Racial Bias Taken into Consideration in Relief from Forfeiture Application

  • October 08, 2020
  • Daniel Waldman and Allan Tung, Pallett Valo LLP

In a recent Ontario Superior Court decision, a commercial tenant was granted relief from forfeiture of its lease after the landlord deprived the tenant of its contractual right to renew. In deciding the matter, Justice Edward Morgan noted that the landlord’s intention was driven in part by racism.

In Elias Restaurant v. Keele Sheppard Plaza Inc., 2020 ONSC 5457, the tenant leased a restaurant space in a shopping plaza in Toronto’s west end. The restaurant was operated by a husband and wife team who spent about $150,000 improving the space since they took possession of it in 2013. The tenant’s business operates as a restaurant serving what it describes as African/Black/Caribbean cultural foods, and it caters primarily to a Black customer base. Although the restaurant is licensed to serve alcohol, it is primarily a food service establishment and not a bar.

The lease expired on July 31, 2017 and the tenant had the right to renew the lease provided it gave the landlord written notice at least six months prior to the expiration of the lease term. When it came time to renew its lease, the tenant made extensive efforts to contact the landlord and its property manager to exercise its option to renew. The landlord did not return the tenant’s emails and phone calls and the tenant was not able to renew by the deadline.  

As such, after the expiry date, the tenant continued to occupy the space on an overholding basis. Nearly three years later, in May, 2020, the landlord delivered a letter to the tenant stating that the lease was being terminated.