In commercial leasing, missing a renewal deadline as a tenant usually means forfeiting the right to renew altogether. Courts typically enforce strict compliance with option-to-renew provisions, treating them as contractual rights that are forfeited when procedural requirements aren’t met. But a recent Ontario Superior Court decision shows that in exceptional circumstances, equity can save a tenant who fails to provide timely notice.

In 8750297 Canada Inc. v. Ambassador Realty Inc., 2025 ONSC 5479, Justice Doyle granted relief from forfeiture to a pizza restaurant operator who missed the eight-month written notice deadline to renew his commercial lease, even though the landlord had already executed a new lease with a neighbouring business to take over the space.

The Facts

Ahmed Yahia operated a pizza restaurant at 1020 St. Laurent Boulevard in Ottawa.

In December 2021, Yahia executed a lease assignment and extension with Ambassador Realty Inc. The lease was set to expire on August 31, 2025, but included an option to renew for an additional five-year term provided the tenant gave eight months’ written notice.

Yahia spent approximately $100,000 on renovations to the kitchen and entrance area. During these renovations in 2022, he told the landlord’s property manager that he intended to stay long-term and was interested in renewing when the lease expired. According to Yahia, she told him it was too early to renew.

Yahia also expected to receive a reminder about the renewal deadline based on past practice. The landlord had sent courtesy reminders to the previous tenant in 2011 and 2016 about upcoming lease expiries and renewal options. One of these reminders (December 2016) was sent when Yahia was already the tenant, though it was addressed to the previous tenant whose name remained on the lease.

Yahia did not provide written notice by the deadline of December 31, 2024.

On February 4, 2025, the landlord wrote to inform Yahia that since he had not exercised his option, the lease would terminate on August 31, 2025. Yahia responded by email the next day that he wished to exercise the option, explaining he had been ill and had been waiting to receive the agreement to sign.

The landlord replied that evening, stating the lease was ending and they had already leased the space to Aladdin Bakery. This was not true; the lease with Aladdin Bakery wasn’t actually executed until March 7, 2025, a month later. Yahia said that he did not receive the landlord’s February 5, 2025 email.

When Yahia followed up about the lease in June 2025, the landlord’s lawyer stated the lease was terminated and vacant possession was required by August 31, 2025. 

Yahia brought an application for relief from forfeiture.

The Legal Framework

The court outlined the principles governing relief from forfeiture in the commercial lease context.

An option to renew is a contractual right requiring strict compliance. Missing the deadline ordinarily means the option is lost. Courts may grant equitable relief from forfeiture, but the test for missed renewal deadlines is “very narrow” and “more narrowly confined” than for other lease breaches. As the Court of Appeal stated in 2324702 Ontario Inc. v. 1305 Dundas W Inc., 2020 ONCA 353 (the “Dundas” case):

“A precondition for the exercise of any such equitable discretion is that the tenant has made diligent efforts to comply with the terms of the lease which are unavailing through no default of his or her own.”

The Decision

Justice Doyle granted Yahia relief from forfeiture, finding that “the equities favour the applicant” and that this case “cries out for the court to exercise its equitable powers.”

The court found the applicant satisfied the narrow test for relief based on several factors:

1. Medical Illness Affecting Compliance

Medical evidence showed that when the renewal notice was due, Yahia suffered from severe, clinically diagnosed insomnia, which impaired his ability to track and comply with renewal deadlines.

2. Reasonable Expectation of Reminder

The court found it reasonable for Yahia to expect a reminder based on the landlord’s past practice of sending at least two previous “courtesy reminders,” even though the landlord had no legal obligation to send them.

3. Good Faith and Clear Intent to Renew

The court found multiple indicators of Yahia’s genuine intention to stay:

• He spent $100,000 on leasehold improvements (his life savings). This was a substantial investment inconsistent with planning to leave;
• He told the property manager in 2022 during renovations that he wanted to renew and stay long-term;
• He immediately responded upon learning he missed the deadline; and
• As a “first time commercial tenant,” his reliance on the property manager’s assurances was reasonable

5. No Pattern of Defaults

Unlike cases where relief from forfeiture was denied, Yahia had no history of rental defaults, late payments, or NSF cheques. 

7. Landlord’s Lack of Good Faith

While not determinative, the court noted the landlord’s February 5 email claiming they had “already leased the space to someone else” was false, and it did not sign the lease until after Yahia had expressed his intention to renew.

The court cited Bhasin v. Hrynew, 2014 SCC 71, noting this was “not in the spirit of performing contractual terms in good faith” and that “parties must not lie or otherwise mislead each other about one’s contractual performance.”

The Innocent Third Party Issue

The landlord argued that granting relief would prejudice Aladdin Bakery, the innocent third party who had already signed a lease for the space.

Justice Doyle rejected this argument, citing McLean v. 1833216 Ontario Ltd., 2013 ONSC 1228. The court found that Aladdin was aware that the parties were in court dealing with the lease issue, and that Aladdin’s lease was signed afterYahia had notified the landlord of his intention to renew.

The court balanced “the prospect of financial ruin on the applicant” against “the speculative prejudice on Aladdin which is wishing to expand” and found no evidence that Aladdin would be unable to operate its ongoing business.

Practical Takeaways

For Commercial Tenants:

1. Don’t rely on past practice: Even though the court found the landlord’s past reminders created a reasonable expectation, don’t assume you’ll get a reminder.
2. Express renewal intentions clearly and in writing: While Yahia’s verbal expressions to the property manager helped show good faith, written documentation would have been stronger.
3. Act immediately if you miss a deadline: Yahia’s same-day response when notified of the missed deadline helped demonstrate his diligence and good faith.
4. Pay on time: Yahia’s clean record of on-time rent payments and no defaults was a significant factor.
5. Relief is rare — don’t count on it: This decision is exceptional. The court repeatedly emphasized the narrow nature of the test. Most tenants who miss renewal deadlines will not receive relief from forfeiture.

For Commercial Landlords:

1. Be honest in communications: The landlord’s false statement about having already leased the space before it actually did hurt its case and raised good faith concerns.
2. Don’t create patterns unless you can continue them: While you’re not legally obligated to send reminders, doing so repeatedly may create reasonable expectations by tenants.
3. Consider whether to fight or settle: Even if you’re technically in the right, courts have broad equitable powers. Landlords should assess whether the tenant’s circumstances might warrant relief before investing in litigation.

Rikin Morzaria is a Toronto civil litigation lawyer at Kinara Law. If you’d like assistance with a legal matter, feel free to reach out to him for an initial consultation.