Money Mart Canada Inc. v. Austrocan Investments Inc.
originally entered into a Lease agreement in 1989. In 2003, a new
Lease was signed for a five-year term and granted an option to
renew for an additional five-year term. On December 2, 2008 (the
"December Notice"), the Tenant sent a letter to the
Landlord purporting to exercise the option to renew the Lease. The
December Notice also proposed further changes to the Lease, such as
a defi nition of permissible uses and for the right to terminate in
certain circumstances. The parties were never able to come to an
agreement on the "other changes" and on September 1,
2010, the Landlord delivered written notice to the Tenant
terminating the tenancy. Following several extensions of the
termination date, the Tenant vacated the premises in April 2011. At
issue was whether the December Notice constituted a valid exercise
of the option to renew. The Landlord claimed that it did not while
the Tenant claimed it was valid.
The Court considered the surrounding circumstances in
determining whether the Tenant demonstrated an unequivocal and
unambiguous intention to negotiate a new lease or renew the
existing Lease. Although a paragraph in the December Notice
expressed a desire to exercise the option to renew, other
paragraphs discussed the possibility of amending, deleting or
adding various clauses, which was contrary to the wording of the
right to renew that called for a renewal on the same terms and
conditions as in the original Lease. Further, the letter ended with
the statement "if you are in agreement with this
proposal." Reading the letter as a whole and the surrounding
circumstances, the Court ruled that the December Notice was not a
clear and unambiguous exercise of the right to renew. Therefore,
the Lease expired and the tenancy was converted to a month-to month
In Rinaldo Hair Stylist Ltd. v. bcIMC Realty Corp., the
Tenant, a hair salon, entered into a Lease with the Landlord in
1998 for a 10-year term expiring May 2008. The Lease contained a
renewal option for two additional five-year terms on written notice
to be delivered by May 31, 2007. The Landlord's leasing agent
was engaged in ongoing renewal negotiations with the Tenant, but as
of March 2007, the parties were far apart on renewal terms. By July
2007, the Tenant had been silent for two months and the agent then
notified the Tenant by letter of the Landlord's decision to
terminate negotiations and pursue other potential tenants.
Following the letter, the Tenant and the Landlord's agent
re-engaged in negotiations and the agent sent another letter to the
Tenant in August 2007 asking whether the Tenant was interested in a
renewal. The Tenant did not respond to the Landlord's inquiry
and the Landlord notified the Tenant in October 2007 that they
would be required to vacate the premises on or before May 31,
The Tenant brought an action claiming that the Landlord's
conduct throughout negotiations led them to believe that the
Landlord waived the strict written notice requirement for renewal
under the Lease. The Landlord countered by bringing an application
for summary judgment. The application was granted and the action
was dismissed. The judge found that no conduct on behalf of the
Landlord would have reasonably led the Tenant to infer that the
strict compliance with written notice for renewal had been waived.
The negotiations were conducted by the Landlord in good faith and
even though negotiations were constant, the two parties were far
from agreement. The negotiations that took place after the renewal
notice was required were negotiations outside of the Tenant's
renewal option and outside any restrictions the Lease may have
imposed. The Court of Appeal dismissed the appeal and determined
that the case was appropriate for summary judgment.
Tenants Beware: Do not taint your exercise
notice with proposed changes to your lease. Keep them separate and
distinct. If you decide not to exercise your option unless certain
lease amendments are obtained, then negotiate the amendments
separately before you exercise the option to extend/renew and well
before your exercise period expires. The extension/renewal and
lease amendments may be documented in the same agreement, but avoid
making your exercise notice conditional on new proposed
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).