Until recently, there has been some confusion over the
limitation period in respect of rent. This is largely due to the
fact that there are two references to the term "rent" in
the Real Property Limitations Act (with one section
referring to a ten-year limitation period1 and the other
section referring to a six year limitation period2),
which governs claims for rent. This differs from the
Limitations Act which governs damages claims (and has a
limitation period of two years).
In Pickering Square Inc. v. Trillium College
Inc.3, the Court was called upon to determine the
effect of a provision in a lease which deemed all payments under
that lease as "rent" (and, by implication, therefore
subject to either a six or ten year limitation period in accordance
with the Real Property Limitations Act). In particular,
the Landlord's claim was for liquidated damages, as was
permitted under the lease, for each day on which the tenant did not
carry on business at the leased premises.
The Court defined "rent" to be the payment due under a
lease as compensation for the use of land or premises and concluded
that rent reserved under a lease is governed by Section 17 of the
Real Property Limitations Act and, therefore, subject to a
six-year limitation period.
The Court held that it would be inconsistent with the
limitations structure in Ontario to allow parties to shelter a
claim for a lease payment under the six-year limitation period
simply by designating it as rent. Accordingly, the Court held the
liquidated damages for failing to carry on business were not rent
and therefore the general two-year limitation period applied. The
tenant was therefore only responsible for the daily damages arising
during the immediately preceding two year period.
The moral of this story is that landlords simply cannot put
lipstick on a pig and call it rent – landlords should act
quickly in asserting claims against tenants for damages to avoid
the lapsing of the two-year limitation period and are reminded that
rent will not be broadly construed by the courts so as to permit
the more generous six-year limitation period to apply.
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.
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