Where a commercial lease provides for a specific method of notice in order to exercise an option to renew and a tenant fails to strictly comply with the service requirements, can the Court provide relief?
In the decision of Ross v T. Eaton Co., 1992 CarswellOnt 615 (CA) the Ontario Court of Appeal considered a case where the lease provided for an option to extend. The wording of the option in the Eaton case stated that “sufficient notice” was provided by registered mail to a specified address. In 1963 the landlord sent to the tenant a letter advising of a change of address for the landlord.
25 years later in 1989 when the tenant chose to exercise its renewal option, it sent the renewal option notice by registered mail to the old address (as it had forgotten that the address for notice had changed 25 years earlier). The landlord (Ross) took the position that the notice was invalid and demanded that the tenant (Eatons) vacate.
The Court of Appeal held that by the terms of the lease, notice of renewal had to be delivered to the landlord in order to be valid. However, notice could also be “sufficiently given” by alternate means. If the tenant sought to depart from the specified method, it could only do so effectively if the communication was by a method that was not less advantageous to the landlord and the acceptance was actually communicated to him (my emphasis).
At paragraph 22 of the decision, the Court noted that “…if an offeree wishes to depart from the method of acceptance prescribed by the offeror (which is not insisted on as the sole method of acceptance), he can only do so effectively if the communication is by a method which is not less advantageous to the offeror and the acceptance is actually communicated to the offeror.”
At paragraph 24 of the decision the Court held that “…if an offeree wishes to depart from the prescribed terms for communicating the acceptance, he should only be able to do so effectively where the offeror has actually received the acceptance.” It is important to note that the landlord in Eaton maintained that it did not have actual notice and did not receive the notice. The Court directed a trial of an issue to determine whether the landlord (Ross) actually received notice. If it was found at trial that Ross actually received notice then the landlord’s application to evict would be dismissed and if it was found at trial that the landlord did not have actual notice, then the landlord would be entitled to an eviction.
The bottom line is that in order to avoid a situation like Eaton parties should carefully review the renewal options of the lease and comply strictly with the provisions.