From: Steve
Hedley
Sent: Wednesday
9 July 2025 11:48
To: Obligations
Subject: RE:
Mitigation of lease repudiation at the SCC
I'm
struck by the sophistication of our debate over who gets to decide - lower
court, upper court, or (by asserting general principle) we leave it to the
relevant legislature - while questions of fairness get far less attention. Yet
fairness will surely influence whoever ultimately decides, and so is undeniably
relevant to anyone who cares about the dispute.
Of
course, fairness is often contested and hard to pin down. But if we are
indifferent to it, why should we care who decides? Are we all simply
proceduralists now, leaving judgments on fairness to others? Considered as
scholarship, this seems self-defeating. Whoever decides the issue can't wish
away their feeling of what is fair, whether or not it ultimately tips the
balance in their minds.
So
what's the diagnosis: Do we fail to discuss the fairness of the claim because
that question is too difficult (and so we concentrate on what we can
answer)? Or is it rather because it is too easy (and so the real question is
rather, whose job it is to act on that insight)?
From: Samuel Beswick <sbeswick@sjd.law.harvard.edu>
Sent: Monday 7 July 2025 19:28
To: Obligations <obligations@uwo.ca>
Subject: Mitigation of lease repudiation at the SCC
ODGers may be interested in a case on which the Supreme Court of Canada recently granted leave, which will revisit whether the doctrine of mitigation applies to the repudiation of commercial leases.
The appellant tenant challenges a common law doctrine that purports to shield landlords in the commercial leasing context from the general principle of reasonable mitigation. From the appellant's leave application:
1. In Canada,
plaintiffs owe a duty to mitigate damages. This is a foundational principle
that has been a part of Anglo-Canadian law for at least a century, requiring a
plaintiff to act like a reasonable and prudent person to avoid losses caused
by a wrongdoing. In Ontario and British Columbia, the Courts of Appeal have
said that there is one class of plaintiff exempt from this doctrine: commercial
landlords. The Quebec courts disagree: there, commercial landlords do have a
duty to mitigate, in the face of a repudiation by a tenant. American courts,
faced with the exact same issue, have consistently changed the common law to
impose a duty to mitigate on landlords.
2. In this case, the
Applicant, Aphria Inc. (the Tenant ), signed a ten-year lease. Early into its
term, as a result of a business combination, it did not have a need for two
duplicate offices. It therefore repudiated the applicable lease. It made repeated,
good faith efforts to send interested tenants to the Respondents (the
Landlords ). The Landlords refused to meet with them, refused to take any
steps to mitigate, refused to accept the repudiation, and made clear they
preferred to sue the Tenant every two years for past rent. The Landlords are
not incapable of mitigating, nor do they say it is too onerous to mitigate.
They simply refuse to mitigate, because they say the law does not require them
to do so.
3. This anomalous
situation is not a product of sound law, logic, or equity. It is a product of
history, where antiquated property law concepts of a lease being a
conveyance , led to that result. And two lines of obiter dicta from Justice
Laskin, as he then was, on a five-member bench of this Court in the 1971
decision, Highway Properties v Kelly, Douglas & Co., have been used
by lower courts as a jurisprudential straightjacket, fossilizing the common law
to a doctrine that predated the law of contract in the Commonwealth.
More generally, the appeal invites the SCC to clarify the scope of judicial law-making power of lower courts in private law matters. From the final section of the leave application:
50. Finally, an issue
that transcends the interests of these parties, and beyond the commercial
leasehold context, is the issue of the development of the common law. As can be
seen from the decisions below, appellate courts continue to struggle with the extent
to which they are permitted to develop the common law, even to be consistent
with other Supreme Court decisions. While the Motions Judge below followed the Canada
v Craig approach of offering comments on the problematic nature of the
precedent, the Court of Appeal simply refused to engage at all (not commenting
on whether he was right or wrong on these points), saying nothing more than if
the law is to be changed, it is for the Supreme Court to do it. This approach
is unsatisfactory, in that it provides no appellate commentary for the Supreme
Court to engage on the issue, leaving it not as the court of last resort, but
the court of only resort and essentially, of first instance.
One to watch!
Warm wishes,
Sam
Samuel Beswick
Assistant Professor | Peter A. Allard
School of Law
The University of British Columbia | Allard
Hall, Room 444
1822 East Mall |
Vancouver, BC, Canada V6T 1Z1
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