From: Gerard
McMeel KC <Gerard.mcmeel@quadrantchambers.com>
Sent: Wednesday
9 July 2025 12:27
To: Matthew
Hoyle; Steve Hedley; Obligations
Subject: Re:
Mitigation of lease repudiation at the SCC
Hear hear Steve
I have read much recently in my field of contact and commercial
from those who see the only fairness as the strict and literal enforcement of
bargains regardless of their provenance and one-sidedness. Now that is a moral
and political stance masquerading as not being one. Whilst sanctity of contract
is important, the common law has always, in my opinion, had a more
sophisticated grasp of fairness. I do not see that fairness as
subjective.
For what it is worth I would be surprised if the SCC departs from
the conventional understanding of commercial leases as property interests once
fully apprised of the law and background here. An interesting point of contrast
in English law is Marcus Smith J's judgment in Canary Wharf, about the 25 year
lease taken by the European Medicines Agency in London on the eve of Brexit. He
rejected frustration, and found the answer lay in the detailed terms. One would
expect that those would be equally heavily negotiated and lawyered in this
case.
Gerard
From: Matthew Hoyle <MHoyle@oeclaw.co.uk>
Sent: 09 July 2025 12:05
To: 'Steve Hedley' <S.Hedley@ucc.ie>;
Obligations <obligations@uwo.ca>
Subject: RE: Mitigation of lease repudiation at the SCC
External Email
Of course fairness matters, but fairness is not objective, nor does it
simply point in one direction in any given situation.
As between the courts and the legislature, the legislature s assessment
of fairness (particular when balancing the justice as between two parties
against social and economic needs and concerns) carries greater constitutional
legitimacy, and constitutional legitimacy is important in a system composed of
humans rather than angels.
But even within the court system, even if the rule appears to be unfair
on the facts before the court, there is also unfairness in:
The doctrine of precedent (including restrictions on the ability of apex
courts to depart from their own decisions) is designed to mitigate at least the
first and third of those concerns to an extent.
That doctrine is in turn mitigated by the ability of the legislature to
intervene to democratically change the rules prospectively and taking account
of the interests of society as a whole as well as the interests of individuals.
(The second cannot be mitigated except by good judgement (deliberate e
there) on the part of judges)
Matthew Hoyle
Barrister
One Essex Court
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From: Steve Hedley <S.Hedley@ucc.ie>
Sent: 09 July 2025 11:48
To: Obligations <obligations@uwo.ca>
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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