From: Jordan English <jordan.english@magd.ox.ac.uk>

Sent: Monday 7 July 2025 20:53

To: Matthew Hoyle; Samuel Beswick; Obligations

Subject: Re: Mitigation of lease repudiation at the SCC

 

Agree entirely Matt. From my brief skim of the PTA and the lower court's decision, there seems to be no distinction being drawn between debt and damages. Were the SC to go down this route, to my mind it would be making leases unlike every other contract rather than bringing them into line. 

 

J 

 

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From: Matthew Hoyle <MHoyle@oeclaw.co.uk>
Sent: Monday, July 7, 2025 8:44:36 PM
To: Samuel Beswick <sbeswick@sjd.law.harvard.edu>; Obligations <obligations@uwo.ca>
Subject: RE: Mitigation of lease repudiation at the SCC

 

Thanks Sam, interesting for a number of reasons:

 

  1. To English eyes at least, there is a prior question here: why is this a question of mitigation at all? As long as the landlord continues to provide exclusive possession of the property to the tenant, then they should be paid the agreed sum (i.e. rent) for as long as they are meeting the condition for payment. There is no question of mitigating a debt, because it is simply inconsistent with the nature of the remedy, which is unconnected to loss and instead involves the insistence on a primary right.
  2. It is only if the law requires the landlord to accept repudiation, and give up their ability to earn the price, that the claim becomes one for damages, which we here find in the legitimate interest case law from White and Carter v McGregor. But that doesn t seem to the way its being analysed here.
  3. Looking at it that way, the question is not whether commercial landlords are an exception to the mitigation rule, but whether the law requires them to accept repudiation. I don t think the law is incoherent in saying that it doesn t because of the nature of a lease as a grant of a proprietary right at the outset. It could lead to odd situations: for example, if one tenant paid an upfront premium in exchange for a grant of a ten-year lease, while the other agrees to pay periodically. It can t be that the party paying a premium get his money back because half-way through he decides he doesn t want the property, surely?
  4. This really demonstrates why the language of duty to mitigate is dangerous. Mitigation in English law is simply a limit on the damages recoverable. It is not a duty in any sense: it isn t even a requirement or pre-condition ,  because a claimant who does nothing to mitigate will still be able to recover damages as if they had mitigated (which may in some cases be nothing, of course)
  5. If it is conceived as a duty , it is easy to see why one can start applying that to situations where it really ought not to be applied. A freestanding duty to mitigate could be imposed on a creditor who doesn t accept repudiation and insists on payment.

 

As to precedent, isn t it quite literally the point of having a sophisticated system of stare decisis and doctrines of ratio and obiter to decide when a lower court can change/develop the law, and when it can t? If the lower court feels bound by the decision of the earlier court even though it would wish to decide the matter the other way, then surely the right approach is to say that is the reason for the judgment and to grant permission to appeal?

 

Matthew Hoyle

Barrister

One Essex Court

 

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From: Samuel Beswick <sbeswick@sjd.law.harvard.edu>
Sent: 07 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

Publications | Courses | Torts Casebook & Wiki | Profile

 

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