Will the Supreme Court of Canada Change the Rules for Commercial Landlords?

The Supreme Court of Canada is about to decide a case that could shake up commercial leasing across the country.

In Canada Life Assurance Company v. Aphria Inc., the Court will consider whether commercial landlords have a legal duty to mitigate losses when tenants walk away from their leases.

What’s the Issue?

Currently, landlords are not required to mitigate damages if they choose to keep the lease in effect after a tenant abandons it. That means they can sue for unpaid rent without trying to re-let the space.

But Canada Life is challenging that rule. The case asks whether commercial leases — which are both contracts and property interests — should be treated like other contracts, where parties must take steps to minimize losses after a breach.

Why This Matters

If the Supreme Court decides landlords must mitigate, it could:

• Force landlords to actively seek new tenants even if they keep the lease alive

• Change how damages are calculated after a tenant defaults

• Shift power in lease negotiations

• Add uncertainty to long-term commercial lease enforcement

For tenants, this could open new legal defences in lease disputes and reduce exposure to full rent liability after leaving a space.

Current Law: No Duty to Mitigate for Affirmed Leases

Under the 1971 case Highway Properties Ltd. v. Kelly, Douglas and Co. Ltd., landlords who refuse to accept a tenant’s repudiation can sue for full rent without mitigation. Courts in Ontario and British Columbia have followed this principle for decades. However, the Supreme Court now appears open to revisiting that precedent, particularly in light of modern contract law, where the duty to mitigate is a standard requirement.

What Should Landlords and Tenants Do Now?

Until the Court rules, the law hasn’t changed — but it might soon. Here’s what to consider:

• Landlords should review lease enforcement policies and consider how a duty to mitigate could impact litigation strategy.

• Tenants should understand that walking away from a lease still carries full liability — but that could change depending on the Court’s ruling.

Stay Tuned

The Canada Life appeal could redefine commercial leasing law across Canada. If you’re involved in a commercial lease dispute or negotiation, speak with legal counsel to understand how this case could affect your rights.

Contact us today to discuss your situation with a paid online consultation. We can be reached at www.bprlitigation.com or by email at justin@bprlitigation.com. We would be happy to arrange a consultation to assist you further and address your specific questions and needs regarding these or other legal issues.