Background

• Parties: The case involves the Canada Life Assurance Company (and others) as landlords and Aphria Inc. (tenant).
• Issue: Whether commercial landlords have a duty to mitigate losses if they refuse to accept a tenant's repudiation of a lease.
• Facts:
  • Aphria Inc. signed a 10-year commercial lease in 2018.
  • In 2021, Aphria repudiated the lease, vacating the premises. The landlord rejected the repudiation, treating the lease as still valid.
  • Aphria argued the landlord had a duty to mitigate damages; the landlord insisted otherwise.
  • Lower court granted the landlord summary judgment for unpaid rent and ruled no duty to mitigate applied.

Appeal Issues

1. Should commercial landlords have a duty to mitigate?
2. Was the lower court’s interpretation of the lease correct, particularly regarding damage caps?

Court’s Analysis

1. Duty to Mitigate:

   • The Court upheld precedent (Highway Properties v. Kelly, Douglas & Co.) stating landlords have no duty to mitigate when treating a lease as ongoing.
   • Arguments for change (good faith, fairness, modern trends) were rejected due to the doctrine of stare decisis.
   • The Ontario Legislature, not courts, is the proper body to address this issue if change is needed.

2. Lease Interpretation:

   • Tenant argued damages should be capped at two years of rent per lease terms.
   • The court found the cap applied only if the lease was terminated, which was not the case here.
   • The motion judge’s interpretation was upheld as reasonable and commercially logical.

Decision

• Appeal dismissed: The landlord owed no duty to mitigate, and the lease terms were properly interpreted.
• Costs: To be determined separately if parties cannot agree. No costs awarded for or against interveners.