Force Majeure Clauses in Commercial Leases

Niagara Falls Shopping Centre Inc. v. LAF Canada Company, 2023 ONCA 159

The Ontario Court of Appeal awarded the commercial tenant with an extension of their lease, rent free, for the duration of the lockdowns. The reasoning was quite simple. The commercial lease force majeure provision - provided that while the tenant was not enjoined from the obligation to pay rent(s) and was required to uphold its obligations under the lease, the strict application of the language in the force majeure provision ( common language found in many commercial leases) meant that the tenant was permitted to extend the term of their lease, rent free, the equivalent of the lockdown period.

This strict application of the language found in the contract emphasizes how courts are loath to rewrite contracts and parties’ intentions and shall apply the provisions of the contract as written; the motion judge on the other hand believed that such an argument would render the contract commercially absurd and struck down the tenant’s argument.

For now, this case identifies how a force majeure provision can be strictly applied and that practitioners should be careful when drafting to ensure that there is minimal ambiguity in the language and a more refined and controlled conclusion that can be achieved on a strict reading.

The landlord has filed for leave to appeal to the Supreme Court of Canada.