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Exercising a termination clause requires strict satisfaction of any attached conditions
The Court of Appeal for Ontario recently articulated the importance of satisfying the conditions attached to termination clauses when seeking to terminate a lease. What the trial court considered to be a largely semantic point in Dunnville Soccer Park Corp. v. Haldimand (County), 2010 ONCA 680 was ultimately found to render the landlord’s termination invalid.
The issue that gave rise to the dispute in this case concerned a long-term lease of 16 acres of playing fields. Under the terms of this lease, the Dunnville Soccer Park Corporation (“Dunnville”) and the Haldimand Youth Soccer Club, as tenants, took on the responsibility of developing soccer facilities on the premises while the Haldimand County, as landlord, was tasked with maintaining the turf. A termination clause afforded the landlord the right to terminate upon 180 days’ notice on the condition that it provided the tenants with “another reasonably similar soccer facility”.
A dispute arose between the tenants that resulted in the Haldimand Youth Soccer Club informing the landlord that it was no longer associated with Dunnville and requesting that it be removed as a party to the lease. Upon receiving this information, the landlord provided the two tenants with notice of termination and subsequently attempted to negotiate a new lease of the same premises with Dunnville on similar terms, with the notable difference that the parties would share the costs associated with turf maintenance. Reluctant to take on this new obligation, Dunnville commenced an application to determine the status of the original lease.
Advancing the position that the lease had been invalidly terminated on the basis that the landlord failed to provide it with “another reasonably similar soccer facility”, Dunnville argued that the lease remained in full force and effect. Specifically, Dunnville submitted that the landlord’s attempt to negotiate a new lease of the same premises on different terms did not satisfy the condition attached to the termination clause. The landlord, in response, maintained that its attempt to negotiate a new lease of the same premises amounted to an offer of “another reasonably similar soccer facility”.
The trial court determined that the landlord’s notice of termination was valid, holding that the landlord had satisfied its obligation to provide a replacement facility. The trial judge remarked that the proposed new lease would have provided Dunnville with the use of the same premises on “similar terms” to those in the original lease. The Court of Appeal reversed this decision, finding instead that the condition attached to the termination clause clearly required the landlord to provide the tenant with another reasonably similar soccer facility at another location, not the same facility on less favourable terms. Having failed to satisfy with this condition, the Court concluded that the landlord’s termination was invalid.
Given the Court of Appeal’s decision in this matter, landlords may wish to exercise a heightened sense of caution when considering whether to accept conditions attached to termination clauses.
Devin Anderson
April 28, 2011 in Leasing | Permalink
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Comments
Having failed to satisfy with this condition, the Court concluded that the landlord’s termination was invalid. Then why initially was concluded as valid?
Posted by: Jeff Morris (Real Estate Agent) | Jul 21, 2011 3:00:45 PM
I would like you to keep up the good work.You know how to make your post understandable for most of the people.I will definitely share it with others.Thanks for sharing.
Posted by: best online drug store | Aug 4, 2011 1:58:38 AM
I would like you to keep up the good work.You know how to make your post understandable for most of the people.I will definitely share it with others.Thanks for sharing.
Posted by: best online drug store | Aug 4, 2011 11:31:58 PM
Interesting read. Termination clauses really have to be looked at closely.
Posted by: Andrew | Aug 13, 2011 2:15:37 PM
very nice post keep it it up..
Posted by: smith | Oct 22, 2011 1:52:37 AM
I think it's a very informative news.Termination clause is big issue for every tenant who are living in lease.Landlord should be careful.
Posted by: sohel | Dec 23, 2011 5:33:17 AM
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