A recent decision by the Ontario Court of Appeal confirmed the impact of a rent abandonment on an ongoing sublease. In Smiles First Corporation v. 2377087 Ontario Limited (International Union of Painters), 2018 ONCA 524, the court upheld the rule that handing over a head loan to the landlord would not erase the tenant`s sub-laudable subleases. Tenants and landlords agree to terminate Lease 1. A lease between the City of Toronto (the “City”), as the owner, and … On October 31, 2016, the principal tenant and the tenant entered into a transfer agreement (the “subordination”), with all rights under the main rent transferred to the subtenant. Neither the principal tenant nor the tenant sought the landlord`s consent for the assignment, contrary to the principal tenant`s terms. The Council of Landlords and Tenants (LTB) enters into a contract to terminate the tenancy agreement that is prematurely electrified when tenants cannot apply for a standard tenancy agreement if they have entered into a lease agreement before April 30, 2018, unless it and its landlord negotiate a new lease with new conditions on or after that date. On February 1, 2015, Smiles First Corp. (the “subtenant”) sublet the premises with a letter of intent (the “subletting”) from the principal tenant. As part of the sublease, the subtenant agreed to pay a significantly higher rate than the principal tenant paid the lessor under the tenancy agreement. In mid-2016, disputes broke out between all parties under the lease and sublease.
In October 2016, the subtenant and the principal tenant informed the landlord that they had reached an interim agreement to settle the ongoing dispute. However, the agreement was conditional on the landlord`s agreement to transfer the principal tenant to the tenant and/or the conclusion of a new principal tenant. In February 2017, the landlord reminded the subtenant that he had not yet signed the transaction agreement or that he had entered into a new principal lease agreement with the landlord. The Tenant refused to sign the contract and was unable to enter into a new principal tenancy agreement with the landlord on terms acceptable to both parties. The Tribunal found that, although it attempted to take over an illegal assignment of the principal tenancy agreement and did not comply with an agreement with the lessor, a subtenant was nevertheless entitled to the forfeiture exemption as a tenant. The court clarified that the tenant did not receive a legal assignment of the principal lease when the principal tenant left the site. However, the transfer of the principal lease did not result in the end of the sublease, so the subtenant was allowed to remain in the premises under the terms of the sublease. (Ont.C.A.), Shapiro v. Handelman, 1947 CanLII 90 (ON CA),  O.R. 223 (C.A.) and Royal Bank v.
Loeb Inc.,  O.J. nr. 1702 (Gen. Div.) and Section 17 of the Commercial Tenancies Act, the Tribunal clarified that when a tenant hands over a principal lease to a lessor, the subletting created by the principal tenant is in place until the end of their respective terms. In January 2015, the tenant (the “main tenant”) signed a commercial space lease (the “Premises”).