Defending a Peterborough Lease Against Termination for Late Rent

The situation

Dawit works full-time as an accountant for a mid-sized firm. On evenings and weekends, he and his partner Meron, who serves as a police sergeant, run a small print and framing shop out of a commercial unit they lease in Peterborough. The shop had been open for a little over three years, built up slowly through word of mouth and a steady base of repeat customers, along with a modest amount of business from local schools and offices ordering signage and framed certificates. Neither Dawit nor Meron had ever run a business before this one, and the lease — a five-year commercial tenancy with a corporate landlord — was the single largest financial commitment either of them had signed. They had put most of their savings into fitting out the unit in the first year, on the assumption that the lease gave them five years to earn that investment back, and they had never missed a payment before that winter.

The trouble started the previous winter. A slow stretch in December and January, combined with an unexpected equipment repair, left the business short on cash for two consecutive months. Rent was paid both times, but ten and then fourteen days late. A third late payment followed in March, again after the fact but within about three weeks of the due date. Each time, the landlord's property manager, Taras, accepted the payment without objection. Then, in April, a formal notice arrived: the landlord considered the lease in default, was terminating the tenancy, and intended to re-enter the premises and lock out the business within days. Dawit and Meron were confused as much as frightened — the property manager had cashed every late payment without so much as a phone call about it, and nothing in their dealings with him had suggested the account was being treated as a serious problem.

The legal problem

Commercial leases in Ontario typically give the landlord a contractual right to terminate and re-enter the premises if the tenant defaults on rent, subject to whatever notice and cure provisions are written into the lease itself. Unlike residential tenancies, commercial leases are governed mainly by the terms the parties negotiated and by the Commercial Tenancies Act, and tenants have far fewer built-in protections — there is no equivalent to the notice and hearing requirements that apply before a residential landlord can evict a tenant. A landlord who follows the lease's default provisions can, in principle, end the tenancy and change the locks with comparatively little advance warning, sometimes without ever going to court first, since re-entry for non-payment of rent is often a self-help remedy under the lease rather than something a landlord needs a judge to authorize in advance.

What was at stake for Dawit and Meron went well beyond a few weeks of rent. Losing the space meant losing roughly $180,000 in leasehold improvements they had invested in the unit — custom counters, a print and mounting workroom, signage and fixtures that could not simply be moved to a new location. It also meant the landlord could pursue them for the rent owing over the remainder of the five-year term, which by our team's calculation came to roughly $450,000 if the lease were terminated and the space sat vacant or re-let at a lower rate. Combined, and including the risk of the landlord seeking legal costs on top, the couple's total exposure sat at around $630,000 — a sum that would have wiped out their savings and put their home at risk if the landlord pursued a personal guarantee they had signed at the outset of the lease.

The couple's first instinct was to try to negotiate directly with the property manager. But a termination notice of this kind starts a clock, and informal conversations rarely stop a landlord who has already decided to act. They needed a legal response, not just a phone call, and they needed it within days rather than weeks, since every day that passed brought the landlord closer to physically re-entering the unit.

What we did

1. Pulled the lease apart clause by clause. Commercial leases are contracts first and foremost, so the exact wording controls what a landlord can and cannot do. We reviewed the default and re-entry provisions closely, along with the notice requirements the landlord was obliged to follow before terminating, checking whether the lease itself set out a cure period the landlord had skipped over in its rush to send the termination notice. That review also told us what arguments were not available, so we could focus effort on the ones that actually fit the facts.
2. Documented the landlord's own conduct. A landlord who repeatedly accepts late rent without objection can, depending on the pattern, be found to have waived strict reliance on the original due date — or at least undermined the argument that late payment alone justified an abrupt termination without further warning. We assembled a clear timeline showing that Taras had accepted all three late payments in full, without protest or reservation of rights, before the termination notice was ever sent.
3. Prepared an urgent application for relief from forfeiture. Ontario courts have long-standing authority to relieve a tenant from forfeiture of a commercial lease where the default has been cured or can be cured, and where terminating the lease would be disproportionate to the harm the landlord actually suffered. We filed this application promptly, before the landlord could complete a re-entry and change the locks, since relief becomes far harder to obtain once a tenant has physically lost possession.
4. Brought all outstanding rent current immediately. Courts weighing relief from forfeiture look closely at whether the tenant has since cured the default and can be relied on going forward. We advised the couple to pay every dollar owing and to get ahead on the following month's rent before the matter was heard, removing any argument that the default was ongoing. This step cost the business some short-term cash flexibility, but it converted the landlord's strongest talking point — an unresolved pattern of missed payments — into a closed chapter before the application was even argued.
5. Negotiated a structured resolution alongside the litigation. Rather than let the dispute run to a full hearing, we opened a parallel negotiation with the landlord's lawyer, proposing a formal payment protocol — rent by pre-authorized debit on the due date, with a defined cure period if a payment ever failed — in exchange for the landlord withdrawing the termination notice. Running the negotiation alongside the litigation, rather than instead of it, kept pressure on the landlord to settle on reasonable terms rather than wait out a court process it might eventually lose anyway.

The outcome

Faced with a documented pattern of accepting late payments without objection, a tenant who had already cured every default, and a court application already filed, the landlord agreed to withdraw the termination notice roughly six weeks after it was issued. The negotiated payment protocol became a formal amendment to the lease, and the five-year term continued on its original schedule, with the landlord's lawyer confirming in writing that the prior late payments would not be relied on again as grounds for default. Dawit and Meron kept their unit, their leasehold improvements, and their business, and the shop reopened for its usual hours the following Monday without customers ever knowing how close it had come to losing its lease.

The couple also came away with something less tangible but just as valuable: a rent payment system that removed the risk of a repeat dispute. Automating rent through pre-authorized debit meant the shop's cash flow no longer depended on someone remembering to write and send a cheque during a busy or difficult month. The personal guarantee they had signed at the start of the lease was never called on, and it remains in place for the balance of the term — a reminder that the couple's exposure did not disappear, but the immediate threat to it did. Dawit and Meron also built a modest cash buffer into the business's bank account afterward, specifically earmarked for rent, so a slow month would never again force a choice between paying rent late and falling behind on suppliers.

What made the difference in this case was speed and documentation. Had the landlord completed the re-entry and re-let the space before the application was filed, relief from forfeiture would have been a far harder argument to win, and in many cases becomes unavailable altogether once possession changes hands. Acting within days of the termination notice, rather than weeks, was what kept the option open. A business owner who waits to see whether a landlord is serious, or who spends that time negotiating informally instead of filing, can lose the ability to ask a court for relief before the question of fairness is ever reached.

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