McDonald’s Not Served Valid Revocation of Waiver – Commercial Leasing in the Court of Appeal

David Alderson, LL.B, LL.M (Commercial and Corporate), Q.Arb, Lawyer and ArbitratorAppeals, Arbitration, Business Litigation, Commercial, Commercial and Contract Litigation, Commercial Arbitration, Commercial Leasing, Injunction & Specific Performance, Real Estate Litigation, Retail Litigation, Shopping Mall Lease Disputes0 Comments

The Court of Appeal for Ontario in North Elgin Centre Inc. v. McDonald’s Restaurants of Canada Limited, 2018 ONCA 71 allowed an appeal by McDonald’s from a decision on applications by both parties to determine whether  the subject lease came to an end on a described date because McDonald’s had not complied with the renewal provision in the lease.

The Court of Appeal allowed the appeal of the decision of the application judge, that despite that the parties were in negotiations, and that the respondent had waived its right to insist on strict compliance with the  terms of the renewal provision (to refer the determination of the renewal rental rate to arbitration), that the respondent had effectively revoked its waiver and reverted to its strict legal rights, namely to terminate the lease in the absence of the referral of the dispute on renewal rental rate to arbitration within the permitted time.

On the issue of waiver, the Court of Appeal described that the principle of waiver provides that “…if one party leads another party to believe that its strict legal rights under a contract will not be insisted upon, intending that the other party will act upon that belief and the other does so, then the first party may not afterwards insist on its strict legal rights when it would be inequitable to do so: Petridis v Shabinsky, 35 O.R. (2d) 215 (H.C.), at para 20.” and found that the application judge made no error in concluding that the respondent had waived strict compliance with the renewal provision under the lease.

However, the Court of Appeal found that the application judge erred in finding that such waiver had been revoked, since a revocation of waiver to be effective,  must provide  (i) reasonable notice to the receiving party, and to be reasonable notice it must make it clear that the party who granted the waiver will insist upon strict enforcement of its legal tights, and (ii) the notice must also afford the opposite party an opportunity to cure any defect resulting from its reliance on the waiver.

The Court of Appeal ruled that the email relied upon by the respondent failed to revoke its waiver since “There is no clear revocation of waiver.”

Please see our related practice area webpages on Commercial Lease Litigation, Contract Termination, Commercial Arbitration, and on Urgent Remedies.

If you have a commercial leasing, commercial lease arbitration or other related legal issue, please contact Gilbertson Davis LLP to arrange an initial  consultation.

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About the Author
David Alderson, LL.B, LL.M (Commercial and Corporate), Q.Arb, Lawyer and Arbitrator

David Alderson, LL.B, LL.M (Commercial and Corporate), Q.Arb, Lawyer and Arbitrator

David Alderson, LL.B, LL.M (Commercial and Corporate), Q.Arb, Lawyer and Arbitrator David has practiced over 35 years as a commercial and business litigator in diverse matters in the courts and in domestic and international arbitration proceedings in Ontario, England & Wales, Bermuda and Dubai. Also admitted in New York. The ADR Institute of Canada has accredited David as a Qualified Arbitrator (Q.Arb). He accepts appointment as a commercial, business, condo and marine arbitrator. Bio | Lawyer | Arbitrator | Contact

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