How NOT to deal with tenants in arrears

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Commercial landlords facing a non-paying tenant have a number of choices available to them. These include terminating the lease, and seizing their tenant’s goods using the right of distraint. Landlords can do either of these things. But they can’t do both. An Ontario landlord recently learned this the hard way in Tosomba v. Base General Contracting Ltd. The landlord changed the locks on the premises following ongoing non-payment of rent by the tenant, and refused to release any of the tenant’s goods until the arrears were paid. The outstanding rent was disputed, but appeared to be less than $10,000. The value of the tenant’s goods was estimated at $50,000.

The landlord conceded that the changing of locks and refusal of entry was a termination of the lease, and B.P. O’Marra J. of the Ontario Superior Court of Justice held that the landlord’s distraint of the tenant’s goods was therefore illegal. Given the value of those goods, the court also found the distraint to be excessive. The tenant was awarded damages to be assessed, including punitive damages, and costs. The costs award alone, $6,800, may have exceeded the amount of rent that was actually in arrears at the time of the landlord’s actions.

The landlord’s “self-help” actions ended up being quite expensive.

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