Messica v. 6971971 Canada Inc. 2025 ONCA 514
This case serves as a reminder to landlords to act quickly when pursuing damages for breach of a commercial lease agreement since the ten-year limitation period for real property does not apply to contractual claims notwithstanding the relationship to real property.
In 2014, the tenant corporation entered into a commercial lease agreement with the landlord. The individual tenants personally guaranteed the corporation’s lease obligations and secured that guarantee with a mortgage against their real property.
A term of the commercial lease agreement required the tenant to complete specific upgrades to the premises. The tenant later sought to assign the commercial lease, however, the landlord refused to grant consent arguing that the upgrades had not been completed as required.
At first instance, the Ontario Superior Court of Justice in 6971971 Canada Inc. v. Messica, 2020 ONSC 1642 held that landlord’s refusal was unreasonable under section 23 of the Commercial Tenancies Act and ordered the lease assignment to proceed. After the assignment in 2020, the landlord refused to discharge the mortgage when requested in 2022. The tenant applied for an order to discharge the security and the landlord cross-applied for breach of the lease, alleging the upgrades had not been completed. The court ordered the discharge of the security and dismissed the landlord’s cross-application as statute barred.
The landlord appealed arguing that the Application Judge erred in declining to convert the application to an action, and that their cross-application was governed under the ten-year period under the Real Property Limitations Act and not the two-year period under the Statute of Limitations Act.
The Ontario Court of Appeal dismissed the appeal and rejected the landlord’s argument that the ten-year limitation period applied. The court held that although the property was subject to a registered charge, the claim’s substance was for damages for breach of contract under the commercial lease agreement, not an action relating to an interest in land. Therefore, the two-year limitation period under the Limitations Act, 2002 governed, and the cross-application was statute-barred.
The landlord’s application for leave to appeal to the Supreme Court of Canada was dismissed with costs.
For landlords, this case serves as a reminder to act quickly when pursuing damages for breach of a commercial lease agreement. This case confirms that the two-year limitation period under the Limitations Act applies to contractual claims arising out of commercial leases, even where those obligations are secured by a mortgage on real property, which will not necessarily trigger the ten-year limitation period under the Real Property Limitations Act.