LZW succeeds in obtaining relief from forfeiture

In the case 974555 Ontario Limited v. 2535679 Ontario Inc., LZW succeeded in obtaining relief from forfeiture on behalf of the Respondent and opposing the Applicants motion for a writ of possession.[1]

On December 21, 2018, the Applicant’s application for the appointment of receiver was adjourned on certain terms set out in minutes of settlement that were appended to an endorsement of the court.  Among the terms, the Respondent was required to stay current on all its municipally fees and taxes in respect of its industrial property and if the respondent failed to pay such fees and taxes within 30 calendar days with the due date, the applicant would be entitled to obtain a writ of possession for the said property. 

The Respondent failed to pay municipal tax installments and was in breach of the minutes of settlement.  However, prior to the hearing, the Respondent brought all municipal tax arrears current.

The motion Judge dismissed the motion and granted relief from forfeiture, considering: (i) that the Respondent had cured the default under the minutes of settlement, (ii) the Applicant’s conduct, finding that it was in breach of certain obligations that contributed to the Respondent’s inability to meet its financial obligations, and (iii) the disparity between the value of the property and the damage caused by the breach.

A significant feature of this case was the Applicant’s argument that relief of forfeiture pursuant to s. 98 of the Court of Justice Act was not available to the Respondent because it does not operate to invalidate a court order. However, the court rejected this argument and found that:

…section 98 of the Courts of Justice is worded sufficiently broadly to include relief against “penalties” and “forfeitures” without reference to how such penalties or forfeitures arise.  The Minutes of Settlement underpinning the consent order include a covenant that specifically provides for forfeiture in the even of a breach. 

The LZW team that acted on behalf of the successful Respondent included Anthony O’Brien and Ian Klaiman.


[1] 2019 ONSC 4770