Aphria vacated its downtown Toronto office in 2021, three years into a ten-year lease, and told its landlord it was done: notice of repudiation, an offer of three months’ rent, the keys effectively left on the counter. Canada Life Assurance Company refused to accept any of it. It kept the lease in force on paper and sued for rent as each month came due, whether the space sat empty or not. By the time the Ontario Superior Court ruled on summary judgment, Aphria owed $638,171.40 in back rent, plus interest, plus whatever accrues next.[1]
A landlord who rejects a tenant’s repudiation can let the space sit dark, make no effort to find a replacement, and still collect every dollar of rent as it comes due. The rule is fifty-five years old, and as of this week the Supreme Court of Canada has heard arguments for overturning it and hasn’t said yet what it’s going to do.
The no-mitigation option is one of four the landlord gets to pick from, and it’s a real pick. Highway Properties Ltd. v. Kelly, Douglas and Co. Ltd., decided by the Supreme Court in 1971, gives a landlord facing an abandoning tenant four paths: do nothing and sue for rent as it accrues, terminate and sue for arrears through the termination date, re-let the space on the tenant’s account while keeping the lease alive, or terminate and sue for damages covering the whole unexpired term.[2] Only the first of those, insisting the lease stays alive, comes with no duty to go find a new tenant. Canada Life picked it. Ontario, British Columbia, Manitoba, Nova Scotia, and New Brunswick all still let a landlord pick it too.[3]
The trial judge who applied the rule didn’t sound happy about it. At the Ontario Superior Court, Justice Callaghan called the no-mitigation doctrine “an anomaly” in the surrounding law of contract, then applied it to Aphria anyway, because a trial judge doesn’t get to overrule the Supreme Court.[3] The Court of Appeal affirmed in December 2024, and was blunter about why: departing from Highway Properties “would create uncertainty and instability in a manner contrary to the doctrine of stare decisis."[4] Two courts, in other words, agreeing the rule might not make sense and applying it regardless, because changing it isn’t their job.
It might be about to become somebody’s job. Quebec’s civil law tradition already imposes a mitigation duty on landlords, and Alberta courts have been drifting the same direction, so the “no duty” rule was never actually national even before this case.[3] The Supreme Court granted Aphria leave to appeal in June 2025, heard oral argument on February 18, 2026, and reserved judgment. Six months later, there’s still no decision on the docket.[5] Whichever way it goes, a national high court ruling on a fifty-five-year-old remedies doctrine is going to move faster through Canadian lease drafting than the ordinary drip of provincial case law does.
None of this is a clause a lawyer forgot to add. It’s the reverse of a mitigation waiver clause: in the US split, the default rule usually requires mitigation and a waiver clause opts out of it. In most of English Canada, the default itself is no duty at all, has been since Bora Laskin wrote the opinion, and a party who wants mitigation has to negotiate it in.
Watching a doctrine that hasn’t landed yet#
A ruling like this doesn’t touch a single lease until it lands, and then it touches every Canadian lease with a default clause that assumed the old rule. Acrebase’s clause library can flag any Canadian lease in a portfolio, current or in negotiation, that relies on the common-law default instead of stating a mitigation position outright, so the ones actually exposed to a rule change are known before the ruling drops, not discovered after. Its negotiation playbook can also carry an explicit mitigation covenant as a fallback position for Ontario, BC, Manitoba, Nova Scotia, and New Brunswick deals specifically, the provinces where the point is currently live.
The practical takeaway: if you’re negotiating a Canadian commercial lease this year in a jurisdiction that still follows Highway Properties, don’t assume the common law will settle the mitigation question for you before your lease term is up, put the position you actually want in writing. If you’re a landlord holding a repudiated lease, the option to do nothing and sue for rent is still good law everywhere outside Quebec today, but “today” is doing real work in that sentence.
Footnotes
[1] BLG, “Rent, repudiation, and re-leasing: The February 18 SCC hearing that could shift Canadian leasing law” — case facts, the $638,171.40 summary judgment figure, and background on Canada Life Assurance Company v. Aphria Inc. https://www.blg.com/en/insights/2026/02/rent-repudiation-and-re-leasing-the-february-18-scc-hearing
[2] Highway Properties Ltd. v. Kelly, Douglas and Co. Ltd., [1971] SCR 562, 1971 CanLII 123 (SCC) — the four remedies available to a landlord on tenant abandonment or repudiation, per Laskin J. https://www.canlii.org/en/ca/scc/doc/1971/1971canlii123/1971canlii123.html
[3] Cassels, “SCC Grants Leave on Lease Repudiation Case and Landlord Mitigation Obligations Will Be Reconsidered” — Justice Callaghan’s “anomaly” characterization at the Superior Court, the provincial split (Quebec’s civil law mitigation duty, Alberta’s trend, the common-law provinces following Highway Properties), and Aphria’s arguments for leave. https://cassels.com/insights/scc-grants-leave-on-lease-repudiation-case-and-landlord-mitigation-obligations-will-be-reconsidered/
[4] Canada Life Assurance Company v. Aphria Inc., 2024 ONCA 882 (December 9, 2024) — the Court of Appeal’s stare decisis reasoning for declining to depart from Highway Properties, quoted via TheCourt.ca’s case summary. https://www.yorku.ca/osgoode/thecourt/2025/11/12/appeal-watch-old-leases-new-law-onca-reaffirms-no-duty-to-mitigate-in-aphria/
[5] Supreme Court of Canada, Case in Brief / docket, Aphria Inc. v. Canada Life Assurance Company, et al., SCC File No. 41665 — leave granted June 26, 2025; heard February 18, 2026; decision reserved. https://www.scc-csc.ca/cases-dossiers/search-recherche/41665/
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