This recent decision shows how important it is for a commercial landlord to secure a personal guarantee from the owner of a closely held corporate tenant if the landlord wants to be able to pursue them in the event of default by the corporate tenant.
Here the landlord failed to have any binding contract with the individual owner of the corporate tenant (the “Individual”). The allegation was that the Individual directed the corporate tenant to deliberately break the lease a year early without notice (so they could set up shop at a new location). The Individual was not listed on the lease, and was not a party to any personal guarantee. The court rejected each of the landlord’s arguments to maintain a civil claim against the Individual personally. This included:
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- a tort claim for interference with contractual relations (rejected);
- an oppression remedy under section 248 of the Business Corporations Act (rejected); and
- piercing the corporate veil (rejected).
The primary pronouncement is that the courts should not be in the business of rewriting contracts. “It is not the function of the court to rewrite contracts or to relieve a party to a contract of the consequences of an improvident agreement.” In this case, the sophisticated landlord entered into a commercial lease without fastening any personal liability on the owner (ie: the “Individual”), and the court was not prepared to rewrite the contract to include this term.
FNF Enterprises Inc. v. Wag and Train Inc., 2022 ONSC 2813
https://www.canlii.org/en/on/onsc/doc/2022/2022onsc2813/2022onsc2813.html