Tenant Without Heat Justified in Ending Lease

In the recent decision of 1723718 Ontario Corp. v. MacLeod, the court considered the duty of a commercial landlord to remedy problems with the building heating system, and found that a tenant who had no heat over several weeks of a holiday period was justified in terminating the lease early.
The tenant, a general surgeon, rented space on the second floor of a building owned by 1723718 Ontario Corp. (the “landlord”).  The lease specified a rent of $24,000 per year, and its term spanned from 2007 to January of 2010.  During the holidays in late December of 2008 the tenant’s office manager checked on the premises, and arrived to a very cold building with water-gushing sounds in the pipes. After she dialled for emergency assistance using the number she found on the alarm panel, the office manager was told that the building was no longer covered for such alarms because the landlord had not paid an outstanding bill. When the tenant returned to the office more than a week later in early January 2009, the alarm was still sounding, the gushing-water sounds were still audible, and there was a visibly-ruptured pipe in the boiler room, where the walls, ceiling and floor were covered in water. The tenant quickly found replacement premises and vacated shortly thereafter. He wrote to the landlord to advise that he was terminating the lease.  In response, the landlord sued, claiming breach of contact, and claimed for unpaid rent for the balance of the lease term.   In turn, the tenant then sued for fundamental breach of contract.
The court dismissed the landlord’s action, but the tenant’s action against the landlord was allowed.
Under the circumstances, the tenant had the right to terminate the lease before the term had expired.  Upon early termination a landlord normally has the right to sue the tenant for unpaid rent for the balance of the term, but here the tenant had proven the landlord’s fundamental breach of the covenant to maintain and repair the heating system.  By this failure, the landlord had deprived the tenant of substantially the entire benefit of the lease, which the landlord knew was for the purposes of running a medical practice.  In making this finding, the court took into account that the landlord had not taken prompt steps to remedy the problem with the heat which, given the season of the year, required immediate attention. See 1723718 Ontario Corp. v. MacLeod, 2010 (ONSCJ).