The Elias Restaurant is a 1,500 square foot hole-in-the-wall in a dreary post-capitalist strip mall on one of the busiest arterial roads in the far reaches of Toronto’s soul-crushing urban sprawl. It is sandwiched between a nondescript beauty supply store and an equally nondescript convenience store. It is two doors down from a “New York Fried Chicken”. Situated in this desert of concrete, power lines, and cell phone towers, Elias Restaurant has managed to carve out a niche for itself, serving an Afro-Caribbean menu since it opened its doors in 2013.
They must have been moving a lot of jerk chicken, because they never missed a monthly rental payment under their lease, even though the rent was close to $50 per square foot per year (which seems like a lot to me). Good thing they are situated on that aforementioned busy arterial road.
Commercial leases, like all contracts, are infinitely malleable. A contract can say pretty much whatever the parties to the contract want it to say. For example, this particular lease expired in 2017. But the lease also contained a provision which allowed the tenant to renew the lease if it wanted to stay.
When the lease expired in 2017, Elias Restaurant did not exercise their option to renew within the required time. So what happens if the tenant doesn’t legally renew the lease, but stays in the unit anyway? That’s called “overholding”, and this lease said that if the tenant did overhold they would have to pay rent at the rate of 125% – which Elias Restaurant did. This case came to court because the landlord tried to evict Elias Restaurant (on the basis that the lease had expired without being renewed), even though Elias Restaurant had never missed a rental payment.
It is very difficult to evict a tenant who is current with the rent. This landlord’s efforts to kick out the tenant backfired spectacularly. The tenant went to Court and asked for “relief from forfeiture”. Not only did they get the relief they were seeking, but they got it in the most sensational way possible.
In ordering that the tenant could remain in the premises, the judge also found that the landlord was motivated to try and evict this tenant because of its prejudice against this tenant’s black proprietors and (overwhelmingly) black customers. In other words, the judge called this commercial landlord racist. While he stopped short of using the “r-word” specifically, he did say that the landlord’s actions were based on “prejudices” and “stereotypes”, and also said there was “some good reason” to describe the landlord’s conduct as “unseemly” and “uncalled for”. Reading the decision as a whole, there is no ambiguity about what the judge meant.
Some commentators have described the judge as ruling that the landlord acted on the basis of “unconscious bias”, but the judge wasn’t even that generous with this landlord. He actually said that the landlord acted on the basis of its “subjective, if perhaps unconscious prejudices.” He was only willing to grant that the landlord’s prejudices were perhaps unconscious – which, of course, leaves the insinuation that the landlord’s prejudices may very well have been conscious.
There are a couple of lessons to be taken from this remarkable case. The first is that judges are human. They are just as susceptible to trends and societal developments as the rest of us. If this case had come to court in 2019, the decision would have been very different. The outcome probably would have been the same: the judge would have simply and quietly applied the test for relief from forfeiture, determined that there is no prejudice to letting a paying tenant stay in the unit, and moved on without providing extensive comments on the landlord’s perceived racial prejudices. But in 2020, with the widespread publicity of the Black Lives Matter movement, this routine commercial lease dispute took on a completely different tenor. This decision is a product of the zeitgeist. It shows that the judiciary are not perfectly detached and dispassionate. They can be influenced by societal developments and prevailing political moods, just like the rest of us can.
The second lesson is the unpredictability of going to court. Regardless of how stubborn or hard-headed this landlord was, NO ONE goes to court if they think there is even a one percent chance that they are going to end up being called a racist by the judge. Clearly, the landlord did not see this coming. Something went badly wrong for the landlord in the preparation of this case. Losing in court? That happens. Losing in court and getting called racist by the presiding judge? You can’t just chalk that up to a bad day at the office.
There is a lot going on in this headline-grabbing case. How it ended up getting this far in the first place is a question the landlord needs to ask itself.