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Elias decision shows judiciary is willing to address racism when granting equitable remedies

Judge finds landlord’s perception of Black restaurateur tenants “stereotypical”

Daniel Waldman

In a recent Ontario decision a commercial landlord was precluded from terminating a lease after it was determined that its intentions were racially motivated.

In Elias Restaurant v. Keele Sheppard Plaza Inc., a tenant operated a restaurant in a suburban Toronto shopping plaza. The restaurant was run by a husband and wife and served what it described as “African/Black/Caribbean cultural foods” catering primarily to the Black community. The restaurant served alcohol but it was not a bar.

The lease was for five years and expired on July 31, 2017. There were two options to renew, provided the tenant provided written notice at least six months before the term expired.

The tenant assumed the lease in 2013 and spent $150,000 in improvements on the restaurant. The current landlord acquired the plaza in April 2016 and instructed all tenants to communicate through its property manager.

When it came time to renew its lease, the tenant made extensive efforts to contact the property manager and the landlord. They ignored and avoided the tenant’s phone calls for nearly a year and the tenant was therefore unable to renew by the deadline.

As a result, the tenant began to occupy the premises on a monthly basis after the term expired. During its tenancy, the tenant had never missed a rent payment and there were no complaints about its business.

In May 2020, the landlord attempted to terminate the lease. The tenant brought an application seeking relief from forfeiture of its lease and an injunction to prevent the landlord from evicting them.

In addressing the application, Justice Edward Morgan noted that the landlord deliberately evaded the tenant about renewing the lease. The reason for this was that the landlord wanted the tenant to leave because, by the landlord’s own admission, the tenant did not attract “likeminded family-oriented customers” and that it “detracts from the appeal of the Plaza for families.” The landlord also referred to the tenant’s business as a “liquor bar.”

Morgan noted that the landlord did not explain those statements and stated that “this comment by the Landlord seems at odds with the fact that the Tenant is, in fact, a family business owned and operated by a husband and wife team, and is open to all customers without regard to family status.”

The landlord provided evidence from a contractor who stated that, while he was working at the plaza, he saw people standing in the plaza that he assumed to be the tenant’s customers, who were “smoking, drinking beer, gambling, and doing other undesirable activities.” It was never established whether the people he observed were, in fact, customers of the tenant.

The tenant argued that the landlord’s remarks towards its business displayed a thinly veiled tone of racism, insofar as the landlord took issue with the tenant because it served the Black community. The tenant also gave evidence that the landlord and/or property manager had also refused to renew the lease of at least one other tenant business in the plaza which was owned or operated by “persons of colour” and was therefore making conscious efforts to transform the plaza along racially-defined lines.

The landlord disagreed with this and tried to argue that it would reap greater rental income from a different tenant. However, the landlord failed to prove this point and Morgan held that this position, “together with the numerous statements about the nature of the Tenant’s clientele, makes it evident that it is not the prospect of higher rent for the Premises that is behind the Landlord’s desire to replace the Tenant.”

In granting the tenant relief from forfeiture, Morgan did not shy away from addressing the allegations of racism. In particular, he stated that the landlord’s evidence, which described “loitering, drinking, and gambling, articulate what might be considered almost a caricature of racially derogatory themes.”

It was acknowledged that the evidence itself did not establish that the landlord was racially motivated. However, Morgan held that motivation was not necessarily the point, stating that the landlord’s stereotypical portrayal of the tenant’s supposed customers and business pointed to “a mindset that condemns the minority population for what is considered normal behaviour for the majority population.” As such, the landlord’s conscious attitude toward the tenant should be considered regardless of whether the landlord was aware of it.

Morgan acknowledged that issues of racial bias are challenging and far-reaching and could not be fully addressed in a single adjudication. However, he noted that “it equally cannot ignore them”.

Elias will likely serve as an important decision for matters that engage issues of racism and social justice. In this regard, it is noteworthy that Morgan considered this issue in making his decision.

Morgan could have decided the case solely on the objective facts, namely that the restaurant proprietors were good tenants, had never missed a rent payment (even through the pandemic) and made good faith efforts to renew the lease, which were ignored by the landlord. Those facts alone could have been sufficient to grant relief from forfeiture.

Regardless, Morgan opted to confront a sensitive issue head-on and used it to guide his decision.

Ontario’s Chief Justice George R. Strathy also addressed racism and the justice system in the recent opening of the Courts of Ontario ceremony for 2020. In his address Strathy noted the “prevalence and perseverance of anti-black racism” in North America and whether our justice system has been delivering on its promise of equity and justice for all.

Strathy stated that we are now at a historic turning point as a result of recent events and he urged the justice system to do its part in confronting pressing societal issues, including racism.

The Elias decision shows that the judiciary is indeed willing to address and consider these issues when granting equitable remedies. The implications of this decision remain to be seen, but at this point we can say that the issues addressed in Strathy’s speech will likely continue to be faced in the coming years.

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