Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether a mutual termination letter for an agricultural land lease extinguished all future obligations, including any claim for unpaid rent or damages.
• Significance of the wording and context of the October 27, 2023 “lettre de résiliation” and the absence of any express reservation of rights by the lessor.
• Alleged breach of the duty of good faith (art. 1375 C.c.Q.) by the lessor in silently planning to claim compensation after inducing the tenant to sign the termination.
• Characterization of the claimed amount (5 000 $ then 10 000 $) as alleged “perte de loyer” and the court’s finding that no certain, proven loss of rent or future prejudice was established.
• Failure by the lessor to prove mitigation of damages (art. 1479 C.c.Q.), including lack of evidence on when and on what terms the land was re-leased, if at all.
• Evaluation of the two grounds in the demand letter (unilateral breach without notice and refusal of a proposed amicable settlement) and the finding that neither ground legally supported a claim in this context.

Factual background and lease relationship

The dispute arises from a five-year agricultural land lease between Ferme Karmen et Yves Bordeleau S.E.N.C. (the lessor and plaintiff) and Ferme Verena S.E.N.C. (the tenant and defendant). The lease was signed on 1 October 2021 for a fixed term running from 1 October 2021 to 1 October 2026 at an annual rent of 10 000 $, payable on 1 October each year. The land in question consisted of farm fields owned by the plaintiff and used by the defendant for agricultural production.
At the outset, the tenant complied with its payment obligations. Verena paid 10 000 $ at the signing of the lease on 1 October 2021, covering the 2021–2022 lease year, and again paid 10 000 $ in October 2022 for the 2022–2023 lease year. The contractual relationship therefore unfolded without payment default for the first two years of the lease term.

Emergence of drainage problems and request to renegotiate

During the second year of the lease, the principal of Verena, Steve Tousignant, informed the lessor that the leased lands were affected by drainage problems which negatively impacted crop yields and caused annual operating losses. He expressed the view that, because of these issues, the existing lease was no longer viable for Verena. Against that backdrop, Tousignant told the Bordeleaus that he wished to terminate the ongoing lease and proposed a new agreement that would include specific provisions on drainage works that Verena considered necessary.
The lessor refused this proposal. Discussions and attempts at settlement followed but did not immediately resolve the situation. Importantly, by this point the plaintiff was aware, well before 1 October 2023, that Verena did not intend to pay the 10 000 $ rent scheduled for that date for the 2023–2024 lease year.

Non-payment of 2023 rent and the mutual termination letter

On 1 October 2023, Verena did not pay the 10 000 $ rent owing for the 2023–2024 period. Instead of immediately suing or sending a formal notice, the parties continued discussions. These culminated, on 27 October 2023, in the signing of a termination document drafted by the plaintiff itself. The letter, described in the judgment as the “document de résiliation”, was signed by Yves and Karmen Bordeleau for the lessor, and by Steve Tousignant and his spouse Karine Veillette for Verena.
The letter stated that, “À votre demande”, the parties expressed their will to terminate the lease dated 1 October 2021, which was to end on 1 October 2026. It cited “Non respect des obligations légales” as the reason for termination and added that refusal to pay entailed the nullity of the contract. It also declared that the signatories “se libèrent de toute responsabilité concernant les travaux exécutés antérieurement comme stipulé dans le contrat.”
Critically, the termination letter contained no clause expressly reserving the lessor’s right to claim unpaid rent, penalties, damages or other compensation. According to the evidence accepted by the court, when the Bordeleaus presented this letter to Tousignant and Veillette, they never mentioned any intention to later claim amounts for unpaid rent or damages in connection with the termination. Tousignant testified that he signed with the understanding that the letter freed Verena from its obligations under the lease and allowed the plaintiff time to find a new tenant for the 2024 season.

Post-termination demand letter and escalation of the claim

Despite this context, less than two weeks later, on 6 November 2023, the plaintiff sent a formal demand letter to Verena. In that notice, the Bordeleaus claimed 5 000 $ from Verena on two stated grounds: first, the alleged “bris” of the agricultural land lease “sans aucun préavis”; and second, Verena’s refusal to accept an amicable settlement proposal the plaintiff claims to have made by telephone on 5 November.
Verena did not respond to this demand, taking the position that, in light of the 27 October termination letter, it owed nothing further. According to Verena, the mutual termination had extinguished the obligations of both parties arising from the original lease.
On 4 December 2023, the lessor escalated matters by filing a claim before the Cour du Québec, Small Claims Division. The claim now sought 10 000 $ from Verena, corresponding to the 2023–2024 rent that the plaintiff alleged it had been deprived of, by reason of the termination and non-payment. The litigation therefore centered on whether the landlord was entitled to that full year of rent (or any amount) despite the mutually signed termination letter and the surrounding circumstances.

Contractual framework, policy-style wording and legal principles

While the dispute did not turn on insurance policy language, the judgment focuses closely on contractual wording and the civil law principles governing contracts and leases in Québec. Several clauses and legal concepts played a role similar to “policy terms” in an insurance dispute:

• The original fixed-term agricultural lease, which established a five-year term and set annual rent at 10 000 $, payable each 1 October. This created the baseline obligation that the landlord later sought to enforce for the 2023–2024 year.
• The termination letter of 27 October 2023, drafted by the lessor, which purported to end the lease. Its wording—especially the statement that refusal to pay entailed nullity of the contract and that the parties were “libérés de toute responsabilité concernant les travaux exécutés antérieurement”—was a key contractual instrument. The court treated this letter as the core “policy-style” document for resolving the dispute.
• The absence of any reservation of rights in that termination letter. No express clause preserved the landlord’s ability to claim past or future rent, damages or other sums following termination. In light of the testimony and the good faith standard, this silence weighed heavily against the plaintiff.
  In terms of codified rules, the judge referred to two specific provisions of the Civil Code of Québec (C.c.Q.). Article 1375 C.c.Q. imposes a duty of good faith on parties in the performance and termination of contracts; it was used to assess the lessor’s conduct in obtaining Verena’s signature without disclosing its plan to claim money afterwards. Article 1479 C.c.Q. addresses the duty of the creditor to mitigate damages; the court used it to analyze the plaintiff’s obligation to attempt to re-lease the land and to prove any resulting loss.

Good faith, mutual termination, and assessment of the landlord’s conduct

The court viewed the termination letter as the “nœud du litige”. The lessor, having drafted the text, presented it for signature only after discussions with Verena over the tenant’s wish to end the lease because of unprofitable farming operations and drainage issues. At the time of signing, the court found that Tousignant and his spouse believed that the letter not only terminated the lease ahead of its October 2026 expiry, but also put an end to all reciprocal obligations under that contract.
The judge emphasized that the lessor never told Verena, during or before signing the termination, that it intended to claim 5 000 $ or 10 000 $ afterward—whether as unpaid rent or as damages. This silence was decisive. The court characterized the plaintiff’s behaviour as difficult to reconcile with the obligation of good faith imposed on contracting parties. The deliberate failure to disclose a planned monetary claim was seen as a tactic to secure Verena’s signature under false assumptions about the consequences of the termination.
The court accepted Verena’s evidence that, had Tousignant known of the intended claim, he would not have signed the termination letter on those terms. Thus, the landlord’s ex post attempt to recover money was treated as inconsistent with the mutual nature of the termination agreement and with the standards of good faith in contractual dealings.

Nature of the claimed amounts and lack of legal basis

In analyzing the 6 November demand letter, the court dismantled both grounds invoked by the plaintiff. First, the assertion that Verena “broke” the lease without any notice was not borne out by the facts: the tenant had signaled its wish to end the lease and non-payment risk well before 1 October 2023, and, crucially, the parties ultimately concluded a mutual termination that the plaintiff itself drafted. The court rejected the idea of a unilateral, sudden rupture by the tenant.
Second, the court noted that Verena’s refusal of an amicable settlement proposal could not, in and of itself, amount to a fault or contractual breach by the tenant. Under the principle of freedom of contract, no party can be compelled to accept an offer; declining a proposed settlement does not, as a rule, generate liability.
The judge then examined whether the plaintiff could alternatively frame its claim as one for damages for loss of rent in a lease context. As a general rule, when a tenant unilaterally resiliates a lease, a landlord may claim damages equivalent to the loss of rent between the date of resiliation and either the end of the originally agreed term or the point at which the premises are re-leased. However, this line of reasoning did not apply here for two reasons: there had been no unilateral resiliation by the tenant, and the sums claimed did not correspond to proven loss of rent following termination.
The initial 5 000 $ claim, made ten days after the termination, could not represent an actual loss of rent incurred by that date, nor a certain future loss; it was speculative and unsupported by evidence. The later 10 000 $ claim, asserted when the court demand was filed about six weeks later, suffered from the same defect. The court concluded that neither amount could be qualified as compensable loss of rent or as certain future prejudice.

Failure to prove damages and mitigation

Beyond the lack of a clear legal basis, the plaintiff also failed on proof. The court stressed that a landlord claiming damages after termination of a lease has a duty to mitigate loss and must present evidence of steps taken to do so. Here, the plaintiff asserted that the land had been re-leased, but brought no concrete proof: no date when a new tenant was found, no copy of any new lease, and no details on the rent or other conditions obtained.
Without such evidence, the court was unable to determine whether the plaintiff had in fact suffered any net loss of rent for 2023–2024, much less to quantify it. Merely pointing to the contractual rent of 10 000 $ and the early termination was insufficient. In the absence of proof, and in light of the mutual termination, the claim failed under the usual civil burden of proof on a balance of probabilities.

Outcome and disposition of the case

After reviewing the termination letter, the parties’ conduct, the content of the demand letter and the governing principles of good faith, freedom of contract, loss of rent and mitigation, the court concluded that the plaintiff had not made out its case. The judge held that Ferme Karmen et Yves Bordeleau S.E.N.C. failed to establish, on a preponderance of evidence, the facts supporting its claim or the legal and factual basis for the amounts sought.
Accordingly, the court dismissed the action. The judgment specifies that the claim is “rejetée” and that this is done “sans frais” given the particular circumstances. This means that the successful party is the defendant, Ferme Verena S.E.N.C., and that no monetary award, damages, or costs were ordered in its favor. The total amount granted to the successful party is therefore 0 $, and no determinable sum was awarded for costs, damages, or any other form of monetary relief.