Executive Summary: Key Legal and Evidentiary Issues

• Sun Life Assurance Company of Canada sought default judgment against its commercial tenant, 8753008 Canada Inc., for failing to pay rent and abandoning its lease obligations.
• Termination of the lease on August 27, 2024, triggered the Landlord's right to claim both arrears and future lost rent over the unexpired term.
• Default judgment required the court to assess whether the deemed admissions in the statement of claim, together with filed evidence, were sufficient to establish liability and quantum.
• Mitigation was achieved by the Landlord securing a replacement tenant, with the new lease commencing January 1, 2026, reducing the total damages claimed.
• Pre- and post-judgment interest was awarded at the contractual rate of the Royal Bank of Canada Prime Rate plus 5% per annum, compounded monthly.
• Costs of $2,500 were granted on the basis that such an amount is reasonable and foreseeable in the circumstances.

Facts of the case

This dispute arose from a commercial lease agreement dated February 24, 2014, between Sun Life Assurance Company of Canada (the Landlord) and 8753008 Canada Inc. (the Tenant). The lease had an initial term of ten years, commencing August 1, 2014, and ending July 31, 2024. The Tenant defaulted by failing to pay rent for several months, which led the Landlord to terminate the lease on August 27, 2024. The Tenant did not file a statement of defence and did not respond to the motion for default judgment, leaving the matter to be decided solely on the Landlord's materials.

Lease terms and obligations at issue

The core contractual obligation in dispute was the Tenant's duty to pay rent under the commercial lease. Upon the Tenant's failure to meet that obligation, the Landlord exercised its right to terminate the agreement and pursued damages for both the arrears outstanding at termination and the loss of the benefit of the lease over the unexpired term. The Landlord also accounted for certain credits and deposits, including $2,146.93 in end-of-year reconciliation credits and a $7,573.25 security deposit, which were deducted from the total claim.

Reasoning and analysis

Justice Callaghan applied the test for default judgment as set out in Elekta Ltd. v. Rodkin, 2012 CarswellOnt 2928 (ONSC), which requires the court to determine: (a) what deemed admissions of fact flow from the pleadings; (b) whether those admissions entitle the plaintiff to judgment as a matter of law; and (c) if not, whether the plaintiff has adduced admissible evidence that, combined with the admissions, establishes entitlement to judgment. The court emphasized, citing Paul's Transport Inc. v. Immediate Logistics Limited, 2022 ONCA 573, that a motion judge must scrutinize both the deemed admissions and any evidence tendered — judgment is not automatic simply because a defendant has failed to defend.

Applying those principles, the court found that both the admissions in the statement of claim and the filed affidavit evidence established a breach of the lease. Relying on Highway Properties Ltd. v. Kelly, Douglas and Co. Ltd., 1971 CanLII 123, [1971] SCR 562, the court confirmed that a landlord may, upon termination, claim the present value of the remaining lease term subject to mitigation. The Landlord had partially mitigated its losses by securing a new tenant for the premises, with that replacement lease beginning January 1, 2026. Because the Tenant had not defended the action, it could not raise any challenge to the reasonableness of the mitigation efforts, consistent with Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51. The contractual interest rate — the Royal Bank of Canada Prime Rate plus 5% per annum, compounded monthly — was upheld on the authority of Bank of America Canada v. Mutual Trust Co., 2002 SCC 43.

Ruling and overall outcome

The Landlord, Sun Life Assurance Company of Canada, was successful on all heads of its claim. The court awarded damages of $380,007.01, calculated as $238,447.67 in rent arrears outstanding at the date of termination, plus $330,205.75 for the loss of the benefit of the lease over the unexpired term, less $2,146.93 in end-of-year reconciliation credits, $7,573.25 representing the security deposit, and $178,926.16 for mitigation received from the new tenant. Pre- and post-judgment interest at the contractual rate was assessed at $25,796.21 as of March 19, 2026. Costs of $2,500 were also granted, bringing the total monetary award to $408,303.22. The Landlord was directed to forward a draft judgment for the court's approval.