Ruling remits matter for another judge to hear argument at the heart of the case
The Ontario Court of Appeal has set aside a judgment determining that the notice of termination of Chayil Church’s lease was valid because a termination clause in a 1998 agreement remained active despite later lease extensions and amendments.
In Chayil Church v. Soneil Pickering Inc., 2026 ONCA 325, the appellant church began operating out of leased premises in a commercial plaza in Mississauga in 1992.
Initially, the appellant provided spiritual ministry and worship services. Eventually, it also offered over 40 community outreach programs with the help of hundreds of volunteers. Over the years, this expansion impacted its needs for space.
The appellant obtained several extensions to the original lease term and numerous amendments to the agreement. In all, it had 14 lease agreements with the prior property owners.
Seeking to buy the plaza, the respondent informed the appellant in February 2024 that it should execute a new lease that would double its rent and require it to surrender 10,000 square feet of space. If the appellant rejected these terms, the respondent said it would terminate the lease and require the appellant to vacate within 30 days.
On Mar. 4, 2024, the appellant objected to the respondent’s proposal. The appellant argued that the demands were unreasonable and inconsistent with the terms of the 2020 lease.
The next day, the respondent advised that it was relying on a 30-day termination clause in a 1998 lease extension and amending agreement. Under this clause, the landlord could terminate the lease by giving the tenant at least 30 days’ written notice.
During its pre-closing process, the respondent required every tenant to sign estoppel certificates it had drafted. These certificates aimed to catalogue the lease agreements.
On Mar. 21, 2024, the appellant signed an estoppel certificate, which confirmed that the original lease was still in full force and effect and was enforceable “save and except for” 13 listed amending agreements.
The respondent completed its purchase of the plaza, with around four years remaining in the appellant’s current lease term. On May 3, 2024, the respondent issued a termination notice.
The appellant applied for an order restraining the respondent from terminating the lease. On Sept. 17, 2025, Justice Grant R. Dow of the Ontario Superior Court of Justice dismissed the appellant’s application. The application judge found that:
On appeal, the appellant argued that the judge erred by failing to address its main argument that he should interpret the 30-day termination clause in the 1998 agreement in the broader context of all 14 lease agreements, rather than as a standalone document.
According to the appellant, it was asserting that the 30-day termination clause applied exclusively to the term of the 1998 extension, not that subsequent extensions and amendments had revoked the clause.
The Court of Appeal for Ontario allowed the appeal, remitted the matter to the Superior Court for a new hearing before another judge, and ordered the respondent to pay the appellant all-inclusive appeal costs of $20,000, including $5,000 for an injunction motion.
The appeal court accepted that the appellant had advanced its argument – a plausible one at the heart of its application – before the application judge.
The appeal court ruled that the judge erred by failing to address this argument and by failing to analyze the original lease agreement and the later amendments to determine whether the landlord and tenant had wanted the 30-day termination clause to survive subsequent extensions and amendments.
Despite this finding in the appellant’s favour, the appeal court ordered a new hearing rather than setting aside the termination notice. The appeal court explained that a court of first instance would be in a better position to interpret the contract, an exercise that entailed factual findings.
