Brief Fact Summary. A tenant was late in exercising a clause to renew its lease. The landlord attempted to terminate the lease.
Synopsis of Rule of Law. Three factors muse be considered when determining if equitable principles should be applied to a party failing to renew a lease on time: (i) whether "the failure to give notice was mere neglect or gross wilful negligence"; (ii) whether the delay has been slight; and (iii) whether "the loss to the lessor is small".
Issue. "[W]hether a tenant's late notice of intention to renew a lease of commercial property should be excused on equitable principles?"
Held. Maybe. The court first relied on [F.B. Fountain Co. v. Stein] and observed how that court held: "We think the better rule to be that in cases of wilful or gross negligence in failing to fulfil a condition precedent of a lease, equity will never relieve. But in case of mere neglect in fulfilling a condition precedent of a lease, which does not fall within accident or mistake, equity will relieve when the delay has been slight, the loss to the lessor small, and when not to grant relief would result in such hardship to the tenant as to make it unconscionable to enforce literally the condition precedent of the lease." Second, the court relied on [Xanthakey v. Hayes] which held the case before it was "peculiarly one for the interposition of equity to prevent the consummation of unconscionable hardship to the plaintiffs." Third, the court relied on [Galvin v. Simons] and observed how that court noted equitable principles should apply where "1) there was no hint of loss to the lessor from the tenants' use of the property for another year; (2) that no space was available in Cheshire for the tenants' purposes; and (3) that thirteen days delay was a small percentage of the notice required. The court then applies three factors it extracts from [F.B. Fountain]. First as to whether "the failure to give notice was mere neglect or gross wilful negligence" the court ruled the trial court's finding "fails to state whether the plaintiff's failure to give notice amounted to wilful or gross negligence which would not allow equitable relief or was merely neglect which would permit such relief under F.B. Fountain Co." Second, as to whether the delay has been slight, the court concluded the delay was slight. Third, the court construed the requirement that the "loss to the lessor is small" to mean "the delay itself must have caused the loss."
Discussion. This case demonstrates how courts attempt to formulate an objective standard to apply a certain equitable principle.