Diplomatic immunity doesn't apply to rent bills, according to an Ontario Superior Court justice who on Friday sided with an Ottawa landlord in an unusual legal spat over a luxury townhouse.

Last year, Rolf Baumann got a judgment from the Landlord and Tenant Board requiring Betsy Zouroudis, who works at the U.S. Embassy, to pay thousands of dollars in back rent and legal expenses.

Zouroudis had rented the top floor of a townhouse in Ottawa's Glebe neighbourhood from him last year.

But she refused to pay and, in a letter from her lawyer, argued she had "diplomatic immunity" from the board.

In a decision handed down on Friday, Justice Rohan Bansie ruled Zouroudis's diplomatic status doesn't exempt her from paying rent, because commercial transactions aren't covered by immunity.

"The underlying activity, being the landlord and tenant relationship between the parties was a commercial activity," he wrote.

Landlord relieved

Zouroudis's lawyer had argued the only way to make her subject to the rent payments was for the U.S. to waive her diplomatic status.

Baumann said he's relieved by the ruling because, otherwise, he said it would be impossible for anyone in Ottawa to do business with diplomats.

"It would mean that nobody who ever has a contract with an embassy or a diplomat could ever rely on getting paid," he told CBC News on Friday.

Landlord Rolf Baumann said doing business with diplomats would have been difficult if they were able to claim immunity for something as simple as paying rent. (Judy Trinh/CBC)

The next step in the case is a hearing set for Tuesday, where Baumann will seek to have the amount owed deducted from Zouroudis's wages.

In Bansie's decision Friday he ordered Zouroudis to pay Baumann an additional $1,500 for legal costs related to this hearing.

Zouroudis's attorney declined to comment.