Flying back from YHZ at Christmas in 1998, when waiting at Air Ontario in YYZ, they came on and announced that the flight for Sudbury was ready for boarding, but the lav wasn't working (I beleive it was frozen, if memory serves, and it was cold enough on the ramp that night that I thought "how could it not be?" LOL). They did offer that if anyone wasn't comfortable flying that distance without a lav, they could change their flight or get a credit.

Maybe the rules have changed since then.