1183882 Alberta Ltd. v. Valin Industrial Mill Installations Ltd., (2012) 522 A.R. 285

• Judge: Berger, Slatter and McDonald, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: March 02, 2012
• Citations: (2012), 522 A.R. 285;2012 ABCA 62

1183882 Alta. v. Valin Ind. Mill Installations (2012), 522 A.R. 285; 544 W.A.C. 285 (CA)

MLB headnote and full text

Temp. Cite: [2012] A.R. TBEd. MR.184

183882 Alberta Ltd., operating as Sok's Contracting (appellant) v. Valin Industrial Mill Installations Ltd. (respondent)

(1103-0242-AC; 2012 ABCA 62)

Indexed As: 1183882 Alberta Ltd. v. Valin Industrial Mill Installations Ltd.

Alberta Court of Appeal

Berger, Slatter and McDonald, JJ.A.

March 2, 2012.

Summary:

The plaintiff tenant applied for a declaration that it validly exercised an option to purchase granted in a commercial lease. Alternatively, the plaintiff sought relief from forfeiture. The defendant landlord applied for a declaration that the exercise of the option to purchase was invalid on the grounds that a precondition to exercising the option was that the plaintiff not be in default. The defendant alleged default based on (1) late (but remedied) rent payments at various times; (2) the failure to either prepay the last month's rent due under an extension of the lease or the failure to pay rent during one of the months of the extended lease period; or (3) the insolvency clause of the lease triggering default when the plaintiff applied for relief under a statute concerning bankrupt or insolvent debtors.

The Alberta Court of Queen's Bench, in a judgment reported 521 A.R. 281, held that the failure to prepay the last month's rent or the rent for one month during the extended lease period, and the application of the insolvency clause, both constituted acts of default that disentitled the plaintiff from exercising the option to purchase. Relief from forfeiture was not available, as the no default condition was a precondition to exercising the option. In any event, the court would not have exercised its discretion to grant relief from forfeiture. The plaintiff appealed.

The Alberta Court of Appeal, McDonald, J.A., dissenting, dismissed the appeal.

Equity - Topic 1061

Equitable relief - Relief from forfeiture - General - [See Landlord and Tenant - Topic 2364 ].

Landlord and Tenant - Topic 2364

The lease - Options to purchase - Conditions precedent - A commercial lease provided a tenant an option to purchase conditional on not being in default - The lease defined "default" as including the nonpayment or rent arrears within 15 days of the landlord giving notice of the default, and included an "insolvency clause" that deemed a default where the tenant applied for relief under any bankruptcy or insolvency legislation - The lease and extended leases required that rent for the last month of any term be prepaid in the first month of the term - A tenant, after making a proposal to creditors under the Bankruptcy and Insolvency Act, purported to exercise its option to purchase - The landlord argued that exercising the option was precluded by default - The tenant purportedly paid the last month's rent, which the landlord applied to the unpaid first month's rent - The trial judge held that however the payment was attributed, either the first or last month's rent remained unpaid more than 15 days after the landlord gave notice of default by a letter demanding payment - That constituted "default" - Additionally, the insolvency clause deemed the tenant in "default" when it made its proposal to creditors - Since not being in default was a precondition or condition precedent to exercising the option to purchase, relief from forfeiture was not available - Alternatively, the court would have declined to exercise its discretion to grant relief from forfeiture - The Alberta Court of Appeal affirmed the decision that the late payment of rent constituted "default" and the demand letter constituted notice of default, which precluded the plaintiff from exercising the option - The judge committed no reviewable error in denying the plaintiff relief from forfeiture - It was unnecessary to determine whether the insolvency clause applied to deem the plaintiff to be in default - See paragraphs 1 to 10.

Landlord and Tenant - Topic 6786

Termination, forfeiture and reentry - Relief against forfeiture - When available - [See Landlord and Tenant - Topic 2364 ].

Cases Noticed:

Nolan et al. v. Superintendent of Financial Services (Ont.) et al. (2007), 225 O.A.C. 163; 86 O.R.(3d) 1; 2007 ONCA 416, refd to. [para. 7].

Aventis Pharma Inc. et al. v. Pharmascience Inc. et al., [2007] 2 F.C.R. 103; 352 N.R. 99; 2006 FCA 229, refd to. [para. 7].

Saskatchewan River Bungalows Ltd. and Fikowski v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490; 168 N.R. 381; 155 A.R. 321; 73 W.A.C. 321, refd to. [para. 9].

Wewayakum Indian Band v. Canada and Wewayakai Indian Band, [2002] 4 S.C.R. 245; 297 N.R. 1; 2002 SCC 79, refd to. [para. 9].

Globex Foreign Exchange Corp. v. Kelcher et al. (2005), 376 A.R. 133; 360 W.A.C. 133; 2005 ABCA 419, refd to. [para. 9].

Canpar Holdings Ltd. et al. v. Petrobank Energy and Resources Ltd. et al. (2011), 505 A.R. 102; 522 W.A.C. 102; 2011 ABCA 62, refd to. [para. 9].

Hua v. Optimum West Insurance Co. (2005), 209 B.C.A.C. 199; 345 W.A.C. 199; 37 B.C.L.R.(4th) 232; 2005 BCCA 123, refd to. [para. 9].

R. v. Shepherd (C.), [2009] 2 S.C.R. 527; 391 N.R. 132; 331 Sask.R. 306; 460 W.A.C. 306, refd to. [para. 15].

R. v. Araujo (A.) et al., [2000] 2 S.C.R. 992; 262 N.R. 346; 143 B.C.A.C. 257; 235 W.A.C. 257; 2000 SCC 65, refd to. [para. 15].

St-Jean v. Mercier, [2002] 1 S.C.R. 491; 282 N.R. 310; 2002 SCC 15, refd to. [para. 15].

Counsel:

Michael J. McCabe, Q.C., for the appellant;

David R. Shynkar, Q.C., for the respondent.

This appeal was heard by way of written submissions dated December 15, 2011, and January 6, 2012, before Berger, Slatter and McDonald, JJ.A., of the Alberta Court of Appeal.

On March 2, 2012, the judgment of the Court was delivered and the following memorandums of judgment were filed:

Berger and Slatter, JJ.A. - see paragraphs 1 to 10;

McDonald, J.A., dissenting - see paragraphs 11 to 44.