1198816 Alberta Ltd. v. Bourbon Lounge Inc., 2008 ABQB 600

• Judge: Martin, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 18, 2008
• Citations: 2008 ABQB 600;(2008), 458 A.R. 1 (QB)

1198816 Alta. v. Bourbon Lounge Inc. (2008), 458 A.R. 1 (QB)

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. OC.045

1198816 Alberta Ltd. (applicant) v. Bourbon Lounge Inc. (respondent)

(0701 03026; 2008 ABQB 600)

Indexed As: 1198816 Alberta Ltd. v. Bourbon Lounge Inc.

Alberta Court of Queen's Bench

Judicial District of Calgary

Martin, J.

September 29, 2008.

Summary:

A dispute arose over a lease of commercial premises. The new landlord alleged that the lease terms had not been complied with in numerous respects, including the payment of all rent owing. The tenant alleged that the rent agreed to between the previous landlord and previous tenant, as well as what he paid to the previous landlord, was less than what was stipulated in the written lease agreement. The tenant tendered the reduced amount each month. At first the landlord accepted these payments, but stated from the outset that the actual rent was higher and requested the shortfall. The landlord sought, inter alia, the termination of the lease.

The Alberta Court of Queen's Bench held that the terms of the written lease prevailed. There was no contractually binding variation to the lease and no conduct by the landlord which grounded a case in estoppel or waiver. Further, any equities or estoppel which might have arisen between the old landlord and the tenant did not alter their legal relationship and did not bind the landlord. Alternatively, if an estoppel arose, the landlord reinstated the strict legal terms of the written lease. The tenant's failure to pay the stipulated rents, especially after they were demanded, was a default and fundamental breach of the contract giving rise to the termination of the lease. The court declined to grant relief against forfeiture as the tenant had not come to court with the requisite clean hands.

Contracts - Topic 1601

Formation - Mistake, misunderstanding or misrepresentation - Plea of non est factum - A landlord of a shopping centre argued that a tenant could not rely on any alleged oral variation in the lease to reduce the amount of rent because the tenant had signed an Estoppel Certificate which provided that the lease was in full force and effect and that it could not assert an oral agreement or any amendment which varied the original lease - The Certificate was executed just before the landlord purchased the shopping centre - The tenant invoked non est factum - The Alberta Court of Queen's Bench held that the Certificate was not binding on the tenant and did not prevent him from asserting an oral variation to the written lease agreement - The new landlord's principal was present when the Certificate was signed and understood that the Estoppel Certificate was presented without an appointment, was said to be necessary for purchase financing, and that the tenant's principal was convinced to sign quickly even though he wanted to have the document reviewed by his lawyer - In such circumstances, the landlord was not misled by the signature on the certificate - Much of the law of non est factum was based on the need to protect reasonable reliance on signed documents - These considerations did not apply when the new landlord's principal saw the tenant's principal sign in circumstances in which it was clear he did not understand or agree to the contents of the document - See paragraphs 139 to 143.

Estoppel - Topic 1328

Estoppel in pais (by conduct) - Acquiescence - Contract terms - [See Landlord and Tenant - Topic 2445 ].

Estoppel - Topic 1329

Estoppel in pais (by conduct) - Acquiescence - Breach of contract - [See Landlord and Tenant - Topic 2445 ].

Landlord and Tenant - Topic 2203

The lease - What constitutes a lease - A dispute arose over a lease of commercial premises - The new landlord alleged that the lease terms had not been complied with in numerous respects, including the payment of all rent owing - Further, the landlord argued that there was no finished lease agreement and that there was only a month to month tenancy - The former landlord and prior tenant argued that although the impugned lease was not finished or complete, that did not mean that they had no deal or that there was merely a month to month tenancy - The Alberta Court of Queen's Bench held that they had a valid lease that only failed to incorporate certain handwritten changes into a clean written and signed document - The written lease was binding on the new landlord - See paragraphs 123 to 137.

Landlord and Tenant - Topic 2445

The lease - Variation or alteration - Validity of - A dispute arose over a lease of commercial premises - The new landlord alleged that the lease terms had not been complied with in numerous respects, including the payment of all rent owing - The tenant argued that the rent agreed to between the previous landlord and previous tenant, as well as what he paid to the previous landlord, was less than what was stipulated in the written lease agreement - The Alberta Court of Queen's Bench held that there was no contractually binding variation to the lease - There was no conduct by the new landlord which grounded a case in estoppel or waiver - At no point did it accept that the lesser rent alleged by the tenant was the amount of rent due and payable - Further, there were no equities or estoppel which arose between the old landlord and the old tenant which altered their legal relationship and thus bound the new landlord - All that was contemplated by the old landlord and old tenant was a temporary indulgence respecting the rent - Alternatively, if an estoppel arose, the landlord reinstated the strict legal terms of the written lease - See paragraphs 145 to 208.

Landlord and Tenant - Topic 2451

The lease - Variation or alteration - Waiver - What constitutes - [See Landlord and Tenant - Topic 2445 ].

Landlord and Tenant - Topic 2825

The lease - Breach by tenant - Waiver of - [See Landlord and Tenant - Topic 2445 ].

Landlord and Tenant - Topic 3842

Rent - Payment of rent - Acceptance of lesser payment - Effect of - [See Landlord and Tenant - Topic 2445 ].

Landlord and Tenant - Topic 6567

Termination, forfeiture and reentry - Right of termination - By landlord - Persistent failure to pay rent - A dispute arose over a lease of commercial premises - The new landlord alleged that the lease terms had not been complied with in numerous respects, including the payment of all rent owing - The tenant argued that the rent agreed to between the previous landlord and previous tenant, as well as what he paid to the previous landlord, was less than what was stipulated in the written lease agreement - The Alberta Court of Queen's Bench held that the tenant's persistent refusal to pay the requested rent constituted a default under the written lease and a fundamental breach of contract that, in and of itself, supported the termination of the lease - The court declined to find that stigma from altercations that took place at the tenant's premises (a bar) and associated noise constituted a breach of the lease - A landlord which permitted a nightclub at the premises had to be taken to have decided to tolerate the problems usually associated with such an enterprise and could not claim these to be defaults under the lease - See paragraphs 209 to 223.

Landlord and Tenant - Topic 6567.3

Termination, forfeiture and reentry - Right of termination - By landlord - Noise - [See Landlord and Tenant - Topic 6567 ].

Landlord and Tenant - Topic 6784

Termination, forfeiture and reentry - Relief against forfeiture - For nonpayment of rent - A dispute arose over a lease of commercial premises - The new landlord alleged that the lease terms had not been complied with in numerous respects, including the payment of all rent owing - The tenant argued that the rent agreed to between the previous landlord and previous tenant, as well as what he paid to the previous landlord, was less than what was stipulated in the written lease agreement - The Alberta Court of Queen's Bench held that the tenant's failure to pay the stipulated rents, especially after they were demanded, was a default and fundamental breach of the contract giving rise to the termination of the lease - Relief against forfeiture was not granted as the tenant had not come to court with the requisite clean hands - Its conduct surrounding creation of the alleged lease amending agreement and failure to provide it to the new landlord for an unreasonable period of time undermined any equities the tenant could invoke - Forfeiture would work hardship for the tenant - Likely its business would be lost - A court was reluctant to grant forfeiture but the facts in this case supported that remedy - Nor had there been a waiver of forfeiture - This was not the case where a landlord had simply accepted rent with the full knowledge of the tenant's breach of covenant - See paragraphs 224 to 258.

Landlord and Tenant - Topic 6786

Termination, forfeiture and reentry - Relief against forfeiture - When available - [See Landlord and Tenant - Topic 6784 ].

Cases Noticed:

Marvco Color Research Ltd. v. Harris and Harris, [1982] 2 S.C.R. 774; 45 N.R. 302, refd to. [para. 140].

Royal Bank of Canada v. Gannon (1980), 42 N.S.R.(2d) 526; 77 A.P.R. 526 (T.D.), refd to. [para. 141].

Hall Estate v. Watton (1975), 8 Nfld. & P.E.I.R. 1; 8 A.P.R. 1 (Nfld. C.A.), refd to. [para. 141].

Brideau et al. v. Gravel (1969), 1 N.B.R.(2d) 372 (C.A.), refd to. [para. 141].

Cormier v. Henwood, Martin and Leger (1979), 25 N.B.R.(2d) 316; 51 A.P.R. 316 (Q.B.), refd to. [para. 141].

Begg v. Toronto Railway Co. (1905), 6 O.W.R. 239 (C.A.), refd to. [para. 141].

Prudential Trust Co. et al. v. Cugnet, [1956] S.C.R. 914, refd to. [para. 142].

Deerfoot Mall (Calgary) Ltd. v. Dalmont Enterprises (1987), 77 A.R. 204 (C.A.), refd to. [para. 181].

Deerfoot Mall (Calgary) Ltd. v. Burt - see Deerfoot Mall (Calgary) Ltd. v. Dalmont Enterprises.

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. 182].

Protective Holdings Ltd. v. M & P Transport Ltd. (1969), 7 D.L.R.(3d) 720 (Alta. C.A.), refd to. [para. 193].

Burrows (John) Ltd. v. Subsurface Surveys Ltd., [1968] S.C.R. 607, refd to. [para. 197].

Sledz v. Edmonton Home Fair Ltd. (1997), 28 R.P.R.(3d) 132 (Alta. Q.B.), refd to. [para. 198].

First City Trust Co. v. Dobler et al. (1989), 94 A.R. 106 (C.A.), refd to. [para. 198].

Combe v. Combe, [1951] 2 K.B. 215 (C.A.), refd to. [para. 198].

Long v. Inter-Habitation Inc., [1999] O.T.C. Uned. 784 (Sup. Ct.), refd to. [para. 199].

Keane (R.A.) Enterprises Ltd. v. Drago's Place Ltd., [1990] O.J. No. 673 (Dist. Ct.), refd to. [para. 200].

789247 Ontario Inc. v. 215 Piccadilly Properties Inc. (1990), 20 R.P.R.(2d) 294 (Ont. C.J.), varied [1992] O.J. No. 1214 (C.A.), refd to. [para. 202].

International Knitwear Architects Inc. et al. v. Kabob Investments Ltd. et al. (1995), 67 B.C.A.C. 128; 111 W.A.C. 128; 17 B.C.L.R.(3d) 125 (C.A.), refd to. [para. 206].

Novacrete Construction Ltd. v. Profile Building Supplies Inc. et al., [2000] O.T.C. Uned. 250; 7 B.L.R.(3d) 248 (Sup. Ct.), refd to. [para. 207].

Kapki v. Palacz (1999), 228 A.R. 373; 188 W.A.C. 373; 1999 ABCA 40, refd to. [para. 207].

Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 211].

Annett v. Breadner (Robert) Children's Trust, [2008] O.T.C. Uned. 57 (Sup. Ct.), refd to. [para. 212].

Jeans West Unisex Ltd. v. Hung (1975), 9 O.R.(2d) 390 (H.C.), refd to. [para. 215].

Danforth-Woodbine Theatre Ltd. v. Loblaws Inc. (1999), 97 O.T.C. 241; 25 R.P.R.(3d) 137 (Gen. Div.), refd to. [para. 218].

931576 Ontario Inc. v. Bramalea Properties Inc. (1992), 24 R.P.R.(2d) 1 (Ont. Gen. Div.), refd to. [para. 220].

Koumoudouros v. Marathon Realty Co. (1978), 21 O.R.(2d) 97 (Div. Ct.), refd to. [para. 221].

933351 N.W.T. Ltd. v. Windmill Restaurant Ltd., 2001 ABQB 599, refd to. [para. 222].

995988 Ontario Inc. v. Shipp Corp., [2000] O.T.C. 554 (Sup. Ct.), refd to. [para. 222].

Ostry v. Warehouse on Beatty Cabaret Ltd. (1991), 21 R.P.R.(2d) 1 (B.C.S.C.), refd to. [para. 222].

Coronet Realty Development Ltd. and Aztec Properties Co. v. Swift (1980), 36 A.R. 193 (Q.B. Master), refd to. [para. 226].

Armenian Community Centre v. Morland Marketing Inc., [1995] O.J. No. 3730 (Gen. Div.), refd to. [para. 228].

King Street West Ltd. v. 418 Wellington Parking Ltd. (1994), 40 R.P.R.(2d) 220 (Ont. Gen. Div.), refd to. [para. 229].

Barlow v. 1137098 Ontario Inc. (1996), 5 R.P.R.(3d) 304 (Ont. Gen. Div.), refd to. [para. 242].

Dalton Cartage Co. v. Continental Insurance Co. and St. Paul Fire and Marine Insurance Co., [1982] 1 S.C.R. 164; 40 N.R. 135, refd to. [para. 244].

Delilah's Restaurants Ltd. v. 8-788 Holdings Ltd. (1994), 46 B.C.A.C. 201; 75 W.A.C. 201; 92 B.C.L.R.(2d) 342 (C.A.), refd to. [para. 258].

Fitkid (York) Inc. v. 1277633 Ontario Ltd. et al., [2002] O.T.C. 749 (Sup. Ct.), refd to. [para. 258].

Authors and Works Noticed:

Waddams, Stephen M., The Law of Contracts (5th Ed. 2005), para. 247 [para. 175].

Counsel:

G.N. Stapon, Q.C., and J.D. Ksiazek, for the applicant;

C.O. Llewellyn, for the respondent.

This matter was heard between April 28 and July 18, 2008, by Martin, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for judgment on September 29, 2008.