CD Plus.Com Inc. v. Concorde Group Corp., 2004 SKCA 1

• Judge: Cameron, Gerwing and Lane, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: September 12, 2003
• Jurisdiction: Saskatchewan
• Citations: 2004 SKCA 1;(2004), 241 Sask.R. 79 (CA)

CD Plus.Com Inc. v. Concorde Group (2004), 241 Sask.R. 79 (CA);

    313 W.A.C. 79

MLB headnote and full text

Temp. Cite: [2004] Sask.R. TBEd. JA.074

Wayne Albo (appellant/defendant by counterclaim) v. Concorde Group Corp. (formerly Dube Investments Ltd.) (respondent/plaintiff by counterclaim) and CD Plus.Com Inc. (formerly National Records Distributors Ltd.), R.B. Music Ltd., carrying on business as Music Baron, Neil Thorndycraft and Richard Drysdale (non-parties)

(No. 549; 2004 SKCA 1)

Indexed As: CD Plus.Com Inc. v. Concorde Group Corp.

Saskatchewan Court of Appeal

Cameron, Gerwing and Lane, JJ.A.

January 7, 2004.

Summary:

In 1994, Concorde leased premises to R.B. Music Ltd. for a five year term. In 1997, CD Plus.Com Inc. purchased the assets and shares of R.B. Music. The inventory of R.B. Music was moved from the leased premises to a CD Plus store. Concorde prepared a distress warrant and a bailiff seized goods at the CD Plus store. The seized goods were returned in exchange for an undertaking by counsel for CD Plus to hold in trust $15,986.68 to cover the rent claimed by Concorde and the cost of seizure. CD Plus sued Concorde for the recovery of those funds, but made an assignment in bankruptcy and did not prosecute its claim. Concorde counterclaimed against R.B. Music, its president (Thorndycraft) and two officers of CD Plus (Albo and Drysdale) for rent owed under the lease and for a penalty pursuant to s. 32 of the Landlord and Tenant Act for aiding or assisting in the fraudulent conveyance and removal of the inventory from the leased premises.

The Saskatchewan Court of Queen's Bench, in a decision reported at 222 Sask.R. 24, dismissed CD Plus's action for want of prosecution and ordered that the $15,986.68 held in trust by CD Plus's counsel be paid to Concorde. With respect to Concorde's counterclaim, the court granted Concorde: (1) judgment against R.B. Music for $52,599.16, being the claim for rent lost as a result of the abandonment of the leased premises (the $15,986.68 paid to Concorde was to be deducted from that sum); (2) judgment against R.B. Music for $150,000 as a penalty pursuant to s. 32 of the Act (being double the value of the assets removed from the leased premises); and (3) judgment against Albo for $150,000 as a penalty pursuant to s. 32. Concorde's counterclaim against Thorndycraft and Drysdale was dismissed. Albo appealed.

The Saskatchewan Court of Appeal allowed the appeal in part and reduced the penalty against Albo under s. 32 of the Act to $31,973.36, being double the amount of rent owed and the costs of distress.

Editor's Note: For a previous costs decision in this matter see 222 Sask.R. 302.

Contracts - Topic 2054

Terms - Implied terms - From apparent intention - The trial judge read into a lease that the landlord had a right of reentry on termination - The trial judge considered that the obvious intention of the parties to the lease was to include a provision for reentry by the landlord upon the happening of certain enumerated events - The Saskatchewan Court of Appeal dismissed an appeal - See paragraphs 6 and 8.

Landlord and Tenant - Topic 2321

The lease - Implied terms, conditions or covenants - General - [See Contracts - Topic 2054 ].

Landlord and Tenant - Topic 2823

The lease - Breach by tenant - Acceleration of rent - [See Landlord and Tenant - Topic 8705 ].

Landlord and Tenant - Topic 6525

Termination, forfeiture and reentry - Termination - Acts constituting - [See Landlord and Tenant - Topic 6627 ].

Landlord and Tenant - Topic 6627

Termination, forfeiture and reentry - Reentry - After abandonment by tenant - In 1994, Concorde leased premises to R.B. Music for a five year term - In 1997, CD Plus purchased the assets and shares of R.B. Music - The inventory of R.B. Music was moved from the leased premises to a CD Plus store - Concorde prepared a distress warrant and a bailiff seized goods at the CD Plus store - An argument was made that by taking possession of the leased premises, Concorde terminated the lease and nullified its distraint - The trial judge held that the lease was in effect at the time of the seizure - The premises had been abandoned and the lease was not terminated by Concorde's reentry - The Saskatchewan Court of Appeal dismissed an appeal - See paragraphs 6 and 8.

Landlord and Tenant - Topic 8705

Distress - General principles - When distress available - In 1994, Concorde leased premises to R.B. Music for a five year term - CD Plus purchased the assets and shares of R.B. Music - The transaction closed on May 27, 1997 - Rent on the leased premises had been paid until the end of May 1997 - On May 31, 1997, the inventory of R.B. Music was moved from the leased premises to a CD Plus store - Concorde prepared a distress warrant and a bailiff seized goods at the CD Plus store - The trial judge held that Concorde had a right to distrain the goods off the premises (Landlord and Tenant Act, s. 30) - The trial judge found that CD Plus was an occupant of the leased premises between May 27 and May 31, 1997 and was therefore a tenant as defined by the Act - The trial judge further found that the requirement in s. 30 that rent be "reserved, due or made payable" was met where the tenant's actions constituted a breach of the lease entitling Concorde to collect the current month's rent plus the next three months' rent as accelerated rent - The Saskatchewan Court of Appeal dismissed an appeal - See paragraphs 5, 6 and 8.

Landlord and Tenant - Topic 8924

Distress - Removal of goods liable to distress - Statutory penalty - In 1994, Concorde leased premises to R.B. Music for a five year term - In 1997, CD Plus purchased the assets and shares of R.B. Music - The inventory of R.B. Music was moved from the leased premises to a CD Plus store - Concorde prepared a distress warrant and a bailiff seized goods at the CD Plus store - The trial judge held that the assets of R.B. Music were fraudulently conveyed away and removed to prevent distress and that Concorde had a right to distrain on goods and chattels off the premises (Landlord and Tenant Act, s. 30) - The trial judge granted Concorde judgment against an officer of CD Plus (Albo) for $150,000 (double the value of the assets removed from the leased premises) as a penalty pursuant to s. 32 of the Act on the basis that he wilfully and knowingly aided and assisted in the fraudulent conveyance and removal of the R.B. Music inventory - The Saskatchewan Court of Appeal reduced the penalty against Albo under s. 32 to $31,973.36, being double the amount of rent owed and the costs of distress - See paragraph 21.

Landlord and Tenant - Topic 8924

Distress - Removal of goods liable to distress - Statutory penalty - Section 32 of The Landlord and Tenant Act provided that "If a tenant so fraudulently removes, conveys away or carries off his goods and chattels, or if a person wilfully and knowingly aids or assists him in doing so, or in concealing them, every person so offending shall forfeit and pay to the landlord double the value of the goods, to be recovered by action in any court of competent jurisdiction" - The Saskatchewan Court of Appeal held that s. 32 had to be read in conjunction with s. 22 of the Act, which required that distress be reasonable - Accordingly, a tenant's removal of goods from leasehold premises would be fraudulent within the contemplation of s. 32 only to the extent that the goods were subject to the landlord's right of reasonable distress under s. 22 - The phrase "double the value of the goods" in s. 32 meant double the value of the goods fraudulently removed to prevent the landlord from distraining to satisfy arrears of rent - The tenant could not be penalized for the removal of goods not subject to the landlord's right of distress - See paragraphs 9 to 20.

Cases Noticed:

Cowie Industrial Developments Ltd. v. National Warehouse Ltd. et al. (1999), 119 O.A.C. 91; 23 R.P.R.(3d) 182 (C.A.), agreed with. [para. 15, footnote 8].

National Trust Co. v. H & R Block Canada Inc. (2003), 180 O.A.C. 1; 312 N.R. 91; 2003 SCC 66, refd to. [para. 19, footnote 10].

Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321; [1992] 2 W.W.R. 193; 88 D.L.R.(4th) 1, refd to. [para. 19, footnote 12].

Ontario v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031; 183 N.R. 325; 82 O.A.C. 243, refd to. [para. 20, footnote 13].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 20, footnote 15].

Statutes Noticed:

Landlord and Tenant Act, R.S.S. 1978, c. L-6, sect 22 [para. 14]; sect. 30(1) [para. 4]; sect. 32 [para. 9].

Authors and Works Noticed:

Chapman, John J., Fraudulent Removal of Tenant's Goods: Section 50 of the Landlord and Tenant Act (1993), 15 Adv. Q. 490, generally [para. 12, footnote 5].

Halsbury's Laws of England (2000) (4th Ed. - Reissue), vol. 13, para. 780 [para. 14, footnote 6].

Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes (4th Ed. 2002), p. 168 [para. 19, footnote 11].

Counsel:

Grant Currie, for the appellant;

Neil Fisher, for the respondent.

This appeal was heard on September 12, 2003, before Cameron, Gerwing and Lane, JJ.A., of the Saskatchewan Court of Appeal. The following judgment of the Court of Appeal was delivered by Lane, J.A., on January 7, 2004.