nan Q.B. A.D. 1998 No. 586 J.C.S. IN THE QUEEN'S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: CAPITAL PROPERTIES LTD. and PRAIRIE SPAN MANAGEMENT LTD. and BENNETT PROPERTIES LIMITED RESPONDENT T.J. Zakreski for the applicants D.D. Kowalishen and G. Richards for the respondent JUDGMENT KLEBUC J. April 24, 1998 [1] The applicants seek an order under s. 11 of TheLandlord and Tenant Act, R.S.S. 1978, c. L-6 vesting the wholeterm of their sub-leases with either V.I.P. Business CentreInc. ("VIP") or 598710 Saskatchewan Ltd. ("Sask. Ltd.") onsuch conditions as the Court deems proper. [2] Bennett Properties Limited ("Bennett") owns an office building municipally described as Hanselman Plaza ("the Plaza"). By lease indenture dated August 14, 1992 it leased 8,787 square feet of office space to VIP for term of five years ending on August 31, 1997 ("the VIP head lease"). By written agreement Bennett extended the VIP head lease to August 31, 1999. VIP operated business center (the "VIP Business Centre") in its premises which included sub-leasing individual offices to clients and providing them with receptionist and the use of miscellaneous office equipment. Each applicant entered into written sub-lease of office space with VIP for term of 50 months ending on August 31, 1997, and an optional renewal term of one year upon three months' notice. Only copy of the sub-lease between VIP and Capital Properties was put in evidence. [3] In August of 1996, Bennett asked VIP to move its business centre and sub-lessees to another part of the Plaza in order to create large block of space which Bennett proposed to lease to Corrections Canada. Bennett agreed to pay all relocation costs. Ms. Peddle, an officer of VIP, then asked the applicants to relocate to offices located in the area substituted by Bennett. Mr. Jim Remai of Capital Properties responded to her request by fax message dated September 9, 1996 wherein he confirmed the applicants' willingness to move to specific location within VIP's new premises on terms stated therein. Subparagraph of his fax reads: We will re-do the leases providing for our current rate to continue to the expiration of the lease you have just renewed. Further, we would appreciate renewal that relates to your renewal, if you exercise it firstly, and secondly, at rate that will be no more than your percentage increase in both the base rent and the operating. In para. of her first affidavit, Ms. Peddle deposed that she gave copy of Mr. Remai's fax to Bennett; that Mr. Olszewski, the property manager for Bennett, confirmed that the terms of Mr. Remai's fax were acceptable; that Bennett agreed to renew the VIP head lease for term of five years; and that she then agreed to new five-year sub- lease with the applicants on the terms they sought with the concurrence of Bennett; that she was to prepare lease renewal agreements for execution by the applicants. In his affidavit Mr. Olszewski denied having received copy of Mr. Remai's fax or having agreed to the lease renewals alleged by Ms. Peddle. He further denied any knowledge of the renewals between VIP and the applicants but admitted he knew Mr. Remai wanted lease renewal for term of five years. [5] VIP and the applicants relocated their premises but thereafter never prepared and executed renewals of their sub- leases. Similarly, no renewal of the head lease was ever [6] By agreement dated May 20, 1997, VIP surrendered its lease to Bennett in consideration of Bennett releasing it from the obligation to pay outstanding rents of approximately $78,572.97. Paragraphs and of the agreement provide: 4. The Tenant herein assigns all leases to the Landlord and agrees not to cancel any existing leases with any of the subtenants or to entice any of the existing subtenants to not renew their leases. The Tenant shall provide list of subtenants and shall agree to not lease to any of the Tenants on the list for period of one year. 5. The effective date of the transfer shall be May 15, 1997, and any lease between the Landlord and Tenant shall be terminated as of this date. VIP then advised its sub-lessees that it would discontinue operating the VIP Business Centre on May 31, 1997 with Bennett to provide services thereafter for those who wished [7] Bennett entered into an undated head lease with Sask. Ltd. for the space previously occupied by VIP and sold Sask. Ltd. the furnishings and equipment it had purchased from VIP. Paragraph of their sale agreement contains an assignment of all leases by Bennett to Sask. Ltd. and its assumption of the lessor's obligations thereunder. The applicants received written notice of the transfer from Bennett and thereafter paid the rent due under their sub- leases to Sask. Ltd. [8] Mr. Olszewski represented Sask. Ltd., and also Bennett. Several oral and written exchanges took place between Jim Remai and Mr. Olszewski after May 1997 concerning traffic in the enclosed courtyard of the Plaza and other matters. In his written messages, Mr. Remai never called on Bennett to execute sub-lease renewals. However, Mr. Olszewski had prepared and forwarded Mr. Remai one-year renewal which the applicants never executed. [9] On March 13, 1998, Bennett re-entered the head lease premises because Sask. Ltd. defaulted in the payment of $53,768.63 of rent. It then gave the applicants notice of termination of their month-to-month tenancy and required them to vacate their premises before April 1, 1998, period of less than the one clear month prescribed by law. The applicants then launched the motion before me. [10] After hearing Mr. Kowalishen, counsel for Bennett, and Mr. Zakreski, counsel for the applicants, reserved the matter. While the application was sub judices, Bennett entered the applicants' premises and removed their property. The applicants then launched second application for possession order. Mr. Grant Richards appeared for Bennett in place of Mr. Kowalishen. During his submission he properly disclosed that Bennett had re-leased the head lease premises to Corrections in February 1997, with possession scheduled for April: material fact that Bennett and Mr. Kowalishen withheld during the first hearing. [11] The exact relationship between Bennett and Sask. Ltd. is not known nor addressed by Bennett in its affidavit material. However, Corporations Branch searches marked as exhibit "M" to Mr. Remai's affidavit confirm that Everett Kearley is the president of both corporations. Position Taken by the Parties [12] Bennett made the following submissions in opposition to the application: (1) valid renewal head lease did not exist between it and VIP; (2) No valid renewal sub-leases existed between VIP and the applicants nor could they be created for lease term extending beyond the term of the VIP head lease; (3) Neither the alleged renewal head lease nor the alleged renewal sub-leases meet the requirements of s. of the Statute of Frauds (1677), 29 Car. 2, c. on which it relies as shield; (4) In the alternative, if the alleged sub-lease renewals are valid, the Court lacks jurisdiction to grant the relief where sought solely by notice of motion; (5) In the further alternative, the applicants are not entitled to the relief claimed under s. 11 of the Act. [13] The applicants submitted that they established the essential requirements for valid renewals of the head lease and their sub-leases, and that they had met the requirements of s. of the Statute of Frauds. In the alternative, they submitted Bennett is bound by their sub-leases as consequence of taking an assignment of VIP's leases. Issues [14] The following issues arise: 1. Whether a valid renewal of the headlease between VIP and Bennett exists? 2. Whether valid renewals of sub-leaseshad been created between VIP and theapplicants? 3. Assuming valid renewals of the sub-leases and the head lease exist, doess. 4 of the Statute of Frauds barenforcement thereof against Bennett? 4. Does the Court have jurisdiction tohear an application for relief unders. 11 brought solely by notice ofmotion? 5. If the answer to issue no. 4 is"yes", are the applicants entitled tothe relief sought? 6. Assuming valid renewals of theapplicants' sub-leases exist, isBennett bound thereby by virtue oftaking the assignment from VIP? [15] Sections 10, 11 and Part IV provide, inter alia, summary procedure for the adjudication of disputes between landlords and tenants concerning rights and obligations under land leases. Where complex questions of fact or law are involved, this Court has consistently held that it should not employ such summary procedure: Saskatoon Business College Ltd. v. 607113 Alberta Ltd. (1995), 1995 CanLII 6110 (SK QB), 132 Sask. R. 248; Feduniak v. Deneiko (1981), 1981 CanLII 2408 (SKDC), 13 Sask. R. 375 (Dist. Ct.); Mirdco Holdings Ltd. v. Westfair Foods Ltd. and Wellington Management Ltd., [1975] W.W. D. 158 Ct.). Further, if the relief sought (e.g. writ of possession under Part IV) will not provide complete justice as between the parties, the same is not to be granted: Fitament v. Demich (1951), 1951 CanLII 164 (SK QB), W.W.R. (N.S.) 522 (Sask. Dist. Ct.). [16] Credibility cannot be determined on an examinationof the conflicting affidavits. Because the findingof facts essential to an adjudication of issue nos.1, 2 and 6 is dependent on which of the conflictingevidence to accept, the same cannot be summarilydealt with. In the result, trial of the issues may be necessary unless decision on those issues where the facts are not in dispute will dispose of the application before the Court. If it cannot, then an adjudication of those issues by way of summary procedure also may be inappropriate. [17] While credibility is critical here, I am of the viewthat a decision on issue nos. 3 and 4 can dispose of theapplication, and perhaps the issues between the parties. Therefore, will address them. [18] I have assumed for the purposes of these reasonsthat the evidence led by the applicants is true. If the parties ultimately require trial of the issues or any of them, my assumptions obviously will not bind the trial judge. 1. Does the Court have jurisdiction to hear s. 11 application brought solely by notice of motion? [19] The respondent submitted the application is not properly before the Court because they proceeded by notice of motion in circumstances where no "action" existed. Since neither Bennett nor the applicants had initiated an action, it argued that the Court lacks jurisdiction to hear "what is clearly supposed to be an interlocutory motion". It cited no authorities in support of this submission. [20] Section 11 of the Act in part reads: 11(1) Where lessor is proceeding by action or otherwise to enforce right of re-entry or forfeiture under covenant, proviso or stipulation in lease, the court, on application by person claiming as under lessee an estate or interest in the property comprised in the lease or any part thereof, either in the lessor's action, if any, or in an action brought by that person for that purpose, may make an order vesting. nan (emphasis added) [21] For the purposes of ss. 11, 12 and 13, "action" is defined to include any proceedings under Part IV where the right to summary application by landlord is clearly provided. Section 10(3) recognizes the right of tenant to summarily apply for relief from forfeiture. Rule 13(1) of the Rules of Court states that except as otherwise provided, every action is to be commenced by statement of claim. [22] Notwithstanding Rule 13(1), am of the view that the term "action" in s. 11 includes summary applications by way of notice of motion. There is no reason for landlords to have better access to this Court than tenants concerning possession of demised premises. The Province of Ontario eliminated any ambiguity by amending s. 21 of its Landlord and Tenant Act (which was identical to s. 11) by adding the phrase "or application in the Ontario Court (General Division) brought by such person" after the words "lessor's action, if any, or in an action". similar amendment of the Act is required to avoid any further confusion or uncertainty in this jurisdiction. am of the further opinion the words "or otherwise" include extrajudicial actions by landlords, including re-entry of leased premises occupied by tenant or former tenant. [23] Had concluded that the applicants erred in not proceeding by statement of claim, such error would have been procedural one, curable under Rule without affecting the jurisdiction of this Court. If required, would have granted the applicants leave to issue statement of claim and abridged the time for service thereof on the respondent. now will address the second issue. 2. Under s. 11 of the Act, are the applicants entitled to leases from Bennett on the same terms as their sub-leases [24] In support of their application the applicants rely on Re Golden Griddle Corporation v. Corporation of the City of Toronto (1997), 1997 CanLII 4440 (ON CA), 33 O.R. (3d) 545 and the authorities cited therein. While these authorities confirm sub-tenant's right to seek relief from forfeiture of the head lease, such right is not as extensive as asserted by the applicants. [25] In Re Golden Griddle Corporation, the City of Toronto owned building and parking lot which it leased to third party ("head lessee") for term of 20 years on conditions that required the head lessee to pay all costs associated therewith save for realty taxes. The head lessee sub-leased one-quarter of the building to Golden Griddle. The City cancelled the head lease when the head lessee defaulted in paying rent and immediately sought to re-enter the whole premises, including the premises occupied by Golden Griddle. Golden Griddle applied for and obtained an order under s. 21 of The Landlord and Tenant Act of Ontario that bound the City with the terms of its sub-lease. On appeal, the Ontario Court of Appeal overturned the trial judge's decision to the extent of vesting the head lease between the City of Toronto and the head lessee in Golden Griddle save for the term of the demise which would be for the shorter period provided in Golden Griddle's sub-lease. The court further required the respondent to pay all arrears of rent under the head lease and to reimburse the City of Toronto for expenditures made in discharging the obligations of the head lessee. At p. 549 the court made the following observations regarding s. 21: The question is not whether the respondent is entitled to relief from forfeiture but, rather, on what terms such relief might properly be granted. The terms on which relief may be granted are obviously important to the head lessor and, as the cases demonstrate, the court must have regard to the effect the grant will have on the head lessor's interests. Before relief is granted to sub-lessee, the court should be satisfied that the granting of the relief will not unfairly prejudice or adversely affect the head lessor: see Toronto-Dominion Bank v. Dufferin-Lawrence Developments Ltd. (1981), 1981 CanLII 1857 (ON CA), 32 O.R. (2d) 597 at pp. 603-04, 1981 CanLII 1857 (ON CA), 122 D.L.R. (3d) 272 (C.A.); Hurontario Management Services Ltd. v. Menechella Brothers Ltd. (1983), 1983 CanLII 1624 (ON CA), 41 O.R. (2d) 348 at p. 350, 1983 CanLII 1624 (ON CA), 146 D.L.R. (3d) 110 (C.A.); Belgravia Insurance Co. v. Meah, [1964] nan Q.B. 436 at pp. 444 and 446, [1963] All E.R. 828 (C.A.); and Goldhar Estate v. Brunswick of Canada Ltd. (1990), 72 O.R. (2d) 763 at p. 769, 1990 CanLII 6664 (ON SC), 68 D.L.R. (4th) 329 (H.C.J.). In each of these cases, relief from forfeiture was granted only after it was established that the making of the order would not impact unfairly on the head lessor. The Court of Appeal further confirmed that sub-division of premises demised under head lease should not be imposed where the head lessor operated the premises as whole, even though the head lessee had sub- leased portions thereof to several sub-lessees. It noted that only where the evidence clearly confirms that sub-premise is separate and divisible from the total premises should the court bind the head lessor to sub-lease of premises and cited Chatham Empire Theatre (1955) Ltd. v. Ultrans Ltd. and Others, [1961] W.L.R. 817. In Chatham Empire Theatre, the sub-leased premises consisted of separate building totally occupied by the sub- lessee. This is not so here. [26] While this Court has considerable discretion under s. 11 of the Act, in my view it should exercise such discretion within the guidelines outlined in Re Golden Griddle. grant of the relief requested by the applicant would constitute an improper exercise of such discretion. They are not the sole tenant in "stand alone building" of the kind in Chatham Empire Theatre. Additionally, the limited evidencebefore me suggests that the relief sought wouldunfairly affect the landlord. [27] In London Bridge Buildings Co. v. Thomson, (1903) 89 L.T. 50 the court gave the sub-lessee the option to have its case dismissed or to accept an order requiring the sub- lessee to pay the whole rent due to the head lessor to the date of recovering possession plus fair rent for the premises thereafter. The applicants expressed no interest in takingover the whole of the head lease premises on the terms of thehead lease between VIP and Bennett. Accordingly, I see noneed for a conditional order of the nature in London BridgeBuildings Co. 3. Does s. of the Statute of Frauds (1677), 29 Car. 2, c. create procedural bar to grant of the relief sought by the applicants? [28] While my decision regarding issue no. is dispositive of the application under s. 11, the applicants' counsel submitted they are entitled to relief under s. 10 of the Act because Bennett accepted an assignment of the renewal sub-leases under the purchase agreement of May 21, 1997. Consideration therefore must be given to the requirements of s. of the Statute of Frauds. It provides: nan No action shall be brought whereby to charge. .any person. .upon any contract or sale of lands, tenements. or any interest in. .them. .unless the Agreement upon which such action shall be brought, or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized. [29] In this case, the only memoranda consist of the original head lease, the original sub-leases between VIP and the applicants, and Mr. Remai's fax messages of September and 16, 1996 to Ms. Peddle. VIP and Bennett never signed these fax messages. Nor do the messages set out the essentialrequirements for a valid lease which are canvassed inSaskatoon Business College Ltd. v. 607113 Alberta Ltd., supra,and the authorities cited therein. Williams Rhodes, Canadian Law of Landlord and Tenant, 5th ed., Vol. (Toronto: Carswell, 1983) at pp. 3-4, para. 3:3, summarized those requirements as follows: It is necessary that lease contain: particulars of the parties; description of the premises demised; the date of commencement and the duration of the term; the rent, if any; and all the material terms of the contract, not being matters incident to the relationship of landlord and tenant, including any covenants, conditions, exceptions or reservations, as well as words of present demise. nan In Marshall v. Berridge (1881), 19 Ch. D. 233, Lush L.J. expressed the significance of such requirement at pp. 244-45: nan Now it is essential to the validity of lease that it shall appear either in express terms or by reference to some writing which would make it certain, or by reasonable inference from the language used, on what day the term is to commence. There must be certain beginning and certain ending, otherwise it is not perfect lease, and contract for lease must, in order to satisfy the Statute of Frauds, contain those elements. [30] In this case, reference cannot be made to renewal of the head lease because one was never reduced to writing. In fact, Ms. Peddle deposed VIP and Bennett failed to agree on its terms. In my opinion, neither the arrangements between VIP and Bennett nor between VIP and the applicants meet the requirements of s. 4. [31] I also conclude that the actions and performance byVIP and the applicants fall short of constituting partperformance for the purposes of s. 4, regardless of whether anarrow or broad interpretation of the doctrine is applied. See: McMillen v. Chapman, 1952 CanLII 130 (ON CA), [1953] D.L.R. 671 (Ont. C.A.); Hansen v. Price Estate (1981), 1981 CanLII 2311 (SK QB), 14 Sask. R. 430 (Q.B.); Lensen v. Lensen (1984), 1984 CanLII 2424 (SK CA), 14 D.L.R. (4th) 611 (Sask. C.A.); and Fridman, The Law of Contract, 2nd ed. (Toronto: Carswell, 1986). The relocation at no cost to the applicants or VIP is as consistent with an agreement to accommodate the needs of Bennett as with the agreements asserted by the applicants. Such relocations are common in commercial office buildings. In like manner, the payment of rent at the rate provided for in the original sub-leases does not support an inference in favour of the sub-leases by "a balance of probabilities" much less "necessarily implies" the existence thereof if narrower interpretation of the doctrine was applied. Such payments are consistent with the applicants remaining in possession under month-to-month tenancy following the expiry of their sub- lease in 1997. Therefore, conclude the applicants have not obviated the requirements of s. by way of part performance of their contractual obligations with VIP or Bennett. Consequently they cannot bind Bennett with the renewal leases by way of the within summary application. [32] In addition, if had concluded that the requirements of s. had been met, or the doctrine of part performance otherwise eliminated the need to comply with s. 4, would not have exercised my discretion by binding Bennett with leases which comprised less than 15% of the head lease premises in absence of evidence that clearly demonstrates the owner's ability to rent out the balance of the head lease premises was not impaired, economically or physically. Theapplicants can obtain other office space, including otherspace offered them by Bennett. Further, should a trial judgefind that the applicants had valid renewal leases which wereenforceable against Bennett, general damages and punitivedamages would provide an adequate remedy. [33] In summary, the application is dismissed. The parties may speak to costs and whether they wish further directions regarding trial of the issues raised but not adjudicated.
The applicants sought an order under s.11 of the Landlord and Tenant Act vesting the whole term of their sub-lease with either VIP Business Centre (VIP) or 598710 Saskatchewan Ltd (SaskLtd). Bennett, owner of an office building (the Plaza), leased space to VIP for five years ending in 1997. Issues included (i)whether there had been a valid renewal of the head lease; (ii)whether there had been valid renewals of sub-leases; (iii)assuming valid renewals, did s4 of the Statute of Frauds bar enforcement against Bennett; (iv)whether the Court had jurisdiction to hear an application for relief under s11 brought solely by notice of motion; (v)are the applicants entitled to such relief; (vi)whether Bennett was bound by the sub-leases by virtue of taking the assignment from VIP. HELD: The application was dismissed. 1)It was assumed that the evidence led by the applicants was true in order to determine issues (iii) and (iv) which dispose of the application. Issues (i), (ii) and (vi) could not be dealt with summarily because of the conflicting affidavits. 2)Notwithstanding Queen's Bench Rule 13(1), the term action in s11 includes summary application by way of notice of motion. There is no reason for landlords to have better access to this Court than the tenants concerning possession of demised premises. The words 'or otherwise' include extrajudicial actions by landlords, including re-entry. Had it been concluded that it was necessry to proceed by statement of claim, such error would have been procedural one, curable under Rule without affecting the jurisdiction of the Court. 3)The Court should exercise its discretion within the guidelines outlined in Golden Griddle. grant of relief requested by the applicant would constitute an improper exercise of such discretion. They were not the sole tenant in stand alone building of the kind in Chatham Empire Theatre. The relief sought would unfairly affect the landlord. As the applicants expressed no interest in taking over the whole head lease premises on the terms of the head lease, there was no need for a conditional order of the nature of London Bridge. 4)The only memoranda consisted of the original head lease and subleases and the unsigned fax messages. The fax messages did not meet the essential requirements for a valid lease. The actions and performance by VIP and the applicant fell short of constituting part performance for the purposes of s.4 regardless of a narrow or broad interpretation of the doctrine. In any case the Court would not have exercised its discretion by binding Bennett with leases which comprised less than 15% of the head premises in the absence of evidence that clearly demonstrated the owner's ability to rent out the balance of the head lease premises was not impaired economically or physically. The applciants could obtain other office space including that offered by Bennett. General and punitive damages would provide an adequate remedy.