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T-1531-85
Holachten Meadows Mobile Home Park Ltd. (Plaintiff)
v.
The Queen in Right of Canada and Lakahahmen Indian Band (Defendants)
Trial Division, Dubé J.—Vancouver, January 9 and 15, 1986.
Jurisdiction — Federal Court — Trial Division — Motion for order relieving plaintiff from forfeiture of lease — Federal Court having jurisdiction to grant relief from forfeiture, but declaration cannot be obtained by motion — Motion denied.
Landlord and tenant — Motion for order relieving plaintiff from forfeiture of lease — Lease terminated for non-payment of rent and taxes — Default admitted — Reference to three criteria in Megarry and Wade, The Law of Real Property court to consider in restoring tenant to position despite forfeit ure — English and Canadian case law considered — Not sufficient that plaintiff pay rent and taxes due and expenses, to be reinstated — Court to consider conduct of lessee to see if in breach of covenant — Plaintiff breached several covenants — Motion denied — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10 — Federal Court Rules, C.R.C., c. 663.
Equity — Forfeiture of lease for non-payment of rent and taxes — Plaintiff seeking to escape forfeiture by paying rent and taxes due and all expenses — Court to consider conduct of
lessee to see if coming to court with clean hands Plaintiff breached several covenants — Motion denied.
CASES JUDICIALLY CONSIDERED APPLIED:
Dennaoui v. Green Gables Fine Foods Ltd. (1974), 47 D.L.R. (3d) 609 (N.S.S.C.); Pacific Salmon Industries Inc. v. The Queen, [1985] 1 F.C. 504 (T.D.); Western Mortgage Development Corporation v. H. & D. Invest ments Ltd. and Jardine Holdings Ltd., judgment dated August 6, 1982, British Columbia Supreme Court, H822074, not reported; Shiloh Spinners Ltd. v. Harding, [1973] A.C. 691 (H.L.); Gleneagle Manor Ltd. et al. v. Finn's of Kerrisdale Ltd. et al. (1980), 116 D.L.R. (3d) 617 (B.C.S.C.); Re Jeans West Unisex Ltd. and Hung et al. (1975), 9 O.R. (2d) 390 (H.C.).
NOT FOLLOWED:
Gill v. Lewis, [ 1956] 1 All E.R. 844 (C.A.).
DISTINGUISHED:
Comtab Ventures Ltd. v. R. in Right of Can. (1984), 35 Alta. L.R. (2d) 230 (F.C.T.D.).
COUNSEL:
D. B. Hyndman for plaintiff.
George C. Carruthers for defendant, The
Queen in Right of Canada.
P. G. Voith and D. I. Schneiderman for
defendant, Lakahahmen Indian Band.
SOLICITORS:
Freeman & Company, Vancouver, for plain tiff.
Deputy Attorney General of Canada for defendant, The Queen in Right of Canada. Davis & Company, Vancouver, for defendant, Lakahahmen Indian Band.
The following are the reasons for order ren dered in English by
Dust J.: This motion seeks an order relieving the plaintiff from forfeiture of a 50-year lease dated June 1, 1977 to itself by Her Majesty the Queen in Right of Canada, as represented by the Minister of Indian Affairs and Northern Develop ment, of land within Holachten Indian Reserve in British Columbia.
In February, 1985 Her Majesty terminated the lease for non-payment of rent and taxes. For the purposes of this motion, the plaintiff admits that it was in default on both counts at that time.
It is common ground that at common law where a tenant has no other defence he may still be able to escape forfeiture by claiming relief after paying the rent due. The criteria are well set out in Megarry & Wade, The Law of Real Property as reported in a Nova Scotia Supreme Court decision Dennaoui v. Green Gables Fine Foods Ltd. (1974), 47 D.L.R. (3d) 609 (N.S.S.C.), at page 613.
In Law of Real Property, 3rd ed. (1966), by Megarry and Wade, the authors state at p. 666:
Even where the tenant has no other defence, he may still be able to escape forfeiture by claiming relief. This jurisdiction is
much used. It is of great importance to tenants, and it greatly qualifies the landlord's common law right of forfeiture.
(a) The claim. Equity considered that a right of re-entry was merely security for payment of the rent, so that if —
(i) the tenant paid the rent due; and
(ii) the tenant paid any expenses to which the landlord had been put; and
(iii) it was just and equitable to grant relief,
equity would restore the tenant to his position despite the forfeiture of the lease.
The plaintiff alleges that it is sufficient for it to pay the rent and tax due and all expenses so as to be reinstated in the lease. On the other hand, the defendants contend that the relief being an equita ble remedy the Court must also consider the con duct of the lessee to see whether its conduct does or does not involve a breach of covenant. In my view, the position of the defendants is the correct one under English and Canadian jurisprudence. It is indeed so stipulated in the third Megarry cri teria, namely that "it was just and equitable to grant relief'.
The plaintiff relies mostly on Gill v. Lewis, [1956] 1 All E.R. 844 (C.A.), wherein Jenkins L.J. said as follows, at page 852:
In my view, as the conclusion of the whole matter, the function of the court in exercising this equitable jurisdiction is, save in exceptional circumstances, to grant relief when all that is due for rent and costs has been paid, and (in general) to disregard any other causes of complaint that the landlord may have against the tenant. The question is whether, provided all is paid up, the landlord will not have been fully compensated; and the view taken by the court is that if he gets the whole of his rent and costs, then he has got all he is entitled to so far as rent is concerned, and extraneous matters of breach of covenant are, generally speaking, irrelevant.
Other courts have not endorsed that proposition. They have looked into the conduct of the tenant to see if he was coming to the court of equity with clean hands.
In Shiloh Spinners Ltd. v. Harding, [1973] A.C. 691 (H.L.), Lord Wilberforce of the House of Lords said at page 723:
I would fully endorse this: it remains true today that equity expects men to carry out their bargains and will not let them buy their way out by uncovenanted payment. But it is con-
sistent with these principles that we should reaffirm the right of courts of equity in appropriate and limited cases to relieve against forfeiture for breach of covenant or condition where the primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the court, and where the forfeiture provision is added by way of security for the production of that result. The word "appropri- ate" involves consideration of the conduct of the applicant for relief, in particular whether his default was wilful, of the gravity of the breaches, and of the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach.
In Gleneagle Manor Ltd. et al. v. Finn's of Kerrisdale Ltd. et al. (1980), 116 D.L.R. (3d) 617 (B.C.S.C.), Locke J. of the British Columbia Supreme Court, referring to Gill v. Lewis (above referred to) and many other decisions, held that the court should consider not only the tenant's failure to pay rent when due, but his entire conduct.
In Re Jeans West Unisex Ltd. and Hung et al. (1975), 9 O.R. (2d) 390 (H.C.), Goodman J. of the Ontario High Court of Justice held that where the tenant was in breach of several covenants in addition to the covenant to pay rent and taxes, the court should not exercise its discretion in the ten ant's favour.
In Western Mortgage Development Corporation v. H. & D. Investments Ltd. and Jardine Holdings Ltd. (unreported), B.C.S.C., Vancouver Registry H822074, August 6, 1982, Spencer J. of the Brit- ish Columbia Supreme Court clearly summed up the basic principles involved as follows, at page 3:
I start with the proposition that the parties are, prima facie, to be kept to the terms of the bargain they themselves have made. Superimposed upon that first principle is the discretion of the court to relieve against forfeiture. Relief ought not to be given where there has been a flagrant and contemptuous disre gard of the contractual obligations.
I therefore must consider the conduct of the lessee in this matter. The uncontradicted affidavit evidence filed by the defendants shows very clearly that the plaintiff was not a good tenant and that it breached several covenants of the lease, apart from its admitted default in payments of rent and taxes. The plaintiff removed some forty truckloads of gravel from the premises which was specifically
prohibited by the lease. The plaintiff did not com plete phase 1 of works that under the lease were to be completed not later than January 1, 1983. The phase-2 development under the lease was to com mence not later than January 1, 1983. No substan tial work has been done by the plaintiff.
Still according to the affidavit evidence, in March 1985 the mobile home park was in a state of general disrepair with numerous abandoned vehicles lying about, the roads improperly main tained, the water and sewage systems inadequate, no landscaping, and the number of tenants decreasing dramatically. Since that time the Band has assumed responsibility for the management and operation of the trailer park and has expended considerable funds in improving its general condition.
Several tenants of the park have filed affidavits to the effect that living conditions there were unacceptable, the water supply inadequate, septic tanks not properly maintained, roads and grounds in a general state of disrepair. Both defendants agree that granting relief and returning the trailer park to the plaintiff would perpetuate these unac ceptable conditions to the detriment of the project, of the Indian Band and of the health of the remaining trailer tenants.
The relief sought is therefore denied.
At the outset of the hearing I expressed my doubt as to the jurisdiction of this Court to grant the relief prayed for by way of motion. Undoubt edly, this action for a declaration against the Crown was properly launched in this Court, but neither the Federal Court Act [R.S.C. 1970 (2nd Supp.), c. 10] nor the Federal Court Rules [C.R.C., c. 663] provide specifically for interim relief against forfeiture. In Pacific Salmon Indus tries Inc. v. The Queen, [1985] 1 F.C. 504 (T.D.), my colleague Strayer J. correctly points out, that
"declarations cannot be sought by way of motion". He continues (at page 510):
... the request appears to be for interim declarations and there is no authority for giving declarations on an interim basis ....
In another 1984 decision, Comtab Ventures Ltd. v. R. in Right of Can. (1984), 35 Alta. L.R. (2d) 230 (F.C.T.D.), this Court dealt with a lease by the plaintiff to the Crown of a building used as a letter carrier depot in Calgary. A declaration of forfeiture was sought by way of an action launched by the plaintiff. Strayer J. said at page 243:
While there was no dispute before me as to whether this court has jurisdiction to grant relief from forfeiture, I think it prudent to confirm that I have concluded that such jurisdiction exists.
After a review of the Judicature Act of Alberta [R.S.A. 1980, c. J-1], the Federal Court Act, Rhodes on Canadian Law of Landlord and Tenant [5th ed., 1983] and the Dennaoui case already referred to, he concluded [at page 243] "that as a court of equity the Federal Court has jurisdiction to grant relief from forfeiture." He therefore granted the relief prayed for, but that resulted from the trial of an action and not the mere hearing of a motion for an interim remedy.
The motion is, therefore, denied with costs.
ORDER
The motion is denied with costs.
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