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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