IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
411056 B.C. Ltd. v. Bingo City Games Inc. et al |
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2005 BCSC 16 |
Date: 20050106
Docket: 18741/03
Registry: Prince George
Between:
411056 B.C. Ltd.
Plaintiff
And
Her Majesty
the Queen in Right of the Province
of British Columbia, Bingo City Games Inc. and
Frank Richard Valentini
Defendants
And
Her Majesty the Queen in Right of the Province
of British Columbia, The Minister of Public Safety
and Solicitor General for the Province of British Columbia,
Richard Coleman and British Columbia Lottery Corporation
Third Parties
Before: The Honourable Mr. Justice Rogers
Reasons for Judgment
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Counsel for the plaintiff: |
T.P. Matte |
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Counsel for the
defendants, |
R.J. Stewart, Q.C. |
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Counsel for British Columbia Lottery Corporation:
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L. Backman, Q.C. |
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Counsel for Her
Majesty the Queen |
J.L. Maxwell |
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Dates and Place of Trial: |
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Facts
[1] The plaintiff is a landlord of commercial premises. The defendants Bingo City Games Inc. and Mr. Valentini were tenants in default. The plaintiff’s claims against the Crown were discontinued prior to trial.
[2] In August 2001, the plaintiff owned a building located at 355 Vancouver Street in Prince George, B.C. The defendants, Bingo City Games Inc. and Mr. Valentini wished to lease that building. They did. The lease contained a provision that in the event of default the plaintiff could retake possession, terminate the lease, and claim compensation for the benefit of the unexpired term of the lease. The lease was for a ten-year period commencing October 1, 2001. The lease stipulated that the defendants should pay an annual rent of $335,000, plus GST for 10 years. The rent was payable monthly at $27,916.67, plus GST. In addition, the defendants were obliged to pay all taxes, utilities, maintenance, and insurance.
[3] The defendants never did pay the full amount of the rent due under the lease. They fell further and further into arrears as 2002 passed. The defendants’ business in the building was a failure. In December 2002, the defendants sent a letter to the plaintiff advising that they would not continue the business after January 15, 2003.
[4] Ultimately, the plaintiff regarded the defendants’ chronic non-payment of rent as a breach of the lease. The plaintiff also took the defendants’ December letter to be notice of their intention to repudiate the lease come January 15, 2003.
[5] On January 11, 2003, the plaintiff took possession of the building. Shortly after that the defendants’ bank creditor appointed a bailiff and sold off the defendants’ business assets. On February 3, 2003, the plaintiff sent the defendants a letter stating that it intended to sue the defendants for damages comprising the lost benefit of the rent due during the unexpired term of the lease. The plaintiff made no effort to redeem its debt for past rent and made no effort to find an alternate occupant for the premises. At trial the amount due for rent, insurance, taxes, utilities and other items under the lease totaled $275,094.60.
[6] The plaintiff has made reasonable efforts to sell or re-let the building. The building is, however, configured to the defendants’ specifications as a bingo hall. This makes it unattractive to non-bingo tenants. The plaintiff has been wholly unsuccessful in finding a tenant or purchaser.
[7] The issue between the plaintiff and the defendants is whether the timing of the plaintiff’s notice works to excuse the defendants from liability for future rent.
[8] The defendants issued third party notices against the Crown, the Minister of Public Safety and Solicitor General Richard Coleman, and the British Columbia Lottery Corporation (BCLC). The third party notice against the Minister was struck in a pre-trial ruling. The third party notices against the Crown and the BCLC were tried along with the plaintiff’s claim.
Discussion: Plaintiff’s Claim
[9] The law in Canada is clear: a landlord may take possession and still recover damages from a defaulting tenant representing the benefit of rent due during the unexpired term of a lease (Highway Properties Limited v. Kelly, Douglas and Company Limited [1972] 2 W.W.R. 28). The prerequisites for such a claim are that the tenant has breached or repudiated the lease, the landlord has taken possession, and the landlord has given the tenant timely notice of its intention to recover damages for future rent. This latter requirement, i.e.: notice to the tenant, may not be necessary where the lease itself gives the landlord the right to claim future rent. I do not need to decide this question because in this case the plaintiff did issue written notice.
[10] Notice of intent to recover future rent is necessary so that the tenant may take steps to protect his position. The notice must be delivered in a timely way. That is to say: the notice must come to the defaulting tenant in time for him (if he wishes) to do something about the lease. Options open to the tenant include finding a new tenant, or repairing his finances and paying back-rent and redeeming the lease, or finding a buyer for the building.
[11] It is not necessary that notice be delivered simultaneously with the landlord’s taking possession. All that is necessary is that the notice be delivered at a time when the tenant’s position is not so prejudiced by the landlord’s possession that it becomes unreasonable for the tenant to take remedial action.
[12] In the present case the notice was delivered three or four weeks after the plaintiff took possession of the building. That possession for those weeks did not, of itself, impair the defendants’ opportunity to take steps to protect their position. That is so because the defendants had abandoned the business that their only source of money with which to pay rent. The defendants had no resources to otherwise redeem the lease. Further, the sale of the defendants’ business assets was at the behest of the defendants’ bank, not the plaintiff. The plaintiff’s action in those three weeks was, with respect to the defendants, benign.
[13] I find that the plaintiff took possession on January 9, 2003, and on February 3, 2003 it delivered notice of intention to recover future rent. That was timely notice in these circumstances.
Conclusion: Plaintiff’s Claim
[14] The defendants are liable to the plaintiff for arrears under the lease in the sum of $275,094.60. The plaintiff is entitled to court order interest on that sum to the date of judgment. The plaintiff is entitled to judgment for damages representing the lost benefit of rent due under the lease from January 11, 2003 to September 30, 2011. Pursuant to Rule 32(2) there will be a reference to a Master of this court to conduct a hearing and make such findings of fact as may be necessary for the Master to prepare a certificate as to the amount of damages to which the plaintiff is entitled.
[15] The plaintiff shall have its costs at Scale 3 throughout.
Discussion & Conclusion: Third Party Notices
[16] The issues raised in the third party notices parallel the issues in Bingo City Games Inc. and Frank Valentini v. BCLC and HMTQ No. 16861 Prince George Registry. That action has been dismissed. For the reasons expressed in the decision in that matter the third party notices in this suit are likewise dismissed.
[17] The Crown and the BCLC did not seek their costs in the parallel action. Although they did not express their wishes with respect to costs in this matter, I expect that their sentiment here is the same. Therefore, absent an application for costs by a third party made within two weeks of the release of these reasons, the third party notices will stand dismissed without costs to any party.
“P. Rogers, J.”
The Honourable Mr. Justice P. Rogers