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Oct 01, 1986

Leases #93

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By Gerry Neely
B.A. LL.B.

Unless you are a property manager and actively involved in residential leases, the oddities of the Residential Tenancies Act, once known to you, may now be forgotten. This could apply particularly to a fixed term house lease, say of 12 months which as everyone knows, automatically expires at the end of the term. Or at least it used to do that before the change in the Residential Tenancies Act. Under that Act, the lease automatically expires at the end of the term only if the Landlord and tenant have agreed in writing at the time they commence the fixed term tenancy, that it will terminate on the date of its expiration. If they do not do that, and the tenant remains in possession, he does so on a month to month tenancy. (Different requirements exist for mobile home pad tenancies.)

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An Ontario property manager knowingly collected rents higher than those permitted in an Order of the Rent Review Commissioner appointed under the Ontario Residential Tenancies Act. The owner of the apartment block was aware of these breaches of the Act. When both the property manager and owner were charged with an offence, they entered into a plea bargain that resulted in the owner being fined $2,000.00 and the charges against the property manager being withdrawn.

The owner sued the property manager unsuccessfully to recover the amount of the fine and legal expenses. The Court refused to order repayment of these amounts because of the owner's knowing participation in the illegal rent increases.

The owner also sued, but this time successfully, to recover in excess of $2,000.00 the property manager had deducted from the rental money it collected for the owner, to cover the property manager's legal fees. The property manager also had to pay the penalty for the illegal rent increases.1

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Dominion Stores leased premises from Bramalea under a long term lease containing a clause that no assignment to a subsidiary Company was permitted without the consent of Bramalea. This consent could not unreasonably be withheld if the subsidiary Company agreed to carry on in the leased premises, the same business as Dominion. (If the assignment was to anyone other than a subsidiary company, Bramalea could arbitrarily withhold its consent.) Bramalea refused to consent to an assignment of a Lease to a subsidiary company whose shares were then to be sold to an operator other than Dominion Stores.

Some of the objections of Bramalea were valid but they were met by Dominion Stores. The Court decided that the reason for requiring permission to assign, was to make certain that the same business was carried on in the premises. The Court also decided that the real reason for the objection by Bramalea was that it wanted to increase the rent. The Court held that this was an unreasonable objection, Bramalea's consent was unreasonably withheld and it ordered approval of the assignment to be made.2

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A British Columbia Court has decided that a Landlord is liable in damages to a tenant where the landlord's consent to an assignment is unreasonably withheld.3

  1. Forest Lane Properties Inc. v. Concise Management Enterprises Ltd., 39 R.P.R. 87.
  2. Dominion Stores Ltd. v. Bramalea Ltd.,38 R.P.R. 12.
  3. Cudmore v. Petro Canada Inc.,SCBC New Westminster C842108.

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