761792 Alberta Ltd. v. Saraswati Prasad Singh, 2013 ABQB 17

Court of Queen ’ s Bench of Alberta Citation: 761792 Alberta Ltd. v. Woody ’ s Pub and Caf é Ltd., 2013 ABQB 17 Date: 20130107 Docket: 0603 02345 Registry: Edmonton Between: 761792 Alberta Ltd. and Saraswati Prasad Singh Applicants - and - Woody ’ s Pub and Caf é Ltd., Buddy ’ s Pub

(1999) Ltd., Steamworks Mens Health Club Ltd. and James L. Brown Respondents Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Memorandum of Decision of L. A. Smart, Master in Chambers _____________________________________________________ Introduction [ 1 ] The Applicant 761792 and Saraswati P. Singh (the Landlord) seek an order that the Respondents Steamworks and Jim

Brown (collectively referred to as “ Brown ” ) are not entitled to renew a lease of the premises at 11745 Jasper Avenue, Edmonton, Alberta known as the Greymac Building. The stated grounds are that: 1. Brown has failed to properly exercise any option to renew; 2. Brown was in default of the terms of the offer to lease at the time of the purported exercise and therefore was not entitled to do so. Default under the Terms of the Offer [ 2 ] An Offer to Lease (Offer) for a 10 year tenancy between the Landlord and Jim Brown or his nominee was agreed to on February 20, 2002.

The Offer had an option to renew for five years and contained a provision that Jim Brown or his nominee must execute a standard form lease. In 2005, the Landlord presented a "standard form lease" which added material provisions not contained in the Offer. No lease has been executed. [ 3 ] In 2006 the Landlord applied in these proceedings for termination of the Offer on a number of grounds including failure to execute a Lease as required under the Offer. Although the parties had apparently resolved their differences on what was to be contained in the Lease, no lease had as yet been signed. Justice M.

Crighton dealt in those proceeding with a similar situation for renewal of an offer to lease between the parties on other premises known as Woody's Pub. In that circumstance, she found that following conclusion of negotiations the Landlord had not provided a revised formal lease and consequently at the time of renewal, there was no refusal to sign a formal lease. Through extension of her reasons, she also declined to terminate the Brown Offer. [ 4 ] Brown argues that as a consequence of Justice Crighton's decision the current issue has been determined, that is, it is res judicata .

The Landlord says that although analogous circumstances were before the Justice, the determination in 2007 that the Brown Offer would not be terminated differs fundamentally from the question of whether or not Brown can exercise an option to lease today. The distinction between termination of a lease and entitlement to renewal options and the availability of relief from forfeiture has been recently addressed by Justice Topolniski in 118382 Alberta Ltd. ( c.o.b. Sok's Contracting) v. Valin Industrial Mill Installations Ltd. ( 2011 ABQB 440 paras 49-64 , aff'd 2012 ABCA 62 ).

The Offer requires that the tenant "if not in default of any of the terms and conditions of the Lease at the time the option is exercised, shall have the Option to Renew the Lease for a further five-year term. . ." Relief from forfeiture, traditionally, was not available to excuse performance of a condition precedent although a distinction may be made where the default is said to be caused by the landlord. I agree with Landlord's counsel that the issue and circumstances before me are not the same as those before Justice Crighton and as a consequence the principles of res judicata do not apply.

Nonetheless, to the extent that this application is based on the ability to exercise the option for failure to execute a formal lease, I reach the same conclusion as Justice Crighton that as no formal lease was presented, there could be no refusal to sign. The "Lease/Offer" was in good standing and the tenant was at liberty to exercise the option. If I'm incorrect in that conclusion, in these circumstances, the Landlord has caused the default and accordingly I would grant relief from forfeiture with respect to the condition precedent.

Improper Exercise of Option [ 5 ] The Landlord and Jim Brown or his nominee entered into the Offer in 2002. Brown's legal counsel by correspondence dated July 22, 2005 nominated Steamworks Men's Health Club Ltd to be named as Tenant in the formal Lease. No formal lease naming Steamworks as the Tenant was prepared or executed. [ 6 ] On October 28, 2011, Brown sent an e-mail to Singh: Subject greymac lease renewal From jim brown<buddysniteclub@[...].ca > Date Friday, October 28, 2011 9:01 pm To “ S.P. SINGH ” <spsingh@[...].ca >

Please be advised that as per our lease agreement, 658190 Alberta ltd. intends to renew its lease of the Greymac building for another 5 years. I understand we do not agree on a lease rate and so I suggest we proceed to arbitration as the lease allows. yours truly, Jim Brown 658190 alberta ltd. ” [ 7 ] On questioning of James Brown on his affidavit sworn February 17, 2012, he responded as follows: Q Okay, what lease did 658190 Alberta Ltd. have of the Greymac Building? A Well, the lease that pertains to the Greymac Building that says James Brown or nominee.

Q All right, and when did 658190 Alberta Ltd. become the nominee of James Brown? A Yeah, I don ’ t have an exact date. But it ’ s acted as my management company for the building since day one. Q All right. Did you tell anybody that 658190 Alberta Ltd. was the nominee of James Brown? A Back then, no. Q At any time. A No. [ 8 ] During the course of the tenancy it is acknowledged that many many times rental payments were made with a cheque from 658190 Alberta Ltd ("658") but entered in the landlord's records as Jim Brown.

Starting in March 2011, Don Wong ("Wong") initiated discussions on behalf of the Landlord with Jim Brown regarding possibilities of early renewal and rates resulting in two e-mails from Singh on May 26th, 2011: Subject Fwd: Re: Greymac Renewal From S.P.

SINGH,<spsingh@[...].ca > Date Thursday, May 26, 2011 3:53 pm To buddysniteclub@[...].ca With reference to our attached response, please be advised of the following ‘ Lease Renewal ’ clause per the lease agreement: “ Six (6) months prior to the end of the primary lease term, the Tenant, if not in default of any of the terms and conditions of the Lease at the time the option is exercised, shall have the Option to Renew the Lease for a further five(5) year term ..... ” Dr SP Singh ....Original message .... From “ S.P.

SINGH ” < spsingh@[...].ca > Date Thu, 26 May 2011 15:28:21-0600 To jim brown < buddysniteclub@[...].ca > Subject Re: Greymac Renewal With reference to your email response of today May 26, 2011, we formally notify you that you do not have the right to renew the lease

for another 5 years. You have defaulted on so many occasions for so many reasons. Therefore we will not renew your lease. From now on we will actively pursue to rent Greymac to other tenants. Dr. S.P. Singh [9] On November 7 and 9, 2011, Wong on behalf of the landlord was in discussions with Jim Brown with respect to rentalrates. On November 22, 2011, the Landlord informed Jim Brown that counsel was being retained to repossess the building with thesuggestion that an offer of $16 per square foot would be considered. On February 6, 2012, Mr.

Wong sent a further e-mail to Jim Brownwhich, inter alia, stated that if a $20,000 monthly rental was agreed to there would be a renewal. I take note that in the foregoingexchanges and many others which took place between the Landlord and Jim Brown neither party makes reference to the nominatedtenant Steamwork's but rather discussions are generally headed "Re: Greymac Renewal" or similarly. [10] The Landlord has presented authority that an optionor must strictly observe the terms of an option in order to enlist the aid ofthe court for enforcement (Pierce v. Empey (SCC), [1939] S.C.R. 247, Gordon v.

Connors (SCC),[1953] 2 S.C.R. 127). In the Offer there are no specific requirements as to the manner or method to be engaged to communicate theintention to renew the lease. [11] Furthermore, the Landlord provides authority that to renew an option it must be exercised by someone legally entitled to doso. Steamworks the nominee of Jim Brown did not exercise the option. Although 658 paid rent it was never specifically nominated byJim Brown or Steamworks to be the Tenant. Finally the notice from Jim Brown did not say that he was exercising his or Steamworksright of renewal. In both Mus v.

Matlashewski [1944] D.L.R. 522 (Man. C.A.) and Horne and Pittsfield Foods Ltd. V. Fithen, (1981)30 A.R. 477 presented by the Landlord as authorities, the lease required agreement or acceptance of assignees of the lease by thelandlord. In those cases neither of the landlords had done so and consequently a purported exercise of the option by the assignee wasineffective. [12] In the Offer there is no restriction as to who may be the nominee nor is there any prescribed manner or method for effectingthe nomination. Steamworks was named as a nominee for preparation of a formal lease but none was ever prepared.

Communicationregarding renewal of the lease was between the Landlord or the representative Wong with Jim Brown. There appears to be a tacitacceptance that Jim Brown is the "Tenant" for purposes of renewing the lease or is at least the person with authority on behalf of the"Tenant" for that purpose. [13] This aspect of the application is for a declaration that Brown is not entitled to renew the subject lease for failure to properlyexercise the option. To grant such a declaration, I must reach that conclusion based on the same standard as that of a

summary judgmentapplication, that is, I must be satisfied there is no genuine issue for trial. The current circumstances differ from those in the authoritiesprovided by the Landlord. Under the factual matrix presented (albeit not in dispute per se), this matter cannot be decided summarily.Given the numerous discussions between the parties, this is not merely a simple

interpretation of their contractual agreement. I am ofthe view I can no more find that there was not a proper exercise of the option than that there was and the issue must be determined by atrier of fact with the full benefit of the complete factual background and circumstances. [14] Accordingly, I dismiss the application by the Landlord. Noting my above conclusion, I direct that costs of this application bein the cause. Dated at the City of Edmonton, Alberta this 7th day of January, 2013.

L. A. Smart M.C.C.Q.B.A. Appearances: Murray Engelking Engelking Wood for the Applicants Bruce Mintz Mintz Law for the Respondent