December 3, 2023 Dükkancılar Law 0 Comments

Although a landlord of a commercial property has the right to evict the tenant based on a breach of a commercial lease agreement, the tenant may seek to be relieved from forfeiture. In Airside Airpark Estates Ltd. v. Langley (Township), 2021 BCSC 2267, the court summarized the factors to grant relief from forfeiture in a commercial lease matter.

Case Summary: Airside Airpark Estates Ltd. v. Langley (Township), 2021 BCSC 2267

In this legal case, Airside Airpark Estates Ltd. (Airside) sought relief from forfeiture after its lease agreement with Langley Township (the Township) was terminated. Airside had invested a significant amount in the leased premises and argued that its investment justified relief from forfeiture.

However, the court found that Airside had intentionally breached the lease agreement in several ways, including subletting without consent, carrying out unapproved construction, and refusing inspections. The court also noted that Airside’s conduct, including offensive communications with the Township, had damaged its relationship with the Township irreparably.

Despite the size of Airside’s investment, the court ruled that it had not demonstrated the required good faith in its dealings with the Township to be entitled to relief from forfeiture. As a result, Airside’s petition for relief was dismissed, and the Township was awarded costs.

The court did not grant special costs to the Township, as it did not find Airside’s handling of the case to be faulted. Special costs would have been excessive in addition to the substantial forfeiture Airside faced.

In summary, the court denied Airside’s request for relief from forfeiture due to intentional breaches of the lease agreement and related misconduct that damaged its relationship with the Township.

The Court set out the legal test to relieve from forfeiture as follows:

III.         The Legal Test

[75]      The Court’s power to relieve from forfeiture is codified in s. 24 of the Law and Equity Act, R.S.B.C. 1996, c. 253, which states as follows:

The Court may relieve against all penalties and forfeitures, and in granting the relief impose any terms as to costs, expenses, damages, compensations and all other matters that the court thinks fit.

[76]      In Sechelt Golf & Country Club Ltd v. District of Sechelt(2012 BCSC 1105, Abrioux J. (as he then was) helpfully summarised the relevant jurisprudence by listing the factors that should inform the Court’s analysis in deciding whether to grant relief from forfeiture, as follows, at para. 139:

a)   whether the sum forfeited is out of all proportion to the loss suffered (Pope v. Potter2011 BCSC 697 at para. 23);

b)   whether it would be unconscionable in the traditional equitable sense for relief not to be granted (Pope at paras. 24-25);

c)   the applicant’s conduct, the gravity of the breaches and the disparity between the value of the property forfeited and the damage caused by the breach (Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co.,1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490] at 504);

d)   whether there are any collateral equitable grounds which exist including the party coming to court with “unclean hands” (600433 B.C. Ltd. v. XJ Motors Ltd.2011 BCSC 1144 at para. 34); and

e)   whether the applicant is “prepared now to do what is right and fair, but must also show his past record in the transaction is clean” (Snell’s Equity (29th ed., 1990) at 31 and 541-542.).

Airside Event Spaces Inc. appealed that decision.Appeal dismissed.

 The judge denied relief from forfeiture under a commercial lease. Airside Event Spaces Inc. admitted it was in breach of the lease. However, it claimed that the magnitude of its loss from early termination was grossly disproportionate to the consequences of the breaches, justifying relief from forfeiture. The judge disagreed, finding that the breaches were intentional; that Airside actively concealed breaches from the lessor, the Township of Langley; and that Airside’s conduct had led to an irreparable break down of the relationship between the parties. Held: Appeal dismissed. The decision to grant relief from forfeiture is discretionary and attracts significant deference on appeal. Airside has not established a palpable and overriding error in the findings of fact; a misdirection in law; or that the denial of relief was clearly wrong, resulting in an injustice.