Sometimes parties to a lease have very different ideas about how the property will be used or how long the lease will last. When a disagreement arises between a landlord and tenant, litigation may follow. With this possibility in mind, ensuring that the written lease agreement accurately reflects the arrangement that the parties wish to enter is important.
In the recent case of Bottoms v Witzke, the plaintiff operated a business which manufactured and sold preserves and relishes under a sole proprietorship called “She Devil Delights”. It was a small business, but by 2015, the plaintiff distributed her products to Save-on-Foods, retail stores in Vernon and farmers’ markets in the Okanagan.
To comply with health requirements, the plaintiff needed to manufacture the products in a commercial kitchen that met various standards. She found a property that she thought might work, which was owned by the defendant and located in Coldstream, British Columbia.
The plaintiff testified that she met with the defendant and told him that she primarily wanted to conduct a food production business at the property but that she would also reside there. She said that she would need to enclose the carport in order to install the kitchen, which she would do at her own expense. She also said she would need a lease of at least five years to recover this investment.
According to the plaintiff, the defendant told the plaintiff that she could renovate the carport if she used reputable builders and paid for it herself. He also agreed to her proposed lease term, provided that she insured the carport and restored it to its original state at the end of the tenancy.
The defendant told a different story and testified that the plaintiff did not say anything about using the property for a business, enclosing the carport or having a long-term lease.
In British Columbia, the Residential Tenancies Act applies to agreements regarding the possession of rental units (that is, living accommodation rented to a tenant) and other residential property. Residential tenancies must comply with the terms of this legislation, which imposes some standard terms to ensure that such agreements are fair and balanced.
On the other hand, leases of non-residential space are governed to a greater extent by contract law. Commercial leases are not subject to the same kind of protections as found in the Residential Tenancies Act. Instead, the Commercial Tenancy Act applies and sets out methods and rules relating to disputes between commercial landlords and tenants. Under the Commercial Tenancy Act, there is no requirement to use a standard form or template agreement for a commercial lease.
In this case, following the disputed discussion, the plaintiff completed a rental application form provided by the defendant. It stated that “The premises shall be used exclusively as the private residence of the tenant […] no sublets.”
The parties then signed the standard form residential tenancy agreement, which stated that the tenancy began on September 1, 2015, and was on a month-to-month basis. This is also known as a periodic tenancy or one that continues until either party gives notice to end the tenancy.
According to the plaintiff, she was concerned about the lack of a five-year term, however, she claimed that the defendant said as long as she paid her rent, he did not see a reason why she could not stay long-term.
The plaintiff moved in and spent $16,000 installing the kitchen. According to the defendant, it was at this time that he learned about the plaintiff’s business and he agreed to allow the plaintiff to continue. The defendant provided the tenant with written permission confirming this, which allowed her to obtain her business license, and supported her when a complaint was filed by the District of Coldstream regarding compost bins.
However, in November 2018, the defendant served the tenant with a two-month notice to end the tenancy as his daughter needed a place to live. The plaintiff disputed this notice and applied to the Court for an injunction preventing the eviction.
The Supreme Court of British Columbia decided that the plaintiff’s evidence about a long-term oral lease agreement was not admissible or sufficient to prove an agreement that differed from the written lease. Justice Ahmad stated that:
“The terms of the Written Lease are clear and unambiguous: the lease was made in respect of a residential tenancy, the term of which started on September 1, 2015 and continued on a month-to-month basis. Given the clear and unambiguous terms of the Written Lease, there is no basis on which to deviate from the express terms regarding the month-to-month nature of the lease or its intended purpose for residential use.”
The Supreme Court dismissed the plaintiff’s other claims, including that the defendant negligently misrepresented that the lease was for five years, that there was a separate longer oral lease regarding the carport, and that the defendant was unjustly enriched by the plaintiff’s improvements to the carport.
The Court concluded that the defendant validly terminated the lease in accordance with the Residential Tenancies Act, and affirmed that this Act applied to the lease because the property was not primarily occupied for business purposes.
The Court awarded the defendant an amount for unpaid rent and out-of-pocket expenses which were incurred to restore the property to its original condition.
Contact Meridian Law Group in Vancouver for Representation in Real Estate and Commercial Lease Disputes
The reputable lawyers at Meridian Law Group help sellers, purchasers, commercial landlords and tenants resolve various residential and commercial tenancy disputes. Whatever the forum, the firm positions its clients for success. We are located in downtown Vancouver and serve clients throughout British Columbia. To arrange a confidential consultation to discuss your real estate or commercial lease dispute, please call us at (604) 687-2277 or reach out to us online.