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Commercial Tenancies Act (CTA)-Landlord’s election between two mutually exclusive remedies is irrevocable and once the election is made, the other remedy is unavailable during the same default period.

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Disclaimer

The following information is prepared for information purposes only. It is not intended to express a legal opinion. In all cases where you require a legal opinion, it is recommended that you contact a lawyer. Should you have any questions or comments relating to this material, please contact Peter Balsdon at your convenience.

If a tenant fails to pay rent, the landlord has a decision to make. Does the landlord terminate the tenancy and sue for the arrears of rent and for future rent or does the landlord continue the tenancy and distrain on the tenant’s goods and chattels.

In the case of Delane Industry Co. Ltd. v. PCI Properties Corp., The British Columbia Court of Appeal recently addressed the question of whether a landlord could distrain first and then terminate the lease after the distress was completed if there still was a deficiency following the sale of goods and chattels.

Canadian Courts have consistently held that distress and termination are mutually exclusive remedies that cannot be exercised concurrently. In other words a landlord cannot terminate the tenancy and then distrain since the distress remedy is only available while there is an ongoing tenancy. Nor can a landlord distrain and terminate the tenancy at the same time. Some Landlords elect to distrain then after selling the tenant’s goods and chattels and applying the sale proceeds to the arrears, terminate the tenancy on the basis of the remaining deficiency.

At trial, the Supreme Court of British Columbia held that since termination is fundamentally inconsistent with distress, the two remedies cannot be exercised concurrently as they are mutually exclusive. The Court found that in order to terminate the tenancy, the landlord was required to provide the tenant with a fresh notice of default and opportunity to cure after the distress was completed.

The landlord appealed to the British Columbia Court of Appeal which upheld the trial Court’s decision and went a step further. The Appellate Court concluded that having elected to distrain for the arrears of rent, the landlord permanently and irrevocably waived its right to terminate the tenancy for those arrears. The Court of Appeal noted that in order to terminate the tenancy, a fresh default, unrelated to the breach that led to the distress, would be necessary.

Although the Court of Appeal noted that some lower Court decisions appeared to conclude that the levy of distress merely “suspended” the landlord’s right to terminate until the distress was fully completed, it ruled that this is an incorrect statement of law as it is contrary to the principles of contract interpretation.

In summary, an election between two mutually exclusive remedies is irrevocable, and once the election is made, the other remedy is unavailable. The landlord was entitled to sue for arrears that accrued as part of the distress process but it lost its right to terminate the tenancy for those arrears when it elected to distrain. The British Columbia Court of Appeal has made it clear that for any given rent default, the landlord cannot pursue both distress and termination but in fact must elect its remedy.

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