Public Health ‘Trumps’ Commercial Losses – B.C. Supreme Court Rules in Favour of Landlords in a COVID-19 Related Termination
Commercial landlords have, in the past year and a half, dealt with many novel issues in relation to COVID-19, often on an emergency basis. Few landlords have had to deal with both public health order violations and gang crime relating to the same tenant, as in a recent decision of the B.C. Supreme Court, Ivy Lounge West Georgia Limited Partnership v. TA F&B Limited Partnership, 2021 BCSC 997. The court allowed the immediate termination of an occupation licence where the tenant’s conduct was bringing the hotel into disrepute, potentially strengthening landlords’ hands to take urgent action. The decision dealt with a licence agreement but it is likely that the same reasoning would apply to a lease.
Ivy Lounge, a bar located in Trump Tower, was issued an immediate Notice of Termination following “ongoing, repeated, and flagrant disregard for Public Health Orders, liquor restrictions” and the tenant’s “apparent indifference” towards gang members who frequented the establishment.
Ivy Lounge sought an interim injunction and argued that the Notice of Termination was invalid due to the lack of opportunity for Ivy Lounge to remedy the default, as well as a breach of the duty of good faith.
The court relied on a term in the licence allowing immediate termination without a cure period where the Ivy Lounge brought the property or the hotel into disrepute and had a material negative impact on the operation of the hotel.
The court found that the tenant did not have a strong prima facie case and denied injunctive relief. In doing so, the court also found that Ivy Lounge had failed to show that it would suffer irreparable harm, or any loss that could not be remedied in damages.
Finally, the court considered the balance of convenience between the parties and found that Ivy Lounge’s lack of compliance and weak claim did not outweigh the interests of the landlord and the residents in the building, who would clearly be adversely affected by the granting of an injunction and the continued violations by Ivy Lounge.
The decision is a favourable one for landlords, and for common-sense, allowing decisive action in light of serious public health and reputational concerns. The decision highlights the importance of well-drafted lease agreements that contemplate circumstances in which a landlord may want, or need, to terminate a tenancy on an urgent basis.
If you have any questions in relation to landlord rights or termination of tenancies, please contact a member of our Real Estate Group.
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