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The Court of Appeal held that a beneficiary could sue a trust debtor directly in special circumstances where the trustee failed to protect the beneficiary’s interest and equity favored relief.
The court stayed the action in favour of arbitration under a broad JVA clause, refused to stop the arbitration, and dismissed an interlocutory injunction over sale of the land.
The court found on the evidence that Dawn Carson deliberately and repeatedly under-reported gross revenues to the landlord despite having accurate net sales records; the Fraser Howatt and PwC audits reliably established large understatements and monetary shortfalls; the lease's audit and reporting provisions permitted investigation and recovery; accordingly the plaintiff was entitled to judgment for unpaid percentage rent and related sums and termination of the sublease was justified; counterclaims and third-party claims failed for lack of merit.
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The Manager failed to satisfy the stay test: article 3.14 did not confer an interest in land at the time of registration and the Manager did not demonstrate irreparable harm or that the balance of convenience favoured a stay; accordingly the motion for a stay was dismissed and the underlying order removing the Manager's notices remains effective.
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Expenses related to the lower unit were either personal (incurred with the intention to occupy) or capital (substantially transformed the unit) and therefore not deductible; for the upper unit the majority of expenditures were repairs incurred to earn rental income but 80% of the electrical work was capital, resulting in an allowable current expense deduction of $15,363.46 for 2005; appeal allowed in part and reassessment referred back to the Minister to give effect to that amount.
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The court held the tenant had to maintain and, if necessary, replace the HVAC system under the lease, and dismissed the claim for loss of business.
The Court of Appeal held that the landlord’s 2006 letter was only a statement of intention, not a binding offer or granted option to renew the lease.
The tenant was in continuing default on the operative date (Aug 1, 2002) due to ongoing over-serving of patrons and resultant nuisance constituting subsisting breaches of the lease; consequently the tenant's option to renew failed, the landlord was entitled to refuse renewal despite acceptance of rent, and equitable relief was not available to the tenant.
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Section 72(1) requires a taking of possession in the sense of an interference with the actual and peaceable possession of another, carried out in a manner likely at the time of entry to cause a breach of the peace or reasonable apprehension thereof; mere peaceful entry with the consent or acquiescence of an occupant, absent interference with the possessor's peaceable possession or a manner likely to cause immediate breach of the peace, does not satisfy the offence. On the facts the Crown's evidence could not establish the required interference or manner and the conviction must be set aside.
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The appeal was allowed in part because the Trial Division erred in valuing reserve land by incorporating lease-specific conditions contrary to Musqueam v. Glass; a new trial is directed to determine fair market rents using fee simple valuation principles and proper fact‑based discounting; the trial judge's choice of the prime rate as at March 31, 1991 was upheld.
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