Date: 20050426
Docket: T-1134-04
Citation: 2005 FC 570
Vancouver, British Columbia, Tuesday, the 26th day of April, 2005
Present: THE HONOURABLE MR. JUSTICE von FINCKENSTEIN
BETWEEN:
TED AIRD, VIVIEN AIRD, GLENN ALSIP, SHIRLEY ALSIP, SHIRLEY BEATTIE, AL BOSSERT, ROGER BOYCE, PAT BOYCE, JIM COLLINS, OLIVE COLLINS, REG COOPER, PATRICIA COOPER, BILL DAVIES, JESSIE DAVIES, ED DAVIES, ELAINE DAVIES, TONY DAVIS, JACKIE DAVIS, WILLARD EDWARDS, ETHNA EDWARDS, PATRICIA ELLIOT, ARCHIBALD ELLIS, KURT FENGLER, ANNA FENGLER, LARRY FENGLER, RENATE FENGLER, THOMAS GLANCY also known as TOM GLANCY, SHIRLEY GLANCY, JOE GRZYB, DOLORES GRZYB, JOHN GIULIANI, BRITT GIULIANI, ED HOLMES, ETHEL HOLMES, HELEN HOLZWORTH, HERB HOLZWORTH, KATHY HRISCHUK, MIKE HRISCHUK, PETER JOHNER, ERNIE KAHLER, HILDA KAHLER, GERRY McCARTHY, MARILYN McCARTHY, RON McCOMB, ROSE McCOMB, PETER MEISTER, INGRID MEISTER, DIANE MOORE, JOHN MOORE, DAISY NEFF, NELLIE OSTENDORF, ROXIE PARKER, JEFFREY PUNSHON, DOREEN PUNSHON, EILEEN EBY, DOROTHY REID, ED ROGOZINSKY, DELORES ROGOZINSKY, DEREK ROLPH, BEATRICE ROLPH also known as BETTE ROLPH, DAVID SCHELLENBERG, JOHN SNIJDERS, JANNIE SNIJDERS, RUDY SNIJDERS, MACHIEL ADRIAAN SONNEVELDT also known as JOHN SONNEVELDT, WILLY SONNEVELDT, TOM SPANN, HENRI STRYD, ADRIANA STRYD, STAN TURNER, HAL WESTON, DOLORES WESTON, DON WHITTAKER, MARYANN WHITTAKER, CATHERINE KNUDSEN, HOWARD KNUDSEN, MARGARET MAKI, LEO MAKI, LORENZ LOHNINGER, HANNELORE LOHNINGER, MARGARET TIBBEN, RALPH CHURCHILL, SANDRA CHURCHILL, JANET REED, CHRIS SEABROOK, MARGARET SEABROOK, FRED HOWSE, PHYLLIS HOWSE, MACE HARRISON, IRENE HARRISON, JOHANNA AUBERTIN, GORDON SIDDONS, ROSEMARY SIDDONS, RUSS GRILLS, DIANE GRILLS, BILL MILLER, GERRY MILLER, DEBORAH INNES, ARLEE MISFELDT, JANET MISFELDT, STANLEY BAXTER, HARRY CHAPLIN, MARION REDMAN, JOAN OLLIFFE and GRACE BALES
Plaintiffs
- and -
COUNTRY PARK VILLAGE PROPERTIES (MAINLAND) LTD.
Defendant
REASONS FOR ORDER AND ORDER
[1] This is an application for an injunction prohibiting the Defendant from terminating any of the subleases on the condition that the Plaintiffs pay rent to the Defendant of:
a) Full size pads $247.00 per month
b) Half size pads $172.00 per month
[2] The Plaintiffs represent 75 of 135 subtenants of the Defendant, which itself is a tenant from the Crown. The Defendant runs a retirement village on the property it leased from the Crown. The Plaintiffs each have 40-year subleases from the Defendant for plots on which they have erected manufactured mobile homes.
[3] Each sublease provides:
2.1 The Subtenant shall pay to the Sublandlord during the Term in lawful money of Canada, without any setoff, compensation or deductions whatsoever, Basic Rent as follows: ...
(b) For the period commencing the 1st day of March, 1996 and ending the 27th day of February, 2041, Rent shall be payable in advance on the first day of each month, and for each Lease Year commencing the 1st day of March, 1996 to the 27th day of February, 2041, shall be the aggregate of amounts determined in accordance with sub-paragraphs (i) and (ii) below:
(i) The Fair Market Rent determined by the Sublandlord for each of the eleven (11) four (4) year Lease periods commencing on the 1st day of March, 1996 and ending on the 27th day of February, 2041 (the "Four Year Periods"); and
(ii) the Annual Cola Increase.
(c) "Fair Market Rent" means, for any particular Four Year Period the amount of annual Rent for which a willing and knowledgeable lessor would rent the Leased Premises in the free and open commercial market to a willing and knowledgeable lessee without restriction to comparison with other Reserve lands available for leasing at the commencement of each Four Year Period assuming that at such time:
(i) The Leased Premises are owned by a lessor in fee simple and have no charges or encumbrances existing against title;
(ii) The Leased Premises include the improvements available to the Leased Premises existing as of the commencement of the term of this Sublease but do not include improvements which are subsequently made to the Leased Premises;
(iii) The Leased Premises are leased for the uses permitted in this Sublease; and
(iv) Such lessor and such lessee are acting at arms length.
[4] The lease from the Crown to the Plaintiff ("Head Lease") has the following clause for determination of fair market rent, which is incorporated by reference into each sublease:
4.8 If the Lessee receives notice of the Minister's determination of the Fair Market Rent and disagrees with the determination, the Lessee may at its expense, within sixty (60) days from the Minister giving the Lessee notice of the Fair Market Rent, refer the matter to the Federal Court of Canada for a new determination of the Fair market Rent pursuant to Section 17 of the Federal Court Act.
[5] When, pursuant to this clause, the Defendant tried to raise the rents for the four years commencing in 2000, most of the current Plaintiffs invoked clause 4.8 of the Head Lease and took the matter to the Federal Court ("Original Aird Action").
[6] By judgment dated April 13, 2004 (reported at Aird v. Country Park Village Properties (Mainland) Ltd., 2004 FC 551) and subsequently revised on June 25, 2004, Layden-Stevenson J. fixed monthly lease payments at $234.00 per full-sized lot and $175.50 per half-sized lot.
[7] Prior to the judgment, the Plaintiffs in the Original Aird Action on December 3, 2001, obtained an injunction from Blanchard J. (reported at Aird v. Country Park Village Properties (Mainland) Ltd., [2001] F.C.J. No. 1843) restraining the Defendant from terminating (until judgment on the rent adjustment dispute was given) any subleases for non- payment of rent as long as the Plaintiffs paid rent at the rate prevailing prior to adjustment.
[8] For the four-year period commencing March 1, 2004, the Defendant is now seeking to adjust the monthly rents to $372 for full size lots and $267 for half size lots.
[9] The Plaintiffs have again invoked Head Lease clause 4.8 and suggest the proper adjustment would be a monthly rent of $247 for full size lots and $172 for half size lots. They started this action on June 11, 2004, to have their numbers confirmed by this Court.
[10] No trial date has as yet been set but, as part of a consent adjournment pending the hearing of this injunction application, Beaudry J. ordered on February 1, 2005:
2. Pending the hearing of the Plaintiffs' motion, the Plaintiffs shall be required to pay basic rent as follows:
(a) full size lot - $234.00 per month;
(b) duplex lot - $175.00 per month.
3. Each Plaintiff shall continue to pay additional rent as required pursuant to Article 3.02 of each sublease.
4. Should any one of the Plaintiffs fail to make their monthly rent payment for February, March or April, 2005, the Defendant, on 72 hours notice to the defaulting Plaintiff, may apply to the Court to have this interim Order varied or set aside, as it relates to the defaulting Plaintiff.
[11] Relying on the decision of Blanchard J. in Aird v. Country Park Village Properties (Mainland) Ltd. supra, the Plaintiffs are again seeking an injunction to restrain the Defendant from terminating any tenants for failure to pay rent. However, rather than freezing rents at the existing rate, they would like them to be frozen at a rate suggested by their appraiser namely $178 for a full lot and $92 for a half lot.
[12] I made it clear at the hearing that an injunction is meant to freeze the status quo, not to improve the situation of the Plaintiffs and, if successful, at best they could receive a continuation of the order of Justice Beaudry. However, for the reasons that follow, I am not prepared to grant the injunction.
[13] Both sides agree that the leading case for an interim injunction isRJR-MacDonald Inc v. Canada (AG), [1994] 1 S.C.R. 311, under which the person seeking an injunction has to meet a threefold conjunctive test of:
a) there is a serious issue to be tried;
b) irreparable harm will occur if the injunction is not granted; and
c) the balance of convenience favours the granting of the injunction.
[14] There is no real dispute here as to serious issue or balance of convenience. The real issue concerns irreparable harm.
[15] In the Original Aird Action, Blanchard J. found irreparable harm and granted the injunction for the following reasons:
8. The disputed "Fair Market Rent" would have certain plaintiffs see their rent increase by 100% (in the case of the owners of half size pads). The Plaintiffs allege that the determination of "Fair Market Rent" by the Defendant is improper, since it is based on a flawed appraisal. The Plaintiffs argue that the appraisal was not conducted in a manner consistent with the terms of the Head Lease and Sub-Leases. Specifically the Plaintiffs contend:
(a) the real estate market is down substantially;
(b) property assessments for tax purposes are going down;
(c) the appraisal includes taxes when the pad owners pay their own taxes;
(d) the appraisal was done on a "gross basis" including "Additional Rent" when the Sub-Lease provides that only basic rent is to be reviewed every four years; and
(e) contrary to the terms of the Sub-Lease, the appraisal applies to the Cola Clause to common area costs.
The Plaintiffs further content that oral representations were made by the Defendant to the effect that Fair Market Rent would only increase if land values in Chilliwack area increased, and that these representations form an integral part of the Sub-Leases.
[16] None of these factors apply today. There have been no oral representations and the Defendant presented several market indicators to establish the new rent rates. These market indicators consist of:
a) evidence from another mobile home park called Cottonwood Village Retirement Division, which although allegedly inferior, charges comparable rates of rent;
b) evidence that the Defendant charged comparable rates of rent on 25 new leases granted since 2002;
c) evidence that assignments of leases consented to by the Defendant contained an acknowledgement by the assignee of the new rates of rents;
d) a new appraisal from an independent appraiser setting the rates of rent at $338 for full lots and $220 for half lots; and
e) a letter from an appraiser engaged by Public Works in connection with a review of the fair market rent of the Head Lease which comments on general market conditions and would seem to validate their proposed increases.
[17] Besides relying on the decision of Mr. Justice Blanchard, the Plaintiffs make two additional arguments in respect of irreparable harm:
a) some of the Plaintiffs have so little income that they cannot afford the increase and may have to give up their home; and
b) termination of the lease and removal of the mobile home will force them to incur one-time removal costs that they will never recover.
[18] Both points have no relevance in terms of determining fair market value. It may be the unfortunate result of a rent adjustment, but such results do not constitute irreparable harm in terms of RJR-MacDonald, supra. The purpose of a rent adjustment clause is to reflect market values, not to establish equitable rates of rent.
[19] The sublease in clause 2.1 provides for an adjustment of rents every four years and adopts, by way of reference, clause 4.8 of the Head Lease which provides a mechanism to resolve disputes. About 75 of the subtenants have invoked the dispute clause. By implication, the other half have accepted the new rates of rent and consider them non objectionable. Nothing has been adduced to suggest that they are excessive or totally unreasonable.
[20] The evidence adduced by the Defendant could, if upheld, justify the new rates. On the other hand, if Plaintiffs are successful and a court orders a reduction in the rent increases imposed by the Defendant, the provisions of clause 4.10 of the Head Lease will provide release. It provides:
4.10 Upon a decision of the Federal Court of Canada, or of any Court having appellate jurisdiction therefrom being rendered any adjustment in the amount of annual rent required by the Court shall be paid forthwith by the respective Party.
[21] Thus, any potential overpayment will be refunded to the Plaintiffs.
[22] In light of the foregoing, I find that a case for irreparable harm has not been established. Any temporary harm caused by potentially excessive rent increases will be cured by the provisions of clause 4.10 of the Head Lease. Accordingly, this application cannot succeed.
ORDER
THIS COURT ORDERS that this application is dismissed, with costs in favour of the Defendant.
(Sgd.) "K. von Finckenstein"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1134-04
STYLE OF CAUSE: TED AIRD et al.
- and -
COUNTRY PARK VILLAGE PROPERTIES (MAINLAND) LTD.
PLACE OF HEARING: Vancouver, BC
DATE OF HEARING: April 25, 2005
REASONS FOR ORDER AND ORDER: von FINCKENSTEIN J.
DATED: April 26, 2005
APPEARANCES:
Mr. Ian D. MacKinnon for Plaintiffs
Mr. George E.H. Cadman, Q.C. for Defendant
SOLICITORS OF RECORD:
Robertson Downe & Mullally for Plaintiffs
Abbotsford, BC
Boughton Peterson Yang Anderson for Defendant
Vancouver, BC