Aird v. Country Park Village Properties (Mainland) Ltd., 2004 FC 551

Date: 20040413

Docket: T-1849-01

Citation: 2004 FC 551

BETWEEN:

TED AIRD, VIVIEN AIRD, GLENN ALSIP, SHIRLEY ALSIP, SHIRLEY BEATTIE, AL BOSSERT, ROGER BOYCE, PAT BOYCE, JIM COLLINS, OLIVE COLLINS, REG COOPER, PAT COOPER, BILL DAVIES, JESSIE DAVIES, ED DAVIES, ELANIE DAVIES, TONY DAVIS, JACKIE DAVIS, WILLARD EDWARDS, ETHNA EDWARDS, PATRICIA ELLIOT, ARCHIBALD ELLIS, KURT FENGLER, ANNA FENGLER, LARRY FENGLER, RENATE FENGLER, TOM GLANCY, SHIRLEY GLANCY, JOE GRZYB, DORLES GRYZB, JOHN GUILIANA, BRITT GUILIANA, ED HOLMES, ETHEL HOLMES, HELEN HOLZWORTH, HERB HOLZWORTH, KATHY HRISHUK, MIKE HRISHUK, PETER JOHNER, HELEN JOHNER, ERNIE KAHLER, HILDA KAHLER, RON BACON, Executor of the Estate of JOSEPH KOVACS, GERRY McCARTHY, MARILYN McCARTHY, RON McCOMB, ROSE McCOMB, PETR MEISTER, INGRID MEISTER, WAYNE MITCHEL, TRUDIE MITCHEL, DIANE MOORE, JOHN MOORE, JOHN MORSE, CATHERINE MORSE, ROY NEFF, DAISY NEFF, JOAN OLLIFFE, JOHN OSTENDORF, NELLIE OSTENDORF, NORMAN PARKER, ROXIE PARKER, KEN PATTERSON, JEFFREY PUNSHON, DOREEN PUNSHON, ELAINE EBY, DOROTHY REID, ED ROGOZINSKY, DELORES ROGOZINSKY, DEREK ROLPH, BETTE ROLPH, DAVID SCHELLENBERG, JOHN SNYDERS, JANNIE SNYDERS, RUDY SNYDERS, JOHN SONNEVELDT, WILLIE SONNEVELDT, TOM SPANN, IRMA SPANN, HARLYN SPROULE, FAYE SPROULE, HENRY 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, BUD THOMPSON, MARJORIE THOMPSON, JOHANNA AUBERTIN, GORDON SIDDONS, ROSEMARY SIDDONS, RUSS GRILLS, DIANE GRILLS, BILL MILLER, GERRY MILLER, DEBORAH INNES, ARLESS MISFELDT, JANET MISFELDT, STANLEY BAXTER and GRACE BALES,

                                                                                                                                            Plaintiffs,

                                                                         - and -

                       COUNTRY PARTY VILLAGE PROPERTY (MAINLAND) LTD.,

                                                                                                                                          Defendant.

                                                    REASONS FOR JUDGMENT

LAYDEN-STEVENSON J.

[1]                More than half of the residents in Country Park Village are disgruntled. They are the plaintiffs and, on various dates between 1994 and 2000, they entered into either subleases or assignments of subleases with the defendant, Country Park Village Properties (Mainland) Ltd. (CPV). Throughout this action, CPV is represented by its officer and director, Mr. Norman William Eden. The dispute arose when Mr. Eden notified the subtenants of a rental increase effective March 1, 2000. The ensuing controversy precipitated examinations, investigations, actions, reactions and accusations that culminated in a situation where the parties regarded each other with mutual distrust and disdain. And so it was at the time of trial. The only things that the parties were agreed upon were the issues between them.

BACKGROUND

[2]                Country Park Village (Country Park) is a residential park consisting of modular, manufactured or stick built (built on site) homes located at 45918 Knight Road, south of the Trans Canada Highway and east of Vedder Road in the Sardis area of Chilliwack, British Columbia, in what is known as the Fraser Valley. It is situated on lands that are part of Skowkale Indian Reserve in the lawful possession (under a certificate of possession pursuant to section 20 of the Indian Act, R.S.C. 1985, c. I-5) of Robert Sepass, a member of the Skowkale Band. Mr. Sepass applied to the Minister of Indian Affairs and Northern Development (the Minister) for the lands to be leased. The Minister consented and, pursuant to subsection 58(3) of the Indian Act, a commercial lease between Her Majesty the Queen in Right of Canada, as represented by the Minister of Indian Affairs and Northern Development, and Knight Road Developments was executed on February 5, 1992, and registered in the Indian Lands Register on February 12, 1992, as Number 137805. The lease is for a period of 44 years and is some 55 pages long. Paragraph 13.1 defines the use of the lands and provides as follows:

The Lessee will not use the Premises or permit or suffer them to be used for any purpose other than for the construction, operation, and maintenance of a residential development consisting entirely of single family manufactured homes and for ancillary purposes ordinarily associated with such a development. All improvements necessarily required for the aforesaid uses are herein referred to as "Permitted Improvements". No more than 96 manufactured homes may be placed on the lands.

[3]                A Modification Agreement dated October 15, 1992, provided for, among other things, an expansion of the use to provide for the addition of a recreation centre and a recreational vehicle storage area. The lease was assigned by Knight Road Estates Ltd. to CPV on October 29, 1992, and registered in the Indian Lands Register on March 5, 1993, as Number 211988. Between April, 1993, and May, 2001, further modifications provided for, among other things, an increase in the number of permitted home units, an extension of the term of the lease (from expiration on February 29, 2036, to expiration on February 28, 2041) and the addition of duplex home units.    All modifications were registered in the Indian Lands Register.

[4]                CPV, a company incorporated under the laws of British Columbia in 1992, has its head office therein at Victoria. It operated a number of "Country Park" modular home parks on Vancouver Island and was looking to expand. The assignment of the above-noted lease constitutes the result (or one of the results) of its expansion efforts. At the time of its acquisition of the lease, the lands consisted of open field. There was no infrastructure. CPV was both developer and builder with respect to the Chilliwack Country Park. When the park was completed, it consisted of 120 units (some of which were duplexes), a recreation centre and a recreational vehicle storage area.

[5]                The head lease set the annual rent payable by CPV at $19,200 for the first year (March 1, 1992, to February 28, 1993), $37,920 for the second year and $66,000 for the third and fourth years. Thereafter, it provided for rent review every four years with the review date being March 1^st. There is an alternative provision for payment of 25% of gross rental income. In 1996, CPV paid $66,000; in 1997, it paid $69,000; in 1998 and 1999, it paid $84,500. With respect to the four year period commencing on March 1, 2000, the Minister determined (after a Public Works Canada appraisal) that the annual head lease rent would be set at $102,000. CPV took exception to the proposed rent and settled on (having obtained the consent of Mr. Sepass, the locatee) annual rent in the amount of $84,500 for the years 2000 and 2001 and $97,241 for the years 2002 and 2003.

[6]                The development was completed in phases. Because Country Park was on reserve land, CPV executed a Development Servicing Agreement with the District of Chilliwack for the provision of water and sewage services on August 24, 1993. The first homes were ready for occupancy by early 1994. Purchasers entered into a contract of purchase, sale and lease and then a sublease with CPV. CPV used the same sublease throughout (changes were minor and inconsequential), therefore all plaintiffs have the "same" sublease. At first, CPV used a standard purchase sale and lease agreement. When realtors became involved in the sale of the homes, at least four different forms of purchase and sale agreements were used, depending on the particular realtor.

[7]                The sublease between CPV and the residents of Country Park , specifically article 2, provides for rent to be paid by the subtenants. Article 2 will be examined in further detail later in these reasons. For now, suffice it to say that the fair market rent (payable by the subtenants to CPV) is also reviewed every four years commencing March 1, 1996.

[8]                The plaintiffs entered into their subleases with CPV at various times between April 30, 1994, and October 1, 1999. Some of them acquired their interest directly from CPV, while others acquired their interest by way of assignment from others with CPV's consent. Until 1997, subtenants paid CPV a fixed amount of basic rent plus additional rent. The latter constituted the subtenant's share of actual costs, including a 20% management fee to CPV. After 1997, CPV charged an all inclusive amount for rent, referred to as "gross rent". Those plaintiffs who acquired their interests directly from CPV after March, 1997, have never paid rent that distinguishes between basic and additional rent.

[9]                Until March 1, 2000, CPV charged monthly rent as follows:

1994-1995                $185.00 basic rent + $78.00 additional rent

1995-1996                $187.96 basic rent + $78.00 additional rent

1996-1997                $206.76 basic rent + $78.00 additional rent

1997-1998                $287.61 gross rent

1998-1999                $287.61 gross rent for full-size units                                                 $150.00 gross rent for duplex units

1999-2000                $287.61 gross rent for full-size units                                                 $150.00 gross rent for duplex units

By correspondence dated February 1, 2000, CPV advised its subtenants that the new rent for the four year period beginning March 1, 2000, would be $400.00 per month for full-size units and $300.00 per month for duplex units. As of that review date, there were 41 years remaining on the lease. The plaintiffs took exception to the quantum.

[10]            Following the March 1^st increase, the plaintiffs attempted to resolve the dispute through mediation, the Residential Tenancy Office, arbitration and in the Supreme Court of British Columbia. All were without jurisdiction. The action in this court was commenced on October 16, 2001, pursuant to subsection 17(3) of the Federal Courts Act, R.S.C. 1985, c. F-7, as amended. Interlocutory relief was obtained on December 4, 2001 (varied in part by Order dated June 13, 2002) permitting the plaintiffs to pay the rent that they were paying prior to March 1, 2000, pending the hearing of this matter.

[11]            Country Park's recreational vehicle storage area covers an area equivalent to four full-size units. From the outset, CPV provided the subtenants with free RV storage for their recreational vehicles, subject to availability. Availability does not appear to have been a problem at any time. However, following the above-noted order of December 4, 2001, the subtenants who are plaintiffs in this action were notified that they would henceforth be charged $450 per year for RV storage because they were "not paying Fair Market Rent as set March 1, 2000...".

ISSUES

[12]            The issues for determination are as follows:

(a)        What is the appropriate Fair Market Rent for the four year period commencing March 1, 2000;

(b)        Is CPV required to account for additional rent overcharge;

(c)        Is CPV required to provide RV storage free of charge and, if so, to whom.

PRELIMINARY MATTERS

[13]            At the outset of the trial, counsel advised that plaintiffs Nell Doornbosch, Bernie Morris, Pat Radbourne, Lynne Reynan and Alan McLean were not proceeding with their actions. The plaintiff, Sophie Honch, had previously discontinued. Accordingly, with the consent of the defendant, the names of those plaintiffs who had discontinued their actions were ordered removed from the style of cause.

EVIDENCE

[14]            I do not propose to review all of the evidence. The plaintiffs called thirty-four witnesses. Of those, twenty-seven were plaintiffs, one was a plaintiff's spouse, two were officers from the Department of Indian and Northern Affairs, two were real estate agents and one, Mr. Danny Ronald Grant, provided expert opinion evidence with respect to the issue of fair market rent. Additionally, six plaintiffs, unable to attend due to medical infirmity, with the consent of the defendant, provided evidence by way of affidavit. The defendant called four witnesses: Mr. Eden; Avis Houlden, a real estate agent; Mr. Howard Kevin Mark Langdon, C.A., the accountant for CPV; and Mr. Brian Edward McConnell, an expert witness in relation to the issue of fair market rent. I will refer to the relevant evidence of the various witnesses when analyzing each of the issues.

[15]            Overall, the documentary evidence was in a sorry state. The head lease as well as 1994, 1997 and 1998 subleases, representative of those executed by the various plaintiffs, were provided. No sublease was entered with respect to a duplex unit. Other documents were either incomplete or evidently not available. Some plaintiffs had their contracts of purchase, sale and lease while others did not. Most were eventually able to provide copies of their statements of adjustments. In one instance, there were discrepancies between the vendor's and the purchaser's statements of adjustments. The defendant relied heavily on a Second Amended Disclosure Statement dated October 11, 1995, but did not provide the previous statements. Exhibit 5 to the tendered document provided the budget estimate for 1993-1994 rather than one for 1995-1996. Exhibit J-2 contained 130 documents in three volumes, but in no particular order. Attachments and enclosures that accompanied particular documents were located in different volumes for no apparent reason. Little guidance was provided regarding the extent to which the parties relied on the various documents. Exhibits in J-2 contained material not specifically referred to at any time during the testimony.

[16]            I will comment, at this point, on portions of the evidence of several plaintiffs to the effect that they did not review the provisions of the sublease and did not see the head lease. To the extent that this evidence conflicts with the specific provisions of the sublease signed by the various plaintiffs, I have accorded no weight to the evidence. In this respect I refer particularly to Articles 15.09, 15.010, 15.011 and 16.01, which provide as follows:

15.09        The Subtenant acknowledges having read and understood a copy of the Head Lease.

15.010      Notwithstanding anything herein contained, this Sublease shall be expressly subject and subordinate to the Head Lease and to the right of Her Majesty thereunder and shall terminate upon termination of the Head Lease.

15.011      The Subtenant agrees to comply with and be bound by all the applicable terms, covenants, conditions, provisos and agreements of the Head Lease. In the event of conflict between the provisions of the Head Lease and this Sublease, the provisions of the Head Lease shall govern.

16.01        In accordance with the provisions of Article 8.01(f) of the Head Lease, this Sublease must be registered in the Indian Lands Registry upon the following conditions: ...

[17]            Similarly, I have given no weight to the evidence implying that those plaintiffs who attended the law firm recommended by the defendant received poor legal advice. I accept the evidence of Mr. Eden that he inquired of local real estate agents regarding the identity of lawyers who were familiar with head leases and subleases in relation to First Nations lands. I also accept his evidence that although he recommended that the plaintiffs retain the services of a particular law firm, they were under no obligation to follow the recommendation. Indeed, there were plaintiffs who took their business elsewhere. CPV had its own counsel separate and apart from that of the various plaintiffs. I assume, for purposes of this proceeding, that each of the plaintiffs received independent legal advice. If they did not, this is not the proper forum for adjudication of that issue.   

THE SUBLEASE

[18]            As noted previously, all subtenants signed the same sublease. I have chosen to rely on the 1998 sublease in evidence. Nothing turns on the choice of this particular document other than the fact that its execution was nearer the March 1, 2000 review date than the 1994 and 1997 documents. A discussion of the issues, of necessity, requires examination of the pertinent provisions of the sublease. Articles 2 and 3 are of particular significance and are therefore reproduced in their entirety:

ARTICLE 2. RENTAL

2.01          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:

(a)            For the period commencing on the Commencement Date and ending on the 29^th day of February, 1996 (the "First Lease Period") Basic Rent shall be the aggregate of the amounts determined in accordance with sub-paragraphs (i) and (ii) below:

                i.              Rent of $2,220.00 payable in equal monthly instalments of $185.00 payable in advance on the first day of each month commencing on the 1^st day of August, 1994 up to and including the 1^st day of February, 1996; and

ii.             The product of the annual rent set for the immediately preceding Lease Year multiplied by the annual average percentage increase, if any, in the Consumer Price Index which shall have occurred during the immediately preceding calendar year calculated in the manner set out in sub-paragraph 2.1(d) (the "Annual Cola Increase"). The Annual Cola Increase shall commence with the payment due the 1^st day of March, 1995.

(b)           For the period commencing the 1^st day of March, 1996 and ending the 27^th day of February, 2041, Rent shall be payable in advance on the first day of each month, and for each Lease Year commencing the 1^st day of March, 1996 to the 27^th 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 1^st day of March, 1996 and ending on the 27^th 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 knowledgable (sic) lessor would rent the Leased Premises in the free and open commercial market to a willing and knowledgable (sic) 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.

(d)           The annual average percentage change in the Consumer Price Index for the preceding calendar year shall be calculated using the Annual Average Consumer Price Index as follows:

           (Current Period Index - Previous Period Index)                                                                                        (Previous Period Index)           x 100

Example:

                                For the Lease Year commencing October 1, 1994, the percentage increase, if any, in the Consumer Price Index for the immediately preceding calendar year will be calculated as:

(Annual Average                        )        (Annual Average                          )                                      (Consumer Price Index Number)       (Consumer Price Index Number )                                      (for the calendar year ending      )       (for the calendar year ending        )                                      (December 31, 1993                    )       (December 31, 1992 )          x 100                                      (                              Annual Average Consumer Price                             )                                      (                 Index for calendar year ending December 31, 1992              )

(e)            The "Annual Average Consumer Price Index" means the Housing Component of the Annual Average Consumer Price Index for Victoria, British Columbia, which is published for each year in the December publication of Statistics Canada Catalogue 62-001. If Statistics Canada changes the base year (now December 1984 = 100) of the Consumer Price Index during the Term of this Sublease, ten subsequent calculations made pursuant to Article 2.01 of this Sublease will be computed using the Annual Average Consumer Price Index which is based upon the new base year. PROVIDED, in the event Statistics Canada cease publication of such index for Victoria, the comparable index for Vancouver shall be substituted therefore.

(f)            The Sublandlord shall endeavour to determine and notify the Subtenant of the Fair Market Rent at least 60 days before the respective Lease Year commences, but may make such determination and notify the Subtenant at any time within 60 days after the respective Lease Year commences; PROVIDED HOWEVER that in the absence of or pending such determination and notice, the Subtenant shall continue to pay annual Rent in the same amount and in the same manner as in the last Lease Year of the Term.

(g)            If notice of the Fair Market Rent is given after the respective Lease Year commences, and the Fair Market Rent is greater than the annual Rent for the last Lease Year of the Term, then the Subtenant will pay the deficiency in annual Rent for the respective Lease Year within 30 days after such notice is given.

(h)           "Rent" means the Basic Rent and the Additional Rent payable hereunder;

(i)            "Lease Year" means each successive twelve month period during the Term commencing on the 1^st day of March.

2.02          Place of Payment - Rent will be paid to the Sublandlord at 3471 Short Street, Victoria, British Columbia, V8X 2V6, or at any other place the Sublandlord may designate in writing.

2.03         Subtenant May Contest Tax Assessment - The Subtenant may contest by appropriate legal proceedings the amount and validity of any taxes or other assessments levied or imposed by any competent authority, any part of which is directly or indirectly payable by the Subtenant under this Sublease, including taxes payable in respect of the Leased Premises, on providing to the Sublandlord security satisfactory to the Sublandlord for that portion of those taxes directly or indirectly payable by the Subtenant. On the Subtenant's request the Sublandlord will join in and support any such proceedings if necessary, but the Sublandlord will not pay any expense nor be subject to any liability in connection with those proceedings, and the Subtenant will indemnify and save harmless the Sublandlord from and against any such liability and expenses; provided the Sublandlord will not be obligated to join in any such proceedings until the Subtenant has provided security satisfactory to the Sublandlord for the Sublandlord's anticipated liability and expenses.

2.04         Net sublease - The Subtenant acknowledges and agrees that it is intended that this Sublease shall be a completely carefree net sublease for the Sublandlord, as applicable to the Leased Premises, and that the Sublandlord shall not be responsible during the term of the Sublease for any costs, charges, expenses and outlays of any nature whatsoever, in respect of the Leased Premises, save and except obligations of the Sublandlord set forth in Article 9 of this Agreement.

ARTICLE 3.    UTILITIES AND OTHER CHARGES

3.01         Subtenant Pays Utilities - The Subtenant will pay for its fuel, electricity, telephone and all taxes, licenses, rates and other charges levied or assessed in relation to the Leased Premises, or in respect of any fixtures, machinery, equipment or apparatus installed in the Leased Premises by the Subtenant, charged to the Sublandlord or the Subtenant.

3.02         Property Taxes and Other Charges - The Subtenant will pay when due and notified by the Sublandlord as Additional Rent,

i.              If the Leased Premises are assessed separately for property tax or other assessments, rate or other charges, such taxes, other assessments, rates of other charges relating to or unpaid in respect of the Leased Premises and its proportionate share of all taxes, including all charges for local improvements, water and sewer, assessments and other charges, rates, fire protection charges, duties, licence fees or levies of any kind or nature whatsoever which may be made, levied or imposed on the Lands, other than the Leased Premises and any part leased to any other subtenant, or upon the buildings, improvements, structures, fixtures, machinery and equipment ("Landlord's Improvements") from time to time situate in or on the Lands, or upon the Sublandlord or the Subtenant on account thereof during the Term. If the Leased Premises are not separately assessed for property tax, or other assessments, rates or other charges, the Subtenant shall pay when due as Additional Rent its proportionate share of all taxes, including all charges for local improvements, water and sewer, assessments and other charges, rates, fire protection charges, duties, licence fees or levies of any kind or nature whatsoever which may be made, levied or imposed on the Lands or upon the buildings, improvements, structures, fixtures, machinery and equipment from time to time situate in or on the Lands, or upon the Sublandlord or the Subtenant on account thereof during the Term (herein called the "property assessments"). The subtenant shall also pay when due as Additional Rent its proportionate share of all operating costs incurred by the Sublandlord with respect to the Lands and Landlord's Improvements and Leased Premises, and without limiting the generality of the foregoing, these shall include insurance, management fees, general maintenance and repair, garbage disposal, snow removal, electricity, water and sewer. The subtenant shall also pay, when due, its proportionate share of the cost of maintaining and repairing and insuring and operating the Recreation Centre situate on the Lands (herein called the "Recreation Centre"). Without limiting the generality of the foregoing, on the 1^st day of January during the Term the Subtenant shall pay to the Sublandlord the Subtenant's proportionate share of the annual assessments for sewer and water required to be made by the Sublandlord to the District of Chilliwack pursuant to the terms of a Development Servicing Agreement made the 24^th day of August, 1993;

ii.             The Sublandlord will estimate the Subtenant's proportionate share of such amount prior to the commencement of the Term for the period from the Commencement Date to the 31^st day of December immediately following the Commencement Date and thereafter for every calendar year thereafter during the Term prior to November 30^th in each year of the Term and the Subtenant will pay to the Sublandlord the subtenant's proportionate share of the amount so estimated in equal monthly instalments in advance on the 1^st day of each month during each Lease Year of the Term. Within 60 days after the 1^st day of January the Sublandlord will make a final determination of the Subtenant's proportionate share of the amount due for the preceding calendar year, or portion of the calendar year as the case may be, and will furnish to the Subtenant in writing a statement of such amount. If the Subtenant's proportionate share of the amount exceeds the aggregate of the instalments paid by the Subtenant during the preceding calendar year or portion thereof, as the case may be, then the Subtenant will pay to the Sublandlord within thirty (30) days after the date of delivery of the statement, the excess. If the sum of the monthly instalments paid by the Subtenant during the preceding calendar year or portion thereof, as the case may be, exceeds the Subtenant's proportionate share of the amount the Sublandlord will return to the Subtenant within thirty (30) days after the date of the delivery of the Statement, such excess. The "Subtenant's proportionate share" means a fraction the numerator being 1 and the denominator being the number of Lots into which the Lands are divided for sublease by the Sublandlord;

iii.            The Sublandlord may upon written notice delivered to the Subtenant allocate the Additional Rent between operating costs and other assessments and may direct the Subtenant to pay all or any part of the Additional Rent to a management company to be retained by the Sublandlord; and

iv.            In addition to the foregoing, the Subtenant shall pay to the Sublandlord when notified by the Sublandlord an administration and accounting fee equal to twenty (20%) per cent of the amounts due pursuant to the provisions of paragraph 3.1(i) and (ii).

THE DETERMINATION OF FAIR MARKET RENT

[19]            The determination of the appropriate fair market rent for the four year period commencing March 1, 2000, involves subsidiary issues. The first question is whether the term "fair market rent" refers to "basic" rent or "gross" rent.

Basic Rent or Gross Rent

[20]            When the first plaintiffs occupied the lots at Country Park, they were charged basic rent and additional rent. The latter constituted, in simplistic terms, the subtenant's share of common area and maintenance costs and a management fee. Property taxes on the leased lot were paid independently and individual water and sewage charges were paid to the District of Chilliwack through CPV.

[21]            Mr. Eden described the basic and additional rent combined as a "gross" rent. He testified that in 1997 the CPV directors decided that the rent would no longer be broken down into components. Rather, CPV would charge a gross monthly rent. The rationale behind the decision was threefold: basic rent and additional rent added together are a gross rent; the competitors in the Victoria and Vancouver markets charged rents for mobile and modular home parks on a gross basis; and "rent" in the sublease was defined as the basic rent and the additional rent payable. Mr. Eden described it thus: "Effective 1997 ... we took it upon ourselves to read and define the sublease and the head lease as a gross lease, and that's the way we treated it".

[22]            CPV maintains that discrepancies existing in the documentation (post 1996 subleases describe a monthly rent of $187.60 when duplex lot leases were $150 gross and full-size lot leases were higher than $187.60) illustrate that no one insisted on strict compliance with the sublease terms. It also maintains that the assessment of rent on a gross basis (post 1997) was based on industry practice, on CPV's interpretation of the sublease and is not contrary to the terms of the sublease. The defendant points to the fact that the majority of the plaintiffs purchased houses at Country Park after CPV adopted the gross rent model. It is said that this raises an inference that, at that time, the setting out of gross rents was acceptable to those plaintiffs. I note that beyond this general, non-specific statement neither evidence, nor argument, was advanced with respect to notions of acquiescence, waiver or estoppel.

[23]            CPV provides a list of twenty-three plaintiffs and contends that the statements of adjustments for those plaintiffs reveal that rent is described as gross rent. I do not find the defendant's list helpful. Nine of the transactions relate to duplex lots and for those the rent in the contracts of purchase, sale and lease (when it appears) and in the statements of adjustments is a gross amount. There is no suggestion that the subleases contain similar references and I cannot make that determination because no subleases regarding the duplex lots were tendered as evidence. Of the remaining fourteen transactions, only three of the statements provide for a gross amount (Bales, Boyd, Churchill). In the case of Bossert, the rent in the purchaser's statement of adjustments is broken down into components while the vendor's statement provides for a gross amount. The statements of adjustments for the remainder of the transactions on the defendant's list do not reference a gross rent. Moreover, there are an additional twenty-nine statements of adjustments (P-20) where the rent is broken down and of those, seventeen post-date March, 1997. CPV also relies heavily on the definition provided in article 2.02(h):

"Rent" means the Basic Rent and the Additional Rent payable hereunder.

[24]            I do not subscribe to the position taken by CPV. While it may be industry practice to charge gross rents in modular home parks, the relationship between these parties is governed by the provisions of the sublease, to the extent that those provisions are not inconsistent with the head lease. The Supreme Court of Canada has repeatedly instructed that matters of interpretation are to be approached in a contextual manner. Thus, in construing article 2(h) and the term "fair market rent", regard must be had to the entire sublease, particularly articles 2 and 3 reproduced earlier.

[25]            In my view, the word "rent" as it is used in article 2.01(a) and (b) and the term "fair market rent" as it is used in article 2.01(b) refer to the calculation of basic rent. The introductory clause of article 2.01 sets out the parameters for paragraphs (a) and (b) and provides for the payment, by the subtenant, of "Basic Rent as follows ..." Paragraph 2.01(a) details the payments to and including February 29, 1996, and provides for an annual Cola increase. The term "Basic Rent" and "Rent" are used interchangeably in paragraph (a). Paragraph 2.01(b) details the "Rent" payable for each of the four-year lease periods and provides for an annual Cola increase. In (b), the words "Rent" and "Fair Market Rent" are used interchangeably. Both (a) and (b), however, fall under the introductory phrase that specifies "Basic Rent as follows...".

[26]            Article 3.02 delineates the charges payable by the subtenant as "Additional Rent". Paragraph 3.02(i) reinforces and clarifies Article 2.04 regarding a "Net Sublease". If the CPV interpretation were adopted, paragraph 3.02(i) would serve no useful purpose. Paragraphs 3.02(ii), (iii) and (iv) further strengthen this position. While it is correct that CPV can itemize its actual costs at the end of each year, if the lot rent is gross, the subtenants are left not knowing what additional rent they paid and article 3.02(ii) would be meaningless.

[27]            There are further difficulties arising out of the defendant's interpretation. First, I see no justification for applying the Cola increase to actual costs when regard is had to the definition in paragraph 2.02(e) that refers only to the housing component of the annual average Consumer Price Index. Second, the subtenant is obligated under paragraph 3.02(iv) to pay a 20% administration and accounting fee. The fee is calculated as 20% of the amounts set out in 3.02(i) and (ii), i.e., the additional expenses. Third, article 12.01 envisions that overholding subtenants, upon expiration of the sublease, will be required to pay monthly rent equal to 120% of the monthly basic rent. Fourth, CPV, from the opening of Country Park in 1994 through to March, 1997, charged basic rent and additional rent, not a gross rent. It appears anomalous to have two distinctly different approaches arising from the same document.

[28]            Viewed contextually, the only reasonable interpretation of the definition of "rent" in paragraph 2.02(h) is that the word can refer to either basic rent or additional rent. In short, "rent" can be, and is, used interchangeably with both "basic" rent and "additional" rent within the sublease. A conjunctive interpretation whereby "rent" must include "basic" rent plus "additional" rent (when regard is had to the surrounding provisions) results in an absurdity. There is no dispute that the word "rent" and the term "fair market rent" are used interchangeably. Thus, when setting "fair market rent", CPV is setting or determining the "basic" rent. This is not inconsistent with the provisions of the headlease. While this result may not reflect industry practice, or be convenient, the sublease and the provisions contained therein dictate the relations between these parties.

[29]            The second question that arises is whether the rent established by CPV in 1996 was a fair market rent. Determination of this issue will impact on the appraisal evidence. However, for purposes of clarity and cohesiveness, I believe it is best dealt with at this juncture.

Was the 1996 Rent Fair Market Rent?

[30]            Mr. Eden testified that in 1995 or 1996, he contacted Burgess, Austin and Associates and requested a survey of modular home pad rentals in suburban parks. He received a fax transmission (Exhibit P-7, also found at J-2 Tab 124) that provided the information set out below. A handwritten notation "As of February, 1995" appears next to the title "Current Monthly Pad Rents".

Survey of Modular Home Pad Rentals in Suburban Parks

Park                          Current Monthly Pad Rents    Common Amenities

SUBJECT                                                                                                                        Laity Street/Lougheed Hwy            $255 to $270            No facilities                           Maple Ridge

Garibaldi Mobile Home Par(sic)         $305                       Minimal facilities                   12892 232^nd Avenue                                                                                                        Maple Ridge

9132 120^th Street                                  $305                        No facilities                            Surrey

Plaza Mobile Home Park                    $320                        No facilities                            8266 King George Hwy                                                                                                   Surrey

Crestway Bay                                     $488 to $510           Rec complex w/sauna, swirl Surrey                                                                                clubhouse                              

Crispen Bays                                       $350 to $498          Outdoor pool                           7790 King George Highway                                                                                            Surrey

Westvilla Estates                                 $385 to $491          Sauna, clubhouse, rec room    8560-156^th Street                                                                                                             Surrey

[31]            After reviewing the information and noting that the closer one gets to Vancouver the higher the rents, Mr. Eden met with the other members of the CPV board of directors. Mr. Eden described the result of the meeting as follows:

We thought about at one time setting the rents at the higher level of 370 to 380 in the park for 1996 but we decided as a marketing business decision was to leave the rents as they were and put a modest 10 percent increase on them. As we have done in our other parks give a lower, undermarket value for pad rents ... for that particular period. Because we know we can raise the rents every four years under the head lease. So we, as a business decision, decided that even though we realized that rents were undermarket, it was a benefit to us to market the park at those rates to create sales to lease up our park and get the revenue from the lots. And it was a business decision for that.

[32]            CPV refers to paragraph 2.01(f) of the sublease and notes that if the sublandlord does nothing at a review date, the rent continues at the existing rate. That, CPV says, does not necessarily mean that the rent is fair market rent. It submits that, "[i]t means that the landlord has simply chosen a rent, which results and made a business determination not to increase it". The defendant maintains that Mr. Eden's evidence stands uncontradicted and that "no evidence has been led by the plaintiffs to suggest that the 1996 rents were not set below market". I disagree.

[33]            There is a problem with the defendant's reasoning in relation to paragraph 2.01(f). The evidence indicates that in 1995-1996, the basic rent was $187.96 and additional rent was $78.00 for a total amount of $265.96 per month. In 1996-1997, the basic rent was $206.76 and additional rent was $78.00 for a total amount of $284.76. Paragraph 2.01(f) provides:

The Sublandlord shall endeavour to determine and notify the Subtenant of the Fair Market Rent at least 60 days before the respective Lease Year commences, but may make such determination and notify the subtenant at any time within 60 days after the respective Lease Year commences; PROVIDED HOWEVER that in the absence of or pending such determination and notice, the Subtenant shall continue to pay annual Rent in the same amount and in the same manner as in the last Lease Year of the Term.

Mr. Eden, in correspondence to the Country Park homeowners dated April 29, 1996, informed the subtenants that their rent would be adjusted and that CPV would be advising them of the new rate. By correspondence dated June 17, 1996, Mr. Eden notified the subtenants of a 10% increase in basic rent. He "waived [the] arrears for the increase for March, April, May and June, 1996" and requested payment of the increased amount commencing July 1, 1996 through February 1, 1997. Although CPV did not comply with the time limitation contained in paragraph 2.01(f), it did comply with the proviso. I fail to see how this aspect of the defendant's argument assists in determining whether the rent established in 1996 was fair market rent.

[34]            There is no question that Mr. Eden testified that the CPV directors made a business decision to set the 1996 rent below market value. However, his evidence as to when CPV moved to market rent was contradictory and confusing. At trial, he corrected some of his responses to questions from his examination for discovery. One of those corrections was regarding question 467. The question, on discovery, was: "The year you went to fair market rent, what was the year?" The answer, on discovery, was: "2000, which we interpret as a gross rent." At trial, Mr. Eden stated that his answer should have been year 1997. Similarly, when explaining the document entitled "Country Park Village Properties (Mainland) Ltd. Investment Illustration" (Exhibit J-2 Tab 72), Mr. Eden stated, "[W]e didn't go to fair market rent till 1997".

[35]            I have considerable difficulty reconciling that evidence. The sublease provides for rent review every four years commencing March 1, 1996. In 1996, basic rent was $206.76 and additional rent was $78.00 for a total amount of $284.76. In 1997, CPV converted to gross rent and charged $287.61. That represents an increase of $2.85 per month over the total paid in 1996. If the 1997 rent was fair market rent plus Cola, how can it be that the 1996 rent was not fair market rent?

[36]            Mr. Christopher Seabrook, a plaintiff, testified that prior to purchasing he discussed the issue of rent with Mr. Eden. He stated that he questioned Mr. Eden about the level at which the rent was set and about the prospective review. Mr. Seabrook's evidence was that Mr. Eden assured him that the rent level was accurate as of the last review and that in March, 2000, if there was an increase, "it would be absolute minimal and we wouldn't even notice it". Mr. Eden, when questioned in this respect, could not recall whether he had made the statements.

[37]            Mr. Grant, the plaintiffs' expert, testified that the 1996 rent would not have been out of line with fair market rent, based on the Burgess Austin survey, when the appropriate adjustments derived from the data contained in the McConnell report were applied.

[38]            The defendant does not suggest that any plaintiffs were informed that the 1996 rent was set below fair market. I am inclined to agree with the plaintiffs that such information is of the type that a responsible landlord or seller would have shared. The plaintiffs also maintain that Country Park did not sell out between 1996 and 2000 although similar developments did so during the same period. The suggested inference is that if the rent was indeed lower than fair market rent, the occupancy rate would have reflected that. While I understand the plaintiffs' position, because it leans more toward conjecture than inference I am not inclined to assign it much weight.

[39]            I do, however, assign significant weight to Mr. Eden's correspondence dated April 29 and June 17, 1996. The April 29^th correspondence reads:

In accordance with paragraph 2.01(b) of our sublease with you, please accept this as notice that we will be adjusting your rent to current fair market rent or by the cost of living.

We are currently discussing with the Department of Indian Affairs what the increase in fair market value for the head lease for the next four years will be. Once this is established, we will advise you as to what your new rate will be.

We are sorry we have not been able to provide you with the new rate prior to this. We will contact you shortly after further discussions with the Department.

[40]            The June 17^th correspondence states:

Further to our letter of April 29, 1996 regarding the adjustment of your rent at Country Park Village. We have reviewed comparible (sic) pad rent values by a Vancouver appraisal company. We will be holding your increase to 10% increase in accordance with paragraph 2.01(b) of your Sub-Lease. (emphasis added)

Paragraph 2.01(b) is the provision of the sublease that sets out fair market rent and provides for increases from March, 1996. There has been no suggestion that the Cola increase would or could be 10%.

[41]            Based on the evidence, in my view it is reasonable to conclude that in 1996, CPV set the rent at fair market rent and I reject Mr. Eden's evidence to the contrary. Plaintiffs who moved into Country Park before 1996 had every reason to believe that fair market rent would be charged as of March, 1996. The subleases indicated that such would be the case and the correspondence from Mr. Eden indicates that it was so. Plaintiffs who moved in after March, 1996, had no basis upon which to question the provisions of their subleases that provided for fair market rent to be charged as of March, 1996. At no time did CPV assert otherwise until the dispute with respect to the 2000 rent arose.

[42]            The third subsidiary issue relates to the manner in which CPV approached the billing of water and sewage charges. Resolution of this question, at this point, will be of assistance when I turn to the analysis of the appraisal evidence and the determination of fair market rent that follows it.

Water and Sewage Charges

[43]            The plaintiffs contend that CPV's calculations for water and sewage were improper. They argue that regard must be had to article 3.02 of the sublease to determine how those fees should be billed. Paragraph 3.02(i) provides that if the leased premises are not separately assessed, the subtenant shall pay, as additional rent, its proportionate share of water and sewer assessments. This, combined with the wording contained at the end of the paragraph - requiring the subtenant to pay to the sublandlord the proportionate share of the annual assessments (from the sublandlord to the District of Chilliwack) pursuant to the terms of the servicing agreement - means, according to the plaintiffs, that they must pay their proportionate share as the term is defined in the sublease. Thus, it is contended, CPV should divide its actual costs by 115 lots for the year 1995 and by 120 lots for the years 1998 onward.

[44]            The plaintiffs maintain that CPV has been simply dividing the estimated annual expenses by the number of occupied lots rather than the total number of lots. The defendant's position that it should bill the plaintiffs on a consumption basis in accordance with the servicing agreement is, in the plaintiffs' view, an incredibly strained interpretation of the wording of the sublease. The servicing agreement, they say, is between CPV and the District of Chilliwack and has nothing to do with them. Moreover, the servicing agreement does not dictate a method of individual billing in any event. If the clause is ambiguous, the plaintiffs urge that it be construed in their favour.

[45]            CPV maintains that both Mr. Eden and Mr. Langdon confirmed that subtenants were charged water and sewage fees based on consumption by developed lots. CPV simply collected the fees and remitted them directly to the District of Chilliwack. At the end and beginning of each calendar year, the cost estimates for water and sewage charges were adjusted and subtenants were provided either rebates or invoices for higher than expected costs, consistent with the actual billing by the District. The defendant maintains that its dealings in this respect were entirely correct, particularly when regard is had to article 2.04 (providing for a completely carefree net sublease for the sublandlord) and article 3.01 (providing for the subtenant to pay for all fuel, electricity, telephone and all taxes, licenses, rates and other charges levied or assessed in relation to the leased premises.)

[46]            The defendant refers to the servicing agreement and submits that it dictates charges based upon usage. Therefore, logically and legally, it follows that it is only those lots in Country Park with houses constructed on them that should properly be assessed a proportionate share of water and sewage charges. CPV argues that the interpretation urged by the plaintiff would create a situation where CPV would, until such time as the development was fully occupied, bear a disproportionate and unfair burden for water and sewage charges. That interpretation, it is contended, would clearly contradict the provisions of article 2.04 and the intention that the sublease is to be a completely carefree net sublease for the sublandlord.

[47]            It is clear that the District of Chilliwack annually estimates the water and sewage charges for the forthcoming year, based on billings from the previous year, and invoices the sublandlord. At the end of the calendar year, the District adjusts to reflect the actual amount payable. Paragraph 6.02(b) of the servicing agreement reveals that both estimated and actual costs are usage based. It is also clear, from the evidence, that CPV regarded the collection and remittance of water and sewage fees as a pass through arrangement.

[48]            The dispute arises from the wording contained in paragraph 3.02(ii) of the sublease wherein it states:

[...] The "subtenant's proportionate share" means a fraction the numerator being l and the denominator being the number of lots into which the lands are divided for sublease by the sublandlord ...

[49]            The plaintiffs refer to the head lease, as modified, and to the survey plan to support their argument that the proportionate share should be 1/115 for 1995 and 1/120 for the years thereafter.

[50]            In my view, the plaintiffs' position cannot be sustained. The servicing agreement was executed before any subtenants signed agreements of purchase sale and lease and before any of the plaintiffs moved to Country Park. The sublease specifically references the servicing agreement and provides for water and sewage charges to be paid pursuant to the terms of the latter. To construe the meaning of "proportionate share" in the manner urged by the plaintiffs requires the reading in of the words "approved for division" rather than the words "are divided for sublease".

[51]            The head lease and the survey plan allow for 120 lots. Neither impose a requirement that all 120 lots be developed at the outset. Rather, the head lease specifically contemplates (article 23) that the development will be completed in stages in accordance with the development plan. In this case, the development was to be completed in phases. Moreover, the head lease was twice modified to increase the number of lots to be developed.

[52]            The interpretation advanced by the plaintiffs would result in a substantial portion of the water and sewage use of the subtenants being funded by the defendant. In essence, the plaintiffs seek a subsidy constituting payment of a large proportion of their water and sewage usage. Such a benefit cannot be derived from the noted provisions of the sublease or from the sublease provisions as a whole.

[53]            While there may exist a theoretical distinction between serviced lots and occupied lots, in reality a serviced lot with capped services will not result in use. Nor (except perhaps in a trivial measure) will an unoccupied home result in use. To distinguish on this basis requires an inquiry into minutia that is not warranted. Insofar as the show home is concerned, the defendant must incur the water and sewage fees in that respect and my understanding of the evidence is that CPV accepts that such is the case.

[54]            Thus, I conclude that the method whereby the defendant collected the water and sewage fees and paid them over to the District of Chilliwack was not improper, as alleged by the plaintiffs. I turn now to the appraisals and the issue of the determination of the fair market rent.

The Appraisals

The plaintiffs

[55]            Mr. Danny R. Grant, P. Ag., was qualified to provide opinion evidence with respect to real estate appraisal. He is an agrologist and has extensive appraisal experience in both the geographic location of the subject property and in dealing with appraisal issues in similar circumstances. His appraisal report includes: photographs; area and neighbourhood data including charts, graphs, and maps; a detailed description of the property including reference to the sublease, head lease and a listing of lease and physical conditions affecting value; the valuations; and a summary with conclusions. His estimates of fair market rent are for base or basic rent.

[56]            It was Mr. Grant's opinion that a number of impediments precluded the achievement of the fullest rent that might be expected from the long-term fee simple rent for each of the lots in Country Park. These included: no control over the head lease by the sublessees; no protection of the sublessees from default on the head lease by the head lessee; the mixing of duplexes and single-family building types; the restrictive rules attached to the sublease; the lack of a real estate agent employed on a continuing basis by the park; the manner of charging rent employed by the operator; the failure of management to report annually regarding actual expenses; the quantum of the management fee; the failure to differentiate between duplex and full units for common area and maintenance fees; the lack of provision for rent review challenges except through the Federal Court; the acts of management involving legal threats and the like; management's position regarding removal of homes; the lands being those of a locatee on a First Nations reserve; the pre-payment by subtenants for improvements; the use of a Cola increase for Victoria that does not have CPI shelter components similar to Chilliwack; the lack of provincial legislative protection governing tenancies; the subtenants' lack of familiarity and receipt of advice regarding the head lease and its amendments, and the obligation of subtenants to sign leases containing inaccurate rents. Such uncertainties, according to Mr. Grant, would make it difficult to find a purchaser buying under terms that reflect the definition of market rental value.

[57]            Mr. Grant identified the highest and best use of the property as residential lots. He found the Country Park sublease to be unique and difficult. Because he felt there were not many reliable comparables, Mr. Grant used a number of different methods to assess the fair market rent.

[58]            First, he employed an indexing approach and used two methods. Base rent derived from application of the shelter index from the Victoria CPI for the closest available time to review date indicated a 2.7% drop from 1996. The rent on this index resulted in rent of $209.61 less 2.7% or $203.95. Next, he indexed local conditions by applying the average unit price of the Chilliwack Real Estate Board rents settled within four years of the date of review and determined that base rent would range from $195.77 to $207.72, approximately $200.00 per month.

[59]            The second method used was direct comparison with comparable developments. Mr. Grant looked at nineteen comparables. None were the same. Some were modular or stick-built, but most were primarily mobile parks. Some were prepaid leases, some were prepaid land improvements and some were rentals. Mr. Grant proceeded on the basis that the subtenants at Country Park had prepaid all improvements to their lots and determined that the only true comparable was the rental of a bare, unimproved lot. He then applied adjustments for area, operating expenses and RV parking. Viewing a range from $180 to almost $250 per month and finding no preferred comparable and considering the possibility of a negotiable competitive range, he concluded the appropriate base rent to be in the mid-range of about $215 per month.

[60]            Next, Mr. Grant looked at direct market comparisons through in-park comparisons with indexing, a task he found challenging. This process involved an analysis of the average unit prices of residential units as published by the Chilliwack Real Estate Board compared with the shelter index of the CPI for Victoria compared with sales and resales of same and similar units within the park. He found a general market decline of 5.3% and a Country Park specific loss of 21.3% greater than the market and concluded that no knowledgeable lessee would pay for improvements and rent a lot under the Country Park terms with the record of losses in value. Country Park exhibited significantly poorer performance than the general real estate market. It lost up to 42% of its value in the late 1990's while the general residential market lost 5%. It failed to respond in the recovery phase when the residential market in general increased over 12%. Mr. Grant concluded that, on the basis of in-park comparisons, to maintain the values paid less market decline, no rent could be charged.

[61]            The final approach employed was referred to as economic rent. In the case of a rental lot, it would be the amount required to attract the factors of production, including land and servicing costs and a profit margin, to creating lots. Mr. Grant viewed it as a helpful approach when market evidence of rental value is not plentiful. Proceeding on the basis that lot rent is estimated as though the lot was a fee-owned lot, leased from a manufactured home park and subject to the terms and conditions of the sublease, Mr. Grant analyzed the return to land. Combining the return on land and the return on all of the improvements, he concluded a rental range of $135 to $150 per month for full size lots.

The defendant

[62]            Mr. Brian E. McConnell, A.A.C.I., P.App., was qualified to provide opinion evidence with respect to the setting of rents for leasehold interests. Mr. McConnell has a designation from the Appraisal Institute of Canada and has considerable direct experience in this field. His initial report dated July 4, 2001, was amended on February 19, 2002, to reflect, among other things, the fact that property taxes levied on individual lots in Country Park are paid by sublessees, a factor that was not considered in his initial report. Mr. McConnell's report is entitled "Amended Summary Market Rent Appraisal Report On Sub-Lease (Pad) Rents At Country Park Village Modular Home Park". Although not as detailed and comprehensive as the Grant report, Mr. McConnell's report contained: a description of the site; photographs; background information; a statement of the purpose and function of the report; the scope of the investigation; additional data; and his market rent estimations.

[63]            Mr. McConnell proceeded on the basis that the quoted monthly rates in the market for modular or mobile home pad rents are typically the gross rates. His fair market estimates for the full size and duplex lots are the gross monthly rents adjusted downward for two factors specific to the development, the payment of property taxes and water and sewage charges by the sublessees. Mr. McConnell identified the highest and best use of the property to be modular home, mobile home, stick-built or duplex development.

[64]            Mr. McConnell adopted the direct comparison approach. He used two units in Country Park as well as five parks in Chilliwack and Langley for his comparables. One comparable (Forest Green in Langley) was a mixed modular home-mobile home development on a fee simple owned site. Another was a mixed mobile home-townhouse development in Chilliwack. The other three comparables were mobile home parks in Chilliwack.

[65]            In his report, Mr. McConnell considered that, with the exception of the two units in Country Park, the rates in the other parks applied to developments inferior to Country Park. He concluded that the monthly gross rent for a full size unit, excluding water and sewage charges was $405 per month. Adjusting that total downward to reflect property taxes of $13.24 per month, he determined the adjusted market gross rent per month for a full size lot to be $391.76 per month.

[66]            Mr. McConnell noted that historically the duplex rents were set at 47.9% below the full size lot rates. He further noted the historical rate was put in place by CPV to attract demand to the duplex modular home units. It was Mr. McConnell's opinion that side-by-side duplex units would typically rent at rates from 20 to 30 percent less than the rates for equivalent sized single family homes in equivalent locations. Using a 75% rating and adjusted for water and sewage fees, the duplex lots would have a market gross rent of $303.75 per month rounded to $305. Adjusting that total downward to reflect property taxes of $7.32 per month, he determined the adjusted market gross rent per month for a duplex lot to be $297.68.

[67]            Thus, Mr. McConnell concluded the fair market gross rent for a full size lot at Country Park would be $391.76 and for a duplex lot it would be $297.68. These rents included common area costs that were reported to Mr. McConnell by CPV as $35.38 for 1999, $43.94 for 2000 and $50.68 for 2001.

[68]            Ms. Avis Houlden is a member of the Real Estate Institute of British Columbia and an employee of Fortin Appraisals Ltd. of Chilliwack. On January 24, 2000, at Mr. Eden's request, she inspected Country Park and undertook a brief survey of pad rents for mobile home parks throughout Chilliwack. The purpose of the review was to provide an estimate of market [lot] rent for the next four-year rental term within Country Park. Ms. Houlden was not qualified as an expert and, therefore, no reference will be made to her opinion regarding fair market rent. However, her observations regarding Country Park and the results of her survey of the Chilliwack mobile home parks are admissible.

[69]            Ms. Houlden considered Country Park to be a good quality, 120 pad modular home park. She described it as follows:

The park is developed with blacktopped on-site roadways complete with concrete curbing and ornamental street lighting, wood or wood and brick perimeter fencing and controlled entry gates. All servicing is in-ground. The layout incorporates extensive "green space", with numerous trees and shrubs and an in-ground sprinkler system.

A wood frame, one-storey clubhouse is located in the central area of the park, containing a meeting/games room with fireplace, a full kitchen, two 3-piece washrooms and two guest bedrooms. The yard area surrounding the clubhouse is extensively landscaped including a small pond with foot bridge and fountain, gazebo, visitor parking area, walkways and a putting green.

At the southeast corner of the park is a gravelled RV storage lot.

The individual pads are of above average size, each complete with a concrete-edged brick paver driveway, sodded yard area and planted shrubs and trees.

The units within the park are modular homes, rather than mobile homes, contemporary in design and typically very well-maintained.

[70]            The rental data regarding the mobile home parks that constitute the result of Ms. Houlden's survey are set out below.

Analysis of Fair Market Rent

[71]            There is jurisprudence that deals with leases of First Nations land. To my knowledge, there is none dealing with reserve lands in the possession of a locatee who consents to a head lease that is subsequently assigned and the assignee then enters into subleases with a number of subtenants. Even if such cases did exist, they would not, in all likelihood, be of assistance because lease provisions differ from one situation to the next and each case will ultimately turn on an interpretation of the particular lease in issue.

[72]            For ease of reference and convenience, the definition of fair market rent as delineated in paragraph 2.01(c) of the sublease is repeated here.

(c)            "Fair Market Rent" means, for any particular Four Year Period the amount of annual Rent for which a willing and knowledgable (sic) lessor would rent the Leased Premises in the free and open commercial market to a willing and knowledgable (sic) 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.

[73]            The parties expended considerable time and energy criticizing the approaches taken by their respective opposing appraisers. For reasons that will become apparent in short order, I do not intend to review all of these arguments in any detail.

[74]            I reserved two rulings regarding the admissibility of certain evidence. The first related to the defendant's objection to specific paragraphs of Mr. Grant's appraisal report on the ground that they constituted factual findings that were for the court to determine. I have concluded that the impugned paragraphs are admissible. Expert evidence on matters of fact should not be excluded simply because it suggests answers to issues that are at the core of the dispute before the court: R. v. Burns, [1994] 1 S.C.R. 656. The paragraphs in question constitute facts upon which Mr. Grant based his conclusions and are admissible for that purpose. It does not follow that those facts will be consistent with the facts as I find them.

[75]            The second reserved ruling related to objections by both counsel regarding questions put to Mr. Grant during his reply evidence. The objections of the defendant regarding the plaintiffs' counsel's questions to Mr. Grant regarding exhibits D33 and D34 and specifically clause 11.2 are well-founded. Mr. Grant was questioned in this respect during cross-examination earlier in the trial and it was open to counsel to canvass these areas on re-examination. Thus, the evidence does not constitute proper reply evidence. The defendant's objection regarding counsel's question to Mr. Grant with respect to the adverse effects of the Musqueam circumstances is also well-founded. This topic was thoroughly canvassed both in Mr. Grant's report and on direct examination and is therefore not proper reply evidence. The plaintiffs' objection to the defendant's questions relating to clause 11.2 is also well-founded. Since I have determined that the plaintiffs' questions in this respect were improper, it follows that no cross- examination arises.

[76]            Finally, the plaintiffs take exception to the defendant's citation, in its final submissions, of three cases wherein Mr. Grant provided appraisal evidence and his evidence was commented upon by the decision-maker. Of the three decisions, the defendant referred to only one when questioning Mr. Grant. The implication that arises from the tendering of these authorities by the defendant is that Mr. Grant's evidence should be viewed with skepticism. In my view, the defendant's reference in final submissions to authorities that might tend to impeach Mr. Grant's qualifications or credibility is improper. Cases that suggest, in the words of the defendant, that "Mr. Grant's reliance upon irrelevant or unsupported assumptions has been criticized by other Courts in the past" should not be considered when they were not put to him during the trial. Accordingly, I have not given any consideration to them.

[77]            As noted earlier, Mr. Grant used four approaches to determine the fair market rent. He did so because, in his opinion, the subject property was unique and there were not many reliable comparables. He did not, as the defendant has suggested, reject the direct comparison approach. Mr. McConnell, on the other hand, maintained that direct comparison was the appropriate and preferable approach because ample nearby market evidence was available.

[78]            I conclude that the direct comparison approach is the method that should be used, in these circumstances, to establish the fair market rent. For appraisal purposes, a direct comparison approach is to be preferred: Musqueam Indian Band v. Glass (1997), 137 F.T.R. 1 (T.D.), rev'd [1999] 2 F.C. 138, aff'd [2000] 2 S.C.R. 633. In Musqueam, the court resorted to the land residual method because fee simple values could not be used and no comparable land existed. That is not the situation here. The fair market rent in paragraph 2.01(c) is based on the assumption in subparagraph 2.01(c)(i) that the premises are owned in fee simple and are free of encumbrances. Mr. McConnell opined that direct comparison was the only appropriate method in the circumstances. Mr. Grant agreed that direct comparison was appropriate, provided that the necessary adjustments were made to reflect the differences between the comparables used. Mr. Grant offered a fair market rent estimate based on a direct comparison approach.

[79]            Unfortunately, this conclusion does not lead to immediate resolution of the issue because the experts, in their respective direct comparison approaches, have expressed divergent views as to the quantum of fair market rent. The discrepancies are not as real, however, as they might first appear. Neither appraisal is entirely satisfactory.

[80]            Mr. McConnell proceeded on two faulty assumptions. The first was that fair market rent is gross rent. For reasons provided earlier herein, I have determined that fair market rent means basic rent. The defendant noted that, in the event that I should reach such a conclusion, the basic rent could nonetheless be extracted from Mr. McConnell's report by reference to the common area expenses referred to at page 16 of his amended report.

[81]            The second assumption was that the 1996 rent was set below market rent. Again, for the reasons provided earlier herein, I have determined that is not the case. In this respect, Mr. McConnell was relying on the representations made to him by Mr. Eden. I have concluded that Mr. Eden's position in this respect must be rejected. Mr. McConnell, on cross-examination, acknowledged that if the 1996 rents were fair market, it would affect his estimate. He did not elaborate on the extent to which the estimate would be affected.

[82]            Mr. Grant proceeded on the basis that the fair market rent is basic rent and in this respect cannot be faulted. The adjustments he applied related to location, operating costs, return on land improvement and RV parking. These, or some of them, were related to the eighteen impediments to achieving the "fullest rent at the subject site" summarized in my synopsis of Mr. Grant's report earlier in these reasons. Most, if not all, of those impediments relate to terms and conditions of the sublease.

[83]            The definition contained in paragraph 2.01(c) dictates the parameters for the determination of fair market rent. It does not refer to the terms and conditions of the sublease. I regard it as settled law that, in the absence of language to the contrary, lease conditions are not to be considered in determining fair market value or fair market rent: Musqueam, supra; St. Martin v. Canada (Ministry of Indian Affairs and Northern Development) (2001), 273 N.R. 134 (F.C.A.). I am not persuaded by the plaintiffs' arguments that, by implication, the definition in paragraph 2.01(c) includes consideration of the terms of the sublease. Thus, downward adjustments made by Mr. Grant in this respect were inappropriate. For reasons that will be discussed later herein under the title RV Storage, I also conclude that Mr. Grant inappropriately adjusted downward with respect to RV parking.

[84]            The most strenuously contested issue was that which Mr. Grant referred to as "prepaid improvements". Without going into unnecessary detail, as I understand it, Mr. Grant took the position that the subtenants, when purchasing their homes, prepaid for lot improvements, specifically the cost of the foundation, driveway, drain tiles, landscaping and any extras. In estimating the fair market rent, Mr. Grant assumed that the defendant had provided the infrastructure with services to the curb. To the extent that the subtenant's improvements were not excluded from the determination of fair market rent, he said that they ought to have been.

[85]            With all due respect to both counsel, I believe that attention has been directed unnecessarily to the use of the words "prepaid improvements". Although Mr. McConnell had some difficulty in not differentiating between the concrete driveways in the comparables and the interlocking brick driveways in Country Park, his evidence was clear that he excluded the home when estimating the fair market rent. Included in his concept of "home" were the items paid for by the subtenants in relation to the home - the foundation, driveway, drain tiles, landscaping and any extras. In the end, it is a matter of characterization or semantics. As I view it, both appraisers have excluded the subtenants' improvements when estimating the fair market rent.

[86]            The only true debate is whether the services provided by CPV extended to the curb or to the centre of the lot. There was confusion regarding this issue and the documents do not support Mr. Eden's evidence in this regard. However, neither expert suggested that this factor was of such significance that it would affect his rent determinations.

[87]            I do not accept Mr. Grant's suggestion, based on the documents, that the subtenants prepaid a portion of the lease. I accept the evidence of Mr. Eden and Mr. Langdon that the segregation of the "long term lease" and assignment of a value to it in the early contracts of purchase, sale and lease constituted a method of reducing the GST for the purchasers. The defendant derived no benefit and eventually discontinued the practice because the administrative difficulties outweighed any sales benefits created by it. Similarly, the documents at exhibit J-2, Tab 25 (partly repeated at J-2, Tab 64) do not support the allegation that the subtenants prepaid a portion of the subleases. While the cover letter may have created the impression that the leased lot was for purchase, the enclosed cost estimates page indicated that the $25,000 was broken down into two costs - improvements to the double-wide lot (landscaping, hookups, driveway, etc) of approximately $16,305 and the price of moving a double-wide modular home in the approximate amount of $8,900.

[88]            Turning to the question of comparables, Mr. Grant took the position that mobile home parks, without significant adjustment, were not appropriate comparables to Country Park for a variety of reasons. These, summarily stated, were that the subtenants at Country Park had the benefit of a long-term lease and had prepaid for the improvements on their pad (lot) sites. More specifically, Mr. Grant stated that in the mobile home park, the owner of the park pays for these improvements up front and then recovers the costs in the monthly rent from the mobile home tenant. Rents should therefore be higher at the mobile home park because the landlord must, as part of the rent, collect the cost of improvements whereas, at Country Park, rent should be lower because the subtenants have paid for their improvements and are leasing a bare lot.

[89]            Mr. McConnell did not agree with Mr. Grant and felt that mobile home parks did provide a proper comparable. I note that the June Ogden report, prepared for the Department of Public Works, referred to both in Mr. Grant's report and on his cross examination, used mobile home parks as comparables. Similarly, from a real estate perspective, Ms. Houlden viewed the two types of parks as comparables. Assuming that Mr. Grant is correct and that an adjustment is required, I find that his failure to apply a positive adjustment for the amenities in Country Park, aptly described by Ms. Houlden in her survey, offsets the negative adjustments made in relation to this factor.

[90]            Regarding Mr. McConnell's use of in-park comparables, Mr. Grant's position that subtenants, who outlay significantly less money for the purchase of the home (because of reduction in prices), would be prepared to spend more on rent makes sense to me. However, I need not make any determination in this regard. There are five comparables common to both reports. I consider that Forest Green Park is the best comparable. Both appraisers used it as a comparable, had visited it, and commented on it extensively at trial. It is a combination mobile-modular home park located in Langley. It is being converted to modular homes as mobile home sites become vacant. Mr. McConnell considered it to be a highly relevant comparable and I agree.

[91]            Again, however, the evidence is somewhat contradictory. Mr. McConnell reported monthly pad or lot rents from $440 to $500 while Mr. Grant reported them at $445 to $485. Mr. Grant's oral evidence was more specific than that of Mr. McConnell and he was very definite that, based on the 2000 rent roll, the range of rents for modular lots ran from $475 to $485, for one that was extraordinarily large. The only other evidence was the documentation tendered through Mr. McConnell and obtained by him directly from Forest Green management, just before trial. That documentation indicated a rent of $482 for a modular home as of the end of February, 2000. I consider this to be in line with Mr. Grant's evidence and I accept $482 as being the gross rent applicable to a modular home lot at Forest Green.

[92]            Mr. McConnell, after allowing an adjustment for the fact that subtenants paid for water and sewage charges, determined that the fair market rental rate for a Country Park lot was $405 per month. He considered that amount to be slightly below the Forest Green rates. In his oral evidence, Mr. McConnell did not dispute that a location adjustment was appropriate, but he did not provide a specific adjustment.

[93]            In relation to the water and sewage charges, Mr. McConnell's report referred to water and sewage fees of $23.89 per month. It is not clear where this amount came from nor was its source discussed during his oral evidence. With all due respect to Mr. McConnell, this seemingly small matter provides an illustration of the unsatisfactory state of the evidence. While the defendant's method of billing for water and sewage was proper, I am totally in the dark regarding the actual (and accurate) amount of the monthly fee in this regard. Mr. Langdon's evidence, specifically exhibits D23 and D24, calculated quarterly amounts that result in totals of approximately $22.80 per month. The Fortin report referred to $29.41 per month for the same expense. Mr. Grant used $25.00 per month in his calculations, and Mr. Seabrook's totals, exhibit J2 Tab 80, flush out at $24.87 per month. The 1999 statements of adjustments (review date was March 1, 2000) indicated that water and sewage charges were $32.16 per month. At best, I have a range within which the water and sewage fees lie.

[94]            After determining the monthly rate of $405, Mr. McConnell adjusted further downward to reflect the subtenants' obligation to pay (independently) the property taxes on their lots. In this respect, he rightly considered the lot taxes, exclusive of those in relation to the home. However, in so doing, he used the net taxes after application of the homeowner grant. I am not satisfied with his explanation for having done so. Mr. McConnell agreed that the tenants at Forest Green would, in the payment of their expenses, pay the gross taxes in relation to the land. His efforts to rationalize his net taxes approach, by stating that he was dealing with a gross rent, were both unconvincing and unimpressive. The homeowner grant applies to the residence, not the land, and I see no justification for treating the subtenants in Country Park differently than those in Forest Green, particularly in circumstances where Mr. McConnell strenuously insisted that the parks were very much alike. The 1999 statements of adjustments provided an amount of $25.57 for both full and duplex units. Whether that amount is accurate for lot property taxes at the review date remains a mystery to me.

[95]            Mr. McConnell did refer to the common area expenses and presented them in his report as they were presented to him. I will have more to say about the common area costs when I deal with the issue of additional expenses. It is not necessary, for purposes of my analysis, to precisely determine the amount. The parties have indicated that they do not expect me to complete mathematical calculations provided that I determine the basis upon which they can perform the necessary computations. Given the noted discrepancies and uncertainties in the evidence, precise determination is a difficult task. Thus, as requested, I have provided the factual findings upon which the precise calculations can be determined.

[96]            As noted previously, Mr. McConnell did not apply a specific location adjustment (to account for the difference between Chilliwack and Langley in proximity to Vancouver) although he did not dispute that such an adjustment could be made. In this respect, I accept Mr. Grant's evidence that it is common sense and a matter of indisputable statistics over a long period of time that prices go up in accordance with movement toward a major metropolitan area. The evidence I have with respect to location adjustment is the 38% used by Mr. Grant, based on data with respect to sales of single family residences, and the CMHC rental data attached to Mr. McConnell's report indicating a 25% adjustment. In the absence of better evidence, I choose the mid-point between the two as the applicable location adjustment and conclude that a location adjustment of 31.5% should be applied.

[97]            The Forest Green rent of $482 provides the starting point and to that a 31.5% location adjustment should be deducted. Further downward adjustments must be made for property taxes, water and sewage and common area costs (in accordance with my findings in relation to these matters). The basic rent should fall somewhere in the range of $230 to $240 per month, depending on the actual common area costs. This result is obtained by working with the estimate contained in Mr. McConnell's report after making the adjustments that ought to be made in accordance with my findings.

[98]            I note that a remarkably similar result occurs when regard is had to D33 where the Forest Green rent is broken down into base rent of $360 per month and maintenance charges of $122 per month. Applying the location adjustment to the Forest Green base rent results in a basic rent for Country Park in the amount of $236.69 per month. Reference to Mr. Grant's fair market rent estimate based on the direct comparison approach reveals a fair market (basic) rent of $215. However, if the RV parking deduction (about which I will have more to say later in these reasons) of $25 is added back in, the result is $240.

[99]            As stated earlier, the discrepancies between the appraisals are not as real as they might first appear. In the result, I conclude that the fair market rent, i.e. basic rent, is between $230 and $240 per month for a full size lot depending upon the calculations for adjustments downward (based on accurate amounts in accordance with the findings contained in these reasons) and the actual amounts of the additional or common area costs. I accept the evidence of Mr. McConnell that the duplex lot rentals would be 75% of the full lot rentals. Thus, the fair market monthly rental for a duplex lot will likely be between $172.50 and $180.00 depending, again, upon the actual additional or common area costs.

THE ADDITIONAL RENT

[100]        The conclusion that fair market rent is basic rent necessitates a determination regarding additional rent or (when property taxes and water and sewage fees are excluded), common area and maintenance expenses. At the outset of the trial, the parties provided their respective accountings as to what these costs were. The discrepancy between the calculations, at that point, can aptly be described as astronomical.

[101]        During the trial, as the evidence unfolded, it became apparent to me that a significant portion of the discrepancy was the product of misunderstanding and miscommunication. As a result, when counsel were addressing the issue of additional rent in their final oral submissions, I suggested that they engage in further discussions and endeavour to reconcile the misunderstandings and correct the miscommunications. I also informed them that until such time as the reasons for judgment and judgment issued, it was not too late to resolve outstanding issues. Additional rent (involving basic accounting for delineated expenses over a number of years) constituted, in my view, an example of a dispute more amenable to resolution by the parties than to adjudication by the court. Counsel undertook to engage in the suggested discussions.

[102]        When the final written submissions were received, the plaintiffs' counsel advised that the parties had reduced the disputed amounts to $20,000 and that further common ground might be found. On April 2, 2004, counsel for the parties, by separate correspondence, informed the court that they had reached an agreement on the accounting issues with respect to the common costs for the years 1995 through 2002. The only outstanding question to enable them to achieve final resolution of the issue is the determination of the appropriate number of sites for the years in question.

[103]        I commend counsel for their persistence and endeavours in this regard and thank them for the prompt notification of the result of their efforts.

[104]        Regarding the outstanding question - the total number of sites - the plaintiffs advance and rely on their submissions regarding the meaning to be attached to the phrase "subtenant's proportionate share" in paragraph 3.02(ii) of the sublease. That argument has been summarized earlier under the title Water and Sewage Charges and need not be repeated here.

[105]        My reasoning in relation to the water and sewage issue applies equally to the issue of common area expenses with one caveat. I determined, because of the servicing agreement, that the water and sewage fees were usage-based charges. That is not so with respect to common area expenses. The difference, for the common area expenses, is that occupancy of the serviced lots is irrelevant. In short, the proportionate share of common area expenses relates not to occupied lots, but to serviced lots. It does not, however, relate to the total number of lots approved for development.

[106]        A hypothetical example illustrates the manner in which the proportionate share, for common area expenses, is determined. If there are 48 serviced lots and 30 of those lots are occupied, the proportionate share of common expenses is 1/48. The defendant CPV must assume responsibility for the common area expenses for the 18 lots that are developed, but not yet occupied. That is the risk that developers must bear when their developments are ready for occupancy, but not yet occupied. That risk cannot fall at the feet of the County Park subtenants who have already moved in.

[107]        Conversely, those same subtenants cannot reap the fruits of an unjust benefit by pointing to the approved number of lots and say that their share of common area expenses should be calculated as 1/110 or 1/120 because eventually that is what will exist. The developer, in that case, would bear a disproportionate burden.

[108]        The common area expenses are incurred with respect to the areas that are developed or serviced. They are not incurred in relation to yet undeveloped areas. Thus, the proportionate share of the common area expenses is the numerator 1 over "the denominator of the number of lots into which the lands are divided for sublease (emphasis added), that is, the number of serviced (not approved) lots.

[109]        One further matter requires attention because it was not referred to in the April 2, 2004 correspondence. I will address this issue in the event that failure to do so would lead to confusion or uncertainty. It relates to the interpretation of paragraph 3.02(ii) of the sublease, the relevant portion of which is reproduced here for ease of reference.

[...] Within 60 days after the 1^st day of January, the Sublandlord will make a final determination of the Subtenant's proportionate share of the amount due for the preceding calendar year, or portion of the calendar year as the case may be, and will furnish to the Subtenant in writing a statement of such amount. If the Subtenant's proportionate share of the amount exceeds the aggregate of the installments paid by the Subtenant during the preceding calendar year or portion thereof, as the case may be, then the Subtenant will pay to the Sublandlord within 30 days after the date of delivery of the statement, the excess. If the sum, of the monthly installments paid by the Subtenant during the preceding calendar year or portion thereof, as the case may be, exceeds the subtenant's proportionate share of the amount the Sublandlord will return to the Subtenant within 30 days after the date of the delivery of the statement, such excess ...

[110]        I note the defendant's submissions that there is a distinction between the obligation of CPV to account and the obligation of the subtenants to pay. I also appreciate that, at the end of the day, whether the plaintiffs pay rent on a gross basis or a basic rent plus additional rent basis, the result may be the same.

[111]        However, as earlier stated, the relationship between the plaintiffs and the defendant is dictated by the sublease and the provisions contained therein. The sublease was prepared at the behest of the defendant. I have concluded that fair market rent is basic rent and have done so on the basis of a contextual analysis. That said, it is incumbent upon the defendant to account annually, as mandated by paragraph 3.02(ii) of its sublease, regarding the charges enumerated in paragraph 3.02(i) therein.

RECREATIONAL VEHICLE STORAGE

[112]        A considerable amount of time was devoted to this issue during the trial. I intend to dispose of it more summarily. Briefly stated, various plaintiffs testified that they were either told by Mr. Eden or saw newspaper ads or promotional brochures that Country Park offered free RV parking. Two plaintiffs have contracts that specifically provide for RV storage.

[113]        Not all plaintiffs owned recreational vehicles and some of those who did sold them before the rental dispute with the defendant arose. The plaintiffs who owned recreational vehicles parked them in the RV storage area at Country Park free of charge until April, 2002. On April 29, 2002, Mr. Eden wrote to those plaintiffs in the following terms:

As you are aware, recreational vehicle storage has been provided to you previously free of charge as a service. As you are not paying Fair Market Rent as set March 1, 2000, and you have additional rent outstanding, we must cease this service.

We are not prepared to absorb the recreational vehicle storage costs any further. Effective May 1, 2002 you will be charged $450.00 per annum, for recreational vehicle storage.

Please remit full payment in the amount of $450.00 by May 15, 2002. Should you choose not to use our RV Storage, please remove your recreational vehicle from our property by May 31, 2002. If no payment is made by that date, we will arrange to have your recreational vehicle removed at your expense.

[114]        The reference to "additional rent outstanding" arises as a result of the plaintiffs having obtained interlocutory relief from this court. Only plaintiffs to this action received the above-referenced notice. Other subtenants (who are not plaintiffs) continued to park their recreational vehicles in the Country Park RV storage area free of charge. I regard Mr. Eden's action in this respect as an attempt to circumvent the order of this court and find his attitude most unimpressive.

[115]        At the trial, Mr. Eden admitted, apparently for the first time, that he had guaranteed the Country Park subtenants free RV parking, subject to availability. There is no evidence to suggest that availability has been, or will be, a problem.

[116]        Excluding those whose contracts provide for RV parking, the plaintiffs' position is that each of them is entitled to a space in the RV storage area irrespective of ownership of a recreational vehicle. To support their position, they say that there exists a collateral contract that is valid and binding. They further rely on past conduct.

[117]        The defendant maintains that any provision of free RV storage by it, to the plaintiffs, is an unenforceable collateral contract. Relying on the agreements of purchase, sale and lease, CPV says that each contains an "entire agreement" clause that provides "there are no representations, warranties, guarantees, promises or agreements other than those set out above". Similar wording is found in the industry standard form agreements. There is no provision in these agreements for RV parking. Since all but two of the plaintiffs signed agreements containing such a provision, the defendant is entitled to rely on them because the wording of the clause is plain and unambiguous. CPV takes the position that "if the court determines that the assessment and setting of fair market rent as of March 1, 2000 by Country Park Village was appropriate and if all arrears are paid, each tenant who paid RV storage will be credited for that payment as against their individual arrears".

[118]        I am inclined to think that the concept of unilateral contract better suits the circumstances than collateral contract. However, in my view, it is unnecessary to refer to either of these notions. Rather, I turn to the provisions of the head lease and the sublease to resolve this issue.

[119]        Article 23.6 of the head lease restricts a lessee to carrying out only such work as is provided in the development plan and of which the Minister approves. Article 13 of the head lease, "Use of Premises", defines the purpose for which the lands may be used. The primary purpose is for the construction, operation, and maintenance of a residential development consisting entirely of manufactured homes. Ancillary purposes ordinarily associated with such a development are also permitted.

[120]        The first modification agreement, registered on March 5, 1993, effective October 15, 1992, included as "ancillary purposes" a recreation centre and a recreational storage area. These additions do not form part of a property that consists "entirely of manufactured homes". They form part of the property developed for ancillary purposes much the same as the pond with foot bridge and fountain, the gazebo, the visitor parking area, the walkway and the putting green described by Ms. Houlden. The recreation centre and recreational storage area form part of the common area.

[121]        Article 5.01 of the sublease requires the subtenant to use or occupy the leased premises or any part thereof only for residential use and only in compliance with the rules and regulations attached as Schedule "C". Schedule "C", paragraph 1(m), prohibits the parking of recreational vehicles except in compounds for that purpose designated by the sublandlord. Article 15.07 of the sublease mandates that each obligation of the sublandlord or subtenant expressed therein, even though not expressed as a covenant, is considered to be a covenant for all purposes.

[122]        The covenants of the sublandlord are delineated in article 9 of the sublease. Article 9.01 provides:

If the Subtenant pays the Rent hereby reserved and performs the covenants herein the Subtenant shall and may peaceably possess and enjoy the Leased Premises and the right in common with other subtenants and the Sublandlord's invitees to use the common areas of the Lands for the Term hereby granted without any interruption or disturbance from the Sublandlord or any other person or persons lawfully claiming by, from or under the Sublandlord, except as herein provided. (emphasis added)

[123]        In my view, article 9.01 is dispositive. CPV must provide access to the RV storage area to its subtenants and it must do so without extra charge. That does not mean, however, that there is a space available in the compound for all subtenants without limitation. It is reasonable to imply from the contract that to obtain a recreational vehicle space the subtenant must possess a recreational vehicle.

[124]        Regarding those plaintiffs who allegedly sold their recreational vehicles or parked them elsewhere as a result of Mr. Eden's imposition of a parking fee, insufficient evidence has been adduced to establish those allegations. Sweeping, generalized statements such as "I sold it because I couldn't afford to keep it" or "I couldn't afford to park it there", without more, will not suffice. Some degree of specificity is required. One plaintiff testified that she paid more to park her RV elsewhere than she would have paid to park it in the Country Park compound. That plaintiff made a choice that was hers to make and she must bear the consequences of having made it.

[125]        I am not prepared to extend my finding beyond what I have already stated. CPV is obliged to provide those subtenants who have recreational vehicles and are not in default in their rent with parking in the RV storage area without extra charge. I hasten to add that subtenants, pursuant to an order of this court and pending the outcome of litigation, paying less than what Mr. Eden considers to be fair market rent are not in default.

CONCLUSION

[126]        That disposes of the issues. In summary, my conclusions are as follows:

1.         The term "fair market rent" in the sublease between the parties refers to basic rent.

2.         The rent set by the defendant in 1996 was fair market rent.

3.         The defendant's method for the collection of water and sewage fees is not improper.

4.         The fair market rent, as at March 1, 2000, for a full size lot is between $230 and $240 per month, depending upon the calculations for adjustments downward, based on accurate amounts in accordance with the findings contained in these reasons, and the actual amounts of the additional or common area costs.

5.         The fair market rent, as at March 1, 2000, for a duplex lot is between $172.50 and $180.00 per month, depending upon the actual additional or common area costs.

6.         The defendant is required to account annually in accordance with paragraph 3.02(ii) of the sublease regarding the charges enumerated in paragraph 3.02(i).

7.         The defendant is obliged to provide those subtenants who have recreational vehicles and are not in default in their rent with parking in the recreational vehicle storage area without extra charge.

[127]        Returning to the pleadings, the plaintiffs will have a declaration, under separate order, regarding the conclusions noted above as numbers 1, 4, 5, 6 and 7.

[128]        While success has been somewhat divided, the plaintiffs have prevailed on most issues. Counsel are encouraged to endeavour to resolve the issue of costs by agreement. Absent resolution, counsel are to serve and file written submissions within 60 days of the date of judgment. Responses to those submissions are to be served and filed within 10 days of service of the first submissions, or within 70 days of the date of judgment, at the election of counsel. I remain seised of this matter with respect to the determination of the issue of costs.

__________________________________

     Judge

Ottawa, Ontario

April 13, 2004

                                     FEDERAL COURT

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  T-1849-01

STYLE OF CAUSE: Ted Aird et al. v. Country Park Village Properties

(Mainland) Ltd.

PLACE OF HEARING:                                 Vancouver, British Columbia

DATE OF HEARING:                                   January 27, 2004 to February 12, 2004

FINAL WRITTEN

SUBMISSIONS:       February 19, 2004

PLAINTIFFS' REPLY

SUBMISSIONS:       February 24, 2004

FURTHER WRITTEN

SUBMISSIONS:       April 2, 2004

REASONS FOR JUDGMENT :                  The Honourable Madam Justice Layden-Stevenson

DATED:                     April 13, 2004

APPEARANCES:

Mr. Ian D. MacKinnon                                                  FOR PLAINTIFFS

Ms. Bianca Scheirer

Mr. George E.H. Cadman, Q.C.                                    FOR DEFENDANT

Mr. John Mostowich

SOLICITORS OF RECORD:

Robertson, Downe & Mullally

Abbotsford, British Columbia                                         FOR PLAINTIFFS

Boughton, Peterson, Yang, Anderson

Vancouver, British Columbia                                          FOR DEFENDANT