Aird v. Country Park Village Properties (Mainland) Ltd., 2001 FCT 1305

Date: 20011203

Docket: T-1849-01

Neutral citation: 2001 FCT 1305

BETWEEN:

                                                                                                                                                        Plaintiffs

                                                                                 and

                                                                                                                                                     Defendant

                                              REASONS FOR ORDER AND ORDER

BLANCHARD J.

[1]                  The Plaintiffs by way of motion seek the following relief:

(1)                 An Order for a Reference to a Judge or other person designated by the Chief Justice, pursuant to Rule 153 of the Federal Rules of Court, referring the assessment of:

i)           "Fair Market Rent" as at March 1, 2000, for all of the Sub-Leases to a Judge or other person designated by the Chief Justice;

ii)          The appropriate amounts of "Additional Rent" for the period 1997 to date for all of the Sub-Leases.

(2)                 An Injunction prohibiting the Defendant from terminating any of the Sub-Leases pending the above-noted Reference.

[2]                  The proper test for making an order to sever the trial and order a reference was dealt with in Depuy (Canada) Ltd. et al. v. Joint Medical Products Corp. et al. (1996), 67 C.P.R. (3d) 145 (F.C.A.). At page 146 of his Reasons, Mr. Justice Hugessen stated:

2           ...The proper test was stated by Jackett C.J. in Brouwer Turf Equipment Ltd. v. A and M Sod Supply Ltd. [[1977] 1 F.C. 51]

______What is clear, in my view, is that, as the learned Trial Judge has indicated, the general principle is that the plaintiff must make out the whole of his case in the first instance;__and, in the absence of consent or of "reasons bearing on the conduct of the action as a whole", Rule 480 should not be invoked to set that principle aside.

[emphasis added]

3___ __             The comments of Urie J.A. in Abramsky et al v. Canada[(1985), 60 N.R. 6] are likewise instructive:

______To make or not to make an Order under the Rule at any given time, is the exercise of a judicial discretion. Fundamental to that exercise is the opinion of the Judge before whom the application for the Order is brought that for the efficient use of the parties' and court's time and to endeavour to minimize expense in the action, it is desirable that the issues of liability should be dealt with first and the issue of damages be dealt with later, if liability is found to lie with the defendant.

[emphasis added]

[3]                  In the underlying action, the Plaintiffs essentially seek to have the "Fair Market Rent" as per the Sub-Leases assessed. The issues proposed for determination by reference are essentially the same issues raised in the underlying action. The assessment at issue in this instance calls for legal interpretation of the provisions of the Head Lease and Sub-Leases by a Judge. The Plaintiffs have yet to file their appraisal. Cross-examinations have not been conducted. Necessary steps required in the case, which have yet to be completed, are provided for under the Court rules applicable to actions. The same essential steps would be required to be completed if the assessment were conducted by reference. I fail to be convinced that a reference would minimize expense in the action or be a more efficient use of the parties' and Court's time. I am of the view that the circumstances of this case do not warrant the exercise of my discretion and the ordering of a reference pursuant to rule 153 of the Federal Court Rules, 1998. I see no reason to deviate from the general rule that the plaintiff must make out the case in the first instance. The motion for an Order for a reference pursuant to rule 153 will be denied.

[4]                  The remaining issue involves an Order for an interlocutory injunction prohibiting the Defendant from terminating any of the Sub-Leases pending assessment of the "Fair Market Rent" as at March 1, 2000, by this Court.

[5]                  In RJR-Macdonald Inc. v. Canada (Attorney-General) (1994), 111 D.L.R. (4^th) 385 (S.C.C.), the Supreme Court of Canada adopted the three-stage test for courts to apply when considering an application for an interlocutory injunction. Citing the test already articulated in Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110, the court stated at page 400 of the its decision:

First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

[6]                  In determining whether there is a serious issue to be tried, the court must be satisfied that the application is neither vexatious nor frivolous. The threshold is generally considered to be a low one. The Supreme Court in RJR-Macdonald (supra), held that a detailed examination of the merits is neither required nor desirable in such an interlocutory proceeding. The Supreme Court held however that there were two exceptions to the general rule, namely:

(1)                 "... when the right which the applicant seeks to protect can only be exercised immediately or not at all,

(2)                 or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial."

[7]                  I am satisfied that the case at bar does not fall within the exceptions contemplated by Supreme Court. The grant or refusal of the injunction will not practically put an end to action. "Fair Market Rent" must still be assessed to resolve the dispute.

[8]                  The disputed "Fair Market Rent" would have certain plaintiffs see their rent increase by 100% (in the case of the owners of half size pads). The Plaintiffs allege that the determination of "Fair Market Rent" by the Defendant is improper, since it is based on a flawed appraisal. The Plaintiffs argue that the appraisal was not conducted in a manner consistent with the terms of the Head Lease and Sub-Leases. Specifically the Plaintiffs contend:

(a)        the real estate market is down substantially;

(b)        property assessments for tax purposes are going down;

(c)         the appraisal includes taxes when the pad owners pay their own taxes;

(d)        the appraisal was done on a "gross basis" including "Additional Rent" when the Sub-Lease provides that only basic rent is to be reviewed every four years; and

(e)        contrary to the terms of the Sub-Lease, the appraisal applies the Cola Clause to common area costs.

The Plaintiffs further contend that oral representations were made by the Defendant to the effect that Fair Market Rent would only increase if land values in Chilliwack area increased, and that these representations form an integral part of the Sub-Leases.

[9]                  The Defendant argues that it fully complied with the Terms and Conditions of the Head Lease and the Sub-Leases; that proper notices of the increases were given the Plaintiffs; that the Plaintiffs acknowledged having read and understood a copy of the Head Lease; that pursuant to provision of the standard sub-lease, the Plaintiffs are estopped from maintaining this proceeding since rent is outstanding. The Defendant further contends that the Plaintiffs' delay in seeking relief justifies the dismissal of this motion. The Defendant argues that it is entitled to the assessed increase which is totally consistent with the contractual terms of the Head Lease and Sub-lease. Essentially the Defendant's position is that to issue the injunction would be tantamount to assisting contractual default.

[10]            It is not for a judge on such an interlocutory motion to conduct a comprehensive assessment on the merits of the arguments of the parties. I am, however, satisfied that the application is neither vexatious nor frivolous. I am satisfied that on the application of the first branch of the tripartite test articulated in RJR-Macdonald, supra, that there is a serious issue to be tried.

[11]            In RJR-Macdonald the Supreme Court described irreparable harm as follows:

"Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other.

Should the Defendant carry through with its threat and issue notices of default to terminate any of the Sub-Leases, the Plaintiffs could be evicted from their homes. I am satisfied this would amount to irreparable harm as contemplated in the above-cited test.

[12]            Finally, the third branch of the above tripartite test requires that I determine "... which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits" (Metropolitan Stores, supra, at page 334). I am satisfied on the record before me, that the Plaintiffs stand to suffer the greater harm should this injunction not be granted. The Defendant will be in a position to recover any deficiency in rent should it be successful in the underlying action. The Plaintiffs even if they succeed on the action will be out of their home, if Sub-Leases are terminated, with little likelihood of being able to return. I conclude that the balance of convenience favours the Plaintiffs.

[13]            Having carefully reviewed the record, and having heard counsel for the parties, I am satisfied that the Plaintiffs have met the tripartite test set out in RJR-Macdonald, supra, and that the granting of the injunction is just and equitable in all the circumstances of the case.

[14]            I will therefore in the exercise of my discretion grant the injunction.

ORDER

[15]            This Court orders that:

(1)                 An injunction issue prohibiting the Defendant from terminating any of the Sub-Leases pending the assessment of the "Fair Market Rent" by this Court as at March1, 2000, conditional upon the Plaintiffs, severally, paying their monthly rent to the Defendant on the due date, at the same level or rate as rent payable on February 29, 2000.

(2)                 Should any one of the Plaintiffs fail to make their monthly rent, as provided for in subparagraph 15(a) above, the Defendant, on 72 hours notice to the defaulting Plaintiff, may apply to this Court to have the injunction lifted against the said Plaintiff.

(3)                 The motion in all other respects is dismissed.

(4)                 There will be no costs on this motion.

(Sgd.) "Edmond P. Blanchard"

                                                                                                              Judge

                                                   FEDERAL COURT OF CANADA

                                                                    TRIAL DIVISION

                             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:                      November 26, 2001

REASONS FOR ORDER OF THE COURT BY: Blanchard J.

DATED:                                               December 3, 2001

APPEARANCES:                          

Ian D. MacKinnon                                                                        FOR PLAINTIFFS

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

SOLICITORS OF RECORD:

Robertson, Downe & Mullally                                                   FOR PLAINTIFFS

Vancouver, British Columbia

Boughton Peterson Yang Anderson                                      FOR DEFENDANT

Vancouver, British Columbia