Some of you may recall that I wrote about the law of “quiet enjoyment” just over a year ago. ( The Tenant’s Right to Quiet Enjoyment – How Far Does it Go? ) To refresh you, here is an excerpt from the Ontario Law Reform Commission 1976 report: “… a breach of the covenant should arise from any acts which result in the interference, interruption or disturbance of the tenant’s reasonable peace, comfort, or privacy being interfered with, whether due to liquids, gases, vapours, solids, odours, vibration, noise, abusive language, threats, fires, the total or partial withholding of heat, electricity, water, gas, or other essential services, or the removal of windows, doors, walls, or other parts of the rented premises…”.
The issue of what constitutes a breach of the covenant for “quiet enjoyment” is often addressed by Canadian courts and the decisions do not always appear consistent since “quiet enjoyment” “means different things in different places, at different times, and in different settings” (Meislik & Meislik 1997 – What Is this Thing Called Quiet Enjoyment? — In the Context of Commercial Leases)
In a June 2013 B.C. Supreme Court decision, (Stearman v. Powers dba Walkabout Casual Wear), the court dealt with the issue off whether an “unpleasant odour” amounted to a breach of the quiet enjoyment covenant and if so, what the appropriate remedy was.
Facts: The tenant signed a 5 year lease for premises to use as a high-end retail clothing store. They inspected the premises before entering the lease but the HVAC system was not in use. The prior tenant had abandoned the premises due to rats and odour and the landlord was in a lawsuit with that tenant as well. No disclosure of that was made to the tenant. As winter passed and spring arrived they noticed an odour that worsened with use of the HVAC and the tenant complained. The landlord took some steps to address the problem but it worsened. Some customers complained and walked out of the store. The Tenant stopped paying rent and left the premises shortly thereafter. The landlord sued the tenant for breach of lease.
The Decision: The strong and unpleasant odour resulted in a breach of the covenant of quiet enjoyment entitling the tenant to terminate the lease and recover damages.
The Reasons: The odour was strong and unpleasant. It prevented customers from entering the store and it was uncomfortable to work in the store. The prior tenant’s evidence regarding the odour supported that position. The whole purpose of the lease was for the sale of clothing which was affected by the odour to the extent that it deprived the tenant of substantially the whole benefit which it was intended it would obtain from the lease. The odour was not detectable when the tenant opened for business until she began to use the HVAC system.
The Lessons: 1. A lease may include an “implied term of fitness of the premises for the intended purpose”. 2. Acceptance of the premises may not be an acknowledgement they are in the condition provided in the lease where parts of the premises cannot be tested on possession e.g. the HVAC. 3. Consider asking for a landlord’s representation and warranty it is not aware of any material defects in the premises or building which could reasonably affect the tenant’s business. 4. Damages flowing from the breach of the quiet enjoyment covenant can include the difference in rent from the old premises to new premises, advertising, renovation and moving expenses, money spent on the old premises which the tenant walked away from. 5. A limitation of liability on the landlord for any defect in the premises was not sufficient to protect it from damages in this case.
Disclaimer: This article is for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.
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