Last week, we discussed the British Columbia Court of Appeal’s decision in Metro Housing Corp v Ganitano (2014 BCCA 10). The justices concluded that termination of a tenancy under the B.C. Residential Tenancy Act for late or non-payment of rent was properly characterized as a forfeiture imposed by statute, not contract. They thus determined that the Law and Equity Act could not grant the tenant equitable relief from the forfeiture of the residential tenancy. This week, we relate the case to Alberta law and discuss whether the same result would have obtained here.
The result in this case is unquestionably harsh – the respondent had lived in the premises for over a quarter-century, the breaches were arguably minor, and a mere technicality was her ultimate undoing. This case certainly cried out for equitable intervention. However, the Court of Appeal was correct in denying her relief; the result was necessary to maintain the proper division of powers between the legislative and judicial spheres. A court should not be able to use its equitable jurisdiction to circumvent clear legislation. Legislative reform is the proper route to avoiding situations like this, not judicial intervention.
It is however interesting to consider whether the same result would have obtained in Alberta. This issue has not been litigated here. As explained last week, the result in this case depended on the British Columbia Court of Appeal’s ability to construe the B.C. RTA as an exhaustive statutory scheme relating to the payment of rent, thereby ousting the equitable jurisdiction of the superior courts.
In Alberta, the legislative equivalent to s. 24 of British Columbia’s Law and Equity Act is s. 10 of the Judicature Act, which reads:
“Subject to appeal as in other cases, the Court has power to relieve against all penalties and forfeitures and, in granting relief, to impose any terms as to costs, expenses, damages, compensation and all other matters that the Court sees fit.”
The wording of these two sections is almost identical. If the Alberta Residential Tenancies Act also provides a comprehensive legislative scheme governing the payment of rent and related matters, the logic of the British Columbia Court of Appeal should apply with equal force.
The Alberta RTA establishes the tenant’s covenant to pay rent under s. 21, and stipulates the manner in which a landlord may enforce its rights when a tenant fails to pay rent under s. 29. In both British Columbia and Alberta, the landlord must provide the tenant with written notice of termination. In Alberta, that notice is ineffective if the tenant pays the overdue rent or provides a written notice of objection. In British Columbia, the notice is ineffective if the tenant either pays the overdue rent or files an application for dispute resolution. Importantly, only the B.C. legislation says “the tenant is conclusively presumed to have accepted that the tenancy ends on the effective date of the notice.” No such language appears in the Alberta RTA. As mentioned last week, this language was a key factor in reaching the Court of Appeal’s conclusion that the forfeiture was statutory in nature. The absence of this language in the Alberta RTA arguably weighs in favour of the opposite conclusion. Furthermore, s. 21 merely says that the tenant’s covenant to pay rent forms part of every residential tenancy agreement, as opposed to “a tenant must pay rent when due…” under s. 26 of the B.C. RTA. This language suggests that the obligation to pay rent under a residential tenancy agreement in Alberta arises from contract rather than statute.
The Court of Appeal also noted that the B.C. RTA had expressly abolished the common law remedy of landlord’s distress (the right of a landlord to seize a tenant’s property in order to recover rental arrears). This was another factor pointing to the conclusion that the B.C. RTA was an exhaustive statutory scheme which ousted the equitable jurisdiction of the courts. The fact this has not been expressly abolished in Alberta also arguably weighs in favour of the opposite conclusion.
Given these significant legislative differences, it is not clear that the reasoning which prevailed in Metro Housing v Ganitano would succeed in Alberta. Predicting the result if the same issue were litigated in Alberta is outside the scope of this case comment, but it is clear that Ms. Ganitano would have had a better chance of success of arguing that a forfeiture under the Alberta RTA arises from the terms of the contract and is therefore amenable to the equitable jurisdiction of the Court of Queen’s Bench under s. 10 of the Judicature Act.
Of the thirty-eight reported decisions citing s. 10 of the Judicature Act on the CanLII database, only one directly applies this section to a residential tenancy. In Dorland Property Management v. Hood, (2000 ABPC 165, CanLII) Justice Ingram used the section to relieve a tenant from an onerous penalty clause in a lease agreement. This confirms the reasoning in Metro Vancouver Housing Corp v Ganitano and The King v Northern Canadian Railway Company that a court can employ its equitable jurisdiction to grant relief from a contractual penalty. It is silent, however, on whether forfeiture of a residential tenancy in Alberta arises from contract or statute. It is therefore an open question whether s. 10 of the Judicature Act could be employed to relieve a tenant from forfeiture of a residential tenancy.
Another interesting question is whether this section could provide relief for tenants whose property has been distrained by their landlord. It seems as though it could – landlord’s distress is a forfeiture, but it has its origin in common law, not statute, so the court would not be trenching on the legislative sphere by providing equitable relief.
To conclude, s. 10 of the Judicature Act could be a valuable tool for lawyers advocating on behalf of tenants, but its potential is untested. Anticipating the manner in which a court would construe the interaction of the Alberta RTA and s. 10 of the Judicature Act would involve a complex exercise in statutory interpretation, but perhaps a cleverer person than I could muster the arguments necessary to protect people like Ms. Ganitano from eviction. A similarly sympathetic situation could open the door to test case litigation in the Alberta courts.