Executive Summary: Key Legal and Evidentiary Issues

• Dispute centers on whether the lease between Schickedanz North Ltd (SNLCo) and Real Estate Assistants Ltd (REALCo) and Cherlyn D. Ewing was surrendered, affecting SNLCo’s claim for damages for lost future rent.

• The lease required written notice from the landlord to effect a surrender; SNLCo did not provide such notice to the tenants.

• Timeliness and adequacy of SNLCo’s notice regarding its intention to seek damages for lost future rent were challenged, with significant delay in notifying the tenants.

• The admissibility of the Johnston Affidavit was contested but ultimately accepted as relevant and material to the factual narrative.

• The court found the summary judgment process appropriate but determined there was a genuine issue requiring a trial, particularly regarding notice and lease provisions.

• The appeal was dismissed, upholding the Applications Judge’s decision to deny summary judgment, with damages and liability to be determined at trial if necessary.

Facts of the case

Schickedanz North Ltd (SNLCo), the landlord, leased Bays 115 and 119 of Royal Vista Link in Calgary to Real Estate Assistants Ltd (REALCo) and Cherlyn D. Ewing (the tenants) under a lease dated April 5, 2018. The lease commenced June 1, 2018, for a term of five years, with a minimum rent of $3,275 per month, a security deposit of $10,027.40, and required the tenant to pay its proportionate share of operating costs. The lease was scheduled to expire on May 31, 2023.

Section 8 of the lease, titled “Default and Termination,” listed events of default, including failure to pay rent or vacating/abandoning the premises. Section 8.4, the “Re-Entry” provision, allowed the landlord to re-enter or terminate the lease upon default but specified that termination required written notice to the tenant.

On October 31, 2019, the tenants delivered a letter to SNLCo indicating their intention to vacate the property due to “economic circumstances and personal and professional financial hardship.” They surrendered their security deposit of $10,027.40 and paid an additional $5,013.70 to SNLCo. SNLCo acknowledged receipt of the letter but did not provide written notice of lease termination. The tenants attempted to sublet the property between November 1, 2019, and spring 2020.

On May 4, 2021, SNLCo’s counsel sent a letter to the tenants stating they were jointly and severally liable under the lease. SNLCo issued a Statement of Claim on December 6, 2021, served by substitutional service on January 18, 2022, seeking damages for the present value of lost future rent for the unexpired term of the lease.

Policy terms and lease clauses at issue

The dispute focused on Section 8.4 of the lease, which detailed the landlord’s rights upon default. Section 8.4(a) allowed re-entry without notice but stated that re-entry would not be a termination unless the landlord advised the tenant by written notice. Section 8.4(b) allowed the landlord to re-let the premises as agent for the tenant. Section 8.4(c) allowed the landlord, on notice to the tenant, to terminate the lease and seek damages, including the present worth of the excess of rent for the remainder of the term over the reasonable rental value. The lease did not contain provisions addressing notice for prospective damages on a proactive basis.

Arguments and legal positions

SNLCo argued that the lease was not surrendered and sought damages for the present value of lost future rent for the unexpired term. REALCo and Ewing contended that the lease was surrendered by mutual agreement and that SNLCo was not entitled to such damages. The Applications Judge declined to grant summary judgment, citing a lack of appropriate notice by SNLCo, referencing Highway Properties Ltd v Kelly, Douglas and Co Ltd, 1971 CanLII 123 (SCC), [1971] SCR 562.

Court’s analysis and outcome

The court reviewed the admissibility of the Johnston Affidavit, finding it relevant and material because it contained facts central to the appeal, including first-hand accounts of interactions between Ewing and SNLCo’s Controller. The court determined the summary judgment process was appropriate due to the narrowness of the issues and the sufficiency of the evidentiary record, which included five affidavits and a transcript of Ewing’s questioning.

However, the court found that SNLCo had not provided timely or adequate notice to the tenants regarding its intention to seek damages for lost future rent. The May 2021 letter was sent approximately 18 months after the tenants’ notice of vacating, and the Statement of Claim was served about 26 months later. The court found this delay did not meet the test for timely notice. The lease itself did not contain adequate notice provisions for prospective damages. The court concluded that the tenants had demonstrated a genuine issue requiring a trial, specifically regarding the adequacy and timeliness of notice.

The court upheld the Applications Judge’s decision and dismissed the appeal, finding that summary judgment should not be granted. The appropriate quantum of damages was not determined, as summary judgment was denied. Costs were left open for further submissions if the parties could not agree. The successful party on this appeal was the respondents, Real Estate Assistants Ltd and Cherlyn D. Ewing.