Executive Summary: Key Legal and Evidentiary Issues

• The court addressed whether a landlord can demand higher-tier rent while denying the tenant access to the corresponding leased land.
   
• Synergraze argued that rent obligations under a graduated commercial lease must correspond to the amount of property actually made available to it.
   
• RCM Search and Rescue maintained that a prior declaration placing Synergraze in the Stage 2 Term fixed the applicable rent at $3,000 per month regardless of access.
   
• Evidentiary conflicts in the parties' affidavits made it difficult to establish whether a right of first refusal had ever been promised.
   
• Proprietary estoppel was raised as an alternative basis for a claim to the leased property.
   
• Divided success in the proceeding led the court to order that each party bear its own costs.
   

Facts of the case

Synergraze Inc. leased commercial property in Sooke, British Columbia from Royal Canadian Marine Search and Rescue Inc. under a lease dated May 1, 2021, for use as a land-based seaweed aquaculture facility. Synergraze had developed a seaweed-based feed supplement that reduces enteric methane in cattle, and the leased property fell within T'Sou-ke First Nation traditional territory, with the Nation holding an aquaculture tenure and both a partnership with, and shareholder interest in, Synergraze. The lease divided the tenancy into three stages, each granting access to progressively more land (from a small initial area up to 10–12 acres at Stage 3) and requiring correspondingly higher rent ($1,000, $3,000, and $6,000 per month plus taxes for Stages 1, 2, and 3 respectively). After a dispute over renewal notice, RCM Search and Rescue attempted to terminate the lease in 2024, prompting an earlier petition decided in 2025 BCSC 1213, in which Justice LeBlanc held the lease remained in force, granted Synergraze quiet enjoyment, and declared that Synergraze had graduated to the Stage 2 Term as of May 1, 2024. Following that decision, RCM Search and Rescue demanded $3,000 monthly rent under Stage 2 but did not grant Synergraze access to the additional three acres that stage was meant to include. Synergraze continued paying at the $1,000 Stage 1 rate, and on November 1, 2025, RCM Search and Rescue gave notice to terminate the lease for nonpayment of rent. Synergraze filed the present petition on December 1, 2025, seeking a declaration fixing the rent owed, a right of first refusal to purchase the property, quiet enjoyment, and costs.

Policy and legislative provisions at issue

The dispute centred on clauses 1.3 and 2.1 of the lease. Clause 1.3 provided that the Stage 2 Term would run for five years, renewable for two further five-year periods, with the leased area expanding to approximately three acres at a location to be mutually agreed. Clause 2.1 set out the corresponding rent obligations, requiring $1,000 per month plus taxes at Stage 1, $3,000 per month plus taxes at the initial Stage 2 Term, and $6,000 per month plus taxes at Stage 3. RCM Search and Rescue also relied on clause 8.2, an entire agreement clause, to resist Synergraze's claim that a right of first refusal had been orally promised outside the lease. Synergraze in turn invoked section 59(3)(c) of the Law and Equity Act, which allows an unwritten contract respecting land to be enforced where a party has reasonably relied on it to its detriment. The court also applied the contractual interpretation framework from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, and Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, along with the prevention principle from Turney v. Zhilka, [1959] S.C.R. 578, and the requirements for an enforceable right of first refusal set out in Baykey v. North West Office Furniture Ltd., 1992 CanLII 568 (BC SC).

Reasoning and analysis

Applying established principles of contractual interpretation, the court found that clauses 1.3 and 2.1 were interdependent: the lease's structure tied each rent increase to a corresponding increase in the land made available to Synergraze. RCM Search and Rescue's position that Synergraze owed the full $3,000 Stage 2 rent regardless of access was found to isolate the rent clause from the access clause in a way that ignored the lease's overall commercial logic. Because RCM Search and Rescue had imposed conditions on access to the additional three acres that were not found anywhere in the lease, including requests for proof of authority, land commission letters, a copy or details of Synergraze's plans, and credit card details, the court concluded RCM Search and Rescue had itself frustrated the very condition it sought to enforce. Relying on Turney v. Zhilka, the court held that a party cannot insist on performance of an obligation where it has prevented fulfilment of the condition that obligation depends on. On the right of first refusal and proprietary estoppel claims, the court found the affidavit evidence from both sides conflicting and insufficiently specific. While an August 2025 meeting may have touched on a right of first refusal, Mr. Riggs had indicated he lacked board approval to bind the organization, and no subsequent approval or agreement on essential mechanics, such as price-setting or acceptance procedures, was established. Since a valid right of first refusal requires clarity on these terms, and proprietary estoppel requires a sufficiently specific representation and reasonable reliance on it, both claims failed for lack of evidentiary support.

Ruling and overall outcome

The court ruled that Synergraze's rent obligation remains at $1,000 per month plus taxes, retroactive to May 1, 2024, and will stay at that rate until RCM Search and Rescue provides Synergraze with proper access to and use of the additional three acres required under the Stage 2 Term. The lease was confirmed to remain in full force and effect, continuing in the Stage 2 Term subject to this qualification, and the court granted Synergraze's requested declaration that its costs from the earlier proceeding be applied against any rent owed to RCM Search and Rescue. Synergraze's claims to a right of first refusal and, alternatively, proprietary estoppel over the property were both dismissed for lack of sufficient evidence. Given this divided outcome, with Synergraze succeeding on the rent issue but failing on the property-rights issue, the court ordered that each party bear its own costs of the proceeding.