Canadian Lawyer

September 2020

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Page 43 of 51

42 LEGAL REPORT REAL ESTATE that line of reasoning, saying to do so would require a subjective approach to the concept of irresistibility, under which an event prevents the performance of an obligation by anyone, not just a debtor. "In order to qualify as superior force, the event at issue must prevent any tenant in Quebec Inc.'s situation from paying its rent and not just those who lack sufficient funds," Kalichman wrote. The landlord HengYun had argued that the gym was not in a situation that could be described as a force majeure, and even if it was, the situation was contemplated by a contract provision in the lease that required Québec Inc. to pay rent even in light of such an event. On top of that, HengYun noted that the fitness centre received a $40,000 emergency govern- ment loan because of the pandemic and could, therefore, not argue that it was prevented from superior force from paying the rent. However, Toronto-based Torkin Manes LLP partner Kenneth Beallor, with the firm's commercial real estate group, says "Tenants will think there is always room to improve their lease forms, and landlords will always be looking to strengthen documents to their benefit." Michael Witt, Stikeman Elliott LLP that, despite the judge rejecting the fitness centre's argument regarding force majeure, in the end, the gym was not obliged to pay rent because the government's restrictive shutdown orders had actually breached the landlord's covenant of allowing the tenant "peaceable enjoyment" of the premises. The court held that the government-mandated shutdown resulted in an obligation of the landlord that could simply not be performed, and while parties to a lease can agree to limit the impact to provide peaceable enjoyment, it can't be excluded altogether. Beallor says the Quebec court said, "Forget the force majeure clause, it's the covenant for peaceable enjoyment that was primary." He adds that while this is the lower court deci- sion under the Civil Code in Quebec, it could have implications other provinces; Ontario for example, which uses the term "quiet enjoy- ment." James Papadimitriou, regional practice lead of the real estate group at McCarthy Tétrault LLP in Montreal, says that the court in this decision did recognize Covid-19 as a force majeure event and the landlord was relieved from performance, but, as a corollary, so was the tenant. In this case, he says, "It is not a situation where the landlord is not refusing to perform an obligation, which would relieve the tenant, AVAILABLE INDUSTRIAL SPACE Q2 2020 (Q2 2019) 2.9% (2.1%) Vancouver 9.7% (8.4%) Calgary 8.7% (8.2%) Edmonton 2.0% (1.5%) Toronto 2.6% (3.2%) Montreal Source: CBRE

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