Canadian Lawyer InHouse

CHOOSING ARBITRATION TO MEND Landlords and tenants are increasingly turning to rent arbitration to solve their commercial leasing disputes quicker and at lower cost. By Michael McKiernan blocks, and renewal options that can easily double or triple that length, par- ties are going to have to get used to living with one another. Without a reliable way to predict T ties where they're committed to a future relationship, but the cost hasn't been determined. That can be problematic, so really it's natural there's going to be issues," says B.C. lawyer Brian Wallace, who runs an arbitration practice with offices in Victoria and Vancouver. Landlords and tenants are increas- ingly turning to arbitrators like Wallace future market conditions, many leases provide for a mid-term rent review, but even when the price is fixed for the first five years, that still leaves a big decision for the following half-decade. "You have a deal between two par- he relationship between a landlord and tenant can get just as fraught with ups and downs as any long-term union. With commercial LEASING WOES tion. He compares the landlord-tenant relationship to that between employers and unions. "It's a long-term relation- ship and they can't just dismiss each other, because each has got such a sub- stantial investment in the other, and Toronto-based David McCutcheon to settle these inevitable disputes, attracted by the confidentiality and speed of tenancy terms typically measured in five-year parties select an arbitrator because they have industry knowledge and expertise that you might not get if you're in front of a judge, which means they don't take a lot of time to grasp and resolve those issues," says Fraser Milner Casgrain LLP partner and dispute resolution special- ist McCutcheon. "It's also procedurally a lot more efficient, I think. I've had some on major items that last for six months, which is considerably less than you would get in the courts. Everything is case managed by the arbitrator, so you don't have to wait for a motion date. You just phone up the arbitrator and say I want to have a motion heard at 9:30 a.m. on some morning, the arbitrator books the time, and you argue the matter. Kenneth Glasner, who works as a the process. "Normally, the " mediator in Vancouver, says the move to arbitrate has been driven by in-house counsel seeking relief from the spiral- ing expense and confrontational atmo- sphere that frequently come with litiga- will benefit from drafting an arbitra- tion clause at the time the lease comes into effect, rather than waiting until a dispute has arisen. "After you hit the dispute, they can According to Glasner, both sides " he says. certainly still go to arbitration, but there's often already a lot of animosity at that point. Get it in there at the begin- ning," he says. And while arbitration clauses are becoming almost standard as part of the commercial lease, Glasner says that par- ties are not always getting the best out of the process. "All too often what hap- pens is the parties will spend a month or two negotiating a commercial lease, and then at the very end, someone will spend two minutes, and say 'let's throw in an arbitration clause' without think- ing through the effects of that clause, he says. A poorly worded clause can cause " problems and delays right from the outset of arbitration, by failing to reflect the wishes of the parties or take into consideration the peculiarities of an individual lease. "Arbitration clauses must be designed uniquely for contract itself. Generally there's no such thing as a good standard clause, Harvey Haber, a senior partner at Toronto's Goldman Sloan Nash and " he says. INHOUSE JUNE/JULY 2012 • 25 KIM ROSEN

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