EKB Succeeds in Landlord’s Claim for Unpaid Triple Net Expenses in Commercial Lease Dispute

EKB’s Angela Folino and Laura Morrison successfully acted for the plaintiffs, Edward Derek Bulley and Ed Bulley Investments Ltd., in a summary trial against Weatherford Canada Partnership and others in a matter involving a triple net commercial lease. Mr. Bulley was the landlord and Weatherford was the tenant. The lease required Weatherford to pay a set monthly amount as base rent plus Weatherford’s proportionate share of expenses, utilities and property taxes (the “Additional Rent”) for the use of certain commercial property in Fort Nelson, B.C.

Through inadvertence, the landlord, Bulley, did not send invoices for Additional Rent for the first three years of the lease’s 7 year term. As soon as the mistake was discovered, Bulley invoiced Weatherford for the outstanding amounts owing for those years. Weatherford refused to pay any of the amounts owing, despite taking no issue with the amounts of any of the invoices. Weatherford took the position that Bulley’s delay in sending the invoices precluded Bulley from recovering the outstanding amount for a number of reasons:

  1. First, Weatherford argued that it was a precondition of payment of the Additional Rent that Bulley deliver budget statements, tax assessments and reconciliation statements to Weatherford annually, which Bulley had not done.
  2. Second, Weatherford argued that Bulley’s delay in sending the budget statements and tax assessments violated the “time is of the essence” clause in the lease. Weatherford argued that because of the alleged breaches, its obligation to pay Additional Rent was void.
  3. Third, Weatherford argued that Bulley’s failure to deliver invoices for the Additional Rent gave rise to an estoppel which disentitled Bulley to the Additional Rent.
  4. Finally, Weatherford argued that Bulley was precluded from recovery because the limitation period had expired.

In her decision released on October 25, 2016, Madam Justice Maisonville found that Bulley was entitled to recover the amounts owing as Additional Rent and, in doing so, rejected each of Weatherford’s arguments.

Maisonville J. held that there was nothing in the lease that made the delivery of budget statements, tax assessments and reconciliation statements a precondition to the payment of Additional Rent.

Further, she agreed with Bulley that the “time is of the essence” clause did not alter Weatherford’s obligation to pay Additional Rent. Rather, the effect of a “time is of the essence” clause is that, when an express time stipulation in a contract has been breached, the party not in breach can elect whether to keep the contract in force or terminate it. Weatherford continued to remain in the premises while disputing that it owed the Additional Rent. Madam Justice Maisonville found that, in doing so, Weatherford elected to affirm the lease in the face of Bulley’s alleged violation of the “time is of the essence” clause.

In addition, Maisonville J. found that in order to succeed in its promissory estoppel argument, Weatherford needed to prove that Bulley made a promise or assurance that he would not seek to collect the Additional Rent. However, she found that the mistake of not delivering the invoices for the first three years of the lease was not a promise or assurance that Bulley would not insist on the Additional Rent because it was unintentional. In Maisonville J.’s words, “the mistake cannot be relied upon to ground promissory estoppel”.

Finally, Maisonville J. found that Bulley had brought the claim in time. The lease required Weatherford to pay amounts due under the lease within 30 days after demand. After making the demand for the first three years of Additional Rent on June 30, 2014, Bulley had a two year period (which commenced 30 days after June 30, 2014) within which to commence its lawsuit. In filing the lawsuit on December 29, 2015, Bulley was well within the limitation period.

You can read the decision here: Bulley v. Weatherford Canada Partnership, 2016 BCSC 1955

Contact:
Angela Folino
Partner
604.661.1057
afolino@ekb.com