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February 2010 - view full issue
Petcetera - Can a landlord bar access to the tenant's premises once the tenant has given a notice of intention to make a proposal?
Petcetera operated a number of retail stores on leased premises. Petcetera's history for timely payment of rent on this particular lease was "dismal". It failed to make timely payments for several months in 2008 and all of the first three months of 2009. On March 21, 2009, Petcetera gave notice of its intention to file a proposal pursuant to the Bankruptcy and Insolvency Act. When payment for the April rent was not received on April 1, 2009, the landlord denied Petcetera access to the store, changed the locks and posted a notice of termination of the lease.
Petcetera sought an injunction requiring the landlord to allow it access to the premises. The trial court held that there was a serious question to be tried; however, since Petcetera had indicated that it was insolvent and was undertaking a liquidation sale of its inventory, there was no evidence of irreparable harm to Petcetera if it was not entitled to access to the premises. Further, Petcetera could not give a meaningful undertaking as to damages as it was insolvent. Therefore, the balance of convenience favoured the landlord.
Petcetera sought leave to appeal the decision to the Court of Appeal. The application for leave to appeal was dismissed.
BC Business Litigation Report is produced by the Business Litigation Group at Clark Wilson. The information and links in this newsletter should not be treated by readers as legal advice and ought not be relied upon without further, detailed legal counsel being sought.