2008-09-30 Commercial Tenancy Act

BRITISH COLUMBIA Consultation Paper on Proposals for a New Commercial Tenancy Act LAW INSTITUTE 1822 East Mall University of British Columbia Prepared by the Vancouver, British Columbia Canada V6T 1Z1 Commercial Tenancy Voice: (604) 822 0142 Fax: (604) 822 0144 Act Reform Project E‐mail: [email protected] Website: http://www.bcli.org Committee Supported by: September 2008 British Columbia Law Institute 1822 East Mall, University of British Columbia, Vancouver, B.C., Canada V6T 1Z1 Voice: (604) 822‐0142 Fax: (604) 822‐0144 E‐mail: [email protected] WWW: http://www.bcli.org ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ The British Columbia Law Institute was created in 1997 by incorporation under the Provin‐ cial Society Act. Its strategic mission is to be a leader in law reform by carrying out: • the best in scholarly law reform and writing; and • the best in outreach relating to law reform. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ The members of the Institute are: Ronald A. Skolrood (Chair) D. Peter Ramsay, Q.C. (Vice‐chair) Gregory Steele, Q.C. (Secretary) Kathleen M. Cunningham (Treasurer) Prof. Joost Blom, Q.C. Arthur L. Close, Q.C. R.C. (Tino) Di Bella Lorne A.J. Dunn Prof. Robert G. Howell David H. Pihl, Q.C. Geoff Plant, Q.C. Kim Thorau Kevin Woodall ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ This project was made possible with the sustaining financial support of the Law Foundation of British Columbia and the Ministry of Attorney General for British Columbia. The Institute grate fully acknowledges the support of the Law Foundation and the Ministry of Attorney General for its work. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ © 2008, British Columbia Law Institute. All rights reserved. Commercial Tenancy Act Reform Project Committee The British Columbia Law Institute formed the Commercial Tenancy Act Reform Pro‐ ject Committee in August 2007. The committee’s mandate is to study the law relat‐ ing to commercial tenancies in British Columbia, to identify defects in the existing legislation governing commercial tenancies, to examine the leading options for re‐ form, and to make recommendations for a new Commercial Tenancy Act. These rec‐ ommendations will be contained in the final report of the committee. This final re‐ port is scheduled for publication in June 2009. The members of the committee are: Richard Olson—chair Arthur L. Close, Q.C. (associate counsel, McKechnie & Co.) (director, British Columbia Law Institute) Sandy Lloyd Ann McLean (former partner, Borden Ladner (solicitor, Legal Services Branch, Gervais LLP) Ministry of Attorney General) Justice Mary V. Newbury Greg Umbach (Court of Appeal for British Columbia) (partner, Blake, Cassels & Graydon LLP) Kevin Zakreski (staff lawyer, British Columbia Law Institute) is the project manager. For more information, visit us on the World Wide Web at: http://www.bcli.org/bclrg/projects/commercialtenancyactreformproject Call for Responses We are interested in your response to this consultation paper. It would be helpful if your response directly addressed the tentative recommendations set out in this con‐ sultation paper, but it is not necessary. We will also accept general comments on re‐ form of the Commercial Tenancy Act. The best way to submit a response is to use a response booklet. You may obtain a re‐ sponse booklet by contacting the British Columbia Law Institute or by downloading one at <http://www.bcli.org/bclrg/projects/commercialtenancyactreformp roject>. You do not have to use a response booklet to provide us with your re‐ sponse. Responses may be sent to us in one of three ways— by mail: British Columbia Law Institute 1822 East Mall University of British Columbia Vancouver, BC V6T 1Z1 Attention: Kevin Zakreski by fax: (604) 822‐0144 by email: [email protected] If you want your response to be considered by us as we prepare final report for the Commercial Tenancy Act Reform Project, then we must receive it by 31 March 2009. Your response will be used in connection with the Commercial Tenancy Act Reform Project. It may also be used as part of future law reform work by the British Colum‐ bia Law Institute or its internal divisions. All responses will be treated as public documents, unless you expressly state in the body of your response that it is confi‐ dential. Respondents may be identified by name in the final report for the project, unless they expressly advise us to keep their name confidential. Any personal infor‐ mation that you send to us as part of your response will be dealt with in accordance with our privacy policy. Copies of our privacy policy may be downloaded from our website at: <http://www.bcli.org/privacy>. Consultation Paper on Proposals for a New Commercial Tenancy Act TABLE OF CONTENTS EXECUTIVE SUMMARY...................................................................................................................ix ABBREVIATIONS ...........................................................................................................................xv PART ONE—BACKGROUND ...........................................................................................................1 I. INTRODUCTION ....................................................................................................................1 A. General Background on Commercial Leasing....................................................................... 1 B. Introduction to the Project ........................................................................................................... 1 C. The Commercial Tenancy Act Reform Project Committee ............................................. 2 D. The Structure of this Consultation Paper............................................................................... 3 II. HISTORICAL BACKGROUND AND KEY TERMS......................................................................3 A. Introduction ........................................................................................................................................ 3 B. Origins ................................................................................................................................................... 4 C. Protection of the Tenant’s Right to Occupy........................................................................... 6 D. No Guarantees as to Use of the Property................................................................................ 8 E. Financial Compensation for the Landlord ............................................................................. 9 F. Enforcement of the Landlord’s Right to Compensation................................................... 9 G. The Landlord’s Right to the Leased Premises ....................................................................10 H. Summary.............................................................................................................................................11 III. BRITISH COLUMBIA LEGISLATION RELATING TO LEASING .............................................. 11 A. Introduction: Building on the Basic Rules by Contract and by Statute ...................11 B. The Commercial Tenancy Act....................................................................................................12 C. The Residential Tenancy Act......................................................................................................14 D. The Rent Distress Act....................................................................................................................15 E. Other Statutes...................................................................................................................................16 F. Summary.............................................................................................................................................17 IV. THE CASE FOR REFORM .................................................................................................... 17 A. Introduction ......................................................................................................................................17 B. The Commercial Tenancy Act is Out of Date.......................................................................17 C. Modern Commercial Tenancy Legislation is Needed......................................................18 D. Models for Reform..........................................................................................................................18 E. Summary.............................................................................................................................................20 V. CONCLUSION TO PART ONE .............................................................................................. 20 PART TWO—TENTATIVE RECOMMENDATIONS......................................................................... 21 I. INTRODUCTION ................................................................................................................. 21 II. A NEW COMMERCIAL TENANCY ACT ................................................................................ 21 British Columbia Law Institute v Consultation Paper on Proposals for a New Commercial Tenancy Act III. FORMAL AND REGISTRATION REQUIREMENTS FOR THE CREATION OF A LEASE.............. 22 A. Introduction...................................................................................................................................... 22 B. Requirement for Writing ...........................................................................................................

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