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LANDLORD AND TENANT RELATIONSHIP - Validity of lease - Lease of unsubdivided portion of land

Wednesday, March 08, 2017 @ 8:32 AM  

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Appeal by the plaintiff from the dismissal of its application to have a lease and caveat declared invalid. In 2007, Ray Grisnich Farms purchased a quarter section of land from the respondents. At the time of the purchase, Grisnich leased back to the respondents the house and buildings located on a 10 acre portion of the land. In effect, the lease granted the respondents an inalienable life interest. The respondents registered a caveat against the land. The appellant acquired the land from Grisnich in 2014 in the course of Grisnich’s insolvency. It was aware of the lease and paid substantially less than market value because of the lease. When the parties were unable to agree on certain matters, the appellant brought an application to have the lease and the caveat declared invalid. It argued that the lease was void because it was in effect a subdivision and the respondents had not obtained the required approval, and the lease lacked sufficient specificity to meet the requirements of s. 95(2) of the Land Titles Act. The chambers judge concluded that the lease was valid and was not a subdivision. He also concluded that the description of the land satisfied the requirements of s. 95(2) because the lease included the house and buildings and approximately 10 acres on which they were situated, which was the farmstead. He further concluded that the specific boundaries of the lease land should be determined at a hearing. The appellant appealed, arguing that the chambers judge erred in finding that the lease was valid and enforceable and did not have the effect of subdividing the land, the description of the premises was sufficient to meet the requirements of s. 95(2) of the Land Titles Act, and that the caveat was valid.

HELD: Appeal dismissed. The chambers judge’s decision was reasonable. The lease did not have many of the factors indicative of an attempt to circumvent subdivision approval and there was no evidence of planning issues with respect to the lease. The description of the land was sufficient. While some clarification as to the specific boundaries might be desirable, the intentions of the parties to the lease were clear. The fact that the interest claimed in the caveat was for a lesser area than the property was irrelevant and did not mean that the caveat was invalid. It was clear that the appellant knew that the respondents’ interest was only in the 10 acres.

Paskal Holdings Inc. v. Loedeman, [2017] A.J. No. 46, Alberta Court of Appeal, P.A. Rowbotham, B.K. O'Ferrall JJ.A. and F.L. Schutz J.A., January 24, 2017. Digest No. 3641-006