“Unconscionability”

Updated 9 January, 2025  While the concept of “unconscionability” of lease clauses has long existed in the common law, a 2020 court ruling strengthened its application in “standard-form” contracts such as the long-term residential leases that govern Orchard House and a few dozen duplicate or very similar 99-year leases in B.C.

As was widely reported, the Supreme Court of Canada ruled in June of 2020 in favour of an Ontario Uber driver who had objected that his contract to drive for the company had an onerous requirement to submit any dispute to arbitration in the Netherlands, which would be expensive or impractical. Canada’s top court ruling that clause to be “unconscionable” allowed Uber drivers to proceed with a class-action suit that claims they are employees, not independent contractors.

In quashing the clause, the court commented regarding the nature of standard-form contracts, saying in part, “The doctrine of unconscionability has particular implications for standard form contracts. The potential for such contracts to create an inequality of bargaining power is clear, as is the potential to enhance the advantage of the stronger party at the expense of the more vulnerable one…”.

May I pause here to address B.C. Minister of Housing Ravi Kahlon and my MLA (also a member of Cabinet), Grace Lore: this is the Supreme Court of Canada speaking about people in the same situation as that of B.C.’s long-term residential lessees, referring to “inequality of bargaining power” and “the advantage of the stronger party at the expense of the more vulnerable one”. We lessees suggest again that our unequal standard-form lease relationships with our landlords merit regulation… just as the first NDP government of B.C. legislated to regulate all shorter-term residential leases in 1974.

Back to the civil law; only weeks before that Supreme Court of Canada decision, the B.C. Court of Appeal had decided in May of 2020 that nine long-term residential leases are identical to the Orchard House lease, and that these are all standard-form contracts. The new Supreme Court of Canada ruling thus applies to these 10 leases and to others that are almost identical. For this finding of fact by the B.C. Court of Appeal we thank our neighbour, lessee Hugh Trenchard, who obtained this ruling while losing the argument that as a tenant with a declining-value leased suite he should not pay about $35,000 to replace old single-pane windows with modern double-pane panels so heavy that they required the addition of supporting angle-iron beams.

The potential “unconscionability” of a lease clause is being put forward as one defense by a few Orchard House lessees (me among them) against Westsea’s interpretation of its leases as allowing it to bill its lessee tenants the company’s unlimited litigation expenses to oppose any lessee on any issue, which can be read about here . Note that nobody has suggested that the entire lease is unconsciounable; we argue only that the landlord’s interpretation to its advantage of a single clause is unconsciounable and should not stand.

The Supreme Court of Canada “Uber” ruling can be read here.