Unconscionable lease?

December 2020 While the concept of “unconscionability” of lease clauses has long existed in the common law, court rulings during 2020 have expanded the application of it to long-term residential leases such as those that govern Orchard House and a few dozen duplicate or similar 99-year leases in B.C.

As has been widely reported, the Supreme Court of Canada (“SCC”) ruled on 26 June 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 expensive arbitration in the Netherlands. The SCC ruling that clause to be “unconscionable” allows Uber drivers to proceed with a class-action suit that claims they are employees, not independent contractors.

With implications for lessees were the Supreme Court of Canada’s extensive comments 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 David Eby and my MLA, Grace Lore: This is the Supreme Court of Canada speaking about people in the same situation as that of long-term residential lessees, using phrases such as “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 leases merit regulation.

But back to the civil law. Only weeks before the Supreme Court of Canada decision, the B.C. Court of Appeal (“BCCA”) 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 SCC ruling thus clearly applies to all of these 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 tens of thousands of dollars to replace old single-pane windows with modern double-pane panels so heavy that they required supporting angle-iron beams.

Also facing bills of $30,000 and more during 2020 were lessees at Blue Haven apartments across the Salish Sea in Richmond, where owner Westpark Investments (‘same owners as Westsea Construction) renewed a wood-frame building at the lessees’ expense. As was reported in Lower Mainland media, the lessees are mostly low-income Chinese immigrant Canadians, some disabled and others unemployed due to the virus pandemic. Twenty-four of them were sued by Westpark for not paying all or a portion of what they were billed. Their defense in part was that the imposition of these costs on them was unconscionable. Their lease is one of the 10 that the BCCA decided are standard-form leases.

For these specific lessees then—with the precedents recently set by the B.C. Court of Appeals and the Supreme Court of Canada—the unfairness of their lease assignments and the costs imposed on those lessees may meet the standards of an unconscionable contract. Perhaps in response to that defense it appears that Westsea has settled with some of those lessees or at least given more time to pay; apparently what was agreed may not be disclosed.

Back at Orchard House tower the potential “unconscionability” of a lease clause is being put forward as one defense by some lessees (me among them) against Westsea’s interpretation of its leases as allowing it to bill lessees its unlimited litigation expenses to oppose any lessee on any issue. On that, you can read this website’s page titled “Disputing WS’s legal costs”.

The Supreme Court of Canada ruling can be read here: https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/18406/index.do

The Response filed by Blue Haven lessees to the suit against them can be read here (opens a new tab):  Response VLC-S-S-205414 (1)   .