November 30, 2023
Montréal partner Christopher Richter spoke with Law360 to discuss a Québec Court of Appeal decision addressing government public health orders imposed during the pandemic.
“You could fairly say that what the court is worried about is the floodgates argument, that if they were to allow (article) 1858 to be interpreted in a way that goes beyond what previous case law had allowed then you’re kind of into a new area where the limits of (article) 1858 are no longer certain,” Christopher said.
“You could see where if this kind of exception were included within the ambit of (article) 1858, then other tenants would be trying to apply other exceptions as well. They wanted to avoid that.”
Christopher explained that the Franchise MTY inc. v. Lechter decision represents a continuation of the court’s fairly conservative view on where the risk lies as a result of the COVID-19 shutdown.
“If there is a problem with zoning requirements, you cannot as a tenant insist on your rights under the lease, because that would run counter to the zoning. But it is an obligation of guarantee by the landlord, and therefore you do have recourses,” he said.
“In this case, they found, of course, that it was not a legal disturbance because it’s a general regulation affecting commerce as a whole, rather than affecting the premises as such. It’s an important decision, and interesting from a legal point of view.”
Christopher also noted that the court reduced the amount of the penalty after conducting an equitable analysis.
“What’s interesting from a landlord-tenant and COVID crisis perspective is that they underline that the landlord did not give the 25 per cent discount that everybody else was getting on their lease,” he said.
“It is unlikely to really change the law regarding penalty clauses, but it is a strong indication to landlords that they should be trying to do something for their tenants.”
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