A decision by the British Columbia Court of Appeal serves as an
important reminder that landlords must choose carefully when
determining which course of action to pursue against a defaulting
tenant. The BCCA confirmed that distress and termination are
mutually exclusive remedies, and held that a landlord who elects to
levy distress for a particular breach of a lease irrevocably waives
their right to subsequently terminate the lease for the same
In Delane Industry Co. Ltd. v. PCI Properties Corp.
 B.C.J. No. 1704, a disagreement arose between a landlord and
a tenant with respect to the terms of the tenant's lease. After
the tenant had withheld rent for over a year and accumulated over
$120,000 in rent arrears, the landlord issued a notice of default
and proceeded to distrain for the unpaid rent by seizing and
selling the tenant's assets. However, the amount recovered in
the distress proceeding was insufficient to cover the full amount
of the rent arrears. Accordingly, the landlord purported to
terminate the lease on the basis of the earlier notice of
The tenant applied to the British Columbia Supreme Court for a
declaration that the lease had not been effectively terminated. The
BCSC granted the declaration sought on the basis that, by electing
to distrain, the landlord had affirmed the lease and had therefore
waived its right to terminate the lease on account of the unpaid
rent. It held that the landlord would need to provide a new notice
of default in order to terminate the lease and implied that such
notice (and the subsequent termination of the lease) could be based
on the rental arrears that had accumulated before the conclusion of
the distraint proceeding. In other words, a fresh breach of the
lease would not be necessary before the landlord could terminate
On appeal, the BCCA agreed with the lower court's
determination that a new notice of default was required in order
for the landlord to terminate the lease. However, the court held
that such notice would need to be based on a fresh breach of the
lease on the part of the tenant. The court reaffirmed that the
remedies of distress and termination are mutually exclusive,
meaning that both cannot be exercised with respect to any one
default in the payment of rent. As a result, once the landlord had
levied distress against the tenant, it had irrevocably waived its
right to terminate the lease for the same default. Although the
landlord was entitled to sue for the unpaid rent since this remedy
was consistent with the affirmation of the lease, it could not rely
on the fact that a portion of the unpaid rent remained outstanding
following distraint in order to reverse course and terminate the
lease based on the same breach. Notably, the BCCA made its
determination despite the existence of a "cumulative
remedies" clause in the lease, on the basis that such a clause
cannot be extended to permit concurrent remedies that are
inconsistent and mutually exclusive.
Delane highlights the fact that landlords must proceed
with caution when choosing the appropriate remedy to address a
defaulting tenant. This is particularly important when considering
whether to levy distress against a tenant's goods, since
distress rarely provides full compensation for outstanding arrears.
A landlord who elects to distrain in order to recover a portion of
rent arrears may be closing the door on their right to subsequently
terminate the lease if the rent arrears remain outstanding. As the
decision in Delane makes clear, it is critical for
landlords and their legal counsel to carefully determine the
objective of exercising a particular remedy before impulsively
pulling the trigger on a course of action that will limit their
remedial options moving forward. If the landlord's objective is
simply to put the tenant on notice of their willingness to take
steps to collect unpaid rent, then the remedy of distress may be
appropriate, provided that the landlord is aware that, by levying
distress, they will not be entitled to terminate the lease unless
the tenant fails to make future rent payments when due. However, if
the landlord is fed up with the tenant and wishes to retain the
right to terminate the lease on the basis of the tenant's rent
arrears, then they should not proceed with distress.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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