CIVIL CODE OF QUÉBEC
…The Civil Code comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the jus commune, expressly or by implication. In these matters, the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it.
In Hengyun International Investment Commerce Inc v 9368-7614 Québec Inc, the Superior Court of Quebec recently granted the Tenant (“Quebec Inc”) a reduction in rent pursuant to articles 1854, 1470 and 1694 of the Civil Code of Quebec (“CCQ”).
In late March 2020, the Government of Quebec suspended all activities of companies deemed to be non-essential by Order in Council No. 223-2020.
From the period of March to June 2020, Quebec Inc. closed its gym business to the public due to the government decree. The Commercial Tenant argued before the Court that a superior force (force majeure) caused business closure; therefore, it cannot afford to pay rent from March to June. The Landlord (“Hengyun”) argued that force majeur was contemplated by paragraph 13.03 of the parties’ lease, which requires the Tenant to pay rent despite an event caused by a superior force.
The Court disagreed with both parties’ analysis of superior force. Instead, the Court found it is the Landlord who was prevented by superior force from fulfilling its obligation to Quebec Inc, to provide the Tenant with peaceable enjoyment of the Premises. The Court thereby concluded that the Landlord shall not claim rent from Quebec Inc during the period of the government decree.
The Court’s Analysis
The Commercial Landlord’s duty to is set out in article 1854 of the CCQ:
- 1854. The lessor is bound to deliver the leased property to the lessee in a good state of repair in all respects and to provide him with peaceable enjoyment of the property throughout the term of the lease.
He is also bound to warrant the lessee that the property may be used for the purpose for which it was leased and to maintain the property for that purpose throughout the term of the lease.
In Quebec, ”[a] lessor’s obligation to provide a tenant with peaceable enjoyment of the leased premises, is the essence of the lease.” (9185-4000 Québec inc. c. Centre commercial Innovation inc., 2016 QCCA 538 at paragraph 19.)
“Superior force” is defined at article 1470 of the CCQ as:
- A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it.
Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.
The Court stated, in the context of the pandemic, it is satisfied that the unforeseeable threshold is met.
The Court stated the event must prevent the performance of the obligation by anyone and not just by the debtor. The fact that the burden may be more onerous does not satisfy the criteria of irresistibility. The Court determined to qualify as a superior force, the event at issue must prevent any tenant in Quebec Inc.’s situation from paying its rent and not just those who lack sufficient funds.
Further, the Court reasoned the Landlord’s fulfilment of its obligation to provide peaceable enjoyment of the premises from March through June of 2020 is not delayed, but rather it cannot be performed. Thus, paragraph 13.03 of the lease is of no effect.
According to article 1694 of the CCQ, a “debtor released by impossibility of performance may not exact performance of the correlative obligation of the creditor”. In the Court’s view, it is the Landlord that was prevented by superior force from fulfilling its obligation to Quebec Inc – to provide it with peaceable enjoyment of the premises. As such, if the commercial Landlord was prevented by superior force from providing peaceful enjoyment, then it could not insist the Tenant pay rent.
While the Court determined the definition of “Superior force” was met according to article 1470, readers should take note it was made in context with article 1854. The arguments raised by the Tenant in support of its claim for damages and reductions in rent center around and emphasize the notion of peaceful enjoyment.
Further, unlike common-law courts, Quebec’s civil-law system first look to a civil code, which are broad statements of principles that set out the minimum standard of conduct, then refer to previously written decisions for consistency. While Quebec judges do write decisions that have precedential value, there are subtle differences in how the civil-law system interprets and applies prior judgments.
If you have any questions regarding this blog, or someone you know needs legal help with commercial leases and contracts, MEHDI AU LLP is a full-service firm that serves clients across the GTA and Ontario.
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