Distraint for rent is a common law remedy for landlords of commercial property. It allows a landlord to seize assets belonging to the tenant and sell those assets to recover rent arrears.
The “cumulative remedies” clause in a commercial lease preserves all of the Landlord’s remedies under the commercial lease. It does not operate to change the position at law that a landlord may not distrain against a tenant’s property and terminate the lease at the same time. Distress and termination are mutually exclusive remedies.
In Delane Industry Co. Ltd. v. PCI Properties Corp., 2013 BCSC 1397, as appealed to 2014 BCCA 285, the parties entered into a sublease, which included the following provision dealing with cumulative remedies (para. 18):
No remedy conferred upon or reserved to the Landlord herein, or by statute or otherwise, will be considered exclusive of any other remedy, but the same will be cumulative and will be in addition to every other remedy available to the Landlord and all such remedies and powers of the Landlord may be exercised concurrently and from time to time and as often as may be deemed expedient by the Landlord.
The landlord alleged there was unpaid rent and, after giving the required notice (the “Demand Notice”), it chose to exercise the remedy of distress. The seized goods were sold but there remained a balance owing to the landlord. Later that same day, the landlord delivered a subsequent notice to terminate the sublease, effective immediately (the “Notice of Termination”).
The court held that the landlord had not effectively terminated the sublease. It began with the proposition that a landlord cannot levy distress against a tenant’s property and terminate the lease at the same time (as these remedies are mutually exclusive) (para. 9).
A landlord who has elected distress may not terminate the lease on the basis of the same breach on which the distress was founded. That is not to say that a landlord is without a remedy for the recovery of the prior rental arrears. However, a landlord cannot rely on notice of default given while distress is ongoing to terminate the lease immediately upon completion of the distress.
A new notice of default is required after a fresh default has occurred in order to claim rental arrears that pre-dated the distress proceeding. That is, a landlord may not rely on rental arrears that accrued prior to the completion of the distress as the basis for terminating a lease. Such new notice of default must be based on a new default or breach by the tenant and the landlord must comply with the requirements in the lease, such as notice and cure periods, for termination by the landlord.