Judge waters down Centre Square owner’s rent arrears claim
An NWT Supreme Court judge criticized a Yellowknife mall owner as it pursued the operators of two former stores for tens of thousands of dollars in unpaid rent.
The Honourable Justice Karan Shaner eventually agreed Holloway Lodging, owner of the Centre Square Mall’s upper level, was owed $26,500 by Daniel Hayward, who had owned Dan’s Place.
That amount was less than half the sum Holloway had initially sought.
A separate claim brought by Holloway against Nancy’s Place, run by Nancy Greenfield-Hayward, was similarly slashed by the same judge.
Holloway wanted more than $20,000 in rental arrears from Nancy’s Place; Shaner said it could have around $950.
In her rulings on both cases, published this week, Shaner characterized Holloway as a landlord acting slowly and with a lack of clarity.
Holloway, based in Halifax, is a Canada-wide hotel operator traded on the TSX. In Yellowknife, it owns the Super 8 and Quality Inn and Suites hotels, including the upper level of Centre Square Mall attached to the Quality Inn.
Dan’s Place and Nancy’s Place were second-hand stores specializing in furniture, music, tools, and all manner of household items. They closed in 2018.
Additional rent ‘too uncertain’ to charge
In the case of Nancy’s Place, Holloway charged a “minimum rent” of $950.91 per month – but the contract said Holloway could top this up with a monthly “additional rent.”
The additional rent was not a set sum in the contract. Instead, it could be set by Holloway based on operating costs for the building, property tax, and other expenses.
Holloway decided Nancy’s Place would have to pay additional rent of $1,150 per month, on top of the initial $950.91. Holloway only communicated that in writing to Nancy’s Place several months after the lease had started, the judge said in her ruling. Holloway nonetheless backdated the additional rent to the start of the lease.
When Greenfield-Hayward immediately wrote back to Holloway asking where that figure came from – and pointing out it more than doubled the rent – Holloway said it was worked out using a nearby, slightly larger unit in the mall as a guide.
Nancy’s Place only ever paid the minimum rent and didn’t pay the additional rent requested.
The business was short-lived. Greenfield-Hayward gave back the keys in July 2018, four months after the lease began and only a month after opening. Despite receiving the keys, Holloway considered the premises abandoned and initiated proceedings to evict the business in early 2019.
Justice Shaner said Holloway clearly knew it had possession of the Nancy’s Place unit when Greenfield-Hayward returned the keys, so applying for an eviction seven months later was “unnecessary.” Even if an eviction had made sense, the judge ruled, there was an “unacceptable delay” in Holloway waiting that long to act.
The judge ruled Holloway “did not give sufficient information” to Nancy’s Place about how the additional rent was calculated, so that part of the contract was “too uncertain to be enforceable.”
As a result, Nancy’s Place must pay only the minimum rent for July 2018, which remains outstanding, plus a small sum of interest.
What happened to the keys?
Dan’s Place had been in business for several years when it fell into arrears and Holloway began pursuing the company for the missing rent.
Hayward’s company was leasing three units on a month-to-month basis without formal leases, relying only on emails from Holloway. In total, the units cost around $7,500 monthly.
Dan’s Place spent months trying to come up with the money but the debt quickly reached $20,000 and continued to grow.
Hayward says he had given the units’ keys back to maintenance staff by September 2018, despite the building’s general manager refusing to accept them. Holloway says the keys were never returned.
On that point, the judge found against Holloway, saying there was “no evidence” Holloway had ever followed up about the keys. Hayward, by contrast, had provided a “very specific” account of his efforts to return them.
What happened to the keys is important because it affects the period for which Holloway can claim unpaid rent. Holloway wanted almost $55,000 in unpaid rent extending to February 2019. The judge said it could have only $26,500 dating to August 2018.
In each case, though Holloway had limited success as the businesses were ordered to pay some form of arrears, the judge said each party should pay its own legal costs.