Prohibited use exception to landlord's obligation
The Manitoba Court of Appeal has held that a trial judge’s decision that a prohibited use under a lease is an exception to the obligation of the landlord not to unreasonably withhold consent to a change of use request did not involve a palpable and overriding error or an extricable question of law.
A landlord refused a tenant’s request to change the use of premises to a prohibited use and the tenant sued. The approved use under the lease was as a shoe store in a shopping mall, while the requested use was as a seasonal/holiday “pop-up” location selling ladies’ clothing, accessories, giftware and some home accessories. Such a use was prohibited under the lease. The trial judge found that a prohibited use is an exception to the obligation of the landlord not to unreasonably withhold consent to a change of use request.
There had been some negotiation and consideration of the contents of the lease by the tenant, particularly at the offer to lease stage, and there was no evidence that the wording in the lease or the clause was similar to leases in other shopping malls.
The court held that the standard of review in this case was whether there had been a palpable and overriding error rather than the correctness of the decision, but expressed no reservations about its correctness. Had there been an extricable question of law, the court would have been able to consider the correctness of the decision. An extricable question of law includes the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor.
Given that fairly flexible inclusive definition, it would have been relatively simple for the court to find an extricable question of law had it considered the judge had erred in coming to that conclusion.