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The Court is not bound to refuse to enforce a contract because it is statutorily void when such a refusal would have harsh effect and when refusal is not required to affirm the legislative policy

Alberta

,

Canada

In Kingdom Properties Ltd v Kilometer 147 GP Ltd (Limited Partner Kilometer 147 LP), 2021 ABQB 881, the Crown leased two parcels of provincial lands to the plaintiff pursuant to the Public Lands Act, RSA 2000, c. P-40. The plaintiff granted subleases to the defendants for the purpose of establishing a camp for oilfield workers.

The defendant fell behind in rent payments. The plaintiff terminated the subleases and commenced an action for arrears of rent and other damages. The plaintiff advanced an alternate claim for quantum meruit based on unjust enrichment. The defendant claimed that the subleases were statutorily void and unenforceable pursuant to s. 151 of the Public Lands Administration Regulation because the Crown never approved the subleases.

On application for summary determination, Master Summers held that he was not bound by the illegality of the subleases to refuse to enforce the subleases and their indemnities, applying the principle that “...one can refuse to apply the traditional rule in a case when to apply it would have harsh effect and is not required to affirm the legislative policy.” In this instance, the Crown had taken steps to penalize the plaintiff for its breach of the statute through administrative penalties.

The Master further held that the defendant was responsible for the arrears for rent for one of the subleases. The plaintiff’s claim for accelerated rent or damages for prospective rent were dismissed because the plaintiff had no evidence that it could provide quiet possession under a lawful sub tenancy for the balance of the term of the sublease.

The Master also considered the plaintiff’s claim for unjust enrichment on a quantum meruit basis and found that it reinforced his decision, as the defendants had been enriched by the use and occupation of the camp land in the amount of the arrears of rent.

April 14, 2022
Kingdom Properties Ltd v Kilometer 147 GP Ltd (Limited Partner Kilometer 147 LP), 2021 ABQB 881