City Gave Proper Notice to Vacate and was Not Obligated to Seek Judicial Remedy When Claiming Title to Building after Owner Accumulated Tax Arrears

Embee Diamond Technologies Inc. v Prince Albert (City), 2018 SKCA 44

The City of Prince Albert (the “City”) took title to a downtown building (the “Property”) after MFN, the Property’s owner, accumulated tax arrears over $175,000.00. Embee Diamond Technologies Inc. (“Embee”) claimed to be tenants of the Property.

The Provincial Mediation Board (the “Board”) wrote to MFN in an attempt to enforce payment. Evert Botha—the Chief Operating Officer of Embee—responded. Though he claimed to hold no official position within MFN, the Chambers judge determined Botha was heavily involved with MFN.

In his response, Botha told the Board that Embee signed an agreement to take over a share of the Property. Botha met with the City to address MFN’s tax arrears. He provided a series of post-dated cheques from Embee, which bounced. The City then sent a letter to MFN, directed at Botha, indicating (a) the City’s intention to take possession of the Property; and (b) that the property must be vacated.

Relying on The Landlord and Tenant Act (the “Tenant Act”), MFN claimed the City was not entitled to possession until a court order was given. Embee also argued that the City intentionally circumvented The Tax Enforcement Act (the “Tax Act”) by not seeking its remedy through the court, making its actions unlawful. Chief Justice Richards dismissed these arguments, and Embee’s appeal.

Section 36(1) of the Tax Act explains that, when a municipality takes title according to tax enforcement proceedings, the occupier of the land (the tenant) is deemed to become the municipality’s tenant. In this situation, a weekly tenancy relationship exists, unless the parties come to some other written agreement.

Section 36(1) states a lease need not exist between the indebted party (MFN) and their tenant (Embee). As Richards CJ explained, s. 36(1) applies if the person is occupying the land. Occupation, not a prior existing lease, triggers s. 36(1). Here, it was undisputed that Embee occupied the property to operate its business.

  • As an occupier, Embee was a tenant, meaning the Tenant Act applied as if Embee was the City’s tenant on a weekly tenancy agreement. The next consideration, per Richards CJ, was whether Embee’s tenancy was properly terminated. Section 18 of the Tenant Act states that, in a weekly tenancy, proper notice is one week.
  • Richards CJ found notice was properly given through the City’s notice to vacate letter. The letter was a “formal notice” requiring the property be vacated. It also indicated the City’s legal right and intention to take possession of the Property.
  • Richards CJ decided that, even though the notice to vacate was addressed to MFN, it was, in effect, also a notice to Embee, based on the following:
  •      1. The letter to MFN was directed to the attention of Botha, the Chief Operating Officer of Embee;
  •      2. Botha had previously responded to tax enforcement letters directed at MFN as if they were directed at Embee;
  •      3. The letter was broadly worded. It read the City “requires you to vacate”; it did not specify MFN, and began with, “Dear Mr. Botha”; and
  •      4. MFN and Embee were represented by the same counsel in property matters, and counsel never differentiated between MFN and Embee.
  • In considering these past actions, Richards CJ decided that a notice to MFN directed to the attention of Mr. Botha also constituted a notice to Embee. As a result, the notice to vacate was properly communicated.
  • Embee relied on s. 50 of the Tenant Act, arguing the City required a court order to receive possession of the Property. Richards CJ dismissed this argument, deciding that s. 50 is not the only method for a landlord to seek remedies against an overholding tenant. Rather, s. 50 provides an avenue whereby a landlord may apply for an order to be given possession. They are not, contrary to Embee’s argument, prevented from taking alternative action outside the court system.
  • Richards CJ stated that, even if s. 50(1) required a landlord to apply to the court for relief (as Embee argued) Embee was given valid notice to vacate. They had no right to occupy the property after that point.
  • Finally, Embee failed to submit any facts or arguments suggesting the City would not have been successful in removing Embee from the property had they applied through the court.
  • In this relationship of close proximity, proper notice was found to exist. This decision emphasizes that occupation, not the existence of a lease, determines tenancy in the context of tax enforcement. It also suggests that landlords are empowered to seek remedies outside the courts when dealing with overholding tenants, so long as proper notice is given.