Case: NPR GP Inc v. Higher Experience Inc, 2026 NUCA 1 (CanLII)
Keywords: cannabis retail store; oral lease; tenancy; bad faith; mootness
Synopsis:
The tenant, Higher Experience Inc., operates a cannabis retail store which is subject to a 1-year commercial tenancy agreement. A dispute arises as to whether the tenancy relationship is extended beyond the 1-year term. (See para. 1). The Chambers Judge (Alibhai J.) accepts the tenant’s position that the landlord entered into an oral lease agreement for a 3-year term. The Chambers Judge also finds the landlord acted in bad faith, awarding solicitor-client costs. (See para. 2).
The landlord appeals; the tenant says the appeal is moot because a settlement agreement was subsequently reached by the parties. The Court of Appeal (Shaner, Ho, and Taylor JJ.A.) finds the appeal is not moot and concludes “the entirety of the chambers judge’s decision must be set aside”. (See paras. 3-5).
Importance:
Regarding mootness, the Court of Appeal observed that settlement agreements are generally subject to “settlement privilege” (i.e., communications made in the course of negotiations are presumptively inadmissible). (See para. 8; Sable Offshore Energy Inc v. Ameron International Corp, 2013 SCC 37 at paras. 11-30). The Court found that the material terms of the parties’ settlement agreement “should not have been disclosed” by the tenant and, therefore, declined to consider arguments dependent upon the agreement. (See para. 9).
As to the application of the test for mootness, the Court of Appeal recited the language from Borowski v. Canada (Attorney General), 1989 CanLII 12 at p. 353-363 and, more recently, Taylor v. Newfoundland and Labrador, 2026 SCC 5 at paras. 41-44:
The court must first decide whether there is a continuing concrete dispute between the parties. If there is no such issue the appeal is moot, and the court must consider whether it should exercise its discretion to decide the issue anyways having regard to the relevant factors including the presence of an adversarial context, the concern for judicial economy, and the court’s adjudicative role. (See para. 10).
In the circumstances here (i.e., where the Chambers Judge found a 3-year oral lease extension was agreed to by the parties and a settlement “of some sort” was also agreed upon), the Court of Appeal determined the appeal was not moot because: 1) there was still a concrete dispute regarding the validity of the oral lease; 2) there was an adversarial context/need to “provide clarity to the parties who remain in a landlord-tenant relationship”; and 3) deciding the appeal was consistent with the Court’s proper role. (See para. 11).
At para. 14, the Court of Appeal provided a helpful summary of the law governing the formation of contracts: “[t]he formation of a contract generally requires an offer, acceptance, consideration, and a ‘meeting of minds’ on all the essential terms of the agreement. The test is whether an objective, reasonable bystander would conclude the parties intended to create a binding agreement”. Citing Parks v. McAvoy, 2023 ABCA 211 at para. 21, the Court noted that parties seeking to enforce oral agreements have the burden of proving on a balance of probabilities that a meeting of the minds was reached. (See para. 14).
In this case, the Court of Appeal found palpable and overriding errors in the Chambers Judge’s assessment of the evidence leading to his conclusion that an oral lease had been formed. (See para. 16). For example, upon reviewing the evidence, the Court concluded “it was unreasonable for the chambers judge to infer the parties were satisfied with the amount of base rent being paid simply because the June 15 and July 11 emails were silent on the issue”. (See para. 20). As a consequence of these findings, the Court set aside the Chambers Judge’s declaration that a valid lease existed. (See para. 23).
As to the Chambers Judge’s finding that the landlord acted in bad faith, the Court of Appeal noted he had “reached the conclusion that the landlord had engaged in ‘bad faith conduct’ based on his own analysis of the evidence and his interpretation of Bhasin.” (See para. 25). For the Court of Appeal, introducing a new issue in the reasons for judgment without alerting counsel was “problematic” and “unfair” such that appellate intervention is warranted. (See para. 27). Since the award of solicitor-client costs was grounded in the bad faith finding, the Court of Appeal also set aside the award. (See para. 28).
In the result, the Court of Appeal directed that the tenant deliver vacant possession of the leased premises. (See para. 30).
Counsel for the Appellant: Toby Kruger and Emma Russell (Lawson Lundell LLP, Yellowknife)
Counsel for the Respondent: Russ Molot (LMS Lawyers, Iqaluit)