Grow-op enough reason for Amacon to terminate lease: judge
The owner of a masonry company thought it was business as usual after selling off its Burnaby industrial property to a developer and leasing it back for two years.
And it was, for a few weeks, until a representative of the new property owner found a marijuana grow-operation in the building.
That led to the owner terminating the lease and the tenant refusing to leave. The tenant then sought to overturn the eviction through the courts, and the owner countered by seeking an enforcement of the lease termination.
Last week, B.C. Supreme Court Justice Brenda Brown sided with the owner, Amacon Dawson Development Partnership, in the case.
In September 2013, a numbered company agreed to sell its property at 4460 Dawson St. to Amacon. The developer then agreed to lease it back to the company and its business, Dominion Masonry Ltd., for two years.
The lease allowed the masonry business warehouse, its offices and existing related uses to continue but not any other uses of the property.
Shortly after the deal closed in December, an Amacon official inspected the interior of the building. On the second floor he found the grow-op of about 225 marijuana plants, and licences posted for two Vancouver-based growers.
Amacon issued a notice of termination of the lease and demanded possession of the property, effective immediately. The tenants took court action to dispute Amacon's right to evict them, and hired a 24-hour security guard to prevent the developer from re-entering the premises. They also removed the grow-op by Jan. 7.
Amacon bought the property as one of four sites it plans to redevelop in the future, said Brown in her reasons for judgment. It did not inspect the building's interior before the deal closed. But it did ask a roofing company to inspect the roof last November to determine if any repairs would be needed over the two-year lease.
It was an employee of the roofing company that informed Amacon about some defects in the roof and the smell of marijuana.
Amacon had Mr. Shapiro, the real estate agent acting for both parties, to ask about the issue.
"Mr. Sigurdson (of the tenant group) said that he was not aware of an illegal operation going on there. Mr. Shapiro understood this to mean that he was not aware of any marihuana grow operation because Mr. Shapiro did not know that marihuana could be grown legally."
Brown noted that Sigurdson's version of the conversation was that Shapiro told him he did not consider the grow-op to be a problem.
She didn't accept Sigurdson's evidence saying, "it is not credible that a commercial real estate agent would say, without more, that it would not cause a real estate development company a problem to have a marihuana grow operation on the premises."
During cross-examination Sigurdson conceded he did not tell the company accountant, the building's insurer nor anyone else about the grow-op. Electrical, ventilation and other work done to accommodate the grow-op was not inspected by Burnaby city hall and there were no permits issued.
Sigurdson said he and two other principals received cash payments from the grow-op, and the amount depended on how much was harvested.
Sigurdson intentionally did not tell Amacon about the grow-op, Brown concluded. "He anticipated that there would be only one more crop from the grow operation and that Amacon would never find out."
The tenants argued that the grow-op was an existing use of the property since April 2013, and so should have been permitted under the lease. But, Brown said, Sigurdson himself admitted "a marihuana grow operation is not part of the light industry masonry business."
Brown concluded the tenants "negotiated the lease knowing they had no intention of complying with it."
And while the tenant sought to stay on the property for the rest of the lease, Brown did not see how that could be possible.
"Given that the plaintiffs had no intention of complying with the lease, they do not come to court with clean hands. The reliance which is necessary between landlord and tenant has been irrevocably destroyed by the tenant's behaviour."
Brown dismissed the tenants' court action with costs to Amacon and upheld the lease termination.