We are often asked by our landlord clients whether they can change the locks on a tenant's premises when it is evident the tenant is in default or has indicated it will be in default under its lease. The answer is clear: unless the tenant has already vacated the premises and demonstrated it has no intention of continuing to occupy the premises, changing the locks will expose the landlord to a claim and damages from the tenant.
A recent judgment from Quebec's Superior Court1 confirms this point.
Background
In this case, despite some murky circumstances surrounding the execution of the lease (for example, multiple versions of the lease were signed, some of them seemingly intended for a different tenant), the tenant began its restaurant business in the leased premises in January 2010.
The restaurant had a rough start and was not as successful as the tenant would have desired. In August 2010, the tenant and the landlord met to discuss the rental payments. Again, while there are contradictory versions of what was discussed at the meeting, the landlord claimed the tenant asked for a 50% reduction in the rent and the landlord countered with a 20% reduction until such time as business improved.
Restaurant padlocked to prevent equipment removal
In response to this proposal, the landlord claimed the tenant said it would close the restaurant and empty the premises of its equipment. After being reminded that the lease provides for a hypothec on the tenant's equipment and such equipment must remain in the premises, the tenant abruptly left the meeting. The tenant denied the landlord's version of the meeting and while it acknowledged it was not pleased with the landlord's proposal, it never intended to vacate the premises.
In any event, the landlord immediately padlocked the premises to mitigate the risk of the tenant removing its equipment. Despite this, the tenant succeeded in breaking the lock and proceeded to remove the cash register and Interac machine. The landlord then installed a more secure padlock, which was nonetheless broken a few days later and the rest of the restaurant equipment was removed from the premises.
Termination notice required
While the judge recognized the landlord's right to unilaterally terminate the lease as a result of a tenant default, because the lease required the landlord to give notice in such circumstances, the landlord's failure to do so proved to be a fatal flaw in the landlord's handling of this situation. The court concluded the landlord's reaction to the tenant's statement that it would vacate the premises was abusive and there were other ways to protect its interests in the leased premises (for example, the judge suggested a security guard could have been sent to the premises instead of padlocking the restaurant).
The tenant did not get away unscathed, as the judge did not entirely believe the tenant's version of the facts. The judge was of the view that the tenant did in fact empty the premises of the restaurant equipment despite the tenant's denials.
While the judge awarded the landlord $31,948.08 from the $83,782.56 originally claimed, the court reiterated that a landlord cannot be judge and jury and unilaterally decide to padlock premises when no prior notice is given to the tenant.
Footnote
1. 7600 Développements Inc. v. Batres, 2014 QCCS 2024.
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