Written by: Dan Dwyre Introduction A recent Alberta Court of Justice decision, Pelley v Streeper, 2024 ABCJ 24 (“Pelley”), cautions landlords that exercising the right of distress can be fraught with peril, especially when combined with other remedies available to a landlord. Sometimes described as a “self-help” remedy for landlords, the right of distress is an important tool in the Alberta commercial landlord’s toolbox, as it allows a landlord to seize and sell tenant property in order to offset unpaid rent. Pelley is an example of how a poorly executed distress action by a landlord can unintentionally equip a defaulting tenant with an opposing claim. Facts The plaintiff tenant (the “Tenant”) verbally subleased one-third of a commercial shop along with a few parking stalls in Grande Prairie, Alberta from the defendant sub-landlord, Streeper (“Streeper”). The Tenant thereafter used the shop to fix up and resell old cars, rarely paying rent on time. Streeper lost his keys to the shop and decided to change the locks. At the same time, he decided to seize the Tenant’s assets to “inspire him to pay the back rent that was owing,” which totalled $3,200. The Tenant arrived at his shop to find that the locks had been changed and that Streeper was in the process of moving the Tenant’s cars with a forklift, damaging them, and making it so the Tenant could not move them. Thereafter, someone broke into the shop and used a sledgehammer to damage several vehicles belonging to Streeper. A second break-in soon occurred, resulting in the theft of two impact wrenches and damage to a rare truck. The Tenant had previously texted Streeper, advising him that the Tenant would “simply grind the new lock and access the premises.” Security camera photos showed a truck similar to that of the Tenant’s leaving the yard loaded with tires and tools. After the break-ins, the Tenant posted a Kijiji advertisement for tires, including a picture of a truck very similar to that observed in the security camera images. In the decision, the Court found it was more likely than not that the second break-in had been conducted by the Tenant. Issue For our purposes, the main issue for the Court to decide was whether there was a wrongful seizure of the Tenant’s property by Streeper. Analysis A landlord is faced with several options when dealing with the failure of a tenant to pay rent. Two of these options are termination and distress. However, these two remedies are mutually exclusive, that is, they cannot be combined. A landlord may decide to forfeit a lease and terminate a tenancy following proper notice, and having regard to the lease and applicable statute. Previous courts have found that changing the locks on a premises generally constitutes a termination and forfeiture if the tenant can no longer access the premises. However, termination and forfeiture is considered a risky strategy, and is subject to court review. As an alternative, distress allows a landlord to seize property of a tenant to cover unpaid rent. As stated by the Court in Pelley, distress is a “powerful remedy that does not first require judicial authority or approval…[and] arises from an existing landlord and tenant relationship” (emphasis added). Accordingly, once a lease is forfeited by changing the locks, there is no longer a right of distress. Distress is available only when a tenant remains in possession under a lease. The Court found that the improper seizure of the Tenant’s property gave rise to the tort of conversion, and possibly also the torts of detinue and trespass to chattel. In total, this indebted Streeper to the Tenant in the amount of $26,000. The Court then offset this debt by $4,500 for the rent owed plus damage caused by the Tenant to Streeper’s property, for a net judgement of $21,500 plus pre-judgement interest payable by Streeper to the Tenant. Held The distress of the Tenant’s property was improper, as it occurred at the same time as the termination of the tenancy. Conclusion and Takeaways Canadian courts regularly hear claims dealing with alleged illegal distress. Issues arise when a landlord distrains property and changes the locks to tenanted premises, thereby terminating the tenancy and forfeiting the lease. This continues to be a persistent mistake made by landlords, as termination and distress are mutually exclusive remedies. It is obviously convenient to distrain tenant goods inside the leased premises by simply changing the locks, and there are several techniques to do this which have met Court approval, including: gaining written tenant approval of the change; or providing “access on demand” to the tenant. An Alberta landlord must also heed the relevant provisions of the Civil Enforcement Act. Please feel free to contact us for advice on the remedy of distress, or other options for recovering unpaid rent. Disclaimer: This article is to be used for educational and non-commercial purposes only. Parlee McLaws LLP does not intend for this article to be a source of legal advice. Please seek the advice of a lawyer before choosing to act on any of the information contained in this article.