SAFEGUARD ORDERS AND COMMERCIAL LEASES

Disputes between landlords and tenants may take months or years to resolve before the courts. In the meantime, the tenant may not be paying rent or the landlord may not be providing peaceful enjoyment of the premises to the tenant. In such circumstances, either party may apply to the court for a safeguard order to manage the relationship until a final decision of the court is forthcoming. A recent decision of the Quebec Superior Court provides an interesting illustration of the principles involved. Immeuble 1001 Rue Lenoir (RCA) Inc. vs. 7932260 Canada inc et al., 2026 QCCS 758. Plaintiff landlord, the owner of the property, entered into two commercial leases with the defendant tenant for premises in the property: one for a daycare and the other for an art studio. The second defendant guaranteed the obligations of the tenant. In November 2024, the tenant ceased paying the rent and the landlord applied the security deposit to reduce the arrears. The tenant cured its default a few months later. In August 2025, the tenant once again ceased paying the rent. The landlord filed suit to collect the arrears of rent coupled with an application for a safeguard order to require the tenant to continue to pay the rent for both leases until a judgment on the merits could be rendered. At the court hearing, the tenant offered to pay the “minimum rent” as defined in the leases to one of the lawyers in trust and to pay the “additional rent” directly to the landlord. A safeguard order is a discretionary measure and far from automatic. Its purpose is maintain a fair balance between the rights and obligations of the parties for a limited period of time i.e. until the parties can prepare and present their case to the court for a ruling. To obtain the issuance of a safeguard order, the landlord must establish urgency; an appearance of right; that he will suffer serious or irreparable prejudice if the order is not issued; and that the balance of inconvenience favours the issuance of a safeguard order. These criteria must be considered globally. The Court was satisfied that the matter was urgent and that the landlord had established an appearance of right. The refusal of the tenant to pay rent was based upon an unconvincing argument that the landlord was in default to provide peaceful enjoyment of the premises. Moreover, a clause in the leases precluded the tenant from unilaterally setting off any amount from the rent based upon an alleged claim. Considering that the arrears of rent were in the amount of $82,500 and would increase at the rate of $28,400 per month, it was clear that without a safeguard order, the cessation of the payment of rent would cause the landlord a serious prejudice. As for the balance of inconvenience, the tenant argued, without convincing evidence, that it was losing money due to the loss of clients at the daycare. Inversely, without a safeguard order, the arrears of rent would continue to accumulate. At first glance, the Court observed that it would be tempting to consider the tenant’s offer to split the rent between the landlord and a lawyer’s trust account as a means of establishing a degree of equilibrium between the divergent positions of the parties. On the further thought, the Court was convinced that considering the strong appearance of right of the landlord, the tenant’s offer was likely destined to create negotiation leverage with a view to convince the landlord to accede to its demands. This was not, in the court’s view, the purpose of a safeguard order. The application for a safeguard order was granted.