Province to break lease, strip right to sue

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This article was published 15/05/2019 (2657 days ago), so information in it may no longer be current.

The owners of a West End property are vowing to fight the Progressive Conservative government after it introduced legislation on Wednesday to break a long-term lease.

Bill 32 would cancel the lease agreement between 5185603 Manitoba Ltd. and the First Nations of Southern Manitoba Child and Family Service Authority for a property on Adele Avenue.

The 20-year lease, signed in 2008, was the subject of a 2016 audit, which noted several uncommon provisions, including the length of the term and the lack of an opt-out clause. The CFS authority also paid a full year’s rent before the lease was signed.

“This lease is an untendered agreement for the rental of a facility that was never appropriate for child care,” Finance Minister Scott Fielding said in introducing the bill in the legislature.

“The building lease and its terms were not in the public interest,” he said. “Given the landlord refusal to agree to a reasonable termination agreement, we are taking this measure to terminate the lease.”

Ken Cranwill, a partner in the company, said the landlords will do everything they can to fight the decision.

“We’re disappointed, we’re shocked, we’re angry,” he said.

Cranwill said the government tried to bully the company into signing a nine-month lease when there were nine years left on the contract.

“It was, ‘You take this deal or else’… It was a shakedown. I’ve never seen anything like it.”

While the CFS authority was no longer using the building, it had been sublet to Marymound, he said.

“They had the enjoyment of our building until the end of February,” he said of the province.

Cranwill said it appears the building was vacated in a rush. He said it had been “trashed.”

Assuming the bill passes, the termination of the lease would be effective Nov. 30. The bill would prevent the owners from suing the government.

Premier Brian Pallister said such legislation may be rare but not unprecedented.

“We’re of a mind that the contract that was entered into was not justifiable, and so we’ve made every effort to try to renegotiate in a fair way the terms of the lease, which we do not believe to be defensible,” he said to reporters.

Asked what message the legal action was sending to those who would do business with government, Pallister said: “Don’t enter into an indefensible contract at the behest of a government that is misguided in its efforts.”

An audit commissioned by the Southern First Nations of Care on the lease its predecessor signed in 2008 for the building at 800 Adele Ave., found the previous NDP government signed off on the lease despite several red flags, including its length and the fact that the contract was sole-sourced.

According to the audit, various versions of a proposed lease were presented to the province’s civil legal services office over the course of around 10 months in 2008, when the unacceptable terms of the lease were noted.

A former NDP cabinet minister said there was an atmosphere of crisis management from November 2006 to July 2007 to get children who were in care out of hotels and into more appropriate facilities.

The Free Press has reported that ownership of the numbered company that leased the building to the CFS authority included Winnipeg businessman Peter Ginakes.

larry.kusch@freepress.mb.ca