Ryan and Tina Smith are the only shareholders in a company called Smith Building and Development Ltd. Included among the company's assets is a commercial building located on the intersection of Souris Avenue and Albert Street, which is located the main business area of the town of Estevan, Saskatchewan. Estevan has a population of approximately 12,000 people.

After many months of listing this building for rent and receiving no offers, the Smiths have been approached by Chris Murphy. Chris turns out to be an excellent candidate to lease the building and he provides financial documents that show that he will have no difficulties paying the rent when it is due. Chris Murphy and the Smiths agree to terms on a five-year lease on this property.

After the lease takes effect, the Smiths drive past their building and notice a "Grand Opening" event taking place. Mr. Murphy has sub-divided the building into two separate units. On one side of the building, Mr. Murphy is operating a tattoo parlour called 1818 Ink. In the other unit, Mr. Murphy has set up a clubhouse for the Reapers Riders Motorcycle Club. The club's distinctive logo has been added to the front door of the building. Around the back of the building, there are two garage bay areas where motorcycles can be worked on.

The opening festivities feature a children's bouncy castle, ice cream, balloons, and barbeque. The Smiths noticed a stall set up with two gentlemen wearing the distinctive patches of the Hells Angels Motorcycle Club and they were selling t-shirts. The Hells Angels Motorcycle Club has been linked by police in the past to organized crime.

After discovering this new information, the Smiths decide that they must re-assess their tort risks associated with their lease contract with Mr. Murphy.

(This scenario was inspired by true events)

Links:

https://www.canlii.org/en/sk/skqb/doc/2021/2021skqb54/2021skqb54.html

Answer the following questions: 1) What research might the Smiths do to consider their tort liability risks associated with this property. 2) What would be the reason for conducting this research? 3) If, after completing the research, the Smiths decide to continue with their lease with Murphy, what risk management steps should they take to protect their property and their business? 4) Are there any guarantees that the Smiths and Smith Building and Development Ltd. can escape liability to any third party for bodily injury or property damage related to this property? Why or why not? 5) To whom would the Smiths owe a duty of care? 6) Make a management plan for 5 unique tort risks which the Smiths may now have because of this lease.