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RTA - Personal and Purchaser Possession (2). Elkins v. Van Wissen
In Elkins v. Van Wissen (Ont CA, 2023) the Court of Appeal considers (and allows) an appeal from an earlier Divisional Court RTA s.210 appeal on an RTA 57(1) ['Former tenant’s application where notice given in bad faith'] compensation application, resultant from an earlier s.49(1) purchaser possession Notice of Termination.
In these quotes the court emphasizes the plain wording of RTA s.49(1) which requires that the 'purchaser' also is acting in good faith, even though the termination notice is technically given by the landlord:[1] In Ontario, the law permits landlords to evict tenants to allow the landlord, or certain members of the landlord’s family, to move in. The law extends such “own use” eviction power to purchasers, but the eviction must be made in good faith.
[2] Section 49(1) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “RTA”), empowers a landlord who has entered into an agreement of purchase and sale to, in certain circumstances, give a tenant a notice terminating the tenancy on behalf of the purchaser, if the purchaser “in good faith” requires personal possession of the residential rental unit. And, pursuant to s. 57(1)(b), the Landlord and Tenant Board (the “Board”) may make certain orders if it determines, among other things, that the landlord gave a s. 49 termination notice “in bad faith”.
[3] This appeal addresses the following questions. Where a landlord terminates a tenancy pursuant to s. 49(1) of the RTA: (1) how is the Board to determine whether the landlord acted in bad faith within the meaning of s. 57(1)(b); and (2) must the Board assess the purchaser’s good faith requirement in s. 49(1) when making that determination?
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III. THE RELEVANT STATUTORY PROVISIONS
[23] As noted, the Vendor Landlords gave the Tenants a notice terminating their tenancy pursuant to s. 49(1) of the RTA.
[24] Section 49(1) stipulates that a landlord may, “on behalf of the purchaser”, give notice terminating the tenancy, “if the purchaser in good faith requires possession” of the rental unit for residential occupation. It reads as follows:49(1) A landlord of a residential complex that contains no more than three residential units who has entered into an agreement of purchase and sale of the residential complex may, on behalf of the purchaser, give the tenant of a unit in the residential complex a notice terminating the tenancy, if the purchaser in good faith requires possession of the residential complex or the unit for the purpose of residential occupation by,
(a) the purchaser;
(b) the purchaser’s spouse;
(c) a child or parent of the purchaser or the purchaser’s spouse; or
(d) a person who provides or will provide care services to the purchaser, the purchaser’s spouse, or a child or parent of the purchaser or the purchaser’s spouse, if the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which the rental unit is located. [Emphasis added.] [25] The Tenants’ T5 Application was made pursuant to s. 57(1)(b) of the RTA, the relevant parts of which read as follows:57(1) The Board may make an order described in subsection (3) if, on application by a former tenant of a rental unit, the Board determines that,
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(b) the landlord gave a notice of termination under section 49 in bad faith, the former tenant vacated the rental unit as a result of the notice or as a result of an application to or order made by the Board based on the notice, and no person referred to in clause 49 (1) (a), (b), (c) or (d) or 49 (2) (a), (b), (c) or (d) occupied the rental unit within a reasonable time after the former tenant vacated the rental unit;
... [Emphasis added.] [26] Under s. 57(3), the Board may make orders that include requiring the landlord to pay the tenant certain sums, abate rent, and pay administrative fines to the Board. Section 57(3) also empowers the Board to make any other order it “considers appropriate”. It reads:(3) The orders referred to in subsection (1) are the following:
1. An order that the landlord pay a specified sum to the former tenant for all or any portion of any increased rent that the former tenant has incurred or will incur for a one-year period after vacating the rental unit.
1.1 An order that the landlord pay a specified sum to the former tenant as general compensation in an amount not exceeding the equivalent of 12 months of the last rent charged to the former tenant. An order under this paragraph may be made regardless of whether the former tenant has incurred any actual expenses or whether an order is made under paragraph 2.
1.2 An order that the landlord pay a specified sum to the former tenant for reasonable out-of-pocket moving, storage and other like expenses that the former tenant has incurred or will incur.
2. An order for an abatement of rent.
3. An order that the landlord pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.
4. Any other order that the Board considers appropriate. ....
(2) Failure to consider the Purchasers’ good faith
[52] Section 49(1) stipulates that a landlord may give a tenant a termination notice, on behalf of a purchaser, if the purchaser, “in good faith”, requires possession of the unit for residential occupation. When deciding the Tenants’ T5 Application, the Board did not consider whether the Purchasers “in good faith” required the Residence for residential occupation. In my view, that failure constitutes an error in law. When deciding applications brought under s. 57(1)(b), it is insufficient for the Board to assess only whether the landlord acted in bad faith in giving a s. 49 termination notice. The Board must also assess the purchaser’s good faith, which s. 49(1) requires. After making both those determinations, the Board must then consider what orders to make in respect of each of the landlord and the purchaser.
[53] My view is informed by a consideration of: (1) the relevant provisions in the RTA; (2) Board Interpretation Guideline 12: Eviction for Personal Use, Demolition, Repairs and Conversion; and (3) Board jurisprudence.
(a) The relevant RTA provisions
[54] The modern approach to statutory construction is set out above and need not be repeated. I use that approach in the following analysis.
[55] Section 49(1) empowers the landlord to give the tenant a termination notice “on behalf of the purchaser…if the purchaser in good faith requires possession” of the rental unit “for the purposes of residential occupation”. Accordingly, an unlawful eviction under s. 49(1) can occur in one of three ways: (1) the landlord gives the s. 49 termination notice in bad faith but the purchaser genuinely requires personal possession of the rental unit; (2) the landlord gives the s. 49 termination notice in good faith but the purchaser does not genuinely require personal possession; or (3) the landlord and purchaser each independently act in bad faith or collude, in bad faith, to evict the tenant by means of a s. 49 termination notice. If the Board considers only the landlord’s bad faith, and it was the purchaser who was not acting in good faith, the purchaser is shielded from any consequence under the RTA and the tenant loses an opportunity for redress as against the purchaser. Such a result undermines the RTA’s stated purpose, in s. 1, to protect tenants from unlawful evictions.
[56] Furthermore, the conduct of the landlord and the purchaser are expressly linked in ss. 49(1) and 57(1)(b). Section 49(1) permits the landlord to, “on behalf of the purchaser”, give the tenant a termination notice so long as the purchaser, in good faith, requires possession of the rental unit for residential occupation and s. 57(1)(b) requires the Board to determine whether the landlord gave the s. 49 termination notice in bad faith. How can the Board assess, under s. 57(1)(b), whether the landlord gave the s. 49 termination notice in bad faith without also assessing the purchaser’s good faith intentions under the latter provision? If it were otherwise, all that would be required to evict a tenant pursuant to s. 49(1) is for the purchaser to tell the landlord it, or one of the other individuals listed in s. 49, intended to use the rental unit for residential occupation.
[57] Section 202(1) of the RTA reinforces my interpretation of the legislation. It requires the Board, when making findings on an application, to ascertain the “real substance of all transactions” relating to a rental unit and “the good faith of the participants”. The transaction in s. 49(1) is an agreement of purchase and sale. There are two participants to such a sale transaction: the vendor landlord and the purchaser. A consideration of both participants is necessary to ascertain the “real substance” of the transaction between them and the “good faith” of each in evicting the tenant.
[58] This interpretation finds further support in s. 57(3) of the RTA. While s. 57(3) sets out specific orders that can be made against a landlord who acts in bad faith in giving a s. 49 termination notice, it also empowers the Board to make any order it “considers appropriate”. Thus, if the Board finds that a landlord did not act in bad faith but the purchaser did, s. 57(3) gives the Board the power to make appropriate orders against the purchaser. This “gives teeth” to the good faith requirement on the part of purchasers in s. 49(1).
(b) Board Interpretation Guideline 12
[59] Board Interpretation Guideline 12 is also consistent with requiring the Board, on a T5 application, to consider the good faith of both the landlord and the purchaser.
[60] Interpretation Guideline 12 is entitled: Eviction for Personal Use, Demolition, Repairs and Conversion. It offers tenants the following guidance, under the heading “Who should be named as the respondent”:If the tenancy was terminated as a result of a notice of termination for personal use by a purchaser and the former tenant is alleging that the purchaser has failed to move into the rental unit within a reasonable time after the tenant vacated the rental unit, the purchaser should be named as a respondent in addition to the landlord who served the notice of termination. See: TST-42753-13-RV (Re), 2014 CanLII 28557 (ON LTB), upheld by the Divisional Court, Wojcik v Pinpoint Properties Ltd., 2016 ONSC 3116. [61] Advising tenants to name both the landlord and the purchaser as respondents is consistent with the Board having to assess the good faith of both when determining whether a tenant has been unlawfully evicted pursuant to s. 49(1).
[62] In this case, the Tenants followed the guidance in Interpretation Guideline 12 in drafting their T5 Application. They named the Vendor Landlords, the Original Purchasers, and the Purchaser, Embleton Homes Inc. (as well as the other directors of Embleton Homes Inc.). In their pleadings, the Tenants discuss the intentions of the Original Purchasers at length.
(c) Board jurisprudence
[63] As counsel for the Board advised in his submissions to this court, the Board jurisprudence on this matter is not consistent. There are cases which, like the current one, ignore the potential liability of purchasers. However, there are other Board decisions in which the Board considered both whether the purchaser acted in good faith under s. 49(1), and whether the landlord acted in bad faith under s. 57(1)(b).
[64] For example, in TST-10645-19 (Re), 2020 CanLII 31285 (Ont. L.T.B.), the landlord gave the tenant a s. 49 termination notice at the request of the purchaser, but the Board traced the bad faith back solely to the purchaser. It ordered only the purchaser to compensate the tenant for his losses.
[65] Additionally, in TST-42753-13-RV (Re), 2014 CanLII 28557 (Ont. L.T.B.), aff’d 2016 ONSC 3116, the Board found that the purchasers, through their agent, caused the landlord to give the tenant a s. 49 termination notice. However, because the Board found that only the purchaser had acted in bad faith, it made orders only in respect of the purchaser.
[66] These decisions reinforce my view that the Board must consider the good faith of the purchaser as well as the bad faith of the landlord when deciding applications under s. 57(1)(b).
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