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RTA - Rent Reduction [s.130]. Birch Equities Limited v. Jacobs
In Birch Equities Limited v. Jacobs (Ont Divisional Ct, 2025) the Divisional Court dismissed a LL's RTA rent abatement appeal [under RTA 130 and Genl Reg 39]:[3] The landlord submits that the LTB Member erred in law in finding that a 30% rent reduction was required under s. 130 of the Residential Tenancies Act, 2006, S.O. 2006, c 17. Subsection 130(1) permits a tenant to apply for a rent reduction “due to a reduction or discontinuance in services or facilities provided in respect of the rental unit”.
[4] By way of brief background, there is no dispute that the roof deck was removed, or that the landlord then offered the tenant exclusive use of a portion of the courtyard instead. Because of the courtyard offer, the landlord submitted to the LTB that the tenant’s facilities had been changed but not reduced or discontinued. The Member disagreed. Having considered the evidence, the Member found that the removal of the roof deck with the discontinuance of a facility. He found the proposed replacement courtyard area did not constitute the same type of facility as the roof deck. The Member reasoned that the roof deck afforded the tenant a view and was private, where the portion of the courtyard area was open to the rest of the courtyard that was shared with other tenants.
[5] The Member then determined the appropriate rent reduction under s. 39 of O.Reg. 516/06, which required a determination of whether the removal of the roof deck was reasonable. The Member agreed with the landlord that it was reasonable to take steps to maintain and repair the roof. However, the Member found that the deck removal was unreasonable. The Member considered the evidence put forward by the landlord, but also noted the uncontradicted evidence of the tenant that the deck had been built in sections that could be lifted to carry out repairs. The Member found that there was no evidence that the landlord considered whether the roof could have been repaired while maintaining the deck and the landlord did not consider options to replace the deck with a comparable deck that would not impede repairs. The evidence of the tenant’s structural engineer made recommendations about how to approach putting in a new roof deck.
[6] Where the discontinuance of a facility was unreasonable, as found here, s. 39(3) requires that the value of the facility to the tenant be taken into account to determine the amount of the rent reduction. The Member found that the roof deck was an important facility that the tenant bargained for in the tenancy. Under s. 39, the Member found that the value of the deck was 20% of the rent but given the important role that the deck played in the tenant’s life, he found that the requested 30% reduction was appropriate.
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[9] On the first issue, the appellant submits, as it did before the Member, that the exchange here (the offer of a portion of a courtyard for the roof deck) was a change but was not a reduction or discontinuance. The appellant relies on two decisions of the Court of Appeal: First Ontario Realty Corporation Ltd. v. Deng, 2011 ONCA 54 and Onyskiw v. CJM Property Management Ltd., 2016 ONCA 477.
[10] First Realty was before the Member and is discussed in the reasons for the Decision without error. In that case, the Court held that the recreational facilities had been changed, rather than reduced. Based on what was described as ample evidence, the Court held that the change was not a reduction under s. 130 of the Act.
[11] It does not appear that Onyskiw was before the Member. Onyskiw underscores that a service or facility can be changed and where something is provided in exchange, the adequacy of the proposed new service or facility must be adjudged to determine whether or not the change was a reduction or discontinuance. At para. 80, the Court held that the adequacy of what is provided in exchange must be adjudged by having regard to the legislation and regulations under the Act, the Board’s Guidelines and the particular factual circumstances, including the reasonable expectations of the parties viewed objectively.
[12] Here, the Decision is in keeping with the above cases. The Member proceeded on the basis that a facility could be changed without a resulting abatement under s. 130. He considered the adequacy of the proposed portion of the courtyard in exchange. He considered the statutory regime and applicable regulation. He considered the factual circumstances and the reasonable expectations of the parties viewed objectively. The Member concluded that the facility had been “discontinued, not changed or reduced.” He made no legal error in doing so.
[13] The appellant submits that reading the above cases together, they show that there need not be an exchange of “like for like” (although that phrase is not in those cases) for there to be a change that is not a reduction or discontinuance. The appellant then relies on a phrase from the reasons for the Decision where the Member says that he does not find the courtyard area is the same type of facility as the roof deck. This submission overlooks the rest of the reasons for the Decision, which show that the Onyskiw principles were followed in adjudging the adequacy of what was offered in exchange.
[14] The Member did not err in law in finding that the removal of the roof deck, on the evidence, was a discontinuance under s. 130 despite the offer of a small portion of the courtyard in exchange. The appellant is, instead, challenging the Member’s weighing of the evidence, which is beyond the scope of this appeal. . O’Shanter Development Company Limited v. Terry Babcooke et. al
In O’Shanter Development Company Limited v. Terry Babcooke et. al (Div Court, 2022) the Divisional Court considered what was apparently a s.130 RTA tenant application to decrease rent on a reduction in services, particularly the quantum of the rent reduction granted, which invoked the Reg 516/06, s.39 'Rules relating to reduction in services'. Here, the court considers the evidence applied by the LTB, particularly the fact that not all of the multiple tenant parties testified directly:(c) The Member did not err in law when determining the quantum of rent reduction. And she did not fail to provide adequate reasons to support the quantum of 15% of the rent charged.
[21] The appellant points out that section 39 of O. Reg. 516/06 provides that if the reduction in the facility is not reasonable, then the amount of the rent reduction is to be determined based on the value of service or facility, including (i) the cost to the tenant to replace the facility; and (ii) the effect of the reduction on the tenant.
[22] At the hearing, the Member did not accept the Tenants' evidence of the cost of replacing the onsite storage lockers. Because of this, the Landlord complains that since the burden of proof of value to the Tenants and the effect of the change of the facility lies with the Tenants and only 9 Tenants from 8 rental units presented evidence relevant to the second factor (the effect of the reduction), the Tenants did not satisfy its burden of proof. And as a result, the Member erred by relying on this evidence to affix the quantum of a 15% reduction in rent. The Board erred in restricting its analysis solely to a consideration of the effect of the reduction on the Tenants, the second factor set out in subs. 39(6) of the regulation.
[23] The Board is required by statute to adopt the most expeditious method of determining the questions before it. This is a mandatory, not a discretionary, procedural duty (ORHT v. MTHA & Godwin, 2002 CanLII 41961 (ON CA), 2002CanLii 41961 (CA)).
[24] The adjudicator did not decide the amount of the rebate based on evidence particular to any witness or group of witnesses. She specifically stated that she would not do so.
[25] Instead, she looked at effects that could be presumed for all the Tenants. These included the reduced size of the new locker spaces, the inconvenience of off-site storage, and the distress caused in some form to all Tenants by the loss of a service that was included in their tenancy agreement.
[26] I agree with the Respondent that the adjudicator did nothing unusual and that it was appropriate for the Board Member, in line with Godwin, to interpret section 183 of the Act as justifying the crafting of a global remedy based on similar fact evidence from a handful of Tenants in multi-tenant applications (ORHT v MTHA and Godwin, supra at para 73).
[27] In addition to the viva voce evidence of the Tenants at the hearing, the adjudicator also had evidence from other Tenants at a meeting between the Landlord and Tenants with the record of the meeting showing that those Tenants moved into the building partly because of the availability of a locker; that those Tenants found the compensation offered was inadequate; that the replacement lockers offered were inconvenient for those who could not drive; and that those Tenants felt it was unfair for the landlord to gain at their expense.
[28] The adequacy and quantum of compensation for lost services is a question of mixed fact and law.
[29] Regulation 39(2) and (3) set out that if the adjudicator deems the reduction unreasonable, she should consider the value of the service. She should also consider the effect of discontinuance on the Tenants. Cost can be part of the determination of value but is not the sole element.
[30] The adjudicator considered the Tenants’ evidence as to cost but decided that the cost they advanced was the wrong measure to use. She considered other evidence related to the value of the locker to the Tenants in addition to evidence of the effect of discontinuance. This evidence included the fact that the availability of the lockers was a reason Tenants chose to move into the building; the uses to which the Tenants put their lockers; the size of the lockers; the convenience of having readily accessible storage, particularly for items that are used frequently; and how the on-site storage made it easier to buy staple items in bulk.
[31] The Tenants’ evidence was that their locker was like a large additional room, on site, so that the loss was significant and not unlike losing one room in a two bedroom or three-bedroom apartment.
[32] The Board’s decision was an available one based on the evidentiary record it had before it. It was also in accordance with what the statute and the regulations require. The alternatives would have been to make its own factual inquiry as to cost or to refuse a remedy to the Tenants in the face of its own factual determinations that the Landlord’s activities were unreasonable and had an adverse effect on the Tenants.
[33] The Board’s review decision also determined that the adjudicator had carefully considered the value of the locker facilities.
(d) The Member did not err in law by making findings and awarding remedies to Tenants who did not testify at the hearing about the "effect" upon them of the reduction of the facility. She did not deny the Landlord procedural fairness and natural justice.
[34] The Landlord argues that it is procedurally unfair to provide a remedy to Tenants who did not give oral testimony. The Landlord did not raise this issue with the adjudicator but raises it for the first time on this appeal.
[35] First, all the Tenants who were parties participated in the hearing, either through their lawyer or by attending in person. A party is not required to testify. The court can draw an adverse factual inference from the failure of a witness to testify in certain circumstances, but this is a matter of discretion in interpretation of the facts before the court rather than a requirement of law (Mudrazia v. Holjevac et al., 1969 CanLII 345 (ON SC), [1970] 1 O.R. 275, 8 D.L.R. (3d) 221; Godwin, paras 37-38).
[36] Second, the identities of the tenants were known to the Landlord and it could have called a tenant as its witness.
[37] Finally, the Board was permitted to use the testimony of individual Tenants about harm done to them to draw general conclusions about the effect of the Landlord’s actions on Tenants.
[38] The Landlord argues that this could only be done if a formal proposal to this effect had been made at the start of the hearing. I disagree.
[39] The adjudicator chose to base the quantum of compensation on deprivations and inconvenience that, according to her determinations of fact, were common to all Tenants. She explicitly rejected the alternative that some Tenants who testified should receive more compensation than others. Under such circumstances, it is not necessary for the Board to hear from every tenant.
[40] The appellate courts have directed that in circumstances such as this one, the Board should look to the interests of the tenants as a whole, rather than look to the evidence of impact upon individual use by the tenants of one unit (First Ontario Realty v Deng, 2011 ONCA at para 57).
[41] The Board is entitled to order an abatement for all tenants reflecting the average experience without requiring that each individual tenant be called to the stand (Godwin, supra at para 30).
[42] The tribunal had the power to determine its own procedures and to exclude any evidence that is unduly repetitious without the consent of the parties. The Board did not need to hear 23 witnesses about the loss of a locker.
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