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RTA - Special and Exempt - Seasonal Occupation

. Egan v. Kincardine Golf & Country Club

In Egan v. Kincardine Golf & Country Club (Div Court, 2023) the Divisional Court considered the RTA s.5(a) 'seasonal accomodation' exemption:

The Decision Below

[7] The respondent filed an application with the Board seeking to determine whether the Act applied to his tenancy. The parties agreed that the cottage falls under the definition of “rental unit” in the Act. The issue before the Board was whether the property was exempt under s. 5(a) of the Act. Kincardine took the position that the property was exempt and the respondent took the position that it was not.

[8] Section 5(a) of the Act reads:

This Act does not apply with respect to,

(a) living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home….

[9] The Board found, in paragraphs 21-23 of its Decision, that the occupation of the cottage was not “seasonal or temporary” given the 99-year lease and accordingly the exemption did not apply.

....

[17] The purpose of the Act is set out in s. 1:

The purposes of this Act are to provide protection for residential tenants from unlawful rent increases and unlawful evictions, to establish a framework for the regulation of residential rents, to balance the rights and responsibilities of residential landlords and tenants and to provide for the adjudication of disputes and for other processes to informally resolve disputes.

[18] The Act is remedial legislation. As such, it must be read broadly to ensure the protection of residential tenants within the Act’s stated purposes (White v. Upper Thames River Conservation Authority (2020), 2020 ONSC 7822 (CanLII), 154 OR (3rd) 133 (Div. Ct.) para 32).

[19] In Matthews v. Algoma (2010), 2010 ONCA 468 (CanLII), 102 OR (3rd) 590, the applicants leased land from the respondent’s predecessor and erected cottages, used year-round as second homes. After the respondent acquired the land, it sent eviction notices to some of the lessees and gave notices of significant rent increases to other lessees. It purported to replace the leases with licenses which gave it an unfettered discretion to renew or terminate the license annually. The applicants brought an application seeking a determination that the Residential Tenancies Act applied to their land lease community. The Landlord and Tenant Board dismissed the application. The Divisional Court dismissed the applicants’ appeal, finding that because the premises were used for recreational purposes, they were not “residential”. The Court of Appeal allowed the appeal,

[20] The focus of the Court of Appeal’s decision was the question of whether the cottages were “rental units” within the meaning of s. 2(1) and s. 3 (1) of the Act. In the case at hand, that point was conceded. However, at para 28 the court said:

[28] In my view, occupants of residential units are entitled to the protection of the Act, whatever they do inside or outside of their premises during their waking hours. The Act applies whether the occupants spend their days at work or at leisure, whether they live in their accommodation 52 weeks a year or some lesser amount of time, and whether the unit in question is their primary or secondary residence.

[21] On s. 5(a) the Court of Appeal said, at paras. 33-34:

[33] Timberlakes points to the exclusion, contained in s. 5(a), of premises "provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home". In particular, Timberlakes argues both that the lessees occupy the premises for a "temporary period" and that the premises are a "resort", "campground" or "vacation home". I do not accept either argument.

[34] First, in my view, the undisputed evidence is that the premises were occupied for more than a temporary period and for more than a seasonal period. The premises were occupied over many seasons, months and years. The evidence establishes that the leases were intended to be continually renewed over a long period of time. Moreover, all the leases provided for payment of rent on an annual basis. There was no seasonal or temporary rental rate. Accordingly, in my view, the s. 5(a) exclusion regarding "seasonal or temporary" occupation does not apply.

[35] Second, even if it could be found that occupation was for a seasonal or a temporary period, the category of premises at issue in this case is quite different from the living accommodations specifically excluded by s. 5(a) of the Act. Regarding the applicability of what was s. 3(a) of the then Tenant Protection Act, 1997, the Divisional Court in Putnam v. Grand River Conservation Authority, 2006 CanLII 18526 (ON SCDC), [2006] O.J. No. 2217, 210 O.A.C. 191 (Div. Ct.), at para. 25, cited with approval the reasoning of the Ontario Rental Housing Tribunal regarding rented "cottage" lots:

The listing of places where this seasonal or temporary accommodation is to take place clearly is a listing of places, owned by private persons or businesses, which appeal to the general public as vacation spots or places to stay when one is away from home. They represent accommodation for travellers, for vacationers, for anyone who needs temporary accommodation provided by someone other than themselves.

The Tribunal accepts that the phrase "in a . . . cottage or cabin establishment" in Section 3(a) should be interpreted to mean that the grouping of cottages or cabins (the establishment) available as seasonal or temporary accommodation is analogous to the rooms in a hotel or a motel, or the rooms in a "bed and breakfast" or in an inn, or the sites at a campground or in a trailer park, available as living accommodation to be occupied for a seasonal or temporary period. To interpret otherwise would be to "hive off" this particular phrase from the listing in Section 3(a) and give it a completely different interpretation from the other words and phrases in the listing. Similarly, the accommodation in this case was not akin to the hotel, resort, campground or vacation home temporary lodgings that the legislature intended to exclude from the application of the Act.

[22] In the case at hand, the Board reviewed all of these authorities and more. Its conclusion is set out in paragraphs 21, 22 and 23 of its decision:

In my view, the facts presented in this case do not support a finding that the exclusion contained in section 5(a) regarding “seasonal or temporary” occupation applies. First, the parties agreed, through the original lease which was assigned to the Tenant that the occupation would last for 99 years, as such, it is, respectfully, unreasonable to deem such a term “temporary” as contemplated by the Act.

In accordance with a purposive interpretation of the legislation as enunciated in Matthews v. Algoma Timberlakes Corp., the type of occupation at issue here is not one which the Legislature intended should be excluded by section 5(a) of the Act. As the Court of Appeal stated in Matthews v. Algoma Timberlakes Corp., it is immaterial “whether the occupants spend their days at work or at leisure, whether they live in their accommodation 52 weeks a year or some lesser amount of time, and whether the unit in question is their primary or secondary residence.” To find otherwise would, as the Court observed, exempt a variety of Ontario tenants who would otherwise be protected by the legislation, such as individuals who reside in warmer locations during the winter or rent premises in areas that offer skiing or golf.

[23] I am in complete agreement with the board’s conclusions.

[24] The appellant asserts that the governing factor to consider in determining whether the rental was “seasonal” is one of intent. The appellant asserts that at the time the lease was entered into the use of the property was intended to be seasonal only. The appellant points to the cost of the lease being membership in the golf club, which was only operational during the warmer months of the year. The appellant asserts that the actual use of the property was seasonal. The appellant asserts that, therefor, the lease is exempt by reason of the inclusion of the word “seasonal” in s. 5(a).

[25] It seems to me that there is a difference between a seasonal rental and an annual rental of premises that is used seasonally. The former involves a premises rented for the season, such as the summer season or the winter season. The latter involves a premises rented annually that is used by the renter only certain months of the year. The former is the type of residence described by a differently constituted panel in this court in Putnam as “accommodation for travellers, for vacationers, for anyone who needs temporary accommodation provided by someone other than themselves”. The latter cannot fit in that description. In my view the former is exempt by s. 5(a) and the latter is not.

[26] This interpretation, in my view, is consistent with a reading of s. 5(a) as a whole, where the accommodations listed are those used by persons needing temporary accommodations for travelling or vacationing purposes. Moreover, this interpretation is consistent with the reasoning of the court of appeal in Matthews where that court opined that a renter is entitled to the protection of the act “whether they live in their accommodation 52 weeks a year or some lesser amount of time, and whether the unit in question is their primary or secondary residence”.

[27] The lease in the case at hand fits into the latter category – namely an annual rental of premises used seasonally. Accordingly, the lease is not exempt and the respondent is entitled to the protection afforded by the Residential Tenancies Act.

. White v. Upper Thames River Conservation Authority

In White v. Upper Thames River Conservation Authority (Ont CA, 2022) the Court of Appeal considered a land lease case, appealed from the LBT and through the Divisional Court. The original issue was the application of the RTA to the lots given that the lease called for seasonal periods of non-occupancy, a provision that had been waived extensively in practice. At the CA it was agreed that the RTA applied, and the only issue was the legality of the non-occupancy period provisions (the court held against their legality):

[13] The parties have a longstanding rental relationship that has always included occupancy limitations. It is unclear why the limitations were established. The respondent can suggest no purpose for them, nor does anything in the record indicate the practice at other conservation authorities in the province. The respondent is attempting to establish the legality of occupancy limitations it has chosen not to enforce for decades.

[14] Regardless of the provenance or utility of the occupancy limitations, the operation of the Act is clear: if the limitations are inconsistent with the Act they are rendered void by operation of s. 4.

[15] Plainly, occupancy limitations are not specifically permitted by the Act, but nor are they specifically prohibited. The Divisional Court considered that the absence of a specific prohibition was determinative, given the parties’ agreement to the limitations. In an apparent application of the expressio unius est exclusio alterius maxim, the court reasoned that because the Act includes some specific prohibitions – for example, the Act prohibits “no pet” provisions – the absence of a specific prohibition of occupancy limitations means that they must be permitted. The court reasoned that “[i]f there was a limitation regarding limiting access or occupation of a residential unit, the court would expect there to be a specific section of the Act dealing with this issue.” The court added: “It can hardly be said that when a party voluntarily agrees to a provision of the residential agreement that is not specifically provided for by the Act, this leads to a determination that the provision is inconsistent with the Act.”

[16] This reasoning is untenable. It does not necessarily follow from the specific prohibition of some things in an act that other things not specifically prohibited must be permitted. Whether this sort of negative implication can be drawn depends on context and common sense – as Scalia and Garner note, whether the thing specified “can reasonably be thought to be an expression of all that shares in the grant or prohibition involved: see Reading Law: The Interpretation of Legal Texts (St. Paul, MN: Thompson/West, 2012), at pp. 107-111. In this case, there is no reason to suppose that the Legislature’s decision to prohibit “no pet” provisions has anything to do with tenants’ right to occupy the units they rent.

[17] The Divisional Court’s reasoning begs the question at issue. Voluntary agreement to a provision is irrelevant if that provision is not otherwise permitted. In the absence of specific authorization or prohibition, the legality of occupancy limitations must be determined by consideration of the provisions of the Act as a whole.

[18] This is simply an application of the modern approach to statutory interpretation. The purpose of statutory interpretation is uncontroversial: it is to determine the intention of the legislature. The Supreme Court summarized the modern approach recently in Vavilov, at para. 117:

A court interpreting a statutory provision does so by applying the “modern principle” of statutory interpretation, that is, that the words of a statute must be read “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26, both quoting E. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87. Parliament and the provincial legislatures have also provided guidance by way of statutory rules that explicitly govern the interpretation of statutes and regulations: see, e.g., Interpretation Act, R.S.C. 1985, c. I-21.

[19] The modern approach to statutory interpretation is now referred to as “text, context, and purpose”: see the helpful discussion by Miller J.A. (dissenting) in R. v. Walsh, 2021 ONCA 43, 154 O.R. (3d) 263, at paras. 133-150. In my view, the text, context, and purpose of the Act confirm that it contemplates only non-temporary, non-conditional, unlimited occupancy arrangements. In short, occupancy limitations in residential leases are not permitted.

The security of tenure

[20] The intervener Advocacy Centre for Tenants Ontario and the Board made helpful submissions highlighting the security of tenure provisions of the Act – provisions that the Divisional Court failed to consider. These provisions are premised on the notion that the Act establishes ongoing tenancies that may be renewed following completion of the initial fixed term. The circumstances in which a landlord may take possession of a rental unit from a tenant are strictly limited to lawful termination, abandonment, death, assignment, eviction, or a Board order – in other words, the end of a tenancy in accordance with the Act. Nothing in the Act authorizes a landlord to take possession of a residential unit during an ongoing tenancy or assists the landlord in doing so.

[21] None of this is surprising in the context of an Act that is designed to redress the imbalance in bargaining power between landlords and tenants. Occupancy limitations are at odds with the very scheme of the Act. This is confirmed by the core concepts in the Act – tenant and tenancy agreement – both of which are defined in s. 2(1) in terms of tenants’ right to occupy the units they rent.

[22] The respondent sought to defend occupancy limitations by drawing a distinction between tenants’ right to occupy their rental units, on one hand, and the right of the landlord to take possession of those units on the other, asserting that the landlord does not take possession of the rental units or occupy them itself during the term in which occupation by the tenant is not permitted. This purported distinction is illusory. The denial of a tenant’s right to occupy the unit he or she has leased is the problem, and it is irrelevant whether the landlord has in some sense taken possession of the unit or simply denied the tenant access to it; in either case, the continuity of the tenancy has been broken in a manner inconsistent with the Act.

[23] The Act specifically enumerates the forms of living accommodation that are exempt from the Act on the basis of seasonal or temporary occupation, and it is common ground that the land lease situation in this case is not included. Section 5(1) provides:

5 This Act does not apply with respect to,

(a) living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home;

[24] In other words, rather than address seasonal or temporary accommodation arrangements in the context of leases covered by the Act, the Legislature exempted them all together.

[25] Thus, the Divisional Court’s concern that the Board’s order would preclude the owner of a cottage and a tenant from including a term in a lease permitting the owner to occupy the cottage during certain limited times of the year, such as at Christmas, is misplaced. Cottage rentals are exempt from the Act by virtue of s. 5. Put another way, there is no need to interpret the Act to protect seasonal or temporary arrangements for living accommodations. The Legislature has adverted to the matter and determined the sorts of seasonal and temporary arrangements that are not covered by the Act.

[26] In summary, the Act establishes security of tenure. Occupancy limitations are inconsistent with the Act and are rendered void by s. 4. The parties’ agreement to such limitations is simply irrelevant: freedom of contract values cannot be invoked to limit the protection the Act provides.

. White v. Upper Thames River Conservation Authority

In White v. Upper Thames River Conservation Authority (Ont CA, 2022) the Court of Appeal considered a land lease case, appealed from the LBT and through the Divisional Court. The original issue was the application of the RTA to the lots given that the lease called for seasonal periods of non-occupancy, a provision that had been waived extensively in practice. At the CA it was agreed that the RTA applied, and the only issue was the legality of the non-occupancy period provisions (the court held against their legality). An earlier (LTB) issue of substantial enjoyment was held to be unnecessary for the tenant's to succeed:

The right to reasonable enjoyment

[28] Section 22 of the Act provides as follows:

A landlord shall not at any time during a tenant’s occupancy of a rental unit and before the day on which an order evicting the tenant is executed substantially interfere with the reasonable enjoyment of the rental unit or the residential complex in which it is located for all usual purposes by a tenant or members of his or her household.

[29] The Act does not define either the concept of reasonable enjoyment or substantial interference with it. These are vague terms that must be fleshed out by Board decisions in particular contexts, and a large body of Board case law has developed in this regard. In this case, the Board stated that the restriction of tenants’ access to rental units would be a “substantial interference with the reasonable enjoyment of the rental units”. The Divisional Court disagreed, stating as follows:

A reading of the ordinary sense of s. 22 of the Act does not lead to a determination that Upper Thames substantially interfered with the reasonable enjoyment of the Tenants’ rental units when these Tenants voluntarily agreed to the provision in the lease. To be clear, s. 22 of the Act cannot be read as to indicate that any limitation to access to a rental unit during certain periods of time, agreed upon by both landlord and tenant, equates to a substantial interference by the landlord with the reasonable enjoyment of the rental units. To find otherwise would be to unnecessarily limit the ability of landlords and tenants to enter into flexible arrangements regarding the leasing of premises.

[30] As I have explained, it was unnecessary for the Board to rely on s. 22. For its part, the Divisional Court erred by assuming occupancy limitations to be proper by virtue of the absence of a specific prohibition in the Act and tenants’ agreement to include them in their leases. This led the court to conclude that s. 22 was at the heart of the appeal, and it had to be interpreted in accordance with the parties’ freedom of contract.

[31] The outcome in this case does not depend on the tenants’ right of reasonable enjoyment. The occupancy limitation in the leases is void because it is inconsistent with the Act as a whole and the nature of the tenancies it establishes and protects.