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RTA - Superior Court Jurisdiction. Rosen v. Reed
In Rosen v. Reed (Div Court, 2023) the Divisional Court considers a non-payment of rent issue [for background see Chapter 7 - Non-Payment of Rent Terminations of the Guide], here whether the $35k monetary LTB limit [RTA s.207] applies to what I call 'catch-up-payments' [under RTA 74(4,11)] [see s.8: 'Enforceable-Order-to-Eviction "Catch-Up Payment" and Tenant's One-Time Motion to Set Aside Eviction Order'].
The specific issue is whether a 'catch-up payment' can be over $35k (the tenancy here was an unusually expensive one at $10k/month). These next quotes review the court's take on this issue (and thus the present authority on it), but this case been compelling for the range of issues that it attracts, so below I set out my comments:[1] This appeal concerns “pay to stay” orders made by the Landlord and Tenant Board (“LTB” or the “Board”). Are they subject to the monetary jurisdiction of the Board (currently $35,000) or may the Board order that all outstanding rent be paid to void an order terminating a tenancy if the arrears are more than $35,000?
[2] The short answer to this question is that the monetary jurisdiction of the Board does not constrain its discretion to impose terms to void an order terminating a tenancy. This has long been the law stated by this court and has been reaffirmed by this court as recently as 2023 (Galaxy Real Estate Core Ontario LP v. Kirpichova, 2023 ONSC 4356). No circumstances have arisen that would lead this court to depart from its prior decisions on this issue. In any event, this court’s prior decisions on this issue are correct in law and sound in principle. Therefore, for the reasons that follow, the appeal is dismissed.
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Prior Jurisprudence on this Issue
[6] In a 2010, Ferrier J., sitting as a single judge of the Divisional Court, held as follows:To hold that the monetary cap applies to “the outstanding arrears of rent” would result in an absurdity. The defaulting tenant could continue ad infinitum to merely pay the monetary limit and continue in possession, all the while continuing in default. (Horstein v. Royal Bank of Canada, 2010 ONSC 3134, para. 13 (Div. Ct.))
This statement was in respect to s. 74(11) of the RTA, not s. 74(4), but the principle in issue is the same for the two subsections. [7] This court has concluded that the monetary jurisdiction of the LTB in the RTA limits the amount of an “order” that may be made for payment, and not the nominal value of all claims that may be adjudicated before the LTB: Ryshpan v. Bayview Summit, [2000] OJ No. 6054 (Div. Ct.).
[8] The LTB has gone both ways on this issue. Some LTB decisions have found that “pay to stay” orders are limited to the monetary jurisdiction of the Board: Galaxy Real Estate Core Ontario Properties LP v Deen, 2022 CanLII 78938 (ON LTB); Guo v Apiou, 2021 CanLII 142621(ON LTB); Divani v. Brown, 2021 CanLII 147655 (ON LTB). Other LTB decisions have concluded that “pay to stay” terms may exceed the monetary jurisdiction of the Board: 2022 CanLII 56643 (ON LTB) and 2022 CanLII 127325 (ON LTB).
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(c) Condition for Setting Aside an Eviction Order is not an Order for the Payment of Money within the meaning of s. 207 of the RTA
[19] An “order for the payment of money” within the meaning of s. 207 of the RTA is an LTB order that may be registered with the court and enforced in the same way as an “order for the payment of money” made by a court. Orders terminating a tenancy under s. 69 of the RTA are not orders for the payment of money. They are orders terminating a tenancy. They are enforced by removing the tenants from possession of the premises and giving possession of those premises to the landlord. Once that has been done, the orders are “spent”, having been “executed”. Orders made pursuant to s. 74 are orders terminating a tenancy, not orders for the payment of money.
[20] The appellant’s arguments do not seriously contest this analysis. Rather, they focus on this language in subsection 207(3) of the RTA: “... all rights of the party in excess of the Board’s monetary jurisdiction are extinguished once the Board issues its order.” Arrears under the lease that exceed the monetary jurisdiction of the LTB are “extinguished” once the LTB “issues its order” and thus, on calculating the amounts required to be paid to void a termination order, “rent in arrears under the tenancy agreement” does not include arrears the rights to which have been “extinguished”.
[21] The result of this approach could be the very “absurdity” noted by Ferrier J. in Horsheim: a tenant could fail profoundly to meet their obligation to pay rent, running arrears over $35,000, and then “cure the default” by paying $35,000, obtaining a rent reduction proportional to the extent of their profound default. The only way to avoid this situation, for a landlord, would be to bring proceedings in the Superior Court – with much higher costs and delays, and adding significantly to the burdens of a court system that is already under considerable strain.
[22] The sense of absurdity is all the greater when one considers the continuing accrual of arrears. In this case, the arrears (accruing at $10,000 per month) were $50,000 at the time of the LTB decision but grew an additional $20,000 over the course of the time required to give the Tenant an opportunity to cure pursuant to s. 74 of the RTA. It could not have been the intention of the Legislature to create a situation whereby a tenant could obtain an ever-greater reduction in rent arrears, at the expense of the landlord, by delay in curing its default in meeting its fundamental obligation to pay rent. These provisions were designed to afford tenants a significant opportunity to cure their default and preserve their tenancy, not to afford tenants an extended period of rent abatement.
[23] Alternatively, if the appellant’s argument were given effect, it would still permit landlords to pursue eviction before the LTB but would require landlords to defer a request for an order for payment of arrears until after termination of the tenancy. It would require the LTB to make its order for payment only after termination had been ordered and executed. In other words, by requiring additional steps and by following a particular order of adjudication, the landlord and the LTB could defer making an “order for the payment of money” until after eviction had taken place – making the process more cumbersome and expensive for the LTB and for the parties.
[24] It is in this context that the LTB stated as follows on this issue in this case:While the Board cannot order a person to pay more than $35,000.00 in accordance with [s.207(1)] of the Act, I find that this does not apply to the “stay and pay” option set out in the order below. The order terminates the tenancy and requires the tenant to pay the amount up to the Board’s monetary jurisdictional limit of $35,000.00 plus the cost of filing the application. The tenant can choose to pay the full amount of rent, and costs owing to the Landlord if they choose not to vacate the unit. This amount is optional and only required if the Tenant elects to continue the tenancy. Therefore, the Board is not ordering this amount to be paid and is not ordering an amount that exceeds the limit. (Decision, para. 4) [25] The standard of review on a question of law is correctness, but this court “should take the administrative decision maker’s reasoning into account – and indeed, it may find that reasoning persuasive and adopt it….” (Vavilov, para. 54; see also Smith v. Youthlink Youth Services, 2022 ONCA 313, para. 17; Reisher v. Westdale Properties, 2023 ONSC 1817, paras. 9-10). As explained above, the LTB’s reasoning on this issue is persuasive and gives effect to the different provisions in the RTA governing orders for payment of money and orders for termination of a tenancy. It follows longstanding authority from this court. The contrary interpretation would result in an unfair windfall to tenants, and would likely have the long-term effect of encouraging transfer of a significant number of landlord and tenant disputes to the Superior Court.
COMMENT
. Overview
In other words, according to this court in Rosen v Reed, any of the various RTA s.47 catch-up payments - even if made in the course of an RTA case before the LTB - can exceed $35,000 in quantum - and to hold otherwise would be 'absurd' as a landlord-ripoff, and inconvenient as creating an incentive unnecessarily bring RTA cases in the Superior Court.
As will be seen below, I disagree - but first, some needed clarification.
. Understanding 'Catch-up Payments'
The court misconceives the nature of the RTA 74 'catch-up payment' scheme right from the start [para 2 and 4]: ... the monetary jurisdiction of the Board does not constrain its discretion to impose terms to void an order terminating a tenancy. andThe LTB terminated the tenancy for non-payment of rent but also ordered that the Tenant could void the termination order (my emphasis) upon payment by March 20, 2023 of the entirety of the arrears ($50,000) plus accrued and accruing rent of $10,000 per month, pursuant to s. 74 of the RTA. 'Catch-up payments' are not subject to any tribunal discretion, nor are they compelled by an order - they instead draw their effect - that of 'cancelling' the RTA 74(3) termination orders - by force of statutory provisions: ie. 'discontinuing' [RTA 74(2)], 'voiding' [RTA 74(4),(5),(6),(14),(16)] and 'setting aside' [RTA 74(9),(10),(11)]. This misconception likely arises from RTA 74(3), which at clause (b) requires that a termination order shall:... inform the tenant and the landlord that the order will become void if, before the order becomes enforceable, the tenant pays to the landlord or to the Board the amount required under subsection (4) and specify that amount; Clause (b) is not akin to what we normally consider to be aspect of an order, either tribunal or court. Rather, if it has any legal precedent it is that a Consumer Protection Act (CPA) informational notice, such as we see in CPA General Reg 35(2) ['Your Rights under the Consumer Protection Act, 2002']. They are consumer advisories, tactically and physically located within the text of a non-payment of rent termination order, in the hope of attracting tenant attention.
While germane to the formal order and it's enforcement, these 'catch-up payment' informational notices are quite different in that they have no compulsory or declarative aspects. But they are not new, as a very similar notice is located earlier in the RTA process - with the RTA 59(2) Notice of Termination (for non-payment of rent) [".. shall specify that the tenant may avoid the termination of the tenancy by paying, on or before the termination date specified in the notice, the rent due as set out in the notice ..."]. Most of RTA 74 can be viewed as an extension of this RTA 59(2) technique through all of the stages of the non-payment notice, hearing, termination and eviction process.
This 'deception' is further understandable in that the RTA 74(3)(b) 'informational notice' is required to contain [at clause (a)] a monetary itemization of the arrears, overhold compensation and costs required to satisfy the 'catch-up payment', much in appearance like a true monetary orders.
It may be helpful to note that termination orders [RTA 74(3)] are not necessarily combined (though they commonly are) with orders for arrears (and related amounts). Separate LTB proceedings and related orders for payment of rent arrears are located in RTA 87 ['Application for arrears of rent'], although they are commonly brought together in a Form L1 ['Application to Evict a Tenant for Non-payment of Rent and to Collect Rent the Tenant Owes '] application.
In any event, no administrative provision or LTB order contained anywhere in RTA 74 [even RTA 74(3) "terminating a tenancy and evicting the tenant"] is one which "order(s) the payment to any given person of an amount of money", and 'catch-up payments' (at least directly) avoid the monetary jurisdictional order limit of RTA 207.
In that respect I agree with the court, but a corrected context was necessary.
. The Appellant's RTA 207(3) Argument
At para 20 the court states the appellant's primary argument, that drawn from RTA 207(3):207(3) If a party makes a claim in an application for payment of a sum equal to or less than the Board’s monetary jurisdiction, all rights of the party in excess of the Board’s monetary jurisdiction are extinguished once the Board issues its order. The argument centers on the phrase "all rights". The argue goes: 'aha! - this means catch-up payment 'rights' as well!' That means that if - as will be done in the common combined non-payment termination and arrears application - the landlord also seeks arrears, then any catch-up payments over $35k are prohibited.
This is the interpretation that Corbett J resists [at para 21], primarily on the dual bases of: 1. 'absurdity' (no doubt with a common law lawyer's instinct to resist forfeiture in the face of a fair exchange), and 2. 'inefficiency' (the court's fear that the incentive that this will create for similarly-situated parties to pursue their RTA cases in Superior Court, apparently an assumed mischief). Note that re 'absurdity', the court is at pains throughout his reasons [paras 6-8,21-23] to spell out further financial [and even procedural (para 23)] mischief.
I am not at all persuaded by this court's abbreviated RTA 207(3) statutory interpretation endeavour. Even an additional cursory 'text/context/purpose' [La Presse inc. v. Quebec (SCC, 2023), para 23] examination raises serious doubts as to the results reached here.
Firstly 'text'. The textual "all rights" of RTA 207(3) clearly goes against the respondents and the court, at least as far as we are into the realm of LTB orders (though not in relation to the several prior administrative 'discontinued's and 'void's). A 'catch-up payment' and it's 'cancellation' of the termination order is clearly a 'right', and the pre-LTB-order and post-LTB-order administrative distinction is wholly consistent with the plain RTA 207 goal of distinguishing the institutional monetary jurisdiction of the LTB from that of the Superior Court.
Secondly 'context'. The statutory 'context' of RTA 207(3) is clearly that of the relevant balance of RTA 207, and that is undeniably the drawing of the monetary dividing line between LTB orders and Superior Court claims/orders: RTA 207(1-2). Given the final operative phrasing of RTA 207(3) [ie. "... once the Board issues its order"] RTA 207(3) can only have application to 'orders' - and consequently with respect to RTA 74, RTA 207(3) law can only be about 'orders' [ie. RTA 74(6,11,14)] - not about the administrative procedural 'discontinuances' or 'voidings' that precede actual orders [ie. RTA 74(4,5)]. Again though we see this institutional line-drawing: LTB versus Superior Court.
Thirdly, 'purpose'. This last observation supports the purposive statutory interpretation point in that RTA 207 is all about - and perhaps even only about - monetary line-drawing between the LTB and the Superior Court as adjudicative 'institutions'. Simply put, the legislation was intent of delegating responsibility for under-$35k cases to the LTB, and higher-value cases to the Superior Court - in an almost identical fashion to which it line-drew earlier between the Small Claims Court and the Superior Court, in the purely civil context. Where an applicant has facts which allow for the choice between the two, that choice is left to the applicant, and it should be respected - and if necessary, enforced - ie. 'you had your choice to 'go higher', and you chose against it - so you're stuck now'.
. Summary
In summary, an unstressed application of the 'modern principle' of statutory interpretation results in a reading of RTA 207(3)'s "all rights" that 'sacrifices' overages when the applicant opts for the 'cheaper' LTB procedure, an ultimate conclusion that is opposed to that of the court in this case. That is, once the parties are into the LTB application stage, 'catch-up payments' are subject to the RTA 207(3) $35k limit.
. Faraone v. Hitti
In Faraone v. Hitti (Ont CA, 2023) the Court of Appeal addresses the appeal route when RTA orders (here, of over $35,000) are first heard by "any court of competent jurisdiction" (here, it can only be the Superior Court), not the LTB [under RTA 207(2)]. It appears that the appellant wrongfully filed their appeal initially in the Divisional Court (where RTA LTB appeals should be commenced), and then corrected themselves and refiled in the appropriate Court of Appeal [under CJA s.6(1)(b)]:[3] The responding parties brought an application to end the tenancy agreement and obtain arrears of rent in excess of $115,000. The Order gave the relief sought: the tenancy agreement was terminated/set aside; the tenants were required to give up possession of the leased premises by March 17, 2023; and, judgment for the arrears plus costs of approximately $13,700 were ordered in favour of the responding parties.
[4] Mr. Hitti has been attempting to appeal the Order since it was issued. He brought an appeal to the Divisional Court and various motions in the Superior Court. He has now concluded that an appeal lies to this court, hence this motion.
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[7] Given Mr. Hitti’s actions since the Order was made, I am satisfied that he formed the requisite intention to appeal and maintained it throughout. I am also satisfied with Mr. Hitti’s explanation for the delay in filing a notice of appeal with this court. It is clear that Mr. Hitti was not the only person in this matter who was confused about which court – the Divisional Court or the Court of Appeal – had jurisdiction to hear the appeal.
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[10] First is the lack of merit of the proposed appeal. The essence of Mr. Hitti’s proposed appeal is that the Superior Court lacked jurisdiction to grant the application and that it amounted to an abuse of process. As the application judge noted in his reasons for decision, this court’s decision in Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, is a full answer to that contention. There is no question that the Superior Court had the jurisdiction to hear and decide the application. . Minas v. Adler
In Minas v. Adler (Div Court, 2022) the Divisional Court took a further crack at an earlier 'abuse of process' line of argument that they first tried in Trinidade v Jantzi. This abuse of process relates to the RTA 'appeal route' (it is different from the 'automatic stay on appeal' line, which also exists):Abuse of Process
[44] In Trindade v. Janzi, the Divisional Court considered a situation where a Superior Court order terminated a tenancy. Subsequent to the entering of the consent order, an application was commenced at the Board for a determination that the RTA applied to the tenancy. The Divisional Court determined that the Board application was an abuse of process.
[45] Writing for the court, Favreau J. (as she then was), stated at para. 27:As held in Maynes v. Allen-Vanguard Technologies Inc. (Med-Eng Systems Inc.), 2011 ONCA 125, at para. 36, the "doctrine of abuse of process seeks to promote judicial economy and to prevent a multiplicity of proceedings". In Birdseye Security Inc. v. Milosevic, 2020 ONCA 355, at para. 16, the Court of Appeal emphasized that a multiplicity of proceedings raising the same issues does not necessarily give rise to abuse of process in all cases. A finding of abuse of process depends on the circumstances and context of the case. [46] Favreau J. then considered the unique aspects of Trindade v. Janzi. First, she found that the issues raised at the Board were identical to those raised in the Superior Court. Second, she found that no monetary remuneration was sought at the Board. Third, she found that there was no ongoing tenancy in Trindade v. Janzi. Accordingly, the Board proceedings were an abuse of process.
[47] At para. 32, Favreau J. stated that:As a general rule, there is no doubt that the Board or a court should be cautious before finding that it is an abuse of process for a party to bring an application before the Board even if there are parallel proceedings before the court. The Board is meant to be a less expensive and more accessible forum in which tenants or landlords can assert their rights. However, in the unique circumstances of this case, where the only apparent purpose of the respondents' application before the Board is to shield against a judgment by the Court in proceedings in which the respondents can raise, and have raised, the same issues as before the Board, I have no difficulty in finding that the respondents' application to the Board for rent abatement is an abuse of process. [48] In the case before us, the Member quoted the correct law and considered the evidence, including the Landlords’ putative forum shopping. On the aggregate, the Member found that the largely duplicative Board proceeding was not abusive in so far as the Board hearing was the most efficient use of the court’s time and the parties’ money. This view accords with the court’s view in Trindade v. Janzi. Further, the Member was correct when he found that, unlike Trindade v. Janzi, there was an ongoing tenancy in the matter being determined by him. As such, the factual matrix underpinning the finding of abuse of process in Trindade v. Janzi was not present in the instant case.
[49] Further, in this case, Dow J. effectively required the parties to attend before the Board when he stated:To the contrary, it would appear the propriety of the eviction of the plaintiffs/tenants should first be dealt with by the Landlord and Tenant Board. If any claims for damages remain, this action seeks same and remains available…
The defendants’ decision to move back in, in my view, provides the best opportunity for the property to be properly maintained pending disposition of all of the disputes between the parties before the Landlord and Tenant Board. [50] It is difficult to conceive of how a Board proceeding could constitute an abuse of process if the parties were being invited by the Superior Court to attend before the Board.
[51] Given the foregoing, the Member did not err in law in his treatment of abuse of process. There is no basis for this court to interfere in his determination that the Board proceeding did not constitute an abuse of process despite the Tenant’s forum shopping in that the Board hearing was the most efficient process available to the parties.
[52] This ground of appeal is dismissed. . Minas v. Adler
In Minas v. Adler (Div Court, 2022) the Divisional Court attempts to address the apparent contradiction between the stated 'exclusive jurisdiction' of the LTB over RTA matters [RTA 168(2)], and the permissive Superior Court provision [RTA s.207(2)] that allows lawsuits over RTA matters where the claims are above the Small Claims limit of $35,000:[41] Given the foregoing, the Board was correct in interpreting its own statute. The language of section 168 is clear, namely that the Board has exclusive jurisdiction to hear matters falling within the purview of the RTA. Conversely, under section 207 of the RTA, the Superior Court of Justice may exercise any power specifically allocated to the Board when a plaintiff/applicant seeks certain monetary relief. The discretionary nature of the Superior Court’s powers as delineated by the statute is such that the legislature gave the Superior Court the ability to decide whether it wished to exercise the powers in question. In this case, Dow J. chose not to exercise these powers by stating “it would appear the propriety of the eviction of the plaintiffs/tenants should first be dealt with by the Landlord and Tenant board. If any claims for damages remain, this action seeks same and remains available.”
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