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Residential Tenancy Cases (1)

These are new cases I'm storing until I do a re-write of the Residential L&T Guide.

Part 2

. Elkins v. Van Wissen

In Elkins v. Van Wissen (Div Ct, 2022) the Divisional Court had a nasty case of bait-and-switch against tenants. During a landlord sale, an N12 [Notice to Terminate at End of Term for Landlord's or Purchaser's Own Use] was issued purporting to require the purchaser's occupation of the premises, but then - 10 days before closing - the purchaser's lawyer delivered notice of an assignment of the sale to a corporation. The tenants, having voluntarily vacated the premises shortly after closing, then filed a T5 [Landlord gave a Notice of Termination in Bad Faith], which they lost at the LTB [see para 13 for essence of these reasons]. On appeal to the Divisional Court the court essentially held that the tenants could not make out the required RTA s.210 'question of law', and so the appeal was dismissed.

The primary mischief of the case seems to lie in the statutory 'switching' of the duty of honesty (and thus the locus of the 'bad faith'), which was initially located on the purchaser at the notice stage [RTA s.49(1): "the purchaser in good faith requires possession of the residential complex"] - and then upon the seller at the application stage [RTA 57(1)(b): "the landlord gave a notice of termination under section 49 in bad faith"] - which the purchaser took advanatage of.

That, and the s.210 'question of law' limitation at the Divisional Court, seemed to put the nails in the tenants' case. However there is no mention of the RTA 202 "real substance of all transactions and activities" provision which applies to all applications, not only termination and eviction applications (of which this wasn't). It may be that a failure of the LTB and the court to consider s.202 may constitute an error of law. Certainly the cost award against the tenants ($6,500) shows little sympathy for them in what appears to be an obvious unfairness in terms of the policy behind the RTA.

Here's the Divisional Court's ruling on the bad faith T5 application:
Issue 1: The T5 Decision

[21] The issue is whether the Member erred in law in dismissing the Appellants’ T5 claim on the ground that they had failed to establish that the Sellers issued the N12 notice in bad faith.

[22] The Member articulated and applied the three-part test set out in s. 57(1)(b) of the RTA. He held that the Tenant must establish all three of the following on a balance of probabilities:
First, that the landlord gave a notice of termination under section 49 of the RTA (the N12 notice) in bad faith;

Second, that the Tenants vacated the rental unit as a result of the (N12) notice or a Board order based on the (N12) notice;

Third, that the Purchaser did not move into the rental unit within a reasonable time after the Tenants vacated.
[23] The Member held that the first part of the test under s. 57(1)(b) requires a consideration of the landlord’s intention when the N12 is given. The change of purchasers under the APS and the title direction took place well after the N12 was given.

[24] The Sellers argue that the Appellants have not raised a question of law on the T5 issue. Rather, at best, what the Appellants argue are mixed questions of fact and law. Further, whatever the intention of the Purchasers, the inquiry under section 57(1)(b) of the RTA was the intention of the Sellers acting as the landlord under the RTA. When the N12 was provided to the Appellants, the Sellers had an APS for the property with people rather than a corporation. The APS had a clause requiring vacant possession so the Purchasers’ family could move in. There was no evidence before the LTB that the Sellers had colluded or were acting on information that would have allowed a finding of bad faith to be made against them when they issued the N12. Their evidence was that at the time of service, they had no reason to disbelieve the Purchasers’ stated intention that vacant possession was required for a family member to occupy the rental unit.

[25] The Appellants argue that the N12 was given in bad faith, as title to the residence was ultimately placed in the name of a corporation, and a corporation cannot personally occupy residential premises. Also, after closing, and after the Appellants vacated the residence, it remained vacant for five months. It was then only occupied for a short time by a relative of one of the directors of the corporate owners. Also, the evidence shows that the Purchasers desired to obtain income from the property. The Appellants submit this permits an inference to be drawn that there was never a genuine intention by the Purchasers to occupy the residence. The Appellants argue the Member ignored the evidence about how the title to the property came to be in the name of a corporation, and that the Purchasers were vague about their intentions for the use of the residence and ultimately what happened to the property. The Appellants assert these facts should have caused the Member to infer that the N12 was given in bad faith.

[26] I do not agree with the Appellants’ argument that the failure of the Board to infer bad faith amounted to an error of law. An appellate court is prohibited from reviewing a lower court or tribunal finding of fact if there was some evidence upon which the decision-maker could have relied to reach that conclusion: Housen v. Nikolaisen, 2002 SCC 33, at para. 1. This principle extends to inferences of fact: General Motors v. Johnson, 2013 ONCA 502, at para. 51. In declining to make the inferences urged by the Appellants, the Member wrote that he had considered all the evidence. There was evidence upon which he could make the finding that he did.

[27] The Appellants also argue that the Member erred in law in restricting his consideration of bad faith to the Seller’s knowledge at the time the notice of termination was given. In support of that argument, Ms. Elkins cited an LTB case - File No. TST-94914-18, 2019 LNONLTB 592 – in which the Board held that the landlord’s duty of good faith extends beyond the time the notice of termination is served. This was the additional issue referred to earlier upon which the parties were invited to make written submissions. Contrary to the submissions of the Respondents, this was not an issue of the panel “going in search of a wrong to right”. It was a circumstance of being alive to an issue raised during the submissions of self-represented individuals and following that issue to a place where logic dictated. TST-94914-18 was not referred to at the Board hearing in the present case – it was under reserve at the time.

[28] In TST-94914-18, Member Solomon held that the landlord’s duty of good faith extends beyond the time the notice of termination is served and found bad faith on the part of the landlord:
22. In many other cases, the Board has found that an unforeseen change in circumstances that results in the person listed in the N12 Notice being unable to occupy the rental unit does not constitute bad faith (see, for example, TST-66921-15, TST-87559-17, TST-80046-16). I agree that this is a case where an unforeseen change of circumstances resulted in CM failing to take occupancy of the rental unit. This change of circumstances was the agreement of purchase and sale falling through. I am satisfied that the Landlords did not foresee this happening when they served the N12 Notice.

23. However, I also agree with the following statement from the Board’s order TST-87742-17-RV, which the landlord submitted: “the Landlord’s obligation to act in good faith extends beyond the time the notice of termination is served”. I take this statement to mean that bad faith is not confined to the moment in time when a landlord gives a tenant an N12 Notice. I find that bad faith can extend to the period between when the N12 Notice was given, and the time when a tenant moves out.
[29] The Appellants characterize the issue as a “bad faith period” and argue that the LTB must consider the sellers’ faith (good or bad) up to the time a tenant vacates. The Sellers countered this argument by submitting several decisions of the LTB which the Board held that only the circumstances at the actual time the N12 is delivered are to be considered.

[30] In my view, TST-94914-18 should be restricted to its own unique facts. In that case, prior to the date the sale of the property was to close, the landlords obtained an eviction order based upon their N12 notice of termination. The tenants appealed the order and obtained a stay from the Divisional Court. As a result of the stay, the landlord was unable to complete the sale on the date set for closing. At some point following the aborted closing, the purchaser advised that landlord he could not complete the sale because he no longer qualified for the same mortgage rate. With knowledge that the sale of the rental unit would not be completed, the landlords asked the sheriff to enforce the writ of possession (the Divisional Court stay had been lifted as a result of the tenants failing to comply with conditions of the stay). The landlord then relisted and sold the rental unit to another buyer.

[31] The Board found that the landlords had not acted in bad faith when they served the N12 notice of termination. The Member accepted that at the time notice was given, the landlord genuinely believed that the purchaser would move into the rental unit following closing. However, she found that the landlords acted in bad faith when they asked the sheriff to enforce the Board’s eviction order knowing that there was no prospect of the sale closing.

[32] In the present case, the sale of the rental unit was alive at the time the Appellants moved out. The Sellers could not have been expected to refuse to close or to get into a dispute with the Purchasers with the potential of litigation. I am therefore unable to accept the Appellant’s argument based upon the decision in TST-94914-18.

[33] The decision on the T5 application focused on findings of fact and the application of a statutory test to the facts as found. Those determinations are ones which members of this specialized tribunal are asked to make regularly. There is no error of law in the Member’s determination that there was no bad faith on the part of the Sellers in giving the Appellants the N12 on March 7, 2018. I would therefore dismiss the appeal of the LTB’sdecision on the T5 application.
. Koda Holdings Inc. c/o Domus Inc. v. Gareth D’Costa, David Evans, Griffin Rush, Hugh Kelly, Cameron Hanson and Shane Bulwa

In Koda Holdings Inc. c/o Domus Inc. v. Gareth D’Costa, David Evans, Griffin Rush, Hugh Kelly, Cameron Hanson and Shane Bulwa (Div Ct, 2022) the Divisional Court reviews the RTA and SPPA relationship regarding hearings:
[22] All proceedings before the Board are governed by the Statutory Powers Procedure Act,4F[5] (“SPPA”). Section 25.01 empowers the Board to determine its own procedures and practices. When the Board determines the hearing format, it must comply with s.52(2) of the SPPA and ss.2 and 3 of the Hearings in Tribunal Proceedings (Temporary Measures) Act, 2020.5F[6]

[23] The RTA directs the Board to “adopt the most expeditious method of determining the questions arising in a proceeding that affords to all persons directly affected by the proceeding an adequate opportunity to know the issues and be heard on the matter”.

[24] The Board has issued Interpretation Guidelines, one of which provides that “[w]here the member is satisfied that the party has received sufficient notice of the hearing and has been provided with an adequate opportunity to prepare their evidence and submissions, summons witnesses and obtain counsel ahead of the hearing date, an adjournment is not usually granted unless there are exceptional circumstances”.
. Delic v. Enrietti-Zoppo

In Delic v. Enrietti-Zoppo (Div Ct, 2022) the Divisional Court considered (the answer was 'no') whether RTA s.210 allows for the appeal of an interlocutory order [s.210 doesn't specify 'final' orders]:
[2] The first question requires us to decide whether s.210 of the Act gives a right of appeal from an interlocutory order.

[3] The tenants filed a notice of appeal on April 23, 2021 from two interlocutory orders of the Landlord and Tenant Board. They filed a notice of appeal on June 25, 2021 from the review on May 12, 2021 of an eviction order of February 13, 2020 and the review of the review, which was released on May 26, 2021. It is agreed that the eviction order of February 13, 2020 has been stayed by the appeal of June 25, 2021.

The notice of appeal of April 23, 2021 was an appeal with respect to two interlocutory orders and did not stay the proceedings.

[4] This notice of appeal purported to appeal the Board’s order of March 3, 2021 and the decision on review of March 18, 2021, which upheld the order of March 3.

[5] In the decision of March 3, 2021, the Board ruled that an order in a previous proceeding, refusing eviction as required by s.83 of the Act because the heat had been turned off, did not decide issues related to rent and did not give rise to res judicata and issue estoppel in a subsequent proceeding to collect rent.

[6] The decision of March 3 was not a decision to evict the tenants or terminate the tenancy, so the automatic stay provided by Rule 63.01 did not apply.

[7] It is not the form of the order, but its effect that governs. An interlocutory decision can contain final orders. An order is final if it disposes finally of a claim. An order is not final just because it is one of substance. Where the effect of an order is to continue the inquiry, it is not final.

[8] The order of March 3, 2021 was an interlocutory order, in name and in effect. It did not finally dispose of the issues between the parties. All the Board decided on March 3 was
a. that the landlord was not estopped from applying to recover rent; and

b. that the application could continue.
[9] The stay pending appeal from the order of a statutory decision-maker provided by s.25 of the Statutory Powers Procedure Act did not apply because the notice of appeal of April 23, 2021 was a nullity. The Residential Tenancies Act, 2006 does not give a right of appeal from an interlocutory order.

[10] The Act provides:
210 (1) Any person affected by an order of the Board may appeal the order to the Divisional Court within 30 days after being given the order, but only on a question of law.
[11] Jurisprudence in this court with respect to similar provisions for statutory appeals from other tribunals has consistently held that in the absence of an explicit right of appeal from an interlocutory decision, only a final order of a tribunal can be appealed.[1] Tribunals and boards are designed to provide expeditious access to justice. That intention is evidenced in section 2 of the Statutory Powers Procedure Act and, with respect to the Landlord and Tenant Board in particular, in section 183 of the Residential Tenancies Act, 2006, which provides:
183 The Board shall adopt the most expeditious method of determining the questions arising in a proceeding that affords to all persons directly affected by the proceeding an adequate opportunity to know the issues and be heard on the matter.
. Hazlett v. Cantusci et al.

In Hazlett v. Cantusci et al. (Div Ct, 2022) the Divisional Court quashed an appeal [under CJA 134(3)], not on the typical grounds of lack of merit but under the more recently-asserted ground of abuse of process [alleged where the appeal is filed only to obtain the automatic stay under R63.01(3)]:
[17] The landlord submits that the tenant’s appeal cannot succeed and should be quashed because it raises no question of law. The test for quashing an appeal is whether it is manifestly devoid of merit: Schmidt v. Toronto Dominion Bank 1995 CanLII 3502 (ON CA), 1995, 24 OR (3d) 1 (C.A.). The court in Schmidt did point out that this power is to be exercised sparingly because “it is very difficult, in most cases, to reach the conclusion that an appeal is devoid of merit without hearing the entire appeal”.

[18] In the present case, I am not persuaded that the tenant’s appeal could not possibly succeed. The tenant advances a number of points about the procedural fairness of the hearing and about the operation of s. 83 of the RTA, which could conceivably be characterized as raising questions of law and which on their face are not clearly frivolous. Accordingly, I decline to quash the appeal on the basis of a failure to raise a question of law.

The appeal is an abuse of process

[19] In his oral argument at this motion, the tenant made it clear that he had no intention of paying the accumulated arrears to the landlord and moreover, he intended to pursue civil proceedings or further proceedings before the Landlord and Tenant Board for substantial damages which, he claims, would exceed any accumulated rental arrears. As noted previously, the tenant has steadfastly refused to pay any rent or water charges since September 2020, a period of 18 months, thereby accumulating arrears in the sum of $27,000 plus accumulated water charges. There is no justification for this position and it is a clear abuse of the stay provision in Rule 63.01(3).

[20] Section 134(3) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that, on a motion, “a court to which an appeal is taken may, in a proper case, quash the appeal”. One of the grounds on which an appeal from an order of the Board may be quashed is where it is an abuse of process: Oladunjoye v. Jonker, 2021 ONSC 1199 (Div. Ct.), at para. 17.

[21] This court has recently held that it is an abuse of process to commence an appeal from an order of the Board in order to take advantage of the automatic stay to avoid paying rent due to the landlord, see Mubarak v. Toronto Community Housing Corporation, 2022 ONSC 382 (Favreau J.), in which the court stated (at para 25):

[25] This Court has repeatedly held that it is an abuse of process for a litigant to commence an appeal from an order of the Board for the purpose of obtaining an automatic stay of an eviction order, otherwise referred to as “gaming the system”: Regan v Latimer, 2016 ONSC 4132 (Div. Ct.), at para. 25; and Wilkinson v. Seritsky, 2020 ONSC 5048 (Div. Ct.) at para. 34. One of the key indicia that a tenant is trying to “game the system” is where the Tenant has failed to pay rent for a persistent and lengthy period of time without a reasonable explanation or any intention to remedy the situation: Wilkinson, at para. 34 and Oladunjoye v. Jonker, 2021 ONSC 1199 (Div.Ct) at para. 27.

[22] In all of the circumstances, I have come to the conclusion that the tenant’s non-payment of his rent since September 2020 and his avowed intention to continue to refuse to pay rent is an abuse of the process of this court.
. Capreit v. Veiga

In Capreit v. Veiga (Div Ct, 2022) the Divisional Court makes clear that RTA s.210 'questions of law' do not include ones of 'mixed fact and law':
[46] Section 210 of the Residential Tenancies Act, 2006 provides that appeals from the LTB may be brought “only on a question of law”. A question of law is a question about what the correct legal test is. A question of fact is about what actually took place between the parties. A question of mixed fact and law is a question about whether the facts satisfy the legal tests. Only questions about whether or not the LTB applied the correct legal test can be appealed to this court. Questions about whether the facts determined by the LTB satisfy the applicable legal tests are questions of mixed fact and law, and cannot be appealed: Solomon at paras. 31-33; Lafontaine v. Grant, 2019 ONCA 552 at paras. 6-7; Regan v. Ennis, 2016 ONSC 7143 at para. 23.
. Guillaume v. Barney Rivers Investments Inc.

In Guillaume v. Barney Rivers Investments Inc. (Div Ct, 2022) the Divisional Court applied the RJR McDonald injunction test to a tenant-appellant's motion to reinstate their tenancy pending appeal:
[9] The motion judge correctly characterized the issue before her as requiring her to apply the test in RJR-MacDonald v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311. She found that the appeal meets the low bar to establish a serious issue to be tried but concluded that the tenant did not establish irreparable harm. This is a factual finding, rooted in the record, and discloses no error. The motion judge also found that the balance of convenience weighed against placing the moving party in the premises, but also weighed in favour of prohibiting the landlord from leasing the premises to anyone else pending the determination of the appeal. As the motion judge expressed, this balance limited the risk of changing the status quo in a way that could lead to complications upon disposition of the appeal in this court.

[10] The motion judge applied the correct legal test, made no palpable and overriding error of fact, and her exercise of discretion discloses no basis for this panel to intervene


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