Residential tenancies are governed in Ontario by the Residential Tenancies Act, 2006 (the “RTA”). Whether you are pro-landlord or pro-tenant it is hard to argue with the fact that the RTA heavily favours the rights of tenants over the rights of landlords as property owners and service providers. In Ontario, it is illegal for a landlord to, among other things, require (or even obtain on consent) a damage deposit, require the tenant provide post-dated cheques, or prohibit a tenant from owning a pet. If a tenant vandalizes a rental property and up and leaves in the middle of the night, the landlord has no recourse except to try to track down the tenant and sue. However, perhaps a bigger problem is not what happens when a tenant disappears without paying rent, but rather what happens when a tenant will not pay rent and will not leave the property.
Given how heavily the legal deck is stacked in the tenant’s favour, it is possible for those who know their legal rights as tenants to abuse the system and live rent-free for months on end. In a Divisional Court decision released earlier this month, Justice Matlow noted the “growing practice by unscrupulous residential tenants to manipulate the law improperly, and often dishonestly, to enable them to remain in their rented premises for long periods of time without having to pay rent to their landlords” and called on the Ontario Government, the Landlord Tenant Board (the “LTB”) and the Courts to respond.
The “condensed” version of the facts of the case are as follows.
In 2005 the landlord purchased a small building that contained one commercial unit and one residential unit. Up until 2010 she lived in the residential unit herself. This building is the landlord’s only income property.
On October 11, 2011, the landlord entered into a lease to rent the property to Rony Hitti and his company Toronto Bespoke Inc. A written lease was signed for a one year term. The tenancy was supposed to begin on October 15, 2011 and the agreed upon rent was $3,600 per month. Hitti and his spouse moved into the unit immediately after signing the lease.
Hitti refused to pay the rent on October 15,2011. On October 21, 2011, the landlord served the necessary paperwork to end the tenancy early as a result of non-payment. Proceedings before the LTB were commenced on November 8. The LTB scheduled the hearing to take place on November 28. Hitti showed up on November 28 and convinced the landlord to withdraw the proceeding in exchange for him providing a cheque for the full outstanding amount. The landlord, unfortunately, agreed.
Less than a week later the landlord found out that Hitti put a stop payment on the cheque. She retained professional help and paperwork for another hearing was served on Hitti on December 20. The LTB scheduled the hearing for January 23.
On January 25 the LTB gave an Eviction Order that required the tenants to move out by February 25 unless the tenants voided the Eviction Order by paying rental arrears and court fees which totaled over $12,000 to the landlord. In February, Hitti provided a cheque for over $11,000 (enough to void the Eviction Order). The cheque was returned NSF. When the landlord went to enforce the eviction order using the Sheriff, she discovered that Hitti had already brought a motion without notice to the landlord to void the Eviction Order as a result of him having paid over $11,000. As such, there was no longer any Eviction Order for the Sheriff to enforce.
On February 7, the landlord filed the paperwork to have the Eviction Order reinstated as a result of Hitti bouncing the $11,000 cheque. The LTB scheduled this hearing for March 7, 2012.
Hitti’s lawyer showed up on March 7 and asked for an adjournment to March 12. As a condition of granting the adjournment, Hitti agreed to pay the full amount owed to the LTB in trust pending the outcome of the hearing. The adjournment was granted, Hitti never paid any money and as a result the Eviction Order was reinstated on March 16.
However, on March 16 the tenants filed an Appeal of the Eviction Order and as a result the Eviction Order became automatically stayed pending the Appeal.
The landlord brought her motion before Justice Matlow to dismiss Hitti’s appeal. That motion was heard on July 26, 2012. Justice Matlow found that the Appeal raised no bona fide question of law, was totally devoid of merit, vexatious and an abuse of process. In addition to dismissing Hitti’s appeal, Justice Matlow also awarded the landlord over $13,000 in legal fees. This put the total amount that Hitti was required to pay the landlord at almost $40,000.
Hitti was contacted by the press after Justice Matlow released the reasons for the decision. Hitti said that he had not yet read the decision, but nevertheless he had instructed his lawyer to appeal Justice Matlow’s decision.
10 months, $40,000 and counting.