Bad Faith Abounds at Landlord Tenants Tribunal

Over 6 months after many landlords in Ontario claimed that some tenants were using the pandemic as an excuse to not pay rent, it’s becoming increasingly clear that many landlords themselves are using these circumstances to violate the Residential Tenancies Act, 2006.

The Landlord Tenant Board (LTB) has been described as “chaos,” as early as late 2020, and the circumstances since that time have not improved. The province’s Digital First Strategy was intended to save money and improve efficiencies, and probably works best in court proceedings where all the parties are represented.

At the LTB, most tenants are rarely represented, and for low-income tenants who don’t have adequate access to the Internet, these proceedings have increasingly become a farce. These evictions occur summarily, with no confirmation that the tenant received the notice, and with little recourse by individuals who are already confused as to how the system works.

In some cases, bad faith by landlords can be observed, and is reported. One of the most common ways that a landlord can legally evict a tenant is through a N12 notice, which terminates the tenancy under s. 48 because a family member requires the rental unit. Similar provisions exist for the sale of a unit. However, these provisions still requires good faith by the landlord.

While this can be difficult to prove by most tenants, especially when scrambling to find new accommodations, it does happen in some circumstances. The test for bad faith can be found under s. 57,

Presumption, notice under s. 48

(5) For the purposes of an application under clause (1) (a), it is presumed, unless the contrary is proven on a balance of probabilities, that a landlord gave a notice of termination under section 48 in bad faith, if at any time during the period described in subsection (6) the landlord,

(a) advertises the rental unit for rent;

(b) enters into a tenancy agreement in respect of the rental unit with someone other than the former tenant;

(c) advertises the rental unit, or the building that contains the rental unit, for sale;

(d) demolishes the rental unit or the building containing the rental unit; or

(e) takes any step to convert the rental unit, or the building containing the rental unit, to use for a purpose other than residential premises.

There is some flexibility as to how the occupation of a unit evicted for these purposes occur. The reason for these provisions was described in TET-97174-18 (Re),

17…. If the Landlord had wanted the rental unit for his daughter he was free to serve notice of termination saying so. The intent of the provision is to stop landlords from evicting tenants in bad faith. Giving notice for one person and then substituting another family member after the fact may genuinely occur because of a change of circumstances but it is also consistent with bad faith. As the intent is to stop bad faith notices from happening, it makes little sense that the Legislature would permit a landlord to give notice for one person, and then substitute a different family member after the fact. As a result, I believe the legislature intended the provisions in the Act to mean that s. 57(1) applies to the situation where the person identified by the notice fails to move in.
[emphasis added]

Fleming in Residential Tenancies in Ontario appears to reach a similar conclusion,

Interestingly, a condition for bringing the bad faith application based on a s. 48 of 2. 49 notice is that “no person” referred to in the list of allowable occupants occupied the rental unit – if the person who was the subject of the notice and application does not move in, but someone else from one of the allowable classes of occupants does, it seems that the former tenant would be precluded from bringing an application. Alternatively, the section may be interpreted as meaning that the individual named in the notice must have failed to occupy, which is a more reasonable interpretation although not matching the specific language in the Act.

On occasion, these decisions are appealed to Divisional Court. A recent decision in Riddell v. Huynh involving an N12 illustrates how these LTB can be overturned.

Although the court found that the tenant was “unduly aggressive” and “frankly, very annoying in his conduct at the hearing,” he did have legitimate concerns about the sale of the unit to the landlord’s brother,

[10] In one area, however, the Board erred in law and the error gave rise to substantive unfairness to the tenant. The critical issue before the Board was the bona fides of the purported sale from the landlord to her brother. As a long line of cases before the Board shows, where the sale transaction is to a close family member, this is a warning sign, or flag, that the transaction may not be genuine. In this case, the unit was not exposed to the open market. No real estate agent was involved. It was a private deal. The agreement of purchase and sale was disclosed, but the price of the transaction was redacted. The appellant requested a complete copy of this critical document. This request was denied by the Board and no proper justification was given for denying this request.

[11] This was no “fishing expedition”. The price was one of the critical indicia to consider in determining the bona fides of the transaction. So were payment terms and financial arrangements that were made to meet those payment terms. Although the prior applications to evict the tenant for “personal use” did not give rise to an issue estoppel or res judicata, they did provide context for the dispute. So, too, did the history of conflict, including evidence adduced by the tenant that the landlord had recently tried to impose another illegal rent increase and had threatened to sell the unit if the tenant did not accede to the improper demand for rent. Just days after this, the landlord purported to agree to the sale to her brother.

[12] There were many “alarm bells” that this was another attempt by the landlord to oust the tenant without a proper justification. The tenant was entitled to test the evidence relevant to this issue, and this included full details of the sale transaction. These were proper questions, the Board erred in disallowing them, and this error may have affected the outcome. If the price and the payment arrangements did not reflect reasonable commercial terms, the inference that the transaction was not genuine would have become more and more irresistible.

[13] On my reading the erroneous ruling respecting full disclosure of the terms of the sale transaction followed as an extension of the Board’s efforts to constrain the appellant’s conduct in the hearing within reasonable bounds. The Board’s discretion is broad in respect to the conduct if hearings, but not so broad as to preclude a party from testing critical evidence on a key issue in dispute.
[emphasis added]

The tenant in this case was legally trained, which may have assisted them in scrutinizing the facts of the eviction better than the vast majority of tenants before the LTB. Effectively, the most critical evidence in N12 evictions is never properly tested at all, even though some self-help resources are available.

An article in the Hamilton Spectator explains further the recourse that tenants may have available,

Caryma Sa’d, a landlord and tenant lawyer in Toronto, says tenants should keep records while they’re living in the unit in case they find themselves before the board later on.

“Tenants should be documenting any conversations they have with the landlord,” she says. “Other things, like the expenses you incurred as a result of the move due to your eviction, are also worth keeping track of.”

Sa’d says landlords may be required to compensate tenants for these costs if the board finds they’ve been evicted in bad faith.

Most importantly, Sa’d says, is that tenants have one year to bring a T5 complaint to the board.

“So tenants should determine early on if they think they’ve been evicted in bad faith,” she says.

Once Bill 184 comes fully into effect, it’s possible that the increased fines will act as a greater deterrent from landlords abusing these processes. If and until then though, tenants should continue to be wary of requests to use a unit for personal use by the landlord or a purchaser.

 

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