North York General Hospital Foundation v. Armstrong et al.

[Indexed as: North York General Hospital Foundation v. Armstrong]

69 O.R. (3d) 603

[2004] O.J. No. 22

Court File No. 89/03

Ontario Superior Court of Justice

Divisional Court

R.A. Blair R.S.J., Gravely and Epstein JJ.

January 7, 2004

Landlord and tenant -- Residential tenancies -- Land lease home -- Land lease community -- Land developed as residential complex of homes -- Homes sold under agreements under which purchasers became owners of homes and subtenants of lands -- Ontario Rental Housing Tribunal correct in holding that purchasers were "owners" under definition of "land lease home" under Tenant Protection Act -- Tribunal correct in holding that complex was "land lease community" under Act -- Parties by agreement excluding normal rule that buildings are fixtures and part of realty -- Tenant Protection Act, 1997, S.O. 1997, c. 24.

Real property -- Fixtures -- Land developed as residential complex of homes -- Homes sold under agreements under which purchasers became owners of homes and subtenants of lands -- Ontario Rental Housing Tribunal correct in holding that purchasers were "owners" under definition of "land lease home" under Tenant Protection Act -- Tribunal correct in holding that complex was "land lease community" under Act -- Parties by agreement excluding normal rule that buildings are fixtures and part of realty -- Tenant Protection Act, 1997, S.O. 1997, c. 24.

Under a 99-year lease, the Imperial Order of Daughters of the Empire Children's Hospital ("I.O.D.E.") leased a property to Garden Court Agencies Ltd. ("Garden Court"), upon which Garden Court developed a residential complex of homes. The homes were sold under agreements under which the purchasers (the "respondents") became owners of the homes and subtenants of the lands. In 1999, Garden Court quit claimed its interest to I.O.D.E., which, in 2001, conveyed its interest to North York General Hospital Foundation (the "Foundation"), a charitable foundation. In 2001, the Foundation brought an application before the Ontario Rental Housing Tribunal for a determination whether Part V of the [page604] Tenant Protection Act, 1997 (the "Act") applied. The issues were whether the respondents were owners within the meaning of the definition of "land lease home" and whether the complex was a "land lease community" under the Act, in which event the respondents had the right to sell or lease their homes and to assign the land lease, without the consent of the Foundation. In a decision dated January 13, 2003, the Tribunal decided that the homes were "land lease homes" in a "land lease community". The Foundation appealed.

Held, the appeal should be dismissed.

An appeal from the Ontario Rental Board under s. 196 of the Act is on a question of law alone and since the determination of whether someone is an "owner" is a mixed question of fact and law, the appeal must fail for this reason alone. However, on the merits, the question was not whether the respondents were owners of their homes in classic real property terms but whether they qualified as owners under the Act within the meaning of the phrase "owner of the dwelling" in the definition of "land lease home". The Act was remedial legislation to be given a liberal interpretation and, having regard to the nature of the relationship between the parties as stipulated in the purchase agreements and the subleases, the respondents were "owners" of the dwellings. Their homes were permanent structures located on lands leased from the Foundation and were "land lease homes" as defined in s. 1(1) of the Act. Moreover, the conduct of the parties and their predecessors reflected this understanding. Where parties agree that buildings may be owned separately from the ownership of the lands underneath them, the real property principle that buildings are fixtures and part of the realty is not applicable. Further, the respondents' homes were part of a land lease community within the meaning of the Act. It followed that Part V of the Act applied to their properties. The Tribunal made no error about the application of the Act and, accordingly, the appeal should be dismissed.

APPEAL from a decision of the Ontario Rental Housing Tribunal.

Cases referred to Devine v. Callery, 1917 559 (ON CA), [1917] O.J. No. 121 (QL), 40 O.L.R. 505 (S.C. Appellate Division); Dollimore v. Azuria Group Inc., [2001] O.J. No. 4408 (QL), 152 O.A.C. 57 (Div. Ct.); Elitestone Ltd. v. Morris, [1997] 2 All E.R. 513, [1997] 1 W.L.R. 687, [1997] H.L.J. No. 15 (H.L.); Feingold and Discipline Committee of College of Optometrists of Ontario (Re) (1981), 1981 1898 (ON SC), 33 O.R. (2d) 169, 123 D.L.R. (3d) 667 (Div. Ct.); Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33, 219 Sask. R. 1, 211 D.L.R. (4th) 577, 286 N.R. 1, 272 W.A.C. 1, [2002] 7 W.W.R. 1, 30 M.P.L.R. (3d) 1, 10 C.C.L.T. (3d) 157; Kiwanis Club of Brantford v. Brantford (Township) (1983), 1983 1790 (ON SC), 44 O.R. (2d) 12, 1 O.A.C. 63, 3 D.L.R. (4th) 186, 24 M.P.L.R. 161 (Div. Ct.); Mediacom Inc. and Toronto (City of) (Re) (1984), 1984 1905 (ON SC), 46 O.R. (2d) 692, 4 O.A.C. 118, 10 D.L.R. (4th) 639 (Div. Ct.), affg (1982), 1982 1987 (ON SC), 38 O.R. (2d) 257, 137 D.L.R. (3d) 193, 19 M.P.L.R. 142 (H.C.J.) Statutes referred to Short Forms of Leases Act, R.S.O. 1990, c. S.11 Tenant Protection Act, 1997, S.O. 1997, c. 24, ss. 1(1), 7, 103, 105, 108, 114, 140(3), 196 Rules and regulations referred to O. Reg 194/98 ("Tenant Protection Act, 1997"), s. 29(7) Authorities referred to Burns, E.H., and G.C. Cheshire, Cheshire and Burns Modern Law of Real Law, 13th ed. (London: Butterworths, 1982) [page605] Golden, D."Who's In, Who's Out: When Does the TPA apply -- Special Cases" (presented at Tenant Protection: One Stop Justice for Residential Tenancies, Toronto, Ontario: CBA Continuing Education; Law Society of Upper Canada, May 20, 1998) Jowitt, E., Jowitt's Dictionary of English Law, 2nd ed. (London: Sweet & Maxwell, 1977) Ontario, New Directions: Tenant Protection Legislation (discussion paper) (Toronto: Ministry of Municipal Affairs and Housing, 1996)

Joseph Debono and Karen Groulx, for appellant. John D. Campbell, for respondents Wedge, Crossin, O'Brien and Briggs. Cheryl Katz, in person.

The judgment of the court was delivered by

BLAIR R.S.J.: --

Background

[1] At issue in this appeal from the Ontario Rental Housing Tribunal is whether the respondents live in a "land lease community" as contemplated by the Tenant Protection Act, 1997 (the "Act") [See Note 1 at end of the document]. If they do, Part V of the Act provides that they have the right to sell or lease their home and assign their land lease without the consent of the appellant Landlord.

[2] The respondents are a group of 38 people living in a residential complex known as "Garden Court in North Toronto". The complex was built on land originally owned by the Imperial Order of Daughters of the Empire Children's Hospital ("I.O.D.E.") and leased on a 99-year lease to Garden Court Agencies Ltd. Garden Court Agencies Ltd. had the right to develop and sublet the property, which it did in the early 1970s by building and marketing the houses that are now located on the land. Each of the residences was purchased by way of an agreement of purchase and sale followed by a long-term sublease from Garden Court Agencies Ltd. respecting the lands on which the home was built. The respondents at all times considered that they were leasing the lands but that they were the "owners" of the homes. It seems that all parties treated the relationship in this fashion until sometime in 2001.

[3] In 1999, Garden Court Agencies Ltd. quit claimed its interest in the premises to the I.O.D.E. and, in March 2001, the [page606] I.O.D.E. conveyed its interest to the appellant, a charitable foundation established to raise funds for the North York General Hospital.

[4] In 2001, the appellant brought an application before the Ontario Rental Housing Tribunal pursuant to s. 7 of the Act seeking a determination whether Part V of the Act applied to the homes in the complex and extensive related relief in terms of the application of various sections of the Act in Part V and other associated provisions. In a "jurisdictional hearing" the Tribunal declined to consider all of the areas of relief sought by the appellant and decided to confine itself to a determination of whether the Act or any provision of it applies in the circumstances.

[5] On January 13, 2003, the Tribunal issued the decision that is the subject of this appeal. It found that all of the homes were "land lease homes" in a "land lease community" and therefore ordered that Part V of the Act, and certain specific sections therein, applied to all of the homes, as did certain other related sections and regulations. These provisions will be referred to in more detail later.

[6] The effect of the order, if it stands, is that the respondents have the right to sell or lease their homes without the appellant's consent and, arguably, that the appellant does not have the right to refuse to consent to an assignment of the land lease (ss. 105 and 108). What is underlying the dispute -- counsel advise -- is the question whether, if the respondents have the right to sell and assign, they have the right to do so at a profit to them. If they do not have that right then they are required to purchase the appellant's interest in the premises before they can deal with their own purchasers. Counsel for the respondents acknowledges that the Tribunal's order does not resolve the sale-for-profit issue, but the parties do not get to that point unless the respondents are entitled to the benefit of the Part V provisions referred to above.

Issues and Statutory Provisions

[7] At the heart of this appeal is the issue of whether the respondents are the "owners" of the dwellings on the leased lands, within the meaning of that word as used in the definition of "land lease home" in s. 1(1) of the Act. If they are -- subject to the second issue considered below -- the residential complex is a "land lease community" as also defined in that subsection. Part V of the Act applies to land lease communities.

[8] Pertinent provisions of the Act state as follows:

Section 1(1)

"land lease community" means the land on which one or more occupied land lease homes are situate and includes the rental units and the land, structures, [page607] services and facilities of which the landlord retains possession and that are intended for the common use and enjoyment of the tenants of the landlord.

"land lease home" means a dwelling, other than a mobile home, that is a permanent structure where the owner of the dwelling leases the land used or intended for use as the site for the dwelling.

Section 103

103. This Part [See Note 2 at end of the document] applies with necessary modifications with respect to tenancies in land lease communities, as if the tenancies were in mobile home parks.

Section 105

105(1) A tenant has the right to sell or lease his or her mobile home without the landlord's consent.

Section 108

108. A landlord may not refuse consent to the assignment of a site for a mobile home on a ground set out in clause 17(2) (b) or 17(3)(c) if the potential assignee has purchased or has entered into an agreement to purchase the mobile home on the site.

[9] A second issue is whether -- even if the dwellings are land lease homes -- the residential complex is a land lease community, since there are no "land[s], structures, services and facilities of which the landlord retains possession and that are intended for the common use and enjoyment of the tenants and the landlord" as contemplated in the definition of "land lease community".

[10] Thirdly, it is argued that the Tribunal exceeded its jurisdiction, as it had defined it in the earlier jurisdictional order, by doing more than simply determining whether certain provisions of the Act "applied" and determining that a tenant of a land lease community (through the combination of ss. 105 and 108) may assign the tenancy agreement without the consent of the landlord.

Facts

[11] A brief further explanation of the facts and the landholding relationship between the parties is required.

[12] Each of the respondents (or their predecessors) acquired their homes by means of a contract called an "Agreement of Purchase and Sale" and a subsequent sublease of the premises. With one exception, these documents are standard for all respondents.

[13] Although the Agreement of Purchase and Sale calls for the execution of "a valid and binding lease on the standard form of lease used by the vendor for the development", the language of its own operative provisions is couched in vendor/ purchaser terms. [page608] The purchaser agrees "to purchase all and singular the leasehold premises" (called the "leasehold property"). There is a stipulated closing date for "this transaction of purchase and sale" and it is "the Purchaser and the Vendor" who are to execute the lease. The purchase price is $50,000. The Agreement contains standard examination-of-title and objection-to-title provisions. The Vendor gives a one-year warranty against structural defects on the house.

[14] The sublease is stated to be pursuant to the Short Forms of Leases Act, R.S.O. 1990, c. S.11. Garden Court Agencies Ltd. subleases the lands and premises to the Sublessee on a net net basis for a period of 23 years and five months, with nine options to renew for further five-year terms (extending the lease to the year 2041). There is an annual rental of $1,500. After October 31, 2016, the Landlord has the option to give notice that "they intend to re-purchase the property from the Sub-Lessee". The Sublessee is responsible for all repairs and maintenance and to repair structural and capital items. The Landlord specifically retains an insurable interest in the premises and is to be named as the loss payee in the Sublessee's insurance policies on the premises. The Landlord is entitled to enter the premises, on reasonable notice, to inspect. At the end of the term, the Sublessee is to quit the demised premises and deliver them and all buildings and improvements up to the Landlord.

[15] Article 11 of the sublease is worthy of particular note. It provides that notwithstanding the covenants affecting the care, maintenance, repair, et cetera, with respect to the buildings and other improvements, the buildings and improvements "shall remain the property of the Sub-Lessee the same to become the property of the Landlord only upon termination of this sub-lease by effluxion of time or sooner as herein provided, ipso facto and without compensation or further consideration" (emphasis mine). The Sublessee is required upon termination of the lease, at the Landlord's request, to deliver "a conveyance of the said buildings and other improvements".

[16] It is apparent from the foregoing summary that the Landlord at all times retains its reversionary rights in the lands and premises. This, too, is worthy of note.

[17] The evidence is that the respondents believed they were buying their homes. This gave them the comfort of owning their home and the economy of not having to purchase the fee simple in the lands on which the home was built. Mr. Tambakis, the appellant's real estate manager, conceded that the lease document speaks of the tenants as owners of the houses. Although what the parties believe about the nature of their relationship is [page609] not necessarily indicative of the true legal nature of that relationship, Garden Court Agencies Ltd., the appellant (and the I.O.D.E.) all took the position as well -- until sometime in 2001 -- that the respondents owned their houses.

[18] In 1998, the I.O.D.E. brought a rent control application against Garden Court Agencies Ltd. Its lawyers advised the respondents of the application, indicating that the I.O.D.E. was ". . . the registered owner of the lands upon which the house you own and a number of neighbouring homes have been built". In its written Application it stated that "the Tenancy Agreements all stipulate that the improvements upon the Rental Unit (including the homes sold to Subtenants) are owned by the Subtenant (during the term)."

[19] Over the years Garden Court Agencies Ltd. has consented to the assignments of various subleases, and most of the Garden Court Agencies Ltd. properties have been sold several times, usually at a profit for the vendor. Since 2000, after obtaining the quitclaim deed from Garden Court Agencies Ltd. in July 1999, the I.O.D.E. and the appellant have been trying to sell their interests to the respondents for approximately $250,000 for each property. In April 2001, the appellant brought the present application to the Tribunal, challenging the respondents' ability to sell their properties and assign the land lease without the appellant's consent and at a profit. The appellant will not consent to the sale of the properties unless the respondents have first purchased the appellant's interest in the lands and premises at the appellant's price.

[20] That is the factual background leading up to the dispute before the Tribunal.

Standard of Review

[21] An appeal lies to the Divisional Court from a decision of the Ontario Rental Housing Tribunal under s. 196 of the Act on a question of law alone. The standard of review is correctness: Dollimore v. Azuria Group Inc., [2001] O.J. No. 4408 (QL), 152 O.A.C. 57 (Div. Ct.), at para. 2; Re Feingold and Discipline Committee of the College of Optometrists of Ontario (1981), 1981 1898 (ON SC), 33 O.R. (2d) 169, 123 D.L.R. (3d) 667 (Div. Ct.).

Analysis

Are the respondents "owners"?

[22] The central question for determination on this appeal is whether the Tribunal was correct in its conclusion that the respondents are "owners" of their dwellings for purposes of the Act. [page610]

[23] I have serious reservations about whether the issue involves a question of law alone, and therefore gives rise to a right of appeal under s. 196. A determination that someone is an "owner" under a statute involves a consideration of the factual and contractual underpinnings of the relationship between the parties and the application of those underpinnings to the provisions of the statute. This is an exercise of mixed fact and law. For this reason alone, this aspect of the appeal must fail.

[24] Nonetheless, I recognize that the distinction between a question of law and a question of mixed fact and law may often be blurred: see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 211 D.L.R. (4th) 577, at pp. 256-57 S.C.R., pp. 591-92 D.L.R. Therefore, in the event I am in error in the foregoing conclusion, and because other questions of law remain to be determined in any event, I propose to deal with the "ownership" issue on the merits.

[25] The appellant asserts that the concept of "owner" in the Act should be approached from a classic conveyancing law perspective. In this respect "owner" is to be defined in accordance with the common law applicable to the law of real property. That is, an owner is someone who enjoys the most extensive rights allowed by law to a person in respect of the property, to the exclusion of all others, subject to an agreed upon use or restrictions to which the owner has agreed: Cheshire and Burns Modern Law of Real Property, 13th ed. (London: Butterworths, 1982), E.H. Burns, at p. 154; Jowitt's Dictionary of English Law, 2nd ed. (London: Sweet & Maxwell, 1977), at p. 1301. Even if the owner surrenders possession under a lease, he or she remains the "owner" so long as the reversionary right to recover the property has been retained. Central to this concept is the notion that there cannot be more than one "owner" of real property.

[26] It is further contended that buildings such as houses are fixtures which become part of the realty and are the property of the owner or landlord. The appellant submits that Ontario law recognizes only a limited exception to this principle, namely, where the parties have expressly agreed to permit the tenant to control the structure during the term and where they have expressly agreed that the tenant has the right to remove the house at the end of the term. It relies on the decision of this court in Kiwanis Club of Brantford v. Brantford (Township) (1983), 1983 1790 (ON SC), 44 O.R. (2d) 12, 1 O.A.C. 63 (Div. Ct.) for this proposition.

[27] On the facts here, the appellant submits that the parties entered into what is in substance a residential sub- lease in which Garden Court Agencies Ltd. leased the lands and buildings to the respondents (or their predecessors) and retained its reversionary interest in the premises. While repair and other obligations have [page611] been shifted to the tenant, the appellant says this is quite normal in a lease situation and that the real substance of the transaction is a tenancy agreement for the house and the land.

[28] In my opinion, however, the issue is not whether the respondents "own" their homes in classic real property terms but rather whether they have acquired sufficient attributes of ownership to qualify as "owners" of the homes during the term of the arrangement, within the meaning of the phrase "owner of the dwelling" in the definition of "land lease home" in s. 1(1) of the Tenant Protection Act, 1997. In my view, they have. Part V applies to them.

[29] The Act is remedial legislation. It must be given a large and liberal interpretation that reflects its object and intent. Part V is designed to protect those who live in what are called land lease communities, the hybrid nature of which (lease of land; ownership of building) gives rise to features that do not fit nicely into the classic conveyancing analysis. The 1996 Discussion Paper produced by the Ministry of Municipal Affairs and Housing, entitled New Directions: Tenant Protection Legislation, outlined the Ministry's perspective in modifying the existing legislation [See Note 3 at end of the document]:

Mobile home parks and land lease communities have unique characteristics and have distinct operating circumstances. Tenants already receive the same protection as tenants in other rental accommodation, but the legislation doesn't recognize that special maintenance and operating provisions are needed. The new tenant-protection package will be designed to recognize mobile homes and land lease homes as affordable ownership housing while providing residents with the rights and consumer protection they need as tenants.

(Ministry of Municipal Affairs and Housing, New Directions: Tenant Protection Legislation, Discussion Paper, 1996, at p. 12).

[30] I agree with Mr. Campbell's submission that the concept of property ownership can have different meanings in different contexts. Having regard to the nature of the relationship between the appellant/Landlord (and its predecessors) and the respondents/Tenants (and their predecessors), as stipulated in the Purchase Agreements and the Subleases and as reflected in their conduct over the years, I am satisfied that the respondents are "owners" of the dwellings in which they live as that term is contemplated in the Act. Their homes are permanent structures, [page612] located on lands leased from the appellant. They are therefore "land lease homes", as that concept is defined in s. 1(1).

[31] While the Landlord retains its reversionary interest in the premises together with the insurable interest that goes with it and some rights of control that enable it to maintain the integrity of the community scheme, the thrust of the arrangement is that the respondents assume all of the responsibilities and many of the attributes of ownership during the potential 70-year term of the lease. They take the lands and premises on a "completely net net basis". They are responsible to maintain the premises in a good state of repair and are also responsible for structural and capital repairs (including rebuilding the houses if they are destroyed and paying rent and realty taxes even if the houses have been destroyed). As the Tribunal found:

The primary obligations of ownership, those of maintaining the houses, improving them as they saw fit and bearing the risk of damage or destruction, were shifted to the Tenants. The rights that remained with Garden Court, to approve encumbrances and supervise standards of repair, were not inconsistent with having only a reversionary interest.

[32] As noted in para. 14 above, the Landlord has the option to re-purchase the premises after October 31, 2016 (sublease, article 33), and at the end of the term may require the respondents to deliver "a conveyance of the said buildings and improvements" (article 11). Neither a re-purchase nor a conveyance of the buildings would be necessary if the respondents had not acquired an ownership interest in the first place. Most telling, however, is the language of article 11 of the sublease, cited in para. 15 above, which makes it clear that the buildings and other improvements "shall be and remain the property of the Sub-Lessee" during the term of the sublease. They only become the property of the Landlord upon the termination of the sublease. I agree with the Tribunal member that this language "goes far beyond merely giving the Tenants possession of the houses, as the Landlord [submits]".

[33] Thus, although there are provisions in the sublease that are inconsistent with the respondents "owning" the dwellings in a classic real property sense, I am satisfied the real substance of the relationship is that they are "owners" of their homes in the sense required for purposes of the Act.

[34] Moreover, the conduct of the parties and their predecessors throughout reflects this same understanding, and is consistent with the contractual arrangements. Garden Court Agencies Ltd. and the appellant (and its predecessor) at all times before 2001, referred to the respondents as the owners of their homes. The record is replete with such examples. Indeed, in 1998, the [page613] appellant's predecessor took the position in proceedings before the Tribunal that the homes had been sold to, and were owned by the respondents. Although the appellant now says it did not have all of the documentation concerning the transactions until after Garden Court Agencies Ltd. quit claimed its interest in 1999, the I.O.D.E. was aware of the terms of the subleases and the fact that it later discovered there were no bills of sale with respect to the dwelling units does not really alter the substance of the relationship between the parties. As mentioned earlier in these Reasons, Garden Court Agencies Ltd. has consented over the years to the assignments of the various subleases, and most of the Garden Court Agencies Ltd. properties have been sold several times, usually at a profit for the vendor.

[35] Ontario courts have recognized that buildings may be owned separately from the ownership of the lands underneath them where the parties have agreed to that effect; in such circumstances, the real property principle that buildings are fixtures on the land and thereby become part of the realty belonging to the owner of the land, is not applicable; see, Devine v. Callery (1917), 1917 559 (ON CA), 40 O.L.R. 505, [1917] O.J. No. 121 (QL) (S.C. Appellate Division), per Riddell J.; Re Mediacom Inc. and Toronto (City of) (1982), 1982 3138 (ON SC), 38 O.R. (2d) 257, 137 D.L.R. (3d) 193 (H.C.J.); Kiwanis Club of Brantford v. Brantford (Township) (1983), 1983 1790 (ON SC), 44 O.R. (2d) 12, 1 O.A.C. 63 (Div. Ct.). To the extent that Elitestone Ltd. v. Morris, [1997] 2 All E.R. 513, [1997] 1 W.L.R. 687 (H.L.) may suggest to the contrary -- see the comment of Lord Lloyd of Berwick at p. 516 All E.R., p. 690 W.L.R. -- I do not think it represents the law in Ontario; however, as I read that decision, it turned on the traditional analysis of whether the wooden bungalows that had been erected on the property in question were fixtures or chattels having regard to the degree and purpose of their annexation to the lands.

[36] In Mediacom, supra, Saunders J. was dealing with whether or not certain transit shelters that had been designed and installed by Mediacom for the City of Toronto were exempt from assessment under the Assessment Act, R.S.O. 1980, c. 31. The shelters were affixed to land belonging to the City, but the agreement provided that the shelters belonged to Mediacom during the term of the agreement. If Mediacom forfeited the agreement, the shelters became the property of the City. If the City terminated the agreement early for reasons other than forfeiture, the shelters remained the property of Mediacom. The City could terminate the agreement early and purchase the shelters at an agreed price. Upon the expiration of the term, the shelters became the property of the City. While concluding that the matter was [page614] "not free from doubt", Saunders J. preferred the view that the shelters belonged to Mediacom during the term of the agreement for purposes of the Assessment Act provisions, although he did not decide the case on that basis. At pp. 262-63 O.R. he said:

In my opinion, the agreement in substance provides that the shelters are at present the property of Mediacom and that the city has the option of acquiring them which may be exercised either by (1) terminating the agreement and exercising the option to purchase; or by (2) allowing the agreement to run its course without exercising the termination right. If the city does not wish to acquire the shelters, it may terminate the agreement at any time up to the expiration of the term and refrain from exercising the purchase option. The city thus is in the position of being able to choose at some time in the future what it wishes to do. If it takes no action, the shelters will, by agreement, become the property of the city when the term runs out. The matter is not free from doubt. Another person might look at the agreement as giving to the city an indefeasible property interest with the right to dispose of the shelters by terminating the agreement and not exercising the purchase option. I prefer the former analysis as the one which least distorts the language used by the parties.

(Emphasis added)

[37] Writing for the Divisional Court in Kiwanis Club of Brantford, supra, Steele J. approved the above reasoning of Saunders J. in Mediacom. He confirmed that in law a building can be owned by one person separate and apart from the ownership of the land beneath it. After examining the terms of the lease in question he concluded that "the intention of the parties, as disclosed by the language used in the agreement, is that the owner of the building, during the term of the agreement is Kiwanis" (emphasis mine).

[38] In Kiwanis, the lessee had the right to remove all buildings and structures in the event of termination or upon completion of the term. Based on this authority, Mr. Debono argues on behalf of the appellant that there is only a limited exception to the general rule that what is attached to the realty forms part of the land and that to come within that exception [See Note 4 at end of the document],

(a) there must be an express intention and agreement to the contrary; and,

(b) the contractual arrangements must give the tenant complete control of the house during the term without the reservation by the landlord of any right to supervise, approve or otherwise interfere with the use and enjoyment of the house; and, [page615]

(c) the agreement must provide that the tenant has the right to remove the house at the end of the term.

[39] In my view neither Kiwanis, nor the other authorities referred to, confine the exception in such terms. It is clear there must be an agreement to replace the general rule. However, nothing in the case law requires that the tenant have absolute control over the buildings during the term or that the tenant have the right to remove the buildings at the end of the term. It is a question of interpreting the terms of the agreement between the parties and determining whether the buildings in question belong to, or are the property of, or are "owned by" the tenant during the term of the agreement, having regard to the purposes and objects of the legislation in question. Indeed, in Mediacom, the shelters became the property of the landlord upon the expiration of the term.

[40] For the reasons articulated above, I am satisfied that the respondents are "owners" of the homes in which they live, within the meaning of the Act. Those dwellings are permanent structures on lands leased by the respondents from the appellant. The dwellings are therefore "land lease homes" as defined in s. 1(1) of the Act. Whether they form part of a "land use community" as therein defined as well, depends upon the resolution of a second issue raised by the appellant.

Are Common Use Elements Essential to a "Land Lease Community"?

[41] Although it is outlined earlier in these reasons, I repeat the definition of land lease community in s. 1(1) for ease of reference:

"land lease community" means the land on which one or more occupied land lease homes are situate and includes the rental units and the land, structures, services and facilities of which the landlord retains possession and that are intended for the common use and enjoyment of the tenants of the landlord.

[42] The appellant argues that even if the respondents' homes are "land lease homes" the residential complex is not a "land lease community" within the meaning of the Act. Consequently, the argument goes, Part V of the Act does not apply.

[43] The premise of this argument is that the word "includes" in the definition of "land lease community" denotes "means and includes" and therefore that there can be no land lease community unless (a) there is at least one site or parcel of land that is a rental unit and (b) there are what might loosely be described as common use elements of which the landlord retains possession.

[44] I do not accept this argument. The word "includes" means just that: "includes". It does not connote "means and includes" as the appellant suggests. The legislature has used the word "means" at the outset of the definition: "'land lease community' [page616] means the land on which one or more occupied land lease homes are situate". For clarity -- and no doubt to avoid the mischief of other arguments -- the concept is stated to include rental units and common use elements of which the landlord retains possession. However, neither a rental unit nor a common use element is a prerequisite to the existence of a land lease community, in my view. I am confirmed in this view by the fact that a "land lease community" can comprise only one land lease home. There would be no elements "for the common use and enjoyment of the tenants of the landlord" in such a case.

[45] Accordingly, I am satisfied that the respondents' premises are part of a land lease community within the meaning of the Act. It follows that Part V of the Act applies to their properties.

Subsection 105(1) and Section 108

[46] In this connection the Tribunal member held that s. 105(1) and s. 108 of the Act apply to all of the homes. Those provisions state:

105(1) A tenant has the right to sell or lease his or her mobile home without the landlord's consent.

108 A landlord may not refuse consent to the assignment of a site for a mobile home on a ground set out in clause 17(2) (b) or 17(3)(c) if the potential assignee has purchased or has entered into an agreement to purchase the mobile home on the site.

[47] Section 103 of the Act states that Part V applies "with necessary modifications with respect to tenancies in land lease communities, as if the tenancies were in mobile home parks".

[48] The appellant attacks the Tribunal's decision that s. 105(1) applies to a land lease home. It does so -- as I apprehend the argument -- on the basis that the subsection only makes sense in the context of a mobile home, which can be moved and disposed of separate from the land upon which it is situate, and that the subsection cannot reasonably be applied in the context of a land lease home since a sale of such a home is impossible in the absence of an assignment of the tenancy arrangement. The "necessary modifications" criterion of s. 103 has therefore not been met, it is said.

[49] In my opinion, this argument cannot be sustained. Section 105(1) and s. 108 must be read together, as the Tribunal member correctly concluded. If one replaces the words "mobile home" in those provisions with the words "land lease home", it is clear that s. 105 protects the land lease homeowner's right to sell or lease the [page617] home without the landlord's consent and s. 108 extends a similar protection with respect to the assignment of the homeowner's lease rights to the land on which the home is located.

[50] I see no error in the Tribunal member's conclusion that s. 105(1) and s. 108 apply to the respondents' properties.

Jurisdiction

[51] Finally, the appellant submits that the Tribunal member exceeded his jurisdiction by going beyond what he had earlier determined his jurisdiction was. In his decision of April 19, 2002, the Tribunal Member concluded that the Tribunal's jurisdiction was "limited to determining whether the Act or any provision of it applies and . . . does not include determining what a particular provision of the Act means or how it applies". He then listed a series of nine questions that the appellant's application would be limited to answering.

[52] The order of January 13, 2003 -- which is what is under appeal here -- dealt with those questions in a rolled-up fashion by ordering (for reasons attached to the order) that:

1. All of the homes are "land lease homes" in a "land lease community" as defined in the Act and therefore Part V of the Act applies;

2. Subsection 105(1) and s. 108 of the Act apply to all of the homes;

3. Subsections 140(3)(c) and (d) apply to all of the units;

4. Subsection 29.7 of O. Reg. 194/98 applies to all of the units; and,

5. Section 114 of the Act applies.

[53] The appeal is from the order made by the Tribunal member and not from his reasons. In my opinion, he had the jurisdiction to make the order he made. I would not give effect to this ground of appeal.

Disposition

[54] For the foregoing reasons, then, the appeal is dismissed.

[55] If the parties are unable to agree on costs, brief written submissions may be made in that regard within 30 days of the release of these Reasons.

Appeal dismissed. [page618]

Notes

1. S.O. 1997, c. 24.

2. i.e., Part V.

3. Cited in David Golden"Who's In, Who's Out: When does the TPA apply - Special Cases" (presented at Tenant Protection: One Stop Justice for Residential Tenancies, Toronto, Ontario: CBA Continuing Education; Law Society of Upper Canada, May 20, 1998), at p. 5.

4. See appellant's factum, at para. 71.