COURT FILE NO.: DC-06-009800 (Brampton)
DATE: 20080627
SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: PEEL HOUSING CORPORATION Appellant/Landlord
- and -
NADIRA SIEWNARINE Respondent/Tenant
BEFORE: CUNNINGHAM, A.C.J., CARNWATH & MACDOUGALL, JJ.
COUNSEL: Martin P. Zarnett, for the Appellant/Landlord
Harry Yeon Cho, for the Respondent/Tenant
HEARD at Brampton: May 28, 2008
E N D O R S E M E N T
CARNWATH J.:
[1] The appellant, Peel Housing Corporation, is the landlord and the respondent, Nadira Siewnarine, the tenant of a subsidized rental unit in Mississauga. Ms. Siewnarine pays rent in an amount that is geared to her income.
[2] The issue to be decided on this appeal is whether the Ontario Rental Housing Tribunal (“the Tribunal”) was correct in staying Peel Housing’s application to evict Ms. Siewnarine. The Tribunal concluded that Ms. Siewnarine’s breach of a mediated settlement, pursuant to the Tenant Protection Act, S.O. 1997, c.24 (“the Act”) was stayed by s. 69.3 of the Bankruptcy and Insolvency Act, R.S., c.B-3 (“BIA”). The Tribunal found further that Peel Housing’s request to re-open the original L2 Application (based on the tenant’s material representation of her income) was also stayed by the BIA. I find her conclusions to be errors in law.
BACKGROUND
[3] Peel Housing is a social housing landlord and Ms. Siewnarine pays rent for her unit that is geared to income. She has occupied the unit since March, 2004.
[4] Peel Housing learned in April, 2005 that Ms. Siewnarine had failed to report an increase in her income that dated back to at least May, 2004. Peel Housing demanded rent arrears for what she should have paid and told her that her rent subsidy had been cancelled. Ms. Siewnarine acknowledged she failed to inform Peel Housing of the increase in her income, but denied that she had knowingly and materially misrepresented her income.
[5] Ms. Siewnarine appealed the cancellation of the subsidy to the Peel Region’s Service Manager, who found she had not knowingly and materially misrepresented her income, that the subsidy was to continue, but that she was to repay the arrears in rent that resulted from her failure to disclose her increased income.
[6] Following the Service Manager’s decision, Peel Housing sent Ms. Siewnarine a demand for payment within thirty days of the arrears ordered by the Service Manager. She failed to pay within the time and Peel Housing applied to the Tribunal for an eviction order and for payment of rent arrears (the original L2 Application, Appeal Book and Compendium, Tab 5). On December 6, 2005, the parties signed a mediation agreement under which Ms. Siewnarine acknowledged she had misrepresented her income and was to make periodic payments until the arrears of $3,747 were paid. At this point, matters between the parties were resolved.
[7] On March 3, 2006, Ms. Siewnarine filed for bankruptcy and included the debt owed to Peel Housing. She continued to pay her monthly rent, but stopped making payments on the rent arrears. She was discharged from bankruptcy on December 13, 2006.
[8] Following the bankruptcy filing, Peel Housing applied to the Tribunal by a Form L4 (Appeal Book and Compendium, tab 7) for an eviction order, based on Ms. Siewnarine’s failure to comply with the mediated settlement. It is important to note that the relief sought by the landlord was an order to terminate the tenancy and evict the tenant because the tenant had not complied with the terms of the mediated settlement. On page 2 of Form L4, Peel Housing marked the box that indicated that it was applying only to terminate the tenancy and was not requesting an order for the payment of money. An examination of Form L4 confirms Peel Housing did not check those boxes requiring the tenant to pay a sum of money.
[9] A few weeks later, Peel Housing requested to re-open the original L2 Application (Appeal Book and Compendium, Tab 8). The request was limited to having the Tribunal adjudicate upon the tenant’s material misrepresentation and to terminate the tenancy based on that material misrepresentation. No request was made for the payment of money.
[10] The application and the request for review were dismissed on May 24, 2006, when the Tribunal ruled that Peel Housing’s claims were stayed under the Bankruptcy and Insolvency Act. Peel Housing subsequently filed a request for review of the order, which request was denied on August 28, 2006. The reviewing Tribunal member found there was no serious error in the original order of May 24, 2006. Peel Housing then appealed both the original order of May 24, 2006 and the order denying the request for review of August 28, 2006.
THE MEDIATED SETTLEMENT
[11] The terms of the mediated settlement (the Appeal Book and Compendium, tab 6) were:
The tenant acknowledged that due to her misrepresentation of her income, she owed the landlord $3,747.
The tenant agreed to pay the application’s costs of $150.
The tenant agreed to repay the arrears monthly on the 20th of each month at the rate of $162.38.
The tenant agreed to pay, in guaranteed funds, the rent due and owing on the 1st of the month, plus the $162.38 on the 20th of the month.
The tenant agreed to an order of the Tribunal extending the re-opening of the application in the event of default for a period of twenty-six months from December 6, 2005.
[12] The agreement is found at tab 6 of the Appeal Book and Compendium. In addition to the terms set out in para. 10, above, the printed form of the agreement provided:
The parties agree that if the tenant fails to comply with the terms of this agreement And/or [sic] to meet any of the payments in this agreement, the landlord may apply to the Tribunal, without notice to the tenant, for an order terminating the tenancy and evicting the tenant. As part of the application the landlord can also request an order for arrears, any rent that becomes due, NSF cheque fees and related administration charges, and the cost of filing the application. The landlord must make this application no later than 30 days after the tenant’s failure to comply with a term or condition. (Pursuant to Section 77 of the TPA)
The applicant understands that they may not re-apply to the Tribunal for the same grounds and time period covered in this agreement. However, if any of the terms in this agreement are not met, the application may be reopened within one year of the date the agreement was signed. This agreement is confidential. The parties should keep a copy of this agreement. The Tribunal will not keep a copy.
[13] These terms demonstrate that the landlord could apply without notice for an order terminating the tenancy and evicting the tenant if the tenant breached the mediated settlement. The agreement further provided the landlord “can also request an order for arrears…”, etc. [Emphasis added] It was for the landlord to decide to apply for termination and eviction alone, or whether to seek payment of arrears as well.
[14] Section 77 of the Act provides:
- (1) A landlord may, without notice to the tenant, apply to the Tribunal for an order terminating a tenancy or evicting the tenant, if
(a) the landlord previously applied to the Tribunal for an order terminating the tenancy or evicting the tenant;
(b) an order or a settlement mediated under section 181 with respect to the previous application imposed conditions on the tenant;
(c) among the conditions imposed by the order or settlement were conditions that, if not met by the tenant, would give rise to the same grounds for terminating the tenancy as were claimed in the previous application;
(d) the order or settlement provided that the landlord could apply under this section if the tenant did not meet the conditions described in clause (c); and
(e) the tenant has not met the conditions described in clause (c). 1997, c. 24, s. 77(1); 2000, c. 26, Sched. K, s. 6(18).
It is not disputed that all the conditions found in ss. 77(1) (a) to (e) were satisfied.
[15] In general terms, s. 69.3 of the BIA provides that all claims provable in bankruptcy are stayed:
69.1(1) Subject to subsections (2) to (6) and sections 69.4 and 69.5, on the filing of a proposal under subsection 62(1) in respect of an insolvent person,
(a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy, until the trustee has been discharged or the insolvent person becomes bankrupt;
Thus, any sums acknowledged to be owing under the mediated settlement were stayed upon Ms. Siewnarine’s filing for bankruptcy. Again, in general terms, upon her discharge, the arrears found owing at the time of the mediated settlement were released.
[16] Thus, any sums acknowledged to be owing under the mediated settlement were stayed upon Ms. Siewnarine’s filing. Again, in general terms, upon an order of discharge, all claims provable in the bankruptcy were released.
[17] In her Reasons for Decision, the member reported, as follows:
The fact remains that the money owing due to misrepresentation is a claim provable in bankruptcy under s. 69.3 of the BIA. The Statement of Affairs prepared by the Trustee specifically includes $3,572 owing in CEL-49284 as of March 3, 2006. This should be taken as conclusive proof, absent proof to the contrary, that the money owing up to that date is a claim provable in bankruptcy and therefore any proceeding to recover it is stayed.
According to the Notice of Bankruptcy, the bankrupt will receive an automatic discharge on December 4, 2006 unless a creditor gives notice of intended opposition before that date. In my view that is where the Landlord should be stating its position regarding obtaining property by fraud. The Landlord should not be asserting a fraud claim before the Tribunal which has no authority to make such a finding in any event.
Counsel for the Landlord put forth the position that the claim for eviction can be separated from the claim for money owing, such that eviction can be ordered based on money owing without an order for money owing.
This issue was dealt with conclusively in Forestwood v. Pritz (Div. Ct.). There the landlord tried to evict the tenants from cooperative housing for failing to verify their income. They entered into minutes of settlement. The tenants breached the settlement, then filed for bankruptcy. The landlord obtained an ex parte order for eviction and money. The tenants’ set aside motion was dismissed. The tenants appealed. In short, the facts are almost identical to the instant case.
The Divisional Court held that the claim for arrears and the writ of possession were both claims provable in bankruptcy, and that the entire proceeding was subject to an automatic stay under the BIA.
- It is beyond dispute that the claim for arrears is provable in bankruptcy. To separate the request for a writ of possession from the money judgment for arrears is artificial and flies in the face of the wording of the section [s. 69.3]. Specifically, the section dictates that the ‘proceeding’ that involves a claim provable in bankruptcy is stayed…
[18] It is clear from the reasons of the member that she concluded the landlord’s L4 Application was seeking both payment of arrears and an order for termination and eviction in the same proceeding. Such was not the case, as noted above. The member was mistaken in finding the landlord was “asserting a fraud claim”. Fraud had nothing to do with the landlord’s application. Ms. Siewnarine acknowledged that she had misrepresented her income, but no acknowledgement of fraud was made nor was one required for the landlord’s purposes.
[19] Similarly, the request for a re-opening the original L2 Application did not include a request for payment of arrears.
[20] Forestwood Co-operative Homes Inc. v. Pritz, [2002] O.J. No. 550 is a decision of a panel of the Divisional Court which considered a different fact situation from the one before us. In that case, a landlord applied for both arrears of rent and for a writ of possession in the same “proceeding”. Indeed, before the Divisional Court, the landlord submitted it did not intend to pursue the arrears and that the claim for a writ of possession could and should be separated from the money judgment. The Divisional Court analyzed the relief sought by the landlord, both arrears and possession, and found them to have been brought in a “proceeding” that involved a claim provable in bankruptcy. The “proceeding” was therefore stayed. The Court found that to separate the request for a writ of possession from the money judgment for arrears was artificial and flew in the face of the wording of the section.
[21] In the matter before us, there is no such linking of a claim for arrears for rent and an application to evict the tenant. As noted above, the Form L4 makes this clear. Only one form of relief is sought in the landlord’s “proceeding”, that of eviction for failing to abide by the mediated settlement.
[22] Similarly, the request to re-open is a separate “proceeding” limited to seeking eviction for misrepresentation of income.
[23] Since the landlord’s application and request to re-open were based solely on the failure of the tenant to abide by the terms of the mediated settlement, the failure entitles the landlord to apply for and obtain an eviction order, should all the conditions of s. 77 be satisfied. Similarly, the failure entitles the landlord to request a re-opening of the original L2 Application. Contrary to the finding of the member, the fact situation before us is different from that in Forestwood Co-operative Homes.
[24] The remedy given to the landlord under s. 77 of the Act, that is, for breach of a mediated settlement, cannot fall within any definition of a claim provable in bankruptcy. Counsel for Peel Housing has persuasively submitted that should the s. 77 remedy invariably be construed as a claim provable in bankruptcy, no landlord would ever enter into a mediated agreement. One can imagine all sorts of tenant behaviour which the tenant would agree to modify by way of mediated settlement to avoid eviction. Should the tenant breach the terms of such a mediated settlement, the conduct of the tenant would have no connection with a claim provable under s. 69.3 of the BIA.
[25] Similarly, the separate “proceeding” of a request to re-open does not seek payment of any kind.
[26] The Tribunal member made an error in law in finding that the landlord’s application by way of Form L4 was an application for arrears of rent. Similarly, the Tribunal member made an error in law in finding that the landlord’s request to re-open was an application for arrears of rent. Under the circumstances, the appeal must be allowed and the matters sent back to the Tribunal for a new hearing conducted by a different member. The decision to deny a request for review, wherein the reviewing member was not satisfied that there might be a serious error in the order of May 24, 2006, is quashed.
[27] If the parties are unable to agree on costs, brief submissions not to exceed three pages may be submitted within twenty-one days of these reasons.
CUNNINGHAM A.C.J.
CARNWATH J.
MacDOUGALL J.
DATE: June 27, 2008