Court File and Parties

CITATION: Conroy v. Jalaie, 2010 ONSC 3626

NEWMARKET COURT FILE NO.: DC-08-92411

DATE: 20100623

ONTARIO

SUPERIOR COURT OF JUSTICE

(DIVISIONAL COURT)

BETWEEN:

VERONICA CONROY Plaintiff (Appellant)

– and –

LAYLA JALAIE Defendant (Respondent)

F. Grazette, agent for the Plaintiff (Appellant)

P. L. Mitchell, agent for the Defendant (Respondent)

HEARD: June 15, 2010

ON APPEAL FROM THE DECISION OF DEPUTY JUDGE KILIAN DATED NOVEMBER 6, 2008

Reasons for Decision

HEALEY, J.

[1] This is an appeal by the plaintiff from the decision of Deputy Judge Kilian dated November 6, 2008, in which he dismissed the plaintiff’s claim and granted judgment on the defendant’s claim against the plaintiff in the amount of $590 plus costs fixed in the amount of $360.

[2] For the reasons given below, the appeal is granted.

[3] The plaintiff’s claim appears to have been prepared while she was self-represented and does not clearly articulate a cause of action. In her claim the plaintiff sought return of monies paid to the defendant pursuant to the terms of an Agreement to Lease (“the lease”) signed by the parties on August 12, 2005 and requests that the court interpret certain clauses found on page 6 of the lease under the headings “Governing Law”, “Severability” and “Amendment to Lease”. The crux of the plaintiff’s claim is found in paragraph 2 of the claim, in which she wrote: “the lease states that it is within the Landlord Tenant Act but it is not. The landlord would not lease monthly and therefore I could not sublet my lease”.

[4] The facts are largely not in dispute. After signing the lease the plaintiff moved into the premises on August 15, 2005, which was a rooming house for students located by the University of Toronto, and she remained living there until October 30, 2005. The lease was for a period of one year effective August 15, 2005. The plaintiff made an initial payment of $4,010, which included 6 month’s rent, parking, cleaning and security deposit, and a deposit of $575 which was to be applied toward the second half of the year. She then decided that she wanted to live elsewhere and sought the landlord’s permission to assign the lease. In her letter informing the landlord of her desire, which was dated September 19, 2005, she wrote: “I understand I have 7 days to receive your decision. After 7 days my lease will automatically expire in 30 days”. In her written response dated October 6, 2005 the landlord indicated that the rental agreement did not expire until August 1, 2006 but a sublease could be arranged if a suitable candidate was found. The plaintiff did not find a sub-lessee, as she was under the understanding that the provisions of what was then the Tenant Protection Act (“the Act”) applied, and, as the landlord did not reply to her request within the seven days, she believed that she was entitled to terminate the lease. The plaintiff gave her notice by registered mail on September 20, 2005, indicating that she would vacate her room on October 30, 2005. The plaintiff moved out on October 30, 2005. The landlord did not return her security deposit, or the three month’s prepaid rent and amounts for parking and cleaning because she took the position that the terms of the lease applied. The plaintiff proceeded to the Ontario Rental Housing Tribunal, where she learned that the provisions of the Act did not apply because the lease indicated on its face that the premises included common elements shared with the landlord’s family. Under s.3(i) of the Act, any living accommodation whose occupant was required to share a bathroom or kitchen facility with the owner, the owner's spouse, child or parent or the spouse's child or parent, and where the owner, spouse, child or parent lives in the building in which the living accommodation is located, was exempt from the Act.

[5] At paragraph 1 of the lease in bold type is the following:

The Premises are more particularly described as follows: Private room with common kitchen-bathroom & common area shared with the landlord’s family and other roommates…

[6] The evidence presented by the plaintiff at trial was that she had read that term of the lease prior to signing it, and had asked the neighbours whether the landlord lived on the property, who confirmed that that was not the case. She testified that when she asked this question of the landlord she was evasive and did not really respond to the question.

[7] The tenant’s evidence at trial was that she only discovered that the Act did not apply to her situation when she tried to give her notice to sublease to the landlord and she refused to accept it. Then, upon applying to the Ontario Rental Housing Tribunal for a refund of her money, it was confirmed by the Tribunal that the Act did not apply because of the above clause. Her evidence was that she believed when she signed the document that she was protected by the provisions of the (in her words) “Landlord Tenant Act”, because it was entitled “Agreement to Lease” and because it contained references to “the Act”.

[8] The Agreement to Lease is a three-paged document, and appends a further six-paged document entitled “Schedule A”. At paragraph 22 of the lease, Schedule A is referred to as forming an integral part of the lease. It also notes that the tenant has read Schedule A carefully and acknowledges complying with all rules and regulations of Schedule A. As one reads through Schedule A, which by virtue of signing the lease the plaintiff acknowledged that she had done, there is reference to “the Act” in several places. The words “the Act” are never defined in either the Lease or its Schedule A. At paragraph 6 of the Schedule, for example, is the following:

6. At all reasonable times during the term of this Lease and any renewal of this Lease, the Landlord and its agents may enter the Premises to make inspections or repairs, or to show the Premises to prospective Roommates or purchasers in compliance with the Act.

[9] Such a clause would be inserted primarily for the benefit of the landlord.

[10] Of significance on this appeal is paragraph 56 of Schedule A, which provides:

56. If there is a conflict between any provision of this Lease and the applicable legislation of the Province of Ontario (the ‘Act’), the Act will prevail and such provisions of the Lease will be amended or deleted as necessary in order to comply with the Act. Further, any provisions that are required by the Act are incorporated into this Lease.

[11] This clause sets up an irreconcilable ambiguity in the lease. As earlier stated, by its opening paragraph the lease excludes the occupants of the premises from the protections and obligations of the Act. Paragraph 56 then requires that “the Act” takes precedence wherever there is a conflict between its provisions and the “the Act”. Reading the lease and Schedule A as a whole, the only possible interpretation for the term “the Act” is the operative legislation that applied at that time to residential tenancies in Ontario, which, as has already been stated, was the Tenant Protection Act.

[12] The provisions of the Act as they relate to subletting of premises were contained at section 17 of that legislation, which allowed the tenant to assign a rental unit to another person under certain circumstances. Subsection 17(4)(b) allowed the tenant to give the landlord a notice of termination under section 48 of that Act if the tenant asks the landlord to consent to the assignment of the rental unit and the landlord does not respond within seven days after the request was made.

[13] By contrast, the lease states at paragraph 11:

11. Without the prior, express and written consent of the Landlord, the Roommate will not assign this Lease, or sublet any concession or license to use the Premises or any part of the Premises. Consent by Landlord to one assignment, subletting, concession or license will not be deemed to be consent to any subsequent assignment, subletting, concession or license. An assignment, subletting, concession or license without the prior written consent of the Landlord, or an assignment or subletting by operation of the law, will be void and will, at Landlord’s option, terminate the lease.

[14] Under the termination clause of the lease, termination may occur for several reasons but the one most relevant to the issue in the case at bar is:

18. The owner may terminate this offer to lease upon 5 days written notice for any one of the following causes:

c. any un-Authorized (sic) assignment or subletting by roommate…..

[15] These provisions of the lease clearly do not provide the plaintiff with the same rights available to her under the Act.

[16] It was the uncontroverted evidence at trial that the landlord’s husband, Hossein Fadaiefard, took on the role of managing the property and did everything except place his signature on the lease. Mr. Fadaiefard testified that he prepared the document with the assistance of a computer program that he had purchased. When drafting the lease he reviewed the clauses provided on the program and put in those that he liked. When asked whether he had a full understanding of every clause his answer was “generally, yes”. However, when asked to explain what “the Act” referred to, he was unable to do so.

[17] Mr. Fadaiefard testified that his children lived on the ground and lower floors of the building, that the plaintiff had been advised of this fact from the start, and that he advised her that “this location is not under the Tenant Act” as his children were living there.

[18] Neither party’s evidence with respect to the discussions surrounding the landlord’s family is relevant. Even if enquiries were made by the plaintiff before signing the lease, the evidence did not disclose why such enquiries were being made. In other words, was the plaintiff asking because she knew the relevance of this fact as it related to the Act, or was she asking because she wanted to know the identities of others living in the building? This was never clarified in the evidence. What was also not clarified in the evidence nor dealt with in the Deputy Judge’s reasons was whether family members did in fact reside at the premises, or whether that was a clause inserted by the landlord deliberately to avoid the application of the Act. In any event, this appeal turns on the fact that the lease was patently ambiguous on its face.

[19] It is an established principle in our common law that ambiguities in a contract that affect the substantial rights and obligations of a party will be construed in favour of the party who did not draft the document. This general principle of construing ambiguities in a document against its drafter reflects the notion of comparative responsibility. Because the drafter could have avoided the ambiguous language, of the two parties, the drafter should bear the adverse construction: Chilton v. Co-operators General Insurance Co. (1997), 1997 765 (ON CA), 32 O.R. (3d) 161 (Ont.C.A.). The plaintiff had no part in drafting the terms of the Agreement to Lease and so it should be construed such that the Act applies. The plaintiff was entitled, then, to comply with the provisions of subsection 17(4) of the Act instead of paragraph 11 of the lease.

[20] Section 48(1) of the Act provided that a tenant may give notice of termination of a tenancy if the circumstances set out in subsection 17(4) apply. Subsection 48(2) provided that the date for termination specified in the notice shall be at least a number of days after the date of the notice that is the lesser of the notice period otherwise required under the Act and 30 days. The plaintiff complied with the Act by delivering her notice by registered mail, giving a day for termination that was at least 30 days from the date of notice.

[21] Accordingly the appeal is allowed and judgment should be entered for the plaintiff against the defendant in the amount of $2,500 plus prejudgment interest calculated from November 1, 2005, plus costs of the proceeding below and of this appeal.

[22] If the parties are unable to agree upon costs they may make brief submissions to me in writing of no longer than 2 pages in length directed to the judge’s chambers in Barrie, the plaintiff’s within ten days and the defendant’s within 14 days of the date of release of this decision.

HEALEY, J.

Released: June 23, 2010