Marineland of Canada Inc. v. Olsen

CITATION: Marineland of Canada Inc. v. Olsen, 2011 ONSC 6522

COURT FILE NO.: DC-11-282

DATE: 2011-11-14

SUPERIOR COURT OF JUSTICE - ONTARIO

(DIVISIONAL COURT)

RE: MARINELAND OF CANADA INC. v. OLSEN

BEFORE: Justices Jennings, McCartney and Swinton

COUNSEL: Peter A. Mahoney, for the Appellant Marineland Judy Olsen and Robert Olsen, in person Randy Schroeder, for the Landlord and Tenant Board

HEARD AT HAMILTON: October 28, 2011

ENDORSEMENT

Swinton J.

[1] The appellant, Marineland of Canada Inc. (“the landlord”), appeals from a decision of the Landlord and Tenant Board (“the Board”) dated February 14, 2011 ordering it to pay the tenants, Robert and Judy Olsen, $3,000.00 in compensation owing pursuant to ss. 52 and 164 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (“the Act”). A request to review that decision was rejected May 25, 2011.

[2] Section 50 of the Act allows a landlord to give notice of termination of a tenancy where the landlord requires possession of the rented premises in order to convert them for a purpose other than residential premises. Section 52 requires a landlord to compensate a tenant in an amount equal to three months rent or offer the tenant another acceptable rental unit in certain circumstances.

[3] There are special protections in place where tenants rent space for a mobile home, as the tenants did here. Section 164 governs, requiring a notice period of at least one year and compensation equal to the lesser of one year’s rent and $3,000.00.

[4] The tenants received a Notice to Terminate (Form N13) in February 2009 for a termination date of August 31, 2010. They were told they would receive $3,000.00 in compensation.

[5] In early February 2010, the tenants were served with a notice to terminate their tenancy for non-payment of rent. At that time, the total rent and taxes owing from August 2009 amounted to $2,587.17.

[6] In April 2010, the Board ordered the termination of the tenancy, but postponed the eviction date to April 30, 2010. The tenants left the premises by that date. At that time, they owed $3,329.52, in accordance with the Board’s order. That amount has never been paid.

[7] In December 2010, the tenants brought an application pursuant to s. 135 claiming they were owed $3,000.00 in compensation. The Board granted the application and ordered the landlord to pay $3,000.00, stating that the literal interpretation of s. 164(2) “is that compensation is due after the N13 notice is given by the landlord to the tenant”.

[8] As the Board was interpreting provisions of its home statute, the standard of review is reasonableness (First Ontario Realty Corp. v. Deng, 2011 ONCA 54 at para. 21). This is not a case like Darragh v. Normar Developments Inc., [2008] O.J. No. 2586 (Div. Ct.) at para. 15, where the Court held that the standard of review was correctness. There, the Board was applying common law principles of statutory interpretation respecting retroactivity and retrospectivity of legislation.

[9] The Board, on the request to review, reasonably concluded that the tenants could pursue a claim for compensation to which they claimed to be entitled under ss. 52 and 164 through an application under s. 135 of the Act. Section 135 allows a tenant or former tenant to apply to the Board for an order that the landlord pay money to the tenant that has been “collected or retained in contravention of this Act.” Where the Act imposes an obligation on a landlord to pay monies to a tenant - for example, pursuant to ss. 52 and 164(2) - and the landlord fails to make the required payment, the landlord has “retained” the funds. Therefore, the tenant can bring a s. 135 application to recover the funds. The tenant is not confined to the remedy in s. 83(4), which bars the Board from issuing an eviction order, where there is to be demolition, conversion or renovations of the rented premises, until the landlord has complied with other provisions, including s. 52.

[10] The landlord also argued that the Board erred in ordering payment of compensation to the tenants, since their tenancy was terminated for non-payment of rent and not because of the landlord’s planned conversion.

[11] It was reasonable for the Board to conclude that the Act creates an immediate legal obligation on the landlord to compensate a tenant once the landlord has given notice to terminate for purposes of conversion (see, for example, Darragh, above at para. 24). It is clear that the purpose of the required payment is to compensate the tenant for the bother and expense of locating and moving into alternate premises. Therefore, the subsequent termination of the Olsens’ tenancy for non-payment of rent did not release the landlord from its obligation to compensate them.

[12] On the request to review and on appeal, the landlord raised a limitations defence based on the Board’s statement that the compensation was due when the notice was given. The landlord argued that the tenants was barred from seeking recovery by s. 135(4) of the Act, which provides that no order shall be made for payment of monies more than one year after the person collected or retained money in contravention of the Act. The N13 notice was given in February 2009, while the tenants’ application was not brought until December 2010.

[13] This argument was rejected by the Board on the request to review, which held that the landlord, by retaining monies owing to the tenants, engaged in a continuing breach. The limitation period did not begin to run until the tenants left the premises on April 30, 2010.

[14] The Board member on the request to review appears to accept the conclusion of the original Board member that compensation first became due on the date of the notice. However, neither Board member mentioned that the Act provides no precise date for payment. Indeed, in some circumstances, where a landlord is seeking to provide alternative premises for the tenant in accordance with s. 52, there may ultimately be no obligation to pay. Thus, the logical inference is that the giving of notice triggers a liability on the landlord to compensate, unless another rental unit acceptable to the tenant is provided. While some landlords may choose to pay the amount immediately on giving notice, as in Darragh, the Act does not create an obligation to pay the compensation prior to the date of termination of the tenancy.

[15] I agree with the conclusion of the Board member on review that the limitation period had not run, but not for the reason he gives - that there had been a continuing breach by the landlord. In my view, that conclusion is based on an unreasonable interpretation of the words of ss. 52 and 164. In my view, the limitation period had not run because the obligation to pay the compensation owing did not crystallize until the tenants left the premises.

[16] The landlord also raised the issue of set-off on the request to review. The Board member questioned whether the Board had jurisdiction to make such an order and then concluded that this was an issue for the enforcement stage.

[17] In my view, this was an error in law and an unreasonable conclusion. The Board was being asked to award compensation to the tenants for amounts that the landlord improperly retained. While the tenants were entitled to $3,000.00 in compensation because of the N13 Notice, the landlord was owed more than $3,000.00 by them at the time of their application. The amount owing for arrears of rent should have been taken into consideration in determining the amount of compensation owing. Had that been done, the Board would have had to conclude that the tenants were owed nothing in compensation at the time of the application because of the set-off.

[18] This conclusion is in keeping with the purposes of the Act set out in s. 1, which include “to balance the rights and responsibilities of residential landlords and tenants and to provide for the adjudication of disputes and for other processes to informally resolve disputes.” I note that counsel for Marineland acknowledged that should it seek to pursue any remaining amounts owing from the tenants, it would be required to set off the $3,000.00 of compensation that it owed to the tenants.

[19] Therefore, the appeal is allowed. The decision of the Board is set aside, and the application of the tenants is dismissed. The appellant does not seek costs, and none are awarded.

Swinton J.

Jennings J.

McCartney J.

Released: November 14, 2011