CITATION: Stefanizzi v. Jameus et al., 2016 ONSC 317
DIVISIONAL COURT FILE NO.: 996/15
DATE: 2016-01-18
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C., SANDERSON, DESOTTI JJ.
BETWEEN:
JOHN STEFANIZZI and LORI STEFANIZZI
Appellants
– and –
ANTHONY JAMEUS and BRANDIE CASSELMAN
Respondents
John Stefanizzi in Person
Lori Stefanizzi, not present and not represented
No One present or appearing for the Respondents
HEARD at Sudbury: October 13, 2015
MARROCCO A.C.J.S.C.
[1] The appellants appeal a February 9, 2015 Landlord and Tenant Board (the “Board”) Review Order denying review of a Board order declaring jurisdiction over an Occupancy Agreement entered into with the respondents.
[2] Initially, the respondents had applied to the Board for an order determining that the appellants had:
failed to meet their maintenance obligations under the Residential Tenancies Act, 2006, S.O. 2006, c. 17, or
failed to comply with health, safety and housing or maintenance standards and
harassed, obstructed, coerced, threatened and interfered with them and their reasonable enjoyment of 766 Frontenac Street, Sault Ste. Marie (the “Frontenac property”).
[3] The self-represented appellants raised a preliminary issue at the Board; namely that no landlord and tenant relationship existed between themselves and the respondents. Specifically, the appellants argued that since the respondents signed both an Occupancy Agreement and an Option to Purchase Agreement, this latter agreement gave them a property interest in the Frontenac property and that as a result the Board had no jurisdiction. The appellants cited a series of decisions from British Columbia and two Board decisions in support of their position.
[4] The appellants cited a series of decisions from the British Columbia Dispute Resolution Services involving monies being paid by a tenant to a property owner for the purpose of eventually purchasing the property. According to the decisions, a transfer of interest occurred, and so the Residential Tenancy Act, S.B.C. 2002, c. 78 did not apply. The Board Member indicated that case law from British Columbia was not binding.
[5] In regards to, the Board Member decided that the two Board decisions from Ontario were factually different and therefore had no application. The Board Member noted that the parties in one of the cases had entered into a trust agreement protecting the interests of the common law spouses until the property was “devolved”. The Board Member then relied upon the fact that in the other decision the purchaser was a constructive trustee for the co-occupant thereby making the co-occupant an owner and not a tenant.
[6] The Board Member then referred to the fact that this was the second time a property owned by the appellants had been the subject of Landlord and Tenant Board proceedings.
[7] The first property (known as the “Searchmont property”) was also subject to an Occupancy Agreement and an Option to Purchase Agreement. According to the Board Member, the Searchmont property case decided that the two agreements were separate and that the existence of an Option to Purchase Agreement did not render the Occupancy Agreement exempt from the Residential Tenancies Act, 2006. The Board Member commented that the Searchmont property case was unsuccessfully appealed to the Divisional Court. The Board Member relied upon the fact that the Searchmont property involved rent to own circumstances similar to the Frontenac Street property; involved the same landlords; and was based upon similarly worded agreements. In the end, the Board Member concluded that the circumstances of the Searchmont property and the Frontenac Street property were “deemed parallel to the extent that the Divisional Court decision relating to the Searchmont property might equally apply to the Frontenac Street property.”
[8] The Board Member then declared that that the Residential Tenancies Act, 2006 applied and that the Board had jurisdiction.
[9] On February 2, 2015, the appellants requested a review of this decision.
[10] A different Board Member (the “Reviewing Board Member”) considered the request to review. The Reviewing Board Member commented on the finding that the Occupancy Agreement and the Option to Purchase Agreement on the Frontenac Street property were similarly worded to the Occupancy Agreement and Option to Purchase Agreement referred to in the Searchmont property decision. The Reviewing Board Member then stated that “the issue of jurisdiction over the two agreements was previously heard and determined for the Searchmont property…” The Reviewing Board Member then commented on the unsuccessful appeal of the Searchmont property decision to the Divisional Court.
[11] The Reviewing Board Member also mentioned evidence relied on by the appellants which established that the respondents had registered the Option to Purchase Agreement on title to the Frontenac property. In the appellants’ view, this registration gave the respondents an equity interest in the property. The Reviewing Board Member declared that this evidence did not affect the application of the Residential Tenancies Act, 2006 to the Occupancy Agreement.
[12] The Reviewing Board Member concluded that there was no serious error in the decision she was reviewing and denied the request for review.
[13] The appellant appeals that decision. Section 210 of the Residential Tenancies Act, 2006 governs appeals and provides as follows:
- (1) Any person affected by an order of the Board may appeal the order to the Divisional Court within 30 days after being given the order, but only on a question of law.
(2) A person appealing an order under this section shall give to the Board any documents relating to the appeal.
(3) The Board is entitled to be heard by counsel or otherwise upon the argument on any issue in an appeal.
(4) If an appeal is brought under this section, the Divisional Court shall hear and determine the appeal and may,
(a) Affirm, rescind, amend or replace the decision or order; or
(b) Remit the matter to the Board with the opinion of the Divisional Court.
(5) The Divisional Court may also make any other order in relation to the matter that it considers proper and may make any order with respect to costs that it considers proper.
[14] The Board Member and the Reviewing Board Member determined that the issue of jurisdiction over the two agreements in this matter had been previously determined by decisions of the Board and the Divisional Court. In doing so, they each made a decision that was wrong in law and unreasonable.
[15] The Divisional Court in its Searchmont property decision referenced section 202 of the Residential Tenancies Act, 2006 which requires the Board to determine the “real substance” of transactions that come before it. This section also enables the Board to disregard the form of a transaction or the separate corporate existence of the participants. The Divisional Court decided that the Landlord and Tenant Board’s decision that the Searchmont property Occupancy Agreement was in essence a residential lease was reasonable because it was justified, transparent and intelligible and within a range of possible acceptable outcomes. The Divisional Court did not decide that all similarly worded Occupancy Agreements entered into by the appellants in respect of other properties were also residential leases, regardless of the circumstances.
[16] Section 202(1) provides as follows:
- (1) In making findings on an application, the Board shall ascertain the real substance of all transactions and activities relating to a residential complex or a rental unit and the good faith of the participants and in doing so,
(a) may disregard the outward form of a transaction or the separate corporate existence of participants; and
(b) may have regard to the pattern of activities relating to the residential complex or the rental unit.
[17] The effect of section 202(1) was considered by the Court of Appeal for Ontario in Slapsys (c.o.b. 1406393 Ontario Inc.) v. Abrams, 2010 ONCA 676, 268 O.A.C. 395, at para. 13:
Furthermore, by its language, s. 202 obligates the Board to ascertain the true substance of transactions, activities and the good faith of the parties when making findings on an application. It allows the Board to disregard the separate corporate existence of the parties to the transaction in doing so. These are matters that are relevant to an enquiry under s.48. As a result, we are satisfied that s. 202 is relevant to the determination of an application under s. 48 of the Act.
[18] Section 202(1) both enables and requires the Board to ascertain the true substance of the transactions, activities and good faith of the parties when making findings on an application.
[19] The Board is required in each one of these cases to consider the “true substance” of the transaction. This involves consideration of all the circumstances surrounding the execution of the agreements which it is considering. The following questions provide a non-exhaustive list of inquiries that might be made into the surrounding circumstances:
Did the appellants acquire the Frontenac Street property in consultation with the respondents?
Did the appellants have a previous history of renting out the Frontenac Street property?
Do the respondents have a previous history of similar transactions?
Why did the respondents resort to this method of purchasing the property?
How did the parties interact with each other while the respondents were residing at the Frontenac Street property? Specifically, did they treat each other as though they were in a landlord and tenant relationship?
Was the Option to Purchase Agreement registered on the title to the Frontenac Street property?
[20] After the surrounding circumstances have been explored, the terms of the Occupancy Agreement and Option to Purchase Agreement should be considered. For example, in this case the Option to Purchase Agreement provided that a portion of the monthly rent ($129) provided for in the Occupancy Agreement applied toward the purchase price of the property; $6,000 was paid toward the purchase price when the Option to Purchase Agreement and Occupancy Agreement were signed; these sums were forfeited to the appellants if the respondents failed to comply with the Occupancy Agreement or failed to exercise their option to purchase; and, finally, both agreements were entered into on September 15, 2011 and expired on September 14, 2013.
[21] The fact that there are two agreements does not determine the issue of jurisdiction. For example, Hassani v. Marchewka, [1992] O.J. No. 1460 (Gen. Div.) involved a single agreement which was a purchase and sale agreement with an incorporated lease agreement. The agreement provided that in the year leading up to the close of the sale, the purchaser was able to lease the property. In the end, the purchaser leased the property, but declined to close the sale. When the vendor attempted to evict the purchaser, the court found a tenancy relationship existed between the parties.
[22] It is only after this type of inquiry that the Board can reasonably determine whether a specific Occupancy Agreement has created a landlord and tenant relationship.
[23] Finally, it is the appellants who maintain that the Board lacks jurisdiction and accordingly it is the appellants’ responsibility to put before the Board all of the relevant circumstances upon which they rely.
[24] Accordingly, this appeal is allowed. The denial of the appellants’ Request to Review is set aside. The Reviewing Member is to reconsider the appellants’ Request to Review after reading and considering these reasons. The appellants are entitled to costs payable
by the respondents in the amount of $1000 inclusive of disbursements and applicable taxes.
MARROCCO A.C.J.S.C.
SANDERSON J.
DESOTTI J.
Released: January 18th, 2016
CITATION: Stefanizzi v. Jameus et al., 2016 ONSC 317
DIVISIONAL COURT FILE NO.: 996/15
DATE: 2016-01-18
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C., SANDERSON, DESOTTI JJ
BETWEEN:
JOHN STEFANIZZI and LORI STEFANIZZI
Appellants
– and –
ANTHONY JAMEUS and BRANDIE CASSELMAN
Respondents
REASONS FOR JUDGMENT
Released: [Click and Type Date]