Introduction

[1] This is an appeal from the decision of the Landlord and Tenant Board (the “Board”) granting the Landlord’s application to terminate the Tenant’s tenancy.

[2] The Landlord and the Tenant are brother and sister. They entered into an agreement whereby the Landlord agreed that the Tenant could rent the Landlord’s basement for $500.00 per month for the rest of her life (the “Agreement”). The Agreement provided that the “The tenancy is NOT a fixed term, beginning on the 1^st day of February, 2006, for lifetime of the tenant.”

[3] The Landlord brought an application to terminate the tenancy pursuant to s. 48 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “Act”) because he required possession of the unit for his daughter.

[4] The Board granted the Landlord’s application, finding that the provision of the Agreement granting the Tenant the right to occupy the premises for her lifetime was “badly flawed” and could not be enforced. The basis for this finding was the Board’s view that the clause stating simultaneously that the tenancy was not for a fixed term and that it was for the term of the Tenant’s life was illogical and contradictory.

[5] The Board also found that the provision was contrary to the Act, as it took away the Landlord’s right to terminate the tenancy under sections 48, 49, 50 and 58 of the Act. All of the sections in question grant landlords the right to terminate tenancies at the end of the term of those tenancies under certain prescribed conditions.

[6] For the reasons that follow, I would allow the appeal. In summary, I find that the Board erred in law in concluding that the clause setting out the term of the tenancy was unenforceable either because it was “illogical” or because it took away a substantive right of the Landlord under the Act.

Background

[7] As already indicated, the Landlord and the Tenant are siblings. The Landlord owns a single-family dwelling, located at 62 Felan Crescent, Toronto, Ontario (the “Property”). The Landlord and the Tenant agreed that the Tenant could occupy the basement of the Property. The Tenant renovated the basement so that it was habitable and, on February 1, 2006, the parties executed a written agreement entitled “Residential Tenancy Agreement” that specified that the tenant would pay rent of $500.00 per month in cash on the 1^st day of the month in exchange for which she could occupy the premises for her lifetime. The Agreement also provided that the terms of the Tenant Protection Act, 1997, S.O. 1997, c. 24 (“Tenant Protection Act”) applied and that to the extent that the Agreement contradicted or changed, “a right or duty under the Tenant Protection Act or a regulation made under that act the term of this tenancy agreement is void.” On January 31, 2007, the Tenant Protection Act was repealed and replaced by the Act.

[8] In 2012, the Landlord made an application to terminate the Tenant’s tenancy because he required the basement for his own use. The Board dismissed that application finding that the Landlord, by his own admission, did not, in fact, require possession of the unit for the purpose of residential occupation by himself or members of his family. The Board also stated that the Landlord was not entitled to seek termination because the end of the term of the tenancy had not been reached, since the tenancy was for the lifetime of the Tenant.

[9] On October 30, 2014, the Landlord once again sought to terminate the Tenant’s tenancy, because he required the basement for residential occupation by his daughter. As mentioned, this time the Board granted the Landlord’s application, noting, among other things, that there was no dispute as to the Landlord’s good faith.

The Board’s Decision

[10] In its decision, the Board found that the Landlord’s second application to terminate the tenancy was not estopped by virtue of the finding in the 2012 application that the end of the term of the tenancy had not yet been reached. The Board observed that Board decisions are not precedent-setting and that in the 2012 application, the parties did not present arguments on the meaning of the life term provision. The Board also characterized the 2012 Board’s statement about the Landlord’s ability to bring the application because the end of the term of the tenancy had not been reached as an “observation”, rather than a “finding” (para. 18).

[11] The Board then went on to consider whether the life term provision violated the Tenant Protection Act or the Act. In this regard, it first considered the wording of the term and found that it was illogical, as it appeared to say two very different things: first, that the tenancy was not for a fixed term; and, second, that it was for the term of the Tenant’s life. It concluded that, since this term of the tenancy was so badly flawed, it had to be disregarded. The Board then construed the tenancy as an indefinite monthly tenancy (paras. 19-21).

[12] The Board went on to consider whether life tenancies were compatible with the Act or the Tenant Protection Act. It found that they were not because it “effectively takes away from the Landlord the right to terminate the tenancy under sections 48, 49, 50 and 58 of the Act” (para. 30).

This Court’s Jurisdiction

[13] Pursuant to s. 210 of the Act, a party may appeal an order of the Board to the Divisional Court, but only on a question of law.

Standard of Review

[14] The Court of Appeal has determined that the standard of reasonableness applies when the Board is interpreting its home statute or making determinations with respect to its core functions: see First Ontario Realty Corporation Ltd. v. Deng, 2011 ONCA 54. Accordingly, the applicable standard of review on this appeal is reasonableness. Accordingly, the issue for the Court in this proceeding is whether the Board’s interpretation of the life term provision is reasonable.

Analysis

[15] The Board’s finding that the Landlord was not estopped from bringing his second application to terminate the tenancy because of the Board’s earlier decision is a reasonable one. Res judicata or issue estoppel does not apply in circumstances that would work an injustice: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] SCJ No. 46. Here, the issue of life tenancy was not fully explored at the first Board hearing and it would be unjust to prevent the issue from being dealt with by the Board on the second application.

[16] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, the Supreme Court found that disputes over contractual interpretation are generally questions of mixed fact and law. However, the Court also made it clear that there are situations where it is possible “to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law. Legal errors made in the course of contractual interpretation include ‘the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor’” (para. 53, cites omitted).

[17] On the question of the Board’s finding that the provision respecting the term of the tenancy could be ignored because it was “illogical” and “ contradictory”, the Board erred in law in failing to give effect to the overriding principle of contract interpretation – namely, to “determine the ‘intent of the parties and the scope of their understanding’”: see Sattva, at para. 47.

[18] Determining the intent of the parties requires the court to construe the words of the parties in the context of the circumstances in which the contract was negotiated. This is distinct from searching for the dictionary definition of a particular word (Sattva, at paras. 47-48).

[19] In this case, the Board focused on the use of the phrase “not a fixed term” and determined that since, in its view, a life tenancy was a tenancy for a fixed term, the contract was “illogical” and “contradictory”. While this analysis may be correct when it comes to the “dictionary” meaning of a life tenancy, what it fails to consider is what the parties would reasonably have understood the words “not a fixed term” to mean in the context of a clear intention to give the Tenant a tenancy for life. Taking into account this clear intention, the parties would reasonably have understood the words “not a fixed term” to mean that the exact length of the term of the tenancy could not be calculated.

[20] Accordingly, I conclude that the Board’s conclusion on this issue was unreasonable insofar as it found the tenancy to be an indefinite tenancy rather than a tenancy for a fixed term.

[21] The question then becomes whether a term that is fixed for the lifetime of the tenant is a term that violates the provisions of the Tenant Protection Act or the Act. In s. 2 of the Act, a “tenancy agreement” is defined as a “written, oral or implied agreement between a tenant and a landlord for occupancy of a rental unit and includes a licence to occupy a rental unit.” There is nothing in this provision that suggests that a tenancy agreement cannot be entered into for the lifetime of the tenant. There is also no other provision of the Act or the Tenant Protection Act that explicitly precludes a residential tenancy agreement that lasts for the life of the tenant.

[22] Under s. 1 of the Act, the purposes of the Act include protecting residential tenants from unlawful evictions and balancing the rights and responsibilities of landlords and tenants. Section 3 of the Act provides that it applies “despite any other Act and despite any agreement or waiver to the contrary.”

[23] As already mentioned, the Board found that the provision was contrary to the Act and, therefore void, as it took away the Landlord’s right to terminate the tenancy under sections 48, 49, 50 and 58 of the Act. All of the sections in question grant landlords the right to terminate tenancies at the end of the term of those tenancies under certain prescribed conditions: the landlord requires possession of the unit for his own use or that of his child, parent or spouse (s. 48), the landlord has sold the premises (s. 49), the landlord needs to demolish, convert or do extensive repairs to the premises (s. 50), and other additional grounds set out in s. 58 such as the tenant’s right to occupy the premises was tied to an employment relationship with the landlord that has ended.

[24] In this case, the end of the term of the tenancy is the date of death of the Tenant. On such date, the tenancy shall be deemed to be a monthly tenancy pursuant to section 38(1) of the Act and the Landlord will have the right to regain possession of the premises on any of the above bases. The fact that there may be no need for notice as the tenant would no longer be in occupation of the premises may be to the Landlord’s advantage. It does not, however, contradict the Act, which otherwise operates in accordance with the scheme contemplated by the provisions referred to above. Therefore, I find that the Board’s interpretation of the Act is also unreasonable insofar as it based that conclusion on a finding that residential tenancies for the lifetime of the tenant are contrary to the Act because they take away a substantive right of a landlord under the Act.

Conclusion

[25] Based on the foregoing, I conclude that the Board’s interpretation of the life term provision is unreasonable. Accordingly, the appeal is allowed. The Tenant is entitled to her costs of this appeal, which are fixed in the amount of $3500.00, all inclusive.

H. SACHS J.

LEDERMAN J.

WILTON-SIEGEL J.

Released: 201604

CITATION: Bory v. Bory, 2016 ONSC 526

DIVISIONAL COURT FILE NO.: 206/15

LTB COURT FILE NO.: TNL-66611-15

DATE: 20160428

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LEDERMAN, H. SACHS and WILTON-SEIGEL JJ.

BETWEEN:

SEREY BORY

Landlord/Respondent

– and –

YOU BORY

Tenant/Appellant

REASONS FOR JUDGMENT

H. SACHS J.

Released: 20160428

Serey Bory v. You Bory, 2016 ONSC 526

Case Summary

Introduction

Background

The Board’s Decision

This Court’s Jurisdiction

Standard of Review

Analysis

Conclusion

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 5

Legal Tests 2

Legislation 2