CITATION: Edwards v. Waham, 2017 ONSC 2882
COURT FILE NO.: DC-17-807
DATE: 2017/05/17
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Richard Edwards Appellant/Tenant
– and –
Saadoon Waham Respondent/Landlord
Richard Gorrin, for the Responding Party
Jean-Alexandre De Bousquet, for the Moving Party
HEARD: May 2, 2017
Turnbull J.
[1] The Landlord (LL) has brought this motion pursuant to S. 134(2) and (3) of the Courts of Justice Act for an order quashing the tenant’s appeal from the decision of Member Michael Soo of the Landlord and Tenant Board and lifting the stay of eviction pending appeal or in the alternative, an order that rent be paid pending the disposition of the appeal and that the Tenant post security for costs. The LL contends that the appeal is frivolous, vexatious and without merit.
The Facts:
[2] The LL is the owner of a residential property (the property) at 2106 Duncan Road, Oakville Ontario.
[3] The tenant, through a Real Estate agent Alex Baksh, became aware of the fact that the LL may be interested in selling the property.
[4] On September 10, 2015, Mr. Baksh drafted an Agreement to Lease (Residential) using the standard form provided by the Ontario Real Estate Association. It provided for a rental term of one year with rent payable of $2500 per month commencing the 11th day of September 2015.
[5] On page 2 of the lease, under paragraph 8 entitled “Additional Terms”, the lease provided as follows:
The said tenant shall have the First right of refusal to purchase said property. Tenant may also exercise this option during the tenancy.
[6] Shortly after the parties executed the lease, they then entered into an Agreement of Purchase and Sale (APS) which appears to have been signed by both parties on October 6, 2015. The agreed sale price was $845,000.
[7] It provided for a completion date of January 22nd, 2016. Attached to the APS was Schedule A which was, to say the very least, poorly drafted. Schedule A contained the following clauses:
The tenant shall have the first right of refusal to purchase said property. Should the tenant decide to obtain ownership of said property before the end of the first rental term, all rents paid shall form equity in favour of the tenant and can be used as necessary towards any purchase agreement of said property between the landlord and tenant.
At the end of the first year of this tenancy, should the tenant not able to arrange satisfactory financing for said property, the landlord may assist or will renew said lease agreement for another term at one year with the same terms and conditions.
Tenant shall have possession of said property as of the first day of September 2015.
[8] The transaction did not close on January 22, 2016. The tenant continued to remain in possession of the property and paid the monthly rent. The tenant allegedly advised the LL that he wanted to purchase the property but he was unable to obtain a first mortgage because the words “agreement of purchase and sale” on page 1 of the APS were crossed out and replaced with the words “Appendix A”.
[9] On April 1st, 2016, the LL commenced an action against the tenant in the Ontario Superior Court of Justice seeking, among other remedies, damages in the amount of $80,000.00 and an order for possession of the property. On May 21st, 2016, the tenant filed a Statement of Defence and Counterclaim wherein he sought, among other remedies, specific performance on the APS.
[10] The LL asserts in that Statement of Claim, as he did before the Landlord and Tenant Board, that he was forced to sell another property because he was unable to manage the carrying costs of the property at 2106 Duncan Road. Apparently the LL was required to pay two mortgages on the 2106 Duncan Road property and when the APS did not close on January 22nd, 2016, he commenced the Superior Court action for breach of the APS.
[11] The tenant failed to pay the rent due for September and October 2016.
[12] On October 20th, 2016, the landlord served the tenant with a Notice to End Tenancy for Non-Payment of Rent. The tenant allegedly had failed to pay rent due on September 11th and October 11th, 2016, and he alleged $5,000.00 was owing. As the date of hearing this motion, the tenant has resided in the property and paid no further rent to the LL.
[13] The LL then brought two separate applications to the Landlord and Tenant Board. The first was an order terminating the tenancy and for eviction of the tenant so that the LL could have possession of the property for his own residential occupation and use.
[14] On January 20th, 2017, Member Sean Henry, a Member of the Landlord and Tenant Board, heard the LL’s application.
[15] In well written reasons issued February 10, 2017, Member Henry terminated the tenancy effective February 21, 2017 and ordered the tenant and his family to vacate the premises as of that date.
[16] The tenant was represented Mr. Gorrin who argued that the Board either had no jurisdiction to consider the application or that it would be an abuse of process for the Board to do so because:
the Superior Court action was filed before the Board application was filed;
the Superior Court action had proceeded to completion of pleadings and discoveries;
the Superior Court is a “higher jurisdiction” than the Landlord and Tenant Board;
the primary purpose of the parties’ relationship was not to enter into a residential tenancy, but to close on the APS; and
a decision by the Board to terminate the tenancy would negatively affect the tenant’s remedies in the actions.
[17] Member Henry released written reasons on February 10, 2017 in favour of the LL and found that the Board did have jurisdiction and ordered termination of the tenancy
[18] On February 19th, 2017, the tenant filed a Notice of Appeal to the Divisional Court from the order Member Henry.
[19] On the same day that Member Henry’s reasons were released, February 10th, 2017, the LL’s second application to the Landlord and Tenant Board for an order terminating the tenancy and evicting the tenant because of non-payment of rent was heard by Michael Soo. Though served with notice of the proceedings, the tenant did not attend and instructed his counsel not to attend that date.
[20] Member Soo issued written reasons on February 13, 2017 in which he ordered that subject to other terms set out in his order, the tenancy between the LL and tenant was terminated for non-payment of rent and that the tenant vacate the rental unit on or before February 25th, 2017. However, in paragraph 9 of his order, he wrote as follows:
If, on or before February 25th, 2017 the tenant pays the amount of $15,170.00 to the landlord or to the Board in trust, this order for eviction will be void. This means that the tenancy would not be terminated and the tenant could remain in the unit. If this payment is not made in full and on time the landlord may file this order with the Court Enforcement Office (Sheriff) so that the eviction may be enforced.
[21] The order further provided in paragraph 10 that the tenant may make a motion to the Board under s. 74(11) of the Residential Tenancies Act to set aside Mr. Soo’s order if the amounts ordered to be paid are paid after February 26th, 2017, but before the Sheriff gives vacant possession to the LL.
[22] At the time of hearing this motion, counsel acknowledged that no money has been paid with respect to the arrears of rent to the LL. Counsel for the tenant acknowledged his client had delivered the sum of $2,500.00 to his office within the day preceding this hearing before me. As part of his submission before this court, he asked that if the court is disposed to rule against his client on this motion, his client be given a short period of time to pay all arrears to bring the lease into good standing.
[23] I have considered this request and refuse it. The tenant was given that right by Member Soo and has failed to comply. He had from February 13, 2017 to February 25, 2017 to pay the arrears of rent and entitle himself to the stay of enforcement of that order. From February 26, 2017 to May 2, 2017 when this motion was argued, he had the opportunity to avail himself of the remedy available to him under paragraph 10 of Member Soo’s order.
[24] Mr. Soo’s decision was dated February 13th, 2017, and the tenant served a Notice of Appeal from that decision to the Divisional Court on February 27th, 2017. The subject matter of the motion before this court relates solely to the order made by Member Michael Soo.
[25] As noted above, the tenant has not made any payments since the hearings before the Landlord and Tenant Board on February 10th, 2017, nor has he vacated the residential property. The effect of the two appeals which have been initiated by him to the Divisional Court is that the eviction order has been automatically stayed.
Issues:
Should the tenant’s appeal to the Divisional Court be quashed and the Stay of Eviction order lifted on the basis that the appeal is frivolous, vexatious and without merit?
In the alternative, should the tenant be required to pay interim rent until the disposition of the appeal?
Should the Appellant be required to post security for costs, because there is good reason to believe that the appeal is frivolous, vexatious and without merit?
Is the Respondent entitled to costs on a substantial indemnity basis?
Position of the Tenant:
[26] Mr. Gorrin, in his able submissions on behalf of the tenant, stated that the primary basis for the appeal from the order of Member Michael Soo is the same as for the appeal of the prior order of Member Sean Henry; i.e., that the Board lacked jurisdiction to hear the matter, or alternatively, if the Board had jurisdiction, it ought to have exercised its discretion to conclude that the subject of the application should be continued in the most logical form, which he asserted was the Superior Court of Justice.
[27] In his submissions, he relied heavily on the case of Crooks v. Levine, (2001) 148 OAC 44 (Ont. Div. Ct.) where the court stated at paragraph 14 “that the line between what is exclusively within the jurisdiction of the tribunal and what may be addressed in the regular courts is not razor sharp”. In Crooks, the Divisional Court ultimately held that the major element in the action was a claim for conversion and that that matter was properly before the civil courts. Applying the principle that the courts must attempt to provide the most expeditious and least costly method to resolve disputes, the court determined that the lesser issues of interest and rent credit should be determined by the trial judge “even though those issues could be characterized as coming within the exclusive jurisdiction of the tribunal”. Crooks, paragraph 17.
[28] In the case of Mackie v. Toronto (City), 2010 ONSC 3801, [2010] O.J. No. 2852 (SCJ) at paragraph 44, Perell J. of this court reiterated the same principle as earlier particularized in Crooks, in stating that the court must determine the “essential character of the dispute” to properly determine the jurisdiction between the courts and tribunal.
[29] Mr. Gorrin further submitted that the Board had failed to recognize and/or appreciate that the tenancy relationship between the LL and tenant was not a standard tenancy relationship.
Analysis:
Issue #1: Should the tenant’s appeal to the Divisional Court be quashed and the Stay of Eviction order lifted on the basis that the appeal is frivolous, vexatious and without merit?
[30] In his action commenced in the Superior Court of Justice (SCJ), the LL does not seek an order for the termination of the lease. That jurisdiction is vested in the Landlord and Tenant Board under the Residential Tenancies Act, 2006, S.O. 2006, C.17. (RTA).
[31] I have examined the Statement of Claim in the SCJ. The LL claims possession of the premises and damages of $80,000 which he has allegedly suffered due to the continued occupation of the premises by the tenant. Those damages are distinct and separate from the remedies sought by the LL before the Landlord and Tenant Board.
[32] The law is clear that the Board has exclusive jurisdiction over the termination of residential leases, including termination for non-payment of rent. The RTA effectively ousts the jurisdiction of the SCJ to make an order evicting tenants from rental properties.
[33] The central issue in the dispute between the parties is the lease agreement. The Agreement of Purchase and Sale is a distinct legal document created by the parties to give effect to the clear intention that the tenant was to have the right to purchase the property pursuant to his first right of refusal contained in paragraph 8 of the lease. The sale did not close. The subsisting lease remained in full effect requiring the tenant to pay monthly rent of $2500. When he ceased paying rent, he was in breach of the terms of the lease. The landlord moved in a timely way before the Landlord and Tenant Board to terminate the lease. First, he was granted an order to occupy the property for his own use. Secondly, the right to retake possession of the property was granted for non-payment of rent.
[34] The Board gave the tenant time to pay the arrears and to take remedial action to stay the eviction notice. He chose not to do so. He has now lived rent free in the premises for 9 months.
[35] Rule 63.01.(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that the delivery of a Notice of Appeal stays the Board order until the appeal is disposed of. In reality, this appeal will not probably be heard by a full panel of the Divisional Court until the autumn of 2017.
[36] I find the appeal is void of merit. The plaintiff has the right to start an action in the Superior Court of Justice for the damages articulated in his statement of claim. In that action, he has named the real estate agent involved in this matter who drafted the APS and pleaded negligence against that agent. Although imperfectly pleaded, the plaintiff claims damages against the defendants for the loss he allegedly suffered by his inability to re-sell the Duncan Street residence as part of his business in which he purchases, renovates and sells properties. His claim does not include arrears of rent or a termination of the lease.
[37] There is nothing in the RTA which prohibits him from pursuing his distinct remedies in both forums. One of the clear statutory purposes of the Landlord and Tenant Board is to afford landlords and tenants access to adjudication in a timely, cost effective setting where matters are heard in a summary manner. The Act does not require a party to move all issues to the Superior Court of Justice for adjudication if an action related to the property in dispute has been commenced. The logic behind that is clear. Actions in the Superior Court generally involve more time, paperwork, interlocutory proceedings and delays than matters heard before the Landlord and Tenant Board. Furthermore, the essential issue in the two proceeding often is distinct, though related to the same property.
[38] That is the situation before this court. The essential issue before the Landlord and Tenant Board was termination of the lease for non-payment of rent. The lease was the central issue in the hearing. The Board had the exclusive jurisdiction to hear that issue and upon review of its decisions, I see no error in law.
[39] The motion before this court relates to the order of Member Soo. The tenant did not even attend at that hearing and offer submissions and assistance to the member. He did not challenge the jurisdiction of the Board to make the order. He did not then comply with the time granted him to put the lease back in good standing. He was given until February 25, 2017 to make the payments stipulated in the order of Member Soo and to thereby render the order of eviction void.
[40] His position is without merit. In my view, his appeal cannot succeed and the motion must be granted.
[41] I am acutely aware that it is the rare case where the right of a party to have his/her appeal heard by a full panel of this Court is to be denied. The Ontario Court of Appeal has held that it is rare when the courts should exercise this power as it is difficult in many cases to reach the conclusion that the appeal has no merit without a full panel of the court hearing the appeal.[^1] Having said that, in similar cases involving unpaid rent, Judges of this court have dismissed the appeal where it has been evident that the tenant is “gaming” the system.[^2], I have considered the alternative remedy of extending the time to allow the tenant to pay the arrears and costs to the Landlord so that the appeal can be fully argued. However, non-payment of a lease in circumstances such as this, in the absence of some exceptional circumstance, almost always results in an order terminating the lease. That is basic contract law. Furthermore, as noted above, he has already been given that opportunity by the Landlord and Tenant Board and neglected and/or refused to avail himself of that remedy.
[42] The tenant will have all his remedies available to him in the Superior Court action which centres on the APS and in which he has filed a counterclaim. In that proceeding, he has sought specific performance, damages and leave to obtain and register a certificate of pending litigation.
[43] If he had just paid the rent under the lease, he would have arguably been able to continue to occupy the premises to the time of trial or at least to September 11, 2017. If he had just paid the arrears of rent and costs ordered by Member Soo and thereafter paid in a timely manner, the same result would have occurred.
[44] The only conclusion I can reach from this behaviour is that the tenant is using the time delays inherent in the court process in this province for his own financial and personal advantage at the expense of the LL. That is not to be countenanced by the courts.
[45] In light of these findings, issues #2 and #3 do not have to be answered.
Conclusion:
[46] The tenant’s appeal to the Divisional Court is dismissed as being devoid of merit and because it is frivolous and vexation.
Issue #4: Is the Respondent entitled to costs on a substantial indemnity basis?
[47] The Landlord is entitled to his costs of this motion on a substantial indemnity basis. He has refused to pay rent which is clearly due and payable (regardless of the merits of his position relative to the APS) and he continues to reside on the property. It is his unreasonable behaviour which has necessitated this motion.
[48] I was given a Costs Outline at the conclusion of submissions by Counsel for the Landlord. If Mr. Gorrin wants to make brief written submissions on behalf of the tenant, he may do so on or before June 1, 2017.
TURNBULL J.
Released: May 17, 2017
CITATION: Edwards v. Waham, 2017 ONSC 2882
COURT FILE NO.: DC-17-807
DATE: 2017/05/17
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Richard Edwards Appellant/Tenant
– and –
Saadoon Waham Respondent/Landlord
ENDORSEMENT
JRT:co
Released: May 17, 2017
[^1]: Schmidt v. Toronto-Dominion Bank (1995), 1995 3502 (ON CA), 24 O.R. (3d) 1.
[^2]: Florsham v Mason, 2015 ONSC 3147 (Div. Ct.); Eldebron Holdings Limited v. Mason, 2016 ONSC 2544; D’Amico v. Hitti, 2012 ONSC 4467.