Court File and Parties
CITATION: Galey v. 1927510 Ontario Inc., 2018 ONSC 1073 DIVISIONAL COURT FILE NO.: 1064/17 DATE: 20180213
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SHAW, THORBURN, and MYERS JJ.
BETWEEN:
SHAWN GALEY AND WENDY GALEY Appellants
– and –
1927510 Ontario Inc. Respondent
Counsel: Frederick Skeggs, for the Appellants Galey et al Leigh Fishleigh, for the Respondent, 1927510 Ontario Inc.
HEARD at Sudbury: February 13, 2018
REASONS FOR JUDGMENT
Thorburn J.
THE ISSUE
[1] This is an appeal of the Order of the Landlord and Tenant Board dated May 10, 2017 (“the Order”). The appeal raises a question of law: namely, the proper interpretation of sections 2 and 5 of the Residential Tenancies Act, S.O. 2006, c.17 (“the Act”).
[2] The Appellants suggest they and other cabin owners held “land lease homes” that are “permanent structures where the owner of the dwelling leases the land … as the site for the dwelling” and are therefore tenants covered by section 2(1) of the Act.
[3] The Respondent suggests the Appellants were exempt from the protections of the Act as section 5(a) provides that the Act does not apply to “living accommodation[s] intended to be … occupied for a seasonal or temporary period in a … cottage or cabin establishment.”
[4] The Board held that the Act did not apply as the owner of the land was exempt from the provisions of the Act.
RELIEF SOUGHT
[5] The Appellants submit that the Board erred in law in finding these land lease homes were not covered by the Act, and exceeded its jurisdiction in making determinations on issues that had not been the subject of argument before the Board.
[6] The Appellants therefore seek to quash the Order. They seek a Declaration that the Act applies to their leases, that they reside in a land lease community within the meaning of section 2(1) of the Act, and that the Respondent provide its consent and authorization to the requisite authorities to upgrade their septic systems.
THE RELEVANT PROVISIONS OF THE ACT
[7] The purpose of the Act is “to provide protection for residential tenants ... to establish a framework for the regulation of residential rents, 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.” (Section 1)
[8] Tenant is defined as "a person who pays rent in return for the right to occupy a rental unit..."
[9] A rental unit includes “[a] rented site for a … land lease home” whether or not the home is owned by the tenant of the site. (Section 2(4))
[10] A land lease home is “a dwelling… that is a permanent structure where the owner of the dwelling leases the land used or intended for use as the site for the dwelling.” (Section 2(1))
[11] The Act does not apply to “living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home.” (Section 5(a))
JURISDICTION OF THIS COURT
[12] Section 210(1) of the Residential Tenancies Act, 2006, S.O. 2006, c.17 (the “Act”) provides that “Any person affected by an order of the Board may appeal the order to the Divisional Court … on a question of law.” The Divisional Court therefore has jurisdiction to hear this appeal.
STANDARD OF REVIEW
[13] The Board was interpreting its home statute and the definition of “tenant” contained therein. The Board’s interpretation of its home statute and its consideration of the facts pertaining thereto are both entitled deference. As such, the Board’s conclusion must be reviewed on a standard of reasonableness.
[14] This means that the decision must fall within the range of possible acceptable outcomes and be transparent and intelligible. (Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 47 and First Ontario Realty Corporation Ltd. v. Deng, 2011 ONCA 54).
ANALYSIS OF THE EVIDENCE
Chronology of Events
[15] The Appellants bought cabins and entered into a 20 year leases with the former owners of a 165 acre property in the District of Algoma. Within one year prior to the termination of each lease, the lessees and lessors were to negotiate a renewal lease or the lessor was required to buy the buildings at fair market value.
[16] The Appellants obtained oral assurances from the former owner that those leases would be renewed.
[17] In November 2015, the former owner authorized a septic upgrade and installed a tank on the Appellants’ property. The property was subsequently sold to the current owner on December 18, 2015. Shortly thereafter, the Respondent notified the tenants that their rents would be increased far beyond the Consumer Price Index. He also advised that they would now be on year to year leases.
[18] The Appellants’ 20 year lease expired on January 1, 2016.
[19] The Respondent sent an email to the Appellants on April 13, 2016 with an invoice and new agreements for their signature, which contained different terms than those in the previous agreement. Those new terms include the following:
a. Rent increased from $2,144.81 in 2015 to $3,300 in 2016 (per year);
b. The agreement was labeled an “Agreement of Occupation”, providing a “right to occupy”;
c. The term was five years;
d. The Agreement of Occupation allowed use of the cottage for only six months a year and set use as “recreational vacation in a campground and/or resort”;
e. Renewal was solely at the discretion of the Resort Owner and no sublet or assignment was allowed without consent (which may be arbitrarily withheld);
f. Agreement was not a lease but a license agreement; and
g. The invoice referred to $3,300 as the “Annual Occupancy Fee”.
[20] The Respondent purported to do so on the basis that the Appellants were not tenants within the meaning of the Act. He said the Appellants were subject to the exemption in section 5 of the Act for “living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home.”
[21] The Appellants sent a cheque to the Respondent on April 19, 2016 for the amount of the previous year plus 2 percent (as per the preexisting agreement with the prior landlord). The Appellant, Wendy Galey sent an email on June 12, 2016 seeking a letter of authorization for the Ministry of the Environment to hook up their septic tank. Terry Rainone, on behalf of the owner/Respondent, responded with an email on June 12, 2016, enclosing the Occupancy Agreement and saying a letter of authorization will be provided upon receipt of the signed agreement.
The Rights and Obligations of the Owners and Tenants
[22] The Appellants and other tenants have been coming to their cabins for years. The ground rent was to be paid annually and to increase in accordance with the Consumer Price Index.
[23] They purchased their cabins for $45,000 to $65,000 per cabin and furnished the cabins. The cabin owners have substantially improved their individual cabins by adding decks, heating sources, fireplaces and other expensive additions.
[24] The Respondent is responsible for the water supply from the lake, and maintenance of the beach and the common yard. The water is not drinkable without treatment. Hydro is supplied by Hydro One and then distributed to individual cabins. Cabin owners are billed annually for hydro consumption.
[25] The Respondent is responsible for general maintenance of the road, but did not maintain the road in the winter.
[26] Cabin owners have their own keys and have unrestricted year round access. Cabin owners admit these are secondary homes and they have not generally used their cottages in the winter season.
[27] Lease payments were to be made yearly, there was no restriction in the leases to access the property and the zoning bylaw does not suggest that use of the property is restricted to a particular season or seasons. The cabins are not winter protected.
[28] Cabin owners were to pay a proportional share of taxes, assessments and utilities, do their own building repairs, and use the buildings only for recreational purposes. Cabin owners paid for heat, sewage disposal, cleaning and maintenance of their units.
[29] There are no booking requirements or requirements to check in upon arrival and each cabin owner has his/her own key.
[30] In 2016 the Appellants advised that they intended to use their cabin year round. The Respondent also advised that the lease agreements and the zoning did not permit year round use. This was not correct.
The Board’s Determination
[31] The Board member noted that the owner bears the onus of proof that the exemption applies.
[32] The Board member recognized that the cabins are permanent structures and living accommodations, and outlined that when the sale to the Respondent occurred, “it is clear the parties intended the original use, seasonal and recreational as part of the resort park, would continue.”
[33] However, the Board held that “I am satisfied that the manner in which [the Respondent] operates as a seasonal park, their control of the property including hydro, road, and water supply, the agreement entered into between the property owner and the cabin owners, leads me to conclude that the resort falls into one of the exempt categories set out in section 5(a) of the Act.”
[34] The Board referred to the leading case of Matthews v. Algoma Timberlakes Corp., 2010 ONCA 468 and distinguished it. The Board held that the fact that the cabins are permanent structures does not substantially change the parties’ agreement that they were always intended to be occupied seasonally which she said, distinguished this case from Matthews.
[35] The Board further held that although access was not forbidden, it was necessarily restricted without road maintenance and water supply for six months of the year.
[36] The Board found that the Respondent provided vital services without which the home owning experience would be significantly different which, the Board held, was different than in Matthews.
CONCLUSION
[37] For the reasons that follow, we find that the decision of the Board was unreasonable.
[38] The Board’s decision is not consistent with the decision of Lang J.A. for the Court of Appeal in Matthews v. Algoma Timberlakes Corp., 102 O.R. (3d ) 590, 2010 ONCA 468. Matthews is binding on the Board and this court and as such, the Board made an error of law. Moreover, it is inconsistent with a purposive interpretation of the Act.
[39] The facts in this case are similar to the facts in Matthews. In both cases:
a. The Appellants owned their cabins;
b. They had 20 year leases. (The court in Matthews held that the length of the lease was commensurate with the intention that the lessees erect structures of a permanent nature and there would be modest rents, subject to an annual rent increase in keeping with the annual inflation rate reflected in the Consumer Price Index.);
c. Lease payments were paid annually;
d. The cabins were permanent structures built for the long term with heating, living quarters, bedrooms, kitchens and sometimes decks;
e. The Appellants and other cabin owners had exclusive use of their cabins as a secondary home or pied-a-terre in more than a transient way;
f. The sites could become inaccessible by car during certain times of the year but could be reached by snowmobile, snowshoes or other means and there were no restrictions in the lease agreement to prevent year round access;
g. The Respondent provided no year-round road access, sewage disposal, garbage disposal, snow plowing, electricity or potable water; and
h. The cabins were not “accommodation for travellers, for vacationers, for anyone who needs temporary accommodation provided by someone other than themselves” as described by the Ontario Rental Housing Tribunal and cited with approval by the court in Matthews (See paragraph 35).
[40] After reviewing the facts, the principles of statutory interpretation and the relevant provisions of the Act, the Court in Matthews held at paragraphs 28 to 34 that:
The Act applies whether the occupants spend their days at work or at leisure, whether they live in their accommodation 52 weeks a year or some lesser amount of time, and whether the unit in question is their primary or secondary residence.
If it were otherwise, a person primarily residing elsewhere who rents a city apartment for convenience, as a pied-à-terre, or as any type of secondary residence, would be denied the tenant protections that would be available to his or her neighbour across the hall. As well, Ontario tenants who “reside” in warmer locations as “snowbirds” during the winter months could lose the tenant protections available to them under Ontario law. Moreover, individuals who rent premises in locations such as Collingwood for golf and skiing would be denied the protections provided by the Act because they would be occupying the premises for “recreational” rather than “residential” purposes. In my view, there can be no difference between the Collingwood residential and “recreational” rental apartment from which the occupant has access to golf and skiing and the ACR residential and “recreational” rental premises from which the occupant has access to fishing and hunting. The recreational attributes of the particular area do not mean that the rental units are not residential within the meaning of the Act.
The purpose of the legislation is to provide protections to tenants. There is no reason to exclude tenants who have a penchant for recreation and spending time with their families in the outdoors. Indeed, if it had been the legislature’s intention to exclude recreational units from the Act, it could have added living accommodation occupied for “recreational” purposes to the s. 5 list of premises to which the Act does not apply.
First, in my view, the undisputed evidence is that the premises were occupied for more than a temporary period and for more than a seasonal period. The premises were occupied over many seasons, months and years. The evidence establishes that the leases were intended to be continually renewed over a long period of time. Moreover, all the leases provided for payment of rent on an annual basis. There was no seasonal or temporary rental rate. Accordingly, in my view, the s. 5(a) exclusion regarding “seasonal or temporary” occupation does not apply. (Emphasis added)
[41] The Court in Matthews therefore determined that the Act applied as the premises in question were neither seasonal nor temporary (paragraph 33 to 35).
[42] In our view, the same reasoning applies in this case.
[43] The fact that the cabins were not used in winter and were only ever secondary properties is not determinative and does not render them seasonal or temporary. On the contrary, the factors set out in paragraph 39 above, suggest otherwise. As Lang J.A. noted, the Act applies even if the occupants live there only part of the year. Otherwise, tenants who "reside" elsewhere for part of the year such as "snowbirds" during the winter months, could lose the tenant protections available to them under Ontario law.
[44] Secondly, we note that the purpose of the Act is to provide protection for tenants and the provisions are therefore to be interpreted liberally. (Ontario Legislative Assembly, Official Report of Debates (Hansard), No. 8 (25 November, 1975) at p. 296.)
[45] Thirdly, there is no basis in the plain wording of the legislation or the legal authorities to exclude tenants who use their cabins for recreation in a second home. The exemption applies to accommodation for “travelling or vacationing people” and that use is of “a seasonal or temporary period” (emphasis added). That is not the case with these Appellants who alone, have been coming to the very same cabins (their cabins) for over 20 years.
[46] Lastly, this case is distinguishable on its facts from the case of Leduc v. Glen Echo Park Inc., [2011] O.J. No. 6146 (Div. Ct) relied on by the Respondent as, unlike this case and the Matthews decision, the facts in Leduc were that there was no long-term or any lease at all, only a membership fee for membership in the nudist camp and a fee for the privilege of erecting a shelter that was meant to be temporary.
[47] For these reasons the Board’s decision was unreasonable. The Appeal is therefore granted. In accordance with the provisions of section 97 of the Courts of Justice Act, we declare that:
a. the Act applies to the Appellants’ leases;
b. they reside in a land lease community within the meaning of section 2(1) of the Act; and
c. the Appellants have the right to upgrade their septic systems in accordance with the provisions of the lease.
[48] We were provided with Bills of Costs from both parties.
[49] Given the Appellants’ success on this Appeal, the Appellants are entitled to partial indemnity costs as follows: $17,760.00 partial indemnity costs inclusive of today’s attendance plus H.S.T. on those fees of $2,308. Disbursements are payable in the amount of $5,495.39 inclusive of H.S.T.
Thorburn J.
I agree
________________________Shaw J.
I agree
Myers J.
CITATION: Galey v. 1927510 Ontario Inc., 2018 ONSC 1073 DIVISIONAL COURT FILE NO.: 1064/17 DATE: 20180213
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SHAW, THORBURN, and MYERS JJ.
BETWEEN:
SHAWN GALEY AND WENDY GALEY Appellants
– and –
1927510 Ontario Inc. Respondent
ORAL REASONS FOR JUDGMENT
Thorburn, J.
Date of Reasons for Judgment: February 13, 2018 Date of Release: