ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
WILTON-SIEGEL, THORBURN, and ELLIES JJ.
BETWEEN:
SARFRAZ WARRAICH Appellant
– and –
AFTAB CHOUDHRY Respondent
Syed Abid Hussain and Marvin Ellison, for the Appellant (Tenant) Sarfraz Warraich Arnold Zweig, for the Respondent, (Landlord) Aftab Choudhry Eli Fellman for the Social Justice Tribunal Ontario
HEARD at Toronto: January 29, 2018
Thorburn J.
REASONS FOR JUDGMENT
RELIEF SOUGHT
[1] This Appeal was heard following a first appeal involving the same parties and the same property.
[2] In the first appeal of the interim order of the Landlord and Tenant Board (“the Board”) dated December 14, 2016 (Court File number 021/17), the Board found the Appellant Sarfraz Warraich to be a tenant and issued an order evicting him on the grounds of non-payment of rent owing to the landlord. The Appellant appealed this first order on the grounds of lack of procedural fairness. The decision in this companion proceeding is being released concurrently with these Reasons for Judgment.
[3] In this second appeal (“this Appeal”), the Appellant appeals the final order of the Board dated December 4, 2017 (“the Order”). The Board terminated the tenancy agreement and evicted the Appellant on the basis that the Appellant was a tenant and the landlord wished to demolish the building.
[4] The Appellant submits that the Board erred in law and/or exceeded its jurisdiction in determining that the Appellant was not a co-owner of the property. The Appellant submits he is a co-owner of the property. He has commenced an action in the Superior Court seeking a declaration to that effect. On this Appeal, he seeks to quash the Order and restrain the Board from making any further orders in respect of the disposition of the property until such time as the ownership rights of the parties are determined in Court File No. CV-16-563338.
[5] The Appellant claims that if the Board determination as to co-ownership is not set aside, this will lead to a multiplicity of proceedings as this is the very issue the Superior Court is to decide in the Superior Court proceeding.
JURISDICTION OF THIS COURT
[6] Section 210(1) of the Residential Tenancies Act, 2006, S.O. 2006, c.17, s.168 (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.”
[7] The Divisional Court therefore has jurisdiction to hear this Appeal on a question of law.
STANDARD OF REVIEW
[8] Where the Board is interpreting and applying its home statute, the standard of review is reasonableness. 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).
[9] As further discussed below, 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 to deference.
[10] As such, the Board’s conclusion must be reviewed on a standard of reasonableness.
THE LAW
[11] The Act provides the framework to adjudicate disputes between landlords and tenants. Section 1 of the Act stipulates that 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.”
[12] Tenant is defined in section 2 of the Act as: "a person who pays rent in return for the right to occupy a rental unit... but ... does not include a person who has the right to occupy a rental unit by virtue of being a co-owner of the residential complex in which the rental unit is located."
[13] The Board has sole jurisdiction to terminate a tenancy and evict a tenant. (Toronto-Dominion Bank v. Hosein, 2016 ONCA 628). However, as the Board correctly noted, “A finding that the Tenant is actually an owner of the rental unit means that the Board loses jurisdiction to hear this application because the Board only has jurisdiction to hear disputes between landlords and tenants (not between owners).”
THE PROCEEDING BEFORE THE BOARD
[14] The central issue on this Appeal is whether the Board erred in law in deciding that the Appellant was a tenant and not a person who had a right to occupy the property by virtue of being a co-owner.
The Evidence
[15] The Board noted that, “The only issue to be determined is the status of the Tenant because it, in turn determines whether the Act applied. … The Landlord’s position is that the Tenant pays him rent in exchange for the right to occupy the rental unit and as such, he is a tenant. The Tenant’s position is that he owns the residential complex with the Landlord and he is therefore, not a tenant.”
[16] At the time of the hearing, the Appellant had been living with his family on the property since its purchase.
[17] The Appellant acknowledged the existence of a signed tenancy agreement but claimed it was obtained under false pretences.
[18] He submitted that the Respondent offered him a 50% ownership in the property provided he paid 50% of the acquisition and carrying costs, which he says he did.
[19] The Appellant paid the Respondent $62,000 in March or April 2013 which he claims represents half the acquisition costs. He says he also paid half of the carrying costs of the property from April 2012 to May 2016 and that a disagreement arose as to valuation of the property.
[20] The Respondent claims the $62,000 was for electrical work he performed on the Appellant’s redevelopment projects and the repayment of loans. The Respondent claims the monthly payments were rental payments paid pursuant to the tenancy agreement.
[21] The Appellant says the Respondent agreed to pay him $204,500 for his beneficial interest in the property and did pay him $20,000. A document was prepared by the Appellant but the Respondent refused to sign it.
[22] On October 4, 2016 the Respondent served the Appellant with this Notice of Termination of tenancy claiming that he intended to demolish the residential complex. The Appellant does not dispute that the Respondent intends to demolish the property.
[23] On November 1, 2016 the Appellant commenced the action in the Superior Court claiming an unregistered interest in the property. The Appellant was later ordered to pay $2,000 per month while he remained in the property.
[24] Also on November 1, 2016 the Respondent commenced two Applications before the Board to terminate the tenancy and evict the Appellant (this Appeal and Court File No. 021/17).
The Decision of the Board
[25] On December 4, 2017, contrary to the assertion by the Appellant, the Board held that it had jurisdiction to hear and determine the matter because:
a. the Appellant was a tenant within the meaning of the Act as he made monthly payments in exchange for the right to occupy the rental unit; and
b. the Appellant was not a co-owner of the property; the Respondent and his wife were the only co-owners of the property.
[26] The Board therefore decided to terminate the tenancy agreement and ordered the Appellant evicted because there was no dispute that the landlord wished to demolish the property. The Board noted that the Respondent had obtained the necessary permits to carry out the demolition.
[27] After considering the circumstances under which relief from eviction could be granted as set out in s. 83(2) of the Act, and because the Appellant said he was prepared to move out immediately if the Respondent paid him half the value of the property, the Board saw “no reason to further delay the eviction.”
[28] Accordingly, the Board granted the Respondent’s application for termination of the tenancy and ordered that the Appellant leave the premises effective December 15, 2017. The Board noted that the Respondent had obtained the necessary permits to carry out the demolition.
ANALYSIS
[29] The Appellant claims the Board had no jurisdiction to determine the issue of ownership as the Board’s mandate is restricted to balancing the rights and responsibilities of landlords and tenants not that of co-owners. He also argues (as he did in the companion proceeding) that this will result in a multiplicity of proceedings as a proceeding has been commenced in the Superior Court in respect of his ownership interest in the property.
Whether the Board had Jurisdiction to Consider the Issue of Ownership
[30] As a specialized tribunal, the Board has exclusive jurisdiction to hear disputes between landlords and tenants and to decide who is a “tenant”. A tenant does not include a person who has the right to occupy a rental unit by virtue of being a co-owner.
[31] The Board therefore reviewed the evidence to determine whether it was satisfied on a balance of probabilities that:
a. the Appellant paid rent in return for the right to occupy a rental property and, if so;
b. whether he had “the right to occupy a rental unit by virtue of being a co-owner of the residential complex in which the rental unit is located." If he was found to occupy the premises by virtue of being a co-owner, he would not be considered a tenant within the meaning of the Act.
[32] The Board found the following evidence suggested that the Appellant was a tenant:
a. The Appellant signed a tenancy agreement that clearly identifies the Respondent as the landlord and the Appellant as the tenant. The tenancy agreement set the monthly rent at $2,000 per month;
b. The Appellant knew he was signing a tenancy agreement when he signed the document and did not sign the document under duress;
c. In text messages dated April 2016, the Respondent referred to the Appellant’s monthly payments as “rent” and the Appellant did not correct these references; and
d. In text messages from September 2016, the Respondent does not mention the Appellant’s ownership interest and the Appellant acknowledged his obligation to pay rent.
[33] The Board went on to consider whether the Appellant was a co-owner occupying the premises (and therefore not a tenant).
[34] There is no dispute that the Board had evidence before it that the Respondent and his wife were the registered owners of the property and the Appellant was not registered on title as a co-owner.
[35] In addition to the fact that the Appellant had no legal interest in the property registered on title, the respondent adduced and the Board received the following additional evidence:
a. The building permit lists Mr. Choudhry and his wife as the owners;
b. The statement of adjustment and letter from the Respondent’s real estate lawyer indicate that Mr. Choudhry and his wife were the only owners of the residential complex;
c. The Board accepted the Respondent’s explanation that the Parties’ written agreement dated September 2, 2016, was an agreement to pay the Appellant $184,500 plus a $20,000 deposit for the construction of a new home on the site of the residential complex; and
d. An invoice from a consulting/architect company, only refers to the Respondent.
[36] The only evidence adduced by the Appellant to support his claim that he was a co-owner was the payment of $62,000, the monthly payments from 2012 to 2016 and the draft agreement that the Respondent refused to sign.
[37] The Board held that the unsigned mortgage agreement the Appellant had drafted was insufficient to establish that he was a co-owner and that the cheques he provided the Respondent, were “insufficient evidence to prefer one party’s explanation for … the other.”
[38] The Board found that, “There is no convincing evidence before me to establish that the Tenant is an owner of the residential complex, which would exclude him from the definition of ‘tenant’”. The Board therefore concluded that the Appellant was not a co-owner occupying the premises but was a tenant occupying the premises within the meaning of the Act.
[39] The decision of an expert tribunal interpreting the provisions of its home statute is entitled to deference. However, the rights of landlords and tenants are restricted by statute, and there is no recourse to the equitable jurisdiction of the Superior Courts. (Metro Housing Corp v. Ganitano, 2014 BCCA 10).
[40] In this case, the Appellant was not registered on title as a co-owner nor had the Superior Court determined that he had an equitable interest in the property. However, whether or not the Board considered legal ownership only or both legal and equitable ownership in this context, the result would not have been different.
[41] If the Board could consider only legal title, it is clear that the Appellant had no legal title to the property. If the Board made a determination that the Appellant had no legal or equitable ownership interest, the Board decided that it was not satisfied on the evidence before it that there was any ownership interest. Moreover, the Board made it clear that its determination that the Appellant was not a “co-owner” was made only for the purpose of determining whether the Appellant was a “tenant” within the meaning of section 2 of the Act, not to address any rights or obligations flowing from an ownership interest.
[42] The Board’s decision was therefore reasonable even if it erred in also taking into account indicia of equitable ownership in reaching its decision that the Appellant was not a co-owner.
[43] On the basis of the tenancy agreement and other evidence of tenancy set out above, and the uncontroverted evidence that there was no legal ownership interest, we find the Board’s decision that the Appellant was a “tenant” within the meaning of the Act was reasonable.
Whether the Board’s Decision results in a Multiplicity of Proceedings or Other Prejudice to the Appellant
[44] Findings of fact about whether the parties are in a landlord-tenant relationship are at the heart of the Board’s jurisdiction and therefore must be adjudicated before the Board. (Carey v. 560779 Ontario Inc. (c.o.b. Carey Industries), 2014 ONSC 1228 (Div. Ct.))
[45] However, where the Residential Tenancies Act applies and the Superior Court has jurisdiction to hear other matters involving the same parties and same property, there is no exclusive jurisdiction of the Landlord and Tenant Board. (Kaiman v. Graham, 2009 ONCA 77 per Weiler J.A.)
[46] In Kaiman the, “the central issue at trial was not the interpretation and applicability of a lease governed by the Residential Tenancies Act [which was the issue before the Board in this case]. Rather, the issues at trial concerned the extension of the lease based on an alleged oral promise and compensation for improvements based on unjust enrichment or quantum meruit. The Superior Court undoubtedly had jurisdiction over this subject matter and the subject matter contained in the statement of claim.” As such, the Court of Appeal held it was proper for the Superior Court to adjudicate those claims.
[47] We do not agree with the Appellant’s assertion that there is a danger of multiplicity of proceedings addressing the same issue or that the Appellant with be met with issue estoppel in respect of the issue of co-ownership before the Superior Court.
[48] In Kaiman, the same parties litigated issues in respect of the same property: one before the Board and the other before the Court but the issues being adjudicated were different. That situation was the same as the situation in this case.
[49] The only issue before this Board was whether the Appellant was a tenant. In addressing that issue, the Board had to address the issue of co-ownership but only to establish that the Appellant was a tenant. The issue was not what equitable interest, if any, the Appellant had in the property, as the Board has no jurisdiction to determine equitable rights and entitlements. By contrast, the issue before the Superior Court is whether the Appellant has an equitable interest in the property and if so, what compensation he should receive.
[50] The two proceedings therefore involve the adjudication of separate and distinct interests in the property.
[51] As such, the Superior Court action will not be a re-adjudication of an issue such that there is a multiplicity of proceedings or that the proceeding before the Superior Court should be subject to issue estoppel. (We note that the Respondent does not dispute that the issue of equitable entitlement should be decided by the Superior Court.)
[52] The Appellant may seek to obtain a valuation of the property and, if necessary seek a stay of eviction and/or of the demolition order from the Superior Court (although, to date, he has taken no steps to seek such relief).
SUMMARY OF CONCLUSIONS
[53] The legislature provides that the Board has the exclusive jurisdiction to determine whether a person is a tenant and if so, to terminate the tenancy and/or evict the tenant. The Act provides that the Board must determine whether a tenant has the right to occupy the premises. A person who occupies the premises as co-owner is not a tenant. Since the Board has no equitable jurisdiction, it may only consider legal ownership (absent a determination by the Superior Court).
[54] The Board’s determination of tenancy is at the heart of its specialized expertise and its interpretation of its home statute is entitled to deference.
[55] As provided for in the Act, the Board considered whether the Appellant was a co-owner solely for the purpose of determining whether he was excluded from the definition of “tenant” in the Act. The Board based its findings and its conclusion on the definition of tenant contained in the Act and the exclusion of co-owners from that definition.
[56] The Board’s determination that the Appellant was a tenant within the meaning of the Act, and was not a co-owner was reasonable.
[57] Since the Board has no jurisdiction to determine equitable ownership rights and entitlements, the Appellant will not be prejudiced by the Board’s decision in the litigation of those issues in the Superior Court, as the Board’s findings on the issue of co-ownership are not binding on the Superior Court. They involve different issues and the findings were made solely for the purpose of determining that the Appellant was a tenant within the meaning of the Act. The Board made no determination of the issue of co-ownership per se.
[58] Given the Board’s statutory direction to resolve disputes expeditiously and its more streamlined adjudicative process, the residential tenancy dispute was decided first. While the parties are the same and the Board’s decision is final in respect of the tenancy, the issues before the court and the Board are not the same and the remedies which flow from them are entirely distinct from each other.
[59] For these reasons the Appeal is dismissed.
COSTS
[60] The parties did not agree on costs but each provided a bill of costs. The Respondent seeks $5,638 in partial indemnity costs. The issue of the Board’s right to determine equitable ownership was a novel issue. For these reasons, we award costs in the amount of $2,500 payable to the Respondent.
Thorburn J.
I agree
Wilton-Siegel J
I agree
Ellies J.
Released: February 28, 2018
CITATION: Warraich v. Choudhry, 2018 ONSC 1267 DIVISIONAL COURT FILE NO.: 732/17 DATE: 20180228
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Wilton-Siegel, Thorburn, Ellies, JJ.
BETWEEN:
Sarfraz Warraich Appellant
– and –
Aftab Choudhry Respondent
REASONS FOR JUDGMENT
Wilton-Siegel, Thorburn, Ellies JJ
Released: February 28, 2018