CITATION: Sandgecko Inc. v. Ye, 2020 ONSC 7245­­

DIVISIONAL COURT FILE NO.: 194/20 DATE: 20201125

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

Sandgecko Inc. Appellant/Respondent on the motion

– and –

Zi Ye and Jie Dai Respondent/Moving Parties

No one appearing for the Apellant/Respondent on the motion Spence Toole, for the Respondent/Moving Parties

HEARD at Toronto by video conference: November 24, 2020

Favreau J.

[1] Zi Ye and Jie Dai, the Landlords, bring a motion to dismiss this appeal for delay or to quash the appeal on the basis that it is devoid of merit and/or an abuse of process. Alternatively, they seek security for costs.

[2] For the reasons below, the motion to quash the appeal is granted. The appeal is devoid of any merit and an abuse of process. The appeal does not raise any legal issues and Sandgecko Inc., the Tenant, has paid no rent since August 2019 and has taken not steps to pursue the appeal.

Background facts

The tenancy

[3] The Landlords own a residential unit at 70 Harrison Road, Toronto.

[4] In May 2016, the Tenant entered a lease agreement with the Landlords to rent the unit. The Tenant’s principal, Behzad Pilehvar, signed the lease. Mr. Pilehvar and his spouse, Mahtab Nali, moved into the rental unit.

[5] The lease was renewed in May 2018 and in June 2019.

[6] The monthly rent under the June 2019 lease is $6,400 per month payable on the fifteenth of each month.

[7] The Tenant did not pay rent for May 2019 and stopped paying any rent in August 2019. The Tenant gave the Landlords cheques for portions of the outstanding rent in October 2019 and November 2019, but both cheques bounced.

Proceedings before the Landlord and Tenant Board

[8] In December 2019, the Landlords initiated proceedings to terminate the tenancy.

[9] On December 8, 2019, they served the Tenant with a notice to end the tenancy. The Tenant did not vacate the unit or pay outstanding rent.

[10] On December 30, 2019, the Landlords filed an application to terminate the tenancy with the Landlord and Tenant Board.

[11] The hearing was scheduled for March 12, 2020. As part of its process, the Board sent a notice of hearing to the Tenant.

[12] The Landlords attended the hearing on March 12, 2020. However, the Tenant did not attend.

[13] The Board released its decision on August 4, 2020.

[14] At the beginning of the decision, the Board explained that the delay in releasing the decision was due to the Superior Court’s order suspending the enforcement of eviction orders which ended on July 31, 2020.

[15] The Board made on order terminating the tenancy on the basis of a finding that the Tenant had not paid rent since May 2019. The Board gave the Tenant the opportunity to void the termination by paying $35,175.00. The Board also required the Tenant to pay the filing cost of $175 and to pay $210.41 to the Landlords per day for use of the unit starting on August 5, 2020.

[16] The Tenant did not pay the amounts ordered or vacate the unit.

[17] The Tenant requested that the Board review the termination order on the grounds that it did not get notice of the hearing. In a review order dated August 25, 2020, the Board refused the request, finding that the Tenant failed to substantiate its claim that it was unable to attend the hearing:

I find that the Tenant has failed to substantiate, on a balance of probabilities, any specific reason for why they were not reasonably able to participate. The Landlord’s legal representative, an officer of the court, filed a certificate of service stating that the N4 Notice of Termination was served on the Tenant by post on December 8, 2019. The Notice of Hearing was sent directly to the Tenant by the Board on January 2, 2020. These documents are deemed by the Board to have been received by the Tenant, in the absence of any other compelling evidence.

The Tenant’s attempt to present new evidence does not support the Tenant’s claim that they were not reasonably able to participate, nor that the order contains serious errors, but rather supports an intention to re-litigate the matter with evidence that the Tenant should have presented at first instance.

The appeal

[18] By notice of appeal dated August 26, 2020, the Tenant appealed the termination order and the review order to the Divisional Court. The notice of appeal states that the Tenant was never served with the notice to end the tenancy and had no knowledge of the notice of hearing. The notice of appeal also states that the Tenant has proof that it paid the outstanding rent.

[19] The commencement of the appeal resulted in an automatic stay of the eviction.

[20] There is no evidence that the Tenant has taken steps to perfect its appeal, including no evidence that the transcript from the hearing was ordered.

Procedural issues leading to the motion

[21] I held two case conferences in advance of the motion for the purpose of scheduling the motion.

[22] At a first case conference held on October 23, 2020, I granted a motion brought by the Tenant’s prior lawyer removing himself as lawyer of record. In advance of the case conference. I directed that the Tenant’s former lawyer advise the Tenant of the case conference. Neither Mr. Pilehvar nor Ms. Nali attended the case conference. At that time, I scheduled a second case conference for October 30, 2020 to give the Tenant another chance to participate in the scheduling of the motion.

[23] Mr. Pilehvar attended the October 30, 2020 case conference and advised that he was in the process of retaining a new lawyer. I nevertheless scheduled the motion given the extensive period of non-payment of rent. The deadline set for the Tenant’s responding materials was meant to give the Tenant or new counsel sufficient time to file responding materials and participate in the motion.

[24] The Tenant did not file responding materials by the deadline and did not appear on the motion.

[25] Given Mr. Pilehvar’s participation in the October 30, 2020 case conference and the communications from the Court about the motion, I am satisfied that the Tenant had notice of this motion. After waiting 15 minutes for the Tenant or a representative of the Tenant to appear, I proceeded to hear arguments from counsel for the Landlords.

Analysis

[26] The Landlords raise the following issues on this motion:

a. Whether the appeal should be dismissed for delay;

b. Whether the appeal should be quashed on the basis that it is devoid of merit and that it is an abuse of process; and

c. Alternatively, if the appeal is not dismissed or quashed, whether the Tenant should be required to pay security for costs.

[27] As set out below, the appeal should be quashed on the basis that it is devoid of any merit and an abuse of process. Given my findings on these issues, it is not necessary to address the issues of delay or security for costs.

Issue 1 – The appeal is devoid of merit

[28] Section 134(3) of the Courts of Justice Act, R.S.O 1990, c. C.43, gives a court to which an appeal is brought the power to quash the appeal. The test for quashing an appeal is whether it is manifestly devoid of merit: Schmidt v. Toronto Dominion Bank (1995), 1995 3502 (ON CA), 24 O.R. (3d) 1 (C.A.), at para. 6. In Schmidt, the Court of Appeal held that this power is to be exercised sparingly because it "is very difficult, in most cases, to reach the conclusion that an appeal is devoid of merit without hearing the entire appeal".

[29] Pursuant to section 210(1) of the Residential Tenancies Act, 2006, an appeal from a decision of the Board lies to the Divisional Court, but only on a question of law. While the bar is generally high for quashing an appeal on the basis that it is devoid of merit, it is appropriate to quash an appeal from an order of the Board where the appeal does not raise a question of law: see, for example, Solomon v. Levy, 2015 ONSC 2556 (Div. Ct.), at paras. 33-34; and Mahdieh v. Chen, 2019 ONSC 4218 (Div. Ct.), at para. 8.

[30] The Landlords’ lawyer argues that the appeal is manifestly devoid of merit because it does not raise a question of law. I agree.

[31] In Canada (Director of Investigation & Research) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748, at para. 35, the Supreme Court of Canada described the difference between a question of law and a question of fact as follows:

Briefly stated, questions of law are questions about what the correct legal test is; questions of facts are questions about what actually took place between the parties; and questions of mixed fact and law are questions about whether the facts satisfy the legal tests.

[32] In this case, the notice of appeal appears to raise two grounds of appeal, neither of which is a question of law.

[33] The first ground of appeal is that the Board erred in finding that the Tenant has not paid any rent. Specifically, the notice of appeal states that “the Appellant disputes the allegations in the Respondents’ application and is able to provide proof of payment for this period by way of certified cheques”. The Tribunal made a finding that the Tenant has not paid rent since May 2019. This is a finding of fact. Whether the Tenant could now prove that it had paid rent does not raise an issue of law and is therefore now a proper ground for appeal.

[34] The second ground of appeal is that the Board erred in finding that the Tenant had notice of the termination and of the hearing. Section 7(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, provides that where notice of an oral hearing has been given to a party and the party does not attend the hearing, “the tribunal may proceed in the absence of the party and the party is not entitled to any further notice in the proceeding”. As addressed above, the review order specifically found that the Landlords provided evidence that the notice of termination was sent to the Tenant and that the Board sent the Tenant the hearing notice. The Board found that there was no compelling evidence that the Tenant did not receive these notices. Again, these are findings of fact and are not issues that can be raised on appeal.

[35] Accordingly, I find that the appeal does not raise any issues of law and it is therefore manifestly devoid of merit.

Issue 2 - The appeal is an abuse of process

[36] This Court has consistently held that launching an appeal for the sole purpose of obtaining the stay of an eviction in the context of landlord and tenant proceedings is an abuse of process: Regan v Latimer, 2016 ONSC 4132 (Div. Ct.), at para. 25; and Florsham v. Mason, 2015 ONSC 3147 (Div. Ct.), at para. 4

[37] As was the case in Regan and in Florsham, one of the key indicia that a party is trying to “game the system” is a circumstance where the Tenant persistently fails to pay rent prior to and throughout the appeal period without any explanation for the failure to pay rent or any evidence of an intention to remedy the situation.

[38] In this case, the Tenant has not paid rent since August 2019. It has not taken any steps to perfect the appeal or even to respond to this motion.

[39] The appeal and the tactics on the appeal are designed to avoid the effect of the Board’s termination order. This is a clear case of abuse of process.

Costs

[40] The Landlords seek costs on a substantial indemnity scale in the amount of $11,123.44.

[41] Relying on prior decisions of this Court, the Landlords justify the request for substantial indemnity costs on the basis that the Tenant has deliberately abused the court process to avoid vacating the unit and to not pay rent for as long as possible: see, for example, Eldebron Holdings Limited v Mason, 2016 ONSC 2544 (Div. Ct.), para. 17.

[42] I agree that this is an appropriate case for substantial indemnity costs. In addition to the lengthy period of unpaid rent and the unmeritorious appeal, the Tenant has persistently treated the legal system with complete disregard, first by not attending the hearing before the Board and in this proceeding by not filing materials or attending the hearing.

[43] In the circumstances, I am awarding the substantial indemnity costs requested of $11,123.44 to the Landlords.

Conclusion

[44] For the reasons above, I make the following order:

a. The appeal is quashed;

b. The automatic stay of the Board’s decision is vacated;

c. The Landlords may file the Board’s eviction order with the Sheriff as of November 30, 2020; and

d. The Tenant is to pay costs to the Landlords in the amount of $11,123.44 all inclusive payable within 30 days of today’s date.

[45] I have signed the draft order provided by counsel for the Landlords with necessary modifications. The Court is to send a copy of the order to counsel for the Landlords via email once it has been issued and entered. Counsel for the Landlords it to send copies of this decision and the order by email to the Tenant upon receiving them from the Court.

___________________________ Favreau J.

RELEASED: November 25, 2020

CITATION: Sandgecko Inc. v. Ye, 2020 ONSC 7245 ­­­

DIVISIONAL COURT FILE NO.: 194/20 DATE: 20201125

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

Sandgecko Inc. Appellant/Respondent on the motion

– and –

Zi Ye and Jie Dai Respondents/Moving Parties

REASONS FOR JUDGMENT

FAVREAU J.

RELEASED: November 25, 2020