2022 ONSC 5040
DIVISIONAL COURT FILE NO.: 61/19
DATE: 20220902
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
The Honourable McWatt A.C.J.S.C.J., Sachs and J.A. Ramsay JJ.
BETWEEN:
O'SHANTER DEVELOPMENT COMPANY LIMITED
Appellant
– and –
TERRY BABCOOKE, SHARIN BARBER, DONA-JEAN CLARY, SARAH CONNOR, AHSLEY JANE, PHILIP KREUGER, PAUL KUNDAREWICH, LINDA LEM, ROSALIND LOBO, JUDITH OLSON, LOURDES PADIOS, ROSITA PADIOS, JUSTIN DUBE PELZ, RIC PHILLIPS, REBECCA STANZELEIT, BORIS SUCHAROV, LINDLEY TAYLOR-WRIGHT, TATJANA TYZKYJ, JONATHAN VANDENBBOSCHE, IAN VEITCH, GRACE WANG, TSERING ZHONGDHO, SIMA ALDAOUD
Respondents
– and –
Landlord and Tenant Board
Respondent
Joe Hoffer and Kristen A. Ley, for the Appellant
Joseph Kary, for the Respondents
Brian A. Blumenthal for the Respondent
HEARD at: Toronto On. May 20, 2021 by Videoconference
MCWATT A.C.J.S.C.J.
[1] The Landlord, O’Shanter Development Company Ltd., appeals from an order of the Landlord and Tenant Board (“Board”) dated January 2, 2019, in which the Board found that the Landlord had unreasonably deprived the Tenants of a service included in their rent, namely their storage lockers, and ordered a 15% reduction in rent as compensation to commence the date that the storage lockers were eliminated on January 28, 2017. The Landlord sought a review of the Board’s order. That review was dismissed on February 21, 2019.
[2] The Tenants each started their tenancies with the use of a storage locker in the building they occupied. The cost of the locker was included in their monthly rent.
[3] In early 2015, the Landlord told the Tenants that it intended to take over the space used by the storage lockers but that the Landlord intended to build new storage lockers in the building as replacements.
[4] On December 9, 2016, the Landlord gave notice to the Tenants that they would no longer have use of the storage lockers in the building because the Landlord planned to create new rental units in the space occupied by the lockers. Tenants were given until January 8, 2017, to remove their belongings from their lockers. The Landlord offered help to any Tenants who could not clear their lockers on their own and told the Tenants the rent would be reduced by $25.00 a month in compensation.
[5] After a meeting between representatives of the Landlord and Tenants on December 15, 2016, the Landlord agreed to provide storage lockers at no additional cost in another building (Brentwood) nearby and agreed to hire movers to move the Tenants' belongings to those new lockers. The Landlord also agreed to provide a mover, at a set date and time twice per year, to move items to and from lockers and to provide an access card to Brentwood so that Tenants could access their new storage lockers at any time. The storage lockers in Brentwood are smaller than the ones previously provided in the residential complex and are located approximately one kilometre from the complex.
[6] The movers were scheduled to move the Tenants’ belongings on January 28, 2017.
[7] After January 8, 2017, the Landlord extended the deadline for Tenants to remove belongings from the storage lockers. Some of the Tenants either moved or allowed their belongings to be moved into the storage lockers in Brentwood.
[8] Some of the Tenants left their possessions in their lockers after January 31, 2017. On various dates in July and August 2017, the Landlord cut the locks on these lockers and moved the Tenants' possessions to a new temporary storage space after giving the Tenants one week's notice that they would do so if the Tenants' belongings were not moved. The Landlord gave these Tenants keys to the temporary lockers. As of September 17, 2018, the last day of hearing before the Board, the temporary lockers were still being used by these Tenants.
[9] The 8 rental units that maintained on-site storage, albeit changed from the original on-site storage, had the continuous use of it until January 24, 2019, when they were ordered to vacate this space by Orders of the Board dated December 6, 2018.
DISPOSITION and ANALYSIS
[10] The Landlord’s appeal is dismissed on all the six grounds claimed and set out here:
(a) There are no questions of law appealed against in this matter. The Landlord appeals, here, against mixed questions of law and fact, questioning whether the facts satisfy the legal tests used by the Board Member to find for the Tenants (Canada (Director of Investigation and Research) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748 at para. 35).
[11] The statutory appeal provisions in the Residential Tenancy Act, 2007, S.O. 2006 c. 17 as amended (“RTA”) limit appeals to this Court from Board orders to questions of law alone. And the Supreme Court, in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at paras. 36 and 37 has made clear that appellate standards of review are applicable to administrative decisions that provide for a statutory appeal – as in this matter. Questions of law arising from Board decisions are reviewable on the standard of correctness. That standard is not applied to the Board’s assessment of evidence, findings of fact, and determinations of mixed fact and law. The Board is entitled to control its own process and will be accorded deference on procedural matters requiring an exercise of discretion.
(b) Contrary to the appellant’s claim, the Board Member did not err in law by concluding that where a Landlord's change of services and facilities is motivated by a desire to "gain more income", it is, by default, "unreasonable" within the meaning of s. 39(2) of O. Reg. 516/06.
[12] In fact, the adjudicator found that there was nothing wrong in a Landlord taking steps to increase its income. The Member found, however, that the Landlord’s actions here were unreasonable because the storage lockers were included in the rent and were a service that the Landlord was contractually obligated to provide; that there was no order by any municipal or other authority to remove the lockers; that it was therefore the Landlord’s free choice to discontinue the facility; and that the Landlord unilaterally decided to resile from its contractual obligation.
[13] The issue of reduction in locker space was not raised in the development approval process. The Landlord’s proposal approved by the planning authorities contemplated new lockers for all Tenants and the Tenants went along with it on that basis. When the Landlord revised its plans, it did not resubmit them to the planning authorities.
[14] The Board found that the Landlord had the right to discontinue the facility to put in more rental units, but that the economic cost of the Landlord’s infill project should not fall on the Tenants.
[15] The regulations required the Board then to value the loss of the lockers according to their value to the Tenants and the effect of their loss on the Tenants.
[16] The Board’s findings are mixed law and fact and are not subject to appeal. The Landlord’s motives and reasons for discontinuing the service were valid factors for the tribunal to consider.
[17] Whether or not the appropriation and destruction of the locker space was reasonable, the Landlord offered no acceptable measure of value so that, under the legislation, the tribunal would have had to price the lockers according to their value to the Tenants.
[18] S. 39 of the Residential Tenancies Act, O.Reg. 516/06, sets out that the Board must determine whether the discontinuation of the services was reasonable ‘under the circumstances’, requiring the Board to make factual determinations. The issue is one of fact or mixed law and fact, and the tribunal’s decision was reasonable and consistent with the jurisprudence.
[19] This was confirmed on review by Member Whitmore, who found that the reasonableness of the Landlord’s decision was a question of fact and that there was evidence to justify Member Lang’s findings of fact on this issue.
[20] I agree with the Tenants’ submission that to make this issue a pure matter of law, the Landlord must establish not just that the adjudicator gave too much or too little weight to the profit motive, but that the adjudicator was wrong in even considering a profit motive. The Landlord has not established this on the appeal.
(c) The Member did not err in law when determining the quantum of rent reduction. And she did not fail to provide adequate reasons to support the quantum of 15% of the rent charged.
[21] The appellant points out that section 39 of O. Reg. 516/06 provides that if the reduction in the facility is not reasonable, then the amount of the rent reduction is to be determined based on the value of service or facility, including (i) the cost to the tenant to replace the facility; and (ii) the effect of the reduction on the tenant.
[22] At the hearing, the Member did not accept the Tenants' evidence of the cost of replacing the onsite storage lockers. Because of this, the Landlord complains that since the burden of proof of value to the Tenants and the effect of the change of the facility lies with the Tenants and only 9 Tenants from 8 rental units presented evidence relevant to the second factor (the effect of the reduction), the Tenants did not satisfy its burden of proof. And as a result, the Member erred by relying on this evidence to affix the quantum of a 15% reduction in rent. The Board erred in restricting its analysis solely to a consideration of the effect of the reduction on the Tenants, the second factor set out in subs. 39(6) of the regulation.
[23] The Board is required by statute to adopt the most expeditious method of determining the questions before it. This is a mandatory, not a discretionary, procedural duty (ORHT v. MTHA & Godwin, 2002 41961 (ON CA), 2002 41961 (CA)).
[24] The adjudicator did not decide the amount of the rebate based on evidence particular to any witness or group of witnesses. She specifically stated that she would not do so.
[25] Instead, she looked at effects that could be presumed for all the Tenants. These included the reduced size of the new locker spaces, the inconvenience of off-site storage, and the distress caused in some form to all Tenants by the loss of a service that was included in their tenancy agreement.
[26] I agree with the Respondent that the adjudicator did nothing unusual and that it was appropriate for the Board Member, in line with Godwin, to interpret section 183 of the Act as justifying the crafting of a global remedy based on similar fact evidence from a handful of Tenants in multi-tenant applications (ORHT v MTHA and Godwin, supra at para 73).
[27] In addition to the viva voce evidence of the Tenants at the hearing, the adjudicator also had evidence from other Tenants at a meeting between the Landlord and Tenants with the record of the meeting showing that those Tenants moved into the building partly because of the availability of a locker; that those Tenants found the compensation offered was inadequate; that the replacement lockers offered were inconvenient for those who could not drive; and that those Tenants felt it was unfair for the landlord to gain at their expense.
[28] The adequacy and quantum of compensation for lost services is a question of mixed fact and law.
[29] Regulation 39(2) and (3) set out that if the adjudicator deems the reduction unreasonable, she should consider the value of the service. She should also consider the effect of discontinuance on the Tenants. Cost can be part of the determination of value but is not the sole element.
[30] The adjudicator considered the Tenants’ evidence as to cost but decided that the cost they advanced was the wrong measure to use. She considered other evidence related to the value of the locker to the Tenants in addition to evidence of the effect of discontinuance. This evidence included the fact that the availability of the lockers was a reason Tenants chose to move into the building; the uses to which the Tenants put their lockers; the size of the lockers; the convenience of having readily accessible storage, particularly for items that are used frequently; and how the on-site storage made it easier to buy staple items in bulk.
[31] The Tenants’ evidence was that their locker was like a large additional room, on site, so that the loss was significant and not unlike losing one room in a two bedroom or three-bedroom apartment.
[32] The Board’s decision was an available one based on the evidentiary record it had before it. It was also in accordance with what the statute and the regulations require. The alternatives would have been to make its own factual inquiry as to cost or to refuse a remedy to the Tenants in the face of its own factual determinations that the Landlord’s activities were unreasonable and had an adverse effect on the Tenants.
[33] The Board’s review decision also determined that the adjudicator had carefully considered the value of the locker facilities.
(d) The Member did not err in law by making findings and awarding remedies to Tenants who did not testify at the hearing about the "effect" upon them of the reduction of the facility. She did not deny the Landlord procedural fairness and natural justice.
[34] The Landlord argues that it is procedurally unfair to provide a remedy to Tenants who did not give oral testimony. The Landlord did not raise this issue with the adjudicator but raises it for the first time on this appeal.
[35] First, all the Tenants who were parties participated in the hearing, either through their lawyer or by attending in person. A party is not required to testify. The court can draw an adverse factual inference from the failure of a witness to testify in certain circumstances, but this is a matter of discretion in interpretation of the facts before the court rather than a requirement of law (Mudrazia v. Holjevac et al., 1969 345 (ON SC), [1970] 1 O.R. 275, 8 D.L.R. (3d) 221; Godwin, paras 37-38).
[36] Second, the identities of the tenants were known to the Landlord and it could have called a tenant as its witness.
[37] Finally, the Board was permitted to use the testimony of individual Tenants about harm done to them to draw general conclusions about the effect of the Landlord’s actions on Tenants.
[38] The Landlord argues that this could only be done if a formal proposal to this effect had been made at the start of the hearing. I disagree.
[39] The adjudicator chose to base the quantum of compensation on deprivations and inconvenience that, according to her determinations of fact, were common to all Tenants. She explicitly rejected the alternative that some Tenants who testified should receive more compensation than others. Under such circumstances, it is not necessary for the Board to hear from every tenant.
[40] The appellate courts have directed that in circumstances such as this one, the Board should look to the interests of the tenants as a whole, rather than look to the evidence of impact upon individual use by the tenants of one unit (First Ontario Realty v Deng, 2011 ONCA at para 57).
[41] The Board is entitled to order an abatement for all tenants reflecting the average experience without requiring that each individual tenant be called to the stand (Godwin, supra at para 30).
[42] The tribunal had the power to determine its own procedures and to exclude any evidence that is unduly repetitious without the consent of the parties. The Board did not need to hear 23 witnesses about the loss of a locker.
(e) The Member did not err in law when she found that the effective date of the rent reduction was January 28, 2017, for all Tenants.
[43] The Board found that the rent reduction began when the Landlord formally terminated the locker facility, effective January 28, 2017.
[44] The Landlord argues that the Tenants did not remove their belongings on that date, and that the rent reduction should not begin until the Tenants’ belongings were removed.
[45] The evidence of the Tenants was they were affected by the removal of the lockers beginning on or before January 5, the original deadline set by the Landlord for the removal of the locker facility. Tenants kept items in the storage lockers to contest the Landlord’s right to remove the locker facility but moved the rest of their belongings from the lockers. Tenants who did not formally surrender the locker space to the Landlord still began moving out their belongings from the locker or disposing of the belongings that were in the lockers on or before the extended deadline of January 28.
[46] In determining the amount of the rent reduction, the adjudicator considered the distress caused in some form to all Tenants by the reduction of a service guaranteed in the tenancy agreement. The Member found that factor came into play when the Landlord terminated the facility, regardless of whether the Tenants continued to leave some of their belongings in the lockers.
[47] The Member found that the locker facility was not ended but reduced on January 28. Accordingly, it was reasonable for her to set that date, the date the Landlord removed locker privileges, as the date on which the rent rebate should begin. She could have set an earlier date.
[48] That factual finding is not subject to appeal. In the alternative, as suggested by the Tenants, it is a question of how the rule should have been applied to the facts and is therefore a question of mixed fact and law. That is also not subject to appellate review.
[49] In the Board’s decision on review, it was suggested that it would have been illegal for the Landlord to charge rent for the locker facility after January 28, 2017.
(f) It was not an error of law for the Member to disregard compensation agreements reached between the Landlord and some Tenants and, instead, impose a rent reduction to those Tenants.
[50] This issue is also being raised for the first time on appeal. The Tenants point out that the Landlord did not argue, before the Board, that there was any contract binding on some or any tenants that would prevent them from making a claim for a greater rent reduction.
[51] The Tenants also argue, here, that this ground of appeal deals with the question of whether such a contract existed, and, if it did how its terms should be interpreted. These are questions of mixed fact and law, which are not reviewable by this court. (Sattva Capital Corp v. Creston Moly Corp, 2014 SCC 53, [2014] 2 R.C.S. 633 at paras 42-55). I agree.
[52] The Landlord did offer to reduce the rent of Tenants by $25 for the loss of the locker spaces and then told the Tenants that it would provide smaller replacement lockers a kilometer away.
[53] There is no evidence that to obtain a replacement locker the Tenants had to agree to the $25 rent reduction. There is also no evidence that any tenant agreed to waive their right under s. 130 of the RTA to assert a claim for a greater rent reduction before the Board.
[54] No releases were obtained from the Tenants and no compensation agreement was signed by the Tenants in this regard.
[55] Three of the Tenants who were called as witnesses provided evidence that they agreed with the $25 rent reduction proposal by the Landlord. There was nothing in writing between them and the Landlord. And one of those witnesses denied, in cross-examination, that he had entered such an agreement. The Landlord had the onus to prove any valid agreement existed. It has failed to do so.
COSTS
[56] The Landlord and Tenant Board does not ask for Costs. Costs shall follow the event. Therefore, on agreement between the parties, the Appellant shall pay the Respondents $8,000.00 in costs, inclusive, forthwith.
McWatt A.C.J.S.C.J.
I agree _______________________________
Sachs J.
I agree _______________________________
J.A. Ramsay J.
Released: September 2, 2022
2022 ONSC 5040
DIVISIONAL COURT FILE NO.: 61/19
DATE: 20220902
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MCWATT A.C.J.S.C.J., SACHS AND J.A. RAMSAY JJ.
BETWEEN:
O'SHANTER DEVELOPMENT COMPANY LIMITED
– and –
TERRY BABCOOKE, SHARIN BARBER, DONA-JEAN CLARY, SARAH CONNOR, AHSLEY JANE, PHILIP KREUGER, PAUL KUNDAREWICH, LINDA LEM, ROSALIND LOBO, JUDITH OLSON, LOURDES PADIOS, ROSITA PADIOS, JUSTIN DUBE PELZ, RIC PHILLIPS, REBECCA STANZELEIT, BORIS SUCHAROV, LINDLEY TAYLOR-WRIGHT, TATJANA TYZKYJ, JONATHAN VANDENBBOSCHE, IAN VEITCH, GRACE WANG, TSERING ZHONGDHO, SIMA ALDAOUD
– and –
Landlord and Tenant Board
REASONS FOR JUDGMENT
Released: September 2, 2022