Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220216 DOCKET: C69475

Lauwers, Huscroft and Coroza JJ.A.

BETWEEN

John White, Sarah White, Garth Williams, Paul Stubbens, Elaine Stubbens, Linda Adams, Steve Ward, Kevin Prust, Theresa Prust, James Osmar, Carol Tracy, Barry Nash, Judy Nash, Brent Poley, Thane Ulrich, Brian Hanlon, Nancy Hanlon, John Conlon, Joan Conlon, Doug Mellor, Norma Mellor, Susan Dawtrey, Claude Guitard, Jamie Mackay, Cindi Davis, Rick Brydon, Roy Bissonnette, Dennis Froese, Dave Farnham, Mike Landry, Pat Warren, George Clemens, Marilyn Greer, Patrick Kelly, Barb Kelly, Lynn Daly, Frank Vandiepenbeek, Frank Sinasac, Gerald Trainor, David Bobier and Leslie Putnam

Applicants (Appellants)

and

Upper Thames River Conservation Authority

Respondent

Counsel: Vedran Simkic and Matthew Helfand, for the appellants Ian Wright, for the respondent Eli Fellman and Katia Snukal, for the intervener Landlord and Tenant Board Karen Andrews, for the intervener Advocacy Centre for Tenants Ontario

Heard: January 28, 2022 by video conference

On appeal from the order of the Divisional Court (Justices Harriet E. Sachs, Brian W. Abrams and Michelle O’Bonsawin), dated December 16, 2020, with reasons reported at 2020 ONSC 7822, 154 O.R. (3d) 133, allowing an appeal from the order of the Landlord and Tenant Board, dated June 5, 2018.

Huscroft J.A.:

Overview

[1] The appellant tenants own homes that sit on land leased from the respondent. The homes are the primary residences of many, though not all of them.

[2] The appellants have long-term leases with the respondent, first entered in 1983. The leases limit occupancy to weekends during the three-month winter period. In other words, for three months out of the year, the appellants are not permitted to reside in their homes Monday through Friday. The leases were amended in 2004 to permit tenants to choose the winter dates when their occupancy limitation runs, but the substance of the limitation remains: the appellants are not permitted to occupy their homes year-round. Occupancy outside the permitted period is expressly stated to be “a violation of the terms of this lease and will result in delivery of Notice of Lease Termination”.

[3] Despite the clear terms of the lease, the respondent has never strictly enforced the occupancy limitation and as a result, many tenants live in their homes year-round. The parties were in the midst of renegotiating their leases and the enforceability of the occupancy limitation became the subject of a dispute. The appellants applied to the Landlord and Tenant Board (the “Board”) for an order that the Residential Tenancies Act, 2006, S.O. 2006, c. 17 applies to their tenancies, and an order requiring the respondent to allow them unfettered access to and occupation of their homes, year-round.

[4] The Board held that the Act applies to the parties’ lease and it followed that the tenants ought to have unrestricted access to the rental units. The Board added that restricting tenants’ access would amount to substantial interference with their reasonable enjoyment of their rental units, in violation of s. 22 of the Act. The Divisional Court allowed the respondent’s appeal, holding that s. 22 does not render illegal provisions landlords and tenants have agreed upon.

[5] The application of the Act to the parties’ lease is no longer contested. The sole issue on appeal is the legality of the occupancy limitation in the lease.

[6] In my view, the occupancy limitation is inconsistent with the Act and as a result is void. I would allow the appeal for the reasons that follow.

Background

The standard of review

[7] This is an appeal from the decision of the Board on a question of law pursuant to s. 210(1) of the Act. As such, the presumption of reasonableness review is rebutted and the standard of review is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1, at para. 37. It follows that neither the decision of the Board nor the decision of the Divisional Court is entitled to deference. Whereas reasonableness review focuses on the decision made and the reasons proffered for that decision, under correctness review this court must make the decision for itself.

The Residential Tenancies Act

[8] The purpose of the Act, as set out in s. 1, is to "provide protection for residential tenants from unlawful rent increases and unlawful evictions, 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."

[9] The Act governs more than the rental of apartments in apartment buildings. It also governs situations in which tenants own the homes in which they live but rent the land on which those homes sit – the situation in this case. The Act defines a “land lease home” as 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”. The general terms of the Act apply to land lease homes along with a number of specific provisions that cover land lease homes and communities, none of which are germane to this appeal.

[10] The Act is remedial legislation designed to redress the imbalance of power between landlords and tenants. It removes leases from the ordinary contract law principles that would otherwise govern and establishes extensive statutory rights for tenants. The Act enjoys primacy over all other legislation, save the Ontario Human Rights Code, and the parties are prohibited from waiving or limiting the protection the Act provides. The key legislative provisions in this regard are ss. 3 and 4:

3 (1) This Act, except Part V.1, applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary.

(4) If a provision of this Act conflicts with a provision of another Act, other than the Human Rights Code, the provision of this Act applies.

4 (1) Subject to subsection 12.1(11) and section 194, a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void.

The impugned lease provisions

[11] The occupancy limitation is set out in para. 3 of the lease, which provides:

The lease and license permits the Tenant, the Tenant's family and guests to occupy the dwelling house and other improvements constructed on the lot only at the following times:

(a) From the first day of March to the 30th day of November in each and every year during the term hereof;

(b) During the months of January, February and December, occupancy shall be weekends only commencing on Friday at 1:00 p.m. and concluding on Sunday at 9:00 p.m. Where Friday or Monday is a public holiday, such shall be included in the weekend with the times so enlarged.

Occupancy of the dwelling house other than at the times as herein provided, shall be a violation of the terms of this lease and licence and the lease and license shall at the option of the Authority become forfeited and such option may be exercised by delivery of notice of termination hereunder.

[12] Appendix B, added in 2004, permits limited choice of the winter dates in which the occupancy limitation runs. During that period, tenants may occupy their units only from Sunday night at 9:00 p.m. to Monday morning at 9:00 a.m. Violation of the occupancy limit is a serious matter. The appendix states: “Occupancy of the dwelling other than at the times provided, is a violation of the terms of this lease and will result in delivery of Notice of Lease Termination.”

Discussion

[13] The parties have a longstanding rental relationship that has always included occupancy limitations. It is unclear why the limitations were established. The respondent can suggest no purpose for them, nor does anything in the record indicate the practice at other conservation authorities in the province. The respondent is attempting to establish the legality of occupancy limitations it has chosen not to enforce for decades.

[14] Regardless of the provenance or utility of the occupancy limitations, the operation of the Act is clear: if the limitations are inconsistent with the Act they are rendered void by operation of s. 4.

[15] Plainly, occupancy limitations are not specifically permitted by the Act, but nor are they specifically prohibited. The Divisional Court considered that the absence of a specific prohibition was determinative, given the parties’ agreement to the limitations. In an apparent application of the expressio unius est exclusio alterius maxim, the court reasoned that because the Act includes some specific prohibitions – for example, the Act prohibits “no pet” provisions – the absence of a specific prohibition of occupancy limitations means that they must be permitted. The court reasoned that “[i]f there was a limitation regarding limiting access or occupation of a residential unit, the court would expect there to be a specific section of the Act dealing with this issue.” The court added: “It can hardly be said that when a party voluntarily agrees to a provision of the residential agreement that is not specifically provided for by the Act, this leads to a determination that the provision is inconsistent with the Act.”

[16] This reasoning is untenable. It does not necessarily follow from the specific prohibition of some things in an act that other things not specifically prohibited must be permitted. Whether this sort of negative implication can be drawn depends on context and common sense – as Scalia and Garner note, whether the thing specified “can reasonably be thought to be an expression of all that shares in the grant or prohibition involved: see Reading Law: The Interpretation of Legal Texts (St. Paul, MN: Thompson/West, 2012), at pp. 107-111. In this case, there is no reason to suppose that the Legislature’s decision to prohibit “no pet” provisions has anything to do with tenants’ right to occupy the units they rent.

[17] The Divisional Court’s reasoning begs the question at issue. Voluntary agreement to a provision is irrelevant if that provision is not otherwise permitted. In the absence of specific authorization or prohibition, the legality of occupancy limitations must be determined by consideration of the provisions of the Act as a whole.

[18] This is simply an application of the modern approach to statutory interpretation. The purpose of statutory interpretation is uncontroversial: it is to determine the intention of the legislature. The Supreme Court summarized the modern approach recently in Vavilov, at para. 117:

A court interpreting a statutory provision does so by applying the “modern principle” of statutory interpretation, that is, that the words of a statute must be read “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26, both quoting E. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87. Parliament and the provincial legislatures have also provided guidance by way of statutory rules that explicitly govern the interpretation of statutes and regulations: see, e.g., Interpretation Act, R.S.C. 1985, c. I-21.

[19] The modern approach to statutory interpretation is now referred to as “text, context, and purpose”: see the helpful discussion by Miller J.A. (dissenting) in R. v. Walsh, 2021 ONCA 43, 154 O.R. (3d) 263, at paras. 133-150. In my view, the text, context, and purpose of the Act confirm that it contemplates only non-temporary, non-conditional, unlimited occupancy arrangements. In short, occupancy limitations in residential leases are not permitted.

The security of tenure

[20] The intervener Advocacy Centre for Tenants Ontario and the Board made helpful submissions highlighting the security of tenure provisions of the Act – provisions that the Divisional Court failed to consider. These provisions are premised on the notion that the Act establishes ongoing tenancies that may be renewed following completion of the initial fixed term. The circumstances in which a landlord may take possession of a rental unit from a tenant are strictly limited to lawful termination, abandonment, death, assignment, eviction, or a Board order – in other words, the end of a tenancy in accordance with the Act. Nothing in the Act authorizes a landlord to take possession of a residential unit during an ongoing tenancy or assists the landlord in doing so.

[21] None of this is surprising in the context of an Act that is designed to redress the imbalance in bargaining power between landlords and tenants. Occupancy limitations are at odds with the very scheme of the Act. This is confirmed by the core concepts in the Act – tenant and tenancy agreement – both of which are defined in s. 2(1) in terms of tenants’ right to occupy the units they rent.

[22] The respondent sought to defend occupancy limitations by drawing a distinction between tenants’ right to occupy their rental units, on one hand, and the right of the landlord to take possession of those units on the other, asserting that the landlord does not take possession of the rental units or occupy them itself during the term in which occupation by the tenant is not permitted. This purported distinction is illusory. The denial of a tenant’s right to occupy the unit he or she has leased is the problem, and it is irrelevant whether the landlord has in some sense taken possession of the unit or simply denied the tenant access to it; in either case, the continuity of the tenancy has been broken in a manner inconsistent with the Act.

[23] The Act specifically enumerates the forms of living accommodation that are exempt from the Act on the basis of seasonal or temporary occupation, and it is common ground that the land lease situation in this case is not included. Section 5(1) provides:

5 This Act does not apply with respect to,

(a) 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;

[24] In other words, rather than address seasonal or temporary accommodation arrangements in the context of leases covered by the Act, the Legislature exempted them all together.

[25] Thus, the Divisional Court’s concern that the Board’s order would preclude the owner of a cottage and a tenant from including a term in a lease permitting the owner to occupy the cottage during certain limited times of the year, such as at Christmas, is misplaced. Cottage rentals are exempt from the Act by virtue of s. 5. Put another way, there is no need to interpret the Act to protect seasonal or temporary arrangements for living accommodations. The Legislature has adverted to the matter and determined the sorts of seasonal and temporary arrangements that are not covered by the Act.

[26] In summary, the Act establishes security of tenure. Occupancy limitations are inconsistent with the Act and are rendered void by s. 4. The parties’ agreement to such limitations is simply irrelevant: freedom of contract values cannot be invoked to limit the protection the Act provides.

[27] This is sufficient to dispose of the appeal, but because of the way in which the matter was argued, both before the Board and Divisional Court, I will discuss briefly the concept of reasonable enjoyment under s. 22 of the Act.

The right to reasonable enjoyment

[28] Section 22 of the Act provides as follows:

A landlord shall not at any time during a tenant’s occupancy of a rental unit and before the day on which an order evicting the tenant is executed substantially interfere with the reasonable enjoyment of the rental unit or the residential complex in which it is located for all usual purposes by a tenant or members of his or her household.

[29] The Act does not define either the concept of reasonable enjoyment or substantial interference with it. These are vague terms that must be fleshed out by Board decisions in particular contexts, and a large body of Board case law has developed in this regard. In this case, the Board stated that the restriction of tenants’ access to rental units would be a “substantial interference with the reasonable enjoyment of the rental units”. The Divisional Court disagreed, stating as follows:

A reading of the ordinary sense of s. 22 of the Act does not lead to a determination that Upper Thames substantially interfered with the reasonable enjoyment of the Tenants’ rental units when these Tenants voluntarily agreed to the provision in the lease. To be clear, s. 22 of the Act cannot be read as to indicate that any limitation to access to a rental unit during certain periods of time, agreed upon by both landlord and tenant, equates to a substantial interference by the landlord with the reasonable enjoyment of the rental units. To find otherwise would be to unnecessarily limit the ability of landlords and tenants to enter into flexible arrangements regarding the leasing of premises.

[30] As I have explained, it was unnecessary for the Board to rely on s. 22. For its part, the Divisional Court erred by assuming occupancy limitations to be proper by virtue of the absence of a specific prohibition in the Act and tenants’ agreement to include them in their leases. This led the court to conclude that s. 22 was at the heart of the appeal, and it had to be interpreted in accordance with the parties’ freedom of contract.

[31] The outcome in this case does not depend on the tenants’ right of reasonable enjoyment. The occupancy limitation in the leases is void because it is inconsistent with the Act as a whole and the nature of the tenancies it establishes and protects.

Disposition

[32] I would allow the appeal and set aside the order of the Divisional Court.

[33] The appellant is entitled to costs of the appeal in the agreed amount of $10,000, all inclusive. The costs in the Divisional Court are reversed. The interveners are not entitled to costs.

Released: February 16, 2022 “P.L.” “Grant Huscroft J.A.” “I agree. P. Lauwers J.A.” “I agree. S. Coroza J.A.”