Clandfield et al. v. Apartment and Housing Services Queen's University

[Indexed as: Clandfield v. Queen's University (Apartment and Housing Services)]

54 O.R. (3d) 475

[2001] O.J. No. 2095

Docket No. C34750

Court of Appeal for Ontario

Catzman, Doherty and Simmons JJ.A.

June 5, 2001

Landlord and Tenant--Residential premises--University housing --Unlike other landlords, university can require tenant to enter into agreement to terminate tenancy at time tenant signs lease or as condition of entering into tenancy agreement --University, however, cannot rely on termination agreement and refuse to renew tenancy solely for purpose of enforcing "no pets" policy--Tenant Protection Act, 1997, S.O. 1997, c. 24, ss. 15, 39(3)--O. Reg. 194/98, s. 4.

Under s. 39(3) of the Tenant Protection Act, 1997 an agreement with a landlord to terminate a tenancy is void if it is entered into at the time the tenancy agreement is entered into or as a condition of entering into a tenancy agreement. However, under s. 4(1) of O. Reg. 194/98, s. 39(3) does not apply to rental units occupied by students of a post-secondary institution, where the units are located in a residential complex owned, operated or administered by a post-secondary institution. Queen's University ("Queen's"), a post-secondary institution, entered into a series of one-year tenancy agreements with AA, a student at the university, who occupied the unit with PC and their child. In addition to the tenancy agreement, AA and PC also entered into an agreement to terminate their tenancy each time they entered into a new lease. Queen's had a policy forbidding pets in the rental units, and in March 1999, AA and PC were advised that their lease would not be renewed for the term beginning September 1, 1999 unless they relocated their two cats. They took the position that Queen's could not require them to remove their pets as a condition of permitting them to renew their lease because s. 15 of the Tenant Protection Act, 1997 provides that any term in a residential tenancy agreement prohibiting pets is void. They brought an application before the Ontario Rental Housing Tribunal for an order declaring that Queen's could not refuse to renew their lease because they kept pets. The Tribunal allowed the application. Queen's appealed to the Divisional Court and the decision was set aside. Leave having been granted, AA and PC appealed to the Court of Appeal for Ontario.

Held, the appeal should be allowed with costs.

While, unlike other landlords, Queen's can require tenants to enter into an agreement to terminate their tenancy at the same time as they sign their leases, Queen's cannot rely on those agreements and refuse to renew a tenancy solely for the purpose of enforcing a "no pets" policy. Queen's is bound by the provisions of the Tenant Protection Act, 1997 from which it is not exempt. Section 4(1) of the Regulation is not intended to permit Queen's to circumvent the Act's clear prohibition against a "no pets" term in a lease. Queen's used the exemption granted to it by the Regulation to do indirectly what it could not do directly. The tenancy termination agreement is not enforceable where it is invoked solely as a means of indirectly imposing a limit on the use of the rented premises where the imposition of that limitation is specifically prohibited by the Act.

APPEAL of an order of the Divisional Court (Matlow, Cosgrove and McLean JJ.) (2000), 2000 CanLII 30142 (ON SCDC), 185 D.L.R. (4th) 763 setting aside a decision of the Ontario Rental Housing Tribunal.

Statutes referred to Tenant Protection Act, 1997, S.O. 1997, c. 24, ss. 15, 39, 196 Rules and regulations referred to O. Reg. 194/98 (Tenant Protection Act, 1997), s. 4(1)

Susan Charlesworth, for appellants. Timothy Wilkin, for respondent.

The judgment of the court was delivered by

DOHERTY J.A.:--

The Issue

Can the respondent Apartment and Housing Services, Queen's University ("Queen's") enforce a "no pets" rule by refusing to renew the lease of tenants who have pets, when it could not enforce a "no pets" term in the lease itself?

[1] I would hold that while, unlike other landlords, Queen's can require tenants to enter into agreements to terminate their tenancy at the same time as they sign their leases, Queen's cannot rely on those agreements and refuse to renew a tenancy solely for the purpose of enforcing a "no pets" policy.

I

[2] Queen's University owns approximately 550 residential rental units. The units are available to students of Queen's University. At least one tenant of each unit must be a student at the university. The appellant, Ms. Atkinson, was a student at Queen's University throughout the relevant time period. She, the appellant Mr. Clandfield and their child resided in one of the rental units owned by Queen's University for several years. Like all other tenants of the units, the appellants entered into a series of one-year tenancies commencing on September 1st and terminating on the following August 31st. The appellants also entered into an agreement to terminate their tenancy each time they entered into a new lease. As of March 1999, the appellants had resided in their unit for about four years. Their lease had been renewed each year.

[3] Queen's had a policy forbidding pets in the rental units. That policy was set out in the Apartment and Housing Services Tenant Handbook and incorporated into the tenancy agreement between Queen's University and the appellants. In March 1999, Housing Services at Queen's learned that the appellants had two cats. The appellants were advised that their lease would not be renewed for the term beginning September 1, 1999 unless they "relocated" their pets.

[4] The decision to refuse to renew the appellants' lease was based entirely on the appellants' breach of Queen's University's "no pets" rule. There was no suggestion that the cats were causing any problems or that there was any other reason for refusing to renew the appellants' lease.

[5] The appellants took the position that Queen's University could not require them to remove their pets as a condition of permitting them to renew their lease. The appellants relied on s. 15 of the Tenant Protection Act, 1997, S.O. 1997, c. 24 (the "Act"), which provides that any term in a residential tenancy agreement prohibiting pets is void.

[6] Queen's acknowledged that s. 15 of the Act applied to the appellants' lease, but took the position that the tenancy termination agreement signed by the appellants terminated the tenancy as of August 31, 1999. Queen's argued that like any other landlord, it could refuse to enter into a new lease with a prospective tenant because that person had pets. Queen's contended that it could enforce its tenancy termination agreement with the appellants for whatever reason it considered appropriate, including the enforcement of its "no pets" rule.

[7] The appellants brought an application before the Ontario Rental Housing Tribunal (the "Tribunal") for an order declaring that Queen's could not refuse to renew their lease because the appellants kept pets. The Tribunal allowed the application and made an order requiring Queen's to renew the appellants' lease.

[8] Queen's appealed to the Divisional Court pursuant to s. 196 of the Act on a question of law. That court, by a majority, allowed the appeal and set aside the order of the Tribunal. Matlow J., for the majority, held that while Queen's could not terminate the appellants' tenancy during the term of the tenancy on the basis that the appellants kept cats, it could refuse to grant a new tenancy to the appellants for that very same reason.

[9] This court granted leave to appeal from the order of the Divisional Court.

II

[10] Two provisions of the Act and one section of the regulations made under the Act are germane to this appeal.

15. A provision in a tenancy agreement prohibiting the presence of animals in or about the residential complex is void.

39(3) An agreement between a landlord and tenant to terminate a tenancy is void if it is entered into,

(a) at the time the tenancy agreement is entered into; or

(b) as a condition of entering into the tenancy agreement.

O. Reg. 194/98 (the "Regulation")

4(1) Subsections 39(3) and (4) of the Act do not apply to rental units occupied by students of one or more post- secondary educational institutions in a residential complex owned, operated or administered by or on behalf of the post-secondary educational institutions.

[11] Section 15 is self-explanatory. A term in a residential tenancy agreement prohibiting pets is void. Section 15 applied to the lease in effect between the appellants and Queen's as of March 1999.

[12] Section 39(3) is one of several provisions in the Act found under the heading "Security Of Tenure". The section recognizes that tenants are often not in an equal bargaining position with landlords when leases are being negotiated and that landlords should not be allowed to extract tenancy termination agreements at the time leases are signed. The prohibition against such agreements affords tenants a measure of security that in many cases they could not achieve through the normal bargaining process.

[13] But for s. 4(1) of the Regulation, the tenancy termination agreement between Queen's University and the appellants would be void. Section 4(1) creates an exemption to s. 39(3). That exemption is narrowly drawn and applies to units occupied by students of a post-secondary institution where those units are located in a residential complex owned, operated or administered by a post-secondary institution. Because of this regulation, landlords like Queen's can require students renting units in its residences to sign a tenancy termination agreement at the same time as they sign their lease.

[14] The Tribunal found that the purpose behind the exemption created in s. 4(1) of the Regulation was to allow post- secondary institutions "to preserve the stock of student housing". In coming to that conclusion, the Tribunal relied on correspondence emanating from the then Assistant Deputy Minister of Municipal Affairs and Housing.

[15] I am in substantial agreement with the Tribunal's conclusion, although I do not need to refer to the Assistant Deputy Minister's correspondence to come to that result. The purpose behind s. 39(3), as well as the language of s. 4(1) of the Regulation, make the purpose of that regulation clear to me.

[16] The significant derogation from the security of tenure allowed by s. 4(1) of the Regulation reflects the unique position of landlords like Queen's whose role as landlord is an adjunct to their broader role as a provider of post-secondary education. In any given academic year, the demands by students for rental units may far exceed the supply. In order to achieve its educational goals, Queen's must be able to allot its limited residential resources on an annual basis in a manner which best serves the broader educational needs and purposes of the university. Queen's may, for example, conclude that the needs of first-year students dictate that the university community is best served by giving priority to applications for rental units made by first-year students, even if that priority means students who rented units in previous years must be denied the opportunity to renew their leases. Without the exemption created by s. 4(1) of the Regulation, Queen's would not have the needed flexibility to permit it to tailor its allocation of rental units to meet broader educational concerns. The normal security of tenure afforded to tenants by s. 39(3) of the Act must yield to the broader institutional concerns of the university.

[17] Queen's is bound by the provisions of the Act from which it is not exempted. These include s. 15. Section 4(1) of the Regulation is directed specifically at ss. 39(3) and 39(4) of the Act. It is not intended to permit Queen's to circumvent the clear prohibition against a "no pets" term in a lease found in s. 15. Nor in my view, can it be seriously suggested (and I don't understand counsel for Queen's to have made this suggestion) that the enforcement of a "no pets" policy somehow furthers the broader educational goals of Queen's. It is those goals and those goals alone which justify some derogation from the security of tenure afforded to residential tenants by the Act.

[18] Section 4(1) of the Regulation provides that a tenancy termination agreement entered into at the time a tenancy agreement is entered into is not void in the circumstances described by the section. Section 4(1) does not say that such tenancy termination agreements are enforceable in all circumstances. In this case, by its own admission, Queen's chose to invoke the termination agreement and to refuse to renew the appellants' tenancy solely because they had pets. Had they relocated their pets, the tenancy would have been renewed. Queen's used the exemption granted to it by the Regulation to do indirectly what it could not do directly, that is, enforce a "no pets" rule. In my view, the tenancy termination agreement is not enforceable where it is invoked solely as a means of indirectly imposing a limit on the use of the rented premises when the imposition of that limitation is specifically prohibited by the Act.

[19] In so concluding, I do not go as far as the Tribunal and hold that the tenancy termination agreement entered into by the appellants is void. I hold rather that it is unenforceable where the sole and stated purpose of reliance on the termination agreement is to impose a prohibited limitation on the use of the rented premises. I would also not go beyond the declaration that the tenancy termination agreement was unenforceable in the circumstances. The Tribunal's order was broader and went beyond the facts of this case. I see no reason to decide more than is required to resolve this case.

[20] I would allow the appeal, set aside the order of the Divisional Court and make an order declaring that Queen's could not enforce the tenancy termination agreement against the appellants for the sole purpose of imposing its otherwise unenforceable "no pets" policy.

[21] The appellants are entitled to their costs on the appeal, the application for leave to appeal, and in the Divisional Court.

Appeal allowed with costs.