DATE: 20040521
DOCKET: C40655

COURT OF APPEAL FOR ONTARIO

DOHERTY, MOLDAVER and FELDMAN JJ.A.

BETWEEN:

1162994 ONTARIO INC.

Respondent

• and -

TIM BAKKER, DAVID CRANE, CONSTANTINE KLEMOS and JOHN HOLMES

Appellant/Tenants

Antonin I. Pribetic for the appellant

Robert A. Haas for the respondent

Julia E. McNally for the intervenor, Advocacy Centre for Tenants Ontario

HEARD: April 1, 2004

On appeal from the order of the Divisional Court dated May 8, 2003.

DOHERTY J.A.:

Overview

[1] The respondent ("landlord") applied to the Ontario Rental Housing Tribunal ("Tribunal") for an order under s. 86 of the Tenant Protection Act, S.O. 1997, c. 24, as amended (the "Act"), requiring the appellant Bakker and three other individuals to pay rent arrears owed to the landlord.

[2] The Tribunal can make an order under s. 86 requiring payment of rent arrears only against a person who is "a tenant in possession of the rental unit" at the time of the application. It was common ground before the Tribunal that Mr. Bakker, and two of the other tenants, David Crane and Constantine Klemos, had permanently vacated the apartment long before the s. 86 application was brought by the landlord. The Tribunal held that these three individuals were not "tenants in possession" and consequently no order could be made against them under s. 86. The fourth lessee, John Holmes, was in possession of the rental unit when the application was commenced and the Tribunal made an order against him requiring payment of the rent arrears.

[3] The landlord appealed the dismissal of the application as against Bakker, Crane and Klemos to the Divisional Court. In a brief endorsement, the Divisional Court reversed the Tribunal on the basis that possession by any of the four lessees constituted possession by all four of them. The court said:

The occupation and possession by the one co-tenant, therefore, constituted the occupation and possession on the part of all four tenants for the purposes of the Tenant Protection Act. The Tribunal, therefore, erred in failing to find all four tenants in occupation and possession. It follows, therefore, that the relief granted against the single tenant Holmes should be granted as against all four tenants. …

[4] The order of the Divisional Court tracks the endorsement. Paragraph one reads:

… The occupation and possession of the rental unit by one of the co-tenants is the occupancy and possession on the part of the four tenants for the purposes of the Tenant Protection Act.

[5] Bakker was granted leave to appeal to this court. Crane and Klemos did not seek leave to appeal. Given the potentially significant ramifications of the broad order made by the Divisional Court, the Advocacy Centre for Tenants Ontario ("ACTO") was granted leave to intervene in the appeal. ACTO has raised several issues concerning the interpretation of the Act in circumstances involving co-tenants whose interests diverge during a tenancy. ACTO contends that several provisions of the Act do not appear to have contemplated co-tenancies. It asks this court to interpret those provisions so as to avoid situations in which the unilateral actions of one co-tenant can adversely affect the rights of the other.

[6] I would allow the appeal and restore the order of the Tribunal. I think the Tribunal correctly held that Bakker was not "a tenant in possession of the rental unit", as required by s. 86 of the Act, when the application was brought by the landlord. The Tribunal had no power to make an order against Bakker. Bakker's liability for rent arrears, if any, can only be determined by the courts. On the approach I take, I do not reach the broader questions raised by ACTO.

The Facts

[7] Bakker, Crane, Klemos and Holmes attended the University of Western Ontario in London. They rented an apartment from the landlord in the spring of 1999. All four signed a lease in which they were identified as the "lessee". The lease ran from May 1, 1999 to April 30, 2000 and provided that if the lessee remained in occupation after the expiration of the one year term, the lessee was deemed to be a monthly tenant on the terms and conditions set out in the lease. Mr. Bakker moved out of the apartment shortly before the expiration of the lease in April 2000, to pursue a professional football career in Edmonton, Alberta. It was contended on behalf of Mr. Bakker and the other tenants that Mr. Robinson, the president of the landlord, had agreed when the lease was signed, that oral notification of termination would be sufficient. It was alleged that Mr. Bakker had provided oral notice well before he left. Mr. Robinson denied that there was any agreement to accept oral notice or that any kind of notice had been given to him or the landlord by Mr. Bakker. The Tribunal did not address these factual disputes in its reasons.

[8] Mr. Crane and Mr. Klemos also moved out of the apartment before the landlord brought this application. Mr. Holmes was living in the apartment at the time the application was made. In the application, the landlord claimed arrears of some $8,300.00, almost all of which related to rent owing during the year 2002. As indicated above, Bakker had not lived in the apartment since before April 2000.

The Tribunal's Ruling

[9] The reasons of the Tribunal are brief and conclusory. After setting out s. 86(1) of the Act, the Tribunal held that Bakker, Crane and Klemos had "vacated the rental unit prior to the application" and were not "occupying the rental unit at the time of the application". Neither fact was in dispute. Based on these findings, the Tribunal held that Bakker, Crane and Klemos were not "tenants in possession" when the application was brought. Consequently, the Tribunal had no power to make an order against them.

The Reasons of the Divisional Court

[10] The reasons of the Divisional Court are also brief and conclusory. The court made no reference to s. 86(1) of the Act and appears to have proceeded on the basis that as all four individuals were named in the lease, they were jointly liable under the lease. As liability was joint, possession by one was deemed to be possession by all. The approach taken by the Divisional Court would seem to have necessitated a determination of the factual dispute over the alleged agreement between the landlord and Bakker to allow Bakker to orally terminate his obligations under the lease. The Divisional Court, however, made no reference to this factual dispute, but instead granted judgment against Bakker (as well as Crane and Klemos) in the amount of the outstanding rent arrears.

The Standard of Review

[11] Under s. 196 of the Act, appeals from the Tribunal to the Divisional Court are limited to questions of law. It would appear that the Divisional Court assumed that the Tribunal's decision was reviewable on a correctness standard. None of the parties to this appeal challenged that assumption. As I am satisfied that the Tribunal's decision was correct, I too will assume, for the purposes of this appeal, that correctness is the appropriate standard of review. I would leave the ultimate determination as to the appropriate standard of review to a case where the issue is squarely raised and requires resolution: See Cartaway Resources Corp. (Re) 2004 SCC 66 at para. 43, 44.

Analysis

[12] The relevant provisions of the Act are set out below:

Section 1

1. In this Act,

"tenant" includes a person who is lessee, occupant, sub-tenant, under-tenant, and the person's assigns and legal representatives;

86(1) A landlord may apply to the Tribunal for an order for the payment of arrears of rent if,

(a) the tenant has not paid rent lawfully required under the tenancy agreement; and

(b) the tenant is in possession of the rental unit.

Compensation, overholding tenant

(2) If a tenant is in possession of a rental unit after the tenancy has been terminated, the landlord may apply to the Tribunal for an order for the payment of compensation for the use and occupation of a rental unit after a notice of termination or an agreement to terminate the tenancy has taken effect [emphasis added].

[13] Section 86(1)(b) limits those against whom the Tribunal can make an order for the payment of rent arrears. Even if the individual had not paid rent owed under a tenancy agreement (s. 86(1)(a)), the Tribunal cannot make an order against that individual unless he or she is "a tenant in possession of the rental unit". The question of whether a tenant is "in possession of the rental unit" is distinct from the question of whether that tenant is legally liable for the rent arrears. I think the Divisional Court erred in law by defining possession in s. 86(1)(b) by reference to its view of the nature of the liability imposed by the lease.

[14] The phrase "tenant in possession" is not defined in the Act and is not a term of art with a settled legal meaning. Counsel were unable to find any cases where the phrase as used in s. 86 of the Act has been interpreted by the Tribunal or the courts. The phrase as it appeared in s. 113(2) of the predecessor legislation, the Landlord and Tenant Act, R.S.O. 1980, c. 232, was considered in ERS Employee Relocation Services v. Ryan (Roy) Milnes and Brenda Coleman (1988), 4 T.L.L.R. 129 (Ont. Dist. Ct.). Section 113(1) of the former Landlord and Tenant Act provided that a landlord could make a summary application to the County Court for an order requiring payment of arrears. Section 113(2) indicated that the application could only be made where "the tenant is in possession". Judge Hoilett held that tenants who had permanently vacated the rental unit when the application was commenced could not be regarded as tenants "in possession" of the unit, even though they had not given notice of their intent to vacate and had kept the keys to the unit. After referring to possession as a fluid concept taking its meaning from its context, His Honour said at p. 137:

In arriving at that conclusion I am mindful of the summary proceedings contemplated by the Act which is aimed at the expeditious resolution of disputes where the immediacy of an actual occupancy demands it. Where, as in the instant case, that actual occupation has ceased to exist then, the urgency contemplated by the summary proceedings no longer obtains.

[15] The approach to the phrase "tenant in possession" taken in ERS Employee Relocation Services v. Ryan (Roy) Milnes and Brenda Coleman offers some guidance for the interpretation of the present provisions.

[16] A "tenant in possession" must be a tenant as defined in s. 1 of the Act. The status of tenant is, however, not enough under s. 86 of the Act. While some sections permit the Tribunal to make orders against tenants without any qualification (e.g. s. 77), s. 86 adds the qualifying words "in possession of the rental unit". The phrase "tenant in possession" must refer to a subset of the broader group identified as tenants under the Act. Not all tenants will be "tenants in possession". Some persons who qualify as tenants under the Act will not be in possession of the rental unit and will, therefore, not be subject to an order under s. 86.

[17] In assigning meaning to the phrase "tenant in possession of the rental unit", it is helpful to begin with the purpose of the Act. This court has described the purpose as being "to encourage speedy, fair and efficient access to justice in residential tenancy matters": Metropolitan Toronto Housing Authority v. Godwin (2002), 161 O.A.C. 57 at 62 (C.A.).

[18] Not every dispute over rent arrears can be resolved by the Tribunal in a speedy, fair and efficient manner. I think the requirement that the tenant be "in possession of the rental unit" at the time of the application reflects a determination that rent arrears disputes can be resolved efficiently and fairly through the Tribunal where the tenant at the time of the application continues to have some connection with the rental unit and, therefore, some relationship with the landlord. Situations where that connection has been severed and the relationship gone are best resolved through the more formal court processes.

[19] Some further assistance in defining "tenant in possession" is found by an examination of s. 86(2). That subsection provides that a landlord may be compensated for "the use and occupation" of a rental unit after notice of termination of the lease. A landlord can only be compensated, however, if the tenant is "in possession of the rental unit" when the landlord's application is made. This suggests that a "tenant in possession" is a person who was using or occupying the rental unit at the time of the application but does not necessarily indicate that the phrase is limited to users and occupiers.

[20] Possession is a difficult concept to define. Both in common and legal parlance, it connotes some form of control over the thing said to be possessed: e.g. D. Dukelow, B. Nuse, The Dictionary of Canadian Law 2nd ed., (1995) Carswell at p. 916; The Shorter Oxford English Dictionary, Vol. II (1973) p. 1635. Clearly, possession in s. 86(1)(b) is not limited to immediate physical control. For example, a tenant who locks up a rental unit and leaves on an extended vacation, continues to exercise sufficient control over that rental unit so as to qualify as a "tenant in possession" for the purposes of s. 86(1)(b). In my view, possession of a rental unit refers to some form of control over that unit as demonstrated by factors such as access to, use of, or occupation of the unit.

[21] There will be cases, although I would not think a great many, where a determination of whether the tenant was "in possession of the rental unit" at the time of the application will raise a difficult issue. In those cases, the Tribunal will have to decide, based on the evidence, whether there is a sufficient connection between the rental unit and the tenant to permit a finding that the tenant was "in possession" of that rental unit.

[22] In this case, there was no connection between Bakker and the rental unit at the time the s. 86 application was commenced. Bakker exercised no control over that unit. He had unequivocally, completely, and permanently vacated the unit more than two years before the application.

[23] I stress that my conclusion that Bakker was not "a tenant in possession" does not determine whether Bakker was liable for the rent arrears under the lease. He may or may not be liable depending on the interpretation of the lease and the relevant provisions in the Act. If the landlord wants to chase Bakker for the rent arrears, it will have to go through the courts. I make no comment on the merits of that course of action.

[24] As indicated above, my conclusion that the Tribunal correctly determined that it had no authority to make an order against Bakker under s. 86 of the Act makes it unnecessary to consider the broader issues raised on the appeal. The court was urged by ACTO to address those issues in any event. Despite the able submissions by counsel for ACTO, I do not think it would be appropriate to do so. The issues raised by the intervenor are complex and call for the interpretation of many provisions of the Act. Those issues go well beyond the interests and, consequently, the submissions of the parties to this appeal. More importantly, this court also does not have the benefit of the analysis of these issues by either the Tribunal or the Divisional Court. Any attempt to address the issues raised by the intervenor on this appeal could cause more problems than it would solve.

Conclusion

[25] I would allow the appeal, set aside the order of the Divisional Court and restore the order of the Tribunal.

[26] The appellant is entitled to his costs in the Divisional Court. Those costs are fixed at $3,000.00. He is also entitled to his costs in this court for both on the leave application and on the appeal. I would fix those costs at $8,000.00. No costs for or against ACTO.

RELEASED: "DD" "MAY 21 2004"

"Doherty J.A." "I agree: M.J. Moldaver J.A." "I agree K. Feldman J.A."