DATE: 20050831
DOCKET: C42467
COURT OF APPEAL FOR ONTARIO
FELDMAN, SIMMONS and GILLESE JJ.A.
IN THE MATTER OF the Tenant Protection Act, 1997, S.O. 1997, c. 24
B E T W E E N :
NORTH YORK GENERAL HOSPITAL FOUNDATION
Appellant
- and -
JANET MARGARET ARMSTRONG, HARRY JOSEPH BOYLE, MARTIN EDWARD BRIGGS, ANNE JOSEPHINE BRIGGS, DONNA BROMLEY, LINDA MAY CROSSIN, GAIL CULP, JOSEPH CULP, ELIZABETH RUTH ELMSLEY, JOHN ANTHONY ALLAN HAKES, DAVID HEWITT, ELIZABETH HEWITT, BARBARA JOAN HOWARD, LINDA LEIGH JACKSON, CHERYL KATZ, FRED LEBER, CATHERINE ALMA LEBER, AMIR MAMDANI, PARIN MAMDANI, NEIL FRANCIS MORRISON, MARY CECILIA MORRISON, BEVERLEY JILL O’BRIEN, BRENDAN O’BRIEN, ROBERT ALEXANDER ORR, JOANNE ORR, GARY PEACOCK, VASILIOS POLYCHRONOPOULOS, ROBERTA ZANE POLYCHRONOPOULOS, COLLEEN ANNE REID, HILARY M. RIDER, GRETCHEN JUDITH THOMAS, EDWARD ALEXANDER THOMAS, TERRY TURNER, SUZANNE TURNER, JOHN RICHARD WARD, IRENE WARD, PHILIP LOMAS WEDGE, ELISABETH ANN WEDGE, FRANCIE ROSLYN WISE, DON ENG YALONETSKY and TANYA MIRIAM YALONETSKY
Respondents
Counsel:
Joseph Debono, for the appellant
Cheryl Katz, in person
John D. Campbell, for the respondents Wedge, Crossin, and Briggs
Heard: February 2, 2005
On appeal from the decision of Justices Robert A. Blair, R.S.J., Patrick Gravely and Gloria Epstein of the Superior Court of Justice, sitting in the Divisional Court dated January 7, 2004, reported at 2004 ONSC 13872 (Div. Ct.), [2004] O.J. No. 22.
BY THE COURT:
Overview
[1] North York General Hospital Foundation (the “Foundation”) is the current owner of 38 individual parcels of land in the City of Toronto (collectively “the leased lands”). A former tenant of the leased lands erected a single-family home on each of the 38 individual parcels of land. The respondents are respectively tenants of one of the individual parcels of land and purchasers of an interest in the home located on their parcel.
[2] In April 2001, the Foundation applied to the Ontario Rental Housing Tribunal (the “Tribunal”) under s. 7 of the Tenant Protection Act, S.O. 1997 c. 24 (the “Act”) for an order determining several issues relating to the respondents’ ability to sell their respective interests in their homes and to assign the leases of the parcels of land on which their homes are located.
[3] At the request of the respondents, Mr. Jeffrey Rogers, a member of the Tribunal, made a preliminary ruling concerning the Foundation’s application, holding that the Tribunal’s jurisdiction under s. 7 of the Act “is limited to determining whether the Act or any provision of it applies”. In his ruling, the member also stated that the Tribunal’s jurisdiction “does not include determining what a particular provision of the Act means or how it applies”.
[4] On January 13, 2003, the member dealt with the merits of the application and made an order determining that various sections of the Act, including ss. 105(1) and 108, apply to the respondents’ homes. Significantly, in his reasons, the member said that sections 105(1) and 108 of the Act are to be read together; he also stated, “[T]ogether [those sections] give the Tenant the right to sell or lease the dwelling and to assign the lease, without the Landlord’s intervention.”
[5] The Foundation appealed the member’s January 13, 2003 order to the Divisional Court. On January 7, 2004, the Divisional Court dismissed the Foundation’s appeal. Writing on behalf of the panel, Blair R.S.J. stated that the member's interpretation of s. 105(1) and s. 108 of the Act indicating that those sections must be read together is correct.
[6] The Foundation raises three issues on appeal. First, it contends that s. 108 and s. 17 of the Act afford the landlord of a land lease community or a mobile home park the right to withhold consent to a potential assignment of a rental unit to a specific assignee and that the member erred in stating otherwise. Second, the Foundation submits that the member erred in holding that s. 105(1) of the Act applies to a land lease community. Third, the Foundation submits that the member exceeded his jurisdiction by determining that, when “read together”, s. 105(1) and s. 108 of the Act mean that a tenant of a land lease community or mobile home park may assign a tenancy agreement without the intervention of the landlord. By way of relief, the Foundation requests an order confirming all of the above-noted matters.
[7] As a partial response to the issues raised by the Foundation, the respondents point out that the member’s order states only that s. 105(1) and s. 108 of the Act apply to the leased lands and that the order does not explain how those sections apply. The respondents contend that in asking this court to determine how the sections apply, the Foundation is attempting, improperly, to appeal from the member’s reasons. In addition, the respondents contend that the interpretation adopted by the member and confirmed by the Divisional Court is correct.
[8] No issue was raised in this court that s. 108 of the Act does not apply to the leased lands and we agree that ss. 105(1) and 108 of the Act both apply to the leased lands. As the Tribunal’s formal order is confined to that determination, we would dismiss the appeal.
[9] We also agree that, in their reasons, the member and the Divisional Court may have gone further than was necessary in stating the effect of ss. 105(1) and 108 of the Act for the purpose of determining, under s. 7, whether those sections apply to the leased lands. However, because the interpretation issue was fully argued before us, and because we have concluded that the member and the Divisional Court erred in their interpretation, we will also address that issue in these reasons.
Background
[10] The leased lands were formerly owned by The Imperial Order of the Daughters of the Empire Children's Hospital (the "Children's Hospital"), one of the founding institutions of North York General Hospital.
[11] On February 1, 1968, the Children's Hospital entered into a lease (the "Head Lease") of the leased premises with Garden Court Agencies Limited for a period of 99 years. Under the Head Lease, Garden Court was entitled to erect buildings on the leased lands and sublease all or any part of the leased lands without Children's Hospital's consent. However, Garden Court covenanted to surrender the leased lands and all buildings, erections and fixtures made by it at the expiration or earlier termination of the Head Lease in good and substantial repair, reasonable wear and tear excepted.
[12] Garden Court constructed all of the homes on the 38 individual parcels of land comprising the leased lands. Each home was sold to a purchaser by way of an agreement of purchase and sale. The agreements provided that the purchaser agreed to purchase “the leasehold premises municipally known as [a particular street address]”. In addition, the agreements of purchase and sale required that, on or before closing, “the Purchaser and the Vendor shall have executed and delivered a valid and binding lease on the [Vendor' s] standard form”.
[13] The standard form leases[^1] include several important provisions. They recite the existence of the Head Lease and the fact that Garden Court agreed to sublease the demised premises (defined by reference to a particular municipal address and legal description) to the sub-lessee. Section 9(b) of the standard form leases states that the sub-lessee “may not at any time assign, mortgage or otherwise dispose of, or deal with the remainder of the term or sublease the demised premises or any part thereof without the prior written approval of the Landlord, which approval shall not be unreasonably withheld”. However, s. 11 provides that, pending determination of the sublease, the buildings and other improvements on the rental unit “shall be and remain the property of the Sub-lessee”.
[14] Further, the standard form leases include covenants by the sub-lessee to carry out all repairs, maintenance and painting of the demised premises and the buildings and other improvements during the currency of the term; not to remove any building or other improvements without the prior written consent of the landlord; and to deliver up the demised premises and all buildings and other improvements at the expiry or sooner termination of the term.
[15] On July 19, 1999 Garden Court quit claimed its interest in the complex and in the Head Lease dated February 1, 1968 to the Children's Hospital. Following the quit claim, the Children's Hospital conveyed its interest in the complex to the Foundation on March 16, 2001.
The Foundation’s Application
[16] On April 27, 2001, the Foundation applied to the Tribunal for an order under s. 7 of the Act determining several issues relating to the respondents’ ability to sell their respective interests in their homes and to assign the leases of the parcels of land on which their homes are located. The Foundation’s prayer for relief included the following requests:
- The Landlord seeks an order from the Rental Housing Tribunal addressing the following issues:
(i) Are the houses within that portion of the Residential Complex which is subject to the Standard Leases, “land lease community homes” so that Part V of the Tenant Protection Act applies to these thirty seven (37) houses?
(iii) If the houses within that portion of the Residential Complex which is subject to this Standard Leases are land lease community homes, can these homes be:
(aa) “sold” or “leased” in the same manner as a mobile home under section 105(1); or
(bb) “purchased” or the subject of “an agreement to purchase” within the meaning of section 108
in view of the terms of the Leasehold Sale Agreements and the interest of the Landlord reserved under the Standard Leases (so that section 105(1) and/or section 108 do not apply and any assignment is covered solely by section 17)?
The Member’s Preliminary Ruling
[17] As already noted, the Foundation’s application was made under s. 7 of the Act, which provides as follows:
- (1) A landlord or a tenant may apply to the Tribunal for an order determining,
(a) whether this Act or any provision of it applies to a particular rental unit or residential complex[^2];
(b) any other prescribed matter.
[18] At the request of the respondents, on April 19, 2002, the member made a preliminary ruling holding that “[T]he jurisdiction of the Tribunal under Section 7 of the [Act] is limited to determining whether the Act or any provision of it applies and it does not include determining what a particular provision of the Act means or how it applies.”
[19] In addition, the member ordered that the application would be limited to answering several specific questions, including the following:
i) Are the "standard lease" houses "land lease homes" so that part V of the Tenant Protection Act applies?
iii) If the "standard lease homes" are "land lease homes", do subsection 105(1) and section 108 apply, upon sale or lease of the homes?
viii) Is the complex a "land lease community" as defined?
[20] No appeal was taken from the member’s preliminary ruling.
The Member’s Final Order dated January 13, 2003
[21] On January 13, 2003, the member made an order concerning the merits of the application, which included the following terms:
It is ordered that (for the attached reasons):
All of the homes are "land lease homes" in a "land lease community" as defined in the Act and therefore part V of the Act applies.
Subsection 105(1) and Section 108 of the Act apply to all of the homes.
The Member's Reasons for the January 13, 2003 Order
[22] In his reasons for the January 13, 2003 order, the member noted that the Foundation's position was that the respondents did not own their homes and therefore that the homes were not “land lease homes” within the meaning of the Act. Although he noted that the respondents “are clearly not the absolute owners of the dwellings”, the member found that the respondents “are owners of the dwellings for the period of time relevant to the application of the Act and owners as required by the definition of "land lease home" in the Act”.
[23] In addition, the member indicated that the Foundation also took the position that it is necessary to make modifications to Part V so that subsection 105(1) and section 108 of the Act would not apply to land lease communities. The member set out the Foundation’s position as follows:
The Landlord also argues that, even if the houses are land lease homes, part V of the Act must necessarily be modified so that sections 105(1) and 108 do not apply to land lease homes. These sections, if they apply would give the Tenants the right to sell or lease the homes without the Landlord's consent and would deny the Landlord the right to refuse to grant an assignment of the lease for the land, if the potential assignee has purchased or has agreed to purchase the home. The Landlord's position is that these sections make sense only in the context of a mobile home, which may be removed from the site. The submission is that, since the Act contemplates a sale without the necessity of an assignment of the lease for the land, it makes no sense to apply these sections to a permanent structure, which will only be sold if the lease is also assigned.
[24] The member held that sections 105(1) and 108 of the Act are to be read together and that those sections provide the respondents with “the right to sell or lease the dwelling and to assign the lease, without the Landlord's intervention.” The member stated the following:
(c) Is it necessary to make modifications to part V so that, when it applies to land lease homes, subsection 105(1) and section 108 of the Act would not apply?
Section 103 of the Tenant Protection Act provides that part V of the Act applies with necessary modifications with respect to tenancies in land lease communities [emphasis in the original].
I accept the Landlord's submission that Section 103 could be interpreted to include the authority not to apply sections of part V to land lease communities, in order to avoid an absurd result. I do not accept the submission that it is absurd that a Tenant would be granted the right to sell or lease a land lease home and to assign the lease for the land on which it is located.
The two sections are to be read together. Together they give the Tenant the right to sell or lease the dwelling and to assign the lease, without the Landlord's intervention.
It is true that a Tenant may sell a mobile home to a purchaser who removes it from the site and does not assume the tenancy. However, the owner of a mobile home has that right, without the intervention of the Act. Although it is unlikely to occur, a Tenant with absolute ownership of a land lease home must surely have the right to sell to a purchaser who will remove the home.
The rights that the Act confers are only necessary where the purchaser of the dwelling would like to assume the tenancy. In that situation, the interests of the Tenant and the purchaser are the same, whether the dwelling is mobile or fixed. I see no absurdity.
I therefore do not accept the submission that a modification of part V is required.
The Divisional Court's Order
[25] By order dated January 7, 2004, the Divisional Court ordered that the Foundation's appeal from the member's order dated January 13, 2003 be dismissed.
The Divisional Court's Reasons
[26] In its reasons, the Divisional Court noted that the member had decided, in a jurisdictional hearing, to confine himself to a determination of whether the Act or any provision of it applies in the circumstances and observed that “the effect of the [Tribunal’s] order, if it stands, is that the Respondents have the right to sell or lease their homes without the Appellant's consent and, arguably, that the Appellant does not have the right to refuse to consent to an assignment of the land lease (ss.105 and 108). ”
[27] The Divisional Court found that the respondents “are ‘owners’ of the homes in which they live, within the meaning of the Act.” The Divisional Court also held that the respondent's homes are “land lease homes” and part of a “land lease community” within the meaning of the Act. Further, the Divisional Court concluded that the member was correct in holding that ss. 105(1) and 108 of the Act must be read together and that they protect the respondents’ right to sell their homes and assign their leases. Finally, the Divisional Court held that, in making the January 13, 2003 order, the member did not exceed his jurisdiction. The court said,
The Appellant attacks the Tribunal's decision that subsection 105(1) applies to a land lease home. It does so -- as I apprehend the argument -- on the basis that the subsection only makes sense in the context of a mobile home, which can be moved and disposed of separate from the land upon which it is situate, and that the subsection cannot reasonably be applied in the context of a land lease home since a sale of such a home is impossible in the absence of an assignment of the tenancy agreement. The "necessary modifications" criterion of section 103 has therefore not been met, it is said.
In my opinion, this argument cannot be sustained. Subsection 105(1) and section 108 must be read together, as the Tribunal member correctly concluded. If one replaces the words "mobile home" in those provisions with the words "land lease home", it is clear that subsection 105 protects the land lease homeowner's right to sell or lease the home without the landlord's consent and s. 108 extends a similar protection with respect to the assignment of the homeowners lease rights to the land on which the home is located.
I see no error in the Tribunal member’s conclusion that subsection 105(1) and section 108 apply to the Respondents’ properties.
Jurisdiction
Finally, the Appellant submits that the Tribunal member exceeded his jurisdiction by going beyond what he had earlier determined his jurisdiction was. In his decision of April 19, 2002, the Tribunal member concluded that the Tribunal's jurisdiction was “limited to determining whether the Act or any provision of it applies and ... does not include determining what a particular provision of the Act means or how it applies”. He then listed a series of 9 questions that the Appellant's application would be limited to answering.
The order of January 13, 2003 -- which is what is under appeal here -- dealt with those questions in a rolled-up fashion by ordering (for reasons attached to the order) that:
All of the homes are “land lease homes” in a “land lease community” as defined in the Act and therefore Part V of the Act applies;
Subsection 105 (1) and Section 108 of the Act apply to all of the homes;
The appeal is from the order made by the Tribunal member and not from his reasons. In my opinion, he had the jurisdiction to make the order he made. I would not give effect to this ground of appeal.
Relevant Statutory Provisions
[28] Sections 105(1) and 108 of the Act are central to the issues on appeal. They are located in Part V of the Act, which deals with Mobile Home Parks and Land Lease Communities. Those sections provide as follows:
Rights and Duties of Landlords and Tenants
(1) A tenant has the right to sell or lease his or her mobile home without the landlord's consent.
A landlord may not refuse consent to the assignment of a site for a mobile home on a ground set out in clause 17(2)(b) or 17(3)(c) if the potential assignee has purchased or has entered into an agreement to purchase the mobile home on the site.
[29] In addition to s. 105(1) and s. 108, ss. 2, 17, 32, 48 and 103 of the Act are all significant for the purposes of this appeal. In particular, s. 2(1) provides that the Act prevails over any agreements between the parties, while s. 2(3) provides that, in the event of a conflict with other provisions in the Act, Part V prevails.
- (1) This Act applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary.
(3) In interpreting a provision of this Act with regard to a mobile home park or a land lease community, if a provision in Part V conflicts with a provision in another Part of this Act, the provision in Part V applies.
[30] As already noted, s. 17 of the Act is the general provision governing assignments. Section 17(2) and s. 17(3) of the Act describe the circumstances where in the case of s. 17(2), a landlord may consent or refuse to consent generally to assignment of the rental unit and under s. 17(3), specifically to an assignment of the rental unit to a potential assignee. Section 17(5) of the Act establishes the parameters of the landlord’s right to refuse consent to an assignment of a rental unit to a potential assignee. Significantly, s. 17(8) of the Act provides that once a rental unit has been assigned, it is the assignee who is responsible for breaches of the tenancy agreement that occur following the date of the assignment. The relevant provisions of s. 17 of the Act are as follows:
Assignment and Subletting
17 (1) Subject to subsections (2), (3) and (6), and with the consent of the landlord, a tenant may assign a rental unit to another person.
(2) If a tenant asks a landlord to consent to an assignment of a rental unit, the landlord may,
(a) consent to the assignment of the rental unit;
(b) refuse consent to the assignment of the rental unit.
(3) If a tenant asks a landlord to consent to the assignment of the rental unit to a potential assignee, the landlord may,
(a) consent to the assignment of the rental unit to the potential assignee;
(b) refuse consent to the assignment of the rental unit to the potential assignee; or
(c) refuse consent to the assignment of the rental unit.
(4) A tenant may give the landlord a notice of termination under section 48 within 30 days after a request is made if,
(a) the tenant asks the landlord to consent to an assignment of the rental unit and the landlord refuses consent;
(c) the tenant asks the landlord to consent to an assignment of the rental unit to a potential assignee and the landlord refuses consent to the assignment under clause (3)(c);
(5) A landlord shall not arbitrarily or unreasonably refuse consent to an assignment of a rental unit to a potential assignee under clause (3)(b).
(6) Subject to subsection (5), a landlord who has given consent to an assignment of a rental unit under clause (2)(a) may subsequently refuse consent to an assignment of the rental unit to a potential assignee under clause (3)(b).
(8) If a tenant has assigned a rental unit to another person, the tenancy agreement continues to apply on the same terms and conditions and,
(a) the assignee is liable to the landlord for any breach of the tenant's obligations and may enforce against the landlord any of the landlord's obligations under the tenancy agreement or this Act, if the breach or obligation relates to the period after the assignment, whether or not the breach or obligation also related to a period before the assignment;
(b) the former tenant is liable to the landlord for any breach of the tenant's obligations and may enforce against the landlord any of the landlord's obligations under the tenancy agreement or this Act, if the breach or obligation relates to the period before the assignment;
[31] Section 32(1) of the Act provides that a tenant or former tenant of a rental unit may apply to the Tribunal for an order “determining that the landlord has arbitrarily or unreasonably withheld consent to the assignment or sublet of a rental unit to a potential assignee or subtenant.” Section 33 of the Act prescribes the remedies that are available in the event that determination is made. In particular, s. 33(1) of the Act provides that “the Tribunal may do one or more of the following:
Order that the assignment or sublet is authorized.
Where appropriate, by order authorize another assignment or sublet proposed by the tenant.
Order that the tenancy be terminated.
Order an abatement of the tenant’s or former tenant’s rent.
[32] Section 48 of the Act provides that, “[A] tenant may give notice of termination of a tenancy if the circumstances set out in subsection 17(4) apply.”
[33] Section 103 of the Act is important because it clarifies that Part V of the Act, which refers to mobile homes and mobile home parks, “applies with necessary modifications with respect to tenancies in land lease communities”:
Part V
MOBILE HOME PARKS AND LAND LEASE COMMUNITIES
Interpretation
- This Part applies with necessary modifications with respect to tenancies in land lease communities, as if the tenancies were in mobile home parks.
[34] Several definitions contained in the Act are also relevant to this appeal. “Land lease community”, “land lease home”, “mobile home” and “rental unit” are all defined in s. 1(1) of the Act as follows:
“land lease community” means the land on which one or more occupied land lease homes are situate and includes the rental units and the land, structures, services and facilities of which the landlord retains possession and that are intended for the common use and enjoyment of the tenants of the landlord;
“land lease home” means a dwelling, other than a mobile home, 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;
“mobile home” means a dwelling that is designed to be made mobile and that is being used as a permanent residence;
“rental unit” means any living accommodation used or intended for use as rented residential premises, and “rental unit” includes,
(a) a site for a mobile home or site on which there is a land lease home used or intended for use as rented residential premises…
Issues and Analysis
(1) Did the member err in holding that s. 105(1) of the Act applies to a land lease community?
[35] Section 105(1) of the Act is set out again for ease of reference:
- (1) A tenant has the right to sell or lease his or her mobile home without the landlord's consent.
[36] The Foundation contends that s. 105(1) of the Act makes sense only in the context of a mobile home that can be moved and disposed of separately from the land upon which it is situate. Therefore, the “necessary modification” of s. 105(1) of the Act that is required under s. 103 of the Act is that s. 105 of the Act applies only to a mobile home and has no application to a land lease home.
[37] In particular, the Foundation submits that because a land lease home is, by definition, a “permanent structure” that is “owned” by the person who leases the land upon which it is located, a “sale” of a land lease home is impossible absent an assignment of the tenancy agreement for the land upon which it is situate. Accordingly, since land lease homes cannot practically be sold without the landlord’s consent, interpreting s. 105(1) of the Act as applying to land lease homes would produce an absurd result.
[38] We reject this submission. It is important to recall that s. 2(1) of the Act provides that “[T]his Act applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary” [emphasis added].
[39] In our view, rather than producing an absurdity, interpreting s. 105(1) as applying to land lease homes serves an important legislative purpose--i.e. it confirms that, in a land lease, just as is the case in a lease of a mobile home site, a landlord and tenant may not contract out of the tenant’s proprietary right to dispose of his or her own property without the landlord’s consent.
[40] While this purpose may have less practical significance in the context of a land lease home than in the context of a mobile home for the reason that the Foundation points out i.e. because it may be difficult, if not impossible, to move a land lease home if the landlord withholds consent to an assignment of the land lease--the practical difficulties do not diminish the legal significance of clarifying a land lease homeowner’s right to sell or lease his or her interest in a land lease home without the landlord’s consent. Section 108 of the Act illustrates the significance of this right to a land lease homeowner.
[41] Again, s. 108 provides:
- A landlord may not refuse consent to the assignment of a site for a mobile home on a ground set out in clause 17(2)(b) or 17(3)(c) if the potential assignee has purchased or has entered into an agreement to purchase the mobile home on the site.
[42] Whatever interpretation of s. 108 of the Act is adopted, on its face it restricts, at least to some extent, the landlord’s right to refuse consent to an assignment of lease. However, it does so only “if the potential assignee has purchased or has entered into an agreement to purchase” the home on the rental unit. Accordingly, clarifying a homeowner’s right to enter into an agreement of purchase and sale of a land lease home without the landlord’s consent avoids any possible uncertainty concerning whether s. 108 of the Act has been triggered.
[43] We would not give effect to this ground of appeal.
(2) Do s. 108 and s. 17 of the Act afford the landlord of a land lease community or a mobile home park the right to withhold consent to a potential assignment of a rental unit to a specific assignee?
[44] We will repeat the relevant provisions of s. 108 and s. 17 for ease of reference.
- A landlord may not refuse consent to the assignment of a site for a mobile home on a ground set out in clause 17(2)(b) or 17(3)(c) if the potential assignee has purchased or has entered into an agreement to purchase the mobile home on the site.
17(2) If a tenant asks a landlord to consent to an assignment of a rental unit, the landlord may,
(a) consent to the assignment of the rental unit;
(b) refuse consent to the assignment of the rental unit.
(3) If a tenant asks a landlord to consent to the assignment of the rental unit to a potential assignee, the landlord may,
(a) consent to the assignment of the rental unit to the potential assignee;
(b) refuse consent to the assignment of the rental unit to the potential assignee; or
(c) refuse consent to the assignment of the rental unit.
(5) A landlord shall not arbitrarily or unreasonably refuse consent to an assignment of a rental unit to a potential assignee under clause (3)(b).
(6) Subject to subsection (5), a landlord who has given consent to an assignment of a rental unit under clause (2)(a) may subsequently refuse consent to an assignment of the rental unit to a potential assignee under clause (3)(b).
[45] The respondents submit that the member and the Divisional Court were correct in observing that the effect of s. 108 of the Act is that a landlord must consent, under s. 17 of the Act, to the assignment of a lease for a land lease home or a mobile home if the potential assignee has purchased (or entered into an agreement to purchase) the land lease home or mobile home.
[46] In particular, the respondents submit that the effect of s. 108 of the Act is to “occupy the field” in relation to consents. Accordingly, if a tenant requests consent to an assignment of lease after selling (or agreeing to sell) his or her home, the landlord is not permitted to withhold consent to the assignment of the rental unit and therefore must consent to an assignment of the lease to the purchaser of the home.
[47] According to the represented respondents, Wedge, Crossin and Briggs, s. 108 on its face contemplates two possible situations: i) an assignment of the lease only; or ii) an assignment of the lease as part of a transaction that also includes the sale of a mobile home (or a land lease home). In the first situation, s. 108 does not apply and s. 17(3) provides that a landlord may withhold consent.
[48] The represented respondents submit that in the second situation, s. 108 indicates that the landlord may not refuse to consent to an assignment on a ground set forth in section 17(3)(c). Accordingly, read to reflect the impact of s. 108 of the Act, s. 17(3)(c) of the Act means “[I]f a tenant asks a landlord to consent to an assignment of a rental unit to a potential assignee, the landlord may not refuse consent to the assignment of the rental unit [emphasis in original]”. Further, s. 17(3)(b) of the Act does not apply in the second situation because s. 108 is the more specific section designed to deal with a transaction involving both the sale of a mobile home (or a land lease home). In this regard, s. 2(3) of the Act provides that if a provision in Part V conflicts with a provision in another part of the Act, the provision in Part V applies.
[49] According to the respondent Katz, s. 2(3) of the Act is central to the interpretation issue. As already noted, s. 2(3) of the Act provides that if a provision in Part V conflicts with a provision in another Part of the Act, the provision in Part V applies. Section 105(1) of the Act provides that a tenant can sell his or her mobile home or land lease home, without the landlord’s consent. In effect, s. 2(3) of the Act makes it clear that once a tenant has sold his or her home, the landlord cannot refuse consent to a particular assignee. Moreover, on a plain reading of s. 108 of the Act, once there is a specific purchaser, there is no requirement for the landlord’s consent to a potential assignee.
[50] The respondents submit that Part V is remedial legislation designed to protect land lease homeowners and mobile homeowners from interference that would inhibit their ability to sell their properties. They say that s. 17(4) of the Act, permitting the tenant to terminate the tenancy agreement if the landlord refuses consent to an assignment, is a hollow remedy where the tenant's investment consists of a land lease home or a mobile home and the land on which it sits.
[51] The tenant’s only alternative would be to seek an order from the Tribunal under s. 32 of the Act granting consent to the assignment. According to the respondents, few purchasers would be willing to wait and participate in such a proceeding. Since there would be no effective remedy for improper conduct by a landlord, interpreting s. 17 of the Act to mean that a landlord can refuse consent to an assignment of lease to a potential assignee where the tenant has sold (or entered into an agreement to sell) his home would mean that landlords can effectively prevent tenants from selling their land lease homes or mobile homes.
[52] Finally, the respondent Katz submits that since a purchaser of a mobile home or land lease home is likely to have the financial ability to pay the rent for the land on which the home is situate, the respondents’ interpretation involves an appropriate balancing of the rights of landlords and homeowners.
[53] We disagree. On a plain reading of s. 17(2) and s. 17(3) of the Act, those subsections deal with distinct issues, i.e. s. 17(2) deals with consent to the assignment of a rental unit, and s. 17(3) deals with consent to the assignment of a rental unit to a potential assignee. Put another way, before seeking the landlord’s consent to an assignment to a potential assignee (a “Specific Assignment”), a tenant of a rental unit is entitled to obtain confirmation concerning whether the landlord is generally prepared to entertain an assignment (an “Assignment in Principle”).
[54] In ordinary circumstances (i.e., where Part V of the Act does not apply), whether a tenant is seeking consent to an Assignment in Principle or to a Specific Assignment, s. 17(2)(b) and s. 17(2)(c) of the Act reserve to the landlord an absolute discretion to refuse to consent to an Assignment in Principle. However, if the landlord refuses to consent to an Assignment in Principle or does not respond within seven days to a request, the tenant may terminate the tenancy agreement under s. 17(4) and s. 48 of the Act.
[55] In ordinary circumstances, even if the landlord has consented to an Assignment in Principle, the tenant must nevertheless obtain the landlord's further consent to a Specific Assignment. Unlike the situation with an Assignment in Principle, consenting to a Specific Assignment requires an assessment of whether the potential assignee is an appropriate tenant. Accordingly, even if a landlord has consented to an Assignment in Principle, under ss. 17(3)(b) and 17(6) of the Act, a landlord may refuse to consent to a Specific Assignment. However, under s. 17(5) of the Act, a landlord’s consent to a Specific Assignment may not be unreasonably withheld.
[56] On a plain reading, s. 108 of the Act eliminates the landlord’s right to refuse consent to an Assignment in Principle but does not restrict the landlord's right to refuse to consent to a Specific Assignment. In our view, this interpretation of s. 108 of the Act achieves an appropriate balance between the rights of the homeowner and the rights of the landlord because it eliminates the landlord's right to withhold its consent generally to any assignment of the rental unit, but preserves the landlord's right to assess whether a potential assignee is an appropriate tenant.
[57] If the landlord withholds consent unreasonably to a Specific Assignment, the tenant is entitled to apply to the Tribunal for relief, including authorizing the assignment on terms specified by the Tribunal, authorizing another assignment proposed by the tenant and ordering an abatement of the tenant’s or former tenant’s rent.
[58] Moreover, on a plain reading of ss. 108 and 17 of the Act, there is no conflict between the two sections that would trigger the application of s. 2(3) of the Act. Rather, s. 108 refers specifically to the particular portions of s. 17 that do not apply once a potential assignee has purchased (or entered into an agreement of purchase and sale) a mobile home or land lease home on a rental unit but preserves the landlord's right to assess whether a potential assignee is an appropriate tenant. Further, in our view, s. 105(1) of the Act does not conflict with s. 17 nor does it change the interplay between s. 108 and s. 17 of the Act. As we have already explained, s. 105(1) of the Act confirms the tenant’s proprietary right to dispose of his or her own property without the landlord’s consent—it does not alter the landlord’s right to assess whether a potential assignee is an appropriate tenant of the rental unit.
[59] Finally, unlike the interpretation posited by the respondents, the above interpretation of ss. 108 and 17 of the Act does not require that the language of s. 17 be altered or ignored.
Disposition
[60] For the foregoing reasons, the appeal is dismissed with costs to the respondents on a partial indemnity basis fixed at $7,500 collectively for the respondents Wedge, Crossin and Briggs, and $1,500 for the respondent Katz. Both sums are inclusive of disbursements and applicable G.S.T.
Signed: “K. Feldman J.A.”
“Janet Simmons J.A.”
“Eileen E. Gillese J.A.”
RELEASED: “KNF” August 31, 2005
[^1]: The terms of 37 of the leases were substantially the same. No issue has been raised on this appeal concerning the one lease that was in a different form.
[^2]: “Residential complex” is defined in section 1(1) of the Act as follows: ‘residential complex’ means, a) a building or related group of buildings in which one or more rental units are located, b) a mobile home park or land lease community, c) a site that is a rental unit, d) a care home, and includes all common areas and services and facilities available for the use of its residents.