Court of Appeal for Ontario

Citation: Kaiman v. Graham, 2009 ONCA 77

Date: 2009-01-28

Docket: C47530

Before: Weiler, Juriansz and MacFarland JJ.A.

Between:

Cyril Kaiman, Personally and as Litigation Guardian for Benyemina Kaiman, an infant, and as Executor and Trustee of the Estate of Diane Elizabeth (Diamond) Kaiman, deceased Plaintiffs (Appellants)

and

Douglas Harvey Graham, Personally, and Brenda Louise Graham and Ronald Johnston Swain, Executor and Trustees of the Estate of Harvey Leonard (Alexander) Graham Defendants (Respondents)

Counsel:

Garry J. Wise, for the appellants

J. William Evans, for the respondent Douglas Harvey Graham

M. John Ewart and P. Kourtney O'Dwyer, for the respondents Brenda Louise Graham and Ronald Johnston Swain

Heard: December 9, 2008

On appeal from the judgment of Justice Robert D. Reilly of the Superior Court of Justice dated July 6, 2007 and reported at 58 R.P.R. (4th) 305.

Weiler J.A.:

OVERVIEW

[1] The subject of this appeal is a cottage property. The central issue in this case is whether the Superior Court had jurisdiction to entertain the action brought by the appellants for damages and other relief or whether the Landlord and Tenant Board had exclusive jurisdiction under the Residential Tenancies Act, 2006, S.O. 2006, c. 17 ("RTA"). A subsidiary issue is whether, even if the Superior Court had jurisdiction, the appellants ought to be allowed to argue the applicability of the RTA on appeal.

FACTS

[2] The appellant Cyril Kaiman married Diamond in 1978. They had one child, the appellant Benyemina.

[3] Shortly after Cyril and Diamond married, they began to vacation at a cottage property owned by Diamond's father, Harvey Leonard Graham ("H.A."). In 1979, Cyril proposed an improvement to the cottage to H.A. The appellants say that H.A. agreed to the improvements and verbally agreed to give Cyril a 100 year lease.

[4] On September 1, 1982, H.A. and his wife Frances Edna Graham ("Frances") entered into a lease with Diamond (and Diamond only) in respect of the cottage. The lease was for a term of 40 years. It contained a termination clause stating that notwithstanding the 40 year term, the lease shall expire upon the death of H.A. and the happening of one of three events: (i) France's death; (ii) France's remarriage; or (iii) written notice by Frances that she no longer wishes to use the cottage property.

[5] The appellants say that both Cyril and Diamond continued to negotiate with H.A. for a 100 year lease and to include provision for any children of the marriage in the lease. Revised leases were prepared but never executed.

[6] On August 18, 1999, H.A. transferred the entire property to his son, the respondent Douglas. Shortly thereafter, Diamond passed away. H.A. passed away two years later. Since Diamond's death, the appellants say that they have been denied use and enjoyment of the cottage property. Frances provided written notice trigging termination of the lease in January 2005.

[7] At trial, the appellants sought the following relief: a declaration that they had an equitable interest in the cottage property; rectification of the written lease agreement to extend the term to 100 years; and a declaration that an unsigned written lease was valid and subsisting. They also sought damages in the amount of $250,000 on account of the improvements to the cottage on the basis of quantum meruit and unjust enrichment.

[8] On appeal, the appellants do not attack the basis of the trial judge's decision. They submit that the trial judge lacked jurisdiction to hear the claim they brought because the RTA applies to the cottage and the Landlord and Tenant Board had exclusive jurisdiction to deal with the matters in issue. The appellants submit that, as a result, the judgment of the Superior Court judge is a nullity and ought to be quashed. They also argue that they are tenants as "heirs" of Diamond pursuant to s. 2 of the RTA and that the lease termination clause is void since it is an agreement to terminate a lease entered into at the time of the tenancy, contrary to s. 37(5)(a).

ANALYSIS

1. Did the Superior Court have jurisdiction to hear the case presented before it?

[9] As stated above, the appellants neither pleaded nor raised the RTA at trial. The question is thus whether the appellants should be allowed to rely on it for the first time on appeal. Since the appellants' argument goes to the jurisdiction of the Superior Court, it may be raised for the first time on appeal: see W.(V.) v. S.(D.), 1996 192 (SCC), [1996] 2 S.C.R. 108, at para. 17.

[10] Although the matter is by no means free from contention, for the purposes of determining the jurisdictional issue, I am prepared to assume that the RTA applied to the cottage property in issue. It is clear, however, that the Superior Court had jurisdiction to hear the case presented before it and that the matters in issue at trial did not fall within the exclusive jurisdiction of the Landlord and Tenant Board.

[11] Contrary to the appellants' submission, the central issue at trial was not the interpretation and applicability of a lease governed by the RTA. Rather, as discussed above, the issues at trial concerned the extension of the lease based on an alleged oral promise and compensation for improvements based on unjust enrichment or quantum meruit. The Superior Court undoubtedly had jurisdiction over this subject matter and the subject matter contained in the statement of claim.

[12] The appellants have framed the issue on appeal as being whether a declaration terminating their tenancy should be granted. They submit that the Landlord and Tenant Board has exclusive jurisdiction to decide this issue: see generally, Part V of the RTA and s. 168(2). However, their statement of claim does not contain a request for a declaration terminating a tenancy. It requests a declaration that a tenancy exists. The RTA does not confer jurisdiction on the Tribunal to determine whether there is a valid tenancy agreement. The existence of a tenancy agreement is presumed: O'Brien v. 718458 Ontario Inc. (1999), 25 R.P.R. (3d) 57 (Ont. Gen. Div.).

[13] Furthermore, in their statement of claim, the appellants sought numerous grounds of relief, including equitable relief and a certificate of pending litigation, which the Landlord and Tenant Board would have had no jurisdiction to order.

[14] In any event, even if the Board had jurisdiction to determine whether the tenancy was validly terminated, having regard to the appellants' claim for damages in the amount of $250,000, the appellants were entitled to commence their proceeding in the Superior Court. Having done so, that court had all the jurisdiction that the Board would have had.

[15] Section 207(1) of the RTA states that the Board, where it otherwise has jurisdiction, may order the payment of the greater of $10,000 and the jurisdiction of Small Claims Court. Section 207(2) states:

A person entitled to apply under this Act but whose claim exceeds the Board's monetary jurisdiction may commence a proceeding in any court of competent jurisdiction for an order requiring the payment of that sum and, if such a proceeding is commenced, the court may exercise any powers that the Board could have exercised if the proceeding had been before the Board and within its monetary jurisdiction.

Simply put, the Superior Court had jurisdiction to grant any and all of the relief claimed by the appellants. The Board did not. Any jurisdiction it did have was, by virtue of s. 207(2), non-exclusive.

[16] Accordingly, I would dismiss the appellants' submission that the Superior Court lacked jurisdiction to try the case.

2. Although the Superior Court had jurisdiction, should the appellants' argument respecting the RTA be entertained on appeal?

[17] The appellants rely on s. 3 of the RTA which states that the Act applies "with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary". They argue that the exception in s. 5(a) of the Act does not apply. That section 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.

The appellants place particular reliance on the Divisional Court decision in Putnam v. Grand River Conservation Authority (2006), 2006 18526 (ON SCDC), 210 O.A.C. 191 which held that year-round cottage properties did not fall within the predecessor to s. 5(a) of the RTA since the properties were not "part of a cottage or cabin establishment" that was analogous to a hotel, motel or the other types of accommodation set out in the definition. Accordingly, the appellants wish us to make a determination on appeal as to the applicability of the RTA or to refer the matter for hearing before the Landlord and Tenant Board.

[18] The general rule is that appellate courts will not entertain entirely new issues on appeal. The rationale for the rule is that it is unfair to spring a new argument upon a party at the hearing of an appeal in circumstances in which evidence might have been led at trial if it had been known that the matter would be an issue on appeal: Ontario Energy Savings L.P. v. 767269 Ontario Ltd., 2008 ONCA 350, at para. 3. The burden is on the appellant to persuade the appellate court that "all the facts necessary to address the point are before the court as fully as if the issue had been raised at trial": Ross. v. Ross (1999), 1999 NSCA 162, 181 N.S.R. (2d) 22 (C.A.), at para. 34, per Cromwell J.A.; Ontario Energy Savings at para. 3. This burden may be more easily discharged where the issue sought to be raised involves a question of pure law: see e.g. R. v. Vidulich (1989), 1989 231 (BC CA), 37 B.C.L.R. (2d) 391 (C.A.); R. v. Brown, 1993 114 (SCC), [1993] 2 S.C.R. 918, per L'Heureux-Dubé J., dissenting. In the end, however, the decision of whether to grant leave to allow a new argument is a discretionary decision to be guided by the balancing of the interests of justice as they affect all parties: R. v. Warsing, 1998 775 (SCC), [1998] 3 S.C.R. 579, per L'Heureux-Dubé J., dissenting; R. v. Sweeney (2000), 2000 16878 (ON CA), 50 O.R. (3d) 321 (C.A.); Vidulich at pp. 398-99.

[19] In my opinion, it would be contrary to the interests of justice to entertain the appellants' argument respecting the RTA with a view to having the issue of the applicability of the Act determined by this court or at a new hearing. Five reasons support this conclusion.

[20] First, appeals cannot be conducted without any regard for the pleadings and positions advanced at trial. The majority of the relief requested – a declaration that the appellants had an equitable interest in the cottage property, rectification and specific performance of a lease, a declaration that an unsigned lease was valid, and damages – had nothing to do with the RTA. Having regard to the fact that the appellants' arguments at trial did not succeed and that they did not challenge them on appeal, it is clear that there was "no error at trial in this case" and that the appellants are seeking "an opportunity to present a whole new case" based on a statute that was neither pleaded nor argued before the Superior Court. To allow them to raise the RTA in these circumstances would run "contrary to the basic purpose of an appeal which is to correct trial error": Canadiana Towers Ltd. v. Fawcett (1978), 1978 1370 (ON CA), 21 O.R. (2d) 545 (C.A.), at p. 548.

[21] Second, the issue of whether the RTA applies to the cottage property appears to involve an application of facts to a legal definition and is thus a question of mixed fact and law.[^1] Since the RTA was neither raised nor contemplated at trial, the factual record regarding the nature and use of the property is sparse. All that is known is that it was a cottage and that the Kaiman family used it during the summers over the duration of the lease period and sometimes over Christmas for a couple of weeks. Had the respondents known that the RTA would have been in issue, they could have developed a more fulsome record on these matters so as to support their contention that the RTA does not apply.

[22] Third, no explanation has been put forward as to why this argument was not raised at trial. Counsel on this appeal, who did not represent the appellants at trial, does not allege negligence or incompetence on the part of trial counsel. Nor is there any affidavit from trial counsel to the effect that the RTA was not pleaded or raised due to inadvertence. We are simply asked to speculate that this is in fact what happened. The appellants should not be allowed to have a second chance based on speculation.

[23] Fourth, in seeking to be allowed to raise this issue, the appellants did not undertake to save harmless the respondents from their costs at trial on a full indemnity basis or offer to pay the costs of the appeal on this basis. The fact that the appellants did not ensure that the respondents would be adequately compensated in costs for their failure to raise the RTA at trial is a factor that has been held to weigh against allowing new arguments on appeal: see e.g. V.S. v. Nova Scotia (Minister of Health) (2006), 2006 NSCA 122, 249 N.S.R. (2d) 185 (C.A.), at para. 28.

[24] Fifth, even if this court were to refer the question of whether the cottage property was subject to the RTA to the Landlord and Tenant Board, the likelihood of success of the appellants' argument is by no means clear and is outweighed by the interests of finality. The approach in Putnam appears to depart from previous approaches taken by the Divisional Court to the interpretation of s. 5(a) of the RTA and its predecessor, s. 3(a) of the Tenant Protection Act, 1997, S.O. 1997, c. 24. In McCormick v. Paul Bunyan Trailer Camp Ltd. (1999), 22 R.P.R. (4th) 305 (Div. Ct.), Aitken J. held that all that was necessary for the exemption to apply was that: (1) the living accommodation falls within one of the categories set out in the definition; and (2) it is intended to be occupied for a seasonal or temporary period. It is arguable that this could be said of the cottage at issue in this case. It would be unfair to the respondents to allow the appellants to rely on the RTA on appeal in light of the state of the authorities and this sparse factual record. It would also be unfair to the respondents to have them undergo the expense of yet another hearing at first instance simply because a fresh lawyer on the case thought of a new argument that may or may not succeed.

CONCLUSION

[25] Having regard to the positions advanced in the pleadings and at trial, the issue being one of mixed fact and law, the lack of any explanation as to why the argument was not raised at trial, the lack of any undertaking by the appellants' with respect to costs on a full indemnity basis, the likelihood of success of the new argument and the interests of finality, it would be contrary to the interests of justice to allow the appellants to raise the new argument concerning the RTA at this late stage.

[26] For these reasons, I would dismiss the appeal. Costs of the appeal are to the respondents and, as agreed, are fixed at $2,500, all inclusive, to each respondent.

RELEASED: RGJ "Karen M. Weiler J.A."

January 28, 2009 "I agree R.G. Juriansz J.A."

"I agree J. MacFarland J.A."

[^1]: While the Divisional Court held in Putnam that the interpretation of the exemption to the RTA for seasonal and temporary accommodation raised a question of law in the circumstances of that case, the court noted that the factual record was accepted by all parties and was not controversial. The same cannot be said in this case.