Court of Appeal for Ontario
CITATION: Nanne v. 3011650 Nova Scotia Limited (Michipicoten Forest Resources), 2015 ONCA 391
DATE: 20150605
DOCKET: C59236
Feldman, Benotto and Brown JJ.A.
BETWEEN
Gerald Nanne
Tenant (Respondent)
and
3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources
Landlord (Appellant)
AND BETWEEN
Joseph Pasternak
Tenant (Respondent)
and
3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources
Landlord (Appellant)
AND BETWEEN
Glenn Campbell
Tenant (Respondent)
and
3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources
Landlord (Appellant)
Wendy J. Earle and Matthew Furrow, for the appellant
Robert G. Doumani and Patrick Harrington, for the respondents
Brian A. Blumenthal, for the intervener Landlord and Tenant Board
Heard: March 30, 2015
On appeal from the order of the Divisional Court (Associate Chief Justice Frank N. Marrocco, Justices Sidney N. Lederman and Harriet E. Sachs), dated February 21, 2014, with reasons reported at 2014 ONSC 1012, dismissing an appeal from order of the Landlord and Tenant Board, dated June 17, 2013.
By the Court:
OVERVIEW
[1] During the 1970s and 1980s, the Algoma Central Railway leased out a large number of one-acre cottage sites on property it owned north of Sault Ste. Marie. In 1997, the Railway sold the land to the appellant, 3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources (the “Landlord”). In 2005, the Landlord sold part of the land and cottage sites to Algoma Timberlakes Corp., retaining for itself a tract of land on which 435 cottage sites are located.
[2] In its 2010 decision in Matthews v. Algoma Timberlakes Corp.,[^1] this court held that the Residential Tenancies Act, 2006 (the “RTA”)[^2] applied to the cottage sites on the Timberlakes land.
[3] The respondents are the tenants of three cottage sites located on the Landlord’s property. The respondents lease the cottage sites from the Landlord and they own the structures that they have built on the sites. The leases are each for a term of one year but renewable for 20 years. (The leased sites and the cottages built thereon collectively will be referred to as the “Cottages”.) In their Agreed Statement of Facts, the parties agreed that the Cottages on the Landlord’s property are similar to those located on the Timberlakes land considered by this court in Matthews.
[4] In 2012, the respondents applied to the Landlord and Tenant Board for rent rebates.
[5] Although the Landlord acknowledged that the Matthews decision applied to the respondents’ Cottages, it argued that the RTA could not apply to them without rendering those tenancies void. The Landlord based its argument on the subdivision control provisions of the Planning Act (the “PA”). Specifically, the Landlord contended that although the leases were at most 20 years in duration, the security of tenure provisions of the RTA would extend the tenancy agreements for the Cottages beyond 21 years, thereby contravening the subdivision control provisions of the PA, with the result that the tenancy agreements would not “create or convey any interest in land”: PA s. 50(21). In order to avoid that result, the Landlord submitted that the Board should find that the respondents’ Cottages were not subject to the RTA, but to the Commercial Tenancies Act,[^3] and dismiss their rent rebate applications.
[6] The Board rejected the Landlord’s argument, holding that the respondents’ tenancies were subject to the RTA and, based on its interpretation of s. 50(3) of the PA, their leases were not void under the PA. It ordered the Landlord to rebate to the respondents part of the rent they had paid for 2011 and 2012. The Divisional Court dismissed the Landlord’s appeal.[^4] Leave to appeal to this court was granted.
[7] For the reasons set out below, the appeal is dismissed.
FACTS
[8] The facts are not in dispute. At the hearing before the Board, the parties filed an Agreed Statement of Facts. As was the case in Matthews, the three one-acre sites leased by the respondents contain cottages built in the 1980s. Access to one Cottage was by road; to the other two Cottages, by boat or snowmobile.
[9] Although the respondents’ original leases were with the Railway, in June 2008, each of them entered into a new lease agreement with the Landlord. Each lease was for a term of one year, with an automatic right of renewal for nineteen further one-year terms, subject to a 30-day notice to terminate before each renewal. The leases would terminate without any right of further renewal on the 20th anniversary of the lease date.
HEARING BEFORE THE LANDLORD AND TENANT BOARD
[10] Section 135(1) of the RTA enables a tenant of a “rental unit” to apply to the Board for an order that the landlord repay any money collected in contravention of the Act. In March 2012, the three respondents each filed with the Board applications for rent rebates against the Landlord by using the standardized Form T1 entitled “Tenant Application for a Rebate.” The respondents argued in their applications that the Landlord had imposed unlawful rents for the years 2009 through 2011 and, as a result, had collected rents for those years in excess of the lawful rents permitted under the RTA. The respondents contended that the rent increases imposed by the Landlord were void. They sought rent rebates in the following amounts: (i) Nanne - $4,353.96; (ii) Pasternak - $3,903.99; and, (iii) Campbell - $3,175.83.
[11] The Board held that the rents charged by the Landlord since 2008 were illegal and ordered the Landlord to pay the respondents rebates for the two years 2011 and 2012 – the maximum period recoverable due to RTA s. 135(4) – specifically, rebates of $1,181.11 to Nanne, $1,083.19 to Pasternak, and $926.68 to Campbell.
[12] Before the Board, the Landlord argued that although the leases for the three Cottages were for a term of no more than 20 years, the deemed renewal of term provision in RTA,s. 38(1) would transform them into leases of indefinite duration. RTA s. 38(1) provides:
- (1) If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act.
[13] The Landlord argued that these leases would then contravene the subdivision control requirements of PA s. 50(3) which states:
(3) No person shall convey land by way of a deed or transfer, or grant, assign or exercise a power of appointment with respect to land, or mortgage or charge land, or enter into an agreement of sale and purchase of land or enter into any agreement that has the effect of granting the use of or right in land directly or by entitlement to renewal for a period of twenty-one years or more unless …
(a) the grantor by deed or transfer, the person granting, assigning or exercising a power of appointment, the mortgagor or chargor, the vendor under an agreement of purchase and sale or the grantor of a use of or right in land, as the case may be, does not retain the fee or the equity of redemption in, or a power or right to grant, assign or exercise a power of appointment in respect of, any land abutting the land that is being conveyed or otherwise dealt with other than land that is the whole of one or more lots or blocks within one or more registered plans of subdivision … [Emphasis added.]
[14] According to the Landlord, since the Cottages were not within a registered plan of subdivision and it retained the fee in abutting lands, the leases would contravene PA s. 50(3), with the result that under PA s. 50(21) the leases would “not create or convey any interest in land.” The only way to avoid that result, in the Landlord’s submission, would be for the Board to hold that the Cottages were not subject to the RTA.
[15] Although both the RTA and the PA contain sections which state that each Act prevails in the event one of its provisions conflicts with that of another statute,[^5] the Landlord submitted that public policy considerations required the subdivision control provisions of the PA to prevail over the deemed tenancy renewal provisions of the RTA.
[16] The Board rejected the Landlord’s submission, holding that the deemed renewal of residential tenancies right contained in RTA s. 38 did not conflict with PA s. 50(3) because the latter section only applied to “agreements” of 21 years or more, not “to a statutory provision for security of tenure,” such as RTA s. 38(1). The Board also found that even if the lease agreements were “void” under PA s. 50(21), the tenancies would continue to be subject to the RTA.
REASONS OF THE DIVISIONAL COURT
[17] The Divisional Court dismissed the Landlord’s appeal. The court found it unnecessary to determine the applicable standard of review as it held that the Board’s decision was correct. At paras. 22-23 of its reasons, the Divisional Court stated:
In my view, the Board correctly interpreted s. 50(3) and correctly observed that the Landlord’s interpretation of the subsection would lead to an absurd result. The wording of section 50(3) is directed at the parties entering into an agreement that has the effect of directly or indirectly providing for the use of the land for more than 21 years. In other words, for a lease to be void, it is the agreement entered into by the parties, not a statutory provision, that must have the effect of providing for a term of usage of more than 21 years. …
Such an interpretation is consistent with the legislature’s intention to prevent people from circumventing the subdivision control provisions of the PA by entering into leases with a term of more than 21 years and consistent with the remedial purpose of the RTA to protect residential tenants in Ontario. [Emphasis in original.]
[18] In its appeal to this court, the Landlord seeks to set aside the orders of the Divisional Court and to dismiss the respondents’ applications to the Board.
[19] The Board intervened on the issue of the standard of review to be applied to its decisions, but took no position on the merits of the appeal.
ANALYSIS
Effect of the Matthews decision
[20] The Landlord argues that even though the respondents’ Cottages fall within the definition of “rental units” in the RTA, s. 50(3) of the PA renders the leases void because of the operation of RTA s. 38(1). Therefore, argues the Landlord, the respondents cannot rely on the rent control provisions in the RTA.
[21] In our view, that argument is not open to the Landlord in the context of this appeal. In Matthews, this court held that the rent control provisions of the RTA applied to the land leases in question in that case. The parties agreed that the land leases in Matthewswere similar to the land leases in the present case. The Board and the Divisional Court were bound by Matthews when determining the respondents’ applications for a rent rebate.
[22] Although the court in Matthewswas not directed to the possible conflict between PA s. 50(3) and RTA s. 38(1), the Landlord has not directly asked this court to overrule Matthews, nor did it request that a five-judge panel be constituted.In fact, the Landlord did not expressly take the position that Matthews was wrongly decided (though in oral argument it acknowledged that were we to accede to its argument, our decision would contradict Matthews).
[23] Consequently, in light of the way this appeal has been presented, this court is not in a position to overrule Matthewsand hold that the respondents cannot rely on the rent control provisions of the RTA in respect of their Cottages: seeCumming v. Peterborough Police Association,[^6] R. v. Labrecque,[^7] and Royal Bank of Canada v. Trang.[^8]
[24] In support of its position that this court should consider the PA issue and the effect of the application of the RTA to land lease communities in Ontario, the Landlord argued in its factum that the RTA’s application to the respondents’ Cottages could “have disastrous consequences for the orderly development and environment of Ontario.” However, this submission ignores the Land Lease Statute Law Amendment Act, 1994,[^9] which simultaneously amended both the PA and Part IV of the Landlord and Tenant Act[^10] (predecessor to the current RTA) to recognize the category of “land lease community home.” At that time, the PA was amended to prohibit the future construction of land lease community homes except on parcels of land within a registered plan of subdivision or which fall within the exemptions of the present PA ss. 50(3)(b) or 50(5)(a) (which apply where a grantor does not retain the fee in abutting lands). The prohibition in that amendment is now found in PA s. 46, which provides:
46(1) …
“parcel of land” means a lot or block within a registered plan of subdivision or any land that may be legally conveyed under the exemption provided in clause 50 (3) (b) or clause 50 (5) (a).
(2.1) Unless otherwise authorized by a by-law in force under section 34 or an order of the Minister made under clause 47 (1) (a), or a permit issued under section 13 of the Public Lands Act, no person shall construct or erect or locate or use or cause to be constructed, erected, located or used a land lease community home except on a parcel of land as defined in subsection (1), and in no case except as otherwise so authorized shall any person construct, erect, locate or use or cause to be constructed, erected, located or used more than one land lease community home on any such parcel of land. [Emphasis added.]
[25] Therefore, there is no concern that future developers could evade the subdivision control provisions of the PA by entering into 20-year land leases where the parcels of land are not part of a registered plan of subdivision.
Indefinite renewal of pre-1994 land leases
[26] The underlying issue in this dispute is whether the rent control provisions of the RTA apply to the respondents’ Cottage leases (which replaced leases that pre-existed the 1994 amendments and therefore were not affected by the amendments).[^11] As discussed, that issue was decided in Matthews.The question of whether the leases are subject to the indefinite, automatic renewal provisions of the RTA – and if so, whether that would create a conflict with PA s. 50(3) –should not, and need not, be decided in the context of the present appeal.
[27] At the time of the 1994 amendments, the Landlord and Tenant Act did not provide for a tenant’s right to indefinite renewal or security of tenure; the security of tenure that exists today in the RTA was not available to tenants until 1997, with the enactment of the Tenant Protection Act, 1997.[^12]
[28] It is therefore arguable whether the legislature, in simultaneously enacting PA s. 46 and adding land lease communities to the Landlord and Tenant Act, had the intention to allow indefinite, automatic renewal of existing 20-year land leases that were not part of a registered plan of subdivision.
[29] In the proper context, it may be open to a party to raise the issue of the possible conflict between PA s. 50(3) and RTA s. 38(1) as these provisions apply to pre-1994 land leases, potentially including the respondents’ Cottage leases.
[30] However, in the current appeal, along with the failure to address the conflict with the Matthews decision or seek to have a five-judge panel reconsider that decision, the parties did not direct the court to PA s. 46, or provide any guidance on how to approach or interpret the 1994 amendments. Nor did they provide this court with evidence regarding the number of pre-1994 land lease communities that are not subject to a registered plan of subdivision, which evidence might well have assisted the court in addressing the policy arguments raised by the Landlord. Without evidence and robust argument of these issues, this court is not in a position to decide the legal question in the full context of the potential effects of the application of RTA s. 38(1) on the Cottage or similar leases.
DISPOSITION
[31] For these reasons, the appeal is dismissed. On the issue of an application for a rent rebate, we are bound by the result in Matthews, and the Landlord did not request a review of that decision by a five-judge panel. The Board’s decision to grant rent rebates to the Tenants for 2011 and 2012 stands.
[32] The parties agreed that the successful party should be awarded costs of the appeal in the amount of $12,000. The Board did not seek any costs. Accordingly, we award the Tenants costs fixed at $12,000, inclusive of disbursements and HST.
Released: June 5, 2015 (KF)
“K. Feldman J.A.”
“M.L. Benotto J.A.”
“David Brown J.A.”
[^1]: 2010 ONCA 468.
[^2]: S.O. 2006, c. 17.
[^3]: R.S.O. 1990, c. L.7.
[^4]: 2014 ONSC 1012 (Div. Ct.).
[^5]: RTA s. 3(4); PA s. 71.
[^6]: 2013 ONCA 670, at para. 3.
[^7]: 2011 ONCA 360, at para. 5.
[^8]: 2014 ONCA 883, at paras. 38-39.
[^9]: S.O. 1994, c. 4.
[^10]: R.S.O. 1980, c. 232.
[^11]: Section 46 does not apply to land lease communities that existed prior to 1994 (including the community at issue). Section 46(4) provides:
This section does not apply to prevent the continued use in the same location of any land lease community home that,
(a) was constructed, erected or located and in use prior to the day the Land Lease Statute Law Amendment Act, 1994 receives Royal Assent …
[^12]: S.O. 1997, c. 24.