Court of Appeal for Ontario

Date: 2022-06-22 Docket: C68608

Before: Brown, Roberts and Paciocco JJ.A.

Between:

Uri Kiselman Plaintiff (Appellant)

and

Joel Klerer, aka (Owner of I.O.F. Business Furniture Manufacturing Inc.), Pamela Klerer and I.O.F. Intelligent Office Furniture Defendants (Respondents)

Counsel: J. Richard Forget, for the appellant Daria Krysik, for the respondent Pamela Klerer Eli Fellman, for the intervener Landlord and Tenant Board No one appearing for the respondents Joel Klerer and I.O.F. Intelligent Office Furniture

Heard: June 17, 2022

On appeal from the order of Justice Gregory M. Mulligan of the Divisional Court, dated November 19, 2019, with reasons reported at 2019 ONSC 6668.

Reasons for Decision

Overview

[1] The appellant, Uri Kiselman, commenced a Small Claims Court claim against the respondents, his former residential tenants. The claim was for $17,166.55 in total damages for the non-payment of rent, and for costs incurred to repair undue damage that the appellant alleges the respondents caused to the rental unit. A deputy Small Claims Court judge dismissed the claim for want of jurisdiction. That decision was upheld on appeal to the Divisional Court. Leave to appeal the Divisional Court decision was granted. At the end of the oral hearing, we allowed the appeal with reasons to follow. These are our reasons.

The Material Facts

[2] The relevant provisions of the Residential Tenancies Act, 2006, S.O. 2006 c. 17 [the “Residential Tenancies Act”] in force at the time the appellant initiated his action confirmed that the Landlord and Tenant Board [“LTB”] had jurisdiction to adjudicate claims for damages for rent arrears and for undue damage to a rental unit if the claim was brought while the tenant was in possession of the rental unit. It is not contested that the respondents were not in possession when the appellant initiated his damages action in the Small Claims Court.

[3] The respondents nonetheless brought a motion to dismiss the Small Claims Court action for want of jurisdiction, arguing that the LTB retains jurisdiction over undue damage actions even where a tenant is no longer in possession of a rental unit if the landlord could, with due diligence, have discovered and initiated the action while the tenant was still in possession. The respondents argued that the appellant failed to exercise due diligence because he did not utilize his right of inspection while the respondents were in possession. Had he done so, he could have discovered the damage and initiated the action before the LTB. In essence, the respondents argued that landlords cannot rely on their failure to exercise due diligence in order to evade the exclusive jurisdiction of the LTB.

[4] The appellant opposed the dismissal motion, relying on the plain wording of the material provisions of the Residential Tenancies Act then in force. He also argued that the notion that actionable undue damage can be discovered with due diligence while a tenant is still in possession of the rental unit makes no sense. He argued that if a tenant repairs such damage before quitting the tenancy, there is no basis to sue. Therefore, it is only after a tenant has left a rental unit without repairing undue damage that such a claim can be discovered.

[5] On September 5, 2017, a deputy Small Claims Court judge accepted the respondents’ submissions and granted their motion to dismiss the appellant’s claim for lack of jurisdiction.

[6] The Divisional Court appeal judge upheld the decision of the deputy Small Claims Court judge, but he applied different reasoning. He held that s. 168(2) of the Residential Tenancies Act gives the LTB “exclusive jurisdiction to determine claims of this type” because “nothing turns on the fact that the action was started after the tenant was no longer in possession”.

Analysis

[7] In order to have exclusive jurisdiction, a tribunal must first have jurisdiction. The LTB did not have jurisdiction to adjudicate the claims that the appellant was seeking to advance. The Divisional Court therefore erred in holding that the LTB had exclusive jurisdiction and in dismissing the appeal.

[8] At the relevant time, s. 87(1) of the Residential Tenancies Act, now repealed and replaced, [1] provided:

87(1) A landlord may apply to the Board 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. [Emphasis added.]

[9] Section 89(1), also now repealed and replaced, [2] provided:

89(1) A landlord may apply to the Board for an order requiring a tenant to pay reasonable costs that the landlord has incurred or will incur for the repair of or, where repairing is not reasonable, the replacement of damaged property, if the tenant, another occupant of the rental unit or a person whom the tenant permits in the residential complex wilfully or negligently causes undue damage to the rental unit or the residential complex and the tenant is in possession of the rental unit. [Emphasis added.]

[10] On a plain reading of these sections, the LTB only has jurisdiction over a claim for the payment of rent, or for the recovery of the costs of repairing damage, when the tenant is in possession of the rental unit.

[11] Not surprisingly, in 1162994 Ontario Inc. v. Bakker, at para. 18, Doherty J.A. held with respect to the identically worded predecessor provisions to s. 87(1) that the LTB does not have jurisdiction over claims for arrears of rent where the connection between the tenant and the rental unit has been severed. He explained that this is in keeping with the purpose of the Residential Tenancies Act of encouraging “speedy, fair and efficient access to justice in residential tenancy matters”: at paras. 17-18. He noted that once the connection between the tenant and the rental unit has been severed, such claims “are best resolved through more formal court processes”: at para. 18. Although Doherty J.A. did not say so expressly, this follows from the fact that once the tenant is no longer connected to the unit, the need for speedy access to justice will have abated, removing the need to direct exclusive jurisdiction to the LTB.

[12] Bakker has not been overturned and has been repeatedly followed, including by the Divisional Court: see Capreit Limited Partnership v. Griffin, 2016 ONSC 5150 (Div. Ct.), at paras. 10-12; Kissell v. Milosevic, at para. 3. This line of authority does not appear to have been cited in the courts below.

[13] The respondents argue before us that this line of authority does not apply. They rely instead on a line of Small Claims Court decisions, including Finney v. Cepovski, at paras. 25-27 and Fong v. Lemieux, which hold that if a landlord has not exercised due diligence in discovering damage to the rental unit while the tenant is still in possession, the LTB retains jurisdiction even if the action was commenced after the tenant is no longer in possession. The respondents maintain that Bakker is not inconsistent with this line of authority because Bakker is a rent arrears case that did not address jurisdiction over damage claims arising from undue damage to rental units.

[14] We disagree. The line of authority the respondents rely upon is inconsistent with the clear language of former ss. 87(1) and 89(1) and should not be followed. It is also inconsistent with the clear language of s. 23 of the Courts of Justice Act, R.S.O. 1990, c. C.43, which describes the jurisdiction of the Small Claims Court based not on the exercise of due diligence but on the monetary amount of a claim. Moreover, although Bakker dealt only with claims for rent arrears, its reasoning applies to the former s. 89(1) relating to damage claims for undue damage to the rental unit.

[15] Given that the respondents had moved out and severed their connection to the rental unit, the LTB does not have jurisdiction, let alone exclusive jurisdiction, over this litigation. [3] Instead, the claims fall within the monetary jurisdiction of the Small Claims Court. The Divisional Court appeal judge therefore erred in denying the appeal from the decision of the deputy Small Claims Court judge, who also erred in dismissing the landlord’s claim for want of jurisdiction.

Conclusion

[16] The appeal is allowed, the decision setting aside the claim is set aside, and this matter is to be restored to the trial list in Newmarket, to be heard on its merits.

[17] As agreed between the parties, costs are payable to the appellant in the amount of $3,500 inclusive of HST and disbursements.

“David Brown J.A.”

“L.B. Roberts J.A.”

“David M. Paciocco J.A.”

[1] Protecting Tenants and Strengthening Community Housing Act, 2020, S.O. 2020, c. 16, Sched 4, s. 18(1), effective September 1, 2021.

[2] Protecting Tenants and Strengthening Community Housing Act, 2020, S.O. 2020, c. 16, Sched 4, s. 21(1), effective September 1, 2021.

[3] We need not decide whether the LTB would have had jurisdiction over an identical claim had it originated after September 1, 2021. We would be remiss, however, in failing to caution that the amendments and transitional provisions in the Protecting Tenants and Strengthening Community Housing Act, 2020 may have supported a different outcome in such circumstances.