COURT OF APPEAL FOR ONTARIO DATE: 20231128 DOCKET: COA-23-CV-0098

Gillese, Benotto and Copeland JJ.A.

BETWEEN

Marilyn Elkins and Joseph Fraser Tenants/Appellants (Appellants)

and

Grace Van Wissen, John Van Wissen, Margaret Van Wissen, Embleton Homes Inc., Paramjit Singh Chahal, Surinderpal Singh Kohli, Malwinder Saini, Embleton Homes [1] and Sukhwinder Singh Landlords/Respondents (Respondents)

Counsel: Ryan Hardy, for the appellant Marilyn Elkins No one appearing for the appellant Joseph Fraser Alexander Dos Reis, for the respondent John Van Wissen (via videoconference) No one appearing for the respondent Grace Van Wissen No one appearing for the respondent Margaret Van Wissen Derrick M. Fulton, for the respondents Embleton Homes Inc., Paramjit Singh Chahal, Surinderpal Singh Kohli, Malwinder Saini, Embleton Homes and Sukhwinder Singh (via videoconference) Eli Fellman, for the Landlord and Tenant Board

Heard: September 6, 2023

On appeal from the order of the Divisional Court (Justices F. Bruce Fitzpatrick, Stephen T. Bale, and Freya Kristjanson), dated April 13, 2022, with reasons reported at 2022 ONSC 2060, dismissing an appeal from an order of the Landlord and Tenant Board, dated March 19, 2020.

Gillese J.A.:

I. INTRODUCTION

[1] In Ontario, the law permits landlords to evict tenants to allow the landlord, or certain members of the landlord’s family, to move in. The law extends such “own use” eviction power to purchasers, but the eviction must be made in good faith.

[2] Section 49(1) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “RTA”), empowers a landlord who has entered into an agreement of purchase and sale to, in certain circumstances, give a tenant a notice terminating the tenancy on behalf of the purchaser, if the purchaser “in good faith” requires personal possession of the residential rental unit. And, pursuant to s. 57(1)(b), the Landlord and Tenant Board (the “Board”) may make certain orders if it determines, among other things, that the landlord gave a s. 49 termination notice “in bad faith”.

[3] This appeal addresses the following questions. Where a landlord terminates a tenancy pursuant to s. 49(1) of the RTA: (1) how is the Board to determine whether the landlord acted in bad faith within the meaning of s. 57(1)(b); and (2) must the Board assess the purchaser’s good faith requirement in s. 49(1) when making that determination?

II. BACKGROUND

[4] Beginning in 2012, Marilyn Elkins and her adult son Joseph Fraser (the “Tenants”) rented and occupied a single-family residence in Brampton, Ontario (the “Residence”). The Tenants say that they enjoyed a comfortable and affordable home in the Residence.

[5] The Residence was on a property comprised of a commercial retail garden centre/nursery and two detached residential houses (the “Property”). The landlords were Grace Van Wissen, John Van Wissen, and Margaret Van Wissen (the “Vendor Landlords”). [2]

[6] On March 5, 2018, Paramjit Singh Chahal and Surinderpal Singh Kohli (the “Original Purchasers”) signed and dated an Agreement of Purchase and Sale (the “APS”) for the Property. Mr. Chahal also completed a Form 160 that same day. A Form 160 is entitled “Registrant’s Disclosure of Interest Acquisition of Property”. [3]

[7] On the Form 160, Mr. Chahal declared he was a registered real estate salesperson representing Homelife/Miracle Realty Ltd. in connection with a proposed offer to purchase the Property. Immediately below that, in preprinted words, the Form 160 provided: “Please be advised that, if the proposed Offer is accepted, I will be either directly or indirectly acquiring an interest in your Property”. Below that statement, a preprinted note called for an explanation if the registrant’s interest was indirect. Mr. Chahal handwrote the following explanation: “Being a partner, we are buying this property as a future development”.

[8] There were two signature lines on the Form 160: one for the registrant who was making the declaration and the other for the Broker of Record/Manager of Brokerage. Mr. Chahal signed as the registrant. It is unclear who signed for the Broker of Record/Manager of Brokerage.

[9] On March 6, 2018, the Vendor Landlords signed the Acknowledgement section of the Form 160. The preprinted words of acknowledgement read as follows: “I/We, the undersigned, as Seller(s) in this transaction have read and clearly understand this statement and acknowledge this date having received a copy of same, PRIOR TO BEING PRESENTED WITH AN OFFER TO PURCHASE, LEASE, EXHANGE, OR OPTION” (emphasis in the Form 160). The Vendor Landlords also signed and dated the APS on March 6, 2018.

[10] The APS had a scheduled closing date of June 1, 2018. A term of Schedule A to the APS required the Vendor Landlords to give vacant possession of the Property. Schedule A to the APS also included a substitute purchasers’ clause.

[11] On March 7, 2018, pursuant to s. 49(1) of the RTA, the Vendor Landlords served the Tenants with a Form N12. Form N12 is entitled “Notice to End your Tenancy Because the Landlord, a Purchaser or a Family Member Requires the Rental Unit”. I will refer to the Form N12 as the “s. 49 Termination Notice”.

[12] The s. 49 Termination Notice gave the Tenants a move-out day of May 31, 2018. On that notice, Reason 2 is ticked off to show “The purchaser” intends to move into the rental unit.

[13] On May 22, 2018, it appears that the lawyer for the Original Purchasers notified the lawyer for the Vendor Landlords that title to the Property would be taken by a corporation, Embleton Homes Inc. (the “Purchaser”). [4] The directors of the Purchaser are the Original Purchasers plus two others, Malwinder Saini and Sukhwinder Singh. I will refer to the Original Purchasers and the Purchaser together as the “Purchasers”.

[14] On June 8, 2018, the Tenants moved out of the Residence. They testified that they moved out as a result of having received the s. 49 Termination Notice.

[15] Over the following months, the Residence remained vacant. Toward the end of 2018, the son of Mr. Kohli, one of the Original Purchasers, moved into the Residence but stayed for only approximately 25 days. The Residence was subsequently rented out for a higher amount than what the Tenants had been paying.

[16] On March 8, 2019, the Tenants filed three applications with the Board: T1, T2, and T5 applications. In their T5 application, the Tenants alleged that the s. 49 Termination Notice was given in bad faith and the Original Purchasers did not want the Residence for their own use (the “T5 Application” or the “s. 57(1)(b) application”). Because only the T5 Application is relevant to this appeal, I will say nothing more about the other two applications.

[17] The Board dismissed the Tenants’ T5 Application.

[18] The Tenants appealed the Board decision to the Divisional Court pursuant to s. 210(1) of the RTA. [5] The Divisional Court dismissed their appeal.

[19] The Tenants then sought leave to appeal to this court. Pursuant to s. 6(1)(a) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), this court granted leave on two issues: “the test for bad faith under s. 57 of the Residential Tenancies Act; and the failure of the Divisional Court to address the potential liability of the respondent purchasers of the property”.

[20] The Tenants were self-represented at the Board and before the Divisional Court. However, on this appeal, the tenant Marilyn Elkins was represented by the Advocacy Centre for Tenants Ontario.

[21] Counsel for the Board participated in this appeal to provide the court with the relevant statutory context, make submissions on the standard of review, and address the impact of the issues on the Board’s jurisdiction and case law. The Board did not take a position on the merits of the appeal.

[22] The respondent, John Van Wissen, was represented by counsel on this appeal but took no position, filed no materials, and made no submissions. The respondents Grace Van Wissen and Margaret Van Wissen were not represented by counsel, filed no materials, and made no submissions. Separate counsel represented the other respondents jointly on the appeal, namely, the Original Purchasers, the Purchaser, and the other two directors of the Purchaser. While the other respondents filed no materials, their counsel made brief oral submissions, primarily on the question of the potential liability of purchasers.

III. THE RELEVANT STATUTORY PROVISIONS

[23] As noted, the Vendor Landlords gave the Tenants a notice terminating their tenancy pursuant to s. 49(1) of the RTA.

[24] Section 49(1) stipulates that a landlord may, “on behalf of the purchaser”, give notice terminating the tenancy, “if the purchaser in good faith requires possession” of the rental unit for residential occupation. It reads as follows:

49(1) A landlord of a residential complex that contains no more than three residential units who has entered into an agreement of purchase and sale of the residential complex may, on behalf of the purchaser, give the tenant of a unit in the residential complex a notice terminating the tenancy, if the purchaser in good faith requires possession of the residential complex or the unit for the purpose of residential occupation by,

(a) the purchaser;

(b) the purchaser’s spouse;

(c) a child or parent of the purchaser or the purchaser’s spouse; or

(d) a person who provides or will provide care services to the purchaser, the purchaser’s spouse, or a child or parent of the purchaser or the purchaser’s spouse, if the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which the rental unit is located. [Emphasis added.]

[25] The Tenants’ T5 Application was made pursuant to s. 57(1)(b) of the RTA, the relevant parts of which read as follows:

57(1) The Board may make an order described in subsection (3) if, on application by a former tenant of a rental unit, the Board determines that,

(b) the landlord gave a notice of termination under section 49 in bad faith, the former tenant vacated the rental unit as a result of the notice or as a result of an application to or order made by the Board based on the notice, and no person referred to in clause 49 (1) (a), (b), (c) or (d) or 49 (2) (a), (b), (c) or (d) occupied the rental unit within a reasonable time after the former tenant vacated the rental unit;

… [Emphasis added.]

[26] Under s. 57(3), the Board may make orders that include requiring the landlord to pay the tenant certain sums, abate rent, and pay administrative fines to the Board. Section 57(3) also empowers the Board to make any other order it “considers appropriate”. It reads:

(3) The orders referred to in subsection (1) are the following:

1. An order that the landlord pay a specified sum to the former tenant for all or any portion of any increased rent that the former tenant has incurred or will incur for a one-year period after vacating the rental unit.

1.1 An order that the landlord pay a specified sum to the former tenant as general compensation in an amount not exceeding the equivalent of 12 months of the last rent charged to the former tenant. An order under this paragraph may be made regardless of whether the former tenant has incurred any actual expenses or whether an order is made under paragraph 2.

1.2 An order that the landlord pay a specified sum to the former tenant for reasonable out-of-pocket moving, storage and other like expenses that the former tenant has incurred or will incur.

2. An order for an abatement of rent.

3. An order that the landlord pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.

4. Any other order that the Board considers appropriate.

[27] Section 202(1) of the RTA directs the Board, when making findings on an application, to ascertain the real substance of all transactions and activities relating to a rental unit and the good faith of the participants. Section 202(1) reads as follows:

202 (1) In making findings on an application, the Board shall ascertain the real substance of all transactions and activities relating to a residential complex or a rental unit and the good faith of the participants and in doing so,

(a) may disregard the outward form of a transaction or the separate corporate existence of participants; and

(b) may have regard to the pattern of activities relating to the residential complex or the rental unit.

IV. The decisions below

A. The Board Decision

[28] The Board gave extremely brief reasons for dismissing the Tenants’ T5 Application.

[29] In the Background section of its reasons, at para. 9, the Board recited that, on March 7, 2018, the Landlord served the Tenants with the s. 49 Termination Notice. In paras. 10-12, it added the following:

10. The evidence for the Landlord is that, at the time the (N12) was served, it was given to the Tenant(s) by the Landlord because the Agreement of Purchase and Sale stipulated that vacant possession was required and a notice was to be given because the Purchaser required residential occupation of the rental premises for a family member of the Purchaser to live in the unit.

11. The fact that the Purchaser’s son did not immediately take possession and continue to live in the rental unit, does not, to my mind, mean that the (N12), at the time it was served, was given by the former Landlords in bad faith.

12. The Landlord’s further affirmed that at the time the Landlord(s) served the (N12) notice there was no reason not to believe it was the Purchasers’ intention for a family member to move into the unit.

[30] At para. 13, the Board set out s. 57(1)(b) of the RTA. At para. 14, the Board observed that, to be successful, the tenants had to establish, on a balance of probabilities, that: (1) the landlord gave the N12 notice under s. 49 of the RTA in bad faith; (2) the tenants vacated the rental unit as a result of the N12 notice or a Board order based on the N12 notice; and (3) the purchaser did not move into the rental unit within a reasonable time after the Tenants vacated.

[31] The Board’s analysis on the applicability of s. 57(1)(b) is contained in paras. 15-17 of its decision. Those paragraphs read as follows:

15. The first part of the test requires me to look at the intention of the Landlords at the time the (N12) notice was given. At the time of the (N12), did the Landlords serve the (N12) in good faith, i.e. to provide vacant possession for the purchasers’ residential occupation?

16. Based upon the totality of the evidence provided, I am satisfied that the Landlord’s served the (N12) in good faith.

17. I find that the Landlord did not give the Tenant(s) a notice in bad faith, and therefore the Tenants’ did not, on a balance of probabilities, prove all three parts of the test, as such the T5 portion of the application is to be dismissed and no remedies will be granted. [Emphasis in original.]

B. The Divisional Court Decision

[32] As previously noted, the Divisional Court dismissed the Tenants’ appeal, and this court granted the Tenants leave to appeal on two issues: (1) the test for bad faith under s. 57(1) of the RTA; and (2) the failure of the Divisional Court to address the potential liability of the purchasers of the Property. Because the Divisional Court said nothing on the second issue, the summary below is of only the Divisional Court’s reasons on the first issue.

[33] As the Divisional Court noted, appeals of a Board order under s. 210(1) of the RTA are limited to questions of law and such questions are reviewed on a correctness standard. [6]

[34] The Divisional Court dismissed the appeal after concluding that the Board made no error on a question of law in determining the Vendor Landlords did not act in bad faith in issuing the s. 49 Termination Notice. It gave the following reasons for so concluding.

• The Board articulated and applied the three-part test set out in s. 57(1)(b) of the RTA, the first part of which requires the tenant to establish that the landlord gave the s. 49 termination notice in bad faith.

• The Board held that the first part of the test required a consideration of the Vendor Landlords’ intention at the time the s. 49 Termination Notice was given, and the change of purchasers and title direction took place after that notice was given.

• It rejected the Tenants’ argument that the Board’s failure to infer bad faith was an error of law, saying that an appellate court is prohibited from reviewing a tribunal’s findings and inferences of fact, “if there was some evidence upon which the decision-maker could have relied to reach that conclusion” (citation omitted).

• It also rejected the Tenants’ argument that the Board erred in law by restricting its consideration of bad faith to the Vendor Landlords’ intention at the time the s. 49 Termination Notice was given. In support of this argument, the Tenants had referred the Divisional Court to TST‑94914-18 (Re). In TST-94914-18 (Re), the Board held that a landlord’s duty of good faith extends beyond the time the termination notice is served and found bad faith on the part of the landlords. The Divisional Court distinguished TST-94914-18 (Re) from this case and said the former should be restricted to its facts. It noted that in TST-94914-18 (Re), the Board found the landlords acted in bad faith when, knowing that there was no prospect of the sale closing, the landlords asked the sheriff to enforce the Board’s eviction order. However, in this case, the sale of the Property “was alive” when the Tenants moved out and the Vendor Landlords “could not have been expected to refuse to close or to get into a dispute with the Purchasers with the potential of litigation”.

V. THE ISSUES

[35] These reasons address the two issues for which leave was granted:

1. What is the test for bad faith under s. 57(1)(b) of the RTA?
2. Did the Divisional Court err by failing to address the potential liability of the Purchasers of the Property?

Issue 1 The Test for Bad Faith under s. 57(1)(b) of the RTA

A. The Standard of Review

[36] The Tenants appealed the Board decision to the Divisional Court pursuant to s. 210(1) of the RTA. As noted, s. 210(1) limits such an appeal to questions of law.

[37] When a court hears an appeal from an administrative decision, in considering questions of law, the standard of review is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at para. 37. Therefore, the Divisional Court had to apply a correctness standard when reviewing the Board decision.

[38] In this case, the Divisional Court properly identified correctness as the standard it was to apply in reviewing the Board decision. However, in determining that the Board committed no errors of law, the Divisional Court incorrectly applied that standard.

B. The Board Errors

[39] In my view, the Board made the following three errors on questions of law: (1) it erred in its approach to determining whether, pursuant to s. 57(1)(b) of the RTA, the Vendor Landlords acted in bad faith in giving the s. 49 Termination Notice; (2) it erred by failing to consider the Purchasers’ good faith, as required by s. 49(1); and (3) it failed to grapple with the evidence and the issues necessary for resolution of the T5 Application.

(1) Incorrect approach for determining bad faith under s. 57(1)(b)

[40] The Tenants’ T5 Application was brought pursuant to s. 57(1)(b) of the RTA. Section 57(1)(b) required the Board to determine whether the Vendor Landlords gave the s. 49 Termination Notice “in bad faith”. The Board decided that matter based on a single consideration: at the time the Vendor Landlords served the s. 49 Termination Notice, the Vendor Landlords said they had “no reason not to believe it was the [Original] Purchasers’ intention for a family member to move into the unit”. This is an unduly narrow approach for determining bad faith under s. 57(1)(b) and, in my view, amounts to an error of law. My view rests on a contextual interpretation of ss. 49(1) and 57(1)(b). It is buttressed by a consideration of Board jurisprudence on this matter.

(a) A contextual interpretation of ss. 49(1) and 57(1)(b)

[41] The modern approach to statutory interpretation requires that the words of ss. 49(1) and 57(1)(b) “be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21, quoting Elmer Driedger, Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983), at p. 87.

[42] The RTA and its predecessor are remedial legislation with a tenant protection focus: Honsberger v. Grant Lake Forest Resources Ltd., 2019 ONCA 44, 431 D.L.R. (4th), at para. 19; Price v. Turnbull’s Grove Inc., 2007 ONCA 408, 85 O.R. (3d) 641, at para. 26. The purposes of the RTA are set out in s. 1. The first purpose listed is “to provide protection for residential tenants from…unlawful evictions”. To ignore events after a landlord gives a tenant a s. 49 termination notice limits the Board from fulfilling its responsibility to determine bad faith under s. 57(1)(b) and undermines the RTA’s stated purpose of providing tenants with protection from unlawful evictions.

[43] On a plain reading of ss. 49(1) and 57(1)(b), the landlord’s conduct is linked to the purchaser’s good faith. Section 49(1) permits the landlord to, on behalf of the purchaser, give the tenant a termination notice so long as the purchaser, in good faith, requires possession of the rental unit for the purpose of residential occupation. Section 57(1)(b) requires the Board to determine, among other things, whether the landlord gave the s. 49 termination notice in bad faith. When ss. 49(1) and 57(1)(b) are read together, it is clear that the object of those provisions is to prevent the sale of a property from being used to unlawfully evict a tenant. Accordingly, the Board must consider all the evidence before it that is relevant to the landlord’s bad faith under s. 57(1)(b). It is an error of law for the Board to restrict its consideration to the evidence at the point in time when the landlord gives the tenant a s. 49 termination notice. This case makes that point.

[44] As a result of artificially narrowing the assessment of bad faith to when the s. 49 Termination Notice was given, the Board failed to consider that, after the notice was given but before the sale of the Property closed, the Vendor Landlords and/or their lawyer knew that title to the Property would be taken in the name of Embleton Homes Inc., a corporation. A corporation cannot personally occupy a residence for residential purposes. This information must surely be relevant to the Board’s determination of the Vendor Landlords’ bad faith under s. 57(1)(b).

[45] It could be argued that s. 57(1)(b) implicitly limits Board scrutiny to the landlord’s knowledge when it gives the s. 49 termination notice. However, such an interpretation runs afoul of s. 202(1) of the RTA. Under s. 202(1), the Board is required, when making findings on an application, to ascertain the “real substance of all transactions and activities relating to…a rental unit and the good faith of the participants”. Limiting the assessment of a landlord’s bad faith to that single point in time when the s. 49 termination notice is given precludes the Board from both ascertaining the true substance of the transaction between the landlord and the purchaser and conducting a fair assessment of their good faith.

[46] As Board member Lynn Mitchell stated in CET-67272-17 (Re), at para. 20:

20. [L]imiting the question of good faith to an exploration of the mind of the Landlord at the instant of serving the N12 notice, and to ignore all the surrounding circumstances, would lead to results inconsistent with the objects of the Act. To require the Tenant to establish what was in the mind of the Landlord at the instant of the N12 notice service, without regard to the surrounding circumstances and to the behaviour of the Landlord between the service of the N12 notice and the termination date, would upset the balance of interests which the Act aims to achieve. The good faith obligation attaching to an N12 notice must surely survive the instant of its service.

(b) Board jurisprudence

[47] Other Board decisions similarly demonstrate a broader approach to the bad faith inquiry under s. 57(1)(b), one that considers the parties’ conduct prior to, at the time of, and subsequent to the giving of the s. 49 termination notice. As I have explained, this broader approach results in a fairer, more meaningful assessment of bad faith in s. 57(1)(b) and accords with the purpose of the RTA to prevent unlawful evictions.

[48] One such case is TST-94914-18 (Re). There the Board found bad faith on the part of the landlords on facts arising after the s. 49 termination notice had been given. The tenants contested their eviction, and the Divisional Court issued a stay of eviction. The purchaser then advised that she could not complete the sale. Despite this, the landlords had the sheriff enforce the eviction when the stay was lifted. The landlords ultimately sold the property to a different buyer. The Board found that, while the landlords had not acted in bad faith when they served the s. 49 termination notice, they did act in bad faith in enforcing the eviction order with knowledge that the sale to the original purchaser had no prospect of closing.

[49] Below, the Divisional Court considered TST-94914-18 (Re) but declined to apply its reasoning on the basis that it could be distinguished from this case. I agree that the two cases differ factually. However, those factual differences do not account for the different legal approaches taken in determining bad faith under s. 57(1)(b). For the reasons given above, in my view, the approach taken by the Board in TST-94914-18 (Re) in determining bad faith is correct in law whereas the approach taken in this case is not.

[50] At para. 22 of Duarte v. 2132338 Ontario Ltd., a Board decision issued after the decision was rendered in this case, the Board stated:

22. [I]n relaying the Purchaser’s intentions to terminate the tenancy, the Landlord does not serve as a mere messenger with no duties or obligations to the Tenants. By conveying the Purchaser’s stated intention to occupy the rental unit, the Landlord initiated events that had the serious consequence of ending the tenancy and compelling them to relocate their family…As a result, I find that the Landlord had a duty to the Tenants to exercise some due diligence to confirm the good faith intentions of the Purchaser before putting the eviction in motion. Otherwise, an unscrupulous purchaser would be free to use a landlord as a straw man to divest tenants of their housing and thereby evade the statutory protections afforded to them under the Act.

[51] I agree.

(2) Failure to consider the Purchasers’ good faith

[52] Section 49(1) stipulates that a landlord may give a tenant a termination notice, on behalf of a purchaser, if the purchaser, “in good faith”, requires possession of the unit for residential occupation. When deciding the Tenants’ T5 Application, the Board did not consider whether the Purchasers “in good faith” required the Residence for residential occupation. In my view, that failure constitutes an error in law. When deciding applications brought under s. 57(1)(b), it is insufficient for the Board to assess only whether the landlord acted in bad faith in giving a s. 49 termination notice. The Board must also assess the purchaser’s good faith, which s. 49(1) requires. After making both those determinations, the Board must then consider what orders to make in respect of each of the landlord and the purchaser.

[53] My view is informed by a consideration of: (1) the relevant provisions in the RTA; (2) Board Interpretation Guideline 12: Eviction for Personal Use, Demolition, Repairs and Conversion; and (3) Board jurisprudence.

(a) The relevant RTA provisions

[54] The modern approach to statutory construction is set out above and need not be repeated. I use that approach in the following analysis.

[55] Section 49(1) empowers the landlord to give the tenant a termination notice “on behalf of the purchaser…if the purchaser in good faith requires possession” of the rental unit “for the purposes of residential occupation”. Accordingly, an unlawful eviction under s. 49(1) can occur in one of three ways: (1) the landlord gives the s. 49 termination notice in bad faith but the purchaser genuinely requires personal possession of the rental unit; (2) the landlord gives the s. 49 termination notice in good faith but the purchaser does not genuinely require personal possession; or (3) the landlord and purchaser each independently act in bad faith or collude, in bad faith, to evict the tenant by means of a s. 49 termination notice. If the Board considers only the landlord’s bad faith, and it was the purchaser who was not acting in good faith, the purchaser is shielded from any consequence under the RTA and the tenant loses an opportunity for redress as against the purchaser. Such a result undermines the RTA’s stated purpose, in s. 1, to protect tenants from unlawful evictions.

[56] Furthermore, the conduct of the landlord and the purchaser are expressly linked in ss. 49(1) and 57(1)(b). Section 49(1) permits the landlord to, “on behalf of the purchaser”, give the tenant a termination notice so long as the purchaser, in good faith, requires possession of the rental unit for residential occupation and s. 57(1)(b) requires the Board to determine whether the landlord gave the s. 49 termination notice in bad faith. How can the Board assess, under s. 57(1)(b), whether the landlord gave the s. 49 termination notice in bad faith without also assessing the purchaser’s good faith intentions under the latter provision? If it were otherwise, all that would be required to evict a tenant pursuant to s. 49(1) is for the purchaser to tell the landlord it, or one of the other individuals listed in s. 49, intended to use the rental unit for residential occupation.

[57] Section 202(1) of the RTA reinforces my interpretation of the legislation. It requires the Board, when making findings on an application, to ascertain the “real substance of all transactions” relating to a rental unit and “the good faith of the participants”. The transaction in s. 49(1) is an agreement of purchase and sale. There are two participants to such a sale transaction: the vendor landlord and the purchaser. A consideration of both participants is necessary to ascertain the “real substance” of the transaction between them and the “good faith” of each in evicting the tenant.

[58] This interpretation finds further support in s. 57(3) of the RTA. While s. 57(3) sets out specific orders that can be made against a landlord who acts in bad faith in giving a s. 49 termination notice, it also empowers the Board to make any order it “considers appropriate”. Thus, if the Board finds that a landlord did not act in bad faith but the purchaser did, s. 57(3) gives the Board the power to make appropriate orders against the purchaser. This “gives teeth” to the good faith requirement on the part of purchasers in s. 49(1).

(b) Board Interpretation Guideline 12

[59] Board Interpretation Guideline 12 is also consistent with requiring the Board, on a T5 application, to consider the good faith of both the landlord and the purchaser.

[60] Interpretation Guideline 12 is entitled: Eviction for Personal Use, Demolition, Repairs and Conversion. It offers tenants the following guidance, under the heading “Who should be named as the respondent”:

If the tenancy was terminated as a result of a notice of termination for personal use by a purchaser and the former tenant is alleging that the purchaser has failed to move into the rental unit within a reasonable time after the tenant vacated the rental unit, the purchaser should be named as a respondent in addition to the landlord who served the notice of termination. See: TST-42753-13-RV (Re), upheld by the Divisional Court, Wojcik v Pinpoint Properties Ltd., 2016 ONSC 3116.

[61] Advising tenants to name both the landlord and the purchaser as respondents is consistent with the Board having to assess the good faith of both when determining whether a tenant has been unlawfully evicted pursuant to s. 49(1).

[62] In this case, the Tenants followed the guidance in Interpretation Guideline 12 in drafting their T5 Application. They named the Vendor Landlords, the Original Purchasers, and the Purchaser, Embleton Homes Inc. (as well as the other directors of Embleton Homes Inc.). In their pleadings, the Tenants discuss the intentions of the Original Purchasers at length.

(c) Board jurisprudence

[63] As counsel for the Board advised in his submissions to this court, the Board jurisprudence on this matter is not consistent. There are cases which, like the current one, ignore the potential liability of purchasers. However, there are other Board decisions in which the Board considered both whether the purchaser acted in good faith under s. 49(1), and whether the landlord acted in bad faith under s. 57(1)(b).

[64] For example, in TST-10645-19 (Re), the landlord gave the tenant a s. 49 termination notice at the request of the purchaser, but the Board traced the bad faith back solely to the purchaser. It ordered only the purchaser to compensate the tenant for his losses.

[65] Additionally, in TST-42753-13-RV (Re), aff’d 2016 ONSC 3116, the Board found that the purchasers, through their agent, caused the landlord to give the tenant a s. 49 termination notice. However, because the Board found that only the purchaser had acted in bad faith, it made orders only in respect of the purchaser.

[66] These decisions reinforce my view that the Board must consider the good faith of the purchaser as well as the bad faith of the landlord when deciding applications under s. 57(1)(b).

(3) Failure to grapple with the issues and the evidence

[67] An administrative decision maker’s reasons must “meaningfully account for the central issues and concerns raised by the parties” and be responsive to the parties’ submissions: Vavilov, at para. 127. The Board reasons do neither. Consequently, they prevent meaningful appellate review and constitute an error of law: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at para. 28; Hanna & Hamilton Construction Co. Ltd. v. Robertson, 2021 ONCA 660, at para. 6.

[68] In this case, among other things, the T5 Application presented the Board with two issues for resolution: (1) did the Vendor Landlords give the s. 49 Termination Notice in bad faith? and (2) did the Purchasers, in good faith, require possession of the Residence for residential occupation? The Board reasons make no mention of the second issue nor the evidence relating to it. Clearly, appellate review was prevented on that issue and, for that reason alone, the Board erred in law.

[69] In addition, however, the Board reasons on the first issue are so deficient as to constitute legal error. The Board made no attempt to grapple with the body of evidence adduced, or the Tenants’ submissions on whether the Vendor Landlords gave the s. 49 Termination Notice in bad faith. Instead, the Board simply recited the Vendor Landlords’ assertion that when they gave the Tenants the s. 49 Termination Notice, there was no reason to believe it was not the purchasers’ intention to have a family member reside in the Residence.

[70] Even on the improperly narrow view of the test for bad faith used by the Board, it failed to address the evidence adduced on this issue. That evidence includes: (1) the Vendor Landlords’ receipt of the Form 160, in which one of the Original Purchasers stated that he was a real estate salesperson as well as one of the Original Purchasers, and stated, “Being a partner, we are buying this property as a future development”; and, (2) the Original Purchasers’ bald assertion that they intended the Residence for personal use.

[71] Had the Board approached the first issue correctly, it would have considered the relevant circumstances both before and after serving the s. 49 Termination Notice. In addition to the two evidentiary considerations noted above, the Board would have had to consider that: prior to closing, the Vendor Landlords and/or their lawyer knew title to the Property was to be taken in the name of a corporation and a corporation cannot personally occupy residential premises; the Residence remained vacant for five months after closing; it was then occupied for only about 25 days by one of the Original Purchasers’ sons; and, thereafter, the Residence was rented out for a higher price than that which the Tenants had paid.

[72] The failure of the Board to address the evidence on the central issue of the Vendor Landlords’ bad faith prevents appellate review and constitutes an error of law.

C. Result

[73] Because the Board failed to make the factual findings necessary to fairly resolve the Tenants’ T5 Application, this court is not in a position to decide it. Accordingly, I would remit it to the Board for a redetermination in accordance with these reasons.

Issue #2 The Divisional Court erred by failing to address the Purchasers’ potential liability

A. The Standard of Review

[74] To determine what standard of review this court is to apply when deciding Issue 2, we must consider the statutory provision which led to that issue coming before this court: Vavilov, at para. 33. In this case, s. 6(1)(a) of the CJA is the relevant provision, as the Tenants obtained leave to appeal the Divisional Court order pursuant to it.

[75] Section 6(1)(a) provides that an appeal lies to this court from an order of the Divisional Court, with leave, “on a question that is not a question of fact alone”. Thus, when an appeal comes before this court pursuant to s. 6(1)(a) of the CJA, the appeal can be on a question of law and/or on a question of mixed law and fact. The only limitation is that the question cannot be one of fact alone. Because the legislation does not indicate what standard of review this court is to apply on appeals heard pursuant to s. 6(1)(a), it is necessary to characterize the nature of Issue 2 to determine what standard of review applies. Thus, the question becomes, does Issue 2 raise a question of law or a question of mixed law and fact? If the former, the correctness standard of review applies. If the latter, absent an extricable error in principle, deference is owed to the Divisional Court decision.

[76] As I explain below, Issue 2 raises a question of law. Therefore, this court must review the Divisional Court decision on the Purchasers’ potential liability on a correctness standard.

B. Analysis

[77] The Tenants’ appeal to the Divisional Court required that court to determine whether the Board committed errors on questions of law. The Divisional Court dismissed the appeal on the basis that the Board made no such errors. However, as I have explained, the Board did err on questions of law by, among other things, failing to address the Purchasers’ potential liability. It was an error of law for the Divisional Court to fail to identify and address that Board error of law.

[78] I would add that, in the circumstances of this case, the Divisional Court’s error is perhaps understandable. There is nothing in the Board reasons to alert the Divisional Court to the issue of the Purchasers’ potential liability. Furthermore, the parties did not squarely address this issue before the Divisional Court. Nonetheless, on a fair reading of the Tenants’ documents and submissions before the Board, it is apparent that the Purchasers’ potential liability was a live issue which the Board was required to address.

VI. disposition

[79] Accordingly, I would grant the appeal and remit the matter to the Board for redetermination, in accordance with these reasons.

[80] Neither the Tenants nor the Board seek costs of the appeal and I would award none. In light of the result, however, I would set aside the costs orders made against the Tenants by the Divisional Court.

Released: November 28, 2023 “E.E.G.” “E.E. Gillese J.A.” “I agree. M.L. Benotto J.A.” “I agree. J. Copeland J.A.”

Footnotes:

[1] It is unclear who Embleton Homes, as opposed to Embleton Homes Inc., is. However, both names appear in the style of cause of the Divisional Court order in this matter. In accordance with standard practice in this court, we have followed suit.

[2] A fourth person – Hendricka Van Wissen – was originally named on the Tenants’ Board applications but her name was removed because she died before the hearing.

[3] Form 160 is a Ontario Real Estate Association form for use by a registrant to disclose an interest in the acquisition of a property.

[4] In their materials before the Divisional Court, the parties state that notification of the change of purchaser to Embleton Homes Inc. was sent from the lawyer for the Original Purchasers to the lawyer for the Vendor Landlords. However, at para. 7 of its reasons, the Divisional Court said that the Vendor Landlords were notified by the Original Purchasers’ lawyer that title would be taken by a corporation, Embleton Homes Inc..

[5] Section 210(1): Any person affected by an order of the Board may appeal the order to the Divisional Court within 30 days after being given the order, but only on a question of law.

[6] Section 210(1) of the RTA is set out at footnote 5 above.