Canada Trustco Mortgage Company v. Park et al.
[Indexed as: Canada Trustco Mortgage Co. v. Park]
63 O.R. (3d) 789
[2003] O.J. No. 1090
Docket No. 756/01
Ontario Superior Court of Justice
Divisional Court
A. Campbell, McNeely and E.M. Macdonald JJ.
March 26, 2003
Landlord and tenant -- Residential tenancies -- Termination -- Mortgagee in possession -- Tenant under lease with fixed term -- Mortgagee in possession may not terminate fixed-term tenancy other than as at end [page790] of fixed term -- Mortgages Act, R.S.O. 1990, c. M.40, ss. 46, 47, 48, 53 -- Tenant Protection Act, 1997, S.O. 1997, c. 24, ss. 1, 2, 47, 51.
Mortgages -- Mortgagee in possession of residential premises -- Possession -- Tenant under lease with fixed term -- Mortgagee in possession may not terminate fixed-term tenancy other than as at end of fixed term -- Mortgages Act, R.S.O. 1990, c. M.40, ss. 46, 47, 48, 53 -- Tenant Protection Act, 1997, S.O. 1997, c. 24, ss. 1, 2, 47, 51.
The respondents were tenants under a lease for a one-year term commencing April 1, 2001 and ending March 31, 2002. Canada Trustco Mortgage Co. ("CTM Co.") was a mortgagee in possession of the leased premises and signed an agreement to sell the premises to a third party with a closing in October 2001. On July 31, 2001, CTM Co. served the respondents with a notice of termination pursuant to s. 53(6) of the Mortgages Act and s. 51 of the Tenant Protection Act, 1997 purporting to terminate the tenancy as of September 30, 2001. The tenants did not vacate. CTM Co. brought an application to the Ontario Rental Housing Tribunal to terminate the tenancy. The tribunal dismissed the application, and CTM Co. appealed.
Held, the appeal should be dismissed.
McNeely J. (E.M. Macdonald J. concurring): Section 51 of the Tenant Protection Act, 1997 provides that the date for termination specified in the notice to terminate "shall be at least 60 days after the notice is given . . . and when the tenancy is for a fixed term be the end of that term". Section 53(4) of the Mortgages Act provides that the notice "may be effective at least 60 days after it is given regardless of any fixed term of tenancy". If there is any conflict between these provisions, s. 46(1) of the Mortgages Act and s. 2(4) of the Tenant Protection Act, 1997 read together resolved the conflict by providing that if any provision of the Tenant Protection Act, 1997 is in conflict with a provision of another Act, the provision of the Tenant Protection Act, 1997 shall apply. Section 53(4) of the Mortgages Act did not permit a landlord to terminate a fixed-term tenancy other than at the end of the fixed term. The tribunal was correct in concluding that a mortgagee in possession who serves a notice of termination of tenancy pursuant to s. 51 of the Mortgages Act cannot terminate a fixed-term tenancy before the end of that fixed term. The requirement that the notice given correspond with the end of term of a fixed term tenancy was consistent with the overriding policy of the Tenant Protection Act, 1997, which is to provide security of tenure for tenants, and the clearly expressed legislative intent that the provisions of the Tenant Protection Act, 1997 override the provisions of any other Act with the sole exception of the Human Rights Code, R.S.O. 1990, c. H.19.
A. Campbell J. (dissenting): The case law established that the specific remedies in the Mortgages Act are not overridden by the Tenant Protection Act, 1997, and this result was not changed by the enactment of s. 2(4) of the Tenant Protection Act, 1997. Nothing in the words of s. 2(4) or any provision of the Act overcame the overriding principle that when two statutes apply to the same subject matter, and both contain paramountcy provisions, the general operative provision -- in this case, the provisions of the Tenant Protection Act, 1997 -- do not prevail over the specific operative remedies -- in this case, s. 53(4) of the Mortgages Act. Further, in the absence of any intervening authority or statutory enactment, established judicial authority should not be changed lightly. The appeal should be allowed and the settled order should be restored until the legislature or the Court of Appeal says otherwise. [page791]
APPEAL from a decision of the Ontario Rental Housing Tribunal.
Cases referred to Laurentian Bank of Canada v. Martinez, unreported, January 23, 2002; Premier Trust Co. v. Heckhausen (1993), 37 R.P.R. (2d) 165, [1993] O.J. No. 3137 (Quicklaw) (Gen. Div.); Royal Bank of Canada v. Cheung, [1993] O.J. No. 1998 (Quicklaw) (Gen. Div.); Toronto-Dominion Bank v. Lee, [1995] O.J. No. 1190 (Quicklaw) (Gen. Div.) Statutes referred to Human Rights Code, R.S.O. 1990, c. H.19 Landlord and Tenant Act, R.S.O. 1990, c. L.7, s. 80 Mortgages Act, R.S.O. 1990, c. M.40, ss. 46(1), 47, 48(1), 53 Tenant Protection Act, 1997, S.O. 1997, c. 24, ss. 1 "landlord", 2(4), 47, 51
James R. Caskey, for appellant. No one appearing for respondents.
[1] MCNEELY J. (MACDONALD J. concurring): -- The landlord, a mortgagee in possession, appeals from a decision of the Ontario Rental Housing Tribunal, which dismissed the landlord's application to terminate the tenancy on a date prior to the end of a fixed term tenancy.
[2] The facts are simple. The appellant/landlord became a mortgagee in possession of the premises on March 15, 2001. The respondent/tenant had already signed an agreement to rent the premises for a one-year term commencing April 1, 2001 and ending March 31, 2002. The tenant moved into the unit on April 1, 2001 and paid his monthly rent thereafter to the landlord/ mortgagee. On June 28, 2001, the landlord/mortgagee entered into an agreement to sell the property to a third party with a closing date of October 3, 2001. On July 31, 2001 the landlord/ mortgagee served the tenant with a notice of termination pursuant to s. 53(6) of the Mortgages Act, R.S.O. 1990 c. M.40, and s. 51 of the Tenant Protection Act, 1997, S.O. 1997, c. 24. The notice purported to terminate the tenancy on September 30, 2001. The tenant did not vacate and the landlord/mortgagee brought an application to the Tribunal to declare the tenancy terminated as of September 30, 2001. The Ontario Rental Housing Tribunal dismissed the application and the landlord/mortgagee appealed to this court.
[3] At the outset of the hearing of the appeal, counsel for the landlord advised the court that the tenant, who did not appear, had vacated the premises on March 31, 2002. He requested the court to hear the appeal because it concerned an issue of great importance to mortgagees and tenants and there were conflicting decisions at the Tribunal level. This court accordingly heard the appeal. [page792]
[4] The important issue is whether a mortgagee in possession who serves a notice of termination of tenancy pursuant to s. 53 of the Mortgages Act can terminate a fixed term tenancy before the end of that fixed term.
[5] The Tribunal, after referring to the cases of Royal Bank of Canada v. Cheung, [1993] O.J. No. 1998 (Quicklaw) (Gen. Div.), Premier Trust Co. v. Heckhausen, [1993] O.J. No 3137 (Quicklaw), 37 R.P.R. (2d) 165 (Gen. Div.), and Toronto-Dominion Bank v. Lee, [1995] O.J. No. 1190 (Quicklaw) (Gen. Div.), decided that the tenancy could not be terminated before the end of the fixed term of the tenancy. It decided that the enactment of s. 2(4) of the Tenant Protection Act after the cited cases were decided made it clear that s. 53(6) of the Mortgages Act, even if it were in conflict with the provisions of the Tenant Protection Act, could not override the mandatory provisions of the Tenant Protection Act that a fixed term tenancy could only be terminated at the end of the fixed term.
[6] The reasons of Mr. Edward Lee, the Tribunal member who heard the application, are clear and succinct:
Royal Bank and Premier Trust are very similar to the present application. In both cases, the learned judges held that s. 53(4) of the Mortgages Act prevailed over s. 103(1) of the Landlord and Tenant Act which corresponded to the present s. 52(2) of the Tenant Protection Act. In Royal Bank, Mr. Justice Farley made this statement: "Clearly, the legislature contemplated that a mortgagee in this position would be able to obtain possession at a time before the end of a fixed term of tenancy."
In Premier Trust, Mr. Justice Greer (at paragraph 7), when reviewing the actions of the bank in seeking to terminate a tenancy in a similar situation to the present case, stated: "The [Mortgages] Act therefore makes it clear that Premier had a right to do exactly what it did do [italics mine]."
Other relevant sections of the Mortgages Act are s. 48(1): "No person exercising rights under a mortgage may obtain possession of a rental unit from a mortgagor's tenant except in accordance with the Tenant Protection Act, 1997", and s. 47(3): "A person who is deemed to be a landlord is subject to the tenancy agreement and to the provisions of the Tenant Protection Act, 1997, which apply to the residential complex."
Section 46(1) of the Mortgages Act is also elucidatory. "In the event of a conflict between this part and any other provision of this Act or any other Act, this part prevails unless the provision or the Act states that it is to prevail over this Part." Thus, the Mortgages Act clearly contemplates that there may be occasions when other Acts will supersede its own provisions.
The difference between these cases and the case at bar is that the Tenant Protection Act contains an explicit provision at s. 2(4) to resolve issues of conflict with other acts: "If a provision of this Act conflicts with a provision of another Act, other than the Human Rights Code, the provision of this Act applies." There was no corresponding provision in the Landlord and Tenant Act, under which the cited cases were decided. [page793]
With respect to the leaned [sic] judges in Royal Bank and Premier Trust, I find that s. 2(4) of the Tenant Protection Act is an explicit provision which makes that Act paramount in cases of conflicts with any other Acts, apart from the Human Rights Code. It is a declaration by the Legislature that the Tenant Protection Act is to prevail in cases of conflict. Thus I find that s. 52(2) of the Tenant Protection Act supersedes s. 43(4) of the Mortgages Act.
The N12 served on the tenant purports to terminate the tenancy on September 30, 2001, 60 days after it was served on the tenant. September 30, 2001 is not the last day of the term of the tenancy. Therefore, the N12 contravenes s. 52(2) of the Tenant Protection Act, and the application must fail for this reason.
[7] The reasons given by Mr. Lee are in our view clear, compelling and correct and he made no error in dismissing the application. In view of the authorities cited to, and distinguished by, Mr. Lee and the general importance of the issue, some further elaboration is desirable.
[8] The relevant sections of the Tenant Protection Act and the Mortgages Act are as follows:
Section 1
"landlord" includes,
(c) a person, other than a tenant occupying a rental unit in a residential complex, who is entitled to possession of the residential complex and who attempts to enforce any of the rights of a landlord under a tenancy agreement or this Act, including the right to collect rent; ("locateur").
Section 2
Conflict with other Acts
(4) If a provision of this Act conflicts with a provision of another Act, other than the Human Rights Code, the provision of this Act applies.
Section 47
Period of notice, tenancy for fixed term
(4) A notice under section 46, 60 or 96 to terminate a tenancy for a fixed term shall be given at least 60 days before the expiration date specified in the tenancy agreement, to be effective on that expiration date.
. . . . . [page794]
Section 51
Notice, landlord personally, etc., requires unit
51(1) A landlord may, by notice, terminate a tenancy if the landlord in good faith requires possession of the rental unit for the purpose of residential occupation by the landlord, the landlord's spouse or a child or parent of one of them.
same
(2) The date for termination specified in the notice shall be at least 60 days after the notice is given and shall be the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term.
Section 46
Application of Part
46(1) In the event of a conflict between this Part and any other provision of this Act or any other Act, this Part prevails unless the provision or the Act states that it is to prevail over this Part.
Section 47
Person deemed to be landlord
47(1) A person who becomes the mortgagee in possession of a mortgaged residential complex which is the subject of a tenancy agreement between the mortgagor and a tenant or who obtains title to the residential complex by foreclosure or power of sale shall be deemed to be the landlord under the tenancy agreement.
Person deemed to be landlord
(3) A person who is deemed to be a landlord is subject to the tenancy agreement and to the provisions of the Tenant Protection Act, 1997 which apply to residential complex.
Section 48
Possession
48(1) No person exercising rights under a mortgage may obtain possession of a rental unit from the mortgagor's tenant except in accordance with the Tenant Protection Act, 1997.
Section 53
Termination of tenancy [page795]
53(1) A person described in subsection 47(1) may obtain, under section 51 of the Tenant Protection Act, 1997, possession of a single family home that is the subject of a tenancy agreement in the circumstances described in this section.
[9] Section 51 of the Tenant Protection Act provides that the date for termination specified in the notice "shall be at least 60 days after the notice is given . . . and [when] the tenancy is for a fixed term, [be] the end of that term". Section 53(4) of the Mortgages Act provides that the notice "may be effective at least sixty days after it is given regardless of any fixed term of tenancy".
[10] If there is any conflict between these two provisions, s. 46(1) of the Mortgages Act and s. 2(4) of the Tenant Protection Act read together resolve it by providing that if any provision of the Tenant Protection Act is in conflict with a provision of another Act, the provision of the Tenant Protection Act shall apply.
[11] Under s. 53(6) of the Mortgages Act the notice to be given by a mortgagee in possession "may be the same as the form used under s. 51 of the Tenant Protection Act, 1997 except that it shall be modified to indicate that the mortgagee is obtaining possession on behalf of a purchaser . . .". That form, which is the form which was served on the tenant in the present case, has a heading "IMPORTANT INFORMATION" under which it is stated: "The termination date cannot be earlier than 60 days after the date the landlord gives the tenant this notice. Also the date must be the last day of the rental period or, if the tenancy is for a fixed term, the last day of the fixed term".
[12] The requirement that the notice given correspond with the end of term in the case of a fixed term tenancy is consistent with the overriding policy of the Tenant Protection Act, which is to provide security of tenure for tenants, and the clearly expressed legislative intent that the provisions of the Tenant Protection Act override the provisions of any other Act with the sole exception of the Human Rights Code, R.S.O. 1990, c. H.19.
[13] To adopt the view urged by the appellant that a mortgagee in possession who sells a single family dwelling can on behalf of a purchaser terminate any lease with a 60-day notice would produce serious anomalies. It would place the mortgagee acting on behalf of a purchaser in a better position than the purchaser himself would be in once his purchase is completed, in a better position than a personal mortgagee would be in should he wish to occupy the premise[s] with his own family instead of selling and making an application on behalf of his purchaser, and in a better position than any ordinary owner wishing to occupy tenanted property by himself and his family. All of such somewhat [page796] similarly situated people could only recover possession at the end of a fixed term tenancy.
[14] More telling is the fact that if the appellant is correct, it would permit a mortgagee in possession applying on behalf of his purchaser to deprive a tenant of his lease without compensation and with no legal recourse even if the lease were executed and registered prior to the mortgage and, apart from s. 53(4) of the Mortgages Act, would enjoy priority over the mortgage on ordinary legal principles quite apart from the Tenant Protection Act.
[15] Since the cases referred to in the decision of the tribunal all predated the enactment of s. 2(4) of the Tenant Protection Act in its present form, it may not be necessary for purposes of this appeal to decide whether such cases were rightly decided under the law as it then stood. The anomalies we have noted, however, invite a reexamination of the proper interpretation of s. 53(4) of the Mortgages Act.
[16] The starting point for such an examination is s. 51 of the Tenant Protection Act, which provides that a landlord seeking to obtain possession of rental premises for occupation by himself or his family may give a notice of termination. Subsection 2 provides that "The date for termination specified in the notice shall be at least 60 days after the notice is given and shall be the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term." This 60-day period corresponds with the 60-day normal termination notice periods set out in s. 47 of the Tenant Protection Act for monthly and yearly tenancies. It is however longer than the 28-day period specified in s. 47 for daily or weekly tenancies. In the case of tenancies for a fixed term, s. 47 provides that the termination date specified is the "expiration date [of the] tenancy agreement".
[17] Thus the effect of s. 51 of the Tenant Protection Act is to extend to 60 days from 28 days the notice required to end a daily or weekly tenancy.
[18] Since the clear purpose of s. 53 of the Mortgages Act is to assist mortgagees in possession or mortgagees who have obtained title by foreclosure or sale to sell the mortgaged premises, we should consider what the position of such a mortgagee would be if s. 53 did not exist. Under s. 47 of the Mortgages Act he is deemed to be a landlord and would also as owner be a landlord as defined in s. 1 of the Tenant Protection Act. If the mortgagee landlord was a natural person he could serve a notice of termination under s. 51 of the Tenant Protection Act to obtain possession for his family. The date of termination would have to comply with s. 51(2) of the Tenant Protection Act. [page797]
[19] If, however, the mortgagee landlord has entered into a binding contract to sell the dwelling and wishes to give possession to the purchaser on closing, s. 51 of the Tenant Protection Act would not assist him. Since he would not be seeking to occupy the premises by himself or his family he could not serve a notice under that section. Similarly the person purchasing the property would not become the tenant's landlord until the sale closed and therefore could not serve a notice of termination under s. 51 of the Tenant Protection Act until the sale closed.
[20] Many prospective purchasers of single family homes would not buy them if they could not get occupancy on closing and had to commence proceedings under s. 51 of the Tenant Protection Act after closing to obtain occupancy and possession.
[21] Section 53 of the Mortgages Act solves the problem. Under that section the mortgagee vendor is permitted to apply under s. 51 of the Tenant Protection Act on behalf of his purchaser. This enables the landlord to serve a notice of termination of tenancy on behalf of the purchaser provided the purchaser will occupy the unit by himself or family.
[22] Clearly s. 53 of the Mortgages Act confers a considerable benefit on mortgagees and purchasers from them who wish to occupy a single family dwelling as their family home. It is the position of the appellant on this appeal that s. 53 and particularly s. 53(4) gives them a further benefit: the right to terminate the fixed term lease of a tenant before the end of the fixed term.
[23] In assessing this claim, two general sections of the relevant Acts may be noted:
Section 39(1) of the Tenant Protection Act reads:
39(1) A tenancy may be terminated only in accordance with this Act.
Section 47(1) of the Mortgages Act reads:
47(1) A person who becomes a mortgagee in possession of a mortgaged residential complex which is the subject of a tenancy agreement between the mortgagor and a tenant or who obtains title to the residential complex by foreclosure or power of sale shall be deemed to be the landlord under the tenancy agreement.
(3) A person who is deemed to be a landlord is subject to the tenancy agreement and to the provisions of the Tenant Protection Act, 1997 which apply to residential complex.
[24] A residential complex as defined in the Act includes a building in which one or more residential units are located.
Section 48 of the Mortgages Act reads: [page798]
48(1) No person exercising rights under a mortgage may obtain possession of a rental unit from the mortgagor's tenant except in accordance with the Tenant Protection Act, 1997.
[25] Thus s. 47(2) makes it clear that a mortgagee landlord is subject not only to the Tenant Protection Act but also to the tenancy agreement. A tenancy agreement, all the terms of which are being complied with by a tenant in occupation during that fixed term, cannot be terminated before the end of that term under any provision of the Tenant Protection Act. There is simply no provision anywhere in the Act for doing so.
[26] What then should one make of s. 53(4) of the Mortgages Act, which says:
53(4) The notice of termination may be effective at least sixty days after it is given regardless of any fixed term of tenancy.
[27] This section of the Mortgages Act, in specifying that the notice may be effective at least 60 days after it is given, parallels s. 51 of the Tenant Protection Act, which also provides that the date for termination shall be at least [60 days] after the notice is given. But s. 51(2) goes on to say that the date of termination shall be "the end of the term". The Mortgages Act does not deal with the issue of what the date of termination specified in the notice of termination must be. It simply provides that any notice in order to be effective as a notice (and regardless of what termination date is specified) must be given at least 60 days before such date. Thus the date of termination is not dealt with by s. 53(4) of the Mortgages Act at all and that date is governed by the explicit provisions of the Tenant Protection Act, which as provided in s. 48(1) of the Mortgages Act is the only Act under which a mortgagee can obtain possession.
[28] Clearly the words "regardless of any fixed term of tenancy" are not easy to explain. It may be that they were inserted simply to make clear that a mortgagee acting under s. 53(4) had to give 60 days' notice even if s. 47 of the Tenant Protection Act would require only 28 days' notice in the case of a weekly or daily tenancy. Section 51 of the Tenant Protection Act, as we have seen, is to the same effect. It may also have been inserted to make clear that if the fixed term would terminate 90 days after the notice but not 90 days after the purchaser would move in, that the notice could be effectively given even though given "on behalf of the purchaser".
[29] In any event, for the reasons given, s. 53(4) of the Mortgages Act does not permit a landlord acting under s. 53(4) of the Mortgages Act to terminate a fixed term tenancy other than at the end of that fixed term.
[30] The appeal is dismissed. [page799]
[1] A. CAMPBELL J. (dissenting): -- The facts are set out in the judgment of McNeely J. and E. Macdonald J. For the following reasons, I respectfully disagree with their conclusions.
[2] In the first place, the Superior Court in Royal Bank of Canada v. Cheung, [1993] O.J. No. 1998 (Quicklaw) (Gen. Div.) (Farley J.) and Premier Trust v. Heckhausen, [1993] O.J. No. 3137 (Quicklaw), 37 R.P.R. (2d) 165 (Gen. Div.) (Greer J.) make it clear the specific remedies in the Mortgages Act such as the one in question here are not overridden by the Landlord and Tenant Act. The same reasoning is implicit in Toronto Dominion Bank v. Lee, [1995] O.J. No. 1190 (Quicklaw) (Gen. Div.) (Ferguson J.). As Farley J. said in Royal Bank:
Clearly the legislature contemplated that a mortgagee in this position would be able to obtain possession at a time before the end of a fixed term of tenancy.
[3] In the second place, the tribunal erred in distinguishing these cases under the false assumption that there was no provision, in the Landlord and Tenant Act under which they were decided, corresponding to the paramountcy provision reflected in s. 2(4) of the present Tenant Protection Act, 1997, c. 24. The tribunal said this:
There was no corresponding provision in the Landlord and Tenant Act under which the cited cases were decided.
[4] In fact there was a corresponding provision and the tribunal was wrong. Section 80 of the Landlord and Tenant Act, R.S.O. 1990, c. L.7 provided:
80(1) This Part applies to tenancies of residential premises and tenancy agreements despite any other Act or Parts I, II or III of this Act and despite any agreement or waiver to the contrary except as specifically provided in this Part.
[5] In the third place, enactment of s. 2(4) of the Tenant Protection Act changed nothing. It provides:
2(4) If a provision of this Act conflicts with a provision of another Act, other than the Human Rights Code, the provision of this Act applies. 1997, c. 24, s. 2.
[6] Although the words are different, nothing in those words suggests an intention to repeal the settled legal understanding, reflected in the Superior Court jurisprudence, that the remedies in the Mortgages Act mesh with and do not conflict with the provisions of tenant protection legislation. Nothing in the words of s. 2(4) or any other provision of the Tenant Protection Act purports to repeal the specific provisions of s. 53(4) of the Mortgages Act [page800] or the paramountcy provision of s. 46(1) of the Mortgages Act, which provides:
46(1) In the event of a conflict between this Part and any other provision of this Act or any other Act, this Part prevails unless the provision or the Act states that it is to prevail over this Part.
[7] Nothing in the words of s. 2(4) or any other provision of the Tenant Protection Act purports to repeal the overriding principle that when two statutes apply to the same subject matter, and both contain paramountcy provisions such as s. 46(1) of the Mortgages Act and s. 2(4) of the Tenant Protection Act, the general operative provisions (in this case of the Tenant Protection Act) do not prevail over the specific operative remedies (in this case s. 53(4) of the Mortgages Act).
[8] If the legislature intended any of these drastic results it would have expressed its intention directly instead of leaving it to the courts to read such intention into the new legislation through the parsing of parallel paramountcy provisions.
[9] In the fourth place, in the absence of any intervening appellate authority or statutory enactment, a stable body of judicial authority under which people have ordered their lives and their businesses should not be changed lightly. Legal stability should not be lost simply because a later court harbours doubts that the earlier cases were rightly decided or discovers anomalies which invite reexamination of the settled question. If the settled law is to be overruled it is the task of the Court of Appeal to do so, not the task of the tribunal or this court. To hold otherwise is to destabilize the economic relationships under which mortgagors are enabled to finance their property.
[10] The mischief of such instability is demonstrated by the fact that a later panel of the tribunal in Laurentian Bank of Canada v. Martinez (January 23, 2002, S.R. Senis) came to the opposite result and held that the settled line of Superior Court authorities is still in effect. In the result no one knows where they stand, neither tenants nor prospective purchasers nor mortgagees nor mortgagors. The only way to dispel this cloud of uncertainty is to allow the appeal and restore the settled order of things until the Legislative Assembly or the Court of Appeal says otherwise.
[11] I would therefore allow the appeal, set aside the order, and give effect to the notice to terminate.
Appeal dismissed.