Helberg Properties Limited v. Caldwell, 2015 ONSC 7863

CITATION: Helberg Properties Limited v. Caldwell, 2015 ONSC 7863

DIVISIONAL COURT FILE NO.: 579/14

DATE: 20151214

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SACHS, WILTON-SIEGEL AND MULLIGAN JJ.

BETWEEN:

HELBERG PROPERTIES LIMITED Applicant Landlord (Respondent in Appeal)

– and –

MARGOT CALDWELL Respondent Tenant (Appellant)

-and –

MICHAEL BELL, DAVID BERALD, EDA BILGIN, ERAY BILGIN, JAMES BURBIDGE, ABIR ABOU CHAKRA, DAVID W. CHAPMAN, PETER CHAPMAN, HARRY COCHRANE, JEREMIAH J. DARCY, DAVID ELLIS, DERRICK FORDE, CYNTHIA FOSBERG, KENNETH JOHN FRENCH, SARAH GRAHAM, ANDREW HAMILTON, MARGARET HANCOCK, HEATHER LYNNE HAWLEY, VIOLET FRAY HIBBE, SHIRLEY SLEPAK JAMES, MARY ELLLEN KEAMS, NATASHA KELEHER, VLADISLAV KIRUSHEV, SOHEE KONG, MONICA KOWALSKI, TERRY LEE, YEWON LEE, MICHAEL LEVE, GEORGETTE LEVEY, MARILYN MAHOOD, KELLY MARR, JWALANT MISTRY, ERNEST MORRISON, PATRICIA MUMM, BRUCE PHILP, JEREMY PIGOTT, SHEREE PORTER, ALEXANDRA PUHACH, RUTH PUHACH, ROBERT RANDY, RONA L. REID, PIRKKO SAARI, LILLIAN SHAPKO, DEBBIE SKIBINSKI, EULA SOLAN, SEAN SPARROW, SUAN D. TEBBUTT, MIKE TUER, DOLLY TULAGAN, MARY WOODS, PATRICK WOODS, PETER WOOODS Respondent Tenants (Respondents in Appeal)

Patrick J. Harrington, for the Applicant Landlord (Respondent in Appeal)

Jeff A. Carolin, for the Respondent Tenant (Appellant)

HEARD at Toronto: December 14, 2015

WILTON-SIEGEL J. (ORALLY)

[1] In this proceeding, the appellant Margot Campbell (the “Appellant”) appeals a decision of Member Savoie (the “Member”) of the Landlord and Tenant Board (the “Board”) dated November 17, 2014 granting the application of the respondent landlord, Helberg Properties Limited (the “Respondent”) for an above-guideline rent increase (the “Decision”).

Background

[2] The Appellant is a tenant residing in Unit 504 at 1220 Bayview Avenue (the “Building”), in which there are 48 units in total. The Respondent is the landlord of the Building. The non-participating respondents are other tenants in the same building. The Respondent made two applications to the Board seeking approval of rent increases above the guideline amounts as required by the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “Act”). Both increases were approved. The Appellant appeals the second approval.

The First Application

[3] In 2010, the Appellant undertook repairs and renovations for the Building to correct municipal code violations under the Building Code Act, S.O. 1992, c. 23 (the “Code”) brought to its attention by the City of Toronto in work orders issued on February 24, 2010. The work was completed by June 18, 2012 ( the “first repairs”).

[4] The Appellant submitted an application on July 24, 2012, seeking to increase rent for 40 of the 48 units (the “2012 Application”). The total capital expenditure claimed was $138,972.21, of which $48,048.28 was for balcony/terrace deck repairs and $7,887.40 was for balcony glass panels. This application was settled by an agreement on consent to a 1.65% rent increase above the guideline, which agreement was the subject of an order of the Board issued January 9, 2013 (the “2012 Decision”). The useful life was set at 10 years for most of the work and at 15 years for the balcony glass panels.

The Application Under Appeal

[5] By August 2012, the Appellant had begun a second round of repairs for the balcony and railings. The work was completed by February 4, 2013 (the “second repairs”).

[6] The Respondent filed the current application on January 29, 2014, seeking to increase rent for 42 units, 35 of which had also been named in the 2012 Application (the “2014 Application”). The second repairs claimed involved $367,363.56 for balcony repairs and $27,452.79 for roof anchors to assist in the balcony repair work. Based on evidence before the Board, the balcony repair work included removal of the rail assembly on the balconies; restoration of the physical integrity of the concrete balcony slabs; application of a protective coating to the concrete; and installation of new railings.

The Decision

[7] The Member allowed the application and ordered a 7.37% rent increase over three years that would remain in place for the useful life of the work, set at 12 years (the “Decision”).

[8] Before the Member, the Appellant submitted to the Member that the portion of the application based on capital expenditures incurred in balcony repairs should be dismissed because: (1) the Respondent had previously obtained an order for an above guideline rent increase based on balcony repairs in the 2012 Decision (the “issue estoppel” argument); and (2) the work was substantially cosmetic in nature and thus failed to meet the definition of a “capital expenditure” in Ontario Regulation 516/06 (the “Regulation”) (the “cosmetic work” argument). The Appellant did not dispute the Respondent’s submissions on the roof anchors.

[9] The Member found that both the balcony repairs and the roof anchors were capital expenditures under the definition of the Regulation that justified an above guideline increase in rent.

[10] The Member dismissed the issue estoppel argument based on the evidence before the Member that the work in the 2014 Application is not the same as the work that was the subject of the 2012 Application.

[11] The Member then dismissed the cosmetic work argument based on evidence that the work was necessary to ensure the integrity of the concrete balcony slabs and address the rusting railings.

Jurisdiction of the Court

[12] Pursuant to s. 210 of the Act, a party may appeal an order of the Landlord and Tenant Board to the Divisional Court, but only on a question of law.

Standard of Review

[13] As discussed in greater detail below, the Appellant submits that the Board erred in three respects in reaching the Decision – failing to apply the correct test, failing to set out its legal analysis in reaching a key holding, and failing to consider certain evidence. It submits that each of these errors is an error of law that is reviewable on a standard of correctness. The Appellant argues that these failures are not matters within the core expertise of the Board and therefore do not attract deference.

[14] The Respondent submits that, in reaching the Decision, the Board was required to interpret its home statute and, accordingly, the Decision should be reviewable on a standard of reasonableness.

[15] We are of the opinion that the Decision is reviewable on a reasonableness standard in accordance with the principles articulated by the Court of Appeal in First Ontario Realty Corporation Ltd. v. Deng, 2011 ONCA 54. As in that decision, the Member was required to interpret the Board’s home statute, the Act, and make determinations with respect to its core functions.

Issues on the Appeal

[16] The Appellant argues that the Member committed three errors in reaching the Decision:

(i) the Member erred in law by failing to determine whether the capital expenditures were eligible capital expenditures within the meaning of s.126(7) of the Act;

(ii) the Member erred in law by failing to provide a more detailed analysis supporting his conclusion that the expenditures were necessary; and

(iii) the Member erred in law by failing to address key evidence related to the 2012 Application and, in particular, how the 2012 Application impacted his decision on the application under appeal.

Analysis and Conclusion

[17] We do not agree for the following reasons which address these arguments in turn.

[18] First, an eligible capital expenditure is defined for present purposes in paragraph 126(7)(a) as a capital expenditure that is necessary to protect or restore the physical integrity of the residential complex or part of it. According to the Appellant, the Board failed to consider whether the capital expenditures at issue were necessary to the physical integrity of the Building. This submission must fail. Reading the Decision as a whole it is clear that the Member turned his mind to the applicable legal test and applied it to the facts before him.

[19] In particular, the Member expressly described the second repairs as restoration of the physical integrity of the balcony slabs and railings in paragraphs 3, 10, 11, and 12 of the Decision. In paragraph 14, the Member then expressly concluded:

While a capital improvement has an inherent cosmetic component in that the new balconies and railing would have a more "cosmetically pleasing appearance" than the old rusted, deteriorating ones that they replaced, the test that must be applied is whether the work [is] "substantially cosmetic" in nature. Based on the evidence before me, I do not find that to be the case in this instance. I am satisfied that the work undertaken to the balcony slabs and railings was necessary to ensure the integrity of the concrete balcony slabs and to address the rusting railings. As a result, I find that this item meets the definition of "capital expenditures" as set out in Reg 516/06.

[20] Insofar as the Appellant argues that the Member erred in finding that the second repairs did not restore the “physical integrity” of the Building, it is our view that all of the second repairs are included in the concept of “all parts of the structure” for the purposes of the definition of “physical integrity” in the Regulation.

[21] Second, the Appellant says that she does not contest the Member’s finding that she had failed to establish the requirements of issue estoppel. However, the Appellant says that the Member failed to apply the evidence relative to this finding in the Decision and his failure to do so was an error in law.

[22] We do not agree. The Member held that the capital expenditures involved in the current application were not the subject of the previous application. There was ample evidence in the record for this conclusion. Moreover, this is a factual determination that is not subject to appeal.

[23] More importantly, having reached this conclusion, there was no reason to address the factual differences between the first repairs and the second repairs in reaching his conclusion that the expenditures constituted eligible capital expenditures. Insofar as the Appellant argues that the capital expenditures were not “necessary” for the purposes of paragraph 126(7)(a) after the first repairs, this issue cannot be raised given the Member’s factual finding relative to the estoppel issue.

[24] Accordingly, the Member’s finding that this was different work together with the Member’s finding that the work was necessary to ensure the integrity of the concrete balcony slabs and to address the rusty railings is sufficient to satisfy the requirements of that provision.

[25] Lastly, taken as a whole, we are satisfied that the Member’s analysis adequately supports the conclusions reached in the Decision that the capital expenditures were necessary to protect or restore the physical integrity of a part of the Building, being the balconies and the railings, and, as such, are eligible capital expenditures for the purposes of the Act.

[26] For the reasons stated above we find that the Decision was reasonable and for these reasons, the appeal is denied.

COSTS

SACHS J.

[27] I have endorsed the back of the Appeal Book, “For reasons given orally by Wilton-Siegel J. this appeal is dismissed. The Respondent is entitled to its costs of this appeal, which we fix in the amount of $5,000, all inclusive.”

___________________________ WILTON-SIEGEL J.

SACHS J.

MULLIGAN J.

Date of Reasons for Judgment: December 14, 2015

Date of Release: January 7, 2016

CITATION: Helberg Properties Limited v. Caldwell, 2015 ONSC 7863

DIVISIONAL COURT FILE NO.: 579/14

DATE: 20151214

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SACHS, WILTON-SIEGEL AND MULLIGAN JJ.

BETWEEN:

HELBERG PROPERTIES LIMITED Applicant Landlord (Respondent in Appeal)

– and –

MARGOT CALDWELL Respondent Tenant (Appellant)

-and –

MICHAEL BELL, DAVID BERALD, EDA BILGIN, ERAY BILGIN, JAMES BURBIDGE, ABIR ABOU CHAKRA, DAVID W. CHAPMAN, PETER CHAPMAN, HARRY COCHRANE, JEREMIAH J. DARCY, DAVID ELLIS, DERRICK FORDE, CYNTHIA FOSBERG, KENNETH JOHN FRENCH, SARAH GRAHAM, ANDREW HAMILTON, MARGARET HANCOCK, HEATHER LYNNE HAWLEY, VIOLET FRAY HIBBE, SHIRLEY SLEPAK JAMES, MARY ELLLEN KEAMS, NATASHA KELEHER, VLADISLAV KIRUSHEV, SOHEE KONG, MONICA KOWALSKI, TERRY LEE, YEWON LEE, MICHAEL LEVE, GEORGETTE LEVEY, MARILYN MAHOOD, KELLY MARR, JWALANT MISTRY, ERNEST MORRISON, PATRICIA MUMM, BRUCE PHILP, JEREMY PIGOTT, SHEREE PORTER, ALEXANDRA PUHACH, RUTH PUHACH, ROBERT RANDY, RONA L. REID, PIRKKO SAARI, LILLIAN SHAPKO, DEBBIE SKIBINSKI, EULA SOLAN, SEAN SPARROW, SUAN D. TEBBUTT, MIKE TUER, DOLLY TULAGAN, MARY WOODS, PATRICK WOODS, PETER WOOODS Respondent Tenants (Respondents in Appeal)

ORAL REASONS FOR JUDGMENT

WILTON-SIEGEL J.

Date of Reasons for Judgment: December 14, 2015

Date of Release: January 7, 2016