Citation: Schwartz v. Fuss, 2021 ONSC 1159

DIVISIONAL COURT FILE NO.: 487/20 DATE: 20210215

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

ISRAEL SCHWARTZ Moving Party/Respondent

– and –

GLENNA FUSS and STEVE FUSS Responding Party/Appellant

Counsel: Elloit Birnboin for the Moving Party Steven and Glenna Fuss on their own behalf

HEARD at Toronto (by videoconference): February 11, 2021

BEFORE: PENNY J.

Overview And issues

[1] This is a motion by the Landlord, Schwartz: a) for an order requiring payment by the Tenants, the Fuss’, of all arrears of rent and ongoing rent as a condition of maintaining the statutory stay of eviction enforcement against them pending their appeal of orders of the Landlord and Tenant Board to this Court; and, b) for an order for security for costs of $20,000 payable by the Tenants pending the outcome of their appeal. In oral submissions, counsel for the Landlord reduced the ask for security for costs to the $10,000 – $15,000 range.

[2] Thus, the issues for determination by this Court are whether to make an order for the payment of arrears and ongoing rent pending the Tenants’ appeal, and whether to make an order against the Tenants for security for costs.

[3] For the reasons that follow, I find that an order shall issue requiring the payment of specified arrears of rent and ongoing rent. I find that no order for security for costs shall issue.

Background

[4] The Landlord is the owner of the rental unit. The rental unit is a house. The Tenants are husband and wife. They live in the rental unit with their two children. The lease began in August 2015. The lease requires the Tenants to pay monthly rent, in advance, of $5,208.43.

[5] There is a lengthy and involved history to these proceedings. For purposes of this motion, it is sufficient to focus on the following key events.

[6] The Tenants’ began having problems keeping current with their rent in August 2019. By October 2019, the Landlord had filed proceedings with the LTB to terminate the Tenants’ tenancy and to evict them for persistent non-payment and late payment of rent. The Landlord and the Tenants entered into a consent order which was issued by the LTB. The consent order required the Tenants to pay the Landlord rental arrears according to an agreed schedule; make monthly rent payments on time and in full; and, to pay any new arrears and NSF fees and related charges that became owing. The consent order further provided that the Landlord could collect the entire outstanding balance if the Tenants failed to make payments in accordance with the payment schedule and that, in the event of default, the Landlord could apply, without notice, to the LTB for an order terminating the tenancy and evicting the Tenants.

[7] The Tenants’ requested a review of the Consent Order. Their request was denied by the LTB in November 2019.

[8] There were further defaults by the Tenants and further proceedings for eviction brought by the Landlord. Under the terms of the consent order, the Landlord sought, without notice, and was granted an eviction order. At a subsequent hearing before the LTB in January 2020, the Tenants staved off eviction by bringing to the hearing bank drafts to pay the balance owing to the Landlord. The Tenants also represented they had the money to pay the February 2020 rent in full and on time. As a result, the LTB granted the Tenants’ motion to set aside the without notice eviction. The consent order remained in full force and effect.

[9] Despite the Tenants’ assurances that they would pay February 2020 rent in full and on time, the Tenants were late in paying February rent once again. The Tenants maintain that the February rent was only half a day late. In any event, under the consent order the Landlord again obtained from the LTB an eviction order without notice. This order required the Tenants to move out of the rental unit by March 16, 2020, failing which the Landlord could seek enforcement.

[10] The Tenants moved before the LTB, once more, to set aside the March 5, 2020 eviction order. The Tenants’ motion was denied by order of the LTB issued on September 28, 2020. The Landlord was entitled to file for enforcement as of October 27, 2020.

[11] The Tenants filed a request to review the September 28, 2020 order. On October 28, 2020, the LTB issued an order denying the request for review and confirming the order of September 28, 2020.

[12] On November 6, 2020, the Tenants served and filed a Notice of Appeal to the Divisional Court. Under rule 63.01(3) of the Rules and s. 25 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, the delivery of the Notice of Appeal automatically stayed the LTB orders pending disposition of the appeal.

[13] As of the date of this motion, the Landlord claims the Tenants are in arrears of rent in the amount of $24,241.23. This includes a credit for what the Landlord says is the only payment made since September; a payment of $3,000 made in December. The Tenants claim they made a second $3,000 payment more recently which is not reflected in the Landlord’s statement, although there was no evidence before me to support this claim. The Tenants otherwise do not dispute the amount outstanding an account of arrears of rent. Even on the Tenants’ version of events, therefore, since September, the Tenants were required to pay $26,042.15 (5 x $5,208.43) and have paid only $6,000, (this does not include additional arrears of $1,199.08 that were owing at the end of September).

Analysis

Payment of Rent Pending Appeal

[14] It is well settled that unjustified non-payment of rent while under the purported protection of the statutory stay of enforcement of LTB orders pending appeal, can be regarded as an abuse of process and is otherwise sufficient grounds to warrant the lifting of the stay. There is no authority, statute or regulation that permits a residential tenant to withhold ongoing rent pending an appeal. As the Divisional Court stated in Sivakova v. Timbercreek Asset Management, 2016 ONSC 281 at para. 4, “[a] tenant is not entitled to live in a rental unit free pending an appeal”.

[15] The Divisional Court may quash an appeal in circumstances where the appeal is manifestly devoid of merit or if it is an abuse of process, Solomon v. Levy, 2015 ONSC 2556 (Div. Ct.).

[16] The Tenants do not dispute their monthly rent obligations nor, subject to the disputed “second payment” of $3,000 since the end of September, do they dispute the amount owing. The Tenants claim that they are temporarily short of cash because the pandemic has interrupted their plans to develop a business. They say they are on the verge of a turnaround and will shortly be in position to make good on all their obligations, including to the Landlord. However, the Tenants has been making this assurance, in one form or another, since August 2019. They have repeatedly been given the opportunity to make good on the rental obligations and have repeatedly failed to make timely payments. The Landlord is not a bank or an investor in the Tenants’ nascent business plans.

[17] Of importance as well, is that, when push comes to shove and the Tenants are on the brink of eviction, they seem to have managed, one way or another, to come up with their arrears and to stave off disaster. That is, until they filed their appeal of the LTB’s orders in November and, for the first time, enjoyed a stay of eviction proceedings against them. Rent has not been paid in respect of October, November and December 2020 or in respect of January and February 2021. The Tenants, in addition, admitted in oral submissions that one of the reasons they cannot pay rent is because of discretionary commitments to others, including family members. I infer from these undisputed facts that the Tenants are simply using the circumstance of the automatic stay to abandon their obligations to the Landlord altogether.

[18] I have no doubt that the Tenants are under constrained financial circumstances and that, with two children, they do not want the disruption of moving to more affordable premises. However, the most fundamental of tenant obligations is the payment of rent. The Tenants have offered no reasonable excuse for the non-payment of their rent. They have offered no concrete assurances on this motion that they will ever be able to make good on their obligations or, if so, when. In this case, the Tenants have not yet even perfected their appeal. The Tenants’ failure to pay rent for the last five months, in these circumstances, amounts an abuse of process. They are, in my view, “gaming” the system to live rent free under the protection of a statutory stay.

[19] For these reasons, I order that the Tenant pay outstanding arrears of $20,042.15 (this is without prejudice to any Landlord claims for other arrears, interest or other charges or expenses) by February 28, 2021 and to pay $5,208.43 on the first day of March 2021, and on the first day of each month thereafter, until their appeal is disposed of.

[20] I also order that the Tenants perfect their appeal by March 15, 2021. If there are still transcripts outstanding, the Tenants’ shall file an affidavit explaining what necessary transcripts are missing and why they have been unable to obtain them on a timely basis. The parties shall attend before Favreau J. for a case management conference if there are any further problems arising out the perfection of the appeal or with obtaining the earliest available date for the hearing of the appeal.

[21] Finally, I order that if the payments referred to above are not made in accordance with this endorsement, the Landlord may move, without notice to the Tenants, before the Divisional Court registrar on evidence proving the Tenants’ non-compliance, and the registrar shall order that the stay be lifted.

[22] I make no order to the sheriff in respect of the moratorium on evictions under Ontario Regulation 13/21 passed in accordance with the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9.

Security for Costs

[23] An order for security for costs is a discretionary remedy. A relevant factor is always the justice of the case. I have found that, in the circumstances of this case, the Tenants’ must pay their rent (from October to February, and on an ongoing basis) as a precondition to enjoying the protection of the statutory stay against enforcement of the LTB’s eviction orders pending appeal. That order is founded on the fundamental obligation of tenants to pay rent if they wish to remain in exclusive possession of their rental unit. The same cannot be said of security for costs; there is no fundamental entitlement. It is clear that the Tenants’ have financial constraints. I am not prepared to burden the Tenants’ further with an anticipatory order as to costs, particularly where it may impair their ability to make good on the more fundamental obligations to the Landlord to make rent.

[24] The motion for an order for security for costs is dismissed.

conclusion

[25] For these reasons, the Landlord’s motion is granted in part. The terms of my order are:

(a) the Tenants shall perfect their appeal no later than March 15, 2021. If there are still transcript issues, the Tenants’ shall file with their Appeal Record an affidavit explaining what transcripts are outstanding and why they have been unable to obtain them on a timely basis;

(b) payment of $20,042.15 outstanding rent by February 28, 2021;

(c) ongoing monthly payment of $5,208.43 on March 1, 2021 and on the first of the month thereafter until the appeal is disposed of;

(d) if the Tenants do not pay the rent as ordered, the Landlord may move without notice before the Divisional Court registrar on affidavit evidence demonstrating the Tenants’ non-compliance. In that event, the registrar is directed to lift the stay of the Board’s eviction order; and

(e) the motion for security for costs is dismissed.

Costs

[26] The Landlord was only partially successful. While distributive costs orders are to be avoided, partial success is a legitimate factor when determining quantum. Costs to the Landlord of $2,500.

___________________________ Penny J.

Released: February 15, 2021

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

REASONS FOR JUDGMENT

J.

Released: