CITATION: Jegasundaram v. Malhotra Holdings Inc. 2021 ONSC 4144

DIVISIONAL COURT FILE NO.: 210/20

DATE: 20210608

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: DIVYA JEGASUNDARAM and RUPASUNDAR JEGASUNDARAM, Appellants

AND:

MALHOTRA HOLDINGS INC., Respondent

BEFORE: Penny J.

COUNSEL: Joga S. Chahal, for the Respondent Moving Party

Mr. Jegasundaram on his own behalf

ENDORSEMENT

[1] This is a motion to quash an appeal from a decision of the Landlord and Tenant Board dated August 5, 2020. In the LTB decision, Member Randy Aulbrook found that the appellants and respondent were in a landlord/tenant relationship, ordered termination of the tenancy on the basis of non-payment of rent and, subject to certain conditions involving paying all arrears of rent by a date certain, ordered enforcement of the order by means of eviction.

[2] In a Divisional Court case management endorsement of April 30, 2021, the Court ordered that the respondent’s motion to quash be heard by a single judge of the Divisional Court on June 4, 2021, “a date that is peremptory for the appellant”. The Court also made an order that rent be paid for the months of April, May and June. The Court further ordered that “failure to make these payments as directed may be a basis relied upon by the moving party on the motion to quash returnable on June 4, 2021”.

[3] The appellant has a mortgage on the rental property. The owner (the former landlord, a man named Krish Vadivale)) went into default on the mortgage. As a result of mortgage enforcement proceedings, by the respondent, Vadivale gave up possession of the property to the respondent, which then became the landlord by operation of s. 47 of the Mortgages Act. The appellants were, and remain, in occupation of the property.

[4] The respondent commenced proceedings against the appellants before the LTB for non-payment of rent. The appellants’ defence was that, under a “rent to own” agreement, they were in fact owners of the property with an equity interest, not tenants.

[5] The LTB found otherwise. Even accepting the potential for an equity interest, the LTB found, interpreting the purported “rent to own” agreement, that it stipulated two forms of payment: $1,522.50 per month for “rent” and $2,844.24 per month as a “purchase reserve” fund to be held in trust by the owner/former landlord. Claims in relation to funds advanced to Vadivale as a purchase reserve were not within the jurisdiction of the LTB and were only properly advanced in civil proceedings against the former landlord. The LTB also considered evidence that Vadivale had, at the appellants’ request, issued a receipt for “rent” on at least one occasion. The LTB also considered s. 202 of the Residential Tenancies Act, requiring the LTB to ascertain “the real substance” of all transactions and activities relating to a rental unit. Rent arrears owing on August 4, 2020 totaled $22, 725.87.

[6] The notice of appeal, which is the only document other than the LTB’s decision before me on this motion, baldly states only that: a) the appellants were denied natural justice because unspecified evidence was not considered and an adjournment request was refused; and, b) the appellants were owners of the property “in all but name”.

[7] The notice of appeal was served August 16, 2020. The appeal has still not been perfected: there is no appeal record, no transcript of proceedings and no factum on the appeal. Until the April 30, 2020 endorsement of Corbett J., no rent had been paid. Total arrears, including a credit for payments made since April 2020, now exceeds $30,000.

[8] The respondent’s motion to quash is founded on the basis that: a) an appeal lies to the Divisional Court only on an issue of law and that the appellants have articulated no viable error of law in their appeal; and, b) the delay in proceeding with their appeal, combined with the lengthy period of non-payment, shows that the appeal is an abuse of process.

[9] The respondent candidly concedes that the appellants have paid rent since April 30, 2021 as ordered by Corbett J. However, the motion schedule for June 4, 2021 was specifically ordered by Corbett J. to be peremptory to the appellants. This was on the basis that there had already been two adjournments of the respondent’s motion (at the appellants’ request) and numerous attendances before Corbett J. in connection with case management. In spite of Corbett J.’s order, the appellants filed no material on the motion, have not advanced the perfection of their appeal and, once again, sought an adjournment on the basis that, although they had a new lawyer, he was “busy” on June 4 and could not attend. Even this explanation was, I hasten to add, completely unsupported by any affidavit or other evidence of any kind. I denied the appellant’s request for an adjournment on this basis.

[10] The notice of appeal, on its face, discloses no error of law. Although denial of natural justice, if proved, could qualify as an error of law, the record before me is devoid of any particulars which could possibly rise to the level of a legal error. The claim that the appellants were owners, not tenants, is conclusory in nature and, again, is, without more, incapable of constituting a legal error. In any event, the essence of the LTB decision involves the interpretation of the purported rent to own agreement. It is clear since Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633, para. 50, that the interpretation of an agreement is a question of mixed fact and law. No appeal lies from the LTB on a question of mixed fact and law.

[11] Further, there has been no satisfactory explanation of the delay in perfecting the appeal or the lengthy period of non-payment of rent. The appellants say they were concerned that, if they paid “rent” it would undermine their claim against Vadivale for ownership of the property. I cannot accept that argument. In the face of the respondent’s claims and the LTB decision, the appellants could easily have (and should have) paid to the respondent the rent owing for occupation of the property without in any way prejudicing their civil claims against Vadivale based on their alleged purchase reserve payments.

[12] In any event, as Corbett J. noted in his April 30 endorsement, the appellants have actually more rights to remain in the premises as tenants that they would as “owners”. In mortgage enforcement proceedings, the lender is prima facie entitled to vacant possession as against the owner of the property on which the mortgage is registered. That is not the case when the mortgagee becomes a landlord and the occupant is a tenant.

[13] The appellants claim to have arranged financing to “buy out” the respondent’s mortgage but cannot close the deal because they do not have clear title. That may be so, but the appellant’s dispute with Vadivale is no excuse for their failure to meet their obligations to the respondent under their tenancy arrangement. If they can arrange hundreds of thousands in potential financing, why can they not raise $30,000 to fulfill their obligations to the respondent?

[14] For these reasons, the motion is granted: the appeal is quashed.

[15] The respondent sought full indemnity costs of $26,000. While I appreciate there were two prior adjournments and several more brief teleconferences with the case management judge, I do not think full indemnity costs are warranted. The amount in issue is about $30,000; proportionality is a significant factor. Costs are awarded to the respondent in the amount of $7,500 inclusive of all fees, disbursements and applicable taxes.

[16] The LTB granted the appellants a “redemption” period during which they could, by paying all arrears and associated costs, bring their tenancy into good standing and avoid termination and eviction. Notwithstanding the lengthy period of non-payment, the appellants have, since April 30, 2021, paid monthly rent. In the circumstances, enforcement of the LTB’s order is stayed until July 30 subject to the condition that the July monthly rent is paid promptly on or before July 1. Failure to make this payment will end this temporary stay immediately without further order of the Court, subject only to filing with the Divisional Court Registrar, to my attention, an affidavit of non-compliance.

[17] If, by July 30, full payment of all arrears of rent to July 30, 2021, as calculated by the order of the LTB, together with costs ordered by the LTB and this Court, is not made, the temporary stay will come to an end, again without further order of the Court, subject only to filing with the Divisional Court Registrar, to my attention, an affidavit of non-compliance.

[18] In the event the required payments outlined above are not made in full, the enforcement measures ordered by the LTB shall come into full force and effect.

Penny J.

Date: June 8, 2021