CITATION: Pinto v. Regan and White v. Regan, 2021 ONSC 5502

DIVISIONAL COURT FILE NO.: DC-21-01241-00 and DC-21-01242-00 DATE: 20210816

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Lococo, Emery and Kristjanson JJ.

BETWEEN:

Hermina Pinto

Lesli Bisgould, Jayson Swain and Anna Rosenbluth, counsel for the Appellant

Appellant

– and –

Matthew Regan

David Williams, counsel for the Respondent

Respondent

AND BETWEEN:

Jennifer White

Lesli Bisgould, Jayson Swain and Anna Rosenbluth, counsel for the Appellant

Appellant

– and –

Matthew Regan

David Williams counsel for the Respondent

Respondent

Heard: June 28, 2021, in Oshawa, by video conference

REASONS ON APPEAL

Emery J.

[1] The appellants are tenants in the same building owned by the respondent landlord in Bracebridge, Ontario. The appellants appeal the decisions made by T. Rossignol, a Member of the Landlord and Tenant Board (the “Board”), dismissing their respective motions to set aside the eviction Orders obtained by the respondent landlord against each of them.

[2] These appeals are brought under s. 210 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “RTA”). The appeals were heard together as the eviction Orders were obtained by the respondent against each appellant under s. 77(4) of the RTA under similar circumstances and involve common principles of law.

Background

[3] The circumstances of each appellant are important to know for the disposition of these appeals.

The appellant Hermina Pinto

[4] Ms. Pinto is 80 years old. She speaks Portuguese as a first language. Although she speaks English, she was assisted at the hearing of her motion before the Board by an interpreter.

[5] Ms. Pinto had been residing in her rental unit for approximately three years, where she lives alone. On November 27, 2019, the respondent gave written notice to Ms. Pinto that he intended to enter her unit on November 30, 2019 to perform some routine maintenance. When the respondent arrived, he informed Ms. Pinto that he had purchased a neighbouring property and intended to renovate the building to build an addition on to it. As the power and water would be cut off during construction, he told her that the tenants in the building would have to move out.

[6] The respondent offered Ms. Pinto four months of free rent and the return of her final month’s rent deposit if she agreed to sign a N11 – Agreement to Terminate a Tenancy. The respondent already had this form filled out when he entered her unit. By signing the N11, Ms. Pinto agreed to terminate her tenancy as of April 1, 2020.

[7] Ms. Pinto claims that the respondent presented the agreement as the only alternative to being evicted. She was not informed about (i) her right under s. 50(2) to a termination date of at least the 120 days after receiving notice of termination, (ii) a right of first refusal under s. 53(1) to reoccupy the unit upon completion of the renovations at the same rent, and (iii) her right to compensation under s. 54(1) for three months rent while the renovations were taking place.

[8] Ms. Pinto gave evidence at the motion before the Member that she had asked the respondent if she could have more time to decide about signing the N11, and time for her son to review the form before signing. Ms. Pinto claims the respondent told her that she had to sign the N11 that day.

[9] Ms. Pinto claims that the respondent did not leave the form with her and did not let her read the form before she signed it.

[10] The respondent claims that he left the form with Ms. Pinto to review, and that he returned later that day to pick it up.

[11] Ms. Pinto signed the N11, claiming that she did so because she felt she had no choice. It was her evidence that she understood she would be terminating her lease as of April 1, 2020 by signing the agreement. However, Ms. Pinto also claims that she did not understand that she had any other choice that would have permitted her to return to her unit once the renovations were completed at the same rent. She did not know or understand that she had a choice because it was not offered to her by the respondent.

[12] The respondent brought his application under s. 77(4), without notice, on the basis that Ms. Pinto had agreed to the termination of her tenancy when she signed the N11. The Board granted the application and an eviction Order was issued against Ms. Pinto. The Member dismissed her motion to set aside the eviction Order on November 9, 2020 based on the N11.

The appellant Jennifer White

[13] Ms. White resides with her daughter in a rental unit in the building. The respondent gave written notice to Ms. White on November 27, 2019 that he intended to enter her rental unit on November 29, 2019 to perform routine maintenance. Once inside Ms. White’s rental unit, he informed Ms. White and her daughter that he would be renovating the building and they would have to move out. He offered Ms. White the same terms he would offer to Ms. Pinto the following day in exchange for signing the N11 to terminate her lease effective April 1, 2020.

[14] Ms. White claims that the respondent told her that she would not be allowed to move back into the apartment when the renovations were completed. She signed the agreement as she was under the impression that she did not have any choice but to agree. Ms. White subsequently obtained legal advice and instructed Lake Country Community Legal Clinic to send a letter one week later. In that letter, she took the position that the respondent had misrepresented the law and had pressured her to sign a one-day deal, and that she now repudiated the agreement to terminate. Ms. White enclosed the cheque the respondent had given her to return her deposit for the last month’s rent. She also enclosed a cheque for the rent due on December 1, 2019 for that month.

[15] The respondent did not respond to Ms. White. Instead, he made an application, without notice, for the Board to issue an eviction Order based on the N11 Ms. White had signed. When the eviction Order came to her attention, Ms. White brought a motion to set the eviction Order aside. The Member dismissed that motion on November 18, 2020 based on the N11.

The Orders under appeal

[16] The Member dismissed the motion of each appellant because he found they had signed the N11 and had therefore entered an agreement to terminate the tenancy. The Member concluded that the respondent was not required to give notice of termination under s. 37(3) as he found the tenant in each case had agreed to terminate the tenancy. He also found that any claim of undue influence or duress exerted at the time either appellant signed the N11 had not been established.

[17] The Member did not consider the evidence given by either appellant on each motion about the circumstances surrounding the signing of the N11. He did not review the evidence that the respondent presented each termination as necessary because of the upcoming renovations to the building, without reference to the tenant’s rights under the RTA, or the appellants belief that they had no choice but to agree when making the decision to sign the N11.

Standard of appellate review

[18] The Divisional Court has jurisdiction to hear appeals from Orders made by the Board under s. 210 of the RTA, but only on a question of law.

[19] For the purpose of these appeals, the standard of review to apply to any question of law is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 8, and Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1 at para. 37. Questions of law are generally questions about whether the correct legal test was applied, or an approach prescribed by statute was followed. In contrast, questions of fact are questions about what actually took place between the parties. Questions of mixed fact and law are questions which involve applying a legal standard to a set of facts: Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688 at para. 43, and Canada (Director of Investigation and Research) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748 at para. 35.

[20] This court had an opportunity to further expand on what constitutes a question of law on a statutory appeal in Yatar v. TD Insurance Meloche Monnex, 2021 ONSC 2507 (Div. Ct.). In that case, Kristjanson J. explained as follows, at para. 28:

On a statutory appeal limited to questions of law alone, the court considers whether the decision-maker correctly identified and interpreted the governing law or legal standard relevant to the facts found by the decision-maker. There are limited circumstances in which findings of fact, or the administrative decision-maker’s assessment of evidence, may give rise to an error of law alone for the purposes of appeal. If the adjudicator ignored items of evidence that the law required him or her to consider in making the decision, then the adjudicator erred in law: Canada (Director of Investigation and Research) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748 at para. 41. Challenges to the sufficiency or weight of evidence supporting a finding of fact do not give rise to a question of law. An error in law or legal principle made during the fact-finding exercise, however, can give rise to an extricable question of law. A “misapprehension” of the evidence does not constitute an error of law unless the failure is based on a wrong legal principle: R. v. J.M.H., 2011 SCC 45, [2011] 3 S.C.R. 197, at paras. 25 and 29. It is an error of law to make a finding of fact on a material point where the factual finding is based solely on (a) no evidence, (b) irrelevant evidence, or (c) an irrational inference (Johannson v. Saskatchewan Government Insurance, 2019 SKCA 52 at paras. 24-25).

[21] C. Boswell J. explained in Musse v. 6965083 Canada Inc., 2021 ONSC 1085, at para. 48, that an error of law also occurs where the decision maker “applies an incorrect standard, fails to consider a required element of a legal test or makes a similar error in principle.”

Issues

[22] Section 77(8) of the RTA requires the Board to apply the following test when deciding the motion of a tenant to set aside an eviction Order:

(8) If the respondent makes a motion under subsection (6), the Board shall, after a hearing, …

(b) make an order setting aside the order under subsection (4), if the Board is satisfied, having regard to all the circumstances, that it would not be unfair to do so; or

[23] The language in s. 202 of the RTA expressly mandates the Board to “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….” when making findings on an application. On the facts in these appeals, the Member was sitting on the appellants’ motions to set aside the eviction Orders obtained on the respondent landlord’s applications, made without notice to the appellants.

[24] The questions of law are therefore these:

1. Did the Member err by not applying the mandatory requirement under s. 77(8)(b) that the Board shall set aside each eviction Order if it was satisfied, having regard to all the circumstances, it would not be unfair to make that Order?

2. Did the Member err by giving no or insufficient consideration to all the circumstances when deciding whether it would not be unfair to set aside the eviction Order in each case?

3. Did the Member err by failing to consider the real substance of the transaction, or the good faith of the participants involved in the events of November 29 and 30, 2019 as required by s. 202 of the RTA?

Analysis

[25] These appeals raise questions of law that relate to the requirements the Board must follow when exercising its statutory authority to set aside eviction Orders under the RTA. The statute not only mandates what test the Board must apply on a motion to set an eviction Order aside, but how it is to fulfill its statutory function.

Fairness and the duty to consider all circumstances

[26] On a motion to set aside an eviction Order under s. 77(6), the moving party is almost always the tenant. For that reason, the determination under s. 77(8)(b) of whether it would not be unfair to set aside the Order is normally focused on the fairness to the respondent landlord. As the moving party, the tenant would logically take the position that it would be fair for the Board to make the requested order, having regard to all the circumstances.

[27] Section 77(8)(b) does not specify which party bears the onus to prove the fairness or unfairness on a motion to set aside an eviction Order. Nor does it provide that either party is to satisfy the Board that the Order to set aside an Order must not be made if making that Order would not be fair, as that would put the burden on the respondent in either case. By using the double negative, the legislature placed the onus on the tenant to satisfy the Board that, having regard to all the circumstances, it would not be unfair to make the order requested.

[28] The Member had a positive duty under s. 77(8)(b) to grant the Order on each motion if it was satisfied it would not be unfair to make that order. In order to determine whether making that Order would not be unfair, the Board was required to make its order “having regard to all the circumstances”. The broad language to consider “all the circumstances” I take to mean the factual matrix that provides the context in which the dispute between the parties arose in its widest sense. This requirement reinforces the remedial nature of the RTA and its purpose to protect tenants’ rights: Musse, at paras. 53 and 58; Honsberger v. Grant Lake Forest Resources Ltd., 2019 ONCA 44, 431 D.L.R. (4th) 1, at para. 19.

[29] If the Member made a decision on a motion under s. 77(6) without regard to all the circumstances, or by ignoring items of evidence the law required him to assess when he made findings of fact and reached conclusions, there was an error of law made: Canada v. Southam Inc., at para. 41. If the appellants can show that the Member incorrectly identified or interpreted the legal standard, failed to apply the proper test or ignored evidence he was bound to consider, he made an error of law: Yatar, at para. 28. Similarly, if the Member applied an incorrect standard than that prescribed by statute in the performance of his statutory duty, the result is an error of law: Musse, at para. 48.

[30] The essential facts for the Member to properly consider on each appellant’s motion unfolded in their respective rental units on the day each N11 was signed. The record before this court shows that there were circumstances given in evidence that would have allowed the Member to find it would not be unfair to grant their motions, had he considered all the circumstances. That evidence includes the following:

1. Neither appellant had any intention of terminating their tenancy prior to the time the respondent gained entry to their units;

2. The respondent gained access to their units by serving notice that he would be attending on site to provide maintenance;

3. The respondent presented the N11 while physically present in their rental units, and insisted that each tenant make a decision that day;

4. The respondent was told by each appellant that she required time to obtain advice before signing the N11;

5. Each appellant was led to believe she had no alternative but to sign the N11, without regard to their rights under s. 53;

6. The respondent made representations that he was offering the concessions for rent gratuitously; and

7. The respondent represented the plans for the building to require vacant possession because water and power would be cut off to renovate.

[31] The Member dealt with the unfairness issue in paragraph 26 of the Reasons in Ms. Pinto’s case, and in paragraph 21 of the reasons in Ms. White’s case, where he summarily ruled that:

a. He has considered all the evidence and submissions before him;

b. He found it would be unfair to set aside the eviction Order;

c. The landlord signed the agreement in good faith and still intends to honour the obligation to pay the Tenant what is owed under the agreement in return for vacant possession; and

d. To deny the landlord the benefit of the agreement now would be unfair.

[32] The Member reached his conclusion that it would be unfair to the respondent to set aside the eviction Orders. While he recited the evidence given by the respondent to find that the respondent has a bona fide intent to move forward with the renovations, he failed to consider whether, on the evidence of all relevant circumstances, it would not be unfair to him if the appellants were given the proper notice to exercise their rights under the RTA. For instance, he did not consider how it would not be unfair to the respondent to require him to serve each appellant with an N13 Termination notice under s. 50(1). As another example, the Member did not explain why it would not be unfair to the respondent if either appellant was given the opportunity to exercise her right of first refusal to reoccupy her rental unit under s. 53 after the renovations were completed.

[33] I conclude that the Member made an error of law when he determined that it would be unfair to set aside the eviction Order against each appellant. This was not the test he was to apply under s. 77(8)(b) of the RTA. The Member was required to determine that to make the order on the motion of each appellant would not be unfair to make, having regard to all circumstances. To compound the error, he failed to take all of the evidence regarding those circumstances into account when he made the decisions under appeal.

Application of s. 202

[34] The Member also had a duty to consider the validity of the N11 on contractual principles under s. 202 of the RTA. The appellants submit that the Member did not consider the evidence with the scrutiny required to reveal the real substance of the transaction, or whether the respondent was acting in good faith when he persuaded each appellant to terminate their tenancies by agreement. The appellants submit that the real substance of having them sign the N11 was to have them vacate the premises without having to give them the appropriate notice under the RTA that would entitle them to assert their rights under s. 53.

[35] The Member’s reasons for the Orders under appeal discuss the evidence as to whether the appellants signed the N11 in each case while under duress, or as the product of undue influence caused by their relationship with the respondent landlord. These are grounds under the law of contract to challenge the N11 signed by each appellant as an agreement.

[36] The Member framed the issue before him as being whether the N11 signed by each appellant was valid as an agreement to terminate, or if it should be set aside on the basis of duress or undue influence. The Member engaged in a legal analysis based on the facts in evidence, and whether the appellants, as the parties seeking to set aside the agreements, had met their onus. In doing so, the Member considered the definition of duress in the Dictionary of Canadian Law,2nd ed. (Toronto: Carswell, 1995) and the test in Taber v. Paris Boutique & Bridal Inc., 2010 ONCA 157. In that case, the court found that the following two elements must be shown by the party relying on duress as a defence: (i) the alleged pressure exerted on the subject was illegitimate; and (ii) pressure had been exerted to such a degree to amount to “a coercion of the will”. See also Metropolitan Toronto Housing Authority v. Bowler, [2002] O.J. No. 1729 (Div. Ct.). In the course of his reasons, the Member also referred to Geffen v. Goodman Estate, 1991 69 (SCC), [1991] 2 S.C.R. 353, as authority to consider whether the respondent was able to take unfair advantage of either appellant having regard to the landlord and tenant relationship, and if this conduct constituted undue influence over the appellants when each N11 was signed.

[37] The appeals did not focus on whether the Member applied the principles of substantive law to make his decision on either motion, or the manner in which he applied those principles to the facts. Those questions would involve errors that were inextricably question of law and fact, or a misapprehension of the evidence that would place them beyond the statutory limits of appellate review for this court. Instead, the appeal concentrated on the principles the Member was required to apply under the RTA, and the manner in which he was to apply them.

[38] The facts on each appeal suggest that the respondent’s intention to obtain vacant possession of each unit on a permanent basis without having to give notice to each appellant under s. 50 was behind each transaction. The real substance of those transactions was not considered by the Member on either motion. Nor did the Member consider if the respondent was acting in good faith when he interacted with each appellant to obtain their signatures on the N11.

[39] The Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, established the organizing principle of good faith applicable to all contracts. This principle requires the performance of contractual duties and obligations honestly, not capriciously or arbitrarily, and with regard to the legitimate contractual interests of the other party: see Bhasin, at paras. 63 and 65. The relationship between a tenant and a landlord is contractual in nature and requires that they discharge the obligations they owe to one another in good faith. This duty of good faith includes how the parties conducted themselves toward each other at the end of that relationship.

[40] Section 202 of the RTA imposed a statutory duty on the Member to determine questions of fact and to apply governing principles of law to ascertain the real substance of the transactions and activities regarding the rental units at issue, and the good faith of the parties to the N11. The Member did not consider all the evidence to determine the element of good faith on the part of the respondent other than making a passing reference in the Reasons. The Member did not take the totality of the evidence into account when he applied the substantive law. This amounted to an error of law.

Conclusion

[41] The appeals are allowed. The following Orders of the Landlord and Tenant Board are set aside:

a. The Order made under s. 77(8) in file number CEL-93083-20-SA made by Member T. Rossignol dated November 9, 2020 dismissing the motion of the appellant Hermina Pinto to set aside eviction Order CEL-93083-20; and

b. The Order made under s. 77(8) in file number CEL-93164-20-SA made by Member T. Rossignol dated November 18, 2020 dismissing the motion of the appellant Jennifer White to set aside eviction Order CEL-93164-20.

[42] Having set aside the Orders under appeal, this court has the power under s. 134(1) of the Courts of Justice Act to make any order that could have been made by the Board, order a new hearing, or to make any other order that would be considered just. Given the nature of the motions, this court can either make the order the Board ought to have made or order a new hearing to set aside the eviction Orders.

[43] When the appeals were argued, counsel made few submissions on the merits of the underlying motion to set aside the eviction Orders, or on the appropriate remedy should the appeals be allowed. I am of the view that a substantial wrong occurred when the Member failed to consider all the circumstances he was mandated by statute to consider, or to apply the test for setting aside an eviction Order. These errors, standing alone or taken together, amount to a miscarriage of justice. In such circumstances, it is appropriate to order a new hearing: Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC, 2016 ONCA 60, 129 O.R. (3d) 37.

[44] This court therefore orders that the motions of Hermina Pinto and Jennifer White to set aside the eviction Orders made against each of them be re-heard at the same time or one after the other by a Member of the Board other than T. Rossignol. Until the time those motions are determined, the eviction Orders are stayed.

Costs

[45] As counsel for the appellants has advised that they would not be seeking costs if successful, no costs are awarded.

___________________________ Emery J.

I agree

Lococo J.

I agree

Kristjanson J.

Date of Release: August 16, 2021