Court File and Parties

CITATION: Arnold v. Lulu Holdings Inc., 2021 ONSC 8125

DIVISIONAL COURT FILE NO.: 767/21

DATE: 2021-12-30

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: J. GORDON ARNOLD, Appellant/Respondent on Motion

AND: LULU HOLDINGS INC., Moving Party/Respondent in Appeal

BEFORE: Matheson J.

COUNSEL: Stefan Juzkiw, for the Moving Party/Respondent in Appeal Adam Varro, for the Respondent/Appellant Valerie Crystal, for the Landlord Tenant Board

HEARD at Toronto: December 11, 2021 (by videoconference) followed by written submissions

Endorsement

[1] Lulu Holdings Inc. moves to quash this appeal or, alternatively, to set aside the stay of enforcement of the Landlord Tenant Board (“LTB”) eviction order pending the appeal.

[2] The underlying appeal is brought under s. 210 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “RTA”). The appellant challenges the decision of the LTB dated August 17, 2021.

[3] The LTB decision appealed from states that it was on consent. This apparent consent gives rise to this motion. It also gives rise to a question of whether leave to appeal is required because of s. 133 of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[4] In the appeal itself, the appellant’s main grounds are that all the tenants were not served with the notice of termination and were therefore not heard, giving rise to a breach of procedural fairness and lack of jurisdiction. The appellant submits that he, family members, and a company for which he is President and CEO were all tenants. The appellant also submits that he did not actually consent to the terms of the LTB decision.

[5] For the reasons set out below, this motion is granted.

Background

[6] By written agreement to lease in 2006, the D’Airain Corporation leased a premises on Bayview Avenue for one year. On this motion, the appellant attests that the lease agreement was extended, but no written document was signed.

[7] In July 2020, the respondent gave the appellant notice of termination of the tenancy because the respondent wanted to demolish the premises.

[8] The appellant now says that he noticed that only he was named in the notice of termination and did not know why his company and family members were not also named. However, the steps that he took at the time are inconsistent with his current position that all of those persons are tenants. He repeatedly took steps as the tenant, including on behalf of his company, and did not suggest that his family members were also tenants. Similarly, he dealt with Lulu Holdings as the landlord, and now challenges that status as well.

[9] By memorandum of settlement dated March 16, 2021, Lulu Holdings and D’Airain and the appellant (together defined as the tenant) agreed that the tenant would pay $50,000 with respect to rental arrears and the monthly rent of $9,000, and related terms. The appellant signed both for himself and as President and CEO of D’Airain. There was no mention of his family members as tenants.

[10] In April and May of 2021, the appellant paid the monthly rent of $9,000, to Lulu Holdings. Rental payments then stopped.

[11] The LTB hearing took place on July 8, 2021. The order arising from the LTB hearing was released on August 17, 2021. The LTB ordered that the Tenant (then named as the appellant) vacate the premises by September 15, 2021. The LTB order noted that the parties had “mutually agreed to resolve all matters at issue” and had requested the order that was made, on consent. The LTB member noted as follows: “I was satisfied that the parties understood the consequences of the joint submission.”

[12] There is a further memorandum of settlement dated the same day as the LTB hearing – July 8, 2021. Lulu Holdings and D’Airain and the appellant (together defined as the tenant) agreed that the tenant would pay $102,561.51 with respect to rental arrears and vacate by September 15, 2021. Again, the appellant signed for the tenant. There was no mention of his family members as tenants.

[13] By notice of appeal dated September 13, 2021, the appellant seeks to set aside the above LTB order, or, in the alternative, to extend the date to vacate until February 1, 2022 and get more time to pay the outstanding rent.

[14] As a result of the notice of appeal, the appellant obtained an automatic stay of proceedings and continued to live in the premises with his family. The rent has not been paid. As of the hearing of this motion, there were rental arrears in the amount of $118,990.83. The appellant’s evidence does not provide an explanation for the failure to pay the rent for such a lengthy period of time. He says that he intends to pay when he is financially able and does not believe that his financial means should be a consideration in determining the merit of his appeal.

[15] The appellant now says that he, his wife, and son are all tenants, as well as him and his company, D’Airain. He also attempts to dispute that the current landlord is Lulu Holdings even though the evidence demonstrates that he dealt with Lulu Holdings as landlord.

[16] The appellant also says that it was not his intention to agree to the timelines in the LTB order. He says that he had “some understanding” of the consequences of a joint submission but did not agree to the “misstated” terms of the LTB order. He does not say what he did agree to and does not explain the contemporaneous minutes of settlement that he signed with the same date to vacate.

[17] The appellant submits, and I accept, that his son is severely disabled and requires around the clock care and a living situation sufficiently proximate to Sunnybrook Hospital. That subject was discussed at the LTB hearing that gave rise to the consent order.

[18] In response to this motion, the appellant submits that the above two settlements, signed by him as tenant, are irrelevant. He further submits that the substantial rental arrears are irrelevant. He attests that the time he had to move out, under the apparent consent order, was far too short. He has now had almost six months since the LTB order was made, the date to vacate that he requested in his notice of appeal is approaching, and the rent is not being paid.

Audio recording of hearing

[19] The appellant received the audio recording of the LTB hearing a few days before the return of this motion. As of the hearing, no transcript had yet been prepared. However, the recording of the hearing was potentially relevant to the position of both sides. As a result, I required that the audio recording be provided to the respondent as well and permitted supplementary written submissions about the conduct of the hearing. Those steps have been taken and I therefore have submissions based upon the audio recording.

[20] The appellant submits that the audio recording is inconclusive because it is truncated – it is not one continuous recording. The parties were having discussions about a consent order. Periodically, the LTB member would resume the recording for on-the-record proceedings.

[21] On the question of consent, the recordings include the Member asking the parties, at the end, “do we have a consent”? and being told “yes”. The Member was told that there was agreement on a termination date of September 15, 2021, on standard terms. The Member explained the consequences of that agreement to the appellant, including the enforcement role of the sheriff if the premises were not vacated by September 15, to which the appellant said, “Yes, I agree with that.”

[22] Given the statements made by the appellant at the hearing, the landlord submits that the appellant swore a false affidavit. The appellant swore that it “was certainly not my intention to agree with those timelines.” The appellant’s position is that any consent is not conclusive unless the parties can hear the entirety of the hearing, which was not recorded. On the question of consent, the appellant submits that the incomplete recordings “leave open the possibility” that he did not consent. This does not explain the answers he gave at the end of the hearing or the minutes of settlement that he signed with the same termination date.

[23] The appellant relies on a discussion at the hearing about allowing for the possibility of a collateral agreement extending the termination date to September 30, 2021. However, that did not form part of the minutes of settlement he signed, nor was an actual collateral agreement reached with the landlord to extend the date.

[24] What remains are the appellant’s submissions about the audio recording based on being self-represented at the hearing. I have taken his self-representation into account.

Analysis

[25] There is no dispute about the test on a motion to quash an appeal. Both sides rely on Meglis v. Lackan, 2020 ONSC 5049 (Div. Ct.). As shown in that case, an appeal under the RTA should be quashed in these circumstances, relied upon by the landlord:

(i) when it does not raise a question of law (including questions of procedural fairness) or is otherwise devoid of merit: and,

(ii) when it is an abuse of process (including appeals brought for the sole purpose of obtaining a stay of an eviction).

[26] In addition to the above issues, the moving party submits that the appellant is required to get leave to appeal and has not requested, nor obtained, leave to appeal.

[27] The grounds of this appeal are based on procedural fairness, specifically the lack of notice naming the appellant’s company and family members resulting in an alleged denial of an opportunity to participate in the LTB proceedings. The question on the appeal would be whether the required procedural fairness was provided to these other persons or there was no jurisdiction to proceed.

[28] There are a number of grounds based upon which this appeal should be quashed. I will address three, each of which justifies granting the motion: (1) the failure to raise the issues now relied on before the LTB; (2) the course of conduct, which amounts to an abuse of process; and, (3) the failure to seek or obtain leave to appeal.

[29] The sufficiency of the notice of termination should not be raised for the first time in this appeal. The appellant now says that back in July 2020 he noted that his company and family members were not listed on the notice. On that evidence, he was aware of the issue and ought to have raised it in the course of the LTB proceedings. He did not do so. He, or the other purported tenants or affected persons, could have come forward and sought a review of the LTB order on the basis that they should have been given notice and had an opportunity to participate. None of them did so.

[30] I accept the submission that there was no formal notice other than to the appellant. That does not mean that his family was unaware of the issue. His company was aware, through him, and entered into a settlement the same day as the hearing with the same date to vacate.

[31] I note that no one else has filed an affidavit in response to this motion. Further, the denial of the right to be heard, put forward as the central issue on the appeal, is not the appellant’s right to begin with. I question how he can assert it in any event. He was given notice. He was present for the hearing before the LTB. He was heard. He told the LTB Member that he agreed to a consent order that matched minutes of settlement that he also signed that day.

[32] What the record before me does show is as follows:

(i) that the appellant represented himself as the tenant at the relevant time (including for his company) and dealt with the respondent as the landlord;

(ii) that the appellant repeatedly entered into settlements as the tenant, with the respondent as landlord;

(iii) that the appellant agreed to vacate by September 15, 2021, as set out in minutes of settlement;

(iv) that the appellant confirmed that agreement to the LTB Member at the hearing in July 2021;

(v) that, because the matter went on consent, the LTB hearing in July 2021 did not proceed to address the merits of the application to terminate the tenancy;

(vi) that no basis has been put forward to challenge the landlord’s application to terminate on its merits;

(vii) that the appellant breached his settlement agreement with the landlord by not vacating in September 2021;

(viii) that no one sought a review of the consent order from the LTB on the basis that they ought to have had notice;

(ix) that the appellant obtained a stay of the consent order to vacate by bringing this appeal;

(x) that the rent has not been paid for a lengthy period of time, with arrears exceeding $118,000; and,

(xi) that no one else has come forward to say that they are tenants as well (which would bring on an obligation to pay the outstanding rent) or affected parties who wished to participate in the hearing and were prevented from doing so.

[33] The evidence shows that the appellant has repeatedly reached agreements and then failed to fulfill them, instead taking steps to postpone the termination of the tenancy while not paying rent. Considering all relevant factors, this appeal is an abuse of the process of this court and is quashed.

[34] This appeal should also be quashed because no leave to appeal has been sought or granted.

[35] Section 133 of the Courts of Justice Act provides that no appeal lies, without leave, from an order made with the consent of the parties. The appellant submits that leave is not required in this case because the consent is disputed on the appeal.

[36] The appellant relies on Ruffudeen-Coutts v. Coutts, 2012 ONCA 65, however, that case does not hold that leave is not required when the consent is challenged. It does provide a test for the granting of leave from a consent order where the consent is challenged.

[37] On its face, the LTB order is a consent order. This is further confirmed by the recording of the hearing. The majority of the court in Ruffudeen-Coutts held that “where the issue relates to the validity of the consent, leave to appeal should not be granted unless the evidence before the court on the leave application demonstrates that there is an arguable case that, at the time the agreement that formed the basis of the consent order was entered into, the moving party could not or did not consent”: at para. 64 (per Epstein J.). Further, the adjudicator’s determination should attract deference and the threshold for granting leave is high: at paras. 69 and 72 (per Epstein J.). The court did not hold that leave to appeal was not required.

[38] Although I recognize that the appellant could still attempt steps to seek leave, absent the other issues discussed above, it remains the case that he was obliged to seek leave to appeal and has not done so.

Orders

[39] This motion is granted, and the appeal is quashed. As a result, the automatic stay of enforcement is also terminated.

[40] Costs shall be paid by the appellant, to the respondent, in the agreed-on amount of $6,000 all inclusive, within 30 days of today.

[41] Counsel to the respondent shall provide the court with a draft order in WORD format.

Matheson J.

Date: December 30, 2021