CITATION: Minas v. Adler, 2022 ONSC 3053

DIVISIONAL COURT FILE NO.: 073/22

DATE: 20220520

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Victor Minas and Janet Minas, Appellants/Responding Parties

AND:

Kerry Evan Adler and Eagle Capital Corporation, Respondents/Moving Parties

BEFORE: Nishikawa J.

COUNSEL: James P. McReynolds, for the Appellants/Responding Parties

Benjamin Salsberg and David Strashin, for the Respondents/Moving Parties

HEARD at Toronto: May 9, 2022

ENDORSEMENT

Overview

[1] The Appellants, Victor Minas and Janet Minas (the “Landlords”), are the owners of a house (the “Premises”) that they leased to the Respondents, Kerry Evan Adler and Eagle Capital Corporation (the “Tenants”).

[2] In his decision dated January 24, 2022, Member Shea of the Landlord Tenant Board (“LTB”) ordered that the Tenants recover possession of the Premises (the “Order”). Member Shea also dismissed the Landlords’ application for an order that the Residential Tenancies Act, S.O. 2006, c. 17 (the “RTA”), did not apply to the Premises.

[3] The Tenants bring this motion seeking an order lifting the automatic stay of the Order. In the alternative, they seek an injunction preventing the Landlords from destroying, renovating, modifying, or otherwise dealing with the Premises until further order of this court and a certificate of pending litigation.

Factual Background

[4] The Landlords purchased the Premises in July 2015 and lived there from 2015 to 2018. The Landlords applied for a severance of the property on which the Premises is located, which was refused by the Committee of Adjustment on March 22, 2017. The Landlords appealed to the Local Planning Appeal Tribunal. Because the appeal could take a significant amount of time, the Landlords decided to live off-site and rent the Premises in the meantime. The Landlords’ severance application was eventually granted on October 29, 2020.

[5] The Respondent, Kerry Adler, is the president and CEO of SkyPower Services ULC. The Respondent, Eagle Capital Corporation, apparently carries on no active business. The Tenants leased the Premises from the Landlords for a one-year term, beginning on August 1, 2019. After July 2020, the tenancy continued on a month-to-month basis. The monthly rent is $18,000, plus utilities. Mr. Adler was residing at the Premises with his partner and children.

[6] In December 2020, SkyPower’s Toronto office closed as a result of the COVID-19 pandemic. Mr. Adler and his family left Toronto for Dubai in the United Arab Emirates. They have remained there since then, initially because of travel restrictions and lockdowns and more recently because they are unable to move back to the Premises.

[7] From December 2020 to August 2021, the Premises was unoccupied, other than the daily attendance of the family’s nanny and Mr. Adler’s assistant, Rachel Ramos, during business hours.

[8] In August 2021, Mr. Minas attended the Premises to repair a leak reported by Mr. Adler’s employee. Mr. Minas found the Premises in disrepair and discovered that no one was living there. The dining room appeared to have been converted into a home office. Mr. Minas then proceeded to remove the Tenants’ personal property from the Premises, change the locks and move back into the Premises. Ms. Minas also moved into the Premises at some point thereafter.

[9] There is no dispute that the Landlords did not obtain an order from the LTB to terminate the tenancy and evict the Tenants, nor did the Tenants consent to the termination of the tenancy.[^1]

[10] The Tenants have continued to pay rent, however, since August 2021, the Landlords have not accepted the payments.

[11] In August 2021, the Tenants commenced an action against the Landlords in the Superior Court of Justice seeking $10 million in damages. In that proceeding, the Tenants brought a motion for an interlocutory injunction returning the Premises to them and restraining the Landlords from dealing with the Premises. In reasons dated October 22, 2021, Dow J. found no irreparable harm to the Tenants, and that the balance of convenience favoured the Landlords maintaining possession of the Premises. The Tenants’ motion was dismissed: Adler v. Minas, 2021 ONSC 6224.

[12] On November 12, 2021, Member Shea heard the Tenant’s application to recover possession of the Premises and the Landlords’ application that the RTA did not apply. Member Shea rejected the Landlords’ argument that the RTA did not apply and found that the Landlords had exercised self-help in terminating the tenancy. The LTB further found that “in the circumstances, anything short of putting the Tenants back into possession of the rental unit would not provide an adequate remedy for the Landlords’ breach of section 24 of the Act.” Member Shea ordered that the Landlords immediately allow the Tenants to recover possession of the Premises.

[13] The Landlords’ appeal of the Order is scheduled to be heard by this Court on November 22, 2022.

Analysis

Lifting the Automatic Stay

[14] The Tenants submit that this Court should lift the stay or order alternative relief because the Landlords are intentionally acting in a way that would render the appeal moot, including: (i) severing the property; (ii) putting the severed portion of the property up for sale; (iii) demolishing a portion of the house that constitutes 12 percent of the Premises; and (iv) entering into a mortgage that precludes renting out the Premises.

[15] The Landlords oppose the motion on the basis that there is no prejudice to the Tenants resulting from the stay. The Landlords further submit that they would suffer irreparable harm if the stay is lifted.

[16] Pursuant to s. 25(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S-22, orders of the LTB are automatically stayed. In this case, the automatic stay of LTB orders under Rule 63.01(3) of the Rules of Civil Procedure does not apply because the Order did not result in an eviction or termination of the tenancy.

[17] Under Rule 63.01(5), a judge of the court to which the appeal is taken may order, on such terms as are just, that the stay does not apply. The parties do not dispute the applicable principles. Motions under Rule 63.01(5) are “restricted to cases of demonstrable and unusual hardship to the respondent, and where a reasonable measure of protection can be afforded to the appellants”: Ryan v. Laidlaw Transportation Ltd., 1994 CarswellOnt 564 (C.A.), at paras. 12-13. When determining whether to lift a stay, the court also takes into consideration the merits of the appeal.

[18] In this case, the Tenants’ main contention is that the Landlords’ “scorched earth policy” will render nugatory any order in their favour on appeal. In my view, this does not meet the requirement of demonstrable and unusual hardship because, in essence, the hardship of which the Tenants complain is eventual. The Tenants argue that the Landlords’ actions will either render it impossible or difficult for them to recover possession of the Premises in the event that the Landlords’ appeal is unsuccessful. It is not a present hardship resulting from the stay.

[19] Moreover, the fact that the Landlords have demolished a portion of the Premises, and have severed and are attempting to sell a portion of the property does not necessarily result in demonstrable or unusual hardship to the Tenants. As Mr. Adler acknowledges, the house remains habitable, as evidenced by the fact that the Landlords continue to live there. The Landlords’ actions do not preclude the Tenants from recovering possession of the Premises, in the event that Landlords’ appeal is unsuccessful.

[20] Similarly, the fact that the Landlords have mortgaged the property on terms that prohibit renting the Premises does not necessarily preclude an order returning possession of the Premises to the Tenants in the event that the Landlords’ appeal is unsuccessful.

[21] The hardship that the Tenants are required to demonstrate is demonstrable and unusual hardship to them if the stay is not lifted. In my view, the Tenants have not provided any evidence to demonstrate that the inability to recover possession of the Premises, pending the outcome of the appeal, causes any particular hardship to them. Mr. Adler states only that he and his family will return to Toronto as soon as they are able to move back to the Premises. However, it is not clear to me on the evidence that the Tenants are unable to return to Toronto because they cannot return to the Premises. In his decision, Member Shea found that as of November 2021 when he heard the applications, the Tenants had no firm plan to return to Toronto. Moreover, other than Mr. Adler’s statement that he has not been able to find a comparable property and is reluctant to enter a one-year lease because he wishes to return to the Premises, he has provided no details to support the absence of a comparable property. In any event, the evidence does not suggest that the inability to return to Toronto is causing demonstrable and unusual hardship to the Tenants.

[22] Based on my conclusion on the absence of evidence of demonstrable and unusual hardship, the Tenants have failed to satisfy the test to have the stay lifted. On the issue of whether a reasonable measure of protection can be afforded to the Landlords if the stay is lifted, the state of disrepair in which the Landlords found the Premises raises some concern about whether a reasonable measure of protection can be afforded to the Landlords. The Tenants have undertaken “to abide by any order that this Honourable Court may make in the proceeding, including as to possession of the Property.” The Tenants have not proposed other measures to ensure that the Landlords interest in the Premises will be protected if they recover the property and the Landlords appeal is successful. It is not clear to me that an undertaking to follow a court order, which is assumed, constitutes a reasonable measure of protection to the Landlords.

[23] The issue of whether the appeal has merit must be considered in the context of s. 210(1) of the RTA, which states that an appeal lies to this court on a question of law only.

[24] In my view, the appeal is not without merit. The Landlords have raised as a ground of their appeal whether Member Shea erred in his interpretation of s. 31(3) of the RTA, which states as follows:

(3) If the Board determines, in an application under paragraph 5 of subsection 29 (1), that the landlord, superintendent or agent of the landlord has altered the locking system on a door giving entry to the rental unit or the residential complex, or caused the locking system to be altered, during the tenant’s occupancy of the rental unit without giving the tenant replacement keys, and if the Board is satisfied that the rental unit is vacant, the Board may, in addition to the remedies set out in subsections (1) and (2), order that the landlord allow the tenant to recover possession of the rental unit and that the landlord refrain from renting the unit to anyone else.

[25] Member Shea interpreted “vacant” in s. 31(3) to mean that the rental unit is not occupied by a third-party tenant. He found that it would be an absurd result if the Board could not make an order allow a tenant to recover possession where a landlord has moved into the unit. While I express no view as to the proper interpretation of that provision, it is not clear to me that this ground of appeal is frivolous or devoid of merit.

[26] Based on the foregoing, it is not necessary for me to consider the merits of the many other grounds of appeal raised by the Landlords.

Injunctive Relief

[27] The Tenants seek an interlocutory injunction prohibiting the Landlords from destroying, renovating, modifying, or otherwise dealing with the property until further order of this Court.

[28] Based on my finding above that the Tenants have not shown demonstrable and unusual hardship resulting from the stay, it follows that the Tenants have failed to demonstrate irreparable harm unless they stay is lifted, which is a more stringent requirement. As noted above, the Tenants’ objection is to the Landlords altering and/or encumbering the property. There is no evidence of irreparable harm to the Tenants if the stay is not lifted. As a result, they have failed to meet the test for an interlocutory injunction.

[29] In their motion for an injunction in the civil proceeding before the Superior Court, the Tenants sought similar relief, including an order prohibiting the Landlords from dealing with the Premises. While the Tenants submit on this motion that the interlocutory injunction sought before Dow J. was only pending the LTB hearing, their notice of motion in the Superior Court is not limited in this way. Dow J.’s reasons similarly make no reference to the relief being sought pending the LTB hearing. The Tenants have brought a motion for leave to appeal Dow J.’s order, which would be heard in writing by a panel of the Divisional Court. Bringing a motion for an injunction in the context of this appeal is not only duplicative, it seeks to indirectly, and without leave, appeal Dow J.’s order.

Certificate of Pending Litigation

[30] A party seeking a CPL is required to include a claim for it in the originating process or pleading that commences the proceeding, together with a description of the land in question sufficient for registration: Rule 42.01(2), Rules of Civil Procedure. The requirement is not merely technical, but a precondition to obtaining a CPL.

[31] The basic procedural requirements for a CPL have not been meet. The Tenants have not included a claim for a CPL in any originating process or pleading. The Tenants submit that they could not have included such a claim in this proceeding because they are respondents on the appeal, and have filed no originating process or pleading. This raises a question as to whether a CPL is available to a respondent in a statutory appeal of a decision of the LTB. I need not resolve that issue, however, because the Tenants have failed to meet the requirements of Rule 42.01(2).

Conclusion

[32] The motion is dismissed.

[33] After the hearing, the parties submitted costs outlines. The Landlords’ costs of the motion on a partial indemnity basis, including disbursements, total $9,900. The Tenants’ costs of the motion on a partial indemnity basis, including disbursements, total $24,551.16.

[34] The Tenants are ordered to pay the Landlords’ costs of the motion in the amount of $9,900 all-inclusive.

Nishikawa J.

Date: May 20, 2022

[^1]: The Landlords withdrew their application, brought in April 2021, for an order terminating the tenancy on the grounds that the Landlords required the Premises for their own use after being advised that it was inconsistent with their application for an order that the RTA did not apply to the Premises.