CITATION: Rosen v. Reed, 2023 ONSC 2211

DIVISIONAL COURT FILE NO.: 73/2023

LANDLORD AND TENANT BOARD FILE NO.: LTB-L-070858-22

DATE: 2023-04-12

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

Title: DAVID ROSEN, Appellant

AND:

WENDY REED, Respondent

BEFORE: Leiper J.

COUNSEL: Yonatan M. Kramer for the Appellant Spencer Toole, for the Respondent E. Fellman for the Landlord and Tenant Board

HEARD: April 5, 2023 by teleconference at Toronto

Date of Decision: April 12, 2023

E N D O R S E M E N T

Introduction

[1] This endorsement follows a case conference with the parties, Mr. Rosen, the Tenant/Appellant and Ms. Reed, the Landlord/Respondent and their respective lawyers. The parties attended to discuss the outstanding rent arrears, whether an order should be made pending the hearing of this appeal to maintain the stay of the eviction order and a schedule for the exchange of materials. Prior to the case conference, the parties were advised that, among other things, the court at the case conference “may make orders respecting payment of ongoing rent and rental arrears as a condition of continuing the stay pending appeal in this court.”

[2] The parties agreed upon a schedule, which was approved in a separate set of case management directions. I reserved on the question of whether there should be an order requiring the Tenant to pay the outstanding arrears of rent as a condition of continuing to benefit from the stay of the eviction order and to pay rent in accordance with the rental agreement, which at the time it was made was $10,000 per month, due on the 16th of each month.[^1]

[3] The Tenant resists paying the arrears because he submits that this amount is the issue in dispute on the appeal—whether the Landlord’s claim to any amount of arrears that are more than the monetary jurisdiction of the Landlord and Tenant Board has been extinguished by virtue of s. 207(3) of the Residential Tenancies Act 2006, SO 2006, c 17 (the “RTA”). He also submits that the stay of the eviction order should not require his ongoing payment of rent (although he has stated his intention and ability to continue to pay rent while he lives in the unit) pending the appeal because of his intended action in damages against the Landlord for alleged failures to maintain/repair the unit.

[4] The Landlord proposes that an amount equal to the outstanding arrears may be paid into court or into trust, pending the outcome of the appeal. She submits that she will be potentially prejudiced by the Tenant remaining in the unit, without ensuring that the arrears in rent owing will not be available if the appeal is unsuccessful. Further, she seeks an order requiring the Tenant to continue paying his monthly rent as a condition of maintaining the stay of the order for termination pending his appeal.

[5] For the reasons below, I conclude that the Tenant should pay into trust the amount of $25,000 on or before April 21, 2023 and that he shall continue to pay rent as it becomes due, in accordance with the terms of his tenancy, as a condition of maintaining the stay of the eviction order pending this appeal. Failure to do so will result in the Landlord being able to move, in writing, with an affidavit in support for an order lifting the stay of the eviction order.

The LTB Order and the Issue on Appeal

[6] The Landlord applied for an order to terminate the tenancy and evict the Tenant for failure to pay rent. The Board held a hearing on February 1, 2023, and issued reasons on March 9, 2023, granting the Landlord’s application for an order terminating the tenancy and ordering payment of arrears of rent at the maximum of its monetary jurisdiction: $35,000.

[7] The Board found that as of February 16, 2023, the Tenant was in arrears of $50,000.00. The Landlord agreed to waive the arrears above $35,000.00 to proceed with the hearing for the order to evict the Tenant but did not consent to a finding that the Tenant could void the termination order by paying only $35,000. The parties made submissions on whether the Landlord could insist on payment of the entire amount of the rent arrears in order for the Tenant to stay in the unit, under the voiding provisions in s. 74 of the RTA.[^2]

[8] The Board found that although it could not order a person to pay more than $35,000 in accordance with s. 207(1) of the RTA, that monetary limit does not apply to the “stay and pay” option under s. 74. That option gives a tenant a choice to pay the full amount of arrears, rent and costs owed to a landlord thus enabling the tenant to remain in the rental unit. The Board found that this is an option, and not an order of the Board, thus the Board does not exceed its monetary jurisdiction in interpreting the amount required to void a termination order to be the entire amount of arrears, even where it exceeds $35,000. It is this finding that the Tenant appeals.

[9] The Board’s order granted the order for termination sought by the Landlord and ordered payment of arrears of $35,000. The order also specified, consistent with its interpretation of the RTA, that the amount required to void the order for termination as follows:

a. $60,186.00 if the payment is made on or before March 15, 2023, OR

b. $70,186.00 if the payment is made after March 15, but on or before March 20, 2023.

[10] Ultimately, the Tenant did not pay any of the outstanding arrears before the eviction order was enforceable. Instead, the Tenant appealed the Board’s order which led to an automatic stay of the eviction order.

[11] On the day before the Case Conference, the Tenant paid $45,186 toward the outstanding arrears. This leaves an amount outstanding of $25,000. The Landlord argues that having paid only part of the arrears owing, the Tenant is seeking to live in the unit at reduced rent to the detriment of the Landlord and is unfairly receiving the advantage of the automatic stay of the termination order triggered by the filing of the appeal.

[12] The Tenant filed several decisions of the Board in which the Board limited the amount payable to void an order of enforcement to the Board’s monetary jurisdiction: See for example, Galaxy Real Estate Core Ontario Properties LP v Deen, 2022 78938 (ON LTB); Guo v Apiou, 2021 142621 (ON LTB). There are other decisions by the Board in which the amount stipulated by the Board to void an order for termination exceeds the Board’s monetary jurisdiction: See for example, Simpson v Bellisle, 2020 119144 (ON LTB); Nishnawbe Homes Inc. v Pangowish, 2022 122655 (ON LTB). It is unclear whether any of the decisions had the benefit of submissions on the interrelationship between the monetary jurisdiction of the Board, the difference between the amounts which can be ordered and the amounts required to void an order and whether a landlord has forfeited all rights to arrears owed by applying for relief before the Board.

[13] The Tenant further relies on the provisions in s. 207(3) of the RTA which provide:

(3) If a party makes a claim in an application for payment of a sum equal to or less than the Board’s monetary jurisdiction, all rights of the party in excess of the Board’s monetary jurisdiction are extinguished once the Board issues its order. 2006, c. 17, s. 207 (3).

[14] The Landlord argued before the Board, and at the Case Conference, that allowing the Tenant to void the order without paying all of the arrears owing to the Landlord would allow the Tenant to benefit financially from his own breach of the tenancy agreement. The Landlord submits that this issue has been decided in favour of her position in the decision of the Divisional Court in Hornstein v. Royal Bank 2010 CarswellOnt 4482, 2010 ONSC 3134, 190 A.C.W.S. (3d) 261 at para. 13, in which Ferrier, J. quashed an appeal, finding that the tenant’s position that the monetary cap should apply to the voiding provisions was without merit. In that decision, Ferrier, J wrote: “To hold that the monetary cap applies to “the outstanding arrears of rent” would result in an absurdity. The defaulting tenant could continue ad infinitum to merely pay the monetary limit and continue in possession, all the while continuing in default.”

Analysis

[15] The Divisional Court may set terms requiring payment of arrears and rent for an appellant to continue to benefit from the stay of an eviction order pending an appeal from a decision of the Board to avoid litigants unfairly living rent-free and abusing the process of the court: Mahdieh v. Kim, 2023 ONSC 825.

[16] This appeal raises a live question as to the application of the statutory limits on the Board’s jurisdiction to determine the amount of arrears payable by a tenant opting to trigger the “stay and pay” voiding of the eviction order. The Board has decisions before it which are on both sides of the question. At the same time, the Tenant is occupying a rental unit with substantial rent and having the benefit of that unit. There is a recent history of this Tenant allowing a large amount of arrears to accumulate, requiring the Landlord to take action to recover rent owed. There is a live dispute as to repairs which has not been adjudicated. On balance, I conclude that there would not be irreparable harm to the interest of either the Tenant or the Landlord to require ongoing payment of rent, as agreed upon, while the Tenant remains in the premises and pending the outcome of this appeal.

[17] On the issue of the outstanding arrears, I have also considered the context and the last-minute part payment of arrears by the Tenant. The risk to the Tenant if he prevails in his action on the appeal is that he will not have access to the capital involved to preserve the stay, however if those funds are held in trust, he will not lose the funds. The risk to the Landlord is that if those funds are not set aside pending the outcome of the appeal, the Tenant may not repay the outstanding arrears and could potentially refuse to pay the arrears (as he did in the recent past) even if the Landlord is successful on the appeal. On balance, I conclude that the fairest decision to make at this stage is to require the Tenant to pay the current outstanding arrears into trust.

CONCLUSION

[18] I order that the Tenant shall pay into trust to counsel for the Landlord, the amount of $25,000 on or before April 21, 2023, and he shall continue to pay rent as it becomes due, in accordance with the terms of his tenancy, as conditions of maintaining the stay of the eviction order pending this appeal. If these steps are not taken, the Landlord may move in writing to set aside the stay, with an affidavit in support of that motion.

_______________________________ Leiper J.

Released: April 12, 2023

[^1]: At the case conference, the Landlord asserted that notice had been given to increase rent payable by $250 per month. The Tenant disputed receipt of that notice and the timing of when any such increase should come into effect. For the purposes of this endorsement, I have used the monthly rent figure found by the Board, $10,000 without prejudice to the Landlord’s rights to establish proper service and entitlement to the increased amount of rent.

[^2]: 74 (4) An eviction order referred to in subsection (3) is void if the tenant pays to the landlord or to the Board, before the order becomes enforceable, (a) the amount of rent that is in arrears under the tenancy agreement; (b) the amount of additional rent that would have been due under the tenancy agreement as at the date of payment by the tenant had notice of termination not been given; (c) the amount of NSF cheque charges charged by financial institutions to the landlord in respect of cheques tendered to the landlord by or on behalf of the tenant, as allowed by the Board in an application by the landlord under section 87; (d) the amount of administration charges payable by the tenant for the NSF cheques, as allowed by the Board in an application by the landlord under section 87; and (e) the costs ordered by the Board. 2006, c. 17, s. 74 (4).

Notice of void order
(5) If, before the eviction order becomes enforceable, the tenant pays the amount specified in the order under clause (3) (b) to the Board, an employee in the Board shall issue a notice to the tenant and the landlord acknowledging that the eviction order is void under subsection (4). [2006, c. 17, s. 74 (5)](https://www.canlii.org/en/on/laws/astat/so-2006-c-17/latest/so-2006-c-17.html); [2013, c. 3, s. 27 (1)](https://www.canlii.org/en/on/laws/astat/so-2013-c-3/latest/so-2013-c-3.html). (Emphasis added)