CITATION: Gykan Enterprises Inc. v. Pourshian, 2023 ONSC 4003
DIVISIONAL COURT FILE NO.: 550/22
DATE: 20230706
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
Gykan Enterprises Inc.
Appellant
– and –
Damon Pourshian
Respondent
COUNSEL:
G. Govedaris, for the Appellant
K. Andrews, for the Respondent
B. Blumenthal, for the Landlord and Tenant Board
HEARD at Toronto by videoconference: July 5, 2023
O’Brien, J.
REASONS FOR DECISION
Overview
[1] On February 11, 2022, the respondent Mr. Pourshian received a notice of termination of his lease in the unit he had rented from Gykan Enterprises Inc. for over ten years. Gykan sought to terminate the lease for non-payment of rent. A few days later, on February 17, 2022, Gykan changed the locks so that Mr. Pourshian could no longer access the unit. The same day, both parties entered into a temporary access agreement that allowed Mr. Pourshian to access the unit for a few hours to retrieve his personal belongings. Gykan took the position that it was entitled to take these steps because the lease was governed by the Commercial Tenancies Act.
[2] On the day he was locked out, Mr. Pourshian brought an application before the Landlord and Tenant Board to determine whether the Residential Tenancies Act applied to the tenancy. The following day, he also filed an application with the Board alleging that he was illegally locked out of the rental unit.
[3] The Board issued an interim order preventing Gykan from re-renting the unit until the application alleging an illegal lock out was heard. Mr. Pourshian stayed in the unit pending the Board’s determinations. By decision dated August 31, 2022, the Board found that the Mr. Pourshian’s tenancy was residential.
[4] Gykan appeals that finding to this court. It makes the following submissions: (1) that the Board did not have the jurisdiction to find the Residential Tenancies Act applied because the lease was terminated and Mr. Pourshian validly evicted from the unit before the application was brought to the Board; (2) that Mr. Pourshian’s application constituted an abuse of process; (3) that the Board failed to appreciate its evidence demonstrating that the lease was commercial; and (4) that the Board failed to balance the rights and responsibilities between the parties.
[5] Section 210 of the Residential Tenancies Act, 2006, S.O. 2006 c. 17 (the Act) limits this court’s jurisdiction on appeal to determining questions of law. Therefore, the central issue for this court is whether the Board erred in law when it determined the tenancy between the parties was residential. At the conclusion of the hearing, I advised that the appeal was dismissed with reasons to follow. In my reasons, which are set out below, I will address each of the submissions raised by Gykan.
Did The Board Err In Law When It Determined The Tenancy Between The Parties Was Residential?
[6] There is no dispute that the standard of review for determining whether the Board erred in law is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at para. 37.
1. Did the Board lack jurisdiction to determine the tenancy was residential?
[7] Gykan submits that the Board did not have jurisdiction to determine whether the Act applied because it validly evicted Mr. Pourshian before he brought his application to the Board. Gykan relies on Mr. Pourshian having executed the temporary access agreement. The terms of the agreement included Mr. Pourshian’s acknowledgment that he had defaulted under the lease, that he would have access for a few hours only to retrieve his personal belongings, and that the agreement was served on Mr. Pourshian pursuant to the Commercial Tenancies Act, R.S.O. 1990, c. L.7.
[8] I do not accept Gykan’s submissions. The Board has jurisdiction over “tenancy agreements” as defined in s. 1 of the Act. Where it receives an application regarding whether the Act applies, it is required to make that determination. Gykan’s reasoning is circular. A landlord locking a tenant out on the basis of its view that a tenancy is commercial cannot pre-determine the issue so as to deprive the Board of jurisdiction.
[9] Mr. Pourshian’s signing of the temporary access agreement does not change this conclusion. Given the Board’s finding that the tenancy was residential, Gykan illegally locked Mr. Pourshian out of the unit. He was required to sign the agreement to retrieve his personal belongings. Also, while Mr. Pourshian agreed to terms under the temporary access agreement stating he was in default of the lease, he did not expressly agree that the tenancy was commercial nor that Gykan was entitled to lock him out of the unit.
[10] Gykan also contests the Board’s jurisdiction to issue an interim order preserving the tenancy pending the determination of the application. The interim order is moot. The Board did not rely on it in determining that the tenancy was residential. I therefore decline to address it further.
[11] Finally, the analysis in 1162994 Ontario Inc. v. Bakker, 2004 59995 (Ont. C.A.) has no application here. There, the Court of Appeal found under previous legislation that a landlord could only seek an order for rental arrears from a tenant who was in possession of the rental unit. The case at bar is not a landlord’s application for rental arrears. Further, Gykan has not pointed to any statutory authority for the proposition that a landlord can illegally sever a tenancy by locking a tenant out and thereby nullify the Board’s jurisdiction.
[12] The jurisdictional argument therefore is without merit and I dismiss it.
2. Did the Board err in law by not finding Mr. Pourshian’s application to be an abuse of process?
[13] Gykan submits that Mr. Pourshian’s application to the Board constituted an abuse of process because the eviction was lawful by the time he filed the application. This repeats the arguments above and I dismiss it for the same reasons.
[14] Gykan also submits that Mr. Pourshian’s failure to pay rent is an abuse of process. It is not clear that this argument was squarely raised with the Board, but I will address it out of an abundance of caution. The commencement of an appeal after the Board has ordered the termination of a tenancy can constitute an abuse of process if the court finds the purpose of the appeal was to prolong a rent-free existence. Here, Gykan alleges Mr. Pourshian owed significant arrears of rent. However, Mr. Pourshian did not initiate an appeal. Instead, he successfully pursued an application to the Board for a determination that the Act applied. It cannot have been an abuse of process for him to successfully seek this determination. As a result of the Board’s determination, Gykan is required to follow the same process as other residential landlords with allegations of unpaid rent. There is no abuse of process and this ground of appeal is dismissed.
3. Did the Board err in law in failing to consider Gykan’s evidence?
[15] Gykan submits that the Board failed to attach significance to its evidence that the tenancy was commercial. Among other evidence, it relies on the facts that (1) the property was zoned as an industrial commercial building and not as residential; and (2) the lease between the parties stated that the unit was leased for commercial use.
[16] Gykan has not demonstrated an error of law. The Board relied on the relevant provisions of the Act. Specifically, s. 2(1) defines a “tenancy agreement” to apply to a “rental unit.” A “rental unit” means “any living accommodation used or intended for use as rented residential premises.” Section 202 directs the Board to “ascertain the real substance of transactions.” In doing so, it “may disregard the outward form of a transaction.”
[17] The Board correctly stated that the fact that Mr. Pourshian signed a commercial lease is not determinative. Looking to the intention of the parties, it found Mr. Pourshian’s evidence to be more credible and reliable than the evidence Gykan’s witness. This conclusion was well founded in the evidence. Gykan has not identified any error of law in the Board’s conclusion on this issue.
4. Did the Board err in law by failing to consider the purpose of the Act?
[18] Gykan submits that the Board failed to appropriately balance the rights and responsibilities between the parties as it was required to do under s. 1 of the Act. It states the Board failed to consider that Gykan’s commercial tenancy was lawfully terminated. This is a restatement of the arguments I have dismissed above. The Board did not err in assuming jurisdiction, nor did it make any legal error in finding the tenancy to be residential. This submission does not raise an error of law and is dismissed.
Disposition
[19] Therefore, the appeal is dismissed.
[20] The parties agreed that if I ordered costs to be payable, Mr. Pourshian would be entitled to costs of $2,000. Mr. Pourshian was represented by the Advocacy Centre for Tenants Ontario. Although the Advocacy Centre is not billing Mr. Pourshian, its funder expects it to seek costs at a reduced level where appropriate.
[21] However, Gykan disputes costs should be payable because, in its submission, Mr. Pourshian owes it arrears of rent.
[22] I order costs of $2,000 payable by Gykan to Mr. Pourshian forthwith. The appeal was without merit. I have no findings from the Board nor evidence before me regarding the current status of rent arrears. Gykan remains entitled to pursue an order for the payment of rent and arrears at the Board.
___________________________ O’Brien J.
Released: July 6, 2023
CITATION: Gykan Enterprises Inc. v. Pourshian, 2023 ONSC 4003
DIVISIONAL COURT FILE NO.: 550/22
DATE: 20230706
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Gykan Enterprises Inc.
Appellant
– and –
Damon Pourshian
Respondent
REASONS FOR DECISION
O’Brien J.
Released: July 6, 2023