Fuamba et al. v. Irving et al., 2024 ONSC 4587

CITATION: Fuamba et al. v. Irving et al., 2024 ONSC 4587

DIVISIONAL COURT FILE NO.: DC-23-2807
DATE: 2024/08/19

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

FAITH CHANTAL FUAMBA, TAMBWE YVES FUAMBA, FAITH FUAMBA, NAOMI FUAMBA, JOYCE FUAMBA Appellants

– and –

CLEVELAND IRVING, NGOZA SIMWANZA and LANDLORD AND TENANT BOARD Respondents

Hayley Crawhall-Duk, for the Appellants Lorinc Mucsi, for the Respondents Cleveland Irving and Ngoza Simwanza Katia Snukal, for the Respondent Landlord and Tenant Board

HEARD at Ottawa by Zoom: February 7, 2024

Labrosse J.

ENDORSEMENT

Introduction

[1] Faith Chantal Fuamba, Tambwe Yves Fuamba, Faith Fuamba, Naomi Fuamba and Joyce Fuamba (the “Appellants” or the “tenants”) appeal the order made by the Landlord and Tenant Board (“Board”) on May 19, 2023 and consequently the amended order dated June 14, 2023.

[2] The Appellants resided in the premises located at 2172 Valenceville Crescent, Ottawa, Ontario for roughly 15 years. The evidence is that Faith Chantal Fuamba was the owner during that time although it is unclear if Tambwe Yves Fuamba was also an owner. The evidence at the hearing before the Board was that the Appellants were having difficulty paying their monthly mortgage payment in the amount of $3,900 per month. They sought the assistance of members of their community which led to the Appellants making certain renovations to their home, selling it to Cleveland Irving and Ngoza Simwanza (the “Respondents” or the “landlords”) who could then get more favorable mortgage terms and providing the Appellants with the option to buy back the house in two years. This would somehow allow them to reduce their monthly payments on the mortgage to $2,000 per month.

[3] The proposed structure of the deal involved a series of transactions which included the renovations, sale of the property to the Respondents with a new mortgage to be registered on title and a limited term tenancy agreement in favor of some or all the Appellants. There was very little evidence of those transactions provided in evidence or otherwise filed with the Board.

[4] At the hearing, the tenants raised the issue of the terms of the rental agreement for them to continue renting the residence that they had been living in for approximately 15 years. While they admitted to being tenants, given that they were no longer the owners, they disputed that the parties had ever arrived at a meeting of the minds for the amount of rent that the landlord claimed was the legal rent. As the tenants could not provide any documentation confirming that the rent was less than the amount claimed by the landlords, the Board made a finding that the legal rent for the unit was $5,500—the amount claimed by the landlords on a draft lease signed only by the landlords.

[5] Very little background evidence was presented to the Board because the matter was treated as a rental arrears issue. Furthermore, other than filing two exhibits relating to e-mail communications involving the landlords and the tenants’ real estate lawyer, the landlords did not provide any evidence at the hearing and relied on the submissions made by their lawyer.

[6] The Board also relied upon the document briefs filed by both the landlords and the tenants and appeared to rely on those documents as evidence at the hearing. There was no opposition to the documentary evidence being relied upon.

[7] At the hearing, the Board was advised that the tenants had commenced an action in the Superior Court of Justice in relation to being the victims of an abusive financial scheme. All of this was treated as being unrelated to the matters before the Board.

[8] The Appellants pursued the following issues at the hearing of this appeal:

1. Did the Board Members err in hearing and determining a matter in excess of their jurisdiction?

2. Did the Board Members err in relying on evidence which pursuant to the Statute of Frauds, R.S.O. 1990, c S.19 has no force and effect?

3. Did the Board Members err in determining that a tenancy agreement existed between the Appellants and the Respondents?

4. Did the Board Members err in failing to discharge their statutory duty pursuant to s. 202 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 [RTA]?

5. Did the Board Members err in improperly denying the Appellants the opportunity to adduce evidence?

6. Did the Board Members err in making judgment against the Appellants Faith Fuamba (Jr.), Naomi Fuamba and Joyce Fuamba?

[9] I will consider each issue raised on the appeal. In doing so, I apply the standard of correctness given that only questions of law are the proper subject of an appeal from the Board: see RTA, ss. 210(1), (4) and (5); Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at para. 37.

Issue 1: Did the Board Members err in hearing and determining a matter in excess of their jurisdiction?

[10] The Board derives its statutory authority from the RTA. Section 168(2) of the RTA states:

The Board has exclusive jurisdiction to determine all applications under this Act and with respect to all matters in which jurisdiction is conferred on it by this Act.

[11] When considering if the Board has jurisdiction over a matter, courts have identified the “essential character of the dispute” as being the proper criteria to be applied: see Mackie v. Toronto (City) and Toronto Community Housing Corporation, 2010 ONSC 3801, at para. 44.

[12] The RTA does not confer jurisdiction on the Board to determine whether there is a valid tenancy agreement. The existence of a tenancy agreement is presumed: see O’Brien v. 718458 Ontario Inc. (1999), 25 R.P.R. (3d) 56 (Ont. Gen. Div.), at para. 19; Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at para. 12.

[13] A valid tenancy agreement must contain certain basic elements. In 3670490 Canada Inc. v. Charles Boushey Limited, [2000] O.J. No. 4861 (S.C.), that court stated that a formal written lease agreement is not required under the Statute of Frauds, however, the essential elements which included rent had to be agreed upon. At para. 31, Polowin J. sets out the essential elements that are required to support a valid lease agreement:

The case law also sets out the essential elements of a valid lease agreement. To be valid, an agreement for a lease must show:

(1) the parties;

(2) a description of the premises to be rented;

(3) the commencement of the term;

(4) the duration of the term;

(5) the rent (if any); and

(6) all the material terms of the contract not being matters incident to the relation of landlord and tenant, including any covenants, exceptions or reservations. (see for example Londos Investments Ltd. v. 353573 Ontario Ltd., [1988] O.J. No. 7 (Ont. H.C.).

[14] In the present case, the evidence before the Board was that the parties had not defined the terms of the lease when the purchase of the Appellants’ residence by the Respondents was concluded. There is even a suggestion that the Appellants were not advised of the closing date and that they only learned of it subsequently.

[15] What is clear from the landlords’ e-mail November 25, 2021 and filed as Exhibit #1 to the Board hearing is that until several days after the closing of the sale transaction, the landlords had yet to determine what rent they would be seeking from the tenants. In that e-mail, the landlords state for the first time that the monthly rent is $5,500. The draft lease is signed by the landlords on November 23, 2021 and November 24, 2021. Since the date of receiving the proposed amount for the monthly rent, the tenants opposed the quantum of rent being sought by the landlords.

[16] It should have been clear to the Board that a significant question before it was if the parties had reached a meeting of the minds on the essential terms of the tenancy agreement. Furthermore, it was illogical for the Board to conclude that the draft lease unsigned and opposed by the tenants for which no payments had ever been made could form the basis for establishing the legal rent. It was also illogical for the Board to conclude that because the tenants continued to reside in the residence they had occupied for 15 years, that this somehow was relevant to the Board’s conclusion on the monthly rent.

[17] On this issue, the illogical nature of the Board’s decision becomes more evident when considering that on the closing date, the Appellants’ ownership ended and they became either occupants or tenants with a yet undefined amount of rent. Did the landlords then have carte blanche to name whatever amount they wanted as the monthly rent?

[18] It is important to note that the closing of the real estate transaction took place on November 17, 2021 and that as of this date, the essential requirements of a lease had not been put in place. The responsibility for this failure falls on both parties but in large part on the landlord. This is particularly true in light of the only oral evidence before the Board which was given by the tenants. Some documentation suggests that the monthly rent payable was to be based on the amount of the mortgage payments that the landlord was required to make. However, at the Board hearing, the tenants clearly stated that a document had been signed by the parties prior to the closing of the real estate transaction which called for monthly rent to be $2,000. The tenants specifically referenced a signed document that was not available to them because their real estate lawyer was not releasing the contents of his file to them.

[19] It is relevant that this issue was never explored by the Board at the hearing. The Board stated that it was incumbent upon the tenants to provide a document which demonstrated a rent of $2,000 per month. The Board seemed to ignore their oral evidence which effectively, was not contradicted in evidence by the landlords who never testified.

[20] It should have been plainly obvious to the Board that the dispute between the parties was far more than an issue of rental arrears. While the tenant Faith Chantal Fuamba accepted that she and her family were tenants, she relied on an agreement for rent to be payable at $2,000 per month and that they would have 24 months to buy the home back. She also raised issues surrounding the real estate transaction, the amount of the mortgage to be registered on title based on the renovation contract and that the closing took place without the knowledge of the tenants. There is also no evidence of an agreement for the tenants to pay a $16,500 deposit.

[21] What remains clear is that the essential character of the dispute between the parties went much further than a simple issue of non-payment of rent and a determination of rental arrears. The essential character of this transaction was clearly a very suspicious transfer of ownership based on terms that were not clearly established in advance, in the absence of either an oral, written or implied tenancy agreement. Furthermore, the existence of a tenancy agreement was also in issue given that the parties did not agree on the rent to be paid and they seemed to disagree on several other essential lease terms.

[22] In the face of the evidence before it, the Board erred in law in its consideration of s. 168(2) of the RTA by concluding that it had jurisdiction over this alleged tenancy agreement. The main terms of the tenancy were never agreed to and only presented to the Appellants several days after the closing of the real estate transaction. The Board should have accepted that the proper forum to resolve this dispute was with the Superior Court of Justice.

Issue 2: Did the Board Members err in relying on evidence which pursuant to the [Statute of Frauds](https://www.canlii.org/en/on/laws/stat/rso-1990-c-s19/latest/rso-1990-c-s19.html?resultIndex=1) has no force and effect?

[23] It is trite law that a tenancy agreement may be in writing, oral or implied: see RTA, s. 2(1).

[24] While the Statute of Frauds requires that an agreement which purports to create an interest in land be in writing, this does not trump the specific statutory provision under the RTA that allows for oral or implied leases that are not in writing. As previously stated, the real issue is if the parties reached an agreement on the essential terms of a tenancy agreement: see 3670490 Canada Inc. above.

[25] I do not agree that because the draft lease included provisions about an option to purchase or a right of first refusal, that this somehow invalidated the draft lease prepared to by the landlords.

[26] In my view, it is more significant that the tenants never agreed to the draft lease, that they clearly objected to the proposed rent and that the essential disputed terms of the bargain between the parties was never properly reduced to writing and not put in evidence at the Board hearing.

Issues 3, 4 and 5: Did the Board Members err in determining that a tenancy agreement existed between the Appellants and the Respondents, did they fail to discharge their statutory duty pursuant to s. 202 of the RTA and did they err in improperly deny the Appellants the opportunity to adduce evidence?

[27] While these issues are dealt with separately by the Appellants in their factum, they are clearly related.

[28] There was a significant evidentiary issue before the Board in respect of the proper monthly rent. The only viva voce evidence was that of the tenants who testified that there was an agreement that the monthly rent would be $2,000 per month but that they did not have a copy of the document. The tenants also testified that the term was to be two years and that the monthly rent was supposed to reflect the renegotiated mortgage rate which was also not in evidence.

[29] However, the Board took no steps to obtain evidence from the landlords. The landlords never testified and the Board simply accepted the submissions of the landlords’ lawyer. The only oral evidence before the Board was that of the tenants who testified that a document had been signed by the parties before the closing of the real estate transaction which acknowledged a monthly rent of $2,000. The Board never required any testimony by the landlords to address this evidence by the tenants. It is possible that the landlords had access to this signed document, but the Board took no steps to clarify this significant factual issue. The Board then solely relied upon the draft lease signed only by the landlords to establish the legal rent. Furthermore, the Board relied on the fact that the tenants had continued to occupy the subject premises as an acceptance of the terms of the tenancy put forward by the landlords several days after the closing of the sale transaction.

[30] It must be noted that on numerous occasions, the Board interrupted the tenants in their evidence and told them that they did not want to hear a long story. This demonstrates the extent to which the Board was solely treating this issue as a rental arrears matter. I accept that it was a significant issue that the tenants had never paid any rent, not even at the $2,000 per month rate that the tenants alleged was the correct rate. One would have thought that to a minimum, the tenants would have paid the lower rent. On the other hand, this could also imply that the tenants were accepting the other parts of the landlords’ draft lease and it seems clear that there were other issues in dispute such as the term of the lease, the deposit, the option to purchase and the terms of the new mortgage.

[31] Finally, the Board took the position that it was incumbent on the tenants to file an application to dispute the amount of rent being claimed by the landlords. Here, the then self-represented tenants made it very clear in the documents filed that they disputed the amount of the rent and the evidence filed was clear that they never accepted the proposed rent of $5,500 per month. Furthermore, the tenants took issue with other portions of the draft lease which did not follow the transaction initially proposed to them. If the landlords were prejudiced by the lack of notice of a dispute on the rent claimed, an adjournment could have been sought.

[32] The landlord’s own e-mail of November 25, 2021 states as follows: “A rental agreement has been in the works for sometime as we were waiting for various parts of the agreement to be finalized and signed. In a nutshell, rental will be $5,500 per month effective November 15, 2021 and ending on November 14, 2021. We are asking for $16,500 to be prorated as follows: First and two last payments.”

[33] As set out in Murphy v. Saskatchewan Government Insurance, 2008 SKCA 57, 310 Sask. R. 149, at para. 5:

Since the right of appeal is confined to a question of law, neither the right of appeal nor the jurisdiction of the Court extends to a finding of fact. However, a finding of fact may be grounded in an error of law, as will be the case, for example, when a finding: (a) is based on no evidence; (b) is made on the basis of irrelevant evidence or in disregard of relevant evidence; or, (c) is based on an irrational inference of fact. See: P.S.S. Professional Salon Services Inc. v. Saskatchewan Human Rights Commission et al., 2007 SKCA 149, (2007), 302 Sask. R. 161 at paras. 60–65 (application for leave to appeal to S.C.C. filed February 13, 2008). The right of appeal, of course, extends to such errors of law.

[34] It is clearly illogical for the Board to have concluded that the legal rent was established through a draft unsigned lease and the refusal by the tenants to move out of their family home because they did not agree with the landlords’ unilateral terms for the tenancy. This had been their home for 15 years and it would make no sense for them to move out as a result of the landlords’ unexpected post-closing request for the monthly rent to be fixed at $5,500.

[35] While both parties had an interest to finalize the terms of the sale transaction and the subsequent lease agreement prior to the closing of the transaction, it was incumbent on the landlords to present their draft lease terms well in advance of the closing date. The evidence is also unclear as to the tenants’ knowledge of the closing.

[36] Regardless, although the landlords never testified, it is apparent that the landlords were relying of the Appellants remaining in the premises as tenants. But on what terms? The documentation filed at the hearing is insufficient to understand what the expectations were of both parties at the time of closing of the real estate transaction and there was clearly never a meeting of the minds on the monthly rent. This evidence should have been put before the Board. At a minimum, s. 202 of the RTA imposes an obligation on the Board to ascertain the real substance of all transactions and activities relating to the rental unit. The Board clearly failed to fulfill this obligation.

[37] To the contrary, the Board accepted that an unsigned draft lease formed the basis to unilaterally impose a monthly rent of $5,500 without any evidence to support that the tenants ever agreed to this amount. This was an essential term of the tenancy which was never agreed to and the Board’s finding is contradicted by the uncontradicted evidence of the tenants.

[38] It was incumbent on the Board to require evidence from the landlords on the purported document signed prior to the closing which established the monthly rent at $2,000, if such a document existed. There was also evidence that the term of the lease was supposed to be 24 months, but the draft lease only provided for a 12-month lease. This again is an essential term of the tenancy agreement which was disputed. The landlords should have been required to testify on these issues.

[39] In the end, the tenants accepted that it was their intention to become tenants and that once the property was sold, that they were tenants. However, the terms of their tenancy were not agreed to by the parties and the Board erred in law by coming to the conclusion on the legal rent in the absence of proper admissible evidence that such an agreement was reached. As previously stated, the Board’s conclusion is tantamount to a finding that the tenancy agreement was for the legal rent to be whatever amount the landlords put in their draft lease. It was an error of law for the Board to have failed to fully explore this issue and come to the illogical conclusion that the terms of the draft lease governed simply because the tenants did not move out of their 15-year-old family residence. This was all due to the landlords’ failure to properly set out the terms of the tenancy in advance of the closing date. The Board’s conclusion of a valid tenancy agreement at a legal rent of $5,500 per month was based on an absence of admissible evidence and illogical factual findings when considering the evidence before the Board.

[40] I come to this conclusion with the understanding that the Appellants have been residing in the Respondents’ residence for almost three years. Even when accepting the Appellants’ claimed rental rate, arrears of rent would be in excess of $60,000. It is for this reason that the entire dispute must be put in the hands the Superior Court of Justice given that the full picture surrounding these various transactions and the various actors involved must be considered together for adjudication purposes.

Issue 6: Did the Board Members err in making judgment against the Appellants Faith Fuamba (Jr.), Naomi Fuamba and Joyce Fuamba?

[41] At the hearing of this appeal, the Respondents conceded that there was no basis to find that the Appellants Faith Fuamba, Naomi Fuamba and Joyce Fuamba were properly listed as tenants.

[42] At the hearing, the Board failed to ascertain the status of these three listed tenants who are the children of the main Appellants and if they occupied the residence. The Appellants’ evidence brief states that the two oldest children reside in Montreal.

[43] There was no evidence at the hearing to support a conclusion that these three Appellants should have been named as tenants. The impact is more significant when considering the significant amount of rental arrears awarded by the Board and who may be liable to pay them.

[44] It was clearly an error of law by the Board to have included these three tenants in its order and made them liable for the obligation to pay arrears in the absence of any evidence to support such a finding. The Board’s decision in this regard must be set aside.

Conclusion

[45] For the reasons set out herein, the impugned decisions are set aside as I allow the appeal on the following grounds:

a. The Board did not have jurisdiction over the matters at issue and the issues should have proceeded before the Superior Court of Justice as part of civil action no. CV-23-93847.

b. The Board erred in determining that there was a valid tenancy agreement with a legal rent of $5,500 per month. In doing so, the Board failed to discharge its statutory duty pursuant to s. 202 of the RTA.

c. The Board erred by making judgment against Faith Fuamba, Naomi Fuamba and Joyce Fuamba.

[46] Furthermore, for the reasons stated herein, issues raised in this dispute are more properly dealt with as part of the civil action no. CV-23-93847. This includes the obvious issue of the Appellants obligation to pay some rent. As a result of this decision, the parties may be required to amend their pleadings to deal with the setting aside of the Board’s decision.

[47] By agreement of the parties, the tenants are entitled to their costs as the successful parties fixed in the amount of $12,000.00, payable within 30 days.

___________________________ Justice M. Labrosse

Released: August 19, 2024

CITATION: Fuamba et al. v. Irving et al., 2024 ONSC 4587

DIVISIONAL COURT FILE NO.: DC-23-2807
DATE: 2024/08/19

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

FAITH CHANTAL FUAMBA, TAMBWE YVES FUAMBA, FAITH FUAMBA, NAOMI FUAMBA, JOYCE FUAMBA Appellants

– and –

CLEVELAND IRVING, NGOZA SIMWANZA and LANDLORD AND TENANT BOARD Respondents

Endorsement

Justice M. Labrosse

Released: August 19, 2024