ENDORSEMENT

[1] The defendants in this action bring this preliminary motion at trial for a series of declarations relating to the application of issue estoppel based on prior findings of the Landlord Tenant Board ("LTB"). If granted, this motion effectively would bring this action to an end.

[2] In the action, the plaintiff claims that he is a co-owner of a residential property based on payments towards a renovation of the property and oral agreements with the defendants.

[3] The defendants argue that they are the legal owners of the property and the plaintiff is a tenant pursuant to a tenancy agreement.

[4] The parties agree that at or around the time that the property was purchased by the defendants, the plaintiffs made a payment of $62,000. The purpose of this payment and subsequent payments by the plaintiff to the defendants is the subject of dispute. At a certain point, the relationship between the plaintiff and the defendants broke down, and payments by the plaintiff to the defendants ceased.

[5] On October 4, 2016, the defendant, Mr. Aftab Choudhry ("Choudhry"), served the plaintiff with a notice of termination of tenancy, claiming that he intended to demolish the residential complex. On November 1, 2016, the plaintiff commenced the action in the Superior Court claiming an unregistered interest in the property, and the defendants have brought a counterclaim for damages and possession of the property.

[6] On November 1, 2016, Choudhry also commenced two applications before the LTB to terminate the tenancy, evict the plaintiff and pursue permits for the demolition of the property.

[7] The LTB heard one of the applications on December 7, 2016, after denying the plaintiff's motion to adjourn the proceedings. In the event, the plaintiff was not present for the hearing and did not participate in it. An interim order followed. Subsequent hearings on the applications were held on April 5, 2017 and July 11, 2017, at which both Choudhry and the plaintiff participated through their legal representatives.

[8] In its Decision of the Board on December 4, 2017, the LTB noted that, "The only issue to be determined is the status of the Tenant because it, in turn determines whether the [Residential Tenancies Act, 2006 S.O. 2006 c.17 ("RTA")] applied". The LTB reached a series of findings in relation to Choudhry's application in that proceeding, and concluded that the plaintiff was in breach of the tenancy agreement.

[9] The LTB held that it had jurisdiction to hear and determine the matter because the plaintiff was a "Tenant" within the meaning of the RTA, as he made monthly payments in exchange for the right to occupy the rental unit; and that the plaintiff was not a co-owner of the property. Member Solomon stated with respect to this second point (at para. 6):

Based on the evidence presented at the hearing, I am satisfied on a balance of probabilities that the Landlord and his wife are the only owners of the residential complex. There was insufficient evidence before me to establish that the Tenant has any ownership rights or interest in the property.

[10] The Board therefore decided to terminate the tenancy agreement and ordered the plaintiff evicted. The Board also found the plaintiff's circumstances did not warrant relief from eviction as set out in s. 83(2) of the RTA. The Board granted Choudhry's application for termination of the tenancy and ordered that the plaintiff leave the premises effective December 15, 2017.

[11] The question to be addressed in this motion is whether, as a result of the findings of the LTB, some or all of the questions in this action are subject to issue estoppel.

[12] As the Supreme Court confirmed in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, issue estoppel is available where the previous proceeding was before an administrative decision-maker and the subsequent proceeding is before a court. Issue estoppel will apply where three conditions are met:

(1) The same question raised in subsequent proceeding was decided in a prior proceeding;

(2) The decision in the prior proceeding which is said to create the issue estoppel was final; and

(3) The parties to the prior decision (or their privies) were the same as the parties to the proceedings in which the estoppel is raised (or their privies).

[13] All three conditions of the issue estoppel framework must be met. In Danyluk, the Supreme Court also confirmed that even where the three conditions are met, a residual discretion remains under which a court may choose not to apply issue estoppel where it would be unjust to do so.

[14] With respect to the third prong, while there was some suggestion by the plaintiff that the defendant, Nuzhat Yasmin, was a stranger to the LTB proceedings, she is the spouse of Choudhry and a joint title holder to the property, and so meets the threshold that the same parties (or their privies) are involved in both proceedings. In the oral argument, the plaintiff did not press this point.

[15] With respect to the second prong, the plaintiff has not suggested that the LTB proceedings, to the extent affirmed by the Divisional Court, are not a final disposition of the issues before the LTB.

[16] The dispute between the parties relates to the first prong of the test – that is, that the issues decided by the LTB are the same as to be decided before this Court.

[17] In Warraich v. Choudhry, 2018 ONSC 1267, the Divisional Court reviewing the final decision by the LTB in this matter, made a number of important findings for purposes of this issue estoppel analysis. Most importantly, Thorburn J. concluded that the LTB had no jurisdiction to consider the plaintiff's argument that he was entitled to an equitable interest and co-ownership in the property. Thorburn J. held:

(1) The only issue before this Board was whether the Appellant was a tenant. In addressing that issue, the Board had to address the issue of co-ownership but only to establish that the Appellant was a tenant. The issue was not what equitable interest, if any, the Appellant had in the property, as the Board has no jurisdiction to determine equitable rights and entitlements. By contrast, the issue before the Superior Court is whether the Appellant has an equitable interest in the property and if so, what compensation he should receive.

(2) The two proceedings therefore involve the adjudication of separate and distinct interests in the property.

(3) As such, the Superior Court action will not be a re-adjudication of an issue such that there is a multiplicity of proceedings or that the proceeding before the Superior Court should be subject to issue estoppel. (We note that the Respondent does not dispute that the issue of equitable entitlement should be decided by the Superior Court).

[18] In the oral argument, the defendants acknowledge that the consideration of whether the initial payment by the plaintiff to the defendants gave rise to an equitable interest in the property is properly before the Superior Court. They assert, however, that this is the only significant issue which has not already been determined, and can be determined separate from the findings of the LTB. In other words, whether or not the plaintiff was an equitable co-owner by virtue of his initial payment is separate and does not affect the finding of the LTB that the plaintiff was a tenant, and that the monthly payments to the defendants were rent payments.

[19] I do not agree that the initial issue of equitable co-ownership can be severed from all the consequential issues. It may be that a finding of co-ownership is discrete, or it may be a point of departure for other issues of proper compensation.

[20] Therefore, further to the Divisional Court's analysis, I find that the issues before this Court and those before the LTB are distinct, as the LTB had no jurisdiction to make determinations with respect to equitable rights of ownership. As a result, there is no issue estoppel with respect to the question of whether an equitable right of ownership has been established, and if so, what other rights might flow from this determination based on the subsequent conduct of the parties.

[21] The defendants submit that the plaintiff should not be permitted to re-litigate whether the relationship between the defendants and the plaintiff is one of a landlord and tenant, whether the tenancy agreement is enforceable, whether moneys paid under it were rent, and related questions addressed by the LTB. The reality, however, is that these matters have yet to be considered in the context of the plaintiff's potential equitable rights as co-owners. Such a consideration can only follow the determination as to whether such equitable rights arise.

[22] In Warraich v. Choudhry, 2018 ONSC 1275, the Divisional Court considered the interim order of the LTB, and the Board's refusal to adjourn the proceedings. As part of that analysis, the Divisional Court also turned its mind to the potential for some overlap of issues flowing from the subsequent hearing of this action before the Superior Court on questions of the plaintiff's equitable rights. With respect to that potential, Wilton-Siegel J. held:

Further, to the extent that the appellant seeks to avoid the eviction order on some basis arising out of his alleged ownership, he can seek a stay in the Superior Court action. Similarly, if he has been wrongly found to owe money to the respondent by the Board because he is found to be a co-owner in the Superior Court action, he can make a claim for damages in that proceeding or otherwise. There is, however, no basis for indefinitely deferring the Board proceeding merely because he asserts an equitable ownership interest that has not been proven. In this regard, it is also relevant that the appellant's request before the Board was for an adjournment rather than for a stay of the proceeding before the Board. (Emphasis added.)

[23] The possibility that similar evidence may be relevant both in an administrative proceeding and subsequent litigation before a court does not lead to the conclusion that the subsequent litigation is duplicative of the issues decided in the administrative proceeding. In this case, the relevant legal standards and potential remedies are distinct.

[24] As the conditions for issue estoppel have not been established by the defendants, I do not need to consider the additional question of whether, even if all three conditions were met, it would be unjust to apply issue estoppel in these circumstances.

[25] Costs of this motion are reserved, to be determined along with the other costs of the trial.

Sossin J.

Date: January 25, 2019

Warraich v. Choudhry et al., 2019 ONSC 629

Case Summary

ENDORSEMENT

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