COURT FILE NO.: CV-21-00664650-0000

DATE: 20221109

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GREATER TORONTO APARTMENT ASSOCIATION

Applicant

• and -

CITY OF TORONTO

Respondent

Raivo Uukkivi and Jennifer Evola for the Applicant

Amy Murakami and Michele Brady for the Respondent

HEARD: October 13, 2022

PERELL, J.

REASONS FOR DECISION

Contents

A. Introduction. 2

B. Procedural and Evidentiary Background. 3

C. Facts. 3

D. City of Toronto Act, 2006. 5

E. City of Toronto By-law 1121-2019. 7

F. City of Toronto By-law 1750-2019. 7

G. Residential Tenancies Act, 2006. 8

H. GTAA’s Political Arguments. 15

I. The Parties’ Arguments. 16

1. The GTAA’s Submissions. 16

2. The City of Toronto’s Submissions. 17

J. Is the Emergency Accommodation User Fee (s. 2 of By-law 1750-2019) an Illegal By-law? 18

1. Legal Background. 18

2. Discussion and Analysis. 19

K. Conclusion. 21

A. Introduction

[1] Pursuant to s. 214 of the City of Toronto Act, 2006,[^1] the Greater Toronto Apartment Association (“GTAA”) seeks: (a) a declaration that s. 2 of City of Toronto By-law 1750-2019 is illegal and void ab initio; (b) a declaration that the City’s “Vital Service Disruption Plan” requirements of By-law 1121-2019 are illegal and unenforceable due to a conflict with the Residential Tenancies Act, 2006.[^2] In the alternative, the GTAA asks that the By-laws be read down to comply with the law.

[2] Section 2 of City of Toronto By-law 1750-2019 imposes a full cost recovery fee for the “actual cost to provide emergency social services.” City of Toronto By-law 1121-2019, which amends Chapter 354 of the City of Toronto Municipal Code, requires owners/operators of residential apartments to have a “Vital Service Disruption Plan”, and the plan prescribed by the MLS Director (Director of Municipal Licensing and Standards) requires an apartment building owner/operator to provide, at its own expense, appropriate temporary accommodations to tenants within 24 hours of a disruption’s onset. The GTAA’s grievance is about the imposition on a landlord of the cost of providing emergency social services for its tenants regardless of the cause of the landlord’s building becoming uninhabitable.

[3] The GTAA challenges By-laws 1121-2019 and 1750-2019 based on two municipal law arguments and on one constitutional law argument. The first argument is that the By-laws should be quashed for illegality. The second argument is that the By-laws should be quashed or read down as conflicting with the Residential Tenancies Act, 2006. The third argument, which is a matter of constitutional law, is that s. 2 of By-law 1750-2019 is ultra vires as an indirect tax outside the legislative competence of the City of Toronto.

[4] For the reasons that follow, I conclude that the City of Toronto does not have the legislative authority to require a landlord to provide emergency social services regardless of the reason that the landlord’s building became uninhabitable. It follows that just s. 2 of By-law 1750-2019 and just the provisions of the Vital Service Disruption Plan that require an apartment owner/operator at its own expense to provide emergency social services should be quashed; however, the rest of By-law 1121-2019 and of By-law 1750-2019 and of the Vital Service Disruption Plan are sound.

[5] Given this conclusion, it is not necessary to decide whether By-law 1121-2019 and By-law 1750-2019 conflict with the Residential Tenancies Act, 2006. It is also not necessary to decide whether the provisions of By-laws 1121-2019 and 1750-2019 that require a landlord to provide emergency social services, are ultra vires the legislative competence of the City of Toronto as an indirect tax. In the balance of these Reasons for Decision, I shall only address the GTAA’s first argument about the legality of By-laws 1121-2019 and 1750-2019.

B. Procedural and Evidentiary Background

[6] On June 18, 2021, the Greater Toronto Apartment Association (“GTAA”) commenced this application. It supports its application with three ffidavits from two witnesses: (a) Affidavits of Daryl Chong dated August 16, 2021 and October 19, 2021. Mr. Chong is the President and the Chief Executive Officer of the GTAA. Mr. Chong was cross-examined; and (b) affidavit of Dan Tetzlaff dated August 16, 2021. Mr. Tetzlaff is an insurance specialist at HUB International Ontario Limited, which is one of the world’s largest insurance brokerage firms. Mr. Tetzlaff specializes in insurance for multi-family housing. He was retained to provide an expert opinion on the availability of insurance for tenant displacement. Mr. Tetzlaff was cross-examined.

[7] The City of Toronto proffered no evidence for the application. The factual background to this application is provided by the GTAA.

C. Facts

[8] The Greater Toronto Apartment Association (“GTAA”), has a membership of more than 320 members, including apartment building owners and property management companies. The membership collectively owns and operates over 150,000 units of purpose-built multi-family rental housing in the Greater Toronto Area.

[9] The City of Toronto is a municipality incorporated pursuant to the City of Toronto Act, 2006. In 2008, after years of consultation, the City launched a Multi-Residential Apartment Building audit and enforcement program (“MRAB Program”). The program set minimum property and maintenance standards. Through the MRAB Program, the City regulated the operation of apartment buildings in the city.

[10] After 15 years of study, on July 1, 2017, the City enacted By-law 448-2017, which became Chapter 354 of the Municipal Code. By-law 448-2017 launched “RentSafeTO”, a regulatory program with respect to the safety of apartment buildings. RentSafeTO applies to all multi-residential buildings with three or more storeys and 10 or more rental units in the City of Toronto.

[11] RentSafeTO is available for approximately 30% of Toronto’s residents who live in approximately 3,500 apartment buildings. The objectives of the “RentSafeTO” program were and are: strengthening enforcement of City by-laws; enhancing tenant engagement; enhancing tenant access to information; promoting preventative maintenance in apartment buildings; preventing the deterioration of standards; and recovering the cost of ensuring compliance through fees. Elements of the scheme are: mandatory registration of apartment buildings; audits and inspections of apartment buildings by the City; requiring the landlord to maintain a tenant notification board; requiring the landlord to maintain a waste management plan, requiring the landlord to maintain a good repair plan; and requiring the landlord to have a “Vital Service Disruption Plan.”

[12] RentSafeTO introduced a fee recovery model to the regulation of residential apartments. Before RentSafeTO, the City’s apartment building inspection program was funded from the general tax base. Between 2010 and 2015, the average annual operating budget was $1.36 million. With increased staffing and enforcement, the operating budget increased over the years, totaling $5.18 million in 2017.

[13] 650 Parliament St. is the location of a 22-storey apartment rental building. On August 21, 2018, there was an electrical fire at the apartment building, and 1,500 residents were evacuated and were left homeless. When the building owners were unable to provide housing and related services but agreed to indemnify the City, the City agreed to provide emergency social services until the owner could resume providing accommodation. Between August 21, 2018 and October 1, 2018, the City incurred costs of $3,754,994 providing emergency social services including the costs of lodging and food for the residents of 650 Parliament St.

[14] By early October 2018, the owners of the apartment at 650 Parliament St. began to take over the responsibility of providing services. The owners, however, did not indemnify the City for the costs of providing emergency social services and the City commenced a lawsuit for recovery of its costs.

[15] 260 Wellesley St. is a 33-storey apartment building. On January 22, 2019, there was a flood at the building. The flood damaged 546 residential units, and over 1,000 residents were without hydro, heat and water for five days. The City provided emergency housing and related services during this period of disruption. It opened a warming centre at the Wellesley Community Centre. Nine individuals were provided with overnight accommodation while other residents used various services at the Community Centre and returned to their residence at night.

[16] In response to these two evacuation incidents, City Staff engaged in a consultive process with those affected and with representatives of tenants, landlords, and building owners to generate ideas on how to improve the response to similar emergencies. The result was recommendations for changes to be made to RentSafeTO.

[17] In a report dated June 19, 2019, City Staff recommended an amendment to Chapter 354 of the City of Toronto Municipal Code to require building owners/operators to develop a Vital Service Disruption Plan that included provisions to support tenants and residents during periods of prolonged vital service disruption with accommodation, water and food. City Staff recommended that the Executive Director of MLS (Municipal Licensing and Standards) be given delegated authority to set the standards for a Vital Service Disruption Plan.

[18] On July 16, 2019, the City enacted By-law 1121-2019, which amended Chapter 354 of the City of Toronto Municipal Code. By-law 1121-2019 required owners/operators of apartment buildings to have a Vital Service Disruption Plan.

[19] In a report dated October 29, 2019, City Staff recommended the introduction of a variable fee for full recovery of costs associated with the City providing emergency social services when an apartment building became uninhabitable and the landlord did not provide re-housing. The report recommended that the fee should include direct aid costs as outlined in the Canadian Red Cross Personal Disaster Assistance Guidelines as well as administrative expenses and ancillary costs associated with providing emergency social services.

[20] On November 26, 2019, the City enacted By-law 1750-2019 to amend Chapter 441 of the Municipal Code to introduce the following full cost recovery fee:

Cost recovery related to the provision of Emergency Social Services in Apartment Buildings with three or more stories and 10 or more units where a substantial portion of a building becomes uninhabitable because of a disruption and the landlord fails to provide re-housing.

[21] In January 2020, the City of Toronto released its Vital Service Disruption Plan requiring an apartment building owner/operator to provide, at its own expense, appropriate temporary accommodations to tenants within 24 hours of the disruption’s onset.

[22] On April 1, 2021, an amendment to the City’s Fees By-law came into force. This amendment added a statement that a service provided by the City or on the City’s behalf shall be paid by the person receiving the service whether or not they requested the service.

D. City of Toronto Act, 2006

[23] The relevant provisions of the City of Toronto Act, 2006 are set out below:

6 (1) The powers of the City under this or any other Act shall be interpreted broadly so as to confer broad authority on the City to enable the City to govern its affairs as it considers appropriate and to enhance the City’s ability to respond to municipal issues.

Broad authority

8 (1) The City may provide any service or thing that the City considers necessary or desirable for the public.

(2) The City may pass by-laws respecting the following matters:

6. Health, safety, and well-being of persons.

7. Services and things that the City is authorized to provide under subsection (1).

8. Protection of persons and property, including consumer protection.

9. Structures, including fences and signs.

10. Business licensing.

Scope of by-laws generally

10 (1) Without limiting the generality of section 6 and except as otherwise provided, a by-law under this Act may be general or specific in its application and may differentiate in any way and on any basis the City considers appropriate.

Conflict with legislation, etc.

11 (1) A city by-law is without effect to the extent of any conflict with,

(a) a provincial or federal Act or a regulation made under such an Act; or

(b) an instrument of a legislative nature, including an order, licence or approval, made or issued under a provincial or federal Act or a provincial or federal regulation.

Same

(2) Without restricting the generality of subsection (1), there is a conflict between a city by-law and an Act, regulation or instrument described in that subsection if the by-law frustrates the purpose of the Act, regulation or instrument.

Application to quash by-law, etc.

214 (1) Upon the application of any person, the Superior Court of Justice may quash a by-law, order or resolution of the City or a local board of the City in whole or in part for illegality.

259 (1) Without limiting sections 7 and 8, those sections authorize the City to pass by-laws imposing fees or charges on persons,

(a) for services or activities provided or done by or on behalf of it;

(b) for costs payable by it for services or activities provided or done by or on behalf of any other municipality or any local board; and

(c) for the use of its property including property under its control.

Local board

(1.1) […]

Same

(2) A fee or charge imposed for capital costs related to services or activities may be imposed on persons not receiving an immediate benefit from the services or activities but who will receive a benefit at some later point in time.

Same

(3) The costs included in a fee or charge may include costs incurred by the City or local board (extended definition) related to administration, enforcement and the establishment, acquisition and replacement of capital assets.

Fees for mandatory services, etc.

(4) A fee or charge may be imposed whether or not it is mandatory for the City or local board (extended definition) imposing the fee or charge to provide or do the service or activity, pay the costs or allow the use of its property.

Conflict

(5) In the event of a conflict between a fee or charge by-law and this Act, other than this Part, or any other Act or a regulation made under any other Act, the by-law prevails.

Restriction, fees and charges

261 (1) No fee or charge by-law shall impose a fee or charge that is based on, is in respect of or is computed by reference to,

(a) […]

(b) the use, purchase or consumption by a person of property other than property belonging to or under the control of the City or local board (extended definition) that passes the by-law;

(c) the use, consumption or purchase by a person of a service other than a service provided or performed by or on behalf of or paid for by the City or local board (extended definition) that passes the by-law;

(d) the benefit received by a person from a service other than a service provided or performed by or on behalf of or paid for by the City or local board (extended definition) that passes the by-law; or

(e) […]

E. City of Toronto By-law 1121-2019

[24] City of Toronto By-law 1121-2019 is set out below:

To amend City of Toronto Municipal Code Chapter 354, Apartment Buildings.

Whereas Council wishes to make certain updates to Chapter 354, Apartment Buildings, to ensure that adequate measures are in place respecting building safety and maintenance issues; and Whereas notice as required has been provided;

The Council of the City of Toronto enacts:

1. City of Toronto Municipal Code Chapter 354, Apartment Buildings, is amended as follows:

A. by adding the following as a new § 354-3.10:

§ 354-3.10. Vital Service Disruption Plan.

A. An owner or operator shall develop and maintain a Vital Service Disruption Plan, in a form and manner satisfactory to the Executive Director.

B. The Executive Director, in consultation with the Office of Emergency Management, is authorized to set standards and minimum requirements for the Vital Service Disruption Plan required in subsection A.

C. An owner or operator who in the opinion of the Executive Director does not implement the Vital Service Disruption Plan required in accordance with this section during a time of prolonged vital service disruption is guilty of an offence.

F. City of Toronto By-law 1750-2019

[25] City of Toronto By-law 1750-2019 is set out below:

To amend City of Toronto Municipal Code Chapter 354, Apartment Buildings and Chapter441, Fees and Charges.

Whereas under sections 7 and 8 of the City of Toronto Act, 2006, the City may pass by-laws in respect of the health, safety and well-being of persons and the economic, social and environmental well-being of the City; and Whereas Council authorized the adoption of City of Toronto Municipal Code Chapter 354, Apartment Buildings, to provide regulations for the operation of apartment buildings within the City of Toronto to better protect the public and enhance the quality of life and living standards for tenants; and Whereas Council has authorized amendments to City of Toronto Municipal Code Chapter 354, Apartment Buildings and Chapter 441, Fees and Charges;

The Council of the City of Toronto enacts:

1. Municipal Code Chapter 354 is amended by:

2. Schedule 12, Municipal Licensing and Standards, of Appendix C of City of Toronto Municipal Code Chapter 441 is amended by adding the following new fee:

Ref. No.	Service	Fee Description	Category	Fee Basis	Fee	Annual Adjustment
	Private Properties	Cost recovery related to the provision of Emergency Social Services in Apartment Buildings with three or more stories and 10 or more units where a substantial portion of a building becomes uninhabitable because of a disruption and the landlord fails to provide re-housing.	Full Cost Recovery	Actual Cost to Provide Emergency Social Services	Variable	No

3. Section 1 of this by-law comes into force on March 1, 2020 and Section 2 comes into force on the date this by-law is enacted and passed.

G. Residential Tenancies Act, 2006

[26] For present purposes, the relevant provisions of the Residential Tenancies Act, 2006 are set out below. The excerpt below focuses on the provisions of the Residential Tenancies Act, 2006 that impose obligations on landlords with respect to the state of repair of the rental units including whether the accommodation is habitable.

PART I

INTRODUCTION

Purposes of Act

1 The purposes of this Act are to provide protection for residential tenants from unlawful rent increases and unlawful evictions, to establish a framework for the regulation of residential rents, to balance the rights and responsibilities of residential landlords and tenants and to provide for the adjudication of disputes and for other processes to informally resolve disputes.

Interpretation

2 (1) In this Act,

“municipal taxes and charges” means taxes charged to a landlord by a municipality and charges levied on a landlord by a municipality and includes taxes levied on a landlord’s property under Division B of Part IX of the Education Act and taxes levied on a landlord’s property in unorganized territory, but “municipal taxes and charges” does not include,

(a) charges for inspections done by a municipality on a residential complex related to an alleged breach of a health, safety, housing or maintenance standard,

(b) charges for emergency repairs carried out by a municipality on a residential complex,

(c) charges for work in the nature of a capital expenditure carried out by a municipality,

(d) charges for work, services or non-emergency repairs performed by a municipality in relation to a landlord’s non-compliance with a by-law,

(e) penalties, interest, late payment fees or fines,

(f) any amount spent by a municipality under subsection 219 (1) or any administrative fee applied to that amount under subsection 219 (2), or

(g) any other prescribed charges

“services and facilities” includes,

(a) furniture, appliances and furnishings,

(b) parking and related facilities,

(c) laundry facilities,

(d) elevator facilities,

(e) common recreational facilities,

(f) garbage facilities and related services,

(g) cleaning and maintenance services,

(h) storage facilities,

(i) intercom systems,

(j) cable television facilities,

(k) heating facilities and services,

(l) air-conditioning facilities,

(m) utilities and related services, and

(n) security services and facilities.

utilities” means heat, electricity and water;

“vital service” means hot or cold water, fuel, electricity, gas or, during the part of each year prescribed by the regulations, heat.

Frustrated contracts

19 The doctrine of frustration of contract and the Frustrated Contracts Act apply with respect to tenancy agreements.

part iii responsibilities of landlords

Landlord’s responsibility to repair

20 (1) A landlord is responsible for providing and maintaining a residential complex, including the rental units in it, in a good state of repair and fit for habitation and for complying with health, safety, housing and maintenance standards.

Same

(2) Subsection (1) applies even if the tenant was aware of a state of non-repair or a contravention of a standard before entering into the tenancy agreement.

Landlord’s responsibility re services

21 (1) A landlord shall not at any time during a tenant’s occupancy of a rental unit and before the day on which an order evicting the tenant is executed, withhold the reasonable supply of any vital service, care service or food that it is the landlord’s obligation to supply under the tenancy agreement or deliberately interfere with the reasonable supply of any vital service, care service or food.

Non-payment

(2) For the purposes of subsection (1), a landlord shall be deemed to have withheld the reasonable supply of a vital service, care service or food if the landlord is obligated to pay another person for the vital service, care service or food, the landlord fails to pay the required amount and, as a result of the non-payment, the other person withholds the reasonable supply of the vital service, care service or food.

Landlord not to interfere with reasonable enjoyment

22 A landlord shall not at any time during a tenant’s occupancy of a rental unit and before the day on which an order evicting the tenant is executed substantially interfere with the reasonable enjoyment of the rental unit or the residential complex in which it is located for all usual purposes by a tenant or members of his or her household.

Order, repair, comply with standards

30 (1) If the Board determines in an application under paragraph 1 of subsection 29 (1) that a landlord has breached an obligation under subsection 20 (1) or section 161, the Board may do one or more of the following:

1. Terminate the tenancy.

2. Order an abatement of rent.

3. Authorize a repair or replacement that has been or is to be made, or work that has been or is to be done, and order its cost to be paid by the landlord to the tenant.

4. Order the landlord to do specified repairs or replacements or other work within a specified time.

5. Order the landlord to pay a specified sum to the tenant for,

i. the reasonable costs that the tenant has incurred or will incur in repairing or, where repairing is not reasonable, replacing property of the tenant that was damaged, destroyed or disposed of as a result of the landlord’s breach, and

ii. other reasonable out-of-pocket expenses that the tenant has incurred or will incur as a result of the landlord’s breach.

6. Prohibit the landlord from charging a new tenant under a new tenancy agreement an amount of rent in excess of the last lawful rent charged to the former tenant of the rental unit, until the landlord has,

i. completed the items in work orders for which the compliance period has expired and which were found by the Board to be related to a serious breach of a health, safety, housing or maintenance standard, and

ii. completed the specified repairs or replacements or other work ordered under paragraph 4 found by the Board to be related to a serious breach of the landlord’s obligations under subsection 20 (1) or section 161.

7. Prohibit the landlord from giving a notice of a rent increase for the rental unit until the landlord has,

i. completed the items in work orders for which the compliance period has expired and which were found by the Board to be related to a serious breach of a health, safety, housing or maintenance standard, and

ii. completed the specified repairs or replacements or other work ordered under paragraph 4 found by the Board to be related to a serious breach of the landlord’s obligations under subsection 20 (1) or section 161.

8. Prohibit the landlord from taking any rent increase for which notice has been given if the increase has not been taken before the date an order under this section is issued until the landlord has,

i. completed the items in work orders for which the compliance period has expired and which were found by the Board to be related to a serious breach of a health, safety, housing or maintenance standard, and

ii. completed the specified repairs or replacements or other work ordered under paragraph 4 found by the Board to be related to a serious breach of the landlord’s obligations under subsection 20 (1) or section 161.

9. Make any other order that it considers appropriate.

Other orders re s. 29

31 (1) If the Board determines that a landlord, a superintendent or an agent of a landlord has done one or more of the activities set out in paragraphs 2 to 6 of subsection 29 (1), the Board may,

(a) order that the landlord, superintendent or agent may not engage in any further activities listed in those paragraphs against any of the tenants in the residential complex;

(b) order that the landlord, superintendent or agent pay a specified sum to the tenant for,

(i) the reasonable costs that the tenant has incurred or will incur in repairing or, where repairing is not reasonable, replacing property of the tenant that was damaged, destroyed or disposed of as a result of the landlord, superintendent or agent having engaged in one or more of the activities listed in those paragraphs, and

(ii) other reasonable out-of-pocket expenses that the tenant has incurred or will incur as a result of the landlord, superintendent or agent having engaged in one or more of the activities listed in those paragraphs;

(c) order an abatement of rent;

(d) order that the landlord pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court;

(e) order that the tenancy be terminated;

(f) make any other order that it considers appropriate.

Same

(2) If in an application under any of paragraphs 2 to 6 of subsection 29 (1) it is determined that the tenant was induced by the conduct of the landlord, the superintendent or an agent of the landlord to vacate the rental unit, the Board may, in addition to the remedies set out in subsection (1), order that the landlord pay a specified sum to the tenant for,

(a) all or any portion of any increased rent which the tenant has incurred or will incur for a one-year period after the tenant has left the rental unit; and

(b) reasonable out-of-pocket moving, storage and other like expenses which the tenant has incurred or will incur. 2006, c. 17, s. 31 (2).

Order, s. 29 (1), par. 5

(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.

Effect of order allowing tenant possession

(4) An order under subsection (3) shall have the same effect, and shall be enforced in the same manner, as a writ of possession.

Expiry of order allowing tenant possession

(5) An order under subsection (3) expires,

(a) at the end of the 15th day after the day it is issued if it is not filed within those 15 days with the sheriff who has territorial jurisdiction where the rental unit is located; or

(b) at the end of the 45th day after the day it is issued if it is filed in the manner described in clause (a).

Eviction with termination order

32 If the Board makes an order terminating a tenancy under paragraph 1 of subsection 30 (1) or clause 31 (1) (e), the Board may order that the tenant be evicted, effective not earlier than the termination date specified in the order.

Tenant’s responsibility for repair of damage

34 The tenant is responsible for the repair of undue damage to the rental unit or residential complex caused by the wilful or negligent conduct of the tenant, another occupant of the rental unit or a person permitted in the residential complex by the tenant.

Termination only in accordance with Act

37 (1) A tenancy may be terminated only in accordance with this Act.

MUNICIPAL VITAL SERVICES BY-LAWS

Definition

215 In this Part,

“vital services by-law” means a by-law passed under section 216.

By-laws respecting vital services

216 (1) The council of a local municipality may pass by-laws,

(a) requiring every landlord to provide adequate and suitable vital services to each of the landlord’s rental units;

(b) prohibiting a supplier from ceasing to provide the vital service until a notice has been given under subsection 217 (1);

(c) requiring a supplier to promptly restore the vital service when directed to do so by an official named in the by-law;

(d) prohibiting a person from hindering, obstructing or interfering with or attempting to hinder, obstruct or interfere with the official or person referred to in subsection 218 (1) in the exercise of a power or performance of a duty under this section or sections 217 to 223;

(e) providing that a person who contravenes or fails to comply with a vital services by-law is guilty of an offence for each day or part of a day on which the offence occurs or continues;

(f) providing that every director or officer of a corporation that is convicted of an offence who knowingly concurs in the commission of the offence is guilty of an offence;

(g) authorizing an official named in the by-law to enter into agreements on behalf of the local municipality with suppliers of vital services to ensure that adequate and suitable vital services are provided for rental units. 2006, c. 17, s. 216 (1).

Exception

(2) A vital services by-law does not apply to a landlord with respect to a rental unit to the extent that the tenant has expressly agreed to obtain and maintain the vital services.

Contents of vital services by-law

(3) A vital services by-law may,

(a) classify buildings or parts of buildings for the purposes of the by-law and designate the classes to which it applies;

(b) designate areas of the local municipality in which the by-law applies;

(c) establish standards for the provision of adequate and suitable vital services;

(d)prohibit a landlord from ceasing to provide a vital service for a rental unit except when necessary to alter or repair the rental unit and only for the minimum period necessary to effect the alteration or repair;

(e) provide that a landlord shall be deemed to have caused the cessation of a vital service for a rental unit if the landlord is obligated to pay the supplier for the vital service and fails to do so and, as a result of the non-payment, the vital service is no longer provided for the rental unit.

Notice by supplier

217 (1) A supplier shall give notice of an intended discontinuance of a vital service only if the vital service is to be discontinued for the rental unit because the landlord has breached a contract with the supplier for the supply of the vital service.

Same

(2) The notice shall be given in writing to the clerk of the local municipality at least 30 days before the supplier ceases to provide the vital service.

Inspection

218 (1) An official named in a vital services by-law or a person acting under his or her instructions may, at all reasonable times, enter and inspect a building or part of a building with respect to which the by-law applies for the purpose of determining compliance with the by-law or a direction given under subsection 221 (1).

Same

(2) Despite subsection (1), the official or person shall not enter a rental unit,

(a) unless he or she has obtained the consent of the occupier of the rental unit after informing him or her that he or she may refuse permission to enter the unit; or

(b) unless he or she is authorized to do so by a warrant issued under section 231.

Services by municipality

219 (1) If a landlord does not provide a vital service for a rental unit in accordance with a vital services by-law, the local municipality may arrange for the service to be provided.

Lien

(2) The amount spent by the local municipality under subsection (1) plus an administrative fee of 10 per cent of that amount shall, on registration of a notice of lien in the appropriate land registry office, be a lien in favour of the local municipality against the property at which the vital service is provided.

No special lien

(3) Subsection 349 (3) of the Municipal Act, 2001 and subsection 314 (3) of the City of Toronto Act, 2006 do not apply with respect to the amount spent and the fee, and no special lien is created under either subsection.

Certificate

(4) The certificate of the clerk of the local municipality as to the amount spent is proof, in the absence of evidence to the contrary, of the amount.

Interim certificate

(5) Before issuing a certificate referred to in subsection (4), the clerk shall send an interim certificate by registered mail to the registered owner of the property that is subject to the lien and to all mortgagees or other encumbrancers registered on title.

Appeal

220 An affected owner, mortgagee or other encumbrancer may, within 15 days after the interim certificate is mailed, appeal the amount shown on it to the council of the local municipality.

Payments transferred

221 (1) If the local municipality has arranged for a vital service to be provided to a rental unit, an official named in the vital services by-law may direct a tenant to pay any or all of the rent for the rental unit to the local municipality.

Effect of payment

(2) Payment by a tenant under subsection (1) shall be deemed not to constitute a default in the payment of rent due under a tenancy agreement or a default in the tenant’s obligations for the purposes of this Act.

Use of money

222 (1) The local municipality shall apply the rent received from a tenant to reduce the amount that it spent to provide the vital service and the related administrative fee.

Accounting and payment of balance

(2) The local municipality shall provide the person otherwise entitled to receive the rent with an accounting of the rents received for each individual rental unit and shall pay to that person any amount remaining after the rent is applied in accordance with subsection (1).

H. GTAA’s Political Arguments

[27] In addition to its three legal arguments against By-laws 1121-2019 and 1750-2019, one of which is discussed below, the GTAA makes several political arguments against By-laws 1121-2019 and 1750-2019; i.e., arguments that the by-laws are bad public policy.

[28] The GTAA argues that it is bad and unfair policy to make landlords pay for emergency accommodation when the emergency is caused by the acts or omissions of the tenants; visualize accidental fires or intentional acts of arson and terrorism. The GTAA argues that it is unfair and bad policy that in the City’s unfettered discretion, landlords can be made responsible for the fee regardless of the circumstances leading to the displacement of tenants. The GTAA points out that the “City Emergency Accommodation User Fee” is not imposed on social housing providers, and that emergency could occur due to a vital service disruption from fire, flood or natural disaster for which the landlord has no responsibility. The City Emergency Accommodation User Fee is payable even in the case of an intentional tenant act, such as arson or terrorism.

[29] GTAA argues that it is bad policy and unfair to require landlords to provide temporary housing when there is no available insurance to landlords to cover the risk of tenant displacement expenses. In this regard, although Mr. Tetzlaff’s expert opinion evidence was challenged during his cross-examination, I find as a fact that at the current time, there are no insurance products on the market that would provide coverage to landlords for the cost of temporary accommodation for tenants. However, displacement cost insurance is available to tenants for an average annual premium between $200 to $400, and some landlords already require tenants to obtain tenant insurance as a stipulation of the rental agreement with the tenant.

[30] The GTAA argues that it is bad policy to require landlords to provide temporary housing because the landlords will pass on the costs of self-insurance to the tenants, and this will have the effect of diminishing the already scarce availability of affordable housing in the City of Toronto.

[31] Since political arguments are a matter for the electorate and not this court, I shall say no more about GTAA’s political arguments.

I. The Parties’ Arguments

1. The GTAA’s Submissions

[32] The GTAA submits that By-law 1750-2019 is illegal because it imposes a user fee on a landlord for a service it is not receiving and for which it receives no benefit, which is contrary to the fee-enabling provisions of the City of Toronto Act,2006.

[33] The GTAA argues that By-law 1750-2019 is illegal insofar as it requires a landlord to provide alternative accommodation to its tenants when a rental building becomes uninhabitable and empowers the City in its discretion to charge a “City Emergency Accommodation User Fee” to reimburse the City for its expense of providing that accommodation regardless of whether the landlord is at fault or the cause of the building becoming uninhabitable.

[34] The GTAA argues that a proper user fee is a fee charged by the government for the use of government services or facilities, but under By-law 1750-2019 no services are provided to the landlord. The GTAA objects that the City has created a purported fee that is imposed on a person that does not receive a service. The City may be providing a service - to tenants - but no services are provided to the landlord; insofar as the landlord is concerned, there is no connection between the service and the fee charged to the landlord. Thus, the GTAA submits that the fee under the by-laws is beyond the authority of the City under the City of Toronto Act, 2006. It is not lawful for the City to charge a fee to subsidize the costs of other municipal responsibilities. Further, the “City Emergency Accommodation User Fee” contravenes the restrictions on fees and charges set out in s. 261 of the City of Toronto Act, 2006.

2. The City of Toronto’s Submissions

[35] The City of Toronto submits that By-law 1121-2019 was lawfully enacted pursuant to the City’s powers under sections 7 and 8 of the City of Toronto Act, 2006 to enact by-laws with respect to the health, safety and well-being of persons and the economic, social, and environmental well-being of the City. In this regard, the By-law amended the regime governing the relationship between the City and multi-residential landlords, and under this regime, the City charges a fee for the service to landlords who are unable to provide temporary housing and housing-related services when the landlord’s property becomes uninhabitable for whatever reason. The City provides these services to landlords to ensure that they are able to comply with their legal obligations to house tenants. The fee accords with the City’s User Fee Policy, whose fundamental principle is that user fees should be utilized to finance those City services and goods that provide a direct benefit to specific users and that user fees should be set to recover the full cost of those services. The fact that the service provided to the landlord also benefits tenants does not make this fee for service illegal.

[36] The City submits that s. 259 of the City of Toronto Act, 2006 authorizes the City to pass by-laws imposing fees or charges on, among other things, persons for services or activities provided or done by or on behalf of it. The City’s power to levy fees and charges is elaborated in Chapter 441 of the City’s Municipal Code, which provides that all fees will be charged in accordance with the City’s User Fee Policy, on a Market Based, Province-Legislated, City Policy or Full Cost Recovery basis. The City submits that the Emergency Accommodation User Fee was lawfully enacted pursuant to these provisions.

[37] The City submits that Landlords have a contractual obligation to provide housing to a tenant and the landlord must bear the responsibility for providing this service, including in cases where the building becomes inhabitable for whatever reason.

[38] Under the Residential Tenancies Act, 2006, a landlord is obliged: (a) to maintain the residential complex in a good state of repair and fit for habitation and to comply with health, safety, housing and maintenance standards; (b) not to withhold any vital service, care service or food that is the landlord’s obligation to supply under the tenancy agreement; and (c) not interfere with the reasonable enjoyment of the rental unit. The City submits that a landlord whose building becomes uninhabitable is presumed to want to continue to provide housing to tenants, but when the landlord is unable to do so, for whatever reason, the City provides the relevant services, as needed. This enables the landlord to continue to provide accommodation and housing-related services to tenants, to ensure that such services are provided to tenants as seamlessly as possible, and to provide critical business continuity for landlords.

J. Is the Emergency Accommodation User Fee (s. 2 of By-law 1750-2019) an Illegal By-law?

1. Legal Background

[39] Municipal by-laws benefit from a presumption of validity, and courts require a clear demonstration before concluding a municipality’s decision was made without jurisdiction.[^3] The onus is on the applicant to prove the enactment falls outside a municipality’s powers.[^4] The courts are to take a broad and purposive approach to the construction and interpretation of municipal powers.[^5]

[40] Municipalities are creatures of the provinces, and municipalities can exercise only those powers conferred on them by provincial or federal legislation.[^6] A municipality may only exercise: (a) powers expressly conferred by statute; (b) powers necessarily or fairly implied by the power expressed in the statute; and (c) powers essential and not merely convenient to the implementation of the purposes of the municipal corporation.[^7]

[41] The enabling legislation constrains the scope of the municipality’s lawmaking power, and a municipal by-law will be illegal if it is inconsistent, not only with the letter, but also with the spirit or purpose of the enabling legislation.[^8] Public authorities, including municipalities, must not use their powers for purposes incompatible with or outside the scope of the purposes envisaged by their enabling statute.[^9]

[42] If a municipality enacts a by-law or resolution to exercise authority that it does not have, then the by-law or resolution is illegal and without force and effect and may be quashed as ultra vires or, when it is possible to sever the illegal portion, quashed in part.[^10]

[43] For examples, in Re Kirkpatrick and District of Maple Ridge,[^11] a municipality was held to be unable to charge a variable fee for a soil removal permit, although it had the authority to charge a flat fee. The court interpreted the enabling legislation, which expressly permitted variable fees in some situations, as excluding variable fees in all other situations. In Toronto (City) v. Wassilyn,[^12] under legislation empowering the municipality to regulate the selling of merchandise from a portable display unit, the municipality did not have the authority to regulate vendors selling event-tickets by requiring a permit.

2. Discussion and Analysis

[44] As I shall explain, I disagree with the City’s submissions, and while I shall express the argument somewhat differently, I agree with the GTAA’s submissions.

[45] The crux of the matter is whether the City under By-law 1121-2019 and By-law 1750-2019 can charge the “City Emergency Accommodation User Fee”. The parties are in agreement that the user fee in the immediate case is not a regulatory charge. A regulatory charge is not imposed for the provision of specific services or facilities; while, in contrast, a user fee is a fee charged by the government for the use of government services or facilities.[^13]

[46] In the immediate case, the City submits that it can charge the City Emergency Accommodation User Fee because it is providing a service to the Landlord in accordance with its authority under the City of Toronto Act, 2006 to enact laws with respect to the health, safety and well-being of persons and the economic well-being of the city. The City submits that its authority to enact by-laws with respect to health and safety etc. includes the City’s authority to regulate a landlord’s obligations to its tenants.

[47] The City submits that the imposition of the fee for services rendered, which is the crux of this dispute, complies with the City’s authority to impose fees for service under the City of Toronto Act, 2006 and with the City’s by-laws that regulate how fees for services are rendered. The GTAA, however, disputes that any services are provided to Landlords, and submits that landlords should not be obliged to pay for the City’s services to tenants.

[48] The GTAA denies that the City is providing a service to landlords by providing emergency housing to tenants when a building has become uninhabitable through no fault of the landlord. The GTAA denies that the City is providing a service to landlords by stepping in to fulfill the landlord’s responsibility to house its tenants in accordance with the provisions of the rental agreement because it denies that a landlord is obliged to provide housing when a building has become uninhabitable through no fault of the landlord.

[49] The place to begin the explanation why the GTAA’s argument is correct and why the City’s argument is wrong is to take the City at its word with respect to the service it says it is providing. The place to begin is to examine the language the City uses in the by-laws and in the Emergency Accommodation User Fee to describe and characterize: (a) the service it purports to be providing; (b) to whom that service is being provided; (c) who are the beneficiaries of that service; and (d) the purposes and utility of the service being provided by the City.

[50] In these regards, with my emphasis added, By-law 1750-2019 imposes a full cost recovery fee for the “actual cost to provide emergency social services.” The new fee is described in Schedule 12, Municipal Licensing and Standards, of Appendix C of City of Toronto Municipal Code Chapter 441 as “actual cost to provide emergency social services” or as “cost recovery related to the provision of Emergency Social Services in Apartment Buildings …”. In its argument, the City submits that By-law 1750-2019 provides a service to landlords who are unable to provide temporary housing and housing related services when the landlord’s property becomes uninhabitable for whatever reason. It thus appears from the City’s own language and its argument on this application that the service for which a fee is extracted is a fee for emergency social services provided to tenants when the landlord’s property becomes uninhabitable for whatever reason.

[51] It appears from the City’s argument that the major premise of the City’s argument is its understanding of landlord and tenant law that pursuant to the rental contract and the Residential Tenancies Act, 2006, landlords are legally obliged to provide habitable premises in all circumstances, and, thus, the City is providing a service when it provides emergency social services because this service discharges the landlord’s responsibility to provide habitable premises in all circumstances. This major premise, however, is false.

[52] Landlords are not universally obliged to provide temporary housing when the landlord’s property becomes uninhabitable for whatever reason. Landlords are in the business of providing social services. Landlords are not universally obliged by contract to provide social services to tenants. Landlords operating retirement homes and landlords operating assisted living accommodation may provide social services to their tenants, but operators of conventional apartment buildings are in the business of providing accommodation in exchange for rent. Moreover, contrary to the City’s submissions in its oral and written argument, landlords operating a typical residential apartment building do not have an obligation to provide accommodation to their tenants whenever the landlord’s property becomes uninhabitable for whatever reason.

[53] Thus, I agree with the GTAA’s submissions that no services and no benefit of a service is being received by the landlords under By-law 1750-2019. Landlords are not in the business of providing emergency social assistance and, generally speaking, landlords are under no obligation to do so. Landlords do not have a universal obligation to provide accommodation or social assistance when an apartment building becomes uninhabitable for whatever reason. Rental contracts can be terminated because of frustration and force majeure. Landlords are not in the business of subcontracting with the City to provide accommodation for their tenants when an apartment building or unit becomes uninhabitable for whatever reason.

[54] Were the City of Toronto to experience a 100-year storm or, alas with climate change, a 1,000-year storm, with hundreds of thousands of residential units made uninhabitable, then as By-law 1750-2019 is written, the City could unilaterally require landlords to take on the responsibility to provide emergency housing and charge landlords an Emergency Accommodation User Fee. This is not providing a service directly or indirectly to the Landlords who would have no obligation to provide emergency accommodation or social assistance in that catastrophe.

[55] In terms of the landlord’s responsibility to provide accommodation the reasons for the uninhabitability of the premises actually matter both as a matter of the contract between the landlord and the tenant and as a matter of the Residential Tenancies Act, 2006. There will be occasions where the Landlord and Tenant Board might impose on a landlord an obligation to house a tenant, for example where it is the landlord that failed to maintain the accommodation,[^14] but where it was the tenant that made his or her premises uninhabitable, that would be grounds for the Landlord and Tenant Board to authorize the eviction of the tenant and there would be no obligation on the landlord to provide replacement accommodation during the run-up to the hearing before the Landlord and Tenant Board.

[56] I agree with the City that services may be provided indirectly to the landlord when the City provides services to the landlord’s tenants. But that is not what occurs under By-law 1750-2019. Under that by-law the services provided by the City benefit the landlord’s tenants, but the services provide no service or benefit to the landlord directly or indirectly. Section 259 (1)(a) of the City of Toronto Act, 2006 authorizes the City to pass by-laws imposing a fee or charge on persons for services provided. However, I agree with the GTAA that the City’s by-laws in the immediate case do not authorize a charge on landlords for services provided because no services are provided directly or indirectly to landlords.

[57] I agree with the City that there are circumstances where it might lawfully impose something like the Emergency Accommodation User Fee. An example of a lawful charge might be pursuant to the municipal vital services by-law provisions of the Residential Tenancies Act, 2006, which authorize a municipality to require every landlord to provide adequate vital services (water, fuel, electricity, gas, heat) to each of the landlord’s rental units, but even this provision does not require a landlord to provide emergency housing or social services. Moreover, and in any event, By-law 1750-2019 was enacted pursuant to the City of Toronto Act, 2006 and not the Residential Tenancies Act, 2006’s provisions for municipal vital services by-laws.

[58] In the immediate case, the GTAA has met the onus of demonstrating that under By-law 1750-2019, the City charges a landlord a service fee when the City renders no service to the landlord. The City does not have the authority to impose a service fee when it does not provide a service.

[59] For completeness and clarity, I add that I agree with the City that in the circumstances of the immediate case there is no breach of s. 261 of the City of Toronto Act, 2006, which imposes restrictions on fees and charges. The problem in the immediate case is more fundamental; insofar as By-laws 1121-2019 and 1750-2019 impose a charge for the city providing its purported social service of emergency accommodation and passing the expense of doing so onto landlords regardless of why a building became uninhabitable, there is no statutory authority to do so and this provision should be excised from the by-laws.

[60] To be clear, the provisions of By-law 1121-2019 that require a “Vital Service Disruption Plan” are not objectionable and the balance of the provisions of By-laws 1121-2019 and 1750-2019 which amend and augment City of Toronto Municipal Code Chapter 354, Apartment Buildings are intra vires the authority of the City. As I explained at the outset, it is not necessary to opine on whether the “City Emergency Accommodation User Fee” conflicts with the Residential Tenancies Act, 2006 or is an illegal tax.

K. Conclusion

[61] For the above reasons, the City of Toronto does not have the legislative authority to require a landlord to provide emergency social services. It follows that just s. 2 of By-law 1750-2019 and just the provisions of the Vital Service Disruption Plan that require an apartment owner/operator at its own expense to provide emergency social services should be quashed; however, the rest of By-law 1121-2019 and of By-law 1750-2019 and of the Vital Service Disruption Plan are sound.

[62] Order accordingly.

[63] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the submissions of the GTAA within twenty days of the release of these reasons for decision, followed by the City’s submissions within a further twenty days.

Perell, J.

Released: November 9, 2022

COURT FILE NO.: CV-21-00664650-0000

DATE: 20221109

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GREATER TORONTO APARTMENT ASSOCIATION

Applicant

• and -

CITY OF TORONTO

Respondent

REASONS FOR DECISION

PERELL J.

Released: November 9, 2022

[^1]: S.O. 2006, c. 11, Sched. A. [^2]: S.O. 2006, c. 17. [^3]: Croplife Canada v. Toronto (City) (2005), 2005 15709 (ON CA), 75 O.R. (3d) 357 (C.A.), leave to appeal refused, [2005] S.C.C.A. No. 329. [^4]: Fortin v. Sudbury 2020 ONSC 5300; Ontario Restaurant Hotel & Motel Assn v. Toronto (City) 2005 36152 (ON CA), [2005] O.J. No 4268 (C.A.). [^5]: London Property Management Assn. v. London (City) 2011 ONSC 4710; Cash Converters Canada Inc. v. Oshawa (City), 2007 ONCA 502; United Taxi Drivers' Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19. [^6]: Magder v. Ford, 2013 ONSC 263 at para 64; Pacific National Investments Ltd. v. Victoria (City) (2000), 2000 SCC 64, 193 D.L.R. (4th) 385 (S.C.C.); Toronto (City) v. Wassilyn (1999), 1999 7317 (ON CA), 43 O.R. (3d) 97 (C.A.); Shell Canada Products Ltd. v. Vancouver City (1994), 1994 115 (SCC), 110 D.L.R. (4th) 1 (S.C.C.); R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674. [^7]: Pacific National Investments Ltd. v. Victoria (City) (2000), 2000 SCC 64, 193 D.L.R. (4th) 385 (S.C.C.); Nanaimo (City) v. Rascal Trucking Ltd. (2000), 2000 SCC 13, 183 D.L.R. (4th) 1 (S.C.C.); Shell Canada Products Ltd. v. Vancouver City (1994), 1994 115 (SCC), 110 D.L.R. (4th) 1 (S.C.C.); R. v. Sharma (1993), 1993 165 (SCC), 100 D.L.R. (4th) 167 (S.C.C.); R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674; Ottawa Electric Light Co. v. City of Ottawa (1906), 12 O.L.R. 290 (C.A.). [^8]: Barrick Gold Corp. v. Ontario (2001) 2000 16929 (ON CA), 51 O.R. (3d) 194 (C.A.); Stadium Corp. of Ontario Ltd. v. Toronto (City) (1993), 1993 8681 (ON CA), 12 O.R. (3d) 646 (C.A.); Ottawa-Carleton (Regional Municipality) v. Marlborough (Township) (1974), 5 O.R. (2d) 297 (H.C.J), affd. (1974) 5 O.R. (2d) 258n (C.A.). [^9]: Shell Canada Products Ltd. v. Vancouver City (1994), 1994 115 (SCC), 110 D.L.R. (4th) 1 (S.C.C.); Stadium Corp. of Ontario Ltd. v. Toronto (City) (1993), 1993 8681 (ON CA), 12 O.R. (3d) 646 (C.A.); Re Numusa Enterprises Ltd. and City of Etobicoke (1984), 1984 2074 (ON SC), 47 O.R. (2d) 769 (Div. Ct.); Re Robinson and Board of Commissioners of Police of the City of Kingston (1980) 1980 1758 (ON SC), 113 D.L.R. (3d) 215 (Ont. Div. Ct.). [^10]: Pacific National Investments Ltd. v. Victoria (City) (2000), 2000 SCC 64, 193 D.L.R. (4th) 385 (S.C.C.); Nanaimo (City) v. Rascal Trucking Ltd. (2000), 2000 SCC 13, 183 D.L.R. (4th) 1; Markham v. Sandwich South (Township) (1998), 1998 5312 (ON CA), 160 D.L.R. (4th) 497 (Ont. C.A.); 710357 Ontario Ltd. v. Penetanguishene (Town) (1998), 47 M.P.L.R. (2d) 163 (Ont. C.A.); Shell Canada Products Ltd. v. Vancouver (City) (1994), 1994 115 (SCC), 110 D.L.R. (4th) 1 (S.C.C.); R. v. Greenbaum, 1993 166 (SCC), [1993] 1 S.C.R. 674; Toronto (City) v. Wassilyn (1999), 1999 7317 (ON CA), 43 O.R. (3d) 97 (C.A); Oro (Township) v. 576487 Ontario Ltd. (1994), 1994 1031 (ON CA), 18 O.R. (3d) 676 (C.A.); Re Christie Taxi Ltd. v. Doran (1976), 1975 336 (ON CA), 10 O.R. (2d) 313 (C.A.); Re Howard and City of Toronto (1927), 1928 427 (ON CA), 61 O.L.R. 563 (C.A.); Wilmot v. The City of Kingston, 1945 87 (ON CA), [1945] O.R. 532 (C.A.). [^11]: (1986), 1986 25 (SCC), 30 D.L.R. (4th) 431 (S.C.C.). [^12]: (1999), 1999 7317 (ON CA), 43 O.R. (3d) 97 (C.A.). [^13]: 620 Connaught Ltd. v. Canada (Attorney General), 2008 SCC 7 at para. 19-20. [^14]: Swan v. Liang, 2019 ONSC 1573 (Div. Ct.); TST-98969-18 (Re), 2018 141685 (ON LTB).