Endorsement

Court File No.: CV-23-92491
Date: 2025/01/22
Ontario Superior Court of Justice

B E T W E E N:
Marie-Jeanne Carola, Plaintiff
– and –
VIP Realty Inc. (carrying on business as Keller Williams Integrity Realty), and Diane Gillette, Defendants

Appearances:
Charles Genest, for the Plaintiff
Michael Swindley, for the Defendants
Heard: January 16, 2025 (at Ottawa)

Justice Michelle Flaherty

Introduction

[1] The plaintiff, Ms. Carola, is the owner of a property in Cumberland. She entered into a leasing agreement with tenants who, unfortunately, caused very significant damage to her property. Ms. Carola has filed a claim alleging that the defendants’ real estate agent and brokerage firm were negligent because they failed to adequately identify and vet the tenants they recommended to Ms. Carola.

[2] The defendants have brought this motion seeking to dismiss the action. They submit that the statement of claim fails to disclose a cause of action, that its subject matter falls within the exclusive jurisdiction of the Landlord Tenant Board (“LTB”), and that the claim is statute barred.

[3] For the reasons that follow, the motion is dismissed.

Facts Alleged in the Statement of Claim

[4] The defendants represented Ms. Carola in listing her property for rent.

[5] The personal defendant, Ms. Gillette, introduced two prospective tenants to Ms. Carola. Ms. Gillette did not meet with the prospective tenants herself, nor did she attend with them at the property for showings. She provided the plaintiff with a family photograph of the tenants as well as some bank statements. She advised that all necessary background checks had been completed, but she did not provide copies of the tenants’ rental application or their identification. She told Ms. Carola that she would be lucky to have these individuals as tenants.

[6] Ms. Carola’s property was ultimately rented to these tenants in about August 2020. Issues arose almost immediately:

• In October 2020, the tenants broke a lock and cut the wires to the building’s security system. Police were called but did not lay charges as they “believed it was a civil matter.”
• In November 2020, Ms. Carola began eviction procedures with the LTB.
• In late 2020, the tenants began harassing Ms. Carola. She feared for her and her family’s safety.
• In December 2020, Ms. Carola discovered that the tenants had provided fraudulent identification when they entered into the lease agreement. She also learned that at least one of the tenants had a lengthy criminal record, including for growing marijuana in rental properties. She contacted police.
• In December 2020, Ms. Carola filed a complaint against Ms. Gillette with the Real Estate Council of Ontario (“RECO”). On May 19, 2021, RECO found that Ms. Gillette had failed to meet relevant real estate standards.
• In March 2021, the tenants were arrested and charged with fraud and forgery.

[7] In July 2021, the tenants vacated the property.

[8] Ms. Carola says she did not discover the extent of physical damage until she accessed the property on July 5, 2021. The interior of the home was destroyed, it required major repairs, and the damage was so severe that the residence was not liveable or rentable.

[9] The Notice of Action was filed on June 23, 2023. Ms. Carola claims damages in the amount of $199,902.

The Issues

[10] The motion raises the following issues:

• Should the claim be dismissed under Rule 21.01(3)(a) because its subject matter falls within the exclusive jurisdiction of the LTB?
• Is Ms. Carola’s claim statute barred under Rule 21.01(1)(a) because the claims relate to matters that occurred more than two years before she filed a notice of action?
• Should the claim be struck under Rule 21.01(1)(b) because it discloses no reasonable cause of action?

[11] The parties agree that, for the purposes of a motion under Rule 21.01, the pleadings must be given a generous interpretation, and I must take all facts pleaded in the statement of claim as true, unless they are patently unprovable.

Analysis

The Court Has Jurisdiction

[12] The defendants submit that the essential character of the claim relates to the lease agreement and the tenants' occupancy of the property. According to the defendants, these issues fall squarely within the exclusive jurisdiction of the LTB under the Residential Tenancies Act, 2006, SO 2006, c 17 (“RTA”).

[13] In support of their position, the defendants rely on Moore v. Habib-Allah, 2022 ONSC 5290. In that case, the claim named several defendants, including the real estate agent who had helped the plaintiff arrange the rental. Justice Ryan-Bell found that the claim disclosed no reasonable cause of action against the real estate agent. She also concluded that the claims fell within the exclusive jurisdiction of the LTB.

[14] Applying AC Concrete Forming Ltd. v. The Residential Low Rise Forming Contractors Association of Metropolitan Toronto and Vicinity, 2008 ONCA 864, 93 O.R. (3d) 529, Justice Ryan Bell began by determining the essential character of the dispute in light of the factual matrix of the case. On the facts before her, she held that the essential character was the plaintiff’s eviction. While the claim made allegations of negligence, fraud, unjust enrichment, emotional suffering, and malice, all of these issues allegedly arose because of Ms. Moore’s eviction from the rental property. The court concluded that the central issue -- the eviction -- was within the exclusive jurisdiction of the LTB. I note that the Moore decision makes no reference to section 207 of the RTA, which may not have been before Justice Ryan Bell and which I will discuss shortly.

[15] The factual matrix of this case is different from in Moore. Here, the only defendants are the real estate agent and her brokerage. They are not parties to the lease, they were not the tenants or the landlords, and they have never been in possession of the property. The essential allegation is that the defendants were negligent in failing to adequately vet and identify the tenants before the plaintiff entered into the lease agreement. The statement of claim seeks damages that flow from the lease agreement as well as compensation for professional fees and unpaid rent. However, the nature of the damages claimed does not alter the essential character of the claim against the defendants, which is that they were negligent.

[16] The alleged negligence of a real estate agent is not within the LTB’s exclusive jurisdiction. First, the LTB is a creature of statute, and its jurisdiction is limited to the powers granted by the RTA. For matters involving damage to rental units, the LTB’s powers under s. 89(1) of the RTA is limited to tenants in possession of the rental unit. Under s. 90, its powers are limited to matters involving a misrepresentation of income, provided the application is brought while the tenants are in possession of the unit. I cannot conclude that either of these provisions empower the LTB to determine whether a real estate agent or brokerage exercised the appropriate standard of care before their client entered into a leasing agreement. In any event, under articles 89 and 90 of the RTA, any jurisdiction the LTB seems to have ended when the tenants vacated the property in July 2021.

[17] Second, under article 207(1) of the RTA the monetary jurisdiction of the LTB is limited to the greater of $10,000 and the monetary jurisdiction of the small claims court. In this case, the damages claimed exceed the amounts within the LTB’s jurisdiction. Ms. Carola is therefore entitled to commence her proceeding in the Superior Court: see Letestu Estate v. Ritlyn Investments Limited, 2017 ONCA 442, para. 11.

[18] Accordingly, the request to strike the claim under Rule 21.01(3)(a) is dismissed. The LTB does not have exclusive jurisdiction over the essential character of the dispute raised in the statement of claim.

The Claim is Not Statute Barred

[19] As the court explained in Kaynes v. BP, PLC, 2019 ONSC 6464, para. 109:

Courts may determine whether a claim is statute barred on rule 21.01(1)(a) motions, where the determination of the issue does not depend on findings of fact. Where the availability of a limitation period defence depends upon findings of fact, it is a question of mixed fact and law and not a question of law that can be decided on a motion under Rule 21. A plaintiff’s claim should not be struck under rule 21.01(1)(a) based on the expiry of a limitation period, where there is a factual controversy about when the claim was discovered.

[20] The Limitations Act, 2002, SO 2002, c 24, Sched B states, at s. 5(1):

A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[21] The defendants submit that there is no factual controversy in this case: the conditions of article 5(2) are met based on the facts pleaded by Ms. Carola. According to the statement of claim, Ms. Carola had knowledge of damage to the property in October 2020. By at least May 19, 2021, when RECO advised that Ms. Gillette had not met applicable standards, Ms. Carola knew of the defendants’ alleged act or omission. According to the defendants, the Notice of Action was filed more than two years after the claim was discovered and the matter should be dismissed.

[22] Counsel for Ms. Carola submits that, while she was aware of minor damage in October 2020, she did not know the extent of the damages until she accessed the property in July 2021. She submits that the limitation period only began to run in July 2021, when the full nature of damages was discovered and it became apparent that a legal proceeding would be appropriate.

[23] In Kaynes v. BP, PLC, 2019 ONSC 6464, para. 83, the court explained that, for the limitation period to begin to run, the plaintiff need not know the full extent or quantification of her damages. Rather, the period begins to run with the plaintiff’s subjective or objective appreciation of being worse off than before the defendants’ conduct. However, the court went on to state (at para. 85):

The appropriateness factor of 5(1)(a)(iv) introduces some uncertainty in the operation of the Limitations Act, 2002 but it also introduces some flexibility and fairness in the application of the discovery principle, which presumptively operates against the claimant as soon as a cause of action becomes objectively apparent. In Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218, the Court of Appeal held that for s. 5(1)(a)(iv) to have a delaying effect, there must be a juridical reason for the person to wait; i.e., there must be an explanation rooted in law as to why commencing a proceeding was not yet appropriate. Appropriateness must be assessed on the facts of each particular case, including taking into account the particular interests and circumstances of the plaintiff.

[24] At this stage of the proceeding and based on the information contained in the statement of claim, I am not prepared to dismiss the action as statute barred. The statement of claim discloses that Ms. Carola was aware of minor damage to the property before July 2021. Keeping in mind that section 5(1)(a)(iv) is intended to deter needless litigation and discourage parties from resorting to litigation at the drop of a hat, I accept that a legal proceeding would not have been appropriate given the nature of the damages Ms. Carola was aware of before July 2021. Moreover, given the factual ambiguity about the timing of the unpaid rent, I cannot determine when that aspect of the claim was discoverable. Accordingly, there is no basis for dismissing the claim as untimely.

The Statement of Claim Discloses a Reasonable Cause of Action

[25] Under Rule 21.01(2)(b), a claim will only be dismissed if it is "plain and obvious" that it has no reasonable prospect of success. A claim will be struck where the allegations it contains do not give rise to a recognized cause of action or where the claim fails to plead the necessary legal elements of a recognized cause of action.

[26] In this case, Ms. Carola alleges the defendants were negligent. The constituent elements that must be pleaded when alleging negligence are: (i) the alleged duty of care owed by the defendant to the plaintiff; (ii) that the defendant breached the alleged duty of care; and (iii) that damage resulted from the breach: Moore, supra at para. 37.

[27] The defendants accept that they owe a duty of care to Ms. Carola. However, they argue the claim should be dismissed because Ms. Carola has not pleaded facts to show the standard of care was not met in the circumstances.

[28] In my view, the statement of claim discloses a reasonable cause of action. It pleads all the elements of negligence, including that the defendants did not meet the standard of care. Among other things, the statement of claim asserts that the defendants breached their duty of care by failing to take reasonable steps to ensure tenants were trustworthy, solvent, had no prior history of property damage or criminal activity.

[29] The request to strike the claim under Rule 21.01(3)(a) is dismissed. On a generous reading and assuming the alleged facts to be true, the statement of claim discloses a reasonable cause of action.

Conclusion

[30] For the above reasons, the motion is dismissed.

[31] If the parties are unable to agree on costs, they may make brief written submissions (no longer than 2 pages, exclusive of costs outlines) within 30 days.

Justice Michelle Flaherty
Released: January 22, 2025