[2] The Review Decision confirmed an order of Board Member Dawn Wickett terminating the Appellant’s tenancy and evicting her on the basis of her failure to pay rent. In making this order, Board Member Wickett made a preliminary finding - upheld on review by Board Member Aulbrook - that the Respondent’s Notice of Termination complied with s. 43(1) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “RTA”).
[3] The Appellant submits that there was an error of law regarding the interpretation of s. 43(1) of the RTA. That section permits landlords and tenants to have their notices of termination signed by an agent. The Respondent used a property manager as his agent. The Appellant submits that s. 43(1) should be interpreted as requiring that, for an agent to select, complete and sign the notice of termination form, the agent must be a member of the Law Society of Ontario or otherwise licensed to practice law.
[4] In her preliminary decision, Board Member Wickett noted that the term “agent” is not defined in the RTA and adopted the dictionary definition of “one who is authorized to act for or in the place of another.” She noted that if the Legislature had intended to limit agents to people licensed by the Law Society of Ontario it would have done so, just as was done in another section of the RTA. Section 185 of the RTA expressly provides that an application to the LTB may be filed by the applicant or “a person representing the applicant under the authority of the Law Society Act”. As well, the Board Member noted that the proposed narrow interpretation ignored references to the term “agent” elsewhere in the RTA, which did not support the appellant’s position.
[5] In the Review Decision, Board Member Aulbrook confirmed Board Member Wickett’s order.
[6] The standard of review on this appeal is correctness. As previously found by this Court, respect for the specialized function of the LTB is still important – our interpretative task is assisted by the LTB’s interpretation of the words of the RTA, its general scheme and policy objectives: Planet Energy (Ontario) Corp. v. Ontario Energy Board, 2020 ONSC 598, at para. 31.
[7] We agree with the decision of Board Member Wickett, as confirmed in the Review Decision. The RTA does not define “agent” and uses the term “agent” in many of its provisions that support a broad interpretation of that term. Elsewhere in the RTA, the legislation refers specifically to persons acting under the authority of the Law Society Act. Section 185 of the RTA, which applies to applications filed at the LTB, does so. When a landlord applies for relief to the LTB, the landlord must sign the application or authorize someone licensed under the Law Society Act to do so. The use of an “agent” is not permitted. Here, the property manager did not sign the application to commence proceedings at the LTB.
[8] The LTB has interpreted the term “agent” broadly in other LTB decisions, although the decisions are not all consistent. The LTB’s overall approach is reflected in the LTB Interpretation Guidelines.
[9] Ordinary principles of statutory interpretation support the interpretation confirmed in the Review Decision. Further, the LTB interpretation of “agent” does not give rise to a conflict between the Law Society Act and the RTA. Section 1(6) of the Law Society Act must be read in the context of the general definition of “providing legal services” in section 1(5), which requires that the conduct “involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person”. In conclusion, for the purposes of s. 43 of the RTA, an agent does not need to be licensed to provide legal services.
[10] This appeal is therefore dismissed.
[11] Costs shall be paid by the Appellant to the Respondent in the agreed upon amount of $5,000 all inclusive."
FACTS:
[4] The factual background is quite simple. The Plaintiff Landlord Valiant rented the premises to the Defendant via a Residential Tenancy Agreement, dated October 25, 2018 for one-year. A year later, the tenant vacated, and on October 31, 2019, the Landlord inspected the premises and found the damages to the hardwood floors from pet urine. The photos of the damage are evidence of same. These damages were likely not occasioned by the prior tenant as the prior inspection documents showed the floors then to be in good order.
[5] On January 27, 2020, the Plaintiff launched a claim in the Small Claims Court for recovery of property damages to the premises found after the tenant had vacated the premises.
[6] The Landlord seeks damages of $2,721.11 (broken down as $1,583.06 for material costs, $1,138.05 for labour costs and $35.00 for administration fees) for a total of $2,756.11 in damages. The Case History Report notes no activity from the Defendant in response to the Plaintiff’s Claim.
[7] Prior to proceeding to my ruling on the Assessment, and notwithstanding a failure of the Defendant to respond to this Motion and Claim, it is important to address a significant jurisdictional issue with respect to the matter before me. This matter is an action in the Small Claims Court for property damage occasioned to the rental unit that was discovered by the Landlord after the tenant had vacated the unit.
[8] The general question of whether landlords or tenants should be bringing claims for recovery of monies to the Landlord Tenant Board, or whether those claims should be brought to the Small Claims Court has long-been a confusing exercise. The reasons for decision below are designed to assist with the development of the caselaw, and bring to light recent legislative changes which undoubtedly clarify this issue.
THE LAW:
Recovery of Property Damages after Tenancy has Ended: Jurisdiction of the Landlord Tenant Board or Small Claims Court?
[9] Prior to recent legislative changes with Bill 184, the former Section 89(1) of the Residential Tenancies Act, 2006 read as follows [my emphasis added]:
A landlord may apply to the Board for an order requiring a tenant to pay reasonable costs that the landlord has incurred or will incur for the repair of or, where repairing is not reasonable, the replacement of damaged property, if the tenant, another occupant of the rental unit or a person whom the tenant permits in the residential complex wilfully or negligently causes undue damage to the rental unit or the residential complex and the tenant is in possession of the rental unit.
[10] Section 89(1) as above is to be read in conjunction with the authority of s. 168(2) of the Residential Tenancies Act, 2006, S.O. c. 17 (hereinafter the “Act”), which indicates that the Board has exclusive jurisdiction to determine all applications under this Act.
[11] There are many sections contained within the Act which arguably convey exclusive jurisdiction to the Landlord Tenant Board (hereinafter “LTB”): property damages (s. 89), unpaid utilities (s. 87), landlord’s right to dispose of tenant’s property (s. 41), among others.
[12] The historical caselaw on exclusivity of jurisdiction for landlord-tenant matters as between the LTB and the Small Claims Court is mixed. There are numerous decisions of the Small Claims Court and the Divisional Court which have gone in both directions. There are even conflicting decisions of the LTB which have not followed the decisions of the Small Claims Court. The following summary chronicles a good part of this history, but is by no means exhaustive.
[13] In Kipiniak v. Dubiel, 2014 ONSC 1344, Mr. Justice H.J. Wilton-Siegel of the Divisional Court overturned a decision of Deputy Judge Barycky (who decided the Small Claims Court did not have jurisdiction to hear the landlord’s claim for compensation for damages). Based on the reasoning from the Divisional Court here, the generalized approach was that the dividing line between jurisdiction or no-jurisdiction in the Small Claims Court over landlord-tenant disputes would usually rest upon whether the tenancy was still live. Put simply, if the tenancy was still active, the jurisdiction was with the Landlord Tenant Board. If the tenancy was over, the jurisdiction was then with the Small Claims Court. Put even more technically, the jurisdictional divide rested upon whether or not the tenant was still in “possession” of the unit.
[14] However, soon thereafter, a new argument regarding the “essential character”[1] of the dispute would become intertwined in this jurisdictional debate. In Efrach v. Cherishome Living, 2015 ONSC 472, Justice Horkins of the Divisional Court affirmed the decision of Deputy Judge McNeely indicating that the LTB had exclusive jurisdiction over a case where the tenants were robbed of their possessions due to the landlord failing to lock the unit doors. The decision in Efrach applied the “essential character” test in Mackie v. Toronto, 2020 ONSC 3801, at para. 44, wherein Justice Perell stated the following in favour of LTB exclusivity,“If the essential character of the dispute, in its factual context, arises from the statutory scheme, it does not matter that the claim is asserted for a cause of action which is ordinarily within the jurisdiction of the courts and upon which the legislation may be silent. The characterization of the dispute is resolved by whether the subject matter of the dispute expressly or inferentially is governed by the statute.”
[15] Later, in Capreit Limited Partnership v. Griffin, 2016 ONSC 5150, Justice Fragomeni for the Divisional Court would again overturn a decision of Deputy Judge Barycky (who was in favour of exclusive jurisdiction of the LTB). The Divisional Court would clarify here that the-then version of s. 89(1) of the Act, would indicate that a precondition to bringing an application (to the Board) was that the tenant must be in possession of the rental unit at the time the application is brought.[2] Capreit stands for the proposition that the Small Claims Court does have jurisdiction to hear an issue of damages arising from section 89(1) of the Act.
[16] In November 2019, Justice Mulligan sitting for the Divisional Court would release Kiselman v. Klerer, 2019 ONSC 6668, a case where the landlord sought to recover rent arrears and property damages arising from a ceased-tenancy. Deputy Judge S. Baker decided the matter in the underlying court and decided that the LTB had exclusive jurisdiction.
[17] In the reasons for decision, Justice Mulligan would go on to render the following reasons for justifying the LTB’s exclusive jurisdiction approach for property damage matters, at paragraph 13 of the decision [my emphasis added]:
[13] The landlord brought a claim in Small Claims Court for rent arrears and damage to the property. The claim was brought after the tenant had vacated the property. The amount of the claim did not exceed the $25,000 cap, then in place under s. 207(1) of the Act. It is plain and obvious that s. 168(2) of the Act gives the Board exclusive jurisdiction to determine claims of this type between landlord and tenant. The parties had a landlord and tenant relationship, and in my view, nothing turns on the fact that the action was started after the tenant was no longer in possession. It is clear that disputes of this sort are the daily fare of the Landlord and Tenant Board. When assessing claims, the Board is in the best position to determine whether claims for rent arrears and allegations of damage to property against the tenant amount to “undue damage” or simply wear and tear as a result of the normal occupancy of a residential unit.
[18] In coming to the decision, Justice Mulligan relied upon reasonings of Deputy Judge T. Marshall in Fong v. Lemieux, [2016] O.J. No. 2695, wherein he indicated that the LTB had expertise in the day-to-day handling of matters involving rental arrears and damage claims to rental units. The Deputy Judge also cited the speed at which the LTB could likely address the matters; much faster than even the Small Claims Court. Justice Mulligan also relied upon the reasons listed above by Justice Horkins sitting for the Divisional Court in Efrach.
[19] To make matters more complicated, the jurisdictional issue was also discussed within a line of caselaw for claims for unpaid utilities brought before the Small Claims Court in Luu v O’Sullivan, 2012 CanLII 98396 (ON SCSM). In Luu, Deputy Judge Sebastian Winny, was in favour that the claim for unpaid utilities was within the exclusive jurisdiction of the LTB on the basis that the tenants were still in possession of the unit. The Luu decision addressed the internal conflict at the LTB wherein “Interpretation Guideline 11” stated that some hydro charges might be pursued before the LTB and others may not, thus creating a dual system of multiple claims before multiple adjudicative bodies. What is important about the decision of Deputy Judge Sebastian Winny’s decision in Luu is that he openly stated in his decision at para. 55 that, “... The question of the Board’s jurisdiction over the utilities component of rent payable in residential tenancies cries out for appellate resolution.”
[20] Deputy Judge Winny, in his decision, would ironically foreshadow the very adjudicative confusion that would eventually become the tribunal reaction to his reasons in Luu. Despite his attempt to admirably clarify jurisdiction at the Small Claims Court level, two later decisions of the Landlord Tenant Board[3] would be openly critical of the Deputy Judge’s approach in Luu and deny jurisdiction of the LTB for unpaid utilities. This would be a litigant’s horror situation of both adjudicative bodies denying jurisdiction to decide the same issue, thus leaving the public with no recourse for recovery.
[21] Nearly a decade later, after Luu, Deputy Judge David José would tackle the same question of jurisdiction for a claim brought under the Small Claims Court for unpaid utilities. In Dick v Robinson, 2021 CanLII 48732 (ON SCSM), having reviewed the post-forensic fall-out from Luu, Deputy Judge José came to the opposite conclusion as Deputy Judge Winny.
[22] I cite Deputy Judge José’s reasonings in Dick v. Robinson, at para. 23, “We should not have a system that requires a Landlord to start multiple proceedings. We should not have two forums resisting and rejecting the same claims – it potentially leaves the public without any recourse at all. If I follow the Luu Decision and deny the Landlord’s Claim for unpaid utilities, the Board may very well do likewise, leaving them without recourse.” Despite agreeing with Deputy Judge Sebastian Winny’s attempt of creating a singular stream-lined forum for recovery at the LTB, Deputy Judge José’s final reasoning of accepting jurisdiction of the Small Claims Court in Dick v. Robinson was sympathetically decided in light of the LTB caselaw wherein it was shown the Board adjudicators were rejecting jurisdiction for unpaid utilities.
[23] Another sympathetic approach to the rights of litigants in this confusing jurisdictional regime was taken by Deputy Judge H. Witteveen in Heafy v Craig, 2020 CanLII 20506 (ON SCSM), wherein the judge had to deal with s. 41 of the Act which dealt with applications by the tenant in relation to property on the rented premises after the lease had terminated. Deputy Judge Witteveen’s commentary at paragraphs 23-24 is most instructive:
[23] There is something attractive about the simplicity of arriving at jurisdiction following a defined event such as termination of the lease or giving up possession of the premises. Unfortunately, that simple test does not definitively resolve the question of jurisdiction because there are “post termination” applications to the LTB that are specifically provided for in the RTA. I think s. 41 is a clear example of such a case.
[24] Those favoring jurisdiction in the LTB frequently refer to the specialized nature of the LTB and its governing legislation. Indeed, this is the raison d’etre for the creation of specialized boards. The opposite view is principally fueled by a concern with avoiding a vacuum where the Board refuses or has no jurisdiction leaving an aggrieved party without a remedy. Such a situation would be untenable.
[24] In Heafy, Deputy Judge Witteveen would end-up granting the motion to deny that the Small Claims Court had jurisdiction but would instead stay the matter in Small Claims out of an abundance of caution if the Plaintiff was able to demonstrate that the LTB had in-turn refused jurisdiction.
[25] Therefore, in reviewing the history of the jurisdictional split, there was a clear historic divide between two general camps: Generally, there were those judges who viewed that the LTB had exclusive jurisdiction landlord-tenant related disputes (Efrach, Kiselman, Fong, Luu, Heafy). There were then those judges who (for their own reasons) felt that the Small Claims Court should have jurisdiction over landlord-tenant matters (Kipiniak, Capreit, Dick). There was also the uncertainty as to whether or not the LTB itself would accept jurisdiction even if the Superior Courts had deemed it did not have jurisdiction for certain landlord-tenant matters.
[26] However, at the time of the decision in Dick v. Robinson (May 21, 2021) the legislative amendments for Bill 184 had not yet come into force. Deputy Judge José’s decision does an excellent job of showing the light at the end of the tunnel via the new legislative amendments in Bill 184 which would clarify the issues of jurisdiction over unpaid utilities.
[27] Finally, most recently, the Divisional Court released a decision of Justice S. Bale in Wu v. Adler, 2022 ONSC 188 (CanLii). Justice Bale heard an appeal of Deputy Judge Davis’ trial decision holding the tenants responsible for rent arrears. It was raised on appeal by the tenants that the Small Claims Court did not have jurisdiction. Justice Bale noted the jurisdictional divide in caselaw between Kiselman/Capreit/Efrach and Capriet/Brydges[4]. That being said, Justice Bale was critical of the strict approach taken in Kiselman because the matter in Wu involved an unfair situation where the named tenant never actually lived on the premises. It was in-fact the tenant’s ex-girlfriend who “possessed” the unit the entire time of the lease. At paragraph 42, Justice Bale explains his reasoning for distinguishing Kiselman v. Klerer:
[42] It is not clear from the appellate judge’s reasons in Klerer whether he is saying that the Board has jurisdiction notwithstanding the restrictions in ss. 87(1) and 89(1), or that a landlord has no remedy for arrears of rent or damages, if the tenant has moved out. The former would require the Board to ignore the clear restrictions in those sections; the latter would be unfair to landlords. It cannot be that a tenant can move out leaving the landlord without recourse for unpaid rent, and in the case of damages, a landlord may have no idea that the rental unit has been damaged, before the tenant moves out.
[28] In Wu, Justice Bale has highlighted yet another confusing outcome arising from the Act’s previous insistence on jurisdiction being predicated upon “possession” of the “tenant”. Justice Bale ends his decision by mentioning the incoming amendments and that, “…as a result, the question of jurisdiction should no longer arise” (at para 47).
[29] As at today’s date, the legislative amendments in Bill 184 are now in force. It is more than likely that the roller-coaster ride of jurisdictional confusion has finally been resolved by the Legislative amendments in Bill 184, which I shall refer to below.
Jurisdictional Question: Legislative Clarity – Bill 184
[30] On July 21, 2020, “Bill 184 - Protecting Tenants and Strengthening Community Housing Act, 2020” was given Royal Assent. However, the changes to the Residential Tenancies Act, 2006, S.O. 2006 c. 17, would take effect on September 1, 2021[5]. For the issue of property damages, section 89(1) of the Act (which formerly indicated that an application could only be made while the tenant was in possession of the unit) now reads:
Application for compensation for damage
89 (1) A landlord may apply to the Board for an order requiring a tenant or former tenant to pay reasonable costs that the landlord has incurred or will incur for the repair of or, where repairing is not reasonable, the replacement of damaged property if,
(a) while the tenant or former tenant is or was in possession of the rental unit, the tenant or former tenant, another occupant of the rental unit or a person permitted in the residential complex by the tenant or former tenant wilfully or negligently causes or caused undue damage to the rental unit or the residential complex; and
(b) in the case of a tenant or former tenant no longer in possession of the rental unit, the tenant or former tenant ceased to be in possession on or after the day subsection 21 (1) of Schedule 4 to the Protecting Tenants and Strengthening Community Housing Act, 2020 comes into force. 2020, c. 16, Sched. 4, s. 21 (1).
[31] The new amendment makes it clear that landlords can now bring an application before the LTB for damages arising from the tenancy, regardless of whether the tenancy is active or not. The only caveat is that applications made after the end of a tenancy must be made no later than one year after the tenant or former tenant has ceased to be in possession of the rental unit, as per s. 89(1.1) of the revised Act.
[32] Other areas have also been clarified, including the area of unpaid utilities, which indicates that under the amended Act, a landlord may now apply to the LTB for unpaid utilities either during tenancy or within one year of the tenancy ending (s. 88.2 of the revised Act). This anticipated change was summarized succinctly in Dick v. Robinson by Deputy Judge José.
[33] The amendments above are to be read in conjunction with the Hansard debate history of Bill 184. On May 26, 2020, the Honourable Steve Clark, moved for a Second Reading of Bill 184 and explained the purpose of the amendments (at 7912-7913)[6]:
Right now, some processes are handled by the Landlord and Tenant Board while some go to Small Claims Court. If a tenant physically damages an apartment—for example, kicking down a door or punching a hole in a wall—the landlord can seek compensation with the Landlord and Tenant Board. But if the tenant doesn’t pay their utility bill, a landlord has to go to Small Claims Court. It’s confusing, and it can be quite expensive. So we’re proposing to make the process simpler and more efficient for landlords. If passed, the changes would allow landlords to go to the Landlord and Tenant Board for unpaid rent, utility bills and damage costs for up to one year after the tenant moves out. This would allow landlords the same opportunity to access the board as is available to tenants after they move out.
...
The changes would shift many disputes, such as unpaid utility bills, from Small Claims Court to the Landlord and Tenant Board, making the resolution process simpler and more streamlined for landlords. And it would make it easier for landlords to recover the costs that they incur not just for damages but also for bad tenant behaviour. It would streamline and cut red tape at the Landlord and Tenant Board over time and where appropriate, including making it easier to access alternatives to formal hearings, like mediation.
[34] It is clear that one of the fundamental purposes of Bill 184 is to end the confusing back-and-forth jurisdictional wars that have dogged the LTB, the Small Claims Court and the Divisional Court for so long.
[35] With respect to retroactivity, there are also several headings under the new amendments to the Act that deal with a “Transition” period. Under the revised s. 89(4) for property damage, this transition provision specifically indicates that these new amendments “... shall not affect any court proceeding for an order for payment of compensation for damage to the rental unit or the residential complex that is commenced before the day that subsection comes into force and has not been finally determined before that day.”
[36] Some brief analysis is warranted here. The amendments to Bill 184 received Royal Assent on July 21, 2020 but did not come into force until recently, on September 1, 2021. It would seem to be that the revised Act would still allow the Small Claims Court to retain jurisdiction over any particular landlord-tenant matter that was commenced prior to September 1, 2021. This would make sense, as there would likely be a “gray zone” of matters (such as the instant case of Valiant) which might be ousted due to limitations reasons by the LTB. It also is evident that if the LTB always had exclusive jurisdiction pre-Amendment, then there would be no reason to place a “transition” clause. The existence of the “transition” clauses accepts that indeed there are cases where the Small Claims Court did have jurisdiction prior to September 1, 2021 and seeks to allow those matters to run their course.
[37] A potentially broad reading of the imposition of s.89(4) and the reciprocal transition period sections in the revised Act, might suggest that the Legislature had intended to correct years of confusion by suggesting that the Small Claims Court always had jurisdiction reaching back to all those years before the Bill 184 amendments. I do not read this as such. I simply see the transition period amendments as being a simple way for the Legislature to protect those parties who commenced court proceedings outside of the LTB before September 1, 2021. The Legislature has now clarified the confusion and the jurisdictional roller-coaster ride is over for those areas affected by Bill 184.
ANALYSIS: Jurisdictional Issue – Landlord-Tenant Property Damage claim before the Small Claims Court
[38] Having reviewed the status of the law above, and the legislative changes, this now brings me to the analysis and ruling on the Valiant matter. In this matter, the Defendant vacated the premises at the end of the one-year lease around October 25, 2019. This Small Claims Court matter was commenced by the Landlord on January 27, 2020. This motion in writing was brought on August 21, 2020. There were court delays due to COVID-19 that had nothing to do with the Plaintiff. This motion in writing was scheduled for January 14, 2022 at its first opportunity. The importance of this date is that if for any reason, I were to deny jurisdiction, the Plaintiff would likely be out of time to commence an application before the LTB (one-year) under either the old or new Act.
[39] Based on a plain-reading of the revised Residential Tenancies Act, 2006, modified by Bill 184 under s. 89(1), and in conjunction with the “transition” period section of s. 89(4), I am of the opinion that the Small Claims Court does have jurisdiction to adjudicate this matter, which is brought during the transition period prior to September 1, 2021. Had it not been for the imposition of Bill 184, however, I was in great agreement with the reasons for decision in the Divisional Court’s decision in Kiselman (also supported in Efrach, Fong, Luu, and Heafy) which are in favour of exclusive jurisdiction of the LTB over property damage claims post-tenancy’s end. In my mind, the balance of the caselaw seemed to favour that a specialized tribunal such as the LTB would be most appropriate to handle such matters such as property damage claims arising from the tenancy.
[40] However, considering that there will be fewer and fewer of these transitional matters that will exist beyond September 1, 2021, there seems to be no point whatsoever to continue any debate about jurisdiction for property damage claims as between the LTB and the Small Claims Court. The most important consideration in my mind is to move these transitional matters through the legal system and to their eventual conclusion. The Valiant matter was brought on the backdrop of a confusing legal context to the Small Claims Court. It is within the best interests of justice that I simply decide the matter here and now, as opposed to even staying the matter so that Valiant will need to potentially start a new matter with the LTB (possibly to even face a limitation issue).
[41] This approach makes the most practical sense at this juncture, and I believe it is in line with the scheme of the newly revised Act, the object of the Act and the intention of Parliament[7] to simplify landlord-tenant proceedings. Put even more simply, my interpretation of the “transition” clauses in the Act are generally as follows: If the Small Claims Court matter was commenced before September 1, 2021, then the Small Claims Court can have jurisdiction. If the matter is commenced on or after September 1, 2021, then these claims are all exclusive jurisdiction of the Landlord Tenant Board.
DAMAGES ASSESSMENT:
[42] In proceeding with the damages Assessment, I have reviewed the Plaintiff’s Claim, and attachments which include non-exhaustively, detailed invoices, inspection reports, photos of damages to the unit, and the original signed lease. A detailed description of the work performed to remediate the premises due to the urine was assistive.
[43] In addition, I appreciated the detailed description of the square footage (830 sq/ft) and type of material used to replace (laminate flooring). The Plaintiff submitted that they used their in-house maintenance company to perform the repairs to mitigate the damages and avoid extra costs, which is understandable. Upon review of the material and labour costs, they appear to be exceedingly reasonable for the work performed. It is accepted that a heavy clean of the concrete would have been necessary prior to relaying the flooring. I also notice there are no demolition or disposal fees, which would have been necessary in these circumstances. A full replacement of the parquet flooring at today’s rates would have been significantly more in materials and labour than the $1,583.06 for material costs and $1,138.05 for labour that is being sought by Valiant.
[44] Based on the damages suffered and generalized knowledge of construction that hardwood floors (and particularly parquet floors) cannot be easily replaced by a partial repair, it was entirely reasonable for Valiant to have replaced the entire floors. Flooring technology has improved over the decades, but laminate flooring is unlikely to be an “improvement” or betterment to hardwood floors, no matter what the type. This approach is consistent with the trial decision of Deputy Judge Hunt and affirmed by the Divisional Court by Justice Lederman in Butala v. Xia et al., 2014 ONSC 932.
[...]"
STANDARD OF REVIEW
[2] There is no standard of review applicable to issues of procedural fairness. The question is whether the requirements of procedural fairness were met.
[3] This appeal is statutorily restricted to questions of law. To the extent that this appeal raises any extricable questions of law, these questions are reviewable on a correctness standard.
DISPOSITION
[4] The Appeal is dismissed for the following reasons, but in summary, the Board did not breach any procedural fairness rights of the Appellant at the May 27, 2021 hearing. Further, the Member made no errors in the findings made on June 2, 2021 when he dismissed the Appellant’s motion to set aside the Eviction Order.
BACKGROUND
[5] The Appellant is a tenant of the Respondent landlord. The Respondent has brought numerous applications to the Board seeking to terminate the Appellant’s tenancy and evict the Appellant based on non-payment of rent, hydro fees and/or persistent late payment of rent. The matter has gone on since 2019 and has had a tortuous history for the landlord. The tenant’s nonpayment and late payment of rent has been a consistent problem throughout.
Payment Order
[6] On March 31, 2021, the Board issued a Payment Order setting out a schedule for the Appellant to pay the Respondent $3,548.00 in rent arrears and requiring the Appellant to pay rent on time. The Board ordered that should the Appellant fail to make any of the payments in full and on time by the dates set out in the Order, “(a) the Respondent would be entitled to apply to the Board, without notice to the Appellant, for an order terminating the tenancy and evicting the Appellant and for any arrears that have become due after the date of this order, pursuant to s. 78 of the RTA; and (b) the entire balance of the amount outstanding shall become due and payable on the day following the date of default.”
[7] The Payment Order required the Appellant to make payments as follows:
• On or before March 5, 2021 the sum of $1,000.00 towards arrears.
• On or before April 1, 2021, $1,370.00 the lawful rent for the month of April 2021.
• On or before April 20, 2021, $1,000.00 towards arrears.
• On or before May 1, 2021, $1,370.00 the lawful rent for the month of May 2021.
• On or before May 20, 2021, $1,000.00 towards arrears.
• On or before June 1, 2021, $1,370.00 the lawful rent for the month of June 2021.
• On or before June 20, 2021, $548.00 the balance of the arrears.
Eviction Order
[8] The Respondent applied for an order to terminate the tenancy and evict the Appellant and for an order requiring the Appellant to pay the rent owing because he had failed to meet a condition specified in the Payment Order. As permitted by the terms of the Payment Order and s. 78 of the RTA, his application was brought without notice to the Appellant.
[9] In an order dated April 13, 2021, the Board ordered the tenancy terminated and ordered the Appellant to vacate the unit on or before April 24, 2021. The Board found the Appellant had not met one of the conditions specified in the Payment Order, specifically, the Appellant did not pay $1,370.00 in rent on or before April 1, 2021.
[10] The Board ordered the Appellant to pay the Respondent -$1,025.65, representing the rent owing up to April 13, 2021, less the rent deposit and interest the Respondent owed on the rent deposit, and to pay the Respondent $46.03 per day in compensation for the use of the unit starting April 14, 2021 to the date the Appellant moved out of the unit.
Motion to Set Aside the Eviction Order
[11] The Appellant moved to set aside the Eviction Order, asserting that he had paid the amounts in question. The motion was heard by videoconference before Member Greg Joy on May 27, 2021. Both parties attended. After the hearing concluded and the Respondent had left the conference, the Appellant remained and told the Board he had receipts to prove that he had paid the amounts the Respondent claimed he had not paid. During that conversation, the Member directed the Appellant to “send copies of his evidence to the Landlord and Tenant Board day of hearing email address by the end of the day of the hearing.” The Board Member found in his June 2 Decision, that as of midday on May 28th the proof of payment email had not been received.
Decision Under Appeal
[12] The tenant was allowed to produce evidence as specified by the Member even after the May 27th hearing should have concluded. The Respondent had left the videoconference and was not given an opportunity to address the Member’s decision to let the Appellant send the email. According to the record before us on this appeal, the tenant did not provide the requested evidence to support that he had paid the outstanding rent. Now, the Appellant claims that he has been highly prejudiced because the Member failed to consider the evidence the Board requested of him. Given the severe consequences of the Member's decision and the resulting effects on him, the Appellant argues that the only remedy is for this Court to set aside the Decision and impose a permanent stay of the Board’s Eviction Order.
[13] In the decision of June 2, 2021, the Board denied the Appellant’s motion to set aside the Eviction Order and lifted the stay of that order. The Board found that the Appellant paid March and April rent late and did not pay the Respondent $1,000 towards arrears as ordered in the Payment Order on either April 20th, 2021 or May 20th, 2021.
[14] The Appellant maintains at this appeal that he did send the evidence requested of him to the Board at 2:19 pm on the day of the hearing.
[15] The Board’s website indicates that parties are to send their evidence to LTB.Evidence@ontario.ca. There is also an email address for the Board at LTB.Hearing@ontario.ca.
[16] A copy of the email sent by the Appellant is filed on this appeal. It is addressed to “LTB.hearings@ontario.ca.” The address has an ‘s’ after “hearing” which the Board’s website address does not.
[17] The Appellant’s email had, attached to it, his receipts indicating a $5,000 payment made on February 20, 2021. It is not clear what this payment is for, but it is clear that the payment was made before the Payment Order of March 31, 2021 (heard March 2, 2021), in which the Board held that the Appellant still owed $3,580.00 in arrears at that point.
[18] The Appellant’s receipts filed on this appeal also do not address the Board’s findings that the Appellant paid March and April 2021 rent late.
[19] The receipts the Appellant maintains he sent on May 27, 2021 set out the following payments to the Respondent:
• February 20, 2021: $5,000
• March 8, 2021: $1,000
• April 1, 2021: $1,000
• April 6, 2021: $370
• April 30, 2021: $1,370
[20] The Appellant’s argument that he has suffered a breach of procedural fairness by the Board fails because his email was not received in the time frame specified by the Member. In fact, the Appellant was given an opportunity to prove that he had paid the arrears in spite of the fact that, in our view, this resulted in unfairness to the Respondent because he had left the videoconference at the end of the hearing after which the Appellant was afforded yet one more opportunity to prove he had paid his rent on time.
[21] We are left with the Member’s findings that there was no proof of payment forwarded to the Board by the Appellant. As such, the Appellant’s claim that the Member erred in his application of s. 83(1) of the RTA also fails and there was nothing for the Member to consider which would have affected the Board’s decision to dismiss his motion.
[22] And even if the Board had received the receipts, those receipts do not address the Board’s findings that the Appellant paid March and April 2021 rent late. The Appellant’s motion would have failed on that basis alone.
[23] After that, this appeal came before the Divisional Court for a hearing on December 14, 2021. The Appellant asked for an adjournment. The Respondent objected to the adjournment. As well as unpaid rent, the Respondent submitted that the Appellant had failed to make hydro payments for quite some time. The Court granted a short adjournment on the following terms: “(1) this appeal is adjourned to the week of January 17, 2022, on a date that week to be set by the court office, which will notify the parties of the date; (2) the appellant shall have no more adjournments; (3) the appellant shall pay any rental arrears and all hydro bills in full by December 20, 2021; (4) the appellant shall serve, and file on CaseLines, all the appeal materials by December 20, 2021.”
[24] The Court also ordered that the Respondent could serve and file any additional materials by January 6, 2022, should he wish to do so, including material about whether the Appellant fulfilled the above terms. The Appellant was told that if the terms for the adjournment were not fulfilled, the appeal may be dismissed.
[25] The Respondent filed a Rent Arrears Record as of January 11, 2022.
[26] Total arrears are $7,135 (Previous $5,765 + January Rent $1,370). The Appellant paid $1,386.44 and did not pay all rental arrears and all hydro bills in full by December 20th, 2021 as ordered on December 14, 2021.
[27] The Respondent also filed evidence that, since the December 14th adjournment, he tried to contact the Appellant regarding property damage the Appellant had caused. The Respondent called the Appellant and texted him on Whatsapp but got no response. After that, the Respondent had an “N5 form” (notifying the Appellant of the damage concerns) issued to which there was no reply and then the Respondent put a letter through the Appellant’s door. The Appellant did not respond.
CONCLUSION AND COSTS
[2] Briefly, the Furneys assert that the Consent Order was made by their then counsel, without their consent or instructions. For that reason, the Furneys assert that the Consent Order ought to be set aside and ought not to be enforced until the Furneys’ motion to set the Consent Order aside has been heard.
[3] At the conclusion of submissions, I dismissed the Furneys’ motion, and fixed costs, with reasons to follow. These are the reasons.
Evidence on the Motion
[4] Maryam Furney is the registered owner of 1728 York Road, Niagara-on-the-Lake, Ontario, L0S 1J0 (the “Property”) and the mortgagor under a mortgage registered as Instrument Number NR313568, transferred to TT5 which transfer was registered as Instrument Number NR452744 (the “Mortgage”). Alex Furney is the guarantor of the Mortgage. The third defendant, Mary Mamleka Adhami, is the tenant of the Property (the “Tenant”).
[5] TT5 issued a Notice of Sale Under Mortgage on April 18, 2018. By statement of claim dated February 1, 2019 TT5 sued the defendants seeking immediate possession of the Property, payment of $474,535.51 due under the Mortgage as of February 1, 2019, together with pre-judgment and post-judgment interest at the rate of 12.50% per annum.
[6] TT5’s claim against the Tenant was for an order requiring her to pay rent directly to TT5, to co-operate in the showing of the Property, and for costs.
[7] The Furneys and the Tenant defended the claim and counter-claimed in pleadings served April 10, 2019. Among other things, in the statement of defence, Maryam Furney states that she has the funds to bring the mortgage up-to-date but was prevented from doing so by TT5.
[8] TT5 moved for summary judgment on the Mortgage. The motion was originally returnable on March 12, 2020. At that time, all three defendants were represented by counsel, Jonathan Rosenstein, but had not delivered responding materials. TT5’s motion was adjourned for a long motion to the week of June 5, 2020. COVID-19 prevented the motion from being heard in 2020.
[9] TT5’s motion was brought before Krawchenko J. on August 6, 2021. On that date, the defendants had retained new counsel, Richard Watson, who advised that he had been recently retained and was not able to proceed on that date. The motion was adjourned to the week of September 1, 2021, peremptory upon the defendants, who were to have filed their responding materials in advance of the hearing date.
[10] The Furneys included a copy of TT5’s motion record on its motion for summary judgment in their materials filed in support of this motion. The Furneys did not include copies of their materials filed in response to TT5’s motion for summary judgment.
[11] In submissions, counsel for TT5 advised the court that he was TT5’s counsel on the summary judgment motion and that, to the best of his knowledge, while the defendants may have served responding materials, they did not file a responding motion record or factum with the court. As a result, it was expected that TT5’s motion for summary judgment would proceed on the basis of TT5’s materials only.
The Consent Order
[12] On November 9, 2021, the parties appeared before Braid J. on the return of TT5’s motion for summary judgment. Mr. Watson appeared on behalf of the defendants and Mr. Ajram appeared on behalf of TT5.
[13] The motion was not argued as the parties advised Braid J. that they had reached a resolution whereby a consent order would issue. On that basis, Braid J. made the Consent Order.
[14] The Consent Order fixed the amount payable by the defendants to TT5, in full satisfaction of the amounts TT5 claimed to be owing claimed under the Mortgage, including principal and arrears, legal costs and related charges.
[15] The amount payable under the Consent Order was $600,000, together with simple interest on that amount at 12.5% per annum, amounting to $205.48 per day, payable from November 9, 2021 to the date of payment, which was to be no later than January 14, 2022. If payment was made in accordance with the Consent Order, TT5 agreed to discharge the Mortgage or to transfer it to a lender as directed by the defendants. Within two business days of a request, the Consent Order required TT5 to provide the defendants with a payout statement reflecting the amounts set out in the Consent Order.
[16] If payment was not made by the defendants by January 14, 2022, the Consent Order provided that TT5 would be permitted to obtain a judgment without notice to the defendants (the “Judgment”). The Judgment granted TT5 the right to a Writ of Possession of the Property, enforceable against all the defendants including the defendant, Mary Mamleka Adhami, the Tenant. In addition, the Judgment terminated Adhami’s tenancy or the tenancy of anybody then in possession of the Property and contained terms waiving any notice requirements under the Residential Tenancies Act.
[17] On January 19, 2021, counsel for the Furneys emailed a Notice of Motion and supporting affidavits to TT5’s litigation counsel. The motion was returnable on Friday, January 21, 2022 on an urgent basis and sought an interim interrogatory injunction restraining TT5 from taking any steps to enforce the Consent Order pending the determination of the defendants’ motion to set aside the Consent Order.
[18] Included in the affidavit evidence put forth by the Furneys are various emails apparently sent in November 2021 to their then lawyer and others, in which the Furneys accuse their own lawyer of acting without their instructions or authorization and accuse him, TT5’s lawyer, and others, of lying. In a number of these emails, the Furneys state that they withdraw their consent to the Consent Order.
[19] Despite their protestations about the validity of the Consent Order and their alleged desire to withdraw their consent to it, the Furneys have not brought a motion to set aside the Consent Order.
[20] On and after November 9, 2021, the Furneys did not make payment in accordance with the Consent Order, nor did they make any payment at all toward the Mortgage. In their motion materials of this motion, the Furneys included TT5’s supporting affidavit on its motion for summary judgment. TT5’s affidavit states, in part, that TT5 served a Notice of Sale under Mortgage on April 11, 2018, in which TT5 claimed $400,195.80, the amount then owing for principal, interest, taxes etc. TT5’s affidavit also states that the Mortgage remained in default and that no payments had been made toward the interest owing on the Mortgage.
[21] The Furneys have not provided this court with any materials they may have served in response to TT5’s motion for summary judgment. On this motion, the Furneys’ counsel advises that he has no firsthand knowledge of any such responding materials, and that his clients report that they cannot find their responding materials.
[22] Mr. Ajram, litigation counsel for TT5, advised this court that he was also litigation counsel for TT5 on its motion for summary judgment and that he appeared before Braid J. on November 9, 2021. Mr. Ajram advised this court that to the best of his knowledge, information, and belief, as of November 9, 2021, the defendants had filed no materials in response to TT5’s motion for summary judgment.
[23] Mr. Ajram also advised this court that Braid J. was ready to hear TT5’s motion, which did not proceed at the scheduled time, because the parties were engaged in settlement negotiations, which culminated in the Consent Order.
[24] The defendants did not make the payments contemplated by the Consent Order and TT5 took steps to obtain the Judgment.
The Furneys’ Motion for an Interlocutory Order
[25] The Furneys’ motion was brought on an “urgent” basis, and on that basis was permitted to be added to the regular motions list of Friday, January 21, 2022. It was clear that this motion would take longer than one hour and should have been scheduled for a long motion.
[26] The moving parties’ timing in bringing the motion created a situation whereby if an adjournment was granted without terms, the purpose for the injunction would be defeated: TT5 would proceed to take possession of the Property and to exercise the other rights given to it under the Judgment. If the adjournment were granted with terms, the Furneys would, in essence, have obtained their injunction without having established that they could meet the requisite test.
[27] Despite the extremely short notice given to him to respond to the Furneys’ motion, counsel for TT5 delivered a responding record, factum and brief of authorities. These were received by the court at approximately 4:15 a.m. on January 21, 2022. TT5 counsel advised the court that his client was prepared to have him argue the motion on the record submitted. The motion proceeded on that basis. The hearing began in late morning and took all afternoon to be heard.
Grounds for the Motion
[28] The Furneys’ motion is brought under r. 40.01 and 45.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. R. 40.01 states:
An interlocutory injunction or mandatory order under section 101 or 102 of the Courts of Justice Act may be obtained on motion to a judge by a party to a pending or intended proceeding
[29] S. 101(1) of the Courts of Justice Act, R.S.O. 1990 c. C.43 states:
In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an in order where it appears to a judge of the court to be just or convenient to do so.
[30] The Furneys’ factum sets out the test they submit should be applied in this case, as taken from RJR – McDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1S. C. R. 311. Set out below is taken from the Furneys’ factum:
25. Generally, the test to be applied in a motion seeking an interlocutory injunction is set out in the well-known decision of RJR -- MacDonald Inc. v. Canada (Attorney General):
First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits [at p. 334].
26. The first branch of the test is a low threshold. As the Supreme Court of Canada stated In RJR -- MacDonald Inc. v. Canada (Attorney General):
Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial [at 337-338].
27. The three prongs are not watertight compartments – all factors can be considered together to assess their collective impact, with the strength of one factor offsetting the weakness of another[Boehringer Ingelheim (Canada) Ltd. v. Pharmacia Canada Inc., 2001 CanLII 28351 (ON SC), at para. 69]. The fundamental question for the judge hearing an injunction is whether it is just and equitable in all the circumstances of the case for the court to grant the injunction [1960529 Ontario Inc. v. 2077570 Ontario Inc., 2017 ONSC 5254 (CanLII) at para. 23]
[31] TT5 submits that the RJR test was clarified by the Supreme Court of Canada in R. v. CBC 2018 SCC 5 (CanLII), 2018 S.C.C. 5. At para. 31 of its factum, TT5 submits that the three-part test to be applied is as follows:
31) The Defendants plead that this is a low threshold. However, the Supreme Court of Canada has clarified the test in RJR-Macdonald in R v. CBC, 2018 SCC 5, wherein the Court held that an applicant must meet the following test:
a) New Test 1: The applicant must demonstrate a strong prima facie case that it will succeed at trial. This entails showing a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice;
b) Test 2: The applicant must demonstrate that irreparable harm will result in the relief is not granted; and,
c) Test 3: The applicant must show that the balance of convenience favours granting the injunction.
[32] Both parties submit that the court must first be satisfied that the application is neither vexatious nor frivolous before proceeding to consider the second and third tests.
[33] In oral argument, TT5 raised a preliminary submission that the Furneys’ motion was not properly brought under r. 40.01 as there is no proceeding: by order of Braid J, the action was completed; there is no longer a “pending or intended proceeding”. TT5 submits that the relief being sought by the Furneys ought to have been brought in the context of a motion to set aside the Consent Order.
[34] There is merit to those submissions. As noted above, while they allege that the Consent Order was made without authority or instructions, the Furneys have not brought a motion to set aside the Consent Order, which was made months ago. Also, without having brought a motion to set aside the Consent Order and, instead bringing this motion, on extremely short notice and at a time when TT5 is in a position to give effect to the Consent Order, supports the submissions made by TT5 that the Furneys are simply trying to delay the enforcement of the Consent Order and that this motion is both vexatious and frivolous. Those submissions are further supported by the evidence on this motion - much of it put forth by the Furneys - that contradicts their assertions that they had no input into the Consent Order and that it was made without their authorization or consent.
Have the moving parties met the first part of the applicable test?
[35] Based on the evidence put forth on this motion, I am not satisfied that the Furneys have established that their case is arguable, raises a serious issue to be tried, and is not frivolous or vexatious.(Cytrynbaum v. Look Communications Inc., 2013 ONCA 455 (CanLII), at para. 54)
[36] The email correspondence set forth in the parties’ motion records contradict the Furneys’ assertions that they had no input into the Consent Order. For example, Exhibit “H” to the affidavit of Maryam Furney contains emails that pre-date the Consent Order among Maryam Furney, her counsel, Richard Watson, and TT5 counsel, Steve Chan in which the Furneys ask that certain terms be included in Consent Order. These terms are found in the Consent Order.
[37] In her email to Richard Watson of November 8, 2021 – the night before TT5’s summary judgment motion is to be heard, Maryam Furney writes to Mr. Watson stating that she is “forced to accept this last-minute offer”. This email is copied to Alex Furney (whose email is identified as iabtd@gmail.com), who claims on this motion that he did not authorize his spouse, Maryam Furney, to give instructions to Mr. Watson.
[38] After the Consent Order was issued, in emails sent by Maryam Furney to Mr. Watson and others, she raises no allegation that the Consent Order was made without her authority or consent. Instead, Maryam Furney alleges that TT5 had failed to deliver the payout statement, as it was required to do pursuant to the Consent Order. For example, her allegation is absent in her emails to Richard Watson, and Steve Chan and others of November 10, 2021 in which Maryam Furney asks TT5 to comply with the Consent Order by sending the payout statement to Mr. Watson (the lawyer she now alleges acted improperly and without her authorization). In a later email of the same date, Maryam Furney alleges that TT5 is delaying providing the payout statement and that the defendants now wish to “withdraw our consent as the opposition are in breach of the court order.” (sic)
[39] Similarly, in her email sent directly to the Hamilton Trial Co-Ordinator, and copied to Mr. Watson and counsel for TT5, Maryam Furney makes no allegation that the Consent Order was improperly made, but, again, complains that TT5 is in breach of it: Maryam Furney’s email asserts that the defendants “were assured and guaranteed the payout statement of $600,000 with the per diem ready for our lawyer by the opposition and as part of our consent to court on November 9, 2021… We were supposed to receive the payout statement along with the honourable judge’s endorsement from the opposition yesterday on November 9, 2021 as part of our condition of consent to court. Mr. Watson our lawyer assured us that without the payout statement from the opposition they will be in breach of the court order.”
[40] In her email of November 12, 2021 sent to Richard Watson, and copied to counsel for TT5, Ms. Furney states: “the consent to judgment is withdrawn, as they failed to provide the payout statement as agreed on Nov 9th, 2021.”
[41] Counsel for TT5 did send the payout statement to Mr. Watson on November 10, 2021, well within the timeframe contemplated by the Consent Order. Receipt of the payout statement was confirmed by Mr. Watson in his email of November 15, 2021 to TT5’s litigation counsel. Mr. Watson’s email reads, in part: “Of course the payout statement was emailed to my office on that date, with the second one later in the day.… Maryam knows this.”
[42] These and other emails contained in the motion records put forth by the Furneys and TT5 on this motion, seriously undermine the Furneys’ assertions on this motion.
[43] The evidence on this motion shows that:
(1) the Mortgage has been in default for many years;
(2) TT5 has been attempting to enforce the Mortgage since at least 2018;
(3) TT5’s motion for summary judgment was originally returnable in March 2020 and adjourned to September 2021, where it was placed on a running motions list;
(4) the defendants in this action could not show that they delivered responding any materials on TT5’s motion for summary judgment;
(5) TT5’s motion for summary judgment was set to proceed on November 9, 2021 before Braid J., on the basis of materials filed by TT5;
(6) on the eve of TT5’s motion for summary judgment, the defendants engaged in settlement negotiations with TT5. Although they were represented by their lawyer, Richard Watson, the defendants, through Maryam Furney (the sole mortgagor), had direct input into the terms of the Consent Order;
(7) in reliance upon the Consent Order, TT5 did not proceed with its summary judgment motion and, as per the submissions of Mr. Ajram made on this motion, which I accept, TT5 compromised its claim so as to reach a resolution and the Consent Order;
(8) TT5 has complied with its obligations under the Consent Order;
(9) the defendants did not make payment to TT5 as contemplated by the Consent Order nor, in fact, any payment at all;
(10) the defendants have not brought a motion to set aside the Consent Order;
(11) as of January 14, 2022, TT5 was entitled to, and did, take steps to obtain the Judgment; and
(12) on January 19, 2022, the defendants served this motion, returnable on January 21, 2022.
[44] Based on the foregoing, I conclude that the Furneys have not met the first part of the RJR test to show a serious issue to be tried or the more stringent test set out in R. v. CBC to show that they have a prima facie case.
Have the moving parties demonstrated that irreparable harm will result in the relief is not granted?
[45] The Furneys submit that if the judgment is enforced, they suffer harm because they (or one or more of them ) would lose their possessory rights to the Property; if TT5 takes possession of the Property, they will lose their rights under sections 2(3) and 23(1)(b) of the Mortgages Act, R.S.O. 1990, chap. M.40. That argument was not strongly advanced in oral submissions. However, there is no evidence on this motion that the defendants, or any of them, have made any payment toward the monies due and owing under the Mortgage. To the contrary, the evidence is overwhelming that the Mortgage has been in default since at least 2018, if not earlier, and remains in default.
[46] TT5 submits that the default under the Mortgage is the reason for the defendants to lose their rights under the Mortgages Act. I agree.
[47] TT5 also submits that if the defendants succeed in proving that their lawyer acted without authority or instruction, the defendants would have available remedies against their lawyer.
[48] TT5 also submits that the Furneys, who are the moving parties on this motion - the Tenant not having appeared - do not live in the Property. This is an investment property for them, not their home.
[49] Counsel for the Furneys asked this court to consider the rights of the Tenant when determining whether to grant the relief sought on this motion. As the Tenant has not participated in this motion, that request cannot be accommodated. However, TT5 asks the court to note that the Tenant was represented by Mr. Watson when the Consent Order was made. TT5 submits that the rights of the Tenant were considered when the Consent Order was made, as evidenced by the paragraphs in the Consent Order that address the tenancy.
[50] Counsel for TT5 submitted that it is TT5, not the defendants, who needs the protection of this court. If the injunction being sought were to be granted, TT5 would be prevented from enforcing the Consent Order, obtained in good faith, properly negotiated between counsel, and made by a judge in open court, following legal submissions made by counsel for the parties.
[51] TT5 also asks the court to consider events that took place after the Mortgage was transferred to TT5, and the conduct of the Furneys after TT5 had served its Notice of Sale and issued a claim against the defendants, as evidenced by the parcel register for the Property, a copy of which was included by the Furneys in their materials on this motion.
[52] The Parcel Register shows that after the Mortgage was transferred to TT5, the Minister of National Revenue registered two liens against the Property with a total face amount of $243,551. Counsel for TT5 submits that the government liens rank in priority to the Mortgage. TT5 submits that the greater the delay suffered by TT5 in realizing upon its security under the Mortgage, the greater the risk that TT5 will not recover full payment of the amount owing pursuant to the Consent Order or, the higher amount that TT5 asserts it could have claimed had it proceeded with the motion for summary judgment and fully enforced the terms of the Mortgage.
[53] In oral submissions, counsel for TT5 also asked the court to consider that in July 2021, Maryam Furney granted a new mortgage against the Property in the principal amount of $700,000 but did not use any of those funds to pay down the Mortgage.
[54] I am not satisfied that the Furneys have shown that they will suffer irreparable harm if the injunction is not granted. Quite the opposite, the Consent Order represents a compromise of the amounts that TT5 could otherwise seek to claim under the Mortgage, that is in default. Separately, if the Furneys can show that their lawyer caused them to enter into the settlement, embodied in the Consent Order, that was prejudicial to their financial interests in the Property, there is no reason to believe that they will be unable to pursue a claim against their prior lawyer.
Have the moving parties shown that the balance of convenience favours granting the injunction?
[55] I accept the submissions of counsel for both sides, that if the moving parties have not satisfied the second part, I need not proceed to consider the third part of the three-part RJR test.
[56] However, the record before me shows that TT5 has been attempting to enforce its rights as mortgagee since at least 2018. TT5 brought a motion for summary judgment originally returnable in March 2020 - just before the interruption of the operation of the Courts, caused by COVID 19. The motion could not proceed in August 2021 because the defendants were not ready and had not yet filed materials. For that reason, the matter was marked peremptory upon the defendants when it was ordered to be placed on the September 2021 long motions list.
[57] Based on the record before me, I cannot conclude that the balance of convenience warrants restraining TT5 from moving to exercise its legal rights arising from the Consent Order made by Braid J. based on the submissions of legal counsel.
Conclusion
Is the noting in default still in place?
[27] Further to r. 19.02 (1)(b), a defendant who has been noted in default “shall not deliver a statement of defence or take any other step in the action, other than a motion to set aside the noting of default or any judgment obtained by reason of the default, except with leave of the court or the consent of the plaintiff”. The defendants in this case say that both exceptions apply here, because Labrosse J. granted the defendants leave to file a defence, and the plaintiffs consented to service of their statement of defence and counterclaim.
[28] The noting in default was lifted by Labrosse J. on February 10, 2020 so that the defendants could file a statement of defence, subject to the condition that they do so by March 30, 2020. When the defendants failed to meet this deadline, the plaintiffs did not consent to extend it. The noting in default therefore remains in effect, unless this Court lifts it on this motion.
[29] As the transcript of the February 2020 hearing reveals, the plaintiffs’ counsel advised Justice Labrosse that the defendants had been noted in default. In granting the defendants leave to file a statement of defence despite this, Labrosse J. implicitly exercised his discretion under r. 19.03(1), which provides that a noting of default “may be set aside by the court on such terms as are just”.
[30] Although the defendants did not comply with this deadline, they take the position that the plaintiffs agreed to waive their non-compliance in early July 2020 when their lawyer acknowledged receipt of the statement of defence and counterclaim and discussed scheduling of next steps with the defendants’ lawyer. Further to r. 19.03(2), where “a defendant delivers a statement of defence with the consent of the plaintiff under clause 19.02 (1) (b), the noting of default against the defendant shall be deemed to have been set aside”.
[31] As I found in my endorsement of the September 2020 case conference, the plaintiffs did not waive the defendants’ non-compliance with the March 30 deadline. The further materials filed in support of this motion reinforce this finding. When Mr. Simmonds and Mr. Vickery talked in late June 2020, I infer that Mr. Simmonds himself believed that he needed the plaintiffs’ consent to file the statement of defence. This is why Mr. Vickery followed up with an email saying he would seek his clients’ instructions on the point. Neither lawyer was sure, however, whether the deadline in Labrosse J.’s order was automatically extended as a result of the suspension of limitations put in place at the outset of the COVID-19 pandemic. When he was served a few days later with the statement of defence and counterclaim, Mr. Vickery assumed that Mr. Simmonds had obtained confirmation that the plaintiffs’ consent to a late filing was not, in fact, required. It was only in early August that he learned differently.
[32] In his affidavit, Mr. Trayanov states unequivocally that he never consented to waive the defendants’ failure to comply with the March 30, 2020 deadline. When it became clear that the plaintiffs’ consent was necessary notwithstanding the suspension of limitations, they refused to provide it. I reject the argument that Mr. Vickery’s assumption about the state of affairs in early July 2020, or his acknowledgment to defence counsel that he received the pleading sent to him, meant that the plaintiffs waived their right to rely on the noting in default.
Should I exercise my discretion to set aside the noting in default?
[33] In Intact Insurance Company v. Kisel, 2015 ONCA 205, at para. 13, the Court of Appeal set out the relevant factors on a motion to set aside a noting in default:
When exercising its discretion to set aside a noting of default, a court should assess "the context and factual situation" of the case… . It should particularly consider such factors as the behaviour of the plaintiff and the defendant; the length of the defendant's delay; the reasons for the delay; and the complexity and value of the claim. These factors are not exhaustive. (…) Some decisions have also considered whether setting aside the noting of default would prejudice a party relying on it… . Only in extreme circumstances, however, should the court require a defendant who has been noted in default to demonstrate an arguable defence on the merits… . [Citations omitted.]
[34] I must accordingly consider:
• The defendants’ behaviour;
• The plaintiffs’ behaviour;
• The length of the defendants’ delay;
• The reasons for the delay;
• The complexity and value of the claim; and
• Any other relevant factor.
The defendants’ behaviour
[35] Mr. Thorbjornsson’s actions suggest that, at least until recently, he has not taken this litigation very seriously.
[36] First, he did not take any steps over 18 months to retain defence counsel, even though his company is presumptively required to be represented by a lawyer further to r. 15.01(2), and even though the plaintiffs’ counsel repeatedly recommended that he seek legal advice. According to Mr. Thorbjornsson’s affidavit, he owns about thirty residential and commercial properties, either directly or through companies he controls. He is not an unsophisticated party. It is interesting that, in his affidavit, Mr. Thorbjornsson says he did not think that the plaintiffs could seek a CPL in October 2019 because he was unrepresented and because of his ongoing discussions with the plaintiffs. This suggests to me that Mr. Thorbjornsson’s decision not to retain counsel was strategic or, at the very least, convenient. In any event, Mr. Vickery’s email to him at the time left no doubt that the plaintiffs intended to proceed with the CPL motion, notwithstanding any ongoing settlement discussions between the parties. Knowing this, Mr. Thorbjornsson chose to remain unrepresented at the October 2019 hearing. When the motion was continued in February, Mr. Thorbjornsson appeared with his ungowned real estate solicitor, who told the court that Mr. Thorbjornsson had consulted him about the action just before the weekend. At the hearing, Mr. Bennett said he was not prepared and sought an adjournment.
[37] Mr. Thorbjornsson appointed litigation counsel of record only in June 2020. He blames the COVID-19 pandemic for difficulties in finding a lawyer in late March, April and May 2020. He has provided no explanation for his failure to retain counsel prior to this time.
[38] Second, Mr. Thorbjornsson has failed to comply with his disclosure obligations in a timely way. In Mr. Vickery’s September 17, 2019 email, he noted that Mr. Thorbjornsson had promised ten months earlier that he would deliver documents relating to his severance application, but that he had failed to do so. When the defendants were ordered by Labrosse J. to produce records in October 2019, they missed the deadline to do so and then delivered some documents they had earlier denied existed (the correspondence with the Minister of Finance), while admitting that they did not have other records that the plaintiffs, and the Court, were led to believe the defendants did have (the severance application that the defendants had supposedly prepared pursuant to the Agreement).
[39] Third, Mr. Thorbjornsson did not comply with the February 2020 order requiring him to file his defence by March 30, 2020.
[40] Finally, I agree with the plaintiffs that Mr. Thorbjornsson has repeatedly misled the court. As already noted, he failed to tell Justice Labrosse at the October 2019 hearing that the documents he was being ordered to produce simply did not exist, and that he had other documents which he had denied having. During the February 2020 hearing, the defendants’ solicitor represented, presumably based on information provided by Mr. Thorbjornsson, that the plaintiffs had defaulted on their last monthly payment to him. As shown by records produced by Mr. Trayanov on this motion, this was untrue. In September 2020, Mr. Thorbjornsson filed an affidavit for use at the case conference before me, in which stated that he represented himself at the February hearing. This was also untrue. As the transcript shows, he and his company were represented by Mr. Bennett.
The plaintiffs’ behaviour
[41] The defendants argue that, based on their conduct, the plaintiffs are poorly positioned to object to a further delay to require a statement of defence. They rely on the plaintiffs’ participation in settlement negotiations and their failure to object to service of the statement of defence in July 2020.
[42] I have already dealt with the second argument. The plaintiffs did not immediately object to late service because their lawyer assumed that the March 30, 2020 deadline had been suspended. When he learned that it had not been suspended, he promptly told the defendants that they would have to move to set aside the noting in default. I do not consider Mr. Vickery’s assumption that Mr. Simmonds had informed himself of his clients’ obligations to weigh in favour of granting the motion.
[43] Depending on the context, settlement negotiations could justify a defendants’ failure to file a statement of defence on time, and thus support a motion to set aside a noting in default. The plaintiffs argue otherwise. Relying on 7084421 Canada Ltd. v. Vinczer, 2020 ONSC 217, they contend that “this Court has held that direct negotiations between the parties should not constitute an excuse for delay, absent an explicit waiver of defence”. This is inaccurate. At para. 39 of his decision in Vinczer, Justice Bothwell said that it was “understandable” if a defendant engaged in negotiations did not file a defence, but that it “obviously would have been preferable had the defendants obtained an explicit indulgence from the plaintiff regarding the deferral of a defence pending negotiations”. He accordingly characterized the existence of ongoing settlement negotiations, in the circumstances, as a “weak” explanation for the defendants’ failure to serve a statement of defence. I agree with and adopt this reasoning. Given that the defendants in this case did not explicitly seek an indulgence to defer the service of a statement of defence, their reliance on ongoing, direct discussions between the parties is a factor on this motion, but not a strong one.
[44] The plaintiffs’ failure to give the defendants more notice of their intention to note them in default could be a significant factor if this were the first time that the defendants were seeking leave to be relieved of their default. When they served the action in November 2018, the plaintiffs put the defendants on notice that they would hold them to the procedural deadlines in the Rules and demanded a defence. This was the only time they demanded a defence. Strictly speaking, they were not required to ask twice. The defendants were, however, unrepresented, and the focus of communications between the parties was the potential resolution of the entire dispute or, at least, the preservation of any rights the plaintiffs had in the defendants’ property as a result of the Agreement. Despite this, Mr. Vickery gave Mr. Thorbjornsson less than a day’s notice before noting the defendants in default in late September 2019.
[45] Although the plaintiffs’ counsel could have made his clients’ position clearer, however, I do not consider this to be a significant factor on this motion. The defendants had seven weeks, pursuant to Labrosse J.’s February 10, 2020 endorsement, to prepare and file a defence. They therefore suffered no prejudice as a result of the plaintiffs’ failure to reiterate their demand for a defence after November 2018 or their lawyer’s decision to give the defendants virtually no notice of the noting in default in September 2019.
The length of the defendants’ delay
[46] The defendants had eleven months to file a defence before they were noted in default in September 2019. They did not provide the plaintiffs with a statement of defence for another nine months after that. This was five months after they were ordered to file a statement of defence within a set deadline, and three months after the deadline set by that order had passed. In all, the defendants waited twenty months after being served with the statement of claim before producing a statement of defence.
[47] In my view, this is a significant delay.
The reasons for the delay
[48] I have already reviewed Mr. Thorbjornsson’s explanation (or lack thereof) for his failure to produce a defence prior to February 10, 2020. Mr. Thorbjornsson blames the COVID-19 pandemic for missing the March 30, 2020 deadline and for his failure to provide a statement of defence for a further three months after that. In his affidavit, he says that a draft defence was “in progress” after February 10, but that the lawyer who drafted it was ultimately unable to represent him and his company in the action. At some unspecified date in March 2020, he went on a family holiday in South Carolina. When he returned, Mr. Thorbjornsson had to self-isolate for two weeks. After this two-week period, he says he had trouble finding a new lawyer because law offices were closed, and he was busy with childcare and dealing with requests from his tenants for rent abatements and lease terminations in the early stages of the pandemic. It was therefore not until mid-June 2020 that he was able to retain Mr. Simmonds’ firm.
[49] I do not find this explanation very compelling.
[50] Based on Mr. Thorbjornsson’s own evidence, he missed the March 30 deadline because he chose not to make the defence of this action a priority. The pandemic created significant challenges for landlords (and tenants), and he self-isolation rules for returning international travellers took many by surprise. But the critical period, from my perspective, is the seven weeks that Labrosse J. granted to the defendants to file their statement of defence in early February. Most of this period had already elapsed before the first COVID-19 pandemic lockdown in mid-March 2020. With the March 30 deadline looming, Mr. Thorbjornsson opted to go on holiday, without first having retained counsel of record, knowing that he was subject to a court-ordered deadline and knowing that no statement of defence had been finalized.
[51] With respect to the further delay between March 30 and mid-June 2020, I am skeptical about Mr. Thorbjornsson’s claim that he could not readily retain counsel when he returned from his holiday, either because he was in self-isolation or because law offices were closed. Given his real estate dealings, it is frankly inconceivable that Mr. Thorbjornsson could not have been obtained a referral to good defence counsel at any point, had he tried. As we have all learned over the past twenty-months, it is entirely possible to conduct all manner of business over the phone, by email or using video conferences. I assume that these are the tools that Mr. Thorbjornsson in fact used to manage his business interests during this same period.
The complexity and value of the claim
[52] The parties’ dispute is relatively straightforward. The court will have to assess whether the plaintiffs are entitled to specific performance of the defendants’ obligations under the Agreement and, if not, whether the plaintiffs are entitled to damages as a result of the defendants’ alleged failure to take meaningful steps to sever the property. The plaintiffs’ alleged damages are not trivial but neither is this a multi-million dollar claim.
Any other relevant factor
[53] There is no evidence that the plaintiffs have relied on the noting in default such that their interests would be prejudiced if it is set side. This is therefore not a relevant factor.
[54] On the other hand, if the noting in default is not set aside, the defendants will not be able to make a counterclaim for additional rent for the plaintiffs’ occupation of their property since October 2018. This consideration carries some weight. The defendants contend that the Agreement required the plaintiffs to leave the premises or to negotiate a commercial rent. According to Mr. Thorbjornsson, the monthly amount that the plaintiffs have been paying is about half of the amount of commercial rent he could charge a tenant. He has been receiving only the plaintiffs’ portion of some common costs (about $500 per month) since March 1st, 2020, when they began depositing the monthly payment under the Agreement into court.
[55] Finally, the procedural history of this action is a highly relevant factor. The defendants have already been given a chance to file a statement of defence after being noted in default. Even though they did not even file a motion seeking this relief, Justice Labrosse granted them leave to defend the action, provided that they filed their statement of defence by March 30. Having obtained this indulgence without exerting themselves, they then failed to take advantage of it. And so now they are seeking yet more time.
Conclusion
[56] Having weighed all relevant factors, I decline to exercise my discretion to give the defendants a further opportunity to file a statement of defence. In my view, the final factor discussed above weighs heavily against it. The defendants were already granted a second chance and they squandered it. Mr. Thorbjornsson has furthermore disregarded his obligations as a defendant in the Rules and shown a casual disregard for the Court’s authority. His actions have resulted in considerable delay and frustration for the plaintiffs. In the circumstances, I see no reason why the defendants should be granted a further indulgence at the plaintiffs’ expense. The only factor that really supports granting the motion is the impact that not doing so will have on the defendants’ ability to make a counterclaim. I do not find this sole factor determinative given all of the other factors arguing against the relief sought by the defendants.
Disposition
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