- whether the appellant was a "tenant" within the meaning of the RTA (RTA s. 2);
- whether the tenant would remain liable after the fixed lease term expired (RTA s. 38);
- whether the SCC has jurisdiction (RTA ss. 168(2), Kiselman v. Klerer, 2019 ONSC 6688 (Div. Ct.), Mackie v. Toronto (City), 2010 ONSC 3801, Effrach v. Cherishome Living, 2015 ONSC 472);
- res judicata / cause of action estoppel.
[1] The defendant George Yanovski appeals from a trial judgment holding him liable for rental arrears and damages in relation to residential premises rented from the respondent landlord.
[2] The total amount owed was $30,053. The landlord waived the excess over $25,000 to remain within the monetary jurisdiction of the Small Claims Court. Neither defendant disputed the amount claimed. Ms. Adler admitted liability; the appellant did not.
Background facts
[3] Pursuant to a written lease signed in May 2016, the appellant rented a home from the respondent landlord. The lease was for a term of one year commencing July 2016.
[4] The appellant had no intention of living in the home – he leased it for a friend, the defendant Naomi Adler. He did this because she had a poor credit rating and the two believed that she would not be successful renting it on her own. The landlord was not informed of the arrangement. Ms. Adler moved into the premises with her five children at the end of June 2016. The appellant never occupied the premises.
[5] The appellant acknowledged that he and Ms. Adler presented themselves to the landlord as a “couple”. He says that he knew that by signing the lease, he was obliged to pay rent: “as a guarantor was my understanding at the time but either way guarantor or your name is on, either way you’re, you’re on the hook.” He did, however, acknowledge that he signed the lease as tenant and not as guarantor. Although he never occupied the premises, he testified that he moved out in July 2016. He agreed that had no discussion with the landlord at that time but that the landlord would have known, because Ms. Adler would have told him. Her evidence, which is corroborated by a text message, was that it was not until the following winter that she told the landlord that the appellant had moved out.
[6] On December 31, 2016, Ms. Adler informed the landlord by text message that the appellant was not living at the premises: "Alex … hope all is well. I didn’t want to tell you before but I broke up with my boyfriend … he had refused to pay so I was paying everything … .” This was given as an excuse for late payment of rent, but in fact, the “boyfriend” (the appellant) had never lived at the premises nor had he ever paid rent.
[7] In July 2017, at the end of the initial one-year term, no new lease was signed. Ms. Adler testified that she thought that it was “just a continuation” and that she just continued to pay rent at the lease rate. The landlord testified that it was a renewal of the lease. The appellant says that he was not involved with the premises “after moving out” and that at no time did he “okay the lease to continue”, beyond the initial one-year term.
[8] The appellant acknowledges that he did not ask the landlord to communicate with him but thought that if there were any issues, he would be the first to know. He acknowledges that at no time did he tell the landlord that he did not consider himself to be a tenant and never asked the landlord to take him off the lease.
[9] The first the appellant heard that there were issues was on October 31, 2017 when he got a call from the landlord’s agent telling him that the rent was in arrears. He responded by telling the agent to evict Ms. Adler – “end of story.”
[10] The appellant was asked whether he knew that following the expiry of the term of a residential lease, the lease continues on a month-to-month basis. His answer was” “I know that now.”
[11] The landlord applied to the Landlord and Tenant Board for an order evicting Ms. Adler on the grounds of persistent late payment of rent. The date for the hearing of the application was February 5, 2018. However, Ms. Adler vacated the premises on February 3, 2018, in advance of the hearing.
Standard of review
[12] The appellate standard of review is set out in Housen v. Nikolaisen, 2002 SCC 33. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, the standard is palpable and overriding error, unless there is an extricable question of law, in which case, the standard of review on that extricable question is correctness.
[13] A palpable and overriding error is an error that can be plainly seen and that affected the result. “The same proposition is sometimes stated as prohibiting an appellate court from reviewing a trial judge’s decision, if there was some evidence upon which he or she could have relied to reach that conclusion”: Housen v. Nikolaisen, 2002 SCC 33, at para. 1.
Reasons of the trial judge
[14] The trial judge found as a fact that when the initial term of the lease expired, “no further lease, assignment, or sublet agreement was entered into by any of the parties.” Such being the case, he held that s. 38(1) of the Residential Tenancies Act applied and that the appellant remained bound by the terms of the expired lease.
[15] In his closing argument, the appellant took the position that the lease had been assigned to Ms. Adler, and that as a result, he was not responsible for rent accruing after the end of the initial lease term or for damages occurring to the premises after the end of the initial lease term. The trial judge disagreed and held that because there was no evidence that the landlord had consented to such an assignment, the lease had not been assigned. I would add that there was no evidence that the appellant had even purported to assign the lease.
[16] Quoting from s. 95(8)(b) of the Act, the trial judge also held that even if the lease had been assigned, the appellant would have remained liable. However, in doing so, he failed to note that the section provides that the former tenant remains liable for any breach of the tenant’s obligations “if the breach or obligation relates to the period before the assignment.”
[17] In his closing argument, the appellant argued that the landlord’s claim for arrears of rent was within the exclusive jurisdiction of the Landlord and Tenant Board and that the claim was not within the jurisdiction of the Small Claims Court. The trial judge disagreed and held that the jurisdiction of the Board was limited by s. 87(1)(b) of the Act which, at the time, provided that a landlord could apply to the Board for an order for the payment of arrears of rent “if … the tenant is in possession of the rental unit.”
[18] In his closing argument, the appellant argued that the one-year limitation period in s. 29(2) of the Act applied. The trial judge disagreed and pointed out that s. 29(2) of the Act applies only to applications made by tenants and not to applications made by landlords.
[19] In the result, the trial judge held that both the appellant and Ms. Adler were liable to the landlord for the $25,000 claimed.
Appellant’s position
[20] The appellant argues that the trial judge erred:
• in finding that he was a tenant within the meaning of the Residential Tenancies Act;
• in finding that pursuant to s. 38 of the Act, he continued to be liable under a deemed renewal of the lease;
• in failing to find that there was a deemed assignment of the lease from himself to Ms. Adler;
• in finding that the Small Claims Court had jurisdiction to hear the landlord’s claim; and
• in failing to find that the landlord’s claim was res judicata and barred by cause of action estoppel.
Whether the appellant was a tenant within the meaning of the Residential Tenancies Act
[21] Section 2 of the Residential Tenancies Act provides that the word “tenant” when used in the Act “includes a person who pays rent in return for the right to occupy a rental unit and includes the tenant’s heirs, assigns and personal representatives.”
[22] The appellant argues that he was not a tenant because he neither paid rent nor occupied the premises. I disagree.
[23] In support of his position, the appellant relies upon three decisions of the Landlord and Tenant Board: TNL-00736-09-RV (Re), 2009 CanLII 79048 (L.T.B.); TEL-02855-10-RV (Re), 2010 CanLII 25295 (L.T.B.); and EAL-55065-16 (Re), 2016 CanLII 38206 (L.T.B.). However, while in those cases a person who had not paid rent was found for that reason not to be a tenant, unlike in the present case, none of them had signed a tenancy agreement.
[24] The Act provides that a person who pays rent in return for the right to occupy a rental unit is a tenant. In doing so, it does not preclude others from being tenants. In particular, it does not preclude someone who has signed a tenancy agreement as tenant from being considered a tenant. The Act simply makes it clear that even in the absence of an explicit tenancy agreement, a tenancy may be implied from the payment of rent in return for the right to occupy a rental unit. In this regard, it should be noted that in the interpretation section of the Act, many of the terms are given definitions by use of the word “means”. For example, s. 2 provides that “subtenant” means the person to whom a tenant gives the right under section 97 to occupy a rental unit. In the case of “tenant”, however, the word used is “includes” and not “means”.
[25] The trial judge found that in his closing argument, the appellant had conceded that he was a tenant. The appellant now argues that he made no such concession.
[26] The section of the appellant’s written argument entitled “Background” contained the following admissions of fact:
The Plaintiff, Jing Hui Wu, (the "Landlord") and Defendant George Yanovski "Yanovski") entered into a residential tenancy agreement, dated May 5, 2016, for a term of one year commencing July 1, 2016 to and including June 30, 2017 for a monthly rental payment of $3,200.00 per month and an annual rental payment of $38,400.00 (the "Lease Agreement”).
…
The Lease Agreement between the Landlord and Yanovski is governed by the provisions of the Residential Tenancies Act, 2006, SO 2006, c.17 (the "Act" or the "RTA").
…
Yanovski admitted that he rented the rental premises and that he took full responsibility for payment of rent whether he was the tenant or the guarantor and holds himself responsible for the payment of rent and any damages that occurred during the term of the tenancy being from July l, 2016 to and including June 30, 2017.
[27] The section of the appellant’s written argument entitled “Argument and Law”, contained the following submission:
It is admitted that the Defendant, Yanovski, entered into a rental agreement with the landlord and therefore a tenancy was created between the Plaintiff and Yanovski subject to Yanovski moving into the Rental Unit on the date agreed to. However, it is clear that as Yanovski did not move into the Rental Unit, he did not take possession of the Rental Unit, thereby ousting any jurisdiction of the Landlord Tenant Board as it related to him.
[28] While it is true that in his legal argument, the appellant submits that his earlier admissions do not amount to a tenancy because he did not move into the rental unit, the tenancy agreement was not conditional upon him doing so. On the evidence before the court, it was open to the trial judge to find that the appellant was a tenant.
Whether following expiry of the initial term of the lease, the appellant continued to be liable under a deemed renewal of the lease, pursuant to s. 38(1) of the Act
[29] Section 38(1) of the Residential Tenancies Act provides as follows:
38 (1) If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act.
[30] The appellant argues that s. 38(1) does not apply to him because he was not a tenant pursuant to the initial tenancy agreement. Having found that he was a tenant, I need not comment further on that argument.
[31] The appellant was entitled to terminate his tenancy by giving notice of termination at least 60 days before the expiration date specified in the tenancy agreement or at any time thereafter, on giving sixty days’ notice. Having not done so, he is bound by the deemed renewal provisions contained in s. 38(1) of the Act.
Whether the trial judge erred in failing to find that there was a deemed assignment of the lease from the appellant to Ms. Adler
100 (1) If a tenant transfers the occupancy of a rental unit to a person in a manner other than by an assignment authorized under section 95 or a subletting authorized under section 97, the landlord may apply to the Board for an order terminating the tenancy and evicting the tenant and the person to whom occupancy of the rental unit was transferred.
(2) An application under subsection (1) must be made no later than 60 days after the landlord discovers the unauthorized occupancy.
…
104 (4) A person’s occupation of a rental unit shall be deemed to be an assignment of the rental unit with the consent of the landlord as of the date the unauthorized occupancy began if,
…
(b) the landlord does not apply to the Board under section 100 for an order evicting the person within 60 days of the landlord discovering the unauthorized occupancy.
[33] The appellant argues that there was an unauthorized transfer of occupancy from himself to Ms. Adler; and that as a result of the landlord’s failure to apply for an eviction order within 60 days of discovering Ms. Adler’s occupancy, there is deemed to have been an assignment to her with his consent. He says that this transfer of occupancy occurred prior to the accrual of the amounts in issue, and that as a result, he cannot be held liable for payment of those amounts. I disagree.
[34] There was no unauthorized transfer of occupancy from the appellant to Ms. Adler – the appellant never occupied the premises. And Ms. Adler was not an unauthorized occupant - at the time the lease was signed, the appellant and she represented themselves to be a “couple” who would be occupying the rental unit together. And, she paid the rent deposit and the ongoing payments of rent.
Whether the Small Claims Court had jurisdiction to hear and determine the claim
[35] The appellant argues that the landlord’s claim was within the exclusive jurisdiction of the Landlord and Tenant Board, and that as a result, the Small Claims Court did not have jurisdiction to hear and determine the claim. I disagree.
168(2) The Board has exclusive jurisdiction to determine all applications under this Act and with respect to all matters in which jurisdiction is conferred on it by this Act.
[37] That jurisdiction is, however, subject to a number of restrictions. Two of those restrictions are applicable in the present case.
[38] With respect to a landlord’s claim for arrears of rent, the landlord’s right to apply to the Board is restricted, by s. 87(1), to situations where the tenant is in possession of the rental unit:
87(1) A landlord may apply to the Board for an order for the payment of arrears of rent if,
(a) the tenant has not paid rent lawfully required under the tenancy agreement; and
(b) the tenant is in possession of the rental unit.
[39] With respect to a landlord’s claim for damages to the rental unit, the landlord’s right to apply to the Board is restricted, by s. 89(1), to situations where the tenant is in possession of the rental unit:
89(1) 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.
[40] In the present case, neither the appellant nor Ms. Adler were in possession of the rental unit at the time the Small Claims action was commenced.
[41] In support of his position, the appellant relies upon Kiselman v. Klerer, 2019 ONSC 6688 (Div. Ct.). In that case, eleven months after the tenant had vacated the property, the landlord sued the tenant in Small Claims Court for arrears of rent and damage to the rental unit. The tenant successfully moved for an order dismissing the claim for want of jurisdiction, and the landlord appealed. In dismissing the appeal, the appellate judge reached the following conclusion:
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. … 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.
[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.
[43] In support of his conclusion, the appellate judge cited two earlier decisions of this court: Mackie v. Toronto (City), 2010 ONSC 3801 and Effrach v. Cherishome Living, 2015 ONSC 472, both of which are easily distinguished. Neither deals with the question of jurisdiction raised in the present case.
[44] In Mackie, the plaintiffs’ claims were that the housing authority had breached its maintenance and repair obligations to the plaintiffs. The plaintiffs’ recourse was under s. 29 of the Act which provides that a “tenant or former tenant of a rental unit may apply to the Board … .” I also note that in that case, the tenants were still in possession.
[45] In Effrach, the tenants, complained that they had been robbed while on vacation and that their loss was a result of the landlord’s negligence. The court found that these claims came within ss. 29(1) and 29(1.3) of the Act, both of which are available to a “tenant or former tenant”. And again, the tenants were still in possession.
[46] Klerer aside, in cases where the question of jurisdiction raised in the present case has been raised, this court has held that the Small Claims Court does have jurisdiction. See, for example: Capreit Limited Partnership v. Griffen, 2016 ONSC 5150, at paras. 8-15; and Brydges v. Johnson, 2017 ONSC 7410, at para. 11.
[47] As a matter of interest, on September 21, 2021, sections 87 and 89 of the Act were amended to provide that applications for arrears of rent, or for compensation for damage to the rental unit, may be made while the tenant is in possession of the unit, or no later than one year after the tenant or former tenant ceased to be in possession of the unit. As a result, this question of jurisdiction should no longer arise.
Whether the landlord’s claims were res judicata and barred by cause of action estoppel
[48] The appellant argues that the landlord’s claim was res judicata and barred by cause of action estoppel. This argument was not made in Small Claims Court. In any event, I disagree, for the following reasons.
[49] Prior to commencing the Small Claims Court action, the landlord applied to the Landlord and Tenant Board and obtained an order evicting Ms. Adler from the rental unit. The appellant argues that the claims made by the landlord in Small Claims Court should have been made in the proceeding before the Board.
[50] However, the application before the Landlord and Tenant Board was an application to evict Ms. Adler for persistent late payment of rent. The appellant was not a party to that proceeding. Prior to the commencement of the proceeding, the landlord had been advised that the appellant was not living at the rental unit.
[51] The landlord’s agent testified that the reason why he did not claim for arrears of rent and damages in the proceeding before the board was that Ms. Adler had promised to repair the damage after she moved out. He was waiting to see if she did and when she did not, he was then able to assess the damage and determine the costs of repair.
[52] Ms. Adler moved out of the premises prior to the hearing date of the eviction application. At the hearing, the only finding of fact made by the Board member was that Ms. Adler had already moved out. Based upon the fact that she had moved out, the member held that the tenancy was terminated as of the date of the move. Under s. 79 of the Act, the Board had jurisdiction to order the eviction based on abandonment. No findings were made in relation to the causes of action pleaded in Small Claims Court.
[53] In these circumstances, cause of action estoppel does not apply.
Disposition
[54] For the reasons given, the appeal is dismissed.
[55] If the parties are unable to agree on costs, I will consider brief written submissions, provided that they are delivered to my judicial assistant by email to monica.mayer@ontario.ca, no later than January 28, 2022.
“S.T. Bale J.”
Released: January 10, 2022
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