O'Shanter Development Corp v. Separi, 1996 CarswellOnt 1701

O'ShanterDevelopmentCorp. v. Separi

 

O'ShanterDevelopment Corporation (Plaintiff / Appellant Respondent by Cross-Appeal) and Ali Separi (Defendant / Respondent in appeal, Appellant by way of Cross-Appeal)

 

Ontario Court of Justice (General Division) [Divisional Court]

 

Steele J.

 

Heard: April 9, 1996

Judgment: May 7, 1996

Docket: 761/94

 

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Counsel: Allistair A. Trent, for Plaintiff / Appellant, Respondent by Cross-Appeal.

 

M. Blazer, for Defendant / Respondent in Appeal, Appellant by Cross-Appeal.

 

Subject: Property

 

Landlord and Tenant --- Residential tenancies — Rent — Obligation to pay — General — Retroactive rent.

 

Landlord and Tenant --- Residential tenancies — Rent review — Powers and jurisdiction of court — Miscellaneous issues — Retroactive rent

 

Landlord and Tenant — Residential tenancies — Rent — Obligation to pay — General — Retroactive rent — Trial judge dismissing landlord's action for rental arrears on basis that it being unfair to tenant to order payment of rent based on orders made after tenant having vacated — Trial judge improperly ignoring the law.

 

Landlord and Tenant — Residential tenancies — Rent review — Powers and jurisdiction of court — Miscellaneous issues — Retroactive rent — Small Claims Court judge dismissing landlord's action for rental arrears on basis that it being unfair to tenant to order payment of rent based on orders made after tenant having vacated — No jurisdiction in court to hear claim — Small Claims Court only having jurisdiction to determine whether valid tenancy agreement existing.

 

The parties entered into a residential tenancy agreement for a five-month term with a rent of $503.16 per month. The offer to lease provided that the rent payable was subject to the appellant landlord's application for a rent increase. The respondent tenant paid increased rent while he remained a tenant. When the tenant moved out of the premises he owed arrears of rent in the amount of $1,083.78 (which included retroactive rent). The tenant's arrears of rent were reduced to $842.86. The landlord brought an action for the recovery of that amount in Small Claims Court. The trial judge found that it was inequitable, unfair and objectionable to order the payment of rent based on orders made after the tenant vacated the premises and he dismissed the action. The landlord appealed.

 

Held:

 

The appeal was allowed.

 

The trial judge erred in ignoring the law. The trial judge did not interpret the law and did not base his decision on any misconduct or on any misrepresetation by the landlord. He based his decision on his belief that the law relating to rent was unfair.

 

In any event, there was no jurisdiction in the Small Claims Court to hear the claim as it related to a landlord and tenant matter. The only issue that the Small Claims Court could determine was whether or not there existed a valid tenancy agreement.

 

Cases considered:

 

Gotlibowicz v. Gillespie (April 11, 1996), Doc. DC2C/96 (Ont. Div. Ct.) — applied

 

Sam Richman Investments (London) Ltd. v. Riedel (1974), 6 O.R. (2d) 335, 52 D.L.R. (3d) 655 (Div. Ct.) — referred to

 

Statutes considered:

 

Landlord and Tenant Act, R.S.O. 1990, c. L.7

 

s. 36considered

 

s. 113(2)referred to

 

Residential Rent Regulation Act, 1986, S.O. 1986, c. 63 [R.S.O. 1990, c. R.29]

 

s. 74 [R.S.O. 1990, c. R.29, s. 73]referred to

 

s. 82 [R.S.O. 1990, c. R.29, s. 81]referred to

 

Residential Rent Regulation Act, R.S.O. c. R.29

 

s. 13(1)considered

 

 APPEAL from judgment dismissing appellant's claim for arrears of rent.

 

Steele J.:

 

1        This is an appeal from the decision of a judge of the Small Claims Court in which the claim by the appellant (the landlord) was dismissed.

 

2        The claim was for $862.50 for arrears of rent representing the retroactive rent owed as a result of orders made by the Rent Review Hearings Board under the provisions of s. 74 of the Residential Rent Regulation Act 1986 (the 1986 Act) and an order of the Minister under the Act as well as arrears of rent.

 

3        In an agreed statement of facts the parties agreed that the balance owing to the landlord by the defendant (the tenant) was $842.86.

 

4        The parties entered into a lease agreement on January 11, 1990, providing for a five month term with a rental of $503.16 per month. This tenancy was subsequently continued on a monthly basis. The offer to lease provided as follows:

 

Application has been made to the Ministry of Housing 06/01/87 for an increase of 15%; for rental unit $420.61, for parking $ zero effective July 01/88.

 

1. 5/31/88 for an increase of 10%; for rental unit $462.67, for parking $40.48 effective July 01/89;

 

2. 05/30/89 for an increase of 8%; for rental unit $499.68, parking $43.71 effective July 01/90.

 

. . . . .

 

We acknowledge having been advised the following matters concerning the above noted apartment prior to signing our tenancy agreement.

 

X The current maximum rent for the apartment.

 

X The contents of three pending Applications to the Ministry of Housing pertaining to the complex in which the apartment is located, insofar as it relates to the apartment.

 

X The most recent notice of increase concerning the apartment.

 

5        The tenancy agreement provided as follows:

 

The final rent will established [sic] by an Order(s) from the Ministry of Housing pursuant to an Application(s) for whole building review set out in the Offer to Lease for the premises.

 

6        The landlord did not charge the full amount provided in the tenancy agreement, but only the maximum amount allowed from time to time under various orders made by the Minister. The tenant paid any increased amount while he remained a tenant. The tenant moved out of the premises on April 30, 1992, and at that time he owed arrears of rent including retroactive rent in the sum of $1,083.78. On October 29, 1993, and May 31, 1994, the Board and the Minister made orders the result of which reduced the tenant's arrears of rent to $842.86.

 

7        At the trial the tenant gave evidence that he did not understand the various notations on the Offer to Lease and was confused by the amounts indicated on the Offer to Lease and the tenancy agreement different than the amount he was asked to pay and was told by the superintendent not to worry. He also testified that he was never advised that after vacating the premises he would be faced with a demand to pay further sums in respect to retroactive rent increases. The trial judge found as a fact that the tenant knew what he was signing and that he was sufficiently informed of the rent that he was supposed to pay. There is no issue that the claim was not below the amount agreed to in the tenancy agreement.

 

8        However the judge found that it was inequitable, unfair and objectionable to order the payment of rent based on Board orders made after the tenant vacated, but applicable to the tenancy period. He dismissed the action.

 

9        In my opinion the judge erred. The Small Claims Court is a court of summary jurisdiction and is empowered to make such order as is considered just and agreeable to good conscience. However, the court's decision was based on the judge's belief that the law relating to rent and the decision of the Board was unfair. He did not interpret the law and he did not base his decision on any misconduct or on any misrepresentation by the landlord. The judge could not ignore the law.

 

10        The agent for the landlord also argued that there was no jurisdiction in the Small Claims Court to hear the claim because it related to a landlord and tenant matter and also that the matter was within the exclusive jurisdiction of the Minister.

 

11        Section 113(2) of the Landlord and Tenant Act R.S.O. 1990, c. L.7 (the 1990 Act) permits applications for arrears of rent only where the tenant is in possession. Here the tenant was not in possession and a claim must be brought in an action in the ordinary course (see Sam Richman Investments (London) Ltd. v. Riedel (1974), 6 OR (2d) 335 (Div. Ct.)).

 

12        The Minister's order to retroactively increase the rent was made on January 3, 1992, while the tenant was still in possession. Subsequent Board orders reduced this amount but the basic order was made during the tenancy. Section 13(1) of the Residential Rent Regulation Act 1990, c. R.29 (which is basically the same as in the 1986 Act) gives the Minister the exclusive jurisdiction to determine the maximum amount of rent payable and what amount may be payable between a landlord and a tenant. In the present case the Board made an order under s. 82 of the 1986 Act that the tenant pay the landlord the amount of $842.86. Such order provided that the tenant may chose to pay the full amount of the money owing immediately or pay the landlord in twelve equal monthly instalments. This was dispositive of the issue. Section 36 of the 1990 Act provides for a certified copy of the order to be filed in the Small Claims Court and thereupon the order has the same force and effect as if it were a judgment of that Court. No such certified copy was filed.

 

13        There was no jurisdiction in the Court to determine the amount of money owing and whether or not it was payable. The only issue that the Court could deal with was whether or not there was a valid tenancy agreement between the parties. The court found that there was. That disposed of that issue.

 

14        The appeal is allowed and the decision below is set aside. Upon the appellant filing a certified copy of the Minister's order in the Small Claims Court the landlord is entitled to enforce such order against the tenant as if it were a judgment of that court.

 

15        The landlord was represented in this court by an agent. In light of the decision in Gotlibowicz v. Gillespie ((April 11, 1996), Doc. DC2C/96, Feldman J. (Ont. Div. Ct.)) this should not be allowed. For this reason there will be no costs.

 

Appeal allowed.

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