) ) DAVID AUDAIN Appellant Tenant (Responding Party) – v. –, 2010 ONSC 6415

CITATION : Audain v. Sisters of Saint Joseph, 2010 ONSC 6415 COURT FILE NO.: 394/10 DATE: 20101123 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT BETWEEN: ) ) DAVID AUDAIN Appellant Tenant (Responding Party) – and – THE SISTERS OF SAINT JOSEPH FOR THE DIOCESE OF TORONTO IN UPPER CANADA Respondent Landlord (Moving Party) ) ) ) ) ) ) ) ) )) ) Paula Boutis , for the moving party for the Mr.

Audain , in person ) ) ) HEARD: November 16, 2010 at Toronto MOLLOY J.: REASONS FOR DECISION Introduction [ 1 ] This is a motion by a landlord to quash a tenant’s appeal from an Order made by the Landlord and Tenant Board (“the Board”) on August 3, 2010. The landlord argues that the appeal is completely devoid of merit and is brought solely for the purpose of delay. The burden on the moving party on a motion such as this is an onerous one, but it is met in this case. For the reasons that follow, the appeal is quashed.

History: Ongoing dispute and the previous Divisional Court decision [ 2 ] This appeal is part of an ongoing saga of litigation between Mr. Audain and his landlord, including disputes that preceded the current landlord’s tenure. It would appear that the apartment was originally occupied by Mr. Audain’s mother and was taken over by him after her death in 2003. The Sisters of St. Joseph purchased the property sometime prior to 2007 with the intention of demolishing the existing buildings and building a convent. The Sisters took over management of the apartment building in 2007, by which time Mr.

Audain had ceased paying rent due to disputes with the prior landlord. Those disputes continued with the Sisters of St. Joseph. [ 3 ] At the present time, demolition permits have been issued for the property and notices have been served on all tenants. All tenants have vacated, with the exception of Mr. Audain and one other tenant. An eviction order has already issued for the other tenant and proceedings with Mr.

Audain involving the demolition notice are ongoing before the Board. [ 4 ] The tenant’s current appeal is from a decision of the Board in August 2010, which in turn flowed from a previous Divisional Court appeal between these same parties. In the earlier Divisional Court matter (Court File No. 61/09), the tenant (Mr.

Audain) appealed a decision of the Board that involved two applications: (1) an application by the landlord to terminate the tenancy for non-payment of rent (“L1”); and (2) an application by the landlord to terminate the tenancy because the tenant had seriously impaired the safety of others in the apartment complex (“L2”). [ 5 ] The main issue on the L1 application was the determination of the rent that could be legally charged by the landlord. The Board held that the monthly rent was $325.00 and that Mr. Audain owed arrears of approximately $5600.00 (of which $2100.00 had

already been paid to the Board in trust and was ordered paid out to the landlord). The L2 application was resolved by a consent order, which included a term that Mr. Audain would move from the unit he then occupied (Unit 3) to another unit in the same building (Unit 203) and would continue to pay the same rent as was chargeable for Unit 3. The L2 consent order further provided that if Mr. Audain failed to vacate Unit 3 by February 17, 2009, the landlord could obtain and enforce an eviction order. [ 6 ] Prior to the February 17, 2009 eviction date, Mr.

Audain appealed both aspects of the Board Order (including the consent order). His appeal was heard in Divisional Court on January 28, 2010 by a three-judge panel, of which I was one. For reasons set out in a written endorsement delivered on January 20, 2010 [1] , this Court granted the appeal in part. With respect to L2, Mr. Audain had argued on the appeal that the consent order was not valid because his consent had not been in writing.

The Court rejected his argument on this point and ruled that the consent order was binding on him, while noting that there could be difficulties with the order if a move to Unit 203 was no longer feasible given the passage of time. With respect to the L1 application, we held that the Board erred in calculating the rent arrears based on a monthly rent of $325.00, because there was no evidence to support such a conclusion.

The Court set aside those aspects of the Board’s decision relating to L1 and the lawful rent for the unit and remitted the matter to the Board for a new hearing before a different Member. (This encompassed somewhat more than the substance of the L1 application because of the stipulation in the L2 Consent Order that the monthly rent determined in the L1 application would apply to Mr. Audain’s new apartment) [ 7 ] The endorsement issued on January 29, 2010 included a provision that approval of the form and content of the formal order was dispensed with.

This was meant to facilitate the landlord’s counsel taking out the order since Mr. Audain was not represented by counsel and not easy to contact. However, Mr. Audain prepared a draft order before the landlord’s counsel did and, since approval was not required, this order was issued by the Divisional Court office. The formal Order as initially issued dealt only with the Court’s decision setting aside the Board Order in respect of L1 and the lawful rent.

The relevant portion of the Order states: THIS COURT ORDERS THAT the decision of the Member dated February 9, 2009 relating to L1 and the lawful rent for the unit is set aside and the matter is remitted to the Board to be heard by a different Member. [ 8 ] Subsequently, a variation of this order was requested by the landlord in order to deal with the L2 aspect of this Court’s ruling. The landlord requested a provision stating that the L2 order was binding on Mr. Audain and that the landlord could evict in accordance with its terms.

In a further endorsement issued on February 16, 2010, this Court varied our previous order by adding a paragraph stating: Apart from the quantum of rent issue set out in Paragraphs 5 and 6 of the Consent Order of the Landlord and Tenant Board, dated February 9, 2009, on the L2 application, the balance of that Order remains binding on both parties. Any issues of

interpretation of that Order are to be dealt with by the Landlord and Tenant Board. Most recent Board decision---the subject of the current appeal [ 9 ] Following the Divisional Court ruling, the landlord brought two applications before the Board: the return of the L1 application with respect to rent arrears; and, an application for the Board’s

interpretation of the L2 consent order in light of the passage of time. A hearing was scheduled for May 21, 2010 before Board Member Sangmuah. Mr. Audain was in attendance at the hearing, and was represented by counsel at that time. The Board’s decision and reasons were released on July 9, 2010 (and subsequently amended on August 3, 2010). [ 10 ] On the L1 application, the landlord advised the Board that it was unable to present sufficient evidence to prove the lawful rent for Mr. Audain’s unit.

The landlord therefore sought the consent of the Board to withdraw its application for a determination of arrears of rent. Mr. Audain objected on the grounds that the Divisional Court Order required the Board to decide what the lawful rent was and argued that he would be prejudiced if the landlord withdrew its application as he claimed to have overpaid the landlord over the years.

The Board consented to the withdrawal of the L1 application, ruling that the landlord was not compelled to litigate the issue and the tenant was not prejudiced because he could bring his own application before the Board if he believed the landlord had collected excess rent from him. [ 11 ] On the L2 application, the Board rejected Mr. Audain’s argument that the consent order was void because it was in breach of s. 37 of the Residential Tenancies Act (“the Act”), holding that this argument was not raised in the Divisional Court and in any event was without merit.

The Board found that the consent order did not make the landlord’s compliance with its obligation to provide Unit 203 to Mr. Audain a condition precedent to Mr. Audain’s obligations under the order to vacate Unit 3 by the specified date. However, the Board noted that Mr. Audain continued to be a tenant. Therefore, if the landlord failed to fulfill its obligations, Mr. Audain could seek tenant’s remedies under the Act, subject to any defence the landlord may plead with respect to whether compliance is still possible and what flows from that.

The Board declined to make any further determinations as it could not be determined what the parties might do in the future with respect to the consent order. The only adjustment made by the Board was to extend the dates in the previous consent order, such that the Order would then require Mr. Audain to vactae his unit by September 15, 2010. Mr. Audain’s objections to the landlord’s motion materials [ 12 ] At the outset of the motion before me Mr.

Audain sought to have the landlord’s motion material struck out on the grounds that it contained affidavits by two individuals who he argued had no authority to make representations binding the corporation and because there had been an Order by Himel J. that the affidavit material be filed by September 17. [ 13 ] The order by Himel J. was made in a completely separate proceeding and has no bearing on this motion. The materials for this motion were properly served. [ 14 ] There is no requirement for an affiant of an affidavit on a motion to be a corporate officer with power to bind the corporation.

The affidavits filed were proper. They were filed by counsel for the landlord and, in that sense, are binding on the landlord. [ 15 ] There is nothing wrong with the landlord’s motion material and I refused to strike it.

Issues raised by Mr. Audain on the appeal [ 16 ] Mr. Audain appeals from the Board’s decision on the following grounds: (

a) the Board breached rules of natural justice by refusing to hear oral evidence on the motion; (

b) the Board was required to decide the rent issue and erred in permitting the landlord to withdraw the L1 application; (

c) the Board erred in dismissing the L1 application without directing that the monies paid to the Board in trust by the tenant be returned to him; (

d) the Board erred in failing to determine that the L2 consent order was void and unenforceable by virtue of s. 37 of the Act; The test on a motion to quash an appeal [ 17 ] An appeal lies to the Divisional Court from a decision of the Board, but only on a question of law. [2] The Board is required to be correct on issues of law. [3] [ 18 ] This Court has jurisdiction to quash an appeal under s. 134(3) of the Courts of Justice Act.

However, such relief should only be granted in the “rarest of cases,” where it is demonstrated that the appeal is “manifestly devoid of merit” or where the appeal can be said to be an abuse of process because it has been brought solely for the purposes of delay. [4] [ 19 ] In this case, I am satisfied that all of the grounds of appeal raised by Mr. Audain are manifestly devoid of merit. That being the case, there is no reason for me to question his motivation in bringing the appeal and I have therefore not dealt with the abuse of process issue.

Is there any merit to the breach of natural justice ground of appeal? [ 20 ] The proceeding before the Board dealt with two points: whether the landlord could withdraw its application to recover rent arrears and issues of

interpretation with rspect to the L2 consent order. There was nothing about those issues that required oral evidence. These are issues of legal

interpretation and there is no merit to the argument that a failure to hear oral testimony was a breach of natural justice or rules of procedural fairness. [ 21 ] Mr. Audain also argued that there was a breach of s. 5.3(4) of the Statutory Powers Procedure Act, which provides that a tribunal member who presides at a pre-hearing conference at which the parties attempt to settle shall not preside at the hearing of the proceeding. There is no air of reality to that argument. There was no pre-hearing settlement conference. This Board Member has had no involvement in any settlement discussions whatsoever.

Could the landlord withdraw its application before the Board? [ 22 ] The landlord did not unilaterally withdraw its application to recover arrears of rent. It sought the consent of the Board to do so.

Section 200(4) of the Act provides that, “An applicant may withdraw an application after the hearing begins with the consent of the Board.” [ 23 ] The Board consented to the withdrawal of the landlord’s application, noting that: (1) the fact that the matter was remitted to the Board by the Divisional Court did not mean the landlord was obliged to continue to litigate the issue; (2) the current landlord was in a difficult position to prove the lawful rent in the absence of records from previous landlords; (3) the withdrawal of the application was not an abuse of process; and (4) the tenant was not prejudiced by the withdrawal because the landlord’s application to evice for non-payment of rent was withdrawn at the same time and the tenant was not precluded from bringing his own application if he believes the landlord has collected excess rent from him.

The Board was clearly right in each of these determinations. [ 24 ] The Divisional Court Order quashed the previous board decision and ordered a new hearing with respect to the landlord’s L1 application. That is not the equivalent of directing the Board to decide a specific issue, regardless of whether the party bringing the litigation chooses to pursue it. Subject to the issues of prejudice and abuse of process, it is always open to a party to determine after an unsuccessful appeal that there is no point in proceeding with a new hearing.

The Board correctly determined that the Divisional Court order did not fetter the Board’s discretion under s. 200(4) of the Act. [ 25 ] The Divisional Court’s basis for ordering the new hearing was the inadequacy of the evidence to support the factual finding as to the lawful rent for the apartment. Due to multiple turnovers in the ownership of the building, the landlord was unable to present evidence as to the rent that it felt would reach an acceptable standard of proof, and was also unable to reach an agreement with Mr. Audain as to the lawful rent.

The landlord therefore opted to discontinue its L1 application. That motivation is clear and is not abusive. The landlord has chosen instead to seek Mr. Audain’s eviction as part of its process of removing all tenants prior to demolition. Again, there is nothing abusive about that. [ 26 ] The Board was also clearly right about there being no prejudice to Mr. Audain’s rights to recover any overpayments of rent from the landlord. That right is provided under s. 135 of the Act and is not dependent upon the applicant being a current tenant.

Section 135 states: A tenant or former tenant of a rental unit may apply to the Board for an order that the landlord, superintendent or agent of the landlord pay to the tenant any money the person collected or retained in contravention of this Act or the Tenant Protection Act, 1997. [ 27 ] Mr. Audain argued that requiring him to proceed with his own application to obtain recovery of the excess rent he has paid is prejudicial to him because he would lose the benefit of s. 83 of the Act. That

section states: 83.

(1) Upon an application for an order evicting a tenant, the Board may, despite any other provision of this Act or the tenancy

agreement, (

a) refuse to grant the application unless satisfied, having regard to all the circumstances, that it would be unfair to refuse; or (

b) order that the enforcement of the eviction order be postponed for a period of time. [ 28 ] The effect of the landlord’s withdrawal of the L1 application with respect to rent arrears is that its application to terminate the tenancy on that basis is also withdrawn. Therefore, there can be no eviction order as a result of the L1 application and therefore no need of the protection of s. 83, which applies only to eviction orders. This argument is without merit. [ 29 ] In these circumstances, the Board validly exercised its discretion to permit the landlord to withdraw its L1 application.

There is no prejudice to Mr. Audain and the grounds of appeal he raised on this issue are completely devoid of merit. The return of the rent monies paid into trust [ 30 ] Mr. Audain is correct in his argument that upon the landlord withdrawing its application, the Board ought to have ordered the return of the money he had paid into trust in respect of that application. When the landlord was initially successful before the Board, those funds had been paid to the landlord. However, since that time, the landlord has voluntarily paid the entire amount to Mr. Audain, together with interest.

He does not dispute that this was done. Accordingly, this argument is moot. Should the Board have declared the L2 consent to be void? [ 31 ] Mr. Audain argued before the Board that the L2 Consent Order was void because it violated s. 37(4) and (5) of the Act. The Board held that the Divisional Court had already determined the L2 Consent Order to be binding and that Mr. Audain could not raise new issues as to its invalidity before the Board. As a question of law that is correct. [ 32 ] However, the Board did go on to consider whether s. 37 is applicable and concluded that it was not.

Again, the Board’s decision is correct. [ 33 ]

Section 37 of the Act states: 37.

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

(4) A tenant’s notice to terminate a tenancy is void if it is given, (

a) at the time the tenancy agreement is entered into; or (

b) as a condition of entering into the tenancy agreement.

(5) An agreement between a landlord and tenant to terminate a tenancy is void if it is entered into, (

a) at the time the tenancy agreement is entered into; or (

b) as a condition of entering into the tenancy agreement. [ 34 ] None of the provisions of s. 37 is applicable to the circumstances of this case. The purpose of ss. 37(4) and (5) is to prevent landlords from circumventing the security of tenure provisions and the notice of termination requirements of the Act by entering into agreements with tenants at the time the tenancy is created stipulating that termination will occur at a specified time. There is nothing about the Consent Order that violates s. 37 in any way.

As was noted by the Board, the Consent Order does not, by its terms terminate a tenancy or commence a tenancy. It merely provides that existing tenancy will be transferred from Unit 3 to Unit 203 on a specified date. It also provides that if Mr. Audain fails to provide vacant possession of Unit 3 by February 17, 2009, a writ of eviction in respect of that unit may be enforced.

Section 37 of the Act has absolutely no application to this situation. [ 35 ] Again, there is no merit to this ground of appeal. Conclusion and Order [ 36 ] In short, every single ground of appeal raised by the Mr. Audain is completely devoid of merit. It is plain and obvious that this is an appeal that has no chance of success. [ 37 ] In the meantime, the landlord is severely prejudiced by the delay. Its plans to demolish the building and construct a new residence for its congregation have been seriously undermined.

This landlord took over management of the apartment building on December 1, 2007, at which point Mr. Audain was already not paying rent to the previous property manager. He continued to refuse to pay any rent to this landlord. The only rent he has paid at all since December 1, 2007 is two payments of $325.00 each which were made as a condition of his proceeding with his Divisional Court appeal. While Mr. Audain remains in possession, the landlord is required to continue to maintain the whole building.

The landlord presented evidence that the continuing delay in getting vacant possession of the building costs the landlord between $62,000 and $72,000 each month. [ 38 ] In my view, this is one of those rare cases where the appeal should not be permitted to proceed in the normal course to a full hearing. It is utterly devoid of merit and should be quashed. [ 39 ] The landlord seeks costs on a substantial indemnity basis. Ordinarily, that might be appropriate. However, Mr. Audain is elderly and has limited financial resources.

The landlord is entitled to costs, but I am not prepared to order them on substantial indemnity basis. The substantial indemnity bill of costs submitted by the landlord is for approximately $7000 in fees and $544.59 for disbursements. The disbursements are allowed in full. I will allow the fees at $4000 plus HST @ 13 % for a total of $5064.59.

MOLLOY J. Date: November , 2010 CITATION : Audain v. Sisters of Saint Joseph, 2010 ONSC 6415 DIVISIONAL COURT FILE NO.: 394/10 DATE: 20101123

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT MOLLOY J. B E T W E E N: DAVID AUDAIN Appellant Tenant (Responding Party) – and – THE SISTERS OF SAINT JOSEPH FOR THE DIOCESE OF TORONTO IN UPPER CANADA Respondent Landlord (Moving Party) REASONS FOR DECISION MOLLOY J. Released: November 23, 2010