Lease Renewel (RTA)(Implied)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-04-28
CLNP Page ID:	2269
Page Categories:	[Payment of Rent (LTB)], [Contract Law, Leases, & Sub-Letting (LTB)]
Citation:	Lease Renewel (RTA)(Implied), CLNP 2269, <https://rvt.link/8b>, retrieved on 2024-04-28
Editor:	Sharvey
Last Updated:	2023/10/23

Residential Tenancies Act, 2006, S.O.

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. 2006, c. 17, s. 38 (1).

(2) If the period of a daily, weekly or monthly tenancy ends and the tenancy has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it for another day, week or month, as the case may be, with 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. 2006, c. 17, s. 38 (2).

(3) If the period of a periodic tenancy ends, the tenancy has not been renewed or terminated and subsection (2) does not apply, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy, with 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. 2006, c. 17, s. 38 (3).

Shnier v. Begum, 2023 ONSC 5556 (CanLII)

[5] The Appellant has rented a home from the Respondent at 162 Banbury Road in North York on an annual lease basis since June 1, 2013. The final lease signed by the parties ran from November 1, 2020, to November 1, 2021. The rent was set at $4400 per month.

[6] Schedule A to the 2020-2021 lease agreement included a renewal provision which read:

The Landlord and the Tenant agree that the lease may be renewed for a further period of one year on the same terms and conditions at a mutually agreed upon rent, with the Tenant having the option to terminate the Lease by giving 60 days notice to the Landlord. The 60 days notice period would be counted from the last day of the month.

[7] On August 12, 2021, the Respondent served an N12 notice of eviction on the Appellant based on her wish to re-occupy the premises as of the end date of the lease agreement, that is on November 1, 2021.

[8] On August 30, 2021, the Appellant sent notice of his wish to renew the lease for a further year and to extend the lease to November 30, 2022.

...

[19] The Board focused on the sole provision which addressed the ability of the parties to renew the lease for a further year. It set out and understood the nature of the lease and the wording of the renewal term. The Board noted the permissive language of the provision by virtue of the use of the word “may.” The Appellant did not provide any examples of other provisions that would logically bear on alternative interpretations of this renewal provision. Although counsel submitted that this provision could be read as mandatory at the election of the tenant, the words of the provision do not say that. The use of the word “may” to describe the renewal, and the addition of a “mutually agreed upon rent” suggest that the renewal is subject to further agreement, and that this provision does not exist for the sole benefit of the tenant who may elect to renew without the agreement of the landlord.

[20] The Board concluded that the renewal provision was clear. It is implicit in the Board’s reasons that it did not find this term to be ambiguous. That conclusion does not amount to evidence of a failure to apply the principle of contra preferentum, that is the principle that an ambiguous term will be resolved in favour of the person who has not drafted the contract. Rather, it is the logical result of the Board’s finding that the wording was clear, and supported the finding that the parties could extend the lease, on terms satisfactory to the parties for a further year period.

[21] The Appellant also submitted that the provision as interpreted by the Board is redundant and does not make commercial sense, because the parties did not need to stipulate that they could agree to a further term. Again, I disagree. The provision regularizes and recognizes the ability of the parties to agree to an extension, to agree on rent to be paid during the period of extension (leaving aside for now the potential for unlawful rent being agreed upon given Ontario’s legislated rent regime, which is discussed below) and permitted the tenant the ability to be relieved from the lease on 60 days’ notice.

[22] In reviewing the provision and the reasons, I conclude that there is no “extricable error in law” revealed by the Board’s decision. As the Supreme Court has noted in Sattva at para. 47, “the interpretation of contracts has evolved towards a practical common-sense approach that is not dominated by technical rules of construction.” On my reading of the reasons, the Board read and understood the provision in its ordinary and grammatical meaning, required by the case law: See Sattva at para. 46.

[23] Thus, I find that the Board did not err in law in making its findings on the meaning of the lease renewal provision.

TSL-72954-16 (Re), 2016 CanLII 44293 (ON LTB)

1. Tenants’ counsel raised two preliminary motions.

2. First, the Tenants submit that the Landlord gave the Tenants a Notice to Terminate at End of the Term for Landlord’s or Purchaser’s Own Use (the ‘N12 notice’) by affixing the N12 notice to the door to the unit and, as this is not a method of service that is acceptable under the Residential Tenancies Act, 2006 (the 'Act') or Rules of Practice, the application must be dismissed.

3. Second, the Tenants submit that, as the parties entered into a one-year tenancy agreement for the period January 1, 2016 to December 31, 2016, the termination date stipulated by the N12 notice herein, that is June 30, 2016, is not the last day of the rental period as required by the Act and the application must be dismissed.

...

13. KS further testified that every year, since the outset of the tenancy, FT asked the Tenants for twelve post-dated cheques “as a renewal of the lease”. In November 2015, FT asked the Tenants for twelve post-dated cheques for the rent payments for the months of January 2016 to December 2016. KS stated that when he spoke with FT in November 2015, he understood that the parties agreed to a “one-year renewal” and he had no “reason to suspect that the lease was terminated”.

...

20. FT provided direct testimony via telephone. On direct examination, FT testified that there was not a written renewal of the initial written tenancy agreement and that the tenancy, at the material time, was month-to-month. FT added that either party could terminate the tenancy with “three months’” notice. FT testified that KS gave cheques to the Landlord in December 2015, but she did not know if the cheques “went to December 2016.”

21. On cross-examination, FT testified that the Tenants always provided cheques “for the whole year” but, on occasion, KS would call saying that he would require “a couple of days” for a cheque to clear. When FT was asked if KS gave her twelve cheques for 2016 in November 2015, she testified “He gave me cheques until March. I wanted cheques for January to December. There was an issue with the rent increase in March so I gave him back the cheques.” FT went on to state that, while she is unsure about this point, KS provided new cheques up to March 2016.

22. When asked the purpose of the Tenants providing cheques for the entire year in advance, FT testified “He was supposed to stay there until the cheques…”

...

25. Pursuant to section 2 of the Act a tenancy agreement can be written, oral or implied.

26. Section 202 of the Act states:

In making findings on an application, the Board shall ascertain the real substance of all transactions and activities relating to a residential complex or a rental unit and the good faith of the participants and in doing so,

(a) may disregard the outward form of a transaction or the separate corporate existence of participants; and

(b) may have regard to the pattern of activities relating to the residential complex or the rental unit.

27. Section 18 of the Act says: “Covenants concerning things related to a rental unit or the residential complex in which it is located run with the land, whether or not the things are in existence at the time the covenants are made.” It is commonly accepted that what this provision means is that when a property is sold and there are sitting residential tenants, any tenancy agreements “run with the land” meaning they remain in place on the same terms and conditions as existed prior to the sale. The new owner steps into the shoes of the previous landlord.

28. There is no evidence before me that the parties entered into a new tenancy agreement when the Landlord took ownership of the residential complex. As such, and pursuant to section 18 of the Act, the Landlord stepped into the shoes of previous landlord, FT, when she assumed ownership of the residential complex. The terms of the tenancy between the Tenants and FT, whether such tenancy be written, oral or implied, ran with the land and must be honoured and abided by the current Landlord. The question then becomes, what was the term of the tenancy between the Tenants and FT?

29. As stated, section 202 of the Act states that I may disregard the outward form of a transaction and consider the pattern of activities relating to the residential complex or the rental unit—in this case as such relate to the term of the tenancy between the parties over the years, including 2016.

30. As stated, a tenancy agreement can be written, oral or implied. In this case there is no doubt that the initial term of the written tenancy agreement was for one year—from March 1, 2007 to the “end Feb 2008 [sic]”. FT testified that the Tenants provided her with twelve post-dated cheques not only for the first year of the tenancy but for every other year thereafter. The Landlord, while she was reluctant to so admit, did accept the Tenants’ twelve post-dated cheques for 2016. While the Tenants providing twelve post-dated cheques, to FT and the Landlord, on each year of the tenancy is longstanding pattern of activity and a strong indication that the term of the tenancy at issue was one year, this in itself is not necessarily conclusive.

31. The Tenants’ direct evidence, as provided by KS, is that the tenancy was renewed for a one-year term every year. KS testified that when he spoke with FT in November 2015, he believed that he was renewing the tenancy for one year and had no reason to suspect that the “lease” was terminated.

32. Equally telling, is FT’s direct testimony. While this witness initially testified that the tenancy was month-to-month, when asked the purpose of the Tenants providing twelve post-dated cheques every year, she stated “He was supposed to stay there until the cheques…” Clearly, before the witness caught herself, she was about to state that the Tenants were to remain in the unit until the cheques ran out. Even if was not the intent of the witness to so state, and as I stated during the hearing, FT had ample and unimpeded opportunity to provide other reasons why the Tenants provided twelve post-dated cheques every year, yet she provided no other reasons.

33. As stated, FT testified that the tenancy during the material time was month-to-month. However, looking at the pattern of activities relating to the term of the tenancy up to the time when the Landlord served the Tenants with the N12 notice, the pattern of activities, and indeed the outward form of the transactions, indicates, on a balance of probabilities, that the implied tenancy between the parties was for a term of one-year from January 1, 2016 to December 31, 2016 and, but for the issue of the rent increase, which the current Landlord wanted to take effect in January 2016, the tenancy would have been for a one-year term from March 1, 2016 to February 28, 2017, as during the previous years. Indeed, FT’s testimony was that, as late as November 2015, while KS gave her rent cheques to March 2016, she “wanted cheques for January to December.”

34. For the reasons stated, I find, on a balance of probabilities, that the initial tenancy agreement between the Tenants and FT was renewed every year, on at least an implied basis, for a one-year term up to and including the term from January 1, 2016 to December 31, 2016.