Bad Faith (Purchaser)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-05-29
CLNP Page ID:	1861
Page Categories:	[Personal Use Application (LTB)]
Citation:	Bad Faith (Purchaser), CLNP 1861, <https://rvt.link/1r>, retrieved on 2024-05-29
Editor:	MKent
Last Updated:	2024/05/23

Residential Tenancies Act, 2006

49 (1) A landlord of a residential complex that contains no more than three residential units who has entered into an agreement of purchase and sale of the residential complex may, on behalf of the purchaser, give the tenant of a unit in the residential complex a notice terminating the tenancy, if the purchaser in good faith requires possession of the residential complex or the unit for the purpose of residential occupation by,

(a) the purchaser;

(b) the purchaser’s spouse;

(c) a child or parent of the purchaser or the purchaser’s spouse; or

(d) a person who provides or will provide care services to the purchaser, the purchaser’s spouse, or a child or parent of the purchaser or the purchaser’s spouse, if the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which the rental unit is located. 2006, c. 17, s. 49 (1); 2021, c. 4, Sched. 11, s. 31 (1).

(2) If a landlord who is an owner as defined in clause (a) or (b) of the definition of “owner” in subsection 1 (1) of the Condominium Act, 1998 owns a unit, as defined in subsection 1 (1) of that Act, that is a rental unit and has entered into an agreement of purchase and sale of the unit, the landlord may, on behalf of the purchaser, give the tenant of the unit a notice terminating the tenancy, if the purchaser in good faith requires possession of the unit for the purpose of residential occupation by,

(a) the purchaser;

(b) the purchaser’s spouse;

(c) a child or parent of the purchaser or the purchaser’s spouse; or

(d) a person who provides or will provide care services to the purchaser, the purchaser’s spouse, or a child or parent of the purchaser or the purchaser’s spouse, if the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which the rental unit is located. 2006, c. 17, s. 49 (2); 2021, c. 4, Sched. 11, s. 31 (1).

(3) The date for termination specified in a notice given under subsection (1) or (2) shall be at least 60 days after the notice is given and shall be the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term. 2006, c. 17, s. 49 (3).

(4) A tenant who receives notice of termination under subsection (1) or (2) may, at any time before the date specified in the notice, terminate the tenancy, effective on a specified date earlier than the date set out in the landlord’s notice. 2006, c. 17, s. 49 (4).

(5) The date for termination specified in the tenant’s notice shall be at least 10 days after the date the tenant’s notice is given. 2006, c. 17, s. 49 (5).

49.1 (1) A landlord shall compensate a tenant in an amount equal to one month’s rent or offer the tenant another rental unit acceptable to the tenant if,

(a) the landlord gives the tenant a notice of termination of the tenancy on behalf of a purchaser under subsection 49 (1) or (2); and

(b) the notice of termination is given on or after the day the Protecting Tenants and Strengthening Community Housing Act, 2020 receives Royal Assent. 2020, c. 16, Sched. 4, s. 5.

(2) Despite section 18, the obligation to compensate the tenant under subsection (1) remains an obligation of the landlord who gives the notice of termination of the tenancy on behalf of the purchaser and does not become an obligation of the purchaser. 2020, c. 16, Sched. 4, s. 5.

...

57 (1) The Board may make an order described in subsection (3) if, on application by a former tenant of a rental unit, the Board determines that,

(a) the landlord gave a notice of termination under section 48 in bad faith, the former tenant vacated the rental unit as a result of the notice or as a result of an application to or order made by the Board based on the notice, and no person referred to in clause 48 (1) (a), (b), (c) or (d) occupied the rental unit within a reasonable time after the former tenant vacated the rental unit;

(b) the landlord gave a notice of termination under section 49 in bad faith, the former tenant vacated the rental unit as a result of the notice or as a result of an application to or order made by the Board based on the notice, and no person referred to in clause 49 (1) (a), (b), (c) or (d) or 49 (2) (a), (b), (c) or (d) occupied the rental unit within a reasonable time after the former tenant vacated the rental unit; or

(c) the landlord gave a notice of termination under section 50 in bad faith, the former tenant vacated the rental unit as a result of the notice or as a result of an application to or order made by the Board based on the notice, and the landlord did not demolish, convert or repair or renovate the rental unit within a reasonable time after the former tenant vacated the rental unit. 2006, c. 17, s. 57 (1).

(2) No application may be made under subsection (1) more than one year after the former tenant vacated the rental unit. 2006, c. 17, s. 57 (2).

(3) The orders referred to in subsection (1) are the following:

1. An order that the landlord pay a specified sum to the former tenant for all or any portion of any increased rent that the former tenant has incurred or will incur for a one-year period after vacating the rental unit.

1.1 An order that the landlord pay a specified sum to the former tenant as general compensation in an amount not exceeding the equivalent of 12 months of the last rent charged to the former tenant. An order under this paragraph may be made regardless of whether the former tenant has incurred any actual expenses or whether an order is made under paragraph 2.

1.2 An order that the landlord pay a specified sum to the former tenant for reasonable out-of-pocket moving, storage and other like expenses that the former tenant has incurred or will incur.

2. An order for an abatement of rent.

3. An order that the landlord pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.

4. Any other order that the Board considers appropriate. 2006, c. 17, s. 57 (3); 2020, c. 16, Sched. 4, s. 9 (1).

(4) In an application under subsection (1), the Board may find that the landlord gave a notice of termination in bad faith despite a previous finding by the Board to the contrary. 2006, c. 17, s. 57 (4).

Elkins v. Van Wissen, 2023 ONCA 789 (CanLII)

[43] On a plain reading of ss. 49(1) and 57(1)(b), the landlord’s conduct is linked to the purchaser’s good faith. Section 49(1) permits the landlord to, on behalf of the purchaser, give the tenant a termination notice so long as the purchaser, in good faith, requires possession of the rental unit for the purpose of residential occupation. Section 57(1)(b) requires the Board to determine, among other things, whether the landlord gave the s. 49 termination notice in bad faith. When ss. 49(1) and 57(1)(b) are read together, it is clear that the object of those provisions is to prevent the sale of a property from being used to unlawfully evict a tenant. Accordingly, the Board must consider all the evidence before it that is relevant to the landlord’s bad faith under s. 57(1)(b). It is an error of law for the Board to restrict its consideration to the evidence at the point in time when the landlord gives the tenant a s. 49 termination notice. This case makes that point.

(...)

[45] It could be argued that s. 57(1)(b) implicitly limits Board scrutiny to the landlord’s knowledge when it gives the s. 49 termination notice. However, such an interpretation runs afoul of s. 202(1) of the RTA. Under s. 202(1), the Board is required, when making findings on an application, to ascertain the “real substance of all transactions and activities relating to…a rental unit and the good faith of the participants”. Limiting the assessment of a landlord’s bad faith to that single point in time when the s. 49 termination notice is given precludes the Board from both ascertaining the true substance of the transaction between the landlord and the purchaser and conducting a fair assessment of their good faith.

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[50] At para. 22 of Duarte v. 2132338 Ontario Ltd., 2021 CanLII 146522 (Ont. L.T.B.), a Board decision issued after the decision was rendered in this case, the Board stated:

22. [I]n relaying the Purchaser’s intentions to terminate the tenancy, the Landlord does not serve as a mere messenger with no duties or obligations to the Tenants. By conveying the Purchaser’s stated intention to occupy the rental unit, the Landlord initiated events that had the serious consequence of ending the tenancy and compelling them to relocate their family…As a result, I find that the Landlord had a duty to the Tenants to exercise some due diligence to confirm the good faith intentions of the Purchaser before putting the eviction in motion. Otherwise, an unscrupulous purchaser would be free to use a landlord as a straw man to divest tenants of their housing and thereby evade the statutory protections afforded to them under the Act.

[51] I agree.

(...)

[55] Section 49(1) empowers the landlord to give the tenant a termination notice “on behalf of the purchaser…if the purchaser in good faith requires possession” of the rental unit “for the purposes of residential occupation”. Accordingly, an unlawful eviction under s. 49(1) can occur in one of three ways: (1) the landlord gives the s. 49 termination notice in bad faith but the purchaser genuinely requires personal possession of the rental unit; (2) the landlord gives the s. 49 termination notice in good faith but the purchaser does not genuinely require personal possession; or (3) the landlord and purchaser each independently act in bad faith or collude, in bad faith, to evict the tenant by means of a s. 49 termination notice. If the Board considers only the landlord’s bad faith, and it was the purchaser who was not acting in good faith, the purchaser is shielded from any consequence under the RTA and the tenant loses an opportunity for redress as against the purchaser. Such a result undermines the RTA’s stated purpose, in s. 1, to protect tenants from unlawful evictions.

(...)

[58] This interpretation finds further support in s. 57(3) of the RTA. While s. 57(3) sets out specific orders that can be made against a landlord who acts in bad faith in giving a s. 49 termination notice, it also empowers the Board to make any order it “considers appropriate”. Thus, if the Board finds that a landlord did not act in bad faith but the purchaser did, s. 57(3) gives the Board the power to make appropriate orders against the purchaser. This “gives teeth” to the good faith requirement on the part of purchasers in s. 49(1).

SWT-14614-18 (Re), 2018 CanLII 88677 (ON LTB)

20. For all of these reasons, I find on the balance of probabilities that the Landlords served the N12 Notice in bad faith.

21. Whether the Tenants vacated the unit on December 31, 2017 or January 30, 2018 according to the competing timelines of the parties, it was not disputed that the Tenants moved out of the rental unit as a result of the N12 Notice. I find on the balance of probabilities that the date listed in the T5 Application of January 13, 2018 is actually more likely accurate than either of the two dates offered at the hearing since this date is supported by a U-Haul receipt that would only logically pertain to the date that the Tenants moved out of the rental unit.

22. Lastly, on the Landlords’ own evidence, no person listed in paragraphs (a), (b), (c) or (d) of subsections 49(1) or 49(2) of the Act occupied the rental unit as of the date of the hearing. Specifically, neither the Landlords nor their son, nor anyone else moved into the rental unit. Even if I were to accept the Landlords’ evidence that the Tenants did not move out of the rental unit until January 30, 2018, this would leave the unit vacant for over two and a half months. As the Landlords offered no reasonable explanation for this lack of occupation and no definite timeline for their son’s future and theoretical move from Toronto, I find that no one has occupied the rental unit within a reasonable time after the Tenants vacated the rental unit.

23. In light of all of the evidence, I therefore find that the Landlords gave the Tenants the notice in bad faith.

TST-10645-19 (Re), 2020 CanLII 31285 (ON LTB)

2. This “bad faith” application was filed pursuant to section 57(1)(b) of the Residential Tenancies Act, 2006 (the “Act”), which requires a former tenant to prove that it is more likely than not that:

1) The landlord gave a notice of termination under section 49 (i.e. for purchaser’s own use) in bad faith;

2) The tenant vacated the rental unit as a result of the notice; and

3) The person listed in the N12 Notice did not occupy the rental unit within a reasonable time after the former tenant vacated the rental unit.

3. I am satisfied on a balance of probabilities that the former Landlords, VJ and SJ, gave the Tenant an N12 Notice under section 49 for purchaser’s own use. I am also satisfied that the Tenant moved out of the rental unit as a result of the N12 Notice he received. The Tenant testified that the only reason he gave VJ and SJ an N9 Notice to terminate the tenancy early (which he was entitled to do pursuant to subsection 49(4) of the Act) is because he received the N12 Notice and then found a new place to live. I am further satisfied that the new Landlord, CRE, did not move into the rental unit within a reasonable time after the Tenant moved out because she had the rental unit advertised for lease less than two months later.

4. With respect to the determination of bad faith, I find that although the former Landlords, VJ and SJ, gave the Tenant the N12 Notice, they did so only at the request of the new Landlord, CRE, and based on their honest belief that CRE was intending to move into the unit, as she represented to them. VJ testified that he and SJ have no relationship with CRE and they had no reason to doubt CRE’s assurances to them that she intended to move into the rental unit. Accordingly, I find that the N12 Notice was given in bad faith but the bad faith can only be traced back to CRE. I find that VJ and SJ should not be held liable for CRE’s dishonesty. Accordingly, only CRE will be responsible for compensating the Tenant for his losses. The application is dismissed as against VJ and SJ.