Unconscionability & Duress (N11)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-27
CLNP Page ID:	2293
Page Categories:	[Section 77 (RTA)], [Consent Terminations], [Section 83 (RTA)]
Citation:	Unconscionability & Duress (N11), CLNP 2293, <https://rvt.link/99>, retrieved on 2024-11-27
Editor:	Rstojni
Last Updated:	2023/12/04

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Pelletier v. Bloorston Farms Ltd., 2023 ONSC 5626 (CanLII)

[15] I conclude that the Board erred in law. The alleged misrepresentation was a separate argument from that of duress. Similar representations were the subject of evidence from another tenant, Mr. Pelletier’s son, who did not sign the agreement presented to him. This evidence went to the heart of the question: why someone who had lived 10 years in a building with rent commensurate with his income, objectively far below market rent in Toronto, would sign such an agreement? Section 77(8) of the RTA required the Board to grapple with this evidence, the submissions, and to explain why it had rejected the evidence of misrepresentation, which was confirmed by other evidence. It did not do so.

[16] The error at first instance was repeated at the review stage which found that the Board member at the motion had “considered the validity of the agreement, including any misrepresentations, and provided cogent reasons for her rejection of the Tenant’s claims of misrepresentation.”

[17] This is not an accurate description of the reasons for rejecting Mr. Pelletier’s motion for relief from eviction.

[18] Alternatively, if the Board at the hearing or on review concluded that duress and misrepresentation arose from the same factual and/or legal foundation, this is an error. Duress and misrepresentation are separate legal concepts: Deschenes v. Lalonde, 2020 ONCA 304, at paras. 28-29.

[19] As the Supreme Court noted at paras. 81 and 86 of Vavilov, reasons are the way that administrative decisions are explained to parties. This is particularly important where the reasons are silent on critical evidence that affects the significant rights and interests, in this case accessible and affordable housing, of a vulnerable individual: see Vavilov at para. 133.

...

[22] Mr. Pelletier also submits that the Board erred in its failure to apply s. 202 of the RTA which requires that the Board “in making findings 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, may disregard the outward form of a transaction or the separate corporate existence of participants; and may have regard to the pattern of activities relating to the residential complex or the rental unit.”; RTA, s. 202(1)(b).

[23] As with the submissions under s. 77(8), the landlord does not dispute the application of these remedial portions of the legislation but relies on the findings of credibility by the Board as applying equally to the aspects of the evidence relative to misrepresentations that are absent from any discussion in the Board’s reasons. For the reasons provided above in the analysis under s. 77(8), I do not accept this submission as it relates to the Board’s duty to consider s. 202 of the RTA. There is no indication that the Board considered the good faith of the landlord given the evidence of misrepresentation before it, and circumstances that suggested that the agreement was at the landlord’s instance, for the landlord’s objective benefit.

[24] As the Divisional Court noted at para. 40 of Pinto v. Regan:

Section 202 of the RTA imposed a statutory duty on the Member to determine questions of fact and to apply governing principles of law to ascertain the real substance of the transactions and activities regarding the rental units at issue, and the good faith of the parties to the N11. The Member did not consider all the evidence to determine the element of good faith on the part of the respondent other than making a passing reference in the Reasons. The Member did not take the totality of the evidence into account when he applied the substantive law. This amounted to an error of law.

I adopt this reasoning and apply it in the instant case.

[26] On appeal, Mr. Pelletier also argued that the Board erred in its treatment of his argument that the agreement was void for being unconscionable. An agreement is liable to being found unconscionable where there is evidence of inequality of bargaining power and an improvident transaction: Uber Technologies Inc. v. Heller, 2020 SCC 16, at paras. 62 - 63.

[27] I would not give effect to this argument on this record. Mr. Pelletier did not pursue this submission on review, relying on the errors relative to the misrepresentation argument which in my view are stronger points. The evidence of vulnerability or issues of capacity on the part of Mr. Pelletier to contract with his landlord is not as compelling as the issue of misrepresentation and the failure of the Board to carry out its statutory duty given that evidence.

[20] I conclude that the Board erred in law by failing to undertake its statutory duty under s. 77(8) of the RTA to have regard to all the circumstances around the making of this agreement, including any misrepresentations and in considering those facts in determining whether it would not be unfair to set aside the order of eviction.

SWL-30382-19-SA (Re), 2019 CanLII 87684 (ON LTB)

15. In The Law of Contract in Canada (1976) by G.H.L. Fridman, the learned author states at p. 123 as follows:

“There are other grounds which, either at common law or in equity, may justify the repudiation of consent once given so as to vitiate an otherwise valid contract. Whether what is involved is duress in the strict sense, undue influence as that notion was developed in equity, or the more modern, perhaps vaguer and more generalized idea of unconscionability, the essence of granting rescission of, or similar relief from an otherwise binding contract is that the victim’s consent was not obtained or given when he or she was physically, emotionally, or intellectually free and competent to give it, but was the product of some minatory, over-weening or improperly persuasive conduct on the part of the guilty party.” {emphasis added]

16. In Stott v. Merit Investment Corp., 1988 CanLII 192 (ON CA) Finlayson J.A. stated, in part, as follows:

… But not all pressure, economic or otherwise, is recognized as constituting duress. It must be a pressure which the law does not regard as legitimate and it must be applied to such a degree as to amount to “a coercion of the will”, to use an expression found in English authorities, or it must place the party to whom the pressure is directed in a position where he has no “realistic alternative” but to submit to it, to adopt the suggestion of Professor Waddams (S.M. Waddams, The Law of Contract, 2nd ed. (1984), at p. 376 et seq.). Duress has the effect of vitiating consent and an agreement obtained thorugh [sic] duress is voidable at the instance of the party subjected to the duress unless by another agreement or through conduct, either express or implied, he affirms the impugned contract at a time when he is no longer the victim of the duress.

17. There was some inconsistency between the testimony of the Tenant and S.N. about who was in the office on March 9, 2019, when the Tenant was given the two notices and how many times and in what manner S.N. followed up with the Tenant to enquire as to whether she had signed the N11. There was also disagreement about what specific information or opinion that S.N. had given the Tenant about the potential outcome of a hearing. However, the salient facts that are not in dispute are:

a. The Tenant has a disability of which the Landlord was well aware;

b. The tenancy is of lengthy duration and is geared-to-income meaning there is significant financial benefit for the Tenant to preserve the tenancy;

c. The Tenant did not approach the Landlord with a request to terminate the tenancy. In fact, the Landlord made the decision to evict the Tenant and “offered” a way to avoid an eviction hearing;

d. The Tenant told the Landlord’s representative that she did not want to move;

e. The Tenant signed the N11 without the benefit of legal advice but filed a motion to set aside as soon as she did obtain legal advice; and

f. The Landlord’s representative acknowledged that it might have been the “pressure” the Tenant felt which had caused her to sign the N11 in spite of his having not imposed a specific time deadline.

18. The Tenant went into the meeting to which she was summoned by the Landlord with the expressed intention of maintaining her long term tenancy. She was given a choice between an eviction hearing and agreeing to vacate. If she had chosen the eviction hearing option the Board might have declined to evict her on the grounds that she had not been home and was not the person who allowed her son to enter the building on the day he caused the damage. Even if the Board had found her responsible, the Tenant would have had the opportunity to argue for relief, or at the very least, delay of eviction, in which case the Tenant might have ended up owing the $175.00 filing fee. So ultimately, the Tenant agreed to leave giving up a geared-to-income housing, providing financial stability in a unit she had occupied for 13 years rather than face a hearing and the potential of winning or risking losing and paying $175.00.

19. The fact that the Tenant, a disabled person without legal advice entered into such an improvident agreement, dictates that it would be unconscionable to let the agreement stand.