Joint Tenancies & Bankruptcy (LTB)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-23
CLNP Page ID:	2433
Page Categories:	[Bankruptcy & Consumer Proposals (BIA)]
Citation:	Joint Tenancies & Bankruptcy (LTB), CLNP 2433, <https://rvt.link/dr>, retrieved on 2024-11-23
Editor:	Sharvey
Last Updated:	2024/10/27

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Mahmood v Riutta, 2024 ONLTB 62844 (CanLII)

6. There are three procedures available under the Bankruptcy and Insolvency Act (the ‘BIA’) that have the potential to impact the landlord-tenant relationship: (a) bankruptcy, (b) ‘ordinary’ or Division I proposals, and (c) consumer or Divisional II proposals.[2] Bankruptcy and consumer proposals are the BIA procedures that are most commonly encountered in applications under the RTA. Each of the BIA procedures is different, but, in general terms, each impacts the landlord-tenant relationship by: (a) staying proceedings before the LTB to recover amounts owed by the tenant; and (b) restricting the termination of the tenancy and eviction of the tenant.[3]

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32. The application of sections 69.3 and 84.2 of the BIA is relatively straightforward, where there is a single tenant: (a) an application to recover rent or other amounts that were owed when the bankruptcy started is stayed; (b) the LTB can make an order that the bankrupt tenant pay rent or other amounts that became owed after the bankruptcy started; and (c) the LTB cannot terminate the tenancy and evict a bankrupt tenant based on an L1 application that is based on rent owed when the bankruptcy started, even if rent became owed after the bankruptcy started. However, the situation becomes somewhat more complicated when there is a joint tenancy and only one of the tenants is bankrupt.

33. A joint tenancy arises when two or more tenants together enter into a tenancy agreement and agree to pay the landlord rent in return for the right to occupy a rental unit, and at the same time, each of them individually makes the same promise to pay rent to the landlord. [See Soucy v Milton Heights Inc, 2015 SKQB 126 (CanLII)] In a joint tenancy, the tenants are not responsible for separate shares of the rent. They are jointly and severally liable to the landlord for the entire rent. This means that if the rent is not paid, the landlord may pursue any of the joint tenants for the full amount owed.

34. When it comes to applications under section 69 of the RTA based on arrears of rent, a non-bankrupt joint tenant benefits, as a practical matter, from the application of section 84.2 of the BIA because it is not possible to terminate the tenancy of only the non-bankrupt joint tenant. If a landlord obtains an order under section 69 of the RTA terminating a joint tenancy, the tenancy ends for all of the tenants and they will all be evicted.

35. In Centurion Property Associates Inc v Somersett [2023 ONLTB 38486 (CanLII)], the LTB considered a situation involving a joint tenancy where one of the tenants had filed a consumer proposal under Part III, Division II of the BIA. The filing of a consumer proposal results in an automatic stay that is similar in effect to the stay that arises under section 69.3 of the BIA. In Centurion Property v Somersett, the LTB refused a request by the landlord to amend the application to remove the tenant who had filed the consumer proposal to permit the LTB to terminate the tenancy because the effect of doing that would have been to ‘sever’ the joint tenancy. Where, however, a landlord brings an application to only recover unpaid rent or other amounts owed by joint tenants—where termination is not’ on the table’—the situation is, in my view, different.

36. The BIA does not prevent a landlord from recovering rent or other amounts owed jointly by a bankrupt tenant and a non-bankrupt tenant from the non-bankrupt tenant [See BIA, s. 179] and the LTB can, in my view, determine as against a non-bankrupt joint tenant an application in which the landlord has asked for only monetary compensation without violating section 69.3 of the BIA. In my view, the same rationale applies where a landlord seeks monetary amounts against a non-bankrupt joint tenant as applies where the LTB is asked to make an order requiring a bankrupt tenant to pay amounts that became owed after the bankruptcy started. [See Global Royalties Limited v David Brook, 2015 ONSC 6277 (CanLII) and McDougall v. Litron Distributors Ltd., 2019 HRTO 1179 (CanLII)][10]. I also note that the LTB proceeding to determine an application against a non-bankrupt joint tenant where section 84.2 of the BIA does not apply is consistent with the obligation to adopt the most expeditious method of determining applications under the RTA. [RTA, s. 183]

37. As noted above, section 69.3 of the BIA stays proceedings that would result in the determination of a claim provable against a bankrupt person as well as claims to recover a claim provable. [See, for example, Labourers' International Union of North America, Local 1059 v Roger Good c.o.b. R. Good Concrete Ltd., 2019 CanLII 16411 (ON LRB), Universal Workers Union, L.I.U.N.A., Local 183 v. En-San Contractors Ltd. [2004 CanLII 22669 (ON LRB) and International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 786 v S&T Industrial Inc. and S&T Electrical Contractors Limited, 2020 CanLII 86613 (ON LRB)] However, in my view, the determination by the LTB of a landlord’s monetary claim against a non-bankrupt joint tenant does not determine the landlord’s claim against the bankrupt tenant and the BIA contemplates that a creditor with a claim against a non-bankrupt co-obligor will be determined outside of the bankruptcy. [See BIA, s. 179]