Non-Application of the RTA (5.(j)): Difference between revisions

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[37] While I am satisfied that the applicant is entitled to this declaratory relief, as reviewed below, in my view the applicant's conduct in first seeking an order from the Landlord and Tenant Board and in later ignoring an order made by the Board may be relevant to consideration of the appropriate remedy in this case.
[37] While I am satisfied that the applicant is entitled to this declaratory relief, as reviewed below, in my view the applicant's conduct in first seeking an order from the Landlord and Tenant Board and in later ignoring an order made by the Board may be relevant to consideration of the appropriate remedy in this case.
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Tauro v. Yu, 2018 ONSC 7319 (CanLII)
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Date:
2018-12-06
File number:
CV-17-581497
Citation:
Tauro v. Yu, 2018 ONSC 7319 (CanLII), <http://canlii.ca/t/hwhvr>, retrieved on 2020-05-13
CITATION: Tauro v. Yu, 2018 ONSC 7319
                                                                                                  COURT FILE NO.: CV-17-581497
DATE: 20181206
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
ANTONIA TAURO
Applicant
– and –
KEDAN YU AND BAIGKUA SUN
Respondents
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)
)
) )
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Arvid Shahmiry
for the Applicant
in person
HEARD: August 31, 2018
FAVREAU J.:
Introduction
[1]              The applicant owns a building, which she leases to the respondent, Kedan Yu. The respondents operate a convenience store on the ground floor of the building, and live in an apartment above the store.
[2]              The applicant seeks to terminate the lease on the basis of numerous alleged defaults by the respondents, including a claim that the respondents are behind on the rent, that they have failed to maintain insurance on the building, that they have failed to pay their share of property taxes, that they are renting out rooms in the apartment contrary to the permitted uses under the lease, and that they have failed to make necessary repairs to the building.
[3]              The respondents deny that they are in default, and claim that it is the applicant who has failed to keep the building in a proper state of repair.  The respondents also argue that the upstairs portion of the building is subject to the Residential Tenancies Act, 2006, S.O. 2006, c. 17, and, therefore, any matters related to the rental of the apartment do not fall within the jurisdiction of this Court.
[4]              For the reasons that follow, I find that this Court has jurisdiction over the lease for the whole building pursuant to section 5(j) of the Residential Tenancies Act, 2006, which exempts properties from the application of the Act where residential premises are attached to a business and are under one lease.  In addition, I find that the respondents are in default under the lease in a number of respects.  However, as detailed further below, the respondents are to be given an opportunity to remedy the defaults pursuant to section 20(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7.
Factual background
[5]              The applicant, Antonia Tauro, is the owner of a property at 54 Peterborough Avenue Toronto. At the time the application was argued, Ms. Tauro was 86 years old, and her lawyer candidly indicated that Ms. Tauro would like to sell the property. Ms. Tauro has had no direct involvement with this litigation.  Rather, it appears that her daughter, Angela Garisto, and her son, Joseph Tauro, manage the property for their mother, and they have both sworn affidavits in support of the application.
[6]              The property consists of a two storey building.  The ground floor is occupied by a convenience store with storage space in the basement.  The second floor is a residential apartment.
[7]              The respondents, Kedan Yu and Baihua Sun (Mr. Sun's first name is misspelled as Baigkau in the style of cause), are husband and wife.
[8]              In 2008, Ms. Yu purchased the commercial lease for the property from the previous operator of the convenience store.  Since then, Ms. Yu and her husband have run the store and lived in the second storey apartment.
[9]              Initially, there was no formal lease between the parties, but, in 2015, Ms. Tauro and Ms. Yu signed a document titled "Commercial Lease Agreement".
[10]          The lease provides that:
a.      The monthly rent is $3,000 payable at the beginning of each month;
b.      The tenant is required to pay 50% of the property taxes plus HST "on the commercial portion"; and
c.      The term of the lease is five years, starting on December 9, 2015 and ending on December 9, 2020.
[11]          The lease includes the following provision describing the permitted use of the building:
The tenant shall only use the Premises for the purposes of a Convenience Store (the "Permitted Use").  The Tenant shall not use or permit, or suffer the use of, the Premises or any part or parts thereof for any business or purposes other than the Permitted Use.
[12]          The lease requires the tenant to maintain insurance:
The Tenant shall place and maintain in amounts with insurers satisfactory to the Landlord policies of public liability, plate glass and tenants' legal liability insurance insuring the Tenant against all sums which the Tenant may become obliged to pay as damages.  All insurance shall be effected with insurers and brokers and upon the terms and conditions satisfactory to the Landlord and copies of all policies or certificates thereof shall be delivered to the Landlord.  All such policies of insurance shall contain a waiver of subrogation clause in favour of the landlord and a clause requiring the insurer to not to [sic] cancel or change the insurance without giving the Landlord fifteen (15) days prior written notice.
[13]          The lease also requires the tenant to make repairs:
During the Lease term, the Tenant shall make, at the Tenant's expense, all necessary repairs to the Leased Premises.  Repairs shall include such items as repairs of floors, walls, ceilings and other parts of the Leased [sic].
[14]          The lease contains the following termination provision:
If default shall at any time be made by Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days after written notice thereof shall have been given to tenant by Landlord, or if default shall be made in any of the other covenants or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the Leased Premises is not surrendered, Landlord may reenter said premises.  Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any tenant default, either in law or equity.  Landlord shall use reasonable efforts to mitigate its damages.
History of proceedings and positions of the parties
[15]          The application was originally commenced in August 2017, to be heard on December 8, 2017.  At the time, the applicant sought an order only with respect to the convenience store portion of the building.  The applicant sought to terminate the tenancy on the ground floor, and sought damages for unpaid rent and taxes.  In part, the application was based on an allegation that Mr. Sun was living in the basement of the building, which was not a use permitted under the lease.
[16]          It appears that the December 8th date was adjourned for the purpose of attempting to resolve the application.  However, in May 2018, the applicant renewed her efforts to terminate the lease, by serving a supplementary application record and setting a new date of May 22, 2018 for the hearing.  The record included an amended notice of application, in which the applicant again sought to terminate the lease, in this case seeking vacant possession of the ground floor and basement.  The applicant also sought damages for unpaid rent, taxes and repairs.  In the affidavit in support of the renewed application, Ms. Tauro's daughter stated that the respondents had paid rent and taxes owing when the application was initially started, but that they had fallen in arrears again.  In addition, she stated that the respondents had failed to provide proof of insurance, that they were unlawfully operating a rooming house on the second floor of the building and that the respondents had failed to make required repairs to the premises.
[17]          It appears that the May 22, 2018 date was adjourned on consent to give the respondents another opportunity to cure the defaults.  However, the applicant then rescheduled the application for August 1, 2018, claiming that the defaults had not been addressed.  On August 1, 2018, Nishikawa J. adjourned the application to August 31, 2018, on the basis that the applicant had served an additional affidavit that day, and that the parties had failed to file facta as required by the Rules of Civil Procedure on an application.
[18]          By the time the application came before me on August 31, 2018, the applicant had amended the notice of application yet again.  The final iteration of the notice of application seeks a declaration that no part of the leased premises is subject the Residential Tenancies Act, 2006.  In addition, the applicant seeks to terminate the lease and to obtain vacant possession on the basis of unpaid rent, unpaid property taxes, failure to provide proof of insurance, unrepaired damage to the property and a claim that the respondents run an illegal rooming house.  In addition, the applicant seeks $17, 266.81 for unpaid rent and taxes, and $22,600 for the cost of repairs. The application is supported by several affidavits sworn by Ms. Tauro's daughter and one affidavit sworn by her son.
[19]          In response to the application, the applicants have served a number of affidavits sworn by Ms. Yu.  In her affidavits, Ms. Yu states that she was assisted by her son in writing the affidavits as her English language skills are inadequate.  It appears that the respondents also received the assistance of an agent in preparing their factum and other materials. In response to the application, Ms. Yu disputes some of the positions and evidence put forward by the applicant.  In particular, she claims that rental payments are up to date, that the respondents' practice is to pay property taxes at the end of the year and that she is therefore not behind on taxes for 2018, that she has not maintained insurance on the property due to the uncertainty surrounding the lease, and that the property was in a state of disrepair when she and Mr. Sun started occupying the property in 2008.  She also disputes the applicant's position that the upstairs apartment is exempt from the Residential Tenancies Act, 2006, relying in part on the fact that both she and applicant have brought applications to the Landlord and Tenant Board in the past.
[20]          At the hearing of the application, Ms. Tauro was represented by counsel.  The respondents represented themselves and required the assistance of an interpreter.  They both made submissions on different aspects of the dispute.
Proceedings before the Landlord and Tenant Board
[21]          From the record on the application, it appears that, until very recently, Ms. Tauro and the respondents have proceeded on the assumption that the second floor apartment is a residential dwelling subject to the Residential Tenancies Act, 2016.
[22]          As part of the record, the respondents have included an Order made by the Landlord and Tenant Board on October 6, 2017.  The Order was made pursuant to an application brought by Ms. Tauro, who sought to terminate the tenancy in the residential portion of the property on the basis of unpaid rent.  A representative appeared before the board on behalf of Ms. Tauro and Ms. Yu represented herself.  The Board made an order requiring Ms. Yu to pay unpaid rent by October 17, 2017, failing which Ms. Tauro was entitled to terminate the tenancy and evict the respondents. It appears that Ms. Yu made this payment as part of a global payment she made late in 2017 to pay for all outstanding rent up to that point and other matters.
[23]          On January 23, 2018, Ms. Yu brought an application to the Board on the basis that the landlord, who is erroneously identified as Antonio rather than Antonia Tauro, had failed to keep the premises in a proper state of repair. No one appeared for Ms. Tauro on the application.
[24]          In its decision, the Board described the property and tenancy as follows:
The rental unit is the second floor above a retail store.  A tenancy agreement between the Landlord and the Tenant indicated the entirety of the property was commercial but the Landlord obtained a previous order of the Landlord and Tenant Board (the 'Board') for arrears of rent for the second floor (although that application did not say it) with rent of $1,550.00.  This would be just over half of the $3,000.00 monthly rent for the whole building.
[25]          Ultimately, the Board rejected some of Ms. Yu's claims but found that she was entitled to $2,000 for costs she had incurred in making some repairs to the apartment plus $50 for the filing fee, for a total of $2,050.
[26]          At the time of the hearing of this application, Ms. Tauro had not paid this amount to Ms. Yu nor had any steps been taken to appeal or set aside the decision. In one of her affidavits, Ms. Tauro’s daughter explains that “due to the relatively small amount ordered by the Landlord & Tenant Board (i.e. $2,050)”, she has not brought an application to set aside the order, but that she believe based on advice from her lawyer that she can still do so. During argument, the explanation provided by Ms. Tauro's lawyer for the failure to pay the amount ordered by the Board was that he had advised his client not to pay the amount because, in his view, the Board did not have jurisdiction to make the order.
Issues and analysis
[27]          The issues to be decided on this application are as follows:
a.      Does the Court have jurisdiction over the residential portion of the property?
b.      Is Ms. Yu in default under the lease?
c.      If Ms. Yu is in default, what is the appropriate remedy?
Issue 1 -- Jurisdiction over the residential portion of the property
[28]          As mentioned above, while the applicant initially only sought to terminate the lease with respect to the commercial part of the building, namely the basement and ground floor, she now seeks to terminate the entire lease. In order to consider granting this relief, I must first be satisfied that this Court has jurisdiction to make an order affecting the second floor apartment.
[29]          As reviewed above, until very recently, both parties proceeded on the assumption that the second floor apartment falls under the jurisdiction of the Landlord and Tenant Board pursuant to the Residential Tenancies Act, 2006. However, in her most recent amended notice of application, Ms. Tauro seeks a declaration that the entire property is exempt from the Residential Tenancies Act.
[30]          Pursuant to section 168(2) of the Residential Tenancies Act, 2006, the Landlord and Tenant Board has exclusive jurisdiction to determine all applications under that Act. In addition, section 2 of the Commercial Tenancies Act provides that "This Act does not apply to tenancies and tenancy agreements to which the Residential Tenancies Act, 2006 applies."
[31]          In seeking a declaration that the Residential Tenancies Act, 2006 does not apply in this case, the applicant relies on section 5(j) which provides as follows:
5 This Act does not apply with respect to,
…
(j) premises occupied for business or agricultural purposes with living accommodation attached if the occupancy for both purposes is under a single lease and the same person occupies the premises and the living accommodation…
[32]          A number of cases in Ontario have interpreted and applied this provision. Most recently, in Toronto Community Housing Corp. v. Didier, 2018 ONSC 5158 (Sup. Ct.), at para. 29, Sanfilippo J. identified a number of relevant principles that emerge from the cases:
Other courts have reached similar determinations on greater evidence of mixed use of commercial space with residential functions. In Lei v. Crawford, 2011 ONSC 349, [2011] O.J. No. 175 (Ont. S.C.J.), Perell J. upheld the application of the Commercial Tenancies Act to the lease of a property that consisted of a retail store on the main level with residential apartments on the second floor and in the basement. In Hahn v. Kramer (1979), 1979 CanLII 2111 (ON SC), 23 O.R. (2d) 689 (Div. Ct.) and Fiset v. DiGeso (1998), 20 R.P.R. (3d) 86 (Gen. Div.), the courts held that the lease of a retail store with associated living accommodation was not a residential tenancy under the Residential Tenancies Act. My conclusion is supported by the finding in Sigrist v. McLean, 2011 ONSC 7114, 283 O.A.C. 100, at paras. 112-115, that the Commercial Tenancies Act applies to a mixed use property where the "predominant purpose" of the property was for business.
[33]          Accordingly, the courts look for the predominant use of the property. In addition, the courts have stated on a number of occasions that the lease of a store with associated living accommodation is a typical situation to which the exemption created by section 5(j) of the Residential Tenancies Act, 2006 applies.  In fact, in Hahn, the Divisional Court held that "the case of a lease of a store with living accommodation combined is relatively easy. That would clearly fall within the definition of premises occupied for business purposes with living accommodation attached." 
[34]          Accordingly, based on the language in section 5(j) of the Residential Tenancies Act, 2006 and a review of the cases that have considered the provision, in my view, there is no doubt that, in this case, the exemption applies to the apartment above the convenience store. The convenience store and apartment are under one lease, the convenience store and apartment are attached, and the same person, namely Ms. Yu and her husband, occupy the convenience store and the apartment.
[35]          At first blush, it may seem that the complicating factor in this case is that, until recently, all parties proceeded on the assumption that the apartment fell under the jurisdiction of the Landlord and Tenant Board, and the Board has already made two orders dealing with the second floor apartment. However, the parties cannot confer jurisdiction on the Board by their conduct or by agreement, and the Superior Court is not bound by the prior decisions of the Board, which appears to have exercised its jurisdiction in error.
[36]          Therefore, I find that the applicant is entitled to a declaration that the whole tenancy is subject to the commercial lease, and that it is exempt from the Residential Tenancies Act, 2006, in accordance with section 5(j) of that Act.
[37]          While I am satisfied that the applicant is entitled to this declaratory relief, as reviewed below, in my view the applicant's conduct in first seeking an order from the Landlord and Tenant Board and in later ignoring an order made by the Board may be relevant to consideration of the appropriate remedy in this case.
Issue 2 -- Defaults by the applicant
[38]          Given my finding that the Residential Tenancies Act, 2006, does not apply in this case, the Commercial Tenancies Act and the lease govern the relationship between the parties.
[39]          As reviewed above, the lease provides that the applicant can terminate the tenancy in the following circumstances:
a.      With respect to a failure to pay rent, the tenancy can be terminated if the tenant does not pay the rent within 15 days of receiving notice of the default; and
b.      With respect to any other default, the tenancy can be terminated 30 days after notice has been provided if the default is not addressed.
[40]          Section 19(2) of the Commercial Tenancies Act also imposes specific notice requirements before a landlord can take possession of a property where the tenant is in default:
A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease, other than a proviso in respect of the payment of rent, is not enforceable by action, entry, or otherwise, unless the lessor serves on the lessee a notice specifying the particular breach complained of, and, if the breach is capable of remedy, requiring the lessee to remedy the breach, and, in any case, requiring the lessee to make compensation in money for the breach, and the lessee fails within a reasonable time thereafter to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money to the satisfaction of the lessor for the breach.
[41]          Therefore, as a pre-condition to determining whether the lease should be terminated, I must first determine whether Ms. Yu is in default and whether she has been given an opportunity to address the default.
[42]          The applicant claims that Ms. Yu is in default in the five following respects:
a.      She has not paid rent since December 2017;
b.      She has not paid property taxes for 2018;
c.      She has not maintained insurance on the property since 2016;
d.      She has unlawfully rented out rooms in the second floor apartment; and
e.      She has failed to make necessary repairs.
[43]          I will review each of these alleged defaults in turn.
a. - Unpaid rent
[44]          At the time of the hearing, the applicant claimed that Ms. Yu had not paid rent since January 2018.  However, she did acknowledge receiving cheques for June, July and August 2018, which Ms. Tauro’s daughter claims were not cashed because of the ongoing dispute.
[45]          Ms. Yu claims that she did pay rent for January 2018.  She agrees that she has not paid rent for February, March and April.  However, she argues that she tried to communicate with Ms. Tauro's daughter to discuss the $2,050 ordered to be paid by the Board, which she said should be applied to some of the outstanding rent.
[46]          Accordingly, while there is some dispute between the parties about the amounts owed, there is no dispute that at the time of the hearing of the application there was some outstanding rent to be paid.


[47] In particular, I find as follows:
[47] In particular, I find as follows:

Revision as of 23:41, 13 May 2020


OnTheGoShipping Inc., and Kwok-Wai Leung, aka Harry Leung v. G. Khan Medicine Professional Corporation, 2020 ONSC 2789 (CanLII)

[5] On March 23, 2019 the applicant, Harry Leung, signed a two-year commercial lease for the premises municipally known as 6882 Fourteenth Avenue in Markham. The lessee was the applicant, described as "ONTHEGOSHIPPING INC. (Harry Kwok-Wai Leung)". The lessor was the respondent, described as "G.Khan Medicine Professional Corporation". As noted at the outset, the premises consist of a two-story heritage house, a yard including a large driveway, and a large two-car garage (approximately 25' x 25'). The property is zoned "rural residential housing", but a "business office" is explicitly permitted. The lease began April 1, 2019, and the agreed upon monthly rent was $3,500.00 plus HST for a total of $3,955.00.

The correct approach for determining whether a tenancy is commercial

[19] Section 3 of the Residential Tenancies Act, 2006, S.O. 2006, c.17 (the RTA) provides that the Act "applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary." Section 2(1) of the RTA defines “rental unit” as "any living accommodation used or intended for use as rented residential premises". The Court of Appeal in Matthews v. Algoma Timberlakes Corporation, 2010 ONCA 468 at para.23 noted that the broad definition of "rental unit" in the RTA is intentional, reflecting the fact that the legislation is remedial, and is designed to protect tenants from unlawful rent increases and evictions.

[20] Section 168(2) of the RTA provides that the Landlord and Tenant Board (the LTB) "has exclusive jurisdiction to determine all applications under this Act and with respect to all matters in which jurisdiction is conferred on it by this Act." However, s. 5(j) of the RTA provides that the RTA does not apply with respect to:

premises occupied for business or agricultural purposes with living accommodation attached if the occupancy for both purposes is under a single lease and the same person occupies the premises and the living accommodation...

[21] In interpreting and applying s.5(j) of the RTA, this court has considered the predominant purpose of the occupation or use of the premises. As Justice Cory explained in Hahn v. Kramer (1979), 1979 CanLII 2111 (ON SC), 23 O.R. (2d) 689 (Div.Ct.) at para.9:

It is to be noted that the exemption clause specifies that the premises be occupied for business purposes with living accommodation attached. To me, the wording of the section seems to indicate that the business purposes should predominate. The Act appears to specifically and carefully proceed in a manner which emphasizes the business use to be made of the combined premises so as to take them outside the definition of residential premises.

For more recent examples of this court considering the predominant purpose test in interpreting and applying s.5(j) of the RTA, see Toronto Community Housing v. Bryant Didier, 2018 ONSC 5158 at para.29; Tauro v. Yu, 2018 ONSC 7319 at paras.32-37; and Firm Capital Management v. Heather Tessier, 2019 ONSC 55 (Div.Ct.).

[22] Substance, not form, governs when considering the true nature of a tenancy. Both the Court of Appeal and the Divisional Court have held that s. 202 of the RTA applies when determining whether or not a unit is residential: Matthews, at para.24, quoted with approval in Firm Capital, at para.34. Section 202(1) provides:

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.

[23] Parties cannot contract out of the RTA. The fact that a commercial lease is used is a relevant circumstance, but it is not determinative: Fiset v. Di Geso, (1998) O.J. No.3466 (Ont.(Gen.Div.)). Nor is a "whole agreement" clause, or a clause forbidding a non-commercial purpose, determinative, or any other clause for that matter: Firm Capital, at para.8. As the Court of Appeal in Matthews explained after noting that s.202 of the RTA applies when determining the nature of a tenancy:

Accordingly, a term in the lease providing that a site is not residential nor a rental unit will not have the effect of avoiding the application of the [RTA], provided that the premises otherwise fit within the statutory definition of a "rental unit".

[24] All the circumstances must be considered to determine the predominant purpose or use of the tenancy. This Court in Fiset, provided examples of circumstances which may be relevant. The circumstances could include:

  • The historical use of the premises.
  • The intention of the parties.
  • Whether the landlord knew the tenant was living at the premises.
  • The zoning for the premises.
  • The form and wording of the lease.
  • Whether the landlord charged GST in relation to the rent.
  • Whether the premises are a single unit or whether they were divided into distinct residential and commercial areas, such that the residential area is "attached" to the commercial area.
  • Whether or not amenities one would expect in a residential tenancy, such as a stove and a refrigerator, are in the premises.
  • The relative share of the premises devoted to commercial use as opposed to residential use.
  • How business was conducted at the premises. Was there a "walk-in" trade? Did employees or workers attend the premises in relation to the conduct of the business?
  • Whether there are any signs indicating a commercial use.
  • The terms of the lease, such as its length, and any provisions for rent increase.

[25] The respondent accepts that the party claiming to come within a s.5 exception to the application of the RTA bears the burden of proving on a balance of probabilities that the exception applies: Fiset, at para.21.

[34] For the reasons set out above, I conclude that the respondent has not discharged his onus of proving on a balance of probabilities that the tenancy falls within the exemption set out in s.5(j) of the RTA. As a result, the RTA applies to the tenancy, and the LTB has exclusive jurisdiction over all applications in relation to the tenancy.

[35] In light of my conclusion, there is no need to continue the interim injunction, granted by Justice Myers, restraining the respondent, and anyone acting on behalf of the respondent, from taking any step to exclude the applicant from exclusive possession of the premises. Given my conclusion that the tenancy is not a commercial tenancy falling with the s.5(j) exemption in the RTA, the tenancy is subject to the exclusive jurisdiction of the LTB, and clearly subject to the March 19, 2020 Order of Chief Justice Morawetz, suspending all evictions and/or writs of possession issued by the LTB.

Toronto Community Housing v. Bryant Didier, 2018 ONSC 5158 (CanLII)

[11] The Landlord and Tenant Board reached its decision on January 19, 2016. The Board determined that it had no jurisdiction over Unit B3 because from the onset of Mr. Didier’s tenancy, Unit B3 was used “predominantly, if not exclusively, for commercial purposes.” The jurisdiction of the Landlord and Tenant Board is restricted to residential premises.

[12] Mr. Didier decided to appeal the decision of the Landlord and Tenant Board, but did not do so in time. Mr. Didier brought a motion to the Divisional Court seeking an extension of time to appeal the Board’s decision. On August 30, 2017, while the motion before the Divisional Court was pending, the TCHC served Mr. Didier with a second Notice to Quit to terminate his tenancy of Unit B3. This August 2017 Notice to Quit demanded that Mr. Didier vacate Unit B3 by September 30, 2017. The TCHC delayed enforcement of the August 2017 Notice to Quit while the Divisional Court had Mr. Didier’s motion under consideration.

[13] On October 19, 2017, the Divisional Court dismissed Mr. Didier’s motion to extend the time for his appeal on the basis that Mr. Didier’s appeal of the Landlord and Tenant Board’s decision had no merit. The Divisional Court held that the Landlord and Tenant Board’s determination that Unit B3 was not used as a residence “was amply supported by the evidence before it.” Appeals from the Board lie to the Divisional Court only on questions of law, and none were raised by Mr. Didier’s appeal.

[22] In cases where there is no written lease and where the parties dispute the type of tenancy that was agreed upon, the onus is on each party to establish, on a balance of probabilities, their respective positions concerning the term of the tenancy. In this regard, the Court must look at the surrounding circumstances, including the actions of the parties, to determine what the parties intended their contractual relationship to be: Manitouwadge General Hospital v. Kudlak, 2000 CarswellOnt 3243 (Ont. S.C.J.), at para. 28. All matters considered, in assessment of all evidence regarding Mr. Didier’s rental history, I have determined that Mr. Didier’s rental of Unit B3 is a monthly tenancy. I do not find in the current record any agreement on implied terms between the parties pertaining to the rental of Unit B3.

[24] The Landlord and Tenant Board determined that Mr. Didier’s rental of Unit B3 was exempted from the Residential Tenancies Act because it came within section 5(j), which exempts “premises occupied for business or agricultural purposes with living accommodation attached if the occupancy for both purposes is under a single lease and the same person occupies the premises and the living accommodation.” The Landlord and Tenant Board has the exclusive jurisdiction to determine and terminate a residential tenancy: section 168(2) of the Residential Tenancies Act; Toronto-Dominion Bank v. Hosein, 2016 ONCA 628, 133 O.R. (3d) 225; Warraich v. Choudhry, 2018 ONSC 1275, 2018 CanLII 1275 (Div. Ct.).

Tauro v. Yu, 2018 ONSC 7319 (CanLII)

[1] The applicant owns a building, which she leases to the respondent, Kedan Yu. The respondents operate a convenience store on the ground floor of the building, and live in an apartment above the store.

[2] The applicant seeks to terminate the lease on the basis of numerous alleged defaults by the respondents, including a claim that the respondents are behind on the rent, that they have failed to maintain insurance on the building, that they have failed to pay their share of property taxes, that they are renting out rooms in the apartment contrary to the permitted uses under the lease, and that they have failed to make necessary repairs to the building.

[3] The respondents deny that they are in default, and claim that it is the applicant who has failed to keep the building in a proper state of repair. The respondents also argue that the upstairs portion of the building is subject to the Residential Tenancies Act, 2006, S.O. 2006, c. 17, and, therefore, any matters related to the rental of the apartment do not fall within the jurisdiction of this Court.

[4] For the reasons that follow, I find that this Court has jurisdiction over the lease for the whole building pursuant to section 5(j) of the Residential Tenancies Act, 2006, which exempts properties from the application of the Act where residential premises are attached to a business and are under one lease. In addition, I find that the respondents are in default under the lease in a number of respects. However, as detailed further below, the respondents are to be given an opportunity to remedy the defaults pursuant to section 20(1) of the Commercial Tenancies Act, R.S.O. 1990, c. L.7.

[33] Accordingly, the courts look for the predominant use of the property. In addition, the courts have stated on a number of occasions that the lease of a store with associated living accommodation is a typical situation to which the exemption created by section 5(j) of the Residential Tenancies Act, 2006 applies. In fact, in Hahn, the Divisional Court held that "the case of a lease of a store with living accommodation combined is relatively easy. That would clearly fall within the definition of premises occupied for business purposes with living accommodation attached."

[34] Accordingly, based on the language in section 5(j) of the Residential Tenancies Act, 2006 and a review of the cases that have considered the provision, in my view, there is no doubt that, in this case, the exemption applies to the apartment above the convenience store. The convenience store and apartment are under one lease, the convenience store and apartment are attached, and the same person, namely Ms. Yu and her husband, occupy the convenience store and the apartment.

[36] Therefore, I find that the applicant is entitled to a declaration that the whole tenancy is subject to the commercial lease, and that it is exempt from the Residential Tenancies Act, 2006, in accordance with section 5(j) of that Act.

[37] While I am satisfied that the applicant is entitled to this declaratory relief, as reviewed below, in my view the applicant's conduct in first seeking an order from the Landlord and Tenant Board and in later ignoring an order made by the Board may be relevant to consideration of the appropriate remedy in this case.

[47] In particular, I find as follows:

a. January 2018 rent is outstanding. While Ms. Yu argues that she made this payment, she also acknowledges that the cheque for the December 2017 rent did not go through. Accordingly, I accept the applicant's evidence that the January 5, 2018 cheque was applied to the outstanding December 2017 rent.
b. February 2018 to April 2018 rent is outstanding. As indicated above, Ms. Yu argues that she sought to offset the rent owing in this time period against the $2,050 ordered by the Landlord and Tenant Board. I do not accept this excuse. Three months rent is equivalent to $9,000, and therefore the outstanding amount ordered by the Board does not account for the failure to pay rent in this time period. While section 35 of the Commercial Tenancies Act does allow a tenant to offset rent against a debt of the landlord, this does not account for $6,950 of unpaid rent for this period of time. (I note that the applicant cannot argue that she does not owe the $2,0505 to Ms. Yu. While the Board may not have had jurisdiction to make the order, in the absence of an appeal or an application to set the order aside, it is still a valid order.)
c. May 2018 to August 2018 has been paid, although the cheques were not cashed. It was the applicant who chose not to cash the cheques, and therefore I do not count this portion of the rent as outstanding.
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