Non-Application of the RTA

See Also:

• Hotel Room (Rental Unit)
• Trespass to Property (LTB)
• Shared Accommodations (With-Landlord)

Residential Tenancies Act, 2006, S.O. 2006, c. 17

Exemptions from Act
5 This Act does not apply with respect to,

(a) living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home;

(i) living accommodation whose occupant or occupants are required to share a bathroom or kitchen facility with the owner, the owner’s spouse, child or parent or the spouse’s child or parent, and where the owner, spouse, child or parent lives in the building in which the living accommodation is located;

(n) any other prescribed class of accommodation.

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.

SOT-66425-16 (Re), 2016 CanLII 57313 (ON LTB)

5. The tenancy began in 2013. At that time, a written rental agreement was entered into by the Respondent and AE. AE is the son of EE and IE. The rental agreement listed AE as "Leaseholder/Occupant" and IE as "Occupant." It makes no mention of EE.

7. The Respondent's position is that simply accepting EE's rent payments does not make him a tenant. The Respondent had a tenancy with AE, and as long as his rent was being paid, they did not care who was paying it. Ultimately, the Respondent's position was that EE is a mere occupant.

8. EE argued that by paying rent and residing in the rental unit, he should be considered a tenant as it is defined by section 2(1) of the Act, particularly as “occupant” is not defined by the Act.

9. Section 2(1) of the Act defines “tenant,” as “includ(ing) a person who pays rent in return for the right to occupy a rental unit and includes the tenant’s heirs, assigns and personal representatives.”

10. As the Divisional Court stated in its reasons for remitting this application back to the Board for a new hearing, the Court of Appeal has recognized, in Ontario (Rental Housing Tribunal) v. Metropolitan Toronto Housing Authority, 2002 CanLII 41961 (ON CA), that the Act should be interpreted with an "expansive and liberal approach," and with a "tenant protection focus."

11. However, I am also mindful of the Divisional Court's pronouncement in Jemiola v. Firchuk, (2005) O.J. No. 6085 (Div. Ct.) which stated that while “tenant” should be broadly and liberally construed, it should also be recognized that,

“… the legislation does not prohibit tenants from having roommates, family and friends living with them. The Member found, correctly in our view, that this does not necessarily confer on them the status of tenant.”

12. Further, while EE is correct in submitting that “occupant” is not defined within the Act, this does not mean that there is no such thing as a non-tenant “occupant” of a rental unit for the purposes of the Act. It is recognized in various provisions of the Act that there may be occupants that are not tenants. One need only look at a number of provisions in the Act referring to “occupants,” and "other members of (a tenants') household," including:

- Section 22, which states that landlords may not interfere with the reasonable enjoyment of rental units by a tenant or “members of his or her household;

- Section 60, which allows landlords to apply to terminate a tenancy if a tenant or “other members of his or her household,” misrepresent their income;

- Section 61, which allows landlords to apply to terminate a tenancy if a tenant or “another occupant of the rental unit commits an illegal act…;”

- Section 62, which allows landlords to apply to terminate a tenancy if a tenant or “another occupant of the rental unit…” wilfully or negligently causes undue damage;

- Section 63, which allows landlords to apply to terminate a tenancy if a tenant or “another occupant of the rental unit” wilfully causes undue damage or uses the rental unit in a manner inconsistent with use as a residential premises;

- Sections 64 and 65, which allow landlords to apply to terminate a tenancy if a tenant or “another occupant of the rental unit” substantially interferes with reasonable enjoyment of a residential complex by other tenants or a landlord, or a landlord’s lawful rights, privileges or interests; and

- Section 66, which allows landlords to apply to terminate a tenancy if a tenant or “another occupant of the rental unit” seriously impairs the safety of any person in the residential complex.

13. Just as the Act recognizes that persons other than tenants may reside in a rental unit, 'it also recognizes that persons other than tenants may pay rent,' as section 2(1) of the Act defines “rent” as “includ(ing) the amount of any consideration paid or given or required to be paid or given by or on behalf of a tenant to a landlord or the landlord’s agent for the right to occupy a rental unit...” [emphasis added]

15. It is worth noting that implied tenancies usually arose where, before the continuation of expired leases on a month to month basis was made automatic by statute, tenants continued to occupy rental units and continued to pay rent after fixed term tenancies had ended. However, implied tenancies could also arise where tenants moved out or died, but other persons paid rent to landlords for the right to remain in rental units.

16. In my view, consideration of the evidence in its full context in the current case did not support the creation of an implied tenancy between EE and the Respondent. The evidence did not show that EE paid rent for continuation of a lapsed or terminated tenancy. He testified that he has lived in the rental unit, and paid the rent, since the commencement of his son's tenancy, which is still in effect. The tenancy with AE has never lapsed or terminated. The Landlord's staff members have approached EE about being added in writing as an occupant, not a tenant. These facts comfortably support a conclusion that EE has lived in the rental unit as an occupant by benefit of his son's tenancy, that he has paid rent on behalf of his son, and that he has never become a tenant himself.