Substantial Compliance - Notice Law - (LTB)

O’Shanter Development v. Bernstein, 2018 ONSC 557 (CanLII)

[12] The Board identified that the central issue to be determined in the case was whether the Landlord’s notices of rent increase comply with the requirements of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (RTA). The Board noted that the Landlord’s representative agreed at the hearing that, if the Board determines that the Landlord’s notices of rent increase are defective, the Landlord’s applications to terminate the tenancy and evict the Tenant for non-payment of rent must be dismissed.

[13] A primary issue of estoppel was raised at the hearing by the Landlord. In his submissions to the Board at the hearing, counsel for the Landlord, stated the following, in part:

So clearly, if the tenants sought to challenge the validity of the rents charged, the time to do it was in the context of the AGI, if you accept the reasoning in Mascan and Ponzi and then if you apply the principles in Mascan and Ponzi, it’s my submission that it would be an abuse of process to allow the tenants after having consented to the increases that were set out in the Notices of Rent Increase subject to adjustment to allow them now to challenge the validity of those Notices of Rent Increase, and those rent increases were essentially established as a result of the Board’s processes, and the Board’s reliance on the rents that were set out in the applications filed with the Board.

[14] In response, the Tenant submitted that estoppel was not available in this case and in support of this position referred the Board to the decision in Price v. Turnbull's Grove Inc., 2007 ONCA 408, (2007), O.R. (3d) 641, which held that a rent increase that is void under the Act is of no force and effect. The Court stated at para. 37, “It is as if the increase never occurred.”

Issue 3: Did the Board make an unreasonable determination that the NORIs were void on the basis that the content of the prepaid rent attachment to the form was “misleading” or “confusing”?

The Landlord argues that the Board imported a subjective inquiry into its consideration of s.212 of the RTA and s. 84 of the Legislation Act, and as such the Board’s decision is unreasonable. However, the Board dealt with the issue relating to substantial compliance at paragraphs 12 to 15 of the decision. The Board stated:

The Landlord’s representative submitted that the Landlord’s addendum does not render the Landlord’s NORI void, because the NORI substantially complies with the Act’s requirements. Section 212 of the Act states that forms that substantially comply with the Act’s requirements “respecting the contents of forms, notices or documents is sufficient.”

The parties did not submit at the hearing case law from the Divisional Court, or from another binding authority, on the issue of substantial compliance. The Board, however, considered the issue of substantial compliance with its forms in TSL-03635, issued on September 24, 2007. In that decision, the Board quoted from TNL-52825-RV, in which the Board held that the landlord who had altered a NORI “should be held to an even higher standard to correctly state the law when he appends an addendum to an ORHT-approved form and uses the same font and format used by the ORHT.” In TNL-52825-RV, the Board determined that the addendum the landlord made to a NORI failed to correctly state the law. The Board concluded that the landlord’s NORI was void because of the addendum.

In TSL-052280, issued on September 19, 2003, the Ontario Rental Housing Tribunal (as the Board was then called) found that a misleading addendum to the landlord’s NORI rendered the NORI void. The Tribunal in that case found that information in the landlord’s addendum “would mislead most tenants”.

The principle that emerges from the Board’s decisions on substantial compliance with the Act’s requirements for forms and other documents, is that landlords must exercise great care when adding an addendum to, or otherwise altering, a Board approved form. Any information that does not comply with the Act may be found to be misleading, and may render the altered form invalid.

[51] I am further of the view that on the facts of this case the Board should have exercised its discretion to apply issue estoppel. Contrary to the Board’s statement that “prohibiting the Tenant from raising the validity of the Landlord’s NORIs at the hearing could lead to an absurd result, if the Board were to uphold and legitimize an invalid rent increase”, the opposite is true. The rent increase was not invalid. It was implemented by the Orders of the Board. The absurd result arises in permitting the Tenant to challenge the validity of the NORIs in circumstances where she has agreed to Orders of the Board implementing the rent increase.

[59] For the above reasons therefore, based on the facts of this case, I conclude that the Board erred in failing to apply estoppel to the Tenant’s defence to the Landlord’s application that the rent increases were void based on defective NORIs.