Application of the Act (RTA)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-24
CLNP Page ID:	1148
Page Categories:	[Contract Law, Leases, & Sub-Letting (LTB)], [RTA Exempt Tenancies]
Citation:	Application of the Act (RTA), CLNP 1148, <https://rvt.link/x>, retrieved on 2024-11-24
Editor:	Sharvey
Last Updated:	2024/07/18

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

[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.

Cowie v. Bindlish, 2010 ONSC 2628 (CanLII)

[16] It is my respectful view that neither view was a sufficient basis on which the board was entitled to decline jurisdiction. Both board members erred in law, albeit differently, in their respective interpretation of section 5 (i) of the Act and we must now interfere. The section explicitly creates an exemption from the general application of the Act only if the person in the category of the respondent “lives in the building in which the living accommodation is located”. That means that the respondent was required to live in the building at the time when she rented the room to the appellant in order for the exemption to apply. It was not sufficient that she merely intended to move in at some subsequent time. Nor was it sufficient that she actually did move in at a subsequent time.

[17] Any interpretation of section 5 (i) of the Act that would permit the respondent to unilaterally cause the board to be deprived of its jurisdiction to hear the appellant’s application by forming an intention in her own mind without communicating it to the appellant or by moving into the house at a later time would be contrary to the language of the section and the intention of the Legislature and would be grossly unfair. It would also effectively result in an unwarranted revision of the tenancy agreement that the parties had made.

Quin v McCaughey, 2016 ONSC 7921 (CanLII)

[20] The Board member and the Vice Chair determined that section 5(i) of the Act governed the tenancy at the time this tenancy agreement was entered into. At the time, the appellant was cohabiting with the respondent’s daughter. The respondent landlady never agreed to a tenancy agreement within the meaning of the Act. The Board therefore determined that the appellant’s living accommodation was within the exemption in section 5(i) of the Act.

[21] The decisions of the Board are reasonable for the following reasons:

(a) The Board’s determinations that there is only one kitchen and bathroom in the unit and that the appellant was therefore required to share them with the respondent’s daughter who lived with the appellant when he entered into the tenancy agreement, are questions of fact that are not subject to appeal;

(b) As the Board found, contrary to the assertion of the appellant, the plain and ordinary meaning of the word “child” in section 5(i) of the Act does not exclude a situation where the tenant is married to the “child” of the landlord or this type of tenancy;

(c) There is no authority for the appellant’s proposition that the legislators intended to treat spouses differently from others subject to the exemption in section 5(i) of the Act;

(d) The finding that the determination is made in this case at the time the agreement is entered into, is consistent with the decisions in Cowie v. Bindlish, paras 4, 16 and 17 and Hooey v. Bomze, 1993 CarswellOntario 2047 (Gen.Div). Those decisions make it clear that one party alone cannot change the legal nature of the relationship. This means that the appellant could not decide that he could rely on the protections in the Act just because the landlady’s daughter Meghan was no longer sleeping in the unit; and

(e) To enable a party to opt in and out of the exemption is not reasonable as it would allow the appellant to unilaterally revise the terms of the tenancy agreement.

[22] For these reasons, the Appeal is dismissed.

SWL-17145-18 (Re), 2018 CanLII 88667 (ON LTB)

20. In this case, when the Landlord moved out, I find he made a unilateral decision that caused the Act to apply after he vacated. I do not view this to be an “unwarranted” revision of the tenancy that is unfair to the Tenant; rather it is a reasonable revision of the tenancy agreement reflecting the reality of the Tenant’s changed living arrangements. As a result of the Landlord’s decision to vacate the Tenant, gained the legal protection offered by the Act.

21. The Landlord and his spouse, expecting their first baby, purchased a new primary residence and permanently vacated the rental unit in order to permanently move into their family home. This action caused the exemption set out in subsection 5(i) to cease to apply as the Tenant was no longer required to share a kitchen or bathroom with the owner or a family member of the owner. Once the exemption in subsection 5(i) of the Act ceased to apply, the tenancy became subject to the Act in accordance with subsection 3(1) of the Act.

22. I must determine exactly when the Act began to apply to this tenancy. The Landlord testified that he moved out of the rental unit in January 2018, while the Tenant insisted he moved out in December 2017. With no other supporting evidence, I find the Landlord vacated on or before December 31, 2017, as the Landlord testified he turned the gas to the stove off sometime before January 1, 2018.

TST-78142-16 (Re), 2016 CanLII 88280 (ON LTB)

15. Section 5(i) of the Act states that the Act does not apply if the tenant is required to share a kitchen or bathroom with the owner.

16. The Landlord testified that he moved into one of the units in the residential complex on September 14, 2016, after the Tenant’s tenancy began. The Landlord’s unit has a bathroom but the Landlord shares a kitchen with three other units. The Landlord testified that he told the Tenant that he was moving into the unit 7 – 10 days prior to moving in but he did not discuss with the Tenant how this would impact the terms of the Tenant’s tenancy.

17. There was no evidence before me that the Landlord moved into the residential complex with the bad faith intention of causing the rental unit to be exempt from the application of the Act, under section 5(i). In fact, it was the Tenant’s legal representative who raised the issue of the application of the Act at the hearing.

18. I nevertheless find that the Act applies to the rental unit for the purpose of this hearing, despite section 5(i) of the Act. The Landlord cannot unilaterally change a fundamental aspect of the Tenant’s tenancy (i.e. whether the Act applies to it) by moving into the residential complex after the tenancy has already begun. (See Cowie v. Bindlish, 2010 ONSC 2628 (CanLII), paras. 16-17). Accordingly, I am satisfied on a balance of probabilities that the Act applied to the rental unit during the Tenant’s tenancy, including at the time of the lock out.

TST-92268-18 (Re), 2018 CanLII 123244 (ON LTB)

12. EX brought a preliminary motion as to whether the Residential Tenancies Act, 2006 (the ‘Act’) should apply in a situation where the Landlord’s child is living on the property and sharing a bathroom and kitchen with the Tenants. Ordinarily in these circumstances section 5(i) of the Act would apply to remove the tenancy from the jurisdiction of the Board. However, the evidence demonstrates that it was never disclosed to the Tenants prior to their making their tenancy agreement and moving in to the rental unit that the daughter of the Landlords was resident in the unit. There were a number of opportunities to do so: the text exchange about a girl residing in the living room that would start in April; the rental agreements provided by EX and signed by the Tenants; advising the Tenants at any time before they moved in on January 5, 2018 that EX was a resident. Even when they moved in, the Tenants were unaware that she had possessions there and was apparently resident.

13. I accept the testimony of the Tenants on this issue. I find that EX did not disclose at any point when the tenancy agreement was entered into that she, as a child of the Landlord, was resident in the unit. The Divisional Court case of Cowrie v. Bindlish, 2010 ONSC 2628 says:

The section [section 5(i)] explicitly creates an exemption from the general application of the Act only if the person in the category of the respondent “lives in the building in which the living accommodation is located”. That means that the respondent was required to live in the building at the time when she rented the room to the appellant in order for the exemption to apply. It was not sufficient that she merely intended to move in at some subsequent time. Nor was it sufficient that she actually did move in at a subsequent time.

Any interpretation of section 5 (i) of the Act that would permit the respondent to unilaterally cause the board to be deprived of its jurisdiction to hear the appellant’s application by forming an intention in her own mind without communicating it to the appellant or by moving into the house at a later time would be contrary to the language of the section and the intention of the Legislature and would be grossly unfair. It would also effectively result in an unwarranted revision of the tenancy agreement that the parties had made.

Any such interpretation would also, in my view, be inconsistent with the objectives of the Act as reflected in sections 1 and 3 (1) of the Act.

14. I find that in the application of Cowrie to the circumstances, that neither EX nor the owner Landlord provided any information to the Tenants on which they could have been advised that they were sharing the rental unit with an owner and that the Act would not apply to their tenancy. I find that the Act applies to this tenancy.