Price v. Turnbull's Grove Inc.

Price v. Turnbull's Grove Inc. Collection Decisions of the Court of Appeal Date 2007-06-05 Neutral citation 2007 ONCA 408 Docket numbers C45943 Judges Cronk, Eleanore Ann; Armstrong, Robert Patrick; MacFarland, Jean Louise Subject Civil Decision Content CITATION: Price v. Turnbull's Grove Inc., 2007 ONCA 408 DATE: 20070605 DOCKET: C45943 COURT OF APPEAL FOR ONTARIO CRONK, ARMSTRONG and MacFARLAND JJ.A. BETWEEN: MARISSA PRICE Appellant and TURNBULL’S GROVE INC. Respondent Jamie Hildebrand for the appellant David Bruder agent for the respondent Heard: April 20, 2007 On appeal from the order of the Divisional Court (D. Cunningham A.C.J. and S. Chapnik and L. Ferrier JJ.) dated April 18, 2006. CRONK J.A.: [1] The main question in this appeal concerns the legal effect of a rent increase purportedly imposed by a landlord in respect of a residential tenancy without written notice to the tenant. At issue is the interplay between ss. 127(1), 127(4) and 141 of the Tenant Protection Act, 1997, S.O. 1997, c. 24 (the “Act”). I. Background [2] Since 1994, the appellant, Marissa Price, has occupied a residential unit in a land lease park community known as Turnbull’s Grove. She owns the unit, but pays rent for her occupancy of the land. The land is owned by the respondent, Turnbull’s Grove Inc. (“TGI”). [3] The appellant initially lived in her unit part-time. In 2001 and again in the spring of 2002, the then principal of TGI – Douglas Sheppard – informed her that if she became a permanent resident at Turnbull’s Grove, her rent would be $179 per month. [4] The appellant claims that she began to live in her unit on a permanent basis commencing in about March 2002. However, in a proceeding commenced by TGI for the payment of rent allegedly owing by the appellant, among other relief, the Ontario Rental Housing Tribunal (the “ORHT”) found that the appellant’s permanent residency began in November 2002. [5] In May 2002, Sheppard sold TGI to George Land. In October 2002, Land demanded that the appellant pay rent in the amount of $250 per month commencing November 1, 2002. This resulted in a rent increase of $71 per month for the appellant. [6] There is no dispute that Land did not provide any written notice of this proposed rent increase to the appellant. [7] The appellant paid rent of $250 per month from November 2002 until August 31, 2003. [8] In August 2003, the Turnbull’s Grove Tenant’s Association purchased the shares of TGI from Land, with the goal of creating a not-for-profit community for the benefit of the Association’s membership. The appellant initially signed an offer to purchase her unit with the Association, but subsequently withdrew it. At about the same time, she also informed TGI that she would no longer pay what she considered to be illegal rent and that, effective September 1, 2003, she would resume paying rent in the amount of $179 per month. [9] On April 16, 2004, the appellant filed an application with the ORHT for the return of rent monies that she alleged had been collected illegally. The ORHT dismissed her application on the basis that it was statute barred by a one-year limitation period set out under the Act. The appellant did not appeal this decision. [10] On September 16, 2004, TGI filed an application with the ORHT seeking to terminate the appellant’s tenancy and to evict her for non-payment of rent. It also sought to recover as arrears of rent the shortfall between the monthly rent that the appellant paid effective September 2003 and her alleged rent of $250 per month. [11] The ORHT granted TGI’s application on February 7, 2005. It rejected the appellant’s argument that TGI was barred, under s. 141 of the Act, from claiming rent arrears after accepting a lesser amount of rent from the appellant for more than one year. The ORHT also held that the appellant’s lawful rent was $250 per month for the period November 1, 2002 to December 31, 2004 and ordered the appellant to pay rent arrears in the amount of $1,227.02 in instalments over a period of six months, failing which TGI could apply to the ORHT for an order terminating the appellant’s tenancy without notice and requiring her to pay the balance of all rent outstanding. [12] The appellant appealed to the Divisional Court. On April 18, 2006, the Divisional Court dismissed her appeal. In a brief endorsement, the court held that: (1) there was “ample evidence” before the ORHT to enable it to determine the lawful rent owed by the appellant; (2) s. 141 of the Act does not establish a limitation period for landlords seeking to recover arrears of rent; (3) TGI’s delay in bringing its application before the ORHT was due to the appellant’s “misrepresentations about her wish to join the association”; and (4) the ORHT’s order was “fair and balanced as it related to the interests of both parties”. [13] The appellant now appeals to this court. She argues that the Divisional Court erred: (i) in its interpretation of s. 141 of the Act; (ii) by holding that there was evidence before the ORHT establishing lawful rent in the amount of $250 per month; and (iii) by finding that the appellant had misrepresented to the Association her intention to join the Association and to purchase her unit at Turnbull’s Grove. [14] TGI filed no admissible materials with this court in response to the appellant’s appeal. Nonetheless, we heard oral submissions from its agent, David Bruder, the Treasurer and a director of TGI. [15] For the following reasons, I would allow the appeal. II. Relevant Statutory Provisions [16] The following provisions of the Act are relevant to the issues in this appeal: s. 121(1) No landlord shall charge rent for a rental unit in an amount that is greater than the lawful rent permitted under this Part. …. s. 122 No landlord shall increase the rent charged to a tenant for a rental unit, except in accordance with this Part. …. s. 127(1) A landlord shall not increase the rent charged to a tenant for a rental unit without first giving the tenant at least 90 days written notice of the landlord’s intention to do so. … (3) The notice shall be in a form approved by the Tribunal and shall set out the landlord’s intention to increase the rent and the amount of the new rent. (4) An increase in rent is void if the landlord has not given the notice required by this section, and before the landlord can take the increase the landlord must give a new notice. …. s. 129(1) No landlord may increase the rent charged to a tenant or to an assignee under section 17 during the term of their tenancy by more than the guideline except in accordance with sections 130 to 139. …. s. 141(1) Rent charged one or more years earlier shall be deemed to be lawful rent unless an application has been made within one year after the date that amount was first charged and the lawfulness of the rent charged is in issue in the application. (2) An increase in rent shall be deemed to be lawful unless an application has been made within one year after the date the increase was first charged and the lawfulness of the rent increase is in issue in the application. III. Issues [17] I would frame the issues in this appeal in this fashion: (1) What is the interplay between ss. 127(1), 127(4) and 141 of the Act? (2) Did the Divisional Court err by concluding that there was an evidentiary foundation for the ORHT’s finding that the appellant’s lawful monthly rent was $250 for the period in contention? (3) Did the Divisional Court err by making findings of fact that were neither made by the ORHT, nor supported by the evidence? IV. Analysis (1) The Statutory Interpretation Issue [18] At the outset, I would make three preliminary observations. First, the reasons of the ORHT contain no reference to ss. 127(1) and 127(4) of the Act, nor any explicit mention of the statutory scheme for rent increases set out under the Act. In addition, although the ORHT relied on s. 141(1) of the Act to hold that the legal rent “charged” to the appellant was $250 per month for the period November 1, 2002 to December 31, 2004 and $253.75 per month effective January 1, 2005,[1] it made no mention of s. 141(2) of the Act. Nor did it explain the basis for its conclusion that s. 141(1) – rather than s. 141(2) – was engaged in this case. [19] Second, like the ORHT, the Divisional Court did not refer to ss. 127(1) and 127(4), or to the statutory regime established by the Act for rent increases, in its reasons. In fairness to the Divisional Court, the record before this court does not permit us to discern whether these sections of the Act were drawn to the Divisional Court’s attention. These sections, together with ss. 141(1) and (2) of the Act, were the focus of the appellant’s argument before this court. [20] Third, in respect of s. 141, the Divisional Court said only: On a plain reading of s. 141 of the [Act] it is clear that the provision does not establish a limitation period for landlords seeking to recover arrears. The appellant wrongly asserts that landlords could simply impose unlawful rents then wait out the limitation period to have the rent deemed lawful. In fact a tenant has valid recourse to the [ORHT] subject to s. 141’s 1 year limitation period. … As to the issue of estoppel the misrepresentations made by the appellant, the Respondents’ [sic] reliance upon them and the statutory amnesty in s. 141 defeat any such claim. [21] As is apparent from these comments, the reasons of the Divisional Court do not differentiate between ss. 141(1) and (2) of the Act. Thus, it is unclear which of these sections anchored the Divisional Court’s reasoning. [22] Against this backdrop, the appellant makes three related submissions concerning the relevant provisions of the Act. She submits that, absent an express agreement between a tenant and a landlord regarding a rent increase, where a rent increase is implemented in non-compliance with the notice provisions of s. 127(1) of the Act, the increase is void at law by virtue of s. 127(4). Implicit in this submission is the contention that the Divisional Court erred by failing to consider the effect of ss. 127(1) and 127(4) in this case. The appellant next argues that the Divisional Court erred in its interpretation of s. 141 of the Act because s. 141(1) of the Act has no application here and s. 141(2) does not operate to render lawful a rent increase deemed to be void under s. 127(4). Finally, the appellant maintains that, absent a clear indication of a contrary legislative intention – which the appellant says does not appear in the Act – ss. 141(1) and (2) should not be construed so as to override s. 127(4) of the Act. [23] I agree with the appellant that the challenged rent increase imposed by TGI in November 2002 was void by operation of s. 127(4) of the Act and, consequently, that it was of no legal force or effect. I also agree that ss. 141(1) and (2) of the Act do not operate in this case to render the void rent increase lawful. It follows, in my opinion, that the Divisional Court erred by failing to consider the effect of ss. 127(1) and 127(4) of the Act in the circumstances of this case and by holding, as it appears to have done, that the rent increase attacked by the appellant was deemed to be lawful by virtue of s. 141 of the Act. I reach these conclusions for the following reasons. [24] The Supreme Court of Canada and this court have frequently cited with approval the following approach to statutory interpretation, as set out in Elmer A. Driedger, Construction of Statutes, 2d ed. (Toronto: Butterworths, 1983) at 87: Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. See for example, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at paras. 21 and 23; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559 at para. 26; Canadian Union of Public Employees v. Ontario (Minister of Labour) , [2003] 1 S.C.R. 539 at para. 106; Canada Post Corp. v. Key Mail Canada Inc. (2005), 77 O.R. (3d) 294 at para. 16 ( C.A. ), leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 422. [25] Under this interpretative approach, the import of ss. 127(1), 127(4) and 141 of the Act must be ascertained by reference to the context in which they appear in the Act, the language employed by the legislature, and the scheme and purpose of the Act. Purpose of the Act [26] The purpose of the Act was considered by this court in Metropolitan Toronto Housing Authority v. Godwin, [2002] O.J. No. 2514. At para. 19 of that decision, the court described the Act as remedial legislation having a “tenant protection focus”. See also Toronto (City) v. Goldlist Properties Inc. (2003), 67 O.R. (3d) 441 at para. 62. As remedial legislation, the Act must receive “such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit”: see the Interpretation Act, R.S.O. 1990, c.I.11, s. 10. See also North York General Hospital Foundation v. Armstrong (2004), 69 O.R. (3d) 603 ( Div. Ct.), aff’d (2005), 258 D.L.R. (4th) 85 (Ont. C.A. ). Scheme of the Act [27] The Act is divided into ten parts. Part VI, which is of particular significance to the issues in this appeal, establishes specific rules relating to rent. These include rules concerning the amount of rent charged (ss. 121 and 122) and lawful rent (ss. 123 to 128), a guideline regarding rent increases (s. 129), agreements to increase or decrease rent (ss. 130 to 134), rent increases or decreases based on statutory or municipal tax-related measures (ss. 135 to 137), applications by landlords or tenants to the ORHT with respect to rent (ss. 138 to 139.1 and 142 to 144), prohibited additional charges (s. 140), and deemed lawful rent (s. 141). [28] The provisions of the Act, including Part VI, reflect the legislature’s aim to balance the rights and obligations of tenants and landlords alike. In this overall context, Part VI of the Act establishes a rent control scheme that is designed to protect tenants from unfair or arbitrary rent charges or increases. Two central features of this scheme are the requirements that the quantum of any rent, including of any rent increase, not exceed amounts permitted under the Act (ss. 121(1), 122 and 129(1)) and that no rent increase be imposed without adequate advance written notice from the landlord to the affected tenant (s. 127(1)). [29] In connection with the latter notice requirement, s. 127(1) of the Act, in clear and mandatory language, prohibits a landlord from increasing the rent “charged” to a tenant unless the tenant has first been provided with at least ninety days written notice of the landlord’s intention to effect such an increase. The consequence of a landlord’s failure to satisfy this notice requirement is set out in s. 127(4) of the Act, which provides that an increase in rent is “void” if the landlord has not given the notice required by s. 127(1). Like s. 127(1), s. 127(4) is precise and unambiguous. Application of Part VI of the Act to this Case [30] In this case, the rent “charged” to the appellant prior to November 2002 was $179 per month. The principal of TGI at that time, George Land, failed to comply with s. 127(1) of the Act when he neglected to provide the appellant with written notice that her rent was to be increased by $71 per month to $250 per month, effective November 1, 2002. In addition, Land failed to give the appellant ninety days notice of the rent increase, as required by s. 127(1). As a result, the November 2002 rent increase was rendered void by s. 127(4) of the Act. [31] Sections 141(1) and (2) of the Act, however, deem certain rent to be lawful in specific circumstances. Under s. 141(1), rent “charged one or more years earlier” is deemed to be lawful rent unless an application, in which the lawfulness of the rent charged is in issue, is made within one year after the date that the amount of rent was first charged. In contrast, s. 141(2) is focused on rent increases, rather than rent “charged”. It deems an increase in rent to be lawful unless an application, in which the lawfulness of the rent increase is in issue, is made within one year after the date the increase was first charged. [32] The effect of these saving provisions is to render an otherwise unlawful rent or rent increase lawful from and after the first annual anniversary of the date of the imposition of the rent or rent increase if, by that date, no application has been brought challenging the lawfulness of the rent or rent increase. Thus, a tenant-challenge to the unlawfulness of a rent charge or rent increase is essentially precluded one year from the date that the rent charge or rent increase was first imposed. [33] Given this statutory scheme regarding rent, the question is whether ss. 141(1) or (2) of the Act apply to a rent increase rendered “void” by virtue of s. 127(4), as in this case. In my opinion, the answer to this question is “no”. I say this for several reasons. [34] First, the word “void” has a well-established legal meaning: it imports a lack of validity or legal force. In Wolkow v. Dunnell (1998), 40 O.R. (3d) 783, this court considered the meaning of a predecessor section to s. 127(4) of the Act, set out in s. 7(5) of the Rent Control Act, S.O. 1992, c. 11. Like s. 127(4) of the Act, s. 7(5) of the Rent Control Act provided that an increase in rent by a landlord was “void” where the landlord had not given the tenant a notice of the proposed rent increase in the form prescribed by that statute. In considering the meaning of s. 7(5) and of a similar voiding provision contained in s. 5(2) of the Residential Rent Regulation Act, R.S.O. 1990, c. R.29, Austin J.A. stated at para. 12, “In my view, ‘void’ in those sections means empty, spent and of no effect.” He elaborated, at para. 15: The courts have held consistently that, without notice in accordance with statutory requirements, rent increases are void, in the sense that they are without legal effect and not merely postponed. [Citations omitted and emphasis added.] [35] The following observations at para. 17 of Wolkow are also instructive: In my view, a fundamental objective of both Acts is to clearly define the amount and the circumstances in which rents may be increased by a landlord. Consistent with this objective, the legislation provides that a tenant shall be given at least 90 days notice, in the prescribed form, of a landlord’s intention to increase the rent. As the Divisional Court held in Re Devitt and Sarochyn, supra, the purpose of the 90-day period is to allow a tenant sufficient time to accept the increase, or to serve the required 60-day notice to terminate the tenancy. [36] In my view, by the use of the word “void” in s. 127(4) of the Act, the legislature expressed its intention, in plain language, that a rent increase imposed without “at least” ninety days advance written notice to the affected tenant is of no legal force or effect. This accords with a fundamental purpose of the Act, namely, to control the circumstances in which a landlord may effect a rent increase. [37] Thus, a rent increase rendered void under s. 127(4) of the Act for non-compliance by the landlord with the mandatory notice requirement of s. 127(1) is not merely unlawful – it is a nullity. It is as if the increase never occurred. Accordingly, in the case of a void rent increase, there is nothing to be ‘saved’ by the curative provisions of s. 141. [38] Second, the conclusion that ss. 141(1) and (2) are not intended to apply to rent increases rendered void under s. 127(4) is reinforced by the fact that s. 127(4) admits of no exceptions. It is not expressed to be subject to s. 141. Likewise, ss. 141(1) and (2) contain no language evidencing an intention that they apply to rent increases affected by s. 127(4). If the legislature had intended that a void rent increase could acquire legal validity under ss. 141(1) or (2) by the mere passage of time it may be assumed that this intention would have been expressed clearly. The legislature did not do so. [39] Third, the conclusion that ss. 141(1) and (2) have no application to void rent increases is consistent with the protectory goals of Part VI of the Act. As I have indicated, one of the primary aims of the rent control scheme established by the Act is to shelter tenants from arbitrary, peremptory, or unjust rent increases. For this reason, the Act emphasizes the need for advance written notice of a proposed rent increase. The purpose of this notice requirement is to ensure that tenants affected by a proposed rent increase are afforded sufficient time to make informed decisions about their housing circumstances where a landlord seeks to raise their rent. [40] Section 127(4) of the Act underscores the fundamental importance of this notice requirement by rendering void rent increases imposed without such notice. The critical statutory purpose of the s. 127(1) notice requirement would be significantly undermined if ss. 141(1) or (2) of the Act were construed so as to imbue otherwise void rent increases with legal validity notwithstanding non-compliance with s. 127(1). [41] Fourth, on the view of the purpose and effect of ss. 127(1) and 127(4) that I hold, as described above, ss. 141(1) and (2) of the Act are not rendered meaningless. Part VI of the Act sets out various rules regarding rent, including, as I have stated, the requirement that the quantum of a rent charge or of a rent increase not exceed prescribed limits. Rent amounts that exceed those limits are unlawful. In my opinion, it is to these types of excessive or ‘tainted’ rents that ss. 141(1) and (2) are intended to apply. In other words, ss. 141(1) and (2) deem a rent charge or a rent increase to be lawful in certain circumstances where they would otherwise be unlawful. But an “unlawful” rent charge or rent increase is not the same as a “void” rent charge or rent increase. Section 141 is directed to the former, while s. 127(4) is concerned with the latter. [42] Fifth, while Part VI of the Act prohibits various conduct in respect of rent and rent increases, only conduct concerning a rent increase that offends s. 127(1) renders the increase void under Part VI. This signifies the importance of the s. 127(1) notice requirement to the rent control scheme established by the Act. For example, rent charged in contravention of s. 121(1) of the Act – rent in an amount that is greater than the lawful rent permitted under Part VI of the Act – is not deemed to be void under Part VI of the Act. This type of ‘tainted’ rent charge, therefore, could be subject to the remedial effect of s. 141(1) of the Act in a proper case. Similarly, where proper notice of a proposed rent increase is given in conformity with s. 127(1) of the Act, but the amount of the proposed increase exceeds the permitted increase prescribed by the guideline under the Act – in contravention of s. 129(1) of the Act – s. 141(2) may be engaged. [43] The Divisional Court indicated that s. 141 affords a “statutory amnesty” to land-lords after the expiry of one year from the date of the imposition of a rent charge or a rent increase. I agree, subject to the following important caveat. This amnesty applies only to an unlawful rent charge or rent increase and only then where the conditions set out in ss. 141(1) or (2) are met. It does not apply to a rent increase rendered void under s. 127(4). [44] Finally, to the extent that there is any ambiguity regarding the interplay between ss. 127(1) and 127(4) of the Act, on the one hand, and ss. 141(1) and 141(2), on the other hand, the tenant-centred focus of the Act requires that these sections be interpreted in a manner that furthers the protective objects of the Act. This both facilitates the achievement of the legislature’s goals in enacting the Act and, in accordance with well-established rules of statutory interpretation, minimizes the potential for conflict between ss. 127(1), 127(4) and 141. [45] I therefore conclude that the rent increase imposed by TGI in November 2002 was void by virtue of s. 127(4) of the Act for non-compliance with the mandatory written notice requirement of s. 127(1). This type of deficiency cannot be cured by the invocation of ss. 141(1) or (2). Importantly, before this court, no argument of laches or estoppel is put against the appellant. I do not wish to be taken as suggesting that such an argument could not arise in a proper case, arguably to preclude tenant reliance on s. 127(4) of the Act many years after an unchallenged imposition of a rent increase implemented in non-compliance with s. 127(1) of the Act. But that is not this case. Accordingly, in this case, the challenged rent increase was of no force or effect from the date of its imposition. (2) Other Issues [46] Given my conclusion that the November 2002 rent increase at issue had no legal validity, I would allow the appeal on this ground alone. It follows that it is unnecessary to address the other grounds of appeal advanced by the appellant. V. Disposition [47] For the reasons given, I would allow the appeal. I do not regard this as an appropriate case for an award of the costs of the appeal. RELEASED: “JUN -5 2007” “E.A. Cronk J.A.” “RPA” “I agree Robert P. Armstrong J.A.” “I agree J. MacFarland J.A.” [1] The appellant’s rent was increased to the monthly amount of $253.75 effective January 1, 2005 in accordance with a written notice of a 1.5 per cent rent increase delivered by TGI to the appellant.