



COURT OF APPEAL FOR ONTARIO

CITATION: Nanne v. 3011650 Nova Scotia Limited (Michipicoten
    Forest Resources), 2015 ONCA 391

DATE: 20150605

DOCKET: C59236

Feldman, Benotto and Brown JJ.A.

BETWEEN

Gerald Nanne

Tenant (Respondent)

and

3011650 Nova Scotia Limited c.o.b. as
    Michipicoten Forest Resources

Landlord (Appellant)

AND BETWEEN

Joseph Pasternak

Tenant (Respondent)

and

3011650 Nova Scotia Limited c.o.b. as
    Michipicoten Forest Resources

Landlord (Appellant)

AND BETWEEN

Glenn Campbell

Tenant (Respondent)

and

3011650 Nova Scotia Limited c.o.b. as
    Michipicoten Forest Resources

Landlord (Appellant)

Wendy J. Earle and Matthew Furrow, for the appellant

Robert G. Doumani and Patrick Harrington, for the
    respondents

Brian A. Blumenthal, for the intervener Landlord and
    Tenant Board

Heard: March 30, 2015

On appeal from the order of the Divisional Court (Associate
    Chief Justice Frank N. Marrocco, Justices Sidney N. Lederman and Harriet E.
    Sachs), dated February 21, 2014, with reasons reported at 2014 ONSC 1012,
    dismissing an appeal from order of the Landlord and Tenant Board, dated June
    17, 2013.

By the Court:

OVERVIEW

[1]

During the 1970s and 1980s, the Algoma Central Railway leased out a
    large number of one-acre cottage sites on property it owned north of Sault Ste.
    Marie. In 1997, the Railway sold the land to the appellant, 3011650 Nova Scotia
    Limited c.o.b. as Michipicoten Forest Resources (the Landlord). In 2005, the
    Landlord sold part of the land and cottage sites to Algoma Timberlakes Corp., retaining
    for itself a tract of land on which 435 cottage sites are located.

[2]

In its 2010 decision in
Matthews v. Algoma Timberlakes Corp
.,
[1]
this court held that the
Residential Tenancies Act, 2006
(the 
RTA
)
[2]
applied to the cottage sites on the Timberlakes land.

[3]

The respondents are the tenants of three cottage sites located on the
    Landlords property. The respondents lease the cottage sites from the Landlord
    and they own the structures that they have built on the sites. The leases are
    each for a term of one year but renewable for 20 years. (The leased sites and
    the cottages built thereon collectively will be referred to as the Cottages.)
    In their Agreed Statement of Facts, the parties agreed that the Cottages on the
    Landlords property are similar to those located on the Timberlakes land
    considered by this court in
Matthews
.

[4]

In 2012, the respondents applied to the Landlord and Tenant Board for
    rent rebates.

[5]

Although the Landlord acknowledged that the
Matthews
decision
    applied to the respondents Cottages, it argued that the
RTA
could not
    apply to them without rendering those tenancies void. The Landlord based its
    argument on the subdivision control provisions of the
Planning Act
(the 
PA
). Specifically, the Landlord contended that although the
    leases were at most 20 years in duration, the security of tenure provisions of the
RTA
would extend the tenancy agreements for the Cottages beyond 21
    years, thereby contravening the subdivision control provisions of the
PA
,
    with the result that the tenancy agreements would not create or convey any
    interest in land:
PA
s. 50(21). In order to avoid that result, the
    Landlord submitted that the Board should find that the respondents Cottages
    were not subject to the
RTA
, but to the
Commercial Tenancies Act
,
[3]
and dismiss their rent rebate applications.

[6]

The Board rejected the Landlords argument, holding that the respondents
    tenancies were subject to the
RTA
and, based on its interpretation of
    s. 50(3) of the
PA
, their leases were not void under the
PA
.
    It ordered the Landlord to rebate to the respondents part of the rent they had
    paid for 2011 and 2012. The Divisional Court dismissed the Landlords appeal.
[4]
Leave to appeal to this court was granted.

[7]

For the reasons set out below, the appeal is dismissed.

FACTS

[8]

The facts are not in dispute. At the hearing before the Board, the
    parties filed an Agreed Statement of Facts. As was the case in
Matthews
,
    the three one-acre sites leased by the respondents contain cottages built in
    the 1980s. Access to one Cottage was by road; to the other two Cottages, by
    boat or snowmobile.

[9]

Although the respondents original leases were with the Railway, in June
    2008, each of them entered into a new lease agreement with the Landlord. Each
    lease was for a term of one year, with an automatic right of renewal for nineteen
    further one-year terms, subject to a 30-day notice to terminate before each
    renewal.  The leases would terminate without any right of further renewal on
    the 20
th
anniversary of the lease date.

HEARING BEFORE THE LANDLORD AND TENANT BOARD

[10]

Section
    135(1) of the
RTA
enables a tenant of a rental unit to apply to the
    Board for an order that the landlord repay any money collected in contravention
    of the
Act
. In March 2012, the three respondents each filed with the
    Board applications for rent rebates against the Landlord by using the
    standardized Form T1 entitled Tenant Application for a Rebate. The respondents
    argued in their applications that the Landlord had imposed unlawful rents for
    the years 2009 through 2011 and, as a result, had collected rents for those
    years in excess of the lawful rents permitted under the
RTA
. The respondents
    contended that the rent increases imposed by the Landlord were void. They
    sought rent rebates in the following amounts: (i) Nanne - $4,353.96; (ii)
    Pasternak - $3,903.99; and, (iii) Campbell - $3,175.83.

[11]

The
    Board held that the rents charged by the Landlord since 2008 were illegal and
    ordered the Landlord to pay the respondents rebates for the two years 2011 and
    2012  the maximum period recoverable due to
RTA
s. 135(4)  specifically,
    rebates of $1,181.11 to Nanne, $1,083.19 to Pasternak, and $926.68 to Campbell.

[12]

Before
    the Board, the Landlord argued that although the leases for the three Cottages
    were for a term of no more than 20 years, the deemed renewal of term provision
    in
RTA
,

s. 38(1) would transform them into leases of
    indefinite duration.
RTA
s. 38(1) provides:

38. (1) If a tenancy agreement for a fixed term ends and has
    not been renewed or terminated, the landlord and tenant shall be deemed to have
    renewed it as a monthly tenancy agreement containing the same terms and
    conditions that are in the expired tenancy agreement and subject to any increases
    in rent charged in accordance with this Act.

[13]

The
    Landlord argued that these leases would then contravene the subdivision control
    requirements of
PA
s. 50(3) which states:

(3)  No person shall convey land by way of a deed or
    transfer, or grant, assign or exercise a power of appointment with respect to
    land, or mortgage or charge land, or enter into an agreement of sale and
    purchase of land or
enter into any agreement that has the
    effect of granting the use of or right in land directly or by entitlement to renewal
    for a period of twenty-one years or more unless


(a) the grantor by deed or transfer, the person granting,
    assigning or exercising a power of appointment, the mortgagor or chargor, the
    vendor under an agreement of purchase and sale or the grantor of a use of or
    right in land, as the case may be,
does not retain the
    fee or the equity of redemption in, or a power or right to grant, assign or
    exercise a power of appointment in respect of, any land abutting the land that
    is being conveyed
or otherwise dealt with other than land that is the
    whole of one or more lots or blocks within one or more registered plans of
    subdivision  [Emphasis added.]

[14]

According
    to the Landlord, since the Cottages were not within a registered plan of
    subdivision and it retained the fee in abutting lands, the leases would
    contravene
PA
s. 50(3), with the result that under
PA
s.
    50(21) the leases would not create or convey any interest in land. The only
    way to avoid that result, in the Landlords submission, would be for the Board
    to hold that the Cottages were not subject to the
RTA
.

[15]

Although
    both the
RTA
and the
PA
contain sections which state that
    each Act prevails in the event one of its provisions conflicts with that of
    another statute,
[5]
the Landlord submitted that public policy considerations required the
    subdivision control provisions of the
PA
to prevail over the deemed
    tenancy renewal provisions of the
RTA
.

[16]

The
    Board rejected the Landlords submission, holding that the deemed renewal of
    residential tenancies right contained in
RTA
s. 38 did not conflict
    with
PA
s. 50(3) because the latter section only applied to
    agreements of 21 years or more, not to a statutory provision for security of
    tenure, such as
RTA
s. 38(1). The Board also found that even if the
    lease agreements were void under
PA
s. 50(21), the tenancies would
    continue to be subject to the
RTA
.

REASONS OF THE DIVISIONAL COURT

[17]

The
    Divisional Court dismissed the Landlords appeal. The court found it
    unnecessary to determine the applicable standard of review as it held that the
    Boards decision was correct. At paras. 22-23 of its  reasons, the Divisional
    Court stated:

In my view, the Board correctly interpreted s. 50(3) and
    correctly observed that the Landlords interpretation of the subsection would
    lead to an absurd result. The wording of section 50(3) is directed at the
    parties
entering into an agreement that has the effect
of directly or indirectly providing for the use of the land for more than 21
    years. In other words, for a lease to be void, it is the agreement entered into
    by the parties, not a statutory provision, that must have the effect of
    providing for a term of usage of more than 21 years.

Such an interpretation is consistent with the legislatures
    intention to prevent people from circumventing the subdivision control
    provisions of the
PA
by entering into leases with a term of more than
    21 years and consistent with the remedial purpose of the
RTA
to
    protect residential tenants in Ontario. [Emphasis in original.]

[18]

In
    its appeal to this court, the Landlord seeks to set aside the orders of the
    Divisional Court and to dismiss the respondents applications to the Board.

[19]

The
    Board intervened on the issue of the standard of review to be applied to its
    decisions, but took no position on the merits of the appeal.

ANALYSIS

Effect of the
Matthews
decision

[20]

The
    Landlord argues that even though the respondents Cottages fall within the
    definition of rental units in the
RTA
, s. 50(3) of the
PA
renders
    the leases void because of the operation of
RTA
s. 38(1). Therefore,
    argues the Landlord, the respondents cannot rely on the rent control provisions
    in the
RTA
.

[21]

In
    our view, that argument is not open to the Landlord in the context of this appeal.
    In
Matthews
, this court held that the rent control provisions of the
RTA
applied to the land leases in question in that case. The parties agreed
    that the land leases in
Matthews
were similar to the land leases in
    the present case. The Board and the Divisional Court were bound by
Matthews
when determining the respondents applications for a rent rebate.

[22]

Although
    the court in
Matthews
was not directed to the possible conflict
    between
PA
s. 50(3) and
RTA
s. 38(1), the Landlord has not
    directly asked this court to overrule
Matthews
, nor did it request that
    a five-judge panel be constituted.

In fact, the Landlord did not
    expressly take the position that
Matthews
was wrongly decided (though
    in oral argument it acknowledged that were we to accede to its argument, our
    decision would contradict
Matthews
).

[23]

Consequently,
    in light of the way this appeal has been presented, this court is not in a
    position to
overrule
Matthews
and hold that the respondents cannot rely on the rent
    control provisions of the
RTA
in
    respect of their Cottages: see
Cumming v. Peterborough Police Association
,
[6]

R. v. Labrecque,
[7]
and
Royal
Bank of Canada v. Trang
.
[8]


[24]

In
    support of its position that this court should consider the
PA
issue
    and the effect of the application of the
RTA
to land lease communities
    in Ontario, the Landlord argued in its factum that the
RTAs
application
    to the respondents Cottages could have disastrous consequences for the
    orderly development and environment of Ontario. However, this submission
    ignores the
Land Lease Statute Law Amendment Act, 1994
,
[9]
which simultaneously amended both the
PA
and Part IV of the
Landlord
    and Tenant Act
[10]
(predecessor to the current
RTA
) to recognize the category of land
    lease community home. At that time, the
PA
was amended to prohibit the
    future construction of land lease community homes except on parcels of land
    within a registered plan of subdivision or which fall within the exemptions of
    the present
PA
ss. 50(3)(b) or 50(5)(a) (which apply where a grantor
    does
not
retain the fee in abutting lands). The prohibition
    in that amendment is now found in
PA
s. 46, which provides:

46(1)

parcel of land means a lot or block within a registered plan
    of subdivision or any land that may be legally conveyed under the exemption
    provided in clause 50 (3) (b) or clause 50 (5) (a).



(2.1) Unless otherwise authorized by a by-law in force under
    section 34 or an order of the Minister made under clause 47 (1) (a), or a
    permit issued under section 13 of the Public Lands Act,
no
    person shall construct or erect or locate or use or cause to be constructed,
    erected, located or used a land lease community home except on a parcel of land
    as defined in subsection (1)
, and in no case except as otherwise so
    authorized shall any person construct, erect, locate or use or cause to be
    constructed, erected, located or used more than one land lease community home
    on any such parcel of land. [Emphasis added.]

[25]

Therefore,
    there is no concern that future developers could evade the subdivision control
    provisions of the
PA
by entering into 20-year land leases where the
    parcels of land are not part of a registered plan of subdivision.

Indefinite renewal of pre-1994
    land leases

[26]

The
    underlying issue in this dispute is whether the rent control provisions of the
RTA
apply to the respondents Cottage leases (which replaced leases that
    pre-existed the 1994 amendments and therefore were not affected by the
    amendments).
[11]
As discussed, that issue was decided in
Matthews
.

The
    question of whether the leases are subject to the indefinite, automatic renewal
    provisions of the
RTA
 and if so, whether that would create a
    conflict with
PA
s. 50(3) 

should not, and need not, be decided
    in the context of the present appeal.

[27]

At
    the time of the 1994 amendments, the
Landlord and Tenant Act
did not
    provide for a tenants right to indefinite renewal or security of tenure; the
    security of tenure that exists today in the
RTA
was not available to
    tenants until 1997, with the enactment of the
Tenant Protection Act, 1997
.
[12]

[28]

It
    is therefore arguable whether the legislature, in simultaneously enacting
PA
s. 46 and adding land lease communities to the
Landlord and Tenant Act
,
    had the intention to allow indefinite, automatic renewal of existing 20-year
    land leases that were not part of a registered plan of subdivision.

[29]

In
    the proper context, it may be open to a party to raise the issue of the possible
    conflict between
PA
s. 50(3) and
RTA
s. 38(1) as these
    provisions apply to pre-1994 land leases, potentially including the respondents
    Cottage leases.

[30]

However,
    in the current appeal, along with the failure to address the conflict with the
Matthews
decision or seek to have a five-judge panel reconsider that decision, the
    parties did not direct the court to
PA
s. 46, or provide any guidance
    on how to approach or interpret the 1994 amendments. Nor did they provide this
    court with evidence regarding the number of pre-1994 land lease communities that
    are not subject to a registered plan of subdivision, which evidence might well have
    assisted the court in addressing the policy arguments raised by the Landlord.
    Without evidence and robust argument of these issues, this court is not in a
    position to decide the legal question in the full context of the potential
    effects of the application of
RTA
s. 38(1) on the Cottage or similar leases.

DISPOSITION

[31]

For
    these reasons, the appeal is dismissed. On the issue of an application for a
    rent rebate, we are bound by the result in
Matthews
, and the Landlord
    did not request a review of that decision by a five-judge panel. The Boards
    decision to grant rent rebates to the Tenants for 2011 and 2012 stands.

[32]

The
    parties agreed that the successful party should be awarded costs of the appeal
    in the amount of $12,000. The Board did not seek any costs. Accordingly, we
    award the Tenants costs fixed at $12,000, inclusive of disbursements and HST.

Released: June 5, 2015 (KF)

K.
    Feldman J.A.

M.L.
    Benotto J.A.

David
    Brown J.A.





[1]
2010 ONCA 468.



[2]
S.O. 2006, c. 17.



[3]
R.S.O. 1990, c. L.7.



[4]
2014 ONSC 1012 (Div. Ct.).



[5]

RTA
s. 3(4);
PA
s. 71.



[6]
2013 ONCA 670, at para. 3.



[7]
2011 ONCA 360, at para. 5.



[8]
2014 ONCA 883, at paras. 38-39.




[9]
S.O. 1994, c. 4.



[10]
R.S.O. 1980, c. 232.



[11]
Section 46 does not apply to land lease communities that existed prior to 1994
    (including the community at issue). Section 46(4) provides:

This section does not apply to prevent the continued
    use in the same location of any land lease community home that,

(a) was constructed, erected or
    located and in use prior to the day the Land Lease Statute Law Amendment Act,
    1994 receives Royal Assent



[12]
S.O. 1997, c. 24.


