



COURT OF APPEAL FOR ONTARIO

CITATION: Honsberger v. Grant Lake Forest Resources Ltd.,
    2019 ONCA 44

DATE: 20190125

DOCKET: C65196

Feldman, Pepall and Pardu JJ.A.

BETWEEN

Floyd A. Honsberger

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd.

Respondent

(Appellant)

BETWEEN

Danny Lacasse

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd. and Facts Ltd.

Respondent

(Appellant)

BETWEEN

Trevor Laing

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd.

Respondent

(Appellant)

BETWEEN

Ivan Mousseau

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd.

Respondent

(Appellant)

Paul A. Johnson, for the appellant Grant Lake Forest
    Resources Ltd.

Kenneth Hale, for the respondent Floyd A. Honsberger

Eli Fellman and Brian Blumenthal, for the Landlord and
    Tenant Board

Heard: October 18, 2018

On appeal from the
    order of the Divisional Court (Justice Kiteley, Justice Conway and Justice
    Mulligan), dated October 11, 2017, with reasons reported at 2017 ONSC 6091.

Pepall J.A.:

Introduction

[1]

This appeal addresses the effect of increases of rent by the landlord without
    notice under the
Residential Tenancies Act
, 2006, S.O. 2006, c.17 (
RTA
) where the parties and the premises
    subject to both new and old tenancy agreements are the same.

Facts

[2]

Algoma Central Railway owned land north of Sault Ste. Marie in northern
    Ontario. The land was divided into leased lots on which tenants constructed
    their own cottages. Algoma Central Railway sold one block of leased land to
    Algoma Timberlakes Corporation and another block to Michipicoten Forest
    Products. Michipicoten Forest Products sold its block to the appellant, Grant
    Lake Forest Resources Ltd., in January 2014.

[3]

The respondents Floyd Honsberger, Danny Lacasse, Trevor Laing and Ivan
    Mousseau were tenants of Algoma Central Railway and/or Michipicoten Forest
    Products and are now tenants of the appellant (the Tenants). Each of the
    Tenants has built a cottage on their rental property. There are approximately 435
    similarly tenanted sites on land previously owned by Algoma Central Railway.

[4]

Each tenancy agreement provided for an initial fixed term of one year
    with 19 automatic one year renewals unless either party, at least 30 days prior
    to the year-end, gave notice to the other terminating the agreement at the end
    of that year. The rent was fixed but could be increased annually by a
    percentage increase not greater than the annual percentage increase in the
    Consumer Price Index. Each tenancy agreement contained a clause that provided
    that at the end of the 20th year, the agreement would terminate without any
    right of further renewal.

[5]

When the 20 year agreements expired in 2008 and 2009, believing that the
    tenancy agreements did not fall within the scope of the RTA, the Tenants signed
    new tenancy agreements. The rents were increased significantly for each of the
    Tenants; for example, the annual rent for Mr. Honsberger went from $370.83 to $1,527.00,
    an increase of in excess of 411%. The Tenants were not served with any notices
    of rental increases pursuant to s. 116(1) of the RTA.

[6]

The Tenants paid the new increased rent to the appellant for six to
    eight years.

[7]

In 2010, in
Matthews v. Algoma Timberlakes Corp.
, 2010 ONCA
    468, 102 O.R. (3d) 590, this court determined that leases for cottage sites
    owned by Algoma Timberlakes Corporation and adjacent to those in issue on this
    appeal were governed by the
RTA
and were therefore protected by its provisions.

[8]

In light of that decision, in 2015 and 2016, the Tenants applied to the
    Landlord and Tenant Board (the LTB) for a rent abatement on the basis that
    the rental increases were illegal. Because of the one year limitation period
    under s.136 of the RTA, they only sought repayment for the one year preceding
    the filing of their applications.

Landlord and Tenant Boards Decisions

[9]

The LTB dealt first with Mr. Honsbergers application. In a decision
    that was rendered on January 21, 2016, the LTB concluded that the lawful rent for
    Mr. Honsberger was $1,527.

[10]

By
    interim order dated March 21, 2016, an interim stay of the decision was issued
    by Vice-Chair Charron of the LTB. She then issued a review order on April 29,
    2016. Applying the
Matthews
decision, she noted that the rental
    property was subject to the RTA. She reproduced s. 38 of the RTA entitled
    Deemed renewal where no notice, and observed that the tenancy agreement had
    not been renewed with the same terms and conditions, nor had the tenancy been terminated.
    She went on to state: subsections 116(1) and (4) of the [RTA] prevent a
    landlord from increasing the rent for a rental unit without first giving at
    least 90 days written notice of the increaseif notice is not given any
    increase is void based on the Court of Appeal decision
Price v. Turnbull's
    Grove Inc.
[2007 ONCA 408].

[11]

The
    Vice-Chair held that the increases in rent starting in 2008 and following were
    illegal, as no 90-day notice of rent increase had been given as required by s.
    116(1). She found the lawful rent to be $370.83 and ordered repayment of the excess
    rent collected by the landlord in the one year prior to the application plus
    $45 for costs.

[12]

The
    three other respondents received similar results in their applications, with
    only the amount of overpayment varying slightly.

[13]

The
    appellant appealed to the Divisional Court.

Divisional Court Decision

[14]

The
    Divisional Court heard the four appeals together. The Court concluded that the
    decisions of the LTB were reasonable, and that its finding that the rent
    increases were void warranted deference. Accordingly, the Divisional Court
    dismissed the appeals.

[15]

The
    appellant was granted leave to appeal from that dismissal.

Issues on Appeal

[16]

The
    appellants primary argument is that no notices of rental increases were
    required because s. 120(1) of the RTA prohibits rent increases during the term
    of a tenancy. Counsel submits that the new tenancy agreements were entered
    into when the old agreements had already expired, thus constituting a new term
    of tenancy. The appellant also advances other grounds relating to the LTBs
    reliance on s.38 (1) of the LTA, freedom of contract, and the inadequacy of the
    Divisional Courts reasons. For the following reasons, I would not give effect to
    any of these grounds and would therefore dismiss the appeal.

Analysis

(1)

Standard of Review

[17]

When
    this court considers a decision of the Divisional Court reviewing a decision of
    an administrative tribunal, it steps into the shoes of the Divisional Court
    and asks whether the Divisional Court identified the appropriate standard of
    review and applied it correctly: see
Agraira v. Canada (Public Safety and
    Emergency Preparedness)
, 2013 SCC 36, [2013] 2 S.C.R. 55, at paras. 45-47;
Onyskiw v. CJM Property Management Ltd.
, 2016 ONCA 477, at para. 27.
    Where an administrative tribunal interprets or applies its home statute, the
    standard of review is presumptively reasonableness:
Onyskiw
at para.
    28;
Alberta (Information and Privacy Commissioner) v. Alberta Teachers'
    Assn.
, 2011 SCC 61, [2011] 3 S.C.R. 654, at para. 39.

[18]

Determining
    whether notices of rental increases were required under s. 116(1) of the RTA is
    one of the LTBs core functions. The Divisional Court properly identified and
    applied a reasonableness standard of review. Indeed, the appellant does not
    argue to the contrary.

(2)

Purpose of the Act

[19]

As
    stated by the Supreme Court in
Bell ExpressVu Limited Partnership v. Rex
,
    2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26, citing E.A. Driedger,
Construction
    of Statutes
, 2nd ed. (Toronto: Butterworths, 1983), at p. 87, 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. This court has described the RTA as
    remedial legislation having a tenant protection focus:
Metropolitan
    Toronto Housing Authority v. Godwin
, 161 O.A.C. 57, at para. 19. 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:
Price
    v. Turnbull's Grove Inc.
, 2007 ONCA 408, 85 O.R. (3d) 641, at para. 26.
    See also the
Legislation Act
2006, c. 21, Schedule F, s. 64 (1);
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.).

(3)

Statutory Provisions

[20]

Section
    1 of the RTA describes its purpose: to provide protection for residential
    tenants from unlawful rent increases and unlawful evictions, to establish a
    framework for the regulation of residential rents, to balance the rights and
    responsibilities of residential landlords and tenants and to provide for the
    adjudication of disputes and for other processes to informally resolve
    disputes.

[21]

Section
    3(1) states that apart from Part V.1 (which applies to non-profit
    co-operatives), the RTA applies despite any agreement or waiver to the
    contrary. Section 110 of the RTA provides that no landlord shall increase the rent
    charged to a tenant for a rental unit, except in accordance with Part VII of
    the Act, and s.111 provides that a landlord shall not charge more than the
    lawful rent permitted under the Act.

[22]

Section
    113 states that, subject to s.111, the lawful rent for the first rental period
    for a new tenant under a new tenancy agreement is the rent first charged to the
    tenant. Thus, new tenancies with new tenants are explicitly exempted from the
    rental increase provisions of the Act.

[23]

Part
    VII of the Act encompasses section 116. That section requires that notice be
    given prior to a rental increase. Specifically, it states:

116(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 landlords intention to do so.

(2) Subsection (1) applies even if the rent charged is increased
    in accordance with an order under s. 126.

(3) The notice shall be in a form approved by the Board and
    shall set out the landlords 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 the landlord must give a new notice
    before the landlord can take the increase.

[24]

According
    to s.120(1) of the
RTA
,
No landlord may increase the rent charged to a tenant, or to an assignee under
    section 95,
during the term of the tenancy
by more than the guideline 
    [emphasis added] subject to certain inapplicable exceptions. The guideline is established
    by the Minister of Municipal Affairs and Housing each calendar year and shall not
    be more than 2.5%. Under s.119, a landlord may only increase the rent once
    every 12 months.

[25]

Section
    38 (1) of Part VII of the
RTA
is entitled Deemed renewal where no notice. That subsection provides:

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.

(4)

Grounds of Appeal

[26]

As
    mentioned, the crux of the appellants argument is that when the Tenants
    entered into the new one-year tenancy agreements, the term of the tenancies was
    severed, and thus the rental increase and notice provisions of the RTA were
    inapplicable, and the new rent lawful.

[27]

There
    are strong factors weighing against the appellants interpretation of the RTA.

[28]

First,
    s. 113 of the RTA expressly permits the establishment of a new rental rate with
    a new tenant. Recognition of a similar carve-out for an existing relationship
    involving the same tenant, the same landlord, and the same premises would undermine
    the purpose of the Act. A renewing tenant is not a new tenant. Put differently,
    the appellants proposed statutory interpretation is inconsistent with the
    scheme of the
RTA

s
    rent control provisions considered as a whole. The structure and purpose of the
Act
would be undercut if at the
    commencement of each year, a landlord could increase the rent simply by
    entering into a new tenancy agreement. A tenancy agreement involving the same
    parties and the same premises requires the landlord to give 90 days notice of
    an increase pursuant to the clear provisions of the RTA. This conclusion is
    also consistent with this courts decisions in
Matthews and Nanne v.
    3011650 Nova Scotia Limited (Michipicoten Forest Resources)
, 2015 ONCA 391.

[29]

Second,
    the words during the term of their tenancy found in s. 120(1) must be read in
    context. The language in this section addresses the
amount
that a
    landlord may charge; it does not detract from or limit the Part VII provisions
    of the
RTA,
including the
    notice requirement. Any increase in rent required notice under s. 116 of the
    Act. Additionally, the increase could not exceed the annual guideline amount.

[30]

Third,
    the appellant did not advance the s. 120(1) argument before either the LTB or
    the Divisional Court. Entirely new issues should typically not be entertained
    on appeal:
Orr v. Metropolitan Toronto Condominium Corp. No. 1056
, 2014
    ONCA 855, at para. 87.

[31]

As
    for the appellants argument that the LTB inappropriately relied on s. 38(1) of
    the Act, the Divisional Court recognized that s. 38(1) was inapplicable to this
    case but agreed with the LTB that the landlord was required to give 90 days
    notice of an increase pursuant to Part VII of the Act. I agree with that determination
    and would not give effect to this ground of appeal. The Divisional Court did
    not err in determining that the decisions of the LTB were reasonable.

[32]

There
    is also no basis for the appellants remaining arguments. As is clear from the
    RTA and particularly s. 3 of the Act, the parties freedom to contract is expressly
    made subject to the RTAs application. The Divisional Court did not err in
    refusing to validate rental increases that, despite their origin in contract,
    were constrained by the provisions of the RTA that required written notice. See
    also
1086891 Ontario Limited v. Barber
, 284 D.L.R. (4th) 568 (Div.
    Ct.).

[33]

Lastly,
    the reasons of the Divisional Court were sufficient. The reasons were
    responsive to the live issues in the case and afforded
meaningful
    appellate review. See
R. v. Sheppard
, 2002 SCC 26
,
[2002] 1 S.C.R. 869
, at para. 24
;
Diamond Auto Collision
    Inc. v. The Economical Insurance Group
, 2007 ONCA 487
,
227 O.A.C. 51
, at para. 11
;
Dovbush v. Mouzitchka
, 2016 ONCA 381
,
131 O.R. (3d) 474
, at paras.
    21-22
; see also
R. v. R.E.M.
, 2008 SCC 51
,
[2008] 3 S.C.R. 3
, at paras. 10-35
and 55
.

[34]

Turning
    to costs, as agreed, there will be no costs order in favour of or against the LTB.
    The appellant shall pay the costs of Mr. Honsberger fixed in the amount of $10,000,
    inclusive of disbursements and HST. This costs award encompasses the costs of
    the leave to appeal motion that was reserved to this panel.

Released: K.F. January 25, 2019

S.E.
    Pepall J.A.

I
    agree. K. Feldman J.A.

I
    agree. G. Pardu J.A.


