LTB Order LTB-T-069440-22

Order under Section 21.2 of the Statutory Powers Procedure Act A. 2023 ONLTB 49767 (CanLII) Section 57 of the Residential Tenancies Act, 2006 Citation: E. v A., 2023 ONLTB 49767 Date: 2023-07-14 File Number: LTB-T-069440-22 (TST-08870-19) In the matter of: 703, 112 GEORGE STREET TORONTO ON M5A2M5 Between: J. E. T. S. E. A. G. A. Landlord Your file under file number TST-08870-19 has been moved to the Landlord A. Tenant Board’s new case management system, the Tribunals Ontario Portal. The new file number is set out above. J. E. A. S. E. (the 'T.’) applied for an order determining that G. A. (the 'Landlord') gave a notice of termination in bad faith. The matter was resolved by way of order TST-088700-19 issued on July 6, 2022 (the ‘Original Order’), granting the T.’ application. Review Request On August 4, 2022 the Landlord requested that the Original Order be reviewed A. that the order be stayed until the Landlord’s request to review the order is resolved. The Landlord submitted, in the request for review, that the Original Order failed to mention why the Member could not find the Landlord’s testimony about his intentions to be credible. The Landlord submitted that he had been left with no choice but to vacate the property A. re-rent the T.’ unit (the ‘Unit’) after taking possession. The Landlord submitted that the Member Order Page 1 of 7  File Number: LTB-T-069440-22 acknowledged, in the Original Order, that there had been a change in circumstances but failed to consider, in the reasons, the impact on the Landlord of that change. The Landlord also submitted that the Member who issued the Original Order failed to consider, or to address in reasons, evidence about the Landlord’s intentions at the time the N12 notice of 2023 ONLTB 49767 (CanLII) termination was served. The Landlord submitted that this failure constituted a serious error. The Landlord’s request for review was first heard by video conference on September 19, 2022. The Tenant J. E. (‘JE’), on behalf of both T., the Landlord A. the Landlord’s representative, C. Aylwin, attended the hearing. As set out in Interim Order dated November 16, 2022, I determined that there was a serious error in the in the Original Order because it failed to adequately address evidence about the Landlord’s intentions at the time the N12 notice of termination was served A./or how any change in circumstances may have affected the Landlord’s position about his alleged intentions. I noted, in the Interim Order, that if I were to find that bad faith has been made out after a new hearing was held, the remedies set out in the Original Order would stand. There was insufficient time on September19, 2022 to complete the rehearing A. the proceeding was adjourned to December 9, 2022. That hearing was rescheduled, on consent, at the request of the Landlord as a witness for the Landlord was undergoing medical treatment A. was unable to testify that day. The hearing was completed by video conference on May 18, 2023. The Landlord, the Landlord’s representative, C. Alwin, A. the Tenant JE, on behalf of both T., attended the hearing. T. Sword (‘TS’) attended a portion of the hearing as a witness for the Landlord. Determinations: 1. Subsection 57(1)(a) of the Residential Tenancies Act, 2006 (the ‘Act’) provides that in order to obtain a remedy the T. must establish that: • The Landlord gave an N12 notice of termination under section 48 of the Act in bad faith; • The T. vacated the rental unit as a result of the notice or as a result of an order made by the Board based on the notice; A. • No person referred to in clause 48(1)(a), (b), (c) or (d) occupied the rental unit within a reasonable time after the T. vacated the rental unit. Order Page 2 of 7  File Number: LTB-T-069440-22 2. Subsection 48(1) of the Act provides that a landlord may, by notice, terminate a tenancy if the landlord in good faith requires possession of the rental unit for the purpose of residential occupation for a period of at least one year by, inter alia, the landlord. 3. The question before me is whether the evidence before the Board establishes, on a 2023 ONLTB 49767 (CanLII) balance of probabilities, that the Landlord gave the notice of termination under section 48 in bad faith – that is, whether the first branch of the test set out in paragraph 1 above was properly made out. 4. Subsections 57(5(a) A. (b) of the Act provide that it is presumed that the landlord gave the notice of termination in bad faith if the landlord re-rents the Unit within one year of the tenant vacating, unless the contrary is proven on a balance of probabilities. 5. It was uncontested both that the Landlord advertised the Unit for rent A. entered into a tenancy agreement in respect of the Unit with someone other than the T. within roughly six months from the date the T. vacated the Unit. Therefore, the presumption of bad faith applies A. the onus shifts from the T. to the Landlord to establish, on a balance of probabilities, that the Landlord gave the N12 notice of termination in good faith. 6. I find, as follows, that the Landlord has not refuted the bad faith presumption A. that the first branch of the subsection 57(1)(a) test has been made out. Therefore, the remedies set out in the Original Order will remain. 7. Relevant facts relating to the bad faith allegation were largely undisputed A. were as follows: • As of January 2019 the Landlord was living with a platonic friend, TS, in a 1300 square foot unit (the ‘Landlord’s Prior Unit’) owned by the Landlord A. members of his family. TS did not pay any rent or contribute to housing charges at the Landlord’s Prior Unit. The Landlord was allowing her to stay with him as a favour, as TS was going through some financial difficulties involving, in part, a large HST debt; • The Landlord faced financial challenges which made his continued occupation of the Landlord’s Prior Unit untenable. He owed roughly $70,000.00 in consumer debt (Refer Exhibit 5, being credit statements at pages 26 though 39 of the Landlord’s document brief). He could not afford the carrying charges of the Landlord’s Prior Unit, together with those for other properties which he owned. In order to save money he determined that it would be best for him to move into cheaper accommodation. He determined that the Unit was the most feasible for him for that purpose; Order Page 3 of 7  File Number: LTB-T-069440-22 • The Landlord met with the T. in early January 2019 A. explained his intent to move into the Unit A. the rationale for that move. (Refer Exhibit 1, being January 8, 2019 email at page 12 of T. materials). He served the T. with an N12 form in January 2019, setting a termination date of March 31, 2019. He advised the T. that if they were to find new accommodation ahead of that date they could 2023 ONLTB 49767 (CanLII) discuss partial rent payment; • The T. found new accommodation A. vacated the unit on February 14, 2019, ahead of the March 31, 2019 N12 termination date; • The Landlord A. TS moved into the unit in February 2019, shortly after the T. vacated. They quickly found that the roughly 600 square foot area was too small to comfortably accommodate them both. TS herself had a condo which she had been renting out. Shortly after moving into the T.’ unit, A. prior to the March 31, 2019 termination date in the N12 notice, TS decided that she would be better off financially to sell her own condo A. retire her HST debt by way of a lump sum payment. She sold the condo in mid-March 2019. She then bought a condo which had come up for sale in a building in which she had been interested. She purchased that condo on April 30, 2019 for a closing date in August 2109; • When TS purchased the new condo in March 2019 she suggested that the Landlord come to live with her in that condo. It was a two bedroom unit A. was substantially larger than the Unit. This scenario appealed to the Landlord as TS would not be charging him for accommodation A. the arrangement would allow him to further improve his financial position. He A. TS moved out of the Unit A. into the condo in or around August 2019, when the purchase of the condo closed; • The Landlord listed the Unit for rent in August 2019. The Unit was rented out for a higher amount than that paid by the T.. New T. took occupancy at the beginning of September 2019; A. • The Landlord lived in TS’s condo for a short time – roughly 10 months. Once the Landlord’s financial problems were addressed, mainly through newly acquired employment, he moved back into the Landlord’s Prior Unit – the one he had vacated to move into the T.’ Unit. 8. The Landlord takes the position that at the time the N12 notice was served he had a good faith intention to take over the T.’ unit for his own residential use. The Landlord submits that any finding of bad faith must be based solely on consideration of what was in the Landlord’s mind at the time the N12 notice was served. His decision to vacate A. rerent the unit was based on a change in circumstances subsequent to the service of the N12 notice A. was not indicative of any initial bad faith intent. Order Page 4 of 7  File Number: LTB-T-069440-22 9. My determination about the Landlord’s intentions must be made on a contextual basis, in consideration of the circumstances, events A. decisions which followed the service of the N12 notice. While the Act describes the test in section 57 as being bad faith in the issuance of the notice, I must also consider the purposes of the Act, which include to balance the rights A. responsibilities of residential landlords A. T.. More 2023 ONLTB 49767 (CanLII) specifically, in interpreting A. applying sections 48 A. 57 of the Act, I must balance the rights of landlords to in good faith take occupancy of a unit for their own residential occupation for a period of at least one year with the rights of T. to security of tenure. This latter includes T.’ right to pursue a remedy at the Board if the landlord obtained the unit in bad faith A. does not live in the unit for at least one year. 10. Limiting the question of good faith to an exploration of the mind of the Landlord at the instant of serving the N12 notice, A. to ignore all the surrounding circumstances, would lead to results inconsistent with the objects of the Act. To require the T. to establish what was in the mind of the Landlord at the instant of the N12 notice being served, without regard to the surrounding circumstances A. to the behaviour of the Landlord subsequent to the service of the N12 notice, would upset the balance of interests which the Act aims to achieve (Refer CET-67272-17 (Re) A. TST-914-18 (Re)). 11. A number of Board decisions have found that an unforeseen change in circumstance that prevents the person listed in the N12 notice of termination from taking possession may result in a finding that it was not served in bad faith. (Refer TST-08803-19 (Re), CET25233-12 (Re) A. TST-63837-15 (Re)). The key question in the circumstances of the application before me, however, is whether the change in circumstance prevented the Landlord from maintaining possession for one year as required under section 48, further to the requisite intent behind the N12 notice. That is to say, did new, unanticipated, circumstances compel the Landlord to leave the unit – A. so not maintain possession for a year? 12. I find, as follows, that the events A. decisions which surround the service of the N12 notice A. the Landlord’s subsequent re-rental of the unit bely the Landlord’s testimony about his good faith intention to live in the unit for one year: • The good faith intention includes an element of commitment to at least one year of residency unless new, unanticipated circumstances render that commitment untenable; • The Landlord knew, or ought to have known, that the 600 square foot rental unit would be too small for both the Landlord A. TS to live comfortably for one year. When asked, during the hearing, whether he should have contemplated that the unit would have been uncomfortably small for TS A. himself, the Landlord simply testified that he hadn’t realized how tight it would be. I find this testimony to be unconvincing. The Landlord was fully aware of the size of the unit that he owned Order Page 5 of 7  File Number: LTB-T-069440-22 A. should reasonably have contemplated that accommodation by two friends would prove challenging; • The Landlord’s basis for the move into the unit was to save paying the substantial carrying costs at the Landlord’s Prior Unit A. to carry lower costs at the Tenant’s 2023 ONLTB 49767 (CanLII) unit. There was no dispute that the Landlord in fact enjoyed that cost reduction on moving into the unit. The circumstances in that regard remained unchanged; • There was no evidence of any necessity for the Landlord to leave the Unit when TS chose to move into the condo she had purchased. He A. TS were not in a partnership relationship. He had not collected rent from TS at the Landlord’s Prior Unit A. there was no evidence that he was compelled to rely on income from TS at the Unit. He already enjoyed a reduction in expenses with the move from the Landlord’s Prior Unit to the Unit. The Landlord acknowledged that he did not attempt to get a new roommate when TS moved to her new condo as “it wouldn’t make sense”. As I understood the Landlord’s testimony, the reason that it would not make sense was that it was more advantageous for him to move to the new condo with TS, live there rent free, A. re-rent the Unit than to stay in the Unit with or without financial contribution from a new roommate; • TS’s sale of her condo in March 2019 A. her subsequent purchase of the new condo constituted a change in circumstance which presented the Landlord with an opportunity to save further on expenses. It did not, however, constitute a change in circumstances which prevented the Landlord from continuing to live in the Unit for at least one year. His decision to avail himself of the new condo opportunity rather than stay in the Unit militates against a finding of an original commitment on his part at the time the N12 notice was served; A. • Within roughly a year A. a half of leaving the Landlord’s Prior Unit, the Landlord returned to live in that unit. According to the Landlord’s evidence, he obtained new employment subsequent to the onset of COVID, was able to turn his finances around A., with his stronger financial position, was able to return to the first unit; 13. I find that the Landlord’s change in circumstances did not constitute the type of change which compelled him to move from A. re-rent the Unit. I find that his actions were inconsistent with a finding that he was committed, in good faith, to living in the Unit for at least one year. I find that his testimony in that regard is refuted by his own actions A. find that he has failed to establish the requisite good faith to rebut the bad faith presumption st out in subsection 57(1)(a) of the Act. 14. As an aside, the Landlord lived in the Unit for a time after the T. vacated before rerenting it. The question of whether the third branch of the subsection 57(1)(a) test was satisfied was not raised by the parties. Nonetheless I note, in obiter, that an N12 notice given under section 48 of the Act stipulates that the landlord must be intending to live in the Order Page 6 of 7  File Number: LTB-T-069440-22 rental unit for at least one year. That requirement cannot be ignored when interpreting A. applying subsection 57(1) of the Act. A landlord cannot defeat an application under subsection 57(1) of the Act by simply occupying the subject unit for a nominal amount of time regardless of that landlord’s bad faith. 2023 ONLTB 49767 (CanLII) It is ordered that: 1. The T.’ application is granted A. the remedies set out in Order TST-08870-19 dated July 6 2022 shall stand, subject to modified dates, as set out in paragraphs 2 through 7 below. 2. The Landlord shall pay to the T. $50.00 for the cost of filing the application. 3. The Landlord shall pay to the T. $7,080.00. This amount represents all of the increased rent that the T. have incurred from February 2 2019 to January 31, 2020. 4. The Landlord shall pay to the T. $1,250.00 for the reasonable out-of-pocket expenses that the T. have incurred for moving expenses, the cost of renting a moving vehicle, gas, paid worker to help moving A. loss of wages. 5. The total amount the Landlord owes the T. is $8,350.00. 6. The Landlord shall pay the T. the full amount owing by August 22, 2023. 7. If the Landlord does not pay the T. the full amount owing by August 22, 2023, the Landlords will owe interest. This will be simple interest calculated from July 18, 2022 at 6.00% annually on the outstanding balance. August 11, 2023 ____________________________ Date Issued Lynn Mitchell Member, Landlord A. Tenant Board 15 Grosvenor Street, Ground Floor Toronto ON M7A 2G6 If you have any questions about this order, call 416-645-8080 or toll free at 1-888-332-3234. Order Page 7 of 7