Order under Section 57

Residential Tenancies Act, 2006

File Number: TST-72609-16

C.F. (“CF”) and K.L. (“KL”) (the 'Tenants') applied, to the Landlord and Tenant Board (the “Board”), for an Order determining that N.I. (“NI”) and R.E. (“RE”) (the 'Landlords'), gave a notice of termination in bad faith.

This application was heard in Toronto on August 22, 2016.

The Tenants attended the hearing and were self-represented. The Landlords attended the hearing and were represented by K.H., licensed paralegal.

N.E. (“NE”), the Landlords’ daughter, appeared as witness for the Landlords.

Determinations:

The Evidence

The Tenants’ Evidence

1. KL moved into the unit in July 1993. CF moved in on December 1, 2013. The monthly rent for the unit was $775.00.

2. The residential complex is a house. During the material time there were three units in the complex, including the Tenants’ unit.

3. On March 31, 2015, the Landlords served the Tenants with a Notice of Termination (“Form N12”), alleging that the Landlords required the rental unit to be vacated, on May 31, 2015, because the Landlords’ daughter, NE, intended to move into the unit for the purpose of residential occupation. At the time of service of the Form N12, the Tenants were paying the lowest rent in the complex.

4. On a few occasions prior to the service of the Form N12, Landlord RE told the Tenants that his daughter would be moving into the unit. After the service of the Form N12, the Tenants remained friendly with the Landlords, as they required a reference letter to give to prospective landlords. During ensuing conversations RE told KL that the Landlords’ daughter would not be living in the unit on a full-time basis as she worked in the western part of the city; rather the daughter would be occupying the unit “on weekends and party”.

5. The Tenants vacated the unit on May 31, 2015 in accordance with the Form N12 and moved to a new unit two blocks away. As the Tenants passed by the complex during the following months, and as the blinds in the unit were left open, that no one had moved into the unit. In the meantime, one of the Tenants ran into RE and was advised that the renovations were delayed due to an issue involving the contractor. Sometime around early December 2015, the Tenants noticed that the renovations started. On February 6, 2016, the Tenants returned to the complex to visit friends and observed that the renovations were essentially completed.

6. As the term of the lease on their new unit was coming to an end, the Tenants began, as a precaution, to look for another unit in the area in early 2016. It was at this time that they came across the unit advertised in March 2016, on the Internet, for a monthly rent of $1,395.00 plus hydro.

7. The Tenants contend that the Landlords served the Form N12 in bad faith in order to re-rent the unit at a higher monthly rent, due to the “gentrification” of the neighbourhood in recent years, and that the Landlord’s daughter did not move into the unit.

The Landlords’ Evidence

8. RE acknowledged having spoken to the Tenants, before serving the Form N12, about his daughter moving into the unit and stated that he did so to give the Tenants a “heads up”. RE testified that his daughter, NE, occupied the unit in early January 2016 and after the renovations were done. RE added that his daughter was involved in part of the renovations such as “picking the colours, etc.” RE testified that due to issues involving his “long term contractor” the renovations to the unit were completed in late 2015 or the beginning of 2016.

9. The Landlords’ and NE’s evidence was that, in June 2015, NE applied for employment closer to the unit at the Eaton Centre. However, at the end of August 2015, NE applied for, and secured, a “newly created management position” at her existing employer at Sherway Gardens mall. Up to the time that RE allegedly moved into the unit, she was living at her parents’ home, located much closer to her place of employment, and also attending Ryerson University.

10. NE testified that, upon moving into the unit in early January 2016, she realized that the commute from the unit to her employment made it difficult to manage her time for both work and school. Consequently, NE decided to move back to her parents’ home, which is located closer to her employment.

Legislation and Analysis

11. Subsection 57(1)(a) of the Residential Tenancies Act, 2006 (the ‘Act’) states:

The Board may make an order described in subsection (3) if, on application by a former tenant of a rental unit, the Board determines that,

(a) the landlord gave a notice of termination under section 48 in bad faith, the former tenant vacated the rental unit as a result of the notice or as a result of an application to or order made by the Board based on the notice, and no person referred to in clause 48 (1) (a), (b), (c) or (d) occupied the rental unit within a reasonable time after the former tenant vacated the rental unit;

12. Clearly, subsection 57(1) (a) of the Act articulates a three-part test. In order to be successful in their T5 application the Tenants must establish all three of the requirements of subsection 57(1)(a) on a balance of probabilities. First, that the Landlords gave a notice of termination under section 48 of the Act (the Form N12) in bad faith. Second, that the Tenants vacated the rental unit as a result of the N12 notice or a Board order based on the N12 notice. Third, that the person specified in the Form N12, NE in this case, did not move into the rental unit within a reasonable time after the Tenant vacated.

13. The determinative issues before me are whether the Landlords gave the Tenants the Form N12 in bad faith. In other words, what was the intention of the Landlords when they gave the Tenant the Form N12? And, did NE move into the rental unit within a reasonable time after the Tenant vacated?

14. Subsection 57(1) (a) of the Act contains no reference to a landlord’s motivation in requiring vacant possession for a landlord or a family member. As well, previous cases before the Board and Divisional Court have made it clear that motive is not especially important as long as there is good faith intention.

15. In considering landlord’s own use applications regarding whether a landlord (or a member of her/his family as described in the Act) genuinely intends to move into a rental unit, the Ontario Divisional Court in Beljinac v. Salter 2001 CanLII 40231 (ON SCDC), [2001] O.J. No. 2792 (Div. Ct.), referring to Justice Steele’s reasons in Feeney v. Noble (1994), 19, O.R. (3d) (Div. Ct.), observed that: “…the test of good faith is a genuine intention to occupy the premises and not the reasonableness of the landlord’s proposal.” Moreover, in Kennealy v. Dunne, the English Court of Appeal pronounced that a Landlord need only establish a bona fide wanted and immediate intention to occupy the premises as a residence.

16. For the reasons stated below, I have serious concerns about the veracity of the Landlords’ testimony and, consequently, about their credibility, which concerns lead me to conclude that, on a balance of probabilities, the Landlords did not serve the Form N12 to the Tenants in good faith.

17. Inconsistencies in a witness’s account will be relevant to credibility. However, only material or compelling inconsistencies are capable of giving rise to an inference of fabrication: R. v. Bennett (2003), 2003 CanLII 21292 (ON CA).

18. The effect of inconsistencies upon the credibility of a central witness was described by the British Columbia Court of Appeal in R. v. B.(R.W.) (1993), 40 W.A.C. 1, in part, as follows:

In this case there were a number of inconsistencies in the complainant's own evidence and a number of inconsistencies between the complainant's evidence and the testimony of other witnesses. While it is true that minor inconsistencies may not diminish the credibility of a witness unduly, a series of inconsistencies may become quite significant and cause the trier of fact to have a reasonable doubt about the reliability of the witness's evidence. There is no rule as to when, in the face of inconsistency, such doubt may arise but at the least the trier of fact should look to the totality of the inconsistencies in order to assess whether the witness's evidence is reliable. This is particularly so when there is no supporting evidence on the central issue, which was the case here.

19. In short, the Landlords’ evidence is that they required the unit for NE’s personal residential occupation as she “has become more independent since she has become a young adult in recent years.” However, the Landlords’, and NE’s, plans changed when it became evident that the commute from the unit to Sherway Gardens, where NE worked, was too “excessive”. The said commute made it difficult for NE to time-manage her work and school. The Landlords testified that they first came to realize that the commute from the unit to Sherway Gardens was too onerous sometime in August 2015 when NE began her new management level position with her existing employer at Sherway Gardens. In contrast, NE testified, in response to my question, that she only appreciated the problem with the commute in January 2016.

20. As I alluded to during the hearing, it stretches credulity to believe that NE and Landlords would only come to realize the excessive nature of the commute between Sherway Gardens and the unit in August 2015 or January 2016 and well after the Tenants were served with the Form N12. I say this because Sherway Gardens and the rental unit were located in the same place during, and for many years before, the material time and such location was well known to NE and the Landlords. Indeed, NE was employed at Sherway Gardens at the time that the Landlords served the Form N12 to the Tenants—the significant distance between the two locations should not have come as a surprise to anyone and I find the Landlords’ evidence in this regard implausible.

21. I do note that the Landlords and NE testified that NE interviewed for a position at the Eaton Centre, located closer to the unit, in July 2015. However, this was a job interview, which took place well after the Form N12 was served to the Tenants, and there was no evidence before me that there was any certainty that NE would secure that employment or that the interview was known to the Landlords and NE at the time that the Form N12 was served to the Tenants. Indeed, RE testified that NE’s employment at the Eaton Centre “never came to fruition”. While the Landlords put forth the Eaton Centre job interview in support of NE’s intention to move into the unit, coming as it did over two months after the Form N12 was served to the Tenants, I fail to see, especially given the lack of a plausible explanation in this regard, how the Landlords would have foreseen this interview taking place two months later at the time of service of the Form N12.

22. I have further serious difficulty with the Landlords’ evidence. In particular, NE testified that she only spent two or three nights in the unit in total. NI testified that NE occupied the unit “from time to time” in January 2016 and that there was no television in the unit—only a mattress. RE testified that NE spent approximately fifteen nights in the unit. NE testified, as did RE, that she did not take steps to change the address on her personal documents to the unit’s address. When asked if she purchased any furniture for the unit, RE testified that she was “just testing” the unit in January 2016. More telling in this regard was NE’s testimony on direct examination. NE was asked if she “moved into the unit” and she testified, “I didn’t move in. I stayed there a few times in January.”

23. Even if NE had a genuine intention to “test” the unit for a period of time in order to see if it was suitable given her circumstances at the time, there is ample case law to support the position that where the Landlord only requires the unit for temporary full-time occupation, termination should not follow: see MacDonald v. Richard, 2015 CanLII 34322 (ON LTB), 2008 CarswellOnt 638, Wiazek v. Armstrong [1994] O.J. No 2737 (Ont. Gen. Div.), McDonald v. Smith, [1993] O.J. No 1680 (Ont. Gen. Div.).

24. Further, I asked NE when she first realized that living in the unit was not working out for her and she testified “January 2016”, however, as outlined above, the Landlords’ evidence was that they first came to realize that the commute from the unit to Sherway Gardens was too onerous sometime in August 2015 when NE began her new management level position with her existing employer at Sherway Gardens. Given that the nature of the commute between the unit and NE’s place of employment was an issue of paramount importance, allegedly leading as it did to NE not remaining in the unit, this is a material inconsistency in the Landlord’s evidence.

25. The stated inconsistencies and implausibilities in the Landlords’ evidence strike at central or material issues before me and are, in my view, sufficient to sustain a global, adverse finding of credibility in relation to the Landlords’ testimony and other evidence. Consequently, I find, on a balance of probabilities, that NE did not have a genuine intention to reside in the unit as claimed at the time when the Landlords served the Form N12 to the Tenants and, as such, the Form N12 was served in bad faith.

26. I am also mindful of section 202 of the Act, which states:

Findings of Board

202. (1) 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. 2006, c. 17, s. 202.

27. The real substance of the transaction and the good faith of the parties are important in any application before the Board. In this case, the Landlords’ conduct has the appearance, on a balance of probabilities, of being geared towards getting the Tenants to leave the unit in order to allow the Landlords to re-rent the unit at a much higher monthly rent. Even if I were to give the benefit of the doubt to the Landlords and find that the real substance of their service of the Form N12 to the Tenants was so that their daughter could move into the unit, and for the reasons stated above the evidence points in another direction, in the end NE’s testimony made it clear that she had, at best, an intention to test the waters by staying at the unit in a non-committal fashion in order to see if it fit her then life circumstances. NE or the Landlords did not present any corroborating evidence in support of their contention that NE intended to permanently move into the unit for the purpose of residential occupation. On the contrary, and as stated above, the evidence revealed that the unit was unfurnished, NE took no steps to change her address on personal documentation and slept in the unit four nights at most. Indeed, she readily admitted that she did not move into the unit. Lastly, in this regard, KL’s affirmed testimony that RE told him that NE would not be living in the unit on a full-time basis as she worked in the western part of the city but rather that she would be occupying the unit “on weekends and party” went unchallenged during cross-examination by the Landlords’ legal representative.

28. For the foregoing reasons, the Tenants proved, on a balance of probabilities, that the Form N12 was served in bad faith, that the Tenants vacated the rental unit as a result of the Form N12 and that the rental unit was not occupied by the person named in the Form N12 within a reasonable time after they vacated. As the Tenants met each aspect of the test, they are successful on their T5 application and an Order will issue.

Remedies

29. The Tenants requested the following remedy pursuant to subsection 57(3) of the Act: “all of any portion of any increased rent that the former tenant has incurred or will incur for a one-year period after vacating the rental unit”. Curiously, the Tenants did not request compensation for “reasonable out-of-pocket moving, storage and other like expenses that the former tenant has incurred or will incur”, which is a remedy similarly permitted under subsection 57(3).

30. The Board is limited to considering the relief requested in an application: Beauge v. Metcap Living Management Inc., [2012] O.J. No. 1052 (Div. Ct). Further, the Board’s T5 application form clearly outlines the different remedies that can be applied for and the Tenants’ application was limited to the rent differential.

31. The Tenants claimed $9,900.00 for increased rent, which represents a monthly rent increase, in the sum of $825.00, for a one-year period after vacating the rental unit. The Tenants’ claim in this regard was well documented. The Tenants produced a copy of their new tenancy agreement showing a monthly rent in the amount of $1,600.00. While the rent increase may appear significant, and it is, it must be borne in mind that Tenant KL lived in the complex for twenty-three years before he was forced to vacate the unit as a consequence of the Landlord’s notice of termination given to the Tenants in bad faith and, as a result of KL’s long-term tenancy, the Tenants’ rent was well below market value. This is evident by the Landlords subsequently advertising the unit on the Internet for a monthly rent of $1,395.00 plus hydro.

32. The Tenants’ current unit is newer, slightly larger by seventy-five square feet, has central air conditioning, en suite laundry facilities and a balcony. The unit at issue had central air conditioning and the Tenants shared a deck. The fact that the current unit is much newer is not an issue for me as older units can be much more desirable for a variety of reasons.

33. In any event, the Tenants were placed in a situation where they were required, after a long-term tenancy, to find comparable accommodation in a neighbourhood in which they wanted to remain within sixty days. While the Landlords provided five listings of available units, ranging in price from $1,000.00 to $1,395.00 per month and purportedly in the general area of the Tenants’ current unit, I do not find that evidence helpful. While the listings provided state the location of the units, price, dimensions of the rooms and sometimes the amenities provided, the documents mainly furnish numbers, which are less than adequate to gauge the suitability of the units. The listings do not provide an insight into the state of the units and the residential complex. One of the lower priced listings does not provide any room dimensions. Equally important, the listings provided by the Landlords were not put to Tenants during the course of the hearing for explanation about why the said listings were not adequate or if the listings were visited and considered—the Landlords simply provided the documents to me without further comment. As well, while the listings refer to units that were listed for rent around the time that the Tenants were looking for new accommodation, it is unknown if the said units were in fact available.

34. Further, the Tenants provided affirmed and uncontradicted evidence that when they were forced to move, they looked at many units in the area and were unable to find a unit with en suite laundry for a lower monthly rent. While no evidence was provided about whether the complex here provided laundry facilities to the Tenants, in my view, the Tenants’ decision to settle only for a new unit that provided en suite laundry is not, in my view, so exorbitant as to bring their choice of unit within the ambit of unreasonableness.

35. I therefore find the rent differential claimed not to be unreasonable.

36. The Tenants did not request an administrative fine and such will not be ordered—although an administrative fine is something that can be ordered even when not requested. A primary function of administrative fines is to deter similar conduct in the future. While I gave some consideration to ordering an administrative fine in this case, in the end I am satisfied that the remedies ordered will have the necessary deterrent effect.

It is ordered that:

1. The Landlords shall pay to the Tenants $9,900.00. This amount represents all of the increased rent that the Tenants have incurred for the one-year period from June 1, 2015.

2. The Landlords shall also pay to the Tenants the filing fee of $45.00.

3. The total amount the Landlords owe the Tenants is $9,945.00.

4. The Landlords shall pay the Tenants the full amount owing by September 26, 2016.

5. If the Landlords do not pay the Tenants the full amount owing by September 26, 2016 they will owe interest. This will be simple interest calculated from September 27, 2016 at 2.00% annually on the outstanding balance.

September 15, 2016 _______________________

Date Issued Roger Rodrigues

Member, Landlord and Tenant Board

Toronto South-RO

79 St. Clair Avenue East, Suite 212, 2nd Floor

Toronto ON M4T1M6

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