Pasternak v. 3011650 Nova Scotia Ltd., (2014) 317 O.A.C. 211 (DC)

• Judge: Marrocco, A.C.J.S.C., Lederman and Sachs, JJ.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: February 06, 2014
• Jurisdiction: Ontario
• Citations: (2014), 317 O.A.C. 211 (DC);2014 ONSC 1012

Pasternak v. 3011650 N.S. (2014), 317 O.A.C. 211 (DC)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. MR.013

Joseph Pasternak (tenant/respondent) v. 3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources (landlord/appellant)

Glenn Campbell (tenant/respondent) v. 3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources (landlord/appellant)

Gerald Nanne (tenant/respondent) v. 3011650 Nova Scotia Limited c.o.b. as Michipicoten Forest Resources (landlord/appellant)

(469/13; 470/13; 467/13; 2014 ONSC 1012)

Indexed As: Pasternak v. 3011650 Nova Scotia Ltd.

Court of Ontario

Superior Court of Justice

Divisional Court

Marrocco, A.C.J.S.C., Lederman and Sachs, JJ.

February 21, 2014.

Summary:

The Landlord and Tenant Board ordered the landlord to repay rent illegally collected under the Residential Tenancies Act (RTA). In doing so it limited the repayment to a one-year period under s. 135(4) of the RTA. The landlord appealed the finding that the rent was illegally collected because, according to it, the RTA did not apply. The tenants cross-appealed the finding that they were only entitled to repayment of illegally collected rent for a one-year period.

The Ontario Divisional Court dismissed the appeal and the cross-appeal.

Estoppel - Topic 1161

Estoppel in pais (by conduct) - Representation by conduct - Acquiescence - In the 1970s, Algoma Central Railway (ACR) became the owner of a large tract of land north of Sault Ste. Marie - In the 1970s and 1980s, ACR leased many one acre sites within the property for recreational use during the summer - The lessees built cottages on their sites - In 1997, ACR sold part of the land, including 429 cottage sites, to the landlord - In 2005 ACR sold the rest of the land and cottage sites to Algoma Timberlakes Corp. - On June 1, 2008, each of the lessees, including the tenants, executed a new lease with the landlord that provided for automatic yearly renewal, unless either party gave notice of termination, for a maximum of 20 years - Section 50(3) of the Planning Act (PA) prohibited a landowner from entering into any agreement that had the effect of granting another person "the use of or right in [the owner's] land" directly, or by entitlement to renewal, for a period of 21 years - The leases were drafted to provide for a term that was less than the 21 year term prohibited under the PA - In 2005, after Algoma Timberlakes acquired its portion of the land, Algoma Timberlakes either tried to evict or increase the rent paid by the tenants who held 20 year cottage leases on the land - The Tenants applied to the Landlord and Tenant Board for a declaration that the increased rents they were paying under the 2008 leases were illegal - The Board agreed and ordered the landlord to repay rent illegally collected under the Residential Tenancies Act (RTA) - In doing so it limited the repayment to a one-year period under s. 135(4) of the RTA - The landlord appealed, asserting that, having agreed to the 2008 leases and accepted the rent increases, the tenants should be estopped from challenging those increases - The Ontario Divisional Court dismissed the appeal - A landlord could not rely on the doctrine of estoppel to escape a challenge to its illegal rent increases - See paragraphs 25 to 29.

Landlord and Tenant - Topic 2381

The lease - Renewals - General - In the 1970s, Algoma Central Railway (ACR) became the owner of a large tract of land north of Sault Ste. Marie - In the 1970s and 1980s, ACR leased many one acre sites within the property for recreational use during the summer - The lessees built cottages on their sites - In 1997, ACR sold part of the land, including 429 cottage sites, to the landlord - In 2005 ACR sold the rest of the land and cottage sites to Algoma Timberlakes Corp. - On June 1, 2008, each of the lessees, including the tenants, executed a new lease with the landlord that provided for automatic yearly renewal, unless either party gave notice of termination, for a maximum of 20 years - Section 50(3) of the Planning Act (PA) prohibited a landowner from entering into any agreement that had the effect of granting another person "the use of or right in [the owner's] land" directly, or by entitlement to renewal, for a period of 21 years - The leases were drafted to provide for a term that was less than the 21 year term prohibited under the PA - In 2005, after Algoma Timberlakes acquired its portion of the land, Algoma Timberlakes either tried to evict or increase the rent paid by the tenants who held 20 year cottage leases on the land - The Tenants applied to the Landlord and Tenant Board for a declaration that the increased rents they were paying under the 2008 leases were illegal - The Board agreed and ordered the landlord to repay rent illegally collected under the Residential Tenancies Act (RTA) - In doing so it limited the repayment to a one-year period under s. 135(4) of the RTA - The landlord appealed, asserting that since the leases were governed by the RTA, they could be renewed indefinitely - This potential renewal for a period of more than 21 years was enough to trigger the application of s. 50(3) of the PA, thereby rendering the leases void ab initio - The Ontario Divisional Court dismissed the appeal - The Board correctly interpreted s. 50(3) of the PA - The wording of s. 50(3) was directed at the parties entering into an agreement that had 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 was the agreement entered into by the parties, not a statutory provision, that had to have the effect of providing for a term of usage of more than 21 years - See paragraphs 12 to 24.

Landlord and Tenant - Topic 7105

Regulation - Rent - Recovery of excessive rent by Director - Limitation period - In the 1970s, Algoma Central Railway (ACR) became the owner of a large tract of land north of Sault Ste. Marie - In the 1970s and 1980s, ACR leased many one acre sites within the property for recreational use during the summer - The lessees built cottages on their sites - In 1997, ACR sold part of the land, including 429 cottage sites, to the landlord - In 2005 ACR sold the rest of the land and cottage sites to Algoma Timberlakes Corp. - On June 1, 2008, each of the lessees, including the tenants, executed a new lease with the landlord that provided for automatic yearly renewal, unless either party gave notice of termination, for a maximum of 20 years - Section 50(3) of the Planning Act (PA) prohibited a landowner from entering into any agreement that had the effect of granting another person "the use of or right in [the owner's] land" directly, or by entitlement to renewal, for a period of 21 years - The leases were drafted to provide for a term that was less than the 21 year term prohibited under the PA - In 2005, after Algoma Timberlakes acquired its portion of the land, Algoma Timberlakes either tried to evict or increase the rent paid by the tenants who held 20 year cottage leases on the land - The Tenants applied to the Landlord and Tenant Board for a declaration that the increased rents they were paying under the 2008 leases were illegal - The Board agreed and ordered the landlord to repay rent illegally collected under the Residential Tenancies Act (RTA) - In doing so it limited the repayment to a one-year period under s. 135(4) of the RTA - The tenants cross-appealed the finding that they were only entitled to repayment of illegally collected rent for a one-year period - The tenants submitted that the decision was unreasonable for three reasons: (1) since the rent increases for the years 2008, 2009 and 2010 were void under s. 4 of the RTA, the Board erred when it used the provisions of s. 135(4) to allow the landlord to retain those increases; (2) since the landlord continued to retain the illegal rents, the one-year period had not begun to run; and (3) s. 135(4) should be interpreted as implying "discoverability" and the tenants did not know that the rents collected under the 2008 leases were illegal until they found out about the Court of Appeal's decision in Matthews v. Algoma Timberlakes Corp., which was released in October of 2010 - The Ontario Divisional Court rejected all three arguments and dismissed the cross-appeal - See paragraphs 30 to 38.

Limitation of Actions - Topic 4410

Statutory causes of action - Recovery of excessive rent - [See Landlord and Tenant - Topic 7105 ].

Cases Noticed:

Matthews v. Algoma Timberlakes Corp. (2010), 266 O.A.C. 261; 2010 ONCA 468, appld. [para. 7].

Londry v. Dean (1994), 21 O.R. (3d) 157 (Gen. Div.), refd to. [para. 18].

Beer v. Beer (1997), 13 R.P.R. (3d) 33 (Ont. Gen. Div.), refd to. [para. 18].

First Ontario Realty Corp. v. Deng et al. (2011), 274 O.A.C. 338; 2001 ONCA 54, refd to. [para. 27].

1086891 Ontario Inc. v. Barber (2007), 225 O.A.C. 54; 284 D.L.R.(4th) 568 (Div. Ct.), refd to. [para. 28].

Price v. Turnbull's Grove Inc. (2007), 225 O.A.C. 1; 85 O.R.(3d) 641; 2007 ONCA 408, refd to. [para. 35].

Dollimore v. Azuria Group Inc. (2001), 152 O.A.C. 57 (Div. Ct.), refd to. [para. 36].

Graham et al. v. Imperial Parking Canada Corp., [2010] O.T.C. Uned. 4982; 2010 ONSC 4982, leave to appeal denied (2011), 279 O.A.C. 342; 2011 ONSC 991 (Div. Ct.), refd to. [para. 37].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 38].

Statutes Noticed:

Residential Tenancies Act, S.O. 2006, c. 17, sect. 38(1) [para. 17]; sect. 135(4) [para. 31].

Planning Act, R.S.O. 1990, c. P-13, sect. 50(3) [para. 13].

Counsel:

Wendy Earle and Matthew Furrow, for the appellant;

Robert G. Doumani and Patrick J. Harrington, for the respondents.

This appeal and cross-appeal were heard at Toronto, Ontario, on February 6, 2014, by Marrocco, A.C.J.S.C., Lederman and Sachs, JJ., of the Ontario Divisional Court. The following reasons for judgment of the Divisional Court were delivered by Sachs, J., on February 21, 2014.