Tenant Legislation Encourages Abuse

It is important to insert a clause into your agreement of purchase and sale for a property that contains a tenant. This is true even when it appears the tenant is leaving before the closing date. As can be seen in the recent decision D’Amico v. Hitti, 2012 ONSC 4467 out of the Ontario Superior Court of Justice, there are many “unscrupulous residential tenants” that will take advantage of the Ontario justice system by manipulating the law and taking advantage of legal loopholes. Justice Ted Matlow recognized this problem when reviewing this case, and a number of other similar cases, which prompted him to call for changes to be made in relation to how landlord and tenant disputes are approached and handled within Ontario.

In this case, Melissa D’Amico (“Landlord”), owned a small building located in Toronto, which she decided to utilize as a rental property. She entered into a residential lease with Rony Hitti and Hitti’s company Toronto Bespoke Inc. (“Tenant”) on October 11, 2011. Pursuant to the lease, the Tenant agreed to pay a monthly rent of $3,600.00 per month, for a twelve-month period, commencing on October 15, 2011. Immediately after the lease was executed, the Tenant and his spouse moved into the rental property.

Almost immediately, the Tenant refused to pay their Landlord their rent for the first month. As a result of their refusal, the Landlord had her real estate agent serve the Tenant with a Notice to End a Tenancy Early for Non-payment of Rent dated October 21, 2011. The Tenant then continued to fail to pay rent to the Landlord, which prompted her to initiate proceedings and file an application with the Landlord and Tenant Board (“Board”) on November 8, 2011, seeking an Order for the termination of tenancy, a payment of the rent that was in arrears and an eviction of the Tenant.

At the hearing at the Board, which took place on November 28, 2011, the Tenant offered the Landlord a cheque for the entire amount that was outstanding up to date, and further convinced the Landlord to withdraw the application. As a result, the application was withdrawn. However, on December 5, 2011, the bank notified the Landlord that the payment had been stopped and the cheque was dishonoured. At this point, the Landlord hired a legal representative who initiated proceedings and filed another application with the Board on December 20, 2011. The Board scheduled this second application to be heard on January 23, 2012.

On January 25, 2012 the Board rendered an Eviction Order that had the following ramifications:
a. a termination of the Tenant’s tenancy, and a requirement to vacate the premises on or before February 5, 2012, unless the Eviction Order was voided by the Tenant by paying the amount that was owed to the Landlord;
b. a requirement to pay $12, 265.99 which represents the amount of rent and other compensation owed, as well as the charges related to NSF fees;
c. a requirement to pay $118.36 per day from the date of January 26 2012 until the date that the Tenant vacate the unit; and
d. a requirement to pay $170.00 for repayment of the cost of filing the second application with the Board.

On February 5, 2012, the Tenant provided a non-certified cheque to the Landlord in the amount of $11,045.00, which was sufficient to void the Eviction Order. However, once again on February 8, 2012, the bank notified the Landlord that the cheque was not honoured due to insufficient funds. The Landlord then attended the Court Enforcement Office and paid the fee of $318.00 to file and enforce the Eviction Order. Shortly afterwards, the Landlord found out that the Tenant had filed a motion with the Board to void the Eviction Order. The Tenant submitted a sworn affidavit confirming payment in the amount of $11,045.00 was provided to the Landlord. The Void Order was granted, and the Eviction Order was not permitted to be enforced by the Landlord.

On February 10th, 2012, the Landlord brought another motion to set aside the Void Order, which was scheduled for March 7, 2012. On March 8th, the Board issued an order on consent, which required the Tenant to pay $14,963.00 to the Board in trust on or before March 12th.The Tenant did not do this, and on March 16th the Motion to Set Aside the Void Order was granted and the Eviction Order remained in full force and effect. However, on the very same day, a final appeal was undertaken by the Tenant in another attempt to prolong the hearing and ultimately extend the amount of time that they could remain in possession without payment of rent.

As of the date of the final hearing the Tenant owed $25,445.00 to the Landlord. When the hearing was finally concluded, it was determined that the Tenant’s “appeal raised no bona fide question of law, that it was totally devoid of merit, vexatious and an abuse of process”. Justice Matlow was very unimpressed by the Tenants improper conduct, and awarded costs fixed at $13,072.12.

Justice Matlow also stated that he was hoping for this decision to be considered by individuals who were in a position to amend the rules that are followed by the Court in relation to landlord and tenant issues, specifically when they are an obvious abuse of the system. Some of the amendments that he suggested should be considered include restrictions on the right of appeal in residential landlord and tenant cases and a requirement for a leave to appeal to be obtained before appeals can be brought forth.

The full case can be accessed by clicking here.

You can also take a look at an article written in the Focus Section for Law Times which makes reference to my article by clicking here.

This article can also be found in our September Newsletter by clicking here.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.