Administrative Fine (LTB)

From Riverview Legal Services


TST-90503-17 (Re), 2019 CanLII 87012 (ON LTB)

This application was heard in Toronto on November 28, 2018.

A.B., K.N., M.O., K.S. and C.T. (the 'Tenants') applied for an order determining that 795 College Inc (the 'Landlord') harassed, obstructed, coerced, threatened or interfered with them, altered the locking system, substantially interfered with their reasonable enjoyment, and gave a notice of termination in bad faith.

1. This application concerns three units in an eight-unit building. In 2016, the Landlord served N13 notices to terminate the Tenants’ tenancies pursuant to subsection 50(1)(c) of the Residential Tenancies Act, 2006 (the ‘RTA’) because the Landlord intended to do renovations so extensive as to require vacant possession of the unit.

4. The Tenants’ fears proved to be well-founded. In November, 2017, the Landlord rented the units to new tenants at higher rents, without first offering them to the Tenants.

5. The Tenants have applied under section 29 of the RTA for a finding that the Landlord substantially interfered with their reasonable enjoyment, and under section 57 for a finding that the Landlord gave them notices of termination in bad faith. At the hearing, the parties agreed that section 57, not section 29, applies to the facts of this case. Section 57.1 clarifies that a section 57 application may be brought where a landlord failed to afford a tenant their right of first refusal.

7. The available remedies set out in subsection 57(3):

1. An order that the landlord pay a specified sum to the former tenant for,
i. all or 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, and
ii. reasonable out-of-pocket moving, storage and other like expenses that the former tenant has incurred or will incur.
2. An order for an abatement of rent.
3. An order that the landlord pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.
4. Any other order that the Board considers appropriate.

15. The Landlord stands to make an enormous profit from its blatant disregard for the Tenants’ RTA rights. Fines are necessary to deter it from similar conduct in the future. Three fines of $25,000.00 each, the maximum allowed under the RTA, will be imposed.

64. Subsection 57(3)(3) provides for an administrative fine as a remedy for a failure to afford a right of first refusal. The maximum fine is equal to the monetary jurisdiction of the Small Claims Court, which is presently $25,000.00.

65. This proceeding concerns three separate rental units. The Landlord argues that I can award a maximum fine of $25,000.00 in respect of the whole proceeding. The Tenants argue that I can award fines of $25,000.00 in respect of each unit, for a total of up to $75,000.00.

66. It is useful to review the exact wording of the relevant provisions:

57 (1) 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,
(c) the landlord gave a notice of termination under section 50 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 the landlord did not demolish, convert or repair or renovate the rental unit within a reasonable time after the former tenant vacated the rental unit.
(3) The orders referred to in subsection (1) are the following:
[…]
3. An order that the landlord pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.
57.1 (1) The Board may make an order described in subsection 57 (3) if, on application by a former tenant of a rental unit, the Board determines that the landlord was required to afford the former tenant a right of first refusal under section 53 and failed to do so.

67. Also relevant are sections 186 and 207(1):

186 (1) A tenant may combine several applications into one application.
(2) Two or more tenants of a residential complex may together file an application that may be filed by a tenant if each tenant applying in the application signs it.
107 (1) The Board may, where it otherwise has the jurisdiction, order the payment to any given person of an amount of money up to the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.

68. This proceeding is three applications under section 57.1, which have been combined into a single application pursuant to subsection 186(2). Despite having been combined into one application, the proceeding still pertains to three separate contraventions in respect of three separate rental units.

69. Section 57.1 is, in my view, clear. It refers, in the singular, to a landlord failing to afford “a” right of first refusal to “a” former tenant of “a” rental unit. A failure to afford the right of first refusal to three former tenants of three rental units triggers section 57.1 three times.

70. Each contravention that triggers section 57.1 gives the Board the authority to issue the order provided for in subsection 57(3)(3). I find that I can consider three fines of up to $25,000.00 each.

71. Subsection 186(2) is a procedural provision which permits multiple applications to be brought efficiently where they concern the same essential facts. I do not find that combining applications under subsection 186(2) would change the substantive remedies that would have been available if the applications had been brought separately. It would be absurd, and inefficient, to force the Tenants to bring their three application separately in order to seek all the remedies available to them.

72. The Landlord also argues that the Board is a “person” and hence, subsection 107(1) prohibits me from ordering payment of more than $25,000.00 to the Board. I am not persuaded by that argument. Subsection 107(1) concerns the monetary remedies available to parties. All the provisions in the RTA respecting administrative fines contain their own monetary limits. I am not convinced that the Legislature intended that a subsection 57(3) fine would be subject both to the monetary limit in that subsection, and to the monetary limit in subsection 107(1).

75. The Landlord is profiting enormously from its contraventions of the RTA. Before the tenancies were terminated, the rent for each of the three units was around $1,250. The Landlord has re-rented the units for $4,150.00, $4,200.00, and $4,200.00, respectively. This means that on each of the three contraventions, the Landlord is realizing a profit of over $2,900 monthly. In the first year alone, it will have profited by over $34,800 for each contravention. The Tenants testified that they all planned to keep living in the units for many years. Even if I estimate, conservatively, that the tenancies would only have continued for another two years, that is a profit of around $70,000 for each contravention.

76. The Tenants could have requested monetary remedies. However, even if they had each been awarded the Board’s maximum monetary jurisdiction of $25,000.00, those remedies would not have been sufficient to provide adequate deterrence and compliance in these circumstances. The profit the Landlord is realizing from its actions vastly exceeds $25,000.00 per rental unit.

77. In light of the above, I find that the appropriate fines in this case would be $45,000.00 per rental unit. Since those amounts exceed the maximum, fines of $25,000.00 will be awarded in respect of each unit, for a total of $75,000.00 in fines.

It is ordered that:

1. On or before April 30, 2019, the Landlord shall pay the Board three administrative fines of $25,000.00 each. The total amount owing is $75,000.00.