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RTA - Agreements to Terminate. Pelletier v. Bloorston Farms Ltd.
In Pelletier v. Bloorston Farms Ltd. (Div Court, 2023) the Divisional Court considered (and allowed) an RTA s.210 tenant's 'question of law' appeal emanating from an 'agreement to terminate', which has unique set-aside enforcement procedures [under RTA s.77(6-8)] which the tenant attempted to exercise on the grounds of "duress, unconscionability, and misrepresentation":[4] At the hearing of the motion to set aside the eviction order, Mr. Pelletier raised issues of duress, unconscionability, and misrepresentation on the part of the agent for the former landlord. The Board found that Mr. Pelletier was not credible in his evidence of duress. During his evidence, the Board questioned Mr. Pelletier on whether he could hold up his phone to prove the number of times that the landlord’s agent contacted him. The Board also asked during his evidence in chief whether he had brought his pay records to show he missed time at work, because he testified that this occurred due to the stress caused by the agent for the landlord. The Board made findings of credibility against Mr. Pelletier in part on his failure to bring corroborative evidence on the issue of duress. It concluded he had not made out duress.
[5] The Board’s reasons did not address evidence from Mr. Pelletier in support of his alternative argument that the landlord’s agent had misrepresented to him the facts and his rights by telling him that the building was condemned, that he was going to be evicted whether he signed the document presented to him or not, without any compensation, and that a visit from the sheriff was imminent. The Board’s reasons did not address evidence from Mr. Pelletier’s adult son, who lives in the same building, that similar representations were made to him by the same agent for the landlord.
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Did the Board fail to comply with its duties pursuant to s. 77(8)(a) and (b) of the Residential Tenancies Act?
[9] Mr. Pelletier exercised his rights under s. 77(8) of the RTA to bring a motion to seek relief from eviction. The applicable part of this section reads:77 (8) If the respondent makes a motion under subsection (6), the Board shall, after a hearing,
(a) make an order setting aside the order under subsection (4) if,
(i) the landlord and tenant did not enter into an agreement to terminate the tenancy, …
(b) make an order setting aside the order under subsection (4), if the Board is satisfied, having regard to all the circumstances, that it would not be unfair to do so; or ... [10] The Board’s guidelines describe these provisions in plain language that:Even though a landlord proves their case in an application to evict a tenant, the Board must review and consider the circumstances of each case to determine whether or not the eviction should be refused or delayed. In some cases, the Board must refuse the eviction. These powers are referred to as "relief from eviction". See: Landlord and Tenant Board Interpretation Guideline 7: Relief from Eviction – Refusing or Delaying an Eviction [11] In applying this section on a motion for relief from eviction, the Board is required to examine the facts and circumstances surrounding the making of the agreement and the broad context of the dispute between the parties: Pinto v. Regan and White v. Regan, 2021 ONSC 5502 at paras. 28-29. Failure to consider facts it was bound to consider under these provisions will constitute an error in law by the Board.
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[14] Mr. Pelletier argued the issue of misrepresentation in his final submissions. The Board’s reasons did not address this argument or the evidence of misrepresentation, confining its analysis to the evidence of duress and its findings of credibility in favour of the landlord.
[15] I conclude that the Board erred in law. The alleged misrepresentation was a separate argument from that of duress. Similar representations were the subject of evidence from another tenant, Mr. Pelletier’s son, who did not sign the agreement presented to him. This evidence went to the heart of the question: why someone who had lived 10 years in a building with rent commensurate with his income, objectively far below market rent in Toronto, would sign such an agreement? Section 77(8) of the RTA required the Board to grapple with this evidence, the submissions, and to explain why it had rejected the evidence of misrepresentation, which was confirmed by other evidence. It did not do so.
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[20] I conclude that the Board erred in law by failing to undertake its statutory duty under s. 77(8) of the RTA to have regard to all the circumstances around the making of this agreement, including any misrepresentations and in considering those facts in determining whether it would not be unfair to set aside the order of eviction. . Pinto v. Regan and White v. Regan
In Pinto v. Regan and White v. Regan (Div Ct, 2021) the Divisional Court considered issues of duress and the contractual duty of good faith in ordering a new hearing based on an RTA agreement to terminate a tenancy:[38] The facts on each appeal suggest that the respondent’s intention to obtain vacant possession of each unit on a permanent basis without having to give notice to each appellant under s. 50 was behind each transaction. The real substance of those transactions was not considered by the Member on either motion. Nor did the Member consider if the respondent was acting in good faith when he interacted with each appellant to obtain their signatures on the N11.
[39] The Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, established the organizing principle of good faith applicable to all contracts. This principle requires the performance of contractual duties and obligations honestly, not capriciously or arbitrarily, and with regard to the legitimate contractual interests of the other party: see Bhasin, at paras. 63 and 65. The relationship between a tenant and a landlord is contractual in nature and requires that they discharge the obligations they owe to one another in good faith. This duty of good faith includes how the parties conducted themselves toward each other at the end of that relationship.
[40] Section 202 of the RTA imposed a statutory duty on the Member to determine questions of fact and to apply governing principles of law to ascertain the real substance of the transactions and activities regarding the rental units at issue, and the good faith of the parties to the N11. The Member did not consider all the evidence to determine the element of good faith on the part of the respondent other than making a passing reference in the Reasons. The Member did not take the totality of the evidence into account when he applied the substantive law. This amounted to an error of law.
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