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RTA - Auto-Renewal After Expiration of a Term Lease [s.38(1)]. Wolf v. Manulife Investment Management
In Wolf v. Manulife Investment Management (Div Court, 2023) the Divisional Court clarified that the expiration of a term lease results in the automatic renewal of the tenancy as month-to-month [RTA 38(1)]:[2] The landlord Manulife had a practice of renewing residential leases for one-year terms. Manulife decided to change its practice and to not renew residential leases with the result that pursuant to the Residential Tenancies Act, the leases became month-to-month tenancies with all the security of tenure afforded to residential tenants under the Residential Tenancies Act.
[3] In the result, the appellants’ lease was not renewed for a one-year term when it expired, and the appellants became month-to-month tenants with no fixed term. The tenants were concerned that this change presaged eviction. They applied to the Landlord and Tenant Board for relief on the basis that their landlord had violated s. 23 of the Residential Tenancies Act which provides “a landlord shall not harass, obstruct, coerce, threaten or interfere with a tenant”. The alleged misconduct was Manulife’s failure to renew the lease for a one-year term.
[4] Once the Landlord and Tenant Board clarified the nature of the tenant’s claim, the hearing was brief. The Board did not permit the tenants to adduce evidence going to the landlord’s motivation for its change of renewal practice, that motivation being irrelevant to the landlord’s decision to do something it was permitted to do as a right under the Residential Tenancies Act. The Board’s conclusion, that the tenant’s complaint had no foundation in law, was based on ss. 38(1) of the Residential Tenancies Act which states “if a tenancy agreement for a fixed terms ends, and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent, charged in accordance with this Act”.
[5] In paragraphs 3 to 6 of the Landlord and Tenant Board’s Reconsideration Decision, the Board found that the original decision was premised on a correct understanding of the law and that it was not procedurally unfair to decline to hear evidence in respect to an argument that, in law, was doomed to fail. Subsection 38(1) of the Residential Tenancies Act could not be clearer. Its meaning and effect have been a central feature of residential tenancies in Ontario for decades. It is one provision in a scheme of protection of tenure for residential tenants. Unlike the cases cited to us by the appellants, such as Bhasin v. Hrynew 2014 SCC 71, non-renewal of a residential tenancy does not have the effect of terminating the contract. There is no analogy between the present case and cases where commercial tenancies or other ongoing commercial agreements are terminated through non-renewal. The tenants enjoy all the protection of the Residential Tenancies Act, and reversion to month-to-month tenancy has not compromised that security.
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