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RTA - Illegal Rent. Guilbeault v. Williams
In Guilbeault v. Williams (Ont Div Ct, 2026) the Ontario Divisional Court considers RTA s.135.1 ['Rent increase deemed not void'] and RTA s.136 ['Rent deemed lawful'], which deem the amount of rent paid over a year to be the legal rent amount, despite any breaches of rent increase laws:[11] Arguably, the finding by the Member about a “meeting of the minds” in June of 2023 is not appealable. That conclusion that the parties reached an agreement would be considered a finding of fact. Even if the statute provided for appeals for findings of fact or mixed findings of fact and law, however, the conclusion that the parties had reached an agreement to increase the monthly payment in June of 2023 was a reasonable conclusion open to the Member on the evidence before her. The landlord demanded an increase. The tenant began to pay it, perhaps under protest, or perhaps on an interim basis while the parties continued to negotiate. Recall that the landlord had asked for an increase to “at least” $2000 per month. So, although the tenant is correct that he and the landlord reached a “meeting of the minds” in December of 2023, that does not preclude a finding that there was an earlier agreement in June. That finding of fact would be entitled to deference even if appealable – which it is not.
[12] In any event, the decision by the LTB does not turn on whether there was an agreement or not. Rather, it turns on the question of when the tenant began to pay an increased amount. Clearly, the increased amount started in July of 2023 – albeit by means of a separate cheque and albeit called a voluntary contribution by the tenant.
[13] On the other hand, the ruling that the increased payment starting in July of 2023 was “rent” within the meaning of s. 2 of the Act is appealable because that is a conclusion of law based upon statutory interpretation. Although the Appellant continuously argued before me that the Act excludes a temporary assessment from the definition of rent, it does no such thing. An assessment by the condominium corporation against the unit is like a form of property tax. It is the unit owner or landlord who is liable. The landlord can seek to pass the increased cost on to the tenant by way of a rent increase, but the tenant is not directly liable for the assessment itself. There is nothing in the RTA which deals with assessments under the Condominium Act [2].
[14] I understand the argument the Appellant is making. He says it is unfair that a landlord faced with a temporary special assessment can increase the rent permanently by 21% to cover a temporary increase in the landlord’s costs. The landlord, of course, would argue that the special assessment which had to be paid over three years (ending in December of 2025) was only one of her increased costs. More importantly, this argument would only be relevant if the landlord had an application before the LTB to raise the rent by more than the provincial guideline. That is not what was before the board. The tenant’s application was not based on whether the increase was justified but only whether or not it was unlawful. An unlawful increase is void regardless of whether or not it is justified. That was the only issue. The tenant argued that since no proper notice had been given, the rent increase was not lawful and should have been void. On that point, the presiding Member agreed with the tenant.
[15] The member then went on to consider when the increased rent was first paid by the tenant. As found by the Member, the definition of “rent” is broadly inclusive. It includes all “consideration paid or given or required to be paid or given by or on behalf of a tenant to a landlord or the landlord’s agent for the right to occupy a rental unit and for any services and facilities and any privilege, accommodation or thing that the landlord provides for the tenant in respect of the occupancy of the rental unit, whether or not a separate charge is made for services and facilities or for the privilege, accommodation, or thing”. See s. 2 of the LTA. The exceptions to this definition are narrow and apply only to property taxes in relation to “a mobile home or a land lease home” or the provision of care services or meals in a “care home”.
[16] I do not consider the finding that increased rent was paid starting in July of 2023 to proceed from an erroneous interpretation of the LTA. There is no error of law in that finding.
[17] The Member then went on to apply s. 136 (1) of the LTA which, as noted above, deems rent that has been paid for more than a year before an application is commenced to be lawful. On that basis the application was dismissed.
[18] The applicability of s. 136 (1) is also a question of law and subject to appeal. In this case, the interpretation of s. 136 (1) is ultimately correct although the route to that conclusion is slightly more complex than reading the subsection in isolation. As pointed out by the Appellant and explained in helpful submissions by counsel for the Tribunal, there is a decision of the Court of Appeal which interpreted a predecessor to s. 136 narrowly. That decision was Price v. Turnbull’s Grove Inc., 2007 ONCA 408 in which the Court of Appeal held that if the increase was rendered “void” by the statute, it could not be saved by the curative provisions of what was then s. 141 of the Tenant Protection Act, 1997.
[19] Read in isolation, the decision of the presiding Member is contrary to the finding in Price and therefore would be incorrect in law. But there has been subsequent legislative intervention. In 2020, s. 135.1 was added to the LTA. Subsection (1) specifies that “an increase in rent that would otherwise be void under subsection 116 (4) is deemed not to be void if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months”. Subsection (2) then states that subsection (1) does not apply if the “tenant has, within one year after the date the increase was first charged, made an application in which the validity of the rent increase is in issue”. As a consequence, the legislature has effectively overruled the finding in Price and in doing so has underscored the legislative intention that tenants may not seek to challenge an increase to their rent after they have paid it for more than a year. See Sapershteyn et al v. 1821317 Ontario Limited et al, 2023 ONSC 5977 (Div Ct.)
[20] In summary, while the reference by the presiding member to s. 136 (1) without reference to the finding in Price might appear to be erroneous, s. 135.1 indicates that the ruling by the presiding Member is correct for applications brought after 2020. S. 135.1 means that an unlawful rent increase is not void unless the application is brought within one year of the tenant first paying the increased rent. That is precisely how the Member summarized the law. . Fisher v. Michel
In Fisher v. Michel (Ont Div Ct, 2025) the Ontario Divisional Court considered an RTA illegal rent s.135.1 provision, here where if the illegal rent is paid for 12 or more months then the illegality is rendered legal:[44] On July 21, 2020, the Protecting Tenants and Strengthening Community Housing Act, 2020 received Royal Assent. That act amended the Residential Tenancies Act by the addition of Section 135.1, meaning Section 135.1 came into force on July 21, 2020. Under subsections 135.1(1) and 135.1(2) of the amended Act, a rent increase that would otherwise be void under subsection 116(4) is deemed valid if the tenant paid the increased rent for at least twelve consecutive months and the tenant did not apply to the LTB regarding the validity of the rent increase within one year of said increase. Subsection 135.1(3) of the Act sets out that, if subsection 135.1(1) applies, section 116 is deemed to have been complied with.
[45] Subsection 135.1(5) of the Residential Tenancies Act states that the provisions of section 135.1, which validate what would otherwise be an illegal and thus void rent increase, apply even if the illegal rent was first charged before the amendment came into force, “…provided the validity of the rent increase was not finally determined by the Board before…” July 21, 2020.
[46] The Appellant conceded at the hearing that he had paid the Landlord's nonconforming January 2019 rent increase for more than 12 consecutive months, before filing the T1 application in March of 2020. Vice-Chair Shea further determined that there had been no final order with regard to the T1 application up to the date of the A1/T1 hearing before him on April 5, 2024.
[47] The Appellant took the position at the April 5, 2024 hearing, that notwithstanding the overall effect of section 135.1, and in particular that of 135.1(5), it should not apply with regard to his application as it was not his fault that his T1 application, filed in March 2020, was not heard due to various Board delays until April 5, 2024 (or at the earliest November 22, 2022, although again that hearing did not result in an order being issued).
[48] The Divisional Court recently considered the correct interpretation and effect of section 135.1(5) of the Act in Sapershteyn v. 1821317 Ontario Limited where it held at paras. 23-24 that:[...] there is no ambiguity in the meaning of s. 135.1. The purpose of the section is clear, it is a response to [Price v. Turnbull’s Grove Inc., 2007 ONCA 408 (CanLII)] and to limit the availability to tenants to seek and obtain payment of illegal rent charged. The legislature, in its wisdom, determined that tenants cannot seek retroactive payment of illegal rent charged after one year and in the cases of an application brought before the legislative change, up to the date the change came into effect, July 21, 2020.
It could be taken that the legislature was well aware that a fixed date will make it difficult if not impossible for some tenants to have their application finally determined by July 21, 2020. With the indication of a fixed date, it can be taken that the legislature intended that fixed date with no exceptions. [49] Indeed, Member Shea relied on the decision in Sapershteyn in determining the proper application of section 135.1(5) of the Act. The Vice-Chair, having correctly apprehended the effect of section 135.1(5), then applied this subsection to the facts before him and determined that the resulting operation of section 135.1 was therefore to "save" the Respondent's January 1, 2019 rent increase, which otherwise would have been a nullity, and render it valid. This is a finding of mixed fact and law which cannot be appealed. . Sapershteyn et al v. 1821317 Ontario Limited et al
In Sapershteyn et al v. 1821317 Ontario Limited et al (Div Court, 2023) the Divisional Court considered an appeal from a LTB order that reimbursed illegal rent charges [under RTA 135]. A landlord appeal was dismissed despite arguments that an RTA provision that 'deems' illegal rents - if paid for continuously more than a year - as legal [RTA 135.1 - 'Rent increase deemed not void'] - which came into force 21 July 2020.
The specific issue here was the interpretation of RTA s.135.1(5), a transition provision which renders the new 'deemed not void' law to be retroactively applicable to rent charged before that in-force date "provided the validity of the rent increase was not finally determined by the Board before that day". The court addressed this phrase under statutory interpretation doctrine and found that the rent increase had been finally determined before 21 July 2020, consequently RTA 135.1 did not apply retroactively and that thus the full rent rebate was due.
. Sapershteyn et al v. 1821317 Ontario Limited et al
In Sapershteyn et al v. 1821317 Ontario Limited et al (Div Court, 2023) the Divisional Court characterized an illegal rent rebate amendment [RTA 135.1 - 'Rent increase deemed not void']:[16] Accordingly, the legislature changed the legislative scheme allowing for illegal increases in rent if the tenant pays the illegal increase in rent in respect of each rental period for at least 12 months and if any illegal increase in rent before July 21, 2020, is not “finally determined by the Board” before July 21, 2020. It is not disputed that this change in this legislation was a response to the Ontario Court of Appeal decision in Price v. Turnbull’s Grove Inc.[12]
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