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RTA - Illegal Rent. 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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