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RTA - Superior Court Jurisdiction (2). Shabaj v. Signet Group Inc.
In Shabaj v. Signet Group Inc. (Ont Div Ct, 2025) the Ontario Divisional Court considered an unusual case which it described as "mishandled" at the LTB level, in the sense that the tenant had what appeared to be equitable set-off personal injury claims to oppose against the LL's successful non-payment of rent claims. It is useful reading for the growing need for extra-$35k RTA cases heard before the Superior Court [under RTA 207(2)], rather than before the LTB:[1] This case was mishandled before the Landlord Tenant Board (“LTB”) by the Appellant’s counsel and the result is a procedural morass and potential injustice for the Appellant.
[2] The LTB has adjudicated the outstanding rent and the ongoing monthly rent and there is no reason for this court to interfere with those findings. Indeed, they are not contested and not controversial.
[3] Due to the procedural reasons mentioned above, the LTB has not adjudicated on the merits of the claim for rent abatement or the claim for a stay in the obligation to pay rent (or a stay of enforcement of an eviction order consequent to the findings of arrears and ongoing rent accrual). If this issue had been placed before the LTB properly it would have been for the LTB to consider how this proceeding ought to relate to the personal injury claims currently before the Superior Court of Justice (SCJ) – claims asserted by the Appellant against his landlord arising from the collapse of the apartment ceiling upon him. Due to the injuries suffered from this incident, the Appellant’s position is that he in unable to pay his rent.
[4] It appears to us that there are two ways in which this matter could proceed for a final adjudication on the merits of these related issues (the personal injury claims and the landlord’s entitlement to be paid rent by the tenant):(a) the claim for abatement or set-off of rent obligations against the damages claimed by the Appellant for personal injury could be retained at the LTB, to be decided in a fair process following the LTB’s procedures, or
(b) all of the outstanding issues between the parties could be adjudicated before the Superior Court of Justice. [5] We stood this matter down so that counsel for the Respondent (the landlord’s property management company) could confer with counsel for the landlord in the personal injury proceedings, to determine whether the Respondent could advise of its position on the best way in which to proceed. The information that came back to us was that the landlord would prefer that the “bifurcation” of the personal injury and the residential tenancy issues should continue. We can appreciate why that position might appear facially attractive given the current state of proceedings: the Appellant would have a judgment for outstanding rent and an eviction order against him, having bungled the process before the LTB, and would be left scrambling to try to obtain relief from the SCJ on an expedited basis before being rendered homeless. We do not fault the landlord for failing to come up with a more equitable approach to these issues on the spur of the moment, but that leaves it to this court to fashion an appropriate way forward.
[6] There is substance to the personal injury claims. This is reflected in the dealings between the parties, including discussions about staying enforcement of the eviction order within the personal injury proceedings. In noting this point, we are not to be taken to have ruled on the merits of the personal injury claims in any respect.
[7] The landlord through its property management company, the Respondent, brought its claim for rent to keep it within the monetary jurisdiction of the LTB. Had the claim been higher, it could have been brought in the SCJ, pursuant to the Residential Tenancies Act, in which event the SCJ would have had all the powers of the LTB in respect to the claim.
[8] The Appellant has an arguable claim for set-off or abatement of rent. That argument was raised as a defence to the landlord’s enforcement claim and not as a separate tenant’s claim for abatement and related relief. This was a procedural error on the part of Appellant’s counsel.
[9] The Appellant has an arguable position that his claim for abatement or set-off ought to be heard by the SCJ because it exceeds (or will exceed) the monetary jurisdiction of the LTB. This position was put to the LTB, but not on the basis of the procedural options afforded by the Residential Tenancies Act, but on the basis of some abstract notion that the SCJ proceedings should “come first”. Then counsel for the tenant failed to place proper evidence before the LTB in support of this position and failed to respect the scheduling directions of the LTB. These were further procedural errors on the part of Appellant’s counsel.
[10] It is in the interests of all parties and the administration of justice that a decision of the Appellant’s request for abatement, set-off and/or stay of eviction be decided on the merits, and not as a result of procedural default. If the Appellant is evicted pending his claim in the SCJ, and it appears that this eviction was brought about by the landlord pursuing a “bifurcation” strategy to put pressure on the Appellant to settle a meritorious personal injury claim, substantial financial consequences could be visited back upon the landlord: if it turns out that the tenant was seriously injured as a result of events for which the landlord is liable in law, and the landlord took advantage of that situation to render the Appellant homeless as a matter of tactics and procedural sophistication, one would expect the trial court would be sufficiently unhappy with the landlord to fashion an appropriate remedy in response. Of course, the Appellant’s interest in having his claim to interim relief pending adjudication of his claim is obvious: he faces homelessness on top of his other current challenges.
[11] We do not wish to be taken to conclude that the Appellant should be able to continue to live in the landlord’s premises without paying anything on account of rent pending adjudication of his personal injury claim. Such relief may be available pursuant to the Residential Tenancies Act, or as interim relief in the personal injury proceedings, but the tenant will have to meet the onus to establish a claim to that interim relief – nothing we have said in this decision should be taken to weigh in on the merits of that issue. However, we are satisfied that there is a sufficient basis for the Appellant’s claim on this issue that he should not lose that issue by default as a result of procedural errors made by his counsel in the LTB proceedings. We are also satisfied that the issue should not have to proceed as an extreme emergency before the SCJ (ie. an injunction on short notice to stay the eviction order) when it can be litigated following a prompt and reasonable process directed by a case management judge of the SCJ.
Disposition
[12] We would dispose of this appeal as follows:(a) the appeal as it relates to the findings of the quantum of rent, rent arrears, and ongoing payments “in lieu of” rent, is dismissed;
(b) the LTB’s decision determining that the tenant has not established a basis to abate rent or to stay the obligation to pay rent, is quashed, with those issues to be determined by a judge of the SCJ in the personal injury proceedings or as that judge may direct;
(c) the LTB eviction order is stayed pending further order of the SCJ or further process directed by the SCJ;
(d) if, in the opinion of an SCJ Justice presiding in the personal injury proceedings, a further order of the Divisional Court is required in respect to this matter, that judge may make such order as a single judge of the Divisional Court presiding in an LTB appeal, or may refer that issue back to this panel of the Divisional Court, in the discretion of the single judge; and
(e) the parties shall attend a case management conference concerning the SCJ personal injury proceedings and the LTB appeal before a single judge of the SCJ, as may be directed by a Toronto Civil Team Lead Justice; and
(f) there shall be no costs of this appeal.
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