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Damages - Mitigation - Effect of Insurance on Mitigation. Equity Builders Ltd. et al. v. Landlord and Tenant Board et al. [mitigation through insurance]
In Equity Builders Ltd. et al. v. Landlord and Tenant Board et al. (Ont Divisional Ct, 2025) the Divisional Court (mostly) dismissed a multiple-proceeding combination of both LL-initiated JRs and RTA s.210 appeals, here respecting multiple units in a Sarnia apartment building. After a fire "the Chief Building Official for the City of Sarnia issued an order to the Landlord directing that the premises be vacated", followed by a second order several days later restricting access to a lesser number of units. The LL subsequently refused re-entry to tenants not covered by the later less restrictive order, eventually resulting in RTA orders of illegal lock-out for numerous units - and that "the Landlords had substantially interfered with the reasonable enjoyment by the Tenants of their units; and found that the Landlords obstructed, coerced, threatened or interfered with the Tenants".
Here the court considered whether the possibility of tenant insurance could act as mitigation, reducing the LL's liability for RTA 'damage' awards:Did the Board err in law by failing to consider the Tenants’ duty to mitigate their damages through tenant insurance policies?
[101] The Landlords take the position that the Board failed to address the effect of the Tenants’ failure to mitigate their damages, specifically their out-of-pocket expenses, by having tenants’ insurance in place that was required by virtue of the tenancy agreements. The Landlords submit that if the Tenants had been insured, they would have been able to make claims for damages to their insurer, thereby reducing the amounts sought against the Landlords.
[102] The Tenants dispute that insurance coverage was a contractual requirement of the tenancy agreements. The Tenants also argue the Board appropriately addressed the issue of insurance and the allegation that the Tenants failed to mitigate their damages.
[103] The tenancies in question are subject to different forms of tenancy agreements. Some tenancy agreements contained a requirement on the tenant to maintain insurance. Other agreements were silent with respect to insurance. Some tenants no written tenancy agreement at all. Given the Board’s finding on the issue of mitigation, it is not necessary to examine the individual tenancy agreements to determine whether insurance coverage was an enforceable contractual term.
[104] To successfully raise the issue of mitigation before the Board, the obligation was on the Landlords to establish that that Tenants failed to take reasonable steps to mitigate their damages and that mitigation was possible in the first place: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at para. 24.
[105] The Board considered and rejected the Landlords’ submission on mitigation noting that many of the amounts claimed for out-of-pocket expenses were nominal and would likely have fallen below an insurance policy deductible even if insurance had been in place.
[106] It is important to keep in mind that the damages awarded by the Board are to compensate the Tenants for the Landlords’ breaches of the RTA. The Landlords did not put forward any evidence about what types of policies were available to the Tenants and whether the policies would respond to damages caused by the Landlords’ actions. Even if a policy were to provide coverage for these types of damages, policies often include subrogation rights which would permit the insurer to pursue the Landlords for the amounts paid out under the policy. The Landlords failed to establish that mitigation was possible in the first place.
[107] The Board considered the issue of mitigation and reasonably rejected the Landlord’s submission. There is no legal error.
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