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Residential Landlord and Tenant Law (Ontario)
(15 August 2015)

Chapter 7 - Non-Payment of Rent Terminations


    Caution
  1. Overview
    (a) Background
    (b) Overview of RTA Scheme
    (c) Interpretation Guidelines
    (d) "Rent Banks"
  2. Notice of Termination for Non-Payment of Rent
    (a) Overview
    (b) Advisories
    (c) Notice Periods
  3. Notice-to-Application "Catch-up Payment"
  4. Landlord Application Procedures
    (a) When Application May be Commenced
    (b) Issues
  5. Application-to-Order "Catch-up Payment"
    (a) Overview
    (b) Interpretation Guideline 11 re "Catch-up Payments"
  6. Hearings and Board Orders
  7. Order-to-Enforceable Order "Catch-up Payment"
    (a) Overview
    (b) "Final Catch-Up Payment"
    (c) Payment Procedures
    (d) Tenant's Ex Parte Motion to Determine Payment and Void Eviction Order
    (e) Landlord's Motion to Set Aside Ex Parte Order
    (f) Interpretation Guideline 11 re "Catch-up Payments"
  8. Enforceable-Order-to-Eviction "Catch-Up Payment" and Tenant's One-Time Motion to Set Aside Eviction Order
    (a) Overview
    (b) Supporting Evidence on Set Aside Motion
    (c) Automatic Stay on Filing of Set Aside Motion
    (d) Denial of Set Aside Motion
    (e) Set Aside Conditions
    (f) Interpretation Guideline 11 re "Catch-up Payments"
  9. "Tenant Rights" Defence
    (a) Overview
    (b) Defences Available
    (c) Tactics
  10. Payment Agreements and Settlement Orders
    (a) Overview
    (b) Obtaining a Settlement Order
    (c) Contents of Settlement Order
    (d) Landlord's Request to Re-Open Application on Breach by Tenant
    (e) Party's Request to Re-Open Application on False or Misleading Representations

________________________________________

Caution
Readers are cautioned that whenever they are dealing with an actual termination and eviction proceeding that it is important to review this Legal Guide thoroughly. For instance, this chapter only deals with issues specific to terminations for non-payment of rent.

Basic issues and concepts involved in such proceedings are covered in Ch.4: "Termination Fundamentals". Reading this present chapter alone would ignore the basic law that applies to all terminations and evictions. As well, other types of termination and eviction proceedings are discussed in Ch.5 "Regular Landlord Terminations", Ch.6: "Early Termination for Cause" and Ch.8: "Other Termination Procedures". You must determine if they are relevant to your proceeding or not.

Further, anyone defending termination and eviction proceedings before the Board would be remiss if they did not also review Ch.13: "General Board Procedures" to understand basic procedural aspects of handling a case before the Board, such as service of documents, disclosure of evidence, basic evidence rules, basic hearing procedure, etc.

You never know what other issues can crop up in a case. Anyone using this Legal Guide for important things should devote the time and effort required to appreciate the law involved in their situation and the complexities that it can give rise to.

Note Re: Special and Exempt Premises:

Some residential rental premises - such as care homes, mobile home parks, land lease communities, student accomodation, superintendent's premises, social housing, premises under mortgage proceedings - and others - may be exempt from all or part of the Residential Tenancies Act (RTA), or may be subject to special RTA provisions. Readers may want to review Ch.2: "Special and Exempt Premises" to check if this is the case for their specific premises.

Note Re: Offences

Many breaches of the Residential Tenancies Act are also prosecutable offences. Readers may want to review Ch.17: "Offences" regarding specific breaches.

1. Overview

(a) Background

Historically, by far the most common application made to any residential tenancy court or Tribunal is a landlord's application to terminate and evict for "non-payment of rent". The outgoing Rental Housing Tribunal (under the old Tenant Protection Act) is no exception to this, and the (new at 2007) Landlord and Tenant Board will no doubt experience the same pattern.

Like the RTA, most of Ontario's past residential tenancy legislation have included provisions for what I call "catch-up payments', which - generally - halt eviction proceedings upon payment of arrears of rent and (usually) additional amounts reflecting further landlord disbursements made at various stages of the termination and eviction process.

(b) Overview of RTA Scheme

The new RTA is no exception to these practices except that it goes further than any previous regime in extending and codifying these "catch-up" provisions.

The present "catch-up payment" provisions operate at all stages of the termination and eviction process, from initial "Notice of Termination for Non-payment of Rent" right up to just before the sheriff actually executes an eviction order by physical re-possession. However, the farther the tenant goes into the termination and eviction process, generally the more 'expensive' the "catch-up payment" becomes due to the progressive addition of landlord expenses (and of course additional rent arrears) incurred in the process.

More particularly, different "catch-up payment" provisions apply to the different periods of the process as they progress. These periods are defined by the steps of the process that they fall between, as listed here (throughout this section I will be referring to these periods by the terms noted in parentheses):
  • Between Notice of Termination and Board Application being filed ("Notice-to-Application")

  • Between Board Application and Board Order Issuance; ("Application-to-Order")

  • Between Order Issuance to Order becoming Legally Enforceable ("Order-to-Enforceable-Order")

  • Between Order becoming Legally Enforceable to Order being Executed ("Enforceable-Order-to-Eviction", or "Final")
Generally, when the occurence of a step in the process occurs (eg. LL applies to Board, Board issues Order, etc), the tenant will find themselves in the next "catch-up payment" category, and must satisfy those "catch-up" payment conditions in order to stop the termination and/or eviction process.

That said, exercising a "catch-up payment" right is not always as simple as giving a cheque to the landlord. The later in the process the tenant finds themselves, the more elaborate the procedures can be. It is essential that any tenant or advocate facing this common legal situation know the applicable procedures thoroughly.

Further, like most landlord applications to terminate and evict, those based on non-payment of rent are almost always joined with additional requests for orders for arrears of rent and "overhold" compensation. Tenants and advocates should review these procedures at Ch.4, s.4(h): "Termination Fundamentals: General Landlord Terminations and Eviction Procedures: Ancillary Landlord Remedies".

(c) Interpretation Guidelines

The following Interpretation Guidelines and Rules contains the Board's perspective on non-payment of rent proceedings - including the "catch-up payment" provisions. They should be reviewed fully by anyone involved in such a proceeding:

Interpretation Guideline 10: Procedural Issues Regarding Eviction Applications

Interpretation Guideline 11: Eviction for Failure to Pay Rent

Rule 31: Paying Money Into and Out of the Board

Important points that may be gleaned from these materials include:
  • that, for purposes of calculating arrears of rent, "payments are applied to the earliest rent owing. For example, if the tenant did not pay the May rent, but paid in June, the payment for June will be applied to May leaving the June rent outstanding."

  • that where the amount of rent owing is less than the last month's rent deposit held by the landlord, the Board may both terminate and evict and order a repayment of the balance from the landlord to the tenant (note this will be reduced by any costs awards made) [see Ch.14, s.6(d): "Hearings, Orders and Enforcement: Decisions, Reasons and Final Orders: Final Orders: Party and Board Costs"].

  • that the claiming, on a Notice of Termination, of amounts owing other than arrears of rent (for example: NSF cheques charges, rent deposits, ultility arrears) may result in the Notice being void.

  • the Board will not Order payment of arrears by guarantors of the tenant (ie. third parties required, as a condition of the tenancy, the guarantee the payment of the tenant's rent). Such claims must proceed through the civil courts [see Ch.16: "Civil Remedies"].
(d) Rent Bank

Financial assistance for rent arrears may be available through a municipal rent bank program. Search online or inquire of your local municipal clerk's office.


2. Notice of Termination for Non-Payment of Rent

(a) Overview

Any tenancy agreement has written, oral or implied terms as to when rent is 'due' - almost universally being at the beginning of the month to which it applies, regardless of whether the tenancy is "periodic" or "term" [see Ch.1, s.2(e)].

Where a tenant fails to pay the lawful rent [see Ch.10, s.4: "Rent Fundamentals: Lawful Rent"] by the due date, then the landlord may serve a "Notice of Termination for Non-Payment of Rent". There are mandatory [Act s.43(1)] Board-issued forms designed and meant for just this purpose, which have the advantage for both parties of including certain legally-mandated procedural information advisories, and having blank spaces calling for the inclusion of all information necessary for the process to advance.

Form N4: Notice to End a Tenancy Early for Non-Payment of Rent

(b) Advisories

A "Notice of Termination for Non-Payment of Rent" shall state [Act s.59 (2)]:
  • the rent due as of the date of the Notice; and

  • an advisory that "the tenant may avoid the termination of the tenancy by paying, on or before the termination date specified in the notice" any arrears of rent due.

    Note:
    The above-advisory, which legally must be included in the Notice of Termination [Act s.59(2)], is misleading regarding the actual terms of the Notice-to-Application "catch-up payment" right as set out in s.3, below. Section 59(3) provides that payment of the arrears anytime prior to an application being commenced (not the "termination date") will void the Notice. The termination date is necessarily before the application date as no application can be commenced until "the day following the termination date": Act s.74(1).
The standard RTA-issued Notice of Termination forms (N4) state this advisory as: "I can apply to the Landlord and Tenant Board to have you evicted if you do not pay this amount" (plus any additional rent that comes due) by the date of termination, which technically is accurate and avoids the misleading aspect noted above.

(c) Notice Periods

A "notice period" is the time that must expire between the service of a Notice of Termination and the "date of termination" specified in the Notice. Service rules are discussed in Ch.13, s.8 ["General Board Procedures: Service and Filing of Documents"].

The notice period for a daily or weekly periodic tenancy is "the 7th day after the notice is given" [Act s.59(1)]. The notice period for any other periodic or term tenancies (including the prevalent 'monthly periodic tenancy') is "the 14th day after the notice is given" [Act s.59(1)].

For the rules for "counting time" see Ch.13, s.9 ["General Board Procedures: Calculation of Time"].

For the distinction between a periodic and a term tenancy see Ch.1, s.2(e)["Fundamentals: Formation of a Tenancy: Periodic v Term Tenancies"].


3. Notice-to-Application "Catch-up Payment"

If the tenant, after the time that a "Notice of Termination for Non-Payment of Rent" is served but before the landlord actually makes Application to the Board for orders terminating and evicting the tenant, pays the following to the landlord, the Notice becomes void [Act s.59(3)]:
  • the arrears owing to the "date of termination" stated in the Notice of Termination; and

  • any additional "rent" that would normally have become due since the "date of termination".
On this issue, see the Note at s.2(b), above.

Note that the Board takes the view that the claiming, on a Notice of Termination, of amounts owing other than arrears of rent (for example: NSF cheques charges, rent deposits, ultility arrears) may result in the Notice being void: Interpretation Guideline 11 (linked above).


4. Landlord Application Procedures

(a) When Application May be Commenced

The landlord can make an Application to the Board for an order of termination and eviction for "non-payment of rent" the day after the termination date set out in the Notice of Termination [Act s.74(1)], and anytime thereafter.
Note:
These timeframes are different from those applicable to other causes and reasons of termination and eviction, where (usually) the Application can be made anytime after the Notice of Termination is issued [Act s.71], up to 30 days after the date of termination [Act s.46].
Form L1: Application to End a Tenancy for Non-payment of Rent and to Collect Rent the Tenant Owes

(b) Issues

Subject to the operation of any "catch-up payment" provisions (discussed below), the main issue in a "non-payment of rent" application hearing is almost always what the legal rent is and whether it has been paid. This is invariably an issue of cancelled cheques, receipts and bank statements.

That said, the Board does have jurisdiction to consider some general defences [see Ch.9, s.5: "Termination Defences: Positive Defences", and s.9: "Tenant's Rights" Defence", below].


5. Application-to-Order "Catch-up Payment"

(a) Overview

If the tenant, after the time that the landlord commences (ie. files with the Board) the Application for orders terminating and evicting the tenant, but before the Board issues an eviction order - pays the following to the landlord, the Application will be discontinued [Act s.74(2)]:
  • the arrears owing to the "date of termination" stated in the Notice of Termination;

  • any additional "rent" that would normally have become due since the "date of termination", and

  • the landlord's Application fee (which the landlord paid to the Board, which at 01 July 2010 is $170).
Tenants would be wise to make such payments by certified cheque or money order, filing an Affidavit verifying that it has been given to the landlord (with a copy of the bank or m.o. receipt as an exhibit to the affidavit) with the Board as soon as possible afterwards.

(b) Interpretation Guideline 11 re "Catch-up Payments"

The following extract from Interpretation Guideline 11: "Eviction for Failure to Pay Rent" sets out the Board's view of these "catch-up payments". I quote them extensively as the Board's administrative perspective on the issue is so important:
Amount Payable to Prevent an Eviction

....

Before the order is issued

Subsection 74(2) provides that if the tenant pays the landlord the full arrears, the application fee and any additional rent that is owed as of the date of payment by the tenant, before the eviction order is issued, the landlord's application will be discontinued.

6. Hearings and Board Orders

A hearing will be scheduled and heard on the issue of (lawful) rent, arrears totals, additional fees and any defences raised by the tenant [generally see Ch.13: "General Board Procedures" and Ch.14: "Hearings, Orders and Enforcement"].

Board Orders terminating and evicting based on non-payment of rent must contain the following particulars [Act s.74(3)]:
  • the amount of rent arrears and overhold compensation due to the date of the order;

  • the daily amount of any future "overhold compensation";

    Regarding "overhold compensation" see Ch.4, s.4(g): "Termination Fundamentals: General Landlord Terminations and Eviction Procedures: Ancillary Landlord Remedies: Arrears of Rent and Overhold Rent".

  • any cost orders;

    Regarding "costs" see Ch.14, s.6(d): "Hearings, Orders and Enforcement: Decisions, Reasons and Final Orders: Final Orders: Party and Board Costs".

  • an advisory as to the tenant's Order-to-Enforceable-Order "Catch-up Payment" rights. [explained in s.7 below] - and the specific amount of such payment; and

  • an advisory that if the tenant has made a prior "Tenant's Motion to Set Aside Eviction Order on Enforceable-Order-to-Eviction "Catch-Up Payment" [as per s.8 below] in respect of the period of the tenancy that they may not make any more such motions with respect to the same period of the tenancy.


7. Order-to-Enforceable Order "Catch-up Payment"

(a) Overview

Under the previous legislation, the Tenant Protection Act (TPA), default orders (where the tenant failed to file a "dispute" to the landlord's application) were "unenforceable" until 10 days after the Order was issued [TPA s.83(2)]. That law has changed, largely because most default proceedings have been abolished under the RTA. Now - while a Board hearing a termination and eviction application under the RTA has discretion to delay the "enforceability" of an eviction Order [see Ch.9, s.5(b): "Termination Defences: Positive Defences: Relief from Forfeiture"], there is no fixed rule as to how long - or even if - the Board will order the enforceability of the Order to be delayed.

However, if the enforceability of the Order is delayed (remember - it may not be), the time between the Board Order and its enforceability creates another "window" where another "catch-up payment" provision applies, as explained here.

(b) "Final Catch-Up Payment"

If the tenant, after the Board issues an eviction order, but before such order becomes enforceable, pays the following "Final Catch-Up Payment" to the landlord or tot he Board (see below), the Application is discontinued [Act s.74(4)]:
  • the arrears owing to the "date of termination" stated in the Notice of Termination (as set out in the Board Order);

  • "the amount of additional rent that would have been due under the tenancy agreement as at the date of payment by the tenant had notice of termination not been given;"

  • also, if the landlord has combined the termination and eviction application with one under s.87 for arrears of rent and/or overhold compensation (which they normally would have), then any amounts ordered by the Board for:

    - any related NSF cheque charge/s from the landlord's bank [maximum of $20 each], and

    - landlord's administrative NSF fee/s [maximum of $20 each].

  • costs ordered by the Board.
It is important to remember that the amount of the "final catch-up payment" can increase with each regular "rent due date" that passes - but not daily by the accruing of daily overhold compensation set out in the Order. At this stage the overhold compensation figure is primarily important as a debt calculation total should the tenancy not be restored.

(c) Payment Procedures

Where the tenant makes a "final catch-up payment" to the Board within the required time frame, "the Board shall issue a notice to the tenant and the landlord acknowledging that the eviction order is void" [Act s.74(5)]. This is by far the easiest and safest method for the tenant to make such payment as it will result in the voiding ("staying") of the eviction order when the Board notice is filed with the sheriff's office (which the tenant must do themselves) [see Ch.14, s.7(f): "Hearings, Orders and Enforcement: Enforcement and Stays of Enforcement: Stays"].

However, where part or all of the payment is (or has been) made to the landlord, the tenant will want to prepare documentary proof of this in the form of an Affidavit. The affidavit should total amounts paid and attach copies of cancelled cheques, money order receipts, etc as exhibits). Cash payment is unwise, even where a receipt is promised - but where payment or part thereof has been made in cash this fact should be stated in the affidavit, with date and circumstance details.

Tenants making such "final catch-up payments" must ensure that they have made full payment. Even the slightest shortfall will allow the eviction proceedings to continue.

(d) Tenant's Ex Parte Motion to Determine Payment and Void Eviction Order

Failing clear evidence (or landlord acknowledgement) that the final catch-up payments/s have been made and the eviction proceedings have been stopped, the tenant may make an ex parte (without notice) motion [see Ch.13, s.13: "General Board Procedures: Motions"] to the Board for a determination that they have fully paid the above catch-up payment (either to the landlord, or to both the landlord and the Board in parts), and for a confirmation that the previous eviction is void [Act
s.74(6].

Tenant's Affidavit and Motion to Void an Eviction Order for Arrears of Rent

The Board will rule on the motion without a hearing [Act s.74(7,8)] (ie. solely on the filed affidavit and the terms of the previous eviction order).

Tenants making such an Application to determine the issues must ensure that they have made full payment of the "final catch-up payment". Even the slightest shortfall will allow the eviction proceedings to continue.

(e) Landlord's Motion to Set Aside Ex Parte Order

The landlord may, within 10 days after the issuance of such an ex parte Board order determining the payments and voiding the eviction order (as immediately above), make a motion to "set aside" the ex parte order if they dispute the payment/s. If successful, such a motion reinstates the eviction order. In such a proceeding, the landlord must serve Notice of Motion on the tenant [Act s.74(9)] (ie. it is not ex parte).

Form S2: Motion to Set Aside an Ex Parte Order

The Board will consider this motion by hearing. In such a hearing the Board shall [Act s.74(9)]:
  • refuse to set aside the ex parte order determining the "final catch-up payment" and voiding the eviction if satisfied that the full payment was made prior to the eviction order becoming enforceable - or has since been made in full (ie. anytime up to and including the decision on the landlord's motion);

  • otherwise, set aside the ex parte order, thus reinstating the eviction order.
(f) Interpretation Guideline 11 re "Catch-up Payments"

The following extract from Interpretation Guideline 11: "Eviction for Failure to Pay Rent" sets out the Board's view of these "catch-up payments". I quote them extensively as the Board's administrative perspective on the issue is so important:
AMOUNT PAYABLE TO PREVENT AN EVICTION

....

After the order is issued

Under subsection 74(3), an order must specify the amount of rent arrears, the daily compensation payable and any costs ordered by the Board. The order will also set out any amount payable for NSF and administration charges. The order must also inform the tenant and the landlord that the order will become void under subsection 74(4) if the tenant pays the landlord or the Board the amount specified in the order before it is enforceable. An order is enforceable on the date the order specifies that the Court Enforcement Office (Sheriff) may give possession to the landlord.

If the tenant pays the amount specified in the order to the Board, staff of the Board will issue a notice to the landlord and tenant acknowledging that the order is void. If the tenant pays the entire amount to the landlord or part to the landlord and part to the Board, the tenant may file a motion with the Board, without notice to the landlord, asking for a Member to issue an order determining that the tenant has paid the full amount due and confirming that the order is void. Such an order will be made without holding a hearing. However, within ten days after it is issued, a landlord may, on notice to the tenant, make a motion to set the order aside. A hearing will be held to determine the landlord's set aside motion.

8. Enforceable-Order-to-Eviction "Catch-Up Payment" and Tenant's One-Time Motion to Set Aside Eviction Order

(a) Overview
Important Note:
These provisions apply after the eviction Order becomes enforceable, unlike those in s.7 which apply before the Order becomes enforceable. Remember though that under the RTA some eviction orders may be immediately enforceable, making the s.7 procedures irrelevant.
If the tenant, after the eviction order becomes enforceable, but before the actual eviction by the sheriff, pays the "final catch-up payment" amount [see s.7(b) above] to either the Board, the landlord or both in parts then the tenant may make a motion, on notice to the landlord, to set aside the eviction order [Act s.74(11)] (a "set aside" motion).

Tenant's Affidavit and Motion to Void an Eviction Order for Arrears of Rent
Issue Re Frequency of Set Aside Motions

RTA s.74(12) says that a tenant may only make such a motion once "during the period of the tenant's tenancy agreement with the landlord". It is obvious to me that this provision is intended to mean that the tenant can only bring such a 'last-ditch' motion once during the entire tenancy, sort of a last and only chance (this is also the Board's perspective as set out in Interpretation Guideline 11). However the term "period" used here has an unfortunately special meaning in L&T law: it refers to the time span over which rent is paid (typically one month, thus a "periodic tenancy"). This usage of the term "period" is all over the act, particularly with respect to the issuance of 'regular' Notices of Termination as explained in Ch.5 (which can be issued at the end of a period or term of the tenancy). That being the case, it can be argued that these motions can be made quite often, just not more than once in any "period" (again, typically a month). The Supreme Court of Canada has stated on numerous occasions that any ambiguity in statutory interpretation of 'benefits-conferring legislation' (which the RTA is) should be read in favour of the rights-claimant (here the tenant): Rizzo v Rizzo Shoes (SCC, 1998). I am unaware of any case law on this specific issue.
Case note:
In the case of Levine v Jack Aaron and Company Ltd. (Div Ct, 2011) the Court held that terms of it's own order (made in the course of a statutory RTA appeal) establishing terms under which a tenant might avoid eviction superceded the foregiveness provisions of RTA 78(11), since the court order was made under separate statutory authority granted to the court by the RTA itself [RTA s.210(5)].
(b) Supporting Evidence on Set Aside Motion

Such a motion should be supported by an affidavit setting out amounts paid directly to the landlord and to the Board, with supporting attached documentary exhibits. Note that the amount of the "final catch-up payment" may have increased due from earlier "catch-up payment" amounts due to the 'coming due' of additional regular rent payments [ie. additional rent payments (usually monthly) that would "normally" have come due in the meantime].

(c) Stay on Filing of Set Aside Motion

The tenant's filing of a set aside motion with the Board stays (suspends) the eviction order [Act s.74(13)], rendering it unenforceable until the motion is resolved.

Procedures for the issuance and filing of "stays" (suspensions) of Orders pending the outcome of set aside motions are discussed in Ch.14, s.7(f) ["Hearings, Orders and Enforcement: Enforcement and Stays of Enforcement: Stays"]. While Board staff will prepare and issue the stay document, the burden lays on tenants to file it with the sheriff's office. Only then will it be effective to prevent the eviction.

(d) Denial of Set Aside Motion

If the Board finds that the "final catch-up payment" has not been made in full, then it shall (ie. must) deny the set aside motion, lifting the stay and reinstating the eviction order [Act s.74(14)]. In such a case the Board may also order compensation for any additional eviction-related fees paid by the landlord [Act s.74(18)].

(e) Set Aside Conditions

Of course, if satisfied that the "final catch-up payment" has been made, the Board shall order that the eviction order is void [Act s.74(14)].

However, if the landlord has since paid out any additional eviction-related fees (ie. to the sheriff or court) - the Board shall make any order voiding the eviction order conditional on:
  • the tenant paying such additional fees to the Board by a specified date [Act s.74(15)], and

  • the issuance by the Board of a Notice confirming that the eviction order is void.
Issuance of such a Notice to the parties is automatic upon the making of such an 'additional fees' payment to the Board [Act s.74(16)], and it stays any eviction proceedings when it is filed with the sheriff's office (which the tenant must do) [see Ch.14, s.7(f): "Hearings, Orders and Enforcement: Enforcement and Stays of Enforcement: Stays"].

Failure of the tenant to make such additional payment (for eviction-related fees) within the time ordered automatically lifts the earlier stay and reinstates the eviction order [Act s.74(17)].

(f) Interpretation Guideline 11 re "Catch-up Payments"

The following extract from Interpretation Guideline 11: "Eviction for Failure to Pay Rent" sets out the Board's view of these "catch-up payments". I quote them extensively as the Board's administrative perspective on the issue is so important:
AMOUNT PAYABLE TO PREVENT AN EVICTION

....

After the order is enforceable

Under subsection 74(11), if the tenant pays the amount specified in the order and any additional rent owing after it becomes enforceable but before it is enforced by the sheriff, the tenant may file a motion with the Board, on notice to the landlord, to set aside the eviction order. The eviction order is stayed and cannot be enforced until the Board issues an order lifting the stay.

Although subsection 74(11) refers to an amount being paid to the Board, the tenant may pay the amount required to be paid under that subsection to the landlord, to the Board, or in part to both. This interpretation is consistent with the wording in subsection 74(11) because if the tenant has paid an amount to the landlord that is sufficient to void the order, then the amount that the tenant must pay into the Board under subsection 74(11) is ?$0?.

This interpretation of subsection 74(11) avoids the absurd result of refusing to void an order and allowing a tenant to be evicted where the tenant paid the full amount to the landlord.

The Board will hold a hearing on the motion. If the tenant paid some or all of the amount owing to the landlord by non-certified cheque, and the landlord is concerned that the cheque may be returned NSF, the member holding the hearing can grant an adjournment or permit post-hearing submissions to allow time for the cheque to clear before making their final order.

If the Board determines that the tenant paid the arrears, the additional rent, any NSF and administration charges and the costs ordered by the Board, the Board will make an order declaring the eviction order to be void. However, under subsection 74(15), if the Board determines that the landlord has paid a non-refundable amount under the Administration of Justice Act for the purpose of enforcing the order (e.g. sheriff fees), the Board will specify that amount in the motion order and require the tenant to pay that amount into the Board by a specified date.

If the tenant pays the specified amount by the specified date, a Board employee will issue a notice to the tenant and the landlord acknowledging that the eviction order is void.

If the Board determines that the tenant did not pay the specified amount by the specified date, a Board employee will issue a notice stating that the stay of the order ceases to apply and the eviction order may be enforced.

9. "Tenant Rights" Defence

(a) Overview

A tenant responding to any non-payment of rent termination and eviction proceedings has the right to argue in "defence" any issues which could have been advanced by way of separate tenant application to the Board [Act s.82(1)]. This is a new "defence" provision under the RTA, as previously such matters had to be raised by way of "counter-application". Now they may simply be raised in the context of the primary landlord non-payment of rent termination and eviction proceeding.

In essence these are what are called 'set-off' defences, arguing that while the tenant owes some money to the landlord, so the landlord owes them some money which should be 'set off' (ie. deducted) from the landlord's rent arrears claim.

(b) Defences Available

There are a range of tenant applications sprinkled throughout the program in relation to various issues, but the ones most likely to arise for defence purposes are:
  • Tenant Rights Applications (regarding repair, maintenance, privacy, harassment, etc) [see Ch.3, s.5: "Tenant Rights and Remedies: Tenant Rights Applications"]; and

  • Tenant Application of Refusal of Consent to subletting or assignment) [see Ch.1, s.5(e): "Fundamentals: Subletting, Assignments and Similar Arrangements: Tenant Applications on Refusal of Consent"].
Where such a 'defence' is raised this is done, the Board has available to it the full range or remedial orders that would be available to it under such a tenant application [Act s.82(2); see Ch.3, s,5 as noted above].
Note:
The same "tenant's rights" defence is available in any termination and eviction proceedings (ie. for reasons or causes other than non-payment of rent) - but only as a defence to claims for arrears of rent or overholding compensation within such proceedings, not for the termination and eviction remedies sought in such applications [see Ch.4, s.4(h): "Termination Fundamentals: General Landlord Termination and Eviction Procedures: Ancillary Landlord Remedies".

Case Note: TCHC v Vlahovich (Div Ct, 2010)

A tenant countered an application to evict for non-payment of rent with a rent rebate application based on non-repair by the landlord (re flooding). The Board order, upheld on review, that a large rebate be granted to the tenant for periods reaching back more than one year prior to the tenant's application. The court set aside those orders, finding that the limitation provision applicable to such applications [RTA s.29(2)] clearly operated to limit such awards to conduct occuring within one year prior to the making of the tenant's application - even though it was made in the context of an eviction defence as is allowed under RTA s.82(1).

Case Note: Urbanowicz v Transglobe (Div Ct, 2010)

Where a tenant withheld rent as a tactic over a cockroach dispute but did
not expressly apply for an abatement of rent, the Board's conclusion that
it had no jurisdiction to consider a rent abatement was an error of law.
The circumstances of the rent withholding made a rent abatement an obvious
issue and the tenant's pleading for "any other costs or orders that the
Board may deem appropriate" ..." were adequate to give the Board rent
abatement jurisdiction. It should be noted that in such a case the Board
would have a duty to clearly indicate to the landlord it's intention to
consider the abatement issue.

Case Note: Collins v BCIMC Realty Corporation (Div Ct, 2009)

This was an interesting non-payment of rent case. The tenant countered the non-payment with a tenant's rights abatement application grounded alleging the premises were uninhabitable condition [as is allowed under RTA s.82(1)] and sought to set-off the amount of the potential abatement against arrears. The Board essentially severed the matters, making an interim order of eviction and assessing arrears at just under $4,000. It adjourned the abatement issue but delayed the enforceability of the eviction to the return date for the abatement issue.

The Board, ostensibly while considering it's relief from forfeiture jurisdiction under RTA s.83, reasoned that as the amount of any abatement would not likely exceed the arrears, the balance of 'prejudice' favoured the landlord. The tenant appealed this to Divisional Court on the grounds that the Board had no jurisdiction to sever the matters - apparently on the argument that s.82(1) gave the tenant the right to counter a non-payment application with an abatement application by way of 'set-off'. The court upheld the Board's interim order and quashed the appeal, holding implicitly that the delaying of the eviction order to the return date of abatement application somehow (the court's rationale is sketchy) 'protected' whatever rights the tenant had to set-off.

From the reported reasons it is unclear whether it was raised in argument, but I think a stronger argument against the Board's interim order is that relief from forfeiture under s.83, which both the Board and the court conflated with the common law interim injunction standard of 'balance of convenience', could not be properly considered until all of the primary issues had been decided. Relief from forfeiture, both logically and traditionally, is the final pre-Order consideration in any eviction proceeding and to proceed to it before all the substantive issues (ie. the tenant's abatement claim) had been resolved was plainly premature. Rather than using s.83 relief from forfeiture in it's 'shield' function to provide equitable relief to tenants, the court is endorsing turning it into a 'sword' against them.
Case Note:: In Lomico 188 Inc. v. Mouritsen (Div Ct, 2014) the court held that a tenant was not entitled to a stay of LTB non-payment of rent proceedings pending resolution of a separate civil claim against the landlord which conceivably might have resulted in a damage claim which could form the basis of an equitable set-off defence against non-payment of rent. The held that the LTB, not being a court of equity, could not grant such relief (ie. equitable set-off) - even if the tenants had a civil damage judgment in hand).
(c) Tactics

This "tenant rights" defence was designed to legitimize "rent withhold" strategies used by tenant in past (with limited success) to address chronic landlord breach issues. It is a tempting defence if properly prepared, and well in advance - but it opens the door to frantic, ill-prepared and last-minute defence issues which I predict the Board will quickly grow impatient with. In an attempt to ensure that such tenant arguments are made in good faith, the RTA expressly directs the Board, when considering the making of tenant's rights remedial orders, to "consider whether the tenant or former tenant advised the landlord of the alleged breaches before applying to the Board" [Act s.30(2)].

Further, while there is no strict statutory requirement that the tenant raising these issues in defence give the other parties and the Board notice of that intention (and the supporting evidence), it is highly desirable in terms of natural justice that they do so. As noted above, tenants wishing to use this defence are well-advised to have documented a history of complaints to the landlord over the tenant rights breach issues (perhaps with photos and other evidence), to serve such documentation (on the landlord) and file it (with the Board) in advance of raising the issues at hearing [see Ch.13, s.11: "General Board Procedures: Document Disclosure"].

As a practical matter, tenants arguing breach of their rights in defence of a non-payment of rent application run the risk, if they lose, of losing their rental unit. As a tactical matter it is best to make it clear early in the hearing, to all present, that the tenant has the funds to pay the arrears available (if of course this is true), but wishes the Board to hear and 'quantify' the value of the tenant rights breach set-off. Thus, even if the tenant ultimately 'loses' in the sense that they are found to owe some money to the landlord, they can make their 'catch-up payment' (see above ss.7 and 8) to avoid the eviction - or alternatively, the Board could refuse the eviction conditional on the monies being paid by a fixed date.

While it would be tempting and (otherwise) sensible to deposit the disputed monies with the Board, this can unwittingly invoke the "catch-up payment" provisions discussed throughout this chapter and terminate the proceedings entirely in the landlord's favour.


10. Payment Agreements and Settlement Orders

(a) Overview

The Residential Tenancies Act sets out specific rules allowing for Board confirmation of 'party' settlements or "payment agreements" (which are distinct from "Mediated Settlements" - see Note below) reached in landlord applications to terminate and evict for non-payment or rent, and/or seeking compensation for arrears of rent [Act s.206(1)] (practically the two are almost always joined, though technically an application for arrears of rent may be sought by itself: Act s.87(1); see Ch.4, s.4(h): "Termination Fundamentals: General Landlord Termination and Eviction Procedures: Ancillary Landlord Remedies".]
Note:
It is important to note that such "settlement orders" are distinct from "mediated settlements" discussed in Ch.14, s.2 ["Hearings, Orders and Enforcement: Mediated Settlements"] [Act s.206(3)]. "Mediated settlements" are allowed to contain terms which contravene otherwise mandatory RTA tenant protections, and provide for specific ex parte (without notice) application procedures where the landlord unilaterally alleges breach of the settlement terms [see Ch.8, s.3: "Other Termination Proceedings: Ex Parte Applications on Breach of Mediated Settlement", above]. The "settlement orders" discussed in this section do not entail these additional 'shotgun' provisions.
Use of these settlement provisions is entirely voluntary to the parties. If they wish to settle their case without benefit of a Board order confirming the terms, then they are free to do so.

(b) Obtaining a Settlement Order

The Board has issued a form to be used for "payment agreements" to settle non-payment of rent proceedings:

Payment Agreement

Assuming the payment agreement contains no legally-objectionable provisions (see below), the Board will issue an over-the-counter (ie. no hearing) order confirming the terms of a settlement of a landlord's application to terminate and evict for non-payment or rent, and/or seeking compensation for arrears of rent - if the parties file it, signed by all parties, with the Board before the hearing commences.

Practically, if the parties present the settlement to the Board at the commencement of the hearing, the Board would likely just confirm the terms "on the record" in an order, or view the matter as not yet having commenced, and send it to the registrar to make an over-the-counter order as per the discussed terms. Unrepresented parties engaged in such a settlement against lawyers or experienced paralegals may want to rely on the Board to state the settlement terms in the order, rather than relying on self-serving documents drafted by professionals on the other side.

(c) Contents of Settlement Order

A settlement order may include terms regarding payment of [Act s.206(2)]:
  • any arrears owing;

  • any NSF cheque charges from the landlord's bank;

  • the landlord's own NSF cheque fee (presently set at a maximum of $20: September 2010);

  • the landlord's Board application fee ($170: September 2010); and

  • ongoing rent during the period required to pay off the above arrears.
However, in such an order "the Board shall not [Act s.206(3)]:
  • order that the tenancy be terminated, or

  • "include a provision allowing for an application under section 78"

    This refers to 'mediated settlements' as per the "Note" in (a) above. These are special "ex parte" (without notice) application procedures where the landlord can unilaterally allege breach of a mediated settlement in order to obtain eviction [see Ch.8, s.3: "Other Termination Procedures: Ex Parte Applications on Breach of Mediated Settlement"]. The above provision bars the Board from making such orders in relation to settlements made under this section (thus protecting the tenant).
If such objectionable terms are included in a Board-submitted payment agreement then the Board will continue with the hearing as though no settlement has been reached.

(d) Landlord's Request to Re-Open Application on Breach by Tenant

On a landlord's allegation of breach of terms of the settlement order by the tenant, the landlord may "request" that the original application be "re-opened" - ie. no new application is required and the 'old' one restarts [Act s.206(4)]. Such a "request" must "indicate which terms were not complied with and the manner in which the tenant failed to meet the terms of the order".

Request to Re-Open an Application

The Board shall not re-open the application for hearing unless "the Board is satisfied that the tenant failed to comply with a term of the order" [Act s.206(8)].

Such a "Request" must be made within 30 days of the alleged breach of the settlement order [Act s.206(6)].

The landlord making the Request must serve a copy of it, and the Notice of Hearing (if issued), on the other parties (ie. the tenant) "within the time set out in the Rules" [Act s.206(7)]. [Author: I have not been able to locate this time in the Rules].

(e) Party's Request to Re-Open Application on False or Misleading Representations

This is a distinct "re-opening" provision from that explained in (d) above - though it uses the same form (linked above).

The landlord or tenant may, within 30 days of the making of the settlement order, request that the application be "re-opened" (ie. no new application is required) on an allegation "that the other party coerced them or deliberately made false or misleading representations which had a material effect on the agreement" and the settlement order [Act s.206(5)].

The party making the request must serve a copy of it, and the Notice of Hearing (if issued), on the other parties "within the time set out in the Rules" [Act s.206(7)]. [Author: I have not been able to locate this time in the Rules].

The Board shall not re-open the application for hearing unless "the Board is satisfied that there was coercion or deliberate false or misleading representations which had a material effect on the agreement" and the settlement order [Act s.206(9)]. The term "material" here can be understood to mean that the alleged misrepresentation induced a party to enter into the settlement, when they otherwise would not have.
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