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10. Payment Agreements and Settlement Orders
As of 21 July 2020, with the Bill 184 COVID amendments, this section is superceded by s.11 below. I'm leaving this s.10 still posted, so readers can understand the context of the new s.11, and because it may be re-instated in it's original form after the virus crisis abates.(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: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.
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.
(b) Obtaining a Settlement Order
The Board has issued a form to be used for "payment agreements" to settle non-payment of rent proceedings:
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)]:
However, in such an order "the Board shall not [Act s.206(3)]:
- 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 2019);
- the landlord's Board application fee [$190 ($175 e-file): September 2019]; and
- ongoing rent during the period required to pay off the above arrears.
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.
- 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).
(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.
11. COVID-era Arrears Agreements and Ex Parte Enforcement
With Bill 184 (received Royal Assent 21 July 2020), the RTA was amended in an attempt to deal with extensive rent arrears being accumulated by unemployed workers with the COVID crisis. The scheme was essentially to (1) encourage parties to enter into LTB-sanctioned terms of payment agreements [under the pre-existing RTA 206 rent arrears settlements (see s.10, above)], and (2) to render such agreements when breached enforceable by using the pre-existing ex parte [RTA s.78] applications [see Ch 8: "Other Termination Proceedings: s.3 "Ex Parte Applications on Breach of Mediated Settlement or Conditional Board Orders"].
Readers can think of these COVID provisions as a merger of these two procedures, with the underlying purpose to get landlords and tenants to reach arrears terms of payment agreements.
Some history is in order. These Bill 184 amendments 'took over' both politically and procedurally from the 19 March 2020 order of Chief Justice Morawetz of the Superior Court, made on the application of the Attorney General. In that order (which was a remarkable instance of co-operation between the executive and the judicial branch of government in a time of social emergency) the court issued an unprecedented Order suspending residential tenancy evictions (with exceptions by special court permission). That order ran from 19 March to 31 July 2020. At 21 July 2020, the Bill 184 provisions received Royal Assent in time to take over termination and eviction for non-payment matters from the expiring Morawetz court order.
Obviously, the intent of the Bill 184 amendments (at least with respect to the massive issue of accumulated rent arrears during COVID) is to minimize the potential mass evictions that still loom under this situation. The situation, being one effecting 'hard-working people' [ie. low-income, hand-to-mouth earners] posed a unique challenge to the in-power Ontario conservatives as the 'victims' were not the classical ones (ie. the poor and disabled). They had to weigh their political commitments to these low-income earners against the undoubtedly better-off landlord class. The result is what you see explained here, and it amounts to (1) no discounting (or 'forgiving') of rent, and (2) efforts at a payment-extension coupled with significant sacrifice of tenant rights. The goal is to ensure that landlords still get their full entitlement, only perhaps later. The landlord class bears little, if any, suffering from the virus epidemic while tenants bear practically all the burden - compounded by what are essentially a stripping of legal rights to ensure that they don't further default.
(b) The Bill 184 'System'
So when a landlord, freed from the ban on evictions of the Morawetz order, first moves to terminate and evict for non-payment of rent, there has to be a 'system' in place to lessen the harshness of the normal outcome. This system is a merger of the pre-existing RTA 78 (ex parte eviction applications) [see Ch 8, s.3: "Other Termination Proceedings: Ex Parte Applications on Breach of Mediated Settlement or Conditional Board Orders] and the RTA s.206 provisions (non-payment terms of payment agreements) [see Ch.7 "Non-Payment of Rent Termination", s.10: "Settlement Orders", above].
The Bill 184 COVID crisis system is explained below.
. Landlord Perspective
The only modification that Bill 184 provides from a landlord perspective is a subtle one [RTA 83(6)]:
83(6) It provides that when a landlord applies to terminate and evict a tenant for non-payment of rent that they shall have weighed in evidence - in addition to the LTB's pre-existing discretion under RTA 83(1) [discretion to refuse or delay the enforcement of the eviction] - whether "the landlord has attempted to negotiate an agreement with the tenant including terms of payment for the tenant’s arrears" [RTA 83(1)]:
Without restricting the generality of subsections (1) and (2), if a hearing is held in respect of an application under section 69 for an order evicting a tenant based on arrears of rent arising in whole or in part during the period beginning on March 17, 2020 and ending on the prescribed date, in determining whether to exercise its powers under subsection (1) the Board shall consider whether the landlord has attempted to negotiate an agreement with the tenant including terms of payment for the tenant’s arrears.
83(1) Upon an application for an order evicting a tenant, the Board may, despite any other provision of this Act or the tenancy agreement,While RTA 83(1) gives (and gave before Bill 184) the authority for the LTB to "refuse to grant the application unless satisfied, having regard to all the circumstances, that it would be unfair to refuse", the fact of continued non-payment was universally held to render it 'unfair to refuse' - and eviction would result.
(a) refuse to grant the application unless satisfied, having regard to all the circumstances, that it would be unfair to refuse; or
(b) order that the enforcement of the eviction order be postponed for a period of time.
This added provision [RTA 83(6)] seems slight but, if used assertively (which is yet to be seen at the date of writing: 20 September 2020) can be effective. With an assertive LTB board member, it could actually result in termination applications where arrears still exist, being denied.
Evidence of a belligerent landlord as to their lack of 'reasonableness' (in the form of their unwillingness to enter into a 'terms of payment' agreement) in this time of social crisis becomes relevant, and - if found sufficiently wanting - they lose. In practice, any such scenarios would certainly be channelled to negotiation [under RTA 194], ideally with counsel that could explain the consequences of further belligerence to the landlord. The goal of course is to have the parties reach a Bill 184 arrears terms of payment agreement.
The RTA 83(6) provision applies to arrears "arising in whole or in part during the period beginning on March 17, 2020 and ending on the prescribed date"[RTA 83(6)] - ie. all COVID-caused arrears. At the date of writing [20 September 2020] the 'prescribed date' [it will be prescribed in the Regulations] has not yet been named [though that a date will be set is anticipated in RTA 83(8)]. But right now this 'COVID' period is still running.
This provision applies to post-21 July 2020 applications, and those already filed but "not finally determined before that day" (21 July 2020) [RTA 83(7)] - so essentially all active and currently-brought applications [at least until a date is prescribed ending the current RTA 83(6)].
. Tenant Perspective
The tenant's perspective on these Bill 184 non-payment termination amendments is heavily slanted to 'reach an agreement, or else'. With an agreement (almost any agreement) the tenant gains the (albeit uncertain) protection of RTA 206(3), the bar on terminations (and thus evictions):
206(3) Be clear, in order for RTA 206(3) [the termination bar] to operate, there must be a RTA 206(1) Order:
In an order under subsection (1) issued on or after the day subsection 31 (1) of Schedule 4 to the Protecting Tenants and Strengthening Community Housing Act, 2020 comes into force [21 July 2020], the Board shall not order that the tenancy be terminated.
206 (1)Without a RTA 206(1) 'terms of payment' agreement the tenant will still be at risk of termination and eviction. Given the complexity of the RTA regime and the brutality of the present supply-shortage in the rental market, the incentive is obvious: 'agree, if you have a chance to'. If the tenant refuses such an offer, then they must live with the LTB's decision - largely based on the Board member's assessment of who has been most 'reasonable' in these unusual circumstances.
Where a landlord has made an application under section 69 for an order terminating a tenancy and evicting the tenant based on a notice of termination under section 59 or an application for payment of arrears of rent, or both, the Board may make an order including terms of payment without holding a hearing if,
(a) the parties have reached a written agreement resolving the subject-matter of the application;
(b) the agreement has been signed by all parties; and
(c) the agreement is filed with the Board before the hearing has commenced.
Now comes the hard part for the tenant:
206(3.1)A 's.78 provision' is one where the landlord can, on the allegation that the tenant has breached the terms of payment agreement, move ex parte (without notice) to re-open the application - essentially a no-notice, expedited eviction. The first the tenant will hear of this is the letter they get (if it arrives) from the LTB containing the Order of termination and eviction. Challenging s.78 proceedings are dealt with in Ch 8, s.3: "Other Termination Proceedings: Ex Parte Applications on Breach of Mediated Settlement or Conditional Board Orders".
In an order under subsection (1) issued on or after the day subsection 31 (1) of Schedule 4 to the Protecting Tenants and Strengthening Community Housing Act, 2020 comes into force [21 July 2020], the Board may include a provision allowing a landlord to make an application under section 78 if the tenant fails to comply with one or more of the terms of the order.
It's not over yet. Few landlords or landlord's counsel would resist the inclusion in a landlord-drafted and Board-sponsored 'terms of payment' agreement [authorized under S.194(1)], of "provisions that contravene any provision under this Act" [RTA 194(2)]. That means, essentially, the tenant 'signing away' the protections of the RTA, perhaps completely. In other contexts I have referred to this as a 'last-resort' provision.
So in that likely case forget landlord and tenant law, it's otherwise gone:
194 (1) The Board may attempt to settle through mediation or another dispute resolution process any matter that is the subject of an application or agreed upon by the parties. Few tenants will have the fortitude or the familiarity with the law to dispute the terms of the terms-of-payment agreement drafted by the landlord or their counsel, but when they spot these particularly onerous provisions they should be raised with the Board in objection. Tenants should not, by any means, view the agreements presented to them by landlords as 'standard' or 'Board-recommended' - they should be read thoroughly.
(2) Despite subsection 3 (1) and subject to subsection (3), a settlement agreed to under this section may contain provisions that contravene any provision under this Act.
. Re-Opening the Application
Even if such an Order is made, the landlord (only) may file to re-open the application if there is a failure by the tenant to comply with the order [RTA 206(4)], made within 30 days of the alleged failure [RTA 206(6)].
Within 30 days of the order, either a landlord or a tenant, may file to re-open the application "on the basis that the other party coerced them or deliberately made false or misleading representations which had a material effect on the agreement and the order issued under subsection (1)" [RTA 206(5)].
The landlord (only) may re-open the application under the above two re-opening provisions, even if the order includes a s.78 ex parte provision (see above in 'Tenant Perspective') [RTA 206(5.1)].
Generally, for these provisions see s.10 above.
In summary, the province has responded to the COVID crisis by treating those suffering from virus-caused unemployment as any pretty much any other cash-short tenant. The only difference is that the LTB, at the discretion of the sitting Board member, may adjudge the tenant 'reasonableness' of when they pay off their full arrears. The landlord, on the other hand, is adjudged by their degree of patience in waiting to receive the full arrears. There is no suggestion of rent foregiveness or waiver, and otherwise the tenant bears to full brunt of the social and economic burden of the epidemic.