Tenant or Owner?

September 5, 2021

By Brian Babcock

Ontario’s Landlord and Tenant Board has the jurisdiction to determine the ownership of buildings, including through a simplified summary process. That determination, however, may not finally determine rights or obligations flowing from an ownership interest.

In Sutton v. Riddle, the Divisional Court, which hears appeals from the Board, has ruled that the Residential Tenancies Act has replaced the common law when it comes to the ownership of buildings on leased land. Since that involves a mixed question of fact and law, and appeals are only available on pure questions of law, the decision of the Board is not subject to appeal, and is final.

The landlord argued that at common law, which applies precedents of property law going back centuries, the buildings in question became part of the land, and thus the landlord’s property, under the well established rule that buildings are “fixtures”, meaning the buildings are attached to and form part of the land. The Board chose not to apply those rules and focussed instead upon the terms of the tenancy. The Residential Tenancies Act recognizes the existence of a “land lease” and the Board based their decision on that provision, under the law that the Board typically considers, rather than common law, which is more at home in a court of law.

A prior Divisional Court decision, Warraich v. Choudhry, had also ruled, on a somewhat different factual background, that the Board had jurisdiction to decide ownership as an issue in the context of an eviction proceeding, since only a tenant, not an owner, may be evicted. The decision is also noteworthy because the Board relied upon equitable principles to defeat the legal title to the property, but the court on appeal used the administrative law standard of deferring to a reasonable decision of the Board, rather than requiring correctness in law.

It is somewhat surprising that the Court considered this approach by the Board not to be a question of law subject to appeal. Jurisdictional questions, as a matter of administrative law, are typically considered to be questions of law subject to review. Perhaps the landlord would have done better applying for a judicial review, but that approach is usually not available where there is a right of appeal (that issue was not considered in the case).

The court did consider issues of procedural fairness, something more typically done on a judicial review, because once it decided that it had jurisdiction, the Board allowed only written submissions on the merits of the ownership issue, rather than an oral hearing. The court decided that the Board has discretion over its own process, and as long as the landlord had an opportunity to make submissions, the form was part of that discretion.

Warraich does say that the Board’s decision does not finally determine the rights of ownership, which in that dispute did end up in front of a Superior Court judge, who found that the “tenant” also had a right to a share of the value of the property. Sutton makes a similar statement. This is somewhat surprising as the court in both cases sidesteps the principle that decisions should be the final determination of issues, to avoid disappointed parties taking a ‘second kick at the can’ in a different forum, which is not an efficient use of resources. It would be very interesting to see what the Court of Appeal says on this subject.

In Warraich, it was the tenant who had applied to Superior Court, prior to the landlord applying to the Board.

If you are the landlord, and sense or know that your tenant will raise an ownership claim, you should consider whether to raise that issue in Superior Court yourself, with the more conventional litigation process and assurance that the court will consider and apply the centuries of precedents governing the common law of property ownership, before commencing eviction proceedings before the Board.

However, the court will not decide about eviction, so you will end up at the Board for that remedy. You may gain some comfort knowing that unless and until the Court of Appeal rules otherwise, Warraich and Sutton offer some protection regarding the final resolution of disputes over the rights to the proceeds of sale of the property.

Although the Landlord and Tenant Board is designed to accommodate parties bringing their own applications without lawyers, if your case involves complex issues of fact or law, the limits on judicial review and appeal suggest that you ought to obtain legal advice before charging off to the Board.