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Focus: Judge calls for changes to rules around rental disputes

|Written By Marg. Bruineman

A disturbing series of events for the landlord was enough to cause an Ontario judge to call for significant changes to the rules around rental disputes.

‘For a tenant that has not paid their rent, there is not much luck of recovering any money owed,’ says Shari Elliott.

After the parties in D’Amico v. Hitti arranged a 12-month rental agreement and signed a lease, the tenants moved in. But the landlord remained standing with her hand outstretched and nothing in it. As time passed, the tenants still hadn’t paid any rent.

The landlord then filed an application with the Landlord and Tenant Board to get the amount outstanding and get rid of the tenants. Suddenly, a cheque for the outstanding amount appeared on condition that the landlord suspend all action. The landlord agreed and accepted the cheque only to have payment on it suspended.

“There is a growing practice by unscrupulous residential tenants to manipulate the law improperly and often dishonestly to enable them to remain in their rented premises for long periods of time without having to pay rent to their landlords,” wrote Superior Court Justice Ted Matlow in his decision.

“It is practice that imposes an unfair hardship on landlords and reflects badly on the civil justice system in Ontario. It calls for the government, the Landlord and Tenant Board, and this court to respond.”

In his reasons for judgment delivered by the Divisional Court in August, Matlow asked for changes to prevent the abuses he finds are increasing. Matlow heard a slew of cases during a five-day period and could have used any of them as an example of his concern, he wrote.

By the time D’Amico got to Matlow’s court, the tenants, Rony Hitti and Anastassia Adani, still hadn’t paid any of their $3,600 in monthly rent for the Kensington Market-area home they were renting in Toronto. As a result, their total bill had accrued to $25,000. They continued to live in the home.

But it was an appeal by the tenants that brought the matter to court.

In looking to have the tenants evicted, landlord Melissa D’Amico wrote in an affidavit: “If the tenants’ appeal is not dismissed and/or if the tenants do not ultimately pay me the amounts that are outstanding and/or that will become due, I am at significant risk of being ruined financially.”

In her ongoing efforts to collect rent from the pair, D’Amico discovered they were habitual non-paying tenants. She found other instances in which they had launched appeals to remain in homes they had paid no rent for. They owed tens of thousands of dollars in rent.

Matlow didn’t just decide against the tenants. In fact, he described their appeal as “totally devoid of merit, vexatious, and an abuse of process.”

“It is my hope that those in a position to amend the rules of this court will consider this judgment and see fit to restrict the right of appeal in residential landlord and tenant cases and, perhaps, require that leave to appeal be obtained before appeals can be brought,” Matlow concluded.

Lawyer Douglas Levitt regularly finds himself in court on behalf of landlords such as D’Amico.

He says changes in legislation originally drafted to protect tenants from landlords are now in order.

“The act was there to address issues . . . created by slum landlords, but you now have slum tenants,” said Levitt of Horlick Levitt Di Lella LLP. “He [Hitti] did a bunch of savvy things to delay the inevitable. Unfortunately, there are unscrupulous tenants who take advantage of the act.”

Levitt believes the judge in this case was struck by the extent to which a tenant would go to obtain rent-free housing.

Levitt points to two areas where the government can improve the process.

For example, the tenants were free to appeal the eviction order as an automatic right. Levitt suggests having tenants apply for leave to appeal could weed out illegitimate claims.

Levitt suggests a change in the process for voiding orders for eviction. Currently, all that’s necessary in some situations is an affidavit from the tenants confirming they’ve paid the rent. But an unscrupulous tenant wouldn’t hesitate to provide false information in an affidavit. Levitt suggests that requiring tenants to pay the outstanding rent to the board would eliminate the ability to void an eviction order by relying on a false affidavit.

Barrie, Ont., lawyer Shari Elliott of Elliott & Elliott has also seen some troubling situations that may be avoidable.

“The first hurdle is to free up your income property so that you can rent it again,” she says.

“The second is to attempt to recover the rent that was not paid. While the legislation provides for recovery like any other cost award, you are left to enforce the order. For a tenant that has not paid their rent, there is not much luck of recovering any money owed.”

For investors in rental properties, Elliott suggests landlords do the basic legwork: check references and previous payments for rentals or do a credit check and secure first and last months’ rent. Make sure the payments go through. Only after the landlords do all of those checks should they hand over the keys.

Elliott also suggests creating a public registry of decisions from the board so that stakeholders such as landlords can check out past cases. A registry might make repeatedly problematic tenants more obvious to landlords.

Ultimately, she says, the priority for landlords in disputes with their tenants is to protect their property.

“What landlords have resorted to is provide a cash incentive for the tenant to leave to assist them with securing a new place to live with a different landlord. The upside to this is you typically avoid the upset tenant and the corresponding damages to your rental unit.”

When landlords identify tenants with a habit of not paying rent, Levitt suggests they act quickly as the system doesn’t move as fast as some would like and provides allowances for renters along the way.

“If they owe you on the first and they don’t pay, you get the ball rolling away,” he says.

“The best advice I can give to landlords is to move as quickly as you can.”

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