Can a landlord first evict tenant and then seek rent for failure to give notice?

The above tweet references an article in today’s Toronto Star. Obviously I have made no effort to independently verify the facts. Frankly, I hope the facts in this article are NOT true. Nevertheless, assuming the truth of these facts, I think this deserves some comment.

The article begins with:

One of Toronto’s biggest landlords has an in-house collections agency that pursues evicted tenants for two months’ rent because they didn’t give “proper notice” when they were kicked out of their apartments, the Star has learned.

MetCap Living Management, which has more than 10,000 rental units in the city concentrated in Parkdale and Scarborough, and Suite Collections operate out of the same Richmond St. E. office. Suite’s president, Brent Merrill, who also sits on MetCap’s corporate board, says everyone must give 60 days’ notice to vacate an apartment, even if they’re being evicted.

It is MetCap’s position that residents who breach their lease or give improper notice are required to pay the rent for the unit until it is re-rented or until the date that would have been the last day of the tenancy had proper notice been given,” wrote Merrill in an email to the Star. “We believe that we are following the law in the Province of Ontario.”

The Ontario Ministry of Municipal Affairs and Housing said the practice does not appear to be appropriate.

“If the landlord gives proper notice of termination and the tenant voluntarily moves out in accordance with the notice, the tenancy is terminated on the effective date of the notice. No rent is payable after the termination date, other than existing arrears,” said spokesman Mark Cripps.

So, the issue appears to be, can a landlord in Ontario:

1. Give notice of termination; and then

2. Argue that the tenant should be responsible for having NOT given proper notice of termination, after the tenant vacated the unit, pursuant to the landlord’s notice of termination.

This strikes me as bizarre. It is clearly a bad business practice. Whether legal or not, it is simply wrong (and I am a landlord).

The article reports that the Landlord relies on the decision of Pajelle Investments Ltd. v. Braham [1993] O.J. No. 261 which was decided in 1993. It’s a Sunday morning and I have not read the actual decision. Nevertheless, the decision has been recently referred to in TST-25926-12 (Re), 2012 36415 (ON LTB).

In TST-25926-12 (Re), 2012 36415 (ON LTB) (an order of the Ontario LTB), member James Robinson, included the following paragraph of interest in his decision:

This case is distinguishable upon its facts from Pajelle Investments Ltd. v. Braham [1993] O.J. No. 261, a decision of Chapnick, J. submitted in argument by the Landlord. In that case, decided under the now-repealed residential tenancy sections of the Landlord and Tenant Act R.S.O. 1980, c. 232 as amended, the court found that the Landlord was entitled to prospective rent in lieu of notice.

More on Pajelle v. Brama – the following comment appeared at the Toronto Star article from TSPrime:

This lawyer is clearly bad at legal research. I used Quicklaw, a legal search tool widely used by lawyers, and in about three minutes found the decision in Yonge Pleasant Holdings Ltd. v. Dragonov from 1995, which said that the Pagelle decision applies only when there is a lease for a specific period of time, rather than a month-to-month tenancy, never mind that there have been many changes to the legal background, including the replacement of the Landlord and Tenant Act (under which Pagelle was decided) with the Residential Tenancies Act.

Okay, the question them becomes, what does the current Ontario Residential Tenancies Act say about a situation where the landlord gives a notice of termination and the tenant then moves out.

Now, I understand the argument of the landlord to be that the tenant (who moved because they were asked to move) is still considered to have NOT given the landlord proper notice.

As ridiculous as that sounds, let’s assume that:

the tenant, who vacated the unit, because he was asked to by the landlord, is considered to have moved without giving notice.

Therefore, we would go to S. 88 of the Residential Tenancies Act (Arrears of rent when tenant abandons or vacates without notice) which reads as follows:

Arrears of rent when tenant abandons or vacates without notice

88. (1) If a tenant abandons or vacates a rental unit without giving notice of termination in accordance with this Act and no agreement to terminate has been made or the landlord has not given notice to terminate the tenancy, a determination of the amount of arrears of rent owing by the tenant shall be made in accordance with the following rules:

1. If the tenant vacated the rental unit after giving notice that was not in accordance with this Act, arrears of rent are owing for the period that ends on the earliest termination date that could have been specified in the notice, had the notice been given in accordance with section 47, 96 or 145, as the case may be.

2. If the tenant abandoned or vacated the rental unit without giving any notice, arrears of rent are owing for the period that ends on the earliest termination date that could have been specified in a notice of termination had the tenant, on the date that the landlord knew or ought to have known that the tenant had abandoned or vacated the rental unit, given notice of termination in accordance with section 47, 96 or 145, as the case may be. 2006, c. 17, s. 88 (1).
Where landlord has given notice under s. 48, 49 or 50

(2) If a notice of termination has been given by the landlord under section 48, 49 or 50 and the tenant vacates the rental unit before the termination date set out in the notice without giving a notice of earlier termination or after giving a notice of earlier termination that is not in accordance with subsection 48 (3), 49 (4) or 50 (4), as the case may be, a determination of the amount of arrears of rent owing by the tenant shall be made as if arrears of rent are owing for the period that ends on the earlier of the following dates:

1. The date that is 10 days after,

i. the date the tenant gave notice of earlier termination, if the tenant vacated the rental unit after giving a notice of earlier termination that was not in accordance with subsection 48 (3), 49 (4) or 50 (4), as the case may be, or

ii. the date the landlord knew or ought to have known that the tenant had vacated the rental unit, if the tenant vacated the rental unit without giving a notice of earlier termination.

2. The termination date set out in the landlord’s notice of termination. 2006, c. 17, s. 88 (2).
New tenancy

(3) Despite subsections (1) and (2), if the landlord enters into a new tenancy agreement with a new tenant with respect to the rental unit, the tenant who abandoned or vacated the rental unit is not liable to pay an amount of arrears of rent that exceeds the lesser of the following amounts:

1. The amount of arrears of rent determined under subsection (1) or (2).

2. The amount of arrears of rent owing for the period that ends on the date the new tenant is entitled to occupy the rental unit. 2006, c. 17, s. 88 (3).
Minimization of losses

(4) In determining the amount of arrears of rent owing under subsections (1), (2) and (3), consideration shall be given to whether or not the landlord has taken reasonable steps to minimize losses in accordance with section 16. 2006, c. 17, s. 88 (4).

The operative language is in S. 88 (1) which reads:

If a tenant abandons or vacates a rental unit without giving notice of termination in accordance with this Act and no agreement to terminate has been made or the landlord has not given notice to terminate the tenancy,

The point is that if either an “agreement to terminate” or “notice to terminate the tenancy” has been given by the landlord, then the landlord is NOT entitled to compensation under the Act (even if the tenant has not given proper notice).

Back to the Toronto Star article which includes:

… points to a court ruling that’s more than 20 years old to justify the practice. He says he’s not aware of more recent judgments that have overruled Pajelle v. Braham, decided in 1993.

“Until the Divisional Court ruling that supports MetCap’s position on this matter is struck down, we believe this to be law in Ontario,” Merrill wrote.

Ken Hale, director of legal services at the Advocacy Centre for Tenants Ontario, says tenant law has changed several times since the Pajelle case, and pointed to Boardwalk v. Fraser, a 2013 small claims court decision that rules the new legislation doesn’t allow the practice.

Whether legal or not (and I don’t think it is), any landlord who first asks a tenant to leave and then pursues the tenant for failure to give two months notice is:

1. Using bad business practices; and

2. Gives a bad name to all landlords.

I am hopeful that this Toronto Star article is factually incorrect. At the very least, the landlord who is the subject of this article should provide an explanation. If the article is correct (which I hope it is), this seems to be to provide fertile grounds for a possible class action lawsuit.

What follows is the discussion on Twitter:

2 thoughts on “Can a landlord first evict tenant and then seek rent for failure to give notice?

  1. admin Post author

    Update: On June 23, the following article appeared in the Toronto Star:

    http://www.thestar.com/news/gta/2015/06/22/ontario-commits-to-closing-eviction-debt-loophole.html

    It includes:

    One day after the Star published an investigation into how MetCap Living Management Inc. and its in-house collections agency, Suite Collections, go after evicted tenants for two months’ rent, Ted McMeekin, minister of municipal affairs and housing, said he would put a stop to it.

    “This practice is unacceptable to me. I’m committed to putting an end to it,” said McMeekin.

    “If somebody gets an eviction notice and they move as a result of that notice . . . the tenant is no longer responsible beyond the date of the eviction notice,” he said. “That’s the law of the land.”

    Brent Merrill, president of both MetCap and Suite, maintains that the practice is legal. He provided the Star with a copy of a divisional court decision from 1993 that ruled a tenant was responsible for two months’ rent even after they had been evicted.

    But the law governing landlords and tenants has changed since then. The Star found a 2013 small claims court decision that rejects the 1993 decision.

    “At this time the divisional court decision that we have provided you and are relying on here trumps the more recent small claims court decision,” Merrill wrote in an email Monday evening. “As of today, our counsel feel that we are in compliance with the law. If the Minister of Housing feels otherwise then he or a member of his staff should pick up the phone and call us.”

    When informed of the Minister’s statements, Merrill agreed to temporarily suspend the practice for any future evictions until the law has been clarified.

    “If the law changes, of course we would have to reassess our position and we are happy to do that to remain in compliance,” he wrote.

  2. admin Post author

    Update Friday June 26/15:

    http://www.thestar.com/news/gta/2015/06/26/landlord-agrees-to-forgive-eviction-debts.html

    The article includes:

    One of Toronto’s biggest landlords has pledged to abandon the debts he claimed two evicted tenants owed and to send settlement letters to credit bureaus to repair their credit ratings.

    The action follows a letter he received from Ontario’s housing minister saying that under currrent rules he is not entitled to demand two months’ rent after evicting a tenant.

    Brent Merrill, president of MetCap Living Management and Suite Collections, told the Star he will stop pursuing Wesley Harkness and Cyrilla Hamilton for two months’ rent after their evictions. If they pay back rent up to the day they moved out and cover the sheriff’s fee, their debts will be considered settled, Merrill said.

    “I’ll present that to the two people and see what they have to say,” he said.

    MetCap’s policy of evicting a tenant and then billing them for improper notice existed in a legal grey area for years, justified by a court ruling from 20 years ago but rejected by a lower court judgment last year.

    After the Star revealed the practice in an investigation published last weekend, provincial housing minister Ted McMeekin said he didn’t believe it was legal and vowed to eliminate any uncertainty in the law.

    In the letter sent to Merrill on Tuesday, the minister wrote: “There is no provision under the Residential Tenancies Act that entitles a landlord to collect an additional 60 days’ rent after an eviction.

    “I expect that MetCap will discontinue this practice immediately and permanently.”

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