Landlords and the Small Claims ProcessMany landlords come to meet our firm about suing their former tenants in Small Claims Court.  Most of them leave our office disappointed.  

This article is not about what to do when you secure an order from the Landlord and Tenant Board.  Those orders can be traversed, and enforcement commenced relatively easy.  This article is about suing for damages, unpaid rent, or unpaid utilities.

Prior to the Residential Tenancies Act, anything that occurred post tenancy would be handled in a civil court like the Small Claims Court.  That is no longer so.

In Grewal v Behling, 2013 CanLII 84115 (ON SCSM), 2013 CanLII 84115 (ON SMSM), Deputy Judge Winny dismissed a claim for 2 months of rent for want of Jurisdiction.  In his order he set out the reasons for his dismissal:

The Board possesses exclusive jurisdiction to determine applications over which it has jurisdiction, under s. 168(2) of the Residential Tenancies Act, 2006, S.O.  2006, c.  17, which provides:

(2) The Board has exclusive jurisdiction to determine all applications under this Act and with respect to all matters in which jurisdiction is conferred on it by this Act.

11.              Exclusive jurisdiction means that if a matter is within the Board’s jurisdiction within the meaning of s. 168(2), no other tribunal or court can have jurisdiction over that matter.  Simply put, if the Board’s exclusive jurisdiction is triggered, the court’s jurisdiction is ousted: Fraser v. Beach (2005),2005 CanLII 14309 (ON CA), 75 O.R.  (3d) 383 (C.A.).

So what does this decision actually mean for landlords?  It means that if a landlord became aware of an issue OR could have became aware of an issue with the residential unit, while the tenant still had possession of the rental unit,  the claim MUST be brought at the Landlord and Tenant Board.

The good news about this is that it is actually much cheaper to bring an LTB Application that it is to go through the small claims process.  The bad news is you must be proactive.  Lets say for example your tenant has given you notice they are leaving.  A big mistake landlords make is they will wait to do a property inspection until the day the tenant is leaving.  The landlord would have reasonably become aware of the damage at that time,  and the Landlord and Tenant Board would have exclusive jurisdiction to hear the matter.  Except depending on the time of day, it may be to late to file anything.

This is actually dealt with in Finney v Cepovski, 2015 CanLII 48918 (ON SCSM);  Justice Winny again found:

23.      In Merlihan v. Hunter, [2009] O.J.  No.  (Sm.  Cl.  Ct.), at para.  11-13, I held that the landlord could have and ought to have exercised the statutory right of inspection, which would have permitted discovery of a damage issue prior to the tenant’s departure.  There was an existing application for early termination for arrears of rent and the landlord could have asked for compensation for the damage in that same application.  Therefore the board’s exclusive jurisdiction under s.  168(2) of the Residential Tenancies Act, 2006 was triggered and the court’s jurisdiction over that issue was ousted.

24.              On the other hand, in Mercier v. Hawco, [2014] O.J.  No.  56 (Sm.  Cl.  Ct.), I found that the court had jurisdiction over a claim for damage to the premises which occurred after the tenant vacated the premises.  The tenant had left pets in the unit for 24 hours after moving out, during which time they caused the damage.

25.              The case at bar is similar to Merlihan v. Hunter, supra, in that the damage could have been discovered earlier through an inspection of the premises and could in law have been put to the board, which dealt with an application between these parties.  If it had been discovered earlier, the damage could have been made part of the application as issued, or given its discovery after the application was launched, could have been made part of the application by amendment pursuant to ss.  200(1) or 201(1)(f) of the Act.

26.              The statutory right of inspection under s.  27 of the Act is there for several purposes.  One of them as expressed in s.  27(1), para.  4, subpara.  i, is for “the purpose of determining whether or not the rental unit is in a good state of repair...”  While it may be an inconvenience to landlords if the law effectively requires an end-of-tenancy inspection simply to protect against the potential jurisdictional conundrum seen in this case, in my opinion that inconvenience is justified compared to the alternative of routinely causing simple residential tenancy matters to be divided into two separate proceedings before two different tribunals.

27.              In my view the two recent appellate decisions reviewed above - Efrach and Spirleanu -  support that result in this case.  The damages could have been addressed by the board if the landlord had discovered them earlier through reasonable diligence.  The essential character of this claim for damage to the rented premises is an aspect of residential tenancies that is expressly governed by the Act.

28.              The claim for compensation for damage to the premises is dismissed for want of jurisdiction.

Had the Landlord done an inspection a week before the tenant vacated,  they could have done an L2 (Damages Only) application,  filed it right away, got a hearing,  and they could get an enforceable order from the Landlord and Tenant Board.

A major part of any type of litigation will be if a person "slept" on their rights.  As a landlord you have a statutory power to perform reasonable inspections.  You can actually evict a tenant for not allowing you in to conduct them.   If you have any questions about inspections, damages, remedies, we offer a free 15 minute phone consultation and al a carte legal services.  Give us a call.

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