Canada: An Apt Decision: Ontario Court Of Appeal Overturns Limitation Period Ruling

Last Updated: August 7 2017
Article by Patricia J. Forte

Introduction

A recent Ontario Court of Appeal decision determined that a personal injury claim arising from the alleged disrepair of a residential rental unit is not constrained by the one-year limitation period prescribed by the Residential Tenancies Act, 2006[1] ("RTA").

In Letestu v. Ritlyn Investments Ltd.[2] a tenant of an apartment building tripped over a "worn, torn and unsecured carpet" in his living room in January 2010. In December 2011, just before the second anniversary date of the incident, the tenant started a law suit against the landlord in the Superior Court of Justice. The allegations against the defendant landlord were framed in negligence and breach of statutory duty under the RTA and Occupiers' Liability Act[3]. In 2016, the landlord brought a motion to strike the tenant's action on the basis that the Court had no jurisdiction to hear it. The landlord argued: (1) the RTA conferred the Landlord and Tenant Board ("the Board") with exclusive jurisdiction to address issues of "disrepair" of a residential unit under the RTA; (2) that jurisdiction could be transferred to the Superior Court if the claim was for more than $25,000; and (3) the Court was bound by the same jurisdictional confines of the Board, including the limitation period for redress prescribed by the RTA.

The RTA

Part III of the RTA sets out various statutory responsibilities of landlords, including the obligation to maintain rental units in a good state of repair and for complying with health, safety, housing and maintenance standards[4]. The RTA creates the Board to which tenants and former tenants may apply for various relief, including an Order that the landlord has breached its duty to repair.

The Board has exclusive jurisdiction to determine all applications under the RTA with respect to all matters in which jurisdiction is conferred on it by the Act.[5] However, the Board's monetary jurisdiction is limited to the monetary jurisdiction of the Small Claims Court, which in Ontario is presently $25,000.00. If an individual's claim exceeds the Board's monetary jurisdiction, the RTA specifically provides that the individual can start a proceeding in court, and the court can exercise the same powers as the Board. More specifically, subsection 207(2) of the RTA provides:

(2) A person entitled to apply under this Act but whose claim exceeds the Board's monetary jurisdiction may commence a proceeding in any court of competent jurisdiction for an order requiring the payment of that sum and, if such a proceeding is commenced, the court may exercise any powers that the Board could have exercised if the proceeding had been before the Board and within its monetary jurisdiction. [Emphasis added.]

Importantly, the RTA prescribes a one year limitation period for tenants to start Board proceedings against a landlord for a breach of the duty to repair[6].

Letestu v. Ritlyn Investments Ltd.

The landlord argued that the RTA governed the adjudication of the tenant's personal injury claim. Since the amount of the tenant's claim was for an amount more than $25,000, the claim could proceed in Superior Court. However, the Court stepped into the shoes of the Board; the Court could only walk within the confines of the Board's jurisdiction. The landlord argued that Court had to adjudicate the tenant's claim within the confines of the RTA. In effect, the RTA trumped the tenant's other causes of action in negligence and for breach of duty under the Occupiers' Liability Act. It followed that claim should be dismissed because it was not brought within the one year limitation period prescribed by the RTA.

In a game changing decision that up-ended everything sacred about occupiers' liability claims, the motions judge granted the relief sought by the landlord and dismissed the action. The motion judge emphasized the importance of the "substance" instead of the "form" of the claim. The substance of the tenant's claim was a claim for "want of repair" between a landlord and a tenant. The characterizations of the action as "negligence" or "breach of duty under the Occupier's Liability Act" are merely derivative to the "essential character" and "true nature" of the dispute. The true nature of the claim is one that is governed by the RTA. The motion judge reasoned that since the subject matter of the dispute is expressly governed by statute, then the claim is within the exclusive jurisdiction of the Board.

Relying on precedent cases, including the 2015 Divisional Court decision in Efrach v. Cherishome Living[7], the motion judge concluded that the Court is bound by the provisions of the RTA, including the limitation period. The motion judge reasoned that a tenant has to start the action within the one year limitation period before the Court can assume jurisdiction for claims exceeding $25,000. Since the one year limitation period for making a claim to the Board had already expired when the tenant issued the Statement of Claim, he had no right to seek relief from the Board. Pursuant to s. 207(2), it follows that since the claim was statute barred before the Board, it is likewise barred for adjudication with the Court because the Court can only exercise powers "that the Board could have exercised if the proceeding had been before the Board".

The Ontario Court of Appeal unanimously ruled to allow the plaintiff's appeal. It determined that the motion judge erred in law when he found that the Court lacked jurisdiction over the claim because it was started after the one year limitation period under the RTA had expired.

A key to the Court of Appeal ruling is its determination that the RTA does not grant the Board exclusive jurisdiction over all claims of non-repair against a landlord. The Board only has jurisdiction over a tenant's claim for damages where the essential character of the claim is for non-repair and within its monetary jurisdiction. However, in this case, the tenant's claim exceeded the Board's monetary jurisdiction, and therefore exceeded the jurisdiction of the Board. The tenant was entitled to start an action in the Superior Court. The tenant's other claims in negligence and breach of duty under the Occupiers' Liability Act were viable claims.

The Court of Appeal also disagreed that the one year limitation period under the RTA applied to landlord "non-repair" cases before the Superior Court. Specifically, the Court of Appeal determined that the motion judge erred in following the reasoning of the Divisional Court decision in Efrach v. Cherishome Living. Accordingly, the claim was not statute barred. The two-year limitation period prescribed by the Limitations Act, 2002 applied. The tenant's claim could proceed.

Footnotes

[1] S.O. 2006, c. 17

[2] 2016 ONSC 6540 (CanLII); overturned 2017 ONCA 442 (CanLII)

[3] Section 8 of the Occupiers' Liability Act, R.S.O. 1990, c. O.2 contains provisions applicable to landlords.

[4] Section 20(1) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 ("RTA")

[5] See sections 168 and 174, RTA

[6] Subsection 29(2), RTA

[7] Efrach v. Cherishome Living, 2015 ONSC 472 (CanLII), 2015 ONSC 472 (Div. Ct.); See also Mackie v. Toronto (City) and Toronto Community Housing Corporation, 2010 ONSC 3801 (CanLII) ("Mackie")

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