Pajelle Investments Ltd. v. Herbold, [1976] 2 SCR 520

Supreme Court of Canada

Pajelle Investments Ltd. v. Herbold, [1976] 2 S.C.R. 520

Date: 1975-11-13

Pajelle Investments Limited (Plaintiff) Appellant;

and

Lillian Herbold and Margaret Herbold (Defendants) Respondents.

1975: October 14, 15; 1975: November 13.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Landlord and tenant—Residential tenancies—Non-repair—Interpretation of “rented premises”—Temporary loss of common facilities—Necessary repairs and renovations—Abatement of rent—Power of judge to grant abatement—Abatement not referred to, or subject of evidence at, hearing—Natural justice—The Landlord and Tenant Act, R.S.O. 1970, c. 236, s. 96(1).

The respondents were tenants of a suite in a high rise apartment building in Toronto. The appellant landlord had advertised that the premises were air-conditioned and that there was an indoor swimming pool and sauna bath available for the use of the tenants of the building. Sometime after the respondent tenants went into occupation the landlord failed to supply air conditioning or the use of either the swimming pool or sauna bath. The landlord alleged that both facilities had become unusable because of mechanical breakdown and could only be repaired at considerable cost. The respondent tenants further alleged that the apartment building was in a deplorable condition of repair and applied for an appointment to inquire and determine whether the tenancy had been terminated by reason of the landlord’s failure properly to maintain the building. The Notice of Appointment did not give specific notice of the tenants’ intention to apply for any abatement of rent and this question was not discussed during the hearings. The judge acting as persona designata under the provisions of The Landlord and Tenant Act, R.S.O. 1970, c. 236, found the tenants entitled to an abatement in their rent. Subsequent appeals by the landlord to the Divisional Court and to the Court of Appeal were dismissed.

Held: The appeal should be allowed in part.

The words “rented premises” in s. 96(1) of The Landlord and Tenant Act include the duty of the landlord to provide the tenant with proper ingress to and

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egress from the apartment and the use of the sauna bath and swimming pool. These words are not defined in the statute and must be interpreted according to the provisions and purpose of the particular section in which they appear.

A Court should only in the most exceptional cases grant an abatement for rent because of failure to provide common facilities and services during a short period required for necessary repairs and renovations. However where there are important and long continuing delays in providing the facilities which it is the responsibility of the landlord to provide these should be compensated by an abatement of rental.

A judge has power under s. 96(3)(c) of the Act to grant an abatement of rent but should not exercise it unless his determination is based on evidence and only if the parties have had an opportunity to make representations thereon. Where, as here, neither landlord nor tenant considered the question of abatement of rent up till the very end of the hearing, the matter should be referred back to the trial court so that the proper amount of the abatement of rent may be determined upon a reference.

APPEAL from a judgment of the Court of Appeal for Ontario dismissing an appeal from a judgment of the Divisional Court affirming a judgment of MacRae, Co. Ct. J. as persona designata under The Landlord and Tenant Act, awarding an abatement of rent on an application by a tenant to terminate a tenancy. Appeal allowed in part.

A.B. Rosenberg, Q.C., for the appellant.

B.D. Bucknell, and Mary Hogan, for the respondents.

The judgment of the Court was delivered by

SPENCE J.—This is an appeal from the judgment of the Court of Appeal for Ontario pronounced on April 30, 1974. By that judgment, the Court of Appeal dismissed an appeal from the judgment of the Divisional Court affirming the judgment of His Honour Judge MacRae pronounced on July 7, 1972. The latter judgment was delivered upon the application of the present respondents as tenants made under the provisions of s. 96 of The Landlord and Tenant Act, R.S.O. 1970, c. 236.

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The respondents, mother and daughter, had acquired tenancy of suite 617-B in a high rise apartment building at 103 West Lodge Avenue in the City of Toronto. The lease period was to commence on April 1, 1971. There was evidence that the landlord, the present appellant, had advertised in newspapers published in the City of Toronto that the premises were air‑conditioned and that there was an indoor swimming pool and sauna bath available for the use of the tenants of the building, and similar statements appeared on a large bill board near the entrance to the building. Some time after the tenants went into occupation, the landlord failed to supply air-conditioning or the use of either the swimming pool or sauna bath. It was the allegation of the landlord that both of these facilities became unusable because of mechanical breakdown and it was required to spend large sums of money in the repair thereof. The tenants, moreover, alleged that the building in which the apartment they occupied was situated was in a deplorable condition of repair.

The tenants, therefore, on May 10, 1972, filed an affidavit setting out these circumstances and applied for an appointment “to inquire and determine whether the tenancy of the above named tenants has been terminated by reason of the landlord’s breach of certain verbal warranties collateral to a lease… ”. Such appointment was granted by the County Court of the Judicial District of York on May 12, 1972, and on that day a solicitor acting on behalf of the tenants served upon the landlord a notice of appointment. I quote that notice in full:

NOTICE OF APPOINTMENT

TAKE NOTICE that His Honour Judge “Martin” has appointed “Thursday”, the “1st” day of “June”, 1972, at the hour of “10:30” o’clock in the “fore” noon, at his Chambers, in the Court House, University Avenue, Toronto, Ontario, to inquire and determine whether the tenancy of the above named Tenants is terminated by reason of the Landlord’s breach of certain verbal warranties collateral to a lease of premises known as 103 West Lodge Avenue, Apartment 617B, Toronto, Ontario and by reason of the Landlord’s failure to provide and maintain the building in a good state of

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repair and fit for habitation during the term of tenancy, and whether the tenants may vacate the premises, or for such other relief as may be equitable in the circumstances.

DATED at Toronto, the “12th” day of “May” 1972.

The matter came on for hearing before His Honour Judge MacRae acting as a persona designata under the provisions of The Landlord and Tenant Act.

It should be noted that the lease between the parties made no reference to air-conditioning or to the facilities of swimming pool or sauna bath. It must also be noted that although the notice of appointment concluded with the words “… or for such other relief as may be equitable in the circumstances” there was never any specific notice of the tenants’ intention to apply for an abatement of the rental. We have been assured by counsel that the question of abatement in rental was never discussed during the hearings and that no evidence as to the amount by which the rental might have been abated was adduced on behalf of either the landlord or the tenants.

His Honour Judge MacRae considered the application on June 15, 16, 19 and 20, 1972, and gave judgment thereon on July 7, 1972. His Honour Judge MacRae has found that the tenants were deprived of air-conditioning into their apartment and the use of the swimming pool and sauna bath for very considerable periods. It would appear that there was no air‑conditioning provided during the month of July 1971 and the tenants had not the use of either the swimming pool or the sauna bath from November 1971 until March 1972.

As to the other items of non-repair, His Honour Judge MacRae made the following finding:

Many other complaints were made of the accumulation of garbage, disrepair of the halls, the lack of elevator service and other details. However the evidence on these complaints is entirely contradictory and there is just as much evidence by other tenants called by the landlord that the apartment is in a satisfactory condition.

An inspector’s report from the Housing Standards Division was filed as Exhibit 4 and is dated 8 March 1971. A Mr. William A. Mett from the department of Buildings, City of Toronto was called by the tenant to give evi-

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dence. Contained in this report were 54 complaints under the Housing By-Law 73-68 and the evidence disclosed that all of these complaints except two were attended to by the landlord by the fall of 1971. The two items not completed at his last inspection 31 May 1971 were “plaster on stair wall”, “No door pull on the door of the parking garage there is no door pull”.

I have considered all the evidence in this application, the brief submitted by the Counsel for the applicant and the arguments of Counsel. I have come to the conclusion that the landlord has reasonably complied with the Housing Standard By-Law 73-68 and find that the conditions of this very large apartment has been considerably improved particularly as to cleanliness and operation. He appears to have a sufficient staff to operate the apartments. The evidence as to the accumulation of garbage, in the garbage rooms and in and around the outside of the apartment, I reject as the photos at first submitted by the tenant were taken during the Toronto Garbage Strike which started on 10 May 1972.

However it appears to me that the representations contained in the advertisement in the Daily Star and also on the board outside the said apartment which also advertised “Air‑Conditioning, Swimming Pool and Sauna”, although not material covenants contained in the lease deserve some relief for the tenant. The lack of air conditioning in the month of July 1971 also affected this particular tenant. Therefore, after giving full consideration to s. 96(1), (2), (3)(a) (b) and (c) I find that the tenants herein are entitled to an abatement in their rent of $20.00 per month for a period of six months. The applicant will have the costs of this application fixed at $100.00 and disbursements.

From this decision, the landlord, the present appellant, appealed to the Divisional Court and then to the Court of Appeal for Ontario, both of which dismissed the appeal.

The landlord now appeals to this Court having been granted leave to do so by order of this Court. The appellant advances three grounds of appeal which may be summarized as follows:

(1) The appropriate section of The Landlord and Tenant Act, s. 96 provided only for enforcement of the obligations imposed by that section and the learned County Court Judge was without jurisdiction to grant relief based on the failure to

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supply services which were neither the subject matter of covenants in the lease nor were obligations imposed by the section.

(2) That no abatement of rental having been applied for by the tenants nor referred to in any way or made the subject of evidence at the hearing, it was against natural justice to grant such abatement.

(3) That it was improper at least to grant such abatement due to a temporary loss of use of such facilities when they were out of service for necessary repairs.

Section 96 of The Landlord and Tenant Act, R.S.O. 1970, c. 236, provides:

96. (1) A landlord is responsible for providing and maintaining the rented premises in a good state of repair and fit for habitation during the tenancy and for complying with health and safety standards, including any housing standards required by law, and notwithstanding that any state of non-repair existed to the knowledge of the tenant before the tenancy agreement was entered into.

(2) The tenant is responsible for ordinary cleanliness of the rented premises and for the repair of damage caused by his wilful or negligent conduct or that of persons who are permitted on the premises by him.

(3) The obligations imposed under this section may be enforced by summary application to a judge of the county or district court of the county or district in which the premises are situate and the judge may,

(a) terminate the tenancy subject to such relief against forfeiture as the judge sees fit;

(b) authorize any repair that has been or is to be made and order the cost thereof to be paid by the person responsible to make the repair, such cost to be recovered by due process or by set-off;

(c) make such further or other order as the judge considers appropriate.

(4) This section applies to tenancies under tenancy agreements entered into or renewed on or after the 1st day of January, 1970 and to periodic tenancies on the first anniversary date of such tenancies on or after the 1st day of January, 1970 and in all other cases the law applies as it existed immediately before the 1st day of January, 1970.

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By subsection (1) thereof, the landlord is made responsible “for providing and maintaining the rented premises in a good state of repair and fit for habitation during the tenancy and for complying with health and safety standards, including any housing standards required by law, and notwithstanding that any state of non-repair existed to the knowledge of the tenant before the tenancy agreement was entered into”.

Counsel for the appellant submits that the duty with which we are concerned here, i.e., the duty “for providing and maintaining the rented premises in a good state of repair and fit for habitation”, applies only to “rented premises” and that the “rented premises” consisted solely of Suite 617-B while, of course, the air-conditioning equipment was in the appropriate part of the apartment building not within the walls of that apartment suite and both the swimming pool and the sauna bath were also outside the walls of the apartment and were in the part of the building available to all the tenants thereof.

I am in agreement with the view that the landlord’s duty of keeping in a good state of repair, by the very words of the section, applies only to the “rented premises” but I am of the opinion that those words in s. 96(1) cannot be given such a narrow interpretation as that assigned by counsel for the landlord. The words “rented premises” appear in ss. 93, 94, 95 and 96 of The Landlord and Tenant Act. Those sections are new legislation added by the Statutes of Ontario, 1968-69, c. 58. The words “rented premises” are not defined in the statute. I am of the opinion that they must be interpreted in each of the sections to accord with the provisions of the section and with the purpose thereof. In my opinion a sound construction would be that the words “rented premises” have a broader connotation than a mere physical space, and encompass not only that physical space but what the tenant is entitled to either under the terms of the written lease or the implied tenancy agreement, and I point out that counsel for the appellant in its factum referred to such matters as air-conditioning and use of the sauna bath and swimming pool as “imposed by collateral agreement”.

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Therefore, I have come to the conclusion that the words “rented premises” in s. 96(1) include the duty of the landlord to provide the tenant with proper ingress and egress to the apartment and to provide the tenant with air-conditioning for the apartment and the use of the sauna bath and swimming pool. It may well be that this will result in the same words, “rented premises”, in s. 96(2) receiving a narrower interpretation than that which I propose for subs. (1). I believe this is required when one has in mind the purpose of the statute.

With respect, I am in agreement with Schroeder J.A., when he said, in delivering the reasons for the Court of Appeal for Ontario:

The recent amendments to The Landlord and Tenant Act have brought about substantial changes in the relations between landlord and tenant and, indeed, those amendments affect the relations of tenants in large apartment buildings not only towards each other, but go beyond that and obligate them to exercise a measure of control over persons who are invited by them to come to the premises as guests or visitors. The legislation reflects the effort on the part of legislators to govern and control the standard of social behaviour of inhabitants of large modern multiple housing units not only towards their lessors but also towards each other with a view to promoting peace and tranquility from a social as well as from an environmental standpoint.

Adopting that interpretation of the words “rented premises”, therefore, I am of the opinion that the learned County Court Judge was correct in finding that under the circumstances of this case, he had jurisdiction to consider the tenants’ application and that, with respect, the Court of Appeal was correct in dismissing this ground of appeal submitted to it.

I think, moreover, I should point out that the learned County Court Judge, although he had found there had been a major correction of other items of non-repair in the building, had not found that there had been a complete answer to such complaints, having used the words:

I have come to the conclusion that the landlord had reasonably complied with the Housing Standard By-Law 73-68 and find that the conditions of this very large apartment has been considerably improved particularly as to cleanliness and operation.

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(The italics are my own.)

I turn now to the third ground of appeal urged in this Court, that is, that the learned County Court Judge erred in his judgment, upheld in the Court of Appeal, in granting an abatement of rent for temporary loss of use of common facilities while they were out of service for necessary repairs and renovations. I am ready to agree that it would be only in the most exceptional circumstances that a court should grant an abatment for rent because of failure to provide the repairs and services during a short period required for necessary repairs and renovations. That is not, however, the allegation or the evidence in the present case. On the other hand, the evidence is that the air-conditioning was not supplied at all during the mid‑summer month of July in the year 1971 and that no use of the sauna bath or swimming pool was provided from November 1971 to March 1972. Those are important and long continuing delays in providing the facilities which it was the responsibility of the landlord to provide and the learned County Court Judge was perfectly justified in considering they would have to be compensated for by an abatement in rental.

That brings me to the consideration of the second ground of appeal submitted on behalf of the appellant that it would be against “all principles of justice to deal with a matter in a manner that was not proposed at the hearing and of which no evidence was given and no argument directed.” Schroeder J.A. said in his reasons for judgment for the Court of Appeal:

It must be borne in mind that s. 96 contemplates the taking of summary and inexpensive proceedings to enable a tenant or a landlord to have a determination made of issues which might arise under the provisions of s. 96. It may properly be observed, that having regard to the essential purpose underlying the enactment of s. 96, the niceties of pleading which obtained in the old Court of Chancery are not to be imported into the summary proceedings thereby authorized. It is not too much to say that when far-reaching relief such as the termination of an existing lease is sought it should be within the contemplation of a landlord that even if that drastic relief were withheld, some relief, not unrelated to so broad a claim, would be considered by the learned judge hearing the application and be given effect.

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and later continued:

It cannot be successfully urged that the granting of such relief was so unrelated to the principal claim of the tenants made pursuant to the provisions of s. 96(3)(a) that it should be discountenanced on the ground of remoteness.

With respect, I am in complete agreement with those statements. I do not think, however, that they cover the present situation. The notice of appointment could have been informal as Schroeder J.A. rightly thought the tenant was entitled to make it but yet have given some indication that the tenant sought not only termination of the lease but an abatement of the rental or one or the other. Had there been any such indication in the notice of appointment then it would have been inevitable that that subject would have been broached during the hearing and both the landlord and the tenant would have had an opportunity to adduce evidence in reference to the proper amount of any abatement which the Court might grant and, just as important, to submit argument in reference thereto. In the present case, it would seem that no one either landlord or tenant considered the question of abatement of rent up till the very end of the hearing before the learned County Court Judge and that he in considering his judgment, which was a reserved judgment, came to the conclusion that the breaches of obligation were not sufficiently serious to justify termination of the tenancy but were sufficiently serious to call upon him to grant an abatement under s. 96(3)(c).

I am in agreement with the view expressed in the judgment below that the learned County Court Judge did possess that power but I feel that he should not have exercised it unless his determination was based on evidence and only if the parties have had an opportunity to make representations thereon. In my view, neither of those prerequisites was present. I am, therefore, of the opinion that this appeal should be allowed only to the extent that it should be referred back to the County Court of the Judicial District of York so that the proper amount of the abatement of rent may be determined upon a reference unless the parties are able to arrive at a reasonable settlement. In view

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of this disposition it is unnecessary to deal with the respondents’ alternative request for leave to amend the Notice of Appointment.

I realize that His Honour Judge MacRae has died since he gave his decision in this matter but I am of the opinion that the person designated by s. 96(3) of The Landlord and Tenant Act is “… a judge of the County or District Court of the County or District in which the premises are situate… ” and that, therefore, another member of that Court may proceed with the reference.

I would not disturb the order of the County Court Judge nor of the Divisional Court as to costs. The Court of Appeal in dismissing the appeal allowed to the respondents their costs of the appeal. The order of this Court granting leave to appeal was on condition that the costs of the appeal to this Court be borne by the applicant, in any event of the appeal. In view of the divided success here, and of that condition, I would direct that there be no costs in the Court of Appeal, but, that the appellant do pay the respondents’ costs of the appeal to this Court, including, of course, the application for leave.

Appeal allowed in part, matter referred back for assessment of the proper amount of the abatement of rent.

Solicitors for the appellant: Rosenberg, Levinter, Toronto.

Solicitor for the respondents: Frederick H. Zemans, Toronto.