Something quite significant has happened in the context of Co-operative Housing in Ontario. The Ontario Legislature has passed Bill 14 the Non-Profit Housing Co-operatives Statute Law Amendment Act 2013. It received Royal Assent on September 26, 2013, and is awaiting a proclamation by the Lieutenant Governor to be in force.
So, what is the big deal? To understand the significance of this new law one needs to understand the cumbersome legal process that Non-Profit Housing Co-operatives have had to follow in dealing with their members for serious matters related to their continued membership and occupancy of their member housing units. I'll take a moment or two to outline the practice at the present time, but be aware it is a high-level summary of the procedure that intentionally leaves out some of the nuance so that this article can come in at a reasonable length.
A non-profit housing co-op is a community that is run on democratic principles whereby the members of the Co-op, by vote and representation through a Board of Directors decide on the "rules" of living in the community. The Co-op is made up of "members" and the members elect the Board of Directors. Non-profit housing co-ops tend to have certain themes or ideologies--whether it is to provide housing to low income persons or to live "green" or whatever else strikes the fancy of the members. The point is that co-ops are recognized, at law, to be a reflective of a manner of voluntary association in accordance with certain rules that the members decide. In a word, it is a rather "communal" lifestyle.
When a co-op needs to terminate a member's membership and terminate occupancy rights, the co-op board of directors are required to invite a member to appear before the Board. The member is informed of the reason for the invitation (terminate membership because of XXX (i.e. housing charges arrears, non-compliance with rules etc.) and the member is given an opportunity to explain the situation and perhaps make proposals to resolve the issues. The Board then considers the member position and comes up with a decision. Sometimes the decision is a performance agreement or some sort of other satisfactory resolution. Other times, the decision is to terminate the membership and occupancy rights of the member.
Once the Board makes its decision the member has the right to appeal the decision to the membership. At a meeting of the membership of the Co-op the member has the right to make a pitch to the membership to explain their position and to ask the membership to make a different decision. Sometimes the members change the Board's decision, sometimes not, or sometimes the Board's decision remains as not enough members show up to the meeting to make quorum.
If the decision to terminate the membership and occupancy rights of the member are upheld, and the member does not abide by the decision (i.e. does not move out), then the Co-op has to get it's decision enforced through the law. The framework for this enforcement is set out in the Co-operative Corporations Act starting at section 171.1.
The framework for enforcement requires the Co-op to apply to the Superior Court of Justice, via application, to terminate the membership and occupancy rights and to obtain a writ of possession which directs the sheriff to enforce the eviction of the member. The Judge hearing the application typically will be concerned to ensure that the procedures were fair and in accordance with the legislation and the Co-op's own by-laws and regulations. For the most part, there is not much intervention in the actual decision to terminate and evict if the process was fair and in accordance with the law (i.e. the Judge will generally not interfere as a matter of "discretion" and "sympathy").
The issue for many Co-op's has been that the process of applying to the Superior Court of Justice has been an expensive method of proceeding. It is especially expensive in comparison to the relative ease of the process at the Landlord and Tenant Board. Invariably, the co-op process in relation to housing is compared to the legal process of evicting tenants in more conventional landlord and tenant relationships. The comparison has been ongoing since the Landlord and Tenant law eviction process was taken out of the Courts (with the advent of the Tenant Protection Act in 1997/98) and put before a specialized and streamlined administrative tribunal. The current Landlord and Tenant Board (previously the Ontario Rental Housing Tribunal), is not constrained by the same procedural requirements nor the protections afforded to parties by the Rules of Evidence.
On a direct comparison basis, it does appear that a landlord (be it a non-profit housing provider or a for profit landlord) has quicker and cheaper access to an adjudicative process than does a Non-Profit Housing Co-Operative. In my opinion, the fundamental reason for the great difference is that the application process to the Court requires the submission of all of the evidence by affidavit whereas the Landlord and Tenant Board process relies on oral evidence of the parties.
To prepare an application record (to the Superior Court) requires a lawyer to put together an affidavit that covers all of the potential issues that may arise. Technically (and it is a big Technicality) on an application before a Judge, the only "evidence" is what is contained in the affidavits. If what you want to say or submit to the Court is not in the affidavit, then you can't say it--regardless of how true or important it is and technically the Court may not accept any facts as true unless those facts are in an affidavit. The significance of this is that lawyers, acting on behalf of co-ops are very careful to ensure that the affidavits and the application records are very complete and contain a full explanation of everything that occurred. Writing all of this into an affidavit, proofing it, reviewing it with the client, and ensuring that it is complete is a big job that can easily take hours and hours. Those hours cost a significant amount of money--but they can't be avoided.
The frustrating part of the "application" process is that all of the work that goes into the Application record and the affidavits often seems wasted as the "member" just before the court hearing either moves out or advises the Court that he/she/they are able to vacate in short order. The great expense (time and money) seems to have been unnecessary and is a big hit to the co-op's operating budget. While some of these costs are ordered by the Court to be recoverable against the member, such an order is often not complied with as the member does not have money.
The Landlord and Tenant Board process is compartively simple to get before the Board. The application process involves two to three forms--which consist substatnitally of ticking off boxes. The boxes on the forms that require actual writing are small and do not call for the same level of detail as the Superior Court application process. This is because the Landlord and Tenant Board process is designed such that the evidence (i.e. all of the information that goes into the affidavit in the Superior Court) will be tendered at the hearing through oral evidence of witnesses and documents made as exhibits during the course of the hearing.
The Landlord and Tenant Board process often avoids an actual hearing as the Board provides mediation services which allows the parties to make a deal without having to have a long hearing. Also, the Board process forces the parties together (into the same space) and makes them wait for their turn at the Board. The waiting process, and forcing people to be at a location that rather not be at, also encourages deal making (thereby avoiding the need to go through with a hearing).
The Landlord and Tenant Board process does not require the same amount of legal work, on the part of the lawyer, to get the case before the Judge/Adjudicator. Therefore it ends up, most of the time, being cheaper than the process that Co-op's are required to follow under the Co-operative Corporations Act.
SO WHAT IS THE NEWS?
Now that you understand the system, the big news is that the Province of Ontario has passed legislation that will allow Co-op's to proceed with termination and eviction applications to the Ontario Landlord and Tenant Board. This means that the expensive process of going to Court (with detailed affidavit evidence etc.) is no longer necessary. Co-op's will have access to the more efficient Board process and Co-op's will not have to prove their cases in accordance with strict evidentiary rules and the procedural fairness requirements of the Court process. The looser rules applicable to proceedings before administrative tribunals will now apply to co-op cases as well.
To be clear, the hallmarks of being a co-op are not being washed away by this legislation. The communal style of living, the rules being made by members, and the authority of the Board of Directors will continue to exist. What is different is that the enforcement of the eviction may now be pursued at the Landlord and Tenant Board.
If you are interested in seeing this new legislation the best link I have found is HERE. If the link goes dead, the "new" parts of the Residential Tenancies Act are now in section 5.1 of the RTA. The Landlord and Tenant Board website, under its Law section has the new provisions in the Act itself.
A small caveat to this article is that I have to say that I have only been through Part 5.1 of the RTA (the new co-op provisions) once. It will take some time getting used to how the mechanics of this part of the Act will actually work--therefore, this new law is still a learing curve for me and you should read it closely as well to see how it is intended to operate.
Michael K. E. Thiele
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