The Residential Tenancies Act was recently amended (June 1, 2014) to include provisions that allow Co-operative Corporations to proceed to the Ontario Landlord and Tenant Board to enforce the termination of membership rights and eviction of Co-op members. For many people involved in Residential Co-ops this is a significant change to the legal process that has been in place for as long as I can remember.
Before the legislative changes, the legal system for dealing with membership rights and eviction from a residential co-op could be summarized as follows (using "conduct" as the basis for termination as an example). If the "office" became aware of a complaint against a co-op member the "office" could try to resolve the issue informally, perhaps send a letter, or take other steps that solve the problem. If the steps taken by the "office" are ineffective, the complaint and the surrounding problems are elevated to the Co-op Board for discussion at a meeting. At that meeting the Board could direct some other less formal ways of dealing with the problem. If that too is ineffective, the Board could decide to ask the member complained about to attend a meeting with the Board to discuss the problem. There are formal notice requirements etc.. At that meeting the Board could, after hearing from the member, make a variety of decisions and one of those decisions might be to terminate membership rights in the co-op and occupancy rights and evict the member from their housing unit.
The termination and eviction decision of the Board is subsequently communicated to the member and the member is further advised of a right to appeal the termination decision to the membership of the Co-op. If the member elects to appeal to the membership, the member has rights to distribute materials to the membership and a meeting of the Co-op is called to review the decision by the Board to terminate and evict the member. There are technical procedural requirements for such meetings that are designed to grant procedural fairness to all concerned.
The manner of proceeding at the meeting is often a matter for the Chairperson of the meeting to decide along with the direction provided by the By-laws of the Co-op and the general requirement to conduct a "fair" meeting. It is not unusual for Chairpersons to adopt the procedures as set out in Robert's Rules of Order which provides a commonly accepted method of conducting a fair and respectful meeting while maintaining Order and ensuring that the meeting does not devolve into chaos. The meeting will normally have representations from the Board as to why the decision to terminate and evict was made. The member whose membership was terminated has the right to make their own statement. The floor is then opened to questions, discussion, clarification. These meetings may become incredibly tense as there are often very strongly held views amongst different factions from within the community.
At the conclusion of the members meeting (presuming that there was quorum), the members will vote (usually by secret ballot). The exact nature of the question on which they vote is sometimes a pre-determined question--such as vote to uphold the Board decision or vote to overturn the Board decision, or sometimes the exact nature of the question to be voted upon is determined by motion from the floor. How the meeting evolves, how the question to be voted on is determined, who speaks, and frankly how good or how badly the meeting goes depends on the Chairperson of the meeting and the manner in which the members of the Co-op participate.
If the membership vote to uphold the termination and eviction, the member must move out of the unit. If the former member refuses to vacate the unit, the Co-op must then apply to the Superior Court of Justice for a writ of possession which will result in the Sheriff attending the members unit and forcibly removing the person if necessary. After enforcement, the member has no legal right to be on the property and can then be arrested and charged for break and enter or trespassing if they are found in the unit without permission.
The application to the Superior Court of Justice is tremendously expensive as the entire application process is by way of affidavit, application record, and factum.
THE CHANGE IN THE LAW
The foregoing procedure remains more or less in place and Co-ops continue to have the option to proceed to the Superior Court if section V.1 (i.e. 5.1) of the Residential Tenancies Act (RTA)does not require the Co-op to proceed through the Landlord and Tenant Board as opposed to the Superior Court of Justice. At this point, on my reading of section V.1 of the RTA, there is no procedure under the Co-operative Corporations Act that must proceed through the Landlord and Tenant Board on a mandatory basis. Meaning, a Co-op has the option to proceed to the Landlord and Tenant Board if it wishes but the Co-op may still proceed with the "old" system if that is preferable.
So what does this "new" system look like. Given that the law was just proclaimed on June 1, 2014, it is all still fairly new. Hence, my comments are based on a first look. From what I see, I think there will be a need for a great many amendments to the statute to make the contemplated new process make sense and there will likely be a need for adjudicators to make procedural rulings that help make section V.1 make sense and be useful.
SO HOW DOES IT WORK?
The new provisions applicable to Co-op's, in essence apply the same rules and procedures to Co-op's that apply to regular tenants in Landlord and Tenant relationships. Unfortunately, they only apply after the Board does all of the things it had to do under the old rules. Meaning, the Board must still meet, terminate by resolution, provide appeal rights, and follow the strictures that it has always followed. The direction that this is the case is set out in section 171.8 of the Co-operative Corporations Act.
What the new law allows--but requires Co-op's to do--is to decide whether they still want to allow members the right to appeal to the membership if the Board terminates the Membership and Occupancy Rights. The new law contemplates that Co-op's will pass a by-law that removes the right to appeal to the membership in the face of a termination decision.
In my view, the only way that proceeding to the Landlord and Tenant Board will ever make sense is by passing a by-law removing the appeal to the membership as a right (the reason will become clear). Though, if a by-law is passed to remove the appeal right a Co-op should consider passing a by-law directing the Board to presumptively proceed by application to the Landlord and Tenant Board as opposed to the Superior Court of Justice unless there is good reason to proceed instead to the Superior Court of Justice.
Once the Board of Directors terminates a members occupancy and membership rights by resolution the Co-op may then decide to serve the member with a Notice of Termination under the Residential Tenancies Act. These Notices of Termination are "Special" Notices specifically designed for Co-ops. The Form Numbering, for those people familiar with regular Landlord and Tenant Board forms will be very familiar as the numbering remains the same. So, whereas a Notice of Termination for Non-Payment of Rent in a landlord and tenant case uses form N4 and Notice of Termination for Non-Payment of Occupancy Fees and charges for a Co-op uses Form N4C. Note that these forms look completely different from each other and you CAN NOT use one in substitution for the other. The other forms are numbered similarly for everything from substantial interference (Form N5 is Form N5C0 to illegal act, impaired safety, misrepresentation etc. etc..
WHY IT'S OKAY TO REVOKE THE MEMBERSHIP APPEAL
If the Co-op proceeds to serve any of these Forms you will see that the same voiding provisions apply that arise in landlord and tenant cases. So, as an example, if a member is behind in housing charges and the Board of Directors decides to terminate they could serve a Form N4C. That Form, provides in its terms, that the member who receives this Form N4C can void the termination by paying the housing charges. In effect, the Form N4C will operate to over-ride the decision of the Board of Directors if the member does or does not do certain things. The same is true for conduct related Notices of Termination---hence if the Board of Directors chooses to terminate for behavior and then serves a Form N5C--that form, if it is complied with will result in the decision of the Board of Directors being over-ridden and the Landlord and Tenant Board will not evict the member (or put another way, it will lack the jurisdiction to evict the member).
At the moment, what is not entirely clear to me is whether the voiding of a Notice of Termination served under the Residential Tenancies Act automatically reinstates the membership rights of a member. Is there anything explicitly stopping a Co-op from applying to the Superior Court of Justice for a Writ of Possession if the member manages to void a Notice of Termination by complying with the provisions of the Notice. I don't see such a prohibition explicitly but certainly I think it would be foolhardy for a Co-op to engage the Residential Tenancies Act process and then abandon it when it doesn't work out as they expected. I imagine a Superior Court judge would deliver a rather damaging Judgment against the Co-op in such circumstances.
What about non-voidable Notices of Termination for things like: Illegal Act (drug dealing and other criminal activity), impaired safety, subsidy misrepresentations, subsequent breaches of a lawful right interest or privilege of the Co-op, or subsequent behavior problems. Such Notices of Termination are not voidable--does this meant that eviction is a foregone conclusion?
Not at all in fact. The Co-op still needs to prove to the adjudicator at the Landlord and Tenant Board that the alleged transgressions did happen and that the Board of Directors by resolution did terminate the membership and occupancy rights of the member. The adjudicator at the Landlord and Tenant Board is then given explicit power to exercise discretion and refuse to grant the application. That discretion is found at section 94.12 of section V.1 of the RTA. It is similar in nature to the discretion afforded to adjudicators under section 83 of the RTA in landlord and tenant applications. Given that the wording of the two sections are the same, I would expect that section 94.12 will be interpreted in the same way as section 83 which means that the Adjudicators will feel free to make such orders as they consider fair. In effect, the traditional view that Co-operatives regulate their own affairs through their Boards and members meetings is over-ridden by this new legislative structure that leaves the final say in the hands of adjudicators at the Landlord and Tenant Board.
What is appealing about discretionary relief in the hands of adjudicators as opposed to members' meetings is that the adjudicator is charged to make a decision in a judicious manner. Having attended a great number of members appeals--on both sides--I think it is fair to say that the decision making in Co-ops is not necessarily confined to pertinent facts.
I do believe that proceeding to the Landlord and Tenant Board is the "way to go" for Co-operatives. The learning curve is of course in applying new rules in the context of what has always been done. However, I do see a certain efficiency in using the LTB forms and I think Co-operatives will be able to save significant costs in legal fees by going through the administrative process of the Landlord and Tenant Board.
As this legislation is new and I myself have not yet been through an application I would be pleased to receive comments from anyone reading this blog about their experiences.
Michael K. E. Thiele
Monday, 23 June 2014
Co-op housing: Evicting Co-op Members at the Landlord and Tenant Board
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