Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of s.50(1)(a) of the Residential Tenancies Act, 2006 (RTA) and whether a landlord must have a genuine, good-faith intention to demolish the rental unit when serving an N13 notice.
• Scope of appellate review from the Landlord and Tenant Board (LTB) to the Divisional Court, limited to questions of law and applying a reasonableness standard to the LTB’s interpretation of its “home” statute.
• Assessment of the landlord estate’s intention in light of conflicting evidence that it would demolish the house versus selling the property with the house intact, and whether a true demolition plan had “crystallized.”
• Weighing of testimony from key witnesses, including credibility concerns with the landlord’s representative and corroborating evidence from an interested buyer about offers to purchase with the house left standing.
• Consideration of the RTA’s remedial, tenant-protective purpose, including statutory provisions requiring good faith and examination of the “real substance” of transactions to prevent unlawful evictions.
• Argument over the relevance of s.57(1)(c) RTA (remedies for bad-faith termination after a tenant vacates), and the finding that it did not apply because the tenant remained in possession and no such application was before the Board.

Factual background

The dispute arose over a rural residential property in Harrow, Ontario, originally a 14.5-acre farm with a detached single-family house. The house, about a century old, had been moved onto its current foundation approximately 50 years earlier. The late owner, Anna Bazala, leased the residence to the respondent, tenant Tammy Sharpe, who moved into the rental unit around October 31, 2011 and had lived there continuously as a residential tenant. After Ms Bazala’s death in or around June 2021, her estate, represented by her daughter and estate trustee Anne Gordon-Kay, inherited the property. The estate first attempted to sell the entire 14.5-acre parcel as a hobby farm but received no acceptable offers. It then severed and sold roughly 10 acres to an adjoining landowner, leaving a 3.5-acre parcel containing the rented house. The estate tried to sell that 3.5-acre parcel with the house but, according to its representative, did not receive what it considered bona fide or reasonable offers. Against this background, relations between the landlord estate and Ms Sharpe had long been strained. The tenant claimed the landlord failed to meet maintenance and repair obligations and harassed her and interfered with her reasonable enjoyment of the unit. The landlord, in turn, repeatedly sought to terminate her tenancy on various statutory grounds under the Residential Tenancies Act, 2006. It served multiple N12 notices (s.48(1) RTA) on the basis that the landlord or related persons required possession for at least a year, and later served an N13 notice under s.50(1)(a) claiming it required possession of the rental unit in order to demolish it. Five resulting applications were heard together before the Landlord and Tenant Board (LTB) over six non-consecutive days between May 2021 and May 15, 2024, before Vice-Chair Harry Cho. Evidence and submissions on the N13 application to terminate for demolition were heard on the final day of the hearing. The estate presented Horst Schmidt as its representative. The tenant called three witnesses: non-party witnesses Matthew Laliberte and Debra Peters, and Ms Sharpe herself.

Evidence before the Landlord and Tenant Board

Mr Schmidt’s evidence focused on the estate’s efforts to realize value from the property during the administration of the estate, which was approaching its third year, the point at which there was an expectation it should be wound up. He described unsuccessful attempts to sell the full farm parcel, then the severance and sale of 10 acres, and subsequent attempts to sell the remaining 3.5-acre parcel with the house. He testified that there were “no reasonable” or “no bona fide” offers that the estate could accept and gave high-level descriptions of deficiencies in the house which, he said, potential buyers used to drive down the price. Mr Schmidt also said the estate had received interest from people who would buy the land if the house were removed, making it a “building lot.” He claimed the estate’s realtor supported this plan and that there were buyers available for a vacant lot, and that what buyers offered for house and land was less than the estate believed it could realize for the land alone. The estate trustee and all four beneficiaries allegedly agreed that demolishing the house to sell the property as a vacant lot was the best way to maximize value. A demolition permit had been obtained, and the N13 notice was served on that stated basis. However, in the same evidence, Mr Schmidt repeatedly acknowledged that the estate would still sell the property with the house intact if someone offered a “better price” for the property in its current state. When the Board questioned the apparent inconsistency between a decision to demolish and an ongoing willingness to sell with the house standing, Mr Schmidt initially insisted the estate was “committed to demolishing” and could not accept a decent price with the house. Yet he also admitted receiving an inquiry from Mr Laliberte in the months before the hearing about buying the property “with the house on it and everything else.” His response to Mr Laliberte had not been that the property “has to be sold as vacant land,” but that the prospective buyer should deal with the realtor and that the estate was “on a plan” with a “direction to go with a vacant land.” Mr Laliberte, a long-haul truck driver who worked nearby, testified he had first noticed the property when a for-sale sign posted a price of $499,000 but only later pursued the idea of buying when he visited to look at a four-wheeler and was told by Ms Sharpe that the property was for sale. He contacted the estate via an email address he believed belonged to the owner, and Mr Schmidt then called him. According to his testimony, Mr Schmidt told him the price was $600,000 for the land and existing house, on the understanding that the buyer “had to get rid of the tenants.” Laliberte said he was prepared to offer $500,000, believed he could secure financing up to that amount, and thought $600,000 would still be a good deal, though he did not think his bank would extend that much credit. The Board repeatedly remarked that the purchase price itself was irrelevant to whether the landlord genuinely intended to demolish the property, but the conversations about selling with the house intact were central to assessing intention. Ms Peters testified that she knew Ms Sharpe through “Andy,” who lived with her and helped care for her husband. She claimed Andy, who was the nephew of one of the estate beneficiaries, had told her that his uncle said the house was being torn down “to get Tammy out of the house,” because that was the only way to remove her. Her testimony was largely hearsay. She also mentioned she had once considered buying the whole unsevered property but had found the then-asking price of $700,000 too high. Ms Sharpe confirmed the length of her tenancy, expressed her belief that the landlord only wanted her out and did not truly intend to demolish, and pointed to the landlord’s efforts to sell as further indication that demolition was a pretext to evict her and escape maintenance obligations. She also described ongoing maintenance problems and, in relation to potential relief from or postponement of eviction under s.83(1)(b) RTA, gave evidence about her disability, health issues and limited income from public assistance. In closing submissions, the Board pressed landlord’s counsel on the credibility of Mr Schmidt and the consistency of the demolition rationale. The Board raised a concern that the landlord’s intention to demolish may not have “crystallized” by the time of the N13 notice and might never have done so, given the evidence of a continuing willingness to sell with the house intact. Landlord’s counsel responded that the estate was absolutely willing and ready to demolish, but also willing to sell with the house in place “if that can be done appropriately,” characterizing the shifting purposes as a natural product of a long-running proceeding and a trustee’s duty to maximize estate value, rather than bad faith.

The Landlord and Tenant Board’s decision

On September 5, 2024, the LTB issued its decision addressing all applications between the parties. As relevant to this appeal, it dismissed the estate landlord’s N13 application (LTB file L-017685-23), finding that the landlord had not proven, on a balance of probabilities, that it “required possession” of the unit for the purpose of demolition or that it had a genuine, crystallized intention to demolish the rental house. The Board concluded that when the N13 notice was served, the decision to demolish “had not crystallized,” the landlord continued to have no defined demolition plan, and in substance was “indifferent” to whether the house was demolished. The Board relied in particular on: Mr Schmidt’s own testimony, including his admission that he had discussed sale of the property with the house intact with Mr Laliberte after the N13 notice was served; the credited testimony of Laliberte confirming such discussions; and landlord’s counsel’s closing submissions acknowledging lingering uncertainty at the hearing date as to whether the property would be sold with or without the house. The Board found that s.50(1)(a) of the RTA is subject to an implied good-faith requirement parallel to the express good-faith language in s.48(1) (N12 owner-occupation). In the Board’s view, the Legislature did not intend s.50(1)(a) to be used as a tool for eviction unless the landlord genuinely intended to demolish the unit. Simply contemplating possible demolition as a way to market the property was insufficient grounds to terminate a tenancy. The Board expressly stated that it did not rely on Ms Peters’ hearsay evidence in reaching its conclusions, instead grounding its findings in more direct and reliable evidence. It also invoked the RTA’s tenant-protective purpose, the requirement in s.73(1)(a) that the Board be satisfied the landlord “intends in good faith” to carry out the activity underlying a termination notice, and s.202(1), which obliges the Board to ascertain the “real substance” of transactions and the good faith of the parties, and to look beyond formal labels to patterns of conduct.

Appeal to the Divisional Court and issues on review

The estate landlord appealed the LTB’s dismissal of the N13 application to the Ontario Superior Court of Justice, Divisional Court, under s.210 of the RTA. The appeal was limited to questions of law and was heard by a single judge under s.21(2)(c) of the Courts of Justice Act, following a general direction that LTB appeals be heard by one judge to promote access to justice. The notice of appeal alleged that the Board erred in its interpretation of s.50(1)(a) RTA, erred in law in finding the landlord lacked a genuine intention to demolish and had not acted in good faith, and erred by failing to consider whether s.57(1)(c) RTA (which provides remedies where a landlord gives notice under s.50 in bad faith and the former tenant later applies after vacating) could cure any lack of genuine intention or bad faith. Although the appellant’s factum also raised allegations of reasonable apprehension of bias on the part of the Board, those grounds were not pleaded in the notice of appeal and no amendment was sought. The judge therefore confined the appeal to the grounds properly set out in the notice. The Divisional Court began by emphasizing that under s.210(1) RTA, LTB decisions are final and binding subject only to a narrow statutory right of appeal on questions of law. The LTB is a specialized tribunal administering its “home” statute, and the Legislature clearly intended a streamlined, efficient appeal route. The Court reviewed the well-established distinction between questions of law, fact and mixed fact and law, and noted that only a serious misapprehension of evidence that is “palpable and overriding” can amount to an error of law. The Court also outlined the standard of review. On questions of pure law, appellate courts generally apply correctness, but in the context of an administrative tribunal interpreting its own statute, the applicable standard is reasonableness unless the issue is one of true jurisdiction or of central importance to the legal system. Reasonableness focuses on justification, transparency and intelligibility in the reasoning and whether the decision falls within a range of acceptable outcomes in light of the facts and law. The Divisional Court held that the LTB’s interpretation of s.50(1)(a) was a question of law within the tribunal’s area of expertise involving its home statute and not of central system-wide importance. The proper standard of review was therefore reasonableness.

Interpretation of s.50(1)(a) and statutory context

The central legal question was whether s.50(1)(a) permits a landlord to terminate a tenancy by serving an N13 notice without a genuine, good-faith intention to demolish the rental unit, particularly where an estate trustee wishes to keep options open to maximize the sale price. Section 50(1)(a) states that a landlord may give a notice of termination “if the landlord requires possession of the rental unit in order to … demolish it.” Unlike s.48(1), it does not expressly include the words “in good faith.” The Court applied the modern approach to statutory interpretation, reading the words in their ordinary sense, harmoniously with the scheme and object of the RTA and legislative intent. It turned to three key provisions anchoring its analysis. First, s.1 of the RTA articulates the Act’s remedial, tenant-protective purpose, including explicit protection from “unlawful evictions.” Second, s.73(1)(a) directs that on an application based on a notice under s.50, the Board shall not make an eviction order unless it is satisfied that “the landlord intends in good faith” to carry out the activity underlying the notice. Third, s.202(1) requires the Board to ascertain the “real substance” of all transactions and activities relating to a rental unit and the good faith of participants and authorizes it to disregard the outward form of transactions and consider patterns of conduct. Reading s.50(1)(a) in that statutory context, the Court held it was entirely reasonable for the LTB to find an implied good-faith requirement in the landlord’s reliance on demolition to terminate a tenancy. The landlord’s subjective motives for demolition are not scrutinized, but the landlord must in fact have a genuine intention to demolish at the time of serving the notice and maintain that genuine intention up to termination. The Court stressed that allowing mere contemplation of possible demolition, with no crystallized plan and continuing willingness to accept offers that preserve the house, would undermine the RTA’s protective purpose and open the door to evictions based on demolition as a pretext. The Court rejected the appellant estate’s submission that estate trustees, because of their fiduciary duty to maximize estate value, should be free to treat demolition as one option among many and abandon it at will if a better offer came along. The judge emphasized that fiduciary duties must be discharged within the confines of the law; an estate trustee’s appointment is not a licence to ignore statutory tenant protections. The RTA does not grant estate landlords any special status or relaxation of tenant-protection safeguards. Adopting the estate’s approach would create two regimes: one for living landlords, constrained by good-faith demolition requirements, and a looser one for estates, subject to the fluctuating strategies of trustees. That would be inconsistent with security of tenure and with the Legislature’s choice to limit eviction grounds to specific, justified situations. It would also facilitate unlawful evictions by enabling landlords to use N13 notices based on speculative demolition plans as a tool to remove “unwanted” tenants rather than to carry out genuine redevelopment.

Assessment of the LTB’s fact-based findings

On the evidentiary issues, the appellant argued that the Board misapprehended the evidence in finding no genuine intention to demolish and a lack of good faith. The Divisional Court disagreed. It underscored that these were findings of fact or mixed fact and law within the tribunal’s domain and that there was no palpable and overriding error. The Board was entitled to consider Mr Schmidt’s multiple acknowledgments that the estate was willing to sell with the house intact, the corroborating testimony from Mr Laliberte about discussions of a sale including the house, and counsel’s own concessions that it remained uncertain, even by the hearing date, whether the property would be sold with or without the house. On that record, the LTB’s conclusion that the demolition intention had not crystallized and that the landlord was essentially indifferent to demolition was plainly open to it. The Divisional Court accepted that the Board had not relied on Ms Peters’ hearsay evidence, which it explicitly characterized as having little probative value. Instead, the Board grounded its findings in more direct and credible evidence. As a result, there was no legal error in the Board’s appreciation of the evidentiary record that would justify appellate intervention.

Inapplicability of s.57(1)(c) RTA

The appellant also faulted the Board for not considering s.57(1)(c) RTA as a way to address any issues concerning lack of genuine intention or bad faith. Section 57(1)(c) permits a former tenant to apply for remedies if a landlord has given a bad-faith notice under s.50, the tenant has vacated as a result of that notice or an order based on it, and the landlord then fails to demolish or otherwise carry out the stated purpose within a reasonable time. The Divisional Court held that this provision was simply inapplicable on the facts and thus the Board had no obligation to consider it. Ms Sharpe remained in possession throughout the proceedings; she was not a “former tenant,” had not vacated as a result of the N13 notice or any order, and had brought no application under s.57. The Board could not be faulted for failing to address a remedial pathway that was neither available nor before it. More broadly, the Court rejected the notion that because tenants might later seek compensation under s.57(1)(c), the Board should take a relaxed approach to enforcing the pre-conditions for termination under s.50(1)(a). That would invert the structure of the RTA by allowing potentially unlawful evictions to proceed in the hope that ex post compensation might later be available, a course inconsistent with the statute’s protective objectives and security-of-tenure framework.

Outcome of the appeal and costs

Having found the LTB’s interpretation of s.50(1)(a) reasonable and its factual findings well within the range of acceptable outcomes based on the evidence, the Divisional Court concluded there was no reviewable error of law. It therefore dismissed the estate landlord’s appeal and left the Board’s decision intact, meaning the tenant’s tenancy could not be terminated under the N13 notice for demolition on this record. As to costs, counsel advised the Court that the parties had agreed in advance that costs of the appeal should be fixed at an all-inclusive amount of $5,000, payable “in the cause,” that is, by the unsuccessful party to the successful one. The judge accepted this joint submission. Because the appeal was dismissed, the successful party on appeal was the respondent tenant, Tammy Sharpe, and the Court ordered the appellant estate landlord to pay her costs of the appeal in the agreed all-inclusive amount of $5,000, payable forthwith.