Does a Legal Dispute Between Landlord and Tenant Ever Get Heard at Small Claims Court?
Most Disputes Between a Landlord and Tenant Must Proceed In the Landlord Tenant Board. Proceedings Brought In An Improper Venue May Be Dismissed for Lack of Jurisdiction.
A common issue for matters arising out of a residential tenancy arrangement involves whether the matter is properly heard at the Landlord Tenant Board (the "LTB") or properly heard at the Small Claims Court. If a matter is brought in the wrong venue, the matter may be 'kicked out'; and getting kicked out of the wrong venue when past the date in which the matter could have been brought in the proper venue can result in a situation where a person becomes unable to pursue the legal issue. Accordingly, reviewing the jurisdictional issues prior to starting a legal proceeding is of foremost importance.
In most cases involving a dispute between a residential landlord and tenant, the Residential Tenancies Act, 2002, S.O. 2006, Chapter 17 (the "RTA") will be applicable. With most cases the legal issue in dispute is conferred upon the LTB for exclusive decision making authority per s. 168 of the RTA, Where certain decisions must be made by the LTB, the jurisdiction of the Small Claims Court is ousted; Brydges v. Johnson, 2016 CanLII 4942; Finney v. Cepovski, 2015 CanLII 48918 at 17; Efrach v. Cherishome Living, 2015 ONSC 472 at 6; Mercier v. Hawco, 2014 CanLII 141 at 6 to 7; Fraser v. Beach, 2005 CanLII 14309 (ON CA) at 15. Unfortunately, the RTA provisions can at times be unclear and cause confusion as many provisions are vague and perhaps conditional. Accordingly, when some specific legal issues arise, determining whether the matter must proceed at the LTB can become difficult.
In the recent decision within Kiselman v. Klerer, 2019 ONSC 6668 the Divisional Court addressed the frequently occurring, and confusing, issue regarding whether a landlord is required to pursue a former tenant for concerns of rent arrears as well as damage caused to the rental unit at the Landlord Tenant Board or at the Small Claims Court. The Division Court stated:
 The landlord brought a claim in Small Claims Court for rent arrears and damage to the property. The claim was brought after the tenant had vacated the property. The amount of the claim did not exceed the $25,000 cap, then in place under s. 207(1) of the Act. It is plain and obvious that s. 168(2) of the Act gives the Board exclusive jurisdiction to determine claims of this type between landlord and tenant. The parties had a landlord and tenant relationship, and in my view, nothing turns on the fact that the action was started after the tenant was no longer in possession. It is clear that disputes of this sort are the daily fare of the Landlord and Tenant Board. When assessing claims, the Board is in the best position to determine whether claims for rent arrears and allegations of damage to property against the tenant amount to “undue damage” or simply wear and tear as a result of the normal occupancy of a residential unit.
Multiplicity of Proceedings
Sometimes the jurisdiction conditions can cause a multiplicity of proceedings occuring in two places such as where tenancy relations break down prior to the 'move in date' whereas the tenant must apply to the LTB for return of a rent deposit as governed by s. 107(1) of the RTA; and yet, the landlord may be forbidden from applying to the LTB per the s. 87(1) condition that require the landlord's access to the LTB be available for certain matters only if the tenant is in possession of the rental unit. For example, this circumstance often occurs where a tenant tries to 'opt out' of a lease at the last moment, for whatever other reason, by failing to occupy the rental unit and then subsequently seeking return of a first and last rent deposit. Regardless of the reason the tenant seeks return of the rent deposit, the tenant must pursue the return of the rent deposit at the LTB per s. 107(1) which provides that the LTB may hear a case about why the rent deposit should be returned and this section coupled with the s. 168 exclusive jurisdiction provision imposes the absoluteness of the requirement that the rent deposit question be decided by the LTB. Contrarily, in the same situation, if the landlord wishes to claim loss of rent arising from the 11th hour 'opt out' by the tenant, the landlord must proceed to the Small Claims Court by virtue of inaccess to the LTB that arises from the s. 87(1) condition that the landlord may seek 'rent arrears' from the LTB only if the tenant remains in possession of the rental unit - and in this situation the tenant failed to take possession of the rental unit. It is interesting to note that the tenant may be with good reason to 'opt out' at the last moment, the tenant may even be in the right with a good enough reason to 'win'; however, the tenant must pursue return of the rent deposit via the LTB and the landlord must pursue the loss of rent at the Small Claims Court despite the multiplicity of proceedings problem that arises.
With the above said in regards to a 'multiplicity of proceedings', principles of natural justice may permit, and perhaps require, that one of the proceedings be 'stayed' until a decision is made in the other forum and then the decision in the matter that was stayed may need to follow the factual decisions in the matter decided upon first. This 'staying' of one of the two processes ensures that the risk of two opposing factual decisions are avoided whereas two opposing factual decisions would put the administration of justice into disrepute.
Whether a legal dispute between a landlord and tenant must proceed at the LTB will depend on the issue in dispute. For some legal issues, the matter must absolutely be heard by the Landlord Tenant Board as a matter of 'exclusive jurisdiction'. For other legal issues the LTB may be without jurisdiction and therefore lack authority to hear the matter at all. Understanding which type of legal issues must proceed at the LTB and which must proceed elsewhere is highly important to ensuring that a case gets properly heard and that justice gets done.