Moving Forward on Co-operative Housing Tenure Disputes Resolution Consultation Paper Ontario Ministry of Municipal Affairs and Housing August 2009
TABLE OF CONTENTS I. Introduction II. III. IV. Scope of Potential Reform Background Current Co-op Housing Eviction Process V. A New Co-op Eviction System For Ontario VI. Issue for Further Consideration Appendices A. Streamlined Co-op Internal Eviction Process B. RTA Grounds for Eviction that Would Apply to Co-ops C. Overview of How the LTB Process Would Work for Coops 2
I. Introduction This paper is a starting point for discussion on whether to reform the process for resolving disputes relating to tenure in co-op housing and, if so, how these reforms might be implemented. The province is interested in the views of stakeholders in order to give due consideration to the various perspectives on reforms, from the viewpoint of co-ops seeking eviction and members facing evictions. The paper provides some background on housing co-ops in Ontario and describes the current co-op eviction process. It provides a description of a proposed new approach and the potential implications of this approach. An issue that requires further consideration has also been identified. II. Scope of Potential Reform In the Co-operative Corporations Act (CCA), a non-profit housing co-operative means a co-operative, without share capital, the articles of which provide that the co-operative is a non-profit housing co-operative for the purposes of the CCA. This means that the scope of this discussion paper includes non-profit housing cooperatives and does not include equity co-operative housing, in which the member provides an equity investment to obtain shares in the co-op and the right to occupy a unit. The paper also does not address non-member (rental) units in housing cooperatives which are regulated under the Residential Tenancies Act, 2006 (RTA). III. Background There are approximately 550 housing co-ops in Ontario with 44,000 households representing approximately 125,000 people. Approximately half of the co-op housing stock was developed under provincial programs and is regulated by the Social Housing Reform Act (SHRA). Most of the remainder was developed under federal programs and have operating agreements with Canada Mortgage and Housing Corporation (CMHC), which administers the agreements primarily through the Agency for Co-operative Housing. Co-op housing is not covered by the RTA, and co-op evictions are not resolved by the Landlord and Tenant Board (LTB) as are other non-profit or private rental eviction disputes. Co-op housing is covered by the CCA administered by the Ministry of Finance (FIN) and the Financial Services Commission of Ontario (FSCO). Currently co-op evictions use an internal eviction process specified in co-op bylaws within parameters mandated by the CCA, followed by a court-based process whereby the co-op applies for an order declaring that a person s membership and occupancy rights are terminated, and for the issuance of a writ of possession. It 1
has been estimated by the Co-operative Housing Federation of Canada (CHFC) that there are approximately 350 co-op housing eviction applications filed with the courts in Ontario each year. Co-ops have indicated that the current court-based process is too lengthy, complex and costly compared to the process that is governed by the RTA. The RTA sets out a quasi-judicial system that is less formal and can respond more quickly than the courts. In addition, the internal co-op eviction process is considered too burdensome compared to the eviction process for private rental and non-profit housing providers, and too complex and confusing for members to adequately understand and safeguard their rights. IV. Current Co-op Housing Eviction Process The relationship between co-ops and members that occupy co-op units is governed by the CCA, the by-laws of the co-op, and the occupancy agreement between the co-op and the member. The occupancy agreement is usually very short and the CCA contemplates eviction based on a ground set out in the co-op s by-laws. Therefore, the by-laws are the operative document in a co-op eviction. Typical grounds for co-op eviction include arrears of housing charges (similar to rent ), persistent late payment, illegal acts and behavioral problems. The CCA provides the minimum content for the procedure for termination of membership and occupancy rights. Within this legislative framework are requirements that when the co-op board makes the decision to evict, the member must be given notice that eviction will be considered and given the opportunity to appear before the co-op board and to appeal the termination to the membership. The CCA also requires that once the internal process is concluded and a person s membership and occupancy rights are terminated, the co-op may apply to a judge of the Superior Court of Justice for an order declaring that the person s membership and occupancy rights are terminated and directing that a writ of possession be issued. If the judge does not issue a writ of possession, the person s membership and occupancy rights are deemed to have not been terminated. Upon an application by a co-op for a writ of possession, a judge may refuse to grant the application if he or she is satisfied, having regard to all the circumstances, that it would be unfair to grant it. The court procedure is very similar to the procedure provided for under Part IV of the former Landlord and Tenant Act at the time the CCA was amended to include the eviction procedure. The Court treats its duties in these matters as a judicial review of the co-op s internal decision. The case-law has established a standard of review that is generally, but not always followed. The standard is that the Court will not intervene if a member has been dealt with in a procedurally fair manner and if the co-op had a reasonable basis for its decision in the circumstances. CHF 2
Canada has expressed concerns that the courts have not been consistent in their adjudication of co-op evictions, with the result that considerable efforts are expended in preparing for court cases. In addition, CHF Canada has expressed concerns that under the present system undue deference is paid to the procedural aspects of the internal co-op decisions rather than to the underlying reason for the eviction process. As a result, it is argued, in some cases members being evicted may not receive adequate protection. CHF Canada considers that it would be more appropriate for the applications to resolve eviction disputes to be decided on their intrinsic merits. The Internal Co-op Process The minimum requirements for the internal co-op eviction process are set out in the CCA. The CCA requires the housing co-op to provide a notice that the co-op board will consider terminating the member s membership and occupancy rights. The notice must be sent at least 10 days before the meeting and must set out the grounds for the proposed termination. In addition, many co-ops have requirements prior to the eviction process such as review by an arrears committee or a grievance committee. A co-op board meeting is held, at which the member can present his or her arguments. The procedure followed at this meeting is subject to a strict review by the courts. Typically, the process would include presentation of the evidence in the presence of the member and his or her representative and an opportunity to crossexamine. If the board decides on termination, a notice must be given to the member about the decision within five days. The member is entitled to appeal the board s decision to a general meeting of co-op members within seven days of receiving the notice of the co-op board s decision. The appeal is heard at a general meeting scheduled at least 14 days after the member s appeal letter is received. The decision of this meeting is final. V. A New Co-op Eviction System For Ontario The current co-op housing eviction process involves an extensive internal co-op process together with a court process that can review both the process by which the co-op board decides to terminate a member s membership and occupancy rights, and to an extent, the merits of the reasons for termination. CHF Canada has asked the government to develop a more effective eviction process that would protect members rights, help co-ops to enforce their memberapproved by-laws, and provide a more easily understandable, efficient and affordable approach. 3
A proposed new approach to co-op eviction in Ontario would make it more responsive, streamlined, and cost effective. The main feature of the new approach would be to use the expertise and infrastructure of the LTB to resolve co-op eviction disputes. This would mean that for most eviction cases, co-ops would be governed by eviction rules set out in the RTA, with some exceptions. All other aspects of co-op administration would continue to be governed by the CCA, co-op by-laws, and in some circumstances, the SHRA. The new approach would recognize the unique structure and governance of co-op housing and would not require that a co-op board/member become a landlord/tenant under the RTA. Co-ops would continue to use their unique system of housing charges and member-approved rules. Amendments would need to be made to the RTA to enable co-ops to make eviction applications to the LTB. Proposed changes to the co-op eviction process would also include a streamlining of the co-op internal eviction process by amending the CCA and the RTA. The proposed changes would also clarify that the LTB, or alternatively, the courts, in reviewing the co-op board s internal termination proceedings, would only consider the merits of the co-op board s decision and not consider the internal procedure followed by the co-op board. The following section provides a description of how the new approach to co-op eviction would work. See Appendix A for an outline of the streamlined internal coop eviction process and Appendix C for an outline of the (external) LTB process for evictions. 1. Streamlining the Internal Co-op Eviction Process This section focuses on the co-op s internal rules and procedures for evictions. The co-op would be required to complete its internal process before filing an application for eviction with the LTB. The diagram in Appendix A demonstrates the proposed streamlined co-op internal decision-making process. The following steps may be proposed for inclusion in legislation with respect to the internal co-op process: 1. The co-op would be required to send a notice of a co-op board meeting to consider whether or not the co-op will be seeking eviction of the co-op member. o The ground(s) upon which the board may seek eviction would be included in the notice. o The notice would have to be provided to the co-op member at least 10 days prior to the board meeting. o The notice would inform the co-op member that if an eviction order is issued by the LTB or the courts, the member does not have to move out of the unit until the full legal process is completed. 4
2. The co-op board meeting would be held, during which, the member would have a right to speak to the co-op board. 3. If the co-op board decides to seek eviction of the co-op member, the co-op would have to provide a notice of this decision to the member within five days of the meeting. 4. If provided for in the co-op by-laws, the member would have seven days after receiving the notice of the co-op board s decision, to request an appeal to the general membership. The streamlined internal process would not require the co-op to provide an appeal to a general membership meeting, however a coop could provide for such an appeal through its by-laws, if it wishes. The by-laws could provide for membership appeals in all cases or only in some cases. Only after the time period has ended for members to appeal the coop board decision (if applicable), can the co-op board serve the notice to terminate occupancy rights (eviction) under the LTB. 2. LTB Process for Co-op Evictions If the grounds for co-op eviction are covered by the RTA (see Appendix B), and the member does not vacate the unit, the co-op may serve on the member a notice of eviction based on grounds set out in the RTA, followed by an application for eviction to the LTB. If a co-op wants to evict for a violation of a by-law that is not included as an RTA ground for eviction, it could proceed to the courts as is currently the case. The co-op could not take these matters to the LTB. The length of the eviction notice period that must pass before the coop could apply to the LTB for an eviction hearing would be the same as under the RTA. The length of this period depends on the eviction grounds (e.g. 10 days for illegal acts involving drugs or seriously impairing safety of other residents, 14 days for arrears, 20 days for causing undue damage to the rental unit or property, and 60 days before the end of the term for persistent late payment). Members would have an opportunity to remedy certain problems in order to avoid eviction, as is provided for in the RTA (e.g. by stopping activities that interfere with others reasonable enjoyment of the coop, by repairing undue damage, or by paying the cost of the undue damage caused by the member). 5
The timing of when the co-op can file an application with the LTB would vary depending on the eviction grounds. In the case of: o evictions based on arrears, the co-op could file an application once the termination date has passed and the member has not paid the money owing or vacated the unit. o evictions based on causing undue damage, overcrowding or interfering with reasonable enjoyment, the co-op could file an application once the remedy period has passed and member has not remedied the problem or vacated the unit, but no later than 30 days after the termination date set out in the notice. o all other evictions covered under the RTA, the co-op could file an application immediately following the notice of termination, but no later than 30 days after the termination date set out in the notice. The member could appear and be heard at the LTB eviction hearing. A provision similar to s. 83 of the RTA would require the LTB to consider a member s circumstances when deciding whether to order an eviction, and members may raise other issues relevant to their defense. The co-op s internal eviction procedure would not be considered by the LTB in arriving at its decision, nor would any deference be given to the co-op s internal process or decisions. Where a member is being evicted for arrears, the member would be able to stay the eviction order by paying the money owing: o before the eviction order becomes enforceable; or o after the order becomes enforceable but before it is enforced by the Sheriff. Sections of the RTA that address tenant applications would not apply, so co-op members would not be able to file those types of applications. Issues raised in tenant applications typically allege a failure on the part of the landlord to fulfill its obligations, for example, failure to maintain the residential complex in a good state of repair. In the co-op context, these issues would continue to be addressed through the co-op s internal democratic process as mandated by the CCA. Special rules for fast-track eviction procedures for serious matters such as serious safety issues, drug production/trafficking, excessive or willful damage, would apply to co-ops. As with other eviction 6
applications, the co-op member would always have a right to a hearing. LTB could order that the occupancy be terminated and the co-op member be evicted, and the eviction order could be enforced by the Sheriff. If the LTB orders an eviction of a co-op member, the member would have the same rights to review and appeal the decision as are currently provided to tenants under the RTA. A member would be able to file an appeal to the court from a decision of the LTB but only on a question of law. If the LTB or the court dismisses the application for eviction filed by the co-op board, subject to any appeal, the member s membership rights would be deemed not to have been terminated. 3. Potential Implications of the New Approach The new approach would make the co-op eviction process more responsive and cost-effective. Streamlining the dispute resolution process mandated by the CCA would simplify the internal process and shorten the time required to evict. It would utilize LTB s expertise in most cases and allow access to established infrastructure and procedures dealing with eviction disputes. It would be less costly for the co-ops to use the LTB in most eviction disputes, in comparison to using the current court-based system for all eviction disputes. Having cases go before the LTB would reduce the burden on the court system. All hearings before the LTB and the courts would be conducted as de novo hearings based on the merits of the case without consideration being given to the internal process for eviction. Current co-op law and policies regarding housing charges and other requirements of membership would remain the same and the unique system of co-op housing would be recognized. Although members would not have the right to make applications to the LTB, members rights to use internal co-op processes and to apply to the courts regarding co-op issues would be maintained. 7
It would provide members with the opportunity to be heard by the LTB through a process that is transparent, accessible and routine. It would require fewer legal resources and legal clinics may be more willing to handle co-op eviction cases and represent co-op residents. Members would have the opportunity to raise other issues relevant to their defence at the LTB hearing as is currently provided to tenants under section 83 of the RTA. The LTB would provide for mediation, as much as possible, to try and resolve an eviction dispute prior to it proceeding to a hearing. VI. Issue for Further Consideration 1. Student Housing Co-ops According to CHF Canada, there are about six student co-ops in Ontario. The student co-ops have raised some concerns with the current system under the CCA. Their basic concern arises from the short-term nature of occupancy. Many student co-ops have a term of membership of 8-9 months and have a separate rental system for 3-4 months during the summers. Student co-ops would like to shorten and expedite the internal eviction procedure. For example, some student co-ops may only have two to three membership meetings per year. Therefore, an appeal to the membership may be impractical particularly in the summer. The streamlining of the internal co-op eviction process through amendments to the CCA may address some of their concerns. With regard to the RTA, students living in university or college dorms are exempted from the RTA because these students are governed by university or college rules. The issue of how student co-ops will be considered under the new approach to coop eviction would need to be resolved. 8
Appendix A Streamlined Co-op Internal Eviction Process Appendix B - RTA Grounds for Eviction that Would Apply to Coops o Non-payment of housing charges (arrears of housing charges) o Persistent late payment of housing charges o Causing undue damage to the co-op unit or property o Seriously interfering with the reasonable enjoyment of other members or coop staff (including pets that disturb, cause a serious allergic reaction, or are a dangerous species or breed) o Committing an illegal act or carrying on an illegal business on the co-op property o Overcrowding the unit (letting more people live in a unit than is allowed by local by-laws) o For a rent-geared-to-income member, misrepresenting his or her income or a family member s income 9
o Member no longer qualifies for an assisted or subsidized unit o Member agreed to terminate occupancy of unit o Unit has been abandoned o Unauthorized occupant is living in the unit o Unit needs to be vacant for demolition, conversion to non-residential use, or during major repair work o Unit is occupied by person working to take care of building (i.e. superintendent), and the person did not vacate unit at co-op s request within seven days of termination of employment o Breach of an order or mediated settlement Fast-track eviction grounds: o Seriously impairing the safety of another person on the co-op property (including keeping a pet that has threatened a person or is a dangerous species or breed) o Committing an illegal act or carrying on an illegal business, involving the production of or trafficking in an illegal drug, or possession of an illegal drug for the purposes of trafficking o Willfully causing damage to the co-op property o Excessive damage resulting from use of the co-op property in a manner inconsistent with the property s use as residential premises 10
Appendix C - Overview of How the LTB Eviction Process Would Work for Co-ops 11
Ministry of Municipal Affairs and Housing Queen s Printer for Ontario, 2009 ISBN 978-1-4435-1124-7 (PDF) ISBN 978-1-4435-1125-4 (HTML) 08/09 Disponible en français 12