Landlords faced with serious damage to their property caused by current or former tenants can find themselves in the unenviable position of not knowing whether to pursue compensation through the Residential Tenancy Branch (“RTB”) or the BC Supreme Court (the “Court”). We recommend obtaining legal advice at an early stage to ensure this often confusing process is navigated correctly.
While the enactment of Bill 7, Tenancy Statutes Amendment Act (“Bill 7”) on March 1, 2021 was said by then Attorney General David Eby to clarify when the RTB doesn’t have jurisdiction to deal with a dispute, the procedure is still anything but simple.
In the recent decision Choi v. Westbank Projects Corp., 2024 BCCA 410, the BC Court of Appeal has provided a welcome clarification of the complex rules governing jurisdiction over landlord-tenant disputes.
The law prior to Bill 7
Until now the leading decision on this issue was Gates v Sahota, 2018 BCCA 375, which affirmed the following procedural rules:
- The RTB has exclusive jurisdiction over disputes covered by the Residential Tenancy Act (the “RTA”) when the amount claimed is within the maximum claimable in the Small Claims Court (currently $35,000).
- When the amount claimed in an RTA dispute exceeds this limit, anyone who wants the dispute to be heard in the Court must file a Petition (i.e., rather than a Notice of Civil Claim), with notice to the RTB.
- An RTA dispute within the small claims limit can be heard in the Court if it is “linked substantially” to a matter already before the Court. In these cases the action needs to be brought as a Petition, pending an application for a consolidation order.
- The RTB’s authority to order a landlord to make repairs to a rental unit is not subject to the small claims limit.
- Separate claims, each within the small claims limit, cannot be aggregated to avoid the RTB’s exclusive jurisdiction over such claims.
- Class action proceedings are not available in the Court to determine RTA disputes.
- When an RTA dispute is head in the Court, the Court may only make orders that the RTB could make.
When Gates was decided in 2018, the language of section 58 of the RTA suggested that the RTB was required to hear monetary claims under the small claims limit and had discretion to hear claims over that amount. This provision required an application by way of Petition to the Court, with notice to the RTB, before the Court could exercise its jurisdiction.
However, in practice, this requirement has often been overlooked.
Bill 7 and Bill 14
With the enactment of Bill 7, section 58 was amended to prevent the RTB from hearing monetary claims above $35,000 or those “linked substantially” to matters before the Court – unless the Court orders the RTB to hear the dispute.
On May 16, 2024 Bill 14, the Tenancy Statutes Amendment Act received royal assent, adding another class of claims to those falling outside the RTB’s jurisdiction, claims for more than $65,000 brought under certain sections of the RTA. This includes claims by tenants for compensation from landlords who run afoul of the regimes governing notices to end tenancy for use by the landlord, fixed term tenancies, etc.
The Choi decision
The appellants in this case signed a tenancy agreement in July 2017 to rent an apartment from the respondent landlord for $1,700 per month. In April 2019, damage to a fire sprinkler in the unit caused flooding in the rental unit, as well as common areas and other units in the building.
In April 2021, the landlords filed a Notice of Civil Claim alleging negligence against the tenants and claiming damages of more than $250,000. The tenants’ Response to Civil
Claim denied the negligence allegation and pleaded that the issue fell under the RTB’s jurisdiction.
In February 2023, the tenants applied to the Court to strike the Notice of Civil Claim on the basis that (1) it was an RTA dispute within the exclusive jurisdiction of the RTB, and (2) it should have been brought by way of Petition with notice to the RTB. The chambers judge found that the Court had at least shared jurisdiction over the dispute, and dismissed the application, but the latter issue was left unaddressed.
On appeal, writing for a three-justice panel Madam Justice Fenlon cited the ultimate principle that the Court’s jurisdiction can only be ousted with “clear and explicit statutory wording to this effect”, and noted that section 58(3) of the RTA contained such express language. However, it was made clear that not all disputes between landlords and tenants are considered under the RTA; personal injury or defamation actions, for example, are not grounded in the RTA or a tenancy agreement.
While the landlords had framed their case in negligence, not relying on the terms of the tenancy agreement or the RTA, the tenants argued that this was fundamentally an RTA dispute within the RTB’s exclusive jurisdiction. Justice Fenlon agreed with the tenants to the extent that it is the essential character of a claim, and not its legal characterization, that determines jurisdiction, but found that it was not necessary or appropriate to decide that particular issue. Under the test for applications to strike claims, it was sufficient to find it was not “plain and obvious” that the Court did not have jurisdiction over the dispute.
Significantly, the landlords’ claim for more than $250,000 well exceeded the $35,000 small claims limit. Although the tenants contested this amount, these applications do not involve a consideration of the evidence but rather require the Court to take the Notice of Civil Claim on its face.
However, Justice Fenlon did note that the tenants had the option to apply to the Court under section 58(4) of the RTA for an order that the landlords’ negligence claim was really an RTA dispute that should be heard by the RTB. This procedure was said to give a chambers judge “more leeway to undertake the kind of qualitative analysis that may be required to determine jurisdiction”, based on the essential character of a claim rather than its legal framing.
In dealing with the issue of whether the landlords’ claim should be struck because it should have been filed as a Petition rather than a Notice of Civil Claim, the Court of Appeal relied on Rule 22-7(3) which prevents an action from being set aside on the sole basis that it should have been started by a different originating pleading. This was an irregularity, but not a fatal one.
The decision continued with a consideration of whether Bill 7 had done away with the need to proceed by way of Petition and notice to the RTB. Justice Fenlon was tempted to interpret the amendments as abolishing the “cumbersome petition process prescribed in Gates” and permitting parties to simply plead in a Notice of Civil Claim matters that explicitly fall under the Court’s jurisdiction. But she ultimately (and reluctantly) concluded that the changes to section 58(4) did not have that effect.
If the legislators intended section 58(4) to simply allow the Court, upon application by a party, to refer a matter pleaded in a Notice of Civil Claim to the RTB for resolution, there would be no need for section 58(4)(b), which explicitly states that on application the Court may “hear and determine the dispute.” In other words, if the default position is that RTA matters involving claims over $35,000, or those closely connected to another Supreme Court matter, can be pleaded in a Notice of Civil Claim, and it is up to the opposing party to request their transfer to the RTB, then section 58(4)(b) would be unnecessary.
Justice Fenlon found it “somewhat puzzling” that the Legislature chose to keep the requirement to apply by Petition with notice to the RTB to have these matters heard in the Court. This appeared inconsistent with the RTA’s express recognition of the Court’s authority over certain kinds of disputes, as well as the government’s rationale for passing Bill 7.
The Bill 7 amendments were nonetheless said to clarify the jurisdictional boundary between the RTB and the Court, even though they did little to simplify the procedure to be followed in bringing landlord-tenant disputes in Court. The following procedural steps from Gates continue to apply.
- If the party bringing an action wants the Court to decide an RTA issue falling within the exceptions listed in section 58(2), this must be done by way of filing a Petition on notice to the opposing party and the RTB.
- If they fail to do so the responding party can apply under section 58(4), on notice, to have the matter heard by the RTB.
How the Court decides which forum is appropriate
As discussed in Price v. Kehal, 2021 BCSC 2118 and Kassam v. Castro, 2024 BCSC 921, the process of determining whether disputes exceeding the small claims limit should be referred to the RTB involves evaluating the nature of the claims, their legal foundation, and procedural efficiencies, while also weighing procedural fairness.
This requires a determination of whether the issues fall within the RTB’s exclusive jurisdiction or extend into areas that require judicial resolution. Claims that align squarely with the RTB’s mandate—such as rent disputes or damages directly tied to tenancy agreements—may be found to be better suited to the RTB’s processes. However, claims involving broader legal principles, such as negligence, are often outside the RTB’s jurisdiction and benefit from the court’s evidentiary and procedural safeguards.
Cases where the claims barely exceed the small claims limit are more likely to be referred to the RTB, particularly if the issues are tightly bound to the RTA‘s regulatory framework. Conversely, cases involving significant conflicting evidence benefit from judicial fact-finding procedures.
While the RTB’s informal and streamlined processes, such as teleconferenced hearings and simplified evidence exchange, can expedite resolutions, these efficiencies must be balanced against procedural fairness. Courts have expressed concern that limited disclosure requirements at the RTB—where parties need only present evidence they intend to rely upon—can affect the ability of parties to properly make their case and enable some parties to withhold relevant material.
A significant consideration is whether there are related disputes pending before the RTB. Courts may consolidate overlapping claims to avoid inconsistent outcomes and reduce costs. Consolidation minimizes pre-trial duplication and reduces the risk of contradictory judgments stemming from differing procedural rules.
Ultimately, the court’s discretion under Section 58(4) of the RTA should be guided by the principle of proportionality—ensuring that the forum selected aligns with the nature and value of the claims and the procedural resources required to resolve them.
Takeaway
In light of the BC Court of Appeal’s decision in Choi, landlords should be mindful of the complex jurisdictional boundaries between the RTB and the Court when pursuing claims against their tenants. While the decision provides some clarification, it underscores ongoing procedural challenges and highlights the potential consequences of missteps in navigating these forums.
One of the key takeaways from Choi is the affirmation that the essential character of a claim—not its legal framing—determines whether it falls under the RTB’s jurisdiction. For landlords pursuing claims exceeding the $35,000 small claims limit, this principle is particularly critical. Although the Court of Appeal allowed a $250,000 negligence claim to proceed, it did so on the basis that it was not “plain and obvious” that the Court lacked jurisdiction. The ruling underscores the risk that high-value disputes could still potentially be subject to referral back to the RTB if they are found to arise from the RTA.
Bill 7 aimed to clarify jurisdictional boundaries by explicitly excluding monetary claims over $35,000 from the RTB’s purview unless the Court orders otherwise. However, procedural hurdles persist. For instance, landlords must still initiate certain RTA matters in the Court through a cumbersome Petition process, with notice to the RTB.
What is particularly concerning for landlords is the potential for significant damages claims to fall within the jurisdiction of the RTB. RTB arbitrators, who often lack formal legal training, could then decide these complex and high-stakes disputes on a summary basis. While the Court’s decisions in Price and Kassam articulate a reasonable test to determine whether to refer a claim exceeding $35,000 to the RTB, the mere possibility that a $250,000 claim could be dealt with on this basis raises serious questions about the fairness and adequacy of RTB proceedings for claims of such magnitude.
Landlords facing substantial property damage caused by tenants should seek legal advice early to ensure their claims are framed appropriately and brought before the correct forum. Procedural missteps, such as filing a claim in the wrong format or failing to engage the proper jurisdictional mechanisms, could jeopardize the resolution of high-value disputes.
While the Choi decision offers guidance, it also serves as a reminder of the complexities inherent in landlord-tenant litigation in British Columbia. It should also be kept in mind that Choi was not a final decision, and this case will need to be followed to see what ultimately comes from the landlords’ damages claim.
By Spencer Evans
Originally from a small town in Ontario, Spencer spent seven years posted to Victoria with the Royal Canadian Navy before returning to study history and political science at the University of Ottawa. After graduating from Queen’s Law in 2021, Spencer moved back to Victoria to complete his articles with Crease Harman and was called to the British Columbia bar in 2022.