Decision upholding B.C. man's eviction for unpaid rent was patently unreasonable, court rules

Part of a blank B.C. 10-day notice to end tenancy form is shown. (gov.bc.ca)

A B.C. Supreme Court judge has thrown out a ruling by the province's Residential Tenancy Branch and ordered it to reconsider the question of whether a tenant should be evicted over $13,300 in unpaid rent.

The tenant in question, Andro Sanchez, acknowledged that he withheld that amount from the rent payments to his landlord Yan Hong Bao, but told the RTB and the court that he did so because of a "long-standing arrangement" in which he paid for certain expenses – such as property taxes – and withheld the amounts from his rent.

In a decision issued Wednesday, Justice Wendy A. Baker found that the RTB arbitrator who upheld the eviction had not adequately considered – or even considered at all – whether the purported withholding arrangement justified Sanchez's unpaid rent.

Why was the money withheld?

According to Baker's decision, Sanchez told the court he withheld rent payments in December 2023 and January and February 2024 as compensation for renovation work he did to create a basement suite in the home.

Bao, who lives in China, had expressed a desire to increase the amount of money he was earning from the property, Sanchez told the court. The tenant said he offered to construct a basement suite that could be rented out to generate additional revenue.

"Mr. Sanchez says that he prepared a budget and the landlord agreed that Mr. Sanchez could do the work and deduct expenses from his rent," Baker's decision reads.

The decision does not specify where in B.C. the rental property is located.

In March, Bao hired a local management company to serve Sanchez with a 10-day notice to end tenancy for unpaid rent.

Sanchez challenged the notice at the RTB, which issued its decision upholding the eviction in April.

Bao also brought a separate complaint to the RTB seeking compensation for the unpaid rent, but he withdrew this complaint when the arbitrator awarded him compensation as part of the eviction decision.

Sanchez petitioned the court for a judicial review of the case, arguing both that the RTB ruling was patently unreasonable and that its process had been procedurally unfair.

No 'rational or tenable line of analysis'

Baker's decision was the result of Sanchez's judicial review petition, and it finds in his favour on both the reasonableness and the fairness issues.

The judge noted that the RTB arbitrator's decision was "very brief," and – while it acknowledged Sanchez's argument that he had an arrangement allowing him to withhold rent to cover agreed-upon expenses – did not make a determination about whether the alleged arrangement was valid.

The "primary question" before the arbitrator, according to Baker, was whether or not the evidence supported that the parties had an agreement to allow Sanchez to deduct renovation costs from the rent.

"Having read the decision in its entirety, I cannot see any rational or tenable line of analysis which addresses this fundamental issue," the decision reads.

"The arbitrator simply repeated the fact that the tenant had not paid the rent, without addressing the underlying argument as to whether such a withholding accorded with an agreement between the parties. In the absence of any analysis addressing the fundamental issue in the dispute, I find the decision is so flawed that no amount of curial deference can justify letting it stand. It is patently unreasonable."

Baker also noted that Sanchez included an email from Bao in his response to the landlord's RTB complaint that "appears to support his position." As reproduced in the court decision, the relevant line of the email reads: "The cost of your basement is deducted from the rent."

Sanchez attempted to refer to this or other evidence during the RTB hearing, but he was unable to find what he was looking for before the hearing's one-hour time limit expired, according to Baker's decision.

The RTB arbitrator reassured him that he would have the opportunity to present his evidence at a second hearing specifically on Bao's unpaid rent complaint, but when the landlord withdrew that complaint, Sanchez lost this chance.

Baker's decision indicates that the RTB arbitrator was required to make a monetary award at the same time that Sanchez's challenge to the notice to end tenancy was denied. The judge found the arbitrator had failed to make that fact clear.

"The failure of the director to ensure that the related disputes were heard together, and to ensure that all evidence relating to the issue of unpaid rent filed in both disputes was before the arbitrator on April 15, 2024, coupled with the misleading reassurance by the arbitrator during the hearing, resulted in a hearing which was procedurally unfair to Mr. Sanchez," Baker's decision reads.

The judge ordered the RTB ruling to be set aside and remanded the case back to that body for a rehearing.