The Ontario Court of Appeal has adjudged that Property Managers (PM’s) who manage rental property for third parties cannot represent themselves or their principals in proceedings at the LTB or in Small Claims Court. This declaration applies even where the PM company or its employee is a “party” to the proceeding. The only exception is where the PM is not acting as agent for a principal with respect to the conduct at issue in the proceeding or where the PM is the owner of the rental property in question. The effect of the Court of Appeal’s ruling is to severely limit the ability of a “Fee Manager” PM to defend itself against allegations of misconduct unless a licensed Paralegal or lawyer is hired to do so.
Here are the key points decided by the Court of Appeal:
- The effect of “licensing” restrictions under the Law Society Act, Ontario, is to require that any PM who provides legal services in Ontario to someone else (including “mediation”, case management hearings, attending on undisputed LTB hearings), must be licensed by the Law Society of Upper Canada.
- While Court of Appeal does not make reference to the completion of Notices of Termination or Applications to the LTB, it does highlight a provision of the Law Society Act which states that a person provides legal services if the person [s. 1.(5), Law Society Act]:
- “…gives a person advice with respect to the legal interests, rights or responsibilities of the person or another person.”
- “…Selects, drafts, completes or revises, on behalf of a person…a document that affects a person’s interests in or rights to or in real or personal property,”
Based on the above it is probable that where a PM gives advice to a Landlord with respect to the provisions of leases; the preparation and service of an N4, N5, etc.; or the preparation and filing of an application to the LTB, the PM is “providing legal services” and, if not “Licensed” by the Law Society or supervised by a Licensee, is providing such services unlawfully.
- Even if the PM is specifically named as “landlord” in the proceeding, the Court of Appeal has ruled that the PM has no right to represent or defend itself from allegations made against it in LTB proceedings. The PM may only appear and make submissions through a licensed third party. Self-representation is only permissible if the PM is the owner of the rental property.
In light of the Court of Appeal’s decision, Fee Management PM’s must exercise care in communications, particularly in written communications (and marketing material), with their principals (ie: Clients). A review of PM contracts should be conducted to ensure the agreements do not require the PM to provide prohibited “legal services” through anyone other than a Licensee of the Law Society or under supervision of a Licensee. Management Agreements should also include provisions for reasonable reimbursement and indemnification for licensed representation in cases where the PM or its employee is named in proceedings where the conduct in issue was undertaken on behalf of the owner of the property.
The decision of the Court of Appeal is called Law Society of Upper Canada v. Chiarelliand may be found at 2014 ONCA 391, docket # C56952.
If you have questions regarding this Bulletin or would like further information, you can contact Joe Hoffer of our office by telephone at (519) 672-9330.