In August 2014, Josh Hawley interviewed Jeff Schlemmer, the Director of Neighbourhood Legal Services for London and Middlesex, ON and author of the most complete review of co-op housing case law in Ontario. Parts of this interview originally appeared in the article Tear the House Down in This Magazine. Here is the full interview, edited for readability.
A Legal History of Co-op Housing in Ontario
Co-op Homes Action Network: What is your legal experience with housing co-ops?
Jeff Schlemmer: I run the legal clinic down in London, Ontario. I’ve been doing residential eviction cases for 32 years. Our clinic historically defended people facing eviction. Back in the 1990s, evictions from housing co-op members were not that different from other types of evictions.
That system worked quite well. It was kind of analogous to small claims court. The additional element, of course, was before you got to court, you had the appeal process at the co-op. You would go off to the Eviction Review Committee and then to the board and then to the general membership before the co-op could start their application to the court to evict. I attended lots of those meetings over the years and got to know about some of the dynamics. We didn’t really see that many co-op evictions and I think most things would get worked out within the co-op.
CHAN: How have co-op evictions been handled by the courts over the years?
JS: What began to concern me was in the late 1990s and early 2000s, there was a huge change in the way judges dealt with things. In 1998, the Ontario Rental Housing Tribunal was created to remove residential evictions from the courts. That was fine, except what ended up happening was the judges weren’t doing these little eviction cases anymore on a regular basis. And so, in the rare case when a co-op eviction would come along, they sort of forgot how to deal with them.
Instead of having a quick little hearing, judges wanted to have the kind of paperwork that would be involved in commercial litigation files. You would file detailed affidavits of the evidence, detailed statements of the relevant law, and so on. Community legal clinics like mine had no resources to do that, so we essentially got out of the business.
As co-op residents were unrepresented, the co-op’s lawyer would go in and tell the judge the law was a certain thing, and there would be nobody to say, “No, that’s not what the law is at all.” What they would typically say was great deference was owed to the co-ops and the judges should not look into whether the co-ops actually had good grounds for evicting people.
That’s fairly unusual in court. I can’t think of another situation where you have two litigants going to court and a judge would say, “Litigant A, you shouldn’t have to prove your case, don’t worry about it.” But that’s exactly what ended up happening. And it happened for a few reasons.
Co-ops are not Private Clubs
CHAN: What were those reasons?
JS: The first was usually the tenants or members were unrepresented so there was no lawyer to point out the landlord’s lawyer was only telling half the story.
The other reason was there was some confusion amongst the judges going back to a case in 1992 called McBride. The Court of Appeal misunderstood what co-ops were and analogized them to private clubs. And back in those days, judges belonged to private, men-only clubs. The sort of clubs that excluded Blacks or Jews, for example. I remember when I started practicing, the senior partner would go off to his men’s club everyday and golf. And so these are the people who decided, “Well, a co-op is just like the private men’s club I belong to and we’re allowed to discriminate in any way we want because we own the club and it’s like our private living room. We can decide who’s going to be there.”
They misunderstood members of co-ops don’t own the co-op. Really, this is a social service being provided by government. It is in no sense analogous to a private men’s country club.
But they said, “Well, we’re not going to look closely at what’s going on in co-ops, because if we start doing that then we’ll have to start looking closely at our men-only country clubs and we don’t want to do that.” What ended up happening was, particularly in the cases where the member was unrepresented, the judges would say, “Well, we owe great deference to these co-ops because they’re little mini-democracies in action. We shouldn’t look into what they’re doing.”
Bob Rae was premier at the time and his government was aghast this had happened. They immediately amended the Co-operative Corporations Act. They took all the language in the Landlord and Tenant Act dealing with residential evictions and put that in the Co-operative Corporations Act to make it clear people in co-ops were supposed to have the same Security of Tenure rights.
In the cases that came out after the amendment was passed, the judges said, “We don’t think that changes anything. We still like this McBride decision and the fact government has totally changed the law to make it clear McBride is wrong will not cause us to change the way we deal with things at all. We’re just going to keep going the way McBride did.”
Justice Malloy is constantly cited in cases up until 2014 as saying McBride was good law. I noticed a recent case where the judge still cites McBride as being the state of the law. Well, it’s not. And government did its best to reverse it by changing the law to make it more clear. But judges still rely on it.
Co-op Boards are not Statutory Tribunals
CHAN: Why did judges give so much authority to co-op boards?
JS: The judges confused co-op boards with a concept called Administrative Law. In Ontario, there are probably 50 different boards and tribunals, from the Landlord and Tenant Board (LTB) to the Social Assistance Review Board to the Securities Commission. Those boards or tribunals are substituting for a court.
Most of the law we deal with around these administrative tribunals deals with the Standard of Review called Reasonableness. That is, the courts will say, “OK, if the LTB has had a hearing, we’re not going to look too closely into whether their decision was absolutely correct. Especially on whether they got the facts right. We’re just going to look at whether it was reasonable.”
Co-ops are all non-profit corporations. Non-profit corporations all have boards. Some genius, acting for a co-op at one point, said, “Well, this is a decision of a board, so you have to apply a Reasonableness Standard in reviewing their decision.” The flaw of that argument is one of the litigants, the applicant or respondent, happens to be a corporation. For any other type of case involving a corporation, it would never occur to a court to look into whether it was reasonable the board of the corporation decided to go to court. It’s just irrelevant.
When I did these cases back in the day, there was no presumption of deference to the co-op. The co-op happens to be a litigant, just like the member is a litigant, and each side will need their admissible evidence and the court will decide who’s right and who’s wrong.
There was a snowball effect. The courts were confused and decided, “This is a review of an administrative tribunal’s decision and we shouldn’t have a hearing on whether or not they have a case. We’ll give great deference to the co-op.” Subsequent judges began relying on the earlier decisions as precedent.
The Supreme Court of Canada is the highest court. Everybody has to follow it. It has never ruled on any co-op issue in Ontario.
The Court of Appeal has ruled on it twice. The courts made decisions that dramatically changed the law to say there’s great deference owed to the co-op. They said, “If they want to evict somebody, we shouldn’t look at whether they have good reason for doing it, we’ll just go ahead and evict them. And we’re not going to let the member come in and defend themselves with oral evidence. We’re not going to test the evidence of the co-op.”
All of that was just made up by judges, off the tops of their heads in cases where the co-op members were unrepresented.
Members Footing the Bill
CHAN: What happened to co-op members who lost their eviction case in court?
JS: Normally if you lose a court case you have costs awarded against you. The costs are normally about half of the legal costs incurred by the winner.
Somebody got the idea to put a clause into every standard membership agreement and bylaw of a co-op, saying, “That’s not going to apply to a member of a co-op. If a member gets taken to court by the co-op, they will have to pay what’s called Substantial Indemnity Costs.” That means all of the legal costs incurred by the co-op.
Substantial Indemnity Costs are only awarded in court cases of egregious misconduct during the trial. They are intended to be a punishment of an extremely evil party. The judges latched onto that one.
We had situations where suddenly people living in non-profits were having costs awarded against them of $20,000 and $30,000 for being evicted. The most outrageous one was down in St. Catherines. In that case, the judge awarded costs of $40,000 against this couple who was on pension. The judge said it was because they were too slow in defending the case and the way they presented their evidence just wasn’t very efficient. As a result, they were going to have to pay this mega-cost award.
Besides the fact it would bankrupt them, the housing subsidy in housing co-ops in Ontario was changed by Mike Harris. One of the provisions brought in said if you owe any money to any non-profit housing provider, you can never be housed in any other non-profit until you pay that money back. So that couple was shut-out for life.
It became exceptionally unfair and difficult for people living in co-ops to defend their homes the way every other person who rented housing in Ontario was entitled to.
There’s a guy, Bruce Woodrow. He’s a lawyer who lives in a co-op in Toronto. And he is the lawyer who caused these things. He always acts for co-ops evicting members. Over the years he was involved in just about every major case that made the law more tilted in favour of co-ops. In a way, one could argue he did a really good job for the co-ops because he made it easier for them to win these cases.
Although, he’s sort of worked himself out of a job now. Or at least a lot of the money that was involved because these cases are now going to be dealt with by the LTB. They can now be dealt with by paralegals instead of lawyers, and it will be way cheaper and easier to evict somebody from a co-op. Although it was easy on the merits to evict somebody, it was also expensive because they had to hire a lawyer. They might spend $5,000 or $6,000 whereas now they can hire a paralegal for probably less than $1,000.
Co-ops at the LTB
CHAN: Now that co-op evictions will go before the LTB, will the LTB have people specializing in co-ops? And would the Co-operative Housing Federation (CHF) train those adjudicators?
JS: I hope not. Again, it would be like saying crown attorneys get to train all the judges in criminal court and the defence lawyers don’t get any say. It would be an extraordinary conflict of interest.
I think the judges were glad to get rid of co-ops. They think of themselves as far too important to be dealing with poor people.
In an administrative tribunal, government can completely control the process and they are very aware of the problem with costs and complexities so they have gone out of their way to keep it very simple and cheap.
I concluded because the law had been so screwed up by judges over the last decade, it really would be better to get it over to the LTB. Hopefully these adjudicators will do their standard residential eviction cases, which are still done the same old way. You have a little hearing, very minimal paperwork, both sides come out and tell their stories, they have their witnesses, they have a few documents in evidence, and they make a quick decision.
That’s the most just way of doing it. One of the big questions is whether the LTB will adopt any of this language from the courts about deference and about standards of review. I’m certainly hoping that’s not going to happen. These cases are the same as other eviction cases and the landlord only gets to evict the tenant if they can prove, based on admissible evidence, they have legal grounds to do it. Don’t make this complicated. If that happens I think it will ultimately be better for members.
Although I realize there is concern. Because it will be so inexpensive now, there will be a lot more applications for evictions. It’s really a tradeoff, no doubt about it.
I hate to sound like an old fart, but back in the day it was done quite well. It was quite efficient and inexpensive for everybody.
CHAN: When you say back in the day you mean in 1992, before the McBride case?
JS: Yes. In fact, even after the McBride case until 1998, when evictions were all taken out of the court system. That’s when the judges really forgot how to do these cases.
Frankly, when I was doing cases in the mid-90s, McBride never came up. The lawyers for the co-ops never really pushed the idea they should have an unfair advantage. They sort of agreed, “OK, we have to have evidence. We have to have witnesses to prove our case. And if we don’t prove our case, then we should lose.”
That happened in part because the member was represented. They weren’t going to try and get away with this stuff.
CHAN: If it’s so easy for a co-op to evict a member, how can members who challenge boards be protected?
JS: The real problem is factionalism. That’s where the law and the judges and now the adjudicators are the last bastion of protecting justice. Inevitably, in co-ops you’ve got groups at different times vying for power.
In one case, a woman who was the board chair who was ousted. The new board tried to evict her. Luckily we had an oral hearing. The reason the new board had done it was because they were expropriating money for themselves from the budget. She thought that was going on but she couldn’t get access to any of the documents. In the end, sure enough that’s what was going on.
CHAN: They were forced by the court to reveal the paper trail?
JS: No. The woman had a faction of her own. But there weren’t enough of them at the time to win the election. So she got ousted. Then we had this long trial and it ended up costing the co-op a lot of money. She was able to garner enough support from her faction to sway enough votes of the members. It was only when the board was ousted they could see the books and realize all this money was gone. In fact, I remember the new board was trying to evict one of the board members who was ousted. She called me about defending her and I said, “No, I can’t do that. Nice try.”
CHAN: Would this not be a criminal case, then? A case of fraud?
JS: I found over the years the police are not that keen to prosecute things like that.
Co-ops and the Struggle for Housing
CHAN: Why do co-op issues have all-party support? There seems to be no politician willing to even listen to the problems that arise in co-ops. And CHF also seems to take that approach.
JS: I think the problem with CHF is they have an inherent conflict of interest. They see themselves as being the representative of co-op boards. Co-op boards are different than co-op members. Co-op boards by definition represent the majorities. Governments and political parties want to be on the side of the majority. That’s where the votes are.
There’s more political juice in being seen to be doing something as opposed to nothing. It’s one of those issues that isn’t really a left of a right issue either. Some of the judges who were the nastiest when it came to throwing people out on arrears were actually lefty-type judges. What they thought they were doing was supporting a lefty organization, namely a housing co-operative.
Justice Archie Campbell was a terrific lefty judge. He threw the person out on their rear. I could see he thought he was supporting this kind of socialist organization, the housing co-operative, for the greater good. I see the argument in theory. On the ground, it didn’t play out that way. He saw the good in people and saw an altruism on the part of co-op boards that wasn’t there.
CHAN: In co-ops, when they want to hire a co-op coordinator or property manager, what sort of certification or standardization is there for somebody who claims to be a property manager or a coordinator?
JS: I doubt there’s any. The only new type of certification is the licensing of paralegals. But I would be amazed if any housing coordinators are licensed paralegals. In fairness to co-ops, they’ve been stretched financially like other social services. The amount spent on social housing in Canada is a tiny fraction of what it was 30 years ago. I know times are tight for co-ops and they’re pinching pennies.
I doubt the coordinators I’ve known would have any formal background. For better or worse. Most of the property management companies that work for co-ops also do all the other types of housing. They would work for non-profits and they would also work for for-profit landlords.
CHAN: Toronto Community Housing just recently appointed a Commissioner of Housing Equity.
JS: There are federally incorporated co-ops and provincially incorporated ones. The provincially incorporated ones are accountable to the local municipal housing manager. The Ontario-incorporated co-ops in Toronto would ultimately be responsible to Toronto’s manager of housing, so potentially the manager could delegate the authority to a commissioner or an ombudsman.
But the federal ones are totally different. They’re run by CMHC.
CHAN: Or the Agency. They deal with some. It’s a very complicated sector.
JS: It is. It’s hard to understand and certainly hard to explain to students. We just want to provide social housing. Why do we have 20 different programs? You think somebody would be trying to consolidate them.
There is Joe Fiorito, the columnist from the Star who’s done a lot of writing about Toronto housing. Al Gosling died in Toronto housing because he had not submitted his documents to prove he was still on welfare. They evicted him and he died under a staircase. There was outrage about that. And this columnist worked hard to stir that up.
I remember there was also a commission set up and a judge made a bunch of terrific recommendations around Toronto housing. At the time, there was a lot of coverage of the arbitrary nature of how some of these services are provided. Especially to vulnerable people, people who are the outsiders.
I’m sure most co-ops actually are probably pretty good at accommodating mental illness. But there are certainly others that would be quite unhappy about it.
Under the Ontario Human Rights Code, we’re all obligated to accommodate disabilities to the point of undo hardship and that means mentally ill people need to live among us one way or another.
That has been one area where co-ops have had trouble. You get a board together, and particularly you get the membership together, and they sort of become like a mob. They say, “This person, we don’t like them. They’re unpleasant in various ways. We want them out of here and we want to banish them from our community. Send them off on the ice flow.”
That’s where the kind of group power does not work well. It doesn’t serve the interests of providing housing fairly.
CHAN: Perhaps the next step would be to enshrine housing as a human right.
JS: Yes, for sure. More and more I’m dealing with the mentally ill around that, and people don’t understand it. Judges don’t understand it. By enshrining it, it does get people’s attention, no doubt about it.
Towards an Uncertain Future
CHAN: Are there any solutions? How can security of tenure be protected in co-ops?
JS: Fundamentally, I love the idea of co-ops and the idea of communal decision-making. And I certainly like alternative dispute resolution. When all those things don’t work, the law becomes relevant.
That’s when laws are important: to protect justice, to protect fairness and to make sure people aren’t arbitrarily thrown out of their homes. A home is an important concept in our society and you shouldn’t be arbitrarily turfed out of your home on the whim of some mean-spirited person.
In my experience, co-ops have had trouble during a period when they’ve gotten a board who are full of themselves. They think they have more power than they do and it goes to their heads. Anybody who dares to challenge them about anything can face arbitrary eviction. To me, that’s when the law is most important because that is the only thing that will stop them.
In reality, co-ops are effectively a government service. They’re funded by government, they’re owned by government, and they are delegating the management to the members. But it’s still a government service that’s being provided: low-cost housing. You shouldn’t be deprived of low-cost housing except where it’s really clear you’ve been a bad person.
I would not be able to live in a co-op because I could not sleep at night knowing I could be arbitrarily evicted any old time by somebody who doesn’t like me, who happens to get in a position at the board where they could swing a majority vote.
I happen to serve on a board of a non-profit that has non-profit housing units and we’ve been asked to take over a co-op. It’s a new co-op. It’s only been around for five or six years. The board and most of the members of the co-op have said, “We don’t want to be a co-op anymore. We just want to be non-profit housing.” I haven’t spoken to them directly, just to the board chair. They say they don’t like doing the work of going to committee meetings and stuff like that. They just want to have a property manager and they want to pay subsidized rent. They want to be effectively a non-profit housing provider.
I was actually not happy about the idea. For one thing they all moved into the co-op. I appreciate there’s not much social housing around and you sometimes take what you can get, but to me it seems a bit low to move to in and say, “Yes, I’m prepared to do the work of a co-op.”
It was only two hours a month of volunteering.
“Sure, I’ll do that while getting to live in a brand new social housing unit at a time when there’s very little being built.”
Then after a few years, they say,”Nah, I’m not going to live up to my end of the deal anymore. I don’t feel like doing the work anymore. I want somebody else to do it.”
The phenomenon of a co-op deciding not to be a co-op anymore is fairly unusual. There are some co-ops that have gone bankrupt or have been shut down by the government because they’ve gotten into such big financial trouble. But for the members to actually say, “We don’t like the concept of co-operative living anymore,” is a bit unusual. Although, they think it’s going to become a trend. Normally, it would be quite difficult to do something like that, just for technical reasons. Apparently, it’s not that difficult to make this happen.