The departure clause: the actual debate on its validity.
On May 6, 2021, the Administrative Housing Tribunal rejected the request of a housing co-operative to evict one of its tenants from its low-rental dwelling, in the decision Coopérative d'habitation Tiohtiake c. Thivierge.
The Facts
Mr. Thivierge, one of the founders of the Tiohtiake Housing Cooperative in Montreal, occupies a low-rent dwelling there. In 2019, he was excluded by the board of directors and lost his membership rights. He judicially challenged this exclusion at the Superior Court, then withdrew his proceeding, having no more energy to devote to this legal challenge. The Cooperative then offered him to cancel his exclusion and to restore him in his membership rights.
The tenant declined the offer, preferring to remain in his dwelling as a non-member tenant. Shortly thereafter, the Cooperative adopts in its regulations a departure clause at the end of the lease in the event of loss of membership rights.
Informed that his lease was modified as a result of the application of this new departure clause (and the increase in his rent following his self-chosen status of a non-member tenant), the tenant refused to leave his dwelling. The cooperative then files at the tribunal an application for his eviction, based on its departure clause.
The decision
After concluding that the court was the right jurisdiction to dispose of this request, Administrative Judge Alexandre Henri was of the opinion that the departure clause could not apply to the tenant in his current situation, mainly for the following reasons:
Even if the tenant failed to contest the modification to his lease, he does not have to leave his dwelling despite articles 1945 and 1955 of the Civil Code of Québec ("C.c.Q."), since he was not a member of the cooperative at the time of the adoption of a departure clause;
Although the absence of a challenge to the modification of the lease, which is also necessary in the case of low-rent dwelling (article 1993 C.c.Q.), may add this departure clause to Mr. Thivierge's lease, it must be set aside because of the right to remain in the dwelling, provided for in article 1936 C.c.Q.;
The adoption of the departure clause being subsequent to the loss of the tenant's rights as a member, the tenant has not renounced in advance his right to remain in his dwelling, this right being of public order and fundamental in matters of residential renting;
The tenant duly paid a 10% increase on his rent, as provided in the Regulation respecting the conditions of dwellings of low-rent housing in the event of loss of membership rights;
The Civil Code of Québec does not explicitly provide for an exception to the right to remain in the dwelling in the case of a housing cooperative (such as the repossession of a dwelling by a landlord). According to the court, section 221.1 of the Cooperatives Act cannot be one of these exceptions, endorsing the opinion of authors who discussed the issue of non-member tenant status in a housing co-operative ;
The tribunal also reviewed the basis for the validity of the departure clause, put forward in the judgment rendered by the Court of Québec in 2004, Coopérative d'habitation Le Rouet v. Herrera. The tribunal considers that this judgment should not be applied in the case at hand, even if it is largely confirmed by the jurisprudence.
Comments
The facts of this decision can be distinguished from many other tribunal decisions that have validated the application of departure clauses in housing cooperatives.
Not only had tenant Thivierge lost his membership rights before the departure clause was adopted, but he had also refused to become a member again after the cooperative offered it to regain his membership. By remaining a non-member tenant in a low-rent dwelling, he sparked a debate about the application of the departure clause.
First, we note the tribunal does not give more weight to the consequences of not subjecting the non-member tenant to a departure clause, while the member tenants are.
We see an imbalance between, on the one hand, members who have agreed to submit to the associative regime of their cooperative (the Cooperatives Act was titled the Associations Cooperatives Act before 1982) and, on the other hand, the rights of a tenant who would no longer be a member.
Thus, members subject to the internal bylaws of a cooperative could not avail themselves of the right to remain in their dwellings, but the tenant who resigned from his membership status before a departure clause was duly adopted, or refused to become a member again, could be entitled to it. It should be highlighted that. in both cases, the right to remain in a dwelling is a right of public order. The non-member tenant would thus benefit from more rights than tenant-members, who not only participate in the management of their cooperative (chores and administrative tasks, participation in committees, attendance at assemblies, etc.), but who also run the risk of being expelled from their dwelling in the event of a decision by the board of directors to exclude them.
Such an imbalance between the rights of members and non-members was logically dismissed in a recent decision of the Administrative Housing Tribunal, applying the departure clause to a tenant, who, like Mr. Thivierge, was not a member when it was adopted: Walsh c. Coopérative d'habitation du Parc vert.
It is also appropriate to comment on the court's reading of article 221.1 of the Cooperatives Act :
"221.1. To be admitted as a member of a cooperative referred to in section 221, a person must be a party to a lease for the rental of a dwelling unit owned by the cooperative. (...)
[108] Under this provision, it is mandatory to be a tenant to be a member of a cooperative, but the contrary is not true. The obligation to be a member of a cooperative in order to rent a dwelling is not provided for anywhere."
We think this statement could be discussed. We believe that the obligation to be a member of a cooperative in order to rent a dwelling is provided by articles 219.1, 220 and 221 of the Cooperatives Act. Indeed, this law classifies housing cooperatives in the category of consumer cooperatives, the purpose of which is to provide its members with services for their personal use (article 219.1), to facilitate the use of housing for its members (article 220) and to rent dwelling to its members (article 221).
We believe that section 221.1, placed in the same chapter and section of the Cooperatives Act, seems to have been read in isolation in this decision and that it must be read in such a way as to harmonize its meaning with these three previous articles.
It should be noted that section 221.1 was added to the Cooperatives Act in 1995, in the same amendment that added section 221, which reads:
221. A housing cooperative that rents dwellings to its members may, where authorized by the by-laws, allow two members per dwelling unit.
Taken together, these two articles reaffirmed the principle of reciprocity between membership and the signing of a lease, in case of a second member in the dwelling : this second member need to sign the lease as well.
This principle of reciprocity has been applied by housing cooperatives in their usual process of recruiting new tenants. It is unlikely that a tenant wishing to settle in a housing cooperative will not be a member of it. How could he benefit from a rebate on his rent, a consideration granted in exchange of his participation in the management of this cooperative, but without having been admitted as a member? The current affordable housing crisis and waiting lists in housing cooperatives make it very unlikely that a housing coop will accept a tenant without requiring him/her to be a member.
Another recent decision read article 221.1 by noting that a cooperative benefits from a special regime and that "it is a question of respecting the principles of cooperative management".
We therefore propose to conclude that articles 219, 220, 221 and 221.1 of the Cooperatives Act, which must be read together, are indicative of the legislator’s true intent. We believe these articles amount to an admissible exception to the right to remain in dwelling of article 1936 C.c.Q., and enforceable against every tenants because of the purpose and objective of the cooperative housing legal regime, whose special and distinctive character was recognized by the Quebec Court of Appeal in 2002.
Conclusion
The decision in Coopérative d'habitation Tiohtiake v. Thivierge preceded and seemed to announce the turn taken by the Superior Court in 2022 in the McLean and Dumberry cases. The Court of Appeal is now seized of a joint appeal of these two cases and will probably render its decision in the coming months.
Until then, we believe that housing cooperatives will have to ensure that a clause as substantial as the departure clause is clear to all their tenants, members and non-members. To do this, it remains important to adopt it within the time limits prescribed by the Civil Code of Québec and to add it expressly in all the contractual documents applicable to tenants, such as the lease, the membership contract and the internal by-laws.
This may be accompanied by another measure, such as increasing - when possible - the discount on the rent granted to members, in order to enhance membership in a housing cooperative.
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