Are Bad Behaviour Lists Allowed?

"Bad Tenant/Landlord Lists" - What's the deal? The answer may surprise you so sit down, grab a coffee, and take a read. It's a long article but one worth reading and sharing.

Guest Author: Christopher (Chris) Seepe

Published: Tuesday, January 2, 2024 | Updated: Saturday, January 6, 2024

Read Time: ~30 Minutes

Background and OPC Case Summary

I was recently sent a summary about an Office of the Privacy Commissioner (OPC) case dated February 19, 2016 (PIPEDA Report of Findings #2016-002) that shut down the maintenance and distribution of a bad tenant list. After reading the summary and the case itself, I was left with unanswered questions, despite the case summary declaring, “… we conclude that the matter is well-founded and resolved (bullet point 45).” For me, this concluding statement just irked me to no end and smacked of government hubris. For tens of thousands of Canadian housing providers, and perhaps even millions of tenants, the matter is far from resolved.

OPC’s case summary on their website titled, “Property management company agrees to scrap ‘bad tenant list’”.

An earlier 2014 OPC “Interpretation Bulletin”:

In my opinion, OPC’s Interpretation Bulletin is selective in the case law it presents on this webpage. By exclusion, OPC is implying (or perhaps I’m inferring) a perspective that bad behaviour lists are not legal, especially section “1(d) Court and tribunal records” and “1(c) Public registries.”

However, drilling down into the actual summary of the PIPEDA 2016-002 case revealed some interesting details that I’ll come back to further below in this article.

Law and Repeat Offenders

The emergence of law in society is a direct consequence of combating the negative qualities of the human condition. A body of law establishes a framework for social order, protects individual rights, resolves disputes, promotes justice, regulates conduct, facilitates predictability, supports economic activities, and contributes to the common good.

Recidivism refers to measuring the tendency of an individual to return to (or “relapse” into) previous criminal behaviour. It measures the results of re-arrest, re-conviction, and/or re-imprisonment of an individual. The odds of an individual receding are affected by many factors. It is arguably a part of human nature that bad behaviour tends to escalate when it remains unchecked and uncorrected. One of the more famous stories about this tendency is the classic fiction novel, Lord of the Flies by William Golding.

Repeat offenders represent a threat to society. The underlying premise of tracking and reporting criminal acts is to not only provide a deterrent to such unacceptable behaviour but to make the task of finding and prosecuting repeat offenders more effective.

Systems of justice throughout the world have all evolved the common characteristic of actively maintaining databases of individuals who have been convicted of breaking the law. They have universally learned that offenders have a propensity to repeat or escalate their crimes. According to the RCMP website, “From burglary to vandalism, property crime is the most commonly recorded offence in most cities … [and] can include theft, breaking and entering, burglary, auto theft, arson and vandalism.” One Internet source stated that 78% of those convicted of a property crime were arrested again within five years.

As best as I could determine, one in five Canadian bankrupts (an individuals who declares bankruptcy) are repeat bankrupts.

I could not find any specific statistics on Landlord and Tenant Board (LTB) repeat offenders, including especially in the LTB’s various annual reports. I strongly suspect that recidivism applies at all levels of criminality so the documented criminal behaviour we do have likely also applies to the lesser crimes of residential tenancy breaches.

What we do know for a fact about LTB cases is:

Half (51.5% or 37,690) of the 73,208 (2022-2023) Landlord and Tenant Board (LTB ) L1 applications are for eviction due to non-payment of rent
21.0% (15,354) are L2 applications to evict for other reasons (including especially property damage)
4.6% (3,366) are L4 applications where a tenant didn’t honour their court-determined settlement
The remaining 22.9% comprises every other type of application for a tenancy legislation breach from both tenants and housing providers

The Need for a Bad Behaviour List

Housing providers and tenants rely upon the justice system, in this case the LTB tribunal, to resolve conflicts. More than two-thirds of LTB cases were for non-payment of rent and property damage.

It doesn’t matter whether a crime is minor or significant. Any action or omission that constitutes an offence that may be prosecuted and is punishable by law is still a crime. And despite the innate and intuitively-obvious deterrent qualities of a bad behaviour list, the Office of the Privacy Commissioner of Canada (and the respective provincial commissioners) has repeatedly attacked and quashed such a deterrent but, much more importantly, the OPC has offered nothing as an alternative to combat the bad behaviour that is perpetuated behind the the cloak of privacy and consequent secrecy.

The burgeoning caseload of the LTB is undeniable evidence of ever-increasing unaccountability among tenants and housing providers.

Applying an oversimplified “sanity check” by assuming an average loss of $5,000 loss per rent non-payment case (a number I picked out of the air but with an informed opinion) times roughly 37,000 cases = $185 million … per year. Year after year for decades, housing providers have been cheated out of tens of millions of dollars in unpaid rent and property damages, and tenants are forced by slumlords out of their homes or are compelled to live in substandard living conditions. Internet stories abound about tenants and landlords who are able to repeatedly hide behind a cloak of secrecy and silence that has been made possible by overreaching government to blanketly prioritize individual privacy over the public good.

Justice delayed or denied is the beginning of the breakdown of society. If government will not provide it then it is inevitable that individuals will take matters into their own hands. I’ve said and written it many times: if you’re an Ontario rental housing provider and don’t know the province’s residential tenancy law and related legislation, then I guarantee that sooner or later you WILL become a victim of it. I deliberately chose the word “victim” because I truly believe there is currently great injustice in Ontario’s housing legislation and judicial system.

OPC’s “Bad Tenant List” Case

OPC’s PIPEDA 2016-002 case, identified earlier, stated that the property management company confirmed that it destroyed its bad tenant list. However, the list itself did not appear to have been stopped by the OPC because it was illegal. Rather, it appears that the company failed to maintain certain requirements for the proper management of the list. Consider:

Our Office recognizes that landlords may take appropriate steps to protect their property and evaluate the suitability of prospective tenants. In our view, the collection, use and disclosure of personal information by a landlord for the express purpose of verifying a prospective tenant's ability to pay rent on time or to determine suitability in the context of a rental application process may be appropriate in certain circumstances [emphasis by me].

Absent any evidence that the Respondent is operating as a licensed credit reporting agency in the province and given that the Respondent appears to be in contravention of the provincial credit reporting legislation, we are of the preliminary view that the Respondent's purposes for collecting, using or disclosing tenants' personal information in the circumstances (i.e., to create a "bad tenant" list) are not objectively appropriate under subsection 5(3).

In our view, in order for the Respondent to rely on any valid consent that may have been obtained by any third-party landlord for tenants' inclusion on the "bad tenant" list, the Respondent [PM company] would have to: (i) establish contractual terms stipulating that the members of the landlord association must obtain appropriate consent from tenants; and (ii) establish a method by which to obtain proof that the tenants affected have in fact consented.

…the Respondent was not assessing the accuracy or credibility of any of the personal information it regularly collected on the "bad tenant" list [emphasis by me]— personal information that the Respondent then disclosed to other landlords and which may form the basis for decisions that could inflict damage on the affected individuals' rental prospects, reputations, lives and those of their dependent family members.”

Other paragraphs reference the requirement for how a person finds out if they’re on a bad behaviour list, what explicit tenant permission was given to be put on such a list, how to handle errors, omissions and potential confusion (such as name misspellings) that could wrongfully associate a person with a past incident, or how to challenge the validity, accuracy, completeness and currency of the information.

OPC stated in paragraph 45. “… we conclude that the matter is well-founded and resolved.”

The Crux of the “Matter”

However, the “matter” of a bad behaviour list is a symptom of a far greater underlying causal issue. While the OPC and especially the tenant may have been satisfied with the outcome, the tenant didn’t appear to ever challenge the overarching fact that she owed a previous housing provider for damages and rent arrears. She was told by the property management company that her name would be removed from the bad tenant list if she provided a reference from her housing provider, but, according to the OPC, the tenant chose not to do so.

OPC’s case and summary failed to mention that it was the tenant’s actions in the first place that created the circumstances that put the tenant’s “(39.) … rental prospects, reputations, lives and those of their dependent family members …” at risk. For me, this was the true crux of the matter.

I wrestled with this constantly for several few weeks to determine what was upsetting to me about OPC’s conclusion to this legal quandary. I finally realized: privacy does not trump accountability. This was the pivotal moment that led to this lengthy article.

The Star (newspaper) vs Ontario’s Attorney General

A well-known recent court case that clarified this principle in my opinion was The (Toronto) Star newspaper’s legal challenge against the provincial tribunal system that the newspaper launched around February 07, 2017 (Toronto Star v. AG Ontario, 2018 ONSC 2586, and the consequent decision rendered April 27, 2018. The Landlord and Tenant Board (LTB) is one of 13 tribunals.

The Star’s website stated (See: Star launches legal challenge to end secrecy in Ontario tribunals):

Provincial tribunals were designed to speed access to justice and take the burden off overcrowded courts. But they routinely block the public’s right to know about disputes they handle. This week, the Star launches a legal challenge to restore transparency … the public’s right to know about public disputes in a public hearing involving matters of public interest can be hidden entirely or delayed to the point that the principle of transparency becomes meaningless.

Justice Edward Morgan of the Ontario Superior Court concluded that, in relation to the delay or blocking of access to adjudicative records produced by administrative tribunals, “…the openness of the system, and not the privacy or other concerns of law enforcement, regulators, or innocent parties …takes primacy in this balance… As other courts across the country have stated, publicity is the order of things [emphasis by me] and "any exceptions" – including those specifically provided by statute – must be substantiated on a case by case basis.”

I interpreted the above to mean that the onus is on the individual to keep information from the public rather than the other way around. The decision of Justice Morgan made it clear that the "open court" principle takes precedence over privacy concerns. In my layperson words then, accountability trumps privacy.

As a noteworthy aside, this precedence would likely also apply to stopping municipalities from routinely hiding even the most basic information (such as public servant salaries and expenses) behind a time-consuming freedom of information application that establishes the “confidentiality cloak of secrecy” for information that should rightly be publicly available.

Landlord’s Self-Help Centre

The Ontario government funds a legal advisory service tor housing providers called the Landlord’s Self-Help Centre (LSHC). It’s a non-profit specialty community legal clinic funded by Legal Aid Ontario (formed under the Legal Aid Services Act of 1998) that is mandated to provide support exclusively to Ontario’s small landlord community. It’s not a branch of, or affiliated with, the Landlord and Tenant Board.

Its webpage titled, “What is a bad tenant list and the legality of starting one in Ontario?” does not deliver on the title’s promise. Rather than make a plain, straightforward and definitive statement, the website skirts around the issue and cites vague PIPEDA legislation snippets. However, it does specifically state, “Disclosing information about a current or prior tenant to others requires that person’s written consent.” From this statement, one could arguably conclude then that a bad tenant list (in the article’s title) itself isn’t illegal. The illegality appears to arise when a list comprises the names of tenants who have not given their consent. Note also that the website does not mention “bad landlord lists.”

As another aside, I could not find any legitimate reasoning for why non-profit housing evictions are separated out from private sector evictions.

Defining Canada’s Moral Compass

The only entity that can formally define the moral values of a society is its judicial system (assuming a "separation of church and state"), and only then by highly-trained and qualified individuals who can ably reflect the wishes and desires of the whole of a society. The only entities in most parts of the “free” world who are entrusted with this noble task are the superior courts, and ultimately the Supreme Court, in our case, The Supreme Court of Canada. That then specifically excludes “tribunals” and non-judicial government agencies of any kind.

In my view, the Privacy Commissioner is presenting their “interpreted” recommendations in a light that is intended to discourage genuinely-needed, properly managed bad behaviour lists. The Office of the Privacy Commissioner of Canada (OPC) is not a court of law. It is an independent agency of the Canadian government responsible for overseeing compliance with the Personal Information Protection and Electronic Documents Act (PIPEDA) and the separate Privacy Act. While it has the authority to investigate complaints, conduct audits, make recommendations, and may even contribute to the development of privacy-related policies and legislation by providing expertise and recommendations to lawmakers, it nevertheless does not have the power to impose legal judgements or penalties. It seeks to resolve privacy issues through mediation, negotiation, and education.

If a resolution cannot be reached, the complainant, not the OPC, may choose to pursue the matter through the Federal Court of Canada, which has the authority to make legally binding decisions and impose penalties for non-compliance with privacy laws.

Infringement of the Canadian Charter of Rights and Freedoms

From Wikipedia.org regarding Section 11 of the Canadian Charter of Rights and Freedoms (“CCRF”), “In R. v. Delaronde (1997), the Supreme Court of Canada found section 11 (a) is meant not only to guarantee a fair trial but also to serve as an economic right. A person must be informed of charges quickly because they will then have to deal with their career and family life in light of the charges. Thus, those who suffer economically because of delayed information of charges have had their rights under section 11(a) infringed, and they may receive a remedy under section 24 of the Charter.” [emphases by me.]

The catastrophic failure of the LTB to deliver on its mandate to “… resolve disputes between residential landlords and tenants …” and the corresponding equal failure of the Canadian Legal Information Institute (“CanLII,” a non-profit organization managed by the Federation of Law Societies of Canada) “… to provide efficient and open online access to judicial decisions and legislative documents …” has not only caused the financial ruin of many residential housing owners, operators and investors but those same failures could be construed as a fundamental infringement of rights guaranteed under Section 11 of the CCRF. This could be the legal premise behind a class action suit against the provincial government.

I further link these failures as major contributing factors to the government’s equally colossal failure to provide adequate and available housing that is affordable.

An Approach to One Possible Solution

Once an issue has been properly defined, then the solution is almost always easier to identify. The bad behaviour list doesn’t appear to be illegal. Defining how the list should be maintained has been the largely unstated ongoing challenge.

What form should a bad behaviour list take? Well, that’s the nut to crack. The underlying principle in its formation could be: “what’s good for the goose (what a female goose is named) is good for the gander (a male goose).” What information and under what conditions would housing providers be willing to make public in a list about their housing services performance as a trade-in-kind for knowing the rental history performance of tenants? The vast majority of housing providers and tenants are law-abiding, and even operate with a strong moral compass and social conscience. The bad actors are the minority. Good actors should have nothing to fear from a bad behaviour list, provided they have accessibility to what has been written about them, they have an unfettered and timely means to challenge and correct honest disagreements in good faith, and the burden of proof is well-documented.

A common argument from some individuals and agencies is that a bad behaviour list should also contain “good” behaviour records to strike a balance. I fundamentally disagree. The default assumption should be that a tenant is inherently good if they aren’t on the bad behaviour list. Applying the “good list” logic to the criminal recidivism tracking discussed earlier, suggests that government should also be maintaining a list of all “good” citizens too. Within a limited, highly-regulated framework, that’s what credit reporting agencies do when reporting on a person’s financial history. However, the greater extent of such a “good person” database would be easily open to the abuse of a strong central authoritarian government (or corporations)—essentially a fascist state. So, in that light, thank goodness we’ve had some decent politicians in the past who enacted thoughtful privacy legislation.

Minimum Requirements

From the sources discussed earlier above, it appears that one could infer that the minimum requirements for maintaining a bad behaviour list that balances the needs of accountability and the long-established “publicity is the order of things” versus the genuine good faith intentions and objectives of privacy legislation, should include:

The housing provider must include a clearly-seen statement—perhaps bolded or in a larger font size —to their application form AND to their residential tenancy agreement that a tenant’s name can be added to a bad behaviour list if certain specifically-identified bad behaviour or events occur
The housing provider must provide formal written notice to the tenant if the tenant has been added to a bad behaviour list.
The exact details of that submission must be given to the tenant
The tenant must be given the contact details of the owner-operator of the bad behaviour list
The tenant has the right to review the submitted record
The tenant has the right to appeal to the owner-operator to modify or delete such record upon the tenant providing proof of any inaccuracy in the submission.
The inquiry should be resolved within 30 calendar days

I expect that there would be additional considerations to add to the above list but the issue of the legality of a bad behaviour list appears to centre around the above bullet points. A similar list of requirements for bad housing providers would follow the same guidelines but probably differ in some respects.

At first blush, it would seem that established credit reporting companies would have the administrative and legal infrastructure already in place to properly manage a bad behaviour list. In particular, they’d presumably be good at detecting and minimizing or eliminating identify fraud and unfounded allegations.

However, tenants don’t have the right to request credit reports about anyone other than themselves while it’s commonplace and sound financial acumen for a housing provider to request a credit report for every final tenant-applicant they are considering. All credit reporting companies are private-sector owned and operated, and earn their livelihood from housing providers and other “lenders.” Revenue from tenants is presumably not a factor. Consequently, credit reporting companies might be viewed by tenants with some distrust and suspicion. In any event, it would be an uphill battle to establish objectivity and trust.

Perhaps the best entity that could properly ensure the balance of accountability and privacy would be an independent government agency with direct, formal ties to the OPC and the Attorney General or whichever government agencies represent the interests of each party as well as maintaining the balance between privacy and accountability.

Alternately, a private company might be successful if they could demonstrably prove true objectivity and no bias—a hard thing to do but possible. The courts do it in large part, for example.

Balanced Needs

Achieving the balance and deciding what should and should not be documented about a bad tenant’s or a bad housing provider’s action or inaction might be subjected to a relatively simple (in mind but perhaps not in practice) principle—what would a housing provider be willing to have recorded in a publicly-available database about themselves and their service track record that would justify the trade-off for information they need about a tenant's application for tenancy? As the old, wise saying goes, “what’s good for the goose (which is also the name of a female goose) is good for the gander (a male goose).”

SUMMARY

In my opinion, bad tenant and housing provider behaviour lists appear to be legal in Ontario and probably for all of Canada. Past implementations of bad behaviour lists have been plagued with various administrative shortcomings that have led to numerous lists being challenged and terminated, most visibly by the federal Office of the Privacy Commissioner (OPC), which itself is not a court of law.

If the OPC believes it has the right or mandate to “interpret” privacy legislation, then it also takes upon itself the moral and legal obligation to make a clear and definitive statement similar to the above paragraph, and to end the ambiguity, vagueness and obscurity of its “interpretations” previously published on the “matter.”

The [Toronto] Star newspaper court case against Ontario’s Attorney General provided much needed clarification: publicity is the order of things and any exceptions, including those specifically provided by statute, must be substantiated on a case-by-case basis.” In my words, accountability trumps privacy.

The catastrophic failure of the LTB and CanLII to fulfill their respective mandates as they relate to residential tenancy legislation and justice not only contributed significantly to the financial ruin of many residential housing providers but those same failures could be construed as a fundamental infringement of rights guaranteed under Section 11 of the Canadian Charter of Rights and Freedoms. I further consider these collective and respective failures as major contributing factors to the government’s equally colossal failure to provide adequate and available housing that is affordable for all Canadians (and immigrants).

The OPC has a duty to strive for a balance between privacy and accountability. It is a significant failure of the OPC, and therefore by extension, municipalities, CanLII and Ontario’s tribunals that hide behind lengthy and obtuse “freedom of information” applications.

The “real” matter of the legality of bad behaviour lists has not yet been formally, legally “well-founded” and remains unresolved. A properly managed, accountable operator of a bad behaviour list would resolve a plethora of tenancy issues and almost certainly significantly reduce the caseload of the LTB.

In the greater picture, citizens should never leave matters of social consciousness and moral compass to politicians, media or untrained individuals, including especially bureaucratic agencies that set themselves up to decide what’s best for its citizens. The governmental implementation of those good intentions rarely leads to the outcomes first envisioned.

Applying earnestly and in good faith the principle of “balanced needs” could end the perception of bias, prejudice and injustice in rental housing disputes and conflicts. If neither side can agree on what goes into a bad behaviour list that fairly represent the concerns of each party, and no lists are ever created, only then can the government say, “The matter is well-founded and resolved.”

About the Guest Author: Christopher (Chris) Seepe

Advisor to the Openroom Team | Former Commercial Real Estate Broker | Past-President of the Landlords Association of Durham.

Over Chris' 13-years career as a Commercial Real Estate Broker of Record (retired), he specialized in multi-residential investment properties. He is the owner and hands-on operator of seven multi-residential investment properties (totalling 70 units). Chris retired after 9 years as president of the Landlords Association of Durham.There are many articles on investment and "landlording" topics published nationally.

Chris has been on several radio and television interviews, podcasts, YouTube videos. Chris is a regular guest speaker and panel member for various real estate-related events including several local government initiatives. Prior to his real estate career, he spent 35+ years in I.T. marketing. He's built software publishing company from $16,000 investment to $10 million sales in six years, resulting in Initial Public Offering and winning the Canadian Government’s 1996 Canada Export Award.

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