Divisional Court Says Oral Agreements to Terminate a Tenancy Not Permitted

Are oral agreements to terminate a tenancy effective to terminate a tenancy in Ontario.  No, at least according to the Divisional Court's decision in In Nistap Development Corporation v. McIntyre, 2009 CanLII 37002 (ON S.C.D.C.).

In 2001 the parties entered into a written lease for residential premises.  Some time in 2004 the tenants moved out of the premises.  The evidence was that at that time there was some money owing for rent. The Small Claims Court trial judge found that although no written notice of termination was given to the landlord, there was an oral agreement between the landlord and the tenant permitting the tenants to leave without proper notice in return for a waiver of a claim for costs that they incurred to do some repairs on the premises.

The Divisional Court overturned this decision, finding that Section 43(1) of the Tenant Protection Act [now section 43(1) of the Residential Tenancies Act] provides that a notice to terminate a tenancy shall be in a form approved by the Tribunal.  The Divisional Court relied on the case of George V. Apartments Ltd. v. Cobb, [2002] O.J. No. 5918, which says that written notice is mandated by the statute and no other notice can suffice. 

Would the Court's decision been different had its attention been drawn to section 39(2) of the Tenant Protection Act (now section 37(3) of the Residential Tenancies Act) which provides that a notice of termination need not be given if a landlord and a tenant have agreed to terminate a tenancy? 

Section 43(1) appears to apply only to notices of termination required by the Act.  The George V. Apartments v. Cobb decision also addressed the issue of a tenant's notice of termination.  Neither appear to address the issue of an agreement to terminate.  On that basis there may be room to distinguish this decision.  

On that basis it appears to be open to allow oral agreements to terminate (although they may be difficult to prove).  But what about section 53, paragraph 4 of O. Reg. 516/06, which requires the landlord to file the agreement to terminate with the application for eviction? Will this provision in the regulation be enough to make written agreements to terminate mandatory.  In the past Members of the Board have said it does not.  However, I am not aware of any pronouncements of the Divisional Court on this specific issue.  

The lesson I take from this case is that relying of an oral agreement to terminate a tenancy may be problematic.  It's best to put it in writing.