BC Court Upholds Residential Tenancy Board Decision Awarding Tenants $17,500 in Compensation

In Lu v. Marchand, the British Columbia Supreme Court dismissed a judicial review application by landlords Duc Lu and Phuong Trinh, who challenged a decision of the Residential Tenancy Branch (RTB) that awarded their former tenants, Lori Marchand and Brandon McNaueal, $17,500 in compensation. The RTB determined that the landlords failed to meet the stated purpose of ending the tenancy—to have a family member move into the rental property—within a reasonable period, as required by section 51 of the Residential Tenancy Act (RTA). The court upheld the RTB’s decision, finding it was not “patently unreasonable,” the applicable standard of review.

Administrative law – Decisions reviewed – Residential Tenancy office; Judicial review – Compliance with legislation – Procedural requirements and fairness – Evidence – Standard of review – Patent unreasonableness; Landlord and tenant – Residential tenancy agreements – Termination.

Lu v. Marchand, [2025] B.C.J. No. 812, British Columbia Supreme Court, May 2, 2025, S. Wilson J.

Factual Background:  Duc Lu and Phuong Trinh (the “Landlords”) rented a home in Vernon, BC to Lori Marchand and Brandon McNaueal (the “Tenants”) starting in June 2017. On June 16, 2022, the Landlords issued a Two-Month Notice to End Tenancy for landlord’s use, stating their intention was to have Ms. Ho, one of the Landlord’s mothers, move into the home.

The Tenants disputed the notice to the Residential Tenancy Board (“RTB”). In November 2022 the parties attended an RTB hearing, during which they entered a settlement agreement. Key terms included:

The Tenants would vacate by December 31, 2022.

The Tenants would not pay $2,700 in rent owing, nor would they pay rent for December as compensation for moving under the notice.

An order of possession and monetary order were granted to the Landlords.

The settlement agreement also included terms stating that if either party violated the terms of the settlement agreement or the Residential Tenancies Act (RTA), it would be open to the other part to take steps under the RTA for an appropriate remedy.

The Tenants moved out on time, but Ms. Ho did not move in until late August 2023, almost nine months later.

The RTB Decision:  In August 2023, the Tenants brought a new RTB application for compensation under section 51 of the RTA, alleging the Landlords had failed to use the property for the stated reason within a reasonable period. A dispute resolution hearing was held in December 2023.

The Landlords brought evidence that the Tenants had caused extensive damage to the home which renovations were required to repair, and that Ms. Ho had significant health issues, both of which delayed Ms. Ho’s move into the home.

The arbitrator found that:

The landlords failed to provide sufficient evidence that the home’s condition or Ms. Ho’s health constituted extenuating circumstances for the delay.

The renovations completed by the Landlord appeared excessive and self-imposed, not required to repair damage from the tenants.

The Landlords’ delay in completing the work, particularly the two months of evening-and-weekend painting, was not reasonable.

Ms. Ho’s alleged need to stay in Vancouver for medical appointments was unsupported by the evidence.

The arbitrator awarded the Tenants:

$16,200 in compensation (12 months’ rent).

$1,200 for return of the security deposit.

$100 for the RTB filing fee.

Landlords’ Application for Judicial Review:  The Landlords sought judicial review on several grounds, primarily challenging the compensation award. Their arguments included:

1.  Misapplication of the Law:  They claimed the arbitrator conflated sections 51 and 51.4 of the RTA and did not clearly base the decision on the correct provision.

2.  Settlement Agreement Exclusion:  The landlords argued that since the tenancy ended through a settlement agreement—not directly via the two-month notice—the tenants were not entitled to compensation under section 51.

3.  Misapprehension of Evidence:  They contended the arbitrator misunderstood or ignored evidence of the significant renovations required due to damage and Ms. Ho’s health-related reasons for remaining in Vancouver.

4.  Legislative Intent:  They said section 51 is aimed at punishing landlords acting in bad faith, which did not apply to them, and it would be “unreasonable and unjust” for them to pay compensation in these circumstances.

Court’s Analysis and Findings:  The court confirmed that, under section 58 of the Administrative Tribunals Act, the standard of review is patent unreasonableness—a highly deferential standard. A decision is patently unreasonable if it is clearly irrational or unsupported by any evidence.

Legal Framework and Arbitrator’s Reasoning:  The court found that, despite references to sections 51 and 51.4, the arbitrator’s decision was clearly grounded in section 51, which applies to tenancies ended for landlord use. The language used and the focus on whether the “stated purpose” was achieved within a reasonable time confirmed this.

The court also clarified that it was not patently unreasonable for the arbitrator to conclude that Ms. Ho did not move in within a reasonable time and that there were no extenuating circumstances to excuse the delay.

1.  Impact of the Settlement Agreement:  Rejecting the Landlords’ argument that the tenancy ended solely through the settlement agreement, the court emphasized that the agreement expressly referred to the two-month notice as the basis for ending the tenancy. The settlement merely adjusted the terms of the notice’s execution, and both the agreement and the RTA allowed for Tenants to seek remedies for violations.

2.  Misapprehension of Evidence:  While the arbitrator may not have precisely summarized all evidence, the court held this was not a basis for reversal. The arbitrator was entitled to find that:

The evidence of $140,000 in renovations was unsubstantiated (invoices provided totaled far less).

Health-related reasons for Ms. Ho’s delay were insufficiently proven, especially given the lack of evidence that she had medical appointments in July and August.

The court found the arbitrator appropriately evaluated the landlords’ burden to prove that extenuating circumstances excused the delay.

3.  Legislative Intent and Precedents:  The court acknowledged that section 51 has both compensatory and punitive purposes and is designed to deter bad faith evictions. It found the arbitrator’s application of the law was consistent with this purpose. There was no evidence of procedural unfairness or arbitrary reasoning. The court also distinguished the case from Athwal v. Johnson and Maasanen v. Furtado, where tribunals had either ignored extenuating circumstances or misapplied legal standards.

Conclusion:  Justice Wilson concluded that the RTB’s decision was not patently unreasonable, and the landlords had failed to demonstrate any legal error or misapprehension that warranted intervention. As a result, the petition for judicial review was dismissed, and the tenants were awarded costs.

This case was digested by Emma Jerrott of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact her directly at [email protected].