Landlords and condominium corporations in Ontario may want to augment their due diligence procedures to ensure they can demonstrate efforts to prevent illegal drug activity in their buildings. Proposed new provincial legislation — introduced earlier this month as part of the omnibus Bill 10, which also includes amendments to seven other statutes — targets landlords who knowingly permit the production or trafficking of controlled substances within premises they control and/or who knowingly possess the proceeds from such activity.
That comes with the possibility of hefty fines and/or jail time, and the potential for corporate officers and directors to be personally penalized. However, as with the Occupiers’ Liability Act, the proposed Act allows the defence that “reasonable measures” were in place to guard against criminal activity. The government is promising more details on what that might entail in future regulations and guidance documents.
“Depending on the context of the situation, reasonable measures can include actions such as informing the police and/or commencing an eviction process,” states associated background posted on Ontario’s regulatory registry for public consultation. “What is reasonable in a specific scenario will depend on the facts.”
The legislation would apply to owners who have leased commercial or residential property or head tenants who have sublet the space to perpetrators of illegal drug activity. Legal specialists draw a clear distinction between the proposed Act’s direct targeting of landlords for specified offences versus the Occupiers’ Liability Act’s more general assignment of a duty of care for people coming onto a property, but there are some parallel best practices for precautions.
Regular inspections coupled with written inspection reports provide a good basis for proving landlords have made reasonable efforts to address risk. In relation to the Occupiers’ Liability Act, Joe Hoffer, a partner and counsel with Cohen Highley LLP, recommends an initial inspection and corresponding report when a tenant first occupies a space with a follow-up three months later. Provided there is no cause for concern, annual inspections should then suffice.
Alternatively, it’s important to investigate if there are signs of suspicious behaviour or activities, or complaints from other building occupants. Residential landlords are already responsible for ensuring a safe and peaceable environment, as stipulated in Ontario’s Residential Tenancies Act (RTA), so the proposed new Act simply adds another layer of offences and liability.
“If there is evidence the landlord knew or ought to have known of the activity — for example, based on the allegations of neighboring tenants — but chose not to investigate or commence eviction proceedings, then not only would the landlord be liable under the RTA for failing to ensure the complaining tenants’ ‘reasonable enjoyment’, but would also be liable under Bill 10 if/when it’s enacted,” Hoffer observes. “In a condo setting, the proper step would be for the corporation to apply to the Court for an order against the unit owner and/or the tenant requiring that the owner/tenant cease the activity and/or giving vacant possession and sale of the unit.”
Proof of complicity an extra test beyond negligence
The proposed Act establishes various compounding penalties for offenders. Individuals convicted of knowingly permitting illegal drug activity would be subject to a fine of $10,000 to $250,000 and/or up to two years of imprisonment for a first conviction, while a subsequent conviction would merit a fine of $5,000 to $100,000 for each day the offence occurs and/or imprisonment for up to two years. For corporations, fines are set at $25,000 to $1 million for a first conviction, and at $10,000 to $500,000 per day for subsequent convictions.
Additionally, individuals would face a fine of up to $100,000 and/or up to one year in prison for knowingly possessing the proceeds of illegal drug activity, or for re-entering or attempting to re-enter a property that has been closed due to illegal drug activity. (Sitting tenants of a residential property are excepted in the latter scenario since the RTA stipulates that Ontario’s Landlord and Tenant Board must formally evict them.) Corporations would be subject to fines of up to $250,000 for the same offences.
The definition of knowingly possessing the proceeds goes beyond collecting rent or condo fees from a perpetrator. Hoffer suggests investigators, and ultimately the Courts, would be looking for evidence of some kind of irregular payment such as rents that are well above the market rate or a substantial deposit of key money for the lease.
Regardless, Crown prosecutors would still have to prove that landlords colluded with law-breaking tenants on both the charges of knowingly permitting illegal drug activity and knowingly possessing the proceeds. That’s likely to be a more difficult test than simply demonstrating negligence. Hoffer characterizes a landlord’s or condo board’s inaction on complaints or other evidence of drug production/trafficking as “some prima facie evidence of failure to exercise due diligence” but not the complete makings of a case.
Other initiatives in Ontario and Manitoba
In tandem with introducing Bill 10, the Ontario government has also announced that the Accommodation Sector Registration of Guests Act will go into force on Jan. 1, 2026. That legislation, which was passed in 2021, will require hotels and online accommodations platforms to keep a register of each transacted bedroom or suite, containing the name, address and possible other prescribed information about at least one the occupying guests.
This register is to be made available to the police, under prescribed circumstances set out in the legislation, when there are grounds to believe the occupant is a victim of human trafficking or at imminent risk of being trafficked. The Act also includes requirements for police services to report annually on the circumstances in which they have sought access to these registers.
Hoteliers and operators of online accommodations platforms could be fined up to $5,000 for failing to maintain the register or for knowingly allowing false information to be recorded. Guests who provide false information would also be liable for fines of up to $5,000.
Meanwhile, the Manitoba government is moving to shorten the timeline for residential evictions if a tenant is engaged in drug, cannabis or human trafficking. Currently, the provincial Residential Tenancies Act provides authority for evictions to occur within five days in cases where there is an immediate risk to the health and safety of other building occupants. A proposed amendment to the Act would create a new category of “significant risk” related to those three types of activities.
This is meant to address situations such as the one Manitoba’s Minister of Justice and Attorney General, Matt Wiebe, cited earlier this spring while introducing the bill for second reading in the legislative assembly. In that case, video evidence provided ample evidence of non-residents entering and exiting a particular unit where drug trafficking was believed to be occurring, but this could not be construed as an immediate risk to others’ health and safety.
With the proposed amendment, hearings officers with the Residential Tenancies Branch could order an eviction based on evidence from one or more designated sources, including: police officers; investigators with the provincial Public Safety Investigation Unit (PSIU); security guards or building operations staff; emergency services first responders; municipal bylaw inspectors; public health inspectors; staff with a family and child services agency; or those deemed to have “specialized knowledge, training or experience on indicators of unlawful activity”.
“Our government believes that trafficking in drugs and human beings is always a risk to public safety, which is why we are changing this law,” Wiebe said. “Proposed amendments will also clarify that if the landlord proves, on balance of probabilities, that the tenant is engaging in drug or human trafficking, such activity will be deemed a significant risk to safety.”
