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I just have one question first. Are you saying that when you were at the hearing no one mentioned the fact that your parents were going to be moving out anyway?
Then you are fine. I can't see there is any possibility of your parents having to pay this landlord anything. This landlord lied and try to break the law to get them out and they have every right to leave and to be compensated. damages.
Just as an aside, you might find it interesting to know that this similar situation happened to my mother. A few years back she got into a fight with her landlord and the landlord pretended that her daughter was going to move it to my mother's space. We went to the LTB and my mother got compensated for moving expenses and got an order for the landlord to pay the difference in rent from her new place as compared to what she had been paying for one year.
The process is correct. If he brings an application for an order for the rent you will fight it and very likely win.
He has two years to sue unfortunately. But I cannot think of anything more you can do unfortunately.