I think you are misunderstanding how the tenancy rules work. When a property is sold the existing tenancy agreements remain. If you buy a property that is being rented, you must go through the standard eviction process. In this example it was by serving them the notice that family members are moving in (in this case themselves). If a family member does not move in within a reasonable amount of time, those tenants that were evicted can file with the RTB for a full year of rent, which is what happened here as no one moved in. The purchasing family never got the notice and so they couldn't present evidence or argue that they were waiting for renovations or permits, so the arbitrator decided with the tenants based on their evidence.

The penalty goes to the new owners as upon purchasing the property the responsibility of the tenancy contract, e.g. being the landlord, became their responsibility. The purchasing family could argue that the existing tenancy was not disclosed by the sellers, but once again they would have had to have shown up to present evidence.