Docket A-007-02 and
A-009-02
Order LR02-06
BEFORE THE COMMISSION
on Thursday, the 3rd day of October, 2002.
Maurice Rodgerson, Panel Chair
Weston Rose, Commissioner
Art Hudson, Commissioner
Order
Participants
1. Appellant: Kent Murray
Witness: Bernard Jay
2. Respondent: Sue DesRoches
Reasons for Order
1. Introduction
This appeal arises from two Orders (Exhibits E-6 and EE-5) issued by the Director of Residential Rental Property regarding the same residence, 191 Pope Road in Summerside, and the same Lessor, Kent Murray and the same Lessee, Sue DesRoches. Both appeals were filed by the Lessor, and with the agreement of both parties, were heard at the same appeal hearing held Tuesday, September 24, 2002, at the Access PEI Boardroom in Summerside. Mr. Murray, the Lessor and Ms. DesRoches, the Lessee were both present and Mr. Bernard Jay appeared as a witness on behalf of the Lessor.
2. Background
There are a number of issues involved in the case and the appeal centered on three matters: efforts on the part of the Lessor to terminate the rental agreement; the amount of damage deposit paid; and the question of the legality of a rent increase.
The Lessor purchased the property in September 1998 and the Lessee moved into the apartment the following month.
About two years into the rental agreement the rent was increased from $600 to $630 per month.
The rental relationship became extremely strained this year when the Lessor, in the process of selling his home, sought to take possession of the apartment for his own use. While this is permitted under the Rental of Residential Property Act, proper notice must be given.
The Lessee did not move, and the relationship has become further strained, resulting in the numerous issues now before the Commission.
3. Decision
The Lessor focused the appeal by stating that the issue arising from the first order was one of credibility. The Panel agrees, and it is most unfortunate that both parties are found to be lacking in that regard.
It is not uncommon for rental relationships to become strained, and that often leads to extremely divergent views and interpretations of past events. In many cases, such as this one, the hard evidence is limited and the Commission is left to decide the matter based on the verbal testimony of the parties involved.
The Lessor and Lessee present opposing statements about a variety of matters, and while both have sworn to tell the truth, obviously directly opposing versions of the same event are not both fully truthful. The Commission must therefore weigh the evidence and testimony and make a decision. The Commission has considered each matter separately and often found the truth to be somewhere in the gray area between the two versions.
In this matter there were many actions of both parties that led to the disagreement and the Orders that are before the Commission. In dealing with this dispute we feel compelled to comment on some of these.
The Commission is appalled at the method of rent payment and collection. It is merely inviting difficulties, such as those that have arisen, for a Lessor to accept rent payments in cash and not issue receipts, and for a Lessee to pay rent in cash and not obtain receipts. Someone being in a hurry, or being on the phone, or any other similar excuse is simply that, an excuse, for what should be a basic aspect of common sense. Over less than 48 months an amount approaching $30,000 changed hands in this rental agreement, most of it in cash, and most without a receipt for payment made or payment received. The resulting problems should be obvious to both parties, and that negligence has cost both parties in this decision. Some of the issues would have been non-issues, if a more appropriate rent payment method had been utilized.
The Rental of Residential Property Act is designed as a protection for both Lessors and Lessees, but it is only effective if the parties inform themselves of their rights and take steps to comply with the Act.
In this case, the Lessor could very probably have obtained procession of the apartment for his own use, if he had merely followed the proper procedure. Not being aware of the provisions of the Act does not eliminate the obligation to follow the law.
Each year the Commission makes a public determination of the maximum allowable percentage increase in rent. It is published in the media, and the Lessee could easily have determined that a $30 increase was beyond the amount permitted. The Lessor would also be able to easily calculate the allowable yearly increase. Action by either party would have resulted in the matter being addressed two years ago.
Forms are available at Access PEI sites, and a toll free number is available for the use of both Lessors and Lessees to obtain accurate information. The Act has been in existence for decades. One toll free telephone call would have answered many questions.
While not required, a signed rental agreement is a protection for both lessees and lessors because it clearly sets out the rights and responsibilities of both parties. A standard agreement is available from the Director of Residential Rental Property, Access PEI site and the Commission web site.
It is unfortunate that neither party took any interest in the Act until problems arose. Obviously in this case, what was judged to be unnecessary at the outset of the rental period would have been invaluable in determining this matter.
Now to the matters addressed at the appeal.
Security Deposit: The Lessor presented, for inspection, a receipt book which clearly contained a receipt for $200 for a damage deposit. He contends that what might first appear to be a second receipt for a $200 damage deposit is in fact the overwrite of the carbon from the first receipt.
The Lessee claims the damage deposit was paid in three $200 installments, but was not able to provide any proof of payment. Evidence was also presented that led the Commission to conclude rent was not always paid on time, and in full, and given the sloppy accounting practices it is possible the full damage deposit was not paid. The Commission rejects the suggestion that someone entered the rental premises and removed the receipts from the Lessee's file.
It is also noted that it appears more receipts were issued in the early stages of the rental agreement and therefore it would be more probable that receipts would be available. Left unanswered by the Lessor is the question of why a $600 security deposit was requested when the Lessee moved in, but four years later still had not been paid and no action taken. Section 14(1)(c) of the Rental of Residential Property Act states:
14(1)(c) The lessee has failed to give, within thirty days after the date he entered into a rental agreement, the security deposit requested pursuant to section 10;
The Commission has determined that the only tangible evidence suggests only a $200 payment was paid on the security deposit. The Commission therefore varies the original order of the Director of Residential Rental Property (Exhibit E-6) to reflect a payment of $200 for the security deposit and that the Lessee shall pay the Lessor the additional $400 for the security deposit which shall be held in a trust account.
Given the lack of clarity about how much was paid, and the amount of time which has passed after the 30 days set in the Act, the Commission is not prepared to accept this as a valid reason for termination.
Attention is also drawn to Section 10 of the Rental of Residential Property Act which governs Security Deposits, in particular the requirement that the security deposit be held in trust.
Other Termination Notices: The Lessor filed a number of other termination notices that were addressed in Order LD02-177 (Exhibit E-6). Upon review, the Commission affirms the decision of the Director of Residential Rental Property on termination notices filed regarding ordinary cleanliness, damages beyond normal wear and tear, and the July 12, 2002 application listing six grounds for termination.
Rent owed: On this matter, given the lack of evidence, the Commission can only rely on the history of the rental agreement. The Lessor says rent was not paid for June and July, but can not offer any concrete evidence to support this claim. The Lessor making comments in a telephone conversation about rent being owed for June and July is not sufficient to establish that rent is owed. The Lessee says she told the Lessor in the telephone conversation she didn't have to pay because she had already paid, yet has no proof of payment. While rent may not have always been paid on time, and for at least one period the Lessee admits it was paid in bi-weekly installments, it appears the rent was eventually paid. A two month absence of any payments would appear to be unusual and inconsistent with previous actions. The overall history of the rental agreement would suggest rent was paid; therefore, in the absence of any evidence to the contrary, the claim regarding unpaid rent is dismissed.
The Commission would recommend a more orderly method of rent payment and receipting be put in place immediately so that from this date forward it will be clear to both parties the amount of rent being paid, the date it is paid and the period it covers.
Rent Increase: An unlawful rent increase is just as illegal two years after the fact as it was the day it was implemented. The Lessor and Lessee both stated the rent had been verbally increased by $30 per month. That is an increase of 5 percent, and far exceeds any of the yearly allowable increases over the relevant timeframe. (2002 - 2.25%, 2001 - 3.75%, 2000 - 1.5%, 1999 - 1%)
The Lessor contends it was due to more people in the apartment. The Lessee states one of the additional people resulted from the birth of her baby, and her boyfriend lived in the apartment for six months. But, regardless of which is the correct version, the Act does not permit an increase in rent for such reasons.
The Lessor stated that he would be farther ahead financially if he had followed the law and the allowable rate increase permitted by the Commission each year, rather than the one $30 rent increase. Aside from being a good argument for following the law, the fact is, one action is legal and the other is not.
The Commission recognizes that Lessors are entitled to a reasonable return on the investment and responsibilities they assume for their property, and that is the reason an allowable rent increase is determined each year.
The Act states in Sections 21, 22 and 23(1):
21. The rent payable for residential premises shall not be increased until twelve months have elapsed since the date of any previous increase or, in the case of residential premises not previously rented, the date on which rent was first charged.
22. Every notice of increase of rent for residential premises shall
(a) be in writing in the form prescribed by regulation; and
(b) be served on the lessee
(i) in the case of a weekly agreement, at least three weeks before the date on which it is to take effect,
(ii) in the case of a monthly agreement, at least three months before the date on which it is to take effect.
23. (1) Except as provided in subsection (3) and notwithstanding the terms of any rental agreement, the amount of any rent increase between January 1 and December 31 of any year shall not exceed the percentage amount which is established by an order of the Commission and published in the Gazette.
The facts are not disputed, the Act is clear, and the Commission is not in a position to waive the requirements of the Act. Therefore the rent increase is illegal under the Rental of Residential Property Act, and the Lessor must return rent in the amount of $720 to the Lessee.
Rent returned for electrical outage: As to the rent being returned for failure to provide electrical service, the Commission finds that this was an ongoing issue that should have been professionally addressed.
The Act addresses services as one of the statutory conditions, and states:
6.2 Where the lessor provides or pays for a service or facility to the lessee that is reasonably related to the lessee's continued use and enjoyment of the premises, such as heat, water, electric power, gas, appliances, garbage collection, sewers or elevators, the lessor shall not discontinue providing or paying for that service to the lessee without permission from the Director.
The power being off in part of the apartment unit due to a tripped breaker is not disputed. The length and number of such occurrences is under dispute. The fact the Lessor attempted to have the power cut completely is not disputed.
It appears to the Commission there was an effort on the part of the Lessor to frustrate the Lessee, and there was a violation of the statutory requirement to provide services. The question then becomes how much rent should be returned to the Lessee because of these outages.
Based on the additional evidence presented at the hearing it appears the periods range from an hour, in the case of the complete power cut-off, to a number of days for a number of plugs not operating. The Commission therefore believes it appropriate to vary the original finding, to one half of one months rent, that is the amount of $300 is to be returned to the Lessee.
Services: The Lessor is reminded of his obligations under the Act to provide services, and to permit the quiet enjoyment of the apartment unit by the Lessee. Arrangements must therefore be made to ensure these "power outages" do not continue. The wiring arrangement should be checked by an electrician to determine the cause of the outages and corrective action taken.
The Lessor has been ordered to provide the Lessee with a key, but says he does not wish to do so for security reasons; however, that still appears to be the best option for addressing the issue. The Commission is prepared to give the Lessor the opportunity to demonstrate he can deal with this matter in a professional and reasonable manner. If a key is not provided, then prompt response to reset tripped breakers is essential. Reasonable access must also be provided to the storage area.
No Act or Order can, on its own, restore trust and respect to a rental relationship. The Commission hopes its decision will guide both parties in respecting each others rights and their own obligation under the Act.
Order
WHEREAS Kent Murray filed two appeals against two decisions of the Director of Residential Rental Property;
AND WHEREAS the Commission heard the appeal in Summerside on September 24, 2002;
NOW THEREFORE, for the reasons given in the annexed Reasons for Order;
IT IS ORDERED THAT
1. The security deposit paid by the Lessee is determined to be $200 and the additional $400 shall be retained by the Lessor making a total of $600 for the security deposit to be held in trust by the Lessor;
2. Rent owed to the Lessee because of unauthorized rent increase is $720;
3. Rent to be refunded to Lessee due to power outages in the unit is $300;
4. Electrical service is to be checked to determine the cause of the breaker tripping and corrective action taken;
5. Access to the storage area and the breaker panel is to be provided by either a key or prompt escorted service: and
6. The Lessor shall pay the Lessee $620 on or before November 3, 2002.
DATED at Charlottetown, Prince Edward Island, this 23rd day of September, 2002.
BY THE COMMISSION:
Maurice Rodgerson, Panel ChairWeston Rose, Commissioner
Art Hudson, Commissioner
NOTICE
Sections 26.(2), 26.(3), 26.(4) and 26.(5) of the Rental of Residential Property Act provide as follows:
26.(2) A lessor or lessee may, within fifteen days of the decision of the Commission, appeal to the court on a question of law only. (3) The rules of court governing appeals apply to an appeal under subsection (2).
(4) Where the Commission has confirmed, reversed or varied an order of the Director and no appeal has been taken within the time specified in subsection (2), the lessor or lessee may file the order in the court.
(5) Where an order is filed pursuant to subsection (4), it may be enforced as if it were an order of the court.