Order LR03-02 - Rental Appeal - A-018-02 & A-019-02 Re: Al Brown (Orders LD02-254 & LD02-255

Docket A-018-02 & A-019-02
Order LR03-02

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Brown Apartments against Orders LD02-254 & LD02-255 of the Director of Residential Rental Property dated November 29, 2002.

BEFORE THE COMMISSION

on Tuesday, the 14th day of January, 2003.

Ginger Breedon, Chair
Weston Rose, Commissioner
James Carragher, Commissioner

Order

Participants

1. Appellant:

Brown Apartments (Lessor)
Represented by Al Brown and Louise Brown

2. Respondent:

Steve Wells (Lessee)
Derek Charters (Lessee)

Reasons for Order

1. Introduction

The Lessor has appealed Orders LD02-254 and LD02-255 of the Office of the Director of Residential Rental Property, dated November 29, 2002, which directed that the security deposits paid by the Lessees be returned to them. The appeals were received by the Island Regulatory and Appeals Commission (the Commission), on December 19, 2002 and were heard on January 8, 2003.

The Appellant/Lessor was represented at the hearing by Mr. Al Brown and Mrs. Louise Brown. The Respondents/Lessees were represented at the hearing by Mr. Steve Wells and Mr. Derek Charters.

The appeals by the Lessor involve two separate orders of the Office of the Director of Residential Rental Property. However, after a review of the two orders being appealed and the clear similarity of the facts, circumstances, decisions and resulting actions in both cases, the Commission decided to consolidate the two appeals and hear them together in the January 8, 2003 hearing.

2. Background

The Lessees leased apartments from the Lessor at apartment #3, 327 First Street, Summerside, P.E.I. and apartment #2A, 331 First Street, Summerside, P.E.I. As part of their verbal rental arrangements with the Lessor, the Lessees each provided $200 as security deposits for their apartment units. The rent for the two units was due on the first day of the month.

The Lessees subsequently informed the Lessor on September 15, 2002 that they would be vacating their units by the end of the month or, in one case, if desired by the Lessor, by the 15^th of October. Following this notification by the Lessees of their decision to move out of the apartment units, the Lessor filed Notice of Intention to Retain Security Deposit forms (Form 8) dated October 1, 2002, with the Lessees. In these notices the Lessor indicated that he would be retaining each Lessees' $200 security deposit due to the fact that they had only given him fifteen rather than thirty days notice.

The Lessees subsequently filed Application Re Determination of Security Deposit forms (Form 9) dated October 3, 2002 with the Director of Residential Rental Property and the Lessor. In their applications Mr. Charters indicated that the apartment had been rented by a new tenant on October 1, with no damage done to the apartment, while Mr. Wells indicated that the apartment was re-rented by October 2, the apartment was not damaged in any way, that he was told by the Lessor the apartment was re-rented and that he also offered to stay until the 15^th.

During the hearing on January 8, 2003, the Lessor pointed out that only fifteen days notice had been given by the Lessees, while the Rental of Residential Property Act requires thirty days notice for a month to month rental arrangement. He further stated that he could not understand how the same Act could also provide that under certain circumstances, a lessee would not have to provide thirty days notice or pay rent for any shortfall in the notice period. He believes the thirty day requirement is black and white.

The Lessor also testified that it is his policy to keep security deposits when a lessee vacates any of his apartments without giving thirty days notice. He also confirmed that the involved units were re-rented for October and that he did not lose any rental revenue as a result of the fifteen day notices given by the Lessees. He did, however, state that he incurred expenses in cleaning up the units and in taking calls and showing the units to perspective tenants. He also expressed his particular frustration in the case of these Lessees, because of the very short time (approximately six weeks and two weeks) they actually occupied the apartment units before moving out and putting him in the position of having to re-rent the involved units.

The Lessor concluded that he believes he should be able to retain the $200 security deposits provided by each of the Lessees.

The Lessees, in their testimony, confirmed that they only provided fifteen days notice to the Lessor. They pointed out, however, that neither unit was damaged in any way and that the Lessor had not lost any rental revenue since he had been able to re-rent the involved apartment units for October. The Lessees therefore believe their $200 security deposits should be returned to them.

3. Decision
Based on the evidence presented and the provisions of Section 11(2.1) of the Act, which reads as follows:

11(2.1) Where premises are let by rental agreement from month to month or week to week,

(a) a notice of termination shall be served by the lessee on or before the due date for the payment of rent; and

(b) service pursuant to clause (a) terminates the rental agreement on the day preceding the day that would otherwise be the next rental payment due date following the date referred to in clause (a).,

the Commission finds that the Lessees did not provide proper termination notice to the Lessor for the vacating of their apartment units. As a result, they could be liable for the payment of rent for all or part of the month of October.

In considering whether or not the Lessees in this case should be liable for the payment of rent for all or part of October, the Commission must consider Section 29 of the Act which reads:

29. If the lessee abandons the premises or terminates the rental agreement otherwise than in accordance with this Act, the lessor shall mitigate any damages that may be caused by the abandonment or termination to the extent that a party to a contract is required by law to mitigate damages.

The Commission believes Section 29 places a clear onus on a lessor to take reasonable action to mitigate any damages, including lost rental revenue, when a lessee abandons the premises or improperly terminates a rental agreement. In the appeals before the Commission in this instance, the Lessor acted as required by Section 29 in quickly moving to re-rent the involved units. The Lessor was, in fact, successful in re-renting both units for the month of October, thereby fully mitigating any damages to him from possible rental revenue loses for the month of October.

In view of the fact that the Lessor did not incur any rental revenue loses as a result of the actions of the Lessees, the Commission finds that the Lessor has no grounds for retaining any of the Lessees' security deposits. The appeal is therefore denied and the security deposits must be returned to the Lessees.

In making this finding, the Commission recognizes the Lessor's frustration in having such a quick turnover of the rental units by the Lessees. There is no question that quick turnovers do add to a lessor's workload. However, at the same time, they are an expected, if not wanted, part of the rental business.

Order

WHEREAS Orders LD02-254 and LD02-255 of the Office of the Director of Residential Rental Property were appealed by Al Brown of Brown Apartments to the Island Regulatory and Appeals Commission on December 18, 2002;

AND WHEREAS the Commission heard the appeal in Charlottetown on Wednesday, January 8, 2003;

NOW THEREFORE, for the reasons given in the annexed Reasons for Order;

IT IS ORDERED THAT

The appeals are dismissed; and
The security deposits in the amount of $200 each are to be returned to Steve Wells and Derek Charters following expiration of the appeal period provided for under Section 26(2) of the Act.

DATED at Charlottetown, Prince Edward Island, this 14th day of January, 2003.

BY THE COMMISSION:

Ginger Breedon, Chair

Weston Rose, Commissioner

James Carragher, 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.