Order LR03-16 - Rental Appeal - A-015-03 Re: Daniel Murray Junior v. Director of Residential Rental Property (Order LD03-211)

Docket A-015-03
Order LR03-016

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Daniel Murray Junior against Order No. LD03-211 of the Director of Residential Rental Property dated September 2, 2003.

BEFORE THE COMMISSION

on Friday, the 7th day of November, 2003.

Maurice Rodgerson, Vice-Chair
Weston Rose, Commissioner
Norman Gallant, Commissioner

Order

Participants

1.   Appellant:

Heidi Hagelstein
Counsel for Daniel Murray Junior
(Lessor)

2.   Respondent:

Daniel T. Murray Senior
(Lessee)

Reasons for Order

1. Introduction

Daniel Murray Junior appealed Order LD03-211 of the Director of Residential Rental Property issued on September 2, 2003 regarding property located at 42 Hilllview Drive in Stratford, PEI.

The appeal was received by the Commission on September 22, 2003 and the hearing was set for October 1, 2003. The Solicitor for the Appellant requested the hearing be postponed and as a result the hearing was scheduled for October 20, 2003. At that hearing the Respondent, Daniel Murray Senior, requested a delay in the proceeding so that he could obtain legal counsel. The Commission considered the request and granted a delay. The hearing was held on Wednesday, November 5, 2003 at the offices of the Prince Edward Island Regulatory and Appeals Commission.

Mr. Murray Senior was not represented by legal counsel as he indicated he had spoken to a lawyer and decided legal counsel was not needed at this time.

2. Background

A dispute arose over the continued occupancy by Mr. Murray Senior and his wife of the premises at 42 Hillview Drive, Stratford.

Mr. Murray Junior claims to own the property and for financial reasons is not able to continue to maintain the property, and wishes to sell the property rather than face foreclosure by the bank holding the mortgage. Mr. Murray Senior refuses to vacate the premises and claims his son can not evict him as no rental agreement exists and he has rights to the property.

There is also a dispute between the parties over a number of financial matters dating back many years and relating to the mortgage on the property and other expenses related to its operation and upkeep.

Mr. Murray Junior filed a Notice of Termination by Lessor of Rental Agreement (Exhibit E-2) on July 20, 2003. When the Respondent failed to vacate the premises the Appellant filed an application for Enforcement of Statutory or Other Conditions of Rental Agreement (Exhibit E-1) on August 22, 2003.

A hearing was held before the Director on September 2, 2003. As a result of that hearing the Director ruled (Exhibit E-4) that a rental agreement did not exist between Dan Murray Junior and Dan Murray Senior and Linda Murray. As a result the Director also stated that she did not have the jurisdiction to rule on the Application for Enforcement of Statutory or Other Conditions of Rental Agreement.

That decision was appealed to the Commission (Exhibit E-5).

3. Decision

The appeal is allowed.

The facts placed before the Commission lead it to conclude that the relationship that existed between the Appellant and Respondent is covered by the definition of a rental agreement.

Section 1(o) of the Rental of Residential Property Act defines a rental agreement:

o) "rental agreement" or "agreement" means an agreement, whether written or oral, express or implied, whereby a lessor confers upon a lessee the right to occupy residential premises;

This definition goes well beyond the concept of a written agreement, including an agreement that is "written or oral, express or implied"

It is also helpful to consider the definition of Lessor and Lessee.

Section 1 (g) of the Rental of Residential Property Act defines a Lessee:

(g) "lessee" means a person to whom permission is given, pursuant to a rental agreement, to occupy residential premises and includes his assigns and legal representatives;

Section 1 (h) defines a Lessor.

h)  "lessor" means the owner or other person permitting the occupation, pursuant to a rental agreement, of residential premises and includes his heirs, assigns, personal representatives and successors in title

In the matter before the Commission, the Appellant claims to own the property and has deeded title dating back to 1993. The Respondent (Lessee) does not dispute this fact, although he claims he was involved in the original purchase of the property in 1981 but his name was not included on the deed for financial reasons. At that time the property was put in the name of Mrs. Murray's father. In 1993 the property was deeded to Dan Murray Junior. Regardless of how the ownership of the property came about the fact remains the Appellant holds title to the property. The ownership of the property meets the definition of Lessor as stated in the Act. The Commission therefore accepts Dan Murray Junior as the Lessor. The Lessor took the action of serving a Form 4 which suggests he either believed or accepted that a rental agreement existed.

It is also a fact that the Respondent does not have title to the property but is occupying the property and has done so since 1993 when the Appellant (Lessor) was granted full title. The Commission has no evidence of any previous attempts to evict the Respondent so the Commission concludes that until the recent dispute, the Lessor conferred upon the Respondent the right to occupy the premises.

Therefore a Lessor – Lessee relationship is established and a rental agreement exists.

Section 1 (n) of the Act defines rent:

(n) "rent" means the amount of the consideration, whether or not in money, paid, given or agreed to be paid or given by a lessee to a lessor for occupancy of residential premises and for any service, privilege or thing that the lessor may provide for the lessee, whether or not a separate charge is made therefor;

Testimony at the hearing also indicated a division of responsibilities regarding the property with the Lessee stating it was his responsibility to pay the electricity, sewer service, and insurance costs. The Lessor paid the mortgage and that included the property taxes. The Lessor also mortgaged the property to make improvements. In return for the right to occupy of the property the Lessee was expected to cover the electricity, sewer and insurance. He was also expected to make payments on the mortgage.

As it is a rental agreement, other aspects of the Rental of Residential Property Act also apply to the relationship.

The Commission must now turn its attention to the original applications to terminate the rental agreement and force the Lessee to surrender the property.

Form 4 (Exhibit E-2) sets out two reasons for the Notice of Termination. The first relates to Section 14(1)(d) of the Rental of Residential Rental Property Act which states:

d) the lessee has knowingly misrepresented the residential property or residential premises to a prospective lessee or purchaser of the residential property or residential premises;

The Lessor has stated the Lessee chased a real estate agent from the property. The Lessor was attempting to sell the property because of payment demands from the financial institution holding the mortgage on the property.

The Lessee also refused to leave the property when approached by the police and claimed a right to occupy the property.

The Lessor also claims the Lessee has permitted the condition of the property to deteriorate and there by making it less attractive to potential buyers.

In the absence of any mitigating evidence the Commission believes such behavior and action on the part of the Lessee violates this section.

The other indicated reason relates to Section 14(1)(e) which states:

e) the safety or other lawful right or interest of the lessor or other lessee in the residential property has been seriously impaired by an act or omission of the lessee or a person permitted in or on the residential property or residential premises by him;

Testimony at the hearing indicated while the insurance bill was now paid, it had been in arrears for a period of time. This would have placed coverage in jeopardy and seriously impaired the lawful interests of the Lessor.

The hearing also received evidence that the sewer charges have not been paid and are in arrears by an amount of $1,290.29 (Exhibit E-8). The Lessee admits this is his responsibility. The Lessor's right or interest has been impaired by this action.

Evidence was also given that the mortgage on the property is in arrears and a demand for payment has been made with the distinct possibility of foreclosure. However, it is not clear to the Commission which party had responsibility for the mortgage. The Lessor, as owner, would assume full responsibility, although the Lessor claims money was made available to the Lessee to pay the mortgage but this was not done.

This entire matter is regrettable, reflecting a situation whereby a family arrangement has turned into open dispute. However, the Commission is guided by the law, and is satisfied that the Lessor owned the property, conferred upon the Lessee the right to occupy the property and the Lessee failed to honour responsibilities assumed in return for that right to occupancy. The Lessee did not exercise his right under the Act to make application to have the Notice set aside.

The Commission believes sufficient grounds exist to support a Notice of Termination by Lessor of Rental Agreement, such a form was properly serviced. The Application for Enforcement of Statutory or Other Conditions of Rental Agreement is valid.

An Order will be so issued.

Order

WHEREAS Daniel Murray Junior appealed Order LD03-211 of the Director of Residential Rental property;

AND WHEREAS the Commission heard the appeal in Charlottetown on November 5, 2003;

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

IT IS ORDERED THAT

A rental agreement existed between the parties;

The Notice of Termination and Application for Enforcement are valid; and

The Lessee, Daniel Murray Senior shall surrender procession of the premises on or before midnight Monday, November 24, 2003.

DATED at Charlottetown, Prince Edward Island, this 7th day of November, 2003.

BY THE COMMISSION:

Maurice Rodgerson, Vice-Chair

Weston Rose, Commissioner

Norman Gallant, 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.