Docket A-004-04
Order LR04-06

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Shady Acres Cottages against Order No. LD04-035 and Order No. LD04-039 of the Director of Residential Rental Property dated February 9, 2004.

BEFORE THE COMMISSION

on Thursday, the 29th day of April, 2004.

Maurice Rodgerson, Chair
Weston Rose, Commissioner
Anne Petley, Commissioner

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Order

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Participants

1.   Appellant:

Clea P. Ward, Counsel for Shady Acres Cottages

2.   Respondent:

Ian MacDonald

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Reasons for Order

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1.  Introduction

Shady Acres Cottages (the Appellant) has appealed Orders LD04-035 (Exhibit E-17) and LD04-039 (Exhibit E-13) issued by the Office of the Director of Residential Rental Property (the Director) on February 9, 2004.  The Appellant's Notice of Appeal (Exhibit E-14) was received by the Island Regulatory and Appeals Commission (the Commission) on February 26, 2004. 

The Director's Order LD04-035 and part of this present appeal arise from an application by the Respondents on February 27, 2003 pursuant to section 8(a) of the Rental of Residential Property Act, R.S.P.E.I., Cap. R-13.1 (the Act) believing that Statutory Condition 1 contained in section 6 of the Act is relevant to the condition of the premises, and said provision has been contravened. 

The Director's Order LD04-039 and the remaining part of this present appeal arise from an application by the Respondents on March 17, 2003, Re Determination of Security Deposit (Form 9), where the Respondents dispute the Appellant's Notice of Intention to Retain Security Deposit (Form 8), dated March 7, 2003.   The above noted applications and the present appeal relate to Cottage #3, a three bedroom winterized cottage located at Shady Acres Cottages in Brackley.

The appeal was heard in the Commission's main hearing room in Charlottetown, Prince Edward Island on Thursday, March 25, 2004.

2.  Background

The Appellant, as lessor, entered into a rental agreement with the Respondents, as lessees, on September 15, 2002 to rent Cottage #3. 

In February 2003, the Respondent applied to the Director to seek termination of the lease pursuant to section 8(a) of the Act, believing that Statutory Condition 1, set out under section 6 of the Act, concerning the condition of the premises, had been contravened.  The Respondents outlined the particulars of their request, which itemized the presence of mold, rot and water/moisture damage.  The Respondents sought a return of $3,000.00 of rent [$600.00 per month, for five months], plus a return of the damage deposit of $300.00 for a total of $3,300.00.  In March 2003, the Appellant applied to the Director to retain the security deposit and the Respondents filed an application to have the issue of the security deposit determined. 

A hearing was held before the Director on May 12, 2003, pursuant to paragraph 4(2)(d) of the Act. 

In the Director's Order LD04-035, issued February 9, 2004, the Director found that the rental agreement was terminated effective March 1, 2003, rent in the amount of $900.00 was to be reimbursed to the Respondents, and the Appellant was ordered to correct various "deficiencies".  In the Director's Order LD04-039, also issued on February 9, 2004, the Director dealt with the issue of the security deposit and found that the Respondent was to receive $242.15 and the Appellant was to receive $60.00.

The Appellant appealed both of the Director's orders to the Commission.

3.  Decision

The appeal of the Director's Order LD04-035 is allowed in part.  Order LD04-035 contained a provision specifying that the lessor (Appellant) shall return rent in the amount of $900.00 to the lessees (Respondent).  This amount represents one half of the monthly rent for December 2002, January and February 2003.  The Commission hereby orders this term of said order to be varied, and the Appellant shall return rent in the reduced amount of $600.00 to the Respondent, said amount representing one half of the monthly rent for the months of January and February, 2003.  All other requirements of Order LD04-035 shall remain in effect.

The appeal of the Director's Order LD04-039 is denied and all requirements of said order shall remain in effect.  The reasons for these decisions follow.

In this matter the Commission must first satisfy itself that the reasoning provided in the above noted orders issued by the Director was valid, and secondly that the Director acted in accordance with the provisions of the Act in issuing Order LD04-035 and LD04-039. The Commission has considered the evidence presented before it, both from the record available to the Director and the evidence presented at the hearing before the Commission.  The Commission has also considered the requirements of the Act.

Sections 25 and 26 of the Act read as follows:

25. (1) Any party to a decision or order of the Director, if the party has appeared or been represented at the hearing before the Director, may appeal therefrom by serving on the Commission, within twenty days after receipt of the decision or order of the Director, a notice of appeal in the form prescribed by regulation.

(2) Appeals made to the Commission shall be heard by it within thirty days of receipt of the appeal.

(3) Where an appeal is not made under subsection (1), the parties are deemed to have accepted the decision of the Director and the decision is final. 1988,c.58,s.25; 1990,c.53,s.7; 1991,c.34,s.1,2; 1991,c.18,s.22 {eff.} Nov. 4/91.

26. (1)  An appeal to the Commission shall be by way of a re-hearing, and the Commission may receive and accept such evidence and information on oath or affidavit as in its discretion it considers fit and make such decision or order as the Director is authorized to make under this Act.

(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. 1988,c.58,s.26; 1990,c.53,s.8; 1991,c.18,s.22 {eff.} Nov. 4/91.  

 Statutory Condition 1 of section 6 of the Act reads as follows:

6.   Notwithstanding any agreement, waiver, declaration or other statement to the contrary, where the relationship of lessor and lessee exists in respect of residential premises by virtue of this Act or otherwise, there shall be deemed to be a rental agreement between the lessor and lessee, with the following conditions applying as between the lessor and lessee as statutory conditions governing the residential premises:

1.  Condition of Premises
The lessor shall keep the premises in a good state of repair and fit for habitation during the tenancy and shall comply with any enactment respecting standards of health, safety or housing notwithstanding any state of non-repair that may have existed at the time the agreement was entered into.

In summary, the Appellant submits that Shady Acres Cottages provide above average accommodation with a three and a half star rating according to Canada Select.  They are also licensed every year by the Department of Health.  Rod MacKinnon, a professional home inspector, testified at the hearing before the Commission.  He noted in his testimony that he observed no musty smell and no signs of mold, mildew or rot during his inspection of Cottage #3.  While there was a problem with mold and mildew at the time the Respondents moved out, there is no evidence that this was a long term problem.  Mr. MacKinnon also testified that plants, an aquarium, too much furniture and keeping interior doors closed could increase the likelihood of moisture related damage.  It is submitted that Cottage #3 was built in 1991, and the Respondents were the first, and only, people to complain.  There is no evidence that the Respondents used the fans and dehumidifier regularly, and it is submitted that the Respondents did not use these "tools" to keep moisture under control. 

In summary, the Respondents submit that they did use the fans and dehumidifier available to them.  However, for a period of time, they did not use the bathroom vent fan because they were uncertain as to whether it vented outside, or merely vented into the attic.  They were concerned that using the bathroom vent fan during the winter months would damage the attic if it were not vented to the outside.  The Respondents submit that they did open the windows from time to time when weather conditions permitted.  They did not enjoy the moisture or cleaning the mold, and suggest that if occupants have to be aggressive in combatting moisture related problems there must be a problem. 

Upon a review of the evidence, including the pictures taken by Christine Boutilier, Environmental Health Officer (Exhibit E-2), Ms. Boutilier's March 4, 2003 letter (Exhibit E-3), the May 12, 2003 inspection of Shayne Hogan, Residential Rental Property Officer which can be found commencing on page 11 of Order LD04-035 (Exhibit E-17), and the testimony before the Commission, the Commission finds that there was, without any doubt, a moisture related problem during the time period that the Respondents occupied Cottage #3. 

There is no evidence before the Commission that the Canada Select rating applies to rental housing.  Instead, referring to the pamphlet provided by the Appellants (Exhibit E-18), the Canada Select rating is of assistance to "travellers" and accommodations are rated within six categories: hotel/motel, country inn, bed and breakfast, resort, cottage, and hunting & fishing lodge.  These categories deal with temporary type accommodation rather than continuous occupancy over many months.  Therefore, the Commission finds that the rather high rating enjoyed by the Appellant under the Canada Select program is not particularly relevant to this appeal.  Further, the evidence before the Commission indicates that the inspections of Cottage #3 by Canada Select and by the Department of Health did not occur during the winter season.

While the Commission does have the benefit of the evidence of Rod MacKinnon and his report (Exhibit E-23), it should be noted that he inspected the property on February 25, 2004, approximately one year after the Respondents moved out of Cottage #3.  In addition, the crawl space under Cottage #3 was not inspected as that area could not be accessed due to snow cover.  Further, while Mr. MacKinnon noted that the bathroom vent fan "did draw air", he could not state with certainty that it vented outside.

Throughout the hearing, Cottage #3 was described as a "winterized" cottage.  The Commission does not have the jurisdiction to determine the quality or suitability of this cottage for the traveling or vacationing public.  What is at issue is whether Cottage #3 met statutory condition 1 of section 6 of the Act as a residential rental unit.  In this context it is important to recognize that the realities of a harsh winter may place any residence under a severe test and conditions may occur in a "winterized cottage" which would make the unit temporarily unfit for habitation during severe winter conditions. 

The Commission finds that while the Respondents did not engage in extraordinary measures to combat moisture problems, their conduct was consistent with that of a typical family living in a small home. 

The evidence reveals that Cottage #3 does seem to have some degree of moisture problems during a typical winter season.  The affidavit of Gerry Seaward (Exhibit E-19), which was presented by the Appellant, identifies that mold or condensation did occur on occasion, and was "completely manageable".  Regular cleaning and use of the bathroom and kitchen vents were effective at controlling the condensation and mold.  "Condensation and mold in Unit #3 was far from excessive and typical for what you would normally see in a winterized cottage."

The Commission notes that the rental agreement (Exhibit E-20) does not make any reference to requiring tenants to take specific measures to deal with condensation and the effects of condensation. 

The Commission finds that the unfortunate problems experienced by the parties with Cottage #3 during the period of the Respondents' tenancy [October 2002 to February 2003] appear to be the result of a family living in a winterized cottage through the coldest portion of a rather severe Island winter. 

However, the Commission finds that Cottage #3 was fit for habitation during the early portion of the Respondent's occupancy.  While there was some evidence that condensation problems were occurring in December 2002, the Respondent did not express urgent concern to the Appellants at this time.  The evidence suggests that the problem went beyond a manageable stage during the month of January, leading to strongly expressed concerns commencing in early February 2003. 

Accordingly, the Commission allows, in part, the appeal of the Director's order LD04-035, varying the requirement of the return of rent by the Appellant (lessor) to the Respondent (lessee) from $900.00 (one half rent for three months) to $600.00 (one half rent for two months).  In all other respects, the Commission confirms order LD04-035.

With respect to the Director's order LD04-039, the Commission finds that the Respondents are entitled to the return of their damage deposit, with interest, minus the cost of a new lock for the main entrance.  Accordingly, the Commission hereby confirms order LD04-039. 

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