Dockets A-012-04 & A-013-04
Order LR04-10

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Faye Williams against Orders No. LD04-119 and LD04-120 of the Director of Residential Rental Property both dated May 6, 2004.

BEFORE THE COMMISSION

on Monday, the 14th day of June, 2004.

Maurice Rodgerson, Chair
Norman Gallant, Commissioner
George MacDonald, Commissioner

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Order

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Participants

1.   Appellant:

Faye Williams
Paul Williams

2.   Respondents:

Tracy Fall
Ken MacDonald

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Reasons for Order

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1.  Introduction

Faye Williams (Appellant) appealed two Orders of the Director of Residential Rental Property relating to premises located at 35 Seaview Drive, owned by Tracy Fall and Ken MacDonald (Respondents). 

Order LD04-119 ((Exhibit E-31) relates to a claim against the security deposit for damage to the rental unit, and Order LD04-120 (Exhibit EE-14) relates to a claim against the security deposit for rent owed.

The original orders were issued May 6, 2004.  The Notices of Appeal for both Orders were received by the Commission on May 19, 2004, within the time limits required by the Rental of Residential Property Act.   Ms. Williams was a participant in the original hearing held by the Rental Officer and is therefore eligible, under the Act, to appeal those decisions.

As both Orders related to the same rental unit and agreement, and the same participants were involved, the Commission combined the appeals for the purpose of the appeal hearing.

The hearing was held in the main hearing room of the Prince Edward Island Regulatory and Appeals Commission on Tuesday, June 8th, at 1:00 p.m. 

Faye Williams and Paul Williams appeared for the Appellants.  Tracy Fall and Ken MacDonald for the Respondents.

2.  Background

The Appellant rented a house at 35 Seaview Drive from the Respondents.  A Standard Form of Rental Agreement (Exhibit EE-4) was signed by both parties setting the rent at $1,100.00 per month.  The agreement confirmed a security deposit of $1,000.00 had been paid.

The Appellant moved into the unit on February 15, 2003 and claims to have vacated the unit by July 31, 2003.

The rental unit was a house and the Appellant sublet the basement to another party.

The Respondents permitted the Appellant to remain with the same oil company and have the bill come to them because of a discount they received on heating fuel.  They also stated they left the electric company bill in their name because the Appellant could not afford the deposit required to start a new account.

On July 14, 2003 the Respondents filed a Notice of Termination (Exhibit EE-5) stating the Appellant was months behind in payment of heat and light bills, there were complaints from neighbours about noise and other problems at the residence.

The Appellant then placed a stop payment on the July 15th rent cheque (Exhibit EE-6 and EE-7). This prompted the Respondents to file a new Notice of Termination (Exhibit EE-8) claiming a failure to pay rent and seeking termination of the rental agreement on August 8, 2003. An Application for Enforcement of Statutory or Other Conditions of Rental Agreement (Exhibit EE-3) was also filed.

The Respondents stated they filed a Notice of Intention to Retain Security Deposit (Exhibit E-8) but it was returned because the Appellant was no longer at that address and they did not have a forwarding address.

The Respondents claimed the total security deposit because of damages to the unit requiring significant clean up and repairs, as well as rent owed.

December 3, 2003 the Appellant filed an Application Re Determination of Security Deposit (Exhibit E-4) claiming she never received a notice to retain the deposit and the Respondents had taken possession of the unit on July 31, 2003.

A hearing was held by the Rental Officer and two Orders were issued. Both are the subject of this appeal.

 3.  Decision

The appeals are denied.

The Commission will address the matters under appeal in two categories, rent and damage to the unit.

 Rent owed:

In this matter the Commission is guided by the Standard Form of Rental Agreement (Exhibit EE-4) signed by both parties, and the requirements of the Rental of Residential Property Act.

The agreement begins on February 15, 2003 and unless properly terminated ends on February 28, 2007.  Rent in the amount of $1,100.00 is due on the 15th of each month, and the payment method is stated as post dated cheques.

The termination of the rental agreement is not in dispute.  However, the Appellant contends the agreement should have terminated earlier then ordered by the Rental Officer because the Respondents took possession over a week earlier then August 8th.

The original Notice of Termination gave the required notice to the Appellant, meaning the unit was to be vacated on August 15th.  This would be the normal time another rent payment would be due. 

The Second Notice of Termination is dated July 19, 2003.   The Respondents claim this follows the stop payment placed on the cheque to cover the rent due on July 15, 2003.  This is consistent with the evidence as the bank information (Exhibits EE-7) is date stamped July 17, 2003.

The Rental of Residential Property Act states in Section 13 (1)

13.(1)  Where a lessee fails to pay rent in accordance with the rental agreement, the lessor may, on any day following the day the rent was due, serve the lessee with a notice of termination to be effective not earlier than twenty days after the date it is served.

The Act clearly specifies the notice can not be effective earlier than twenty days after the date it is served.   In this case that would indicate August 8, 2003 was the earliest the termination could take effect under the Act, and that is the date stated on the notice.

The Appellant states that the Respondents took procession July 31, 2003 by entering the premises without her permission.

Section 6 of the Act refers to entry of premises:

6.  Entry of Premises
Except in the case of an emergency, the lessor shall not enter the premises without the consent of the lessee unless the lessor has served written notice stating the date and time of the entry to the lessee at least twenty-four hours in advance of the entry and the time stated is between the hours of 9 a.m. and 9 p.m.

While this section requires notice to be given, it does not indicate the rental agreement is automatically void if notice is not given. The appropriate action to be taken for such a violation of the Act would be determined after an appropriate application to the Director of Residential Rental Property. 

The Commission has not been presented with compelling evidence to indicate the Respondents took possession of the unit prior to August 8, 2003.

The Rental Officer visited the unit on August 12, 2003 (Exhibit E-1) and it is clear from his observations that the unit had not been cleaned by the Respondents, nor occupied by new tenants.  

The statement from F. Troy MacInnis (Exhibit E-30) indicates he was first shown the property "approx August 1^st 2003".  The statement also indicates he was "overwhelmed by filth" when he entered the unit. This does not appear to the Commission to be the condition a landlord would want to show a property if they had full possession of the unit.  The same statement indicates it was weeks later before he again returned to the unit for a "pre-occupancy inspection".

The Appellant claimed she was barred from the unit after August 1, 2003 but could not provide any specific evidence of such an action, other than she claimed to have seen someone else in the unit.   The Appellant did not take any steps to find out who the person was, and whether it was someone she had permitted access to the residence or if it was someone the Respondents had granted permission to enter. The Appellant used the term "barred from the residence" but the Commission has not been presented with evidence the Respondents had taken any action to actually bar her from the premises, and could not legally do so. 

The Respondents indicated they suspected the Appellant had moved out, and they claim they entered the unit to close windows that were left open after being called by neighbours, and after speaking to a Rental Officer.  They also stated they did not enter the unit any other time without giving notice.

As the date is in dispute, obviously there is no evidence of any agreement among the parties for a delivery of possession on July 31, 2004.

The Commission also notes action to stop payment of the cheque had to be initiated by the Appellant in advance of July 15th as that was the date the cheque could be cashed. The stop payment followed the first Notice of Termination which listed August 15th as the effective date.  Therefore, the action to stop payment of rent was taken well in advance of any dispute over the date of possession, and precipitated the notice of termination for August 8th.

The bottom line is the Act.  Possession could not legally be assumed prior to August 8, 2003 and the Appellant was legally in possession of the unit until that time, regardless of whether or not she was still living in the unit.

The amount of rent owing is confirmed as $904.11. 

Security Deposit for Damages:

The claim of damages to the unit was also the subject of an Order appealed by the Appellant.

The Appellant took issue with the time lapse from vacating the unit to receiving a copy of the Notice of Intention to Retain Security Deposit.  While the notice (Exhibit E-8) is dated August 12, 2003, the Appellant states she was not aware of the notice until December when she filed an Application Re Determination of Security Deposit.

The Respondents claim they did not have the Appellants new address and had mailed the notice to the only address they had for her.  The Appellant claims they had the new address or could have mailed the notice to her work.

Section 33. of the Act addresses the service of notices:

33.(1)  Any notice, process or document to be served by or on a lessor, lessee or the Director or the Commission is sufficiently served if

(a) delivered personally; or

(b) sent by ordinary, certified or registered mail

(ii) to the lessee at the address of the premises,

In terms of the time lag, the Commission is guided by the Act which clearly gives such discretion to the Director.  Section 10 (5) states:

(5)  The lessor may retain all or part of a security deposit and interest thereon where he believes the lessee is liable to the lessor for damage to the residential premises caused by a breach of statutory condition 4, or for outstanding rent, provided that the lessor, within ten days of the date on which the lessee delivers up possession of the residential premises or such longer period as the Director may permit, serves the lessee with a notice of intention to retain security deposit in the form prescribed by regulation. 1998,c.100,s.2.

The same applies to an application for determination of a security deposit. Section 10. (7) states:

(7)   A lessee served with a notice under subsection (5) may, within fifteen days of the date of service or such longer period as the Director may permit, apply to the Director in the form prescribed by regulation for a determination on the disposition of the security deposit, in which case he shall serve a copy of the application on the lessor. 1998,c.100,s.2.

The Commission believes such discretion is essential to address situations where delivery of notice may not be able to take place within the set days. The Commission has no reason to question the Director's use of that discretion in this matter; in fact, that action permitted both parties an opportunity to provide their claims and evidence and hear the claims and evidence of the other party to the dispute.  

The Appellant was very upset with the manner in which the Respondents finally served her the notice, specifically by meeting her at the school where she was picking up her son.  This may not have been the brightest idea on the part of the Respondents, but it is not a matter covered by the Rental of Residential Property Act. 

On the matter of damages, the Act permits the lessor to retain the security deposit for damage to the residential premises.  Therefore, the matter for the Commission to determine is whether or not damages did occur and if the Appellant is responsible for those damages.

In considering this matter the Commission would first point out that the Appellant rented the entire home from the Respondents, and sublet the basement to other tenants.

The Appellant stated in her appeal document that all the complaints during her tenancy were connected to the tenant renting the basement.  Whether a true reflection of the circumstances or not, it does not alter the responsibility of the Appellant.

The agreement concerning the basement unit (Exhibit E-18) is signed by the Appellant and two tenants.  It is not signed by the Respondents, although they are mentioned in the agreement.  These tenants paid rent to the Appellant, not the Respondents and testimony at the hearing confirmed that to be the arrangement.

Under the Rental of Residential Property Act the Lessee is responsible for the activities in the unit, and the Lessors must deal with the Lessee in addressing any issues with the unit.  Therefore the Appellant is responsible for any damages caused by individuals she permitted to use or occupy the unit she was renting. The obligation is part of any rental agreement and set out as a Statutory Condition

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

4.  Obligation of the Lessee
The lessee shall be responsible for the ordinary cleanliness of the interior of the premises and for the repair of damage caused by any wilful or negligent act of the lessee or of any person whom the lessee permits on the premises, but not for damage caused by normal wear and tear.

As is common in such disputes the two parties have radically differing views on the extent of the damage, when it was caused and who should be responsible.

However, in this case, the Commission has access to the observations of an independent third party, namely the Rental Property Officer who conducted a no-comment inspection of the unit on August 12, 2003. 

The Officer is a trained professional, fully familiar with the requirements of the Act, experienced in rental matters, and charged with the responsibility to be fair and unbiased.

The report of the Officer (Exhibit E-1) reflects his observations as he walked though the unit.  These observations detail a number of damages to the unit which go beyond normal wear and tear. The observations are supported by 42 digital pictures taken by the Rental Officer during the inspection.

These observations form the basis of the Rental Officer's decision and Order.  They also serve as compelling evidence for the Commission, and in the absence of specific evidence to the contrary, lead the Commission to confirm the original Order.

The Commission notes that the combined Orders total an amount almost double the security deposit provided and under dispute.  The Commission is fully satisfied that retention of the total security deposit is warranted.

The Appellant claims a long list of items were in need of repair at the time she occupied the unit (Exhibit E-22), and these repairs were not carried out by the Respondents.

The Appellant also stated the condition of the yard and premises was untidy and provided three signed statements (Exhibits E-14, E-15, E-16) to support this claim.  The statements refer to the month of April, some three months before the rental agreement was terminated and sufficient time for the Appellant to seek remedy under the Rental of Residential Property Act.  While the Appellant agreed to the termination of the lease, she did not initiate the termination and the Commission must therefore conclude the matters were not of a significant concern to prompt more direct action.

The Act does provide a remedy for someone occupying a rental unit to have such issues addressed, but the time for such action is at the time the matters are noted and not acted upon by the Lessor.  In this case the items are being raised after the rental agreement has been terminated by the Lessor and the rent and security deposit are in dispute.

The Appellant makes reference to a video taken of the residence by the Respondents shortly after she had moved into the unit, and would like it submitted as evidence.  However, the Appellant did not pursue the matter of the video at the appeal hearing, nor did she question the Respondent's on the existence of the video and its whereabouts.  The Commission does have the power by subpoena to compel the production of evidence, but would require a compelling reason to exercise such powers, and such reasons were not present in this case.

The Appellant contends such a video would indicate many of the damages occurred prior to her renting the unit, however many of the items covered in the original hearing and referred to during the no-comment inspection appear to be of a newer rather than prior nature. 

The Commission in considering an appeal of a determination of security deposit directs itself to the variety and dollar amount of easily verified claims in relation to the amount of the security deposit.  In cases such as this, where the valid claims easily total more than the security deposit, the Commission places less emphasis on making a specific determination on every item listed in the claim when a finding for either party on a specific item would not in any way vary the final determination of the security deposit.

Based on the evidence provided, the Commission is satisfied that damages to the rental unit were of a cost great enough to warrant the retention of the full security deposit in the amount of $1.006.25.

For the reasons stated above, the Commission denies the appeals and confirms the Orders.

It should be noted that the Respondents submitted a video tape in support of their claim.  The tape had not been viewed by the Appellant, and therefore was not viewed by the Panel and not considered by the Panel in reaching a decision on this matter.

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