Docket A-010-04
Order LR04-14

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by A. J. Floyd against Order No. LD04-091 of the Director of Residential Rental Property dated April 5, 2004.

BEFORE THE COMMISSION

on Tuesday, the 13th day of July, 2004.

Brian J. McKenna, Vice-Chair
Weston Rose, Commissioner
Norman Gallant, Commissioner

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Order

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Participants

1.   Appellant:

A.J. Floyd
Alfred Fraser, Q.C.

2.  Respondents:

Russell Burgoyne
Brenda Ellis

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Reasons for Order

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1.  Introduction

A.J. (Alan James) Floyd (the Appellant) appealed Order LD04-091 (Exhibit E-6) issued by the Office of the Director of Residential Rental Property (the Director) on April 5, 2004.  The Appellant's Notice of Appeal (Exhibit E-7) was received by the Island Regulatory and Appeals Commission (the Commission) on April 28, 2004. 

The Director's Order and this present appeal concern the residential premises located at 140 Sackville Street in Montague (the premises) and arise from an Application for Enforcement of Statutory or Other Conditions of Rental Agreement (Exhibit E-1), dated August 5, 2003 and received August 7, 2003.   

The appeal was heard in the Commission's main hearing room in Charlottetown, Prince Edward Island commencing on Friday, May 21, 2004.  At the request of the parties, the hearing was adjourned until June 9, 2004.

2.  Background

The Appellant hired the Respondent Russell Burgoyne to train his horses at $600 per horse per month starting in March 2002.  The following month, the Respondents moved into the premises where they lived until July 30, 2003. 

The Appellant takes the position that the Respondents were required to pay rent in the amount of $400 per month from July 1, 2002 to July 31, 2003.  However, no such rent was paid.  On July 15, 2003 the Appellant had the Respondents served with a Notice of Termination for failing to pay $4,800 in outstanding rent.  The Respondents were required to vacate the premises on or before July 31, 2003.

The Respondents take the position that they were not required to pay rent.   The Appellant knew they could not afford rent and offered them the premises to live in.  The Respondents performed some work on the premises.  The Respondent Russell Burgoyne was hired to train two of the Appellant's horses and he was also employed by the Appellant to drive taxi on weekends.

In the Director's Order issued on April 5, 2004, the Director found that the parties had a rental agreement in place from April 2002 to July 31, 2003.  However, the Director found that the lessor (Appellant) failed to establish that the lesses (Respondent) were to pay money to the lessor for occupancy of the residential premises.  The Director also noted that the lessor holds the burden of proof in making a claim for rent owing. 

3.  Decision

The appeal is denied, for the reasons that follow.

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.  

The Appellant submits that a verbal rental contract existed between the parties for $400 per month for rent, with the Respondents responsible for the electricity bill.  Exhibits E-5.2 (May 24, 2002 receipt for $450 made out to Brenda Ellis from A.J. Floyd) and E-5.3 (May 15, 2002 statement regarding the payment of $450 a month rent) establish that the Appellant did receive $450 and establishes that there was a rental agreement.  The Appellant further submits that the Respondent's submission that they were suffering from "hard times" is not relevant.  It is not reasonable to expect that the Respondents would be provided with the premises rent free.  The Respondent, Russell Burgoyne, received $1200 per month from the Appellant for training two horses.  He was also paid for driving taxi.  The Appellant submits that the evidence, on a balance of probabilities, establishes that a rental contract existed and therefore, the Respondent owes the Appellant the sum of $4,800 for twelve months rent.

The Respondent submits that Mr. Burgoyne was employed by the Appellant, and that the Appellant was aware that the Respondents were facing hard times.  No mention was made of paying rent.  Ms. Ellis did receive some social assistance and it was the Appellant's idea to give a receipt.  Mr. Burgoyne did drive taxi for the Appellant, first on Saturday nights, then later Friday and Saturday nights.  Mr. Burgoyne found he was unable to drive a taxi all night, and then train horses the next day, so he eventually refused to drive a taxi for the Appellant.  Mr. Burgoyne provided his own jog carts and bikes for the Appellant's horses, even though the owner would normally provide this equipment.

The Commission agrees with the Director's finding that the onus lies with the lessor (Appellant) to establish, on a balance of probabilities, that the Respondents were to pay money for the rent of the premises.  Oral rental agreements present difficult challenges to enforce, and in this case, an oral rental agreement appears to have been intermixed with an oral employment contract.  It is agreed that the Appellant did pay the Respondent Burgoyne for his horse training services.  It is also agreed that the Appellant paid the Respondent for driving a taxi.  What is at issue is whether the parties agreed that the Respondent would pay $400 per month rent for the premises, or whether no such requirement to pay money occurred, causing the Respondents to sincerely believe that free accommodation was provided as part of the employment "package".

With respect to the receipt for payment of $450 in May 2002, the Commission notes that this receipt is provided along with a note from May 15, 2002, apparently prepared for the purposes of obtaining social assistance.  The Appellant testified that he gave the Respondents "two and a half months free rent".  Further, it appears that the Respondents performed work on the property during the first few months.  If in fact, after that time, rent payments were to commence and then were not paid, it was open to the Appellant to take action.  However, no action was taken until July 2003, approximately one year later, when there were no horses left to train and the employment relationship between Mr. Burgoyne and the Appellant concluded.  There is no evidence that the Appellant deducted, or attempted to deduct, any such unpaid rent from the Respondent Burgoyne's paycheck.  There is no evidence that the Appellant required the Respondents to enter into a written rental agreement to acknowledge their obligation to pay rent. 

The Commission does not find it credible that the Appellant would allow rent to go unpaid for such a lengthy period of time, or that he would tolerate the electric power not being transferred from his name to the Respondents for such an extended period of time.

The Commission finds that, even if the Appellant expected to receive rent, he did not take steps to make this clear to the Respondents.  This state of confusion may have been understandable for the first month.  However, no steps were taken by the Appellant to bring any obligation to pay rent to the attention of the Respondents or to enforce any such obligation. It appears the Respondents viewed the provision of the premises as a ‘bonus' for the horse training and taxi driving services that Mr. Burgoyne was providing.  

Accordingly, the Commission finds that the Appellant has not satisfied the onus of establishing that the parties had agreed that monetary rent for the premises was due and owing, and therefore, the appeal is denied and the Director's Order is hereby confirmed.

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