Docket A-019-04
Order LR04-19

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Carol Mingo of Order No. LD04-200 of the Director of Residential Rental Property dated August 13, 2004.

BEFORE THE COMMISSION

on Wednesday, the 13th day of October, 2004.

Brian J. McKenna, Vice-Chair
Weston Rose, Commissioner
Anne Petley, Commissioner

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Order

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Participants

1.   Appellant:

Carol Mingo
Represented by Chris Montigny

2.  Respondent:

Bonnie MacEachern

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Reasons for Order

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1.  Introduction

Carol Mingo (the Appellant) appealed Order LD04-200 (Exhibit E-4) issued by the Office of the Director of Residential Rental Property (the Director) on August 13, 2004.  The Appellant's Notice of Appeal (Exhibit E-6) was received by the Island Regulatory and Appeals Commission (the Commission) on September 7, 2004. 

The Director's Order and this present appeal concern a house located at 145 Clyde Road, in Hazel Grove (the house). 

The appeal was heard in the Commission's main hearing room in Charlottetown, Prince Edward Island on Monday, September 27, 2004.

2.  Background

The house was acquired in February 1997 with the Deed of Conveyance (Exhibit E-3.1) naming Bonita MacEachern (the Respondent) as Grantee.   

It is the position of the Appellant that the house was purchased for the benefit of herself and her estranged husband Gordon Mingo.  The Appellant and Mr. Mingo lived together in the house from December 1998 until their separation in December 2003.  The Appellant and their children continue to live in the house.  The house required substantial renovations to make it livable.  The Appellant believes that she and Mr. Mingo owned the house.  Their payment for the house was through paying the mortgage as well as providing the materials and labour for the renovations.  It is submitted that the Appellant and Mr. Mingo would not have worked for two years and spent their own money to improve someone else's property.  While legal title to the house was in the Respondent's name, it is submitted that the Respondent holds the house in trust for the Appellant and Mr. Mingo.  Pursuant to the interim separation agreement, Mr. Mingo is required to pay the mortgage payment on the house in partial exchange for child support.  It is submitted that the house constitutes family property and the arrangement between the parties is that of trustee and beneficiary, rather than lessor and lessee, and therefore there is no rental agreement. 

It is the position of the Respondent that she purchased the house in February 1997 subject to a mortgage of $23,000 and then entered into an arrangement with her brother Gordon Mingo and the Appellant.  The Appellant and Mr. Mingo could live in the house provided that they pay, in lieu of rent, the mortgage payments of $126 every two weeks, property taxes, insurance, maintenance and the cost of renovations.  The Respondent did, however, pay for the trusses to repair the roof.  The Respondent takes the position that the arrangement represents a rental agreement.   

On July 1, 2004, the Respondent served the Appellant with a Notice of Termination by Lessor of Rental Agreement (Form 4) (Exhibit E-1.1) requiring the Appellant to vacate the house by July 21, 2004.  This Notice of Termination specified the reason for termination as a failure to pay rent in the amount of $1,303.95, due on May 31, 2004.  The particulars of the termination noted that this figure consisted of "back mortgage and tax payments".  Also on July 1, 2004, the Respondent served the Appellant with a second Notice of Termination by Lessor of Rental Agreement (Form 4) (Exhibit E-1.2) requiring the Appellant to vacate the house by August 1, 2004.  The reason indicated on this latter Notice of Termination related to s.14(1)(e) of the Rental of Residential Property Act, R.S.P.E.I. 1988, Cap. R-13.1 (the Act).  

On July 9, 2004, the Appellant filed an Application by Lessee to Set Aside Notice of Termination (Form 6) (Exhibit E-1).  This Application specified that the Director of Residential Rental Property has no jurisdiction to enforce the Notice of Termination as the relationship between the parties is that of trustee and beneficiary, not lessor and lessee.

In Order LD04-200, the Director determined that a rental agreement existed, set aside both Notices of Termination and noted that the rental agreement remains in effect. 

The Appellant appeals the Director's decision on the basis that the Director erred in determining that a lease agreement existed between the Appellant and Respondent. 

3.  Decision

The Appeal is allowed, for the reasons that follow. 

The definition of "rental agreement" is contained in section 1.(o) of the Act: 

1.(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;

Subsection 5.(1) of the Act reads as follows:

5. (1)   The relationship of lessor and lessee is one of contract and a rental agreement does not confer on a lessee an interest in land.

In this case, there is no written document to clearly establish a rental agreement.  That fact alone is not unusual.  The parties take polar opposite views with respect to whether or not an oral rental agreement exists.  The evidence before the Commission is very incomplete, with obvious omissions.  The Appellant emphasized the fact that she and Mr. Mingo spent time and money renovating the house.  The Respondent did not disagree with this evidence.  The Appellant submitted that she and Mr. Mingo would have not paid for improvements to a house which they did not own.  Yet there was no evidence before the Commission as to the amount of money that the Appellant and Mr. Mingo invested in improvements for the house.

However, this matter has assumed importance with respect to a division of family property, an area of law over which neither the Director, nor the Commission, has any jurisdiction.  It appears to the Commission that the purpose of this appeal is to reverse a finding by the Director that a rental agreement existed, thus by inference attempting to establish that the home is family property.

The Commission wishes to make it crystal clear that it is only the courts who can make a ruling as to whether or not the house is family property.  While the Commission does generally have the jurisdiction to determine whether or not a rental agreement existed, the Commission finds that neither the Director, nor the Commission, had sufficient evidence to find that a rental agreement existed given that such a determination awaits a finding as to who is the beneficial owner of the house.  The real issue is thus whether or not the house is family property, and the Commission does not have the evidence, expertise or the jurisdiction to make such a finding.

Accordingly, the Commission reverses the decision of the Director and finds that there is insufficient evidence to establish the existence of a rental agreement until such time as the courts have ruled on the family property issue. 

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