Docket A-006-94
Order LR94-8
and
IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Olive Simmons (the Lessee) against Order No. LD94-132 of the Director of Residential Rental Property dated October 7, 1994.
Friday, December
23, 1994 John L. Blakney, Vice-ChairmanDebbie MacLellan, Commissioner
James Nicholson, Commissioner
Order
Participants 1. Appellant
Olive Simmons (the Lessee)
Ralph McKenna (Witness)
2. Respondent
Karen Brockway of Slemon Park Corporation (the Lessor)
Paul Matheson of Slemon Park Corporation
Reasons for Order
1 Background
On July 14, 1994 the Lessor and the Lessee entered into a rental agreement. The parties named in the agreement are Slemon Park Corporation (the Lessor) and Olive Simmons (the Lessee). According to the lease arrangement the Lessee was able to take occupation of the residential rental unit some time between July 23 and August 1 and she and her two teenage daughters took up residence at 645 6th Street, Slemon Park.Shortly after occupying the premises Mr. Ralph McKenna took up residence at that location.
At the hearing Karen Brockway submitted the following evidence. That she received a call informing her that drugs were being sold from the location of 645 6th Street. Within 48 hours of the call a Royal Canadian Mounted Police (R.C.M.P) Officer visited Ms. Brockway and asked her questions about the residency of Ralph McKenna at 645 6th Street and that the matter was related to the illegal sale of drugs. Ten (10) days later, at the request of the Officer, she gave him keys to a unit that provided a view of the Lessee's residence. On September 1, 1994 a legal search of the Lessee's premises was conducted by the Summerside Police and the Summerside R.C.M.P. which resulted in finding an amount of drugs and drug paraphernalia on the premises. Subsequently, Ralph McKenna made a statement to the police in which he admitted to the sale of a small quantity of drugs two ounces of the drug since the previous day. (Exhibit #10) The occurrence was reported in a local newspaper. (Exhibit #3)
According to Karen Brockway and after consultation with other officials of the Slemon Park Corporation a decision was made to issue a Form 4 Notice of Termination for the following reasons:
more people living in home than on lease
home being used to sell drugs on a regular basis
constant traffic coming and going.
The notice was issued on September 7, 1994.
After the report on the raid appeared in the local newspaper and after the Notice of Termination was issued, Karen Brockway submitted at the hearing that she received about three more calls from neighbors.
Also, subsequent to the issuance of the Notice, Ralph McKenna was sentenced to 20 days in jail on a possession charge as the result of a plea bargain.
On September 13, 1994, the Lessee submitted Form 6 Application By Lessee To Set Aside Notice of Termination to the Director of Residential Rental Property. The Director delegated the matter to Shayne Hogan, Rental Property Officer who held a hearing on September 23, 1994. As a result, Order LD94-132 was issued on October 7, 1994 which ordered that:
1. The rental agreement is hereby terminated on or before October 8, 1994.
The Lessee received a copy of Order LD94-132 on October 9, 1994 and filed with the Island Regulatory and Appeals Commission a Notice of Appeal pursuant to Section 25 of the Rental of Residential Property Act.
The Commission heard the appeal on November 16, 1994.
2 DecisionIn making its decision the Commission gave careful consideration to all the evidence heard during the hearing and the documents submitted. In the opinion of the Commission there are two relevant issues that need to be addressed. Did the Lessor have enough grounds or reason to issue a Notice of Termination on September 7, 1994? If not, can the events that occurred subsequent to the Notice of Termination be used to supplement the grounds or reasons on which the notice was based? In order to answer these questions the Commission examined the legislative provisions for termination of a rental agreement and the reasons stated by the Lessor for issuing the Notice of Termination.
Legislative Provisions
Section 5 of the Rental of Residential Property Act, R.S.P.E.1. 1988, c. 58, provides:
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.
(2) Subject to this Part, the common law rules respecting the effect of the breach of a material covenant by one party to a contract on the obligation to perform by the other party apply to rental agreements.
(3) The doctrine of frustration of contract applies to rental agreements.
In addition to the rental agreement between the lessor and the lessee, Section 6 of the Act provides for certain statutory conditions of which one-Statutory Condition 3-was used as a basis for permitting the termination of the rental agreement. These provisions are 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 the lessee, with the following conditions applying as between the lessor and the lessee as statutory conditions governing the residential premises. ...........
3. Good Behavior
The lessee and any person admitted to the premises by the lessee shall conduct themselves in such a manner as not to interfere with the possession, occupancy or quiet enjoyment of other lessees.
The grounds for termination of a rental agreement are set forth in sections 12 to 15 of the Act. Section 12 specifies that:
12. A lessor shall not terminate a rental agreement, whether fixed or indeterminate duration, other than a cause set out in Sections 13, 14 or 15,
The provisions of Section 13 relate to a failure to pay rent which the Commission understands is not at issue in this appeal. Section 15 concerns a termination where the lessor wants vacant possession to facilitate personal use or to facilitate a sale of the premises; again, these are not circumstances at issue here. Accordingly, the grounds for termination by the lessor must be established within the provisions of Section 14.
14 (1) The lessor may also serve notice of termination upon the lessee where
a) statutory condition 3 or 4, or any other term of rental agreement has been breached, other than failure to pay rent;
b) occupancy by the lessee has resulted in the residential premises being damaged to an extent that exceeds reasonable wear and tear, and the lessee has failed within a reasonable time after the damage to take the necessary steps to repair the damage;
c) the lessee has failed to give, within thirty days after the date he entered into a rental agreement, the security deposit requested pursuant to section 10;
d) the lessee has knowingly misrepresented the residential property or residential premises to a prospective lessee or purchaser of the rental property or residential premises;
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;
f) the number of persons permanently occupying the residential premises violates public health or fire safety standards prescribed by any Act or regulations;
g) the residential premises must be vacated to comply with an order by a provincial, regional or municipal government authority respecting zoning, health, building or fire prevention standards;
h) the lessee has purported to assign or sublet the residential premises in violation of this Act;
i) the rental agreement is for a fixed term with an option to renew and the lessee has not exercised the option.
In consideration of this appeal the Commission has approached this issue by considering the grounds used by the Lessor to issue the Notice of Termination on September 7, 1994 to determine if sufficient justification existed to issue the notice at the time the Lessor decided to serve notice.
Ground #l More People Living in the Unit
According to the Rental Application submitted by Olive Simmons to Slemon Park Corporation she indicated that besides herself other residents would be her two teenage daughters. In the case of the rental agreement, the Lessor indicated to the Commission that it is the Corporation's practice that where there are two adults residing in the rental unit and both responsible for the rent that both people are required to sign the agreement. According to the Lessor and supported by the evidence at the hearing, Ralph McKenna took up permanent residency in the unit shortly after the Lessee occupied the unit. He was not named in the rental agreement.
While the Lessor contends that other adult occupants are normally made party to the leasing, the Lessee has taken the position that as a single-parent wishing to control the leasing arrangement, she had no desire to make anyone else a party to the rental agreement. The Commission accepts this reason as reasonable.
In the Commission's opinion, the additional occupancy of another person in the unit could not be said to be a cause that would constitute grounds for termination under the provisions of Section 14(1) of the Act unless it could be brought within the provisions of paragraphs (a) and (f). In this instance, there has been no evidence to suggest that the addition of another adult in the unit violated public health or fire safety standards prescribed by any Act or regulations. Accordingly, paragraph (f) of Section 14(1) would not be applicable.
As for paragraph (a) of Section 14(1), the additional occupancy of another person in the unit without advising the Lessor could not be said to be in violation of either statutory conditions 3 or 4. Whether or not the behavior of that person violates the statutory conditions is dealt with later in this decision. But for purposes of this issue-whether or not the presence of an additional occupant constitutes grounds for termination of a rental agreement-it would seem to the Commission that statutory conditions 3 and 4 in Section 6 are not applicable.
The Commission also considered the possibility that a term of the rental agreement had been breached by limiting the Lessee in allowing others to occupy the premises.
After examination of the rental agreement and Form 1 Standard Form of Rental Agreement provided under the Rental of Residential Property Act Regulations the Commission can find no such term or provision. Even if there were such a term it is the Commission's view that a breach of the term is not enough to warrant a notice of termination. Section 5(2) of the Act makes the common law rules respecting the effect of the breach of a material covenant applicable to rental agreements. This provision is qualified by the words subject to this part. Despite this qualification the Commission interprets Section 14(1)(a) in accordance with this general principle inherent in Section 5(2) and therefore a notice of termination based on the breach of any term of a rental agreement-other than failure to pay rent-would be valid only if the breach were a material breach. The Commission can find no material breach resulting from the fact that the Lessee allowed another adult to occupy the premises.
Therefore, in this case the Commission finds that the reason more people living in home than on the lease does not warrant a notice of termination.
Ground #2 Home being used to sell drugs on a regular basis constant traffic coming and going.
The Lessors argued at the hearing that Mr. Ralph McKenna was carrying on illegal activities associated with possession and trafficking of drugs at 645 6th Street and that the information they had prior to the issuance of the Notice of Termination was enough to justify the notice.
The Commission approached this issue first by asking the following question: Does the existing provisions of the Act provide for the termination of notice on the basis of illegal activity by the Lessee or some other occupant?
In its review of the Act the Commission can find no specific provision that gives authority to the lessor to terminate a rental agreement for reasons that the lessee or other occupants of the premises carried on illegal activities. For example the Ontario legislature found it necessary to require a landlord to apply to the courts for an order terminating a tenancy on specified grounds which are enumerated in Section 109 of the Landlord and Tenant Act, R.S.O. 1980, c.232. Section 109 (1) states as follows:
109 (1) Notwithstanding sections 100, 101, 102, 103, 104 or 105, where,
........
(b) a tenant at any time during the term of the tenancy exercises or carries on, or permits to be exercised or carried on, in or upon the residential premises or any part thereof, any illegal act, trade, business, occupation or calling;
(c) the conduct of the tenant or a person permitted in the residential premises by him is such that it substantially interferes with the reasonable enjoyment of the premises for all the usual purposes by the landlord or the tenants;
(d) the safety or other bona fade and lawful right, privilege or interest of any other tenant in the residential premises is or has been seriously impaired by an act omission of the tenant or a person permitted in the residential premises by him where such act or omission occurs in the residential premises or its environs ... the landlord may serve on the tenant a notice of the tenancy agreement to be effective not earlier than the twentieth day after the notice is given, specifying the act or acts complained of... (Emphasis added)
A review of the Ontario case law reveals that the use of paragraph (b) has been utilized to successfully evict tenants involved in illegal activities, rather than the other provisions.
The Commission can find no provision similar to section 109 (b) of Ontario's Landlord and Tenant Act in the Rental of Residential Property Act. In some situations it might be argued that Section 14(1)(e) would permit termination on the face of illegal activity. But it is the Commission's view such activity would have to include weapons or violence, the safety ... of the lessor or other lessee in the residential property could be said to be seriously impaired. In the opinion of the Commission, in some circumstances drug trafficking could also satisfy the test for this section. However, the Commission finds that at the time the notice of termination was issued, the Lessor was acting on hearsay evidence and that neither the hearsay evidence with respect to frequent visitors and the quantity of drugs found on the premises would be sufficient to justify termination of the rental agreement in this case.
In the absence of a term in the rental agreement that prohibits illegal activities there is no material breach of the rental agreement. The question then becomes one of whether or not there has been a breach of statutory condition 3 as found in Section 6. A question that requires close examination.
It is the Commission's view that statutory condition 4 has no relevance in this matter.
Because of the significance of the words of this statutory provision they warrant repeating: The lessee and any person admitted to the premises by the lessee shall conduct themselves in such a manner as not to interfere with the possession, occupancy or quiet enjoyment of other lessees. (Emphasis added) Clearly this provision would apply to the Lessee and Ralph McKenna, the other person living on the premises. But the Commission emphasizes that the standard of conduct is directed only towards interference with the possession, occupancy or quiet enjoyment of other lessees.
After a review of relevant case law it is clear to the Commission that the test is that on the balance of probabilities the lessee's conduct must substantially interfere with the reasonable enjoyment of the premises by the lessor or other lessees or seriously impair the safety or other interests of other lessees: 411 Duplex Avenue (Berkshire House) v. Baker (1990), 10 R.P.R. (2d) 27 (Ont. Dist. Ct.). The lessor must demonstrate on the balance of probabilities that the lessee's conduct infringed a specific provision on the Act and thereby entitles it to terminate the lease. Unless there is some adequate reason given, the Commission has found the Court to find that it should be reluctant to terminate on the basis of hearsay evidence, except in the clearest of cases: Cando Property Management v. Wilson (1991),17 R.P.R. (2d) 219 (Ont. C.J.-Gen. Div.) 225 and 226.
Therefore, in this case, the relevant question to be considered is whether or not the Lessor brought forward evidence at the hearing to prove that on the balance of probabilities that the illegal activities interfered with the possession, occupancy or quiet enjoyment of other lessees? That is, the issue is whether or not the activity interfered with other lessees in respect to their possession, occupancy of quiet enjoyment. The Commission believes that the onus is on the Lessor in this case to provide evidence of such interference taking place on or before September 7, 1994-the date of the Notice of Termination-but this would not preclude evidence of such interference that did not come to the attention of the Lessor until after the notice of termination. It would, however, preclude evidence of interference that took place after September 7.
The Commission finds that the evidence presented at the healing on this point by the Lessor was hearsay evidence. The Commission did not hear direct evidence from any Lessees that the activities interfered with their possession, occupancy or quiet enjoyment of the premises. It is the view of the Commission that the Lessor failed to prove that the conduct of the Lessee or other occupants of the premises on the balance of probabilities interfered with the possession, occupancy or quiet enjoyment of other lessees.
Therefore, the Commission finds that the issuance of a Notice of Termination on September 7, 1994 was not warranted.
The Commission understands and appreciates the corporate objectives of the Slemon Park Corporation as described at the hearing by Mr. Paul Matheson. However, in this case, those objectives are not enough to dismiss the appeal.
It is therefore the decision of the Commission to allow the appeal and hereby reverse the order of the Director of Residential Rental Property LD94-132.
1. The appeal is allowed;
2. The Order of the Director is reversed; and
3. The rental agreement will remain in effect.
An Order will therefore issue.
IN THE MATTER of the Rental of Residential Property Act, R.S.P.E.1. 1988, C. R 13.1,
and
IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Olive Simmons (the Lessee) against Order No. LD94-132 of the Director of Residential Rental Property dated October 7, 1994.
Order
UPON the appeal of Olive Simmons against a decision of the Director of Residential Rental Property dated October 7, 1994;AND UPON hearing the appeal conducted in Charlottetown on November 16, 1994;
NOW THEREFORE, for the reasons given in the annexed Reasons for Order;
IT IS ORDERED THAT
1. The appeal is allowed;
2. The Order of the Director is reversed; and
3. The rental agreement will remain in effect.
DATED at Charlottetown, Prince Edward Island, this 23rd day of December, 1994.
BY THE COMMISSION:
John Blakney, Vice-Chairman
Debbie MacLellan, Commissioner
James Nicholson, Commissioner