Docket A-010-95 and A-011-95
Order LR95-11IN THE MATTER
of an appeal, under Section 25 of the Rental of Residential Property Act, by Ed Keunecke (the Lessor) against Orders No. LD95-134 and LD95-135 of the Director of Residential Rental Property both dated June 1, 1995.Friday, September 29, 1995
Linda Webber, Chair
Anne McPhee, Commissioner
Emmett Kelly, Commissioner
Order
Participants
1. AppellantEd Keunecke (the Lessor)
2. Respondent
Dawn Holmes (the Lessee)
Reasons for Order
1 Background
The Lessor Ed Keunecke and the Lessee Dawn Holmes signed a standard Form of Rental Agreement, Form 1, dated January 13, 1995 for rental of an apartment at 62 Walthen Drive, Charlottetown, P.E.I. at a rental of $590.00 per month commencing February 1, 1995. The document filed with the Director indicates a fixed term of six months. The Lessee states that this agreement was amended, in writing, to a month to month tenancy but no documentation was provided to the Commission in support of this statement.
On or about February 24, 1995 the Lessee received a Notice of Termination from the Lessor's agent, Bill Morrison, which notice advised the tenant to vacate on or before February 28, 1995. The Lessee vacated the premises by that date.
On March 8, 1995 the Lessor signed a Notice of Intention to Retain Security Deposit, Form 8, claiming that rent of $590.00 was owed for the month of March, 1995.
On March 31, 1995 the Lessee filed with the Commission an Application Re Determination of Security Deposit, Form 9. In that Notice the Lessee claimed that since she was evicted and told to be out by February 28, 1995 she had no responsibility to pay the rent for March of 1995.
On April 5, 1995 the Lessor signed an Application for Enforcement of Statutory or Other Conditions of Rental Agreement, Form 2, which was received by the Commission on April 13, 1995. By this Application the Lessor sought a finding that rent was owing.
These two matters -- the application for a finding that rent was owing and the application for return of the security deposit -- were heard by a Rental Property Officer acting as agent of the Director. He issued two separate decisions. Order LD95-134 denied the Lessor's application that the Lessee owed rent to the Lessor. Order LD95-135 determined that the security deposit of $250.00 should be returned to the Lessee. Both these decisions were based upon a finding that
"When the Lessor's former agent served the Lessee with the Notice of Termination of the Rental Agreement to be effective on or before February 28, 1995, this absolved the lessee of any further rent owing."
By Notice of Appeal, Form 17, dated June 15, 1995 and filed with the Commission on June 19, 1995 these decisions were appealed by the Lessor. The reasons given were:
"Tenant violated the lease agreement and the eviction notice was not valid because of the dates."
The Commission has consolidated these appeals and held a hearing on the consolidated appeal on July 13, 1995.
2 Decision
The Appellant based his appeal on two arguments: First, he argued that the Notice of Termination was invalid in that it only gave four days' notice to the Lessee, rather than the one month's notice required by law. While there were some suggestions by the Appellant that perhaps "no notice was given" -- the Appellant's agent who served the notice no longer works for the Appellant and there was a falling out between them -- the Commission doesn't give much weight to these suggestions.
The Appellant further stated that as the Notice should have been given one month in advance of the termination date, the Lessor is due rent for that extra month, and if he had received this he would not have appealed the initial decision.
With respect to this argument, the Commission cannot allow the Lessor to illegally induce the Lessee to leave the premises and then claim for rent after the date the Lessee was induced to leave. This would be allowing the Lessor to profit at the expense of the Lessee by the Lessor's own illegal act. No legal principle would justify this.
The second argument made by the Appellant is that since the Notice of Termination was given because of a breach of a term of the rental agreement by the Lessee, the Lessor should be entitled to enforce the whole of the rental agreement, including payment of rent for the term of the lease.
The Lessor's position is that the Lessee was evicted because the Lessee's friend, who was at the time living in the premises leased by the Lessee, was making noise and disturbing the quiet enjoyment of the other tenants in the building.
The Lessee states that the Lessor's agent, Bill Morrison, told her that her friend was disturbing the quiet enjoyment of the other tenants in the building but she didn't really believe it. The Lessee's position is that her friend said she didn't have parties and she believes her. Unfortunately, neither the Lessor nor the Lessee could give first-hand evidence of this. The Lessee was living in a treatment centre at the time. The Lessor was out of province, having left matters in the hands of his agent Bill Morrison.
The evidence shows that the Lessor telephoned the Lessee after the Lessee was given the Notice of Termination. During that conversation he asked her/offered her to stay in the premises. She responded that she would think about it. The Lessor's explanation was that he believed that once the Lessee was back living in the apartment there would no longer be a noise problem.
In the circumstances the Commission cannot find that there is sufficient evidence of any breach of a condition of rental by the Lessee. The Lessor's willingness to have the Lessee continue as a tenant suggests no serious problem in this regard. The Lessor's testimony at times disregarded evidence given by his agent Bill Morrison and yet on this point he argued the validity of the agent's claims. The lack of consistency in supporting his agent's claims further undermined the Lessor's evidence on this point.
Because of this finding, that there was no breach of the lease terms by the Lessee, we do not need to deal with the arguments made by the Lessor as to his right to claim for rent after Notice of Termination. However, we feel a few comments on this are appropriate.
There is some legal basis for the position taken by the Lessor, if the circumstances support a claim for breach of a term of the rental agreement.
The common law position in contract is that upon a tenant's repudiation, the landlord has the right to recover rent or damages for the balance of the term. The question of what is a repudiation of the lease remains to be answered in each case, but it would appear arguable that any breach sufficient to justify a termination by the lessor would be such a repudiation.
Another issue is whether or not the Rental of Residential Property Act has changed the common law right of a landlord to claim for prospective rent loss and/or damages for the balance of the term. Two recent cases out of Ontario have held that a landlord can recover future rent: Pajelle Investments Ltd. v. Braham (1993), 99 D.L.R.(4th) 187; 190 Lees Avenue v. Dew (1991), 2 0.R.(3rd) 686.
In both cases, the landlord had given notice to terminate as a result of the tenant's breach of condition. The Courts relied on the Landlord and Tenant Act (Ontario) and held that the Act does not specifically take away the right of a landlord to sue for prospective rent or damages for loss of rent for the balance of the term. The policy reason behind this was articulated by the Court in the Lees Avenue case at p. 689 as follows:
"Allowing the landlord to have a claim in contract makes good policy sense as otherwise, a defaulting tenant would simply have to behave badly enough to push the landlord into early termination in order to avoid the financial consequences of breaking a lease."
Read in the light of the provisions of our own legislation, especially ss.5(1) and (2), ss.9(4) and s. 29, it may well be that such is the law in Prince Edward Island, as well:
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.
5. (2) Subject to this Part, the common law rules respecting the effect of the breach of a material convenant by one party to a contract on the obligation to perform by the other party apply to rental agreements.
9. (4) In addition to the statutory conditions, a lessor and lessee may provide in a rental agreement for other benefits and obligations that do not conflict with this Act or the provisions of the standard form.
29. If the lessee abandons the premises or terminates the rental agreement otherwise than in accordance with this Act, the lessor shall mitigate any damages that may be caused by the abandonment or termination to the extent that a party to a contract is required by law to mitigate damages.
However, such a remedy would not appear available through this Commission.
The two cases referred to above treat the claim for loss of future rental income as a claim grounded in breach of contract. Breach of contract is a common law remedy available through the courts. While the Rental of Residential Property Act provides that the Director may make a finding that an amount of rent is owed and may issue an order that the amount found to be owed be paid, those powers do not appear to go so far as to authorize the Director to deal with a claim for damages under a common law remedy not covered by the Act. Therefore, a landlord wishing to pursue such a remedy would have to do so by making a claim in the Supreme Court of Prince Edward Island.
For the above reasons, the appeals are dismissed.
IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Ed Keunecke (the Lessor) against Orders No. LD95-134 and LD95-135 of the Director of Residential Rental Property both dated June 1, 1995.Order
WHEREAS Ed Keunecke filed an appeal against two decisions of the Director of Residential Rental Property dated June 1, 1995;
AND WHEREAS The Island Regulatory and Appeals Commission consolidated these matters and heard the consolidated appeal in Charlottetown on July 13, 1995;
NOW THEREFORE
, for the reasons given in the annexed Reasons for Order;IT IS ORDERED THAT
1. The appeals are dismissed;
2. The Orders of the Director are affirmed; and
3. The security deposit in the amount of $250.00 is to be returned to the Lessee on or before October 13, 1995.
DATED at Charlottetown, Prince Edward Island, this 29th day of September, 1995.
BY THE COMMISSION:
Linda Webber, Chair
Anne McPhee, Commissioner
Emmett Kelly, Commissioner
NOTICE
Sections 13.(1) and 13.(2) of the Island Regulatory and Appeals Commission Act provide as follows:
13.(1) An appeal lies from a decision or order of the Commission to the Appeal Division of the Supreme Court upon a question of law or jurisdiction.
(2) The appeal shall be made by filing a notice of appeal in the Supreme Court within twenty days after the decision or order appealed from and the Civil Procedure Rules respecting appeals apply with the necessary changes.