Docket A-005-96
& A-006-96

Order LR96-05

IN THE MATTER of appeals under Section 25 of the Rental of Residential Property Act, by Gordon MacCallum against Order No. LD96-046 and Order No. LD96-047 of the Director of Residential Rental Property both dated February 27, 1996.

BEFORE THE COMMISSION

on Tuesday, the 14th day of May, 1996.

John L. Blakney, Vice-Chair
Anne McPhee, Commissioner
Carl Riggs, Commissioner

Order

Participants

1. Appellant:

Gordon MacCallum (the Lessor)
Jeanette Simm (witness)

2. Respondent:

Joyce Allen (a Lessee)

Reasons for Order

1. Background

In January, 1995 Gordon MacCallum (the Lessor) and Joyce Allen and Blair Oake (the Lessees) entered into a verbal rental agreement to rent a residential rental premise located at Brackley R.R.#9, Station Main, Prince Edward Island. It was agreed that the Lessees would take possession of the residential unit on February 1, 1995. The agreed upon rent per month was $500.00.

It is an agreed upon fact that the Lessees took up possession of the premises on January 21, 1995 and that prior to that date had cleaned the unit in preparation for their occupancy.

After renting the residential unit for a period of time the Lessees gave the Lessor the required one month notice that they would be vacating the premises on or before October 31, 1995.

On October 7, 1995 the Lessor served a Notice of Intention to Retain Security Deposit (Form 8) to the Lessees. The reasons given for retaining the security deposit or a part of it are:

1. Rent owing for 11 days in Jan - $125.00

2.The keys have not been returned (change locks) 40.00

3. One broken window (Large) & 1 screen $75.00

4. And most important: you agreed to pay 50.00 ea per mo for boarders staying in the ½ duplex you rent. Which I pay for heat, lights, hot water, washer, dryer & dishwasher. When you moved in Jan 21st there were 3 people. 2 adults & 1 child. Then about mid March your brother & his friend moved in for about 2 months. Then it was only your brother staying with you until Oct 1. I know you left the fridge & stove as part payment 300.00 (max). But the amount owing to me is still as follows:
Rent owing 11-days Jan = 125.00
Boarders 2X2 mo at 50.00 = 200.00
1X4 ½ mo at 50.00 = 225.00
Keys & damage 115.00
655.00
Less fridge & stove
Less security -500.00
owing to Gordie MacCallum 155.00

Subsequently, on October 11, 1995 the Lessees submitted a Form 9—Application re Determination of Security Deposit to the Director of Residential Rental Property and filed the following reasons for making such application:

1. Damage deposit was 250.00 - not 200.00

2. Rent owing - January - our original date to move in was Feb 1-95. Gordie MacCallum told us the apt was vacant & we could move in anytime - we moved in Jan 16/95. Our old apt was paid in full for January - we would not have moved in early if we had thought he would come back now & want rent for it. We feel we owe nothing for January.

3. We were given 1 key & Blair returned 1 key.

4. Windows were broken when we moved in & were told they would be replaced & never were.

5. We did not agree to pay 50.00/mth for my brother staying with us. I called Shane at the residential office & he informed us we did not have to pay extra money, the 500 mth rent is a unit price - not a per person price & this is a Board Decision not Gordie MacCallum's decision.

6. We left our fridge & stove there as a curtousy (sic) to Gordie but now we feel he does not deserve this & we would like to have it back. We are owed 250 + interest & our fridge & stove returned.

On November 21, 1995 Joyce Allen filed a Form 2—Application for Enforcement of Statutory or Other Conditions of Rental Agreement with the Director of Residential Rental Property informing the Director that the Lessees:

gave their fridge and stove for illegal rent charge—$300.00

The relief the Lessees were seeking was:

(e) a finding that rent is owed;

(g) an order that an amount to be owed be paid;

The Residential Rental Property Officer, authorized by the Director of Residential Rental Property, heard submissions by the Lessor and the Lessees on the applications on February 13, 1996 and issued two orders—LD96-046 and LD96-047— on February 27,1996.

On March 19, 1996 the Lessor filed a Notice of Appeal pursuant to Section 25 of the Rental of Residential Property Act appealing the two orders of the Rental Officer. On March 21, 1996 the Lessor filed a second notice clarifying that the original appeal notice constituted a notice of appeal against both orders of the Rental Property Officer.

On April 11, 1996 the Commission convened the hearing, however the parties to the appeal were not in attendance. The Commission determined that they did not receive the notices of hearing that were sent to them by mail. After consideration of the situation the Commission decided to adjourn the matter to re-convene on a date to be fixed.

After proper notification to the parties, the Commission held the hearing on April 25, 1996 and heard submissions from both the Lessor and the Lessees, specifically Joyce Allen who also represented Blair Oake.

2. Decision

After careful consideration of all the submissions and evidence presented during the hearing the following are the Commission's findings:

Security Deposit

The Lessor submitted that when he discussed the amount of security deposit with the Lessees he wanted $250.00, however he decided to reduce the amount to $200.00. He presented a receipt showing that he received $200.00 from the Lessees on January 11,1995 for payment of the security deposit. The receipt also confirmed that the rent for the residential unit was $500.00 starting on February 1, 1995. The Lessor submitted that although the rent for the first month was $500.00, the Lessees paid $550.00. The Lessee argued that the security deposit was $250.00 and they paid that amount in two installments. One installment was paid on January 11th in the amount of $200.00 and the second installment was $50.00 which they paid with their first month rent. That is why the amount paid was $550.00. On the basis of the evidence presented it is reasonable to believe that the amount of security deposit was $250.00 and that the extra $50.00 paid at the time the rent was paid was completing the payment of the security deposit. Therefore the Commission finds that the amount of the security deposit was $250.00. The Lessor did not, in the view of the Commission, present evidence to convince it that it should find otherwise.

Rent Owing

There are two issues that must be determined in regard to whether or not rent is owed. The first is a determination as to whether or not there is rent owing for the days the Lessees occupied the residential premises during the month of January and second, whether or not there is rent owing for two additional people who occupied the premises on a temporary basis.

The definition of rent will assist in deciding these issues:

Section 1(n) "rent" means the amount of the consideration, whether or not in money, paid, given or agreed to be paid or given by a lessee to a lessor for occupancy of residential premises and for any service, privilege or thing that the lessor may provide for the lessee, whether or not a separate charge is made therefor;

(a) Days Occupied in January, 1995

It was agreed to by both parties that the Lessees occupied the premises on January 21, 1995. The Lessor submitted that he gave the Lessees permission to move some of their furniture and possessions into the unit prior to February 1, 1995. Further he submitted that the Lessees asked the Lessor if they could move into the premises before the first of the month and he consented to an early occupation. They agreed during the hearing that the Lessees occupied the premises on January 21, 1995 or eleven days before the date of occupancy that they originally agreed to. The Lessor further submitted that the Lessees had not paid rent for the eleven day period and therefore there is an amount of rent owing to him for those days.

In response, Joyce Allen argued that if they had known they were going to have to pay rent for the days they occupied the unit in January they would have remained at their former residence because the rent was paid for that month. According to her, there was no indication from the Lessor that he would charge rent for that period.

The Commission finds that in accordance with the definition of rent, the Lessor provided a residential premises for occupancy along with associated services such as heat, electricity and water and in accordance with the definition he is entitled to receive a rent for that service. Even though the Lessor might not have declared it, the rent amount was set prior to the Lessees moving in when they entered a rental agreement and they decided to occupy the premises. Therefore, the Commission finds that the Lessor is owed rent for the eleven days that they occupied the premises during the month of January— ($500/31days)X 11 days = $177.42.

(b) Additional Residents

According to the Lessor, he understood at the time he entered into the rental agreement that two adults and a child were to reside in the duplex unit. Shortly after the Lessees occupied the premises they informed the Lessor that Joyce Allen's brother would be living in the unit on a temporary basis and that a friend of her brother would also be residing for a short time. The Lessor argued that he and the Lessees had reached a mutual agreement for them to pay an additional $50.00 per month during the time that the boys were residing with the Lessees. His position was that because the entire building was heated from one furnace unit and he provided the electrical and hot water service, having the extra people live in the unit was costing him directly and he should be compensated. According to the Lessor's submission, he continually raised the matter of the $50.00 additional rental charge with Blair Oake whenever he paid the rent. The rent was always paid with cash but he never paid the additional $50.00. According to Mr. MacCallum, Mr. Oake assured him that it would be paid. Witness Jeanette Simm confirmed to the Commission that on one occasion Mr. MacCallum discussed the matter with Mr. Oake and he knew that the Lessor was asking for compensation for the additional residents. At the time the Lessees gave up possession of the unit he had not received compensation and therefore claimed, in his Notice of Intention to Retain Security Deposit, a total amount owing of $425.00 for the additional residents.

Joyce Allen responded to the Commission saying that no mutual agreement on the payment of $50.00 per month for allowing her brother and friend to reside in the unit was ever reached. The first she knew about the Lessor actually charging $50.00 was when Mr. Oake informed her of the fact in August or September of 1995. She promptly made a call to the office of the Director of Residential Rental Property to determine if such an additional rent charge could be made. She was informed that the rental charge was based on the unit and not the number of persons residing in the unit. Although unhappy over the situation, in the end the Lessees left their refrigerator and stove for compensation and the Lessor accepted the appliances, placing a value of $300.00 on them.

The Commission understands the predicament the Lessor found himself in because of the structural arrangement he has for heating and providing utility services to the unit. Logically his costs would increase with an increase in the number of people who reside in the unit. It is clear to the Commission that although the Lessor believed he had a mutual agreement, the agreement was with Blair Oake and not Joyce Allen. It was Blair Oake that continued to lead the Lessor to believe that compensation for the additional residents would be forthcoming and it was not until late in the rental period that Ms. Allen learned of the arrangement.

During the hearing, both parties agreed that the terms of the verbal agreement included a month to month rental arrangement at $500.00 per month. Even though the Lessor found himself in a position where it was costing him more to rent the unit the relevant issue is how he tried to correct the problem. If the Lessor at the time of rental agreement knew that three plus two temporary residents were going to live in the unit he might have chosen not to rent to the Lessees but those are not the circumstances of this case.

Entering what the Lessor terms as a mutual agreement for compensation constitutes, in the view of the Commission, an increase in rent. Part V of the Act is very clear on what procedure a Lessor must follow to increase the rent for residential premises and during the hearing the Lessor made clear to the Commission that in his experience as a lessor he understood the procedure. In this case he believed the special circumstances warranted the increase. But clearly, he did not follow the provisions of the Act. Therefore the Commission finds that the rent increase of $50.00 per month is in non-compliance with the Act and cannot be allowed.

If the Lessor found himself unhappy with the arrangement then he should have pursued other options under the legislation for dealing with such a situation. Even if Mr. Oake led him to believe that compensation would be paid, it does not change the fact that the $50.00 per month charge did not comply with the provisions of the Act.

Mr. MacCallum acknowledged his awareness of the rules on raising rents and therefore should have realized it improper to raise the monthly rent on the basis of a month to month rental arrangement for $500.00 for the occupancy of a residential property. Also, it is clear from the parties description of the details of the verbal rental agreement that the Lessees rented the unit on the basis of a month to month arrangement and not on the number of people who lived there. In the result the Commission must confirm the Rental Property Officer's decision not to allow an additional rent charge of $50.00 per month for the two additional residents.

Keys

The Lessor submitted that the Lessees were given two keys to the unit and that upon giving up possession of the unit they only returned one. Due to the fact that one key had not been returned, Mr. MacCallum decided it was necessary to change the locks on the door. The Lessee contends that they had only one key to the unit and that one was taken from a hook next to the door. According to Joyce Allen they never received another key from the Lessor. Although it is reasonable for one missing key to cause a lessor to change a lock on an apartment door the Lessor must provide evidence of the cost for replacement of the lock even if the new lock was a part of the Lessor's inventory. Acceptable evidence would be a receipt for the lock purchased for the replacement. In this case, the Lessor provided a receipt but was not sure it was for the lock replacement in this case. The Commission does not believe this to be evidence enough to support the Lessor's claim for compensation for the lock replacement.

Refrigerator & Stove

It is clear from the evidence that the Lessees agreed to give the refrigerator and stove for compensation for the increased rental charges. The Commission has already determined that these rental charges are improper. The Lessor put a value on those goods of $300.00 and intended to apply the $300.00 to the amount he determined to be owing him. Although the Lessee agreed to leave the appliances with the Lessor, upon second thought, she decided that she wanted them returned and consequently filed an Application for Enforcement of Statutory or Other Conditions of Rental Agreement. In the application she claims that the refrigerator and stove should be returned to them because keeping them constituted an illegal rent charge—$300.00.

The Commission agrees with the Lessee. Based on the evidence the only reason the appliances were left was to resolve the matter regarding the claim for $50.00 per month. The Lessor placed a value on the appliances of $300.00 and in the result increased the rent for the premises which the Commission has already determined that he could not do in accordance with the provisions for rent increases in the Act. Therefore, the Commission confirms the decision and order of the Rental Property Officer that the refrigerator and stove be returned to the Lessees in a condition similar to how they left it. Allowing the refrigerator and stove to remain with the Lessor would be tantamount to allowing an illegal increase in rent.

Broken Windows

The Lessor submitted that the Lessees were responsible for breaking one of the windows at the front of the unit. According to the Lessor, when he rented the unit, two of the window panes were cracked but when he examined the window after the Lessees vacated the unit he found that the third window had a hole the size of a ball or the point of a football. The Lessor presented a receipt for repair of the broken window. Joyce Allen argued that all three windows are broken and that if the third window was broken they were not responsible for breaking it. Upon review and consideration of the evidence relevant to the matter of the broken window the Commission finds that the Lessor did not provide enough evidence to convince the Commission that the Lessees were directly responsible for breaking the window to the extent he claimed. Therefore, the Commission cannot require the Lessees to compensate the Lessor for the replacement of the window and confirms the decision of the Rental Property Officer on this point.

Therefore, the Commission varies the order of the Rental Property Officer;

Accordingly,

1. The Order LD96-046 of the Rental Property Officer is varied;

The Lessor shall pay to the Lessees an amount equal to: (security deposit amount plus interest earned at the rate of 5.0% per annum) minus (rent owed by the Lessees for the month of January).

$261.52 - $177.42 = $84.10

Therefore, the amount to be paid to the Lessees is $84.10 and the remainder $123.00 ($207.10 - $84.10) is to be remitted back to the Lessor.

2. The Order LD96-047 of the Rental Property Officer is confirmed;

The Lessor shall either return to the Lessees the refrigerator and the stove at no cost and in good condition or make them available for pickup by the Lessees by May 30, 1996.

IN THE MATTER of appeals under Section 25 of the Rental of Residential Property Act, by Gordon MacCallum against Order No. LD96-046 and Order No. LD96-047 of the Director of Residential Rental Property both dated February 27, 1996.

 Order

WHEREAS Gordon MacCallum filed two appeals against two decisions of the Director of Residential Rental Property dated February 26, 1996 ;

AND WHEREAS the Commission heard the appeals in a consolidated hearing in Charlottetown on April 25, 1996;

NOW THEREFORE, for the reasons given in the annexed Reasons for Order;

IT IS ORDERED THAT

1. The Order LD96-046 of the Rental Property Officer is varied;

The Lessor shall pay to the Lessees an amount equal to: (security deposit amount plus interest earned at the rate of 5.0% per annum) minus (rent owed by the Lessees for the month of January).

$261.52 - $177.42 = $84.10

Therefore, the amount to be paid to the Lessees is $84.10 and the remainder $123.00 ($207.10 - $84.10) is to be remitted back to the Lessor;

2. The Order LD96-047 of the Rental Property Officer is confirmed;

The Lessor shall either return to the Lessees the refrigerator and the stove at no cost and in good condition or make them available for pickup by the Lessees by May 30, 1996.

DATED at Charlottetown, Prince Edward Island, this 14th day of May, 1996.

BY THE COMMISSION:

John L. Blakney, Vice-Chair

Carl Riggs, Commissioner

Anne McPhee, Commissioner

NOTICE

Sections 26.(2), 26.(3), 26.(4) and 26.(5) of the Rental of Residential Property Act provide as follows:

26.(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.