Docket A-014-97
IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Crystal Smith and Vicki Profit (the Lessees) against Order LD97-141 of the Director of Residential Rental Property dated August 11, 1997.
Order LR97-11BEFORE THE COMMISSION
on Tuesday, the 30th day of September, 1997.
Ginger Breedon, Vice-Chair
Carl Riggs, Commissioner
Debbie MacLellan, Commissioner
Order
Participants1. Appellant:
Crystal Smith and Vicki Profit (the Lessees)
Wendy Profit (Witness)2. Respondent:
Ed Keunecke (the Lessor represented by Nora MacLeod, his Agent)
Reasons for Order
1. Background
The Commission reviewed the documentary evidence in the file, confirming with the parties that there are nine exhibits before the Commission. The Lessees subsequently presented three additional exhibits to the hearing. There was a receipt for a rental payment dated April 23, 1996, with a handwritten additional receipt for July 1996 on the back (Exhibit A-10); a package of 31 rental receipts for a period starting April 18, 1995 to February 10, 1997 (Exhibit A-11); and a receipt for a Damage Deposit (Security Deposit) for $200 dated October 5, 1993 (Exhibit A-12).
On August 11, 1997, as delegated by the Director of Residential Rental Property, the Rental Property Officer issued Order LD97-141. In this Order the Rental Property Officer directed that:
1. Rent in the amount of $965.80 is found owing by the Lessees.
2. The payment or payment arrangements suitable to the Lessor shall be made on or before September 5, 1997.
On August 27, 1997 the Lessees filed a Notice of Appeal with the Island Regulatory and Appeals Commission against Order LD97-141. The Lessees attached to their Notice of Appeal a typed statement which generally outlined their reasons for appealing the Order. In summary, the Lessees indicated they felt all the information that should have been heard had not be heard; information regarding the agreement made between Mr. Keunecke and the Lessees was not included; the agreement on the noisy neighbours was not only regarding noise but also regarding repairs that should be made to the apartment; the condition of the apartment had not been included in the Order; the Lessees had two receipts which had been made out on the back of other receipts; they had not received the notice from the Lessor on retaining the damage deposit (security deposit); and they had given verbal notice and attempted to give written notice of termination of lease in February 1997 when they were informed the Lessor expected the rent to return to $450 per month from $400.
The Commission held a hearing of the appeal on September 18, 1997.
The general background details of the situation relating to the original issues between the Lessees and the Lessor have been outlined in Order LD97-141 and will not be repeated here.
The Lessees provided testimony to the Commission to expand on and clarify some of the information provided and discussed during the hearing leading to the issuance of Order LD97-141. In so doing, the Lessees introduced the three exhibits noted above. The Lessor's Agent confirmed the handwritten receipt of July 1996 as contained on the back of the receipt dated April 23, 1996, and explained she did not have her receipt book with her on that date in July 1996 and did provide the handwritten receipt as introduced by the Lessees. The Lessor's Agent testified that she was not aware of the Lessees' receipt for damage deposit (security deposit) as it had been issued before she was involved as the agent for the Lessor. She also indicated she really did not review the 31 receipts in detail but they appeared to be original receipts from either her, the Lessor, Mr. Keunecke or other representatives.
The Lessees, in further speaking to the July 1996 handwritten receipt on the back of the April 23, 1996 receipt, questioned whether this amount had been properly included in the Lessor's calculation of rent outstanding. They also drew attention to figures (total of $200) that were contained on the back of a February 1, 1997 rent payment which they identified as painting materials. They further indicated these materials had been paid for by the Lessees with the understanding that the Lessor would reimburse them. They questioned if, in fact, this amount had been deducted from their rent.
The Lessees also asked the Commission to note the handwritten comment on the September 1996 receipt for rent, that indicated the payment of $150 was for "Bal of rent for Sept. 96". They pointed out that the other payment for that month, as confirmed by a receipt, had been for $250 and that the combined payment totalled $400. They concluded by asking why would the Lessor's representative say that the $150 payment was for the balance of the month's rent (total $400) if the rent actually being charged at that time was $450 per month.
In line with the information presented in Order LD97-141, the Lessees testified that they had spoken to the Lessor's Agent in February 1996 and indicated to her that they were no longer going to pay $450 per month because of noise from a neighbouring tenant and would henceforth only pay $400 per month. The Lessor's Agent, in turn, told the Lessees that she would bring this matter to the Lessor's attention. The Lessor was out of the Province at the time but the Lessees indicated they subsequently spoke to him on the telephone and that they informed him that they were only going to pay $400 per month because of the noise and because of work that was required in their apartment. The Lessees stated that the Lessor indicated he would speak to them on both matters when he returned to the Province. The Lessees stated that the Lessor did not follow up when he returned to the Province. The Lessees also spoke about their ongoing concerns about the condition of the apartment and their unsuccessful efforts to have the Lessor fix the problems. They confirmed they continued to pay $400 per month rent from February 1996.
The Lessees testified that they were not informed by the Lessor's Agent that the rent was going back to $450 per month and that the $450 would be retroactive back to and including August 1996 until February 10, 1997. The Lessees indicated that upon being told this, they told the Lessor's Agent that at that price ($450 per month), they will move out. They also stated that on the same day they attempted to give written notice to the Lessor, who was in the building, that they were moving out, but he would not accept it and referred them to his Agent. The Lessees contended that if they had been given proper notice their rent was going up they would have given proper notice about moving out.
The Lessees then addressed the subject of the Lessor's retention of their damage deposit (security deposit). The Lessees indicated they did not receive the Lessor's Notice of Intention to Retain Security Deposit informing them that he would be retaining their damage deposit. They said if it had been sent to 177 North River Road, they had continued to check their mail and they did not see either the notice dated March 5, 1997 or the subsequent amended notice of March 14, 1997. They indicated, as a result, they had not applied to the Director of Rental Property, for a determination on the retention of their damage deposit.
The Lessees also challenged the damage identified by the Lessor's Agent in the notice. They indicated that they did not leave the apartment in a dirty state and did not agree with the damage deposit being used for paint, for cleaning of the fridge and stove and the carpet. They also said they did not know of any damage to a window which was included as identified work on the amended March 14, 1997 notice.
The Lessees' witness testified she and her mother had vacuumed and scrubbed the floors of the apartment after the Lessees‘ belongings had been moved out and the apartment was clean.
The Lessor's Agent testified the Lessees had informed her in February 1996 that they were only going to pay $400 per month rent because of the noise. She indicated she did not believe the Lessees' mentioned anything to her about paying less rent because of work they asked to have done in the apartment had not been done. The Lessor's Agent also stated it was her understanding that once this noisy tenant moved out the Lessees would return to paying the regular $450 per month rent.
The Lessor's Agent confirmed she had spoken to the Lessor in February 1996 to inform him of the situation with the Lessees. She understood from a subsequent conversation with the Lessor that he had spoken to the Lessees about the noise. He told his Agent to let the Lessees' rent payment ride because he agreed there was a noise problem. When the noisy tenant moved out in July 1996, the Lessor's Agent testified that she did not tell the Lessees their rent was to go back to $450 per month starting August 1996.
The Lessor's Agent further testified the Lessor told her in January 1997 that he wanted the rent to go back to $450 per month and he also wanted it retroactive to the time of the move out of the noisy tenant in July. The Lessor's Agent stated she did not inform the Lessees of this decision in January because she felt she knew their reaction would be to leave the apartment. She confirmed she did so inform the Lessees on February 10, 1997 of the Lessor's direction on the rent and the Appellants did indicate they would be moving out.
In response to questions regarding the rental payments made as evidenced by the handwritten receipt on the back of the April 23, 1996 receipt and the reimbursement of the $200 in painting materials paid for by the Lessees, the Lessor's Agent pointed out in the receipts and other material (Exhibit A-5) where these amounts had been recorded and accounted for in her calculation of the rental status as of March 1997.
The Lessor's Agent also testified about the damage deposit situation. She stated she had mailed out the March 5, 1997 notice from the Lessor regarding the retention of the $200 damage deposit. She stated this notice had been mailed to the Lessees at the address of the apartment in question at 177 North River Road and this notice was returned to sender. She then completed an amended notice dated March 14, 1997 and mailed this and it was not returned.
In response to questions about the work which was identified on the notices, the Lessor's Agent indicated she assumed the work for cleaning carpets was for general cleaning which would be natural on the moving out of tenants. In the case of the addition of window damage to the second notice, she said the Lessor had directed her to include this and she did not know which window or what damage was involved.
2. Decision
The Commission identified a number of issues it needed to address in providing a decision on this appeal.
Rental Arrears at the end of February 1997 – The Commission has reviewed the material provided by the Lessor's Agent to the Rental Property Officer (Exhibit A-5) and the Lessees' material provided to the appeal hearing (Exhibits A-10, A-11 and A-12), as well as the testimony of both parties. The Commission believes all rental payments and the appropriate reimbursement of painting material costs made by the Lessees have been properly recorded and accounted for. The Commission has, therefore, determined that the rent arrears to the end of February 1997, excluding any impact of a possible retroactive rent situation are as determined by the Rental Property Officer and total $320.Retroactive Rent – August 1996 through February 1997 – The Lessees acknowledge their action to only pay $400 per month in rent commencing February 1996, instead of the $450 per month rent they had been paying, was based on their concern over noise from a neighbouring tenant. They also testified they informed the Lessor that as well as the noise problems, they were reducing their monthly rent payments because work they sought to have done to their apartment was not followed through on by the Lessor. The Lessees also pointed out that a receipt issued by a representative of the Lessor for a payment of $150 in September 1996 contained a handwritten statement that the payment was for the "Bal of Rent for Sept. 96". The $150 payment was in addition to another payment for September 1996 of $250. The Lessees contend that since the two payments total $400 and the comment on the receipt indicates the rent for September has been paid, it was reasonable to assume that $400 per month was the rent in September 1996. The Commission draws the same conclusion from the rent payment receipts for September 1996.
The Lessor's Agent agrees the Lessees informed her in February 1996 that they were only going to pay $400 per month rent because of the noise. She does not, however, agree that the Lessees also stated concerns about the condition of the apartment in informing the Agent they were going to pay less rent. The Lessor's Agent was also very clear it was her understanding that once the noisy tenant moved out of the building, the Lessees would be expected to again pay the regular $450 per month rent. The Lessor's Agent did, however, also acknowledge she did not specifically inform the Lessees that they should start paying $450 in August 1996 after the noisy tenant moved out at the end of July 1996.
The Lessor's Agent also testified the Lessor told her in January 1997 that he wanted the Lessees' rent to return to $450 per month and he also wanted this rent to be retroactive to August 1996, the first month after the noisy tenant moved out. The Lessor's Agent informed the Lessees of this direction on February 10, 1997.
The Commission accepts that both parties may have had different understandings of what was suppose to happen to the level of rent payments following the move out of the noisy tenant. The Commission therefore looked for other evidence to support one party or the other in their position on this matter. In reviewing the testimony and exhibit materials the Commission found:
a. the Lessor's Agent did not inform the Lessees in August 1996 that the rent was to return to $450 per month;
b. the September 1996 rent receipt with handwritten comment seems to indicate that $400 per month was the rent at that time;
c. the receipt and other payment information provided by the Lessor's Agent (Exhibit A-5) did not in any month from August 1996 to February 1997 indicate an arrears situation arising from the payment of $400 per month instead of $450 per month; and
d. the Lessor's Agent did not directly inform the Lessees until February 1997 that the rent was to return to $450 per month and was to be retroactive from February 1997 back through August 1996.
The Commission therefore concludes that it was reasonable for the Lessees to believe the $400 per month rent payments from August 1996 to February 1997 were meeting the Lessor's requirements. The Commission also believes because of the relatively long term nature of the $400 per month rent payments, the Lessor should have given the Lessees at least one month lead time before having the rent return to the $450 per month. The Commission did not believe informing the Lessees on the day their rent was being collected that it was returning to $450 effective that month (February 1997) was adequate lead time.
For the above reasons, the Commission does not support the Lessor's retroactive application of the higher rent level and the consequent identification of $350 in arrears based on $50 per month for seven months (i.e. August 1996 through February 1997.)
Lessees' Termination of Rental Agreement – The Rental of Residential Property Act contains very clear provisions regarding rental agreements. The definition of a rental agreement or agreement is contained in Section 1.(o):
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;
This definition is clear that a rental agreement or agreement can be either "written or oral, express or implied". The Commission concludes a rental agreement existed in this case.
Sections 11.(1), 11.(2)(b), 18.(1) and 18.(2) of the Rental of Residential Property Act identify the required process for a lessee to terminate a rental agreement.
11(1) A lessee may terminate a rental agreement by serving on the lessor a notice of termination which complies with section 18.
11(2) A notice of termination is to be served by the lessee
(b) if the premises are let from month to month, at least one month before the due date for payment of rent, to be effective on the day preceding the due date.
18.(1) A lessor and lessee shall give notice to terminate in writing in the form prescribed by regulation.
18.(2) A notice to terminate
shall be signed by the person giving the notice, or his agent;
shall identify the premises in respect of which the notice is given;
shall state the date on which the notice is to be effective; and
where notice is given by the lessor, shall state the reasons for the termination.
The Lessees testified they verbally informed the Lessor's Agent on February 10, 1997 that they would be moving out at the end of the month. They also testified that later that day they attempted to give a written statement to the Lessor that they would be moving out by the end of February 1997 and he refused to accept it.
It is important to note that whether or not the Lessor had accepted the written statement from the Lessees on February 10, 1997, the Lessees would not have met the requirements of the Rental of Residential Property Act for serving proper notice in terms of time, if they wanted the termination to take effect at the end of February 1997. (Section 11.(2)(b) of the Rental of Residential Property Act). In this case the notice would have had to have been served by the Lessees on the Lessor on or before February 1, 1997, to be effective at the end of that month.
The Commission therefore agrees with the Rental Property Officer's decision on this matter and finds that the Lessor's claim for $450 in rent owing for the month of March 1997 is a valid claim.
Damage Deposit (Security Deposit) – The pertinent Sections of the Act regarding the security deposit in this case are Sections 10.(5), 10.(7), 10.(8); 33.(1) and 33.(2).
10.(5) The lessor may retain all or part of a security deposit and interest thereon where he believes the lessee is liable to the lessor for damage to the residential premises caused by a breach of statutory condition 4, or for outstanding rent, provided that the lessor, within ten days of the date on which the lessee delivers up possession of the residential premises, serve the lessee with a notice of intention to retain security deposit in the form prescribed by regulation.
10.(7) A lessee served with a notice under subsection (5) may, within fifteen days of the date of service, apply to the Director in the form prescribed by regulation for a determination on the disposition of the security deposit, in which case he shall serve a copy of the application on the lessor.
10.(8) Where no application is made by the lessee pursuant to subsection (7), the lessor may retain the security deposit or such portion thereof as claimed in his notice.
33.(1) Any notice, process or document to be served by or on a lessor, lessee or the Director or the Commission is sufficiently served if
a. delivered personally; or
b. sent by ordinary, certified or registered mail
(i) to the lessor at the address given under section 31,
(ii) to the lessee at the address of the premises,
(iii) to the Director at the address of his office;
(iv) to the Commission at the address of its office.
33.(2) Where a notice cannot be delivered personally to a lessee by reason of his absence from the premises or by reason of his evading service, the notice may be served on the lessee
by serving it on any adult person who apparently resides with the lessee;
by posting it in a conspicuous place upon some part of the premises or a door leading thereto; or
by sending it by ordinary, certified or registered mail to the lessee at the address where he resides.
The Lessor's Agent testified she mailed the Notice of Intention to Retain Security Deposit (Form 8) to the Lessees at the subject apartment at 177 North River Road. This notice was dated March 5, 1997. She also testified this notice was returned to sender. She then mailed another, amended notice dated March 14, 1997 to the Lessees and this notice was not returned. The second notice (March 14, 1997) does not have any standing as it did not meet the ten day time limits of Section 10.(5) of the Act.
The Lessees testified they never saw either the March 5, 1997 or March 14, 1997 notices. As a result, they indicated they could not have appealed the notices since they were not even aware they had been served.
The Commission is of the view that the fact the March 5, 1997 notice was returned to sender, should have provided sufficient evidence to the Lessor's Agent that the Lessees had not received the notice and she should have proceeded under the provisions of Section 33.(2) to post the notice at 177 North River Road or mailed it to the Lessees' new address.
The Commission does not, therefore, accept that the March 5, 1997 notice was appropriately served. The Commission also does not accept, in view of the lack of any evidence to the contrary, that the "damages" identified by the Lessor for use of part of the security deposit were anything more than "normal wear and tear". The Commission does not support the claim of the Lessor for the use of any of the security deposit for alleged damages to the apartment.
The Commission agrees with the Rental Property Officer's decision that an additional $25.66 in interest (in addition to the $18.54 identified by the Lessor) should be included in the outstanding security deposit amount.
Following from the preceding decisions, the Commission finds the amount of rent owing by the Lessees to the Lessor to be:
$320
- outstanding balance of rent owing over the course of the tenancy
$450
- the rent due for March 1997, due to Lessees' failure to provide proper termination notice
$770
- Total rent owed by the Lessees to the Lessor
From this total rent owed, the Commission directs that the $200 security deposit amount held by the Lessor plus interest of $44.20 is to be applied against the above identified total rent owed. The Lessees therefore owe:
$770.00 - total rent owed by Lessees - 244.20 - security deposit plus interest already held by Lessor $525.80 - rent to be paid by Lessees to Lessor
IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Crystal Smith and Vicki Profit (the Lessees) against Order LD97-141 of the Director of Residential Rental Property dated August 11, 1997.
Order
WHEREAS Crystal Smith and Vicki Profit filed an appeal against a decision of the Director of Residential Rental Property dated August 11, 1997;
AND WHEREAS the Commission heard the appeal in Charlottetown on September 18, 1997;
NOW THEREFORE, for the reasons given in the annexed Reasons for Order;
IT IS ORDERED THAT
1. The appeal is allowed;
2. Rent in the amount of $770 is found owing by the Lessees to the Lessor;
3. The security deposit plus interest (total of $244.20) is to be retained by the Lessor and applied against the rent owing the Lessor by the Lessees; and
4. The Lessees shall pay the remaining $525.80 to the Lessor or make payment arrangements suitable to the Lessor on or before November 19, 1997.
DATED
at Charlottetown, Prince Edward Island, this 30th day of September, 1997.BY THE COMMISSION:
Ginger Breedon, Vice-ChairCarl Riggs, Commissioner
Debbie MacLellan, Commissioner
NOTICE
Sections 26.(2), 26.(3), 26.(4) and 26.(5) of the Rental of Residential Property Act provide as follows:
(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.