Order LR98-09 - A-009-98 - Rental Appeal - Bernie Fitzpatrick v. Susan Christoff (Oct. 8/98)

Docket A-009-98
Order LR98-9

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Bernie Fitzpatrick (the Lessor) against Order No. LD98-158 of the Director of Residential Rental Property dated September 10, 1998.

BEFORE THE COMMISSION

on Thursday, the 8th day of October, 1998.

Wayne D. Cheverie, Q.C., Chair
Debbie MacLellan, Commissioner
Norman Gallant, Commissioner

Order

Participants

1. Appellant:
Bernie Fitzpatrick

Counsel:
Gregory Howard

2. Respondent:
Susan Christoff

Reasons for Order

1. Introduction

The present appeal has been launched by Bernie Fitzpatrick (the Appellant) against an Order of the Director of Residential Rental Property issued by Shayne Hogan, Residential Rental Property Officer on September 10, 1998 and being Order LD98-158 (Exhibit C-4). After hearing all the evidence and reviewing the matter before him, the Residential Rental Property Officer found that a rental agreement existed between the Appellant and Susan Christoff (the Respondent) and issued an order with respect to the residential premises in question to be effective as of September 1, 1998. Further, it was ordered that occupation of the residential premises be allowed by the Respondent and her family on or before 12:00 p.m., noon, Friday, September 11, 1998. It is from this order that the Appellant has appealed pursuant to Section 25 of the Rental of Residential Property Act, R.S.P.E.I. 1998, Cap. R-13-1, (the Act).

In her notice of appeal dated the 11^thday of September 1998 (Exhibit C-5) the Appellant sets out her grounds of appeal as follows:

1.    The Residential Rental Property Officer erred in his finding that there existed a rental agreement between the parties;

2.    The Residential Rental Property Officer erred in applying the provisions of the Rental of Residential Property Act to the facts before him;

3.    The Residential Rental Property Officer erred in misapprehending the evidence of the Lessor and neglected to consider such evidence in arriving at his decision;

4.    Such other grounds of appeal as may arise at the hearing of the appeal.

On September 28, 1998, the Commission convened for the purpose of hearing this appeal which was heard at the Commission Offices in Charlottetown, Prince Edward Island. At that time, the Appellant was represented by Mr. Greg Howard while the Respondent, Susan Christoff, appeared on her own behalf. At the opening of the hearing, Mr. Howard tendered the affidavit of the Appellant dated the 28^th day of September 1998 which document was subsequently entered into evidence as Exhibit A-1. After some discussion, the Appellant was sworn for the purpose of cross-examination on the contents of her affidavit by the Respondent. Upon completion of the cross-examination of the Appellant, the Respondent was sworn and gave her evidence with respect to the present matter. Since the appeal to the Commission is by way of a rehearing pursuant to Section 26 of the Act, the Commission had the benefit of the record before the Rental of Residential Property Officer as well as any new evidence that might be tendered at this time.

2. Background

At the outset of the hearing, the documentation which was before the rental officer and transmitted to the Commission pursuant to the Act was tendered. There being no objection from either the Appellant or the Respondent, the said documents were entered into evidence as Exhibits C-1 to C-6. In addition, as mentioned earlier, the affidavit of the Appellant was subsequently entered into evidence and marked Exhibit A-1. With the exception of Exhibit A-1, all other exhibits had been circulated to the Appellant and the Respondent prior to the hearing.

The evidence of the Appellant on this appeal is essentially set out in her affidavit (Exhibit A-1) as supplemented by her sworn testimony on cross-examination by the Respondent. For her part, the Respondent reviewed again the circumstances leading up to and including the refusal by the Appellant to allow her to occupy the residential premises in question being 25 Orlebar Street in the City of Charlottetown, P.E.I.

Notwithstanding the series of conversations between the Appellant and the Respondent or the various conversations between the Respondent's husband and/or the Appellant or her husband and the differences of opinion with respect to the content of those conversations, the fact is that the Appellant acknowledges and the Respondent confirms that a security deposit was requested by the Appellant pursuant to which request the Respondent's Husband, John MacGillivrary, provided the Appellant with $350.00 in cash with the balance of the $25.00 to be provided later with the rent, as evidenced by the receipt dated August 11, 1998 and being Exhibit C-3. However, the thrust of the Appellant's submission on appeal is that notwithstanding the request for and receipt of the security deposit, that the Appellant was justified in repudiating the rental agreement, if one existed, by reason of the fact that the Appellant had been misled by the Respondent as to her previous rental situation.

3. Decision

After reviewing all of the evidence presented by way of documentation and testimony, and upon reviewing the Act and its application to the facts, the Commission has concluded that the appeal must be denied. In arriving at this conclusion, the Commission confirms the decision of the Rental of Residential Property Officer wherein he found that a rental agreement as defined in Section 1(o) of the Act did exist. That definition reads as follows:
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.

A key to our decision is a relationship between the definition of "rental agreement" and the fact that a security deposit was requested by the Appellant and, for the most part, was provided by the Respondent to the satisfaction of the Appellant. The importance of the security deposit is underlined by the various attempts made by the Appellant to return the same to the Respondent once the Appellant had determined that she no longer wished to continue the rental agreement.

While the Appellant relies upon Section 5 of the Act, in particular, subsection 2, i.e. that 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 applies to rental agreements, the Commission finds that there has been no such breach of a material covenant.

There have been no prior decisions by the Commission directly on the point raised in the present appeal, i.e. whether the taking of a security deposit constitutes a rental agreement. We have concluded that it does, and in doing so we have paid particular attention to subsection 10(1) of the Act which reads as follows:
10(1) The lessor may, upon entering into a rental agreement, request from a lessee a security deposit not exceeding

(a) in the case of a rental agreement where the rent is paid weekly, the equivalent of the rent per week;

(b) in any other case, the equivalent of the rent per month that is or would be required to be paid for the residential premises.

[emphasis added)

A fair construction of this section would lead one to conclude that a rental agreement must exist before a lessor could request a security deposit from a lessee. That being the case, the request for and receipt of the security deposit in this case is further evidence of the fact that a rental agreement did exist.

It should be noted, that the Appellant is not without her remedies under the Act should the Respondent not live up to her legal obligations. If the Appellant sought to terminate the rental agreement then she must proceed to do so according to the provisions of Sections 13, 14 and 15 of the Act. For her own reasons, she chose not to proceed in this fashion, but rather sought to bring the rental agreement to an end by merely returning the security deposit.

As stated earlier, we could find no prior decisions of the Commission precisely on point, but there have been numerous decisions rendered pursuant to the Act wherein a lessee had provided a security deposit to a lessor, changed his mind, and sought to have the security deposit returned. In those instances, it has been consistently held that a rental agreement had been entered into and that the security deposit had been forfeited. If the lessor is protected in those circumstances, then an equal and fair interpretation of the law should provide similar protection to a lessee in the present circumstances.

For all of the foregoing reasons, the present appeal is denied and the Commission makes the following order:

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Bernie Fitzpatrick (the Lessor) against Order No. LD98-158 of the Director of Residential Rental Property dated September 10, 1998.

Order

WHEREAS Bernie Fitzpatrick filed an appeal dated September 11, 1998 against a decision of the Director of Residential Rental Property;

AND WHEREAS the Commission heard the appeal in Charlottetown on September 28, 1998;

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

IT IS ORDERED THAT

1.    The appeal is dismissed;

2.    The Order of the Director dated September 10, 1998 is confirmed;

3.    The Respondent is entitled to immediate possession of the residential premises.

DATED at Charlottetown, Prince Edward Island, this 8th day of October, 1998.

BY THE COMMISSION:

Wayne D. Cheverie, Q.C., Chair
Debbie MacLellan, Commissioner
Norman Gallant, 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.