Order LR01-03 - Rental Appeal -A-01-003 Clifford McQuaid v. Nora Brooker & Elaine Nisbet (January 29, 2001)

Docket A-01-003
Order LR01-03

IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Clifford McQuaid (the Lessor) against Order LD01-004 of the Director of Residential Rental Property dated January 29, 2001.

BEFORE THE COMMISSION

on Tuesday, the 10th day of April, 2001.

Maurice Rodgerson, Panel Chair
Norman Gallant, Commissioner

Order

Participants

1.     Appellant:      Clifford McQuaid (Lessor)

2.   Respondents:   Nora Brooker & Elain Nisbet (Lessees)
                           Matthew Dunlay, Witness

Reasons for Order

1. Introduction

Clifford McQuaid (Lessor) is appealing Order LD01-004 (Exhibit E-8) of the Director of Residential Rental Property (the Director) issued on January 29, 2001.

The matter relates to a rental unit at 71 Browns Court. On form 17 (Exhibit E-9) the Lessor states the reason for the appeal is, "Proper notice wasn't given and we lost rent because we couldn't rent until middle of July."

2. Background

In 1999 the Respondents, Nora Brooker and Elaine Nisbet rented a furnished unit at 71 Browns Court to serve as their residence while attending the University of Prince Edward Island. Post-dated cheques were provided for twelve months. Ms. Brooker and Ms. Nisbet each paid separately, half the monthly rent of $800.00.

At the hearing both parties made specific positive comments about each other and it appears a good lessor/lessee relationship existed until the incident on or about June 2, 2000.

The Respondents are residents of New Brunswick and had summer jobs in their home community. They would not be using the apartment during the summer months but stated at the hearing they had every intention of returning in the fall and continuing to rent the unit while attending university.

Clearly there was some discussion between the Lessor and Lessees about subletting the unit during the summer. The Appellant recalls the conversation took place in the parking lot and he was encouraged by the Respondents to find someone to occupy the unit for the summer. The Respondents stated the discussion took place on the telephone and they underlined the condition that they be contacted and have the opportunity to meet and approve any potential lessees found by Mr. McQuaid before subletting their unit. The Respondents planned to return in the fall and stated they had personal belongings in the unit that they wanted to remove before anyone else moved in. They wanted to have confidence the apartment would not be damaged.   They also stressed that the Appellant had post-dated cheques and was being paid for the unit and was provided telephone numbers where they could be contacted.

On or about June 1, 2000 Mr. McQuaid stated that a person arrived at Browns Court inquiring about immediate rental of a unit. He would be working at UPEI for the summer months and was interested in a furnished unit.

Mr. McQuaid states that knowing the Respondents unit was furnished and their interest in subletting, he believed he was doing them "a favour" by having this person, his wife and small child occupy the unit. He did not contact Ms. Brooker or Ms. Nisbet for permission to sublet the unit and had not taken any action to notify them that the unit had been subletted.

Late on the evening of June 2, 2000 or early in the morning of June 3, 2000, Ms. Brooker returned from out-of-province, and using her key entered and discovered someone else's belongings in the unit. As outlined at the original hearing this resulted in a rather unpleasant evening for all involved, culminating with Ms. Brooker returning to New Brunswick.

Ms. Brooker put a stop payment on her rent cheques, and within a week the Respondents moved their belongings out of the apartment.

The new people occupying the unit were apparently also upset by the incident and rather than remaining in the unit for the summer they moved out the end of June. Mid July the unit was rented to new lessees.

Mr. McQuaid is seeking retention of the damage deposit of $500.00 to cover lost rent. He claims he lost $200.00 in the month of June because the person subletting was paying $600.00 rather than the $800.00 under the rental agreement signed by the Respondents. He claims sufficient notice was not given and a further $361.00 is due for the period of time the unit was vacant in July. He is also seeking $400.00, claiming a cheque provided by Ms. Brooker for rent was returned because of insufficient funds in her account.

3. Decision

There was a disagreement at the hearing regarding the possible NSF cheque from Ms. Brooker. She claims no knowledge of an NSF cheque and her bank has not made her aware of any such problem. Mr. McQuaid gave an undertaking to the Commission to produce the cheque or a letter from the bank indicating the cheque had been returned due to insufficient funds.

Within hours of the hearing Mr. McQuaid presented the Commission with a cheque signed by Ms. Brooker, dated May 1, 2000 with the notation "May rent" on the memo line. The Royal Bank returned the cheque to the TD Bank and then to Mr. McQuaid due to insufficient funds. It is stamped by the bank so that it cannot be cleared "unless certified".   Certification would require the action of Ms. Brooker and it is clear from the hearing that no such action was taken by her.

The Commission notes that at the rental officer's hearing Ms. Brooker stated she put a stop payment on the rent cheque for May, but acknowledges she owes her share of the rent for that month.   The stop payment action may have resulted in the NSF cheque held by Mr. McQuaid.

As this pertains to the month of May, a period prior to any dispute between the Respondents and Appellant, the Commission finds Ms. Brooker owes rent in the amount of $400.00 for the month of May.

While the Commission believes Mr. McQuaid thought he was "doing them (the Respondents) a favour" by renting the unit for the summer months he should have obtained written agreement from the Respondents prior to renting the unit and permitting new lessees to move in, especially while belongings of the Respondents were in the unit and they were still paying rent.

Section 5 of the Rental of Residential Property Act sets out the requirement for a lessee subletting a unit.

5.       Subletting Premises

(1)    Where a fixed term rental agreement is for a period greater than six months, the lessee may assign or sublet the premises subject to the consent of the lessor, which consent will not unreasonably be withheld or charged for unless the lessor has actually incurred expense in respect of the grant of consent, in which case he shall be entitled to recover such reasonable expenses as were actually incurred.

The Act clearly places the responsibility for subletting on the lessees and requires the agreement of both parties. In the absence of evidence that the Respondents completely delegated that responsibility to Mr. McQuaid the Commission cannot determine the action to be a legal sublet. Regardless of the intent of Mr. McQuaid, it was incumbent upon him to ensure the Respondents agreed with subletting the unit before he permitted anyone to move in.

The Commission agrees with the Rental Officer that written permission should have been obtained from the Respondents to permit rental of the unit for the summer months. At the time the unit was subletted the Respondents were still paying rent and therefore legally occupying the premises.

The Act only permits a sublet where a fixed term rental agreement is for a period greater than six months and the situation is therefore further clouded by the question of whether a rental agreement existed.

While a copy of the agreement was introduced (Exhibit E-7), the Respondents claim not to have received a copy of the agreement.

Section 30.(1) and (2) of the Act sets out the requirements for the lessor to delivery a copy of the rental agreement to the lessee and the impact of a failure to do so.

Delivery of copy of rental agreement

30. (1) Where a rental agreement in writing is executed by a lessee, the lessor shall ensure that a fully executed duplicate original copy of the agreement is delivered to the lessee at the time of signing or within twenty-one days after the lessee signed the agreement.

Failure to deliver, effect of

(2) Where subsection (1) is not complied with, only the provisions of this Act and the standard form rental agreement are binding upon the lessee, and the lessee is not bound by any additional terms contained in the written agreement unless and until it is served on him in accordance with subsection (1).

In the absence of additional information, the Commission confirms the decision of the Rental Officer, that a copy of the agreement was not served and the rental agreement would therefore be month to month.

That being the case, Mr. McQuaid terminated the month to month agreement with the Respondents the day he re-rented the apartment.

It therefore stands to reason that he could not expect to obtain rent payment from the Respondents when another lessee, that he moved into the unit, was occupying the unit. Nor could he expect the Respondents to give proper notice to move out of a unit he had already rented and was being occupied by another lessee.

The Commission therefore finds that the Appellant is not entitled to any additional rent from the Respondents after May 31, 2000.

This would also apply to the matter of the difference in rent between the usual $800.00 and the $600.00 that the new lessee paid. The Respondents did not approve the summer lessee and they did not approve the amount of rent he was to be charged, and since the Rental Agreement (Exhibit E-7) has been determined a nullity, a sublet was not possible.

Form 8, Notice of Intention to Retain Security Deposit (Exhibit E-6) only makes reference to lost rent from June onward and the May NSF cheque. No reference is made to any damage to the unit, and no such claims were made at the hearing.

Since the Commission has confirmed that no rental agreement existed after May 31, 2000 the Respondents are entitled to the return of the damage deposit with interest. Since each paid half the security deposit each are entitled to $260.25.

In the case of Ms. Brooker, she requested the amount be deducted from the May rent owing of $400.00 she therefore owes the Appellant $139.25.

Ms. Nisbet is entitled to her full share of the damage deposit, $260.25. She is also entitled to a refund of her share of the rent for the month of June in the amount of $400.

At the hearing Mr. McQuaid suggests the Director of Residential Rental Property produce a form that both the lessor and lessee would sign to prove each had a copy of the rental agreement. The Commission notes that the Appellant, for his own use and protection, could easily produce such a form. It is also noted that some lessors have lessees sign and date the lessor's copy of the agreement with a statement they received a signed copy.

Having reviewed the material and evidence presented, including the statements from the hearing conducted by the Rental Officer, the Commission reaffirms the finding of the Rental Officer in Order LD01-004 dated January 29, 2001.

Order

WHEREAS Clifford McQuaid filed an appeal dated February 20, 2001 against a decision of the Director of Residential Rental Property;

AND WHEREAS the Commission heard the appeal in Charlottetown on February 22 and April 3, 2001;

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

IT IS ORDERED THAT

The appeal is dismissed;

Order LD01-004 of the Director of Residential Rental Property is confirmed;

The Commission confirms the rental agreement for 71 Browns Court was terminated as of May 31, 2000;

The Appellant shall, within 14 days, refund rent in the amount of $400.00 to Lessee Elaine Nisbet, together with the security deposit and interest in the amount of $260.25 for a total of $660.25; and

Lessee Nora Brooker shall pay, within 14 days, to the Appellant, rent owed in the amount of $139.75.

DATED at Charlottetown, Prince Edward Island, this 10th day of April, 2001.

BY THE COMMISSION:

Maurice Rodgerson, Panel Chair

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.