Docket A-005-01
IN THE MATTER of an appeal, under Section 25 of the Rental of Residential Property Act, by Bill McInnis agent for McInnis Property Development (the Lessor) against Order No. LD01-062 of the Director of Residential Rental Property dated April 6, 2001.
Order LR01-05BEFORE THE COMMISSION
on Thursday, the 24th day of May, 2001.
Maurice Rodgerson, Panel Chair
James Carragher, Commissioner
Arthur Hudson, Commissioner
Order
Participants1. Appellant: McInnis Property Development
Agents: Bill and Kathy McInnis
In attendance: Bill McInnis2. Respondents: Marty Dalton and Evelyn MacDougall
Also in attendance: Ethel Ellsworth, Advocate for Evelyn MacDougall
Arnold MacDougall, father of Evelyn MacDougall
Reasons for Order
1. Introduction
Bill McInnis, agent for McInnis Property Development is appealing Order LD01-062, dated April 6, 2001, of the Director of Residential Rental Property. This Order directs the Lessors to pay $100.00 to the Lessees.
The Commission heard the appeal on May 14, 2001, in the Access PEI Office, Summerside, PEI.
2. Background
The Lessees responded to a newspaper ad for an apartment at Cheslie Court in Summerside, PEI.
There is conflicting direct testimony about the discussions that took place that day and what comments, decisions and promises were made.
The Lessors state they had a tenant moving out of unit 26 and that is the apartment which was available for rent. The Lessors could not gain access to unit 26 because the tenant was still occupying the unit and they had not received permission to enter. They asked the occupants of unit 24 if they could show that apartment as it was the same layout as the unit becoming available, but was one floor up, directly above the unit for rent. The available unit was in the basement and they made it clear to the Lessees the unit becoming available was unit 26, not the one they actually viewed.
The Lessees agreed to rent the apartment and provided a one hundred dollar security deposit. A receipt was issued (Exhibit E-3) which indicates the amount is for apartment #26 at 403 Chelsie, and the Lessors state it was made clear the deposit would not be refunded if they did not take the apartment.
Later in the month Mr. Dalton called to say he was not taking the apartment, and was informed the deposit would not be returned.
The Lessees state they viewed apartment unit 24 and it was their understanding that it was the unit available for rent and the one they wanted to occupy. Both Lessees say the occupants of the apartment told them that they planned to move out. Several days later Mr. Dalton says he was told by the occupant of that apartment that they were not moving, and later in the month he let the Lessors know that he did not want the unit. He contends he wanted unit 24, not unit 26.
Evelyn MacDougall says the apartment she viewed was the one they wanted to rent and the occupants indicated to her that they were looking at moving out.
When contacted by the Rental Officer the occupants of unit #24 state they did not indicate to the Lessees they planned to move out, in fact they have occupied the apartment for some 13 years and had no intention of moving, and are still in the unit. They had agreed to show the apartment in response to a request from Mr. McInnis and had very little conversation with the Lessees.
The question dealing with which apartment was for rent is answered by the receipt (Exhibit E-3) which clearly states Apt. #26. The Lessees received a copy of the receipt and would have known at that point that a deposit was made on unit #26.
Ms. MacDougall stated under oath at the hearing it was unit 26 they were going to rent.
The occupants of unit 24 have stated they did not plan to move and had not indicated to the Lessees that they were considering a move, and still occupy the same unit.
Mr. Dalton stated under oath he knew two days after the visit to the apartment that unit 24 was not available, yet he made no effort to contact the Lessor to have the matter clarified, and did not speak to the Lessor until some weeks later.
The units are on two different floors of the complex and should have helped avoid possible confusion resulting from viewing an apartment not available for rent.
The question of the purpose of the $100.00 deposit is not completely clear, other than it was intended to hold the apartment.
The receipt says, "deposit for Apt #26" and includes the names Marty Dalton and Evelyn MacDougall and a phone number. It does not say it is a security deposit, nor does it state it is a deposit towards rent.
The Act defines security deposit as:
(r) "Security deposit" means money or any property paid or given by a lessee of residential premises to be held by or for the account of the lessor as security for the performance of an obligation or the payment of a liability of the lessee"
Given the broad definition, the Commission is of the opinion that the payment in this case meets the definition of security deposit. The liability of the lessee is to rent the apartment, the obligation of the lessor is to hold the apartment for the lessee.
In finding the payment to be a security deposit the Commission must then deal with the matter of Form 8.
Section 10(5) of the Rental of Residential Property Act states:
"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 or such longer period as the Director may permit, serves the lessee with a notice of intention to retain security deposit in the form prescribed by regulation."
The Commission finds the situation before it to be rather unique and one that may not have been contemplated by the legislation. The Lessor is required to file a Form 8 with the Lessee, but that would normally happen in a situation where the Lessee had occupied a unit and a full lessor/lessee relationship was established. That did not happen in this case.
The Act sets out the requirements for serving of notices:
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.(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
(a) by serving it on any adult person who apparently resides with the lessee;
(b) by posting it in a conspicuous place upon some part of the premises or a door leading thereto: or
(c) by sending it by ordinary, certified or registered mail to the lessee at the address where he resides.
The hands of the Lessor were somewhat tied in this particular case as the Act contemplates knowledge that was not available. The Lessors did not have an address for the Lessees and did not know what community they were from, so could not personally serve the notice nor send it by mail. As the Lessees had never occupied an apartment, posting the notice in a conspicuous place upon some part of the premises could not be met. While both Appellants would occupy the apartment, they no longer live together, adding further challenge to the serving process.
The Commission must also call upon its own experience in this case. Commission staff had to resort to the highly unusual action of placing an open newspaper advertisement to contact the Lessee, Evelyn MacDougall. Correspondence from the Director of Residential Rental Property to the Lessees was returned due to 'unknown address'. The phone number listed on the receipt (Exhibit E-3) was no longer valid. Mr. Dalton and Ms. MacDougall did not attend the original hearing, although Ms. MacDougall did contact the Rental Officer after the hearing.
Section 10(5) of the Act does permit the Director, or in this appeal hearing, the Commission, to extend the timeframe for the filing of a Form 8; however, such a provision must be weighted carefully so as to ensure the protection and fairness contemplated by the Act.
The Commission is satisfied that this case represents an unusual set of circumstances.
As a result of the hearing, addresses are now available for both the Lessees. The Commission could return the matter to the Office of the Director of Residential Rental Property and permit the filing of the Form 8 by the Lessors and the Form 9 by the Lessees, however the Commission is cognizant of the fact that this matter has gone on for some time and such action would further postpone a final resolution.
It is also clear from the hearing that the information that would be provided in both Form 8 and Form 9 has already been stated before the Commission.
Section 26 (1) of the Rental of Residential Property Act states:
An appeal to the Commission shall be by way of a re-hearing, and the Commission may receive and accept such evidence and information on oath or affidavit as in its discretion it considers fit and make such decision or order as the Director is authorized to make under this Act.
The Commission has therefore reviewed the information before it, the information provided at the original hearing and at the appeal hearing and after careful consideration finds the appeal is upheld.
The Commission believes it must comment on the absence of an address. The matter would be much more direct if a proper address for the Lessees had either been obtained or provided at the time the Lessees visited the apartment complex, and it is unfortunate that no address for the Lessees was supplied or obtained which could have been written on the receipt at the time it was made out for the deposit.
The Lessors would have been better served if such information had been obtained, not just in terms of filing a Form 8 but also with ongoing contact with a planned Lessee.
The Lessees would have been better served by providing a proper address where they could be contacted or have information sent regarding the apartment and to further demonstrate the commitment made on that day.
It appears to the Commission that both parties acted in good faith regarding the rental. However, as has become evident, the best of intentions can fade in the face of a dispute and give rise to serious divergent interpretations of the same event.
3. Decision
The $100.00 deposit is determined to be a security deposit and therefore can be retained by the Lessor for outstanding rent. As the Lessees had agreed to rent the unit, provided a deposit, and declined to move in, at close to the end of the month resulting in the unit being vacant, the Lessor can claim lost rent.
Given the difficulties involved in this specific case the Commission extends the timeframe for filing a Form 8 and accepts the information provided at the hearing as information that would have been provided in a Form 8.
Order
WHEREAS Bill McInnis, agent for McInnis Property Development filed an appeal dated April 19, 2001 against a decision of the Director of Residential Rental Property;
AND WHEREAS the Commission heard the appeal in Summerside on May 14, 2001;
NOW THEREFORE, for the reasons given in the annexed Reasons for Order;
IT IS ORDERED THAT
- The appeal is allowed;
- The $100.00 deposit is awarded to the Lessors.
DATED at Charlottetown, Prince Edward Island, this 24th day of May, 2001.
BY THE COMMISSION:
Maurice Rodgerson, Panel ChairJames Carragher, Commissioner
Arthur Hudson, 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.