Cite as: Silver Star Properties Ltd. v. DeMerchant, 1990 NSCO 3 .. PROVINCE OF NOVA SCOTIA COUNTY OF HALIFAX I NTH E C 0 U OF DISTRICT NUMBER BETWEEN: SILVER STAR PROPERTIES LIMITED, - and SHIRLEY DeMERCHANT David P.S. Farrar, Esq., solicitor for the applicant Andrew Pavey, Esq., solicitor for the respondents. 1990, November 19, Cacchione, involves a notice of objection recommendation of the Halifax and Tenancies Board dated July 13, 1990. The facts as found by the are that the tenants entered in the standard form with question on March 1, 1989. lease was $500.00 per month. renewable at the expiration the landlord or the tenant months notice to terminate prior to of the lease. In the present given and the lease automatically March 1, 1990. Despite the specific provision with respect to rent payable contained in the lease, the rent was raised from $500.00 per month to May 1, 1989. This was a three percent guideline increase on the base rent which was ) C.H. 70655 N T Y C 0 U R T
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Appellant & IMELDA FAJARDO, Respondents J.C.C.: This case filed against a County West Residential Residential Tenancies Board into a year to year lease respect to the premises in The rent provided for in the The lease was automatically of the term unless either had provided at least three the anniversary date case no such notice was renewed itself as of $515.00 per month effective accepted, albeit apparently
- 2 reluctantly by the tenants. month prior to the expiration of the existing lease term, and its automatic renewal on provided a notice of proposed an application being made to for increase in rent with respect notice provided a proposed effective date of the requested rental increase as of May 1, in fact three months from the the ef fecti ve date of the proposed increase. did offer to allow the tenants to terminate their renewed lease on three months notice during the term of the lease if they were unhappy with the in the amount of $580.00 per not to exercise this option. Board, after having made these findings of fact, recommended to this court that the rental 1990 should be found to be a repayment of $195.00 should to the tenants. By notice of objection filed on July 16, 1990 and amended on July 23, 1990 the objectors following grounds of objection. 1. That the Residential in its interpretation of s.ll Tenancies Act. 2. That the Board erred s.4 of the Standard Form Lease. 3. That the Board erred its jurisdiction in interpreting s. 3 (2) Review Act. 4. That the Board erred the landlord owed the tenants the sum of $195.00. On January 30, 1990, one March' 1, 1990, the landlord rent increase pursuant to the Rent Review CO!Tll1lission to the premises. The 1990, a notice period of issuing of the notice to The landlord rental increase obtained month. The tenants chose The Residential Tenancies increase effective May 1, invalid and that therefore be made from the landlord in this matter list the Tenancies Board erred of the Residential in its application of in law and exceeded of the Rent in· determining that
- 3 5. That the Board erred that a properly worded lease agreed to by the tenants might provide for an increase term as approved by the Rent Review Commission. 6. That the Board erred opinion for the clear wording of the Rent Review Act. At the hearing of this objection grounds of objection to one, in law in interpreting the Residential concluding that a landlord cannot increase the rent during the term of the lease? Put Does a landlord in Nova Scotia have the right under either the Residential Tenancies Act the Rent Review Act, R.S.N.S. demand an increase in rent notice at any stage of the tenancy? The issue is an important one, will be the first in examining the Residential Tenancies Act, Act. In addition, similar tenancies acts across the country have yet to face judicial interpretation [Alberta Landlord 1980, c.L-6, s.13; B.C. Residential 1984, c.1S, s.18; Manitoba Landlord and Tenant Act, 1987, c.L-70, s.112; Newfoundland Act, S.N. 1989, c.44, s.17; Tenancies Act, R.S.S. 1978, c.R-22, s.39J. One does not have to look landlord - tenant law to discover that the landlord-tenant relationship is one which has in the common law 'of contract, Canadian Law.of Landlord and in law in suggesting in rent during the in substituting its of the provisions counsel narrowed the namely: Did the Board err Tenancies Act by another way the issue is: R.S.N.S. 1989, c.401, or 1989, c.398, to unilaterally from a tenant with 90 days and indeed this decision the meaning of s.ll of and s.ll of the Rent Review provisions in residential and Tenant Act, R.S.A. Tenancy Act, S.B.C. R.S.M. Residential Tenancies Saskatchewan Residential far into any treatise on its roots firmly planted see Williams & Rhodes, Tenant 6th ed., Carswell,
- 4 Toronto, 1988, at and Tenant 12th at p.3. As such, the contractual acceptance and consideration agreement entered into by a same manner as it did to other Redman's correctly observed: An agreement for a lease and in accordance with the contract law it will not until their minds are at which are cardinal to every and also upon matters that are part bargain. Redman, Op.Cit, at p.90. The "cardinal" matters Hill and we consider today as the essential terms of the contract. The essential .terms go to the very heart of the certainty of the contract, and as such, terms must be founded upon the ~utual intent of the parties. Gilchrist Vending Ltd. v. Sedley D.L.R. (2d) 24 (Sask.Q.B.) judgment as to the effect of a contract of vending machine services that failed to identify the type of shuffleboard that was the object of the contract: " ... because this very important agreement is uncertain and term (in fact it goes to the basis of the plaintiff's claim) I must hold the a reement void for uncertaint and so unenforceable." Emphasis mine In the case of an uncertain J. properly pointed out, referring of the English Law of Contract, Press', 1964, at p. 26, that the courts are at liberty doctrines of offer, applied to any tenancy landlord and tenant in the contracts. As Hill and is an ordinary contract, general principles of be binding on the parties one, both upon matters agreement for a lease of the particular Redman refer to are what any interpretation of those solid foundations of the As Tucker J. found in Hotel Ltd. (1967), 66 at p.26, in delivering a clause of the is not a meaningless non-essential term, rucker to Anson, Principles 22nd ed., Oxford, Clarendon
- 5 ... if the. contract contains sUbsidiary provision .... to without significance, and rest of the contract without the meaningless [Emphasis mine] Nicolene Ltd. v. Simmonds, [1953] Shipping Co. Ltd. v. Anglo-Saxon A.C. 133. Over the years the essential for lease have been thus identification of the parties, Warner v. Willington ( 1856 ) , identification of the premises v. De Trafford (1862), 30 commencement and duration of Bayley (1860) 12 Digest 136, other consideration to be paid, 36 L.J. Ch.474. The primary on the certainty of the latter uncerainty has on the enforceability of the lease entered into by the tenant and landlord. Following first principles, to the prospective tenant, the for lease, and consideration in the out. In leases, for example is established and most often subdivded into twelve monthly instilments. As such the price for the tenancy is clearly set out, the tenant knows how to pay during the life of the can plan accordingly, knowing receive for the premises. an indef ini te, but stike it out as being to give effect to the term. II 1 Q.B. 543; Adamastos Petroleum. Co.Ltd., [1959] terms of an agreement determined as (a) the the lessor and the lessee, 12 Di ge s t 145 , 988, (b) to be leased, Lancaster Digest 418, 794, (c) the the term, Fitzmaurice v. 916, and (d) the rent or Dolling v. Evans ( 1867) , focus of our attention is and the effects its the landlord makes an offer tenant accepts the offer form of rent is laid in a one year lease, rent much he or she wi 11 have lease, and the landlord how much he or she will
- As with any non-unilateral contract, the landlord-tenant contract can only be modified parties. At common law, rental imposed during the term of two conditions were met: (a) by the tenant, and (b) there had to be consideration given by the landlord, such as the undertaking that improvement would be made to the premises v. Read (1832), 110E.R. 330,3B been adopted in Jenkins R. Lewis Ch. 477, at p. 497. As such, parties to the tenancy agreement were preserved in theory in that the consideration for the premises was ultimately a matter demanding the certainty of mutual agreement. The Introduction of the Residential Tenancies Act in 1970 Codification and Protection of Tenant and Landlord Rights The legal regime surrounding in Nova Scotia was significantly introduction of the Residential Following the lead taken by Scotia Legislature established the Law of Landlord and Tenant Committee reported, among other of urban rental housing in situation where the landlord tenants, demanding rights and rental payments that exploited the vulnerable bargaining position of prospective tenants, The Report of the Select Committee and Tenant,1970. Based on the recommendations the Nova Scotian Legislature the Residential Tenancies Act in 1970. wi th three main purposes in mind: 6 with the consent of both increases could only be the lease by a landlord if there had to be consent within a year: Donellan & Ad.897, a view that has & Son v. Kerman, [ 1971 ] the bargaining rights of both landlord and tenant law altered with the Tenancies Act in 1970. Ontario in 1968, the Nova the Select Committee on in 1970. The Select things, that the lack Nova Scotia had led to a could pick-and-choose their on the Law of Landlord of the Select Committee, quickly proceeded tq pass The Act was enacted firstly, to codify and
- 7 protect the rights of the the rights of the landlord; fast, eff icent, and cost-ef f ective resolution thereunder. Given this background to the Act, it is fair to conclude that one of the primary public Legislature was to provide better protection for the marketplace that unjustly favored the landlord. the Legislature sought to establish that ensured basic rights were both parties to a residential tenancy. Rental Increases Mid-lease Under the New To the extent that the Residential not alter the common law relationship between the landlord and tenant, the contractual relationship at common law remain intact: Barron v. Bernard, (1972), 33 D.L.R. (3d) 371 becomes to what extent have their contractual rights altered negotiation of "rent" and "Alterations in the rent" the life of the lease? If we follow the argument case, they would interpret s.ll of the Residential Tenancies Act as permitting landlords increase ln rent 'simply on of what stage in the tenancy the parties are at. 11 provides as follows: Duty of notice to increase rent 11 (1) When a landlord the rent payable in respect of residential premises tenant; secondly, to codify and thirdly, to provide a means for dispute policy objectives of the a regime that would afford rights of the tenant in a In short, a statutory regime able to be exercised by Regime Tenancies Act did principles governing that (N.S.Co.Ct.). The question the parties to a lease had with respect to the during of the appellants in this to unilaterally demand an 90 days notice, regardless Section intends to increase
- 8 occupied by or in the possession landlord shall give to the tenant a notice in writing stating the landlord's intention rent and the proposed amount least three months before demands or negotiates an increase in the rent payable by the tenant. Frequently of Increase (2) Notwithstanding no landlord shall increase the rent for residential premises more than once in whether or not the twelve-month a period of time before the this subsection. If this was the proper interpretation following would result: On and tenant sign a one year lease for a residential premises. The rent is agreed to be $6000.00 On February 1, 1990, or any the landlord could decide to increase the rent to per month or $6420.00 per year. this increase as of May 1st, would put the tenant in an unreasonable position for tenant is obligated under s.lO(l)(a) Tenancies Act not to unilaterally until the 12 month period of the tenancy is up, in so doing, the tenant is obligated to give the landlord ~hree months notice of his a result, the tenant is forced not certain, a rent that was adequate certainty under the no idea how great the increase increase was from $500.00 per/month to The c0ntract price is left too open ended. The interpretation of s.ll as suggested by the appellants goes against the very grain of the object of the Residential Tenancies Act which is to protect of a tenant, the to increase the of the increase at the landlord receives, any other enactment, a twelve-month period, period includes coming into force of of s .11, then the January 1, 1990 a landlord or $500.00 per month. date after January 1, 1990, $535.00 and they could demand 1990. This interpretation the of the Residential terminate the lease and also intention to terminate. As to pay a rent that was not clearly defined with lease, for the tenant has could be. What if the $800.00 per/month? the bargaining rights
- 9 of both the landlord and the is intended to protect the tenant the landlord into giving up a landlord is permitted to in rent from the tenant, only to after the tenant is statutorily locked into the agreement for 12 months, then the result serves to violate .the well established bargaining rights of the tenant. has to be certain in its essential essential term of the tenancy rent alterable on the wish of contract void for uncertainty. no other interpretation than in the rent payable under a of both parties. Consequently, s .11 (1) of Act means that the three month come three months before the expiration of the lease period. In a one year lease, this means ninth month. It is this reading which respects both the intention of the bargaining rights still available common law. It is when the renewal that the landlord can assert his increase. At that point, if accept the price for the rental premises, then the landlord can refuse to renew the lease, will accept his offer, complete with increased rent. Section 11(1) uses the words negotiates". "Receives" is meant landlord cannot receive a rental increase before the notice requirement is met. "Demands" acknowledges that at the end tenant. Moreover, the Act from being coerced by his contractual rights. If hide anticipated increases sneak the increases in The contract terms. Rent is an agreement. To leave the one party can render the As such, there can be to find that any alteration lease requires the consent the Residential Tenancies notice requirement is to before the end of the and this reading alone the legislature and to the tenant at Tenancy Agreement is up for proposed rental the tenant chooses not to and seek out a tenant that "receives, demands, or to guarantee that the clearly recognizes and of the lease, the landlord
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is in the position to demand it recognizes his bargaining "negotiates" acknowledges that still possess their common renegotiate the contract price lease. Consequently, the landlord three months notice to the negotiations for an increase the lease. The Effect of the Rent Review Act The rent payable during a tenancy is a matter of contract to be negotiated by the parties. out earlier, and the only constraint power is the Rent Review Act. controls increases in rent a prescribed statutory limit, the spiralling costs of rental Scotia. The limitation restricts the tenant from agreeing to premises under the tenancy agreement statutory percentage increase of the Rent Review Commission of the Rent Review Act explicitly acknowledges of the parties to a tenancy the s.9 restriction, wherein it provides agreement, negotiated between no rent increase or a lesser percentage increase in rent than is provided under s.8 prevails over the Act. Section 11(1) of the Rent every landlord shall give three increase to the tenant prior the tenant. This provision is same manner as section 11 of the rental price he wants, power. The use of the word the tenant and landlord law contractual right to during the term of the is obligated to give tenant before he commences in rent during the term of This was clearly laid on this bargaining Section 8 of that Act on residential premises over a measure designed to control accommodations in Nova both the landlord and increase the rent of the over the prescribed in the absence of approval under s.9. Section 3(2) the right agreement to bargain within that a tenancy the parties, providing . for Review Act provides that months notice of a rent to increasing the rent of to be interpreted in the the Residential Tenancies
- 11 Act, however, its scope is the Rent Review Act is solely landlord to provide a . notice tenant prior to the end of the lease can be afforded the opportunity the offer for lease renewal before they ultimately decide whether or not to accept the offer Residential Agreement at the term. In other words, just to give three months notice of the Residential Tenancies Act, to give three months notice tenant, so that the tenant can about continued leasing of it is a legislative scheme designed to protect the integrity of the contractual rights of both parties to the lease. Section 4 of the Standard Form Lease The Standard Form Lease, N.S. to s. 26 of the Residential Tenancies regulated and mandatory provisions be read as containing. The the following paragraph under s.4. RENT: The rent may be increased written notice in accordance of the Rent Review Act but once in a twelve month attach a separate Schedule proposed or approved rent. Wi th respect to the provision, what the statute failed to this tenet of statutory interpretation Standard Form Lease means no must furnish notice of rental increase to the tenant three narrower. Section 11(1) of aimed at requiring the of increased rent to the so that the tenant to effectively evaluate or to terminate the expiration of its current as the tenant is required of termination under s.lO the landlord is required of rental increase to the make an informed decision the premises. Once again, Reg. 270/87 made pursuant Act, prescribes the that a lease shall Standard Form Lease contains on three(3) months with the provisions no more frequently than period. The landlord may B giving details of the regulation cannot do provide for. It flows from that s.4 of the more than that the landlord
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months prior to the end of interpretation ~s a natural, made under s.26(1)(c)(iv) of Act was made to describe the in accordance with s.l of that Act. of the regulation is derived interpretation of which was delivered above. Further, it is important extinguish bargains to which of entering. To this end we of English law verba ita sunt intelligenda ut res magis yaleat quam pereat, Hillas and Co.Ltd. v. Arcos Ltd. (1932), 147 L.T. 503 (H.L.). In short, bargain. achieved by the parties, interpret this provision as leaving the entire lease void for uncertainty, we must interpret s. 4 landlord to furnish notice of tenant at least three months prior to the end of the rental period. Conclusion The modern law of landlord is one of mixed statute and to the negotiation of rent and alterations in rent during the term of the lease, the and the tenant remain at common rental increases over the Review Act need the approval of the Rent Review Commission. Consequently, I find in favor cf the respondents, holding that the three month notice increases under both the Residential the Rent Review Act must come at least three months prior to the expiration or possible the rental period. This given that the regulation the Residential Tenancies rent payable under a lease In effect the power from the Act, s.ll, the that the courts do not parties had every inention must follow the old maxim in order to preserve the and to avoid having to as obligating the any rental increase to the and tenant in Nova Scotia common law. With respect rights of both the landlord law with one exception prescribed rate in the Rent requirements for rental Tenancies Act and renewal of the tenancy.
- 13 Further, it is the finding of this court that the landlord cannot unilaterally impose or during the term of the lease. essential term to the lease like rent requires the consent of both parties. In this manner, intention and wording of the legislature, common law doctrine of certainty in contracts that still governs the modern Residential to say that a properly worded mid-term rental increase can lease at the time of the signing is clear that a rental increase will the tenant agrees to it then void for uncertainty. The notice of objection is dismissed without costs. demand an increase in rent The alteration of an we respect both the as well as the Agreement. This ~s not lease, providing for a never be drafted. If the on its face occur during the term and the contract will not be Judge of the County Court of District Number One
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