Citation: Cote v. Armsworthy, 2012 NSSC 15
Date: 20120110
Docket: SAT No. 338464
Registry: Antigonish
Between:
Sophia M. Cote, Charlotte Oosteven, Lesley Tucker
and Alexandria Whitty
Appellants
v.
Allan Armsworthy
Respondent
Judge: The Honourable Chief Justice Joseph P. Kennedy
Heard: April 29, 2011 in Antigonish, Nova Scotia
Counsel: Paul A. Côté for the Appellants
Donald Macdonald for the Respondent
By the Court:
[1] This is an Appeal by four, now or former, students at St. Francis Xavier University (the "Tenants") from the decision of an adjudicator of the Small Claims Court of Nova Scotia, dated 27 September 2010.
[2] The adjudicator varied the order of the Director of Residential Tenancies by setting aside that part of the order directing that the Respondent Landlord repay to the Tenants rent in the amount of $13,580.00. The Small Claims Adjudicator allowed the Landlord to keep the rent received.
[3] The grounds of appeal available from a finding of the Small Claims Court are restricted by s. 32(1) of the Small Claims Court Act to three:
(a) jurisdictional error;
(b) error in law, or
(c) failure to follow the requirements of natural justice.
[4]The Appellants' claim that the adjudicator in this matter made an error in law.
BACKGROUND
[5] On 22 January, 2008, each of the four Tenants entered into a lease with the Landlord.
[6] Each lease provided that:
(a) The Landlord would rent to each tenant premises at 57 Hillcrest Street, Antigonish, Nova Scotia ("the Premises");
(b) The description of the property rented was "one bedroom";
(c) The tenancy was for a fixed term beginning on 1 August 2008 and ending on 30 May 2009 - a year at the university.
[7] In August 2008, the Tenants took possession of the basement of the Premises which consisted of the four bedrooms, a commercial bathroom, a kitchen facility, a laundry room and a room containing an oil fuel tank.
[8] In late January 2009, the Landlord opened up a wall to repair a frozen water pipe disclosing what the Tenants believed to be mould.
[9] The Tenants reacted by vacating the Premises at the end of January 2009, expressing concerns for their health and safety. They collectively made a written complaint as to the state of the Premises to the Town of Antigonish.
[10] The Landlord then filed an application with the Residential Tenancies Board ("the Board") seeking payment of rent to the end of the term, which was May 30th, 2009.
[11] The Tenants also filed an application with the Board upon learning, after having vacated, that the Landlord did not have an occupancy permit for the Premises. The Tenants claimed the lease agreements were therefore void.
[12] The Tenants not only refused to pay the rent to the end of the term, but asked for the return of all rents paid during their occupancy from August 1, 2008 to February 28, 2009.
[13] The Board dismissed the Landlord's claim for unpaid rent after finding that the lease agreements were illegal and a breach of Statutory Condition 1 of s. 9(1) of the Residential Tenancies Act. Further, the Landlord was ordered to return all rents paid.
[14] The Landlord, on appeal to the Small Claims Court, argued that he should be able to retain the rents paid for the period that the Tenants occupied.
[15] Section 9(1) of the Residential Tenancies Act is central to this matter and reads:
9 (1) Notwithstanding any lease, agreement, waiver, declaration or other statement to the contrary, where the relation of landlord and tenant exists in respect of residential premises by virtue of this Act or otherwise, there is and is deemed to be an agreement between the landlord and tenant that the following conditions will apply as between the landlord and tenant as statutory conditions governing the residential premises:
Statutory Conditions
1. Condition of Premises ‑ The landlord shall keep the premises in a good state of repair and fit for habitation during the tenancy and shall comply with any statutory enactment or law respecting standards of health, safety or housing.
[16]In Small Claims Court, the adjudicator addresses the facts in pages 3 and 4 of his decision.
[17] The Landlord purchased the Premises in the summer of 2005. It was a two bedroom residence. By the Fall of 2005, the Premises had been converted to a seven bedroom residence with units in both the upstairs and the basement. A building permit had been obtained from the Town of Antigonish in August 2004, after the renovations had been commenced.
[18] When the building permit was issued it came with a covering letter which set out that construction must comply with the Nova Scotia Building Code, that building inspections would be requested by the Landlord "when all framing is completed, before drywall is installed and a final inspection before occupancy".
[19] The Landlord did request the framing – pre-drywall inspection, however did not request any further inspections and the renovated building was occupied by student tenants in the Fall of 2005 without a final inspection being accomplished and without an occupancy permit being issued.
[20] Section 8 of the Building Code Act provides that no person shall occupy or change the occupancy in a building unless a permit has been issued.
[21] On the February 19, 2009, after the Tenants had vacated the Premises and complained to the Town, it was visited by the building inspector for the Town of Antigonish ("the Inspector") and found to be non-compliant with respect to both the Building Code and the Fire Code.
[22] The Inspector's report was in evidence before the adjudicator.
[23] Specially, the Inspector found in part:
(a) The exit stairway from the basement lacked fire separation;
(b) The furnace room in the basement lacked fire separation;
(c) The basement room containing the oil tank lacked fire resistance;
(d) The basement lacked fire resistant walls and ceiling;
(e) The basement lacked proper air circulation;
(f) There was mould and mildew behind the refrigerator;
(g) The exit stairway lacked headroom clearance; and
(h) The basement failed to satisfy minimum fire, building, and safety standards.
[24] In September 2009, after the Building Code and fire safety concerns listed in the report had been addressed, the Inspector did issue an occupancy permit for the Premises.
THE SMALL CLAIMS COURT DECISION
[25] The adjudicator accepted the Tenants' argument that the failure to obtain an occupancy permit caused the leases to be void.
[26] He found the leases to be "both illegal and subject to forfeiture" and determined that the Landlord had no valid claim for rents after the Premises were vacated (p. 9 of the his decision).
[27] The adjudicator then addressed the Tenants' claim to the return of the rents paid during occupancy.
[28] He found that notwithstanding the illegality of the leases and the Landlord's failure to satisfy "minimum fire, building and safety standards" the Tenants were not entitled to the recovery of the rent monies paid.
[29] He stated (at page 17) that he was not satisfied that the Tenants had proven that there was mould in the building or that the air quality was the cause of their health problems.
[30] He said, "I was not convinced on the evidence before me, that either of these issues caused dangerous conditions for the Tenants or that the premises was unfit for occupancy" [pages 17 and 18]. "In my opinion, none of the concerns raised by the Tenants, i.e., the alleged mold or lack of an air exchanger were related to the Landlord not having obtained an occupancy permit in 2005."
[31] Having so found, the adjudicator noted that the Landlord "incurred expenses related to all of his tenancies, including utilities, which is included in the rents."
[32] The adjudicator found that the Premises was "not unfit for occupancy" notwithstanding non-compliance with s. 9(1) of the Residential Tenancies Act. This was, say the Tenants, a mistake in law.
[33] It was argued that this mistake in law led to his determination that the rents paid were not to be returned to the Tenants.
STANDARD OF REVIEW
[34] The leading description of the standard of review governing an appeal of a decision of a Small Claims Court adjudicator is from Brett Motors Leasing Ltd v Welsford (1999), 181 NSR (2d) 76, 1999 CarswellNS 410 (SC), where Saunders J (as he then was) said:
14 One should bear in mind that the jurisdiction of this Court is confined to questions of law which must rest upon findings of fact as found by the adjudicator. I do not have the authority to go outside the facts as found by the adjudicator and determine from the evidence my own findings of fact. "Error of law" is not defined but precedent offers useful guidance as to where a superior court will intervene to redress reversible error. Examples would include where a statute has been misinterpreted; or when a party has been denied the benefit of statutory provisions under legislation pertaining to the case; or where there has been a clear error on the part of the adjudicator in the interpretation of documents or other evidence; or where the adjudicator has failed to appreciate a valid legal defence; or where there is no evidence to support the conclusions reached; or where the adjudicator has clearly misapplied the evidence in material respects thereby producing an unjust result; or where the adjudicator has failed to apply the appropriate legal principles to the proven facts. In such instances this Court has intervened either to overturn the decision or to impose some other remedy, such as remitting the case for further consideration.
[35]This description of the appeal court’s duty has been reaffirmed in many subsequent decisions.
[36] Small Claims Courts deal with appeals from the Residential Tenancies Boards as trial de novos.
[37] Section 17C(5) of the Residential Tenancies Act reads:
(5) The Small Claims Court shall determine its own practice and procedure but shall give full opportunity for the parties to present evidence and make submissions.
[38]Because the Small Claims Court is acting, in essence, as a court of first instance, it is reasonable to conclude that the applicable standard of appeal – based on Brett Motors – is the same as it would be for any other Small Claims Court decision.
FINDING
[39] The adjudicator made a mistake in law.
[40] He contradicted himself, having found that the Landlord was in breach of Statutory Condition 1 of s. 9 of the Residential Tenancies Act - therefore having found that the Landlord did not keep "the premises in a good state of repair and fit for habitation during the tenancy and did not comply with any statutory enactment or law respecting standards of health, safety or housing", the adjudicator then finds that the Premises was "not unfit for habitation" when determining the rent return issue.
[41] In finding the Premises "not unfit for occupancy" the adjudicator disregarded the building inspector's report of 6 March 2009 which pointed out that the Premises "failed to satisfy minimum fire, building and safety standards" and the letter from the inspector dated September 14th, 2009 which was sent in conjunction with the final issuing of the occupancy permit. This letter states:
Having carried out a number of inspections at the above noted premise with regards to building code and fire safety concerns listed in correspondence to your attention, dated March 06, 2009, and whereas all concerns have been addressed and no unsafe conditions are known to exist, I am hereby issuing an Occupancy Permit for that portion of this dwelling that underwent renovations.
Please find enclosed, your copy of the permit. Thank you for your continued cooperation during this process and congratulations on the safety upgrades to this existing dwelling.
[42] This letter makes clear that the permit was issued only after "safety conditions" were addressed and "safety upgrades" met.
[43] This premises could not have been fit for occupancy during the period of time that the Tenants resided there.
[44] The adjudicator tied the finding of fitness for occupancy to his decision not to require the return of the rents.
[45] Having decided that the leases were void and illegal - having found that the Premises, at time relevant, were not in compliance with Statutory Condition 1 of s. 9(1) of the Residential Tenancies Act - having found that no further rent was owing, the adjudicator should have ordered the return of the rents paid by the Tenants.
[46] To allow the Landlord to retain the rents paid, under these void leases, for premises that were subsequently determined to have safety issues would be to disregard statutory obligations in place to insure the safety of unsuspecting tenants.
[47] By so doing he is ignoring the manifest intent of s. 9 of the Residential Tenancies Act that rental properties be safe to live in.
[48] The adjudicator's finding not to return the rent money paid was motivated significantly by his concern that the Landlord had paid for heat and utilities to the benefit of the Tenants during their occupancy. He stated at p. 24 of the decision:
Even if the court were to find there was non-compliance with the legislation, in my opinion it was not of such a nature that would demand having all the rental payments paid during the Tenants' occupancy, use and enjoyment of the premises, returned to them. In my opinion, this would result in an unjust enrichment to the Tenants and would seem grossly misappropriate to the breach, bearing in mind the facts in this case.
[49]This issue was addressed at the hearing when counsel for the Tenants agreed that this Court might allow the Landlord to retain his demonstrable costs related to the period of occupancy.
[50] I find this to be a fair compromise. It is my understanding that there was not going to be any difficulty in determining and apportioning these costs.
[51] I find that the adjudicator erred in law in his determination that the Premises was "not unfit for occupancy" and that therefore the rent monies paid need not be returned to the Tenants.
[52] The Tenants will have their rent monies returned less the demonstrable Landlord costs which I restrict to heating and utilities during the period of occupancy.
COSTS
[53] Pursuant to the Small Claims Court Regulation 18 costs, in favour of the Appellant, are limited to a $50.00 Barristers fee and "out of pocket expenses approved by the judge".
Kennedy, C.J.S.C.