CLAIM NO. 263885
Date: 20060330
IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
(Citation: Tucker v. Killiam Properties Inc., 2006 NSSM 6)
BETWEEN:
Name Kenneth James Tucker
Appellant
Name Killam Properties Inc.
Respondent
Appearances
Kenny J. Tucker, Appellant/Tenant, on his own behalf
Carolyn Dunford, Property Manager, on behalf of the Respondent Landlord Killam Properties Inc.
D E C I S I O N
[1] This appeal by the tenant of a Residential Tenancies Order dated March 14, 2006 came on before me on March 28, 2006. The Order under appeal requires the tenant to pay the landlord the sum of $1,215.00, and further orders the tenant to deliver vacant possession of a premises known municipally as 21 Plateau Crescent, Apt. 502, Halifax, NS to the landlord.
[2] For reasons set out below, the appeal is granted, and the Order of the Residential Tenancies Officer is vacated and set aside.
The Facts
[3] I heard the evidence and submissions of Carolyn Dunford, on behalf of Killam Properties Inc. (“Killam”), and of the tenant, Kenny J. Tucker. There was little real disagreement between the two as to the salient facts of the case.
[4] In December, 2005, Mr. Tucker was an employee of Killam Properties Inc. He worked as a labourer. At that time Killam, which owns or manages a number of residential rental properties, had a special “deal” for its employees. It would provide its employees with a special reduced rent, and would waive a security deposit for those of its employees who also became its tenants.
[5] On December 21, 2005, Mr. Tucker entered into a Standard Form of Lease with Killam. Pursuant to the terms of the lease, Mr. Tucker and Killam entered into a year-to-year lease, with a tenancy to take effect on February 1, 2006. The rental was $607.50 a month. There is a $25.00 NSF fee for all returned cheques. Under Clause 11 of the Lease, which deals with security deposits, the lease provided that a security deposit was “not required.”
[6] Ms. Dunford testified, and Mr. Tucker did not dispute, that the “normal” rent for the apartment unit in question was $675.00 a month; and that tenants were usually required to provide a security deposit.
[7] Mr. Tucker asked Ms. Dunford whether he could move in “a week or so early”. She agreed. The evidence on the reason for this was a little unclear, but I am satisfied on the evidence of both Ms. Dunford and Mr. Tucker that part of the consideration for permitting Mr. Tucker to move in early was his agreement to provide certain repairs and maintenance to the apartment unit, including installing some interior doors and painting the apartment.
[8] Ms. Dunford said she thought he would move in some time in January 2006, whereas he apparently in fact moved in at the end of December, 2005. However, she did not object to the time. As she said, she “let January slide, he is in there getting the apartment ready.”
[9] Mr. Tucker ceased to be an employee of Killam on January 23, 2006. This happened after he had moved into the apartment, but before the commencement date of the lease. Ms. Dunford asked Mr. Tucker for an increase in the rent, saying that since he was no longer an employee, he was no longer entitled to the rent of $607.50, but should instead be paying $675.00 a month. She requested a security deposit for the same reason.
[10] Mr. Tucker apparently moved out of the apartment into his common-law mother-in-law’s apartment (which was in the same building), and then back into the apartment. He apparently moved back and forth a few times, although as I understood the evidence on each occasion he left some of his furniture in the apartment. I find that he never did give up possession of the apartment, given that he retained the keys to the apartment; he always had some of his furniture in the apartment; and as I understood the evidence, the moves back and forth were at least in part a function of the threats of the landlord to evict him if he did not pay the new rent it was demanding.
[11] Killam accordingly applied for an Order terminating the tenancy and paying outstanding rent. The application was made February 3, 2006 (that is, three days after the commencement of the tenancy under the agreement).
[12] The hearing before the Residential Tenancies Officer took place on March 6, 2006.
[13] The Residential Tenancies Officer’s Order is dated March 14, 2006. It is unclear whether or not he gave an oral decision on the date of the hearing. In any event, on March 7, 2006, Mr. Tucker provided two cheques in the amount of $607.50 to the landlord, one of which he subsequently stopped payment on.
The Issues
[14] As I see it, there are three issues in this appeal:
a. what was the rent?
b. is a security deposit payable by the tenant?
c. is the tenant liable in respect of any outstanding work he was to have performed on the apartment?
Issue One: What was the rent?
[15] As I have noted, the lease dated December 21, 2005 was a Standard Form of Lease pursuant to the Residential Tenancies Act, R.S.N.S. 1989, c. 401, as amended. The tenancy was to take effect on the 1st of February, 2006. It was to run from year-to-year, and pursuant to Clause 7, the tenant “will pay rent of $607.50 per month.”
[16] In arguing that the rent “should be” $675.00 a month, the landlord is in effect arguing that the rent:
a. was really $675.00 (because the tenant was no longer an employee); or alternatively, that
b. it could increase the rent to $675.00 once the tenant ceased to be an employee.
Was the rent “really” $675.00?
[17] At some level to pose the question is to answer it. The lease on its face was for a rent of $607.50. The landlord’s submission in effect amounts to an argument that there was a side deal, or a side agreement, that the lease could be amended regardless of the provisions of the Residential Tenancies Act; or that there was some other agreement regarding rent in addition to the lease that was entered into.
[18] This submission cannot stand. Section 3 (1) of the Act provides that the Act applies “[n]otwithstanding any agreement, declaration, waiver or statement to the contrary.” The lease in question was a Standard Form of Lease under the Act, and pursuant to s. 8 (3) of the Act “[a]ny alteration of or deletion from provisions that a Standard Form of Lease is required by regulation to contain is void.” I am accordingly of the view that any attempt to alter or amend or avoid a clear written provision in a lease, other than pursuant to the provisions of the Act, is void.
[19] I am also of the view that there are significant policy reasons that should make this Court slow to uphold the kind of arrangement the landlord is advocating. To permit the landlord here to do what it is attempting to do would be to permit it to avoid or frustrate the Act. Moreover, it would permit the landlord as employer, or indeed the landlord as landlord, to threaten its tenants with increased rents if they did not comply with its demands, either as an employer or as a landlord. The Court should be slow to permit a situation where the landlord could have one rent if the tenant satisfied certain conditions, but another rent if the tenant failed to satisfy those conditions.
[20] I am accordingly satisfied that the rent in this case is $607.50.
Can a landlord increase the rent once the tenant ceased to be an employee?
[21] In my opinion, the answer to this question must be “no”. The Act is clear that a landlord cannot increase rent during the original term of a lease: s. 11 (1). It is also clear that rent may be increased on a year-to-year lease (which this was) only on certain conditions. One of those conditions is that notice of the rent increase must be given four months before the anniversary date: s. 11 (2) (a).
[22] Accordingly, the landlord’s attempt to increase the rent from $607.50 to $675.00 was a clear violation of s. 11 (1) of the Act. Its “notice” to that effect was similarly a violation of s. 11 (2) (a).
Could the landlord apply for early termination?
[23] It will be seen from the above that the landlord’s application to the Residential Tenancies Board was clearly contrary to the provisions of the Act. The application was being made in respect of the alleged non-payment of what was in effect an illegal rent increase. The application ought to have been dismissed out of hand.
[24] It is clear of course that the tenant was in fact in default of rent as of the date of the original application (February 3, 2006), inasmuch as he had not paid the rent of $607.50 due under the lease.
[25] Even here, however, the landlord’s application was contrary to the Act. A landlord may apply for early termination of a lease when a tenant is in arrears for 30 days, not three days: s. 10 (6). The best that can be said in this case is that the tenant was in arrears as of the date of the hearing. However, the Act does not say that a landlord may apply on the basis that the tenant will be in arrears as of the date of the hearing. I would have thought then that the Residential Tenancies Officer ought to have dismissed the application on that ground alone, subject to any argument concerning anticipatory breach (which does not arise on the facts of this case given that the tenant was not refusing to pay any rent, only the illegal rent that the landlord was demanding).
Issue Two: Is a security deposit payable by the tenant?
[26] The landlord next argues that since the tenant is now a “normal” tenant, he should be expected to pay the “normal” security deposit required of all “normal” tenants. The waiver of the security deposit given in the circumstances of this case was a function of his status as an employee, and once he lost that status he was no longer entitled to the waiver.
[27] In my opinion the situation here is a little different than that involving the landlord’s argument with respect to rent.
[28] First, the Residential Tenancies Act is not as clear regarding changes in security deposits as it is with respect to changes in rent. In particular, there are no express bars or requirements dealing with when and how security deposits may be required, other than that they cannot be more than half the rent: s. 12 (2).
[29] Second, the lease on its face does indicate that while the landlord does not require a deposit, it is because “n/a - employee”. In other words, the requirement is “not applicable” because the tenant is an employee. There is an ambiguity on the face of the lease that certainly permits a reference to the oral part of the agreement which both the landlord and the tenant accepted was in place: that is, that the security deposit requirement was waived because of his status as an employee.
[30] Third, since a security deposit is not rent, and remains the property of the tenant (subject to any claim the landlord may have on it in the event of damages), there is not the same social policy respecting changes in security deposits amounts during the term of the tenancy, at least if such changes had been agreed to by the parties. Indeed given that rents go up from time to time one would expect similar changes in the amount of a security deposit to take place from time to time.
[31] I am accordingly satisfied in the circumstances of this case that the tenant does have to provide a security deposit. I should note, however, that in the circumstances of this case, the landlord must give the tenant time to bring the security deposit up to date. I make this finding because when the waiver agreement was entered into the landlord knew that the event that triggered the end of the waiver (the tenant’s loss of status as an employee) would be precisely an event where the tenant’s financial situation might be somewhat precarious. In other words, it would know that the waiver was being granted at a time when the tenant was in fact more able to pay a security deposit rather than less. That being the case, it would not in my view be equitable to require the tenant to pay the entire security deposit up front, at least in circumstances where the landlord knew or ought to have known that the end of the waiver would occur at precisely a juncture where the tenant might have difficulty coming up with the deposit.
[32] I accordingly order that the security deposit is to be $303.75 (being one half of the monthly rent), and that it is to be payable in twelve installments of $25.31 each. These payments are to be treated as payments towards a security deposit, not rent, and hence are to be returned to the tenant (with appropriate interest) when the tenant leaves (subject to any lawful claim the landlord may have on it at the time).
Issue Three: Is the tenant liable in respect of any outstanding work he was to have performed on the apartment?
[33] The landlord made some submission that the tenant had taken possession of the apartment before the commencement date of the lease in consideration of his promise to effect certain repairs or maintenance to the apartment. I am satisfied that assuming there was such an agreement, and assuming there was a breach of it, any such breach would not be sufficient to warrant termination of the lease. I make this finding for several reasons.
[34] First, as I see it the general intent of the “agreement” is contrary to the provisions of the Act, inasmuch as it is the landlord who is under a duty to provide premises that are in a state of good repair.
[35] Second, even if there was a separate “agreement” to permit early rent free possession of the unit in exchange for certain work done, the landlord did not establish on a balance of probabilities the value of any such work to be done. Indeed, the tenant did give evidence that at least some of the work was done.
[36] In these circumstances I am not satisfied that the evidence amounts to a ground to justify early termination of the lease.
Order
[37] For the reasons set out above, I allow the appeal and set aside the Order of the Residential Tenancies Officer dated March 14, 2006.
[38] In its place, I make an Order as follows:
a. the lease between the landlord and the tenant is a year-to-year lease, with a monthly rent of $607.50, payable the 1st of every month, commencing February 1, 2006.
b. the tenant is in arrears for the month of March, so must pay to the landlord $607.50 plus the NSF charge of $25.00, for a total of $633.50;
c. the tenant must commence monthly payments of $607.50 in respect of rent as of the 1st of April, and every month thereafter during the currency of the lease; and
d. the tenant must pay $25.31 a month, in addition to rent, such payments to be credited towards a total security deposit of $303.75.
Dated at Halifax, Nova Scotia )
this 30th day of March, 2006 ) ___________________________
) ADJUDICATOR
) W. Augustus Richardson, Q.C.
276036.1