Caldwell and Valiant Property Management

Factual Background

In Caldwell, the landlord undertook necessary repair/maintenance work to the exterior of an apartment building over a two year period. For eleven months out of twenty-four, extensive repair work was underway which resulted in the following inconveniences for the complaining tenants: at times their windows and doors had to be kept shut; they could not use their balconies for extended periods; they experienced sleep disturbances (one of the tenants worked shifts); air conditioning was not available for extended periods of time; and the tenants had no use of the building’s pool.

The tenants sought an abatement of rent under Section 113(1)(f) of the Landlord and Tenant Act on the grounds that the repair work interfered with their enjoyment of the premises.

After hearing the Application, the Court concluded that the tenants should succeed in their claim for an abatement despite the fact that the landlord was meeting its legal responsibility to keep the premises in a good state of repair.

The Court found that in exchange for a fixed monthly rent the tenants were to receive, among other things, "quiet enjoyment" of their premises. During the construction period, the tenants did not receive quiet enjoyment of the premises and were, therefore, not receiving something which they were paying for and which they were entitled to under their tenancy agreement.

After taking into account the degree of disruption experienced by the tenants, the Court decided to exercise its discretion to grant an abatement of rent. The Judge fixed the abatement at $200.00 per month for eight months and an additional three months of abatement at $125.00.

The Court’s Analysis

In the course of his decision in Caldwell, the Judge observed that the tenancy agreement contained a standard provision that if the tenant believed the landlord was in breach of any covenant, the tenant was obliged to give written notice thereof within thirty days and give the landlord a reasonable period to remedy the breach. A failure by the tenant to give such a notice would deprive the tenant of a remedy. The Court concluded, however, that as the provisions of the Landlord and Tenant Act override any agreement between the parties, the landlord could not restrict the tenant’s right to seek an abatement under Section 113.

The landlord had also argued that an abatement should be refused as it would be unfair to a landlord to have the burden of an abatement imposed where the landlord was simply carrying out its statutory obligations to repair. The Court found that an abatement was nevertheless justified because the tenant was paying rent for something that the tenant was not receiving: i.e. quiet enjoyment of the premises. In the Judge’s words "the tenant should not be expected to share a burden imposed by the Legislature on the landlord". The bottom line for the Judge was that "an abatement of rent is justified when the tenant does not receive, for a significant period of time, a substantial benefit promised by the terms of the lease".

In our view, to avoid the consequences in Caldwell, it would be necessary for a lease to specify that the monthly rent has, as one component, a discount based on the expectation that the tenant’s right to quiet enjoyment could be subject to disruption at some time during the term of the tenancy. The tenancy agreement would further state that, in view of the discount built into the monthly rent, the tenant would not seek a remedy for any substantial disruption of the covenant for quiet enjoyment where the disruption arises as a consequence of the landlord carrying out its statutory obligations under the Landlord and Tenant Act.

It would still be open to a tenant in these circumstances to seek an abatement where the right to quiet enjoyment is substantially interfered with. A tenant might complain that he was under "duress" when he signed the agreement or that the amount of disruption was far greater than that contemplated when the tenancy agreement was signed; nonetheless, such measures offer some protection to a landlord wishing to avoid rent abatements. The landlord could argue that as the tenant was in receipt of a discount to compensate for disturbance, the Court should exercise its discretion to refuse an abatement.

The Caldwell decision illustrates a conflict in provincial policy when it comes to the question of whether a landlord should be subject to a rent abatement when carrying out necessary maintenance and repair work or capital expenditures. Under the Rent Control Act (and prior Rent Control legislation) a landlord’s rent could not be reduced as long as the specific interference with the use of the premises did not exceed a consecutive six month period. Under the Landlord and Tenant Act the rent can be reduced through a court ordered abatement regardless of the duration of the inconvenience to the tenant, unless the duration is so short as not to constitute "substantial interference". Thus, tenants who cannot obtain a rent reduction under Rent Control legislation can potentially obtain a rent abatement under the Landlord and Tenant Act on the same facts.

Cunningham and Whitby Christian Non-Profit Housing Corporation

Factual Background

A tenant/resident of a rent-subsidized housing project applied for an abatement of rent under Section 113(1)(f) of the Landlord and Tenant Act because the Non-Profit Housing Corporation was attempting to prevent the tenant’s fiancé (the Invitee) from entering upon the housing project and occupying the tenant’s unit.

The Invitee had previously been a tenant of the Non-Profit Housing Corporation and his obnoxious and offensive behaviour was the subject of numerous complaints by other tenants: some complaints involved intervention of the Police and Fire Departments.

The housing corporation had served the Invitee with a Notice under the Trespass to Property Act advising him that he was prohibited from entering the rental project and would be charged if he did so. In response, the tenant brought an Application for an abatement because of the landlord’s interference with the tenant’s right to invite whomever she chose to her residence. The Application was granted and an abatement was awarded by the Court.

The Court reasoned that the landlord did not have the right to prevent invitees of a tenant from entering the premises and accessing the tenant’s rental unit, regardless of the Invitee’s behaviour. A landlord only has the right under the Trespass to Property Act to prohibit a person from entering a rental project if the person is not an Invitee of a tenant. In the circumstances, therefore, it was a breach of the tenancy agreement and a breach of the implied covenant of "quiet enjoyment" between the landlord and tenant for the landlord to interfere with the tenant’s right to have invited guests visit. The Court awarded an abatement of 15% of the rent. As the tenant paid only $142.00 per month rent, the abatement was $21.30 monthly.

Comment

In this case, the landlord was attempting to meet its legal obligations and do something positive for the benefit of other tenants. The Invitee had previously been a problem tenant and continued to be the subject of complaints while visiting the tenant at her rental unit. Despite the Invitee’s past and present obnoxious behaviour, the Court felt that the landlord’s interference with the Invitee’s right to visit the tenant warranted payment of "damages" by the landlord for breach of covenant. From the landlord’s perspective, the result may not seem fair.

Landlords frequently encounter problems with non-tenant invitees who may be engaged in criminal behaviour, who verbally abuse other tenants or who otherwise interfere with other tenants’ reasonable enjoyment of their premises. In such cases landlords are expected to exercise their rights to ensure tenants’ rights to quiet enjoyment are not interfered with.

For landlords, the message from the Cunningham case is that it is futile for the landlord to use the provisions of the Trespass to Property Act as a basis for trying to prevent an undesirable Invitee from being at a residential complex . The person is entitled to be at the building so as long as they were invited by a tenant or the landlord of the premises. In many such cases, the undesirable person (i.e. a drug dealer) will be able to find a tenant who is willing to say they made the invitation. It appears the landlord’s only recourse in these circumstances (and this is not always a practical recourse) is to solicit particulars of complaints by other tenants in the complex and to use those complaints as a basis for seeking an eviction of the tenant whose "guests" have committed an illegal act or have substantially interfered with the "reasonable enjoyment" of the premises for all usual purposes by other tenants.

Update on Status of Proclamation of New Tenant Protection Act (TPA)

The new Residential Tenancies Law is now on track to be proclaimed in late fall of this year: anywhere from November to early January.

The Province has publicly said that any capital expenditures undertaken eighteen months prior to proclamation or after first reading of the TPA (whichever is earlier) can be the subject of a Rent Increase Application under the new law. For example, if proclamation is January, 1998, then an immediate Rent Review Application would permit cost recovery for work completed as early as July, 1996. Under the TPA, landlords will receive a better return for dollars spent.

While most landlords in Ontario are restricted by the market place from taking rent increases, the latest news of the eighteen month "capital window" represents an opportunity for some. Capital expenditures incurred in the late summer and fall of 1996 will likely qualify for recovery under the new law.