Rent Increase - Re: Nullity (LTB)

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Date Retrieved:	2024-04-27
CLNP Page ID:	740
Page Categories:	[Payment of Rent (LTB)]
Citation:	Rent Increase - Re: Nullity (LTB), CLNP 740, <https://rvt.link/ae>, retrieved on 2024-04-27
Editor:	Sharvey
Last Updated:	2024/01/19

Residential Tenancies Act, 2006, S.O. 2006, c. 17

116 (1) A landlord shall not increase the rent charged to a tenant for a rental unit without first giving the tenant at least 90 days written notice of the landlord’s intention to do so. 2006, c. 17, s. 116 (1).

(4) An increase in rent is void if the landlord has not given the notice required by this section, and the landlord must give a new notice before the landlord can take the increase. 2006, c. 17, s. 116 (4).

...

120 (1) No landlord may increase the rent charged to a tenant, or to an assignee under section 95, during the term of their tenancy by more than the guideline, except in accordance with section 126 or 127 or an agreement under section 121 or 123. 2006, c. 17, s. 120 (1).

121 (1) A landlord and a tenant may agree to increase the rent charged to the tenant for a rental unit above the guideline if,

(a) the landlord has carried out or undertakes to carry out a specified capital expenditure in exchange for the rent increase; or

(b) the landlord has provided or undertakes to provide a new or additional service in exchange for the rent increase. 2006, c. 17, s. 121 (1).

(2) An agreement under subsection (1) shall be in the form approved by the Board and shall set out the new rent, the tenant’s right under subsection (4) to cancel the agreement and the date the agreement is to take effect. 2006, c. 17, s. 121 (2).

...

135.1 (1) An increase in rent that would otherwise be void under subsection 116 (4) is deemed not to be void if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months. 2020, c. 16, Sched. 4, s. 24.

...

212 Substantial compliance with this Act respecting the contents of forms, notices or documents is sufficient. 2006, c. 17, s. 212.

Schell v. Clarke, 2020 ONSC 7169 (CanLII)

[4] The following facts are uncontested. The tenant rented a house in Wingham, Ontario from the landlord from May 1, 2015 to April 21, 2017, when the tenant vacated the house. The tenancy agreement was originally a month-to-month oral agreement, with the tenant agreeing to pay $650 per month. In February 2016, the landlord informed the tenant that he was planning to sell the house, thereby ending the tenant’s tenancy. In February 2016, the tenant made the landlord an offer to pay more to remain in the house. The parties negotiated a rental increase of $200 per month, changing the rental price from $650 per month to $850 per month. A written lease recording the $850 per month rental price was signed in February 2016. The landlord did not serve a notice of rent increase on the tenant.

[6] Subsequent to the LTB’s Decision, the Court of Appeal for Ontario released its decision in Honsberger et al. v. Grant Lake Forest Resources Ltd., [2019] ONCA 44, which clarified that upon the expiry of an existing lease, where the parties and premises that are the subject of a tenancy agreement do not change, a new tenancy agreement cannot be created outside of the rental increase constraints of s.120 of the RTA.

Honsberger v. Grant Lake Forest Resources Ltd., 2019 ONCA 44 (CanLII)

[28] First, s. 113 of the RTA expressly permits the establishment of a new rental rate with a new tenant. Recognition of a similar carve-out for an existing relationship involving the same tenant, the same landlord, and the same premises would undermine the purpose of the Act. A renewing tenant is not a new tenant. Put differently, the appellant’s proposed statutory interpretation is inconsistent with the scheme of the RTA’s rent control provisions considered as a whole. The structure and purpose of the Act would be undercut if at the commencement of each year, a landlord could increase the rent simply by entering into a new tenancy agreement. A tenancy agreement involving the same parties and the same premises requires the landlord to give 90 days’ notice of an increase pursuant to the clear provisions of the RTA. This conclusion is also consistent with this court’s decisions in Matthews and Nanne v. 3011650 Nova Scotia Limited (Michipicoten Forest Resources), 2015 ONCA 391.

[32] There is also no basis for the appellant’s remaining arguments. As is clear from the RTA and particularly s. 3 of the Act, the parties’ freedom to contract is expressly made subject to the RTA’s application. The Divisional Court did not err in refusing to validate rental increases that, despite their origin in contract, were constrained by the provisions of the RTA that required written notice. See also 1086891 Ontario Limited v. Barber, 2007 CanLII 18734 (ON SCDC), 284 D.L.R. (4th) 568 (Div. Ct.).

Price v. Turnbull's Grove Inc., 2007 ONCA 408 (CanLII)

[23] I agree with the appellant that the challenged rent increase imposed by TGI in November 2002 was void by operation of s. 127(4) of the Act and, consequently, that it was of no [page647] legal force or effect. I also agree that ss. 141(1) and (2) of the Act do not operate in this case to render the void rent increase lawful. It follows, in my opinion, that the Divisional Court erred by failing to consider the effect of ss. 127(1) and 127(4) of the Act in the circumstances of this case and by holding, as it appears to have done, that the rent increase attacked by the appellant was deemed to be lawful by virtue of s. 141 of the Act. I reach these conclusions for the following reasons.

[37] Thus, a rent increase rendered void under s. 127(4) of the Act for non-compliance by the landlord with the mandatory notice requirement of s. 127(1) is not merely unlawful -- it is a nullity. It is as if the increase never occurred. Accordingly, in the case of a void rent increase, there is nothing to be 'saved' by the curative provisions of s. 141.

Williams v 1175326 Ontario Ltd., 2016 ONSC 7781 (CanLII)

[6] In late 2015, the respondent, along with other tenants, filed an application for a rebate alleging that the landlord had been charging unlawful rent since at least December 31, 2012. The Board heard the matter over two days. With the exception of three tenants, the Board dismissed the tenants’ application. In doing so, the Board determined that the unsuccessful tenants (who included the respondent) had not challenged the rent increases within the one year limitation provided for in the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (“RTA”) and thus had lost their rights to dispute the rent increases.

[7] The unsuccessful tenants sought a review of the Board’s decision. That review was dismissed.

[12] The tenant, both before the Board and now on this appeal, places her entire argument on her reading of the decision in Price v. Turnbull's Grove Inc. (2007), 2007 ONCA 408 (CanLII), 85 O.R. (3d) 641 (C.A.) which she says renders the manner, in which the landlord proceeded with its Notices of Rent Increase, a nullity. The respondent needs to have the finding of a nullity, in other words that the Notices of Rent Increase are void, in order to avoid the effect of s. 136 and the one year limitation period.

[13] The Board held that the respondent’s reading of Price was fundamentally flawed. The Board held that the principle in Price only applied if the landlord failed to give the requisite written notice. It did not apply if the flaw in the Notice related to other matters, such as an improperly calculated or claimed rent increase.

[14] In my view, the Board’s conclusion in this regard is correct. It is supported by the plain language of the decision in Price. The respondent’s contention that the finding of a nullity can go beyond the notice requirement is not only incorrect, it is expressly rejected by that decision. Indeed, the factual circumstances raised in this matter were specifically addressed in Price, where Cronk J.A. said, at para. 42:

Fifth, while Part VI of the Act prohibits various conduct in respect of rent and rent increases, only conduct concerning a rent increase that offends s. 127(1) renders the increase void under Part VI. This signifies the importance of the s. 127(1) notice requirement to the rent control scheme established by the Act. For example, rent charged in contravention of s. 121(1) of the Act - rent in an amount that is greater than the lawful rent permitted under Part VI of the Act - is not deemed to be void under Part VI of the Act. This type of “tainted” rent charge, therefore, could be subject to the remedial effect of s. 141(1) of the Act in a proper case. Similarly, where proper notice of a proposed rent increase is given in conformity with s. 127(1) of the Act, but the amount of the proposed increase exceeds the permitted increase prescribed by the guideline under the Act - in contravention of s. 129(1) of the Act - s. 141(2) may be engaged.

[17] One other argument should be addressed. The respondent points to the fact that there was an earlier decision of the Board, involving this same building, that concluded, in similar circumstances, that the Notice of Rent Increase was void. I make the following observations with respect to that argument. First, the Board member here was not bound by an earlier decision of another Board member. While consistency is desirable as a general rule, it is not a requirement. Second, the earlier decision turns on a misreading of the decision in Price. The Board member here was not obliged to follow a flawed decision, even in the interests of consistency. Third, the earlier decision is not, of course, binding on this court. This court is, however, bound by the decision of the Court of Appeal.

[18] The appeal must therefore be quashed.

TSL-57945-14-RV (Re), 2015 CanLII 69071 (ON LTB)

1. This request for review is about the proper interpretation and application of the Court of Appeal’s decision in Price v. Turnbull's Grove Inc., 2007 ONCA 408. The Tenant argues that the Member erred in law by failing to declare that notices of rent increases (‘NORIs’) served on her were void and of no force and effect.

2. On the basis of the submissions made in the request, I am not satisfied that there is a serious error in the order or that a serious error occurred in the proceedings. I say this for the reasons set out below.

8. To meet the requirements of s. 116 a NORI must be in the prescribed form, it must set out the landlord’s intention to increase the rent and the amount of the new rent, and it must be served at least 90 days in advance of the effective date of the rent increase. Pursuant to s. 116(4) a NORI that does not meet these requirements is “void”.

9. The rule set out by the Court in Price v. Turnbull's Grove Inc. is that a NORI that is “void” because it does not meet the requirements of what is now s. 116 cannot be saved or deemed to be a valid increase by operation of s. 136. This is because the word “void” means the notice is a nullity just like if it had never been served at all. The Court explained that what is now s. 136 only applies to NORIs that meet the requirements of s. 116 but are otherwise invalid.

12. The Landlord served a NORI on the Tenant with an effective date of October 1, 2013. That NORI would appear to be invalid as it purported to raise the rent more than the guideline amount that was in effect in 2013. But it was not “void” as it was in the prescribed form, set out the rent increase, and was served at least 90 days prior to the effective date. This application was filed with the Board on November 17, 2014 which is more than one year after the effective date; no other application was filed after October 1, 2013, in which the lawful rent was an issue. So as a result of s. 136 the Member found that the increase taken October 1, 2013, is deemed to be lawful.

SWT-00924 (Re), 2008 CanLII 82447 (ON LTB)

5. I believe the RTA and the Court of Appeal decision make it clear that where notice to increase the rent did not give 90 days notice, the notice is void – a nullity – as though it never existed. Section 116(4) of the RTA makes it clear that a landlord must first give a new, valid, notice before any increase may be taken from a tenant. The Landlord’s honest, but mistaken, belief while understandable cannot change the application of the law. In light of this, I must find that none of the Landlord’s notices complied with either the TPA or the RTA. Accordingly, all of the Landlord’s notices are void and it is as though they never existed.

6. As the Court of Appeal explored in Price, even though the Tenant has paid the unlawful rent for more than 12 months this rent cannot be “deemed lawful” as section 136 is not intended to make a void increase lawful. Therefore, this section will not be applied in this case.