Notice of Rent Increase (N1)

Increase Rent on Consent

Residential Tenancies Act, 2006, S.O.

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.

123 (1) A landlord may increase the rent charged to a tenant for a rental unit as prescribed at any time if the landlord and the tenant agree that the landlord will add any of the following with respect to the tenant’s occupancy of the rental unit:

1. A parking space.

2. A prescribed service, facility, privilege, accommodation or thing. 2006, c. 17, s. 123 (1).

Application

(2) Subsection (1) applies despite sections 116 and 119 and despite any order under paragraph 6 of subsection 30 (1). 2006, c. 17, s. 123 (2).

124 An agreement under section 121 or 123 is void if it has been entered into as a result of coercion or as a result of a false, incomplete or misleading representation by the landlord or an agent of the landlord.

125 A landlord shall decrease the rent charged to a tenant for a rental unit as prescribed if the landlord and the tenant agree that the landlord will cease to provide anything referred to in subsection 123 (1) with respect to the tenant’s occupancy of the rental unit.

Contractual Basis for Rent Increases

Heger v. Varajao et al., 2010 ONSC 4603 (CanLII)

C. The requirements for a valid lease

[93] “To be valid, an agreement for a lease must show (1) the parties, (2) a description of the premises to be demised, (3) the commencement and (4) duration of the term, (5) the rent, if any, and (6) all the material terms of the contract not being matters incident to the relation of landlord and tenant, including any covenants, exceptions or reservations”: see Canada Square Corp. et al. v. VS Services Ltd. et al. (1981), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250 at 258-59 (C.A.), 1981 CarswellOnt 124, at para. 21, citing Williams, Canadian Law of Landlord and Tenant (4th ed., 1973), at p. 75.

[94] “[R]equirement (6) . . . relates to material terms. It comes into play only in certain cases. It may be said now that conditions (1) to (5) are invariable requirements”: see Canada Square Corp. et al. v. VS Services Ltd., et al., ibid.

TET-05754-10 (Re), 2010 CanLII 52145 (ON LTB)

2. In a ruling by the Divisional Court in “Opara v Cook” the Court stated “Ordinary rules of contract law apply. There is no unilateral right to rescind a contract that has been duly entered into by the parties simply because the effective date of the contract has not been reached”. In this matter the parties entered into a rental contract and the Tenant wanted to unilaterally rescind his offer to rent. The Tenant resolved his domestic situation and decided to back out of the contract. As cited above this is not permitted under the ordinary rules of contract law.

TNT-71808-15 (Re), 2015 CanLII 76626 (ON LTB)

3. It is not in dispute that the Landlord called the Tenant to inform him that the rent would be increased. This would not have been necessary if there was no previous agreement on the amount of the rent. In Opara v Cook (2008) O.J. No 1934 (Ont. Div. Ct.) the court stated with respect to tenancy agreements, “Ordinary rules of contract law apply. There is no unilateral right to rescind a contract that has been duly entered into by the parties simply because the effective date of the contract has not been reached”. Likewise a party does not have the ability to unilaterally change the terms and conditions of such a contract.

Opara v. Cook, 2008 CanLII 22923 (ON SCDC)

[6] A tenancy agreement came into effect on December 11, 2006 upon the agreement being reached between the parties and the deposit being paid. There is no real dispute that such an agreement was reached. Mr. Opara purported to unilaterally terminate that agreement on December 13, 2006. The only real issue is whether he was entitled to do so. In this regard, ss. 9(1) and 9(2) of the Tenant Protection Act are irrelevant as they deal only with when the “term” of the tenancy commences. This has nothing to do with whether either party can rescind the agreement prior to the date of occupancy. Ordinary rules of contract law apply. There is no unilateral right to rescind a contract that has been duly entered into by the parties simply because the effective date of the contract has not yet been reached.

Drewlo Holdings Inc. v. Custidio 2009 CarswellOnt 9151

1. Custidio signed a lease. She was a tenant and not a prospective tenant when she repudiated the lease. Bd decisions have interpreted "prospective tenant" as someone at the application stage. That is not the case here where a tenancy agreement was entered into. Since Custidio was not a prospective tenant, S.107 of the Residential Tenancies Act does not apply. There is nothing in S.106 to require the Landlord to refund the deposit in these circumstances. There is nothing to distinguish this case from the Divisional Court case in Opara v. Cook, 2008 CarswellOnt 2747 (Ont. Div. Ct.).

Drewlo Holdings Inc. v. Weber, 2011 ONSC 6407 (CanLII)

[1] Drewlo appeals an order of the Landlord and Tenant Board dated February 3, 2011 and a Review Order of February 8, 2011 holding that a rent increase of 9 percent levied against pet owning tenants was an impermissible premium or penalty proscribed by Section 134(1)(a) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the RTA) , and as such interfered with Weber’s reasonable enjoyment of her apartment. The Board awarded an abatement of the increased rent charged pursuant to Section 31(1)(c) of the RTA. The appellant submits that the abatement remedy is available only if an application is brought under Section 29 of the RTA. It is not an available remedy, the appellant submits, under Section 135(1) of the RTA for a breach of Section 134.

[2] For the reasons that follow we disagree.

[9] In our opinion, it was appropriate for the Board to have recourse to Section 202 of the RTA to ascertain the real substance of the rent increase. Section 14 of the RTA voids prohibitions in leases against pet ownership. The Act also provides a mechanism for a landlord to recover compensation for damage caused by pets and in certain circumstances, to obtain an order terminating a tenancy because of a pet. The Board found that the real substance of the rent increase was to extract a premium or penalty from pet owning tenants. Although taking the position on the hearing before us that the real substance was irrelevant, Drewlo conceded that the finding was reasonable on the evidence before the Board. The Board then found that “…a tenant’s reasonable enjoyment of the property…includes the expectation that they [sic] will not be made subject to premiums, penalties or other charges for otherwise lawful conduct.” We find that was a reasonable finding that was open to the Board.

Service of NORI - Re: Failed to Serve

TSL-72945-16 (Re), 2016 CanLII 53015 (ON LTB)

12. Moreover, I note that, on October 30, 2015, some five months before the Landlord filed the within application and the Tenant became aware of these proceedings, the Tenant delivered a letter to the Landlord stating, in part, “I have never been notified of any rent increase since the initial increase to $1015 in April 2014.” The Tenant then proceeds to ask the Landlord for information and clarification about the arrears claimed in the N4 notice. Equally telling, is the Tenant’s statement in the said letter where he informs the Landlord as follows: “If rent is going up, notify me, and I will pay the increase (if it is reasonable). I can pay $1050 monthly. That is not the issue.” The Tenant’s letter, in my view and for the reasons stated, corroborates his testimony that he was not served with a NORI 90 days prior to April 1, 2015. It appears that the Landlord’s response to the Tenant’s letter was to file this application with the Board.

13. For these reasons I find, on a balance of probabilities, that the Landlord failed to serve the Tenant with a NORI 90 days prior to April 1, 2015 and, accordingly, the rent increase claimed by the Landlord to have taken effect on that date is unlawful.

TSL-80962-17 (Re), 2017 CanLII 60295 (ON LTB)

20. The Act and the Board’s Rules require a landlord to provide a tenant with documents, including NORIs, and, if they are served in accordance with the Act and Rules, they are deemed to have been served whether the tenant receives them or not. It is only when documents are not served in accordance with one of the permissible methods set out in subsection 191(1) of the Act or Rule 5 that a landlord must prove the tenant actually received them (pursuant to subsection 191(2) of the Act).

21. Here, the certificate of service provided by the Landlord states that the NORI was served to the Tenant, by AC, in accordance with one of the permissible methods set out in subsection 191(1) of the Act. In particular, by placing the document under the door of the rental unit on August 16, 2016. Moreover, AC’s affirmed and uncontradicted testimony was to the same effect. I further note that the Tenant acknowledged that he received the N5 notice of termination that was served to him, by AC, at the same time as the NORI. As well, NO, who initially testified that he was unaware of the NORI at issue, later conceded that it is possible that the Tenant received the NORI and did not bring the document to his attention. NO also testified that he was unaware that the Tenant was served with the N5 notice on August 16, 2016—something readily admitted by the Tenant.

22. AC was cross-examined by the Tenant’s legal representative during the sitting of this matter on March 27, 2017. His testimony going to the service of the NORI to the Tenant remained unshaken, was provided in a straightforward fashion and was wholly devoid of internal inconsistencies and was consistent with the documentary evidence provided.

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.

Lawful Base Rent

TSL-29748-12 (Re), 2012 CanLII 98084 (ON LTB)

11. As a result, I am satisfied that on January 1, 2012 the lawful rent was $970.71.

12. Unfortunately for the Landlord it then compounded the problem caused by its miscalculation by serving a notice of rent increase on the Tenant for June 1, 2012 that used as the starting point for the calculation the amount of $970.73 instead of the lawful rent of $970.71. As the guideline increase amount in 2012 is 3.1% the maximum amount the Landlord could increase the rent to in 2012 by serving notice of rent increase is $1,000.80. However, the notice of rent increase served on the Tenant by the Landlord purported to raise the monthly rent to $1,000.82 which is $0.02 more than the lawful amount permitted.

13. The second argument made by the Landlord in its submissions is that its calculations and notices should be found to “substantially comply” with the Act. This submission is based on section 212 of the Act which says: “Substantial compliance with this Act respecting the contents of forms, notices or documents is sufficient.” In support of its argument the Landlord’s representative provided me with two cases: a decision of the Divisional Court called Grand Canyon Properties Ltd. V. Corinne S. Enright (April 23, 1993; Court File No. 200/92); and an order of the Board dated February 3, 2009 issued with respect to Board file number TNL-18527.

15. As best as I can understand the decision in Grand Canyon Properties it would appear that the case involved a notice of rent increase which the Divisional Court found “substantially complied” with the requirements of the RRRA. Apparently the trial judge in that case found that the base amount on the notice of rent increase on which the increase calculation was made was incorrect, and from that concluded the notice was invalid. Unfortunately, the decision and the excerpts from the factum provided do not explain the Court’s reasoning with respect to substantial compliance. As a result, the case is not very helpful. I would say however, that if a notice of rent increase misstated the current rent or the dollar amount of the increase but nonetheless requested a new rent amount that was equal to or less than the lawful rent, then I too would find that notice to be in substantial compliance. I say this because the point of a notice is not the base amount for the calculation, but rather the new amount of rent that the landlord is demanding.

20. With respect to the application here the problem with the Landlord’s notice of termination is that it does not accurately set out the amount of rent arrears due which is a mandatory requirement of section 59 of the Act. The problem with the Landlord’s notice of rent increase is that it purports to raise the rent by more that the guideline amount which is in contravention of section 111 of the Act. I do not believe I can simply ignore the mandatory nature of these provisions in the Act and waive their application, even where the mistakes made were in good faith or not misleading.

21. As a result, I find that the notice of termination served on the Tenant is invalid in that it did not accurately set out the amount of rent arrears that were due when it was served. I also find that the notice of rent increase effective June 1, 2012 is invalid as it purported to raise the rent in excess of the lawful rent. This means the lawful rent continues to be $970.71.

22. In the Landlord’s submissions it indicated that if I found its notice of termination to be invalid, it did not wish to proceed for an order for arrears only. As a result, the Landlord’s application shall be dismissed.

TEL-86883-17-RV (Re), 2019 CanLII 126904 (ON LTB)

17. In very general terms, under the Act the lawful monthly rent is the rent that is charged at the beginning of the tenancy plus any lawful increases or decreases.

18. That general rule is found in section 113. But that provision explicitly states it is subject to section 111 which is about rent discounts. In other words, discounts like the ones offered here are permitted. I agree with the Tenant that they can be very consuming and even misleading because most people would think the lawful monthly rent charged is the amount the Tenant must actually pay. When rent discounts are involved that is actually not the case.

19. The other limitation on the general rule is s. 136. That provision stands for the proposition that where a tenant receives a notice of rent increase under the Act that meets all of the legal requirements of the Act, but gets the amount of the increase wrong, that increase becomes lawful if a year passes without it being an issue raised in an application to the Board.

20. This application was filed with the Board on December 15, 2017. So section 136 means that any notice of rent increase served on this Tenant prior to December 15, 2016 is deemed to be lawful regardless of the amount of the rent claimed as long as the notice otherwise meets the requirements of the Act.

21. So whether or not the former landlord was right or wrong to raise the lawful monthly rent to $877.81 on June 1, 2016, is no longer an issue that the Board can engage with. The NORI served by the former landlord meets all of the requirements of the Act. More than a year passed before an application was filed with the Board in which the rent charged is an issue. Pursuant to subsection 136(1), $877.81 is deemed to be the correct lawful monthly rent as of June 1, 2016 because of the passage of time.

O’Shanter Development v. Bernstein, 2018 ONSC 557 (CanLII)(DIVISIONAL COURT)

[12] The Board identified that the central issue to be determined in the case was whether the Landlord’s notices of rent increase comply with the requirements of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (RTA). The Board noted that the Landlord’s representative agreed at the hearing that, if the Board determines that the Landlord’s notices of rent increase are defective, the Landlord’s applications to terminate the tenancy and evict the Tenant for non-payment of rent must be dismissed.

[22] I agree with the Tenant’s position that the rent control scheme and the notice requirements under s. 116 of the RTA are a core function wholly within the Board’s specialized expertise. In these circumstances, deference is afforded to Board Member Cho’s decision. (Onyskiw at paras. 35 and 36)

[32] I agree with the position of the Tenant on this issue. I am satisfied that Board Member Cho considered all of the Landlord’s submissions within the context of the evidentiary record before him, the relevant section of the RTA and case law and the submissions of counsel. The central issue to be determined by the Board was the validity of the Addendum. In doing so Board Member Cho acted reasonably.

[37] As noted, in determining that the remedy of estoppel was not available to the Landlord, the Board relied on the Court of Appeal decision of Price v. Turnbull’s Grove which held that a rent increase that is void under the RTA is of no force and effect. In agreeing with the Tenant’s submission that where a matter is a nullity, the remedy of estoppel is not available, the Board went on to say at para. 7 of the decision:

I agree, because a nullity by definition is something that holds no legal force and has no legal validity. A rent increase that is void under the Act is therefore void, ab initio. Because section 3 of the Act does not permit parties to contract out of the Act’s protections, or otherwise waive their rights and obligations under the Act, I am not persuaded by the Landlord’s representative’s submission that the Tenant’s consent to previous orders concerning the lawful rent estops the Tenant from challenging the rent at this time. Indeed, prohibiting the Tenant from raising the validity of the Landlord’s NORIs at the hearing could lead to an absurd result, if the Board were to uphold and legitimize an invalid rent increase. Such a result would offend the purpose of the Act, which is, in part, ‘to provide protection for residential tenants from unlawful rent increases and unlawful evictions”.

[38] What is important to note is that the NORIs that the Tenant challenged as being void, were dated October 25, 2011 and November 29, 2012. They were served on her and other tenants in her building seeking rent increases above the guidelines commencing in 2012 and 2013 respectively. Those applications came before the Board and, as a result of the Board’s dispute resolution mechanisms, they were settled by reducing both the amount of the increases and the timing of their implementation. Subsequently, the settlements were embodied in the 2012 and 2014 Orders.

[55] The Board also made reference to and relied on s. 3(1) of the RTA in its decision. That section provides that the RTA applies “despite any agreement or waiver to the contrary.” Having regard to the purposes of the RTA as set out in s. 1 which include providing for the “adjudication of disputes and for other processes to informally resolves disputes”, the “agreement” referred to in s. 3(1) cannot be interpreted to prevent an agreement to resolve a dispute before the Board. Otherwise there could never be a resolution of a dispute under the RTA.

TSL-22903-11 (Re), 2012 CanLII 21464 (ON LTB)

7. The second of these arguments is squarely addressed in the Residential Tenancies Act, 2006 (the 'Act') in subsection 119(2). Section 119 reads as follows:

119. (1) A landlord who is lawfully entitled to increase the rent charged to a tenant for a rental unit may do so only if at least 12 months have elapsed,

(a) since the day of the last rent increase for that tenant in that rental unit, if there has been a previous increase; or

(b) since the day the rental unit was first rented to that tenant, if clause (a) does not apply.

(2) An increase in rent under section 123 shall be deemed not to be an increase in rent for the purposes of this section. [Emphasis added.]

8. Section 123 says: “A landlord may increase the rent charged to a tenant for a rental unit as prescribed at any time if the landlord and the tenant agree that the landlord will add any of the following with respect to the tenant’s occupancy of the rental unit… A parking space.”

9. What this means is that the twelve month rule does not apply to increases in the rent that result from a landlord and tenant agreeing to add a service like parking. In other words, a landlord has the right to increase the rent once a year and that right is not affected by tenants choosing to add services between anniversary dates.

10. With respect to the argument that the base rent used on the NORI should have been the amount the Tenant was paying on the date the NORI was served is not an argument explicitly addressed by the Act. That being said, it seems to me that the very concept of an “increase” means that on a certain date the rent will go from A to B and B must be calculated based on A. So if a NORI is served for October 1, 2010 the proper starting rent to base the increase on must be the rent that was in effect for September, 2010. To say that the starting rent should be the amount charged back in May on the date the NORI was served is not particularly logical given the concept of an increase which occurs at one date in time. More importantly, if the argument was accepted it would defeat the explicit intention of subsection 119(2). As a result, I am satisfied that a rent increase that is supposed to be effective October 1, 2010 should be based on the rent charged for September, 2010 plus the increase sought.

7. In my view, it is not the date on which the NORI was prepared that determines its validity; rather, it is the date on which it is served. It is the giving of notice in a form approved by the Board containing the information required by the Act and with the amount of notice required by the Act, which is the prerequisite to the right of a landlord to increase rent under section 116 of the Act. The purpose of giving notice would not be served if the information contained in the notice is inaccurate at the time notice is given. In this case, before the Second NORI had been served, the lawful rent had been established by the AGI Order on November 24, 2016. The requested increase of 3.59% above that lawful rent would not result in a new rent amount of $1,684.60 as was stated in the Second NORI, but would result in a new rent of $1,678.28. Therefore, the information contained in the Second NORI was inaccurate at the time it was given to the Tenant in December, 2016 because it overstated how much the new rent would be if the Landlord succeeded on its second AGI application.

24. I am not convinced that the error relating to the AGI portion of the increase on the Second NORI resulted in any confusion on the part of the Tenant in relation to the guideline portion of the increase. I am also satisfied, pursuant to section 212 of the Act, that the Second NORI substantially complies with the Act in relation to an increase by the guideline amount.

Guide Line Increase

Year	Rate		Year	Rate		Year	Rate		Year	Rate		Year	Rate		Year	Rate
2020	2.2
2019	1.8		2015	1.6		2014	0.8		2013	2.5		2012	3.1		2011	0.7
2018	1.8		2010	2.1		2009	1.8		2008	1.4		2007	2.6		2005	1.5
2017	1.5		2004	2.9		2003	2.9		2002	3.9		2001	2.9		2000	2.6
2016	2.0		1999	3.0		1998	3.0		1997	2.8		1996	2.8		1995	2.9
1994	3.2		1993	4.9		1992	6.0		1991	5.4