Lawful Base Rent (LTB)

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.