Wednesday, 12 June 2019

OPTIONS WHEN TENANTS CAUSE DAMAGE


 Evicting a tenant for damage: the law gives them options!

This article deals with the interpretation of section 62 of the Residential Tenancies Act and seeks to clarify what exactly a landlord must offer a tenant when dealing with damage caused by the tenant.  Where the damage to a rental unit is not wilful, the usual way to approach the problem is to serve the tenant a Notice of Termination in Form N5 (as opposed to just suing for damage and not evicting).  That Form (reproduced below--current as of June 2019), allows a landlord to terminate and evict a tenant if they have wilfully or negligently damaged the rental unit or the residential complex.  Note that wilful damage may be pursued under a different Notice of Termination as well (Form N7) but that is not the focus of this article.

When deciding to serve an N5 for damage, a landlord is deciding to terminate the tenancy subject to giving the tenant a chance to void the eviction and remain in the apartment and continue the lease.  The landlord's decision to give the tenants a chance to void the N5 for damage is not a real decision or choice.  It is the law that mandates that a tenant who receives an N5 for damage be given a chance to void the notice by dealing with the damage.

I use the phrase "dealing with the damage" because the Residential Tenancies Act sets out a number of ways that the damage can be dealt with and the N5 be voided.  The ways are reflected in section 62 and I will reproduce those sections here so that you can see the 5 distinct ways that damage can be dealt with that voids the eviction and allows a tenant to stay.

Section 62 provides as follows:

TERMINATION FOR CAUSE, DAMAGE---1) A landlord may give a tenant notice of termination of the tenancy if the tenant, another occupant of the rental unit or a person whom the tenant permits in the residential complex wilfully or negligently causes undue damage to the rental unit or the residential complex.  2) NOTICE--A notice of termination under this section shall, a) provide a termination date not earlier than the 20th day after the notice is given; b) set out the grounds for termination; and c) require the tenant, within seven days, i) to repair the damaged property or pay to the landlord the reasonable costs of repairing the damaged property, or ii) to replace the damaged property or pay to the landlord the reasonable costs of replacing the damaged proper, if it is not reasonable to repair the damaged property.  3) NOTICE VOID IF TENANT COMPLIES---The notice of termination under this section is void if the tenant, within seven days after receiving the notice, complies with the requirement referred to in clause 2 c) or makes arrangements satisfactory to the landlord to comply with that requirement.



Highlighted above in yellow are the 5 options that the legislation sets out.  Reproduced below is the Notice of Termination in Form N5.  Highlighted in yellow, on the form, are the 5 options that set out how damage can be dealt with.
WHAT IS THE PROBLEM??? IS THERE AN ISSUE?

If you are the landlord and you have a tenant who has caused extensive damage to a rental unit do you want the tenant to have the right to fix the damage themselves?  Or replace the damaged items themselves?  What if the work requires electrical work, or patching, sanding and painting?  What if it is quite clear that the tenant does not have the skills to perform the work in a workmanlike manner (i.e. professionally)?

As you read section 62 (above) you will see the word "OR" inserted between the various options.  The form must require the tenant to "repair" or "pay".  The form must require the tenant to "replace" or "pay" to the landlord the cost of replacement.

When reading the "or" is it the landlord's choice to limit the tenant's options to pay or repair.  Or to pay or replace?  Who controls the number of choices that the tenant has?

Is the correct reading of section 62 that the options provided to the tenant must include each of the 5 possibilities set out in section 62?  Reading section 62 in this way would mean that the tenant has the legal right to: repair, replace, pay, or make a deal.  And the landlord must offer the tenant each of these options in order for the Form N5 to be valid.  

What if a landlord only gives a tenant a repair cost but not a replacement cost?  Is the form invalid?  What if the landlord enters the unit, repairs or replaces the damaged things and then serves the N5 on the tenant and only sets out the "pay" options.  Is the N5 valid?

Take a look at the Form N5 reproduced above.  What if the dollar amount to repair the damaged item is different than the dollar amount to replace the damaged item.  Would the two different dollar amounts make the form confusing?  The law generally directs that a Notice of Termination that is confusing is void--meaning it is unenforceable and an application based on that notice would be dismissed.

LANDLORD: WHAT DO I DO?

It does appear that section 62 is being interpreted as giving the tenant as many of the 5 options as possible.  Where the circumstances of the damage permit, and it is reasonable to wait, the tenant should be given the option to repair, replace, pay for either repair or replace, or make a satisfactory arrangement.

With respect to different amounts to repair versus replace, inserting two different numbers in the form is also acceptable.  However, the reason for the different numbers should be explained in an attachment or in the reasons and details.  Satisfactory explanations include that a repair is not as perfect as a replacement (though acceptable) and cheaper than replacing.  A tenant might choose replacing where the condition of the damaged item is important enough to warrant the extra expense.  It is also possible that repairing is more expensive than replacing an item due to the work needed to do the repair.  Nevertheless, a repair might be chosen if there is less disruption to the tenant's household by repairing than replacing.  Whether this is the case depends on the circumstances.

CAN'T THE LANDLORD JUST say that "or" means landlord's choice?

Such an interpretation is not inconsistent with how many N5 cases for damage proceed.  Often enough, once landlords become aware of the damage they enter a unit and do the work and then fill out the N5.  Landlords often do the work because the work is necessary to protect the integrity of the building, the failure to do the work would impact other tenants, and the RTA imposes a duty on the landlord to repair and maintain the rental unit.  On this basis, landlords argue that there are certain kinds of damage that can't be ignored pending the serving of an N5 and waiting to see which way the tenant wants to go with repairing, replacing or paying.

This too seems reasonable.

RECENT DIVISIONAL COURT GUIDANCE

In Bombaci v. Gatien the Divisional Court held that the provisions of section 62(c) RTA do not require the landlord to choose between the two options of repair or pay and replace or pay.  The Court holds that the landlord can give the tenant more options and that the N5 Notice is not void as a result.  Hence, different amounts for repair versus replace are acceptable and this does not void the N5 even though the amounts are different.

The Court goes on to say that it is in the tenants' interest to be given all the options: do repairs themselves, or pay for the repairs, or pay for replacement.

The Court's direction that it is in the tenants' interest to be given all the options is not, I think, a direction that the tenants must be given all the options every time.  However, I do believe that it is clear indication from the Court that where it is reasonable and feasible that as many of the options as possible be granted to the tenant.

How might this direction become an issue?  Imagine a tenant with reasonable skills as a general contractor.  Imagine that a door is damaged by a tenant's pet dog who has scratched and gnawed on the door to the point where the only fix is to replace the door.  What if the landlord retains its usual "windows and doors company" and on 24 hours notice the company comes and replaces the door with a similar and standard typical door available at most building centres.  Let us assume that the invoice for replacing the door is in fact reasonable but that the majority of the cost of the invoice is for "labour".

Now the tenant whose door is replaced might be on a limited income or might otherwise have difficulty paying the amount of the invoice.  Or, the tenant might simply be frugal.  Regardless, the tenant is upset with having to pay the "labour" on the invoice because had he been given the option, he would have gone to a building centre, bought the same door, and replaced the door himself with his own labour (and hence pay nothing for it).  The cost difference to the tenant is meaningful.

Has the tenant been lawfully denied a "right" to replace the door?  Does the tenant have to pay the contractor's invoice even though he could have (and would have) done the work himself for much less?

At present, I do not think that there is an absolute answer to this question.  My inclination on the above example about the dog damaged door is that the tenant would indeed have a case to argue.  Especially with the Divisional Court's suggestion that it is in the tenants' interest to be given all the options (see paragraph 10 of the decision in Bombaci above).  Where a repair is not pressing, where a delay in the repair would not jeopardize the integrity of the building, and a delay would not impact other tenants, then perhaps the correct approach when serving an N5 for damage is to give the tenant as many options as possible.

CONCLUSION

In my view, the options set out in section 62(2)(c), exist for the benefit of the tenants.  The choices are not disjunctive in that the landlord can choose which of the options to grant the tenant.  As many of the choices as possible must be offered to the tenant in order for the N5 to be valid.  The number of available choices will be dependent on the circumstance of each case and the nature of the damage.  Sometimes it will be imperative for the landlord to act quickly and undertake the work immediately for the protection of the building and tenants.  In that case, the only reasonable option to give the tenant is the invoice to pay to void the N5.

To be clear, I do not think that the Court in Bombaci is saying that every option must be provided to tenants in every instance.  What I think the Court is saying is that tenants have an interest in being given all of the options.  And while giving all of the options is not mandatory, an N5 that does not provide as many options as reasonably possible risks being found void and incapable of sustaining an application to terminate a tenant for damage.

Michael K. E. Thiele
www.ottawalawyers.com










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