CAN A LANDLORD CHARGE LATE FEES in ONTARIO?

When the Rent is late what penalties can a landlord require a tenant to pay?

Covid 19 and the pandemic has left a lot of residential tenants a bit short or unable to pay the monthly rent when it became due.   For many this is a very unusual situation to be in because they "always" pay the rent and being behind on such a basic obligation is very worrying.  What can happen?

In other articles in this blog I've written about the rather lengthy process to terminate a tenancy for non-payment of rent. The law does not make it easy to evict a tenant and there is a philosophical underpinning in the law that seeks to ensure a security of tenure for tenants.  Therefore, for most tenants, being temporarily unable to pay rent is not going to lead to eviction because the law has built into it numerous opportunities, delays, and discretion that gives tenants a chance to pay rent arrears and maintain their home.   Uniquely, for this Covid and pandemic period, the Ontario government through the Superior Court of Justice and the Ontario Landlord and Tenant Board has made it impossible to get an eviction Order for non-payment of rent and further has made it impossible for landlords to direct the Sheriff to enforce an eviction Order for non-payment rent without getting specific and special permission from the Court.

While tenancies are being protected and landlords are being forced to bear the cost of non-paying tenants (without any legal recourse against tenants during the state of emergency) tenants will eventually have to pay their rent and they will have to make up and pay the rent arrears that they have accumulated.   Whether the arrears will be so large as to be impossible to pay is still left to be seen as we don't know what the end of this pandemic looks like.  

The question that this article answers is whether a landlord may legally charge a penalty, interest, late fee, or some other charge to compensate them for not receiving the rent on time?  The question is posed in the context of virtually every other commercial transaction where the failure to pay in accordance with a contract attracts some kind of penalty, interest, or other consequence.

The short and simple answer is that under the Residential Tenancies Act (RTA), a landlord is prohibited from charging a late fee, interest, or any other kind of charge or penalty for the late payment or late partial payment of rent.  Additional charges for failing to pay the rent "on time" are very clearly illegal.

It does not matter what clauses are contained in the lease and what terms a landlord has inserted or negotiated to include in a lease.  All such penalty clauses are illegal and void.  It also doesn't matter if a tenant agrees to specific penalty clauses, has signed such clauses, acknowledged such clauses or even has paid such penalties in the past.  The Residential Tenancies Act does not allow a tenant and landlord to agree to late payment penalties and any such agreements (even if freely made) are illegal and void (see section 4 RTA for the "voiding" provision).

So where exactly does it say that a landlord can not charge a tenant a late fee, penalty, bonus, interest, or other such charge for paying the rent late?  This question is actually answered in a couple of different ways under the Residential Tenancies Act.  The first spot where the RTA prohibits these kinds of charges is in section 134 RTA.  This section is titled "Additional Charges Prohibited" and it describes charges like a "fee, premium, commission, bonus, penalty, key deposit or other like amount of money whether or not the money is refundable".   Section 134 (1)(b) continues (with further clarification of the prohibition by stating that a landlord can not require or attempt to require a tenant to pay "any consideration" for goods and services as a condition for granting the tenancy or continuing to permit occupancy of a rental unit if that consideration is in addition to the rent the tenant is lawfully required to pay to the landlord.  

The point of section 134 RTA (as it is broadly worded) is that is designed to capture and prevent any kind of sneaky or indirect way of charging a tenant more than the lawful rent.  This section throws up a massive roadblock to a landlord who is seeking to levy charges or create a basis for charges that would exceed the lawful rent.

Another way that the RTA clearly prohibits interest, late fees, penalties, (and like charges) for the late payment of rent or the late partial payment of rent is in section 111 RTA.  This section states that the landlord shall not charge a rent that is greater than the lawful rent that the landlord is permitted to charge.  The "lawful rent" is the amount first charged to the tenant (section 113) and includes lawful annual rent increases.  The "lawful rent" does not permit there to be late fees, penalties, interest, or other such charges.

In simple terms, the RTA in section 111 is stating that a landlord may not charge a tenant more than the lawful rent--even if that rent is late or partially late.

A tenant does not have to have a "good excuse" for late payment or some other explanation that the landlord finds acceptable as an explanation for a late payment.  A tenant does not have to get the landlord's "okay" or forgiveness for the late or partial payment of rent.   A landlord may exercise its rights to serve a Notice of Termination for Non-Payment of Rent (with its numerous protections for tenants built in), but a landlord may not coerce, manipulate, threaten, charge, or otherwise take retributive action against a tenant for late or non-payment of rent.  A landlord can not punish a tenant or take away "rights" under the lease just because a tenant has failed to pay rent on time.

Are there any exceptions to charges for late payment of rent?  There are a very few.  If the rent is late because the rent cheque went NSF a landlord is permitted to charge a tenant the actual fee charged to the landlord by its Bank for the NSF cheque plus a maximum amount of $20 as the landlord's fee for dealing with the NSF cheque.  Aside from NSF charges, a tenant could also be required to pay the "costs" of an application to the Ontario Landlord and Tenant Board if the landlord serves a Notice of Termination for Non-Payment of Rent and then, when permitted, applies to the LTB for an eviction Order.  That fee can be $175 to $190 dollars and is typically awarded to the landlord if the landlord wins the application.  Note however that the LTB fees are a reimbursement of money actually spent by the landlord and not a "fee" that the landlord simply gets to charge a tenant for starting a termination process with an N4 form.

Michael K. E. Thiele

www.ottawalawyers.com

Ottawa, Ontario

Breathing asbestos and dangerous substances in an apartment

WHAT ARE A TENANT'S RIGHTS?

The topic of this blog article comes up due to several recent cases I've worked on and a recent newspaper article about an Ottawa tenant who fears having been exposed to asbestos fibres in her apartment while the landlord was carrying out a repair.    My cases involved asbestos, silica, and electromagnetic fields.

Exposure to dangerous substances in a rental unit causes a fair bit of anxiety.  It is not uncommon for the tenant to have a more serious view of the risk posed by the dangerous substance than the view of the landlord or the view of the contractors hired by the landlord.   It seems that many tenants fear that the landlord is indifferent to the health and safety of the tenant and that shortcuts are being taken in dealing with dangerous substances.  The shortcuts are intended to save money by avoiding the safety protocols to do the job correctly.  Further, it seems, that certain contractors appear to be indifferent to the "dangerous" substances and that they don't perceive the risks that the "dangerous" substances pose.

This last statement about the "perception of risks" is a dominant feature in cases about dangerous substances.   Invariably, the landlord side of the case will often argue that the tenant is over-reacting due to a false appreciation of the actual dangers posed by the substances.  The argument is that a tenant hears a word (like "asbestos") and over-reacts out of a needless panic.  The suggestion that the tenant is neurotic and hence unbalanced is the underlying thrust of the argument.  The tenant's overreaction may be fueled by a "google" search that gives up horror stories in the countless number of search results that seem to prioritize the bad news stories and this in turn feeds the narrative that the tenant's appreciation of the circumstances is inaccurate.

So what is the right approach to "dangerous substances" in a rental unit?  Oddly enough, there isn't a clear cut and dried approach.  Tenants, and people generally, are surprised to learn that there is very little legal guidance in how to deal with exposure to substances like asbestos, silica, EMF, in residential apartments.  As you go looking for law and regulations what does pop up are Occupational Health and Safety requirements and guidelines.  How substances like these need to be dealt with in the workplace is in fact addressed in quite some detail.  The significant legal protection is apparent when you see a workplace dealing with asbestos and negative pressure rooms, full personal protective equipment, air filtration, and bagging of asbestos containing materials with disposal to special sites for dangerous substances.   However, aside from finding law dealing with these substances in a work setting there is very little (to nothing) in the context of a residential apartment/rental unit.

EXAMPLE OF A TYPICAL PROBLEM

How about some examples of the context of what I'm taking about.  Imagine an apartment where there is a water leak in the bathroom.  The leak appears to be behind a wall or perhaps in the ceiling as the wall is getting soft and pliable.  The landlord attends the unit and figures that the only way to determine what is going on is to "open up" the floor/wall/ceiling in the area where there is water/wetness/dampness.  Doing so requires cutting into the materials to expose the interior of the wall or floor or ceiling.  That cut might be through plaster, drywall, ceramic tiles, pliable tiles, paints (think lead), and other substances.   The extent of the cutting really depends on how much is needed to find the source of the problem.

So, imagine a wet ceiling in an apartment in the bathroom with the wall getting soft behind ceramic tiles that seem to falling from the wall.  The landlord sends a contractor who cuts the wall and ceiling around a shower handle/faucet and the shower head.  The source of a leak isn't immediately apparent, there is a stack in the wall that is opened and now the landlord goes to the unit above and opens the wall and piece of the floor.  All of this to hunt for the source of the leak which surprise surprise has nothing to do with the plumbing but instead is coming from the flat roof and pooled water that has found a hole to the inside of the building.   Now that the source of the water is identified we look around and see--cut ceramic tile, cut floor tile, cut plaster, cut drywall, cut grout, and layers of other materials that had been covered in years past during renovations.  The cutting process leaves a fine dust like powder settling all over the apartment.  Is any of this stuff dangerous?

It turns out that many people will research whether this dust is dangerous.  Inevitably, they find references to mold, asbestos, silica, lead, and other toxic substances.  Now worried about their health, they approach the landlord and/or the contractor to ask for information and confirmation that their health is not in jeopardy.  A fairly typical and flippant response is "there is nothing to worry about".  For many, this answer does not inspire confidence.

Sometimes however, the landlord or contractor will say, "you're right".  Before we start work on repairing or renovating this space we will need to take the necessary safety precautions.  Therefore we will have a "Designated Substances Survey" conducted.  This will involve the gathering of samples from all around the apartment from all of the things we intend to move/disturb/replace/repair.  The samples are collected and sent to a lab that will test the samples (scientifically) and prepare a report indicating which samples contained any of the dangerous substances.

This kind of a response is reassuring, however, the tenant is left wondering "what about the fine dust all over my apartment that you caused while looking for the leak"?   Shouldn't the tests have been done before you ripped open the walls/floor etc.?  

If a contractor/landlord goes through the process of doing a "designated substances survey" my experience is that they will follow the processes necessary to handle any identified substances properly.  In essence if they go through the trouble of testing they are prepared to act in accordance with what the tests reveal.

The issue lies more with the work being done where the landlord or contractor feels that it is unnecessary to test for dangerous substances and where they avoid doing the "designated substances survey".  What rights does a tenant have then?  Does the Residential Tenancies Act provide any protection for tenants?

THE RESIDENTIAL TENANCIES ACT

There is nothing in the Residential Tenancies Act that specifically deals with designated substances in a rental unit.  By this I mean, if you search the entire Residential Tenancies Act and the Regulations thereto you will not find the word "asbestos" anywhere.  You will have a similar result when you search for other dangerous substances.  The RTA does not specify specific rules for specific substances.  Does this mean that the tenant is simply out of luck and subject to the whim of the landlord and its contractors?

It turns out that there is, in fact, protection for tenants from dangerous substances like asbestos, in the Residential Tenancies Act.  Unfortunately, the protection is somewhat indirect and there is no explicit direction or clear set of rules that deal with the specific things that a tenant sees in their apartment--for example, the white dust settling all over the unit, debris from construction materials, mold spores entering the air, or any of the other things a tenant sees as a result of construction work.  The protections available to a tenant arise from general obligations and duties imposed on a landlord under the Residential Tenancies Act.

How it works

The Residential Tenancies Act, at section 20, sets out the "Landlord's Responsibility to Repair".  This section requires the landlord to maintain a rental unit in a good state of repair and fit for habitation and for complying with health, safety, housing and maintenance standards.  These phrases, as you can see, are rather open ended and broad.  What exactly does the phrase "good state of repair" mean--I'd suggest it means an awful lot and can include a great many things that are beneficial for a tenant.  Likewise for the phrase "fit for habitation" and complying with "health, safety, housing and maintenance standards".   These phrases are, in my opinion, very broad and open ended and therefore impose a rather significant burden on a landlord.  The wording is broad and general so that a landlord can't easily avoid the obligations through technicalities.

Using for a minute, our asbestos example and the cutting of the wall/floor/ceiling.  If the act of cutting open the walls/floor/ceiling resulted in friable asbestos fibre being dislodged and put into the air capable of being breathed would you not conclude that the apartment was NOT "fit for habitation"?   If the asbestos fibre can be inhaled is the landlord complying with health and safety?   If open walls are exposing black mold into the rental unit and tenants are breathing the mold spores is the unit "fit for habitation"?  I think that the answer very clearly is that it is not.  The broad wording of section 20 RTA is easily engaged (and breached) if you can demonstrate a dangerous activity happening in the rental unit (i.e. breathing in asbestos fibres, mold spores, etc.).

Accordingly, we need to look at section 20 of the Residential Tenancies Act as establishing a very high burden on the landlord to fulfill its maintenance responsibilities in accordance with the duty described in this section.  The duty, for sure, is broadly worded and in that breadth it will capture all sorts of actions and situations that should not occur.  This is the case even though the word "asbestos" does not appear (nor any other dangerous substance) anywhere in the RTA.

So what is a tenant to do if the fine white dust covering everything is suspected of being a dangerous substance and the landlord or its contractor is indifferent and unwilling to do anything about it?   What if the landlord says that the dust is harmless and there is nothing to do but get out the Swiffer?

The first steps will be to see if an official inspector can be found to make Orders against the landlord.  This is the preferred course of action (if possible) because it results in immediate action without much effort or work for the tenant.  Therefore, if the premises are an active work site then the Ontario Ministry of Labour may exercise its administrative and/or regulatory enforcement powers under the Occupational Health and Safety Act (OHSA).  There can be "stop work" orders and prosecutions as necessary.  A tenant could benefit from such inspections and orders even if the Ministry's mandate is the workers and OHSA and not specifically tenants in the housing sense.

If appealing to officialdom (Ministry of Labour) is not possible or impractical, what should a tenant do then?  The first step, I think is to collect samples and send them to a lab for testing.  The question to be answered is whether there actually is a risk and a dangerous substance in the rental unit.  Without scientific proof (test results), that the substances being identified by a tenant are dangerous the presumption will be that they are not.  If a tenant wishes to compel the landlord to treat a unit as containing designated and harmful substances the tenant will have to prove that those substances exist in the rental unit.  If the landlord denies that the powder, dust, mold, fibres, paint chips, etc., are dangerous and that special handling is not required it is up to the tenant to prove that indeed the powder, dust, mold, fibres, etc., are indeed dangerous and designated substances because in the absence of doing so the tenant will not meet the burden of proof that is applicable in any application.  This is the first critical step that needs to be done.

With a report in hand identifying the presence of "asbestos" or "dangerous mold" or "lead paint", a tenant can then link the handling of these dangerous substances, inside the apartment or rental unit, with the duty imposed on a landlord under section 20.    The tenant's concerns, once the presence of a dangerous or designated substance is identified, are given credibility as it can't be said that you should be indifferent to the presence of "asbestos" that you prove as present based on the lab report testing the materials from inside the apartment.

The next step is for a tenant to establish what the presence of the designated substance in their rental unit means to their health, safety, and personal circumstances.   There may be "asbestos" but what does this mean for habitability of the apartment and the tenant's health?   That there is asbestos in a rental unit is not at all a surprise and that a test result of materials in a unit would reveal a designated (and dangerous substance) is not in itself shocking.  Asbestos is in many materials and it is "safe" because it is bound to other materials and not airborne capable of being inhaled.  So what is it about the presence of the designated substance, (proven to be in the rental unit by the lab report), that makes it dangerous to the tenant?

Answering this last question can be done in many different ways.  If we are talking about disturbed asbestos fibre (from cutting, drilling, scrapping or chipping), in a dust that has settled through the apartment  onto carpet, furniture, fixtures, I would be inclined to seek a medical report/opinion about the risks of exposure to asbestos in this form.  The manner of the asbestos containing dust getting onto everything is indeed relevant.  Asbestos that was combined in a floor tile that now is airborne as a result of cutting, drilling etc., has a very different safety profile that needs to be addressed by the right professional.

The right professional may be the tenant's family doctor, who might themselves have consulted with a specialist, to answer the question:  "Is my patient exposed to any risk if they inhale white dust that has been shown to contain asbestos fibres"?  Perhaps the doctor is given a copy of the lab report showing the concentrations of the substances identified.  The doctor can then identify the health risk to the tenant and provide advice.  That advice might include a direction not to disturb the dust, not to inhale it, to have the dust professionally cleaned, and for the tenant to not to remain in the unit pending the dust being cleaned up.  The opinions expressed by the doctor should be grounded in their knowledge and expertise as physicians.

Other experts can also be consulted and a series of opinions can be obtained that explain the nature of the substance, how it is a danger, how it should be handled, and what a person who has been exposed can do to mitigate the risks of exposure.

Once this evidence has been obtained a tenant should continue to try and work with the landlord to have the issue addressed.  On the assumption that the landlord and its contractor remain indifferent to the situation the next step is to file a T6 Application with the Ontario Landlord and Tenant Board.  The T6 Application is a tenant's application about maintenance.   In that application a tenant is setting out the maintenance problems (from our example--the wet wall) and what the landlord did (cut the wall) and how that action caused a dangerous substance to be distributed around the apartment (proven to be a dangerous substance by the lab report).

The application (T6) will continue to explain that the presence of the dangerous substance is a breach of the section 20 RTA obligation because it exposes the tenant to serious health risks and that while the serious health risks are present the unit is not "fit for habitation".   The serious health risks are explained in the doctors report.  Additional reports (engineers, specialists, health inspectors, etc.), can be referenced to prove these points.

The second part of the T6 application will then be to claim the appropriate remedies.  If the tenant has proven the existence of the duty (easy--because that's section 20), the breach of the duty (being exposed to the dangerous substance as explained in the lab report) and that the breach amounting to a serious health danger (proven by doctor's report), the question will be what should the LTB order/award the tenant.

The LTB's powers in a T6 application are fairly broad and the LTB can Order the landlord to do certain work, clean up, repair, and do things in a way that makes the rental unit safe.  The tenant can be awarded a rent abatement, replacement costs for damaged personal property, and there is a broad power to make other appropriate awards.   What is appropriate really depends on the facts of the case.

A word of caution when bringing T6 applications (and/or the associated T2 Tenant's Rights application).  The Landlord and Tenant Board has a maximum jurisdiction of $35,000, and it is not well set up as a venue for personal injury claims.  If the exposure to the designated substance has potentially caused significant personal injury it may be wise to pursue the claim in the Superior Court where there is no monetary maximum to the award.  While splitting claims is generally frowned upon and there is a risk of losing the right to sue (section 207 (3) RTA), it may be worth exploring having the LTB make orders in relation to clean up only and nothing with respect to the health impacts of the incident with the intent of preserving the personal injury aspect of the claim to the Superior Court.

 Michael K. E. Thiele

www.ottawalawyers.com