Economic Evictions in a Residential Tenancy

Economic Evictions in a Residential Tenancy

Case commented on: Oneka Land Company Ltd v Mouyadine Nur, RTDRS Case No. E-18-61728, September 17, 2018, unreported (“Oneka”)

The 2014 Court of Queen’s Bench Master’s decision Milner’s Aloha Mobile Home Park (1998) Ltd v Jenkins2014 ABQB 229 (CanLII) (“Milner’s Aloha”) recognized that if a landlord in a mobile home site tenancy tries to use a rent increase to evict a tenant that they otherwise could not lawfully evict, the Court can step in and treat the rent increase as void.

Attempts to use rent increases to evict tenants are sometimes called economic or constructive evictions.

In a post on ABlawg [ https://ablawg.ca/2014/05/15/constraining-a-landlords-ability-to-terminate-a-residential-tenancy-by-raising-the-rent/ ], Jonnette Watson Hamilton discussed the Milner’s Aloha case and concluded that, given the similarities between the provisions of the Mobile Home Sites Tenancies Act (MHSTA) and the Residential Tenancies Act (RTA), a tenant in an RTA context should have the same remedy in an economic eviction situation. However, there has been no reported decision of which the author is aware where an RTA tenant has successfully used this argument in Alberta.

Recently, in the Oneka case referenced above, the ECLC represented a tenant at a hearing at the Residential Tenancy Dispute Resolution Service (RTDRS) where this defence was successfully raised in an eviction application. RTDRS decisions are granted orally and are not reported, and so their use as precedents is limited. It is hoped that this discussion of the case will provide a useful reference for advocates who practice in this area.

Background

Like under the MHSTA, under the RTA a landlord cannot terminate a periodic tenancy unless:

  • a tenant has breached the RTA or the lease in such a way as to justify an eviction order (ss. 29 and 30 – all section references are to the RTA unless otherwise noted); or
  • the landlord has given notice to terminate the tenancy for one of the reasons set out in the RTA or its regulations (s. 6).

However, in a periodic tenancy, the RTA also says that a landlord may raise the rent as long as:

  • the form of notice provided to the tenant is correct
  • sufficient time is given before the rent increase is to take effect (which, for month-to-month tenancies is three tenancy months), and
  • there has not already been a rent increase in the previous year (s. 14).

There is no limit in the RTA on the amount the rent can be increased.

As a result, in situations where a landlord wants to evict a tenant but cannot prove a breach or does not have an otherwise valid reason to terminate the tenancy, the landlord will often give a Notice of Rent Increase for an amount beyond the tenant’s ability to pay, which will effectively end the tenancy after the notice period.

Milner’s Aloha addressed this situation in a mobile home site context.

Analysis

In many ways, the facts in the Milner’s Aloha case made it easy for the Court. There, the evidence showed that communications between the landlord and tenant were highly charged, the rent increase was 300% over the previous rent amount, and the landlord was recorded admitting that the rental increase was targeted at the tenant to get her out. Landlords are rarely so obvious in their tactics.

Indeed, the Tenancy Dispute Officer (TDO) hearing the Oneka case pointed out the obviousness of the landlord’s tactics in the Milner’s Aloha case, and asked what a decision-maker should consider when deciding whether the landlord is attempting an economic eviction.  The ECLC submitted that the following factors should be considered:

  • Whether the relationship between the landlord and tenant, or other circumstances, show that the landlord has a motive to evict the tenant.
  • Whether the rent increase is part of a broader program of rent increases the landlord is pursuing, or whether the tenant facing the rent increase is being singled out.
  • The amount of the rent increase should be considered in the context of the rental rate for similar units in a similar location (particularly other similar units in the same building), and whether there is a rationale that could justify the amount of the rent increase, such as a change in the market or upgrades to the unit or building in question.

The facts in the Oneka case were as follows:

  • There was evidence of tensions between the landlord and tenant:
    • Prior to the Notice of Rent Increase being purportedly delivered to the tenant (note: see comments below on the issue of the notice), the tenant had asked for a rent reduction, believing he was paying more than other tenants in the building with similar units.
    • The tenant believed that he had made an oral agreement for such a decrease with a previous resident manager, but a new resident manager did not agree there was a deal.
    • The tenant gave evidence that he had been treated rudely by the new resident manager on the phone.
    • Around the time of the purported Notice of Rent Increase, the tenant had signed a petition along with many other tenants in the building complaining about the new resident manager. The tenants believed they were being treated differently because they were of the same racial and cultural group.
    • After the Notice of Rent Increase had purportedly been delivered (again, see the comments below), the tenant gave evidence for other tenants of the building in two RTDRS hearings brought by the landlord.
  • No other tenant had received a notice of rent increase. The landlord’s agent gave some oral evidence that the tenant’s unit had been identified as being able to bear the increased rental rate amount, and suggested that the rent for other units were going to be increased in the future, but could not point to any specific timeline or plan.
  • The rent increase was from $975 to $1300, a 33% increase. As well:
    • No other units in the building were paying rent as high as $1300.
    • There had been no recent upgrades to the tenant’s unit or the building.
    • At the time of the hearing, the landlord’s website was advertising 1, 2, and 3 bedroom units in the building with rental rates ranging from $850 to $1150. The tenant’s unit was a 2 bedroom unit.

There were some issues at the hearing around the Notice of Rent Increase the landlord said it served on the tenant. The landlord’s evidence was that it first served the notice by posting it to the tenant’s door in late April, with the rent increase in that notice to take effect on August 1. This would have complied with the notice provisions in the RTA. The landlord also gave evidence that they reposted the Notice in early May (which, if it was the first notice, would have been less than three tenancy months, and would not have complied with the RTA). The tenant’s evidence was that he never received the Notice of Rent Increase document until it arrived attached to the Notice of Termination of Tenancy for Unpaid Rent he received in August for not paying the increased rent amount.

One of the reasons the timing of the Notice of Rent Increase in this case was significant was the tenant was also advancing a retaliation defence, using s. 25 of the RTA, which says:

No landlord shall

(a)    terminate a tenancy, or

(b)    take any kind of retaliatory action against a tenant including, without limitation, the imposition of a financial penalty,

by reason only of the tenant’s having made an application, filed a statement, made a complaint, assisted in an investigation or inquiry or given evidence at a hearing under this Act or the Public Health Act.

Broadly, the use of the phrase “by reason only of” creates a high bar for a tenant to meet, and restricts its usefulness in many cases. Aside from that issue, it was difficult to prove retaliation in the Oneka case because although the tenant did give evidence at the RTDRS for other tenants, that evidence was given in July, well after the Notice of Rent Increase was purportedly given to the tenant in late April or early May (again, the tenant maintained that he never received the Notice of Rent Increase until it was included in the Notice of Termination of Tenancy in August, and believed that it had never been delivered prior to that).

The limits of the retaliation provision in s. 25 of the RTA highlights another reason the remedy the Court recognized in economic evictions situations in the Milner’s Aloha case is needed for residential tenancies.

In the end, although the TDO stated he had concerns about whether the Notice of Rent Increase was served on the tenant in time to take effect in August, he expressly did not want to base his decision on that issue, recognizing that if he did, the landlord could simply issue a new Notice of Rent Increase for $1300 that would take effect three tenancy months from the date of service of the notice.

Instead, he found that the Notice of Rent Increase was invalid because it was an attempt to evict the tenant by raising the rent, and dismissed the landlord’s application for termination of tenancy and judgment for unpaid rent based on the Milner’s Aloha case.

Although the RTDRS does not typically issue written decisions, the TDO did helpfully add this into the text of the Order:

The RTDRS finds that, on a balance of probabilities, the Notice of Rent Increase dated April 30, 2018 constitutes an invalid increase in rent pursuant to the Alberta Court of Queen’s Bench precedent: Milner’s Aloha Mobile Home Park (1998) Ltd v Jenkins, 2014 ABQB 229.

The RTDRS therefore concludes that the Tenant did not substantially breach the terms of the Residential Tenancies Act and no amount is owing by the Tenant to the Landlord for unpaid rent.

Conclusion

This RTDRS decision is an important recognition that in a residential tenancy context, a landlord cannot raise the rent on a tenant with impunity, and that if it can be shown that a rental increase is in reality an attempt to evict the tenant, it will be treated as invalid.

If you need a precedent demonstrating that the Milner’s Aloha case has been applied in a residential tenancy context, feel free to e-mail the author for a copy of the RTDRS Order.

 

 

 

 

 

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About Tim Patterson

Tim Patterson is a staff lawyer at the Edmonton Community Legal Centre where he serves low income clients. His primary areas of practice are housing, employment, and other areas of civil litigation. After graduating with an B.A. and LL.B. from the University of Alberta, he was called to the Alberta Bar in 2002, and practiced at a large law firm in Edmonton before moving to the ECLC. In his current practice setting, Tim has been able to pursue his interest in improving access to justice for those living with poverty.
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One Response to Economic Evictions in a Residential Tenancy

  1. Jonnette Watson Hamilton says:

    Great post! It sounds like you did excellent work with a pretty difficult argument. The Residential Tenancies Act can be surprisingly technical. And it is so important to tell people about cases like this, so that they can act as precedents for arguments. Well done.

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