1.
- The guideline for 2022 is 1.2%. To find out more about the guideline and to see how the guideline is calculated: post 1, post 2.
- In general, "the guideline for a calendar year shall be not more than 2.5 per cent", even if CPI (inflation) numbers are higher (RTA subsection 120(2)2).
- At least 12 months must pass between rent increases (RTA section 119), but not necessarily between notices.
- 90 days' notice of rent increase needs to be filled out correctly (RTA section 116) and served correctly (RTA section 191, Rule 3 of the LTB Rules of Procedure). Please use the instructions provided on the LTB website.
- If the unit falls under the Guideline, the correct form is an N1 Notice (see N1 Instructions). If the unit is exempt from the Guideline under RTA section 6.1 (i.e. first occupied for residential use after November 15, 2018), the correct form is an N2 Notice (see N2 instructions).
- The burden of proof for the exemption from the Guideline under RTA section 6.1 is on the landlord claiming the exemption (RTA subsection 6.1(6), Re Koressis et al. and Turner et al., 1986 CanLII 2633 (ON SC), <https://canlii.ca/t/g1cwq>)
- Minimum notice is 90 days (RTA subsection 116(1)).
- If rent is increased, landlords are advised to request to top up Last Month's Rent deposit accordingly (under RTA subsection 106(3)) right away, in order to prevent having to pay interest on LMR deposit (since offsetting this way is allowed under RTA subsection 106(7)).
- Signing a new lease does not remove the requirement for a minimum 90 days' notice of rent increase, which still needs to be filled out and served correctly, respecting RTA s. 116 (form), RTA s. 119 (12-month rule), RTA s. 120 (Guideline), etc.
- An Above the Guideline Rent Increase (AGI) under RTA section 126 is available only for eligible items (eligible capital expenditures, operating costs related to security services, extraordinary increases in municipal taxes and charges), an AGI requires the Board's approval, and tenants can challenge the landlord's claim (landlord's L5 application) at the LTB. Landlords are no longer permitted to apply for an AGI for extraordinary increases in operating costs due to utility costs (see Bill 124, the Rental Fairness Act of 2017). More information can be found in LTB Interpretation Guideline 14.
- If the tenant does not pay the lawful rent increase, the landlord's recourse would be N4 / L1 (to evict and collect rent arrears) or L9 (to collect rent arrears).
- If the tenant pays an illegal or void rent increase for at least 12 consecutive months and does not challenge the rent increase during that time at the LTB (e.g. by filing a T1 application), it becomes legalized. For more precise wording on the issue, see RTA section 135.1 and RTA subsection 136(2). To provide a historical footnote, prior to Bill 184, a void rent increase (an increase without a proper minimum 90 days' notice, as per RTA subsection 116(4)) could never be cured, since "it is as if the increase never occurred" (see Price v. Turnbull's Grove Inc., 2007 ONCA 408 (CanLII), at para 37), but the new RTA section 135.1 (that came into force on July 21, 2020) introduced a 1 year limitation period (similar to what we've already had for decades for unlawful rent increases under RTA subsection 136(2)), so you will see some older rulings no longer being relevant.
2.
Some interesting rulings on rent increases:
4. The lawful monthly rent is $1,071.29 effective September 1, 2020.
Lawful monthly rent prior to September 2020
5. The main issue in this application is the lawful monthly rent for the unit. The Tenant challenged various notices of rent increase (NORIs) issued by the Landlord between 2013 and 2019. As a result, the Tenant continued to pay $1,109.35 a month despite receiving multiple NORIs. The Landlord maintained that their rent increases were valid and the Tenant was in arrears of rent. As a result, the Landlord served a Notice of Termination (N4) effective October 4, 2019, thus starting this application.
6. I find that as of September 2018 the lawful monthly rent, was $1,109.34 a month including parking. I accept that this was the amount the Landlord had charged since May 2016, and the Tenant consistently paid this amount in full. In fact, the Tenant was paying 1 cent more - $1,109.35. The extra cent had been consistently credited to the Tenant in the Landlord’s ledger. Subsection 136(1) of the Residential Tenancies Act, 2006 (the 'Act') deems rent charged for one or more years lawful unless an application is made within a year of when the rent was first charged challenging the lawfulness of this rent. Section 135.1 deems a rent increase that would otherwise be void to not be void if the tenant has paid the increased rent for 12 consecutive months. This means that I can’t consider the Tenant’s submissions regarding validity of rent increases prior to October 2018 or the Tenant’s submissions that the original base rent amount was not calculated correctly.
October 2018 Rent increase
7. Having found that the lawful monthly rent was $1,109.34 in September 2018, I find that the Landlord lawfully increased the monthly rent to $1,129.31 inclusive of parking effective January 1, 2019. The Landlord served a Notice of Rent Increase (NORI) for this increase that complies with the requirements contained in s. 116 the Act.
8. The Tenant took the position that the Landlord was not entitled to apply the annual rent increase to the parking fee. She testified that there was a separate contract for the parking, and as a result the parking fee was supposed to remain a flat fee which the Landlord could not increase.
9. The Act includes parking into the definition of rent. Section 2(1) of the Act defines “rent” to include:
“the amount of any consideration paid or given or required to be paid or given by or on behalf of a tenant to a landlord or the landlord’s agent for the right to occupy a rental unit and for any services and facilities and any privilege. Accommodation or thing that the landlord provides for the tenant in respect of the occupancy of the rental unit, whether or not separate charge is made for services and facilities or for the privilege, accommodation or thing…”
10. Neither party was able to present the parking agreement at the hearing and the Landlord seemed to take the position that such an agreement did not exist but rather the Tenant only filled out an application form before she was assigned a parking spot.
11. I find that the outcome of this dispute would not affect the lawfulness of the rent increase, because even if the parties had an agreement that the Landlord would not raise the portion of the rent relating to the parking, such an agreement would be contrary to the Act and therefore void. (See s. 3(1) of the Act and 1086891 Ontario Inc. v Barber, 2007 CanLII 18734 (ON SCDC)). As such, the Landlord was entitled to apply the annual rent increase to the full amount of rent and parking fee.
October 2019 Rent Increase
12. Having found that the lawful monthly rent was $1,129.31 in September 2019, I find that the Landlord lawfully increased the monthly rent to 1,149.64 inclusive of parking effective January 1, 2020. The Landlord served a Notice of Rent Increase (NORI) for this increase that complies with the requirements contained in s. 116 the Act.
13. The Tenant raised an additional issue with the 2019 rent increase. She testified that the Landlord first sent a NORI dated September 18, 2019, increasing rent to $1,149.64 effective January 1, 2020. This was an increase of 1.8%. The Landlord then attempted to “amend” the NORI by sending a letter on November 25, 2019 purporting to increase the rent to $1,154.15 effective January 1, 2020. This would be an increase to the maximum guideline amount. While I agree with the Tenant that the Landlord was not entitled to “amend” the NORI in such manner, I do not agree that this attempt to “amend” the original NORI invalidated the original NORI or rendered it unlawful. The Landlord did not attempt to enforce this “amended” NORI and only sought to collect arrears based on monthly rent of $1,149.64 at the hearing. I find that the Landlord lawfully increased the rent to $1,149.64 effective January 1, 2020.
New rent as of September 2020
14. At the Hearing the Landlord presented an L1/L9 update sheet asking for September rent in the amount of $1,129.31. The Tenant testified that she had notified the Landlord that she no longer required parking in August 2020 and that a Landlord’s agent confirmed that she would not be charged for parking in September 2020. The Landlord did not dispute this evidence and withdrew their request for the parking fee for September 2020. The Landlord requested that I amend their L1/L9 update sheet to reflect the new September 2020 rent as $1,071.29. I will order the arrears accordingly.
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;…
10. Essentially the Tenants argue that the day of the last rent increase was November 1, 2011 and so the Landlord is barred from increasing the rent again until November 1, 2012. The Tenant before me indicated that she had received legal advice from a clinic to the effect that the Act contains no provision which would permit a landlord to rescind a notice of rent increase. The reason this argument is important is because if the Landlord is not barred from raising the rent again and the notice of rent increase for June 1, 2012 is valid, then the Tenants cannot afford the rental unit and the Landlord will be able to economically evict them.
11. The difficulty with the Tenants’ argument is that section 119 says “since the day of the last rent increase”. It does not say: “since the effective date of the last rent increase notice served”. Here, the evidence supports the conclusion that although a notice of rent increase was served and supposed to be effective November 1, 2011 the rent was not actually increased in that the pervious landlord did not collect it and the Tenants did not pay it.
12. I say this even though the Tenants did initially pay the increase for November 1, 2011. There was some dispute at the hearing as to whether or not the previous landlord refunded to the Tenants the overpayment of $9.10 paid for November, 2011. The Tenant before me denied receiving the refund and the current Landlord produced a copy of the previous landlord’s refund cheque, but not proof it had been cashed. So it may be that the Tenants paid the increase in November, 2011 but it may also be that the increase was refunded to them. In the end I do not think this dispute is particularly determinative because of the Board’s previous order in file TSL-23254-11. That order made a clear finding that the rent charged was $1,300.00 a month and a clear finding that the arrears of rent for the period ending January 31, 2012 totalled $2,600.00. The Tenants did not appeal that order or request a review of it. The argument that the Tenants now seek to advance is therefore a form of collateral attack. In other words, they want to argue that the Board got it wrong in order TSL-23254-11 and the rent arrears were something other than what was ordered and the lawful monthly rent was not $1,300.00 as ordered by the Board. Collateral attacks are considered to be a form of abuse of process and pursuant to subsection 23(1) of the Statutory Powers Procedure Act the Board is empowered to make any order in proceedings before it as it considers proper to prevent an abuse of process. To put it in colloquial terms, the Tenants cannot suck and blow at the same time. They cannot accept the previous landlord’s rescission of the rent increase and rely on it to pay less rent to avoid eviction, and then turn around and repudiate the rescission because they subsequently figured out it was in their interests to do so.
13. So I believe the answer to the question: can a landlord rescind a rent increase so that it becomes a legal nullity is yes where the tenant essentially consents to the rescission explicitly or by their actions and that consent is relied on and results in a Board order that impliedly reflects that consent.
14. As a result I find that the rent was not increased November 1, 2011 and the Landlord was entitled to serve the notice of rent increase she did. This means that effective June 1, 2012 the lawful rent increased to $1,800.00.
• Both forms set out the Tenant’s name, the rental unit address, and the Landlord’s name and address, the effective date of the rent increase and the amount that the rent will increase per month.
• Both forms identify: “This rent includes basic rent for your rental unit plus any amount you pay separately to your landlord for services.”
• Both forms inform: “The landlord must give the tenant this notice at least 90 days before the date of the rent increase”.
• Both forms state “If a tenant plans to move, the tenant must notify the landlord on Form N9 (Tenant's Notice to Terminate the Tenancy) at least 60 days before the lease expires if the tenant has a fixed term of tenancy or 60 days before the end of a monthly or yearly rental period. The tenant must notify the landlord on Form N9 at least 28 days before the end of a weekly rental period”.
• Both forms instruct:”If you have any questions about the law related to rent increases and how it applies to this notice, you can contact the Landlord and Tenant Board at 416-645-8080 or toll-free at 1-888-332-3234. Or, you may also visit the Board's website at www.LTB.gov.on.ca for further information”.
16. GC claimed that his Notice of Rent Increase Form N1 was also accompanied by an oral and a written explanation in which GC informed RL that the above guideline increase was permitted because the residential complex was exempt from rent rules as it was built after November 1991. GC did not submit a copy of the addendum letter of explanation during the hearing; however GC’s provision of additional exemption information was not challenged during cross examination.
The effect, if any, of the provision limiting rent increases
6. As I stated at the hearing, s.3 of the Residential Tenancies Act, 2006 (the ‘Act’) provides that landlords and tenants cannot waive their entitlements under the Act. The rental unit is a condominium apartment and it was built well after November 1, 1991, so, pursuant to subs.6(2) of the Act, it is exempt from the rent increase guidelines. This means the Act entitles the Landlords to increase the rent in any amount that they choose (recent changes to the Act with respect to the partial exemption to rent increases were not in effect at the time that the Landlords served their notice or at the time the notice took effect). As per s. 3 of the Act the Landlords cannot waive their entitlement to raise the rent in any amount they choose. The provision in the lease that purports to limit rent increases is therefore not enforceable.
7. Further, subs. 4(1) of the Act provides that provision in a tenancy agreement that conflicts with a provision of the Act is void. The Act permits the Landlords to increase the rent to any amount that they choose. The provision of the lease limiting rent increases conflicts with the Act and so it is void.
8. Whether the provision in the lease is unenforceable or void, either way it has no effect on the notice of rent increase served by the Landlords and so it does not render the notice of rent increase invalid."
[18] The policy rationale behind ss. 2(1) is to treat tenants and landlords equally. The subsection is designed to prevent parties from bargaining away or waiving their statutory rights no matter what the circumstances. Both Crown Trust Co. v. Rosenberg and Pinheiro v. Bowes found that the provision was meant to operate as a blanket prohibition. To permit a departure would create a significant loophole which could dramatically impair the entire scheme of the Act.
[19] The appellant submitted the landlord was estopped from resiling from its bargain. Estoppel cannot override statute (see Harzuz Holdings Ltd. v. Peel (Regional Municipality), [2006] O.J. No. 1830). There is no need for the subsection to make specific reference to the doctrine of estoppel. In any event, it would be illogical to conclude that, although the TPA prohibits in very clear terms any agreement to the contrary or waiver of rights, it leaves open to the parties to accomplish the same thing through the doctrine of estoppel. In any event, the Tribunal does not have the jurisdiction to apply the principle of estoppel in the absence of specific statutory authority (see Klymko v. Lem, [2001] O.J. No. 156)."
“TERM OF LEASE: The lease shall be for a term of five years commencing October 8, 2015.
RENT: The Tenant will pay to the said Landlord monthly and every month during the said term of the lease the sum of Two Thousand Canadian Dollars (CDN) $2,000.00 payable in advance on the first day of each month during the currency of the said term…” [Emphasis added]
14. For the reasons that follow the Landlord is, in my view, permitted to increase the Tenants’ monthly rent in accordance with the NORI served to the Tenants on October 27, 2016.
15. In Crown Trust Co. v. Rosenberg, [1986] O.J. No. 2683 (“Crown Trust”), Galligan J., in considering subsection 2(1) of the Tenant Protection Act, a provision identical to subsection 3(1) of the Act, prohibited contracting out even if it is for the benefit of the tenant. At paragraph 11 Galligan J. states as follows:
In attractive and sophisticated arguments, counsel for the landlord contended that the words ‘to the contrary’ in these sections referred to the mischief which the legislation was intended to redress. They contended that the mischief intended to be redressed by both pieces of legislation was the perceived inequality of bargaining power between tenants and landlords. Thus they contended that the parties could effectively agree to terms, which, so long as they increased tenants’ rights, or at least did not impinge upon tenants’ rights, would not be an agreement or waiver to the contrary, as contemplated by s. 82(1).
16. And, further, at paragraphs 14, 15, 16 and 19, as follows:
It is my opinion however, that there is no ambiguity in the provisions of ss. 82(1) and 2(1) of the Acts which would entitle me to engage in the exercise of searching out the mischief addressed by the Legislature when it enacted the two pieces of legislation. Indeed the proposition advanced on the landlord’s behalf, when followed to its logical conclusion, proposes that I should rewrite the sections so that they read that the legislative provisions are to apply notwithstanding any agreement or waiver to the contrary, entered into by the tenant. In my opinion, I can do no such thing.
I am unable to find anything in either Act that would lead me to think that a landlord can bargain away his statutory rights, but that a tenant cannot. It is interesting to compare ss. 126 and 127 of the Residential Tenancies Act, because very similar language is found in both of them. Section 126 says that where a landlord desires to increase the rent permitted under the statute he may make an application for certain relief. Section 127 says that a tenant who desires to dispute any intended rent increase, may make an application for relief. I don’t think that anyone would suggest that an agreement by a tenant to forgo [sic] his s. 127 rights for a given period of time would be enforceable in the light of s. 2(1) of the Act. I am quite unable to conceive how the rights given to the landlord in the preceding section in very similar language could be treated differently.
I have come to the conclusion that the words ‘to the contrary’, when used in the two sections, do not refer to the mischief sought to be redressed by the Legislature, but refer to the application of the legislation. Thus an agreement to the contrary cannot affect the application of Pt. IV of the Landlord and Tenant Act or the application of the Residential Tenancies Act.
…While a failure to abide by the terms of the proposed agreements might well be regarded with disfavour, I am of the opinion that to the extent that they conflict with, restrict, waive or modify the provisions of the Residential Tenancies Act, they are legally unenforceable. [Emphasis added]
17. I also find the following comments of Killeen J., in Pinheiro v. Bowes, [1994] O.J. No. 115 (“Pinheiro”), helpful:
[13] Judges must accept statutes as they find them if they are clear and unambiguous and catch the factual situation under consideration.
[14] In my view, while s. 99 was largely created to protect tenants, it cannot be said to be contrary to public policy to enforce it in favour of a landlord. Section 99 provides a broadly-gauged protective rule for landlord-tenant relationships and must be enforced as it plainly reads and provides. On its face, it invalidates the lease proviso in issue and makes the tenant liable for one month’s additional rent. [Emphasis added]
18. Again, considering subsection 2(1) of the Tenant Protection Act, in Barber the majority of the Divisional Court cited Crown Trust and Pinheiro, with approval, and concluded:
[17] In the present case, the effect of the so-called agreement on which the tenant seeks to rely would be to forever prohibit the landlord from exercising his right to a rent increase as long as the tenant remained in possession. Because the so-called agreement would amount to a contracting out of the landlord’s right to increase rent in accordance with the TPA, it runs afoul of ss. 2(1) of the statute. While there is provision in the TPA permitting landlords and tenants to negotiate increases and decreases in specific circumstances, none of those circumstances apply here and indeed no provision of the TPA permits a “rent free” agreement.
[18] The policy rationale behind ss. 2(1) is to treat tenants and landlords equally. The subsection is designed to prevent parties from bargaining away or waiving their statutory rights no matter what the circumstances. Both Crown Trust Co. v. Rosenberg and Pinheiro v. Bowes found that the provision was meant to operate as a blanket prohibition. To permit a departure would create a significant loophole which could dramatically impair the entire scheme of the Act.
[19] The appellant submitted the landlord was estopped from resiling from its bargain. Estoppel cannot override statute (see Harzuz Holdings Ltd. v. Peel (Regional Municipality), [2006] O.J. No. 1830). There is no need for the subsection to make specific reference to the doctrine of estoppel. In any event, it would be illogical to conclude that, although the TPA prohibits in very clear terms any agreement to the contrary or waiver of rights, it leaves open to the parties to accomplish the same thing through the doctrine of estoppel. In any event, the Tribunal does not have the jurisdiction to apply the principle of estoppel in the absence of specific statutory authority (see Klymko v. Lem, [2001] O.J. No. 156). [Emphasis added]
19. Subsection 194(2) of the Act illustrates that the Legislature turned its mind to circumstances where it is permissible to oust the provisions of subsection 3(1) of the Act—that is, where the parties enter into an agreement, which is the product of mediation at the Board, on consent. Here, clearly the facts do not give rise to the application of subsection 194(2).
20. Section 17 of Ontario Regulation 516/06 further illustrates where the Legislature saw fit to exempt parties from the application of the Act. Section 17 outlines payments made by a tenant to a landlord that will not be considered to be illegal fees under s.134 of the Act. Clearly, none of those circumstances apply here.
21. In my view, had the Legislature intended that other circumstances exist, where landlords and tenants could further abrogate their respective statutory rights, such as when negotiating the terms in a lease as is the case here, the Legislature could have, with relative ease, so specified as it did in other provisions of the Act. In this case, the Landlord’s rights impinged upon, and in fact annulled, by the lease are those accorded to him by subsection 119(2) of the Act and, as such, the above-noted term in the parties’ lease alters the law by taking away from the Landlord that which the Act grants.
22. As Killeen J. says, Pinheiro v. Bowes, above, triers of fact must accept statutes as they find them. Moreover, where the provision of a statute is clear and unambiguous, as is the case here with subsection 3(1) of the Act, it should be interpreted according to its ordinary meaning within the broader context of legislative intention, the object of the Act and the scheme of the legislation.
23. The Tenant stated he spoke with some of his friends and clients, who are lawyers, and submitted Barber should be distinguished because that case involved a month-to-month tenancy, which is not the case here. However, there is nothing substantive to distinguish the case at bar from Barber. In Barber, the landlord had given the tenant a letter indicating that the tenant’s rent would be frozen until the tenant decided to vacate the unit. However, the following year the landlord served the tenant with a notice of guideline rent increase. The tenant refused to pay the increase and the landlord applied to the Tribunal for an order for arrears and termination which was granted. The tenant appealed the decision, however it was upheld by Divisional Court. The majority of the Divisional Court held that the landlord was not estopped from increasing the rent despite the letter stating otherwise.
24. Section 1 of the Act states the purposes of the Act include protection from unlawful evictions and a balancing of the rights and responsibilities of residential landlords and tenants. It seems to me entirely inconsistent with one of the stated purposes of the Act, for the Legislature to then, concomitantly, contemplate making it lawful for parties to contract away a right codified in the legislation. This is especially so on a plain reading of subsection 3(1) and in light of the Divisional Court’s pronouncement in Barber, as already noted above, where the majority of the Court stated, in connection with the section in the predecessor legislation identical to subsection 3(1) of the Act, in part:
The subsection is designed to prevent parties from bargaining away or waiving their statutory rights no matter what the circumstances.
25. The Court in Barber goes on to find that the provision was meant to operate as a blanket prohibition and, “To permit a departure would create a significant loophole which could dramatically impair the entire scheme of the Act.”
26. And I agree. To uphold the term(s) at issue in the lease would deny the Landlord, for a period of five years, his statutory right to raise the monthly rent in accordance subsection 119(1) of the Act while, simultaneously, amount to a licence for breaches of the Act by the Tenants, when Landlord chooses to exercise his statutory right to lawfully raise the rent. Again, this could not have been the intent of the Legislature.
27. Accordingly, the Landlord was entitled to increase the monthly rent as stipulated in the NORI, served to the Tenants on October 27, 2016, to take effect on February 1, 2017 and increasing the monthly rent from $2,000.00 to $2,040.00."
[6] Weber thereupon launched a T2 Application About Tenants Rights, claiming only that Drewlo seriously interfered with her reasonable enjoyment of her unit. That application was brought pursuant to Section 29 of the RTA.
[7] It was further conceded that at the hearing it was the position of the Tenant and of the Member hearing the application, that the issue before the Board was whether the increase for pet ownership was contrary to principles expressed in the Act and amounted to a penalty for pet owners only.
[8] No evidence was led by Drewlo to justify its position that a 9 percent rent increase was related to habitual pet-caused damage. The position of Drewlo was then, and is now, that its reasons for levying the increase were and are irrelevant. Drewlo submits it has the unfettered right to raise rent under the RTA as it sees fit.
[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.
[10] At that point, the provisions of Section 31(1)(c) of the RTA came into play and the Board had the power to award an abatement for the breaching of Weber’s right to reasonable enjoyment. We reject the submission that Section 135 and Section 29 cannot operate harmoniously together. It cannot be the case that a breach of Section 134 is not to be considered in determining whether there has been a breach of the right to reasonable enjoyment.
[11] The decision of the Board was reasonable. [...]"
The Tenant never disputed that the property was partially exempt from rent control under section 6 of the Act, but submits that increasing her rent merely because she is a pet owner substantially interferes with her reasonable enjoyment of the property contrary to the Act. She also testified that she was aware of pet-owning tenants at the complex who did not receive NORIs from the Landlord.
[5] The Landlord’s agent relies upon the partial exemption from rent control explained in the Landlord’s letter of June 22, 2010 as legal authority to increase rents at the complex without regard for the guideline or other rules of rent control. In her submission, neither the Act nor the
NORI form requires a landlord to explain the reason for an increase. When asked whether a rent increase taken explicitly because of pet ownership amounted to a penalty for pet ownership, the Landlord’s agent relied upon her client’s partial exemption from rent control arguing that reasons are not required for rent increases at properties of this kind. On that basis, she submits that the reason for the increase in this case is legally irrelevant.
IV. Analysis
[6] Section 22 of the Residential Tenancies Act, 2006 (the ‘Act’) provides that:
22. A landlord shall not at any time during a tenant’s occupancy of a rental unit and before the day on which an order evicting the tenant is executed substantially interfere with the reasonable enjoyment of the rental unit or the residential complex in which it is located for all usual purposes by a tenant or members of his or her household.
The Board must determine on a case-by-case basis whether the landlord has “substantially” interfered with the tenant’s reasonable enjoyment of the property for all usual purposes under section 22. In making that determination, the Board may consider the nature of the landlord’s conduct, its seriousness, extent and duration, and the nature of the premises in question: Kay v. Parkway Forest Developments (1982), 1982 CanLII 1986 (ON SC), 35 O.R. (2d) 329 (Div. Ct.). The Board may also consider whether the problem persisted after the tenant brought the problem to the landlord’s attention.
[7] “Interference with reasonable enjoyment” may be seen as any activity that limits or hinders a person’s exercise of lawful rights, or activity that impedes, obstructs or frustrates someone from doing or obtaining that to which they have a lawful right. In some cases, a single act may constitute substantial interference, while, in other situations, it may take several acts before a pattern of behaviour amounting to “substantial interference” can be found. Reasonable enjoyment “for all usual purposes” can be seen as the normal expectations of everyday living within the rental unit or at the complex as a whole.
[8] The residential complex in this matter is exempt from rent control under clause 6(2)(c) of the Residential Tenancies Act, 2006 (the ‘Act’) as no part of the property was occupied for residential purposes before November 1, 1991. The landlords of such properties may lawfully take rent increases, without regard for the annual increase limits imposed under the Regulations, without making application to the Board, and without meeting any specific statutory test. A strict reading of clause 6(2)(c) would suggest that such a landlord could increase rents at the complex to whatever amount the market will bear and, as otherwise permitted under the Act, for any reason or, for no reason at all. The proviso on this right bears repeating, however. The rent may be increased without regard for rent control where the increase is otherwise permissible under the Act.
[...]
[10] The words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intentions of the Legislature.10
[11] Section 202 of the Act requires the Board, in every case, to ascertain the real substance of disputed transactions regardless of their outward form. In doing so, the Board may consider the pattern of activities at the residential complex and the good faith of the parties. In my view, although the NORI was duly served, the real substance of this rent increase was the Landlord’s collection of a “premium … penalty … or other like amount of money” from pet-owning tenants, which explicitly contravenes section 134 of the Act.
[12] In my view, a tenant’s reasonable enjoyment of the property for all usual purposes includes the expectation that they will not be made subject to premiums, penalties or other charges for otherwise lawful conduct. There was no evidence that this Tenant’s pet had caused any damage to the complex property, nor any specific evidence of any particular case of such damage being done. That being so, the rent increase demanded of the Tenant in this case substantially interferes with her reasonable enjoyment by penalizing her for otherwise lawfully keeping a pet in the rental unit.
[13] For all the foregoing reasons, I find the Tenant is entitled to an abatement of rent equal to the increase demanded under the NORI.[...]"
"(4) Grounds of Appeal
[26] As mentioned, the crux of the appellant’s argument is that when the Tenants entered into the new one-year tenancy agreements, the term of the tenancies was severed, and thus the rental increase and notice provisions of the RTA were inapplicable, and the new rent lawful.
[28] First, s. 113 of the RTA expressly permits the establishment of a new rental rate with a new tenant. Recognition of a similar carve-out for an existing relationship involving the same tenant, the same landlord, and the same premises would undermine the purpose of the Act. A renewing tenant is not a new tenant. Put differently, the appellant’s proposed statutory interpretation is inconsistent with the scheme of the RTA’s rent control provisions considered as a whole. The structure and purpose of the Act would be undercut if at the commencement of each year, a landlord could increase the rent simply by entering into a new tenancy agreement. A tenancy agreement involving the same parties and the same premises requires the landlord to give 90 days’ notice of an increase pursuant to the clear provisions of the RTA. This conclusion is also consistent with this court’s decisions in Matthews and Nanne v. 3011650 Nova Scotia Limited (Michipicoten Forest Resources), 2015 ONCA 391.
[29] Second, the words “during the term of their tenancy” found in s. 120(1) must be read in context. The language in this section addresses the amount that a landlord may charge; it does not detract from or limit the Part VII provisions of the RTA, including the notice requirement. Any increase in rent required notice under s. 116 of the Act. Additionally, the increase could not exceed the annual guideline amount.
[30] Third, the appellant did not advance the s. 120(1) argument before either the LTB or the Divisional Court. Entirely new issues should typically not be entertained on appeal: Orr v. Metropolitan Toronto Condominium Corp. No. 1056, 2014 ONCA 855, at para. 87.
[31] As for the appellant’s argument that the LTB inappropriately relied on s. 38(1) of the Act, the Divisional Court recognized that s. 38(1) was inapplicable to this case but agreed with the LTB that the landlord was required to give 90 days’ notice of an increase pursuant to Part VII of the Act. I agree with that determination and would not give effect to this ground of appeal. The Divisional Court did not err in determining that the decisions of the LTB were reasonable.
[32] There is also no basis for the appellant’s remaining arguments. As is clear from the RTA and particularly s. 3 of the Act, the parties’ freedom to contract is expressly made subject to the RTA’s application. The Divisional Court did not err in refusing to validate rental increases that, despite their origin in contract, were constrained by the provisions of the RTA that required written notice. See also 1086891 Ontario Limited v. Barber, 2007 CanLII 18734 (ON SCDC), 284 D.L.R. (4th) 568 (Div. Ct.)."
It is ordered that:
1. The Landlord’s application is dismissed."
1. The Tenants allege that the Landlord repeatedly asked the tenants to vacate the rental unit and when they asked to stay, she increased their rent as a condition. According to the Tenant this happened in 2016, 2017 and 2018.
Rent Increase in 2016:
2. Based on the evidence and testimony of the parties the first alleged unlawful increase happened during negotiations between the parties after the Tenants had moved in but prior to an actual agreement to lease being signed in 2016 when the Landlord discovered that they had been renting out a portion of the home without her express consent. In this instance, the parties negotiated an increase in rent in exchange for Landlord’s consent to the Tenants’ renting the basement to someone else. The parties agree that the rent increased by $300.00 as a result. The Tenant who had originally rented the basement without the Landlord’s consent or knowledge now had her permission to do so, and the Landlord received increased rent commensurate with the number of tenants in her property and as compensation for the fact that the Tenants had altered the rental unit to create two separate units without her consent.
3. Nonetheless, the Act is clear that the Landlord can only increase the rent after proving the Tenant with lawful notice. The rent change at the beginning of the tenancy reflected on-going negotiations between the parties and was intended to remedy the Tenants’ failure to obtain consent prior to altering the unit to create a basement tenancy.
4. Regardless, the Tenants filed the application in September 2019 and s. 122(2) provides:
Tenant application
122 (1) A tenant or former tenant may apply to the Board for relief if the landlord and the tenant or former tenant agreed to an increase in rent under section 121 and,
(a) the landlord has failed in whole or in part to carry out an undertaking under the agreement;
(b) the agreement was based on work that the landlord claimed to have done but did not do; or
(c) the agreement was based on services that the landlord claimed to have provided but did not do so. 2006, c. 17, s. 122 (1).
Time limitation
(2) No application may be made under this section more than two years after the rent increase becomes effective. 2006, c. 17, s. 122 (2).
5. Therefore, I do not need to make any findings with respect to the 2016 increase because the application was filed more than 2 years after the increase took effect.
Rent increase in 2017
6. The parties agree that in spring/summer 2017 as their initial term was ending, the Landlord asked the Tenants to vacate and they asked to stay and in exchange she asked them for more rent. The Tenants testified that they reluctantly agreed to pay $100.00 per month and their lease was renewed for an additional 12-month term from July 2017 to August 2018.
7. The increased rent took effect the following month. In this instance, the Landlord failed to give the tenant proper notice as required in section 116 of the Act and set out below.
Analysis:
Notice of rent increase required
116 (1) A landlord shall not increase the rent charged to a tenant for a rental unit without first giving the tenant at least 90 days written notice of the landlord’s intention to do so. 2006, c. 17, s. 116 (1).
Same
(2) Subsection (1) applies even if the rent charged is increased in accordance with an order under section 126. 2006, c. 17, s. 116 (2).
Contents of notice
(3) The notice shall be in a form approved by the Board and shall set out the landlord’s intention to increase the rent and the amount of the new rent. 2006, c. 17, s. 116 (3).
Increase void without notice
(4) An increase in rent is void if the landlord has not given the notice required by this section, and the landlord must give a new notice before the landlord can take the increase. 2006, c. 17, s. 116 (4).
8. Based on the notice requirements of s. 116(4) and the fact that the Landlord insisted on receiving more rent, I find that she breached the notice requirements for lawful rent increase and the Tenants would ordinarily be entitled to receive that money back but for the fact that they delayed filing their application until September 2019 which is more than 1 year after the rental increase was applied, therefore and pursuant to section 136 of the Act.
136 (1) Rent charged one or more years earlier shall be deemed to be lawful rent unless an application has been made within one year after the date that amount was first charged and the lawfulness of the rent charged is in issue in the application. 2006, c. 17, s. 136 (1).
Increase deemed lawful
(2) An increase in rent shall be deemed to be lawful unless an application has been made within one year after the date the increase was first charged and the lawfulness of the rent increase is in issue in the application. 2006, c. 17, s. 136 (2).
s. 122 prevails
(3) Nothing in this section shall be interpreted to deprive a tenant of the right to apply for and get relief in an application under section 122 within the time period set out in that section. 2006, c. 17, s. 136 (3).
Rent increase 2018 after notice that Landlord wished to move for Landlord’s own use:
9. Based on her testimony, the Landlord wished to move back into the rental unit in 2018. She had been renting an apartment and relied on the rental income to supplement her living expenses, however, after a trip overseas to visit her ailing mother she decided that she wished to move into the rental unit and reside there herself.
10. Once again, the Tenants attempted to delay vacating and this time they offered to pay an additional $100.00 which the Landlord accepted in exchange for extending the term for an additional year, this time to August 1, 2019.
11. The Tenants submit that they offered more money because they had formed a close connection with the community and because of their young child who was in school nearby. They asked the landlord if they could remain in the rental unit for an additional year so their daughter could remain in the same elementary school. As such the parties agreed to extend the tenancy from August 1, 2018 to August 28, 2019.
12. The Landlord argues that the extension constitutes a new agreement and that each party received something in exchange for the new arrangement. She explained that the original term had ended and therefore, she was entitled to renegotiate, and in any event, it was the Tenants who proposed the increase. I find that the parties entered into a new agreement for an additional year and that each party benefited from the new arrangement. Therefore, s. 116 (4) does not apply to this situation, nor does s. 124 which prohibits Landlords from coercing Tenants into agreeing to pay more rent.
13. Having considered the testimony of the parties, I do not find that the Landlord coerced the Tenants into offering more money nor that she applied any form of duress. It seems to be more likely than not, that Tenants were not ready to vacate even though the Landlord had been consistent in wanting her property back. They likely believed that she was attempting to get more money and so offered to pay more. The Tenants may have felt compelled to offer more money, but the compulsion was not from the Landlord in this instance. From her testimony, which I found credible, it seems more likely than not that she simply wanted to reside in her property.
Landlord failed to provide proper compensation as required in s. 55.1 of the Act
14. The Tenants also claimed that the Landlord failed to provide them with 1 month’s compensation as required pursuant to s. 55.1 of the Act.
15. Sections 48 and 55.1 of the Residential Tenancies Act, 2006 require a landlord to pay the tenant compensation equal to one month’s rent prior by no later than on the termination date specified in the N12 Notice.
16. In this case, the tenants were served with Notice to Terminate at End of the Term for Landlord’s or Purchaser’s Own Use (N12) in July 2019 and this time she refused to renegotiate and so the Tenant’s agreed to vacate on or before the September 30 of 2019. The Landlord did not provide the one-month compensation as required, however, she testified, and the Tenants did not disagree, that she did not cash their rent cheque for the month of September 2019. The Tenants vacated the rental unit on or about September 17, 2019, the rental period runs from the 1st to the end of each month. Since the Tenants vacated on September 17, 2019, they should have received 13 days of rent paid back. Therefore, I find that the landlord owes the tenants per diem compensation in the amount of $1,196.65, which is per diem of $92.05 times 13 days.
17. The Landlord collected rent in excess of the amount allowed by the Act."
- On the facts of this case, I do not agree that the parties entered into a new tenancy agreement, and I do not accept that the addition of Tenant 2 as a tenant in 2014 created a new tenancy so as to allow the Landlords to increase the rent without service of a NORI as required by the Act. Section 202 of the Act directs the Board, when determining issues before it, to ascertain the real substance of transactions and activities, and states that the Board may disregard the outward form of a transaction and have regard to the pattern of activities relating to the unit. The parties signed either “new” tenancy agreements or extension agreements every year, with few, if any, changes, and the Landlord does not argue that those created new tenancies. The fact that a new written tenancy agreement was signed does not necessarily mean that a new tenancy agreement was created. In this case, neither party acted as though the 2014 leasing document created a new tenancy. This is demonstrated by the fact that the Landlords continued to maintain the same rent ledger as they had since 2011 in which Tenant 1 was named as the tenant, and the Landlords continued to deal only with Tenant 1 in relation to the tenancy. The father was already named as an occupant prior to 2014. I find that this was not a new tenancy, but rather, was an extension of the existing tenancy, with Tenant 2 being added as a tenant.
- Therefore, since no NORI was served, I find that the increase in rent from $900.00 to $950.00 was an illegal rent increase, and that the lawful monthly rent was and continues to be $900.00."
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