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Residential Landlord and Tenant (Ontario) Legal Guide
Chapter 12 - Other Rent Proceedings
(01 September 2020)Caution
- Overview
- Rent Reduction on Decline in Municipal Taxes and Charges [Act s.131-133]
(a) Overview
(b) Municipal Notice and Rent Reduction
(c) Applications to Vary s.131 Reductions
(d) Tenant Applications for Rent Reduction on Decrease in Municipal Taxes and Charges
(e) s.132/133 Written Hearing Procedure
- Tenant Applications to Decrease Rent on Reduction in Services [s.130]
(a) Overview
(b) Determination of Rent Reduction
(c) Orders
(d) Limitation Period
(e) Rent Decrease Rules Superceded by Suite Meter and Utility Cost Apportionment Rules Where Applicable
- Changes in Rent on Agreement to Change Prescribed Services etc [Act s.123, 125]
(a) Overview
(b) Listed Services, Facilities, Privileges, Accomodations or Things
(c) Determination of Amount of Increase/Decrease in Rent
. Minimum Decrease Where Prior Rent Control Activity regarding the Service
. Maximum Increase/Decrease Where No Prior Rent Control Activity regarding the Service
(d) Rent Increases from Agreed Service Increases Independent of Other Rent Control Rules
(e) Rent Increase/Decrease Rules Superceded by Suite Meter and Utility Cost Apportionment Rules Where Applicable
- Agreements to Increase Rent on Capital Expenditures and Other Service Increases [Act s.121]
(a) Overview
(b) Form of Agreement
(c) Tenant Right to Cancel
(d) Agreed Rent Increases Exempt from some Rent Control Procedures
(e) Tenant Applications Where Non-Compliance
- "Serious Breach" Rent Increase Restriction Orders and New Tenants [Act s.114-115]
(a) Overview
(b) Notice Regarding Lawful Rent to New Tenant
. Overview
. Notice Regarding Lawful Rent to New Tenant Before Possession Taken
. Notice Regarding Lawful Rent to New Tenant After Possession Taken
(c) New Tenant's Application to Determine Lawful Rent and Rebate
. Orders Available
. Procedures
(d) Resumption of Rent Increases Against New Tenant When Serious Breach Order Remedied
. Overview
. Where Notice of Rent Increase Not Required
- General Application to Recover Illegally Paid or Retained Monies [Act s.135]
(a) Overview
(b) Note re s.115 Procedure
(c) Illegal Rent Recovery
. Overview
. Substantive Issues
. Limitation Issues
(d) Other Illegal Charge Recovery
- Suite Meters
(a) Overview
(b) Suite Meter Conversion Requirements
. Overview
. Information that Must Be Given to Existing Tenants
. Consent
. Notice of Change
(c) Physical Installation of Suite Meters
(d) Suite Meter Conversion Where Electricity is the Primary Form of Unit Heating
(e) Rent Reduction on Suite Meter Conversion
. Overview
. When Rent Reduction to be Effective
. Calculation Options Where Electricity is Not Primary Form of Unit Heating
. Calculation Where Electricity is the Primary Form of Unit Heating
. Exemptions from Rent Reduction Requirements
(f) No In-Force Provision for Revision of Rent Reductions
(g) deleted
(h) Landlord Duties Re Appliances After Conversion
(i) Tenant Application to Board to Determine Suite Meter Rules Compliance
. Overview
. Ancillary Non-Compliance
. Basic Non-Compliance
(j) Ancillary Suite Meter Changes to Other RTA Provisions
. Overview
. Above-Guideline Rent Increases
. Illegal Charges
. Where Landlord's Vital Services Duty Excepted
- Apportionment of Utility Costs
(a) Overview
(b) Utility Cost Apportionment Requirements
(c) Apportionment Options
(d) Rent Reduction
. Overview
. 'Bill-Splitting' Apportionment
. 'Square Footage' Apportionment
. Exemptions from Rent Reduction Requirements
(e) No Termination and Eviction for Non-Payment of Apportioned Utility Costs
(f) Landlord Compliance with Conservation and Efficiency Standards
(g) Landlord Information Duties Re Prospective Tenants
(h) Tenant's Application to Enforce Utility Cost Apportionment Rules
. Determination
. Orders Available Where Conservation and Information Duty Breaches
. Orders Available Where Apportionment Illegal
(i) Apportionment Rules Not Available Where Pre-Existing Apportionment Already In Place
(j) Ancillary Changes to Above-Guideline Rent Increase Rules
Caution
Readers reviewing this section regarding a specific application procedure should also be sure to review Ch.13, s.4 "General Board Procedures: General Application Procedures". That section discusses important procedures governing all applications that can be brought before the Board.
Note Re: Special and Exempt Premises:
Some residential rental premises - such as care homes, mobile home parks, land lease communities, student accomodation, superintendent's premises, social housing, premises under mortgage proceedings - and others - may be exempt from all or part of the Residential Tenancies Act (RTA), or may be subject to special RTA provisions. Readers may want to review Ch.2: "Special and Exempt Premises" to check if this is the case for their specific premises.
As well, some premises are exempt from all or most rent control provisions of the RTA. Readers should be sure to review Ch.10, s.6: "Rent Fundamentals: Exemptions from Rent Control". Especially note that even "rent control"-exempt premises may require Notice of Rent Increase to be issued to take a rent increase.
Note Re: Offences
Many breaches of the Residential Tenancies Act are also prosecutable offences. Readers may want to review Ch.17: "Offences" regarding specific breaches.
1. Overview
This chapter can be viewed as 'all the other rent stuff' besides general rent procedures and the main s.126 landlord-initiated above-guideline rent increases procedures [see Chapters 10 and 11].
The matters discussed here are independent of any previous s.126 Application or Order, and are generally either tenant-initiated or in the nature of agreements between both landlord and tenant. That being the case, they may generally be initiated at any time, including during any s.126 proceedings or while any prior s.126 Orders are still active.
As with s.126 applications, these procedures can be quite complex. It is a safe prediction that they will see far less usage than above-guideline applications, for the same reason that s.126 procedures will be little-participated in by tenants: complexity and relative expense (ie. the cost of legal participation when compared with the potential gain).
2. Rent Reduction on Decline in Municipal Taxes and Charges [Act s.131-133]
(a) Overview
Any significant municipal property tax and charge decreases in a residential complex must be passed on to the tenants in the form of a rent reduction [Act 131(1)].
The procedures for obtaining the rent reduction vary with the size of the residential complex in which the rental unit exists. For larger residential complexes (seven or more rental units), the RTA imposes a duty on the local municipality to give both landlord and tenants Notices of the municipal tax and charge reduction and of the corresponding rent reduction [Act s.131(3)(4)].
For smaller residential complexes the burden of implementing the rent reduction falls on the landlord (who will receive their property tax bill directly). Where the landlord does not do this, the tenant may make an application to the Board for an Order compelling a rent reduction [Act s.133].
In any case the parties may apply to the Board for a variance of the rent reduction amount set out in the municipal Notice, or as determined by the landlord - as the case may be [Act s.132].
(b) Municipal Notice and Rent Reduction
As mentioned above, the RTA imposes a duty of municipalities to notify both tenants and landlords of larger residential complexes (seven or more rental units) of property tax decreases above a certain threshold level (2.49%) [Reg s.41(1)(5); Act s.131(2)(3)]. It is that Notice that informs the tenant of the amount and date of the rent reduction [Act 131(4)].
The determination of rent reduction amount, date, notice and service procedures governing these reductions is set out in Reg 41, linked here:
RTA General Regulation s.41: Rent Reduction Rules re Act s.131
As well, the Act specifically countenances the use of the general "illegally-paid monies" application procedures to recover excess rents paid due to non-compliance with these rent reduction duties [Act s.131(4)(c); see s.7 below].
(c) Applications to Vary s.131 Reductions
Both landlords and tenants may apply to the Board for a "variance" of a rent reduction generated under s.131 (above) [Act s.132] - either as a result of a Municipal Notice or the landlord's implementation of a rent reduction - under the circumstances and in accordance with the rules set out in the following General Regulation provisions:
RTA General Regulation s.42: Grounds and procedures for s.132 variances
RTA General Regulation s.43: Determination Rules for s.132 variances
RTA General Regulation s.44: Information to accompany s.132 Variance Applications/a>
Form A4: Application to Vary the Amount of a Rent Reduction
(d) Tenant Applications for Rent Reduction on Decrease in Municipal Taxes and Charges
In a process apparently designed for small building situations where the landlord does not reduce the rent in accordance with s.131 rules (above), the RTA provides for a tenant-initiated Application to the Board to obtain a rent reduction Order "due to a reduction in the municipal taxes and charges for the residential complex" [Act s.133(1)].
Form T3: Tenant Application for a Rent Reduction
These Applications may be made under the circumstances and in accordance with the rules set out in the following General Regulation provisions:
RTA General Regulation s.45: Rent Reduction Determinations and Procedures re s.133 Applications
RTA General Regulation s.40: Application of s.24 and 25
RTA General Regulation s.24: Determination of capital expenditures, operating costs
RTA General Regulation s.25: Non-arm's length transaction
As noted above, the Act specifically countenances the use of the general "illegally-paid monies" application procedures to recover excess rents paid due to s.131 non-compliance [Act s.131(4)(c)]. Tenants making s.133 applications may want to join them with such s.131 applications [see s.7 below].
(e) s.132/133 Written Hearing Procedure
Section 132 and 133 Applications, if heard by way of written hearings, are subject to some variations from normal Statutory Powers Procedures Act (SPPA) procedures regarding written hearings. These variations relate to the "right to object" to use of the written hearing procedure, and the right to the same disclosure as that afforded to the Board [Act s.184; see Ch.14, s.4(f): "Hearings, Orders and Enforcement: Hearings: Written Hearings"].
3. Tenant Applications to Decrease Rent on Reduction in Services [s.130]
(a) Overview
Tenants (and former tenants) may apply to the Board for a rent reduction "due to a reduction or discontinuance in services or facilities provided in respect of the rental unit or the residential complex." [Act s.130(1)(2)].
Form T3: Tenant Application for a Rent Reduction
"Services and facilities" includes [Act s.2]:- furniture, appliances and furnishings,
- parking and related facilities,
- laundry facilities,
- elevator facilities,
- common recreational facilities,
- garbage facilities and related services,
- cleaning and maintenance services,
- storage facilities,
- intercom systems,
- cable television facilities,
- heating facilities and services,
- air-conditioning facilities,
- utilities (heat, electricity and water) and related services, and
- security services and facilities.
Case Note: First Ontario Realty Corporation Ltd v Deng (Ont CA, 2011)
In this case the Court of Appeal considered an appeal from a Divisional Court judgment which reversed an earlier Board order granting a tenant request for a rent reduction based on a reduction in "common recreational facilities". The Divisional Court decided, applying a standard of correctness, that an external area of land around the buildings only fit that definition if it was specifically landscaped for recreational purpose.
The Court of Appeal disagreed that the standard to be applied to this was correctness, and on a standard of reasonableness held that the Board had not erred on this point. However, the court also found that even if this was the case that the tenants were not entitled to a rent reduction as they had been otherwise compensated by collateral improvements to other available facilities, for which the landlord had foregone by agreement the right to apply for an above-guideline rent increase. Further, as the Board's valuation of the reduction in facilities was ultimately based entirely on what was requested by the tenants, and not some objective standard, that it was unreasonable.
While this case was decided under s.142(1) and related provisions of the old Tenant Protection Act, the current RTA s.130(1) is similar and the reasoning transferrable. (b) Determination of Rent Reduction
The amount of any rent reduction (and retroactive rebate due) shall be determined by the rules set out in the following General Regulation provisions:
RTA General Regulation s.39: Rent Reducation Rules
RTA General Regulation s.40: Application of s.24 and 25
RTA General Regulation s.24: Determination of capital expenditures, operating costs
RTA General Regulation s.25: Non-arm's length transaction
(c) Orders
The Board's remedial jurisdiction on a s.130 Application includes [Act s.130(3)]:- permanent rent reduction;
- where a temporary reduction of service is found, a temporary rent reduction;
- rebates of unlawfully charged rents.
Any rent reduction Order shall be effective "on the day that the discontinuance or reduction first occurred". [Act s.130(4)].
Rebates can be expected to be ordered where the Application is made by a former tenant, for whom rent reduction is inapplicable.
(d) Limitation Period
Applications under s.130 may not be made more than one year "after a reduction or discontinuance in a service or facility" [Act s.130(5)].
(e) Rent Decrease Rules Superceded by Suite Meter and Utility Cost Apportionment Rules Where Applicable
Special rent reduction rules apply where electricity suite meter or utility cost apportionment programs are put in place. These are energy conservation-related programs that are discussed in detail at Ch.12, s.8 "Suite Metering" and s.9 "Utility Cost Apportionment".
Commensurate with these programs are provisions for rent reduction which result from the transfer of electricity cost responsibility from the landlord to the tenant directly (in the case of suite meters) and the removal of utility costs from the legal definition of rent (for utility cost apportionment). When rent reductions are mandated under such changes then those rules supercede the s.130 rules set out above, at least with respect to reductions in water, electricity and heat services [Reg s.39(1.1)].
4. Changes in Rent on Agreement to Change Prescribed Services etc [Act s.123, 125]
(a) Overview
Agreements between tenants and landlords to either increase or decrease any of a list of "services, facilities, privileges, accomodation or thing(s)" [hereafter "services"] may (at the landlord's discretion) trigger rent increases and shall trigger rent decreases, as the case may be [Act s.123, 125].
It is important to note that the issues discussed in this section are not agreements to increase or decrease rent, but rather agreements to change service levels (which may have an incidental effect on rent). In this section it is the RTA-prescribed rules which determine the amount of rent increase or decrease based on the nature of the service level change. For agreements to expressly increase rent (in relation to capital expenditure and/or service increases), see s.5 below.
Even quite casual 'agreements' or understandings amongst landlords and tenants regarding service changes can give rise to these rent changes - and there is no apparent legal duty on the part of either to notify the other of their intentions to seek a consequent rent change. As such, one or both parties are at risk of not understanding the full implications of such service change agreements, and may be later surprised by demands from the other for rent changes.
That said, the law renders void any agreements to increase services (and thus potentially to increase rent) that have "been entered into as a result of coercion or as a result of a false, incomplete or misleading representation by the landlord or an agent of the landlord" [Act s.124]. Failure of the landlord to notify the tenant of their intention to exact a corresponding rent increase based on the service increase would seem in most cases to constitute an "incomplete ... representation".
Note that there is no corresponding 'incomplete or misleading representation' provision to protect landlords when agreements to reduce services are made.
(b) Listed Services, Facilities, Privileges, Accomodations or Things
As noted above, where both landlord and tenant agree to the service change, the rent "may" be increased (ie. at the landlord's option) where a service is added - and "shall" be decreased (ie. mandatory) where a service is removed. These provision apply with respect any of the following "services, facilities or privileges" [Act s.123(1), s.125; Reg 16(1)]:- a parking space;
- cable television;
- satellite television;
- an air conditioner;
- extra electricity for an air conditioner;
- extra electricity for a washer or dryer in the rental unit;
- blockheater plug-ins;
- lockers or other storage space;
- heat;
- electricity;
- water or sewage services, excluding capital work;
- floor space;
- property taxes with respect to a site for a mobile home or a land lease home.
(c) Determination of Amount of Increase/Decrease in Rent
. Minimum Decrease Where Prior Rent Control Activity Regarding the Service
The minimum rent decrease for the decrease of a service which was earlier subject of agreement-based rent change activity under this or predecessor legislation [s.132 of the Tenant Protection Act, 1997, s.46 of the Rent Control Act, 1992 or s.96(4) of the Residential Rent Regulation Act] shall be equal to [Reg s.16(5)]:- any separate charge most recently made for the service, or
- where no separate charge was made "the increase in rent which the landlord took when the service, facility, privilege, accommodation or thing was first provided" increased by the total rent increase percentages taken since that time (ie. the past increase for the service, increased by any accumulated guideline or other authorized rent increases since that time).
In other words, where the service decreases - in whatever degree, any rent increases made for it under any prior agreements are wiped out.
. Maximum Increase/Decrease Where No Prior Rent Control Activity Regarding the Service
Where there has not been such prior rent control activity respecting the changed service/s, the maximum change in rent resulting from such agreements shall be the actual cost of the service increased or decreased "or, where the actual cost to the landlord cannot be established or where there is no cost to the landlord, a reasonable amount based on the value of the service" [Reg 16(2)].
For floor space changes however the rent increase or decrease is normally limited by the simple arithmetic proportion that the floor space increase or decrease bears to the whole floor space in the rental unit [Reg s.16(3)]. However, where the "nature and quality of the floor space" is such that this simple proportion would be unreasonable (eg. a large unfinished basement) the rent change may be varied to something more reasonable [Reg s.16(4)].
(d) Rent Increases from Agreed Service Increases Independent of Other Rent Control Rules
Landlord rent increases resulting from agreed additional services are not subject to [Act s.123(2)]: - the guideline amount limitation [Act s.120(1)] (ie. they can exceed it),
- the duty to give a Notice of Rent Increase,
- the 12-month rule; and
- any s.30 "serious breach" Orders restricting the landlord from charging a decontrolled rent to a new tenant until the landlord remedies their default in repair duties [see Ch.3, s.5(c): "Tenant Rights, Responsibilities and Remedies: Tenant Rights Applications: Serious Breach Orders for Repair and Maintenance-Related Breaches].
(e) Rent Increase/Decrease Rules Superceded by Suite Meter and Utility Cost Apportionment Rules Where Applicable
Special rent reduction rules apply where electricity suite meter or utility cost apportionment programs are put in place. These are energy conservation-related programs that are discussed in detail at Ch.12, s.8 "Suite Metering" and s.9 "Utility Cost Apportionment".
Commensurate with these programs are provisions for rent reduction which result from the transfer of electricity cost responsibility from the landlord to the tenant directly (in the case of suite meters) and the removal of utility costs from the legal definition of rent (for utility cost apportionment). When rent reductions are mandated under such changes then those rules supercede the s.123/125 rules set out above, at least with respect to reductions in water, electricity and heat services [Reg s.16(1.1)].
5. Agreements to Increase Rent on Capital Expenditures and Other Service Increases [Act s.121]
(a) Overview
Landlords and tenants may agree to a rent increase of up to three percent above-guideline if the landlord has carried out - or promises to carry out - a "specified capital expenditure in exchange for the rent increase" or "the landlord has provided or undertakes to provide a new or additional service in exchange for the rent increase." [Act s.120(1), 121(1)(3)].
With respect to an increase in services, these s.121 Agreements are very similar to s.123 agreements (s.4, immediately above). However s.123 agreements are agreements to increase or decrease services, while the present s.121 agreements are ones to increase rent (in relation to a service increase or capital expenditure). This may seem a fine distinction but s.123 agreements have no requirement that the rent change consequences of a service change be made plain between the parties, a problem not shared with s.121 agreements.
Further, as with s.123 agreements, the law renders void any agreements to increase rent that have "been entered into as a result of coercion or as a result of a false, incomplete or misleading representation by the landlord or an agent of the landlord" [Act s.124].
(b) Form of Agreement
Such agreements must be in writing, use the appropriate Board-approved form, and "set out the new rent, the tenant's right under subsection (4) to cancel the agreement and the date the agreement is to take effect" [Act s.121(2)].
Form N10: Agreement to Increase the Rent Above the Guideline
(c) Tenant Right to Cancel
Such agreements may not come into effect until at least six days have past since they were signed [Act s.121(5)], so the tenant may repudiate (cancel) the agreement "by giving written notice to the landlord" to that effect in the first five days after signing [s.121(4)].
Note that the delay in mail service is five days [Act s.191(3)], so tenants seeking to repudiate such agreements would be wise to serve such written repudiation personally [see Ch.13, s.8: "General Board Procedures: Service and Filing of Documents"].
(d) Agreed Rent Increases Exempt from some Rent Control Procedures
No Notice of Rent Increase is required for a landlord to take a rent increase resulting from such agreement [Act s.121(6)].
Note further that any Notices of Rent Increase given before such agreement, to take effect after it takes effect, are voided by the agreement. Further (and perhaps unnecessarily) a tenant's failure to give a Notice of Termination at the next available oppourtunity after receiving such a (now voided) Notice of Rent Increase does not operate to condone the increase claimed in it [this provision included to avoid Act s.118, which would otherwise impute an acceptance of the increase if the tenant stayed on] [Act s.121(7)].
(e) Tenant Applications Where Non-Compliance
After such a rent increase agreement, a tenant (or former tenant) may apply to the Board for relief if they allege that the landlord has [Act s.122(1)]:- "failed in whole or in part to carry out an undertaking under the agreement";
- "the agreement was based on work that the landlord claimed to have done but did not do"; or
- "the agreement was based on services that the landlord claimed to have provided but did not do so".
Form T4: Tenant Application - Landlord Did Not Comply with an Agreement to Increase Rent Above the Guideline
Such application must be commenced within two years of the rent increase becoming effective [Act s.122(2)].
If, on such an application, the Board finds some or all of the rent increase "invalid from the day which it took effect" it may order a rebate of such excess rent to the tenant [Act s.122(3)].
While - normally - illegally-charged rents are "deemed" legal if unchallenged by way of RTA application within one year, that rule is excepted to allow recovery going back more than a year under these s.122 applications [Act s.136(3)].
6. "Serious Breach" Rent Increase Restriction Orders and New Tenants [Act s.114-115]
(a) Overview
As is discussed in Ch.3, s.5(c) ["Tenant Rights, Responsibilities and Remedies: Tenant Rights Applications: Serious Breach Orders for Repair and Maintenance-Related Breaches"], special "serious breach" orders can be made by the Board (on the application of either a tenant or a former tenant) against landlords who are in "serious breach" of their repair and maintenance duties. Such Orders may suspend the landlord's right to increase rent, either between tenancies (thus barring the effect of vacancy decontrol) or during tenancies (by restricting the right to give an NRI, or the right to take an increase of an NRI already given) [Act s.30(1) paras. 6,7,8].Note:
In most circumstances, determining when these "serious breach" rent restriction Orders are no longer in effect can be difficult.
Where the increase sought by the landlord relates to a continuing tenant (ie. not a new tenant) and is an above-guideline rent increase which has been other authorized by the Board (but suspended by the serious breach Order), the rent restriction Order (ie. suspension) is in effect until the Board, on motion broght by the landlord for this purpose, lifts it [Act s.126(13); see Ch.11, s.6: "Above-Guideline Rent Increases: Dismissal or Suspension of Order Where Serious Repair Breach by Landlord"]].
However, in all other circumstances where a serious breach rent restriction Order is in effect (ie. "new tenant" market rent increase, or "guideline" increase against continuing tenant) there is no legal mechanism (such as the motion, above) to determine when the serious breach Order has been satisfied - and thus when rent increases may be resumed. This section discusses the duty of the landlord to notify new tenants of current serious breach Orders, and related procedures.
(b) Notice Regarding Lawful Rent to New Tenant
. Overview
This sub-section discusses the notification duties that a landlord has to a new tenant when a serious breach Order is in effect, and the new tenant's remedies on default of these duties.
The following form is used for these purposes:
Landlord's Notice to a New Tenant About an Order Prohibiting a Rent Increase
. Notice Regarding Lawful Rent to New Tenant Before Possession Taken
Where a serious breach Order is in effect with respect to a rental unit and the unit becomes vacant, the landlord is required to serve a prospective tenant with a written Notice (hereafter "serious breach notice") regarding the lawful rent (as below) before the tenancy agreement is entered into [Act 114(1)]. A similar duty exists if the tenancy agreement is already entered into but possession has not yet been taken [Act 114(2)].
Such a "serious breach Notice" must be in the Board-approved form (above) and should include [Act 114(3)]:- information about the order (as the form requires);
- the lawful rent during the period of the rent restriction;
- the lawful rent after the rent restriction ends;
- the last lawful rent charged for the rental unit;
- "such other information as is prescribed."
. Notice Regarding Lawful Rent to New Tenant After Possession Taken
If a serious breach Order takes effect after a new tenant moves in (ie. a tenant other than the one that initiated the s.30 Order by application to the Board) then the landlord is required to "promptly" serve them with a written "serious breach Notice" regarding the lawful rent (as below) [Act 114(4)].
The serious breach Notice must be in the Board-approved form (above) and should include [Act 114(5)]:- information about the order (as the form requires);
- "such other information as is prescribed."
(c) New Tenant's Application to Determine Lawful Rent and Rebate
. Orders Available
Any new tenant (ie. other than the one who initiated the serious breach Order) who is entitled to a serious breach Notice under s.6(b) above - and regardless of whether they received it or not - is entitled to apply to the Board for Orders [Act 115(1)]:- determining the lawful rents during and after the s.30 rent increase restriction;
- rebating any overpayment of rent to the tenant.
Form T1: Tenant Application for a Rebate of Money the Landlord Owes
In addition, if the Board finds that the landlord has not met their notification duties (under s.114, as above) then it may also order "the landlord to pay to the Board an administrative fine not exceeding the greater of $10,000 and the monetary jurisdiction of the Small Claims Court". [which at September 2019 was $25,000] [Act 115(3)].
. Procedures
Such applications must be made within one year of the new tenant taking possession of the rental unit [Act 115(2)].
Further, on the making of such an application the landlord is required to file with the Board "at or before the hearing, an affidavit sworn by the landlord setting out the last lawful rent charged to the former tenant and any available evidence in support of the affidavit" [Act 115(4), Reg s.15].
Proceedings available to recover excess rent paid by a new tenant due to a landlord's non-compliance with the duties discussed in this section are limited to those set out here. Note that this application procedure does not appear to be available to former tenants [Act s.115(5)], who must presumably proceed as per s.7 below (under a s.135 application). This distinction can be confusing as the same forms [T1] are used for both applications. Pay close attention to which of the numbered options you select, and read the instructions carefully.
(d) Resumption of Rent Increases Against New Tenant When Serious Breach Order Remedied
. Overview
A serious breach Order ends when the landlord satisfies the outstanding work orders and/or Board-ordered "specified repairs or replacements or other work".
Regarding problems in determining when serious breach Orders are satisfied, see the "note" in s.6(a) above.
. Where Notice of Rent Increase Not Required
Where a serious breach Order has restricted the landlord's ability to charge a new tenant a 'decontrolled' rent [under Act s.30(1)6], and the landlord remedies the breach, the landlord may claim the now-decontrolled rent without the need to give a Notice of Rent Increase (the tenant should know what this rent level is as it will have been the negotiated rent).
Similarly, where the serious breach Order halted a rent increase for which Notice of Rent Increase was already given [under Act s.30(1)8], the landlord may resume this right, on remedying the breach, without the need to give another Notice of Rent Increase.
This right to increase rent without a Notice of Rent Increase resumes on "the first day of the rental period following the date that the landlord" completes the work required under the serious breach Order [Act 117(4)]. For purposes of calculating the next rent increase date under the 12-month rule [see Ch.10, s.3(b)] the rent increases which were barred under the serious breach Order shall be deemed to have been taken at the dates they could have been taken under the normal operation of the twelve-month rule [Act 117(5)].
7. General Application to Recover Illegally Paid or Retained Monies [Act s.135]
(a) Overview
A general Board application process is available to tenants to obtain "an order that the landlord, superintendent or agent of the landlord pay to the tenant any money the person collected or retained in contravention of this Act or the Tenant Protection Act" [Act s.135(1)]. Such Orders are also available to former tenants, prospective tenants (in the case of illegally-obtained and retained "application fees") [Act s.135(2)], and subtenants against chief tenants [Act s.135(3)].
As well, when a landlord terminates a tenancy for any of a variety of reasons (personal or purchaser possession, repair/renovation, conversion, demolition) they typically owe the tenant monetary 'compensation' [Ch.5, ss.2 and 3]. If the landlord does not pay it, then the landlord is "deemed to have retained money in contravention of this Act", and as such the tenant may commence an application to obtain the funds [Act 135(1.1)].
Form T1: Tenant Application for a Rebate of Money the Landlord Owes
Tenants may want to review the Ch.10, s.4 and 5 discussions of "Lawful Rent" and "Non-Rent Charges and Security Deposits" on these issues.
While there is only one situation where such s.135 recovery is expressly recommended in the RTA (recovery of excess rent paid after property tax decrease) [Act s.131(4)(c); see s.2 above], the broad wording of the provision makes it plain that the s.135 procedures are meant to be general in nature, applying to both illegal rents and any other illegal charges made against tenants as long as they were initially paid in monetary form. As well, as was clarified in the below (Marineland) case, the provision can also be used to recover monies owing to the tenant under the RTA.Case Note: Marineland of Canada Inc. v. Olsen (Div Ct, 2011)
In this case the court clarified that monies owed to a tenant under the RTA (here statutory compensation for a landlord termination for conversion to use other than residential rental premises under RTA s.52), but remaining unpaid, were "retained" within the meaning of this provisions and as such subject to a tenant's s.135 application [para 9]. As such s.135 can apply not only to recover illegally-paid monies, but those illegally withheld as well. However such compensation owed to the tenant may be set-off by the Board against any rent arrears orders that it makes. (b) Note re s.115 Procedure
One situation where the s.135 recovery procedure is superceded by other available RTA applications is where the landlord's failure to comply with duties to serve new tenants with a "Serious Breach Notice" (which limits rent increases) results in the tenant paying illegal rents. In that case the tenant may only recover those monies under s.115 application procedures [see s.6(c) above]- unless they were not available to them (as in the case with former tenants), in which case the s.135 procedures may be used. This distinction can be confusing as the same form (T1) is used for both applications. Pay close attention to which of the numbered options you select, and read the instructions carefully.
Further, while (see below) illegally-charged rents are normally "deemed" legal if unchallenged by way of RTA application within one year [Act s.136(1)], that rule is excepted where a tenant alleges breach or non-compliance by a landlord respecting an agreement to increase rent based on capital expenditures or service increases [see s.5(e) above]. Such (s.122) applications allow recovery going back more than a year [Act s.136(3)] and thus may be preferrable in that situation to the general s.135 recovery procedure.
(c) Illegal Rent Recovery
. Overview
The 'grand (and not so old) days' of rent control, where a tenant found old evidence of low rent and discovers that they have been subject to illegal rent for years (and thus are entitled to a substantial present windfall) are almost gone. I handled one such case in the 1990s that went over $30,000 in value for one unit alone.
Now such claims may only go back one year in time, and the previously established "rent registry" - which evidenced past "legal rents" (tied to rental units themselves) - has been phased out [Act s.245(2)] (many view this as the death of "real" rent control in Ontario, and I agree). It's replacement, "vacancy decontrol", now establishes rent control over individual tenancies (rather than rental units, as was formerly the case) - with their typically limited duration. This frees landlords to charge market rents upon termination of the tenancy (ie. a vacancy).
That said, there are still limited oppourtunities to recover "recent" (ie. within the last year) illegal rents and charges through RTA processes [Act s.135]. This topic is assessed below from both substantive (ie. rights) and procedural perspectives.
. Substantive Issues
As noted above, the death-knell of substantial retroactive illegal rent recovery is that now (subject to a sympathetic reading of the Price case below) - regardless of the volume or egregiousness of any past illegality of rent amount - rent actually charged "one or more years earlier shall be deemed to be lawful unless an application [to recover same] has been made within one year after the date that amount was first charged" [Act s.136(1)].
Note that this is not just a simple limitation period barring RTA s.135 general recovery applications - which if it was might leave open civil restitution claims going back earlier than that. Rather, s.136(1) is a substantive provision which actually 'legalizes' these old illegal rents. As such (again, subject to Price) it bars claims going back earlier than a year regardless of procedural issues.
To this provision the RTA adds the (perhaps redundant) provision that rent increases also unchallenged by way of application become lawful, regardless of any inherent illegality within one year [Act s.136(2)].
Case Note: Price v Turnbull's Grove Inc (Ont CA, 2007)
The important case of Price v Turnbull's Grove Inc. (Ont CA, 2007), while deciding law under the Tenant Protection Act (TPA), considered TPA provisions that are practically identical to those differently-numbered ones of the present RTA. The facts are that a landlord gave verbal (and thus quite illegal, even under TPA law) notice of rent increase to a tenant, but that the tenant waited for more than a year later to dispute it before the Board.
For reference here are the parallel provisions, I will cite the TPA provisions in the below discussion as they are the ones referred to by the court. (NRI = Notice of Rent Increase):
| TPA | RTA | Description |
|---|
| 127(1) | 116(1) | written 90 day NRI required |
|---|
| 127(3) | 116(3) | NRI must use Board form and state new rent |
|---|
| 127(4) | 116(4) | non-compliance with section renders increase void |
|---|
| 141(1) | 136(1) | charged rent deemed legal after one year |
|---|
| 141(2) | 136(2) | charged increase deemed legal after one year |
|---|
The tenant's application for a rent rebate of the 'illegally'-paid excess rent was dismissed by the Board on the basis of TPA 141(1) which 'deemed legal' any rent charged if it was unchallenged by the tenant for more than one year after it was first charged. While not appealing that result the tenant persisted in paying the lower rent, in response to which the landlord moved to terminate and evict for non-payment of rent, which the Board granted and which the Divisional Court upheld - again relying essentially on TPA 141(1). It is worth noting that TPA 141(1) [like RTA 136(1)] was not a simple one year limitation period which only eliminated the tenant's legal remedy after one year - rather, after the year had expired, it actually purported to 'make' the rent legal for all other intents and purposes as well.
The Court of Appeal, Cronk JA writing for a unanimous panel, focussed however in the provisions of TPA 127, in particular the interaction between 127(1) and (4): TPA 127(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.
TPA 127(3)
The notice shall be in a form approved by the Tribunal and shall set out the landlord's intention to increase the rent and the amount of the new rent.
TPA 127(4)
An increase in rent is void if the landlord has not given the notice required by this section, and before the landlord can take the increase the landlord must give a new notice. It was plain that the original (verbal) 'notice' given to the tenant violated TPA 127(1), thus attracted the 'voiding' provisions of TPA 127(4). The Court of Appeal focussed on this and considered there to be an apparent conflict between TPA 127(1,4) and TPA 141(1) which deemed a charged rent to be legal if it was unchallenged after one year. The conflict existed between the use of the strong term 'void' in TPA 127(4) (rendering any such non-compliant notice ineffectual for all legal purposes) and the later 'legalizing' function of TPA 141(1).
In her analysis, Cronk JA relied heavily on basic principles of statutory interpretation, particularly the principles that a statute should be interpreted consistent with it's purpose (here tenant protection) and that any ambiguity in benefits-conferring legislation should flow in favour of the benefits-claimant (here the tenant): [40] .... The critical statutory purpose of the s. 127(1) notice requirement would be significantly undermined if ss. 141(1) or (2) of the Act were construed so as to imbue otherwise void rent increases with legal validity notwithstanding non-compliance with s. 127(1). Primarily on that basis she found that TPA 127(4) - when operative - acted as an exception to the legalizing provisions of TPA 141(1). Essentially she was saying that the rent charged was a 'nullity': "It is as if the increase never occured." [para 37].
The primary problem with that result (which I personally favour as a disincentive to landlord fraud) however was that it necessitated coming up with some residual meaning for TPA 141(1), for it is an equally compelling principle of statutory interpretation that no legislative provision should be rendered meaningless. Cronk JA addressed that concern in the following passages: [41] Fourth, on the view of the purpose and effect of ss. 127(1) and 127(4) that I hold, as described above, ss. 141(1) and (2) of the Act are not rendered meaningless. Part VI of the Act sets out various rules regarding rent, including, as I have stated, the requirement that the quantum of a rent charge or of a rent increase not exceed prescribed limits. Rent amounts that exceed those limits are unlawful. In my opinion, it is to these types of excessive or "tainted" rents that ss. 141(1) and (2) are intended to apply. In other words, ss. 141(1) and (2) deem a rent charge or a rent increase to be lawful in certain circumstances where they would otherwise be unlawful. But an "unlawful" rent charge or rent increase is not the same as a "void" rent charge or rent increase. Section 141 is directed to the former, while s. 127(4) is concerned with the latter.
[42] Fifth, while Part VI of the Act prohibits various conduct in respect of rent and rent increases, only conduct concerning a rent increase that offends s. 127(1) renders the increase void under Part VI. This signifies the importance of the s. 127(1) notice requirement to the rent control scheme established by the Act. For example, rent charged in contravention of s. 121(1) of the Act - rent in an amount that is greater than the lawful rent permitted under Part VI of the Act - is not deemed to be void under Part VI of the Act. This type of 'tainted' rent charge, therefore, could be subject to the remedial effect of s. 141(1) of the Act in a proper case. Similarly, where proper notice of a proposed rent increase is given in conformity with s. 127(1) of the Act, but the amount of the proposed increase exceeds the permitted increase prescribed by the guideline under the Act - in contravention of s. 129(1) of the Act - s.141(2) may be engaged. Cronk JA thus tries to set up a distinction between 'void' and 'illegal' rent increases. She would allow the TPA 141(1) 'legalizing' provision to operate to protect unchallenged rents that are (only) 'illegal' in the amount claimed, but not those that are 'void'. On the other hand a 'void' Notice is one that violate the (apparently) more primary requirement of TPA 127(1) that the Notice be in writing and that it be given 90 days prior to the rent increase.
With respect, in my opinion this is a legal error on her part. It is not only TPA 127(1) that triggers 127(4) - it is any failure to give notice "required by this section" - that is, the whole of TPA s.127, not just TPA 127(1). With that in mind, if we have regard to TPA 127(3) we see that it creates the requirement that the NRI "set out ... the amount of the new rent". Under Cronk JA's reasoning then an NRI which sets out an illegally excessive rent [and thus manifesting a TPA 121 violation] does not violate TPA 127(3) so as to attract the voiding provision of 127(4). That is, claiming an illegal rent is compliant with TPA 127 - a strained bit of reasoning for a tenant-protecting, benefits-conferring provision.
Lasatly, it is plain that Cronk JA did not have regard to the operation of TPA 127(3) in her analysis, as she was of the view that "... only conduct concerning a rent increase that offends s. 127(1) renders the increase void under ..." [para 42].
So, with respect - and inviting anyone with a differing analysis to correct me - I think that the 'illegal/void' distinction that Cronk JA advances to support her avidance of TPA 141 is untenable.
That's all well and good (and again, I prefer the result) but the question remains as to the practical effect of this ruling. After all, it is a Court of Appeal ruling and neither the Board nor the Divisional Court are entitled to second-guess it. In my opinion the case will stand as authority for the following limited propositions:- rent increases that are made in violation of the writing and 90 days notice requirements of TPA 127(1) [now RTA 116(1)] will be challengeable (even after one year of being otherwise unchallenged), although only through by a non-payment of rent defence [because RTA s.135 illegal charge rebate applications are otherwise barred by the one year limitation period established by RTA 135(4)];
- rent increases and illegal rents that are made in violation of any of the following provisions and requirements will, after one year of being unchallenged in either in a non-payment of rent termination proceeding or a RTA s.135 illegal charge application (or otherwise), be unchallengeable in any forum whatsoever:
- the TPA 127(3) [now RTA 116(3)] rules that require use of the Board-issued form, and that require such the notice to "set out ... the amount of the new rent",
- any NRI form requirement (the NRI's use Form N1) such as naming the tenants and/or the address of the unit, stating the increase in percentage terms, and/or stating the date that the increase is to be effective;
- any other NRI-related or rent increase-related law, such as improper service (and ... whatever else these complex rules can throw up as a violation).
But courts - being courts - if they are sensitive to Cronk JA's error here, are quite able to apply Price as they see fit. This would suggest that the reasoning may be applied narrowly and that the clear (though unsavoury) statutory intent will shine through. Time will tell. . Limitation Issues
Again perhaps redundantly [at least for purposes of illegal rent recovery in light of s.136(1) discussed above], the RTA continues to bar illegally-paid money recovery applications unless brought within one year "after the person collected or retained money in contravention of this Act or the Tenant Protection Act" [Act s.135(4)].
Due to s.136's retroactive "legalization" of past illegal rents, no civil court recovery for illegally-paid rent is possible after that period has elapsed. As to whether the tenant has recourse to the courts to recover illegally-paid (and non-rent) charges after the limitation period has expired, see Ch.16 generally ["Civil Remedies"], and sub-section (d) below.
(d) Other Illegal Charge Recovery
This discussion covers all recovery of illegal "non-rent" amounts, or "charges". These are extensively reviewed in Ch.10, s.5 ["Rent Fundamentals: Non-Rent Charges and Security Deposits"], and that section should be reviewed on this topic.
While there is no RTA provision "legalizing" unchallenged illegal charges after a year [such as s.136(1) does for illegal rents, see above], recovery of illegal charges under the general s.135 recovery application procedure is still subject to the one year limitation period. That is, the RTA bars such recovery applications unless brought within one year "after the person collected or retained money in contravention of this Act or the Tenant Protection Act" [Act s.135(4)]. However, as alluded to above, the tenant may have recourse (after the expiration of the Board limitation period) to the civil courts under a restitution claim to recover such monies [see Ch.16 generally ["Civil Remedies"].
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