nan S.C.A. No. 02392 IN THE SUPREME COURT OF NOVA SCOTIA APPEAL DIVISION Macdonald, Hallett and Matthews, JJ.A. BETWEEN: SILVER STAR PROPERTIES LIMITED and SHIRLEY DeMERCHANT IMELDA FAJARDO Respondent David P.S. Farrar for the appellant Andrew Pavey for the respondents Appeal Heard: April 10, 1991 Judgment Delivered: April 22, 1991 THE COURT: Appeal allowed, the decision of Judge Cacchione set aside and any order based thereon, and the decision and recommendation of the Board set aside without costs to any party per reasons for judgment of Matthews, J.A.; Macdonald and Hallett, JJ.A. concurring. MATTHEWS, J.A.: This appeal concerns the interpretation of s. 4 of the standard form lease, N.S. Regulation 270/87 made pursuant to s. 26 of the Residential Tenancies Act 1970, c. 13, s. 1 (the Act), and certain sections of the Rent Review Act 1975, c. 56, s. 1. The facts are not in dispute. The parties entered into written year to year lease in standard form which lease commenced on the 1st day of March, 1989, with rent at the rate of $500.00 per month, in respect to property in Halifax. The appellant is the landlord, the respondents the tenants. The appellant increased the rent to $515.00 on May 1, 1989, which increase was somewhat reluctantly accepted by the respondents. By virtue of its terms, the lease would automatically be renewed for further term of one year from March 1, 1990, provided that neither party gave notice of termination to the other at least three months prior to the annniversary date of the lease. Here no such notice was given. However, on January 30, 1990, that is approximately one month prior to the expiration of the lease, the appellant gave to the respondents notice of increase in rent to $580.00 per month, to be effective May 1, 1990. The appellant offered to permit the respondents to terminate the renewed release on three months notice during the term of the lease if they were unhappy with the rental increase. The respondents chose not to exercise this option. The respondents objected to the rental increase and made application to the Halifax and County West Residential Tenacies Board (the Board) for determination as to whether or not that increase was valid. The Board heard the matter on July 10, 1990, and rendered its decision on July 19, 1990. The Board recognized the importance of the issue: "This application raises significant question. May landlord obtain an increase from tenant in the midst of year‑to‑year lease in the standard form, or is the landlord bound to the rent for the year as of the date of the renewal." Section of the lease sets out the rent to be paid for the premises, the time and method of payment and what the rent includes. The only provision in the lease respecting rent increase is contained in that section: "The rent may be increased on three (3) months written notice in accordance with the provisions of the Rent Review Act but not more frequently than once in twelve (12) month period." The relevant provisions of the Rent Review Act considered by the Board are: "Application of Act over tenancy agreement 3(1) This Act applies to all residential premises as defined herein notwithstanding the terms of any tenancy agreement to the contrary. Application of tenancy agreement over Act (2) Notwithstanding subsection (1), where tenancy agreement provides for no rent increase or lesser percentage increase of rent than is provided herein during the rent periods to which this Act applies, then the provisions of the tenancy agreement in respect of rent apply to the residential premises rather than this Act. Notice of rent increase 11(1) Every landlord, prior to increasing the rent of tenant, shall give three months notice of such rent increase to the tenant and deliver copy of the notice to the Secretary to the Commission. Form and content of notice (2) The notice shall be in such form and contain such information as is determined by the Governor in Council by regulation. 1975, c. 56, s. 12." As the Board noted, s. of the lease is reflection of s. 11 of the Act which reads: RENTAL INCREASE Duty of notice of intent to increase rent 11(1) When landlord intends to increase the rent payable in respect of residential premises occupied by or in the possession of tenant, the landlord shall give to the tenant notice in writing stating the landlord's intention to increase the rent and the proposed amount of the increase at least three months before the landlord receives, demands or negotiates an increase in the rent payable by the tenant. Frequency of increase (2) Notwithstanding any other enactment, no landlord shall increase the rent for residential premises more than once in twelve‑month period, whether or not the twelve‑month period includes period of time before the coming into force of this subsection." The Board concluded that it did "not interpret these provisions as granting the landlord the right to demand an increase in rent in the middle of the term" and further, that it could not say "that the standard form of lease really provides rent increase since neither the time nor the amount are specified". It further concluded that the rent should remain at $515.00 per month. It recommended to the Court that the appellant be ordered to pay to the respondents the amount they paid in increased rent, being $195.00. In fairness to the parties the Board commented: "The Board invites an objection. This is an important point and the Board has felt particularly constrained by the necessity of making recommendation within three (3) days”. The appellant filed notice of objection. The matter was heard before the Honourable Judge Felix Cacchione on October 25, 1990. He rendered his decision on November 19, 1990. Judge Cacchione put the issue before him this way: "Did the Board err in law in interpreting the Residential Tenancies Act by concluding that landlord cannot increase the rent during the term of the lease? Put another way the issue is: Does landlord in Nova Scotia have the right under either the Residential Tenancies Act R.S.N.S. 1989, c. 401, or the Rent Review Act, R.S.N.S. 1989, c. 398, to unilaterally demand an increase in rent from tenant with 90 days notice of any stage of the tenancy?" He commented: "The issue is an important one, and indeed this decision will be the first in examining the meaning of s. 11 of the Residential Tenancies Act, and s. 11 of the Rent Review Act. In addition, similar provisions in residential tenancies acts across the country have yet to face judicial interpretation [Alberta Landlord and Tenant Act, R.S.A. 1980, c. L‑6, s. 13; B.C. Residential Tenancy Act, S.B.C. 1984, c. 15, s. 18; Manitoba Landlord and Tenant Act, R.S.M. 1987, c. L‑70, s. 112; Newfoundland Residential Tenancies Act, S.N. 1989, c. 44, s. 17; Saskatchewan Residential Tenancies Act, R.S.S. 1978, c. R‑22, s. 391". In some detail he examined the historical landlord‑tenant relationship which has "its roots firmly planted in the common‑law contract". He stressed that as "with any non‑unilateral contract, the landlord‑tenant contract can only be modified with the consent of both parties." He noted that the the Nova Scotia Legislature established Select Committee on the Law of Landlord and Tenant in 1970. Based upon its recommendations the Legislature in 1970 enacted the Residential Tenancies Act. He remarked: "The Act was enacted with three main purposes in mind: firstly, to codify and protect the rights of the tenant; secondly, to codify the rights of the landlord; and thirdly, to provide fast, efficient and cost‑effective means for dispute resolution thereunder." He considered the effect of the Rent Review Act and said: "Section 11(1) of the Rent Review Act provides that every landlord shall give three months notice of rent increase to the tenant prior to increasing the rent of the tenant. This provision is to be interpreted in the same manner as section 11 of the Residential Tenancies Act, however, its scope is narrower. Section 11(1) of the Rent Review Act, is solely aimed at requiring the landlord to provide notice of increased rent to the tenant prior to the end of the lease so that the tenant can be afforded the opportunity to effectively evaluate the offer for lease renewal before they ultimately decide whether or not to accept the offer or to terminate the Residential Agreement at the expiration of its current term. In other words, just as the tenant is required to give three months notice of termination under s. 10 of the Residential Tenancies Act, the landlord is required to give three months notice of rental increase to the tenant, so that the tenant can make an informed decision about continued leasing of the premises. Once again, it is legislative scheme designed to protect the integrity of the contractual rights of both parties to the lease." Both the appellant and the respondents are bound by the provisions of s. 10(1)(a) of the Act which provides: "Time for notice to quit 10(1) Notwithstanding any agreement between the landlord and tenant respecting period of notice, notice to quit residential premises shall be given (a) where the residential premises are let from year to year, by the landlord or tenant at least three months before the expiration of any such year;" Judge Cacchione concluded: "Consequently, find in favor of the respondents, holding that the three month notice requirements for rental increases under both the Residential Tenancies Act and the Rent Review Act must come at least three months prior to the expiration or possible renewal of the tenancy." It is from that decision that this appeal is taken on the following grounds: "1. THAT the Learned Trial Judge erred in the interpretation of s. 11(1) of the Residential Tenancies Act 1970, c. 13, s. 1; 2. THAT THE Learned Trial Judge erred in his interpretation of s. of the Standard Form Lease N.S. Regulation 270/87 made pursuant to s. 26 of the Residential Tenancies Act. Judge Cacchione based his conclusion "that the three month notice requirement is to come three months before the expiration of the lease period" upon his analysis of the report of the Select Committee. He said "the Act is intended to protect the tenant from being coerced by the landlord into giving up his contractual rights." Lord Reid's statement in Attorney General for Northern Ireland v. Gallagher, [1963] A.C. 349 at p. 366 is instructive when considering whether he was correct in doing so: "We can have in mind the circumstances when the Act was passed and the mischief which then existed so far as these are common knowledge, but we can only use these matters as an aid to the construction of the words which Parliament has used. We cannot encroach on its legislative function by reading in some limitation which we may think was probably intended but which cannot be inferred from the words of the Act.” Indeed s. 12 of the lease sets out: "This lease is for the benefit of the landlord and the tenant...". That is, the provisions of the standard form are not simply for the benefit of the tenant. R. v. Wildsmith (1974), 1974 CanLII 1472 (NS CA), N.S.R. (2d) 64 was concerned with the interpretation of certain provisions of the Gasoline Licensing Act R.S.N.S. 1967, c. 117. At p. 69 Judge Hearn said: "The gist of these decisions (which am citing as have not found this particular hierarchy dealt with elsewhere) is that you apply rules of construction and interpretation only when problem of construction or interpretation arises. If the challenged expression is clear and not in conflict with other provisions of the law, no problem of construction arises and the literal and grammatical meaning according to ordinary usage is applied following the Golden Rule. problem of ccnstruction arises when the provision in question is ambiguous, obscure, in conflict with other provisions of the enactment in question, or with provisions of other enactments, or at odds with the expressed purpose and policy of the legislature." On appeal to this Court (1974), N.S.R. (2d) 58 Coffin, J.A. speaking for the Court said at p. 62: "Judge O'Hearn, after referring to such cases as In Re Halifax City Charter (1967), 53, M.P.R. 22, concluded from them that when the challenged expression is clear 'and not in conflict with other provisions of the law,'the literal and grammatical meaning according to ordinary usage is applied and not rules of construction and interpretation." See also Driedger, The Construction of Statutes, (2d) 1983, at p. 85. Section of the lease is clear. It is not in conflict "with other provisions of the law". It only becomes obscure when words are read into it which the clear meaning does not permit. It is not unusual in contract to provide that certain provision contained therein may be altered during the term of the contract by way of agreement or unilaterally by one of the parties upon certain conditions. It is of importance to keep in mind that here, the landlord could not unilaterally increase the rent to any amount simply by giving the required notice. The increase sought must be subject to the provisions of the Rent Review Act. Judge Cacchione expressed concern for the tenant if the landlord were permitted to increase the rent within the term of the tenancy: "The interpretation of s. 11 as suggested by the appellants goes against the very grain of the object of the Residential Tenancies Act which is to protect the bargaining rights of" both the landlord and the tenant. Moreover, the Act is intended to protect the tenant from being coerced by the landlord into giving up his contractual rights. If landlord is permitted to hide anticipated increases in rent from the tenant, only to sneak the increases in after the tenant is statutorily locked into the agrement for 12 months, then the result serves to violate the well established bargaining rights of the tenant." Section of the standard form of lease sets out the procedure landlord must follow if rent is to be increased. That must be done in accordance with the Rent Review Act. The reference is not to the provisions of the Act. In my opinion reference is to the Rent Review Act in order to provide the protection to the tenant which was the justifiable concern of Judge Cacchione. It is important to note the difference between s. 11 of the Rent Review Act and s. 11 of the Act. Section 11 of the Rent Review Act places strictures on the landlord not contained in s. 11 of the Act. copy of the notice of the rent increase must be delivered by the landlord to the secretary of the Rent Review Commission. The notice must be in "such form and contain such information as is determined by the Governor in Council by regulation". Section 12 of the Rent Review Act provides further statutory protection for the tenant: "Secretary finds rent increase in notice is excessive 12(1) The Secretary to the Commission, upon receiving copy of the notice referred to in Section 11, shall calculate the rent increase and if such rent increase is in excess of that authorized by this Act, the notice is deemed to be an application for increase of rent pursuant to Section and the provisions of Section 10 shall apply to that deemed application. Tenant believes rent increase in notice is excessive (2) If tenant is of the view that the true increase in rent is in excess of that authorized by this Act and within thirty days after receipt of the notice referred to in Section 11 so informs the residential tenancy officer, then the residential tenancy officer shall review the rent increase and the notice is deemed to be an application for increase of rent pursuant to Section and the provisions of Section 10 shall apply to that deemed application. 1975, c. 56, s. 13" Subject to the provisions of s. of the Rent Review Act landlord may increase the rent under ss. and of that Act: “Maximum increase nan Except as provided in Section 9, for any rental period between the first day of January and the thirty‑first day of December, both dates inclusive, in any year, no landlord shall charge tenant an amount of rent which is more than the amount determined by adding to the rent lawfully charged for the same residential premises for the last rental period immediately preceding the first day of January, for which the residential premises were rented, the percentage increase determined by the Governor in Council which percentage increase shall be determined no later than the first day of September in the previous year. 1975, c. 56, s. 9; 1977, c. 75, s. 1. Conditions for increase in excess of maximum nan landlord may increase the rent of residential premises in excess of the percentage increase authorized by Section for the rental periods set forth in Section (a) after first having given three months notice to the tenant, if any, of the residential premises; (b) upon application to the residential tenancy officer at least two months before the date he wishes to increase the rent; and (c) upon being authorized by an order or decision pursuant to either Section 10 or Section 15, as the case may be. 1975, c. 56, s. 10." Section 10 sets out the review procedure by the residential tenancy officer and the factors to be considered in determining whether an increase in rent is to be permitted. It is my opinion that reading of s. 11 of the Act in conjunction with the relevant sections of the Act and in turn considering the wording and effect of s. of the standard form in conjunction with the relevant sections of the Rent Review Act, discloses no ambiguity as suggested by the respondents. The respondents must have been aware of the provisions of s. of the lease between the parties. It clearly provides that rent may be increased on three months written notice in accordance with the provisions of the Rent Review Act. There is nothing in the Rent Review Act or the Act to suggest other than the clear words of s. of the lease, that is, that the landlord may increase the rent on three months written notice. The landlord may not do that "more frequently than once in twelve (12) month period." That latter provision, in my view, reinforces the opinion that the landlord may increase the rent during the yearly tenancy, for it places a restriction upon the common law right of the landlord: the increase may be only once every twelve months. With deference, the provisions under review may not be considered to be ambiguous because of opinions expressed by some members of the Legislature or by the Select Committee or indeed the state of the common law prior to the passing of the legislation. As the respondents say in their factum: "Section of the lease is standard provision of the standard form of lease provided for pursuant to regulations established under the Residential Tenancies Act. This section, the Standard Form Lease and the Residential Tenancies Act, along with the Rent Review Act referred to in the section, all modify the common law position of the parties." After the appellant gave notice to the respondents of the increase in rent in accordance with the provisions of the lease, the respondents have the right in law to complain of that increase as provided by the Rent Review Act. The appellant may increase the rent during the term of the lease, provided three month notice is given and the increase does not offend the provisions of the Rent Review Act. There is no requirement that the only method of increasing the rent be by the landlord giving three months notice to take effect at the expiration of the lease. The landlord had that right without any statutory provision. All the landlord would have to do, three months prior to the expiration of the lease, would be to inform the tenant that the lease was at an end, if the tenant did not agree to certain increase in rent. The landlord could do that, repeat, without the necessity of the words in the relevant provisions. There is no restriction in s. of the lease as to when, during the term of the tenancy such notice must be given. There is no suggestion that such notice must be given three months prior to the termination of the lease to become effective at such termination. Those words should not be read into s. 4. Further, if the intention had been that the notice of rent increase "must come at least three months prior to the expiration or possible renewal of the tenancy", it would have been simple to add words to that effect to s. of the standard form lease. The respondents seek to rely upon s. of the Rent Review Act previously cited. However, here it is not the case that the tenancy agreement did not provide "for no rent increase". On the contrary, the agreement by s. did provide for one. In my opinion the interpretation of the relevant provisions of the Act, The Rent Review Act and the Standard Form of Lease are clear. The landlord may increase the rent during the term of the lease provided the procedures so to do as set out are strictly followed. In consequence, I would allow the appeal, set aside the decision of Judge Cacchione and any order based thereon and set aside the decision and recommendation of the Board, but in the circumstances, without costs to any party. J.A. Concurred in: Macdonald, J.A. Hallett, J.A. PROVINCE OF NOVA SCOTIA COUNTY OF HALIFAX C.H. 70655 IN THE COUNTY COURT OF DISTRICT NUMBER ONE BETWEEN: SILVER STAR PROPERTIES LIMITED, and SHIRLEY DeMERCHANT IMELDA FAJARDO, Respondents David P.S. Farrar, Esq., solicitor for the applicant Andrew Pavey, Esq., solicitor for the respondents. 1990, November 19, Cacchione, J.C.C.:‑ This case involves notice of objection filed against recommendation of the Halifax and County West Residential Tenancies Board dated July 13, 1990. The facts as found by the Residential Tenancies Board are that the tenants entered into year to year lease in the standard form with respect to the premises in question on March 1, 1989. The rent provided for in the lease was $500.00 per month. The lease was automatically renewable at the expiration of the term unless either the landlord or the tenant had provided at least three months notice to terminate prior to the anniversary date of the lease. In the present case no such notice was given and the lease automatically renewed itself as of March 1, 1990. Despite the specific provision with respect to rent payable contained in the lease, the rent was raised from $500.00 per month to $515.00 per month effective May 1, 1989. This was three percent guideline increase on the base rent which was accepted, albeit apparently S.C.A. No. 02392 IN THE SUPREME COURT OF NOVA SCOTIA APPEAL DIVISION BETWEEN: SILVER STAR PROPERTIES LIMITED and SHIRLEY DeMERCHANT IMELDA FAJARDO Respondent REASONS FOR JUDGMENT BY MATTHEWS, J.A.
The issue in this appeal was whether a landlord can give notice of a rental increase at any time during a yearly tenancy under the Standard Form Lease. Section of the lease provides for increases upon months notice to the tenant. The trial judge found that notice must be given months prior to the expiration of the lease. For the appellant, that notice of a rental increase may be given at any time during a yearly tenancy under the Standard Form Lease.