CITATION: Graham v. H & R Property Management Ltd., 2017 ONSC 1695

DIVISIONAL COURT FILE NO.: 278/16

LTB Nos.: TSL-63775-15-HR and TSL-63777-15-HR DATE: 20170314

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SACHS, SPIES and PARAYESKI JJ.

BETWEEN:

BERYL GRAHAM and DAVID RHONE

Appellants (Tenants)

– and –

H & R PROPERTY MANAGEMENT LTD.

Respondent (Landlord)

– and –

ERZSEBET CSEH

Appellant (Tenant)

– and –

H & R PROPERTY MANAGEMENT LTD.

Respondent/Landlord

LANDLORD AND TENANT BOARD

Intervener

Karen Andrews, for the Appellants (Tenants)

Mark Melchers, for the Respondent (Landlord)

Eli Fellman, for the Landlord and Tenant Board

HEARD at Toronto: March 14, 2017

SACHS J. (Orally)

[1] This is an appeal from a decision of the Landlord and Tenant Board (the “Board”) dated May 18, 2016 requiring the tenants to pay the landlord for arrears of rent relating to the provision of electricity.

[2] Under s. 210 of the Residential Tenancies Act, 2006 (the “Act”), an appeal lies to our court on a question of law alone. Further, as the tenants have now conceded, the standard of review applicable to the Board’s decision is reasonableness (First Ontario Realty Corporation Ltd. v. Deng, 2011 ONCA 54).

[3] In this case, the landlord and the tenants entered into written agreements that provided that the tenants were to pay the cost of electricity in addition to their rent. The first argument the tenants advanced is that these agreements were void for uncertainty as the actual cost of electricity is not specified. The Board dismissed this argument at paras. 19 – 23 of its decision. In doing so, the Board recognized that an agreement will only fail for uncertainty if it is “so vague or imprecise that a court cannot give a meaning to the term that the court can comfortably enforce …” (John D. McCamus, The Law of Contracts (Irwin Law Inc., Toronto, 2005) p. 104.) In this case, the Board found that the meaning of the term at issue “is discoverable; the agreements outline that the tenant and tenants shall pay for the cost of their electricity” (Board’s decision at para. 23). These costs were capable of being determined and the agreements were therefore capable of being enforced. We see nothing unreasonable about this conclusion.

[4] While the tenancy agreements provided that the tenants were to pay the cost of the electricity in addition to their rent, the landlord did not seek reimbursement for these costs until 2013 when suite metering was installed in the rental units. As a consequence, electricity consumption for each unit was now able to be tracked. Once suite metering was installed, the electricity service provider asked the tenants to sign a contract with them and to start paying for their electricity directly.

[5] When the tenants refused, the landlord averaged the tenants’ electricity use for the period December 2013 to April 2015 and applied it as a lump-sum increase to the tenants’ rent on April 30, 2015. The landlord also added an average monthly amount to the tenants’ monthly rent commencing on May 1, 2015. The landlord gave notice to the tenants of his proposed course of action.

[6] The Board found that the average amount sought to be collected as rent for electricity was less than the amount the tenants would have had to pay for electricity based on their actual electricity usage.

[7] The tenants argue that the landlord’s actions violated s. 136 of the Act, which provides as follows:

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.

[8] This argument ignores the finding by the Board that s. 123(1) of the Act permitted the landlord to increase the tenants’ rent. Section 123(1) of the Act provides as follows:

123(1) A landlord may increase the rent charged to a tenant for a rental unit as prescribed at any time if the landlord and the tenant agree that the landlord will add any of the following with respect to the tenant's occupancy of the rental unit: … 2. a prescribed service …”

[9] There is no issue that electricity is a prescribed service. The Board found that given that the tenants had clearly agreed to pay for electricity in addition to their rent, and that they were refusing to do so directly to the service provider, the landlord was entitled to increase their rent in December 2013 as he was now responsible for this prescribed service. In making this decision, the Board referred to this court’s decision in Gonte Construction Limited v. Tenants of 90 Eastdale Ave. and 2 Secord Ave., 2012 ONSC 6733 where the Divisional Court found that the Board acted reasonably when the Board found that s. 123(1) of the Act entitled the landlord to increase rent in a similar situation. We agree.

[10] Given that the time of the rent increase as found by the Board occurred in December 2013, s. 136 has no application.

[11] The alternative argument that the tenants make with reference to s. 123 is that s. 16(2) of the Regulation does not permit the landlord to add electricity costs to rent since these costs fluctuate each month and rent cannot fluctuate. On this point, the Board found as follows at para. 24:

The Landlord charged the Tenants a sum that was an average based on their electricity usage in a given period. This sum is lower than the amount that the Tenants would be required to pay if the landlord charged them the sum it was entitled to collect based on their actual usage. Section 16(2) of Regulation 516/16 outlines that a Landlord shall charge a tenant the actual cost of electricity. However, the sections 110, 111 and 116 of the Act also make it clear that a tenant’s rent cannot fluctuate each month. Had the Landlord charged the Tenants the actual cost of electricity their respective rents would vary month to month. As such, the Landlord’s averaging of the cost of electricity was consistent with the intent of the statute; namely to provide certainty to tenants regarding their periodic rental charges.

[12] In our view, the Board’s finding on this issue was a reasonable one.

[13] The tenants also argue that the agreements between the landlord and tenants pertaining to future suite metering were void pursuant to s. 137(18) of the Act. That section reads as follows:

(18) A provision in a tenancy agreement which purports to provide that a tenant has consented or will consent to the termination of the obligation of the landlord to supply electricity to the rental unit on a future date or otherwise purports to provide terms which are inconsistent with the provisions contained in this section is void.

[14] The Board rejected this argument on the basis that s. 137(18) of the Act has no application to the facts of this case. Section 137(18) refers to the obligation of the landlord to supply electricity to the rental units. The agreements in question did not state that the tenants were consenting to the termination of the obligation of the landlord to supply electricity to the rental unit. The agreements only provided that the responsibility for the payment for the supply of electricity was not included in the tenants’ rent and that it was the tenants’ responsibility to pay for the supply of electricity.

[15] Section 137 makes a clear distinction between the obligation to supply electricity and the responsibility for the payment for the supply of electricity. Given this, the Board’s conclusion on this issue was reasonable.

[16] The tenants also argue that sections 3 and 4 of the Act provide that landlords and tenants cannot contract out of the Act and that any provision of a tenancy agreement that conflicts with the Act is void. Nowhere does the Act prohibit a landlord and a tenant from entering into an arrangement providing that the tenant is to be responsible for the payment of electrical services. Thus, sections 3 and 4 have no application to the facts of this case.

[17] For these reasons, the appeal is dismissed.

Costs

[18] I have endorsed the Appeal Book and Compendium as follows: “This appeal is dismissed for reasons given orally by Sachs J. The Respondent Landlord is entitled to its costs of this appeal, which we fix in the amount of $6,000.00, all inclusive.”

___________________________ SACHS J.

I agree

SPIES J.

I agree

PARAYESKI J.

Date of Reasons for Judgment: March 14, 2017

Date of Release: March 16, 2017

CITATION: Graham v. H & R Property Management Ltd., 2017 ONSC 1695

DIVISIONAL COURT FILE NO.: 278/16

LTB Nos.: TSL-63775-15-HR and TSL-63777-15-HR DATE: 20170314

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

SACHS, SPIES and PARAYESKI JJ.

BETWEEN:

BERYL GRAHAM and DAVID RHONE

Appellants (Tenants)

– and –

H & R PROPERTY MANAGEMENT LTD.

Respondent (Landlord)

– and –

ERZSEBET CSEH

Appellant (Tenant)

– and –

H & R PROPERTY MANAGEMENT LTD.

Respondent/Landlord

LANDLORD AND TENANT BOARD

Intervener

ORAL REASONS FOR JUDGMENT

SACHS J.

Date of Reasons for Judgment: March 14, 2017

Date of Release: March 16, 2017