SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: 283/13
DATE: 2013-10-07
RE: Alison Corvers v. Tanveer Bumbia
BEFORE: Barnes, J
COUNSEL: Christopher Sansom, for the Applicants
Howard Manis, for the Respondents
HEARD: September 16, 2013
E N D O R S E M E N T
[1] The tenant (“Applicant”) seeks an order requiring the Landlord (“Respondent”) to refund $7,500 paid as Security Deposit for any damages paid to the premises and for the Respondent to refund the amount of prepaid rent, in the amount of $90,000 minus credit for the months the Applicant has already rented the premises.
[2] The Applicant seeks other relief flowing from the two major remedies set out above.
[3] After hearing the submissions of counsel and after reviewing all affidavits filed, this court orders as follows:
The Applicant’s application is dismissed in part;
The Respondent shall refund the Applicant the $7,500 security deposit, for damages, within 30 days from the date of this Order and at an annual interest rate of 2.5 per cent per annum.
[4] The premises was rented from May 1, 2013, until April 30, 2014. The rent payable was $7,500.00 each month applied to the last month of the lease. The Applicant paid the Respondent $90,000 up front, representing the rent owed for the entire 12 months of the lease.
a) Is a Landlord prohibited from demanding that a tenant prepay rent?
b) Is a tenant prohibited from voluntarily pre-paying Landlord rent?
c) Is a Landlord prohibited from accepting prepaid rent voluntarily offered by the tenant?
Is the Landlord prohibited from demanding that a tenant prepay rent?
[5] Sections 105 and 106 of the Residential Tenancies Act, 5.0. 2006, c17 (RTA) prohibit a Landlord from demanding prepaid rent. See also Royal Bank of Canada v. MacPherson [2009] O.J. No. 3806 at paragraph 27.
[6] Simply put if the Respondent demanded that the Applicant pay the $90,000 up front that action would be unlawful.
[7] The Applicant’s position is that the Landlord demanded that she pay the $90,000 as prepaid rent up front, because the Applicant was not ordinarily resident in Canada and did not have a credit rating.
Is a tenant prohibited from voluntarily pre-paying the Landlord rent?
[8] In Royal Bank of Canada supra Mr. MacPherson entered into a one year lease with the Landlord. He voluntarily paid a security deposit of $2,000 and one year’s rent less a discount of $4,800 in consideration of prepayment.
[9] Mr. MacPherson defaulted on his mortgage payments and the Royal Bank became the mortgagee-in possession.
[10] The Royal Bank filed an application with the Landlord and Tenant Board seeking arrears of rent of $4,800 and an order for eviction of the tenant for non-payment of rent. The Board found that the Bank was bound by the terms of the lease.
[11] The Ontario Court of Appeal upheld the Board’s decision explaining at para 25-27 as follows:
“The Bank argues that the term for the prepayment of rent is void and unenforceable by the tenant because ss. 105 and 106 of the RTA, which prohibit rental deposits of more than one month’s rent. I disagree with this argument for two reasons. First, the plain language of these sections does not make pre-payment by a tenant of a rent in excess of one month’s rent illegal. It makes the act of a Landlord demanding such prepayment illegal. Moreover, s. 234(d) of the Act makes it an offence for a person to require or receive a security deposit from a tenant contrary to s.105. The tenant does not commit an offence in paying more than one month’s rent in advance.”
[12] Thus a tenant is not prohibited from voluntarily pre-paying rent to the Landlord and in answer to issue (c) the Landlord is not prohibited from accepting pre-paid rent voluntarily offered by the tenant.
[13] The Respondent asserts that the Applicant voluntarily offered to pre-pay her rent.
[14] In negotiating the lease agreement the Applicant was represented by Real Estate Agent, Carolyn Reilly and the Respondent was represented by Real Estate Agent, Aatef Wali.
[15] In the Applicant’s affidavit, she stated that she proposed that she provide 12 post-dated cheques, however, the Respondent required her to pay all the rent due, up front, which she did. See the affidavit of Alison Covers dated September 13, 2013.
[16] In an affidavit, also dated September 13, 2013, the Respondent’s Agent, Mr. Wali, asserts that it was the Applicant who offered to prepay the rent and the Respondent agreed to rent the premises, to the Applicant, only because the Applicant made that offer.
[17] In support of his assertion, Mr. Wali attached a copy of a text he received from the Applicant’s agent. This document is attached to his affidavit as Exhibit “C”.
The message reads:
“Hi Aatef, Alison will pay the 12 months up front and she will provide a letter from her sister to you on Monday. Let me know if that works for your clients. Thx! Carolyn.”
[18] Upon a review of all the evidence, I am satisfied that it was the Applicant who voluntarily offered to pay the Landlord the 12 months rent up front. The Respondent did not demand that the Applicant pre-pay the rent up front.
[19] There is no evidence that the $7,500 security deposit, which is applied towards damages, was voluntarily offered by the Applicant to the Respondent.
[20] The amount of $7,500, described above, was thus paid to the Respondent in contravention of s.106 of the Residential Tenancies Act (“the RTA”).
[21] The Respondent, as Landlord, is entitled to an amount of “rent deposit not more than the lesser of the amount of rent for one rent period and the amount of rent for one month”.: See s.106(2) of the RTA. The Respondent is not entitled to request $7,500 as a security deposit to cover damages: See s.105 of the RTA.
[22] In the result, the Applicant’s application is dismissed in part. The $90,000 can be retained by the Respondent and the $7,500 returned to the Applicant as ordered.
[23] The parties may submit a two page cost outline for consideration if they wish.
Barnes, J
DATE: October 7, 2013
COURT FILE NO.: 283/13
DATE: 2013-10-07
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Alison Corvers v. Tanveer Bumbia
BEFORE: Barnes, J
COUNSEL: Christopher Sansom, for the Applicants
Howard Manis, for the Respondents
ENDORSEMENT
Barnes, J
DATE: October 7, 2013