LTB Order LTB-T-068185-22

Order under Subsection 135 Residential Tenancies Act, 2006 2023 ONLTB 74304 (CanLII) Citation: S. v A., 2023 ONLTB 74304 Date: 2023-11-15 File Number: LTB-T-068185-22 In the matter of: 678 Adelaide Street W, Toronto M6J1B1 Between: N. S. T. J. C. A. M. M. L. F. A. L.’s A. N. S. A. J. C. (the 'T.') A. F. an order determining that M. M. (the 'L.') A. F. A. (the L.’s A.) collected or retained money illegally. This application was heard by videoconference on June 28, 2022 A. November 2, 2023. The L.. The L.’s A. A. the Tenant J. C. attended the hearing. Determinations: 1. The L.’s A. A. the L. requested an adjournment because the L. was not served a Notice of Hearing A. the L.’s A. only became aware of the hearing when the Tenant N. S. (NS) sent her the evidence around October 27, 2023. She said they were not prepared to proceed with the hearing. She also stated that they will not be able to return F. a new hearing soon because the L. was scheduled F. a surgery in the next two weeks. 2. The Tenant objected to the adjournment request because the L. put forward the same reasons when the hearing was adjourned on June 28, 2022, A. the T. would be prejudiced by further delay. 3. Based on the last hearing, the T. amended the application to correctly name the L. A. also amended the amount of claim, but they did not add the L.’s address to the file. Therefore, the Notice of Hearing was only sent to the L.’s A.. The L.’s A. confirmed that the address on file was the correct address F. her. The Board’s records show that the Notice of Hearing was mailed to all T. A. the L.’s A. on August 16, 2023 deemed served on August 21, 2023. Based on all Order Page 1 of 6  File Number: LTB-T-068185-22 this information I find that the L. was served via the L.’s A. by the Board more than two months before this hearing. 2023 ONLTB 74304 (CanLII) 4. The L.’s A. was present at the last hearing on June 28, 2022 which means that the L. was aware of the proceedings against her A. could have submitted their evidence to the Board anytime after that day. The L. A. the L.’s A. are related to each other, A. it is more than likely on a balance of probabilities that the L. was aware of the proceedings A. chose not to submit anything to the Board A. the T.. Therefore, I denied the adjournment request. T1 Application 5. As explained below, the T. did not prove the allegations contained in the application on a balance of probabilities. Therefore, the application is dismissed. 6. The T. are claiming that the L. has kept half month of their last month's rent deposit illegally. Background Information 7. The tenancy was to begin January 1, 2022. No written lease agreement was signed till the date the T. decided not to continue with the agreement. 8. The T. went to see the rental unit sometime in November 2021. On or around November 29, 2021, the parties agreed to a tenancy agreement with the start date of Januay1, 2022. The L.’s A. listed out the terms F. her to get the lease agreement ready which was payment of last month’s rent deposit, optional first month’s rent plus a $500.00 security deposit. Even though this security deposit is illegal as per the Residential Tenancies Act, 2006 (the “Act’), this was reversed back by the T.. Therefore, it is not before me that the L. collected an illegal security deposit F. the purpose of this application. 9. The T. gave the L. a cheque dated November 25, 2021 in the amount of $4,600.00 F. the first A. last in the L.’s name A. a cheque dated December 31, 2022 in the amount of $500.00 as security deposit in the L.’s A.’s name. 10. The L.’s A. deposited the cheque in her bank, A. it cleared on or around December 4, 2021. The Tenant NS texted the L.’s A. to say that their bank informed them that a cheque dated December 31, 2022, was cashed even though it was post-dated F. a year later. She also stated that the T.’ bank was reversing the transaction A. that they would provide a new cheque soon. 11. This caused the T. to decide on or around December 5, 2021 that they would not be renting the rental unit from January 1, 2022. They informed the L.’s A. of the same A. the L.’s A. agreed to reimburse $5,100.00 back to the T. on or around December 6, 2021 once the funds were deposited in the L.’s account. 12. The Tenant NS told the L.’s A. that the $500.00 was already reversed so the .  File Number: LTB-T-068185-22 L. only owes them $4,600.00. The L. returned the T. $2,300.00 on December 15, 2021 A. another $1,150.00 on February 2, 2022. This application claims the balance of the deposit in the amount of $1,150.00. Tenant’s testimony 2023 ONLTB 74304 (CanLII) 13. The Tenant JC testified that the L. cashing the post-dated cheque prior to the date was a major cause of concern F. the T. about the L.’s intentions. He added that he A. his wife have been Landlords before A. know that the $500.00 security deposit is illegal, A. the L. should not have asked F. it. They had consented to pay the security deposit because they wanted the rental unit A. that is why they decided to post-date the cheque to December 31, 2022. 14. He also stated that the communication between the parties turned hostile after they decided not to rent the unit A. the L.’s A. promised to pay back the rent deposit in full yet backtracked on it later. The Tenant stated that the L.’s A. changed in her mind A. then informed them that she will only return the deposit if the rental unit gets re-rented. 15. He also added that the L.’s A. texted NS A. told her that she will return their half month’s rent deposit F. January 2022 A. they should sign a waiver that they would not proceed with further action which they declined. L.’s Agents testimony 16. The L.’s A. testified that the T. did inform her that they would not be taking occupancy of the rental unit on January 1, 2022 A. since she cannot force anyone, she accepted it. She also testified that she was unaware of the cheque being post-dated to end of December 2022. The T. had never spoken to her about it A. what good would a security deposit be if it’s dated F. the end of the tenancy. Unaware of the date, she deposited the cheque, A. her bank cleared it. She was surprised when the Tenant NS raised it as an issue. 17. She also testified that there are many other messages which the T. have chosen to not include in their evidence where she told them that she will return the deposit once the rental unit is re-rented. She testified to advertising the rental unit right away on all social media like Facebook Marketplace A. paid sites like Kijiji. She also added that no one wanted to move in on January 1, 2023 due to Christmas season but she did re-rent the place F. January 15, 2023. She tried convincing the new tenant to move in earlier, but he declined. She also testified that she informed the T. via text that the rental unit was rented A. gave them their money back F. the half month. 18. The L.’s A. submitted that she has been fair in the process A. the T. are very aware that she made genuine efforts to re-rent the unit A. she was in constant communication with them. She testified that she did ask the T. to sign the waiver once she returned the half month’s rent deposit after the property was rented on January 15, 2023. Analysis 19. Subsection 105(1) of the Act provides that the only security deposit that a L. can collect is a rent deposit collected in accordance with s. 106. “Security deposit” is defined in s. 105(2) to mean money, property or a right paid or given by, or on behalf of, a tenant of a rental unit to a L. or .  File Number: LTB-T-068185-22 to anyone on the L.’s behalf to be held by or F. the account of the L. as security F. the performance of an obligation or the payment of a liability of the tenant or to be returned to the tenant upon the happening of a condition. 20. Section 106 requires that the rent deposit be paid on or before entering a tenancy agreement A. specifies that it must be A. to the last rent period before the tenancy terminates. 2023 ONLTB 74304 (CanLII) 21. In the present case, the T. rely on s. 107(1) of the Act to claim return of their rent deposit. That provision states, A L. shall repay the amount received as a rent deposit in respect of a rental unit if vacant possession of the rental unit is not given to the prospective tenant. 22. It is established by uncontested testimony A. evidence that the parties had a binding agreement. They had the essential elements of an agreement established - a start date, an end date A. the monthly rent even though a written lease agreement was not signed yet. The parties agree that there was an agreement to rent the unit from January 1, 2022 with an end date of December 31, 2022. It is uncontested that the T. gave the L. a deposit F. the first A. last months rent. Before the scheduled start of the tenancy the T. unilaterally decided they no longer wanted to proceed with the tenancy agreement. 23. As stated above the L. did collect the first A. last month’s rent deposit but as evident from the text the L.’s A. sent the Tenant on or around November 25, 2021 she states that the T. need to pay only the last month's rent deposit A. the security deposit immediately. The first month’s rent is due on January 1, 2022. The T. choose to give the L. the first A. last month’s rent in the same cheque dated November 25, 2021. On December 15, 2021, the L. returned the first month’s rent that the T. paid. The security deposit was reversed by the T.. Therefore, the L. only retained the last month's rent deposit. She also returned half month’s rent deposit once the rental unit was rented. 24. Subsection 13(2) of the Act states: “A tenancy agreement takes effect when the tenant is entitled to occupy the rental unit, whether or not the tenant actually occupies it.” This section means that if there is a binding agreement F. a tenancy to begin on a set date, then the tenancy commences on that date regardless of whether the tenant goes into possession. 25. In this case there was a binding agreement F. a tenancy to begin on January 1, 2022. When the Landlords accepted the Tenant’s cheque A. the parties agreed to the essential terms of the tenancy, they formed a binding tenancy agreement. Therefore, pursuant to subs. 13(2) of the Act, the tenancy commenced on January 1, 2022 even though the Tenant did not move into the unit. 26. Pursuant to section 37 of the Act a tenancy agreement can only be terminated according to the provisions of the Act, which means a tenancy can only be terminated by proper notice, by way of agreement between the L. A. tenant, or by way of an order issued by the Board. In other words, a tenancy cannot be terminated by one party to it unilaterally repudiating it. Subsection 106(1) states that the deposit paid by the Tenant shall be A. to the rent due F. the last month of the tenancy. In this case, that is the rent due F. the month of January 2022. I say this because of subsection 88(3). That section is intended to limit the liability of a tenant who abandons a rental unit. Applying subsection 88(3) to this situation effectively ends the Tenant’s liability F. the rent A. terminates the tenancy as of January 14, 2022 because the L. re-rented the unit F. January 15, 2022. .  File Number: LTB-T-068185-22 27. Section 16 of the Act requires parties to mitigate their losses; in other words, a party who is going to be harmed by the actions of another must take steps to minimize the harm that is caused to them. In this case, the Landlords had a duty to mitigate their vacancy loss by taking reasonable steps to rent the unit F. January 1, 2022. 2023 ONLTB 74304 (CanLII) 28. The L.’s A. testified to her attempts to rent the rental unit A. I find it credible that fewer people want to move around the holiday season so she could only rent it F. January 15, 2022. This means that in this situation, the Tenant’s liability F. the rent stopped on January 15, 2022, which is the date the unit was re-rented. Therefore, the Tenant was required to pay the L. rent totalling $1,150.00 F. the period from January 1, 2022 to January 14, 2022. 29. In the leading case Musilla v. Avcan Management Inc., 2010 ONSC 5425, the Div Court finds that “(25) In my view, the interpretation of s. 107(1) advanced by the Tenant would deprive the words “rent deposit” of any meaning. The purpose of a deposit is to secure the performance of an obligation. If a tenant could change his or her mind about renting a unit A. demand return of the rent deposit at any time prior to the date F. taking possession, the rent deposit would lose its meaning. It would provide no security to the L. F. the tenant’s performance of his or her obligation to take occupancy at the date agreed upon F. possession. … “(27) As in Opara, above, the Tenant here was bound by the agreement with the L.. She was not entitled to the return of the rent deposit because it was her act of repudiation of the agreement that prevented her from taking possession of the unit, not the action of the L.. “ 30. Even though the Tenant states that the L.’s A.’s cashing the security deposit cheque earlier than the date of the cheque was the reason F. them to back out of the agreement. I do not find in the evidence presented before me in the text messages that the T. tendered that they were unhappy about it. The Tenant states in the text message tendered, “They’re reversing the transaction A. we can bring you a new one upon signing the lease.” The whole issue here was miscommunication. At no point did the L. or L.’s A. state that the rental unit was not available F. occupation by the T.. 31. It is also not before me whether the L.’s A. told them she will return the full deposit. I am bound by Act when determining whether the L. is entitled to keep the deposit or not. 32. Pursuant to subsection 106(10) of the Act a L. is mandatorily required to apply a deposit to the rent due F. the last month of the tenancy. Because the Tenant had paid the first A. last month's rent deposit in the form of the deposit, the L. did not have to pay the T. any monies back F. the first fifteen days of the January 2022. Hence the T.’ application is dismissed. It is ordered that: 1. The Tenant’s application is dismissed. .  File Number: LTB-T-068185-22 November 15, 2023 ____________________________ Date Issued Sheena Brar Member, L. A. T. Board 15 Grosvenor Street, Ground Floor Toronto ON M7A 2G6 2023 ONLTB 74304 (CanLII) If you have any questions about this order, call 416-645-8080 or toll free at 1-888-332-3234. .