Friday, January 6, 2012

Why Do Governments Not Fix Their Own Obvious Legislative Shortcomings

I read a consumer protection column today in the Hamilton Spectator regarding deposit interest payable under the Residential Tenancies Act.  Read it here:

The question, asked of a Ministry official, was whether interest on the LMRD (last month's rent deposit) was payable with a calculation using simple or compound interest.  The Ministry's answer was..."We don't know".  All that the Ministry was willing to confirm was that interest paid on a rent deposit was usually calculated with simple rather than compound interest.

Not a terrible answer, as the Residential Tenancies Act (RTA) doesn't say.  But it did strike me as to why it is so difficult for government lawyers to draft legislation with clarity.  A more troubling concern is that once an ambiguity is found, why is it so difficult to resolve it by way of an amendment to the statute or regulation.

Now those who have worked in government affairs will tell you that making legislative change is not easy; governments have a number of priorities, and to try and get the attention of a Minister who may have bigger fish to fry is not always easy.  Again, a fair answer, but it's utter nonsense.

This government has made numerous amendments to the RTA, some related to a certain issue, and others in omnibus bills.  Since the Residential Tenancies Act came into force in January of 2007, there have been a number of amendments.  Just this past week, an amendment came into force allowing the Board to send respondents a copy of the application and notices of hearing rather than the applicant having to do so.  In 2011 section 206(1) was added, allowing Board officers to hold hearings and issue orders. These two provision sneaked in as part of the government's Strong Communities Through Affordable Housing Act.

Sections 137 and 138 of the Residential Tenancies Act which were not proclaimed back in 2007, were proclaimed last year along with a new Regulation controlling sub-metering and apportionment of utility charges.  Changes were made after the HST came into force so that landlords would be stuck holding the bag for HST costs on utilities, and couldn't pass these through to tenants on above guideline applications.  There were changes to s.108 about direct debiting of bank accounts and s.185 to recognize the licensing of paralegals.  In 2010, there were 4 private members bills related to the Residential Tenancies Act, none passed.  This current year, there is a government bill to amend the way the provincial guideline governing rent increases is calculated. 
So if the government can use specific or omnibus legislation to fix errors and resolve ambiguities, why isn't it done more often to fix up some of the known ambiguity and provide clarity on issues while you are passing other amendments into law?  This should be done to address issues such as:
    • How long can a tenant go back with an application to collect unpaid interest  (Dollimore v. The Azuria Group)?;  
    • How are rent deposits calculated?;
    • At a hearing on a tenant's void motion (after sheriff), must the tenant have paid everything owed to the date he filed the motion, or the amount owed to the date of the hearing, which is usually in the next month;
    • How does a landlord stay "safe" when entering a unit with notice, in light of the Wrona v. TCHC decision?;
    • How do the voiding provisions of an N5 conduct notice work in terms of voiding, when you have breaches of commission, and breaches of omission, both of which require different techniques?;
    • Clarifying whether lease-breaking parties or tactics are an effective, legal way to get out of lease term and avoid having to give proper notice;
    • Clarifying how the "new rentals" (condominiums) can exist within a statutory framework that doesn't anticipate their unique distinctions;
    • Clarifying whether or not a tenant is entitled to an opportunity to fix something they have damaged before being served with an N5 notice rather than have the landlord fix it to its standards and with its expertise;
    • And finally, the most serious unexamined flaw lurking in the Residential Tenancies Act needs to be fixed.  There needs to be clarification on what is the effect going forward of a defective rent increase notice after one year has passed. Here's the text of s.136.

      Rent/Increase deemed lawful
      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. 2006, c. 17, s. 136 (1).

      (2) An increase in rent shall be deemed to be lawful unless an application has been made within one year after the date the increase was first charged and the lawfulness of the rent increase is in issue in the application. 2006, c. 17, s. 136 (2).

      This section was rendered meaningless by a decision of the Ontario Court of Appeal in 2007 called Price and Turnbull's Grove.  This obviated any protections that were intended to be afforded a landlord who might have forgotten to raise the rent with an N1 notice, or perhaps an investor who bought a property where the previous landlord didn't give proper notices.  This section had provided them with a limitation period, an amnesty for past sins.  My understanding from speaking with my elders in the industry was that the real estate bar had argued for and received that concession to protect clients buying rental properties. 

      I had a meeting with Donna Cansfield, the then Parliamentary Assistant to the Minister of Housing, about two years ago.  She assured me that her government wished to deal with landlords and tenants evenhandedly.  I spoke with her about the injustice of s.136 in light of the Price decision.  I described the situation, and she agreed it was unfair and that she would look into it with Ministry staff.  Of course I never heard from her again. 

      It seems that a law firm, Iler Campbell in Toronto, has made the effort to have the government take another look.  I've attached a link to a paper recently submitted to the new Minister, Kathleen Wynne written by this respected firm.

      I pray it gets the attention it deserves.  If you read the submission, you will see that landlords, primarily small, unsophisticated landlords, are at terrible risk because of the Court's wrong (in my opinion) decision.  This Minister can change it with a stroke of the pen by adding the three words "Despite s.116(4)" to section 136.  Would it be so hard?

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