Morris v. Elkaderi, 2011 ABQB 449

Court of Queen ’ s Bench of Alberta Citation: Morris v. Elkaderi, 2011 ABQB 449 Date: 20110711 Docket: 1103 03094 Registry: Edmonton Between: Michelle Morris & 1129822 Alberta Ltd. Appellants - and - Hussein Elkaderi & Mohamad Elkaderi Respondents _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice R.A.

Graesser _______________________________________________________ Introduction [ 1 ] Michelle Morris and 1129822 Alberta Ltd. appeal three orders of the Alberta Residential Tenancy Dispute Resolution Service in relation to a tenancy dispute over suites 103, 303 and 304, 5715-48 Avenue, Cold Lake, Alberta. [ 2 ] After a hearing on January 25, 2011, the Tenancy Dispute Officer awarded the Landlords, Hussein Elkaderi and Mohamad Elkaderi, judgment of $133.33 for furniture storage, $106.00 in costs and directed that the Landlord “shall keep the security deposit of $850.00 in addition to this judgment” in relation to suite 103; $642.87 for cleaning, painting, damage and furniture storage, $106.00 for costs and the security deposit of $850.00 for suite 303; and $133.33 for furniture storage, $106.00 for costs and the security deposit of $1,100.00 for suite 304.

[ 3 ] The officer’s decision is reproduced in Appendix I. [ 4 ] Ms. Morris and 1129822 appeal the orders on the bases that: 1. The Officer did not take Ms. Morris’s evidence into account; and 2. Ms. Morris was not a party to the action. [ 5 ] She seeks to have the orders set aside, a new trial and costs. [ 6 ] Her affidavit in support of her appeal alleges: 1. The officer said he did not read her evidence; 2. Documents from the Landlord were altered and submitted into evidence by the Landlord; 3.

Documents from the Landlord were not complete records and had not been kept as per the Residential Tenancies Act ; and 4. No attempts were made by the Landlord to conduct a move-out inspection. [ 7 ] Hussein Elkaderi responded that: 1. He dealt solely with Michelle Morris throughout the length of the tenancy. She purported to have full control over any decision made with respect to 1229822; 2. The rental agreement was signed by Michelle Morris in her personal capacity; there is no indication she signed only in her capacity as a signing authority of 1129822; 3. Ms.

Morris had sent a letter on October 7, 2010 “that was signed by her indicating that she personally would be vacating the premises”. The letter was submitted to the officer; and 4. The evidence presented in written format by Ms. Morris at the hearing “indicates repeatedly that she personally rented the premises from myself. It never indicates that she is not liable for rental arrears and damages by way of being a mere employee of 1129822". [ 8 ] Ms. Morris’s letter of October 7 was attached to Mr. Elkaderi’s affidavit.

It does not refer to 1229822; rather it refers to “the tenants may move out sooner.” It instructs Mr. Elkaderi to deduct rental arrears from the deposits. It appears to be giving notice that all three suites will be vacated and available for re-rental by the end of October. [ 9 ] Mr. Elkaderi notes that “the suites were all left in a mess.” [ 10 ] It appears from a written submission provided by Ms.

Morris at the hearing that rent was paid for September and the deposits were to be applied to any rental arrears for October. [ 11 ] It also appears from the materials and the awards by the officer that he concluded that the rental arrears for October were indeed owing and should be paid from the deposits. The judgment amounts represent cleaning, storage and repair charges. [ 12 ] At the hearing before me, Ms. Morris objected to the cleaning and repair charges as being undocumented and unnecessary;

the storage charges were described in the materials as being excessive. [ 13 ] Mr. Elkaderi’s affidavit appends an illegible rental application, a Residential Tenancy Agreement dated January 6, 2009 for the three suites, describing 1129822 Alberta Ltd. as Tenant. In the spots for “Tenant’s signature”, Ms.

Morris has signed, with no reference to 1129822. [ 14 ] A late rent notice for October, 2010 is appended, describing the tenant as 1119822 Alberta Ltd. [ 15 ] A Landlord’s Notice to Tenant and Termination of Tenancy for Substantial Breach is also appended relating to suites 303, 103 and 304, addressed to 1129822 Alberta Ltd. It is dated October 6, 2010 and specifies the reason for the notice as being “Company failed to pay your rent for this month.” Legislation [ 16 ] The Residential Tenancies Act , S.A. 2004, c.

R-17.1, authorizes tenancy disputes to be resolved using the Residential Tenancy Dispute Resolution Service. Here, the Landlord chose to have the dispute resolved using that service. [ 17 ] The relevant sections of the Act are as follows: 54.3

(1) A landlord’s application to the Dispute Resolution Service for a remedy binds the tenant in respect of whom the remedy is sought to the choice of that forum. 54.6

(1) An application to the Dispute Resolution Service must be made in accordance with the regulations.

(2) The Dispute Resolution Service must conduct all proceedings and decide all applications to it (

a) in accordance with and subject to any limitations and restrictions set out in the regulations, and (

b) in accordance with the rules of practice and procedure and the code of conduct established pursuant to the regulations. [ 18 ] Alberta Regulation 98/2006 is the Residential Tenancy Dispute Resolution Service Regulation . The relevant provisions of it are: Rules of evidence 14 A tenancy dispute officer is not bound by the rules of evidence or any other law applicable to court proceedings and has the power to determine the admissibility, relevance and weight of evidence given. Appeal 23

(1) Any party who is subject to an order of a tenancy dispute officer may appeal the order on a question of law or of jurisdiction to the Court of Queen’s Bench

(

a) within 30 days after the order is given, by (

i) filing in the Court of Queen’s Bench a notice of appeal setting out the grounds of appeal, and (ii) serving the notice of appeal on (

A) the respondent, (

B) the Dispute Resolution Service, and (

C) any other person that the Court of Queen’s Bench directs, and (

b) by filing in the Court of Queen’s Bench not later than 7 days after the last day for service on those persons served pursuant to clause (a)(ii) (

i) an affidavit of service of the notice of appeal, and (ii) a copy of a requisition to the Dispute Resolution Service for a transcript of evidence, together with (

A) a receipt for payment of the transcript at the expense of the appellant, or (

B) written confirmation from the Dispute Resolution Service that a transcript is not available.

(2) The appellant shall, within 3 months from the date the notice of appeal is filed, file with the Court of Queen’s Bench a transcript of the evidence heard before the tenancy dispute officer unless (

a) the Court of Queen’s Bench orders otherwise, or (

b) the Dispute Resolution Service has confirmed that a transcript is not available. Hearing of appeal 24

(1) The Court of Queen’s Bench shall (

a) hear and determine an appeal, and (

b) make an order.

(2) The decision of the Court of Queen’s Bench is final and cannot be further appealed. Decision on appeal 25

(1) On hearing the appeal, (

a) no evidence other than the evidence that was submitted to the Dispute Resolution Service may be admitted, but the Court of Queen’s Bench may draw any inferences (

i) that are not inconsistent with the facts expressly found by the Dispute Resolution Service, and (ii) that are necessary for determining the question of law or of jurisdiction and (

b) the Court of Queen’s Bench may confirm, vary, reverse or cancel the order of the tenancy dispute officer.

(2) If the Court of Queen’s Bench cancels an order of the tenancy dispute officer, it may refer the matter back to the Dispute Resolution Service, in which case the Dispute Resolution Service must rehear the matter and deal with it in accordance with any direction given by the Court of Queen’s Bench on the question of law or of jurisdiction.

(3) No member of the Dispute Resolution Service is liable for costs by reason or in respect of an appeal.

(4) If the Court of Queen’s Bench finds that the only ground for appeal established is a defect in form or technical irregularity and that no substantial wrong or miscarriage of justice has occurred, it may deny the appeal, confirm the order of the tenancy dispute officer despite the defect and order that the order of the tenancy dispute officer takes effect from the time and on the terms that the Court of Queen’s Bench considers proper. [ 19 ] No objection has been taken by the Landlord with the timing or requirements of the appeal process instituted by the Appellants. [ 20 ] Ms.

Morris’s main concern is that the orders include her personally, and not just 1129822 Alberta Inc., although she considers the damages awards totaling $1,227.53 to be excessive and contrary to the evidence. Submissions of Parties [ 21 ] After the hearing before me on March 23, 2011, I asked the parties to provide me with written submissions. [ 22 ] Ms. Morris repeated her objection to being included as a party, reiterating that the tenant was 1129822.

She objected to any deduction being made from the deposit on account of damages, as she alleges that s. 47.6 of the Act (inspection reports) was not complied with. [ 23 ] She alleges that the Tenancy Agreement was altered by Mr. Elkaderi after it was executed, with him adding all three suites to one agreement, and that the inspection reports were also altered. She alleges that the officer did not read all of her materials, and that he

ignored some of them. She also objects to charges for items left behind in the suites. [24] The Landlord responds to her allegations stating that: 1. Ms. Morris was asked by the officer “which tenant signed the tenancy agreements” and she responded that she had. The officerlater gave judgment against both 1129822 and Ms. Morris. The Landlord submits that there was significant evidence that Ms. Morriswas a party to the agreement and the orders were properly made against her.

As a result, “if an error was made it was not in respect ofjurisdiction but rather fact, and would therefore be outside of the jurisdiction of the court”; 2. The officer had the jurisdiction to order deductions from the security deposit; it is an appropriate remedy and there is therefore noerror of law or jurisdiction; 3. Any forged or altered documents were considered irrelevant by the officer; 4. Any failure to consider the Appellant’s arguments is not a valid ground for appeal, as dealing with the evidence is within thejurisdiction of the officer; and 5.

Storage fees were within the jurisdiction of the officer and there was evidence to support the award. [25] The Landlord submits that no errors of law or jurisdiction have been established, and that the appeal should be dismissed withcosts. Alternatively, the Landlord requests that costs be dealt with at any new hearing, if ordered. Jurisdiction on Appeal [26] The Landlord submits that the court’s jurisdiction on appeal is limited to correcting errors of law or of jurisdiction. Thepower of the court on appeal set out in s. 25.

The court may make any inferences from the evidence before the officer “that are notinconsistent with the facts expressly found by the Dispute Resolution Service” (s. 25(1)(a)(i)), and the court may “confirm, vary, reverseor cancel the order of the tenancy dispute officer” (s.25(1)(b)). [27] S. 25(1)(a)(ii) qualifies the inferences by limiting them to such inferences “ that are necessary for determining the question oflaw or of jurisdiction”.

That wording suggests that the intention of the Lieutenant Governor in Council was to make the appeal an appealon the record and limit the bases of appeal to questions of law or jurisdiction. However, that is a generous

interpretation of theregulation. If the intention of the Lieutenant Governor in Council was to limit the power of the court beyond what the court may do onan appeal from Provincial Court in residential tenancy matters, clearer wording is needed in the Regulation. [28] The regulation is poorly drafted. If the intent was to limit appeals to questions of law and jurisdiction, the regulation does notexpressly say so.

If the intent was to make the officer’s fact findings unassailable, clearer wording should have been used. [29] Appellate courts generally review fact findings on the unreasonableness standard: Schwartz v. Canda, (SCC), [1996] S.C.J. No. 15; Housen v. Nikolaisen, 2002 SCC 33 , [2002] S.C.J. No 31. Judicial review of quasi-judicialtribunals, often facing comprehensive privative clauses limiting review to matters of law and jurisdiction, has frequently treatedunreasonable fact findings or irrational inferences as errors of law. Murphy v. Saskatchewan Government Insurance, 2008 SKCA 57holds at para. 5:

Since the right of appeal is confined to a question of law, neither the right of appeal nor the jurisdiction of the Court extends to a finding of fact. However, a finding of fact may be grounded in an error of law, as will be the case, for example, when a finding: (

a) is based on no evidence; (

b) is made on the basis of irrelevant evidence or in disregard of relevant evidence; or, (

c) is based on an irrational inference of fact. See: P.S.S. Professional Salon Services Inc. v. Saskatchewan Human Rights Commission et al., 2007 SKCA 149 at paras. 60-65 (application for leave to appeal to SCC filed February 13, 2008), [2008] S.C.C.A. No. 69 . The right of appeal, of course, extends to such errors of law. [ 30 ] It is clear that the appeal is not a hearing de novo . The Lieutenant Governor in Council obviously intended that there be significant deference to the fact findings of the officer. That being said, however, no deference should be given to fact findings (

a) based on no evidence, (

b) based on irrelevant evidence, (

c) made disregarding relevant evidence, or (

d) based on irrational inferences of fact. [ 31 ] Of course any issues of law or jurisdiction are to be determined on the correctness standard as set out in Housen . Analysis [ 32 ] The Appellants appear to be proceeding with this appeal on some misapprehensions of tenancy law. Firstly, the notice to vacate given by Ms. Morris on October 7 was ineffective. The Residential Tenancies Act is clear that the tenant must give notice: 8(1)(

a) by a tenant on the tenant’s landlord, on or before the first day of a tenancy month to be effective on the last day of that tenancy month [ 33 ] The tenancy agreement does not vary this. While initially for a fixed term, it continued on a month to month basis after the term expired. If effective at all, the notice given to the Landlord terminated the tenancies on November 30, 2010 and not October 15 or 30, as specified in the notice. [ 34 ] Secondly, the Act does not give tenants the right to leave chattels in the premises on termination.

The Act provides a method for the landlord to get rid of abandoned property instead of having the responsibilities of an involuntary bailee at common law. [ 35 ] Thirdly, Ms. Morris specifically authorized the landlord to deduct any unpaid rent from the security deposits. Unpaid Rent [ 36 ] There is nothing in the materials that were before the officer contradicting his finding that rent for all three suites for the month of October was owing. I confirm his orders that the security deposits be retained by the Landlord on account of unpaid rent for all three premises.

The Landlord did not pursue damages for the late notices of termination. Judgment/damages [ 37 ] Ms. Morris argued that the absence of inspection reports for each suite precluded the Landlord from claiming damages relating to cleaning and repairs. While that may be correct insofar as preventing the Landlord from deducting such damages from the security deposit, the Landlord did not deduct the claimed amounts from the security deposits. The Landlord was entitled to and did deduct unpaid rent from the security deposits, which exhausted the security deposits.

[ 38 ] The proceedings before the officer amounted to an assessment of damages. Ms. Morris’s argument was to the effect that her military subtenants were good tenants and never left rented suites in anything but immaculate condition. The Landlord’s evidence before the officer was as to what was actually found by them after the subtenants vacated. It was not disputed by Ms. Morris that the subtenants had left chattels behind; her complaint was that the Landlord spent too much dealing with the chattels. [ 39 ] The officer was alive to the issues raised by Ms. Morris.

He assessed the cleaning and repair costs on the basis of the information provided to him at the hearing. While that information may not have been to the standard expected in court, the officer is not bound by the rules of evidence. Ms. Morris’s objection that the Landlord altered the inspection reports was considered irrelevant by the officer. The fact that Ms. Morris had not been provided with colour copies of the photographs taken by the Landlord to show the damages to the suites did not deprive Ms. Morris of being able to respond to the Landlord’s claims.

Colour photos were available at the hearing. [ 40 ] There was evidence before the officer that supported his findings as to damages. He was not bound to accept Ms. Morris’s arguments, so that argument is not a basis for appeal. He was bound to give both parties a fair hearing, at a minimum in accordance with the rules of natural justice. [ 41 ] The fact that he may not have read all of Ms. Morris’s written submissions is a curious admission on his part. It is an error of law for an adjudicator of facts to not listen to and consider relevant evidence. However, I am not satisfied that there is anything in Ms.

Morris’s written materials that she was unable to refer to before the officer. She had a full opportunity to present her case before him in person. No error of law is thus made out on this ground. [ 42 ] Ms. Morris has not persuaded me that any error of law or jurisdiction was made regarding the assessment of damages. Personal Liability [ 43 ] It is unclear on the record before me how the officer determined that the written tenancy agreement did not accurately reflect the agreement between the parties, and how or why he added Ms.

Morris as a party to the proceedings and gave judgment against her. [ 44 ] The Landlord prepared the Tenancy Agreement; the Tenancy Agreement clearly describes 1129822 Alberta Inc. as the tenant. When the October rent was not paid, the Landlord sent a default notice to 1119822 Alberta Inc. (obviously a typographical error). When the Landlord commenced proceedings against the tenant for termination of the tenancies, the proceedings were commenced against 1129822 Alberta Inc. Ms. Morris is not named in these documents. [ 45 ] For the Landlord to claim at the hearing that the real tenant was Ms.

Morris was undoubtedly surprising to Ms. Morris. It may be understandable, if the Landlord has concerns about 1129822’s ability to pay. But if the Landlord considered that Ms. Morris was the tenant, that should have been reflected in the Tenancy Agreement (not just by Ms. Morris signing as tenant). That fact might support the Landlord’s argument, but for the fact that the Landlord obviously treated 1129822 as the tenant throughout the tenancy and in terminating it. [ 46 ] Ms. Morris was sloppy in her communications with the Landlord.

She did not make it clear that she was writing or communicating on behalf of 1129822. But the Landlord needs more than that to pierce the corporate veil. [ 47 ] There were no fact findings made by the officer in this regard. He listened to the parties and the witnesses, and reviewed documents and other submissions. The order against Ms. Morris essentially came out of the blue. [ 48 ] I conclude that the officer erred in law by including Ms. Morris as a party to the process before him, and by finding her jointly liable for rent and damages with 1129822.

In this respect, he clearly misapprehended the law surrounding the corporate veil. There were

no fact findings supporting that conclusion of law. Any reasoning by the officer must have been based on irrelevant evidence (such as the October 7 notice and the fact that Ms. Morris always dealt with the Landlord and purported to have authority to act) and were made disregarding relevant evidence such as the Tenancy Agreement and the Landlord’s communications with the tenant. [ 49 ] I am satisfied that the officer made an error of law by attributing personal liability to Ms. Morris, in the face of the Tenancy Agreement and the Landlord’s correspondence. The proceedings were commenced against 1129822.

At the hearing, the officer had no jurisdiction over Ms. Morris. She appeared as the tenant’s representative, not the tenant. She did not occupy the premises herself; they were sublet to her clients. Occupants are not liable to the landlord for rent; only the tenant is. [ 50 ] If the Landlord’s actions at the hearing were tantamount to seeking to amend the proceedings to include Ms. Morris as a party, more formality was required by the officer. The evidence in any event did not support the finding that Ms. Morris was the tenant. [ 51 ] The order against Ms. Morris in her personal capacity cannot stand.

It was not supported by the evidence at the hearing and there were no proceedings against her before the officer. The officer cannot simply assume a jurisdiction to give judgment against non- parties. Remedy [ 52 ] As noted above, the court’s power is to confirm, vary, reverse, or cancel an order. The orders here are confirmed as against 1129822 Alberta Inc. [ 53 ] The orders were not validly made against Ms. Morris. That finding cannot be logically or legally inferred from the evidence. [ 54 ] In my view, the Landlord made an election when it commenced the proceedings. It did not seek to evict Ms.

Morris, or claim that she had not paid rent. They took proceedings against the entity they believed to be their tenant, 1129822 Alberta Inc. [ 55 ] As a result, there is no basis for me to refer the matter back to the Dispute Resolution Service. Proceedings there are entitled to be

summary. The Landlord is bound by the Tenancy Agreement it prepared and the notices they sent out. Ms. Morris’s October 7, 2010 correspondence and her submissions at the hearing do not make her a tenant. [ 56 ] As such, the orders are cancelled against Ms. Morris. Costs [ 57 ] There has been mixed success on this appeal. There will be no costs to either party. Heard on the 24 th day of March, 2011. Dated at the City of Edmonton, Alberta this 8 th day of July, 2011.

R.A. Graesser J.C.Q.B.A. Appearances: Michelle Morris Appeared on her own behalf for the Appellants Aaron Reinhart Todd & Drake LLP for the Respondents Appendix I Mr. Baron: Okay. Here is my decision. I’ll start with Suite 303. I’m awarding 850 for the October rent. Regarding the carpet cleaning, the general cleaning and the wall damage, I have awarded for Suite 303 only but not for the other two suites. For the carpet cleaning I have awarded 159.50 for it because I felt it was that one stain, and I felt that 159 is a reasonable amount to clean that one stain.

The other two suites really didn’t show much that I saw. I would have liked to see more evidence to justify that charge, so I have only awarded the carpet cleaning for the one suite. The cleaning I felt all the evidence showed about $200 worth of cleaning in my view, based on the debris, stuff on the walls, stove, and some of that other stuff I did on a calculation based on how many hours I figured it would take to do based on 20 bucks an hour, and that’s where I got the 200 bucks. But I have only awarded it for 303, not for those other two suites. Same with the wall damage.

From what I could see on the wall damage, there was about 150 bucks worth of wall damage, and I did that based on the calculation of looking at those pictures, how long would it take to patch, how long would it take to paint, and how much a bucket of paint would cost, and that’s where I got the 150 bucks. And I felt that’s how much he has proved based on those damages, and that was it. I felt the amount for the storage of the furniture was reasonable for all three units, so I have awarded the 133.33 for each unit for the storage of the furniture.

The late fees. By law you are allowed to charge late fees. I am not allowed to enforce them unless that’s what the bank actually charged you, because otherwise it’s considered a penalty, and I can’t enforce penalties. So for the suite 303 it adds up to $1492.87. I take off the security deposit of $850. that leaves a balance owing for Suite 303 of – I’m giving you a copy of this in writing. 642.87. I have also awarded you $106 of costs. So the total will be for that award 642.87 plus 106 is 748.87. Plus I wrote on the order you keep the security deposit in addition to this amount. Mr. Elkaderi: Oh, okay. Mr.

Baron: Okay. So that’s that for 303. The other two suites, I have only awarded – for Suite 103 I have only awarded the October rent plus the furniture rental of 133.33, because I felt that the damage that I awarded in the first suite was enough for all three. So that adds up to 983.33. I take off the security deposit of 850 bucks, and I say that you still owe them 133.33 plus costs of $106, and I also write you can keep the security deposit in addition to that. Okay. Last order, basically the same as what I just said. I have only awarded the rent, $1100 plus the 133.33 for the furniture for a total of 1233.33.

I took off the security deposit of $1100. There is no interest. that gave a balance owing of 133.33 plus costs of 106, and allow him to keep the security deposit on that too. So if you are wondering how much in total you owe him after all is said and done – do you want me to add this up? Ms. Savard: Yes. Ms. Morris: Yes, please. Mr. Baron: Okay. $1227.53. Okay. So this hearing is now concluded.