Armco Capital Inc. v. Saunders, 2021 NSSM 10

2021 Claim No. 503688 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Armco Capital Inc. v. Saunders , 2021 NSSM 10 BETWEEN: ARMCO CAPITAL INC.

Appellant/Landlord - and - SHAUN SAUNDERS and NYOKA WILLIAMS Respondents/Tenants Hearing Date: March 22, 2021 Appearances: Appellant – Perry Yung Respondents – Self Represented DECISION and ORDER [ 1 ] This is an appeal of a Director’s Order dated January 21, 2021, by which it was ordered that the Landlord pay to the Tenants the sum of $725. [ 2 ] The Landlord has appealed that Order arguing that the premises were left in a state beyond ordinary wear and tear which required remediation and that there were associated costs incurred by the Landlord.

While the total claimed amount was $1,108.42, before me the Landlord limited its claim to $825, being the exact amount of the security deposit. [ 3 ] There are two issues here in my view. First, whether or not the Landlord has met its burden to show that the condition of the premises when the Tenants vacated, as compared with when they took possession approximately a year earlier, went beyond that of ordinary wear and tear. Second, whether or not the Landlord breached the requirements of

Section 12 of the Residential Tenancies Act , R.S.N.S. 1989, c. 401 and, if so, what, if any consequences should flow from that. Condition of Premises on Vacating [ 4 ] The basic law is clear that tenants are responsible to maintain the ordinary cleanliness of the premises during the tenancy and upon termination of the tenancy. Further, the tenants are responsible for any damage that occurs during their tenancy, excepting ordinary wear and tear. [ 5 ] The relevant sections of the Act are Sections 2(h), 9(1) 4., and 12(15), which read:

2(k) “wear and tear” means the usual degree of depreciation or deterioration caused by living in a residential premise, relative to the duration of the lease. . . . 9(1) 4.

Obligation of the Tenant - The tenant is responsible for the ordinary cleanliness of the interior of the premises and for the repair of damage caused by wilful or negligent act of the tenant or of any person whom the tenant permits on the premises. . . . 12(15) A claim for damages from a security deposit shall not include any costs associated with ordinary wear and tear of the residential premises [ 6 ] The burden of proof is on the Landlord to demonstrate that the premises do not meet these statutory standards. [ 7 ] As noted, the claim while limited to $825, actually comprises a greater total amount, as follows: a.

Cleaning $ 650.00 b. Carpet cleaning $ 148.35 c. Drywall repair $ 100.00 d. Three spring door stops $ 10.07 e. Removal of items $ 200.00 $1,108.42 [ 8 ] Of these items, the only one that appears to clearly go beyond reasonable wear and tear is the drywall repair. I will allow the $100 claimed for that. [ 9 ] I comment on the others. The claimed cleaning amount is $650. In a letter dated November 5, 2020, from the cleaner, Tetiana Roienko, it is stated that it took 15 hours to complete this cleaning of which four hours was spent on the kitchen appliances. Ms.

Roienko did not testify and therefore was not available for questioning. [ 10 ] In the photos tendered by the Landlord there were no photos of the kitchen.

And, in the walkout inspection completed by the Landlord representative, with the exception of an apparent missing ice tray, all of the codes for the kitchen indicated clean or good condition. [ 11 ] With the exception of the drywall repair, the rest of the photos appear to indicate ordinary wear and tear. [ 12 ] I also note that in the video done by the Tenants at the time of the “walk out” inspection, there were no discernable items of significance that would support the Landlord’s claim for compensable damage. [ 13 ] On the basis of the evidence submitted by the Landlord and the evidence of the Tenants, I am unable to conclude on a civil burden that the premises fell below the ordinary cleanliness standard or that there was damage that went beyond ordinary wear and tear, apart from the drywall repair. [ 14 ] In this regard I also note that the Tenants testified and provided a receipt as verification thereof that they rented a carpet cleaner and stayed up almost the entire night cleaning the carpets.

I do note the small stain of pink or red in a little area by a door. In my view the odd such stain falls within ordinary wear and tear. [ 15 ] One feature of note in the evidence was that the house was being readied for sale with an intended closing date of December 10 th . The final inspection with the Tenants took place on or about September 2 nd . Mr. Pirovarov, a Project Manager with the Landlord company, confirmed that his mandate was to ready the house for the intended sale. He is the one who did the walk out inspection and completed the form.

That evidence along with the fact of the impending real estate closing supports the inference that the Landlord’s intention was to have the premises in an attractive state for the pre-closing inspection. Certainly that is to be understood for any vendor in such circumstances and certainly they are perfectly entitled to do so. [ 16 ] Also equally clear, is that they are not entitled to charge back the expenses for that to the departing Tenants unless the items in question are shown to fall outside of ordinary wear and tear standard.

[ 17 ] It is perhaps worthwhile to point out the not uncommon practice of landlords to do a “deep clean” and a general remediation of premises at the termination of a lease in order to make the premises attractive and inviting to potential new tenants. In such cases, the cost of doing so cannot in total be passed on to the departing tenants. Always the standard remains as ordinary cleanliness and damage that goes beyond ordinary wear and tear.

Clearly the same approach applies here where the premises are being readied for sale [ 18 ] In the amounts claimed there is also a claim for moving out property of the Tenants including, I understood, a bedframe, a mattress and some bags or boxes. In evidence from the Tenants and not disputed by the Landlord was that the bedframe was there when they moved in.

Given that fact, it would not be appropriate to make them responsible for removing that. [ 19 ] Also, they testified that the mattress was put out for the garbage day and therefore, they should not be charged for that. [ 20 ] The Tenants did not dispute that there may have been some bags or boxes left behind of their items. They abandoned them in my view and the cost for removing them should in fairness be allocated to them. I allow $50 for that. [ 21 ] In total therefore, I am allowing $150 to the Landlord.

Section 12 of the Residential Tenancies Act [ 22 ] The Landlord has not to this date returned the security deposit of $825. The Residential Tenancies Act requires that it be returned within ten days of the termination of the tenancy unless the landlord files an application to retain the security deposit within that ten day period or there is an agreement with the tenant to keep the security deposit. Neither of those two exceptions applies here.

Some seven months have now passed since the Tenants ought to have received their security deposit. [ 23 ] The Landlord has breached the Residential Tenancies Act by not returning the security deposit within ten days. The fact that they filed an application in November to retain the deposit and seek payment of money does not cure that default. [ 24 ] In a recent decision of Mizrachi v. Lenihan , 2021 NSSM 3 , I dealt with a somewhat similar although not identical scenario. The distinguishing feature was that in that case the landlord had never filed any application to retain the security deposit.

Based on my review of the important provisions in

Section 12 of the Residential Tenancies Act , I ordered that the security deposit be returned and while there had been some evidence about issues regarding the condition of the premises, because no application had been filed by the landlord, I did not consider any of that evidence in my decision. [ 25 ] In this present case, I note that the Landlord did file an application to the Director in November. It would appear that it was filed in response to the Tenant’s application of October 23 rd .

At the hearing before the Director, both applications were considered. [ 26 ] The Tenants testified that they had requested several times the return of the deposit. In apparent response to that, the Landlord representative, Jonathan Andrews, sent an email on September 30, 2020, to Ms. Williams where he stated, in part: Hi Nyoka, Apologies for not getting back to you on this earlier I wanted to gather all my invoices. I have reviewed the walk out documentation and have attached invoices for work completed at 62 Kaleigh Drive.

Unfortunately I cannot return the damage deposit as we had to spend more than the damage deposit to clean the unit and make necessary repairs. [ 27 ] With respect, the Landlord was not entitled to take that position at that stage. I refer to Sections 12(5), (6), and (7) of the Act which make this clear:

(5) Subject to subsection 6, the security deposit together with any interest, shall be returned to the tenant within ten days of the date of the termination of the lease;

(6) Where the landlord seeks to apply all or part of the security deposit and interest to the outstanding rent or to expense incurred in respect of any damage for which the tenant is responsible and the tenant does not consent in writing, the landlord may make an application under

Section 13 in the form prescribed in the regulations;

(7) An application pursuant to subsection 6 shall be made within ten days of the date of the termination of the lease and, if no application is made the security deposit shall be returned in accordance with subsection (5). [Emphasis Supplied]

[28] I also note that in addition to this requirement being in the Act, it is also in the standard form of lease including the lease that wasentered into here. I refer specifically to paragraph 15 of the lease which reads, in part: The Landlord shall file a claim for unpaid rent and/or damages within ten days of the termination of the lease if the deposit is notreturned. [29] In the Mizrachi case I reviewed the statutory provisions and existing case law.

I will quote at some length from that case: [5] Existing case law makes it clear that the requirement to [either file an application or] return the security deposit within ten days ofthe termination of the lease is, unless the tenant consents in writing, mandatory. I refer first to the Supreme Court of Nova Scotia case ofSingh v. Cowie, , where Nathanson, J., stated (page 3): It is probably undesirable to treat the ten-day time period for applications set out in s. 12(7) of the Act as a matter of jurisdiction.

If itwere treated as a matter of jurisdiction, there might be a danger of overlooking appropriate adjudication or prejudging an objector’scomplaint. However, the requirement of that provision is a mandatory condition precedent for a valid application: Fuchs v. Hancock(unreported, C.A. No. 02932 dated June 9, 1994); Voiculescu v. Gailinaugh (unreported, S.H. No. 93-100851 and 93-6497R, dated May4, 1994): and Law v. L. & R. Equities Ltd. (unreported, C.H. No. 60541, dated May 31, 1988). [6] A similar conclusion was made in the Small Claims decision of Quon v.

Johnson, 2007, SSSM 80, where Adjudicator Slone stated: [15] It is my view that the time limits set out in the Residential Tenancies Act are mandatory. If no application to retain the securitydeposit is made within ten days, the obligation to return the deposit is mandatory. The Tenant should not have to make an application, asshe did, to the Director to obtain the return of the deposit.

Accordingly, upon this second, procedural ground, it is my finding that theDirector’s order was correct and the Landlord must return that portion of the security deposit that he retained without legal right. [7] These rulings are, of course, consistent with Section 9(3) of the

Interpretation Act, R.S.N.S. 1989, c. 235, which reads:

(3) In an enactment, “shall” is imperative and “may” is permissive. [8] Security deposits are given special prominence in the Residential Tenancies Act. [Section 12 citation omitted] [9] I note in subsection 12(13) that owners, partners and directors of companies are personally liable for any breach ofthe Act governing security deposits. This is the only subject area where the Act imposes personal liability for corporate landlords. [10] I also note that under subsection 12(16), the fine for a breach of

Section 12 is set at a maximum of $5,000. This is to becontrasted with

Section 23 for other breaches of the Act which are limited to a fine of $1,000. [11] There are also the Residential Tenancies Regulations, N.S. Reg. 190/89 . These contain detailed provisions governing securitydeposits, including that they be held in separate trust accounts and various other requirements. [12] The degree of detail and comprehensiveness of all of these provisions show the particular significance that is to be accorded tothe subject of security deposits. It is clear that the Legislature had a particular concern about security deposits and the potential for abusethat might be visited on tenants.

For example, a tenant of modest means and moving from one residence to another residential premisewould have a vital interest in receiving back his or her security deposit within tendays. An unscrupulous landlord could, without doinganything, retain the funds and take a wait and see approach, and then only if challenged or ordered to do so, release the funds. Or, theymight use the possession of the security deposit as negotiating leverage in settling with the tenant.

There can be other scenarios imagined. [13] To permit this to occur reverses the statutory intention for a speedy release of the money which must happen unless the landlordmakes the required application. [14] In this present case, and I emphasize that I attribute no bad faith or intention to the Landlord, the facts are that the Landlord hasneither returned the security deposit nor filed an application pursuant to

Section 13 to retain the security deposit. Rather, it is the Tenantwho has been put to the task of filing an application pursuant to

Section 13 seeking the return of the security deposit. In response to thatapplication, and without filing his own application, the Landlord then seeks to justify the retention of the security deposit on the basis of

various items which he has referred to. At the hearing before me I heard evidence from both parties on those items. Given my ruling here, I make no comment on that evidence. [15] In my view, allowing the Landlord to raise these issues at this stage without filing his own application, is inappropriate and is not countenanced by the provisions referred to above. [16] In this case, the tenancy terminated on August 31, 2020. The security deposit should have been returned no later than September 10, 2020.

It is now nearly five months since then. [17] I will order the return of the security deposit. [18] In so ruling, I should not be taken as suggesting that a landlord, who does not file a claim within the tendays of lease termination, forfeits his or her right to make a subsequent claim for damages, or for that matter, for unpaid rent. What is forfeited is the legal right to withhold the security deposit. The landlord (or the tenant) still has a one (1) year period in which to otherwise file a complaint (Section 13(b)).

It may well be that legitimate items of physical damage are not reasonably or capable of being detected at the time of termination of the lease or even within a week or tendays thereafter. The landlord’s rights in this regard are preserved. [19] In a case where a tenant has applied for the return of the security deposit and the landlord has filed their own complaint claiming damages, it is suggested that the two hearings he heard together.

This approach was suggested by Justice Nathanson in his concluding comments in the Singh case, referenced above. [ 30 ] As noted above, in this present case the Landlord did file its own application. As such, it clearly was appropriate for both applications to be heard together. However, there should be some consequences to a landlord who does not comply with the ten-day requirement of returning a security deposit or making the application to retain it within that ten-day period. Otherwise, there is no incentive for compliance with this ten-day requirement.

So long as the landlord files their own application (within a year), they get their “day in court” without returning the security deposit as required by Section 12(5). This cannot be right. There should be some consequence for violating the statutory obligation to return the deposit with ten days. [ 31 ] There is precedent for assessing general damages for violations of the Act. In the case of RNS Realty Limited v. Harlow , 2004 NSSM 27 , Adjudicator Thompson assessed general damages for trespass and violating a statutory condition of the lease in an amount of $500.

He also assessed exemplary damages in the amount of $1,500 for a total order of $2,000 to be paid to the tenant. In that case the facts were more egregious in that the landlord had its agents enter the tenant’s premises while she was yet in bed, turned off the power and changed the locks on the door. This was all done without any order from the Residential Tenancies Director. [ 32 ] Here, a more modest amount would be in order. I would note that when I raised the prospect of general damages for failure to comply with the ten-day requirement, Mr.

Yung suggested that the degree of familiarity between the parties may have contributed to the delay. With respect, I found that to be unconvincing . [ 33 ] In the circumstances of this present case, I am assessing $250 general damages for the breach of the statutory requirement. [ 34 ] In

summary, the amount owing by the Landlord to the Tenants is $925 calculated as follows: Security Deposit $ 825.00 General Damages 250.00 $1,075.00 Less: Total amount allowed to Landlord $ 150.00 Net Amount Owing $ 925.00 ORDER

[ 35 ] It is hereby ordered that the Landlord pay to the Tenants the sum of $925. DATED at Halifax, Nova Scotia, this 13th day of April, 2021. MICHAEL O’HARA ADJUDICATOR