Schulze v. Gillis, 2021 NSSM 52

IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Schulze v. Gillis, 2021 NSSM 52 Claim No: SCCH 21-505241 BETWEEN: Marijka J. Nel & Delia D. Schulze Appellant/ Landlords Jessica Gillis Respondent/ Tenant Derek B. Brett appeared for the Appellant Nora MacIntosh appeared for the Respondent DECISION [ 1 ] This is an appeal of an Order of the Residential Tenancies Director dated March 17, 2021, which dismissed the Landlord’s application to terminate the tenancy based upon section 10 (8) of the Residential Tenancies Act , RSNS 1989, c. 430 .

The matter came before me for hearing by telephone conference call July 14, 2021. [ 2 ] I am dismissing the Landlord’s appeal and confirming the Decision of the Director. My reasons follow. [ 3 ] Ms. Nel and Ms. Schulze (the “Landlords”) purchased the property, a duplex at […], Halifax, in October of 2017.

They lived in half of the property, [..]B until August of 2020, at which time they purchased and moved to a home in Eastern Passage, Nova Scotia. [ 4 ] Miss Gillis (the “Tenant”) has lived in the unit at [..]A since September 2021. [ 5 ] The tenant's rent was $800 per month until June of 2020, at which point the tenant was giving a rental increase of $300 a month effective October 1st, 2020, making the new rent $1100. [ 6 ] In November of 2020, and in response to the pressures placed upon tenants by the effects of the COVID 19 pandemic, the Province of Nova Scotia announced a 2% cap on monthly rental increases for current tenants only, under the Nova Scotia Emergency Management Act , S.N.S. 1990, c. 8 .

That cap was retroactive to August 1 st , 2020. [ 7 ] Ms. Gillis’s rent was re-adjusted back to $816.00, reflecting the cap. Almost immediately, the Landlords commenced what is described by the Landlord as “negotiations” to convince Ms. Gillis to agree to pay $1100.00. Ms. Gillis was clearly uncomfortable with this request, both from a financial perspective (she is a single parent), but also because, as she said in an email, she “believes in rent control”. [ 8 ] On December 21, 2020 Ms. Nel wrote an email to Ms. Gillis as follows:

a. As investors, it's the goal to purchase property in areas that will show the passive appreciation which […] St has in the past three years- and which will automatically bring reasonable rent increases… b. Delia and I actually can't afford the kind of compromise we have already offered, since we know that the unit would be worth significantly more already if it were rented to anyone else... having said that, we do appreciate how easy you have made things for us and we would like to keep you on as a tenant. c.

In light of all of the above, and taking the provincial rental cab into account, we would like to offer you the rate of $1050 per month for the remainder of the 2020/ 21 rental contract term. [ 9 ] There were continued requests in January of 2021 for Ms. Gillis to respond, and at least two meetings upon the Landlords return from South Africa, where they had been over the Christmas period. In a meeting on January 26, 2021, Ms.

Gillis was told, according to her evidence, that the Landlords were going to have to move into the unit “because I wouldn't negotiate a rental increase”. [ 10 ] The Landlord’s position is that they are forced by their financial situation to move back into the unit. Evidence was led of their expenses relating to the […] property and the Eastern Passage property, most notably a significant water damage bill in 2020 at […] which was caused by a leak in the water heater. Ms. Nel also testified that on January 28, 2021 she received a serious health diagnosis, which has put financial pressure on the landlords.

Argument: [ 11 ] Mr. Brett argued that the pre-existing financial circumstances and the health diagnosis of Ms. Nel justified the desire to terminate the tenancy under section 10 (8) (f) (

i) of the Act. In his submission, the evidence presented now supports that the landlord has in good faith a requirement to take the unit over. [ 12 ] Ms. Macintosh argued that the evidence is clear that the landlords are not satisfied with the rent that they are making from the unit and the provincial rental cap has prevented them from increasing it.

She argued that there was no evidence that they are not able to continue to live in their home and noted that there were significant efforts to negotiate a higher rent. [ 13 ] She submitted that they are not acting in good faith, and that rather this is simply about the desire to make more money, pointing out that under cross-examination Ms. Nel agreed that she continues to receive a salary from her employment and has access to a health plan, such that the only aspect of her care that is not paid for is some naturopathic treatments. [ 14 ] I thank the parties for their submissions.

Decision: [ 15 ] Section 10 (8) (f) (

i) of the Act states: A landlord may give to the tenant notice to quit the residential premises where (

f) the Director is satisfied that it is appropriate to make an order under

Section 17A directing the landlord to be given possession at a time specified in the order, but not more than 12 months from the date of the order, where (i)the landlord in good faith requires possession of the residential premises for the purpose of residence by himself or a member of his family. [ 16 ] I find that there is nothing in the evidence before me that supports the Landlord’s position that they in good faith have made this application. [ 17 ] Their actions prior to giving notice of their intention to take over the unit display at worst, an absolute disregard, or at best, an

absolute misunderstanding of the legislative requirement currently in place in Nova Scotia that residential rental increases must not exceed 2% per month. [ 18 ] It is in my submission completely inappropriate and contrary to the legislation, that is to say against the law, to attempt to what is described as “negotiate” with a tenant for a higher amount, because any residential tenant is currently legally justified in relying upon the 2% cap. [ 19 ] I find that the evidence is clear that the motivation of the Landlords was to achieve a higher rent from Ms. Gillis.

When they failed in their efforts to convince her to give them what they wanted, the notice of an intention to take over the unit resulted. Once Ms. Gillis is removed, any subsequent tenancy will not be subject to the legislative rental cap. [ 20 ] There is no evidence before me of the Landlords planning to either rent or sell their other property. The evidence with respect to a financial need to live in the unit is not sufficient to overcome the evidence that the Landlord’s motivation was to in some way regain control of the unit.

The ongoing narrative of the evidence is that the Landlords want to charge more rent for the unit. There was a 2020 financial loss completely attributable to the water damage, but that is not an ongoing expense, and is a given with respect to the risk inherent in investment properties. [ 21 ] Ms. Nel’s medical diagnosis was argued as the catalyst for needing to take over the unit. While her health issues are indeed unfortunate, it is temporally impossible for them to have triggered the need to take over the unit, as the Tenant was advised of the Landlord’s decision, two days prior (January 26 th ) to Ms.

Nel’s diagnosis (January 28 th ). [ 22 ] I find that the evidence does not support that the application to terminate Ms. Gillis’s tenancy was made in good faith, or for the purpose of taking over the unit. The Landlord’s whole motivation was to charge more for the unit, and Ms. Gillis would have to be removed to clear the path to install a tenant to whom the cap would not apply. [ 23 ] For all of these reasons, the decision of the Director is confirmed, and an Order will issue accordingly. Dale Allane Darling, QC Adjudicator Dated at Halifax, Nova Scotia on July 23, 2021