Watson v. White Diamond Developments Ltd., 2022 NSSM 27

SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Watson v. White Diamond Developments Ltd., 2022 NSSM 27 ON APPEAL FROM AN ORDER OF THE DIRECTOR OF RESIDENTIAL TENANCIES Date: 202204 22 Docket: SCCH 512100 Registry: Halifax Between: Nellie S.J. Watson Appellant (tenant) - and - White Diamond Developments Ltd. Respondent (landlord) REASONS FOR DECISION AND ORDER Adjudicator : Eric K. Slone Heard : Via teleconference in Halifax, Nova Scotia on April 7, 2022 Appearances : For the Appellant, self- represented For the Respondent, Scott Donkin (owner) BY THE COURT :

[ 1 ] This is an appeal by the tenant from a decision and order of the Director of Residential Tenancies dated January 17, 2022, which terminated the tenancy at 69 Main Ave., Apt A, in Halifax effective January 31, 2022. The order also required the tenant to pay to the landlord the sum of $1,531.15 after crediting a security deposit. [ 2 ] The appeal was heard via teleconference on April 7, 2022. The tenant gave evidence herself and called several witnesses on her behalf. The landlord (or more accurately, Mr.

Donkin) called his handyman to testify but, somewhat surprisingly, did not testify on his own behalf. [ 3 ] The landlord had initiated the proceeding at Residential Tenancies because the tenant had been withholding (or more accurately, not paying) part of her rent for several months partly as a way of addressing what she regarded as inadequacies in her unit, and partly because she was incurring additional expenses that created financial strains on her. [ 4 ] The tenant is a single mother with three special needs children. She is a recipient of income assistance and a housing subsidy.

She appreciates that this tenancy is not viable for the long term, and that she will need to vacate the unit, but asks that she be permitted to complete the 2-year fixed term of her lease which expires on September 1, 2022. She seeks an abatement to offset the arrears that she owes. She is willing to resume paying full rent as at this point. [ 5 ] The landlord asks me to uphold the eviction. He did not concede that the tenant is entitled to any offsetting amounts.

He points out that the tenant is now in arrears of rent in the amount of $4,500.00 (not including any offset of the security deposit), which is half the total rent accrued for the last six months. The tenant only stopped paying her portion of the rent but allowed the housing subsidy to go through, which is paid directly by Metro Regional Housing. [ 6 ] The deliberate withholding of rent is sometimes referred to as a “rent strike” and is a practice that is almost always to be discouraged.

It amounts to a heavy- handed self-help remedy, when the system is designed with theoretically adequate legal remedies available. However, sometimes those legal remedies are elusive and people feel trapped with no choice but to take matters into their own hands. [ 7 ] It becomes more complicated when the tenant is without funds to pay full rent because they have been incurring extraordinary expenses to compensate for services that the landlord has failed to supply. [ 8 ] The tenant filed records of text messages between herself and Mr.

Donkin dating back to before the tenancy began and extending into January 2022. These texts paint a vivid picture of a troubled tenancy from virtually the beginning of the tenant’s occupation with her family. Not all of the issues concerned the state of the unit. There were some issues surrounding the payment of rent, made more complicated by the fact that outside agencies were involved.

But those issues were straightened out, and the tenant appeared to be acting in good faith to fulfill her end of the bargain. [ 9 ] One could say that the sheer volume of text messages exchanged must have been exhausting for both parties. [ 10 ] Possibly some of the problems with the state of the unit could have been avoided had the tenant been able to inspect it before moving in, but the tenant was moving to Halifax from Bridgewater and never saw the unit until she was already committed and in the process of moving in. [ 11 ] The evidence satisfies me that the tenant has been consistent in her complaints and the landlord has been either slow in responding, or non-responsive to the tenant’s many complaints.

He has at times tried to blame her for issues that were clearly not her responsibility, such as trying to blame her for a faulty internal switch in her furnace that kept her and her children freezing in the unit for prolonged periods of time until a technician was finally brought in to repair it. [ 12 ] The Residential Tenancies Officer did not allow the tenant to present any evidence in support of her claim for an abatement. He noted in his decision that “the tenant attempted to file a counter claim just before the hearing, but the claim was not filed.”

[ 13 ] The tenant testified that she tried to file a counterclaim but was told she was “too late.” I have no doubt that this was what she was told, or at least what she reasonably understood from Residential Tenancies staff. As such, she was prevented from advancing her complaints against the landlord. The Residential Tenancies Officer treated the matter as a simple case of the rent is in arrears therefore the landlord is entitled to evict. [ 14 ] This is a situation that I have seen many times before.

At the very least, there is no reason why the tenant should not have been permitted to file her counterclaim, even if that might have necessitated a brief delay in the landlord’s hearing. Clearly the issues of rent owing, and a claimed abatement, were inextricable. Not to allow them to be heard together created an injustice. In my view the Residential Tenancies Officer ought to have allowed the tenant to argue for an abatement. Refusing to consider her grievances because she had not filed the necessary paperwork, was a victory of form over substance.

While procedures are important, sometimes accommodations must be made in order to do justice. [ 15 ] Even so, in my opinion, it was not strictly necessary for the tenant to file a counterclaim. I say this because a claimed abatement is not only a counterclaim, but in law amounts to a defence of equitable set-off. [ 16 ] There is some supporting authority for this position. In Rockwood v. Humes , 2016 NSSM 29 , at pp.5-6 , Adjudicator Knudsen had a similar situation before him.

He commented: Abatement At the commencement of the hearing, I indicated that I knew of no reason prescribed in the Residential Tenancies Act why a breach of statutory conditions could not be addressed at the hearing before the Residential Tenancies Officer, in response to a claim for rental arrears. There are decisions of other Small Claims Court Adjudicators where my colleagues have upheld decisions of the Director to not permit such claims for abatement without some form of notice or documentation. A common practice is for Residential Tenancies Officers to require some type of “counterclaim”.

The Residential Tenancies Act and Small Claims Court Act are silent on such a practice. There is a general recognition by the courts in Nova Scotia that the Small Claims Court is a creature of statute which may determine its own process consistent with the legislation. The ability to hear or not hear a claim by a tenant falls under that jurisdiction. Regrettably, all Adjudicators and Residential Tenancies Officers have received surprise requests from a tenant for an abatement at the last moment when hearing a claim for arrears. Usually, this had not been raised before.

However, in this case, the damage and duration of the problems arising from the flood are hardly a surprise. This is also a case where both parties would benefit from moving forward. With that in mind, I considered the motion for an abatement of rent on the grounds of a breach of the statutory conditions. To do otherwise would result in a needless delay and further inflame a very difficult relationship. [ 17 ] I generally agree with this approach.

It is important that opposing parties not be taken by surprise when such claims arise, but it is less important, in my opinion, that the reasonable notice take on a particular form. [ 18 ] I believe it is wrong to require the filing of a counterclaim for every claim of abatement. Defences and counterclaims [ 19 ] There is an important distinction between defences and counterclaims. In the civil court context, parties may raise defences in their statement of defence, but must raise any counterclaim (and pay to file it) in a separate document.

Residential Tenancies is not a system that requires parties to file a statement of defence. I cannot imagine a party in Residential Tenancies being told that they cannot raise a valid defence at the hearing because they failed to put it in writing. [ 20 ] There are two types of set-off generally recognized: legal set-off and equitable set-off.

[21] An example of legal set-off would be where a tenant argued that they had loaned the landlord money, and that the debt shouldbe set off against rent owing. [22] Equitable set-off is less straightforward. [23] Although it was in the context of a court proceeding, the defence of equitable set-off was commented upon by Smith, ACJ (asshe then was) in Agate Developments Ltd. v. United Gulf Developments Ltd., 2008 NSSC 144 at para. 39: [39] …Set-off in equity does not require mutuality nor do the cross obligations need to be debts [see Singer v. Sommex Maritime Ltd, (NS SC), [1996], 148 NSR (2d) 118) at para. 15].

In Singer, supra, Davison, J. referred to the following principles which were set out by the British Columbia Court of Appeal in Coba IndustriesLtd. v. Millie’s Holdings (Canada) Ltd. et al. (1985),20 DLR (4th) at pp. 696-697:

(1) The party relying on a set-off must show some equitable ground for being protected against his adversary’s demands:Rawson et al v. Samuel (1841), Dr. & Ph. 161, 41 E.R. 451.

(2) The equitable ground must go to the very root of the plaintiff's claim before a set-off will be allowed: British Anzani.

(3) A cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow theplaintiff to enforce payment without taking into consideration the cross-claim: Federal Commerce & Navigation Ltd.

(4) The plaintiff’s claim and the cross-claim need not arise out of the same contract: Bankes v. Jarvis, [1903] 1 K.B. 549;British Anzani.

(5) Unliquidated claims are on the same footing as liquidated claims: the Newfoundland case. [24] The tenant’s claim here is that the landlord was in breach of his obligations under the lease, which diminished her enjoymentof the rental property and created expenses that undermined her ability to afford the rent. These are claims that are “so clearly connected”to the claim of the landlord that it would be “manifestly unjust to allow the [landlord] to enforce payment” without considering herclaim. [25] Accordingly, I am willing to consider the tenant’s abatement claim.

The landlord has had adequate notice from the tenant thatshe would be making this claim, so there is no unfair surprise. The abatement claim [26] The most serious issue that has impacted the tenant has been the heating system. Compounding the problem with the heatingsystem has been the inadequacy of the windows, which are leaky and allow too much heat to escape. Complaints about these thingsbegan with the onset of colder weather in the fall of 2020. The exchange of texts was intense during that winter as the tenant was burningthrough tanks of oil without experiencing adequate heat.

Also, she was frequently out of hot water which is also heated by the furnace. [27] Throughout these exchanges the landlord offered help, at times, and always begrudgingly, as he insisted that heat was thetenant’s responsibility. He apparently believes that because the lease makes the tenant responsible for the cost of heating, that he is notresponsible to provide a working furnace. I disagree with his

interpretation of his obligations.

[28] The text messages also reveal exchanges concerning: a. Plumbing problems b. A treacherous pile of construction debris at the side entrance c. Dangerous condition of the front steps d. Dirty conditions dating from the previous tenant e. Lack of proper insulation in attic f. Drafts through window frames g. Incomplete fencing (though advertised as “fenced”) h.

Fridge broke down resulting in food wastage and increased cost for takeout food [29] The tenant took the step of reporting the landlord to HRM Bylaw enforcement (Building Standards) which resulted in three reports and orders requiring the landlord to take action. Those orders noted a laundry list of deficiencies. As at the date of the hearing before me, the landlord had only rectified a small number of items. [30] Building Inspector Meagan Best testified that she had spoken with Mr. Donkin about the problem of lack of heat. She stated that Mr.

Donkin told her that it was a “new heating system” and that the problems were due to the actions of the tenant. Ms. Best confirmed through her inspection that this furnace was far from new, and that it had not been properly serviced since 2013. As already noted, the tenant did not cause the furnace to fail. [31] Mr. Donkin had the opportunity to testify to deny that he made this statement, or otherwise to explain himself. He did not take that opportunity. I therefore accept that he has been not only neglectful of his responsibility, but he has been untruthful about it.

How much of an abatement is appropriate? [32] Quantifying the claim for an abatement is not easy. The tenant did not give a precise accounting of everything that she has spent that can be traced to the failures of the heating system, lack of hot water, or the breakdown of appliances, though I am satisfied that significant amounts were incurred. There is also a general loss of enjoyment to consider. [33] I believe that justice will be served by awarding the tenant a one-time abatement of $2,500.00. [34] This means that currently the tenant is in arrears in the amount of $2,000.00.

It also means that rent for the month of May (and thereafter) will be due in the full amount of $1,500.00. [35] As for the continuation of the tenancy, I believe that the tenant should be given the opportunity to place herself in good standing and serve out the balance of the lease - if she wants. Accordingly, if she pays the arrears of $2,000.00 on or before May 1, 2022, and make full rent payments thereafter, the lease will remain in effect and terminate on its natural end date of September 1, 2022. [36] Should the tenant fail to pay the arrears by May 1, 2022, the lease will terminate at an earlier date.

Given the complexity of moving for her, I set that date as July 1, 2022. [37] I believe it will serve everyone’s interests for the court to retain jurisdiction to make such further orders as may be appropriate until the tenancy is over. Either party may ask court administration to convene a further hearing for that purpose.

[38] I believe the security deposit should remain with the landlord and be dealt with in the ordinary way after the tenancy concludes. [39] I decline to order any costs to either party, either before Residential Tenancies or this court. ORDER [40] In the result, the order of the Director of Residential Tenancies dated January 17, 2022, which terminated the tenancy at 69 Main Ave., Apt A, in Halifax effective January 31, 2022, is set aside and in its place an order is made as follows: a. The tenant is allowed a one-time rent abatement of $2,500.00. b. Current arrears are confirmed as $2,000.00. c.

Rent for the month of May (and thereafter) will be due on the 1 st of the month in the full amount of $1,500.00. d. If the tenant pays the arrears of $2,000.00 on or before May 1, 2022, and make full rent payments thereafter, the lease will remain in effect and terminate on its natural end date of September 1, 2022. e. Should the tenant fail to pay the arrears by May 1, 2022, the lease will terminate on July 1, 2022. f. This court will retain jurisdiction to make such further orders as may be appropriate until the tenancy is over. DATED at Halifax, Nova Scotia this 22 nd day of April 2022. Eric K.

Slone, adjudicator