3336580 Nova Scotia Limited Appellant (landlord) - v. -, 2023 NSSM 40

SMALL CLAIMS COURT OF NOVA SCOTIA Citation: 336580 Nova Scotia Limited v. Spelman, 2023 NSSM 40 ON APPEAL FROM AN ORDER OF THE DIRECTOR OF RESIDENTIAL TENANCIES Date: 202306 22 Docket: SCCH 522576, 522580, 522581 Registry: Halifax Between: 3336580 Nova Scotia Limited Appellant (landlord) - and - Bianca Spelman, Christopher Stevens, Jen MacDonald & Christopher Faubert Respondents (tenants) REASONS FOR DECISION AND ORDER Adjudicator : Eric K.

Slone Heard : Via zoom in Halifax, Nova Scotia on June 2 and 5, 2023 Appearances : For the Appellant, Meaghan Kells, counsel For the Respondent, Bianca Spelman Tanya Jones, counsel For the Respondents, Christopher Stevens, Jen MacDonald & Christopher Faubert Katie Brousseau, Community Legal Worker

BY THE COURT: [1] This is an appeal by the landlord from decisions of the Director of Residential Tenancies dated March 21, 2023 in these threefiles, which were heard together as they involve (mostly) identical facts. [2] The landlord is the owner of an 8-unit townhouse complex at 28 Frederick Street in Bedford, Nova Scotia. The tenantsoccupy three of the units. Bianca Spelman is the tenant in unit 8, Christopher Stevens and Jen MacDonald occupy unit 6, and ChristopherFaubert occupies unit 5. They have been tenants in these units for 11, 6 and 19 years respectively.

Their rents could properly bedescribed as reasonable or affordable, by contemporary standards. [3] The landlord purchased the building in 2020, with a clear agenda to terminate the tenancies, renovate the units and derivehigher rents. The beneficial owner and directing mind of the landlord is Suneal Andrieno, also known as Neal Andrieno. Mr. Andrienowas very frank that his business model is to purchase buildings that he believes to be at or near the end of their useful lives, with a viewto doing significant updating.

He boasted about this practice on a podcast that he hosts, showing how with the substantial rent increasesthat he can charge once new tenants are installed, he can significantly increase the capital value of his investment. [4] This practice can fairly be described as “renoviction.” [5] The landlord may not have anticipated when he purchased the building that he would soon be impacted by government actionresponding both to the Covid pandemic and the affordable housing crisis. As I wrote in Bluenose Inn and Suites v.

McGuire, 2023 NSSM 4 : [16] The term renoviction can be traced in a legislative sense to the decision by the Nova Scotia government early in the Covidpandemic to use its emergency powers to impose an outright moratorium on renovictions. [17] As recited helpfully by adjudicator Richardson in Certain Tenants of Victoria Road v.

Central East Development Inc, 2020NSSM 28 at paragraph 16: [16] On November 25th, 2020 the Government of Nova Scotia issued a Direction of the Minister under a Declared State of Emergency(section 14 of the Emergency Management Act), 20-014R, “regarding tenant protections” (the “NS Direction”).

Part 1 (Renoviction of Tenants) of the NS Direction provides as follows: 1 For the purpose of this Direction, a “renoviction” means a renovation undertaken by a residential landlord to residential premises, ora building containing residential premises, that will require the tenant to vacate the premises, (

a) effective on and after September 1, 2020, a residential landlord is prohibited from giving a notice to quit under the ResidentialTenancies Act to a tenant for a renoviction, (

b) effective on and after September 1, 2020, any notice to quit given by a residential landlord to a tenant for a renoviction is void, (

c) effective on and after November 25, 2020, a residential tenancy officer, or on appeal the Small Claims Court, must not make anorder terminating a tenancy or order the tenant to vacate the residential premises for a renoviction. [18] The particular mischief that the government was responding to is obvious. Landlords in Nova Scotia, and in particular in theHalifax region, were undertaking often quick and sometimes minor renovations, evicting the tenants, and then jacking up the rentsignificantly for new tenants moving in.

This contributed to the affordable housing shortage, and the government was concerned thatmost people would be unable to find another residence while in a state of complete or partial lockdown.

[ 19 ] Toward the end of 2021, the government passed new amendments to the Residential Tenancies Act which were in effect but had no practical implications until the lifting of the moratorium in March 2022. At that point, renovictions again became possible, but certain procedures (and disincentives) were introduced. [ 20 ] I will recite the new sections in full, as they set out an important scheme. Early termination for demolition, repairs or renovations 10AB

(1) Where the landlord and tenant mutually agree to terminate a tenancy for the purpose of demolition or making repairs or renovations to the residential premises, the agreement must be in writing and in the form required by the Director.

(2) Where the landlord and tenant do not mutually agree to terminate a tenancy under subsection (1), the landlord may make an application to the Director for an order under

Section 17A directing the landlord to be given vacant possession of the residential premises on the date specified in the order, but not less than three months and not greater than twelve months from the date of the order.

(3) In an application under subsection (2), the landlord shall satisfy the Director that the landlord has all the necessary permits and approvals required by law and that the landlord in good faith requires possession of the residential premises for the purpose of (

a) demolition of the residential premises; or (

b) making repairs or renovations so extensive as to require a building permit and vacant possession of the residential premises.

(4) When making a decision on an application under subsection (2), the Director shall consider any vacant possession guidelines prescribed by regulation.

(5) A tenant whose tenancy is terminated by mutual agreement or by an order of the Director under this

Section may, at any time before the date specified in the agreement or order, terminate the tenancy effective on a date earlier than the date specified in the agreement or order but at least ten days after the tenant gives notice to the landlord to terminate the tenancy.

(6) For greater certainty, a landlord shall not terminate a tenancy for the purpose of demolition or making repairs or renovations to the residential premises except by mutual agreement or by an order of the Director under this Section. 2021, c. 36, s. 7 . [ 6 ] In early 2021, the landlord applied for a building permit for all of the 12 units, describing the work as "new kitchen cabinets, flooring, bathroom vanities, trim, paint." In the months after having purchased the building, the landlord was in discussions and in some cases negotiations with tenants to leave the building voluntarily.

Some were willing to do so, and others were not. [ 7 ] As noted, it was during this time that the Nova Scotia government essentially froze evictions. There was also a cap on rental increases of 2%. A bit later, the government amended the Residential Tenancies Act to provide certain protections for tenants during what has been described as a crisis in affordable housing. These so-called renoviction provisions are quoted above. [ 8 ] It was only upon the lifting of the freeze or moratorium that the landlord was in a position to begin to try and use the processes set out in the Act to obtain vacant possession.

On November 2, 2022, the landlord served each of the tenants in this case, with an application to terminate their tenancies and obtain vacant possession for renovations. The application to the Director of Residential Tenancies described the request as follows:

Demolition and renovation required in unit. No updates or repairs have been made to apartment since it was built in the 1970s. Demolition and rebuilding of the unit is required to ensure the building’s condition long-term. Plumbing and electrical infrastructure is the biggest concern. Some of the plumbing upgrades require that we jackhammer a trench under the floor to upgrade the apartments drainage. We will also need to upgrade bathroom plumbing to ensure no future water damage. For electrical we need to remove all outlets and wiring as we have had issues with wires shorting in the wall.

Current electrical panel will be removed and updated to current building code. [ 9 ] In each of the three cases that came before the Director of Residential Tenancies, the Officer issued decisions disallowing the application. As the orders say: The landlord in making these applications must establish on a balance of probabilities that the renovations/demolitions are being conducted in good faith for the purpose of renovations so extensive as to require not only a building permit but vacant possession of the premises. These applications have become more and more prevalent since the rent cap.

The provisions are new and there is little guidance as to how these are to proceed. [ 10 ] Having set out the test, the Residential Tenancies Officer focussed on the question of whether or not the landlord had established that it had all of the necessary permits and approvals required by law. He found as follows: In this matter, the landlord started with the building permit that described work as new kitchen cabinets, flooring, bathroom vanities, trim and paint. This permit itself would not have satisfied myself on the balance of probabilities that the tenant must vacate.

It was described by the landlord as stripping it down completely. Other work was described as not requiring a permit. A work stoppage occurred while the matter was adjourned. The email from the building inspector suggests that more may be required. The landlord's position is what is in place currently is all that is necessary. I accept that the only necessary permit is one where the work must be completed with the tenant no longer residing in the property. The email from the building inspector describes this new amended permit as including a plumbing upgrade. The amended permit was not provided for my review.

I am not convinced that all of the permits necessary, where a tenant has to vacate, have been provided. I am not convinced on the balance of probabilities that the landlord has satisfied

section 10AB(3). As a result, I am dismissing the application. [ 11 ] A number of things have changed since the Residential Tenancies order was issued on March 21, 2023. For one thing, we do have the amended permit which has been extended for two further years, and which adds the words “demolishing interior” and “plumbing upgrades” to the description of the work. [ 12 ] As it turns out, the landlord also requires an electrical permit to do the rewiring and other electrical work that it proposes to do. There are contracts in place with a reputable electrical contractor for such work.

I understand that it is the responsibility of the electrician to obtain the required permit from Nova Scotia Power, and although the actual electrical permit was not produced in evidence, I am satisfied that it has been applied for and received. [ 13 ] The issue of whether or not all necessary permits have been obtained is not the issue that I believe this case turns on. This process is not about whether or not a landlord has dotted the i’s and crossed the t’s. The issue is not whether the landlord could become authorized by the municipal authority and Nova Scotia Power, to do all it wants to do.

That would be no protection whatsoever to tenants. The real issue, from my point of view, is whether or not the renovations are necessary, or to be more precise, whether the landlord “in good faith” ... “requires” vacant possession. [ 14 ] The landlord contends that the building is at the end of its useful life. This is a debatable proposition that I have trouble accepting. The landlord may well believe this, and it is, after all, his building. But in the context of the renoviction protections provided by the Residential Tenancies Act, it is no longer the landlord’s sole decision to make.

He needs either the agreement of the tenants or an Order of the Director. [ 15 ] The landlord’s evidence included descriptions of work done on other units in the property, and some photographs of that work.

There is no question that, once he had vacant possession of these three units the landlord did extensive works to upgrade the units that he worked on. [ 16 ] But there was no evidence of specific problems with the units in question on this appeal. There was no evidence that these particular units had even been inspected. [ 17 ] This is a townhouse complex.

Work can be done on the interior of any unit without necessarily requiring possession of contiguous units, or units elsewhere in the complex. [ 18 ] All of the tenants of these three units described their units as being in good shape with no significant plumbing or electrical issues. They described the flooring, kitchen cabinets, bathroom vanity and paint jobs as OK. No photographic or other evidence was offered to confirm or dispute the proposition that these three units are fully habitable.

That they may be slightly outdated, with minor maintenance issues, is not enough to justify wholesale gutting, rewiring or re-plumbing. [ 19 ] I accept that the landlord might need possession to create individual laundry facilities, but this is not something that is “necessary.” I do not doubt that future tenants would find it desirable and possibly pay more rent on account of it, but that is not a sufficient reason to allow the tenants to be evicted. [ 20 ] I am also doubtful that the landlord has a firm grip on what needs to be done to these three units.

He justified the electrical work, at least in part on the presence of out-dated and possibly dangerous Pushmatic Bulldog Electrical Panels. Even so, there is no logical reason why the entire unit would need to be rewired just to have the panel replaced. But more to the point, none of three units in question actually has a Bulldog panel. They have Commander panels. It does not inspire confidence that the landlord did not appear to know that. Conclusion [ 21 ] The renoviction provisions of the Residential Tenancies Act were passed to address particular mischiefs, as is the case with most legislation.

The context included the pandemic, but I believe the primary mischief was the increasing shortage of affordable housing. While evictions for so-called “lipstick renovations,” or superficial facelifts, may have been the most egregious abuse requiring a response, the legislation appears to go beyond that. [ 22 ] To repeat, the relevant language is: 10 AB

(3) In an application under subsection (2), the landlord shall satisfy the Director that the landlord has all the necessary permits and approvals required by law and that the landlord in good faith requires possession of the residential premises for the purpose of [demolition or] (

b) making repairs or renovations so extensive as to require a building permit and vacant possession of the residential premises. [ 23 ] So there are two conditions or prerequisites that apply.

One: the required repairs must be so extensive as to require vacant possession, and Two: they are significant enough to require a building permit. [ 24 ] Dealing with the second prerequisite first, I believe that the Nova Scotia Legislature required landlords to have all their permits available for two reasons, namely to serve as some measure of the significance of the planned work and also to demonstrate that they are serious about having the work done.

So permits are necessary , but not in themselves sufficient to satisfy the requirements where eviction is sought. [ 25 ] The more important prerequisite, in my opinion, is that the work is “required” in good faith to justify the displacement and loss of an affordable tenancy that it would cause to the affected tenants. The planned work may be desirable, and on some level may also be adjudged prudent, but that does not mean it is truly required.

[ 26 ] I find that the landlord has not satisfied me that the work on the units involved with this application is required, within the meaning of s.10AB(3). I believe that the landlord’s primary purpose here is to increase the rents applicable to the units. Absent convincing evidence that the units are in need of substantial renovation, this is precisely the type of renoviction that the Residential Tenancies Act seeks to preclude. ORDER [ 27 ] This court orders that the Order of the Director of Residential Tenancies dated March 21, 2023 in each of the three appeals is dismissed, and the Order of the Director is confirmed. Eric K. Slone, Adjudicator