Divisional Court Overturns LTB Decision on Illegal Rent Increase in Schell v. Clarke: Schell v. Clarke 2020
Divisional Court overturns LTB decision on alleged illegal rent increase, refers case back for further consideration
Summarized by RentZenLast updated: August 6, 2024
Case Summary
86 Mary Street, Wingham, ON
Decision in favor of
tenant
Balance Owed
-
Dispute Categories
Agree with the ruling?
Timeline
Tenancy End Date
Apr 2017
Hearing Date
Nov 2020
Order Date
Nov 26, 2020
Dispute Summary
Tenant appealed a decision by the Landlord and Tenant Board dismissing her claim for reimbursement of monies paid pursuant to an alleged illegal rent increase. The tenant rented a house from the landlord from May 1, 2015 to April 21, 2017. In February 2016, the parties negotiated a rental increase from $650 per month to $850 per month, but the landlord did not serve a notice of rent increase. The LTB found that this was an express agreement and not an illegal charge. The tenant appealed, arguing that the real substance of the transaction was to preserve the tenancy, not to end it.
Determinations
- LTB erred in relying on Price v. Turnbull's Grove Inc.
- Need to determine if parties or premises changed under written agreement
- Amount owing if rent increase was illegal
- Whether limitation period under s.135.1(2) of RTA applies
Case Study
The Divisional Court found that the LTB erred in relying on the decision in Price v. Turnbull's Grove Inc. to support its finding that the rent increase was not an illegal charge. However, the matter was heard prior to the release of the Honsberger decision, which clarified that upon the expiry of an existing lease, a new tenancy agreement cannot be created outside of the rental increase constraints of s.120 of the Residential Tenancies Act. The court was unable to determine from the LTB's decision whether the parties or premises changed under the written agreement, which would be an exception under Honsberger. The court therefore referred the matter back to the LTB to determine these issues.
Arguments and Actions
Landlord
Arguments
The written agreement changed the oral agreement by (a) allowing the tenant's spouse to be an occupant of the house and (b) allowing the tenant to rent the garage, which were not parts of the oral agreement.
Tenant
Arguments
The real substance of the transaction was to preserve the tenancy, not to end it. The fact that her spouse was not named as a tenant and no monetary value was attached to the use of the garage underscores that the real substance of the transaction was to deter the landlord from his plan to sell the rental unit and not to create a new tenancy.
Decision Summary
The Divisional Court allowed the tenant's appeal and referred the matter back to the LTB to determine whether the parties and premises changed under the written agreement, such that the exceptions in Honsberger would apply. The LTB was also directed to determine the amount owing if the rent increase was illegal and whether the limitation period under s.135.1(2) of the RTA applies.
Adjudicator Details
LTB Member
Total Orders
2
Landlord Favorable
0.0%
Tenant Favorable
100.0%
Mutual Agreement
0.0%
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Financial Details
Lawful Rent
$650
Source
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