Seafield Tenants win at BC Supreme Court –Gordon Nelson Investments Denied 38% RTO Rent Increases and Ordered to Refunds Tenants
January 13, 2010
The Seafielders and BC renters won a monumental victory at the BC Supreme Court today. Madame Justice Loo’s decision overturned the RTO’s decision giving 15-38% rent increases to the Seafield’s new owners, Gordon Nelson Investments Inc, and ordered refunds of the additional rent increases the tenants have already paid resulting from the RTO decision.
In April 2009, Dispute Resolution Officer K. Miller delivered an unprecedented RTO decision ordering up to nearly $500/month increases to some tenants at the Seafield. The DRO’s decision was based only on several higher priced units chosen from the landlord’s evidence, and she refused to consider the tenants extensive evidence showing their units were priced similarly to other comparable units in the same geographic area, and in line with current CMHC guidelines for average rents in the area.
However, BC Supreme Court Justice Loo disagreed with the DRO’s decision, and overturned it based on patently unreasonable errors in law and fact. The DRO’s refusal to consider the tenants evidence was at the heart of the appeal. The matter is remitted back to a new DRO at the RTO for another hearing. This is not the first time DRO K. Miller’s decisions have been overturned at Judicial review on this very issue of additional rent increases.
The BC Residential Tenancy Act limits yearly rent increases to 3.7% in 2009, except under a relatively new 2004 RTA Regulation that allows landlords to apply for additional rent increases in a geographic area on units “significantly” below rents in the area. Soaring rents over the last three years have triggered some landlords to use this clause as a way to catch up longer term renters to peak market values in an area and get around yearly rent increase limits, which was not the intent of the regulation.
This is a huge victory and the first bright light for BC renters since the Berry Court Decision in 2007 overturning DRO K Miller’s Renoviction decision at Bay Towers. It means a landlord doesn’t just get a free ride to to leverage the “Geographic Area Increase clause for easily obtained and exorbitant market rent increases based on a few top priced rental units in the area as evidence. Tenants will now have a stronger legal leg to stand on if they fight similar additional rent increase cases at the RTO.
BC Renters owe a large debt to the Seafield tenants, who have lived under extreme stress since the building was bought by Gordon Nelson Investments over a year ago, and yet had the courage, determination and support, to see this case through to the Supreme Court of BC.
The four key points overruling the RTO decision are:
• That the Dispute Resolution Officer (DRO) “failed to comply with the statutory requirement” by not considering the Tenants’ evidence. Madam Justice wrote: “…the Officer must consider the Tenants’ relevant submissions. It defies common sense to imagine an affected tenant…would make a submission showing that there are rental units that attract higher rents.”
• That the DRO was “patently unreasonable” in awarding the landlord an above normal rent increase when the landlord had only two “comparable” units demonstrating their case. (In contrast, our evidence – which was disregarded – contained scores of comparable units, in some cases even identical, at similar or lower rents). She wrote: “…it is doubtful that s. 23(1)(a) requires merely two comparator units.”
• The DRO made an error of law by basing her analysis on rents before (rather than after) the regular annual rent increase (3.7%) permitted under the law;
• The Judge concluded that “the officer made a patently unreasonable factual error” when the DRO granted the rent increase based on apartments that were not, in fact, comparable to units at the Seafield by her own admission.