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Landlord's special levy upheld

But court says province should review rental law

Toronto Star, August 27, 2002
by Kerry Gillespie

Provincial legislation allowing landlords to dramatically, and permanently, increase rents to pay last winter's high heating bills has been upheld by an Ontario court.

The three-judge Divisional Court panel sided with the landlord, allowing a 10 per cent rent increase, but gave the tenants at 1305 Wilson Ave. consolation of sorts by suggesting the province take another look at the Tenant Protection Act, which governs landlord-tenant dealings.

"While deciding against the tenants, the court would be remiss if it did not observe that the tenants have presented a sympathetic case," reads the decision released yesterday. It went on to say that the place for reforming law is the Legislature, not the court. "We are of the view that this area may well merit a second look," it reads.

The panel was referring to the portion of the Tenant Protection Act that allows landlords to recoup their costs, such as property tax increases, roof repairs and heating bills, by raising the rent of their tenants above the yearly rent-control limit set by the province.

In this case, Mary Blumenthal and the other tenants in the 86-unit apartment building between Jane and Keele Sts. appealed a decision of the Ontario Rental Housing Tribunal, which granted their landlord, Leadway Apartments Ltd., a rent increase above the rent-control guideline based on last year's one-time spike in energy costs.

Each year, a landlord is allowed to raise the rent by a set guideline amount 3.9 per cent for 2002. But hundreds of landlords, like Leadway, have applied for extra increases, saying the guideline wasn't enough to recoup their heating costs due to last winter's increase in natural gas prices.

The vast majority of above-guideline applications filed last year affecting more than 97,000 Toronto households and 43,000 elsewhere in Ontario involved heating costs.

At 1305 Wilson, the landlord's heating bills went up $35,000 in 2000-01 over the previous year, according to evidence. Under the tribunal's formula, the tenants were ordered to pay an average rent increase of $35 a month so the landlord could recoup what he paid to heat the building. In one year, the tenants will have paid the landlord his $35,000. But they will also pay him $35,000 next year, and the year after and so on, because the rent increase is permanent. On top of the heat increase, tenants had to pay other costs plus the guideline amount, bringing their actual rent increase to about 10 per cent, an average of $70 a month.

The Wilson Ave. tenants claimed the increase was unfair; their Toronto lawyer Richard Fink argued it was illegal. They appealed and on June 28, Divisional Court heard the case.

Section 188 of the Tenant Protection Act gives tribunal adjudicators the ability to consider the long-term pattern the heating bills went up, then came back down and therefore temper rent increases, Fink argued. But a tribunal regulation, also created by the province, instructs adjudicators to follow a mathematical formula. The statute gives discretion but the regulation takes it away, and that is unacceptable in law, Fink argued.

The landlord's lawyer, Robert Doumani, disagreed, arguing Section 188 allows adjudicators to think within the rules, not ignore them.

"It's not fair. Doesn't the government know?" said Blumenthal of the ruling. She has lived in the building for 34 years.

The tenants have 30 days to decide whether to appeal, but many housing advocates are hoping the government will take action instead and make such court cases unnecessary.

Doumani said landlords don't like much of the legislation either.

"You open a whole Pandora's Box. All the landlords' counsel and advocates have a list of things they're not too happy with and the tenants have their own list," Doumani said.

"This case was destined to failure. The question now is do we go in and open the whole legislation on a one-time event (the spike in gas prices)? I guess that's a question for the Legislature and the minister," Doumani said.

Will the government take action?

"We're constantly receiving and reviewing input from both landlords and tenants," said Jim Miller, spokesperson for Municipal Affairs and Housing Minister Chris Hodgson. But, as yet, no official review of the legislation has been set, Miller said.

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