This appeal asks the question of
whether a tenant is entitled to an Order authorizing termination of a
fixed-term rental agreement.
This appeal also explores the landlord's duty to mitigate.
The Appellant, Cristina Radic ("Ms.
Radic"), leased a room in the lower level of 35 Westview Drive,
Charlottetown, PE (the "Premises") from Hart Hone Properties (the "Respondent") for a one-year fixed term from September 1, 2020 to August 31,
Weeks into the rental agreement, Ms.
Radic took issue with the Premises, citing an odour and a lack of natural
light in the room. She sought to terminate the rental agreement.
On October 2, 2020, Ms. Radic filed
with the Director of Residential Rental Property (the "Director") an
Application for Enforcement of Statutory of Other Conditions of Rental
Agreement ("Form 2") seeking an order to authorize the termination of the
In Order LD20-302, the Director
found that the rental agreement will continue to be in full force and effect
until terminated in accordance with the
Rental of Residential Property Act
Ms. Radic appealed.
The Commission heard the appeal on
November 25, 2020, via telephone conference call. Ms. Radic was present. The
Respondent was represented by William (Bill) Hart ("Mr. Hart").
The appeal is allowed.
Director's Order LD20-302 is reversed.
The rental agreement shall continue, but shall be terminated as of
March 31, 2021, as the Respondent only partly met a landlord's duty to
The Commission will consider the
following questions in determining this appeal:
1. Should the rental agreement be terminated?
If so, when?
What is a landlord's duty to mitigate and was it met?
Should the rental agreement
If so, when?
Ms. Radic testified that she arrived
in Prince Edward Island in September 2020, and due to Covid-19 protocols was
required to self-isolate for two weeks. She did so at the Premises. She
testified that a few days into her isolation, she noticed an odour and
advised Mr. Hart of same. The room is located in the basement of the
Premises and is beside the washer and dryer unit.
Ms. Radic stated that the odour
became so pervasive that her colleagues began noticing the odour on her
clothing, even while away from the Premises. Ms. Radic called three
witnesses, all of whom testified that they, too, had smelled the odour when
they attended at the Premises as Ms. Radic was moving out.
Ms. Radic also testified that the
lack of natural light in the room was problematic for her. There is a deck
attached to the house, and the deck partially obstructs the window in the
room. She stated that she had not been able to personally view the Premises
prior to entering into the rental agreement, but instead had relied on video
and photographs provided by Mr. Hart.
She stated that she would not have entered into the rental agreement
had she been able to view the Premises personally before signing.
Evidence before the Commission
confirms that Mr. Hart was made aware of Ms. Radic's concerns, and that he
made efforts to address them. He offered to purchase a dehumidifier, to have
the room checked for mold, and to have the room cleaned. He also offered to
purchase new light bulbs which could mimic more natural light. Ms. Radic
nevertheless sought to terminate the agreement.
Mr. Hart acknowledged that from time
to time moisture accumulation was an issue in the lower level of the
Premises, and same was stated in the package of materials that was provided
to all tenants. Those materials contain advice as to how to address the
issue should it arise. He also stated that none of the other occupants in
the house raised the same issues, including the others who lived in rooms on
the same floor, and that the previous tenant to occupy the Premises did not
have similar complaints.
The Commission finds no grounds to
terminate the rental agreement. Ms. Radic entered into the rental agreement
of her own volition, having viewed and accepted the video and photographs of
the Premises. There is insufficient evidence to establish that Mr. Hart is
in violation of the statutory conditions of the lease which require him to
keep the Premises in a good state of repair and fit for habitation, nor is
there any evidence that Mr. Hart misrepresented to Ms. Radic the nature of
What is a landlord's duty to
mitigate and was it met?
In the present appeal, the rental
agreement was to run from September 1, 2020 to August 31, 2021.
By late September 2020, the Appellant had advised the Respondent of
issues of concern and raised the matter of ending the lease.
The Appellant indicated that she vacated the premises on October 15,
2020, and requested before the Director that the rental agreement be
terminated effective November 1, 2020.
The Director heard the matter on October 29, 2020, and issued Order
LD20-302 the following day. As
of the Director's hearing, the Respondent had not made any efforts to
mitigate. Order LD20-302
reminded the Respondent of the need to mitigate and quoted section 29 of the
In his evidence before the
Commission, Mr. Hart stated that he placed a Kijji advertisement for the
premises following the hearing before the Director.
While Mr. Hart does not reside in Prince Edward Island, his daughter
does and she posted an ad at the educational institution she attends.
Section 29 of the
29. If the lessee abandons the
premises or terminates the rental agreement otherwise than in accordance
with this Act, the lessor shall mitigate any damages that may be caused by
the abandonment or termination to the extent that a party to a contract is
required by law to mitigate damages.
Section 5 of the
Act defines the
nature of the relationship between a lessor and a lessee as a contractual
relationship. Further, the
common law rules apply, with respect to the effect of a breach of a material
covenant by one of the parties to the contract. The duty to mitigate,
referenced in section 29 of the
Act, is a common law rule and principle that
applies in contract law.
The duty to mitigate is an
established principle in contract law, and arises in the context of
assessment of damages for breach of contract.
The general rules for the assessment of damages for breach of
contract was outlined in Keneric Tractor Sales Ltd. v. Langille et al.,
 2 S.C.R 440, which held that the award should put the plaintiff in
the position he would have been in had the defendant fully performed his/her
The duty to mitigate was further
explained by the Supreme Court of Canada in Red Deer College v. Michaels et
al.,  57 D.L.R. (3d) 386 at p.390 (S.C.C). The primary rule in breach
of contract cases, that a wronged plaintiff is entitled to be put in as good
a position as he would have been if there had been proper performance by the
defendant, is subject to the qualification that the defendant cannot be
called upon to pay avoidable losses which would result in an increase in the
quantum of damages payable to the plaintiff. The reference in the case law
to a "duty" to mitigate should be understood in this sense.
This common law duty to mitigate
when a breach of contract has occurred prevents plaintiffs from simply doing
nothing and thereby accumulating losses.o:p>
While the matter of a lessor's duty
to mitigate does not appear to have been thoroughly reviewed by either the
Courts of Prince Edward Island or the Commission, some other provincial
jurisdictions do have a similar duty to mitigate, or in lay language, a
"duty to minimize" damages.
The province of Nova Scotia's Rental
Tenancies Act ("RTA") shares an almost identically worded section on the
duty to mitigate. Section 6 of
the RTA, includes the following:
Abandonment and Termination - If the
tenant abandons the premises or terminates the tenancy otherwise than in the
manner permitted, the landlord shall mitigate any damages that may be caused
by the abandonment or termination to the extent that a party to a contract
is required by law to mitigate damages.
Given the very similar wording
between the above-cited portion of the RTA and section 29 of the Act, as
well as an absence of Prince Edward Island case law on the matter, a brief
review of some Nova Scotia case decisions may provide some guidance to the
In the Nova Scotia Small Claims
Court decision of Bond v. Hall,
2010 NSSM 31 the duty of
mitigation was given a thorough analysis when the adjudicator stated:
 I turn then to the general
law of contract and the duty to mitigate.
IIn the case of Halifax Regional Municipality v. Amber
Contracting (2009), NSCA 103, Hamilton, J.A. (dissenting on another point),
stated as follows (paras 61-62):
 In contract law, the
plaintiff must make reasonable efforts in good faith to mitigate its losses
upon breach of contract.
 However, contract law
does not impose on the plaintiff the evidentiary burden to show that it
mitigated its losses. Rather, the burden to show that the plaintiff failed
to mitigate its losses and is trying to recover for losses that were
avoidable, rests upon the defendant.
The adjudicator in Bond v. Hall
reviewed the law on the duty to mitigate, and further determined the onus to
prove the duty to mitigate in paragraph 11, which states as follows:
onus in this case therefore to prove that there has been a failure to
mitigate is on the party alleging a failure to mitigate.
Regarding the specific facts of Bond
v. Hall, and its application to the duty to mitigate, the adjudicator
 Mr. Hall brought forward
no evidence to show that Ms. Bond did not make reasonable efforts or that if
she had, she could have found a replacement tenant.
What he argued was that if the rent was reduced she probably
could have found an alternate sub-tenant.
As the matter of law, I have my doubts that Ms. Bond would
be under a legal duty to reduce the rent amount in order to be seen to be
exercising reasonable efforts to mitigate. The further question might be
asked is why would it not be the defaulting party (i.e., Mr. Hall) making
that type of decision, particularly where it is he who has defaulted and it
is he who bears the primary obligation to pay the rent (to the sub
 In my view, the law
requires that there be some evidence on that point before reducing a claim
for failure to mitigate. Without such evidence, it becomes a matter of pure
speculation as to whether or not there actually was an avoidable loss which
is the whole point of the mitigation doctrine in contract law.
In Watts v. Haverstock Estate,
2016 NSSM 30 the adjudicator stated that:
I find that they have failed
to fulfill this obligation to mitigate as they did not make efforts to rent
the house when they received notice. Consequently, I deny claim
for rent for January 2016. However, I allow a portion
of rent for December 2015, namely 50% or $400. I also disallow any claims
for oil or power during any portion of these months.
In Poirier v. Sinha, 2007 NSSM 96
the adjudicator found mitigation to be properly done, and stated in paras 19
and 20 as follows:
(19) The landlord must
mitigate his losses. I find he attempted to rent the premises shortly after
they were vacated and ran an ad on Kijiji in each of June, July, August and
September. There was no ad run in May 2016. The next ad was not placed until
February, 2017. There were inquiries during each month. The Sinhas also
showed the unit during these months. They attempted to rent the unit on the
same conditions as the lease subject to this appeal.
I am not satisfied their efforts
were sufficient to justify an award of rental payments for one year.
The landlords had an obligation to repair the unit and attempt to rent it
commencing May 1 and an ongoing obligation to keep it on the market. They
did not do so. As noted below, many repairs were not commenced until later.
In addition, I find Dr. Sinha took no alternative
efforts towards mitigation of his losses, such as reducing the rent and
seeking the difference from the tenant as a cost of mitigation. It would be
extremely rare for this Court to award a full year's rent unless all
reasonable attempts at mitigation have been exhausted. The evidence
does not support any such finding. [emphasis added]
The adjudicator in Bond v. Hall
focuses on evidentiary burden and appears to favour an all or nothing
approach, while the adjudicators in both Poirier v. Sinha and
Watts v. Haverstock Estate seem to view the duty to mitigate
proportional to the monetary amount being sought by the party seeking
damages. In other words, the duty to mitigate is not a matter of toggling an
"on-off switch" where once a party shows some evidence of mitigation, they
are then entitled to the full relief they are seeking.
Act does not expressly set
out objects or guiding principles of the legislation, the overall essence of
Act appears to be one of consumer protection. Thus, the legislator
sought to balance the normal freedoms afforded to parties entering in a
contract at common law, with statutory
provisions to protect both parties, but particularly for the lessee
as the typically more vulnerable party.
Section 9 of the Interpretation Act
9. Enactments remedial
Every enactment shall be
construed as being remedial, and shall be given such fair, large and liberal
construction and interpretation as best ensures the attainment of its
In addressing the lessor's duty to
mitigate under section 29 of the
Act, the Commission finds that the adequacy
of mitigation, not just whether or not mitigation occurred, may be
considered. The quantum of the
claim and the remaining duration of the rental agreement are relevant facts
to consider when addressing the adequacy of mitigation.
What may be considered reasonable efforts to mitigate for a small
claim or a short period of time may be lacking for a large claim or an
extended period of time.
As of November 1, 2020, there were
ten (10) months left in the rental agreement.
At a monthly rent of $600, the quantum of the claim would be $6,000.
With such a lengthy time period and such a large quantum, the
Commission would expect substantial efforts to mitigate the Respondent's
losses. The placement of a Kijji
advertisement and a posting at an educational institution, while a good
start, does not, of itself, constitute substantial efforts to mitigate given
the length of the remaining rental agreement and the quantum of the claim.
The Commission finds that the Respondent only partly met the obligations of
a lessor to mitigate.
The Commission finds no grounds to
terminate the rental agreement.
That said, as the Respondent only
partly met the obligation to mitigate under section 29 of the Act, the
Commission determines that an early termination of the rental agreement is
The Commission determines that the
remaining ten (10) months of the rental agreement (November 1, 2020 to
August 31, 2021) shall be equally divided between the parties and therefore
orders that the rental agreement be terminated effective March 31, 2021.
The Appellant will continue to be responsible for paying the rent
until said date, subject to the Respondent's ongoing duty to mitigate.
pursuant to the
Island Regulatory and Appeals Commission
Act and the
Rental of Residential Property Act
IT IS ORDERED THAT
1. The appeal is allowed. Director's Order LD20-302 is reversed.
2.The rental agreement shall continue but shall be terminated as of March 31, 2021.
3. The Appellant will continue to be responsible for paying the rent until said
date, subject to the Respondent's ongoing duty to mitigate.
at Charlottetown, Prince Edward Island,
this 18th day of December, 2020.
BY THE COMMISSION:
Erin T. Mitchell, Panel Chair & Commissioner
M. Douglas Clow, Vice-Chair
Jean Tingley, Commissioner
Sections 26.(2), 26.(3), 26.(4)
and 26.(5) of the
Rental of Residential Property Act
provide as follows:
26.(2) A lessor or
lessee may, within fifteen days of the decision of the Commission,
appeal to the court on a question of law only.
(3) The rules of court governing appeals apply
to an appeal under subsection (2).
(4) Where the Commission has confirmed,
reversed or varied an order of the Director and no appeal has been taken
within the time specified in subsection (2), the lessor or lessee may
file the order in the court.
(5) Where an order is filed pursuant to
subsection (4), it may be enforced as if it were an order of the court.