When a Lease is Rent plus Reimburse the Landlord for Utility Bills, where Does the Landlord Sue for Payment if Necessary?
Nobody knows for sure! A case law decision within an Appeal Court or clearer legislation is needed.
A significant concern to many residential landlords involves the right to pursue tenants for reimbursement of utility bills, such as gas, electric, or water, paid for by the landlord in accordance to a lease agreement and whether to pursue such a right at the Landlord Tenant Board or at the Small Claims Court. While it would seem that where rent is defined within a lease agreement as a specified dollar amount plus utilities, the issue of unpaid utilities might logically come under review by the Landlord Tenant Board ("LTB"); however, such is often debated within legal circles. Furthermore, it seems that the administrative clerk staff for the LTB routinely turn away landlord applications seeking payment of the portion of rent involving unpaid utilities.
In the case of Luu v. O'Sullivan, 2012 CanLII 98396 at paras 55 to 58, it was stated by Winny D.J. that legislative instruction or appellate clarification of the LTB jurisdiction seems necessary on this issue. Here specifically is what was said:
55. The question of the Board’s jurisdiction over the utilities component of rent payable in residential tenancies cries out for appellate resolution. One avenue for such resolution would be on appeal from this judgment.
56. The other avenue would be for the Board to make a decision on this issue which could then be appealed as a question of law under s. 210 of the RTA. However if the practice of the Board’s staff is to turn away applications based on the contents of Interpretation Guideline 11, this creates an unfortunate obstacle to clarification of the law for residential landlords and tenants in Ontario. My view is that Interpretation Guideline 11 is seriously flawed and internally inconsistent, but it is clearly not a legally-binding instrument. The Board’s ability to adjudicate this issue should not be compromised by its own staff; nor should the ability of the Divisional Court to clarify this issue be so compromised.
57. It also appears plain that there is no aspect to this problem which could not be addressed by amendment to the RTA or its regulations.
58. The Small Claims Court, like any other court or tribunal, must apply the current law. My determination is that this matter falls within the exclusive jurisdiction of the Landlord and Tenant Board. Accordingly, both parties’ claims are dismissed for want of jurisdiction.
In the Landlord Tenant Board ("LTB") case TET-56570-15-RV-IN2 (Re), 2016 CanLII 52841, the LTB disagreed with the Deputy Justice Winny of the Small Claims Court and said:
41. For the same reason, and although it is not mentioned in the exclusions in the definition of rent, the Board has consistently stated that fluctuating amounts for utility charges paid by a tenant to either a utility company or to reimburse a landlord cannot be considered “rent”. (See: Interpretation Guideline #11 Eviction for Failure to Pay Rent.) This is why I disagree with the analysis of Deputy Judge Winny relied on by the Landlord in the request for review in the Small Claims Court case of Luu v. O’Sullivan, 2012 CanLII 98396. It fails to take into account the entire scheme of the Act with respect to rent set out in sections 110 through 133.
In the case of SOC-01295-17 (Re), 2017 CanLII 47397, the Landlord Tenant Board ruled that unpaid utilities are an irregular charge, meaning variable each month (or billing period) rather than a regular charge, and that as an irregular charge utility bills are outside the adjudication powers of the Landlord Tenant Board. Specifically, it was said:
17. Given my determination that unpaid utilities are irregular charges that may be housing charges but NOT “regular monthly housing charges”, the inclusion of these charges on the N4C notice of termination means that the N4C notice of termination is fatally flawed. For this reason, the application must be dismissed.
18. The Co-op’s Legal Representative urged me to consider Luu vs. O’Sullivan, 2012 CanLII 98396, as authority for the proposition that utilities are included within the definition of “rent” in Section 2 of the Act, and by analogy within the definition of “regular monthly housing charges” in Section 94.1. The decision is not binding on the LTB, nor is it helpful to the Co-op. Whether utilities are included in rent is an issue that falls within the expertise of the LTB and is decided on a case-by-case basis. With regard to whether the term “regular monthly housing charges” includes utilities, I am bound by the express provisions of the Act which exclude irregular charges from the definition of “regular monthly housing charges”.
Whether a landlord must go to the Small Claims Court when a tenant fails to reimburse for utility bills or whether a landlord must go to the Landlord Tenant Board is unclear. There are decisions by the Small Claims Court that say the Landlord Tenant Board has the jurisdiction on reimbursement of utility bills and there are decisions by the Landlord Tenant Board that say the Small Claims Court has the jurisdiction on reimbursement of utility bills. These conflicting views make it nearly impossible for legal advisors to provide a landlord with assured advice.