LD25-109

Application · eviction, compensation. Outcome: denied. I find that the evidence does not establish that the eviction notice for purchasers’ occupation was served in bad faith.

Linked prior order: LR19-09

Order text

Order of The Director of Residential Tenancy
Docket 24-337 March 21, 2025
INTRODUCTION
[1] The Tenant claims against the Purchasers (“P1” and “P2”) for bad faith compensation due to an eviction notice served for purchasers’ occupation.
DISPOSITION
[2] I find that the evidence does not establish that the eviction notice for purchasers’ occupation was served in bad faith.
BACKGROUND
[3] The Unit is a three-bedroom, one-and-a-half-bathroom rental unit located in a duplex building (the “Residential Property”).
[4] The Tenant and the former landlord entered into a written, fixed-term tenancy agreement from August 15, 2020 to August 31, 2021. The tenancy then continued on a month-to-month basis. As of January 1, 2024 rent in the amount of $1,212.00 was due on the first day of the month. Utilities, including electricity, heat, water, internet, snow removal and grass cutting, were not included in the rent.
[5] On January 16, 2024 the former landlord served the Tenant with a Form 4(B) Eviction Notice under section 63 of the Residential Tenancy Act (or the “Act”) for the Purchasers’ occupation of the Residential Property (the “Notice”) and a Purchasers’ affidavit with a closing date of March 27,
2024.
[6] On January 17, 2024 the Tenant was served with an amended Purchasers’ affidavit stating that the closing date was March 31, 2024.
[7] The Notice’s effective date was March 30, 2024. I note that the correct effective date was March 31, 2024, which was corrected by operation of law under section 54 of the Act.
[8] On January 31, 2024 or February 1, 2024 the Tenant moved out of the Unit.
[9] On February 28, 2024 the Purchasers completed the purchase of the Residential Property from the former landlord.
[10] On May 22, 2024 the Tenant filed a Form 2(A) Tenant Application to Determine Dispute (the “Application”) with the Residential Tenancy Office (the “Rental Office”) claiming against one of the Purchasers for bad faith compensation.
[11] On June 28, 2024 the Rental Office mailed the parties notice of a teleconference hearing scheduled for September 24, 2024.
[12] On September 6, 2024 the Rental Office emailed the parties a 102-page evidence package.
[13] On September 24, 2024 the Tenant emailed the Rental Office shortly before the scheduled hearing to advise that she was unable to participate in the teleconference. Only the Purchasers’ lawyer (“Counsel”) joined the teleconference hearing. I adjourned the hearing to a later date.
[14] On November 1, 2024 the Rental Office emailed the parties notice of a teleconference hearing rescheduled for December 5, 2024.
[15] On December 5, 2024 the Tenant and Counsel joined the teleconference. The parties confirmed receipt of the Evidence Package and confirmed that all documents submitted to the Rental Office were included. The parties provided additional evidence and submissions after the hearing.

PRELIMINARY MATTERS
[16] The Application only named one of the Purchasers (P2). The Tenant stated that she intended to add both of the Purchasers. During the hearing the Application was amended under clause 80(3)(f) of the Act to include both of the Purchasers.
[17] Counsel made a motion to dismiss the Application arguing there was no landlord-tenant relationship or tenancy agreement between the Purchasers and the Tenant. Counsel noted that the Tenant had moved out of the Unit before the Purchasers became owners of the Residential Property.
[18] I denied Counsel’s motion to dismiss the Application because clause 65(6)(d) provides me with authority to issue “any other order that the Director considers appropriate.” This clause provides authority to issue a monetary claim against a purchaser who did not own a rental unit at the time a tenant moved out.
[19] At the hearing I also noted that the definition of “landlord” in subsection 1(h) includes “successors in title to the owner.”
[20] In this decision I would like to note that another jurisdiction has also interpreted a clause comparable to 65(5)(d) to allow compensation against a purchaser. In the Ontario Court of Appeal decision, Elkins v. Van Wissen, 2023 ONCA 789 (paragraph [58]), the Court found that an order could be issued against a purchaser who acted in bad faith.
ISSUE
A. Has the Tenant established that the Notice was served in bad faith?
ANALYSIS
[21] Subsection 65(1) of the Act permits a tenant to make a bad faith compensation claim, stating as follows:
A former tenant may make an application to the Director under section 75 to determine whether a landlord gave a notice of termination under sections 62, 63 or 64 in bad faith.
[22] In order to determine the meaning of bad faith it is necessary to consider the requirements for a purchasers’ occupation eviction notice and the meaning of good faith.
Purchasers’ Occupation Requirements
[23] The former landlord served the Notice under subsection 63(1), which states:
A landlord of a residential property that contains fewer than three rental units who has entered into an agreement of purchase and sale of the residential property may, on behalf of the purchaser, give the tenant of a rental unit in the residential property a notice of termination if the purchaser in good faith requires possession of the rental unit for the purpose of residential occupation by (a) the purchaser;
(b) the purchaser’s spouse;
(c) a child, parent or a dependent of the purchaser or the purchaser’s spouse; or (d) a person who provides or will provide care services to the purchaser, the purchaser’s spouse, or a child, parent or dependent of the purchaser or the purchaser’s spouse, if the person receiving the care services resides or will reside in the residential property or mobile home park in which the rental unit is located.

[24] Subsections 63(3) and (5) state:
A notice of termination under subsection (1) or (2) is valid only if the tenant has been provided with a sworn affidavit certifying that the purchaser in good faith requires possession of the rental unit for a purpose set out in subsection (1) or (2).
In giving a notice of termination under this section, a landlord shall comply with the requirements of section 53.
[25] Therefore, a valid eviction notice for purchasers’ occupation includes the following requirements:
• The residential property has one or two units;
• The landlord and a purchaser have entered an agreement of purchase and sale for the residential property;
• The purchaser in good faith requires possession of the rental unit for occupation by an eligible family member;
• The tenant must be provided with a sworn affidavit certifying that the purchaser in good faith requires possession of the unit; and • The notice must comply with the section 53 content and form requirements.
[26] Meeting all of these requirements is necessary for a landlord to obtain an order of possession to force a tenant to move out of a rental unit.
[27] In this case there is no earlier Rental Office order determining the Notice’s validity. The Tenant did not dispute the Notice and moved out before the effective date.
[28] However, the claim in the Application is not based upon the validity of the Notice. Instead, I must consider a specific requirement of a valid eviction notice, being whether the Purchasers acted in good faith or bad faith.
Good Faith
[29] A purchaser acts in good faith when the purchaser has a genuine intention to occupy the selected rental unit.
[30] In the Ontario Supreme Court decision, Fava v. Harrison, 2014 ONSC 3352, the Court considered what is meant by “good faith” in the context of a termination notice for landlord’s occupation. The following is stated at paragraph [17] of this decision:
“We accept, as reflected in Salter, supra, that the motives of the landlord in seeking possession of the property are largely irrelevant and that the only issue is whether the landlord has a genuine intent to reside in the property. However, that does not mean that the Board cannot consider the conduct and the motives of the landlord in order to draw inferences as to whether the landlord desires, in good faith, to occupy the property.”
[31] This interpretation of “good faith” was accepted by the Island Regulatory and Appeals Commission (the “Commission) in Orders LR19-09, LR19-16 and LR21-50 under the former rental legislation, the Rental of Residential Property Act. This also appears to be the Commission’s interpretation of good faith under the Residential Tenancy Act (see LR24-03 at paragraph 12).
[32] Based upon this meaning of good faith, I will consider whether or not the Purchasers had a genuine intention to occupy the Residential Property.

Bad Faith
[33] Under section 62 of the Act, a landlord can serve an eviction notice for occupation of a rental unit by the landlord or an eligible family member. I note that the presumption of bad faith in subsections 65(4) and (5) only applies to evictions under section 62.
[34] In this case the Notice was served for purchasers’ occupation of the Unit under section 63.
Therefore, this legislated presumption of bad faith is not engaged.
[35] The Tenant has the burden of proof to establish that the Purchasers had the notice served in bad faith. The parties’ evidence regarding the bad faith compensation claim is summarized below.
[36] The Tenant’s evidence is summarized as follows.
[37] On January 31, 2024 the Tenant moved out of the Unit and into a new, smaller rental with a fixed term ending February 1, 2025. The Tenant’s children had to attend new schools because the Tenant moved to a different zone. The Tenant’s rent and security deposit significantly increased.
Water, snow removal and grass cutting were services included in the new agreement’s rent. The Tenant paid rent for the new unit until August 31, 2024 and moved out before the fixed-term ended.
[38] The Tenant left Prince Edward Island for a new career.
[39] The Tenant stated that after moving she checked the Unit a few times and it remained vacant. The Tenant drove by the Residential Property every couple of weeks starting in mid-February 2024.
[40] The Tenant viewed real estate sites and saw a Facebook Marketplace advertisement for the Unit where the rent had significantly increased. The Tenant responded to the advertisement and submitted into evidence a copy of her communication with P2 on May 14, 2024. The Tenant stated that she responded to the advertisement to see if the Purchasers had increased the rent, not because she was interested in living in the Unit.
[41] The Tenant provided evidence regarding her moving expenses and the financial claims in the Application.
[42] The Purchasers’ evidence is summarized as follows.
[43] On February 29, 2024 P1 moved into the Unit after the purchase of the Residential Property was completed. P2 moved into the other side of the Residential Property. The Purchasers are immigrants and they intended to live in Prince Edward Island, make the Residential Property their home and obtain their permanent residency.
[44] In February and March of 2024 the Provincial Government’s immigration rules changed suddenly.
The immigration policies were amended to reduce its intake of potential permanent residents under the Provincial Nominee Program by 25% and removed permanent residency pathways for those working in the retail and service sectors. The focus changed to people involved in healthcare, childcare and building trades. P1 works in the retail and service sector and was at risk of being deported.
[45] The following timeline was provided for P1:
• On April 19, 2024 P1 applied for a community letter, a pre-requisite for the Rural and Northern Immigration Pilot program, to continue his permanent residency pathway outside of the province.
• On May 13, 2024 P1 was selected for the Rural and Northern Immigration Pilot Program.

• On May 17, 2024 P1 was approved for the Rural and Northern Immigration Pilot Program.
• On June 1, 2024 P1 vacated the Unit for the purpose of finishing his permanent residency application process by completing his residency in another province.
[46] The Purchasers also dispute the amount of compensation that the Tenant claims.
[47] I have reviewed the evidence of the parties.
[48] I am not satisfied that the Purchasers acted in bad faith.
[49] The Purchasers intent was for P1 to occupy the Unit and for P2 to occupy the other side of the Residential Property. Based upon the evidence presented it appears that P2 moved into the other side and continues to occupy it.
[50] The Tenant raised evidence putting into question whether the Unit was vacant after the Purchasers became owners of the Residential Property. However, I am not satisfied that P1 did not move into the Unit.
[51] Part of the Tenant’s evidence was correspondence with P2 on May 14, 2024 about renting the Unit.
P2 advised the Tenant that the Unit would be available for occupation on June 1, 2024.
[52] If the Unit was vacant, then it would be expected that occupation would be permitted immediately to generate rental income and avoid the risks of a vacant property. The June 1, 2024 rental date is consistent with the Unit being occupied as of May 14, 2024.
[53] Further, the Purchasers’ timeline of events is consistent with P1’s occupation of the Unit. In particular, on May 13, 2024 P1 was selected for the Rural and Northern Immigration Pilot Program and P1 vacated the Unit on June 1, 2024. This is consistent with the content of the message correspondence between the Tenant and P2 on May 14, 2024.
[54] I also note that the utility statements submitted into evidence are also consistent with P1’s occupation of the Unit.
[55] Based upon the evidence presented, it appears that P1 moved into the Unit on February 29, 2024 and vacated the Unit on June 1, 2024. It also appears that the reason P1 moved out of the Unit was because of unforeseen circumstances outside of his control regarding changes to the immigration policies in Prince Edward Island for obtaining permanent residency.
[56] At the time the unforeseen circumstances arose, the Tenant had already moved out of the Unit. I also note that, at the time P2 advertised the Unit, the Tenant was no longer interested in renting the Unit. The Tenant responded to the advertisement to see if an unlawful rent increase was being made.
[57] Although the evidence presented indicates a later above guideline rental increase for the Unit, this appears to co-exist with P1’s genuine intention to occupy the Unit.
[58] For these reasons I am not satisfied that the Purchasers acted in bad faith. The Application is denied.
[59] Based upon the evidence presented, I am satisfied that as of January 1, 2024 the Tenant paid a monthly rent for the Unit of $1,212.00, excluding utilities.

[60] Any rent the Purchasers collect from a tenant that does not comply with Part 3 of the Residential Tenancy Act is recoverable by the tenant charged under subsection 50(8). I also note that the Purchasers have a duty under clause 11(2)(g) to disclose the amount of rent collected from the Tenant for the Unit and the services and facilities provided.
IT IS THEREFORE ORDERED THAT
1. The Application is denied.
DATED at Charlottetown, Prince Edward Island, this 21st day of March, 2025.
(sgd.) Andrew Cudmore Andrew Cudmore Residential Tenancy Officer
NOTICE
Right to Appeal
This Order can be appealed to the Island Regulatory and Appeals Commission (the “Commission”) by serving a Notice of Appeal with the Commission and every party to this Order within 20 days of this Order.
If a document is sent electronically after 5:00 p.m., it is considered received the next day that is not a holiday. If a document is sent by mail, it is considered served on the third day after mailing.
Filing with the Court
If no appeal has been made within the noted timelines, this Order can be filed with the Supreme Court of Prince Edward Island and enforced as if it were an order of the Court.