Legislative Assembly of Ontario

RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS

CONTENTS

Monday 13 January 1992

Rent Control Act 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121

STANDING COMMITTEE ON GENERAL GOVERNMENT

Chair / Président(e): Brown, Michael A. (Algoma-Manitoulin L)

Vice-Chair / Vice-Président(e): McClelland, Carman (Brampton North/-Nord L)

Abel, Donald (Wentworth North/-Nord ND)

Bisson, Gilles (Cochrane South/-Sud ND)

Drainville, Dennis (Victoria-Haliburton ND)

Harrington, Margaret H. (Niagara Falls ND)

Mammoliti, George (Yorkview ND)

Marchese, Rosario (Fort York ND)

Murdoch, Bill (Grey PC)

O'Neill, Yvonne (Ottawa-Rideau L)

Poole, Dianne (Eglinton L)

Turnbull, David (York Mills PC)

Winninger, David (London South/-Sud NDP)

Substitution(s) / Membre(s) remplaçant(s):

Morrow, Mark (Wentworth East/-Est ND) for Mr Winninger

Owens, Stephen (Scarborough Centre/-Centre ND) for Mr Bisson

Ward, Brad (Brantford ND) for Mr Marchese

White, Drummond (Durham Centre/-Centre ND) for Mr Marchese

Clerk / Greffier: Deller, Deborah

Staff / Personnel: Baldwin, Elizabeth, Legislative Counsel

The committee met at 1415 in room 151.

RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS

Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation / Projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.

Section 13:

The Chair: The standing committee on general government will come to order. The business of the committee is to do the clause-by-clause review of Bill 121. We will commence our discussions today with subsection 13(8) as printed. The parliamentary assistant has an explanation for the government amendment.

Ms Harrington: Subsection 13(8) sets out the requirement for a landlord to file information for rent registry purposes prior to an above-guideline increase order being issued, even if the prescribed filing date for that complex has not passed. In other words, the complex must be registered in order for them to apply for an above-guideline increase.

The Chair: Are there questions, comments or further amendments to subsection 13(8)?

Ms Poole: Just a question of clarification: Could the parliamentary assistant tell us why this particular amendment is necessary?

Ms Harrington: I think it is just a clarification, to make sure it is clear that you have to be registered.

Ms Parrish: I think too it is partly to avoid a sort of duplication of proceeding. The process we have taken in the past is that if you make an application and you are not registered, then as part of the application, we will order you to register, because to determine the rent we have to do the space rent validation and then we have to register. All the big landlords, frankly, know that. It tends to be the smaller landlords who make an application and then find out that they have to do this additional thing. We just felt it was more efficient and more up front to tell people that this is how it works. Then people will know that if they want to apply for an above-guideline increase, they have to register their rents at the same time or in advance of the determination.

The Chair: Are there further questions or comments on subsection 13(8)? If not, is it the pleasure of the committee that subsection 13(8) carry? Carried.

Section 13, as amended, agreed to.

Section 14:

Ms Harrington: A landlord's jurisdiction to base an application on extraordinary operating cost increases is provided by subsection 14(1). The operating cost categories are set out. They are the following: municipal taxes, hydro, water and heating. Costs are to relate to the whole residential complex.

The Chair: I see there is a Liberal amendment and also a Conservative amendment to section 14. We will deal with the Liberal amendment first.

Ms Poole moves that section 14 of the bill, as reprinted to show the amendments proposed by the minister, be struck out and the following substituted:

"14(1) The landlord may base an application on an extraordinary increase in operating costs for municipal taxes; hydro; water; heating; a land lease from a government, a government agency or a financial institution, or any other prescribed operating cost category for the whole residential complex.

"(2) An increase in operating costs for the operating cost category is extraordinary if the increase, expressed as a percentage, is at least 50% more than the percentage set out in the corresponding operating cost category recognized in the table referred to in subsection 12(1) for that category."

I am just wondering out loud here, Ms Poole, would it be better for us to deal with just your amendment to subsection 14(1)? I notice the government has an amendment to subsection 14(2) and the Conservative amendments relate to subsections 1 and 2 separately.

Ms Poole: That is certainly agreeable with us.

The Chair: Is it agreeable to the committee to deal with them in that fashion?

Mrs Marland: You are going to deal with all the amendments to subsection 14(1)?

The Chair: We will deal with all the amendments to subsection 14(1) and then we will move to all the amendments to subsection 14(2). Ms Poole, do you have an explanation?

Ms Poole: I probably do.

The Chair: I thought you might.

Ms Poole: It is very difficult after three weeks to get one's mind back in gear as to what we are doing in clause-by-clause, but I shall try my best. The major differentiation -- actually, there are two -- as to what the government has proposed in the legislation is that we have added one category where there may be an extraordinary increase in operating costs of a land lease from a government, a government agency or from a financial institution.

In itself this may not seem like a fairly major problem, but there have been estimates that many land lease programs that were set up, say, 20 or 25 years ago are now becoming eligible for renewal. At the time the land was leased, the price for land of course was quite reasonable. We are talking about land where an apartment building is situated.

This engenders a problem for landlords. If they do not have an outlet to have an extraordinary operating increase, then they may be forced to pay land lease costs that might be 10 or 20 times as much as what they were paying 30 years ago, and yet there would be no recourse to change the rents. In many cases, rents in these buildings are very reasonable because the leases are very low. There would be no recourse to make sure the landlord is able to recover those costs and keep solvent. This is a problem that we felt could be dealt with very simply. I do not think there are very many situations, but there are a few and this would solve it.

The second change from the government's is that we have put "or any other prescribed operating cost category for the whole residential complex." "Prescribed" refers to the fact that the regulations can set another one if the government wished to change things.

Changing legislation know, is much more difficult than changing regulations. This would give the government some flexibility in that if there were a cost category at some future date that it felt should be prescribed as extraordinary operating, it could do this by regulation without having to come back and open up the legislation.

We feel that rather than specifying certain things in the extraordinary operating cost category, such as the Conservatives have done in their amendment to subsection 14(1) in the extraordinary operating costs category, it might be more palatable for the government if we just gave it the discretion to open up new categories as the need arises.

The Chair: Do you wish to respond, Mrs Harrington? Mr Turnbull is also on the list.

Ms Harrington: It is up to you, Mr Chair, how you would like to deal with it.

The Chair: Go ahead.

Ms Harrington: I would first like to say that land leases are considered to be a form of financing. The intent of the government is that any form of financing the building is not a pass-through. That is the first part of your amendment. That is why we are not agreeing to that. The basic philosophy of the government is that financing the buying of a building is not something that is going to be passed through to the tenants.

I was thinking about, and speaking with my assistant here, with regard to your second consideration on an operating cost category. If things changed in the future, dealing with it through regulation is certainly an easier way than opening up the bill. I will discuss that with the minister, but at this point in time, no.

Ms Poole: I would just like to respond, if that is in order. I am trying to make some sense out of the government's response in this regard. First of all, on their philosophy that there should be no financing of buildings passed through to the tenants, surely the parliamentary assistant must agree that this is an extraordinary situation. As I mentioned, there are not a lot of them in the province, but it is not an ordinary financing situation where you have a mortgage that is renewed in one year, two years or five years.

We are looking at situations that have changed over an extended period of time and might incur real hardship. The government's response to that might be, "Well, as long as it's the landlord having the hardship, we don't really care." But I will tell you, in these very hazardous economic times, if you are going to create a situation where a landlord is going to go insolvent because he or she simply cannot afford to pay these significant costs, I think that is irresponsible.

As for the second item about whether the government might be willing to accept this section where we have proposed that the prescribed operating costs category for the whole residential complex be enabled through regulations, if the parliamentary assistant feels there is a possibility the minister may be considering this, then we would certainly ask to stand down this particular amendment until such time as we find out the minister's response on it.

Ms Harrington: That might be the simplest thing to do. I understand your point that this land lease is an extraordinary thing in occurring every 25 years, but our position is clear with regard to the financing costs of buildings. I wonder if Colleen wants to comment on that particular aspect of it.

The Chair: I thought I heard a second ago that we were agreeing to stand this down. If we are going to stand it down, maybe we should do that now and come back to the whole issue. Rather than explaining it now and then standing it down, I think it would be --

Mr Turnbull: Can I just add a couple of comments before you stand it down, just as background, if you want to think about this?

The Chair: Yes, I think that would be fine, Mr Turnbull. You have been most patient.

Mr Turnbull: This is a very important aspect of landlord costs Ms Poole has brought forward. There are several large buildings actually on TTC rights of way, and most of the land leases on those buildings will be coming up within the next three or four years.

When you view it as simply a financing cost, you are talking about a variable of an interest rate. Let us take an extreme case, not taking the low interest rates we have today. Let us say you had a 9% interest rate and interest rates were going up to 15%. That obviously would be a terrible hardship on the landlord, but not of the order of magnitude of having a land lease.

Typically, how you arrive at a land lease, for the benefit of the parliamentary assistant, is that you will assign a value to the land at the time you renegotiate the lease and then you will take a certain percentage of that. I am just going to pull figures out of the air.

Let's say you use 8% of the value of the lease. If you have 8% of a piece of land which today would be valued at $5 million, as compared with when the lease was started 25 years ago, 8% of perhaps $750,000 -- that is the kind of order of magnitude -- you can tell you have an absolutely enormous increase in your costs, with no ability to pass that through. It is just the very nature of land leases that they work like this.

The tenants in a building which would be 25 years old -- and typically the kind of buildings we are talking about will be buildings which have been in rent review since the very beginning, because normally a land lease will come up, say, every 25 years for renegotiation -- those buildings will have already had the benefit of the lower cost, inasmuch as rents were reflective of the lower costs to the landlord.

In other words, you would not build a building and have rents which were quite as high as one where you owned the land fee simple. There has already been that benefit to the tenants, because the landlord has not been going back and getting refinancing increases during that period of time, so it is a onetime cost which is not incurred with other buildings.

I think it is tremendously erroneous to start trying to put it within the matrix of financing costs because it is a very different type of animal. It undoubtedly could lead to bankruptcy of some landlords.

The Chair: Thank you. I take it we are to continue this discussion even though there has been an offer to stand it down by the government.

1430

Mr Mammoliti: I am somewhat compelled to tell you of a little story, a little background, of a place in my riding I am not too pleased about. The case I would like to refer to in reference to what we are speaking about is a case where a landlord owns a piece of property and he leases it out to his own company, leases it out to his own property management firm as well. The reason I am not too pleased about it is that the tenants who live in the Antica Village apartments in my riding have been literally screwed, royally ripped off, because the landlord --

Mrs Marland: On a point of order, Mr Chair: Do you think you could direct Mr Mammoliti to use parliamentary language? Thank you.

The Chair: I am sure Mr Mammoliti will carefully consider his comments.

Mr Mammoliti: I want to thank Mrs Marland for her concern, but I would like to continue. She has the habit of interrupting and I am not too pleased about that. I have shown you that in the past.

The Chair: Just continue speaking to subsection 14(1).

Mr Mammoliti: As I said, they have been continually screwed, ripped off, and I am not --

Mrs Marland: I object to this kind of language.

The Chair: Mr Mammoliti, could you more carefully consider your usage of the English language?

Mr Mammoliti: The language is a little firm, a little strong, but in this case there is reason for it. I would appreciate Mrs Marland waiting until I am finished and maybe she would agree that in this particular case the language has to be this strong for people to understand why I feel so strongly about this.

The landlords a few years ago decided to up the amount they were charging their own company for this land. Ultimately, because they did that, the tenants now have to pay up to 55% of an increase.

Ms Poole: On a point of order, Mr Chair: I am afraid Mr Mammoliti's story, while interesting, is quite irrelevant to this discussion because we are talking about a land lease from a government, a government agency or a financial institution. We are not talking about private sector land leases. So, like I say, while the story is of course of some interest, it is quite irrelevant to the amendment.

Mr Mammoliti: It is relevant, and if people would let me finish, they could see the relevance.

The Chair: I think Ms Poole was just trying to help you define what subsection 14(1) is about.

Mr Mammoliti: I understand it. The reason I have to agree with the government's decision on this is that I do not condone tenants being ripped off this way. In the particular case I am talking about --

Mrs Marland: I have a point of order, Mr Chairman.

Mr Mammoliti: Here we go again.

Mrs Marland: It has been brought to the attention of the member that he is not speaking to the matter which is before the committee, and I think, with respect, he should be called to order.

Mr Mammoliti: Let me finish.

Mrs Marland: He is not speaking about land leases in the categories that are addressed by this amendment and I do not think he should be allowed to continue when he is dealing with a subject that comes under another matter.

Mr B. Ward: On a point of order, Mr Chair.

The Chair: On the same point of order, Mr Ward.

Mr B. Ward: I think what Mr Mammoliti is suggesting is that this is a scenario that could occur under some of these options that are listed. I would like to hear his finished discussion on this issue.

The Chair: On the same point of order, Ms Poole.

Ms Poole: On the same point of order, Mr Chair: I would question Mr Mammoliti. Are you suggesting that the government or a government agency would institute this type of action where it would -- not to use your first word, but perhaps your second one -- rip off the tenants?

Mr Abel: That is a question, not a point of order.

The Chair: No, it is not a point of order, but I think the information that has been brought forward is correct, although, as all members will recognize, the Chair has allowed a great deal of latitude when discussing clause-by-clause consideration of this bill. I would ask Mr Mammoliti to continue but to incorporate section 14(1) in his comments.

Mr Mammoliti: Thank you, Mr Chair. First of all, let me wish everybody a happy new year. I think I should have started with that.

The Antica Village apartments that I am using as an example is an example I am not too pleased about. More commonly known as the Sorbara apartments, they are a prime example of what could happen if we do not put our foot down. Yes, in answering Ms Poole's question, we have to control ourselves. If we allow ourselves to do that to tenants -- and I am not saying we would or any government would or has; I am saying we have to control the future. We have to control what may happen and we have to read signs. We have to read the potential. The Antica Village/Sorbara apartments are a prime example of how tenants can be ripped off. The Sorbara apartments have increased the rent of the tenants to 55% because of this lease. We have to control that.

Ms Poole: On a point of order, Mr Chair: Mr Mammoliti seems to want to politicize this. Just as I have --

The Chair: What is the point of order?

Ms Poole: The point of order is that when Mr Mammoliti made his comments, many members of this august committee could have pointed out that Ms Akande ripped off her tenants, but we do not do that.

The Chair: That is not a point of order.

Ms Poole: And I think he is going outside the bounds by trying to make inferences that are not correct.

The Chair: Mr Mammoliti has the floor.

Mr Mammoliti: The people that sit across from the Chairman are wicked people. They do not want to listen to reason. They do not want to listen to argument. They do not want to listen to my opinion, Mr Chairman.

The Chair: Order, Mr Mammoliti. We will continue our discussion of the Liberal amendment to section 14(1) and, if we can, let us try to keep our discussion as close as possible to that amendment.

Mr Mammoliti: I will just close by saying I agree wholeheartedly with the government's amendment. I agree that we have to maintain; I agree that we have to control, and I do not think the government would do that to tenants. I am hoping the government would never do that to tenants. Tenants want to be protected and, if we are not going to protect them, who will? If the private sector is doing this to tenants, it has to stop as well. I assure you that is something I would like done as well.

The Chair: Mrs Marland has some comments on a section we are trying to stand down.

Mrs Marland: Actually, Mr Chairman, I do not have any comments on the section we are going to stand down, but I do have a question on procedure. I am very happy to have the parliamentary assistant in the minister's chair this afternoon because I personally find Ms Harrington very reasonable and easy to deal with. I do, however, wonder if the Chair or the clerk or the parliamentary assistant can advise the committee where the minister is this afternoon, and also when she will be attending these committee hearings this week.

Ms Harrington: I will be pleased to do that. This afternoon she is at policy and priorities board of cabinet. I believe her intention is to be here every single day she can be here. In other words, she should be back tomorrow.

1440

Mrs Marland: I appreciate the answer. Thank you.

Ms Poole: On that point, may I say on behalf of the Liberal caucus that we are delighted that as charming and fairminded a person as Ms Harrington is with us in this position today.

The Chair: The Chair still has a problem. Are we to stand down the consideration of subsection 14(1) or are we to continue the discussion?

Ms Harrington: If it is the wish of the committee to proceed with it, I have no problem. If you wish to proceed with it, as we have had the discussion --

The Chair: I think we have had the discussion, or at least a partial discussion.

Ms Poole: The reason I suggested we stand it down and the parliamentary assistant agreed was the fact that she mentioned she would bring this matter up with the minister as far as the second part of it is concerned, the part that refers to prescribing extraordinary operating costs categories and empowering the government to have that ability. I thought from the parliamentary assistant's comments, if she was going to be discussing it with the minister, the minister may be reconsidering that we should give that opportunity.

Ms Harrington: We have had the discussion on the first part of this, which is the land lease idea. The second part of it is the part I was concerned about, whether the government would find it easier or more expeditious to have it in the form of regulations or whether we want to have this more closed in the legislation. At this point we could stand it down and proceed as quickly as possible to the next section.

The Chair: Do I have unanimous consent to stand down subsection 14(1)? Agreed. Thank you. I am advised by legal counsel that we cannot finish the consideration of section 14 until we have dealt with subsection 14(1).

Interjections.

Section 16:

The Chair: We are on section 16, after a little bit of discussion about the proper procedure here.

Ms Harrington: Subsection 16(1) allows a landlord to base an above-guideline increase application on capital expenditures incurred if the work was completed between January 1, 1990, and June 6, 1991. The expenditure could not have been claimed in an application under section 71 of the RRRA unless it was claimed during the period in which no relief was available under that legislation for capital expenditures. In other words, this is the transition period and we are allowing landlords to claim above the guideline for their expenditures made, at a cap of 3% above the guideline.

The Chair: I see we again have both Liberal and Conservative amendments to subsection 16(1).

Ms Poole moves that subsection 16(1) of the bill, as reprinted to show the amendments proposed by the minister, be amended by striking out "1st day of January, 1990" in the fifth and sixth lines and substituting "the 1st day of September, 1989."

Do you have an explanation?

Ms Poole: I probably do, Mr Chair. This section deals with the transition period which was affected by Bill 4, the rent freeze the government brought in and introduced in the fall of 1990. There are not very many cases where the work was completed between September 1 and January 1, 1990. Most of the work was completed after the first day of January 1990.

However, we felt that to be truly accurate and restore at least a small measure of fairness, all cases where the landlords were caught under Bill 4 should be considered and it should not be restricted to only those that occurred from the first day of January 1990. There are not, as I mentioned, a lot of cases, but certainly it is reasonable that these cases should be given consideration.

Ms Harrington: Briefly, the government considers that it was most fair in going back to that date of January, that indeed, as you mentioned, most of the cases have been covered and it is our intention to remain with that date.

Ms Poole: Just to continue on that point, when the parliamentary assistant says it is most fair that the government has chosen this particular date, perhaps we should point out that there is very little fairness in what you have done. You retroactively went back in time and changed the law from what the law in the land had been for people who had done work in expectation that they would be covered and that they would get full cost recovery. Now you have in your graciousness allowed a very small proportion of that recovery to be made and at the same time limited it to the first day of January 1990.

It just does not seem to me that there is any fairness or merit in this situation. If you are going to try to be at least a bit fair, at the very minimum the government should cover all the cases. When we get to the section on the cap, that will be another debate, but certainly I cannot see why, as it affects so few cases and is just a matter of bringing fairness to the legislation, the government would object to it.

Mrs Marland: Obviously, with our amendment being only one month different from the Liberal one, our intent and concerns are the same, because of the tremendous hardship that has been brought on the property owners who were given awards based on the existing statute. Now we have an even better, I suppose, for lack of a stronger word -- a situation where Bill 4, being the statute that was in existence at the time, has been challenged successfully in court. I am referring to the Moretta case, I think it is, in St Catharines. When an independent court decision, which obviously has no partisan political games to play --

1450

Mr Mammoliti: On a point of order, Mr Chairman: The Moretta case in St Catharines deals with Bill 4. We are on Bill 121.

The Chair: Thank you for the information.

Ms Poole: Mr Chairman, on that point of order.

The Chair: It was not a point of order.

Ms Poole: Whatever point Mr Mammoliti was making, I would like to make the same point.

The Chair: I think Mrs Marland has the floor. You will have your opportunity after Mrs Marland.

Mr Mammoliti: Can you rule on mine?

The Chair: It was not a point of order; it was a point of information.

Ms Poole: On a new point of order, Mr Chair: This particular section relates directly to Bill 4 and trying to repair the devastating impact of Bill 4, so it is very much in order that the Moretta case be discussed.

The Chair: Thank you, Ms Poole. Mrs Marland, you have the floor. You may continue.

Mrs Marland: The member for Yorkview may not fully understand the relationship between Bill 4 and Bill 121, although he has been a member on this committee much longer than I have. My understanding is that I am in order discussing them, because there is a relationship between Bill 4 and Bill 121.

If the parliamentary assistant would like to clarify it, I would appreciate it, because it is my understanding that when this socialist government came into office, it decided that the existing statute, namely Bill 51, was not the approach to rent controls it wanted to have. So in a whisk of frenzy they passed Bill 4. At the time it was being dealt with in the House Bill 4 was described as an interim measure. It was in fact to be in place for two years. During that two years the government proposed to come forward with another piece of legislation, which is the legislation currently before this committee today, Bill 121. Bill 121 was to address the concerns and problems Bill 4 had brought, and hopefully Bill 121 was to provide the remedies for those people who were so badly caught with the implementation of Bill 4.

It is very important to talk about both pieces of legislation. I would ask Ms Harrington, through you, Mr Chairman, whether what I have said is correct about the relationship of those two bills and the purpose of Bill 4.

The Chair: Thank you, Mrs Marland.

Ms Harrington: Did you want an answer just to that question or would you like a little clarification about the judge's ruling?

Mrs Marland: No, I am very clear on the judge's ruling in the Moretta case in St Catharines. The judge's ruling -- I have a copy of it here -- identifies very clearly what the powers of the government are under Bill 4. The interesting thing is that the Moretta case -- I gather Mr Moretta owns four St Catharines rental buildings -- this decision, I think, was handed down just two or three days before Christmas; I think it was December 23. But it is a very significant ruling while we are looking at Bill 121, because in the case of Mr Moretta, he was given rent increases in a phased-in program in subsequent years. He was in the midst of his approved phased-in rent increases when Bill 4 came in.

What happened to him, I understand, is that in the midst of his already approved rent increases, which obviously were legal -- they had gone through the examination of their legality and their eligibility and they stood, so therefore his rent increases were awarded -- in the midst of this, Bill 4 came in and took away the ongoing increases he had already been awarded.

Yet Mr Justice R. T. P. Gravely, in his judgement, is stating very clearly, in referring to part VI-A, which I understand is obviously Bill 4 amending Bill 51, "Counsel for the minister argues that while part VI-A does not void increases set out in these orders it does void increase in the notices of phase-in which had first effective dates beyond October 1, 1990." This is the date we are discussing in this amendment now. "He contends that the orders did not set out rent increases for the periods covered by the notices."

Justice Gravely in his summation talks about the ambiguity: "Counsel for the minister argued that if phased-in rents contained in a notice are meant to be treated as part of an order, then there would be no need to deal with phase-in notices in sections 100b(2), 100n(7) and 100q.

"Perhaps these references are redundant. They may be legislative overkill to ensure that there is no doubt that notices do not give greater rights than do orders. If their presence raises ambiguity as to the interpretation of section 100b(2), then that ambiguity must, in my opinion, be resolved in favour of the applicant."

In his finding he says, "By 100b(2), therefore, these increases were excepted from the operation of Part VI-A. It was not open to the minister to treat the relevant notices of phase-in as void." That is a very powerful judgement, because here is an independent legal ruling made by the court, under Justice Gravely, that something the minister was claiming was within their powers under that bill in fact were not. When we are talking about Bill 121 -- and we were hoping for remedies to this possibility of a ruling being part of Bill 121 -- the fact is that we are going to get into the same number of problems of appeals to the power and the jurisdiction under Bill 121.

I think that is a cause of concern to everyone in this province, landlords, tenants and the public alike, because every time we go through a court proceeding, no matter which side you are on it costs a great deal of money. If the Ministry of Housing is there, we are looking at a very big investment of taxpayers' money fighting these cases, which, if we had very clear, well-drafted legislation, would not have the scope to be on the table in the first place.

1500

Ms Harrington: I believe Mrs Marland has pointed out and explained what this ruling is about, that is, she has used the word "ambiguity." What the judge has found is that the wording was not clear. It was a technical ruling. The judge has recognized that the government is certainly within its rights to do this, but it has not put it clearly enough. In fact, one of the clauses he has overlooked -- I will ask one of my assistants to explain the details of that. Certainly, the public and tenants across Ontario -- tenants are included in the public -- are very concerned about this and I think we should explain it as clearly as possible. I will ask Colleen to clarify this, or if we have a legal person. I think the public certainly should know that the government is firm in this. It was just a technicality and this will be clarified.

Mrs Marland: You are saying the judge overlooked another clause?

Mrs Harrington: I will ask my assistant to clarify.

Mrs Marland: I just wanted to know if I heard you properly.

Ms Parrish: I do not want to talk too much about the Moretta decision. As people may know from reading the press, the ministry is appealing that decision and I think it is appropriate that we allow the Court of Appeal to decide whether the ministry's arguments are right.

I would just point out that the Moretta decision does not deal with capital repairs at all; it deals with financial loss and phase-in of financial loss. I guess it is an interesting case and the member has explained a number of points about it, but in terms of whether the Moretta decision affects capital applications in the transition period, it dealt entirely with financial loss and not with any capital repairs.

I just thought it might be useful for me to step back and respond to the question as to why the ministry was reluctant to go into the fall period of 1989 and why January was picked as the date. I think that is the question that is coming up relevant to the amendments of Ms Poole and also to a similar amendment by the Progressive Conservatives.

Ms Harrington: Have we clarified the point about the case?

Mrs Marland: Ms Parrish, are you confirming today that the ministry is appealing the Justice Gravely decision?

Ms Parrish: Yes. We already indicated in the press at the time that we intend to appeal that decision.

Mrs Marland: It was rumoured in the press that you intended to appeal it.

Ms Parrish: We will be appealing the decision, yes.

Mrs Marland: We have not had an affirmative that you were going to.

Ms Parrish: I am sorry, I had not realized that. I was on vacation. We are appealing that case. As a matter of fact, I believe we may be filing our papers as soon as this week. We are certainly working hard on it.

Mrs Marland: The appeal of this case is very significant. When the decision was handed down just prior to Christmas, we heard that someone in the ministry said, "Of course we'll appeal it." It was reported in the press as a rather offhand, off-the-cuff response. We were hoping that when the minister had time to consider the judgement, had time to read and review it, the ministry obviously would not appeal this decision.

If the decision takes another year to go through the Court of Appeal, and say the judgement changes, what we have is a situation where these tenants do not have any idea about what is going on, and maybe they are going to have to pay back rent; that is a possibility. In the meantime, these tenants are really hung out to dry. Nobody knows what the outcome is going to be because the ministry is, as we now know, appealing this decision.

Mr Chairman, even though you have clarified the amendment in front of us as dealing with capital increases, the precedent is set. I think what you are going to have with this decision are a lot more appeals, because we now have a precedent in law, albeit it is being appealed. The whole process means there has been one decision by a judge who upheld one interpretation of the law, so the minister is now going to drag everybody through that process again at untold thousands of dollars of expense.

I guess I want to ask why it is being appealed and is it relative --

Mr B. Ward: On a point of order, Mr Chairman: I would appreciate it if the Chair could explain the relevance of this discussion to the particular bill we are discussing, with the appropriate clause. I believe the member has gotten off track to a degree and we should get back to the subject we are discussing.

The Chair: I believe the discussion relates to the transition part of the bill and Mrs Marland is in order in speaking to that. I believe the parliamentary assistant also has an interest in speaking to it, so I believe she is in order.

Mrs Marland: Thank you, Mr Chairman, for that ruling. I understand that a few moments ago the parliamentary assistant mentioned there was another clause in the bill which the justice did not address, or "chose to ignore" I think were your words. Ms Parrish did not refer to that and I wonder if she would like to refer to it now.

Ms Harrington: By way of introducing staff, I would like to answer one of your questions, in that we have asked for an expedited hearing. I want to reiterate that the judge has said phase-ins are not void. It is merely that the judge thought the wording was not clear enough and that it is up to us to make that clear. You have asked about a certain clause; I was going to ask one of our legal people if they would like to explain that any further.

Mr Mammoliti: On a point of order, Mr Chairman.

The Chair: If you would like to sit down with one of your legal people, I will entertain a point of order from Mr Mammoliti while you are doing that.

Mr Mammoliti: I am not too sure we should allow this questioning to happen. This is going a little fast, I think, and I am not too sure whether legally they should answer any questions at this point. I think we should leave that to the courts.

1510

The Chair: Thank you for the point of information, but I believe it is up to the ministry to speak for themselves and we will allow that. Perhaps you would introduce yourself for the purposes of Hansard.

Ms Brandon: I am Cynthia Brandon. I am a lawyer with the rent review section of the Ministry of Housing.

As has been indicated, we are asking that the appeal be expedited. We will be filing our notice of appeal. If it has not been filed already, it will be filed early this week. As a result, we hope to have this matter brought on as soon as possible. We are hopeful we may have it heard at the appeal level in February or March.

In terms of the appeal itself, without getting into the legal arguments of what will be argued on appeal, I would indicate that it is our position that parts of 100b(2), 100n(7) and 100q were not provided with any meaning by the judge's interpretation of the part of 100b(2) that he did give meaning to. It is really an argument as to the interpretation of the wording, whether significant meaning was given to each part of it.

I do not know that I can really expand much beyond that. The basis of the appeal is simply that he misinterpreted the legislation, rendered parts of it meaningless and found ambiguity where we do not believe there is ambiguity.

Ms Harrington: I want to request clarification for you, Mrs Marland, to let everyone know exactly where this is at.

Mrs Marland: What is this magical clause that he ignored?

Ms Brandon: Part of it would be 100b(2), with the references to rent increases set out in notices of phase-ins. It is a matter of what meaning is left to be given to that clause in the part that he interpreted, 100n(7) and 100q, and reading the legislation in its entire context, whether or not appropriate meaning has been given even to 100b(1).

Mrs Marland: So this is just a normal battle of legal opinions, as to who interprets what and how.

Ms Brandon: Exactly. I would say that is a fair assessment.

Mrs Marland: Nothing is new. It is just that you are going to go through the process and hope to convince whoever hears the appeal that there is another way of interpretation.

Ms Brandon: The proper interpretation we are hoping will be decided for the ministry, yes.

The Chair: Mrs Marland, if you would like to continue your discussion of the Liberal amendment to subsection 16(1).

Mrs Marland: I think what this whole discussion points out, when you look at the history of the problems in the drafting of Bill 4, is that in drafting such significant legislation as Bill 121, the fact that in Bill 121 we have a bill with some 140 sections and that we have this horrific situation of over 200 amendments, obviously that speaks for itself. Bill 121, even with the experience of Bill 4, probably is not drafted any better than Bill 4. That is why we have so many amendments. If you disregard the opposition parties' amendments, the government itself has over 100 amendments to its own bill.

I appreciate the fact that the ministry's legal department has asked for the appeal date to be expedited, and hopefully it would be in February or March; I think that is what they said. Even so, there is an example of why we are asking the kinds of tough questions we are asking about the wording in some sections of this bill. It is like anything else. We can write a report, we can write a letter and we can write a statement, and our understanding of those words we write can be totally different from those of the next person who picks that up. We just got a perfect example with Ms Brandon's answer, that they are hoping to go to the appeal court and through their arguments prove that Justice Gravely took a meaning that was not actually there in the wording of Bill 4.

Ms Harrington: We certainly appreciate that the opposition is trying to help us with this process. I know that is what you are there for.

Mrs Marland: Anything, Ms Harrington, that we can do to help clear up this mess, of course we want to do, because in the midst of this kind of chaos that this legislation is going to bring to this province we see a lot of people being hurt. We see landlords, property owners, being hurt and we certainly see tenants, as a result, also being hurt.

What our party is trying to do is to say that if this is the kind of legislation you are bound and determined to bring into this province, then let's try to make it work. I think the Liberal amendment that is on the floor right now, which is so similar to my own amendment, except for one month, is trying to appeal to the logic of the ministry, and in particular that of the minister, to say: "Look, this is unjust. It is unfair to make it January 1990."

The people who have been caught out may not be the people this socialist government cares about, but it says it cares about the tenants, and it will be the tenants in the long run who will be equally hurt. More than that, if this bill is so mismanaged because it is poorly drafted, it is the taxpayers in this province who will be hurt.

First of all, it is the taxpayers who have to pay for the legal challenges and the process through the courts. That is an endless expense that should be avoided, especially when you get into appeals. It is entirely possible that Mr Moretta may wish to appeal again. So here we have a situation where just in one area in the existing statute we have a problem.

When we talk about ambiguity in Bill 4, we have not only ambiguity in Bill 121; we have wording in Bill 121 that nobody has a definition for. How many days and weeks have we asked for very critical definitions of words in this bill that whole sections pivot on?

The Chair: If I could be helpful, the Liberal amendment is really discussing a change in the date in particular, and that is where we should be focusing our discussion very carefully, on the difference between the date that is proposed under this amendment and that of the government suggestion.

Mrs Marland: The difference in the date, going to September rather than January, is not a small matter. It is a very significant matter. As far as we are concerned, it points out the problems with the overall bill. It is just one further example of why the government section 16 for October 1990 is totally unjust, totally unfair.

The Chair: Thank you, Mrs Marland. If the committee would indulge the Chair a question, could you tell us how many applications or how many units might be involved in the change of date? That is really what we are discussing. Does the ministry have some information on how many units might be involved?

Ms Parrish: There are very few actually filed, but of course we have no way of really knowing what is out there that might come out, in a sense. All we can look at are people who have already filed, but we do not know somebody who might be out there who has not. The number that have actually filed is a very small number, I think fewer than 10.

The one comment I would make is that as you go back to the fall of 1989, you have a bit of a problem with applications occurring during that period, and the problem goes like this: In some cases people who had made application, who had done capital expenditures at that time and did not apply, might not have been permitted to apply under the old statute either. In other words, they would have been past the time when they would have been allowed to do so. Under the old act, the Residential Rent Regulation Act, you could not do a capital repair and then wait a couple of years if you decided you wanted to apply for it many years back. You had to apply within a very specific period.

1520

The concern was that we did not want to give people rights to make an application for capital repairs that they would not have had under the previous statute. In fact, we would have given them more rights to apply for a capital expenditure than they would have had before. So for anything occurring during that period, you would have had to have some sort of rule that if you were allowed to apply, you would not be allowed to apply if you had not been able to apply under the old statute. That becomes a very difficult and complex issue.

It is very difficult for tenants because tenants are not going to know whether their landlord would have been allowed to apply under the old rules. Therefore, you have the problem that tenants, when you go back such a long time, have not prepared their case or maintained their own materials to defend their positions, because they may have had good reason to believe their landlord could not now make an application and they have not kept all this material from this fall period.

If you decided to go back into this period, you would probably have a lot of problems for tenants who would have had a legitimate reason to believe they would not have to defend a capital application and therefore did not keep the material, the evidence they might have put forward. You would also have to have a somewhat complex regime to figure out who would have been barred from taking this application under the previous statute.

It was felt that under those circumstances it was appropriate to do the cutoff at that level. We are already going back some considerable time and I am sure there will be some cases where tenants simply have not maintained the evidence related to capital expenditures done a year ago, or two years ago now.

The Chair: Ms Poole.

Mrs Marland: Something further on that point.

Ms Poole: I just wanted to ask for clarification of something Ms Parrish said. I do not intend to be very long, if you would like to get back on --

Mrs Marland: It was just on one point, when Ms Parrish mentions the evidence. Can you give an example of the kind of evidence you are referring to that may not still be available?

Ms Parrish: Under the old statute, for example, evidence of neglect, evidence that work was not done that the landlord claimed for -- the landlord said, "I replaced this," or, "I did this," or some other thing and in fact they did not -- service withdrawal: There are a number of things the tenants might have done. They might have taken pictures or taken evidence from tenants who were leaving about whether work was done or not, or whether they got a new stove, fridge or whatever.

Mrs Marland: Is that capital?

Ms Parrish: Yes, it could be capital.

Mrs Marland: Are appliances capital?

Ms Parrish: Under the non-transition provisions, if I can put it that way, you have to meet all these necessary tests, but for the transition capital it just has to be capital that would have qualified under the old statute. It could be appliances or it could be our infamous marble lobbies and microwaves. For the transition period we are simply using the old test because of the difficulty of demonstrating all the new tests under the new statute when nobody knew all this was happening in 1990.

When you go back to the fall of 1989, you are going back quite a long time and you develop, to be blunt, a straight evidentiary question, that people are supposed to adduce evidence as to whether they did get a new stove as opposed to a second-hand stove or whether X, Y or Z was replaced. For the tenants, not knowing the landlord was going to make an application and having their application revived under our statute, in essence, when they might not have been able to apply under the old statute, it would become a very complex and difficult situation.

Obviously when you draw a line there is always somebody on one side or the other, but our view was that when you get into the fall of 1989 you get into situations where you may have actually revived the landlord's right that would have expired under the previous statute, and you certainly have evidentiary problems for the tenants. That is the explanation I can give. I understand you may not agree.

Ms Poole: I would like to ask for a clarification from Ms Parrish as to what she said a bit earlier. You have in effect said that one of the problems is that there is a time period during which the application must be made or there would be a lapse. Are you telling me that if the work was completed on December 20 and the first rent increases were to be effective as of October 1, 1990, that was caught in the freeze, the time would have elapsed and that could not have continued under the old legislation?

Ms Parrish: I do not know. The problem is, when you get into the fall of 1989 you are getting into a grey area. What you will get are some applications that would have elapsed if they had not been made and some that would not have. The problem is not really that there are no applications in this period at all that would qualify. The problem is that there might be some that would not have qualified. You have this sort of mixed bag during this period of time, and therefore you would have to have very complex rules in order to say, "These ones are sheep and these ones are lambs and we'll figure this out."

For tenants who are not necessarily going to know when the landlord's base year or reference year was, you are going to get a lot of difficulty figuring that out. Obviously we have a line-drawing exercise. I could probably find something on August 28, too. When you have a line-drawing exercise it is always difficult to draw the line. The problem about getting into the fall of 1989 is that you are going to raise more of these kinds of grey-area problems, and then the question is, how possible is it to adduce evidence for this period of time and how many complex rules are you going to have to have to screen out landlords who would not have been eligible under the previous legislation and have now had their ability to apply essentially resuscitated?

Ms Poole: Basically, you are saying the difficulty is that you are using a new test to refer to something that has happened in the past when they did not know the test was in existence. You used words to that effect a bit earlier.

Ms Parrish: The tenants may find the landlord's application has been revived when they did not expect that would happen. Of course tenants, as tenants are not in the business of being tenants -- they are just tenants -- do not maintain business records, so the problem of evidence is more difficult for tenants than it is for landlords.

Ms Poole: It surprises me to hear you say that on the one hand, yet when we are looking at sections like subsection 16(2) where we are talking about going back in time and not allowing any capital expenditures if there was neglect, the same principle holds: It is extremely difficult to prove neglect or otherwise two years after the fact. What might be in a certain state now might not have been at the time.

I would think you would want some sort of consistency if you are going to say in this particular case you are cognizant of the fact that you need to be able to ensure evidence was provided during that period, yet in the very next section we are going to be dealing with you have said you are going to apply new rules to an old situation when that same evidence may be extremely difficult to obtain.

I, for one, do not have much sympathy for landlords who neglect their properties and then try to capitalize on it. I am not talking about that situation. I am trying to say that to guess what the situation is after the fact, if you are not going to allow it in one area then you should not allow it in the other.

I am also trying to piece together your comments about how some applications might get into a grey area from the fall and some might not. I wonder if it would be acceptable for the ministry if we did take a second look at this amendment. We could consider changing the wording so that if time has elapsed -- and time would have elapsed even if they were under the ordinary situation and had been able to apply and Bill 4 had not frozen the state of affairs -- I think we could probably amend the amendment to ensure it met the government's concerns.

Ms Harrington: The point of view of the minister is that we have very carefully considered a lot of these things we have just been discussing and a decision has been made that this is the most appropriate date and it is time for the decision to be carried forward.

Ms Poole: I guess that then goes back to the earlier comment. I actually choked when Ms Parrish, or maybe the parliamentary assistant -- one of you made the comment about the logic of the minister -- I started to choke but it was purely coincidental, I am sure -- in saying, "This is the date and therefore we're not willing to consider any other date."

Ms Harrington: We have considered the dates.

Ms Poole: Not after you initially made the decision. I do not think there has been any reconsideration. There certainly does not appear --

Ms Harrington: We have looked at all the factors that contribute to the choosing of this date.

The Chair: Thank you. Shall the Liberal amendment to subsection 16(1) carry?

Mrs Marland: Mr Chair, if you are going to take that vote, I would like to get my colleague in the room.

The Chair: You are requesting 20 minutes, Mrs Marland?

Mrs Marland: Yes, please.

The Chair: The committee will reconvene at eight minutes to 4 to take this vote. The committee is adjourned until then.

The committee recessed at 1532.

1552

The Chair: The committee will come to order. We are dealing with a Liberal amendment to subsection 16(1).

Mrs Marland: A recorded vote, Mr Chairman.

The committee divided on Ms Poole's motion, which was negatived on the following vote:

Ayes -- 3

Marland, Poole, Turnbull.

Nays -- 6

Abel, Harrington, Mammoliti, Morrow, Owens, White.

The Chair: We have a Conservative amendment to subsection 16(1).

Mrs Marland moves that subsection 16(1) of the bill, as reprinted to show the amendments proposed by the minister, be amended by striking out "1st day of January 1990 and before the 6th day of June, 1991" in the fifth, sixth and seventh lines, and substituting "1st day of October 1989 and before the day this section is proclaimed in force."

Mrs Marland, do you wish to comment on this amendment?

Mrs Marland: Obviously this amendment extends the eligibility of transitional applications to include those applications caught by the introduction of Bill 4, thus the October date up to the proclamation of this act. We have had many, many examples before this committee, when it was holding its public hearings, of the kinds of hardships we are talking about, caused by applications that were caught in that transition period. I think there is enough firm evidence in the record to support the necessity for this amendment should the government choose to observe and consider the concerns of those people who were caught. If the government chooses to ignore them, however, as I said earlier, the very people the government seems to think it is trying to protect will be the people who in the long run will be hurt.

We are very concerned about tenants in this province. We are also very concerned about the supply of rental accommodation, and the decrease in rental accommodation stock is happening because of the limitations put on those property owners now. In this case, when we are dealing with this section where people have had approvals for legitimate, reasonable rent increases -- which incidentally the tenants are happy to pay rather than have their buildings run down and their facilities and services deteriorate -- I think the answer and the evidence is there for anyone with any common sense, should they choose to consider it. The amendment is obviously very much needed, and I hope there will be support for it.

Mr Turnbull: I have come to the conclusion that no matter what we say, we are not going to significantly change this bill, simply because the NDP does not want to listen to what we have to say. Nevertheless, it bears mentioning once again that the people who need affordable rental housing are not being served by the current legislation. What we are trying to do with this amendment is stop landlords going bankrupt. People who had undertaken renovations during the period immediately before the NDP came into power and had not been able to get their costs flowed through have been hit. We were promised by the previous Minister of Housing at the time we were discussing Bill 4 that when the permanent legislation came in, there would be a way of addressing this issue. By choosing the date we have chosen, it would accommodate those people who had undertaken the expenditures prior to the NDP being elected.

It is a very fair approach. It is not gouging; it is simply saying that the people who had complied with the then existing law should be able to be compensated. That is the thrust of this amendment. There is nothing sinister behind it. It is a way of ensuring that those landlords do not go into bankruptcy. A lot of them are teetering on the brink right now. We know there are going to be further court challenges to the legislation, some of which are already pending.

Surely the government would want to react at a time we have a deepening recession and have a lack of confidence from the business community. Surely we want to send out some signals that the government is prepared to address the very real problems of these landlords, not drive them out of business, and in that way try and revive the confidence in the economy which is sadly lacking under this government.

Ms Poole: In light of the fact that this is a shorter time frame than the previous amendment, I wonder if the parliamentary assistant would be willing to reconsider her position that January 1 is the one and only date they will consider.

Ms Harrington: Thank you for the question. As Mr Turnbull has pointed out, this minister, as well as the previous minister, has given a fair amount of consideration in response to what Mrs Marland has said. We have considered all the options, and a lot of common sense has come to bear on this dealing with the landlords who have done renovations during this time period. My assistant here has explained to you all the ins and outs of those decisions. This is the date we have decided on.

Mr Turnbull: Excuse me. Your associate has not explained all of the ins and outs as to how that date is arrived at.

Ms Harrington: A fair number.

The Chair: Thank you, Mr Turnbull. Ms Poole, you had the floor.

Ms Poole: I want to go back to the fact that the date chosen was January 1. Part of the rationale for that was that there was apparently a grey area where applications in the fall of 1989 might or might not qualify under the Residential Rent Review Act. I wonder if Ms Parrish could be a little more specific about this particular problem and which applications it would most likely affect and how many, and the depth of concern about this problem affecting the ones in the fall of 1989. Is it going to affect all of them, a few of them, half of them? Is there any analysis of it? Most important, I really am not clear from what you have said what the problem really is, why some of these would not be eligible. What time frame specifically were you referring to?

1600

Ms Parrish: This is a very complex answer. This amendment does not say you have to have made an application, so of course, as I do not know who might have applied but did not apply, it is very difficult for me to say how many cases are out there. If you look at who did apply, there is a very small number of cases. The problem is that this section could revive the right to apply of a landlord who had lost his right to apply. The reason they lost their right to apply is based on when their base year and reference year is. It is a very complicated system, but essentially it says you have to apply within a certain period of time. There are some cases in this period of time that, if they did not apply during the relevant period, would have lost their right to apply under the previous statute. It depends on when their reference year and base year was, and that usually depends on when their financing was. That is the group. We do not create the base year or the reference year for the landlords; they choose it themselves. That is not something the ministry would control. That is the population.

On another level, I think the minister and the ministry were really trying to address the fact that if you go back too far it becomes very difficult for tenants to put their viewpoints forward, because you are dealing with a period which is so far in the past and the tenants simply did not anticipate having to defend these applications.

Ms Poole: First, we are talking about only a three-month period to go back. Second, I cannot see why the government could not accept this amendment and put a rider on saying "provided that the application meets all the criteria established under the RRRA with reference to eligibility and time frame." I mean, you do not have to specify. Then, if it meets it should be considered; if it does not meet and would not have met, it should not be considered. If there are only a small number, I do not understand why the government is being so adamant and inflexible.

Ms Harrington: There are only a small number who have applied. We have no idea how many out there might apply.

Ms Poole: But if a landlord did apply for that period, the landlord would have to provide bona fide receipts. I cannot see whether there would be a lot of additional applications. I think you are probably dealing, in the vast majority of the cases, with the ones who have already applied, and you have admitted that is a very small number. It is highly unlikely that people who did not apply for a full year would now suddenly, two years later, decide to apply, particularly with the tightened restrictions you have put in under this act.

Ms Harrington: As we have said, we have looked at the difficulty of drawing a line and considering the cases before and after the line. We believe this is the best date, as we have discussed.

Ms Poole: So there.

Mrs Marland: It is very simple to say we are dealing with drawing a line. What we are really dealing with is drawing a line and inserting a knife, because what happens as a result of this arbitrary line? When you make any legislation retroactive -- it does not matter what kind of legislation -- there are always going to be people who get caught. But there are also ways of dealing with that. I do not see any difference.

You are talking about the fact that everybody is going to have to come up with evidence. Say some property owners do apply who did not previously apply. They are still going to have to bring forward the same evidence, as the member for Eglinton said, the bona fide documents. What is the difference between having to provide that kind of evidence in this kind of case, as with a rent review application -- I am not sure what you call it -- where the tenant applies for a rent review going back over a number of years? That case was referred to earlier here this afternoon. I am not going to refer to it again by name, but in that case you have a tenant who is applying for a rent reduction based on the existing legislation over that number of years. The documents have to be provided by the property owner to justify the rents. What is so different between providing documents when you are defending your rent, as in the case I am referring to, and providing documents to prove you have done X amount of work? You know the case I am referring to.

Ms Parrish: I am sorry, I am not sure. I am puzzled. I do not mean to be difficult.

Mrs Marland: I am not familiar with the correct terminology, but if I am a tenant and it is my feeling that my rents have exceeded the legal rents over a number of years --

Ms Parrish: You are applying for a rebate.

Mrs Marland: A rebate. When I apply for a rebate, it may be that my landlord has to go back eight, nine, 10 years and dig out the documents if there has been a renovation involved, for example, or a remodelling. Is it not true that the landlord has to provide the documents that prove the renovation was done: the receipt for work done, the receipts and documents to prove that certain things were purchased? Is that so?

Ms Parrish: It depends on what the case is about and on whether there has been a pre-existing order. If there has never been an order on a property, you do this thing called base rent justification, in which you may go back in time to establish what the legal rent was. If there was an order on the property, you only go back as far as the order; you do not attempt to go back any further in time.

Mrs Marland: Right. In this case, I understand there is not an order. So what is the difference between gathering evidence as a property owner -- if I were a landlord and my tenant said, "I think I'm entitled to a rent rebate because I think I've been paying above the legal guideline for a number of years now," the appeal process for that rebate requires that the property owner provide legal evidence that he has in fact spent the money he says he has spent, which allows him to do two things: perhaps change the rent totally because they have changed the configuration of the dwelling totally -- what is the difference between when that happens and you go back in time, and what we are talking about here, which is not going back in time very far, if a landlord should apply under this section?

Ms Parrish: I cannot really speak as to specific cases, as you can understand, especially if they are ongoing. I am not being obtuse, but I am really not too sure which case we are talking about. The point I would make is that here you are really dealing with the reasonable expectations of the tenants that they would have to defend these applications that would not have been allowed under the previous statute because of the elapsed time. Tenants, unlike landlords, are not required by law to maintain business records so I think there is a distinction that could be made.

The amendment, as proposed -- not with Ms Poole's variation -- could revive the ability of a landlord to apply when he had lost that right. Therefore the tenants would have thought even under the previous statute, not under Bill 4 but under the previous statute: "My landlord is not going to apply for this. He is not going to ask for a rent increase for this." Then all of a sudden, as a result of a change in the date, the landlord can apply for something that he could not have applied for before, and the tenants of course, if they had maintained evidence for some period of time thinking the landlord might have applied, certainly would not have maintained this evidence for two or three years just thinking that something might change in future.

I think Ms Harrington pointed out that you are drawing a line and you will always find people on either side, but I think tenants do not maintain business records. They are not required by law to maintain business records and there is a distinction there in terms of who has the burden of proof, the landlord or the tenant.

1610

Mrs Marland: You are saying landlords may now have an option to apply for something for which they could not have applied before, or chose not to. Could not have or chose not to?

Ms Parrish: At some stage, they chose not to. They let enough time go by that they could not have.

Mrs Marland: Okay, but the point I am making is, you said that landlords by law have to keep records, and I would certainly hope they do. But it is very interesting because when we deal with other sections of Bill 121, we are going to be dealing with history in terms of tenants. Under Bill 121 you are going to allow tenants to challenge what is a capital expenditure by legitimate need against a capital expenditure by neglect.

The argument you are giving against this cannot be used in both examples because the example I want to give you is this: If the landlord has neglected to do ongoing repairs in the underground garage for example, and what could have been a question of maintenance for a number of years is now going to be proven as neglect, you are going to allow these same tenants who by law do not have to keep records, by your own words -- and the tenancy may have changed; they may not have the ongoing word of mouth about how long that hole was in the roof, in the garage or whatever it is -- you are now going to allow that evidence to come forward without any tangible strength or continuity against an application by a landlord.

In that case, there is an example of where suddenly the tenant is now able to argue back in history against an application by the landlord. Yet in the section we are discussing at this point, you are saying, "Oh yeah, but we can't go back because the tenants won't have their records." I have to ask you, how are the tenants going to have their records in any of the cases in this bill under which tenants can apply for rent decreases?

I realize we are not talking about rent decreases but you have just raised a very important point, because what you are saying against the amendment we are dealing with now is that it cannot happen because it would not be fair, because nobody has records. How fair is it going to be when they apply for something else in some other section of this bill and what better are their records going to be for that section?

Ms Parrish: I know we will have the opportunity to discuss the issue of neglect in subsection 16(2), so I do not want to get too far afield. But I would note there is a difference between having the opportunity to bring forward evidence the tenants have and having the obligation to defend a specific application for which you would have had to have specific evidence. I think there is a distinction.

I understand you do not agree with that distinction, but I do think there is a legitimate distinction to be drawn as to the period of time. Obviously, when you draw the line, there can be a difference of opinion as to where it is. I can only explain to you the rationale given to the best of my ability. I think there is a distinction between opportunity to provide evidence -- tenants will still have to provide evidence to the best of their ability -- and the obligation to defend a specific application, and whether or not there was a reasonable expectation that this would have been required.

Mrs Marland: Okay. I do not want to discuss the neglect part because we are going to get into that too, but you cannot look at one without looking at the other. When you discuss neglect you are talking about two sides, two opinions, one saying it is not neglect, one saying it is neglect. Both will have evidence. In this glorious situation, these rent officers are going to decide who is right, even if it involves thousands and maybe millions of dollars to some investor and certainly, we know, an adverse impact on tenants.

Here you have a situation where in one case the evidence can be provided by the landlord, and the evidence can be provided by the tenants when we are dealing with neglect. That is acceptable apparently, because we have already discussed neglect a little bit earlier in the bill and found that the judgement of the rent officer will be made based on the evidence in front of him.

We are saying we cannot change this retroactive date because as soon as we do we put it back two or three years and maybe the tenants will not have their evidence. What I am asking you is, how come we think the bill is going to work? They are going to have the evidence in the case of neglect, but if the property owner is applying for a legitimate rent increase under the statute that existed at the time, you are saying, "No we can't go back and let them look at that because the tenants won't have their legitimate evidence."

Now I hear you say that, I cannot understand how you could be so grossly unfair. It just does not make sense. There is no continuity of argument on your part there. On the one hand you are saying, "It's okay. We know the tenants will have the history and we know they'll be able to provide legitimate evidence." On the other hand you are saying, as in this case: "No, we can't ask them to do that. We can't expect them to do that because they are not required by law because the tenants are not in a business."

Ms Harrington: Mrs Marland, I believe Ms Parrish has explained her distinction between the points you are making and I think that is all she can do.

Mrs Marland: Are you not allowing her to say any more?

Ms Harrington: I think she has answered your question.

Mrs Marland: All right, let's go to other example then, if you do not want her to answer that question.

Let's go to the example where a landlord has a major rent increase and has a new tenant in the building who pays this major rent increase for a number of years. Then the current tenant decides maybe that was not a legitimate jump in rent when the major rent increase took place and is going to apply for a rent rebate.

In that case, there are going to be two lots of evidence too, I respectfully suggest to you. There is going to be the evidence that I understand you require from the landlord to prove that certain work was done, as I said a few moments ago -- maybe a remodelling, a renovation or a changing of the configuration of that accommodation -- that made the rent increase legitimate. In this case you are asking the property owner for proof, bona fide documents, that the work was done, that money was spent and that these were the costs. I understand you accept that. Pardon me, the ministry does not accept it, the panel which hears the evidence under the act accepts as evidence bona fide documents of expenditure. Is that correct?

1620

Ms Parrish: What would constitute acceptable evidence would be determined by the panel hearing the case. I assume you are speaking about the current statute and not about what the law would be under this statute?

Mrs Marland: I am speaking about under the current statute.

Ms Parrish: Whether evidence was good or bad would be determined by the panel. It is an issue of credibility, the substance of the proof and so on. It is not an issue which is determined by the words of the statute but on the evidence.

Mrs Marland: But you have enough experience to be able to tell us that in normal proceedings where the tenant applies for a rent rebate, the landlord, the property owner, has to provide these documents in whatever form they are. The landlord has to provide documents of proof of expenditure. Is that right?

Ms Parrish: It depends on what the rebate is about and what the defence of the landlord is. There are a number of defences, but the person who brings the case, the tenant bringing the rebate application, has the burden of proof to do what is called a prima facie case. Then landlords have to bring their defence based on their proof. The evidence is weighed, as well as the credibility of the parties and so on. That is a decision which is made on a case-by-case basis. Evidence is weighed. That is the case in all hearings. I am not too sure where these questions are going. It is not appropriate for me to debate with you. That is why I am not --

Mrs Marland: No, I am not asking you to debate with me. I am asking you to tell me whether I am on the right track. I am asking you to confirm for me that in the one situation landlords have to prove they have spent money on their accommodation in order to be eligible for different types of rent increases. I think that is fairly simple.

In the case of a rent rebate under the current legislation, if the rent increase has exceeded a legal limit, then landlords have to prove they have spent a certain amount of money and done a certain amount of remodelling and renovation where the unit under that legislation could be described as substantially changed, as substantially a new unit. In that case the evidence is provided and certainly a judgement is made, but the point I am making is that evidence may be any number of years old, five, six, seven or eight years old. The case that I am thinking of, that I have in mind, I think is seven or eight years old.

Now we are talking about this section and we are saying, "No, we can't go back two years, because nobody can provide enough evidence." That was your reason for not supporting Ms Poole's amendment and for not supporting my amendment now. You are saying it would not be fair because they would have to go back and dig up their records and justify their eligibility and the tenants would not have an opportunity because they would not have the records. It just does not flow that in one case we are dealing with rent control and it is all right to go back eight years and have evidence brought forward and a judgement made, and in this case it is not all right.

Ms Parrish: I guess the distinction I would make is that the why in the initial case you referred to did not change. In this case, if you revive the right of landlords to make an application that they would not have had under the previous statute, then the tenants would be in a situation where they never would have had to defend that application but now they do. That is the distinction.

Again, I cannot debate this issue with you. I am not supporting or posing or anything. I am only explaining things and I think I have explained it as best I can. I can understand that there is a difference of opinion as to whether that is appropriate, and there is certainly a difference between the RRRA and this statute. This statute is a tighter statute. That is true. There are differences between the current law and this statute. That is the case. I personally cannot support or oppose anything. I am just doing my best and clearly not doing a very good job of explaining the rationale, but I think I have given you the information as best I can.

Mrs Marland: I am referring to the case of the former Minister of Community and Social Services, Ms Akande's property, which is now under appeal by a tenant. In fact, it goes back through other statutes. It goes back to the legislation prior to the Liberal RRRA, Bill 51.

The point I am making here is that we cannot keep changing the rules, because people get hurt. We have a new government. It sweeps with a new broom and decides that it is going to hammer these people over the head a bit more, that it will make some changes etc, whatever the ideology is of whatever the government of the day is. I give that right to the current government. Any government has a right to pass legislation. That is what it is all about. They put forward their own doctrine, and Bill 121 is an example of socialist doctrine in terms of providing housing in this province. We know that. I accept that as a given.

What I am saying is that when you make it retroactive, which is what this amendment deals with, the retroactivity line you are talking about is very significant because you can suddenly say, "That was another bill and that was another government and we're cleaning it up with this." Yes, we have to draw a line and there are always going to be people on both sides of the line. You bet your boots there are always going to be people on both sides of the line. In this case we are going to have people who can be hurt, because they lose an opportunity they should have been able to have.

You say that these property owners perhaps would not be able to come up with their records satisfactorily. You are not even giving them an opportunity to try to do that. You are saying at the same time that the tenants would not have their records, and yet further on in this bill you are going to accept anybody's records about what is neglect. It is so inconsistent it is unbelievable.

The more I get into this legislation, it does not get any easier to understand. It gets more frustrating. The more you get into Bill 121, the more you realize there are all kinds of loopholes and contradictions. I think that is one I have just pointed out to you. On the one hand you are saying, "No, we can't go back to October 1989 because then we may have landlords applying for increases and the tenants won't have their evidence." Well, in other sections you are certainly going to say to those tenants: "Yes, you can prove neglect, going back. If you have been in that building for 10 years, we're going to accept your evidence."

This is unfair to tenants and to property owners because it is inconsistent, is not clear and in my opinion is totally unjust. I say with respect that when you read Hansard for today, you will follow the point that you cannot say in one section, "We accept somebody's evidence going back a number of years," and then in the very next section say, "It's not workable because nobody would have their records going back that number of years."

Ms Harrington: Mrs Marland, when you read Hansard, I believe everyone will realize that Ms Parrish has explained the distinction between the two types of going back for evidence.

1630

Mr Turnbull: One of the comments that was made by Ms Parrish struck me as rather curious. She did not know how many people would apply if they were to change the date. Does that matter? We are talking about a fundamental question of fairness. If you are saying you are going to have a certain date in the bill that you can go back to for some people, and there are others who cannot, that smacks of a very arbitrary government at best.

The suggestion is, "We can't do this because of a lack of evidence on the part of the tenants." That is absolute baloney. It is the NDP's Bill 4 which is the one that complicated things in the first place. We have very easy qualifications as to whether the application is correct. All you have to do is look at the dates on all the receipts and so forth.

If you want to compare it with being complicated, just look at the form tenants and landlords are going to get with respect to capital expenditures under Bill 121, where you have a depreciation schedule and you will have dates of various capital items that are no longer borne. Either the money has been spent or it has not been spent. Why are we arbitrarily saying, "This group of people can get it and other people can't"? That kind of arbitrary approach baffles me. I have several other questions, but I would like to put them as questions, because we are here to try to understand this.

Ms Parrish: These are transition provisions. They are trying to move from one regime to another regime. There are certain elements in these provisions -- for example, the fact that it can be any kind of capital, not necessary capital -- that are designed to make the applications involve fewer elements of proof than under the full-blown rent control system. The question really is that when you have a transition from one regime to another, what is a reasonable period of transition. The government has chosen this period of time. Other people have suggested you might increase it by a few months here at the beginning, a few months there at the end or whatever. It is a transition period.

The government has looked at the period of time. Our instructions are that it is comfortable with this period of time. There were certain considerations given to looking at the fall of 1989 as opposed to the summer of 1989 or whatever. Clearly, there is a spectrum in there. There was a view that it was a reasonable expectation to go back to January, that to go further back was not reasonable. Clearly, there is a difference of opinion. As a public servant, I can only indicate to you that all these things have been explored. I understand that you and your colleagues do not agree.

Mr Turnbull: I understand. Perhaps we can redirect this to the parliamentary assistant. We have a fundamental question. You have some buildings that are included and some that are not. The whole debate revolves around the dates. People have either spent the money or they have not. To a great extent applications flow from when the year-end of a company is or its anniversary date, and its anniversary date relates back in history to all the rent review regimes we have had. Consequently, an anniversary date has been set up, so people will tend to make applications at a certain point in the year. Here we are arbitrarily saying: "For everything before this, you're out of luck." That would be my redirection of this question. I have settled a lot of the questions in this vein, but perhaps the parliamentary assistant can respond to that.

Ms Harrington: Basically you are asking, why not an anniversary-type date, an annual-type date. Is that what you are saying?

Mr Turnbull: You may have two or three buildings, some that have anniversary dates under the old rent review regime which are such that would mean you already had your application in or would be covered by this, and others that do not. I am asking you, why do you discriminate against these buildings that fall between the cracks, to the extent that you may -- there are all kinds of items. As you well know, we feel this legislation is going to send people into bankruptcy. I am trying desperately to make a point. These arbitrary dates just do not make any sense.

Ms Harrington: I think we have discussed that question about dates, and Mrs Marland and yourself have said how difficult it is to set a date.

Mr Turnbull: No, we have not said it is difficult.

Ms Harrington: Mrs Marland said that. We have looked at both sides. We have debated this now for quite some time this afternoon. Yes, we are trying to be as fair as we can. We have looked at this amendment, which is certainly pro-landlord -- let's face it -- trying to deal with that situation of the interim period, the transition period, and go above the guideline to give some relief. That is what the intention behind this section of the bill is. I think it is clear. We have debated the date and this is the date the government would like to go with.

Mr Turnbull: I do not view it as pro-landlord. It is a question of fairness. If people have expended the money, they expended the money under the existing Bill 51 legislation, and in good faith. They were totally within the law when they expended it. It really goes back to any government of any political stripe bringing in retroactive legislation. My concern is we periodically hear the Premier of this province saying that he wants to get a partnership, that he wants business to work with him.

We send out a very powerful message to investors, to the investor in Düsseldorf and the investor in Hong Kong who owns a building and maybe owns an industrial company. I can tell you that the majority of German investors who have invested in property in Canada are typically people who have small industrial companies. These are the people who are in a position to be able to start subsidiary companies or expand subsidiary companies here in Ontario. We send out the most incredibly negative message. We do not have to spend $50,000 of the taxpayers' money to send out this negative message. You are sending it out free of charge because you are telling people we are not open for business. What kind of message does this say about the business climate?

Mr Morrow: On a point of order, Mr Chair: Can you please ask the member to go back to the amendment?

The Chair: I am certain Mr Turnbull was about to bring that very carefully into line with the change of date.

Mr Morrow: I appreciate that very much.

1640

Mr Turnbull: This goes to the heart of the amendment. If we do not alter the date in this clause, we simply are sending out a negative message to the investors that, "Okay, we as an NDP government can confiscate essentially any investment that people have made." It is an investment they have made in renovations on this building, so consequently we send out that negative message.

I have a couple more questions, but I would like you, Ms Marland, to respond to that: the message you send out relative to the suggestion that we keep hearing from the Premier that he wants partnership with industry.

Ms Harrington: I am Ms Harrington, Mr Turnbull. I think we fundamentally disagree on how to go about governing. We believe in dealing with all sectors of the community, the tenants as well as the business people. We are trying to deal with the business community, as you mentioned.

Mr Turnbull: Well, it is a terrible way of dealing with them, because you are driving them into bankruptcy. I am interested: What would be the difference between an owner who has been required to spend money under Bill 51, the previous legislation, and then after he has spent it in good faith, he is told he is disallowed this because of the way your legislation has been drawn and the retroactivity, and the case of your government's reluctance to say to workers who have a two- or three-year contract where the wage increases for subsequent years -- subsequent years, not previous years -- are going to be higher than the inflation rate in the present very difficult situation?

Ms Harrington: I think that is a little beyond this particular legislation, but the whole point of this section of the legislation, section 16, is to deal exactly with what you said, those landlords who have put out money for renovations and capital and whatever was allowed at that time.

Mr Turnbull: It does not deal with enough of it.

Ms Harrington: That is the point of this and why we are doing it, to deal fairly as best we can with these landlords.

Mr Turnbull: It does not deal fairly with them, though.

Ms Harrington: Maybe you do not agree, but that is what this government is doing.

Mr Turnbull: That is not what the business community and the landlord community believe, and there are a lot of tenants who are concerned about this because we have a government which is prepared to spend $150,000 --

Ms Harrington: Mr Turnbull, may I just point out that you are talking about 10 cases, to our knowledge.

Mr Turnbull: No, excuse me. Ms Parrish made the comment at the beginning that she did not know how many cases there were.

Ms Harrington: I understand. I said "to our knowledge."

Mr Turnbull: Yes, okay, but we have sent out a massively negative message about the business climate in Ontario. Yet this is a government that is prepared to spend $150,000 per unit on subsidized housing when the private sector can produce one for $89,000.

Ms Harrington: I think I have tried to answer your question.

Mr Turnbull: It is absolutely inadequate.

The Chair: Are there further questions or comments on the Conservative amendment to subsection 16(1)? Shall the Conservative amendment to subsection 16(1) carry?

Mr Turnbull: A recorded vote, please.

The committee divided on Mrs Marland's motion, which was negatived on the following vote:

Ayes -- 2

Poole, Turnbull.

Nays -- 6

Abel, Harrington, Mammoliti, Morrow, Owens, White.

The Chair: I am advised that legal counsel would like to have a little bit of time for an explanation.

Ms Baldwin: There is an issue I should draw to your attention that comes up in the first instance in subsection 16(1). It has to do with the fact that since the committee last sat, between then and now, namely on December 31, 1991, the Revised Statutes of Ontario 1990 came into effect.

One of the things that happened in the revised statutes of 1990 is that the numbering system of the statutes changed. As a result of that, you may recall that the House, some time before it rose, passed a motion in which it authorized the office of legislative counsel to redo the statutes in order to make those changes which would have the correct section references and statute references to correspond with the 1990 revision instead of the statutes that were in effect before then. For example, in clause 16(1)(b) there is a reference to the RRRA, 1986. That is going to be a reference to the RRRA under the 1990 revision, and section 74 will be a different number under the 1990 revision.

What was going to happen in the motion and will happen is that our office is going to be reprinting all the bills to make those corrections for when the House comes back in March. For two reasons I have not done that yet with this bill. One of them is that there has not been time. The other is that I thought it would create extreme confusion for the committee to suddenly start working with a different version of the bill than they have been working with until now.

Therefore, what I am seeking right now is the committee's permission or understanding that, when this bill is reported back to the House, I propose to editorially make all those changes so that it corresponds with the 1990 revision.

Ms Poole: I suggest that as the request of legislative counsel is really of a technical nature, we should have unanimous consent of the committee to allow Betsy to have leeway to make changes after we have considered the act at the time she deems appropriate.

Ms Harrington: Thank you very much, Ms Baldwin. That would be appreciated.

The Chair: Do we have unanimous consent? We do. Thank you.

Shall subsection 16(1), as printed, carry? Carried.

Are there questions, comments or amendments to subsection 16(2)?

Ms Poole: Mr Chair, just a point of clarification. I do not know if I am working with the right act, as we have had a number since we started this excursion, but in my act I have subsections 16(1.1) and (1.2). Were those considered dealt with under subsection 16(1) or are they separate?

The Chair: I am sorry. They should be dealt with. I was just charging along a little too fast and I apologize to the committee.

Ms Harrington: We appreciate your intentions.

The Chair: We will deal, then, with subsection 16(1.1).

Ms Harrington: This subsection provides that if there was partial relief for a capital expenditure in an order under subsection 83(3a) or 100o(6) of the Residential Rent Regulation Act, 1986, this section does not apply. This prevents the landlord from obtaining additional relief. These are the conditional orders. Subsection 16(1.1) is a new subsection preventing the landlord from obtaining additional relief under the rent control act where partial relief for a capital expenditure was made under the RRRA after that act was amended.

Ms Poole: Just for clarification, my understanding is that this amendment would say that those people who had conditional orders and were caught under the Bill 4 freeze and, because of a Liberal amendment, received up to a 15% relief factor would not be entitled to claim the additional 3%. Is that correct?

Ms Harrington: That is what it says.

The Chair: Further questions or comments? In that event, shall subsection 16(1.1) carry? Carried.

Subsection 16(1.2).

Ms Harrington: Subsection 16(1.2) stipulates that the landlord must make application for capital expenditures allowed under this section within six months of proclamation of this section of the act.

The Chair: Questions or comments? Ms Poole.

Ms Poole: Subsection (1.2) is shown as an amendment; actually, the whole thing is. I was just wondering, as I do not have my first copy of the act with me, is that a change from the original?

Ms Harrington: No, that is the same.

The Chair: Shall subsection 16(1.2) carry? Carried.

Now subsection 16(2).

1650

Ms Harrington: Subsection 16(2) states that those capital expenditures shall not be considered if they were due to neglect.

The Chair: Questions, comments? Ms Poole.

Ms Poole: I brought this up earlier when we were talking about the previous amendment. Mrs Marland also continued on that particular point. What this does is basically say that retroactively we are going to decide what might or might not have been neglect two years ago. Again, I do not see how you can change the rules retroactively. I see how you can do it; I do not see how you can justify doing it. It would appear to any logical, thinking person that if you are operating under a certain set of rules and the government wishes to change those rules, which it is entitled to do, it should be prospective, not retroactive. In fact, legislative counsel have made the statement, I believe in the standing committee on regulations and private bills, that they believe for good legislation it should be prospective, not retroactive.

In this case, what you are doing is saying, "Yes, we know this test is different from the test that was in place two years ago, but we are retroactively going to take you back up to two years and have you provide evidence now as to whether there was neglect."

The first case, as previously cited by Ms Parrish, is what kind of valid evidence is available, on the part of either the landlord or the tenant, from two years previously, when this particular rule was not in place, so they did not know they were operating under this criteria?

The second point we have to look at when we are considering neglect is the retroactive aspect. I really have a problem with how this government deals with legislation. You seem to think you can snap your fingers and make things appear or disappear or reappear, regardless of the order, the sequence, the substance with which things happen in the course of nature.

I really do not see how you can say, after the fact, "neglect" -- which we are not going to define, by the way; we are just going to use "neglect" because these superhuman rent review administrators are now going to magically appear on the scene, who apparently have never been there before but now are going to be so properly trained that they know what neglect is, even though it is not defined, and we are not only going to have the rent review officers make these decisions, but they are going to make them from two years back when the rules were very different.

If you want to apply "neglect" for the future, I do not have a problem with that. I particularly do not have a problem with it if you are going to define it so everybody knows what you are operating with. But we go back to the fact that you are going to ask tenants and landlords to spend a great deal of time when they do not know what definition they are acting under, do not know what it means, do not know when the neglect occurred. Do not forget we are talking about work completed as of January 1990. The neglect may have occurred in January of 1988. It may be four-year-old neglect we are now trying to prove.

Ms Harrington: I think I understand what you are saying here. You are concerned about the retroactivity of this. This whole section means we are going back to a transition period in order to help those people who have already spent money. You are not telling us that we should not go back to help these landlords, are you?

Ms Poole: No, Ms Harrington, with respect, you do not understand 16(2). Subsection 16(2) says, "The rent officer shall not consider a capital expenditure under this section if it became necessary as a result of neglect in maintaining" a residential complex.

Ms Harrington: I understand that.

Ms Poole: That is not going to help the landlord who has been caught under the transition rules. On the contrary, that is going to penalize that landlord and impose a further restriction. If the restriction is deserved it is one thing, but when you change the rules after the fact --

Ms Harrington: Surely, Ms Poole, you are not saying we should go back and help these landlords with regard to capital expenditures that were due to neglect?

Ms Poole: But, Ms Harrington, you are not looking at how you determine neglect two, three, four or five years after the fact. You are rewriting history; it is revisionist history.

Ms Harrington: We are getting down to a definition of -- I would like to ask Ms Poole to explain why this is in there.

Ms Poole: Ms Poole does not know why, but you might want to ask Ms Parrish.

Ms Harrington: I am sorry, Ms Parrish. I think we both agree about the intent of this --

Ms Poole: But no --

The Chair: One at a time would be better.

Ms Poole: No, this is more fun.

Ms Harrington: I think we both agree about the intent of this subsection, to go back to a transition period and pick up capital expenditures. What we are discussing, I believe, is whether it should be, due to neglect, allowed or not. I think I would like Ms Parrish to clarify that definition and why that is in there.

Ms Parrish: Under the previous statute, the test was "ongoing, deliberate neglect." There are virtually no cases because it is almost impossible to prove "deliberate" because you have to know something about the state of mind of the landlord. It is hard to imagine that if the landlords knew the test of "ongoing and deliberate neglect" would be changed to "neglect" they would have changed their behaviour in any way. If they knew they were neglecting, they would have met the old test, too. All we are really doing is taking a test which everyone has agreed has never worked and gone to a test which can have some reasonable chance of being dealt with.

Both landlords and tenants still have to have evidence. You cannot just say, "I don't want the landlord to increase the rent, so I'm going to say there was neglect." There still has to be evidence. Regarding ongoing and deliberate neglect, in the entire period of time we have only been able to find two cases of examples where there has been sufficient evidence as to the state of mind of the landlord. Certainly it is not as if landlords said, "The test under the previous statute was ongoing and deliberate neglect, so I will just neglect and not do it ongoingly and deliberately." In terms of whether it would have changed the landlord's behaviour by changing the test, it seems to me very unlikely.

As the landlords, as Ms Harrington said, are getting the opportunity to bring forward these transitional claims, it does not seem unreasonable that tenants should have a reasonable opportunity to put their viewpoint forward, and under the previous test they did not really have that opportunity because almost no one could prove it.

Ms Poole: It is not a matter of whether it was going to change the landlord's behaviour; that is not the question at issue. The point at issue is that you are saying we are going to look at what happened before. Again, it comes down to what kind of evidence is going to be available of what happened four years ago. The representative from the ministry has said there are virtually no cases of ongoing, deliberate neglect where there was an order because of it. Quite frankly, tenants gave up a long time ago trying to collect evidence on that because under the Residential Rent Regulation Act ongoing, deliberate neglect was not something they were able to prove.

So tenants have not collected evidence. In many cases, landlords have not collected evidence or saved evidence to say, "But I repaired that four times in 1987 and I have all the receipts here to prove it." Maybe some people save all their petty cash receipts from five years ago, but I can tell you when it is now January 13, 1992 and you want to go back in time and expect them to have evidence, it is going to be extremely difficult.

The Chair: I am just going to suggest that it appears to the Chair, seeing as we have Mr Mammoliti and Mr Turnbull on the list, that we are not going to get a vote on subsection 16(2) by 5 o'clock this afternoon and that perhaps this would be a good time to adjourn.

I would remind members of the subcommittee that we are having a brief -- I hope -- meeting.

The committee adjourned at 1701.