Laws of Eve | More on the Rent Restriction Act
The response to last week's article - 'Can landlords charge late fees?' - has only served to intensify the calls for the Rent Restriction Act to be amended.
One senior litigator reviewed Section 24 of the act, and she is of the view that, in a written lease, neither reasonable interest charged on overdue rent of controlled premises nor a reasonable security deposit that is usually intended to ensure that the landlord has available funds to repair any damage the tenant caused to the enter premises at the end of a tenancy should be interpreted as "fine, premium or other like sum" that is "imposed as a condition of the grant, renewal or continuance of a tenancy". She also said that, because outstanding rent is a debt, in the usual way, a claim can be made for it and (I agree) that the courts have the discretion to order a debtor to pay interest on an outstanding debt.
My colleague may well be correct, but the problem is that, in the end, the point is arguable instead of being clearly stated in the outdated act. In fact, if you visit the website for the Ministry of Economic Growth and Job Creation, you will find a heading under a section dealing with the Rent Board - 'Excess Rent (Security Deposit Section 24(1))' - which suggests that security deposits are treated as being unrecoverable.
I came across two local cases that may be helpful in assessing the court's view on the legality of security deposits - Albert Simpson v Island Resources Limited Claim No. 2005 HCV 0102 and Mayne v Rotherham and Another  JMSC Civ. 77. In the first case, the Court of Appeal ruled that the security deposit was unenforceable. In the second case, the learned judge ruled that the security deposit in that case did not resemble a fine, premium or consideration in addition to rent; but she made it clear that the "determination of the legality of a security deposit must depend upon the construction of the particular provision in issue and the purpose associated with collecting the sum".
On my review of the act, I did not identify one instance in which a tenant could be fined or imprisoned for any breach of the act, although a landlord could be fined and/or imprisoned for several things, including:
- Making an entry in the rent book stating that the tenant is in arrears in respect of any amount that is irrecoverable under the act.
- Interfering with the tenant's quiet enjoyment of the rented property by forcibly removing the tenant from it without a court order.
- Publishing a false notice as to the standard rent that the tenant is to pay for the property.
- Serving a false notice of increase in rent.
- Knowingly demanding or receiving any payment from the tenant that is not recoverable under the act.
- Failing to make an application to determine standard rent payable for a property.
- Stating that children cannot reside in the rented property.
There is need for a Rent Board and for legislation that properly regulates the affairs of landlords and tenants. However, under the present circumstances in which landlords can be subject to criminal sanctions while tenants often act with impunity, there is an imbalance that needs to be corrected.
In my view, what is required is tribunal that will adjudicate in disputes between landlords and tenants, deal with issues concerning recovery of arrears of rent and recovery of possession to remove those matters from the overburdened parish courts to a entity (much like the Commission of Strata Corporations) that is specially created for that purpose.