The Island Regulatory and Appeals Commission dismissed a landlord’s appeal of a repair order and 50% rent reduction in Z & C Flourish International Ltd. v. Sheri Bailey, 2026 PEIRAC 66, issued Oct. 9, 2026. Order LR26-52 confirmed the Residential Tenancy Office’s requirements, changing only the deadline for compliance.
The confirmed reduction lowered monthly rent from $1,109.26 to $554.63, effective Aug. 1, 2026, until all outstanding work required by the Rental Office’s order is complete. The commission gave the landlord one month from its decision to complete the work.
A history of repair directions
The tenancy concerned a Charlottetown townhouse in a four-unit building. A fixed-term agreement beginning April 1, 2023, continued monthly after March 31, 2024. Environmental Health directed the landlord in July 2025 to investigate and repair a roof leak, address mould, assess moisture damage and replace affected materials where necessary.
A December 2025 Rental Office order required inspection and necessary repairs or replacements involving the washing machine, roof insulation, two windows and a stair railing. The washing machine appeared in that earlier order, not in the eight-part repair list confirmed on this appeal.
The tenant filed an amended application for repairs and a rent reduction on May 21, 2026. The landlord did not attend the June 11 Rental Office hearing and submitted no evidence there. On July 14, the Rental Office ordered repairs by Aug. 14 and reduced the rent pending completion. The landlord appealed on July 24; the commission heard the appeal on Aug. 19.
Cost and vacancy arguments rejected
The landlord argued that the rent was substantially below market and insufficient to cover its expenses. It said it had invested $36,000 in repairs during the preceding year, including insulation and decking, and had discovered more serious defects. It maintained that work involving interior walls and ceilings could not reasonably or safely proceed while the tenant remained, and favoured a complete renovation after vacancy. It also planned to sell the property.
The tenant argued that previously ordered repairs remained unfinished and that the landlord was confusing renovation plans with ongoing maintenance obligations. The commission found that the repair history supported the Rental Office’s intervention: the deficiencies were established, and substantial repair spending did not contradict the evidence that particular requirements remained unmet.
Section 28(1) of the Residential Tenancy Act required the landlord to maintain the property in compliance with applicable health, safety and housing standards and make it suitable for occupation, having regard to the unit’s age, character and location. The commission accepted that some repairs had been done and further substantial work might be needed. The cost or extent of repairs, the convenience of vacancy and a planned sale did not relieve the landlord of its obligations during the tenancy.
The parties also disputed the stovetop problem. The landlord said the tenant had replaced the original stove without authorization, did not admit responsibility for the later damage and said it had offered a replacement that the tenant declined. The tenant said a pot fell onto the stovetop during exterior wall work and that a promised repair was not completed; she considered the replacement stove older and inferior.
The commission focused on whether the unit had a functioning stovetop, rather than resolving responsibility for the damage. It accepted the tenant’s evidence that the stovetop was damaged and not functioning, and upheld the repair requirement.
Lost tenancy value justified the reduction
The commission applied section 85(1)(e), which authorizes a rent reduction equivalent to the reduction in the tenancy agreement’s value. The question was not whether the landlord was receiving market rent or covering its expenses. Significant, longstanding deficiencies involving the roof, mould and moisture, windows, stair railings and stovetop affected several aspects of the unit. Considering their nature, extent and duration, the commission found a 50% reduction appropriate.
Work and confirmation required
The confirmed eight-part direction requires the landlord to inspect the unit and:
- Investigate and repair the source of the roof leak.
- Clean the ceilings and walls with soap and water to remove mould.
- Assess the extent of moisture damage, including surface mould and damage to drywall, wood or the structure.
- Remove and replace moisture-damaged material if mould has affected drywall or wood above.
- Repair the roof insulation.
- Repair the kitchen window and second-floor bedroom window.
- Repair the wall stair railings.
- Repair the tenant’s stovetop.
The commission allowed additional time because the original deadline had passed before the appeal hearing and some work could require access to walls and ceilings. It accepted that contractors, materials, investigation of moisture damage and safe completion required coordination. That justified a one-month completion period from the Oct. 9 decision, not removal of the repair obligations.
Within seven days after completion, the landlord must give the Rental Office and Environmental Health photographs and written confirmation of the repairs. The rent reduction ends only when all work required by the order is complete; rent then becomes payable in accordance with the tenancy agreement.
The order’s notice permits an appeal to the Court of Appeal within 15 days of the commission’s decision, on a question of law only. Where the commission has confirmed, reversed or varied an order of the Director, either party may file the order with the Supreme Court. If filed, it may be enforced as a Supreme Court order.
