INCOME CRITERIA FOUND TO CONSITUTE RACIAL
DISCRIMINATION AND TO BE ILLEGAL UNDER ONTARIO'S AMENDED HUMAN RIGHTS CODE
Newby and Sinclair, a young black couple, applied for an apartment in Toronto but their application was rejected by the landlord because they failed to meet a specified rent-to-income ratio and job tenure criteria. Newby and Sinclair felt that the criteria used by the landlord have an adverse impact on young prospective tenants and prospective tenants who are persons of colour because their incomes are significantly lower than those of older adults and those who are not persons of colour. After filing human rights complaints, their case eventually was heard before a human rights Board of Inquiry.
The Board of Inquiry found that minimum income criteria or rent to income ratios constitute discrimination on the grounds of race and age, and are prohibited under Ontario's Human Rights Code. The ruling is significant because the board rejected arguments from landlords and from the Ontario Human Rights Commission and agreed with CERA's position, that amendments to the Ontario Human Rights Code and a Regulation governing tenant selection adopted by the Conservative Government in 1998 DO NOT permit minimum income criteria such as the common rule that rent must not exceed 30% of income.
In
Newby and Sinclair v. Morris A. Hunter Investments board chairperson Marrianne
McKellar followed an earlier decision of a three person board of inquiry in Kearney
et al. v. Bramalea Ltd et al., prohibiting the use of any minimum
income criteria or rent to income ratios to disqualify low income applicants
for apartments, whether or not they are used along with other factors such as
credit and reference information.
Chairperson
McKellar notes that the Divisional Court, in deciding on an appeal from the
board's decision in Kearney, upheld the findings of the Board but altered the
orders, and "appears to have premised its orders on the assumption that
O.Reg. 290/98 functioned to permit the use of rent/income ratios".
However, as the Court "did not engage in any close examination of the
implications of O.Reg. 290/98" she finds that the Court's decision in
Kearney does not preclude her from ordering the landlords to cease and desist
from using rent to income ratios. She warns landlords in Ontario that
regardless of whether they were parties to and bound by decisions rendered to
date, the continued use of minimum income critieria would render them
susceptible to further human rights complaints.
The
Ontario Human Rights Commission has taken a different position from that
advanced by CERA and has generally supported the landlords' notion that they
are now permitted to use minimum income criteria as long as they consider
credit and reference information. The protection from discrimination because of
receipt of public assistance in particular has been rendered largely illusory
by the Commission's interpretation of the Regulation.
Landlords
believe that they can refuse people in receipt of public assistance on the
basis of their income as long as they ask for credit and reference information
before doing so. The board, however, found in favour of CERA's argument that
the regulation continues to prohibit the discriminatory use of income
information and therefore prohibits the use of minimum income criteria to
disqualify social assistance recipients or any other group protected from
discrimination in housing. This finding was necessary to restore the integrity
of the Code's protections in housing.
The
other significant aspect of this decision is the acceptance by the board of the
evidence of M. S. Mwarigha, a Programme Director at CERA specializing in
anti-racism and systemic discrimination in housing, of the effect of income
discrimination in creating racialized settlement patterns in rental housing
markets. This is the first human rights decision to describe these kinds of
intersections of poverty and racial discrimination and segregation in rental
housing in Canada.
The
board found that:
"The
unchallenged expert evidence in this case unequivocally supported findings that
rent/income ratios: discriminate against rental applicants at least up until
their middle twenties (Ornstein); discriminate against visible minority rental
applicants (Ornstein); result in the creation of "ghettoized" communities
of low income visible minority tenants in poor quality housing about whom
prejudices and stereotypes develop and flourish (Mwarigha); and are not
reliable predictors of rental default (Hulchanski). The expert evidence further
established that, even if rent/income ratios were reliable predictors of
default, losses associated with such default are not a significant factor in
determining the economic viability of a landlord's rental business
(McIlravey)."
To
download the full decision click here.
OTHER HIGHLIGHTS
The
board adopted the interpretation of the new regulations to the Code which were
obiter in a previous case, finding that while income information may be
required, discriminatory uses of such information, including rent/income
ratios, continue to be prohibited. The following is adopted from the previous
decision in VanderSchaaf.
"O.Reg.
290/98 provides that a landlord can request and consider "income
information" as long as it also requests and considers rental history and
credit references. If the latter information is not forthcoming, the landlord
can consider income information alone. Section 4 of the regulation expressly
states that nothing in it authorizes a landlord to refuse accommodation
"because of" various proscribed grounds of discrimination. These
proscribed grounds of discrimination are the same as the ones set out in s.
2(1) of the Code, and the grammatical structure of s. 4 of O.Reg.290/98 is
identical to that of s. 2(1) of the Code.
Both
the Commission and the Complainant agreed that the term "income
information" is broad enough to encompass information about the amount,
source, and steadiness of a potential tenant's income. The Commission submits
that O.Reg. 290/98 insofar as it allows landlords to consider "income
information" permits them to apply rent/income ratios. The Complainant, on
the other hand, while conceding that a landlord may obtain information
respecting the amount of a potential tenant's income, argues that the landlord
is not permitted to apply a rent/income ratio. The question of what meaning to ascribe
to "income information" can only be answered having regard to the
whole of O.Reg. 290/98."
At
this point, however, the Board notes that it would have been a simple matter
for the legislature to have clearly indicated if it intended to permit landlords
to use rent/income ratios by employing that express language in the regulation.
The Board also notes that during the Standing Committee on General Government
hearings into Bill 96, Government members of the Committee offered repeated
assurances that it was not the Government's intention to authorize the use of a
30% rent/income ratio, but that their intention was confined to clarifying what
information landlords could request from prospective tenants.
"...... . The [interpretation] I prefer, is to find that permitting landlords to obtain "income information" from prospective tenants does not permit them to apply rent/income ratios, all of which Kearney found contravened the Code. On balance, therefore, I adopt the Complainant's interpretation of "income information" to that offered by the Commission."
The
board then considers the impact of the Divisional Court decision on the appeal
of the Kearney decision:
"The Kearney Appeal, supra, issued subsequent to the
decision in VanderSchaaf. The appeal was allowed in part and the Court replaced
two of the Kearney remedial orders having prospective effect with a single
declaration that the respondents in that case had breached the complainants'
rights under the Code. The rationale for the Court's substitution of its remedy
is set out in the following passages respecting the impact of O.Reg. 290/98:
"If paragraph 1 or paragraph 2 [declaring the use of
rent/income ratios to contravene the Code and ordering the landlords to cease
and desist from using them] of the December 22, 1998 Order of the Board is
allowed to stand, the Appellants/landlords would be forever prohibited by
paragraphs 1 and 2 from utilizing the new s. 21(3) of the Code and/or O.Reg.
290/98, entitled: "Business Practices Permissible to Landlords in
Selecting Prospective Tenants for Residential Accommodation".
If paragraph 1 and paragraph 2 of the impugned Order are
allowed to stand, because of the June 17, 1998 amendments, the
Appellants/landlords would be bound, in perpetuity, by a different set of rules
than every other landlord in Ontario. On several occasions during their
submissions, counsel for the Respondents reminded us that the Code was remedial
and not punitive. That proposition alone points out why those paragraphs cannot
be allowed to stand."
The above passages represent the totality of the Divisional
Court's comments with respect to the legislative amendments. The Court did not
engage in any analysis of how the provisions of O.Reg. 290/98 might be
interpreted and applied. Instead, without engaging in that analytical exercise,
the Court appears to have premised its orders on the assumption that O.Reg.
290/98 functioned to permit the use of rent/income ratios. The regulation on
its face, however, only refers to "income information", and only
purports to permit landlords to ask for and rely on such information in
restricted circumstances. While the Board is bound to follow the decisions of
the Divisional Court, in the absence of the Court's engaging in any close
examination of the implications of O.Reg. 290/98, and with the Board's own
analysis in VanderSchaaf suggesting that O.Reg. 290/98 does not permit the use
of rent/income ratios, the Board finds that O.Reg. 290/98 and the Kearney
Appeal do not preclude it from making a cease and desist order. The Board is of
the view that such an order would generally be appropriate for the following
reasons.
Rent/income ratios have been found to constitute
discrimination on 8 of the 14 grounds prohibited in subsection 2(1) of the
Code. The Code protects those who are susceptible of being socially
disadvantaged because of particular personal attributes. Kearney and
VanderSchaaf recognize the fact that social disadvantage is frequently
accompanied by economic or financial disadvantage. It is entirely possible that
an evidentiary basis may also exist for concluding that rent/income ratios
which prefer the economically advantaged would also be found to discriminate on
other grounds prohibited under the Code, such as ancestry, colour, ethnic
origin or handicap. Rent/income ratios have already been found and are likely
to be found to be discriminatory in respect of their application to such a wide
range of potential tenants that it would be difficult to think of circumstances
in which they could be employed without contravening the Code.
Board of Inquiry decisions are not made in rem. They have no
precedental authority and are not binding upon persons who are not party to
them. Nevertheless they must be regarded as having significant persuasive
authority. In this case involving an issue of access to accommodation and the
use of a rule that restricts that access, it is difficult to conceive of a way
in which an applicant for rental housing can be accommodated under the Code
short of elimination of the access criteria. The situation before the Board
does not involve a subsisting relationship between the complainant and the
respondent, rather it pertains to the opportunity to commence a relationship.
Human rights jurisprudence frequently states that members of protected groups
who are differentially and disadvantageously impacted by apparently neutral
rules of general application must make known their need for accommodation. That
proposition is of very doubtful application to this type of situation where it
is simply not meaningful to look at individual accommodation, and where the
very existence of the rental criteria may have a chilling effect on
applications from members of identified groups. The only accommodation possible
is to forego use of the rent/income ratio at all in the assessment of many
applicants for tenancy. The remedial orders in Kearney recognize this fact.
Implicitly, so too does the Supreme Court of Canada's analysis in British
Columbia (Public Service Employee Relations Commission) v. B.C.G.S.E.U. (1996),
176 D.L.R. (4th) 1 ("Meiorin"), although since that case arose as a
grievance following a termination of employment rather than as a proceeding
under human rights legislation, we do not have the benefit of the Court's
pronouncement on what an appropriate remedy under human rights legislation
might be.
Based on Kearney and Meiorin, and this Board's unchallenged
interpretation of O. Reg. 290/98 in VanderSchaaf , all landlords, regardless of
whether they were parties to and bound by those decisions, would be wise to
consider carefully indeed whether to continue using rent/income ratios as a
means of screening tenants. While using rent/income ratios would not render
them susceptible of an enforcement application or contempt proceedings pursuant
to decisions to which they were not a party, such practices would render them
susceptible to further human rights complaints, in which, in the absence of any
further legislative reform, an order to cease and desist using such ratios
could well issue should the Board follow its own jurisprudence to date.
Certainly in the circumstances of this case such an order would be appropriate.
With respect to rental practices requiring tenants to satisfy minimum job tenure criteria, the Board notes that O. Reg. 290/98 addresses itself to landlords' use of "income information". It does not expressly purport to apply to "employment information". In the absence of such express language, the Board is not prepared to find that O.Reg. 290/98 has any application in permitting the collection of and reliance on information respecting the status and tenure of a potential tenant's employment. Nor does any provision in the Code purport to permit the collection of such information. Consequently, an appropriate order in respect of this practice would have been to order landlords to cease and desist from requiring potential tenants to meet minimum job tenure criteria."
To
download the full decision click here.