This case was heard in the Small Claims Court of Nova Scotia.
Puddingstone Incorporated ("Puddingstone") leased a basement apartment to the respondents, Ms. Chambers and Ms. Baxendale. The apartment was next to the building’s furnace room, and both tenants began to experience health problems after they moved in. While investigating the furnace room, they found what they believed to be evidence of spilled oil, and they notified Mr. Downward, a representative of Puddingstone. Puddingstone informed Superline Fuels, which sent a technician to assess the problem. Neither Puddingstone nor Superline informed the Department of Environment of the spill.
The tenants applied for an early termination of their lease, citing environmental hazards and an “unhealthy atmosphere” among their reasons. Puddingstone agreed verbally, and agreed in writing after the respondents made repeated requests for a written confirmation. After moving out, the respondents contacted Mr. Downward repeatedly about the return of their security deposit, and they also indicated that they desired a rent abatement due to the poor living conditions in the building. Shortly after Mr. Downward informed the respondents that he would contact the Halifax Regional Police if they continued to contact him so frequently, Ms. Chambers contacted the Department of Environment to report what she and Ms. Baxendale had seen in the furnace room. The Department initiated an investigation, and Puddingstone incurred expenses while complying with the Department's instructions.
Afterwards, Puddingstone brought a claim against Ms. Chambers and Ms. Baxendale under the Residential Tenancies Act, arguing that the respondents had contacted the Department of Environment maliciously and should be liable for the expenses that Puddingstone had incurred during the Department's investigation. Puddingstone also sought compensation for keys that the respondents had not returned.
The Residential Tenancies Officer who reviewed the file held that the respondents were not responsible for the expenses that Puddingstone had incurred during the Department's investigation, but they held that the respondents should pay $50 for the unreturned keys.
Puddingstone appealed to the Small Claims Court of Nova Scotia, which affirmed that the respondents were not liable for the expenses that the company had incurred during the Department's investigation. It held, however, that the terms of the lease stated clearly that tenants would be charged $75 for unreturned keys, and so it ordered that the respondents pay $75 rather than $50.