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When staff at the Red Door Housing Society decided to do extra scrutiny on one of the tenants in its low-cost subsidized units, they discovered that her 21-year-old live-in daughter had recently deposited more than $30,000 into the bank.

They determined, after checking the daughter's bank accounts, that the family's household income was too high to qualify any more for the subsidized rate of $650 a month for a three-bedroom unit in the society's Quayside project on the waterfront in north False Creek.

But the tenant, Lisa Hu, refused to pay the higher rent of $1,990 and fought the housing society when she got an eviction notice last November, first at the Residential Tenancy Branch and then in the B.C. Supreme Court.

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Now, Justice Heather Holmes has ruled that Red Door was within its rights.

The decision has people at Red Door, which manages 564 units in 12 projects around the Lower Mainland, relieved.

But renter advocates say the case unfortunately reinforces a system in which renters have no avenue of appeal when social-housing agencies decide that they do not qualify for a subsidy any more.

Red Door executive director Susan Snell said the case cost the agency $30,000 in legal fees – "money we don't have" – but that everyone there felt that it was important to be aggressive about abuses.

"Somebody out there that really needs [that unit] can't have it when things like this happen and there is such a need now," Ms. Snell said.

"If we cave, it gets around and people are going to think it's okay to cheat a non-profit."

According to the judge's ruling, the society, in the yearly audit that all non-profits do of income and assets for subsidized tenants, decided that it needed more proof of the family's income and assets.

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Ms. Hu was claiming that she got only about $1,000 a month from social assistance for herself and her seven-year-old son and that her 21-year-old daughter, Wendy, had no income.

After getting Wendy Hu's bank statements, the society found that she had $33,000 in deposits in a five-month period that had not been declared.

The mother and daughter insisted that $20,000 were loans from Wendy's boyfriend, Michael Li, to pay off credit card debt.

But the society, like other non-profits, counts loans from friends and family – though not bank or student loans – as income. The new level of household income put the Hus over the line and the society said they had to pay what is called market rent for the unit.

When Ms. Hu continued to pay only $650, the society issued a 10-day eviction notice last November. The two parties have been battling legally ever since.

Ms. Snell said Ms. Hu and her family are still in the apartment and the society will now need to proceed with eviction.

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The women's lawyer, Rebecca Robb, declined to comment.

It's unusual for a tenant to fight back so hard, Ms. Snell said. "Usually they just leave when we start asking questions."

Other non-profit managers said they routinely have to deal with problems of people trying to hide income in order to get a subsidized rate.

In some cases, they know that tenants are getting little bits of help from friends and family, but it's no big deal if they are really poor.

"How could they survive otherwise?" said Kim Stacey, the executive director of the McLaren Housing Society, which provides housing for people with HIV or AIDS.

Andrea Zimmering, whose Terra Property Management oversees 30 housing projects, said the vast majority of people are honest, but there is a steady stream of people who try to game the system.

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They will produce the paycheques from one place of employment, but not the second, refuse to provide their tax documents, saying they haven't filed them, hide cash payments and more.

But Joshua Prowse, a lawyer with the Community Legal Assistance Society, said the problem with the ruling is that it supports a system where non-profits get to unilaterally decide that someone can't get a subsidy any more and raise the rent by hundreds of dollars between one month and the next.

Justice Holmes said it was not the court's place to rule on whether the non-profit had calculated the subsidy properly, only whether it had followed proper eviction procedures. The Residential Tenancy Branch had also ruled that it had no jurisdiction over subsidy calculations, only evictions.

Mr. Prowse said that, however bad Ms. Hu's case looks, tenants should have a place where they can appeal subsidy decisions. "The real issue is the lack of an effective method of reviewing decisions."

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