What was Tenancy Tribunal case 4575030 about?

The tribunal order states: An application for suppression has been made in this case, and the Tribunal

How much money was awarded in case 4575030?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 4575030?

The dispute type was not classified.

Where can I read the official tribunal order for case 4575030?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9207281-Tribunal_Order_Redacted.pdf.

What was Tenancy Tribunal case 4575030 about?

The tribunal order states: An application for suppression has been made in this case, and the Tribunal

How much money was awarded in case 4575030?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 4575030?

The dispute type was not classified.

Where can I read the official tribunal order for case 4575030?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9207281-Tribunal_Order_Redacted.pdf.

New Zealand Tenancy Tribunal Case 4575030 — Tenancy dispute

Order

An application for suppression has been made in this case, and the Tribunal orders suppression of both parties names and identifying details.
The application to reduce the fixed term tenancy is dismissed.

Reasons

This is protracted and difficult situation for all involved. The parties have been to the Tribunal previously on similar issues in April 2022 and the landlord applies now for a reduction in their fixed term tenancy. In fact, they are not seeking for the tenancy to end, just for it to be amended into a periodic tenancy so that they might market the home with a tenancy that can be ended by notice, not an elongated (fixed term) tenancy.
The tenancy is currently contracted to end on 30 December 2023, which means that it will roll over into a periodic tenancy then. That means that the landlords will be able to give notice to end the tenancy at a date after 30 December provided, they keep within their notice responsibilities outlined in the Residential Tenancies Act 1986 (RTA). Their evidence is that they are in a financially perilous situation which will be only exacerbated if the tenancy runs its contracted course as they are in desperate financial need to sell the property now. The owners, [The Landlord’s] attended the hearing with their property manager, [The Property Manager].
[The tenant/s], the tenant loves her home and wishes to stay. She also seeks closure on this matter which she says has been ongoing and stressful.
As discussed with the parties at the hearing, I consider their situation as I find it now, at the hearing date. I understand that the landlord’s initial application was filed back in December 2022 however that was not accepted by Tenancy Services, presumably due to it being incomplete. This application which I am deciding was only filed in May and it is on these circumstances I determine it now.

Should the fixed term be reduced?

Fixed term tenancies are legal contracts parties entered into to provide surety for both parties. Both parties rely, and are entitled to rely, on the terms as contracted for. Therefore, there are only two ways in which such a contract can be amended; either by agreement, or Tribunal order. As the parties cannot agree on the terms to amend the tenancy, they now ask the Tribunal to decide the matter.
In accordance with section 66 of the RTA the Tribunal may reduce a fixed term tenancy where: a. there has been an unforeseen change in the applicant’s circumstances; and b. there would be severe hardship to the applicant if the term is not reduced; and c. the applicant’s hardship would be greater than the hardship to the other party if the term is reduced.
All three of these requirements must be met before the Tribunal can consider reducing a fixed term tenancy.
The jurisdiction in s66 is an extension to the doctrine of frustration found in the general law of contract. In most cases, s66 is used to seek a balance between the competing interests of applicants for whom significant obligations under fixed term agreements can create severe hardship when circumstances unexpectedly turn against them, and respondents who have obligations and expectations of their own arising from the same bargain.
The term “unforeseen” is a legal term defined by reference to the reverse, “foreseeability”. Case law has established that: (a) foreseeability must be assessed objectively through the eyes of a reasonable person who has taken all reasonable steps to inform themself of the circumstances. (b) an outcome is foreseeable in legal terms if it is “liable to result”, “not unlikely”, “quite likely”, a “real danger”, a “serious possibility” or a “real risk”. (c) The term “unforeseen” has few if any direct dictionary definitions, but by thesaurus is aligned with such concepts as “unexpected” and “without warning”. In a legal context, it must also be taken as the reverse of what is “foreseen”, thus being “not liable to result”, “unlikely”, “not a real danger”, “not a serious possibility” or “not a real risk”.

Was there an unforeseen change in circumstances for the landlord?

[The landlord/s] initially instructed their property manager to file the application in December 2022 when they were advised of the significant interest rate increase they would face come March 2023 when their interest rate of 2.79% would increase to 6.5%. They also faced the additional wonderful, but financially difficult circumstance of an unexpected pregnancy which meant that in May 2023 [The landlord/s] would have to stop work.
They saved money and [The landlord/s] got a better job to prepare for the inevitable financial hardship however these changes have now happened, and they find themselves in extremely difficult circumstances. Their interest rate payments have increased by $1,200 per week and they are now on a reduced income. They have had to borrow $20,000 from a family member when their savings ended just to get by. [The landlord/s] would like to remain home with their young children however upon expiry of her paid parental leave in November says they may not be able to afford it if they cannot sell this house.
I accept that [The landlord/s] are in an extremely difficult financial situation which can only (realistically) be relieved by the sale of this house. I also am satisfied that their circumstances have changed in an unforeseeable way due to the substantial increase in the interest rates applied to their home loans and the birth of their son. Accordingly, I find the first limb of s66 made out. What will be the hardship the parties will suffer if the tenancy term is amended, or if it is not?
[The landlord/s] say they tried to market the property in 2021 but a sale was not achieved due to the length of the fixed term tenancy that would come with the home on any sale. Their evidence from the estate agent at the time confirmed that the prospective purchasers were only prepared to purchase if they received vacant possession. They do not want to risk marketing the property again and the costs they would incur in doing so, if they would obtain the same result.
Their submission is that given current interest rates, and the price of this home, it does not make financial sense for someone to rent it out; it is more suitable for an owner occupier scenario. The income generated by the rent is simply not sufficient to meet the currently high outgoings. This argument is of course tempered by the fact that every purchaser’s financial situation is different.
Section 60A(3)(a) of the RTA says that a party (either a landlord or tenant) can give notice “before the continuation” of a fixed term tenancy as if the tenancy were periodic, to terminate the tenancy “from a time after the continuation”.
The notice that either party may give can be of any type covered by section 50(1)(a) to (b), which includes (for the landlord) all of the termination powers in section 51(2) which states: 2) A landlord may terminate a periodic tenancy by giving at least 90 days’ notice if— (a) the premises are to be put on the market by the owner within 90 days after the termination date for the purposes of sale or other disposition; or (b) the owner is required, under an unconditional agreement for the sale of the premises, to give the purchaser vacant possession;
Therefore, in theory notice can be given to end the tenancy of at least 90 days provided that the termination date is after 30 December 2023. This would mean that the earliest the landlords can give notice to end the tenancy after 30 December would be at the end of September 2023.
Accordingly, pursuant to the RTA the landlords can give notice to end the tenancy in a little over two months. They are therefore effectively asking the Tribunal to give them an extra two months of the ability to give notice and are saying that if they do not have these two months then their hardship would be substantial.
It is accepted that the current sales market is difficult for vendors; it is not an easy financial market in which to sell houses. It is also the middle of winter, another aggravating factor in selling a house. However, this house is not even on the market yet and no specific evidence of the market in [Suburb] was provided. I therefore cannot see why an extra two months would make the difference the landlords say it would.
There is nothing to stop [The landlord/s] commencing their marketing process now with the advice to prospective purchasers that vacant possession could be achieved in early January. I do not accept that it has been established in evidence that even in the current slow market, being able to advertise vacant possession in November, is any more an inhibitor than January.
At this point it is important to reiterate that the onus of proof lies with the person bringing the claim. It is the civil standard of “balance of probabilities “or “more likely than not” but it still has to be met. The evidence relating to the market in 2021 I do not accept as relevant to these proceedings. Not only is it considerably outdated as the market is substantially different now than it was then, but the length of the fixed term tenancy is also now significantly shorter.
[The landlord/s]’s argument then is twofold: i. Firstly, they say marketing with [The tenant/s] in situ would be challenging. ii. Secondly, they say they cannot sustain this financial hardship another two months.
I do not accept the first argument. [The tenant/s] has advised me that she will present no difficulties to the landlords in showing people through, particularly at the weekends and evenings. She does not work primarily from home as she did the last time the house was marketed, so the situation is different. [The tenant/s] is aware of her legal obligations in providing access, and I am satisfied she would abide by them. Further, the landlords have advised that if the tenancy is amended to be a periodic one, they would not terminate the tenancy, just advertise as is.
I do accept that another two months of financial hardship will be challenging for this young family. I must weigh that against the hardship [The tenant/s] would face in potentially being given notice two months earlier than she would otherwise have potentially been given. She has rigorously defended her right to this tenancy as it was contracted for, as is her right. This has been her home for almost three years, and she enjoys it to the extent that she is wishing to purchase the home herself should she become financially able.
[The tenant/s] is however well embedded in a protracted legal battle over her father’s estate that has been ongoing for a number of years and is on the brink of court action. Should that settle, she may be able to purchase the home but until it does, she is not in a financial position to do so. She has also recently lost her mother whose estate she will shortly need to administer, and she has a demanding job. She has provided medical evidence of the emotional stress she is currently dealing with, and she says the added impact of having to find a new home on top of everything else would be considerable.
Having weighed up the severe hardship that I find both parties would suffer in the respective potential situations here, I find that the greater would be [The tenant/s]’s given that we are only discussing the difference of two months. Fixed term tenancies are not interfered with lightly by the Tribunal because of the sanctity of contract principal that must be applied.
I also, and importantly, do not find it proven in evidence that marketing the home now with the advice that vacant possession in January would be possible, is materially different to marketing it with vacant possession being available after November. There has been no concrete evidence provided that this would create any real deterrence in an already difficulty market. I think [The landlord/s] are sadly going to face difficulty selling either way. If anything, marketing in spring may be more advantageous to them. The time period they now face for their sale process is finite and not unduly elongated any longer.
I further echo the same comment as the previous adjudicator made that at this stage the landlords could take steps now to alleviate their hardship without interfering with [The tenant/s]’s contracted rights. As stated above, there is nothing stopping them putting the home on the market for sale now.
Accordingly, and not without the greatest sympathy to both parties, this application is dismissed.
I do note that my findings may have been different had the initial application filed in December been filed accurately enabling it to be progressed to hearing at that time. However, I must take the parties circumstances as I find them now, which in reality, is very close to the end of their fixed term anyway. The tenant’s claims
[The tenant/s] seeks two directions by the Tribunal, as follows: i. To maintain the fixed term status of her tenancy. ii. To have an option to purchase the home when her father’s estate settles.
[The tenant/s] clarified at the hearing that she does not seek any monetary award for what has been occurring, she simply wants the challenges to her tenancy to end. She has achieved this by virtue of the landlord’s claim failing. The tenancy will continue for its contracted term.
The landlords were entitled to make the two claims for relief to the Tribunal that they have. They are in difficult circumstances, and it was their right to attempt to mitigate them. I am satisfied that they respected and followed the available processes, and in doing so did not unduly harass [The tenant/s], although I accept that the two sets of proceedings have been stressful for her.
What is to happen with the sale process remains uncertain and not something the Tribunal has jurisdiction to make any directions over other than the ones made here. The Tribunal cannot compel [The landlord/s] to sell to [The tenant/s] however I note their willingness to enter into negotiations with her as soon as she is in a financial position to make an offer. Filing fee
As both parties have been partially successful in their applications it is not appropriate to award reimbursement of the filing fee to either party and those costs should lie where they fall. Suppression
Section 95A of the RTA requires the Tribunal to supress a party’s name or identifying details if that party was “wholly or substantially” successful and allows discretion if in the public interest.
This matter involves personal and financially sensitive information. The landlords were entitled to make this application and as I said above, had it been heard earlier the result may well have been different. Accordingly, I do not find it in the public interest to publish their names and direct that all identifying details are redacted.

Reasons

This is protracted and difficult situation for all involved. The parties have been to the Tribunal previously on similar issues in April 2022 and the landlord applies now for a reduction in their fixed term tenancy. In fact, they are not seeking for the tenancy to end, just for it to be amended into a periodic tenancy so that they might market the home with a tenancy that can be ended by notice, not an elongated (fixed term) tenancy.

The tenancy is currently contracted to end on 30 December 2023, which means that it will roll over into a periodic tenancy then. That means that the landlords will be able to give notice to end the tenancy at a date after 30 December provided, they keep within their notice responsibilities outlined in the Residential Tenancies Act 1986 (RTA). Their evidence is that they are in a financially perilous situation which will be only exacerbated if the tenancy runs its contracted course as they are in desperate financial need to sell the property now. The owners, [The Landlord’s] attended the hearing with their property manager, [The Property Manager].

[The tenant/s], the tenant loves her home and wishes to stay. She also seeks closure on this matter which she says has been ongoing and stressful.

As discussed with the parties at the hearing, I consider their situation as I find it now, at the hearing date. I understand that the landlord’s initial application was filed back in December 2022 however that was not accepted by Tenancy Services, presumably due to it being incomplete. This application which I am deciding was only filed in May and it is on these circumstances I determine it now.

Should the fixed term be reduced?

Fixed term tenancies are legal contracts parties entered into to provide surety for both parties. Both parties rely, and are entitled to rely, on the terms as contracted for. Therefore, there are only two ways in which such a contract can be amended; either by agreement, or Tribunal order. As the parties cannot agree on the terms to amend the tenancy, they now ask the Tribunal to decide the matter.

In accordance with section 66 of the RTA the Tribunal may reduce a fixed term tenancy where: a. there has been an unforeseen change in the applicant’s circumstances; and b. there would be severe hardship to the applicant if the term is not reduced; and c. the applicant’s hardship would be greater than the hardship to the other party if the term is reduced.

All three of these requirements must be met before the Tribunal can consider reducing a fixed term tenancy.

The jurisdiction in s66 is an extension to the doctrine of frustration found in the general law of contract. In most cases, s66 is used to seek a balance between the competing interests of applicants for whom significant obligations under fixed term agreements can create severe hardship when circumstances unexpectedly turn against them, and respondents who have obligations and expectations of their own arising from the same bargain.

The term “unforeseen” is a legal term defined by reference to the reverse, “foreseeability”. Case law has established that: (a) foreseeability must be assessed objectively through the eyes of a reasonable person who has taken all reasonable steps to inform themself of the circumstances. (b) an outcome is foreseeable in legal terms if it is “liable to result”, “not unlikely”, “quite likely”, a “real danger”, a “serious possibility” or a “real risk”. (c) The term “unforeseen” has few if any direct dictionary definitions, but by thesaurus is aligned with such concepts as “unexpected” and “without warning”. In a legal context, it must also be taken as the reverse of what is “foreseen”, thus being “not liable to result”, “unlikely”, “not a real danger”, “not a serious possibility” or “not a real risk”.

Was there an unforeseen change in circumstances for the landlord?

[The landlord/s] initially instructed their property manager to file the application in December 2022 when they were advised of the significant interest rate increase they would face come March 2023 when their interest rate of 2.79% would increase to 6.5%. They also faced the additional wonderful, but financially difficult circumstance of an unexpected pregnancy which meant that in May 2023 [The landlord/s] would have to stop work.

They saved money and [The landlord/s] got a better job to prepare for the inevitable financial hardship however these changes have now happened, and they find themselves in extremely difficult circumstances. Their interest rate payments have increased by $1,200 per week and they are now on a reduced income. They have had to borrow $20,000 from a family member when their savings ended just to get by. [The landlord/s] would like to remain home with their young children however upon expiry of her paid parental leave in November says they may not be able to afford it if they cannot sell this house.

I accept that [The landlord/s] are in an extremely difficult financial situation which can only (realistically) be relieved by the sale of this house. I also am satisfied that their circumstances have changed in an unforeseeable way due to the substantial increase in the interest rates applied to their home loans and the birth of their son. Accordingly, I find the first limb of s66 made out. What will be the hardship the parties will suffer if the tenancy term is amended, or if it is not?

[The landlord/s] say they tried to market the property in 2021 but a sale was not achieved due to the length of the fixed term tenancy that would come with the home on any sale. Their evidence from the estate agent at the time confirmed that the prospective purchasers were only prepared to purchase if they received vacant possession. They do not want to risk marketing the property again and the costs they would incur in doing so, if they would obtain the same result.

Their submission is that given current interest rates, and the price of this home, it does not make financial sense for someone to rent it out; it is more suitable for an owner occupier scenario. The income generated by the rent is simply not sufficient to meet the currently high outgoings. This argument is of course tempered by the fact that every purchaser’s financial situation is different.

Section 60A(3)(a) of the RTA says that a party (either a landlord or tenant) can give notice “before the continuation” of a fixed term tenancy as if the tenancy were periodic, to terminate the tenancy “from a time after the continuation”.

The notice that either party may give can be of any type covered by section 50(1)(a) to (b), which includes (for the landlord) all of the termination powers in section 51(2) which states: 2) A landlord may terminate a periodic tenancy by giving at least 90 days’ notice if— (a) the premises are to be put on the market by the owner within 90 days after the termination date for the purposes of sale or other disposition; or (b) the owner is required, under an unconditional agreement for the sale of the premises, to give the purchaser vacant possession;

Therefore, in theory notice can be given to end the tenancy of at least 90 days provided that the termination date is after 30 December 2023. This would mean that the earliest the landlords can give notice to end the tenancy after 30 December would be at the end of September 2023.

Accordingly, pursuant to the RTA the landlords can give notice to end the tenancy in a little over two months. They are therefore effectively asking the Tribunal to give them an extra two months of the ability to give notice and are saying that if they do not have these two months then their hardship would be substantial.

It is accepted that the current sales market is difficult for vendors; it is not an easy financial market in which to sell houses. It is also the middle of winter, another aggravating factor in selling a house. However, this house is not even on the market yet and no specific evidence of the market in [Suburb] was provided. I therefore cannot see why an extra two months would make the difference the landlords say it would.

There is nothing to stop [The landlord/s] commencing their marketing process now with the advice to prospective purchasers that vacant possession could be achieved in early January. I do not accept that it has been established in evidence that even in the current slow market, being able to advertise vacant possession in November, is any more an inhibitor than January.

At this point it is important to reiterate that the onus of proof lies with the person bringing the claim. It is the civil standard of “balance of probabilities “or “more likely than not” but it still has to be met. The evidence relating to the market in 2021 I do not accept as relevant to these proceedings. Not only is it considerably outdated as the market is substantially different now than it was then, but the length of the fixed term tenancy is also now significantly shorter.

[The landlord/s]’s argument then is twofold: i. Firstly, they say marketing with [The tenant/s] in situ would be challenging. ii. Secondly, they say they cannot sustain this financial hardship another two months.

I do not accept the first argument. [The tenant/s] has advised me that she will present no difficulties to the landlords in showing people through, particularly at the weekends and evenings. She does not work primarily from home as she did the last time the house was marketed, so the situation is different. [The tenant/s] is aware of her legal obligations in providing access, and I am satisfied she would abide by them. Further, the landlords have advised that if the tenancy is amended to be a periodic one, they would not terminate the tenancy, just advertise as is.

I do accept that another two months of financial hardship will be challenging for this young family. I must weigh that against the hardship [The tenant/s] would face in potentially being given notice two months earlier than she would otherwise have potentially been given. She has rigorously defended her right to this tenancy as it was contracted for, as is her right. This has been her home for almost three years, and she enjoys it to the extent that she is wishing to purchase the home herself should she become financially able.

[The tenant/s] is however well embedded in a protracted legal battle over her father’s estate that has been ongoing for a number of years and is on the brink of court action. Should that settle, she may be able to purchase the home but until it does, she is not in a financial position to do so. She has also recently lost her mother whose estate she will shortly need to administer, and she has a demanding job. She has provided medical evidence of the emotional stress she is currently dealing with, and she says the added impact of having to find a new home on top of everything else would be considerable.

Having weighed up the severe hardship that I find both parties would suffer in the respective potential situations here, I find that the greater would be [The tenant/s]’s given that we are only discussing the difference of two months. Fixed term tenancies are not interfered with lightly by the Tribunal because of the sanctity of contract principal that must be applied.

I also, and importantly, do not find it proven in evidence that marketing the home now with the advice that vacant possession in January would be possible, is materially different to marketing it with vacant possession being available after November. There has been no concrete evidence provided that this would create any real deterrence in an already difficulty market. I think [The landlord/s] are sadly going to face difficulty selling either way. If anything, marketing in spring may be more advantageous to them. The time period they now face for their sale process is finite and not unduly elongated any longer.

I further echo the same comment as the previous adjudicator made that at this stage the landlords could take steps now to alleviate their hardship without interfering with [The tenant/s]’s contracted rights. As stated above, there is nothing stopping them putting the home on the market for sale now.

Accordingly, and not without the greatest sympathy to both parties, this application is dismissed.

I do note that my findings may have been different had the initial application filed in December been filed accurately enabling it to be progressed to hearing at that time. However, I must take the parties circumstances as I find them now, which in reality, is very close to the end of their fixed term anyway. The tenant’s claims

[The tenant/s] seeks two directions by the Tribunal, as follows: i. To maintain the fixed term status of her tenancy. ii. To have an option to purchase the home when her father’s estate settles.

[The tenant/s] clarified at the hearing that she does not seek any monetary award for what has been occurring, she simply wants the challenges to her tenancy to end. She has achieved this by virtue of the landlord’s claim failing. The tenancy will continue for its contracted term.

The landlords were entitled to make the two claims for relief to the Tribunal that they have. They are in difficult circumstances, and it was their right to attempt to mitigate them. I am satisfied that they respected and followed the available processes, and in doing so did not unduly harass [The tenant/s], although I accept that the two sets of proceedings have been stressful for her.

What is to happen with the sale process remains uncertain and not something the Tribunal has jurisdiction to make any directions over other than the ones made here. The Tribunal cannot compel [The landlord/s] to sell to [The tenant/s] however I note their willingness to enter into negotiations with her as soon as she is in a financial position to make an offer. Filing fee

As both parties have been partially successful in their applications it is not appropriate to award reimbursement of the filing fee to either party and those costs should lie where they fall. Suppression

Section 95A of the RTA requires the Tribunal to supress a party’s name or identifying details if that party was “wholly or substantially” successful and allows discretion if in the public interest.

This matter involves personal and financially sensitive information. The landlords were entitled to make this application and as I said above, had it been heard earlier the result may well have been different. Accordingly, I do not find it in the public interest to publish their names and direct that all identifying details are redacted.

Tenancy Tribunal case 4575030 — Tenancy dispute

At a glance

Claims & awards

Tenancy Tribunal case 4575030 — Tenancy dispute

At a glance

Claims & awards

Order

Reasons

Should the fixed term be reduced?

Was there an unforeseen change in circumstances for the landlord?

Topics & place

Residential Tenancies Act sections

Frequently asked questions

Order

Reasons

Should the fixed term be reduced?

Was there an unforeseen change in circumstances for the landlord?

Topics & place

Residential Tenancies Act sections

Frequently asked questions