Published tribunal order
Tenancy Tribunal case 4731409 — Tenancy dispute
Decided 20 Dec 2023 · Published 20 Dec 2023 · Application 4731409
- Rent arrears
Party names are redacted in the official published order.
Order
- The tenancy of Onyedika Kingsley Anumba at [Tenancy address suppressed] is terminated, and possession is granted to [The landlord/s], immediately.
- The landlord’s application for rent arrears is dismissed.
- The Bond Centre is to pay the bond of $20.44 ([Bond number suppressed]) to [The landlord/s] immediately calculated as shown in the table below. The remainder of the bond is to remain on hold at the Bond Centre pending further order or agreement between the parties:
Reasons
- Only the landlord attended the hearing. I am satisfied the tenant has been served and so the hearing proceeded in the tenant’s absence.
- The landlord has applied for termination of the tenancy for abandonment, rent arrears and refund of the bond.
Who is the correct legal party to bring this application?
- The Tribunal has jurisdiction to hear claims between tenants and landlords. A property manager can only be an applicant (or respondent) therefore if they have status as a landlord.
- This application is made only in the name of [The property manager/s]. [The property manager/s] says she is the property manager for [The owners]. She is a sole trader. She regards herself as the landlord.
- The definition of landlord in the RTA includes an agent “where appropriate” (section 2(1), Residential Tenancies Act 1986). The RTA recognises that the owner of the property will not necessarily be the landlord. For example, s 5(1)(n) refers to both 'landlord' and 'owner'.
- Under common law principles in the absence of other indications, when an agent makes a contract, purporting to act solely on behalf of a disclosed principal, whether identified or unidentified, the agent is not liable to the third party on it. Nor can the agent sue the third party on it (Montgomerie v United Kingdom Steamship Association [1891] 1 QB 370; W C Fowler & Sons Ltd v St Stephens College Board of Governors [1991] 3 NZLR 304 (HC)).
- The mere involvement of an agent does not mean the tenant can bring a claim against an agent (or, on the other hand, that an agent can bring a claim against a tenant) (Edinburgh Realty v Gray DC Dunedin TT 1080/97).
- The contract (the tenancy agreement) is a fundamental factor in determining whether an agent is an intermediary or a party to a contract. The question whether an agent has standing to be sued or be sued is one of construction dependent on the intention of the parties determined objectively from the words of the contract, taking into account the background facts.
- The District Court and other leading authorities have taken the definition of landlord in the RTA to include an agent “where appropriate” to mean “where appropriate in accordance with the principles of the law of agency” (Mumby v Gary Brown Realty Ltd [2011] DCR 420). However, the Tribunal has frequently applied the definition of landlord in s 2(1) RTA broadly to include a property manager acting as an 'agent'.
- By way of illustration, in Hayward v Lambton Property Management Limited [2012] NZTT, Lower Hutt, 11/01694/LH the Tribunal held that the common law rules of agency are affected by the extended definition of landlord, and that the words "where appropriate" in s 2(1) do not limit the extended definition. It said there were sound policy reasons why the definition of landlord should be extended to include the agent: many owners use professional property managers; some owners are absentee or live oversees; many tenants, owners and agents do not understand the implications of the common law rules; and a tenant could be left in a difficult situation if forced to pursue an owner whom they did not know and had no dealings with (particularly if the owner is overseas).
- There are several District Court cases which discuss agency principles. In Harcourts Accommodation Centre Ltd v Barker (DC, Christchurch, M56/93, 16 March 1993) an agent brought a claim against the tenant in its own name, which was then appealed by the owner. The Court declined to hear the appeal because the original claim was wrongly brought by the agent. The Court held the primary meaning of "landlord" was appropriate to the commencement of the claim, and it was not appropriate to use the inclusive definition of "agent of the landlord". However, it seems that in this case the agent was not in fact a party to the original contract at all so it appears that this decision is not directly relevant to the issue of whether an agent who signs (and/or is named on) a tenancy agreement can sue or be sued on it.
- The most comprehensive discussion of agency principles is in Mumby v Gary Brown Realty Ltd [2011] DCR 420. There the agent took over the tenancy from a previous agent. A new tenancy agreement was prepared, which named the agent as landlord and required the tenant to pay rent to the agent. The agreement was signed by the tenant, but not the agent or owners. The tenant brought a claim against both the owner and the agent. The Tribunal held that, because the tenant knew that the agent was acting for the owners, liability rested solely with the owners. The tenant appealed on the grounds that the tenancy agreement was with the agent and, because they were overseas, the order against the owners was unenforceable.
- The District Court referred to the commentary on agency in The Laws of New Zealand and stated: [30] The findings by the tenancy adjudicator in respect of liability appear to be premised, on his view, as expressed in his "Background" - that if a tenant is aware that the agent is acting for landlords then liability rests with the landlords and no liability attaches to the agent. [31] This is in fact not the legal position in respect to agents, and the law is no different for agents acting under the Residential Tenancies Act than agents acting in any other capacity. [52] The tenant is entitled to sue the person who made the contract and the agent cannot escape by saying that, in fact, he was really acting on behalf of someone else. The only avoidance of liability would be to show on the contract (and in the supporting documentation) that he is only an intermediary, for example by signing "as agent for" or "on behalf of". [53] Regardless of the fact that the tenant was aware that Gary Brown Realty Limited was an agent, the agent is still liable in respect to the tenancy.
- The Judge considered several factors in deciding the agent was liable: the tenancy agreement named the agent as landlord, a bond lodgement letter from the Bond Centre referred to the agent as landlord, the agent was involved in inspections, the agent dealt with the tenant's inquiries and complaints, and the agent issued a termination notice. The Judge considered the surrounding circumstances as well as the tenancy agreement itself.
- Many tenancies are managed by agents who are professional property managers. In almost every case the tenancy agreement will prominently name the agent, the bond will be paid to and lodged by the agent, the agent will conduct inspections and deal with any complaints or queries by the tenant, and any notices required under the RTA will be served by the agent. Usually, the tenant will know the agent is acting for an owner, and may know the name of the owner, but to all intents and purposes will understand the agent to be their landlord. These are some of the background factors the District Court considered in Mumby when deciding the agent was a landlord.
- Where an agent gives the third party (here the tenant) the understanding that the agent acts for another, as by reference to a generic reference (such as “the owner”) there can be situation where the third party can be regarded as being willing to deal with the principal, whoever that person is. Often this is accepted in commercial transaction but this can sometimes be an improbable construction to put on the situation. The facts can give rise, or assist in giving rise, to the inference that the third party will deal only with the agent.
- Whether the agent is a 'landlord' or mere intermediary should depend on the substance of the relationship as well as considering the words used in the agreement. The tenancy agreements used by professional property managers vary widely in the way they describe themselves, the owners, and their interrelationship. Sometimes the wording is more likely to obscure than illuminate intent, both for property managers and tenants.
- An approach based on the substance alongside form is consistent with the Tribunal's jurisdiction under 85(2) RTA: The Tribunal shall determine each dispute according to the general principles of the law relating to the matter and the substantial merits and justice of the case, but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities Application of the law to the facts
- Applying these principles to the facts of the case I am satisfied that it is appropriate for [The property manager/s] to be regarded as the landlord for the purposes of this application.
- This is because the tenancy agreement simply records that [The property manager/s] is the landlord for [The owners]. It says: ‘Landlord details... [The property manager/s] for [The owners]’. The only wording to indicate that [The property manager/s] is acting on behalf of someone else is the use of the wording ‘for’.
- [The property manager/s] deals with all aspects of the tenancy – inspections, serving notices and so on. She says that the only aspect of property management she does not do is collect rent – that is paid directly to [The owners]. She says the tenant would not know how to contact [The owners] and all contact is via her. The bond lodgement form records the same information. [The property manager/s] says that the tenant would regard her as her landlord. She regards herself as the landlord.
- The drafting of the tenancy agreement and the surrounding circumstances are all factors which point to a full assumption of responsibility as landlord by [The property manager/s]. There is a clear inference from all of the facts that the tenant was expected to deal only with [The property manager/s] – in fact on the evidence presented, the tenant has no way to contact the owner.
- [The property manager/s] became more than an intermediary by not identifying herself as such clearly in the tenancy agreement and by the activities that she then undertook.
- I have proceeded to consider the substance of the application below.
Should the tenancy be terminated?
- The Tribunal may terminate the tenancy where the premises have been abandoned and rent is in arrear at the hearing date. See section 61 Residential Tenancies Act 1986 (RTA).
- The term “abandoned” is not defined in the RTA. In the context of s 61 it seems to connote, first, the broad meaning of going away without intending to return and, secondly, an element of irresponsibility such as non-payment of rent or failure to give notice of termination.
- The tenancy agreement records that the tenancy began on 1 February 2023 and that the weekly rent payable is $690.00. It is a fixed term tenancy ending on 31 January 2024.
- The landlord says that she has been told by the police on 5 October 2023 that the tenant had been arrested. The landlord says the tenant remains in custody pending a hearing on 14 December 2023. The tenant has stopped paying rent.
- The landlord has not been to the property but has been contacted by someone who says that they have spoken to the tenant and that they are willing to collect his items. The landlord says that they discussed that this could be done after the Tribunal heard this application.
- In the week prior to the hearing the person contacting the landlord also told the landlord that the tenant remained in prison.
- I am satisfied the property has been abandoned. The tenant has left the property and has not communicated to the landlord an intention to return. He has ceased paying rent.
- Because the premises have been abandoned, and rent is in arrear, the tenancy is terminated immediately.
How much does the tenant owe?
- The landlord seeks rent arrears to the date of today’s hearing on 12 December 2023. The landlord provided limited rent records. These records were lacked detail and did not appear to start from the beginning of the tenancy.
- I am satisfied that there are arrears to enable me to find that the tenancy has been abandoned because there are significant sums that have accrued recently but I cannot be satisfied as to the precise amount of arrears on the basis of the rent summary before me.
- The summary does not, for example, appear to take into account an initial sum of $690 (which the tenancy agreement indicates would have been paid with the bond) and there appears to be no explanation as to why the rent summary starts from 7 February 2023 or what that date relates to (e.g. does it relate to the start of a rental period or a date the tenant made a payment). It would appear that if the tenancy began on 1 February 2023 the next weekly rent due would be from 8 February 2023.
- I therefore decline to make an order for arrears today. The rent summary was not definitive enough.
- If the landlord wants to persue its application for arrears it may make a new application. Filing fee and suppression
- Because the landlord has been substantially successful, I reimburse the filing fee.
- The remainder of the bond is to remain at the Bond Centre pending a further application and order or agreement between the parties.
- The landlord sought name suppression and I have awarded this as they have been substantially successful (s95A, RTA)