What was Tenancy Tribunal case 4765238 about?

The tribunal order states: The term of the fixed-term tenancy of [The tenant/s] at [Tenancy address

How much money was awarded in case 4765238?

Compensation: $3,120.00 awarded to landlord

What type of tenancy dispute was case 4765238?

The dispute type was not classified.

Where can I read the official tribunal order for case 4765238?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9890767-Tribunal_Order_Redacted.pdf.

What was Tenancy Tribunal case 4765238 about?

The tribunal order states: The term of the fixed-term tenancy of [The tenant/s] at [Tenancy address

How much money was awarded in case 4765238?

Compensation: $3,120.00 awarded to landlord

What type of tenancy dispute was case 4765238?

The dispute type was not classified.

Where can I read the official tribunal order for case 4765238?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9890767-Tribunal_Order_Redacted.pdf.

New Zealand Tenancy Tribunal Case 4765238 — Tenancy dispute

Claims and awards in Tenancy Tribunal application 4765238 — net $3,120.00 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Landlord	Reason
Compensation	$3,120.00	Compensation
Net award	$3,120.00
Total payable by Tenant to Landlord	$3,120.00

Order

The term of the fixed-term tenancy of [The tenant/s] at [Tenancy address suppressed] is reduced and now ends immediately.
[The tenant/s] must pay [The landlord/s] $3,120.00 immediately.

Reasons

Both parties attended this remote video hearing on 26 January 2024.
The tenanted premises are at [Tenancy address suppressed] (“the premises”).
The tenancy commenced on 26 June 2023 and was a fixed term tenancy through until 21 June 2024. The tenancy agreement was signed by the parties on 19 June 2023.
The premises consist of a cottage, with an attached garage and coffee cart. The coffee cart rests on a tandem trailer.
The tenant operated a café from the premises. The café business was started in September 2023.
The tenancy agreement provides for the provision of a range of chattels by the landlord. Those chattels included the standard chattels provided in a partially furnished tenancy, as well as a list of chattels required to operate a coffee cart.
Clause 10 of the tenancy agreement provides that the tenant agrees to principally use the premises for residential purposes. The section of the tenancy agreement which shows the landlord insurance cover for the premises, refers in part to insurance on the coffee cart business.
It is clear that the premises were used partially for residential purposes and partially for commercial purposes.
Section 5(1)(a) of the Residential Tenancies Act 1986 (“RTA”) provides that the Act does not apply where the premises are commercial premises. Section 2(1) RTA rather unhelpfully defines commercial premises as premises that are not residential.
Section 2(3) RTA provides that, where leased premises are used for both residential and commercial purposes, they are deemed to be residential, unless it is proved that they were let “principally for purposes other than residential purposes”.
When determining whether the Act is excluded, the Tribunal considers the substance of the agreement between the parties rather than the labels they have applied.
In determining whether the premises are primarily residential or commercial, relevant factors include: the nature of the premises; any advertising and pre-contractual statements about the intended use of the premises; the terms of the agreement; and whether any chattels provided are more likely for commercial or residential use.
The tenant explained that the cottage which was used for residential purposes was approximately 70-80m2. There was a single garage used for food preparation and storage and a coffee cart. The tenant said that she allocated the weekly rent of $780.00 for her financial records, equally between the residential and commercial . It may be that this was done purely for her financial records rather than it having any basis in the actual division.
The landlord said that $650.00 per week was charged for the residential side and $130.00 per week for the coffee cart and associated chattels. This was not made clear in the tenancy agreement, nor was any other documentary evidence provided.
The Tribunal must decide if the premises were let “principally for purposes other than residential purposes.” The term “principally” in s 2(3) RTA must mean an amount more than half. Even If I were to rely solely on the tenant evidence, the tenant says that the rent was allocated equally. The landlord evidence is that the majority of the rental should be allocated to the residential aspect of the tenancy.
In light of all the evidence, I do not consider that the premises were let for a purpose which was principally commercial and I find that the Tribunal does have jurisdiction to consider this application. Reduction of a fixed term.
The usual legal position with a fixed-term contract is that the term of the contract will be applied strictly, and it is only in limited circumstances that a court or tribunal will interfere with it. For residential tenancies, one of those circumstances is found in s 66 RTA, which allows for the reduction of fixed term tenancy agreements.
There is a high threshold to be met before the Tribunal will reduce the term. In particular the applicant will need to establish that: a) there has been a change in their circumstances. b) the change was unforeseen. c) the unforeseen change will result in severe hardship to the applicant if the tenancy is not reduced. d) the severe hardship the applicant will suffer if the term is not reduced exceeds the hardship the other party will suffer if the term is reduced.
Section 66(2) RTA provides that, if the Tribunal reduces the term of the tenancy, it may order the applicant to pay reasonable compensation to the other party for any loss or damage which results from the reduction of the term.
The weighing of relative hardship is a question of fact to be assessed objectively in each case. Tenant Evidence
The tenant said that she took on the premises with the intention to operate a café from the site. She moved in during June 2023 and started operating the café in September 2023. In the period for October and November 2023 she found that the café was only just breaking even financially.
Early in December 2023, it became apparent to the tenant that the business was not viable. The local kindergarten where her child attended, was to close down for three weeks resulting in the tenant having to pay for child care . There was low traffic numbers for the cafe in the vicinity. After a very short period, the tenant made the decision to close the business on 12 December 2023.
The tenant says that she gave the landlord notice of her intention to close the café and asked for the fixed term tenancy to be reduced so as to end the tenancy on 20 January 2024.
The tenant says that she has sold assets to pay off some of her bills and that she has outstanding PAYE and GST still to pay. She has previously been adjudged bankrupt and wants to avoid that happening again. Landlord Evidence
The landlord says that they had been looking to lease the residential premises and that the commercial café side was an addition to that intention.
The landlord says that they have mortgages to pay as well as rates and insurance on the premises. They say that the premises are negatively geared and that the costs associated with the premises exceed the income received.
The landlord commenced trying to relet the premises once they received the tenants notice in December 2023. No replacement tenant has been found yet. They said that it was a tight rental market in the area, but they were confident of obtaining a new tenant within four to six weeks of the hearing. They said that even if a tenant were found immediately, it was likely that the replacement tenant would need to give their landlord the appropriate notice.
Was there an unforeseen change in the tenant’s circumstances? Unforeseen means unexpected, without warning, unlikely, not a serious possibility, not a serious risk. Is the failure of a business unforeseen? If the tenant had considered the failure of the business to be likely, a serious possibility or a serious risk, would she have entered into the business in the first place? In the circumstances of this case, I accept that the failure of the business was unforeseen to the tenant.
Having decided that there was an unforeseen change in the tenants circumstances, I must now consider the relative hardship between the parties. Is the severe hardship which the tenant will suffer if I do not end the fixed term, more than the hardship which the landlord will suffer if I do end the tenancy?
The tenant’s hardship must be severe, that is more than ordinary hardship. The tenant is currently unemployed and has previously been adjudicated bankrupt. She says that it is likely that she will suffer that outcome again if forced to continue with the fixed term tenancy. A second bankruptcy adjudication would certainly have severe consequences for the tenant.
The landlord must show that the hardship that they will suffer if I do terminate the fixed term tenancy is greater than the extreme hardship that the tenant will suffer. I accept that there will be financial consequences to the landlord, but I do not consider that they will be greater than the severe hardship suffered by the tenant.
Accordingly, I order that the fixed term tenancy be ended immediately.
Having made the order terminating the tenancy, I must consider whether a payment by the tenant of reasonable compensation for losses that the landlord will suffer as a result of the early termination, is appropriate.
At the commencement of the tenancy, it would have been a reasonable expectation on the landlord’s part that the tenancy would last to at least 21 June 2024.The landlord has ongoing financial obligations for the premises. It is reasonable in my view that the tenant pay reasonable compensation, which I find to be the equivalent of four weeks rent ($3,120.00).
Both parties have applied for name suppression. The Tribunal must order name suppression where the parties have been wholly or substantially successful. In this matter, somewhat unusually, I consider that both parties have been substantially successful. Suppression of both parties names and details is ordered.

Claims and awards in Tenancy Tribunal application 4765238 — net $3,120.00 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Landlord	Reason
Compensation	$3,120.00	Compensation
Net award	$3,120.00
Total payable by Tenant to Landlord	$3,120.00

Order

The term of the fixed-term tenancy of [The tenant/s] at [Tenancy address suppressed] is reduced and now ends immediately.
[The tenant/s] must pay [The landlord/s] $3,120.00 immediately.

Reasons

Both parties attended this remote video hearing on 26 January 2024.
The tenanted premises are at [Tenancy address suppressed] (“the premises”).
The tenancy commenced on 26 June 2023 and was a fixed term tenancy through until 21 June 2024. The tenancy agreement was signed by the parties on 19 June 2023.
The premises consist of a cottage, with an attached garage and coffee cart. The coffee cart rests on a tandem trailer.
The tenant operated a café from the premises. The café business was started in September 2023.
The tenancy agreement provides for the provision of a range of chattels by the landlord. Those chattels included the standard chattels provided in a partially furnished tenancy, as well as a list of chattels required to operate a coffee cart.
Clause 10 of the tenancy agreement provides that the tenant agrees to principally use the premises for residential purposes. The section of the tenancy agreement which shows the landlord insurance cover for the premises, refers in part to insurance on the coffee cart business.
It is clear that the premises were used partially for residential purposes and partially for commercial purposes.
Section 5(1)(a) of the Residential Tenancies Act 1986 (“RTA”) provides that the Act does not apply where the premises are commercial premises. Section 2(1) RTA rather unhelpfully defines commercial premises as premises that are not residential.
Section 2(3) RTA provides that, where leased premises are used for both residential and commercial purposes, they are deemed to be residential, unless it is proved that they were let “principally for purposes other than residential purposes”.
When determining whether the Act is excluded, the Tribunal considers the substance of the agreement between the parties rather than the labels they have applied.
In determining whether the premises are primarily residential or commercial, relevant factors include: the nature of the premises; any advertising and pre-contractual statements about the intended use of the premises; the terms of the agreement; and whether any chattels provided are more likely for commercial or residential use.
The tenant explained that the cottage which was used for residential purposes was approximately 70-80m2. There was a single garage used for food preparation and storage and a coffee cart. The tenant said that she allocated the weekly rent of $780.00 for her financial records, equally between the residential and commercial . It may be that this was done purely for her financial records rather than it having any basis in the actual division.
The landlord said that $650.00 per week was charged for the residential side and $130.00 per week for the coffee cart and associated chattels. This was not made clear in the tenancy agreement, nor was any other documentary evidence provided.
The Tribunal must decide if the premises were let “principally for purposes other than residential purposes.” The term “principally” in s 2(3) RTA must mean an amount more than half. Even If I were to rely solely on the tenant evidence, the tenant says that the rent was allocated equally. The landlord evidence is that the majority of the rental should be allocated to the residential aspect of the tenancy.
In light of all the evidence, I do not consider that the premises were let for a purpose which was principally commercial and I find that the Tribunal does have jurisdiction to consider this application. Reduction of a fixed term.
The usual legal position with a fixed-term contract is that the term of the contract will be applied strictly, and it is only in limited circumstances that a court or tribunal will interfere with it. For residential tenancies, one of those circumstances is found in s 66 RTA, which allows for the reduction of fixed term tenancy agreements.
There is a high threshold to be met before the Tribunal will reduce the term. In particular the applicant will need to establish that: a) there has been a change in their circumstances. b) the change was unforeseen. c) the unforeseen change will result in severe hardship to the applicant if the tenancy is not reduced. d) the severe hardship the applicant will suffer if the term is not reduced exceeds the hardship the other party will suffer if the term is reduced.
Section 66(2) RTA provides that, if the Tribunal reduces the term of the tenancy, it may order the applicant to pay reasonable compensation to the other party for any loss or damage which results from the reduction of the term.
The weighing of relative hardship is a question of fact to be assessed objectively in each case. Tenant Evidence
The tenant said that she took on the premises with the intention to operate a café from the site. She moved in during June 2023 and started operating the café in September 2023. In the period for October and November 2023 she found that the café was only just breaking even financially.
Early in December 2023, it became apparent to the tenant that the business was not viable. The local kindergarten where her child attended, was to close down for three weeks resulting in the tenant having to pay for child care . There was low traffic numbers for the cafe in the vicinity. After a very short period, the tenant made the decision to close the business on 12 December 2023.
The tenant says that she gave the landlord notice of her intention to close the café and asked for the fixed term tenancy to be reduced so as to end the tenancy on 20 January 2024.
The tenant says that she has sold assets to pay off some of her bills and that she has outstanding PAYE and GST still to pay. She has previously been adjudged bankrupt and wants to avoid that happening again. Landlord Evidence
The landlord says that they had been looking to lease the residential premises and that the commercial café side was an addition to that intention.
The landlord says that they have mortgages to pay as well as rates and insurance on the premises. They say that the premises are negatively geared and that the costs associated with the premises exceed the income received.
The landlord commenced trying to relet the premises once they received the tenants notice in December 2023. No replacement tenant has been found yet. They said that it was a tight rental market in the area, but they were confident of obtaining a new tenant within four to six weeks of the hearing. They said that even if a tenant were found immediately, it was likely that the replacement tenant would need to give their landlord the appropriate notice.
Was there an unforeseen change in the tenant’s circumstances? Unforeseen means unexpected, without warning, unlikely, not a serious possibility, not a serious risk. Is the failure of a business unforeseen? If the tenant had considered the failure of the business to be likely, a serious possibility or a serious risk, would she have entered into the business in the first place? In the circumstances of this case, I accept that the failure of the business was unforeseen to the tenant.
Having decided that there was an unforeseen change in the tenants circumstances, I must now consider the relative hardship between the parties. Is the severe hardship which the tenant will suffer if I do not end the fixed term, more than the hardship which the landlord will suffer if I do end the tenancy?
The tenant’s hardship must be severe, that is more than ordinary hardship. The tenant is currently unemployed and has previously been adjudicated bankrupt. She says that it is likely that she will suffer that outcome again if forced to continue with the fixed term tenancy. A second bankruptcy adjudication would certainly have severe consequences for the tenant.
The landlord must show that the hardship that they will suffer if I do terminate the fixed term tenancy is greater than the extreme hardship that the tenant will suffer. I accept that there will be financial consequences to the landlord, but I do not consider that they will be greater than the severe hardship suffered by the tenant.
Accordingly, I order that the fixed term tenancy be ended immediately.
Having made the order terminating the tenancy, I must consider whether a payment by the tenant of reasonable compensation for losses that the landlord will suffer as a result of the early termination, is appropriate.
At the commencement of the tenancy, it would have been a reasonable expectation on the landlord’s part that the tenancy would last to at least 21 June 2024.The landlord has ongoing financial obligations for the premises. It is reasonable in my view that the tenant pay reasonable compensation, which I find to be the equivalent of four weeks rent ($3,120.00).
Both parties have applied for name suppression. The Tribunal must order name suppression where the parties have been wholly or substantially successful. In this matter, somewhat unusually, I consider that both parties have been substantially successful. Suppression of both parties names and details is ordered.

Tenancy Tribunal case 4765238 — Tenancy dispute

At a glance

Award balance

Tenancy Tribunal case 4765238 — Tenancy dispute

At a glance

Award balance

Claims & awards

Order

Reasons

Topics & place

Residential Tenancies Act sections

Frequently asked questions

Claims & awards

Order

Reasons

Topics & place

Residential Tenancies Act sections

Frequently asked questions