Published tribunal order
Tenancy Tribunal case 4930534 — Property damage at 230 Durham Drive, Havelock North, Hastings 4130
Decided 18 Dec 2024 · Published 18 Dec 2024 · Application 4930534
Landlord favoured
- Property damage
- Cleanliness
Order
- Findings have been made that each party breached their obligations. No suppression Order is made.
- This Order supersedes and replaces the Tribunal’s Order dated 16 August 2024.
- SHHB Reed Limited as Agent for Karen Stanford and Evan Mccarthy must pay Chris Burt and Xuyen Le $3,417.01 immediately, calculated in the table below:
Reasons
- Both parties attended the hearing.
- An Order was made on 16 August 2024 that the tenants pay the landlord rent arrears and compensation (“the August Order”). This Order should be read alongside the August Order. Some awards made in the August Order are repeated here, without the reasons being reproduced.
- The August Order was made without an appearance by the tenants and for reasons given in the Tribunal’s Order dated 9 November 2024, the tenants’ application for a rehearing of that Order was granted.
- The rehearing was conducted with a hearing of the cross application that was filed by the tenants on 17 September 2024. Issues
- The tenants confirm that their rehearing request and cross application seek compensation and damages for what they say was the landlord’s failure to consider a request to assign the tenancy and to take reasonable steps to mitigate the losses caused by their request to end the fixed term tenancy early.
- The other findings in the August Order are not challenged. The Law
- The relevant provisions of the Residential Tenancies Act (“RTA”) are as follows: Assignment
- Section 43B RTA provides that: a. “(1) A tenant may, at any time during the tenancy, assign the tenancy—(a) with the prior written consent of the landlord; and (b) in accordance with any reasonable conditions attached to that consent by the landlord. b. (4) If a tenant makes a written request for the landlord’s consent to an assignment and the request identifies, and includes contact details for, the proposed assignee, the landlord must respond in writing to the request within a reasonable period of time. c. (5) A landlord who, without reasonable excuse, fails to comply with subsection (4) commits an unlawful act.’ d. (6) The landlord must not—(a) withhold consent unreasonably; or (b) attach any unreasonable conditions to the consent. Mitigation
- Section 49 RTA provides that: “Where any party to a tenancy agreement breaches any of the provisions of the agreement or of this Act, the other party shall take all reasonable steps to limit the damage or loss arising from that breach, in accordance with the rules of law relating to mitigation of loss or damage upon breach of contract.” The Evidence
- The parties’ agreement was for a fixed term from 16 July 2023 to 28 October 2024.
- On 8 March 2024 the tenants advised the landlord they had bought a house and wanted to end their tenancy early.
- The landlord prepared a break fixed term agreement, which the tenants signed on 12 March 2024. That agreement records that: “Your responsibility remains to pay the rent until a suitable replacement tenant begins paying rent. We will help you find that tenant by: • advertising on the trade me website • prospective tenants through the property and • signing a tenancy agreement with a successful tenant We will of course consult with you on the commencement date of the new tenancy before we sign.”
- The tenants confirmed that the settlement date for their purchase was 22 April 2024 and that “Anytime on the same day or after is all good for us...”
- Through a mutual acquaintance involved in real estate, the tenants had been in contact with a Ms Gibson, who had recently sold her property and thought these premises might be suitable for her immediate needs.
- Ms Le’s evidence is that when asking the property manager about ending the fixed term early she raised with him the possibility of Ms Gibson taking over the tenancy. She says the property manager was dismissive and not interested in pursuing that option and told her that Ms Gibson would need to make an application through the listing, along with any other interested parties.
- A letter from Ms Gibson was provided in evidence. It says that that Ms Le told her at the time that the landlord had not been receptive to the suggestion that she take over the tenancy and said that she would need to apply through the listing. Ms Gibson’s evidence is that she wasn’t contacted by the landlord and didn’t see the listing. She found somewhere else.
- The landlord was asked to provide evidence of the efforts made to find alternative tenants. A response to the landlord’s query with Trade Me says that: “Here are times when the property went live on Trade Me 4033646146 – first listed 10/3/23 withdrawn 16/3/2023 4181840221 – first listed 15/6/2023 withdrawn 29/6/2023 4612099317 – listed 15/3/2024 withdrawn 9/4/2023”
- Further information from Trade Me shows that Listing 4612099317 was from 15 March 2024 withdrawn 9 April 2024. The other dates do not appear relevant to this dispute.
- The landlord says that there were other listings not included in the listing summary, which appears to be corroborated by evidence that there were viewings of the premises arranged with the tenants, during times where the summary shows no active listings.
- The rent payable under the fixed term tenancy was $950.00 per week.
- Listing 4612099317 was at a rent of $1,000.00 per week.
- Communication between the property manager and the owners on 7 May 2024 says, “No updates at this stage. I think if we get to the 15 th and haven’t had any applications – we reduce the rent to $950.00 per week and the new tenants mow their own lawns.” The property manager’s evidence is that the listed rent was reduced to $950.00 as proposed.
- On 10 April 2024 the tenants contacted the property manager to say, “Can you please change the end of tenancy date to the 3 rd May 2024? Our settlement on the new house won’t be until the 26 th April we need a week to pack up and do the cleaning.”
- On 11 April 2024 tenants asked, “Can we please make it 31 st of May 2024 as the last day of our tenancy? We need some work done to our new house b4 moving in.”
- On 26 April 2024 the tenants advised the property manager, “We can be out of 230 Durham by the Monday 20 th May is it OK to end the tenancy by then please?”
- On 3 June 2024 the tenants txt the property manager: “...it has been three months since we gave you the notice, I don't understand that there are not enough houses to rent but we can't find anyone to takeover that 230 Durham Dr rental. Can you please let us know what seems to be the problem? And we had someone wanted to take over the lease then you won't let them.” The property manager replied, “...I did find someone but you extended your stay until early June. That was your decision to do that not mine. We are now in Winter and it is harder to rent houses out. I have done multiple viewings and have been trying.” The tenants responded, “...but at that time you could have told us that he wanted to move in sooner, we had no idea. We just want to be out of that tenancy.”
- Shortly after that there was another viewing, which resulted in a prospective tenant offering to pay $900.00 per week for the tenancy. The property manager proposed that the tenants “top up” the rent by $50.00 to $950.00 per week for the full term of a new tenancy. The tenants objected and spoke directly to the owners, following which the proposal was modified to the tenants paying the top up for the remainder of their fixed term. The tenants agreed. The new tenancy began on 21 June 2024.
- In the course of those discussions around 7 June, the property manager confirmed, “I will continue to search for a new tenant. I understand you don't want to pay any extra funds. Can you please get the people you know that would like to rent the property to get in contact me with me.” The tenant replied, “...she wanted to rent the house three months ago....... and you wouldn't even consider getting in contact back then.” The property manager emailed the tenants a link to the tenancy application, for them to forward on to Ms Gibson.
- I find that exchange corroborates the tenant’s evidence that the property manager was aware the tenants had a proposed replacement tenant and is consistent with their evidence that the proposal was not acted upon by the landlord.
- After forming the view that it had taken an unreasonably long time for new tenants to be found, the tenants stopped paying rent beyond 5 June 2024.
- The August Order required that the tenants pay: a. the full rent of $950.00 per week from 6 June 2024 to the date before the new tenancy started on 21 June 2024; and b. top up rent of $50.00 per week from when the new tenancy started on 21 June 2024 to the end of their fixed term on 28 October 2024. Analysis
- Any agreement entered into between the parties is subject to s.11(3) RTA, under which any provision that waives any of the tenants’ rights or powers, is of no effect.
- Subject to complying with any reasonable conditions imposed by the landlord, the tenants had a right to assign the remainder of their fixed term tenancy to another tenant (s.43B(1)) RTA - above).
- Had the tenants made a written request for the landlord’s consent to assign the tenancy to Ms Gibson as required by s.43B(4), identifying and providing contact details for her, the landlord’s lack of response would have constituted an unlawful act. However, no such written request was made and the landlord is not in breach of s.43B(5).
- I do however find that by not responding to the tenants’ proposal that Ms Gibson be considered as a replacement tenant, the landlord breached its obligation under s.49 to, “....take all reasonable steps to limit the damage or loss...” resulting from the tenants wish to end their obligations under the tenancy before the end of the fixed term.
- Section 49 requires that a landlord take all reasonable mitigation steps available to it.
- I am satisfied that the property manager acted promptly in preparing the break fixed term agreement and arranging a Trade Me listing in accordance with that agreement.
- The evidence shows that the landlord made arrangements for multiple viewings of the premises, which the tenant’s facilitated, sometimes at short notice. The landlord was accordingly taking steps to find replacement tenants.
- While there may be processes for establishing new tenancies that the property manager prefers to follow, for good reason, here the tenants had 7 1/2 months of a fixed term tenancy remaining. That is an assignable property right. It would have been reasonable for the landlord to let the tenants know that they had a right to assign the tenancy and that if they wanted consent to assign it to Ms Gibson they should make a written request with the details required by s.53B.
- A reasonable mitigation step, even if not dealing with a formal assignment request under s.53B, would have been for the landlord to contact Ms Gibson and assess whether she was an interested and suitable new tenant.
- I find that it was not a reasonable mitigation step to advertise for replacement tenants, at rent higher than the landlord was entitled to receive for the 7 1/2 months remaining of the fixed term from 12 April 2024 to 28 October 2024.
- I find that it was not a reasonable mitigation step for the landlord to request the tenants to pay the $50.00 per week top up for the whole of the term of the new tenancy rather than the remainder of the tenant’s fixed term – although that was retracted and the property manager has noted his error in making that request.
- I find that it was not a reasonable mitigation step, knowing that the tenants were paying both rent for these premises and the mortgage for their new home, not to let the tenants know that there was an interested party who might take a tenancy if they could vacate earlier than they had indicated. I accept that the landlord had been asked by the tenants if their move out date could be extended, but that was in the context of no new tenants having been found. In the circumstances it would have been reasonable to give the tenants the opportunity to reduce their losses by moving out earlier than they had planned, to allow a replacement tenancy to be put in place.
- For those reasons I find that the landlord breached its obligations under s.49.
What compensation is appropriate?
- The principle of mitigation of loss is described in British Westinghouse Electric and Manufacturing Co v Underground Electric Railway Co of London 1 , as being: “[T]he law does not allow [a claimant] to recover damages to compensate him for his loss which would not have been suffered if he had taken reasonable steps to mitigate his loss. Whether a claimant has failed to take reasonable steps to mitigate is a question of fact depending on the particular circumstances of each case.
- What the Tribunal therefore needs to assess, as best it can, is what part of the rent loss would not have been suffered if reasonable mitigation steps had been taken.
- Allowing that: a. the initial advertising was at $1,000.00 per week; and that b. by the time the listing rent was reduced to $950.00 it was approaching Winter; the available evidence suggests that an achievable rent for the premises was $900.00 per week. At whatever point the landlord put a replacement tenancy in place at that rent, it would have lost $50.00 per week for the remainder of the tenants’ term. The tenants should compensate the landlord for that loss.
- Considerable speculation is involved in assessing the likely outcome if the landlord had taken reasonable mitigation steps. It is by no means certain that Ms Gibson would have taken the tenancy or have met reasonable suitability criteria (pets may or may not have been an issue). Nor is there certainty that another tenancy would have been put in place sooner. 1 [1912] AC 673
- Assessing the evidence as a whole I do find it more likely than not, that if the landlord had taken the reasonable mitigation steps of: a. Letting the tenants know what was required for an assignment of the tenancy to be considered; b. immediately following up with Ms Gibson; c. listing the premises at a rent of $950.00 rather than $1,000.00 per week; and d. letting the tenants know there was an interested party who would take the tenancy if the tenants could move out sooner; a replacement tenancy/ assignee would have been found sooner than 21 June 2024.
- Although the tenants say that they could have made arrangements to move out sooner to allow a new tenancy to start, on 11 April 2024 they specified an end date for the tenancy of 31 May 2024 on the basis that “We need some work done to our new house b4 moving in.” They later asked, on 26 April, if that date could be changed to 20 May 2024.
- In my view 20 May 2024 is the date that can fairly be taken as the date to which the tenants continued to receive the benefit of occupying the premises for their own needs, rather than simply because no new tenancy was found. Reasonable mitigation would not require the landlord to have a new tenancy in place before then.
- From 12 March to 20 May is 10 weeks. I find it more likely than not that apart from the top up payments, addressed separately above, the loss of rent from 21 May 2024 to 20 June 2024 could have been avoided by the landlord taking reasonable mitigation steps as outlined. That loss is therefore not recoverable by the landlord and the tenants should be compensated for the rent they paid from 21 May to 5 June 2024. General damages
- The Tribunal has jurisdiction to award general damages where a landlord or tenant has breached the RTA (S.77(2)(n)).
- General damages are damages for pain or suffering or emotional distress 2
- When assessing the quantum of general damages, the Tribunal must take into account the following factors: 3 a. the nature of the breach 2 Birch v Otautahi Community Housing Trust [2020] NZDC 17667 3 Palmer v Housing New Zealand (No 2) Auckland TT 2378/92, 25 August 1993 b. the duration of the breach c. the effect of the breach on the other party.
- My findings are that the landlord breached its obligations under s.49 in 2 fundamental ways: a. First: by failing to recognise that the tenants had an assignable right in the remaining term of their tenancy; and b. Second: by seeking to make gains by initially advertising the premises at a rent higher than it was entitled to receive for the 7 ½ months of the remaining term.
- My findings mean that the duration of the breach was not over an extended period, to the extent that until 20 May 2024 the tenants had the benefit of using the premises and a new tenancy started a month later.
- The evidence shows though the degree of stress and frustration felt by the tenants who on the one hand had the continuing obligations of a fixed term tenancy, potentially until 28 October 2024, but on the other were not able to obtain the benefit of that tenancy by being able to assign it.
- The tenants were entitled to feel aggrieved that their proposal for a replacement tenancy was not taken seriously and that the landlord was seeking to gain financially from them ending the tenancy early, at what they felt was their expense in terms of reducing the attractiveness of the tenancy for replacement tenants. That was compounded by the landlord’s initial expectation that they pay top up rent for the whole of the term of a replacement tenancy.
- On the other hand, I need to take into account that the risk of losses arose from the tenants wanting to end their fixed term tenancy early, not though any fault on the landlord’s part.
- Weighing those considerations and looking at other awards of exemplary damages the Tribunal has made, I find that an appropriate award of general damages would be $750.00.
- No award is made regarding the filing fee.