What was the outcome of Tenancy Tribunal case 5033589?

The tribunal order states: The application to reduce the fixed term tenancy is dismissed.

How much money was awarded in case 5033589?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 5033589?

The dispute type was not classified.

Where can I read the official tribunal order for case 5033589?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/11185673-Tenancy_Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 5033589?

The tribunal order states: The application to reduce the fixed term tenancy is dismissed.

How much money was awarded in case 5033589?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 5033589?

The dispute type was not classified.

Where can I read the official tribunal order for case 5033589?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/11185673-Tenancy_Tribunal_Order.pdf.

109B Owen Street, Newtown, Wellington 6021 Tenancy Tribunal Case 5033589 — Tenancy dispute

Order

The application to reduce the fixed term tenancy is dismissed.
No suppression orders apply around publication of this decision.

Reasons

Both parties attended the hearing.

Should the fixed term tenancy be ended early?

The tenants have applied for reduction of their fixed-term tenancy, due to end on 26 January 2025. The basis for their application for the Tribunal to end their tenancy early is: a. They purchased a house and gave notice to the landlord on or around 16 August 2024, when the sale and purchase agreement went unconditional; b. They informed the landlord they intended to move out on or around 16 October 2024, the settlement date and they could not afford to pay their mortgage and the rent; c. The landlord had refused to end the fixed term lease early and told the tenants they would be held liable for the rent until the end of the fixed term lease; d. The tenants had advertised the property on Trade Me at a cost to them on $300.00 but had not found anyone willing to take on the tenancy; e. The tenants moved out of the premise on 26 October 2024 and have had to borrow money from friends to pay the rent.
The tenants do not consider that the landlord has done everything within its power to re-let the property and it should of when it was given two months’ notice of the tenants’ intention to move out of the premise before the end of the lease. In short, the tenants say the landlord took no steps to mitigate its losses after the tenants gave two months’ notice
During the tenancy, the tenants had another couple as flatmates to assist them to pay the rent. The flatmates were not parties to the tenancy agreement.
The tenants confirmed they moved out on 26 October 2024 and they have consented to their flatmates continuing to live in the premise under the tenants tenancy agreement. They did so to help offset some of the rent they are liable to pay until the end of the tenancy. These flatmates have informed the landlord they will move out of the premise on 25 January 2025.
The landlord has confirmed that on the basis he will not receive vacant possession of the house until 25 January 2025, he has re-let the house from 26 January 2025, so as not to incur any loss of rent. The landlord stated he would have relet the house earlier if he had received vacant possession of it on 26 October 2024.Further, he could not do so when the house was still tenanted. The law
Parties enter into a fixed term tenancy for security. For tenants this is security of tenure; they can be sure they have a home for at least the agreed term. For landlords it is security of income; they can rely on a set amount of income from their investment.
If a tenant wishes to default on that contract, and the landlord accepts the repudiation, then the tenancy ends on the terms agreed. In such a situation of surrender the landlord does not have to agree and can stipulate terms provided they are reasonable. Such reasonable terms can be to ensure the aggrieved party (here the landlord) be placed in the same position as they would have been in, but for the breach of the tenancy agreement.
If the parties cannot agree to end the tenancy, it is open to the tenants to apply to the Tribunal to reduce the term pursuant to section 66(1) RTA.
The Tribunal 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.
Section 66 sets a high threshold for reducing fixed term tenancies. The jurisdiction in this section 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 applicant tenants, for whom significant obligations under fixed term agreements can create severe hardship when circumstances unexpectedly turn against them, and landlords, who have financial 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”) in cases relating to negligence (in determining whether a duty of care is owed and what damages are reasonably foreseeable) and in cases assessing damages for breach of contract (also in assessing the remoteness of damage). In both contexts, there is a body of case law which has established that: a. Foreseeability must be assessed objectively through the eyes of a reasonable person who has taken all reasonable steps to inform himself 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”. Analysis & findings
The parties here could not come to an agreement to end the tenancy.
The tenants took all reasonably practicable steps to find tenants to take over the lease but were unsuccessful.
The tenants moved out of the premise on 26 October 2024. However, the tenants have continued to reside in the premise as they have consented to the flatmates continuing to live in the house under the tenants’ lease. The flatmates have not agreed to move out of the premise until 25 January 2025. Therefore, the tenants by default have agreed to the tenancy continuing until 25 January 2025 by allowing the flatmates to continue to reside in the premise until that date.
The tenants have sought relief from the Tribunal in the form of an application pursuant to s66 for their tenancy to be ended earlier than 25 January 2025, even though the house will still be occupied and the landlord will not have vacant possession of the premise until 25 January 2024.
I then turn to an application of s66 of the RTA to this situation. Having considered the facts, I find: a. There has not been an unforeseen change in the tenants’ circumstances. b. The purchase of a home had been an ultimate goal for some time and then became able to be realised. It was foreseeable that the tenants would be able to purchase a home at some point, and it was clearly foreseeable that if they offered on a property, that they would be successful. I am satisfied that the tenants knew they could not end their fixed term tenancy until replacement tenants were secured and that was an unknown factor in this equation. It was always possible that it may take some time to obtain new tenants and that they would remain liable for the rent until new tenant were found or the lease term ended. This was a calculated risk they took which unfortunately has not progressed in their favour. c. What has changed for the tenants is that they now have a mortgage to pay and rent. This was foreseeable when they signed a contract to purchase a home whilst still being bound by a fixed-term tenancy contract. d. The flatmates staying in the premise with their consent was something they agreed to in order to enable them to offset some of the rent they owed as a result of moving out of the premise early without finding new tenants to take over the remainder of the lease. They say the rental market is bad and they could not find someone to take over the lease at the rental rate they were paying.
Section 66 of the RTA is clear that it must the applicants’ circumstances that have changed in an unforeseeable way, not external factors such as the rental market not being conducive to . the tenants not being able to sublet the premise for the remainer of the fixed term lease.
The tenants have proven they will suffer severe hardship if the term of the tenancy is not reduced.
The landlord has also confirmed it would suffer severe hardship if the term is reduced.
Section 66 of the RTA is clear in requiring the Tribunal to establish an unforeseen change in circumstances before the respective hardships are weighed.
I empathise with both parties circumstances, but particularly the tenants’, however, as an unforeseen change in the tenants’ circumstances has not been established, I have no jurisdiction to end the tenancy, and this claim must be dismissed.
Finally, I note that I cannot accept the argument that the property is priced above market value and that the landlord’s refusal to end the fixed term tenancy early has resulted in the tenants being in their current position of financial duress.
The parties entered into a contract for this tenancy for this price. It cannot be argued post-agreement that one of the terms is no longer fair.
The landlord was under no obligation to agree to end the fixed term early.
The tenants have not given the landlord vacant possession on 26 October 2024 when they moved out, as they have allowed their flatmates to continue to stay in the premise until the end of the lease. Therefore, the landlord cannot relet a house that remains occupied.
I dismiss the tenants claim to reduce their fixed term tenancy for all the reasons set out above.

Tenancy Tribunal case 5033589 — Tenancy dispute at 109B Owen Street, Newtown, Wellington 6021

At a glance

Claims & awards

Tenancy Tribunal case 5033589 — Tenancy dispute at 109B Owen Street, Newtown, Wellington 6021

At a glance

Claims & awards

Order

Reasons

Should the fixed term tenancy be ended early?

Topics & place

Residential Tenancies Act sections

Property management

Frequently asked questions

Order

Reasons

Should the fixed term tenancy be ended early?

Topics & place

Residential Tenancies Act sections

Property management

Frequently asked questions