Published tribunal order
Tenancy Tribunal case 5048251 — Mould & damp at Unit/Flat 5C, 6 Whitaker Place, Grafton, Auckland 1010,
Decided 29 Nov 2024 · Published 29 Nov 2024 · Application 5048251
- Mould & damp
- Leaks
- Unit Titles
Party names are redacted in the official published order.
Order
- The Tribunal orders suppression of the parties’ names and identifying details.
- The tenancy is ended on 3 November 2024.
- As compensation for the early termination of the fixed term tenancy the tenant is to pay an additional 2 weeks’ rent from the bond. The tenant must accordingly pay the landlord: a. rent 24.10.24 to 3.11.24 - $1,052.86; plus b. two week’s rent as compensation - $1,340.00.
- The landlord’s application for payment of reletting fees and expenses is dismissed.
- The Bond Centre is to pay the bond of $2,680.00 ([Bond number suppressed]) as follows: [The respondent/s] [The applicant/s]
Reasons
- Both parties attended the hearing which was held by teleconference with interpretation services provided. Background
- The parties entered into a fixed term agreement for a term from 17 March 2024 to 16 March 2025.
- On 18 September 2024 the tenant became aware of flooding into the apartment, from above in unit 6C.
- The tenant notified the landlord who in turn contacted the Body Corporate.
- Dehumidifiers were installed to dry the premises. The tenant was asked to vacate the premises while the drying was carried out.
- The rent was refunded for 4 days the tenant was not able to occupy the premises.
- Claims were also made by the tenant for damage to his property, for reimbursement of the cost of a hotel stay and for the cost of electricity used at the premises to run the dehumidifiers. Those claims are not pursued in this application.
- A report from the drying contractor confirms that all drying equipment was removed from the premises on 21 September 2024
- On 19 September 2024 the tenant indicated to the landlord an intention to end the fixed term tenancy early, because of the incident.
- The tenant later vacated the premises. Rent was paid to 23 October 2024. The Applications
- The tenant made his application on 24 October 2024. The tenant seeks: a. confirmation that he does not have to pay rent after 23 October 2024; b. refund of the bond.
- The landlord’s application was made on 25 October 2024. The landlord seeks: a.rent of $287.15 for the balance of the rent week ending 26 October 2024; b.rent from 27 October 2024 to the date of the hearing; c.compensation for reletting fees and expenses; d.a declaration that he is entitled to rent from the tenant until a new tenant for the premises is found. Termination of the tenancy
- This was a fixed term tenancy. Accordingly, the tenancy could not be ended during the term by notice from either party.
- It could be ended before the end of the fixed term: a. If the premises had become uninhabitable (s.59) or if for some other reason the tenant was entitled to cancel the tenancy agreement; b. By agreement between the parties; c. By Order of the Tribunal under s.66. Uninhabitability/ Cancellation
- The tenant says that although the contractors assessed the premises as being safe for reoccupation because moisture levels had been reduced below guideline safety levels, invasive moisture testing of the framing had not been carried out. The tenant was not comfortable that the premises were safe to reoccupy.
- The tenant also asserted (for the first time at this hearing) that there were security issues with the premises and that there were concerns about the electrical reticulation such that he did not feel safe living there.
- The landlord contacted the Body Corporate manager on 2 October 2024 saying, among other things, “....I would also like the floor under the carpet to be thoroughly inspected to ensure there is no risk of mould forming..... I want to be assured that both under the carpet and above the ceiling there is no mould growing due to the water leak.” The Body Corporate manager replied, “....all water has been dried and there is no further damage. This includes under the carpet which was moisture checked. Please see report. If you suspect there is further damage please provide a report. The drying company and Ben have confirmed that no further damage is present.”
- The drying report referred to by the Body Corporate manager was provided as part of the landlord’s evidence.
- While I have no doubt the tenant’s concerns were genuine, the available evidence is that the premises were fit for occupation after having been dried out after the flooding event.
- There is no evidence to suggest that the tenant had raised concerns about the security at the premises or that there were grounds for concern about the electrical supply.
- I do not find it proved that the tenant was entitled to end the tenancy because the premises had become uninhabitable or was entitled to cancel the agreement on other grounds.
Was there an agreement to end the tenancy early?
- The tenant’s position is that after he notified the landlord on 19 September 2024 that he wished to vacate the premises before the end of the fixed term, the landlord agreed that he could. After discussions between the parties, in which the tenant says the landlord went back on his agreement to allow the tenant to end the tenancy, it was agreed that the tenant would be able to end the tenancy on two weeks’ notice. The tenant says that two weeks’ notice was given and that by 23 October 2024 the tenant had vacated, thoroughly cleaned the premises and returned the keys to the property manager.
- The landlord’s position is that he initially indicated to the tenant that the tenant was entitled to end the tenancy if the premises had become uninhabitable because of the flooding. He says it soon became apparent that the premises would not be uninhabitable and so there was no longer a basis for the tenant to end the tenancy, so he confirmed to the tenant that the tenancy would continue.
- The landlord says that throughout the following negotiations he made it clear that although he would try to find a new tenant for the premises, the law required that the tenant be responsible for paying rent until a new tenancy started and that the tenant would be responsible for costs incurred in finding a new tenant.
- A detailed and lengthy communication chain between the parties has been provided in evidence. It is, with respect, somewhat confusing and at times contradictory.
- Key elements in that communication chain are: a. a text from the landlord to the tenant on 26 September 2024 makes it clear that the landlord was then aware that the tenant wished to end the fixed term early. The text includes, “.....also, we have both agreed that the unit is habitable since Sunday 22nd September, so the rent should be paid as normal until the day you decide to leave”. That indicates, at that point, that the landlord had agreed that the tenant could leave, on paying rent to the date of his departure. b. on 6 October 2024 the tenant advised the landlord, “.... .I am planning to move out around next Wednesday and the process may take a few days.” c. later that evening the landlord emailed, “....regarding your decision to leave the unit you informed me of your intention on September 19 but you haven't specified the exact date you plan to leave. After the unit was made habitable you have stayed on for almost 2 weeks since then. Under NZ law tenants are responsible for the rent until the end of the contract if the unit is habitable. You initially described the unit as uninhabitable and I told you that you wouldn't need to pay nearly termination penalty. The unit was deemed habitable when we visited on September 24th. As I promised earlier I won't ask for the penalty but you will need to give formal notice of four weeks to allow time to arrange a new tenant. Please specify the exact date you intend to leave, ensuring that it is at least four weeks from now. You will be responsible for paying rent until that date (my emphasis). If you wish to leave because you believe the property as uninhabitable or unsafe and I would like to take your case to the tenancy tribunal, I'm willing to cooperate.” That communication from the landlord seems to me a clear representation from the landlord that the tenant could vacate the tenancy on giving four weeks’ notice, without paying a penalty. d.The tenant’s response on 8 October 2024 was, “....regarding the decision to vacate the unit, I phoned you of my intention to move out on September 19th. At that time you did not mention a requirement for four weeks’ notice or any continued rent obligations. In fact, I even asked if I should give one weeks’ notice to which you did not provide a specific response provide a Groupon response. You also suggest that I reach out to [the property manager. Her] reply was that I should let you know when I've found a new place and was ready to move out, without any mention of a four week notice requirement. I've since found a new place and signed a new tenancy agreement. It is very unreasonable to be informed now about a four week notice requirement which contradicts our previous conversations and arrangements.”
- On 9 October 2024 the parties agreed that they should sign a formal termination agreement. The landlord proposed three options the first of which was, “Submit an official early termination request: to begin the process of finding a new tenant, you must formally submit your early termination request, as previously requested by [the property manager]. Once received we can move forward with the early termination process. However, you will remain responsible for rent payments until a new tenant is found or until the end of the tenancy term, whichever comes first. You will also be responsible for costs such as marketing and tenant search fees. You may choose to find a suitable replacement in yourself, subject to my agreement. As previously agreed, I'm willing to waive the break fees and reduce the notice period to two weeks from your formal request. Please confirm your agreement to proceed.”
- The tenant replied, “Thank you for your response and outlining the options. Considering my current situation, I really don't have the time or energy to engage in further disputes or handle these matters at length. I also understand that you need time to find a new tenant, so I'm willing to proceed with option one as outlined. However, I would like to propose that the two week notice period start from last Sunday October 6th as that one was when we began discussing this issue in detail...”
- The position later taken by the landlord that the tenant is liable for rent until a new tenancy begins, is in accordance with the RTA. The difficulty is that earlier communications from the landlord represented that he would accept something different. On 26 September he said, “the rent should be paid as normal until the day you decide to leave”. On 6 October 2024, he said, “....Please specify the exact date you intend to leave, ensuring that it is at least four weeks from now. You will be responsible for paying rent until that date.’
- The evidence suggests that the tenant relied on those earlier representations when he committed to a new tenancy. Had that been the end of the parties’ negotiations, I would have found that the tenant was entitled to rely on the landlord’s representation that the tenancy could be ended on four weeks’ notice and that the landlord was estopped from resiling from that representation. The effect would have been to require the tenant to pay rent for 4 weeks from the date notice was given on 6 October 2024 ie to 3 November 2024.
- The tenant then however confirmed that he would agree to the first of the 3 options proposed by the landlord which clearly included the requirement that, “....you will remain responsible for rent payments until a new tenant is found or until the end of the tenancy term, whichever comes first.”
- Despite what appears to be the clear wording of that term of Option 1, the tenant seems not to have not understood the effect of it. On 22 October 2024 he txt the landlord, “Just to clarify, as per our agreement my rent responsibility extends until October 23rd or until a new tenant is found, whichever comes first. Since tomorrow is the 23rd and no new tenant has been found, my understanding is that my rent responsibility will end after tomorrow, as the 23rd will have occurred first. Could you please confirm if that's correct.
- The landlord noted that was not the effect of that provision in Option 1.
- While the tenant may have been confused about the effect of his acceptance of Option 1, that is nevertheless what he agreed to.
- I do not find it proved that there was a concluded agreement that the tenant could end the tenancy by giving notice. Should the term of the agreement be reduced by the Tribunal
- Section 66(1) RTA provides that: “(1) On application by a party to a fixed term tenancy, the Tribunal may make an order reducing the term of the tenancy by a period stated in the order, and making such variations in the terms of the tenancy as are necessary because of the reduction of the term, where it is satisfied that, because of an unforeseen change in the applicant’s circumstances, the severe hardship which the applicant would suffer if the term of the tenancy were not reduced would be greater than the hardship which the other party to the tenancy would suffer if the term were reduced.”
- There were unforeseen changes in the tenant’s circumstances in this case. The tenant’s wish to end the fixed term tenancy early was honestly motivated (even if not objectively warranted) by concerns arising from a flood at the premises for which the tenant was not responsible.
- I also take into account that hardship will be caused to the tenant because he entered into a new tenancy at a time when he believed the landlord had represented to him that the tenancy could be ended early without penalty or ongoing rent liability. I take into account what appears to be an unambiguous later representation by the landlord, that the tenant could leave on giving 4 weeks’ notice.
- The hardship caused to the tenant will be greater than that caused to the landlord because the tenant is otherwise exposed to the risk of ongoing rent liability, without any ability to limit or mitigate that risk. The process of finding new tenants and thereby ending the tenant’s liability, is entirely in the landlord’s hands. The landlord has had since 6 October 2024 to find new tenants.
- I take into account as well that financial loss will be caused to the landlord for any period that neither this tenant nor any new tenant, is paying rent. Mitigation of loss
- Under s.49 RTA, “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 landlord’s correspondence seems to suggest a view that the tenant was required to give four weeks’ notice before the landlord could put in place the process to begin finding new tenants.
- There is no such requirement in the RTA, a tenant is only required to give 28 days’ notice to end a periodic tenancy.
- In terms of s.49, the reasonable approach for a landlord to take on this situation is to begin advertising for new tenants once the tenant has confirmed an intention to end the fixed term tenancy and a date by which the premises will be available for new tenants.
- In this case, that happened on 6 October 2024 when the tenant advised the landlord in writing, “I am planning to move out around next Wednesday and the process may take a few days.”
- Evidence provided by the landlord shows that the premises were listed on Trade Me on 10 October 2024, as available from 23 October 2024.
- I do not find it proved that the landlord has breached his obligation to take reasonable steps to mitigate the situation in terms of looking for new tenants.
- Taking all those factors into account, I find that it would be just to order that the tenancy be ended and that the tenant not be exposed to the risk of ongoing rent liability. The appropriate date to Order the tenancy be ended is 4 weeks from 6 October 2024.
- In terms of s.66(2), I find it would be just to award compensation to the landlord for the consequences of ending the fixed term early, which I fix at 2 weeks’ rent. Reletting fees
- The landlord accepts that he promised to waive any early termination “penalty” but not to waive reletting expenses. Early termination penalties are unlawful. Under s.44A. in these circumstances a landlord is only entitled to recover “...any expenses reasonably incurred by the landlord in respect of the assignment, subletting, parting with possession, or termination”, after first providing an itemised account of those expenses.
- That being so, the only meaningful interpretation of the landlord’s promise to waive early termination penalties, is as a waiver of his right to recover those expenses, which would in any case have been incurred when the fixed term ended.
- The landlord’s application for payment of reletting fees and expenses is accordingly declined.
- Neither party has been entirely successful, and no order is made in respect of the filing fee.