Published tribunal order
Tenancy Tribunal case 5078388 — Tenancy dispute
Decided 23 Dec 2024 · Published 23 Dec 2024 · Application 5078388
Party names are redacted in the official published order.
Order
- An application for suppression has been made in this case, and the Tribunal orders suppression of both the Tenants and the Landlord’s name and identifying details.
- The fixed term tenancy of [the tenants] at [Tenancy address suppressed] is terminated, and possession is granted to [The landlord], at 5pm on Monday 7 April 2025.
- [The landlord/s] owes [The tenant/s] $3,120.00 for the costs they will incur because she is breaking the fixed term tenancy on 7 April 2025 instead of 12 July 2025. The parties have agreed the tenants will not be charged any rent for the last 4 weeks of their tenancy as payment of the $3,120.00 awarded to [The tenant/s].
- The Bond Centre must pay the $3,120.00 to the tenants immediately, by the consent of both parties.
Reasons
- Both parties attended the hearing.
- The landlord applied for early termination of the tenants fixed term tenancy under section 66 of the Residential Tenancies Act 1986 (“RTA”). The tenancy is due to end on 12 July 2025.
Should the fixed term tenancy be ended early?
- The landlord has applied for reduction of the tenants fixed-term tenancy, due to end on 12 July 2025. The basis for her application for the Tribunal to end their tenancy early is: a. The landlord moved to Auckland to be closer to her son, who is currently studying in Auckland. She quit her job and rented her house out to the tenants for a year on her understanding she could live in a friend’s home in exchange for paying the rates on the mortgage free property. This arrangement was supposed to allow her to be able to cover the mortgage and other outgoings on her property [tenancy address suppressed] and be closer to her son during his studies; b. The landlord was not able to view the house she was to rent from her friend as it was tenanted at the time. When she went to move into the house she found it was uninhabitable and she was left firstly living in a horse float and then more latterly in a tiny home on a farm that is connected to creek water that is unfit to drink and is so small she is unable to have her so live with her, her sole reason for renting her house out and coming to Auckland, and is also not allowed to have her dog with her; c. The landlord cannot afford to rent a house in Auckland while paying the outgoings on the [tenancy address suppressed] property she owns, as the rent paid by the tenants does not cover the mortgage, rates, swimming/spa pool monthly service, landlord insurance and/or storage cost; d. The landlord says that because of this unforeseen event, she is desperate and has to move back into her house. She has given evidence she can transfer from Auckland to Rotorua with her current employer and can live in [tenancy address suppressed] in her house until she is able to sell it; e. The landlord is under extreme financial duress, despite having a full-time job, because of her friend letting her down and leading her to believe she could rent a habitable residence in Auckland at a very low rental rate so she could provide an Auckland based home for her son while he studies.
- The tenants do not consider that the landlord has done everything in her power to find a better solution to her dilemma and claim she should have done better due diligence, in relation to the house she was promised she could rent cheaply from her friends, before renting out her house on a fixed term basis . They say that she is putting them and their two children in a position of having to incur moving costs, having the stress, inconvenience, and time off work to allow them to find another place to live, in the area where their children go to school, and to move house. They also say they would have to save more money for another bond at a time of the year where costs increase due to Christmas and school holidays.
- The landlord says she has been friends with the friend that offered her the cheap rental for at least 12 years, their friendship is based on high levels of trust, and she did not consider that her friend would let her down so badly. She apologised to the tenants and said she had no other option but to apply to the Tribunal to end the tenancy early as the parties had not been able to come to an amicable agreement in relation to the landlord needing to bring the tenancy to an early end. 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 landlord wishes to default on that contract, and the tenants accept the repudiation, then the tenancy ends on the terms agreed. In such a situation of surrender the tenants can stipulate the terms of early surrender provided they are reasonable. Such reasonable terms can be to ensure the aggrieved party (here the tenants) 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 that party to apply to the Tribunal to reduce the term pursuant to section 66(1) RTA.
- The Tribunal can 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 landlord took all reasonably practicable steps to find alternatives to having to end the fixed term tenancy early, but has been unsuccessful, and is now under extreme financial duress, cannot provide a home for her son or dog and is living in extremely poor conditions.
- The tenants have two children that go to school in the area they live in and took on a fixed term tenancy to give them security for 12 months. They both have jobs, one works part time, and they are concerned they will not be able to find alternative accommodation over the Christmas and immediately preceding holiday period. They are also concerned about the moving costs, having to save for a new bond and having to take at least 4 days off work to find accommodation and move. They are also concerned that they have recently paid for a new dishwasher, curtains and blinds that they cannot take with them at the end of the tenancy.
- The landlord has sought relief from the Tribunal in the form of an application pursuant to s66 for the tenants fixed term tenancy to be ended earlier than 12 July 2025so she can immediately move back to her home and address her dire financial circumstances, have her son come home on weekends and holidays and have her dog back to live with her.
- I then turn to an application of s66 of the RTA to this situation.
- Section 66 of the RTA is clear that it must the applicants’ circumstances that have changed in an unforeseeable way.
- Having considered the facts, I find the landlord has proven that there has been an unforeseen change in her circumstances.
- The landlord has also proven she is and will continue to suffer severe hardship if the term of the tenancy is not reduced.
- The tenants have also confirmed they 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, however, I am satisfied the unforeseen change in the landlord’s circumstances has been established and I have jurisdiction to end the tenancy if the landlord’s hardship is greater than that of the tenants.
- Based on the evidence before me, I am satisfied the landlord would suffer severe hardship if the term of the tenancy were not reduced.
- I am also satisfied the tenants would suffer hardship if the term were reduced, in that they have incurred costs of around $800.00 improving the premise, $500.00 moving costs and will have to try to save for a bond over the Christmas/New Year period when money is already tight. They will also incur the cost of time off work to look for a new home and to move their family and belongings to a new home.
- I find the hardship faced by the tenants, if I was to end the tenancy early, would not be as extreme as the landlord’s hardship if I was to hold her to the fixed term tenancy bargain, she struck with the tenants until 12 July 2025. As such, because I find that the landlord’s hardship would be greater than the tenant’s hardship, the tenancy will end on Friday 7 April 2025.
- Where the Tribunal reduces a fixed-term tenancy, it may order the landlord to pay the tenants reasonable compensation for any resulting loss. See section 66(2) Residential Tenancies Act 1986.
- I award compensation of $3,120.00 to the tenants, considering the break lease costs it will incur as a direct result of the fixed term tenancy ending early.
- The tenants have agreed, at the end of the tenancy, to leave in the premise the dishwasher, curtains and blinds they purchased.
- The landlord has agreed to pay the tenants the $3,120.00 ordered by letting the tenants live at the premise rent free for the last 4 weeks of their tenancy. The tenants have agreed to the $3,120.00 being paid to them this way.
- The landlord has also agreed to the Tribunal releasing the bond to the tenants immediately so they do not have to save for a new bond before they can look for new accommodation. Name suppression
- The landlord and the tenants apply for non-publication of their names and identifying details.
- The Tribunal must, on the application of a party that has wholly or substantially succeeded in proceedings, order that the party’s name or identifying particulars not be published, unless the Tribunal considers that publication is in the public interest or is justified because of the party’s conduct or any other circumstances of the case.
- The landlord has substantially succeeded in her proceedings, and I accept the tenants’ names being published may hinder them being able to find new accommodation. I do not consider publication is in the public interest or justified because of the landlord’s or the tenants conduct or any other circumstances of the case.
- Non-publication is ordered.