Published tribunal order
Tenancy Tribunal case 4584189 — Rent arrears at 7A McFetridge Place, Hillcrest, Auckland 0627
Decided 21 Aug 2023 · Published 21 Aug 2023 · Application 4584189
Mixed / unclear
- Rent arrears
- 14-day notice
Order
- The application for name suppression filed by the landlord is declined.
- The tenancy of Raiza De Guzman Acub, of 7A McFetridge Place, Hillcrest, Auckland is terminated, and possession is granted to Fast Rental Limited as agent for Leo Liu as follows: a. If the tenants make the rent payment of $480.00 on Sunday 27 August 2023, then possession is to return to the landlord at 9:00am on Monday 4 September 2023. b. If the tenant fails to make the rent payment ordered above, on Sunday 27 August 2023, then possession is to return to the landlord at 9:00am on Monday 28 August 2023.
- Raiza De Guzman Acub to pay Fast Rental Limited as agent for Leo Liu, the sum of $52,262.85 immediately, being rent arrears. Background
- The Tribunal must consider an application filed by the landlord against the tenant, seeking an order terminating the tenancy and ordering the payment of rent arrears and release of the bond.
- The tenancy commenced on 1 July 2017. The landlord is Leo Liu, and the tenant is Raiza Acub.
- Based on the rent records provided, it is clear that the tenants failed to make full rent payments from 2017. While some rent was paid between the start of the tenancy and 14 February 2020, the tenants made no rent payments between 14 February 2020 and 26 April 2023.
- At the hearing, the landlord’s agent advised that the Landlord went to China around February 2020, a date which coincided with the tenants ceasing rent payments.
- In April 2023 the landlord appointed Fast Rental Limited (Fast Rental) to be its agent. The tenants made some payments from that date, but missed about half of them.
- On 23 May 2023 Fast Rental filed this application with the Tribunal.
- A telephone hearing was convened with Adjudicator Ms Singh on 5 July 2023. However, given the complexity of the matter, Ms Singh directed the matter be heard at an in person hearing.
- A hearing was convened today in the North Shore District Courthouse. In attendance was Mr Li from Fast Rentals for the landlord, and also Ms Acub the tenant, with her husband Angelo Acub in support. Landlords case
- The landlord applies for termination of the tenancy, an order for rent arrears and the release of the bond.
- The landlord’s position is that the rent arrears owed by the tenant is $106,925.71.
- The landlord presented the rent ledger covering two periods, one prior to Fast Rentals taking over management, and following that time. The arrears claimed over those two periods are:
- Prior to property manager 1 July 2017 – 21 April 2023 $102,400.00
- Following property manager 22 April 2023 – 21 August 2023 $4,525.71
- Mr Liu advised that the landlord went back to China in early 2020, around the time the payments stopped.
- The Landlord seeks an order terminating the tenancy, and an order for the payment of the rent arrears, and release of the bond. Tenants case
- The tenants dispute that Fast Rental Limited are in fact representatives of the landlord.
- In relation to the rent ledger from 22 April 2023, the tenants state that there was work conducted for a four day period on the house, and they ceased paying rent because of that.
- The tenants further submitted that some payments had not been accounted for. At the hearing we compared the landlords payment records with the tenants bank statements, and all payments matched, and none were missed.
- The tenants further stated that because Mr Liu was overseas, they could not contact the landlord, and needed to deal with problems in the premises themselves.
- Otherwise I record that the tenants have provided no evidence to show that any of the landlords rent records (payments received) were wrong. Bond
- The landlord seeks a release of the bond. I have contacted the Bond Centre to confirm the bond situation. The Bond Centre advised they have no record of any bond being lodged for these premises. However the Tenancy Agreement includes a receipt for $1,440.00 of bond, and I have therefore treated that as a rent credit for the purpose of calculating the arrears below. Analysis
- The landlord has presented two rent ledgers for the two periods noted above. The landlord’s rent ledger seems correct, and I note the tenants have not proven that they have made any payments which the landlord claims were missed.
- I accept the arrears are as follows: a. 1 July 2017 – 21 April 2023$102,400.00 b. 22 April 2023 – 21 August 2023 $3,565.71 1 1 At the hearing the tenants provided evidence of a payment made the day prior to the hearing, being $960.00. Once that payment is accounted for, the arrears reduced to $3,565.71.
- The arrears therefore total $105,965.71.
- Once the bond payment is accounted for, that would reduce the rent arrears to $104,525.71. Termination of tenancy
- Section 55 of the Residential Tenancies Act 1986 (RTA) confirms that the Tribunal shall terminate the tenancy when the arrears are more than 21 days on the day the application is filed. That is the case here, so the tenancy must be terminated.
- The landlord was agreeable to allow the tenants 2 weeks to vacate the premises providing another rent payment is made. I direct that payment to be made on Sunday 27 August 2023, failing which possession must be returned on Monday 28 August 2023 at 9:00am.
- Providing the required rent payment is made on 27 August 2023, then possession of the tenancy is to return to the landlord at 9:00am on Monday 4 August 2023. Rent arrears
- As noted, the rent arrears established are $104,525.71.
- I have no doubt that the tenants have taken advantage of the fact their landlord was overseas, in stopping rent payments.
- At the hearing I raised with the parties that they each had a duty to mitigate their losses. That obligation is found in section 49 of the RTA which holds:
- Mitigation of damage or loss 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 question then becomes, what are the rules of law relating to mitigation of loss or damage following a contract breach? The rules of law are summarised in Halsbury’s Laws of England (4th ed, 1975) vol 12 at [1193]–[1194]: The plaintiff must take all reasonable steps to mitigate the loss which he has sustained consequent upon the defendant’s wrong, and if he fails to do so, he cannot claim damages for any such loss which he ought reasonably to have avoided. “The plaintiff is only required to act reasonably, and whether he has done so is a question of fact in the circumstances of each particular case, and not a question of law.”
- In British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London [1912] AC 673 (HL) at 689, Lord Haldane described the rule as to mitigation of loss as follows: That the 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 dependent upon the particular circumstances of each case.
- It is open to the Tribunal to reduce the level of rent ordered to be paid, following a finding that the landlord failed to mitigate their loss. I note for example the District Court decision of Dunn and Dunn v Beedie and Beedie CIV-2014-088-000349. In that case the Tribunal (Adjudicator Blake) determined that: In this instance the Beedies breached the agreement by falling into rent arrears. Mr & Mrs Dunn took some steps but failed to take the ultimate step, which was to terminate the tenancy. In recognition of this failure to properly mitigate the loss I have reduced the amount of rent arrears owed by 10%
- The Dunns’ appealed the Tribunal’s decision to the District Court. What happened then was somewhat unusual because the Beedies requested that the appeal be found in the landlords favour thereby requiring that they pay the full arrears to the landlord, but the Court commented that: I note in passing that the adjudicator could not be faulted for rightly pointing to s 49 of the Act and there have been cases where that clause has worked to reduce rent arrears where failure to mitigate exists.
- The landlord’s duty to mitigate his loss meant that he should have acted much sooner in pursuing the rent arrears, which would have meant applying for orders in the Tenancy Tribunal years earlier. I cannot see that the landlord has done much to address the extraordinary rent arrears in this case. Given the landlords failure to mitigate I have determined that the arrears to be ordered by the tenants is to be reduced by 50%, meaning I will order the tenants to pay arrears to the sum of $52,262.85.
- I record for completeness that the tenants defence to the arrears claim seems to be that there were defects with the premises. Even if that was the case, the tenants also had a duty to mitigate, that would also have reasonably required the tenants to seek orders from the Tribunal, and in this case no such application has been filed at all. The RTA provides an obligation on the tenants to pay rent when it falls due, the tenants cannot just unilaterally decide to stop paying rent for any reason. Name suppression
- The landlord has applied for name suppression.
- Section 95A of the RTA relates to suppression orders, and confirms that: 95A Suppression orders (1) 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.
- In this case that landlord has not been substantially successful as only a portion of the arrears have been ordered. However even if that were not the case, the landlord has contributed to the level of the arrears by failing to mitigate, because of those circumstances it would not be reasonable to order suppression of the landlords name. R Woodhouse 21 August 2023