Published tribunal order
Tenancy Tribunal case 4975833 — Rent arrears at Unit/Flat Flat 6, 8 Percy Spiller Avenue, Maraenui, Napier
Decided 10 Oct 2024 · Published 10 Oct 2024 · Application 4975833
Landlord favoured
- Rent arrears
Order
- The tenancy of TARRON TAMATI TOHIARIKI at Unit/Flat Flat 6, 8 Percy Spiller Avenue, Maraenui, Napier 4110 is terminated, and possession is granted to Kāinga Ora–Homes And Communities, at 5:00pm, Thursday 24 October 2024.
- The Bond Centre is to pay the bond of $210.00 (3089169-004) to Kāinga Ora– Homes And Communities immediately.
- TARRON TAMATI TOHIARIKI must pay Kāinga Ora–Homes And Communities $32,776.42 immediately, calculated as shown in the table below.
Reasons
- Both parties attended the hearing.
- The landlord has applied for termination of the tenancy, rent arrears and refund of the bond.
- As the applicant, the landlord must prove each claim to the civil law standard of proof, on the balance of probabilities.
Should a conditional termination order be made?
- Where rent is at least 21 days in arrears on the date the application is filed, the Tribunal must order termination of the tenancy, unless it is satisfied that the tenant will pay any rent in arrear within a period specified by the Tribunal and is unlikely to commit a further breach in the future. See sections 55(1)(a) and (1A) Residential Tenancies Act 1986 (RTA).
- The landlord provided a rent summary with their application. The tenant disputed the accuracy of this summary. The tenant did not provide any evidence to support their claim that the rent summary was not accurate. I am satisfied that the rent summary provided by the landlord is accurate and reliable.
- The application was filed on 19 August 2024. Rent arrears totalled $31,435.13 (1,135 days) on this date.
- The tenant submitted that one of the reasons they had not paid rent was because the roof in the toilet was leaking. The tenant claims it took the landlord four years to fix this problem properly. The tenant did not provide any evidence to support their claim and they did not file a cross-application requesting that the total rent arrears be decreased to reflect a leaking roof in the toilet.
- Alleged maintenance issues do not permit a tenant to stop paying rent. The appropriate course of action is for a tenant to file an application in the Tribunal. A tenant can seek orders from the Tribunal that the landlord fix the issue. If the problem is significant enough to render the rent charged excessive in the circumstances, the tenant can also seek an order that the landlord compensate the tenant financially.
- The fact that the tenant alleges there was a leaking roof in the toilet does not excuse him from paying rent. I note that at the date of the hearing the tenant is three years behind in their payment of rent. There have been instances throughout the tenancy where the tenant has gone nine months without paying rent.
- The tenant advised that they are studying part-time. The tenant said that they do not receive a benefit or student allowance, nor are they employed in any capacity. The tenant stated that they have no income. When asked how the tenant intended to pay their rent in the future, the tenant advised that they would hopefully apply for a student allowance with Study Link. The tenant has not provided me with any reassurance that they will be able to meet their rental payments in the future.
- Rent was at least 21 days in arrears on the date the application was filed and I am not convinced that the tenant will pay their rent when due moving forward. I decline to make a conditional termination order. The tenancy is terminated with effect from 5:00pm, Thursday 24 October 2024. Rent arrears
- The landlord provided a rent summary, which shows that at the date of the hearing on 10 October 2024, rent arrears totalled $32,959.42 (1,189 days).
- The issue I have to decide is whether the landlord took appropriate steps to mitigate their loss. If they did, then the tenant must pay the arrears in full. If they did not, then I am able to make an adjustment to the total arrears ordered to be paid by the tenant.
- 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.
- In Huang v Ashworth [2024] NZDC 15726, the District Court helpfully summarised the law regarding mitigation of loss in the context of the RTA as follows: [8] If either the landlord or tenant breaches the provisions of the tenancy agreement or the Act, the other party must take reasonable steps to minimise any loss arising from that breach. Accordingly, where the tenant fails to pay rent owing, there is an obligation on the landlord to mitigate the loss. This can be achieved by not allowing the arrears to continue to accrue, instead ending the tenancy and reletting the premises thereby preventing ongoing loss. [9] The rules that apply to mitigation of loss were described by Lord Haldane in British Westinghouse Electric and Manufacturing Co v Underground Electric Railway Co of London, as follows: [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 dependent upon the particular circumstances of each case. [10] The learned author of Law of Contract in New Zealand puts it this way: The burden which lies on the defendant of proving that the plaintiff has failed in his or her duty of mitigation is by no means a light one, for this is a case where a party already in breach of contract demands positive action from one who is often innocent of blame. [11] Of relevance is s 55(1)(a) of the Act, which contains the power for a landlord to end a tenancy where rent is more than 21 days in arrears. In Housing New Zealand v Witika the landlord, Housing New Zealand, had allowed five months of arrears of rent to accumulate before it took steps to terminate the tenancy. In the Tribunal the adjudicator applied a “standard practice” of limiting rent arrears to 6 – 8 weeks on the basis that allowing rent arrears to accrue significantly beyond 21 days was indicative of a failure to mitigate loss. He awarded Housing New Zealand only $1760 of the $2256.43 arrears of rent claimed. In the District Court Judge Kerr overturned that decision. On appeal it was held that Housing New Zealand had acted reasonably in relation to the tenant given its position as the provider of state housing. It should not be restricted in its ability to recover the full amount of rent arrears on the basis of a failure to mitigate loss. Judge Kerr concluded: The learned adjudicator, as a matter of practice, seems to have dealt with claims for arrears by fixing an allowance of up to six weeks or two months worth of arrears as being the maximum allowable in any claim. In my view, that artificially creates a ceiling, which in terms of the principles relating to mitigation should not be created. If mitigation of damages is to be based on all the circumstances of the case and on the factual situation pertaining, then each case must be treated on its own merits, and to adopt a practice which may have the effect of tying an adjudicator’s hands in my opinion is not appropriate. [11] The Court held there is a duty to mitigate any loss by ensuring rent does not get too far in arrears. The test of what is required by the landlord to mitigate loss is a factual one that requires the Court to consider: (a) whether the landlord took all reasonable steps to mitigate its loss; and (b) more particularly, whether it acted reasonably having regard to all the circumstances of the case. [12] Judge Kerr avoided imposing an artificial ceiling on the amount of arrears a landlord can let build up but clearly indicated that there is a duty to mitigate when the rent goes into arrears. [13] On one view Judge Kerr appears to be placing a gloss on the obligation to mitigate for an organisation such as Housing New Zealand. This is because under s 3B(a)(i) of the Housing Corporation Act 1974, one of the objectives of Housing New Zealand is to exhibit “a sense of social responsibility by having regard to the interests of the community in which it operates.” As the main provider of social housing in New Zealand at the time, it may be considered as contrary to Housing New Zealand’s social obligation to promptly evict tenants who cannot pay their rent. My view is that this analysis by Judge Kerr is an excellent illustration of the need to assess reasonable steps with regard to all the circumstances of the case. Applying that approach to this case, I do not consider that a landlord who has made a considered and sympathetic decision to allow a tenant to have more time to pay arrears should be prejudiced if payment is not made.
- This tenancy began on 9 March 2018. The tenant immediately fell into arrears on 28 March 2018. Up until August 2021, the tenant was in and out of arrears. The total arrears accumulated during this period were not overly significant. From 18 August 2021 up to the date of the hearing, rent arrears have steadily increased.
- The landlord has shown immense leniency to the tenant. The landlord has tried communicating with the tenant about the arrears. The tenant has promised to pay the debt, but never has. The tenant has been difficult to engage with at times.
- From 4 October 2023 – 10 July 2024, the tenant’s income related rent increased to $512.00 per week. The landlord has actively assisted the tenant to engage with the Ministry of Social Development (MSD) by participating in a three-way call to help bring down the tenant’s income related rent. This was successful and since 17 July 2024, the tenant’s income related rent has been $194.00 per week.
- The landlord has done everything they can to work with the tenant and has delayed applying for termination of the tenancy, because the tenant has children that reside at the tenancy address. Termination has been sought as a last resort by the landlord.
- The landlord has not sat idle while rent arrears have accumulated. They have been pro-avtive in trying to communicate with the tenant. They even assisted him to reduce his income related rent by participating in a meeting with MSD. The landlord has also tried to arrange payment plans that the tenant has only ever stuck to for very short periods of time. I find that the landlord has engaged in meaningful, sustained efforts over a long period of time.
- Considering these efforts and the unique position that Kainga Ora Homes and Communities occupies as the main provider of social housing in New Zealand, I am satisfied that the landlord has acted reasonably to mitigate their loss in the circumstances.
- The tenant is liable to pay the rent arrears in full. Filing fee and suppression
- Because Kāinga Ora–Homes And Communities has wholly succeeded with the claim I must reimburse the filing fee.
- The tenant made an application for name suppression. I have a discretion whether to grant the tenant name suppression under section 95A(4) RTA. I must consider the interests of the parties and the public.
- In Lewis v Wilson & Horton [2003] 3 NZLR 546 at paragraph 43, The Court of Appeal endorsed the approach taken in the High Court, which held: ...that the principle of open justice dictates that there should be no restriction on publication of information about a case ‘except in very special circumstances.’
- The tenant stated that they were concerned about the effect that publication would have on their mana, as well as their children who share the same last name. The tenant was also worried about the effect publication would have on their ability to find a rental property in the future. The tenant said it is difficult to get a rental property, especially with children and publication of his name would make this even harder. I consider these to be ordinary consequences of the tenant’s actions. They are not “very special circumstances.”
- I consider there is significant public interest in publication of the tenant’s name. The level of arrears in this case is very significant. It is rare for the Tribunal to see arrears that have accumulated over the period of time the arrears arose in this case. It would be in the public interest to be aware of the tenant’s rent history, and that is a particularly legitimate interest for potential future landlords.
- The tenant’s application for name suppression is dismissed.