Published tribunal order
Tenancy Tribunal case 4995472 — Rent arrears at 25 Stephens Crescent, Highbury, Palmerston North 4412
Decided 24 Sept 2024 · Published 24 Sept 2024 · Application 4995472
Landlord favoured
- Rent arrears
Order
- Krista-Lee Anne May Judd owes Kāinga Ora–Homes and Communities $6,012.00 for rent and rent arrears as calculated in the table below (“the debt”).
- Krista-Lee Anne May Judd must pay rent and the debt as follows: a. By 150 weekly payments of $124.00, being $84.00 for rent and $40.00 for the debt. b. A final payment of $96.00, being $84.00 for rent and $12.00 for the debt. c. Payments will be every Wednesday, with the first payment on 25/09/2024 and continuing until 11/08/2027.
- Payments will be allocated in the following order: rent, the debt
- If the tenant fails to pay rent and rent arrears within two working days of the due dates, the balance of the debt will be payable immediately.
Reasons
- The hearing was conducted on Microsoft Teams.
- Kura Waata attended the hearing by video link.
- Ms Judd attended by telephone
- The landlord has applied for rent arrears and payment of the arrears by instalment over time.
What amount of arrears should be ordered?
- The arrears have built up over several years. Ms Waata says she understands the landlord did not apply to the Tribunal in respect to the arrears previously because of Government directives. Those directives are now to pursue tenants like Ms Judd for arrears from an early stage.
- The arrears now stand at $10,559.00. That is a daunting amount for Ms Judd. The rent is currently $84.00 per week. It appears the landlord did virtually nothing to prevent the arrears accruing from 13 July 2021 when the tenant first feel into arrears until it started taking action this year. Consequently, a question arises as to whether Kāinga Ora breached its duty to mitigate its loss imposed by s 49 of the Residential Tenancies Act 1986, which provides: 49 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.
- In the recent case Huang v Ashworth [2024] NZDC 15726, the District Court confirmed there is a duty to mitigate for rent arrears. His Honour, Judge Sainsbury confirmed the question is one of fact as to what the landlord did to limit their loss in rent. It the landlord did not do enough, then mitigation required for rent arrears order. His Honour considered observed in respect to a decision of Kerr DCJ in which Kāinga Ora (known then as Housing New Zealand) was the landlord: [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 the all the circumstances of the case.
- Thus, Sainsbury DCJ’s guidance is to recognise the fact Kāinga Ora has a statutory duty to consider the interests of the community as a factor that can be taken into account in assessing whether it is has taken “all reasonable steps” in all the circumstances of the case.
- In this case, Kāinga Ora took a compassionate approach to the tenant arrears which was consistent with the interests of the community. However, that does not obviate the need for it to mitigate its loss. Indeed, failure to reasonably do would not be in the interests of the community because the community would potentially be unfairly funding Kāinga Ora tenants whom Kāinga Ora does not hold to account.
- So, Kāinga Ora is to be given some latitude on account of its social responsibilities, but I find that it has failed to take all reasonable steps to mitigate its loss on the facts of this case even considering that.
- Consequently, the arrears are reduced to $6,000.00, which is a figure that in line with what the arrears might have been had Kāinga Ora taken all reasonable steps to mitigate its loss in the context of its role as the Government’s main social housing provider.
How must the arrears be paid?
- The tenant says she can pay rent from now on and repay the arrears at $40.00 per week.
- If the tenant fails to pay rent and rent arrears within two working days of the due dates, the balance of the debt will be payable immediately.
- The tenant is aware that because rent is 21 days in arrears, Kāinga Ora can apply to the Tribunal for termination and the Tribunal would have to allow the application. Therefore, the tenant is well-advised to keep to the repayment plan she has agreed to.