Tenant Ordered to Pay Rent Arrears and Break Fee

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[2025] NZTT 5159872, 5163592

TENANCY TRIBUNAL AT WELLINGTON | TE TARAIPIUNARA RETIHANGA KI TE WHANGANUI-A-TARA

APPLICANT: [redacted]

Tenant

RESPONDENT: [redacted]

Landlord

TENANCY ADDRESS: Unit/[ADDRESS], [POSTCODE]

ORDER

1. The tenancy of [NAME] and [NAME] at Unit/[ADDRESS], [POSTCODE] is terminated, and possession is granted to [COMPANY] and [NAME] at 5.00pm on 2 April 2025.

2. The Bond Centre is to pay the bond of $2,000.00 (5816785-008) to [COMPANY] As Agent For [NAME] immediately.

3. [NAME] and [NAME] must pay [COMPANY] As Agent For [NAME] $2,450.00 immediately, calculated as shown in the table below:

4. All other claims are dismissed.

Description Landlord Tenant Rent arrears to 2.4.2025 $7,300.00 Compensation: Misleading compliance statement $500.00 Compensation: Non-compliant bathroom extractor fan $1,000.00 Compensation: Failure to maintain draught stopping $1,000.00 Compensation: Failure to maintain washing machine $300.00 Compensation: Reimburse cat door cost $50.00 Total award $7,300.00 $2,850.00 Net award $4,450.00 Bond $2,000.00 Total payable by Tenant to Landlord $2,450.00

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Reasons:

1. Both parties attended the hearing.

2. The tenants have applied for reduction of the fixed-term tenancy. They also seek refund of the bond and compensation for breaches of the Residential Tenancies Act 1986 (RTA) and the Residential Tenancies (Healthy Homes Standards) Regulations 2019 (HHS) for non-compliance with healthy homes standards and failing to maintain the premises.

3. The landlord has applied for termination of the tenancy, rent arrears and refund of the bond. A prior application to terminate the tenancy for abandonment was withdrawn.

4. I deal first with the landlord’s application for termination, secondly the tenants’ application for reduction of the fixed term and then the remaining claims.

5. All parties agreed at the hearing that the tenancy should be terminated. However, because the tenancy was for a fixed term, the basis for the termination is relevant to the tenants’ liability for rent. At the hearing I confirmed that an order would be made terminating the tenancy as at the hearing date, and that a reserved decision would be released confirming the basis for termination, the tenant’s liability for rent and whether the liability and term of the tenancy should be further reduced.

Termination of the tenancy-background

6. The fixed term tenancy was from 13 May 2024 to 12 May 2025. The [NAME] manager employed by [NAME] at the time arranged for the tenants to rent the premises following a flood at their previous tenancy. After that [NAME] manager resigned, [NAME] and [NAME] took over management of the tenancy.

7. On or about 18 December 2024, the tenants telephoned the [NAME] manager [NAME] advising that they wished to exit the tenancy early. [NAME] was joined to the call. Unfortunately, the call did not go well with each party blaming the other for the discussion becoming heated. The tenants believe they advised the landlord that they wished to vacate by 21-23 January 2025. The tenants say that the landlord’s response was not what they were expecting. They felt that the landlord was not willing to work with them to find new tenants. They were overwhelmed by the landlord’s advice that they were liable for rent, a break fee and any rent shortfall.

8. The landlord sent the tenants an email on 18 December 2024 to explain the process for breaking a fixed term tenancy early. It stated (correctly) that the fixed term could not be terminated by notice. However, the landlord agreed that the tenants could vacate provided they paid rent until a new tenant moved in and they paid a break lease fee. The landlord explained that the fee was to

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cover the landlord’s reasonable costs in negotiating the lease break, administration costs, an extra bond inspection, marketing the [NAME] and all costs associated with re-letting. They advised that the fee would be capped at $850 so that the tenants would be liable for costs up to and not exceeding the cap. They included a letter for the tenants to sign agreeing to the break lease terms. The letter also made provision for the tenants to indicate their preferred vacate date.

9. On 20 December 2024, the landlord sent a follow-up email acknowledging that the tenants wished to vacate the [NAME] in “late January” but asking them to confirm the “vacate date”. The email also explained the steps the landlord could take to advertise the [NAME] for let. It warned the tenants that due to an oversupply of rentals it might be difficult to find tenants to pay the same rent and the rent may have to be dropped. In that case, the tenants would need to top up the difference.

10. The tenants replied by email on 20 December proposing that they take on the burden of advertising the premises at their cost. They suggested that any break fee be capped at $300 and rejected any liability to top up the rent if necessary. The landlord accepted that the tenants could take responsibility for finding new tenants but did not agree to the other terms proposed by the tenants. Notably, the tenants did not sign the break lease agreement letter prepared by the landlord. In early January 2025, the landlords advised that they may have a prospective tenant, and the tenants sent the landlords a link to some advertising they had arranged on Facebook. Nothing came of the inquiry and nor did the landlord hear from the tenants about any prospective tenants.

11. The landlords served a notice on the tenants to conduct an inspection on 28 January 2025. At the inspection they discovered that the tenants’ belongings had been removed and it appeared they had moved out. The tenants also stopped paying rent after 19 January 2025. The landlords sent the tenants a message asking if they had moved out but received no reply.

12. The landlords filed an application to terminate the tenancy for abandonment. However, when Tenancy Services contacted the tenants, they advised that they had not abandoned the premises. The landlords withdrew the application and filed a new application to terminate the tenancy for rent arrears.

13. On or about 19 February 2025, the tenants returned the keys. The landlords asked them for permission to advertise and show the [NAME] to prospective tenants. The tenants agreed. The landlord has been advertising for tenants since that date but as at the hearing on 2 April 2025, no tenants have been found. The landlords seek rent to the end of the lease or the hearing date as appropriate.

14. The tenants believed that they could vacate the premises because they had told the landlords that they wished to leave the premises on 21 January 2025. They

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thought the tenancy would end that day. In support of this, they refer to the Facebook advertisement they prepared which states that the premises are available from 23 January 2025 or earlier and to the email from the landlord on 20 December 2024 which acknowledges that they wish to vacate in “late January” following the phone call on 18 December 2024.

What are the consequences of terminating a fixed term tenancy for rent arrears?

15. Where a fixed term tenancy is abandoned, s61(3)(b) RTA provides that the tenant is liable for rent until the earlier of the end of the tenancy, or the premises are re-tenanted. S 61(4) then provides that a landlord is not required to mitigate loss by granting a new tenancy.

16. The Tribunal has ruled in Oxygen.CO.NZ Limited v Mundy1 that where a tenant makes it clear to the landlord by words or actions that they want to end a fixed term tenancy early, and they stop paying rent, this is a repudiation of the contract but not necessarily an abandonment. This is particularly so where the parties discuss ending the tenancy but cannot agree on the terms. In this situation the landlord can terminate for rent arrears but not, for abandonment.

17. Unlike an abandonment, where the contract has been repudiated, there is no statutory equivalent to s61(3)(b) entitling the landlord to claim rent after the termination date. While the Tribunal may award compensation for loss of rent in appropriate circumstances, the Tribunal in Mundy2 found that terminating for rent arrears alone, even if substantial, would not justify awarding compensation for lost rent past the termination date. This is because the landlord elected to end the tenancy rather than just enforce the rent arrears debt. The effect of termination is to remove the tenant’s right to occupy the premises, so there should be a compelling reason for them to continue paying rent if they cannot live there. The most obvious situation is where the tenant has shown a clear intent to repudiate the tenancy agreement and has stopped paying rent. In summary, the Tribunal found in [NAME] as follows:

a. Where a tenancy is terminated for abandonment, the landlord can claim rent past the termination date (until the tenancy ends or the premises are earlier re-tenanted) and is not required to mitigate loss;

b. Where the landlord elects to terminate the tenancy for rent arrears, and there is no evidence the tenant has repudiated the tenancy, the landlord cannot claim rent past the termination date.

c. Where the landlord applies to terminate the tenancy for rent arrears, and there is convincing evidence that the tenant has repudiated the tenancy,

1 Oxygen. CO.NZ Limited v Mundy [2020] NZTT 4225871

2 Ibid n1

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the landlord may be entitled to compensation for loss of rent past the termination date. However the landlord must take reasonable steps to mitigate loss.

18. I am satisfied on the evidence that the tenants’ clear intention was to end the lease sometime in late January 2025. However, they did not confirm the exact date with the landlord. I find that the tenants did not respond to the landlord’s emails asking them to advise their preferred “vacate date.” The tenants giving indicative dates in a telephone call and advertising the premises as being available from 23 January 2025 or earlier is not effective and direct notice to the landlord of the vacate date. In any event, it was not open to the tenants to give notice to terminate a fixed term tenancy without the landlord’s consent. In this case the landlord did not consent unless the tenants complied with the break lease conditions clearly communicated to them. The tenants had not complied with the conditions because they had not found a replacement tenant acceptable to the landlord. Therefore, the tenancy was still “on foot’ and they continued to be liable for rent and all other obligations under the tenancy agreement.

19. Once the tenants left the premises, they did not respond to the landlords messages asking whether they had vacated. After the landlord lodged an application to terminate the tenancy for abandonment on 3 February 2025, the tenants advised Tenancy Services on 10 February 2025 that they had not abandoned the premises (dates confirmed in the Tenancy Services records for application 5153713). This message was passed onto the landlord who withdrew the termination for abandonment application and filed an application to terminate the tenancy for rent arears instead.

20. By vacating the premises on or about 21 January 2025, I find the tenants repudiated the tenancy agreement and the landlord was required to take steps to mitigate their loss. However, even on 10 February 2025 the tenants advised Tenancy Services that they had not abandoned the premises. It is not until 19 February 2025 that the tenants returned the keys to the landlord and made clear that they had vacated the premises and repudiated the tenancy agreement. From that date onwards, I consider that the landlord was obliged to start the process of re-advertising the [NAME]. They have done so but have been unable to find a new tenant during the 6-week period that elapsed up to the hearing date. I consider that 6 weeks is not an unreasonable length of time in the circumstances. Therefore, I consider the landlord has taken reasonable steps to mitigate their loss and rent is owed to 2 April 2024. The landlord has provided records to prove the amount owing.

21. Whether the landlord would be entitled to loss of rent beyond the hearing date when the tenancy was terminated is not a matter that I can deal with as it depends on what has happened since that date and whether the premises have been re-let. The landlord would have to bring a separate claim on that issue.

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22. The tenants argue that they were unable to relet the premises themselves before they vacated because the home did not meet healthy homes standards. This meant they could not complete the [NAME] advertising form which requires the advertiser to confirm that the [NAME] complies with HHS. Therefore, they say the landlord’s breach has contributed to their loss and rent arrears should be reduced accordingly.

23. The landlord says that while some HHS issues had been raised and were outstanding, at no time did the tenants advise them that they could not advertise the premises for this reason. I have reviewed the correspondence between the parties at the time and accept that the tenants did not raise this issue specifically with the landlord. Had they done so, the landlord could have provided a response or assured the tenants that any outstanding HHS would be completed before any new tenancy. I also accept that it was unlikely that new tenants would be found during the Christmas/New year period and before the tenants left on 21 January 2025. Therefore I consider that the rent owed should not be reduced for any failure by the landlord relating to the tenants’ advertising process. However, later in this decision I have awarded compensation to the tenants for the landlord’s failure to comply with HHS which I consider addresses the issue.

24. For the above reasons, the tenants are liable for rent arrears of $7,300 owed as at the termination date, 2 April 2025.

Should the fixed term be reduced and ended prior to 2 April 2025?

25. The tenant has applied for reduction of the fixed-term tenancy.

26. The Tribunal may 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. See section 66(1) RTA.

Has there has been an unforeseen change in the tenant's circumstances?

27. [NAME] gave evidence that in November 2024, her employer advised her that they were intending to restructure, and her employment may be affected. Due to her length of time with the company she was told that she would be the first to be made redundant. [NAME] had already become unemployed in August 2024 after her start-up venture

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ended. So, they were concerned about their ability to afford the rent because they were reliant on the income of [NAME] alone.

28. [NAME] was advised by her company that she had options to voluntarily leave; take a six-month break and/or find other opportunities. In the meantime, [NAME]’s role continued. On 25 February 2025, the company confirmed that despite certain measures they had taken, the number of employees was no longer sustainable, and she was told that she would need to find other employment. [NAME] confirmed that she was leaving the company on 25 April 2025.

29. The tenants did not share the above information with the landlord when asking to terminate the tenancy and the first time these details were mentioned was at the hearing. They had indicated to the landlord and in their application that they were looking for work outside the Wellington region and were unhappy with the condition of the [NAME].

30. While news of a restructure occurred after the tenancy started, Ms [NAME]- [NAME] was not made redundant during the tenancy and she confirmed that her employment was not due to end until after the tenancy was terminated on 2 April 2025. Therefore, while the threat of restructuring and redundancy was present, it did not actually happen during the tenancy. Her circumstances did not change during the tenancy and there is no reason why she could not pay rent during the term of the tenancy. Therefore, the first test for considering an order under s66 has not been met. There has been no unforeseen change in the tenants’ circumstances, and the application must fail.

Has the landlord breached their maintenance obligations?

31. The tenants claim that the landlord has breached their obligations under section 45 RTA to provide and maintain the premises in a reasonable state of repair.

32. It was not disputed that at the start of the tenancy (14 May 2024) the washing machine was not working, and a new machine was not installed until approximately 7 June 2024. The tenants seek compensation of $300 for the time and expense of having to use a laundromat for 3 weeks. However, the tenants did not produce any receipts or other evidence to substantiate the amount claimed.

33. The landlord considers fair compensation is $197.10 which they have calculated based on laundromat costs, mileage, and an assumption that the tenants did three washes per week. However, the tenants pointed out that they had suffered a flood at their previous premises and that is why the [NAME] manager they were dealing with offered them this [NAME]. Therefore, they had a lot of extra washing as a result of the flood.

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34. I am satisfied that the compensation sought of $300 is reasonable in the circumstances.

35. It was also not disputed that that there was a hole in the front door which required repair. The [NAME] manager at the time advised the tenants to have it fixed and the landlord would reimburse the costs. The tenants seek $50 for purchasing and having a builder instal a cat flap. There is no receipt or invoice for the cost and the landlord considers it excessive. I am satisfied on the evidence that the compensation sought of $50 is reasonable in the circumstances.

Has the landlord breached Healthy Homes Standards?

36. The tenants claim that the landlord has breached the landlord’s obligations under section 45(1)(bb) HHS in respect of ventilation, draught stopping and drainage standards.

37. Compliance dates for the HHS vary depending on the tenancy. For this tenancy, the premises must comply within 120 days of the commencement date. The tenancy started on 14 May 2024. Therefore the compliance date was 11 September 2024.

Background facts regarding HHS compliance

38. [NAME] gave evidence that when the [NAME] manager who had initially managed this tenancy left [NAME], they quickly realised that he had signed HHS statements himself without consulting a third party or owner. Therefore, they initiated inspections to check the properties he had been managing.

39. On 21 August 2024, the [NAME] managers inspected these premises. During the inspection, the tenants reported that the front door was draughty. The [NAME] managers also realised that there were no extractor fans in the kitchen or bathroom. The bathroom did have a skylight with a passive ventilation grill which the landlords thought might be compliant. The landlords then obtained the owner’s permission to arrange a full healthy homes assessment.

40. At the same time, they engaged a contractor to draught-stop the front door and provided an invoice for the work dated 28 August 2024.

41. On 2 September 2024, [NAME] assessed the premises and completed a report (the HHS report). It recorded four outstanding HHS issues: No extractor fans in the kitchen/bathroom; the deck drain was blocked; and the front door required draught-stopping. The problems were addressed by the landlord as follows:

a. Kitchen extractor: The landlord obtained a certificate from their electrician that the kitchen is exempt from meeting the requirement.

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b. Bathroom extractor: The landlord gave evidence that this took some time to arrange. First, there was an investigation as to whether the existing skylight grill was compliant. When it was established that it was not, the landlord had to obtain [NAME] consent to instal a mechanical extraction system. This was completed on or about 14 January 2025.

c. Deck drain: The landlord sent a contractor to complete the work. However, it was earlier completed by the [NAME] on 21-22 November 2024.

d. Draught-stopping the front door: The landlord relied on the fact that their contractor had draught-stopped the door prior to the HHS report.

42. The landlord provided the Healthy Homes assessor with evidence of the above work and on 30 January 2025, he issued a second HHS report confirming compliance with all the HHS standards. It was established at the hearing that he did not reinspect the premises and relied on the landlord’s evidence that the work was done. The tenants raised the issue that the draught-stopping work on the front door was done before the original assessment on 2 September 2024 which still identified a draught. Therefore, they argue that this was not remedied.

Ventilation

43. The ventilation standard requires that each kitchen and bathroom have extractor fans installed with a minimum defined extraction capacity.

44. I am satisfied on the evidence that the kitchen was exempt from the standard. However, the bathroom required a new extractor fan, and it should have been installed by the compliance date, 11 September 2024. It was not installed until 14 January 2025. The tenants are entitled to compensation for the breach.

45. The Tribunal can award compensation where a party has been in breach of the RTA or has been in breach of the tenancy agreement, and the other party has suffered a loss because of that breach. In general, when awarding damages, the accepted principle is that the injured party should be put in the same position as they would have been but for the breach, since there is liability for losses flowing from the breach.

46. The tenants claimed that the lack of an extractor in the bathroom meant that mould developed in the bathroom and adjoining bedrooms which required constant cleaning. There is little documentary evidence that they complained about this to the landlord. However, I accept that the lack of an extractor fan is a loss of amenity for which they were paying rent, and it was not fixed until 4 months after the HHS compliance date. I award $1,000 which I consider is fair and reasonable compensation for the breach.

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Draught-stopping

47. The draught stopping standard requires that residential premises be free from unreasonable gaps and holes that are not an intentional part of the building, which allow draughts to arise.

48. I am satisfied on the evidence that while some draught-stopping of the front door was completed, a further issue was identified in the HHS report, and it was not addressed before the tenancy ended. The tenants are entitled to some compensation for the landlord’s failure to investigate and repair the front door draught.

49. The tenants claim that the draught contributed to the premises feeling cold and required them to use more heating. Again, there is little evidence that they advised the landlords that draughts persisted after the contractor’s draught- stopping work in August. However, I also accept that it was reasonable for the tenants to assume that the landlords were on notice of a continuing issue because it was detailed in the HHS report.

50. For failing to address the draught-stopping issue for the 4-month period from September 2024 to January 2025, I award $1,000 which I consider is fair and reasonable compensation.

Drainage

51. The moisture ingress and drainage standard requires that buildings comprising residential tenancies must have efficient systems to drain storm water, surface water and ground water, and that includes gutters, downpipes and drains.

52. The deck guttering was blocked and remedied by the [NAME] conducting an annual exterior wash which included gutter cleaning on 21-22 November 2024. While the cleaning took place almost 3 months after the HHS report, there is no evidence that the blockage impacted the premises or the tenants. I accept the landlord’s explanation that the blocked drain was on the edge of the deck and beneath is a large soffit above the garage. Therefore, there was no risk of water ingress into the house unlike a gutter on the edge of a roof that could lead to water ingress/mould on an adjacent internal ceiling. In those circumstances, I consider an award of compensation is not justified.

Has the landlord provided a false or misleading Healthy Home Compliance statement?

53. A landlord must include a signed statement in the tenancy agreement that provides information concerning compliance with the HHS. See section 13A(1CA) and (1CB) RTA.

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54. The tenants claim that the HHS compliance statement in the tenancy agreement that was prepared and signed by the [NAME] manager at the time falsely states that overall the [NAME] complies with HHS. However, the statement records that there is no bathroom or kitchen extractor fans. The tenants also argue that the problems later discovered regarding draught- stopping and drainage shows that the [NAME] did not comply with HHS.

55. The tenants also allege that they specifically asked if, and the [NAME] manager assured them, the [NAME] was HHS compliant.

56. I have already made a finding that the landlord breached the ventilation standard in the bathroom. Although the HHS compliance statement records that there is no fan, it otherwise stated that the [NAME] was HHS compliant. With regard to draught stopping and drainage, I consider that those are maintenance issues that arose after the tenancy started.

57. In any event, I am satisfied that the HHS compliance statement was not filled out correctly and misled the tenants by stating overall that the [NAME] complied with HHS when it did not. The tenants are entitled to some compensation for the breach. I award $500 which I consider reasonable in the circumstances.

Summary

58. Both parties have partially succeeded with their claims. However, the landlord has substantially succeeded in terms of the monetary outcome.

59. The tenants have applied for suppression. 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. See section 95A RTA. In this case, I find that the tenants have not “wholly or substantially” succeeded and there are no grounds to grant them suppression.

[NAME]

16 May 2025

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Please read carefully: Visit justice.govt.nz/tribunals/tenancy/rehearings-appeals for more information on rehearings and appeals.

Rehearings You can apply for a rehearing if you believe that a substantial wrong or miscarriage of justice has happened. For example: • you did not get the letter telling you the date of the hearing, or • the adjudicator improperly admitted or rejected evidence, or • new evidence, relating to the original application, has become available.

You must give reasons and evidence to support your application for a rehearing. A rehearing will not be granted just because you disagree with the decision. You must apply within five working days of the decision using the Application for Rehearing form: justice.govt.nz/assets/Documents/Forms/TT-Application-for-rehearing.pdf

Right of Appeal Both the landlord and the tenant can file an appeal. You should file your appeal at the District Court where the original hearing took place. The cost for an appeal is $260. You must apply within 10 working days after the decision is issued using this Appeal to the District Court form: justice.govt.nz/tribunals/tenancy/rehearings-appeals

Grounds for an appeal You can appeal if you think the decision was wrong, but not because you don’t like the decision. For some cases, there’ll be no right to appeal. For example, you can’t appeal: • against an interim order • a final order for the payment of less than $1000 • a final order to undertake work worth less than $1000.

Enforcement Where the Tribunal made an order about money or [NAME] this is called a civil debt. The Ministry of Justice Collections Team can assist with enforcing civil debt. You can contact the collections team on [PHONE] or go to justice.govt.nz/fines/civil-debt for forms and information.

Notice to a party ordered to pay money or vacate premises, etc. Failure to comply with any order may result in substantial additional costs for enforcement. It may also involve being ordered to appear in the District Court for an examination of your means or seizure of your [NAME].

If you require further help or information regarding this matter, visit tenancy.govt.nz/disputes/enforcing- decisions or phone Tenancy Services on [PHONE].

Mēna ka hiahia koe ki ētahi atu awhina, kōrero ranei mo tēnei take, haere ki tenei ipurangi tenancy.govt.nz/disputes/enforcing-decisions, waea atu ki Ratonga Takirua ma runga [PHONE] ranei.

https://www.justice.govt.nz/tribunals/tenancy/rehearings-appeals https://www.justice.govt.nz/assets/Documents/Forms/TT-Application-for-rehearing.pdf https://www.justice.govt.nz/tribunals/tenancy/rehearings-appeals/ https://www.justice.govt.nz/fines/about-civil-debt/ https://www.tenancy.govt.nz/disputes/enforcing-decisions https://www.tenancy.govt.nz/disputes/enforcing-decisions http://www.tenancy.govt.nz/disputes/enforcing-decisions/

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A manaomia nisi faamatalaga poo se fesoasoani, e uiga i lau mataupu, asiasi ifo le matou aupega tafailagi: tenancy.govt.nz/disputes/enforcing-decisions, pe fesootai mai le Tenancy Services i le numera [PHONE].

Reasons: