SMITH v ACCESSIBLE PROPERTIES NEW ZEALAND LIMITED [2019] NZCA 38

SMITH v ACCESSIBLE PROPERTIES NEW ZEALAND LIMITED [2019] NZCA 38 [8 March 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA453/2018[2019] NZCA 38BETWEEN ESMERALDA MONICA SMITHApplicantAND ACCESSIBLE PROPERTIESNEW ZEALAND LIMITEDRespondentCourt: French and Miller JJCounsel: M J Sharp for ApplicantO J Grant for RespondentJudgment:(On the papers)8 March 2019 at 10.30 amJUDGMENT OF THE COURTA The application for special leave to appeal is declined.B The applicant must pay the respondent costs for a standard applicationfor leave to appeal on a band A basis with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by French J)Introduction[1] Ms Smith applies for special leave under s 120 of the Residential TenanciesAct 1986 (the Act) to appeal a decision of Woolford J in the High Court.11 Smith v Accessible Properties New Zealand Ltd [2018] NZHC 1010 [High Court Decision].[2] Ms Smith is a former tenant of the respondent, Accessible PropertiesNew Zealand Ltd. In 2017, Accessible Properties gave Ms Smith 90 days' notice ofits intention to take possession of the rented premises, following testing that revealedlevels of methamphetamine contamination at the property. On the expiry of the90 days, Accessible Properties obtained a possession order from the TenancyTribunal.2[3] Ms Smith appealed the Tenancy Tribunal decision to the District Court.The appeal was unsuccessful.3 Ms Smith then exercised her right of appeal on aquestion of law under s 119 of the Act to the High Court.[4] In his decision, Woolford J made the following key findings:4(a) Section 51 of the Act entitles a landlord to give 90 days' notice oftermination without having to supply a reason.5(b) The only specific provision in the Act empowering theTenancy Tribunal to declare the notice of no effect was s 54 of the Act(notice issued in retaliation of tenant exercising any right, power,authority or remedy conferred on the tenant by the tenancy agreementor any Act or any complaint by the tenant against the landlord relatingto the tenancy) which did not apply on the facts.6(c) The Tribunal did not have jurisdiction under either s 78(1)(f) or underss 77 and 85 of the Act to make an order that it was harsh andunconscionable for Accessible Properties to give Ms Smith 90 days'notice of termination.72 Accessible Properties New Zealand Ltd v Smith NZTT Tauranga 4104292, 11 December 2017.We note that Mrs Smith later applied for a re-hearing and the Tenancy Tribunal declined to grantone in Accessible Properties New Zealand Limited v Smith NZTT Tauranga 4104292, 22December 2017.3 Smith v Accessible Properties New Zealand Ltd [2018] NZDC 704.4 High Court Decision, above n 1.5 At [34].6 At [34].7 At [45].(d) In order to decide the case, it was not necessary to determine whetherthe methamphetamine testing of the property was unlawful as claimedby Ms Smith.8(e) If it had been necessary, Woolford J would have found it was notunlawful because Ms Smith had consented to the testing and in anyevent non-invasive testing for methamphetamine could properly beconsidered as part of the landlord's general power of inspectionprovided for in the tenancy agreement.9[5] Dissatisfied with that outcome, Ms Smith asked the Judge under s 120 to grantleave to appeal to this Court. The Judge declined to grant leave.10 Ms Smith thenmade the current application for special leave.Analysis[6] It was common ground that in order to grant leave we must be satisfied that theproposed appeal raises a seriously arguable question of law of general or publicimportance.11[7] On behalf of Ms Smith, Mr Sharp advances four grounds of appeal which hehas helpfully summarised into two questions of law:(a) Whether there is jurisdiction under the Act to set aside terminations oftenancies as being harsh and unconscionable.(b) Whether, in the absence of an express provision, landlords have theright to carry out methamphetamine testing of tenanted propertieswithout the tenant's consent and whether terminations of tenancies8 High Court Decision, above n 1, at [46].9 At [46]–[47].10 Smith v Accessible Properties New Zealand Limited [2018] NZHC 1795 at [9].11 Residential Tenancies Act 1986, s 120(3); Cook v Housing New Zealand Corp [2014] NZCA 504at [3]; Waller v Hider [1998] 1 NZLR 412 (CA) at 413; and Winther v Housing New Zealand CorpHC Wellington CIV-2009-485-1954, 4 November 2009.based on testing results can be set aside as being harsh andunconscionable.[8] For the reasons that follow, we are not persuaded that either question raises aseriously arguable question of law warranting determination by this Court.[9] In support of her contention that the Tribunal does have jurisdiction to set asideterminations of tenancies as being harsh and unconscionable, Ms Smith relies on twoprovisions, first, s 78(1)(f) of the Act and, secondly, s 85.[10] Section 78(1)(f) states that where it appears to the Tribunal that an agreementbetween the parties, or any term of any such agreement, is harsh or unconscionable,or that any power conferred by an agreement between them has been exercised in aharsh or unconscionable manner, it may make an order varying the agreement, orsetting it aside (either wholly or in part).[11] We agree with Woolford J that Ms Smith faces insuperable difficulties inrelying on this provision. First, the power is limited to making an order setting asideor varying the agreement itself, which is not the remedy Ms Smith seeks. Secondly,the power which Accessible Properties was exercising in giving the 90 days' noticewas a statutory power and not a power under the tenancy agreement.12 It is correctthat the power to give 90 days' notice is mentioned in Ms Smith's tenancy agreementbut under a heading stating, "Outline of the Provisions of the Residential TenanciesAct." The mere fact of the reference to the power in that agreement cannot in our viewconvert it from being a statutory power into a contractual power for the purposes ofs 78(1)(f).[12] Ms Smith also seeks to rely on s 85. It states:85 Manner in which jurisdiction is to be exercised(1) Subject to the provisions of this Act and of any regulations madeunder this Act, the Tribunal shall exercise its jurisdiction in a mannerthat is most likely to ensure the fair and expeditious resolution ofdisputes between landlords and tenants of residential premises towhich this Act applies.12 Residential Tenancies Act, s 51(1)(d).(2) The Tribunal shall determine each dispute according to the generalprinciples of the law relating to the matter and the substantial meritsand justice of the case, but shall not be bound to give effect to strictlegal rights or obligations or to legal forms or technicalities.[13] Again, in our view, Ms Smith faces insuperable difficulties in relying on thisprovision. As the heading makes clear, it is about the manner in which the Tribunal'sjurisdiction is exercised. It does not purport to create a jurisdiction.[14] It follows we consider it is not seriously arguable that the Tribunal hasjurisdiction to set aside terminations of tenancies on 90 days' notice as being harshand unconscionable. An amendment of the legislation would be required to achievethat result.[15] As for the second proposed question of law — whether, in the absence of anexpress provision, landlords have the right to carry out methamphetamine testing oftenanted properties without the tenant's consent and whether terminations of tenanciesbased on testing results can be set aside as being harsh and unconscionable — that toois highly problematic, not least of all because it was not the basis of Woolford J'sdecision.[16] Further, the question assumes the testing was done without consent whereasWoolford J found Ms Smith consented.13 That was a case-specific finding of fact andso not appealable. We acknowledge that the testing in this case yielded results nowconsidered not to raise any health and safety concerns.14 However, this cannot, in ourview, assist Ms Smith when under the Act the giving of 90 days of notice oftermination can be given for any reason, need not give reasons and so is not requiredto be justified.15 We also consider that arguments that Accessible Properties had no13 High Court Decision, above n 1, at [46].14 There is no evidence that the levels of methamphetamine contamination typically resulting fromthird-hand exposure to methamphetamine smoking residues (as opposed to methamphetaminemanufacture) on household surfaces can elicit an adverse health effect. Peter GluckmanMethamphetamine contamination in residential properties: Exposures, risk levels, andinterpretation of standards (Office of the Prime Minister's Chief Science Advisor, 29 May 2018).Consequently, in the future, the Residential Tenancies Amendment Bill (No 2) 2017 (258-2) willrequire the Minister to be satisfied that a contaminant may be harmful to the health of personsbefore making regulations under the Act (cl 138C).15 Residential Tenancies Act, s 51(1)(d); and Winther v Housing Corp of New Zealand [2010] NZCA601, [2011] 1 NZLR 825 at [64].right to conduct the non-invasive testing untenable having regard to the landlord'sgeneral right of inspection.16Outcome[17] The application for special leave to appeal is declined.[18] There is no reason why costs should not follow the event. The applicant istherefore ordered to pay the respondent costs for a standard application for leave toappeal on a band A basis with usual disbursements.Solicitors:Te Whenua Law & Consulting, Rotorua for ApplicantDuncan Cotterill, Wellington for Respondent16 Residential Tenancies Act, s 48(2)(b). We note that the Residential Tenancies Amendment Billprovides for an explicit right of entry for the purposes of testing for contaminants (cl 27(1)(ba)).This does not preclude such testing from also being covered by the landlord's general right ofinspection.