PORTFOLIO PROPERTY MANAGEMENT LIMITED v CLUTTERBUCK [2013] NZHC 3165

PORTFOLIO PROPERTY MANAGEMENT LIMITED v CLUTTERBUCK [2013] NZHC 3165 [29 November 2013]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2013-485-1047[2013] NZHC 3165UNDER the Residential Tenancies Act 1986BETWEEN PORTFOLIO PROPERTYMANAGEMENT LIMITEDAppellantAND PAUL CLUTTERBUCKRespondentHearing: 5 November 2013Counsel: J D Evans for AppellantD D Vincent for RespondentJudgment: 29 November 2013JUDGMENT OF GODDARD JThis judgment was delivered by me on 29 November 2013at 3.00 pm, pursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Hayman Lawyers, Wellington for AppellantThomas Dewar Sziranyi Letts, Lower Hutt for RespondentIntroduction[1] This is an appeal on a question of law from the District Court, stated in the following terms:Does the Residential Tenancies Act 1986 (the Act) allow for a tenant and landlord to enter into a boarding house tenancy for a fixed term of more than 28 days?Background[2] Portfolio Property Management is the landlord of 48 Aurora Terrace. Mr Clutterbuck was a tenant of room 34 of that property, and entered into a written boarding house tenancy agreement that commenced on 4 August 2012 and ended on 22 February 2013. On 5 September 2012 Mr Clutterbuck gave written notice terminating the tenancy and vacated on 18 September 2012.[3] Portfolio Property sought rent from 19 September 2012 until 22 February 2013 on the basis the tenancy was still on foot.[4] In the Tenancy Tribunal, the claim failed. The Tribunal relied on Platinum Rentals NZ Ltd v Madden1 in which it was held that boarding house tenancies could not have a fixed term of over 28 days, and thereafter it becomes a periodic tenancy and is terminable on notice. Thus the fixed term expired on 31 August 2012, and after that Mr Clutterbuck was entitled to give notice of termination, and had complied with all the requirements under the Residential Tenancies Act 1986 as to notice and rent.[5] Portfolio appealed to the District Court, submitting that Platinum Rentals NZ Ltd was decided incorrectly, and that a fixed term tenancy does not turn into a periodic tenancy. Judge Bouchier considered the decision carefully, and decided it was correct. Accordingly the appeal failed.1 Platinum Rentals NZ Ltd v Madden DC Wellington CIV-2011-085-992, 11 September 2012.The Residential Tenancies Act[6] Boarding house tenancies are included in the Residential Tenancies Act 1986(the Act), and therefore come within the Tribunal's jurisdiction from 1 October 2010by virtue of the Residential Tenancies Amendment Act 2010. Part 2A (ss 66A to 66Y) sets out the special provisions which apply only to boarding house tenancies.[7] Under s 66B, a "boarding house tenancy" is one that lasts for 28 days or more(or is intended to), and under which the tenant has exclusive rights to particular sleeping quarters and shared use of facilities in a boarding house.[8] A "boarding house" is also given a particular definition as meaning residential premises occupied, or intended to be occupied, by at least six tenants and which has one or more boarding rooms along with facilities for communal use.[9] The arrangements for a boarding house are significantly different from a normal residential tenancy. Concepts of exclusive possession and a clearly demarcated space that the tenant has quiet enjoyment of simply cannot apply. Presumably that was one of the reasons why boarding houses were originally excluded from the Act.[10] Greater powers are given to landlords of boarding house tenancies to terminate the tenancy than given to landlords of other tenancies. A landlord of a boarding house tenancy may terminate a tenancy on short notice and without an order of the Tribunal.[11] Section 66V allows a tenant to terminate a boarding house tenancy on 48 hours notice, which need not be in writing.[12] Section 50 sets out the circumstances in which tenancies can be terminated, and subs (a) – (b) provide:(a) in the case of a fixed-term tenancy, on the expiry of the term of the tenancy or, if any of sections 58(1)(d), (da), 59, or 59A apply, by giving notice in accordance with the applicable section;(ab) on the death of a sole tenant under a tenancy agreement or a sole tenant under a boarding house tenancy agreement, in accordance with section 50A or 66W, as the case requires;(b) by the giving of notice of a period no shorter than that required by this Act, in the case of a periodic tenancy or where provision is made in the tenancy agreement for termination by notice:The competing arguments[13] On behalf of Portfolio, Mr Evans submitted that a reading of the Act allows for boarding house tenancies to be for a fixed term longer than 28 days, based on the following interpretation:(a) while Part 2A sets out special provisions that apply only to boarding house tenancies, this does not mean that only Part 2A applies – other sections in the Act also apply. Portfolio relies on s 50(ab) to establish that Part 2A is not a code (which deals with the death of a tenant in a boarding house);(b) section 66C sets out the requirements for the content of a boarding house tenancy agreement, and s 66C(1)(a) requires the agreement to state whether the tenancy is intended to last for 28 days or more. Thewords "or more" are meaningless unless a fixed term tenancy ofgreater than 28 days is possible. Section 13A sets out the minimum information all tenancy agreements must have, and includes the date the tenancy will terminate if it is for a fixed term. Read together, the Act permits a boarding house tenancy agreement to last more than 28 days and to be a fixed term tenancy;(c) section 66V(1) provides that under a boarding house tenancy, a tenant may terminate on 48 hours notice. This should only apply where the tenant has a periodic boarding house tenancy. In this respect, Mr Evans referred to s 50, which deals with termination, pointing out that s 50(ab) deals with the death of the tenant and that distinguishes the time for termination between a boarding house tenancy and other tenancies. He submitted that the absence of provision under s 50(a)for fixed term boarding house tenancies illustrates that no clarification was required and a fixed term boarding house tenancy will terminate on expiry of the fixed term;(d) allowing a fixed term tenancy for boarding house tenancies accords with the purpose of the provisions, by providing more formal and permanent accommodation and more certainty.[14] On behalf of the respondent, Mr Vincent submitted that:(a) Part 2A creates a code for boarding house tenancy agreements. It was brought in as part of the 2010 amendments, whereas previously the Act did not apply to boarding house tenancies;(b) a boarding house tenancy has an initial period of 28 days, but can continue thereafter, and is different from a periodic and fixed term tenancy. The terms have been in the Act since its inception and have been defined on the understanding that they did not include boarding houses which were excluded from the Act at the time;(c) irrespective of how long parties intend the tenancy to last for, boarding house tenancies can be terminated on 48 hours notice. This is fundamental – and given that Parliament has made all boarding house tenancies terminable on notice, they cannot be by definition a fixed term tenancy. If parties contract for a fixed period greater than 28 days, this must be subject to the ability to terminate on notice.Applicable law[15] In Platinum Rentals NZ Ltd v Madden,2 the tenant moved into a boarding house under an agreement with a fixed term of one year. For various reasons, she needed to vacate and did so. She applied to the Tenancy Tribunal for a release from the tenancy. The Tribunal held as a matter of law that her tenancy was a boardinghouse tenancy, not a fixed term tenancy, because the agreement included "boarding2 Platinum Rentals NZ Ltd v Madden, above n 1.house rules" which enabled Platinum to terminate on 48 hours notice. On appeal, Judge Broadmore found:(a) the property was a boarding house;(b) the aim of the amending legislation was to provide protection for the sort of people who reside in boarding houses – transient, on low income, or temporary. Section 66U allows the landlord to terminate tenancies with very little notice (48 hours, 14 days and 28 days in different circumstances), and s 66V allows the tenant to terminate with only 48 hours notice;(c) section 66V provides that if the property is a service tenancy as well as a boarding house tenancy, the 14 days notice requirement that applies to service tenancies does not apply. There is no express provision providing for boarding house tenancies which are also fixed term tenancies;(d) since Ziki Investments (Properties) Ltd v McDonald (a case that found residential tenancies under the Act were either fixed term or periodic),3 parties have attempted to construe boarding house agreements as either fixed term tenancies or periodic tenancies. However, that case was decided before Part 2A was inserted, so it does not determine that boarding house tenancies are to be classified as either periodic or fixed term;(e) Parliament's intention was to introduce boarding house tenancies intothe Act as a further and separate category of tenancy, subject to its own particular rules. Part 2A was an imperfect fit in that regard. It would have been helpful to have an express statement about boarding house tenancies and fixed terms. However, applying statutory interpretation principles, the scheme and purpose of the Act was to ensure that tenancies of rooms in boarding houses take effect in terms3 Ziki Investments (Properties) Ltd v McDonald HC Auckland CIV-2008-404-38, 23 July 2008.of s 66C and parties are entitled to use the notice provisions in ss 66U and V. Parliament would not have intended that those sections should be easily overridden by recourse to more general provisions elsewhere in the Act;(f) the result is that a landlord cannot stipulate for a fixed term for a boarding house tenancy except for the minimum initial period of 28 days and so the fixed tenancy in this case was unenforceable.[16] No other relevant case law presents. Thus the question is whether the District Court's assessment in this case should be upheld.Jurisdiction[17] Under s 117 of the Act, any party to any proceedings before the Tribunal who is dissatisfied with the decision of the Tribunal in the proceedings may appeal to a District Court against that decision. Any party to an appeal under s 117, who is dissatisfied with the decision of the District Court Judge, as being erroneous in point of law, may appeal to the High Court on that question of law.4Discussion[18] Professor Burrows' has expressed the opinion that:5... the modern trend [of statutory interpretation] is towards a "purposive"interpretation where the words of the legislation are read in their fullest context, and with the view to giving effect to the purpose of the legislation.[19] It is therefore necessary to explore the context surrounding, and Parliament'sintent in incorporating, the 2010 amendments which introduced Part 2A. From a perusal of parliamentary documents, two matters can be discerned. First, it is clear Parliament intended to include boarding house tenancies in the Act, so that such tenants could be afforded protection where they previously had not been. The focus was on the protection of tenants, not landlords.4 Residential Tenancies Act 1986, s 119.5 JF Burrows and RI Carter Statute Law in New Zealand (4th ed, LexisNexis, Wellington, 2009) at 201.[20] In this regard, the first reading of the Residential Tenancies Amendment Bill, the Hon Maurice Williamson relevantly advised that:6The bill will protect some of the most vulnerable people—those living in boarding houses—and also address risks for landlords in providing rental accommodation.This Government is intent on ensuring protection for some of the most vulnerable tenants in New Zealand, those who live in boarding houses, as they are currently not covered by the legislation.[21] And the Hon Phil Heatley said of the proposed amendment:7I personally believe that this provision is the most important part of this legislation. It will cover those vulnerable people in boarding houses who are often transient, who are often on low, low incomes, and who are often in search of more formal and permanent accommodation. It is very, very important indeed to cover them while they are in boarding-house tenancies. In fact, much of the overcrowding in houses out in the general sector, in the suburbs, is due to the fact that many of these people refuse to go into the slum conditions of some boarding-house tenancies. Now they will be protected, and they will be more willing to take on the opportunity to live in a boarding house, even if only for a short time.[22] And in the third reading:8The bill extends coverage of the Act to more people involved in renting, including the most vulnerable tenants in New Zealand: those living in boarding houses. Up until now people living in boarding houses did not have significant protections, but protections will be there now.[23] Secondly, it is also clear that Parliament intended to carve out a specific section for boarding house tenancies, or as David Grinlinton has said, a code within a code.9[24] The Hon Maurice Williamson said further, at the first reading:10In the case of boarding houses, some of the rights and obligations of tenants will differ from those of other tenants, because of the different dynamics created by communal living. These differences include the way tenancies are terminated, the process for dealing with abandoned goods, and the ability for landlords to make house rules. Boarding-house landlords will be able to6 (26 May 2009) 654 NZPD 3827.7 (8 December 2009) 659 NZPD 8364.8 (22 June 2010) 664 NZPD 12208.9 David Grinlinton Residential Tenancies: The Law and Practice (4th ed, LexisNexis, Wellington, 2012) at [7.1].10 (26 May 2009) 654 NZPD 3827.take bonds from their tenants in the same way that other landlords may do so, but the amount of the bond will dictate whether it is required to be lodged with the Department of Building and Housing.[25] This context, combined with a plain reading of the Act, suggests that ss 66U and 66V were intended to be the only termination provisions for boarding house tenancies.[26] However, it is necessary to respond to Portfolio's remaining arguments, as thelegislation does lack some clarity.[27] While there was an intention to provide more formality and permanence in relation to boarding house tenancies, this was in order to protect the tenants of boarding house tenancies, not the landlords. Furthermore, s 66V provides a more formal procedure for terminating boarding house tenancies as before, unless specified in an agreement, there was no set notice period.[28] It is clear that Parliament did not intend boarding house tenancies to be either fixed term or periodic. Instead Parliament created a new category of tenancy.[29] The fact that s 66C requires a statement of whether the tenancy is intended to last 28 days or more is not, in my view, a stipulation for a fixed term for a boarding house tenancy. Instead it is intended to fulfil the requirement of the definition of a boarding house tenancy in s 66B, that it must be intended to (or in fact) last for 28 days or more. It may be that parties have is a specific term in mind, and this can be included in a tenancy agreement. However, it does not mean a tenancy becomes a fixed term tenancy, subject to the fixed term tenancy provisions in the Act, or that Part 2A becomes redundant. Both tenant and landlord are still able to terminate in accordance with Part 2A.[30] Once this is understood, the fact that s 50 does not distinguish boarding house tenancies ceases to be an issue – the distinction is not necessary because Part 2A clearly applies with its specific sections as to boarding house tenancies.Conclusion[31] The Act does not allow for a tenant and landlord to enter into a boarding house tenancy for a fixed term. Instead, the tenant and landlord can terminate at any time in accordance with ss 66U and 66V of the Act.Result[32] The appeal is dismissed.Costs[33] The respondent, having succeeded, is entitled to costs, which are awarded on a 2B basis.Goddard J