Housing New Zealand Corporation v Davis HC Auckland CIV-2011-404-3766 [2011] NZHC 1648 (7 November 2011)

Last Updated: 24 November 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV-2011-404-3766}

IN THE MATTER OF the Residential Tenancies Act 1986

BETWEEN HOUSING NEW ZEALAND CORPORATION

Appellant

AND ELIZABETH ANN DAVIS Respondent

Hearing: 2 November 2011

Counsel: SN Haszard for Appellant

PN Teei for Respondent

Judgment: 7 November 2011 at 5:00 PM

_{JUDGMENT OF TOOGOOD J}

This judgment was delivered by me on 7 November 2011 at 5:00 pm

Pursuant to Rule 11.5 High Court Rules

_{Registrar/Deputy Registrar}

HOUSING NEW ZEALAND CORPORATION V DAVIS HC AK CIV-2011-404-3766 7 November 2011

Introduction

[1] This is an appeal on questions of law, pursuant to s 119 Residential Tenancies Act 1986, from a judgment of Judge Recordon on appeal from a decision of the Tenancy Tribunal:

(a) terminating the tenancy of the respondent, and granting possession to the appellant, in respect of a State tenancy property in which the respondent has resided for some 21 years;

(b) ordering payment of the respondent‘s bond of $236 to the appellant;

and

(c) ordering the respondent to pay rent arrears of a net sum of $2,002.50. [2] In brief, Housing New Zealand Corporation (“Housing NZ” or “the

Corporation”), the owner of the tenanted property, claims that Judge Recordon erred in law in granting to the respondent a stay of the Tribunal‘s orders pending a review of the market rent charged by the appellant and in failing to dismiss the appeal in circumstances where the Judge held that the Tenancy Tribunal had not been wrong in law making the orders.

[3] The issues on appeal are focused very much on the extent to which a District Court Judge hearing an appeal from a decision of the Tenancy Tribunal is able to make such orders as the Judge thinks fit to achieve his or her perception of a fair outcome, in circumstances where a strict application of the law produces what the Court might consider to be a harsh or unfair outcome.

[4] It is clear that in the present case, Judge Recordon accepted that the Tenancy Tribunal was at least entitled, if not required, to make the orders set out above, but considered that Ms Davis should be permitted to remain in possession of the house pending completion of the review and appeal process related to the determination of the rent to be paid.

Factual background

[5] The background to the two judgments giving rise to this appeal is conveniently set out in the first judgment dated 17 February 2011[1] as follows:

[1] The appellant, Elizabeth Davis, has been in the Housing NZ Corporation (“Housing NZ”) property at 9 Cecil Beatt Place, West Harbour, Auckland, since 1989. On 5 July 2010, following a request from Housing NZ, the Tenancy Tribunal ordered termination of Ms Davis‘ tenancy on

26 July 2010 (11:59 pm) with payment of the bond to Housing NZ and payment of $2,002.50 being rent arrears to 5 July 2010 – less the bond $236

– making a total of $2,002.50 payable by Ms Davis.

[2] A continuation of the hearing was granted in respect of any further rent arrears at the end of the tenancy. This may be relevant given the stay that I granted on 13 July 2010. I also ordered that the tenancy was to continue “on previous terms” until the appeal was dealt with.

[3] Ms Davis has appealed the decision to terminate the tenancy, to pay the bond to Housing NZ and ordering her to pay rent arrears. I was told by Mr Teei, Ms Davis‘ counsel, 20 December 2010 that Ms Davis accepted that if the appeal went against her she would be liable for the difference in the rent she was paying and the market rent she has been asked to pay. I was also told that she has approached Housing NZ with a request for the Housing NZ review office to review the original decision by Housing NZ even though that request was out of time. I am not sure of the result, if there is one, of that application for review.

[4] Housing NZ opposes the appeal. They also apply to rescind or vary the order (stay) 13 July (papers filed 13 September 2010). They argued that the stay should not have been ordered because there was no jurisdiction to do so, and the tenancy continuing on previous terms until the appeal was dealt with also lacked jurisdiction as far as direction from a District Court Judge was concerned as Housing NZ argues that a District Court Judge‘s powers on appeal from a decision of the Tenancy Tribunal do not extend beyond the powers of a Tenancy Tribunal Adjudicator making determinations pursuant to the Residential Tenancies Act 1986 (“the Act”).

Background

[5] Notwithstanding the length of Ms Davis‘ tenancy, Housing NZ considered that they had a valid reason to increase the rent for Ms Davis from a lower rent to a market rent. The reasons for the increased market rent are not entirely clear from the evidence but seem to relate to other people, including a possible partner, Housing NZ thought might be or were living in the property. There was a letter referred to which appears to have been written by Ms Davis‘ ex-partner to Housing NZ. Ms Davis says she received notice that rent was being raised without any discussion or approach from Housing NZ. She says she discovered that her ex-partner of 21 years had

written a letter to the Minister of Housing indicating a desire to purchase the property, claiming at the same time that he and Ms Davis had been living together in the property for 21 years – Ms Davis says this is not true.

The appeal provisions

[6] Judge Recordon heard the appeal from the decision of the Residential

Tenancy Tribunal pursuant to s 117(1) of the Residential Tenancies Act 1986.

[7] Section 117 of that Act provides:

117 Appeal to District Court

(1) Subject to subsection (2) of this section, 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.

(1A) A decision referred to in subsection (1) includes the decision to grant, or refuse to grant, an application under section 105 for a rehearing.

(2) No appeal shall lie—

(a) Against an interim order made under section 79 of this Act;

or

(b) Against an order, or the failure to make an order, for the payment of money where the amount that would be in dispute on appeal is less than $1,000; or

(c) Against a work order, or the failure to make a work order, where the value of the work that would be in dispute on appeal is less than $1,000.]

(3) A District Court shall have jurisdiction to hear and determine an appeal under this section notwithstanding any limits imposed on such courts in their ordinary civil jurisdiction by sections 29 to 34 of the District Courts Act 1947.

(4) The provisions of section 85 of this Act, with any necessary modifications, shall apply in respect of the hearing and determination by a District Court of an appeal brought under this section.

(5) An appeal under this section shall be brought by the filing of a notice of appeal in the District Court nearest to the place at which the Tribunal sat in the proceedings to which the appeal relates.

(6) Every such notice of appeal shall be filed within 10 working days after the date of the decision to which the appeal relates.

(7) As soon as practicable after a notice of appeal has been filed under this section, the Registrar of the Court shall cause a copy of the notice to be lodged with the Tribunal's records relating to the proceedings to which the appeal relates, and, on receipt of that copy, the Registrar of the Tribunal shall send the Tribunal's file on the matter to the Court.

(8) The Registrar of the Court shall fix the time and place for the hearing of the appeal and shall notify the appellant.

(9) A copy of every notice of appeal together with a notice of the time and place for hearing the appeal shall be served by the Registrar on the other party to the proceedings before the Tribunal, and that party may appear and be heard.

(10) The filing of a notice of appeal under this section shall not operate as a stay of proceedings, unless the Tribunal or a District Court Judge, on application, so determines.

(11) Where the appeal relates to an order terminating the tenancy made on the ground of non-payment of rent, a stay of proceedings shall not be granted unless the application for stay is supported by a receipt or other written evidence tending to show that the rent was not in fact in arrear at the date of the hearing before the Tribunal.

[8] The Judge referred to s 117(4) and to s 85 of the Act. That section reads:

85 Manner in which jurisdiction is to be exercised

(1) Subject to the provisions of this Act and of any regulations made under this Act, the Tribunal shall exercise its jurisdiction in a manner that is most likely to ensure the fair and expeditious resolution of disputes between landlords and tenants of residential premises to which this Act applies.

(2) The Tribunal shall determine each dispute according to the general principles of the law relating to the matter and the substantial merits and justice of the case, but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities.

[9] Section 118 of the Act is also relevant. It reads:

118 Powers of District Court Judge on appeal

(1) On the hearing of an appeal under section 117 of this Act, a District

Court Judge may—

(a) Quash the order of the Tribunal and order a rehearing of the claim by the Tribunal on such terms as the Judge thinks fit; or

(b) Quash the order, and substitute for it any other order or orders that the Tribunal could have made in respect of the original proceedings; or

(c) Dismiss the appeal.

(2) In ordering a rehearing under subsection (1)(a) of this section, the District Court Judge may give to the Tribunal such directions as the Judge thinks fit as to the conduct of the rehearing.

(3) The procedure at an appeal under this section shall be such as the

Judge may determine.

[10] The Judge summarised his view of the approach to be taken to the appeal by saying that case law recognised that the District Court “should approach resolution in a commonsense way not ‗slavishly‘ applying technically correct legal niceties.”[2]

[11] It is apparent from what the Judge did and said, both in the first judgment and in his subsequent judgment dated 25 May 2001,[3] from which this appeal is brought, that he considered he had a wide discretion as to how to dispose of the appeal.

The stay order

[12] The Tenancy Tribunal order was made on 5 July 2010, with the order for possession in favour of Housing NZ to come into effect three weeks later, at

11:59 pm on Monday 26 July 2010.

[13] On 7 July 2010, Ms Davis lodged a notice of appeal with the District Court at Waitakere under s117 of the Act. She claimed that Housing NZ‘s decision to charge her market rent was based on false information, and complained that no evidence supporting the increased rent had been given. She said that she had not been given an opportunity to respond to Housing NZ‘s investigation into the circumstances alleged to justify the increased rent. She said that she believed that her rental payments were not in arrears as she had been paying what she described as her

_{“normal rent”.}

[14] At the same time, Ms Davis applied to the Court for a stay of the proceedings pending the outcome of her appeal. The grounds for the stay were that, if her appeal was not heard until after 26 July 2010, she would have to move out of the house. She said that she did not want to incur additional rental payments “until a decision regarding the false allegations regarding ... [her] living arrangements have been sorted out.”

[15] In the stay application, Ms Davis said she would continue to pay the

“normal” rental payments until her appeal was heard. It appears that she did so and

has continued to do so, at least until 18 August 2011, but probably to date.

[16] On 16 July 2010, Judge Recordon directed that the proceedings be stayed pending the outcome of the appeal and further directed that the tenancy was to continue “on previous terms” until the appeal was dealt with. The orders were made without notice to Housing NZ. No reference was made in Ms Davis‘s application, or

in the Court‘s order, to the limitation in s 117(11) of the Act[4] on the Court‘s

jurisdiction for ordering a stay.

[17] The stay directions and appeal papers were served on Housing NZ subsequently. On 13 September 2010, the Corporation made an interlocutory application to the District Court for an order rescinding the stay orders or, in the alternative, varying the stay by removing the order that the tenancy was to continue on its previous terms until the appeal was dealt with.

[18] In that application, Housing NZ referred to the provisions of s 117(11), stating that where, as here, an appeal relates to an order terminating the tenancy on the grounds of non-payment of rent, a stay of proceedings “shall not be granted” unless the application for stay is supported by a receipt or other written evidence tending to show that the rent was not in fact in arrears at the date of the hearing before the Tribunal. Housing NZ pointed out that, as is common ground, the stay had not been supported by such receipt or written evidence. It was further argued in

_{support of the application for rescission or variation that the effect of the stay orders}

was to set the rental for the tenancy, at least on a temporary basis pending the hearing of the appeal, and that such a direction was outside the powers of the Tenancy Tribunal and, therefore, the District Court.[5]

[19] The application to rescind or vary the stay, and Ms Davis‘s appeal, were

heard by Judge Recordon together on 20 December 2010.

The significance of the Housing Restructuring and Tenancy Matters Act 1992

[20] Subject to specific exceptions which are not relevant for the purposes of this case, the Residential Tenancies Act applies to every tenancy for residential purposes, including tenancies of properties owned by Housing NZ which I will refer to as

“State tenancies”. Before considering what the District Court Judge said and did about the appeal, it is necessary to examine the legislative and regulatory framework for the determination of the rentals.

[21] A principal difference between private tenancies and State tenancies is the way in which rents are determined. For State tenancies, the determination of rents is governed by the Housing Restructuring and Tenancy Matters Act 1992 (“the HRTM Act”). Section 43 of that Act states:

43 Income-related rent

(1) This subsection applies to HNZ housing and a tenant if—

(a) the tenant has applied to the company for it to calculate an income-related rent for the housing; and

(b) the corporation is satisfied that—

(i) it has had all information reasonably needed to calculate such a rent for the housing for long enough to be able to do so; and

(ii) the information is accurate.

(2) If subsection (1) applies to any HNZ housing and a tenant, the rent for the housing on or after the appointed day must be the income- related rent for the time being calculated for the tenant.

(3) If subsection (1) does not apply to any HNZ housing and a tenant, the rent for the housing on or after the appointed day must be its market rent for the time being.

(4) If satisfied that special circumstances justify its doing so, the corporation may, in its absolute discretion, set for and accept from a tenant of any HNZ housing a rent lower than the rent otherwise required by subsection (2) or subsection (3) to be paid for the housing by the tenant.

(5) Subsections (2) and (4) are subject to sections 57(2) and 58(4). (6) Subsections (2) to (4) are subject to section 45.

[22] Thus the rent to be paid by a State tenant is the market rent for the subject property for the time being, unless the conditions for the payment of income-related rent apply.[6] A State tenant will be charged income-related rent if the tenant has applied to Housing NZ for it to calculate an income-related rent for the housing, and Housing NZ is satisfied that it has had all information reasonably needed to calculate such a rent for the housing for long enough to be able to do so, and the information is accurate.[7]

[23] The income-related rent for any Corporation housing is calculated on a weekly basis by reference to the household income or benefit levels.[8]

[24] State tenants who wish to avoid paying market rents are required to apply annually for an income-related rent. As can be seen from s 43, it is the tenant who is responsible for providing the information necessary to satisfy Housing NZ that the income-related or subsidised rental should be paid. Under s 43(4), Housing NZ may impose a lower rent than the income-related rent calculated in accordance with s 46. There does not appear to be any discretion, however, for Housing NZ to fix a rental of an amount somewhere between the income-related rent properly calculated and the market rent as defined.

[25] Where a State tenant is dissatisfied with a decision by Housing NZ in relation to income-related rent, a two-tiered internal review process is available. A dispute is

first referred to the review office of Housing NZ where what is described as an independent view of the appropriate outcome is formulated. If the tenant remains dissatisfied, the tenant may request that the matter be referred to an internal review authority for a final decision.

[26] Once that process is complete, and only once that process is complete, a tenant who remains dissatisfied with Housing NZ‘s decision may apply under s 62 of the HRTM Act to the State Housing Appeal Authority, a body established by reg 16 of the Housing Restructuring and Tenancy Matters (Appeals) Regulations 2000.

[27] The Appeal Authority has the same powers, duties, functions and discretions as those of Housing NZ to confirm, modify or reverse the decision or determination. There is a further right of appeal from a decision of the Authority to the District Court,[9] but that is confined solely to determinations made under the rent-fixing mechanisms and was not the basis for the District Court‘s jurisdiction in the present case.

The legislative scheme

[28] The legislative scheme under the HRTM Act is unusual, if not remarkable, in that it provides no fewer than four opportunities for a tenant dissatisfied with the determination of his or her rent by Housing NZ to have the substantive issue reviewed independently; the third and fourth opportunities by a statutory authority and the District Court respectively.

[29] Relatively tight timeframes for exercising these rights of review are provided. In the case of an appeal to the State Housing Appeal Authority, the appellant generally has 10 working days from the result of their review to lodge an appeal.[10]

On further appeal to the District Court, the notice of appeal must be lodged within 14

_{days of the date of the Appeal Authority‘s determination.}[11]

[30] Although it is not entirely clear, it appears that in this case Housing NZ may not have informed Ms Davis, in its correspondence with her, of the rights of review available to her. But, as Mr Haszard indicated, it would have been open to Ms Davis to contact the Housing NZ officer responsible for her file as soon as she was notified of the rejection of her claim to an income-related rent, and there is no evidence that she did not do so. The Tenancy Adjudicator referred in the course of the hearing to Ms Davis‘s right to seek a review of the market rental decision.

[31] As s 43 of the HRTM Act makes clear, the default position is that market rents should be charged for State housing tenancies, with the onus being on tenants to satisfy Housing NZ, by the provision of accurate information, of their entitlement to an income-related rent. The implications of that onus are demonstrated starkly in the present case where the income-related rent formerly enjoyed by Ms Davis was

$97 per week, in contrast to the market rent of $325.

[32] The determination of rent under s 43 is expressly subject to Housing NZ‘s powers and duties in respect of changes of rent, including as here the power to review any income-related rent from time to time, and to carry out investigations into the tenant‘s circumstances.[12]

[33] The election by a tenant to exercise the rights of review of the Corporation‘s determination of the appropriate rent does not operate as a stay of a decision that a market rent, rather than an income-related rent, is payable. That much is clear from s 44 HRTM Act, which allows Housing NZ to back-date income-related rent where it is subsequently justified by the provision of all the accurate information reasonably required to make the necessary calculation. It is reinforced by the express limitation on the discretion to grant a stay contained in s 117(11).

[34] Where, in a case such as the present, the arrears of rent arise from a tenant‘s default in paying an increased rent as determined under the statute, an order terminating the tenancy is open to enforcement by Housing NZ, notwithstanding the

_{filing of a notice of appeal, if the tenant does not demonstrate by the production of a}

receipt or other written material, prior to the hearing of the appeal, tending to show

that the Tribunal‘s finding that rent was in arrears was incorrect.

[35] There are obvious, adverse practical implications in this statutory regime for a State tenant who is a beneficiary or person on some other form of low fixed- income faced with a dramatic increase in rent. Unless the tenant has savings or some other means of access to additional funds, it will be inevitable that any review proceeding must be undertaken promptly to avoid the enforcement of an order terminating the tenancy.

The first judgment of the District Court dated 17 February 2011

[36] It is clear from the terms of the first judgment that the District Court Judge was concerned that the termination of Ms Davis‘s longstanding tenancy occurred before Housing NZ had completed its investigation into her living arrangements. Because she considered that the reasons given for changing her rent to market rent were based on false information, Ms Davis had continued paying her rent at the former, income-related level but not at the increased market rate. The Judge said:

[22] ... In terms of fairness, it seemed to me harsh for Ms Davis to be put on the street pending an investigation which might see market rates removed and the IRR level reinstated, which was the level she was paying and had paid ... (since 1989.) Housing NZ accepted that there was a fairness argument but considered there was essentially no jurisdiction for the Tribunal or District Court on appeal to do other than adduce whether or not the rent as set by Housing NZ was in arrears.

[37] Significantly, the Judge went on to say:

[23] I accept that in terms of this argument there was no unfairness in the Tenancy Tribunal decision and Housing NZ was within their rights to act in accordance with the HRTM Act in their application. Housing NZ is not saying Ms Davis sat on her hands and did nothing but that she went the wrong way about trying to review the rent. There was a process. She did not follow it. They concede there is an investigation which, they hinted at to the Tenancy Tribunal, was not favourable to Ms Davis. Housing NZ has not acted unfairly. They have followed the rules, but Ms Davis has not had the chance to comment on the outcome of the investigation as the investigation was not complete at the time of the Tenancy Tribunal hearing.

[38] The Judge then reviewed the scheme of the Act, noting that the legislation

seemed “determined to prevent abuse of the IRR scheme which operates as a type of

social welfare benefit.”[13] His observation is undoubtedly correct. Mr Haszard explained from the Bar that the Crown reimburses Housing NZ for the difference between the applicable market rent for a State housing property and the rent actually paid by a tenant who qualifies under the income-related rent provisions. The Judge then said:

[28] There were, on the face of it, a number of options open to Ms Davis when faced with an increase in her rent, including payment of the market rent with back-payments to be sought later. This would have relied on her having the necessary money to fund the market rental. She could have utilised the appeal procedures in the HRTM Act by asking the Housing NZ review officer to consider her rental increase and if still not satisfied could have appealed to the State Housing Appeals Authority and then to the District Court.

[29] As far as the decision of the Tribunal was concerned, both parties acknowledge that the Tribunal had no jurisdiction to adjust market rent charged by Housing NZ in terms of the Tindale decision. The Adjudicator was correct to limit her findings to those required under s 55 of the Act, namely whether the rent was 21 days in arrears. It was in arrears and the Adjudicator was required to terminate the tenancy.

[39] The Judge confirmed that the Tenancy Tribunal had not erred in law but said that he would not allow the appeal “at this time”, nor reinstate the termination and order rental arrears to be paid. He considered that would be unfair, saying that Ms Davis “could conceivably be forced to leave her home of the last 21 years with an internal review or an independent body later deciding this was not what should have happened. That would be meaningless for her if she had already been moved

out.” [14]

[40] As to the stay, the Judge said:

[30] As far as the stay of proceedings is concerned, it seems there is agreement there was no jurisdiction to grant the stay because the application was not supported by a receipt or other evidence intending [sic] to show the rent was not in fact in arrears. Mr Teei said that it was unnecessary to provide the evidence because Ms Davis accepted the rent as calculated by Housing NZ was in arrears. Ms Paterson argues that this does not satisfy the requirements of s 117(11) which requires the applicant to show the arrears were paid – presumably to protect landlords from protracted arguments over arrears or the rate of rent.

[41] Nevertheless, the Judge went on to say, in a telling observation:

[31] The stay should not have been granted in terms of the law, although in terms of justice it was correctly granted.

[42] The Judge noted that although at the time of the first judgment it was open to Ms Davis to avail herself of the review process and any subsequent appeals, it would be likely that Ms Davis would have to move out of her home before completion of that process.

[43] The Judge mentioned his understanding that the Corporation, notwithstanding the Tribunal‘s orders, had issued a notice under s 51(1)(d) Residential Tenancies Act terminating the tenancy on 90 days‘ notice, but it is not clear whether he thought the notice had been formally served but not acted upon, or whether he thought it had been prepared but not served as at the date of the hearing of this appeal. Either way, the ability of the Corporation to terminate the tenancy by giving 90 days‘ notice is irrelevant to the matters which fell to be determined on the appeal.

[44] Having held both that the Tenancy Tribunal did not err in making the orders which were the subject of Ms Davis‘s appeal to the District Court, and that the stay of proceedings should not have been granted, the Judge nevertheless deferred making any decision on the appeal and did not set aside the stay. He asked counsel for an update of the tenancy situation, including the steps taken in relation to the investigation and any review appeal process, before he would make a final determination.

[45] The Judge said that, while Housing NZ may have considered that following that course was not entirely legal in terms of the powers in the relevant legislation, that step was nevertheless covered by the District Court‘s wide powers on appeal.[15]

The second judgment of the District Court dated 25 May 2011

[46] In his judgment dated 25 May 2011, the Judge said he had received what he

_{described as “very helpful” memoranda from both counsel. He noted that the 90-day}

termination notice had not in fact been issued because the Corporation considered there was no tenancy to terminate as a result of the Tenancy Tribunal‘s order. Reference was also made to nine informations in respect of an unspecified prosecution of Ms Davis in the Waitakere District Court relating to, I assume, improperly obtained rental benefits obtained by Ms Davis totalling a sum said to be of $88,258. In addition, rent arrears of $10,000, being the difference between the income-related rent rate paid by Ms Davis and the market rent imposed by the Corporation were also owed by that time.

[47] The Judge then recorded that the review process initiated by Ms Davis had been completed at the first level, and that the decision that Ms Davis should be charged a market rent had been confirmed. On that basis, Housing NZ sought dismissal of the appeal with the order of the Tenancy Tribunal for termination of the tenancy to be confirmed and an order made for the payment of rent arrears.

[48] It appears that Mr Teei for the appellant had indicated to the Judge that notwithstanding the review process, the Corporation was continuing an investigation into the circumstances of Ms Davis‘s tenancy. That investigation had led the Corporation to conclude that Ms Davis‘s income-related rent applications between

2002 and 2010 were not complete, in that the information did not disclose that she had a partner, Mr Heta, living with her during that period and that she had not declared income earned during the period. Presumably in relation to the second tier of review, further information had been sought from Mr Heta, through Ms Davis who carried the onus of providing the information to support an application for an income-related rent.

[49] It was said on behalf of Ms Davis, however, that although Housing NZ had asserted that the information provided by Ms Davis in relation to her relationship with Mr Heta was false, the Corporation had not provided anything in support of its allegation. Ms Davis‘s position was that if the second review decision was not in her favour she would look to appeal that decision to the State Housing Appeals Authority and then to the District Court.

[50] In his second judgment, therefore, the Judge determined that “the status quo should be maintained until the appeal process (if necessary) on the review application runs its course.”[16] The Judge appeared to assume that Housing NZ would take steps, in any event, to terminate Ms Davis‘s tenancy by giving 90 days‘ notice. The Judge granted a stay for a further three months. It is clear, however, that he did not issue any decision on the appeal, saying that that decision could wait

_{“until the result of the review process and the appeal process if required.”}[17] _While

the Judge expressed the criminal proceedings as being “unhelpful”, he correctly

determined that they were a separate issue.

The extent of a District Court’s discretion in disposing of an appeal under s 117

[51] It is clear from both of the District Court‘s judgments that Judge Recordon believed he had broad discretionary powers to provide what he considered to be a just result in circumstances where he believed that confirming the Tenancy Tribunal‘s decision at that time would be wrong, given the review process available to the respondent was not then complete.

[52] After the conclusion of the hearing before me, I sought memoranda from counsel as to the implications of a District Court‘s powers under s 85 Residential Tenancies Act, as incorporated by s 117(4).

[53] As Mr Haszard submitted, it might be inferred that the Judge considered these powers were derived from s 85 Residential Tenancies Act, as incorporated by s 117(4) of the Act.

[54] I have noted at [41] that Judge Recordon said that even if the stay should not have been granted in terms of the law, it was correctly granted by him in terms of justice. With respect, I disagree with him. Achieving justice in any proceeding

_{before a court requires proper consideration of the rights of all parties and adherence}

to the rule of law; it is not just to ignore such matters in order to do what the court might think is fair to only one party.

[55] As Portia made clear in her famous speech to Shylock, justice is not always to be equated with mercy.[18] The legislature frequently provides courts with a discretion the exercise of which may season the harshness of a result which justice decrees should follow from a strict application of the law. But judicial discretion must be exercised on a principled basis, and in accordance with the terms upon which it is conferred. Thus, the question in the present case is whether the powers

conferred upon the District Court by ss 85, 117 and 118 of the Residential Tenancies

Act entitled the Judge to act as he did.

[56] Section 85(1) is directed to the procedure to be adopted by the Tribunal in the exercise of its jurisdiction, so as “to ensure the fair and expeditious resolution of disputes between landlords and tenants”. In that regard, the provision recognises the statutory purpose described in the Long Title to the Act of establishing a Tribunal to determine such disputes expeditiously.

[57] Section 85(2) is directed not to the procedure by which the Tribunal is to exercise its jurisdiction, but to the substance of its determination of disputes before it. The provision does not create a licence for the Tenancy Tribunal to impose its view on the substantial merits and justice of the case upon one or other disputant unless its determination is based on general principles of law relating to the dispute.

[58] In Welsh v Housing New Zealand Ltd, a Full Court said that meant, for the purposes of that case, that if there is no remedy properly open to the Tribunal as a matter of law, it is not for the Tribunal to invent one.[19] The Court observed, however, that the qualification that the Tribunal was not bound to give effect to strict legal rights or obligations, or to legal forms or technicalities, “may enable the Tenancy Tribunal to waive or mitigate what might otherwise be the consequences of

_{the general principles of law applicable to the dispute.”}[20]

Discussion

[59] The position in the present case was that the Tribunal was faced with an indisputable case that the market rent, which had been duly notified to Ms Davis and was payable by her at the time of the hearing, was more than 21 days in arrears. That entitled the landlord to terminate the tenancy. It may have been open to the Tenancy Adjudicator to adjourn the proceedings for the provision of further information, or to allow time for further discussions between the landlord and the tenant to achieve a mutually satisfactory resolution, but any such adjournment would have to have been related to the matters properly in issue, and consistent with the Tribunal‘s obligation to deal with the dispute expeditiously.

[60] Judge Recordon had similar powers available to him on appeal by virtue of s 117(4), but not so as to defer indefinitely the proper exercise by Housing NZ as landlord of its right to a termination for non-payment of rent. As the tenancy adjudicator was at pains to point out, and as Judge Recordon agreed, it was not within the jurisdiction of the Tribunal or the District Court on appeal to determine or interfere with the determination of the proper rent. The only issue before the Tribunal was whether the rent was in arrears and whether the landlord had taken proper steps on that basis to terminate the tenancy.

[61] It is important to note that the legislative scheme under the Residential Tenancies Act for the termination of a tenancy recognises the right of the landlord, as the owner of the property, to the timely termination of the tenancy where the statutory conditions have been met. It is not open to the Tribunal, or a District Court on appeal, to deny that right on grounds which are irrelevant to the exercise of the Tribunal‘s or the Court‘s jurisdiction. In this case, any adjournment of the proceedings before the Tribunal, or any deferment of a decision, could properly be granted only for reasons confined to the matters before the Tribunal. Ms Davis‘s challenge to the level of her rent was not a matter for the Tribunal or the Court.

[62] I have been informed from the Bar that, following an unsuccessful second review of the rent determination, Mrs Davis appealed to the State Housing Appeal Authority. The Authority subsequently determined that the appeal would not be

dealt with until after the criminal charges resulting from Housing NZ‘s investigation are dealt with. They were due to be heard earlier this week and while arguably relevant to the correctness of the decision to require payment of a market rent, the decisions on the prosecution are irrelevant to the issues in this appeal.

Decisions on the appeal to this Court

[63] As to the appeal from the Tribunal‘s decision, the Judge did not dispose of it in terms of the District Court‘s powers under s 118 to quash the order and direct a re- hearing, or substitute any orders that the Tribunal could have made, or dismiss the appeal. In those circumstances it might be argued that the only decision so far made by the Judge was not to determine the appeal but to adjourn it.

[64] In the particular circumstances of the case, given the requirements of the Act that disputes over the termination of a tenancy should be decided expeditiously, that course was not open to the Judge, particularly at the time of the second judgment. It is clear from the current circumstances in relation to the review and appeal process regarding the appropriate rent that that issue will take some time to resolve. More importantly, it was irrelevant to the proceedings before the Tribunal, which were concerned solely with the adequacy of the steps taken by the Corporation to terminate the tenancy on the grounds of non-payment of rent.

[65] It is open to this Court to send the case back to the District Court for the Judge to make a final decision dismissing the appeal in accordance with the view, which he properly reached, that the Tribunal had not made any error in making the orders. Both counsel requested that I should not follow that course, however, because the parties are anxious to bring the litigation to an end and achieve certainty.

[66] Under s 119(2) Residential Tenancies Act, appeals to this Court on questions of law are to be dealt with in accordance with the High Court Rules. Rule 20.19(1)(a) entitles this Court to make any decision it thinks should have been made by the District Court, and r 20.19(1)(c) empowers the Court to make any order the Court thinks just, including any order as to costs. In the exercise of those

powers, I dismiss the Ms Davis‘s appeal against the orders of the Tenancy Tribunal

dated 5 July 2010.

[67] In his second judgment, the District Court Judge ordered that the Tribunal‘s orders be stayed for a further period of three months. It is clear from the express terms of s117(11) of the Act that he had no jurisdiction to ignore the statutory prohibition upon a stay in circumstances where the appellant had failed to provide proof that the rent then payable was not in fact in arrears at the time of the Tribunal‘s hearing.

[68] As a matter of law that decision must be quashed, with the result that the

Tribunal‘s orders remain in force.

[69] I reserve the question of costs. In the circumstances, an award of costs in favour of the Corporation is likely to be futile and my inclination is to let costs lie where they fall. If Ms Davis is supported by legal aid then there may be even less point in making any orders which might otherwise be available.

[70] Nevertheless, the parties are entitled to be heard if they cannot reach an agreed position. In the absence of agreement, Housing NZ may file a memorandum as to costs within 20 working days‘ of this judgment; Ms Davis is to file any memorandum in response not more than 20 working days‘ thereafter. A decision as to costs can then be made on the papers.

..............................................

Toogood J

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[1] Davis v Housing New Zealand Corporation DC Waitakere CIV-2010-090-001661, 17 February 2011.
[2] _{At [7].}
[3] Davis v Housing New Zealand Corporation DC Waitakere CIV-2010-090-001661, 25 May 2011 at [21].

[4] Quoted at [7] above.

[5] Housing New Zealand v Tindale DC Wellington, CIV-2008-085-448, 1 July 2008.
[6] _{HRTM Act, s 43(3).}
[7] _{HRTM Act, s 43(1) .}
[8] HRTM Act, s 46.
[9] HRTM Act, s 62(5).
[10] Housing Restructuring and Tenancy Matters (Appeals) Regulations 2000, reg 5.

[11] HRTM Act, s 62(5)

[12] HRTM Act, ss 43(5) and (6), 45, 57(2) and 58(4).

[13] Davis v Housing New Zealand Corporation DC Waitakere CIV-2010-090-001661, 17 February _{2011, at [24].}

[14] At [35].

[15] At [37].

[16] Davis v Housing New Zealand Corporation DC Waitakere CIV-2010-090-001661, 25 May 2011, at [20].

[17] At [22].
[18] W Shakespeare, The Merchant of Venice, Act IV, Sc. 1.
[19] _{Welsh v Housing New Zealand Limited HC Wellington, AP35/2000, 9 March 2001.}
[20] At [29].