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Why The Case Of Cattermole v Jackson Should Enter Every Landlord's Lexicon?

Monday, October 21, 2013

Do you have one of those tenants who seem to know the system inside-out, so much so that he always, always, gets away with paying rent late?  I had one once.  And let me tell you something, it was like being stuck in the Twilight Zone.  For months no end, he would always be exactly 20 days behind on rent, carefully skirting around the 21-day legislative deadline for the Tenancy Tribunal to intervene and order a termination.  That sneaky little so-and-so... #$%#^@

Thanks to the case of Cattermole v Jackson, the District Court has unequivocally closed the loophole previously available for habitual late paying tenants.

Cattermole v Jackson started off as nothing more than a run-of-the-mill story so spectacular in its indistinguishability that it attracted little attention when first heard at the Tenancy Tribunal in early 2012.  Cattermole took a tenancy from Jackson.  The tenancy was plagued with persistent rent arrears and dishonoured payments.  Jackson applied under s56 of the Residential Tenancies Act for termination which the Tribunal granted.  

Not willing to let sleeping dogs lie, Cattermole promptly lodged an appeal against the decision and it wasn't until the case arrived at the District Court that it became of some seminal importance.  Unwittingly, and some might say ironically, in setting out to exaggerate his rights as a non-paying tenant, Cattermole had paved the way for the broadening of a landlord's scope to terminate a tenancy.  

Amongst other things, Cattermole claimed that at the time of Jackson's application, his rent was less than three weeks in arrears.  Jackson therefore had no ground to apply for a s56 termination and the Tribunal had no jurisdiction to preside over the case.   That said, Cattermole accepted that at the time of the Tribunal hearing rent was behind for over six weeks. 

In arriving at its decision to dismiss Cattermole's appeal, the District Court examined closely sections 85, 55, and 56.  

Section 85 broadly defines the scope of the Tribunal's jurisdiction as being 'determin[ing] expeditiously disputes arising between ... landlords and tenants' according to the general principles of the law to award substantial merits and justices of each case rather than abide by strict legal forms or technicalities.  To put it simply, the Tribunal is primarily concerned with the principles of justice.  Applicants to the Tribunal (be it landlords or tenants) can rest be assured that the threshold standard of your application need not be overly technical.  What the Tribunal looks for are the relevant facts (such as rent arrears) with adequate evidentiary back-up (such as detailed rent ledger). 

Sections 55 and 56 both deal with termination of non-payment of rent (amongst other things).  In that respect, the material differences between the two sections are:

  1. That s55 deals with rent that is over 21 days in arrears at the time of application; 
  2. That s56 deals with non-payment of rent despite a 14-day notice; and 
  3. That s56(2) empowers the Tribunal to convert 

In examining ss55 and 56 together, the District Court arrived at the following principles relating to termination on the basis of non-payment of rent: 

  1. That a landlord may make an application to the Tribunal for termination if the rent is outstanding; 
  2. If at the time of the application, rent is more than 21 days in arrears, the application will be deemed by the Tribunal as having been made under s55; 
  3. If at the time of the application, rent is less than 21 days in arrears, the application will be deemed by the Tribunal as having been made under s56; 
  4. If at the time of hearing, the rent is over 21 days in arrears, the Tribunal can only terminate under s55; and
  5. If at the time of hearing, the rent is less than 21 days in arrears but the application was made when rent was over 21 days in arrears then termination can be applied for under s55;
The Cattermole v Jackson protection for landlords anticipates that in the event the landlord files an application for termination under s56 which is subsequently converted to a s55 hearing by the Tribunal, the tenant is not allowed to examine the validity of the 14-day notice.

What does this mean in practice for landlords?  If you have a tenant who is habitually late paying rent, do the following the moment rent falls into arrears: 
  1. Make sure your rent ledger is up to date at all times leading up to the hearing date; 
  2. Issue a 14-day notice; and
  3. Apply for a termination order under ss55 and 56 (technically you don't have to quote the sections but I would recommend you to do that just in case)
Thanks to Cattermole, landlords no longer have to ride out the 14-day period for habitual late payers.  

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