Jack Canty (applicant) v. Private Residential Tenancies Board (respondent) and David Connolly (notice party)
Landlord and Tenant - Private Residential Tenancies Board - Appeal - Validity of notice of termination - Rent increase - Rent arrears - Whether error in law in determination order by the Board - Jurisdiction of High Court - Whether matters pleaded justiciable as points of law on appeal - Residential Tenancies Act 2004 (No. 27), ss. 19, 22, 86, 123.
The High Court (Miss Justice Laffoy); judgment delivered on August 8th, 2007
In considering the court's jurisdiction under section 123(3) of the Residential Tenancies Act 2004, any of the parties concerned in dispute resolution may appeal to the High Court from a determination of the Tribunal on a point of law. Where there is non compliance with requirements under the Act, a notice of rent increase cannot have effect.
The High Court so held in varying the determination order.
The applicant appeared in person: Gerard Hogan, SC, and Peggy O'Rourke BL for the respondent; Ciaran Lewis BO for the notice parties.
Miss Justice Laffoy stated that the proceedings were initiated by special summons which issued in October, 2006. In the special endorsement of claim the applicant claimed to be exercising a right of appeal under s. 123(3) of the 2004 Act against the determination order made by the respondent (the board) on October 6th, 2006, seeking to vary or cancel the determination order on the basis of "manifest error(s) of law committed in the purported adjudication thereof". The applicant was a tenant of the notice party (the landlord) since September, 2004. Since April, 2005, the tenancy was the subject of a series of dispute resolution processes under the Act.
Miss Justice Laffoy first set out the terms of the tenancy agreement between the landlord and the applicant and then outlined the disputes which were referred to the board in relation to the tenancy and the board's determinations in relation thereto. By a tenancy agreement the landlord agreed to let the dwelling house for the term of six months commencing on September 22nd, 2004, to March 31st, 2005, at a rent of €700 per calendar month. Miss Justice Laffoy referred to what were subsequently described as the "2005 Disputes". In 2005, two matters in relation to the applicant's tenancy came before a Tenancy Tribunal (the tribunal) comprising three members of the board. One matter, referred by the applicant, related to the alleged breach by the landlord of his obligations under the tenancy agreement, namely, a defect in the heating system of the property resulting in a loss of amenity to the applicant. The other, referred by the landlord, related to overholding by the applicant following the expiry of a notice of termination given by the landlord and non-payment of rent. The two matters were heard together by the tribunal in January, 2006. The tribunal found in favour of the applicant that his tenancy was for a period of greater than six months certain, holding that the applicant had a right to a tenancy protected by Part 4 of the Act of 2004. The tribunal also made an interim direction, in accordance with s. 117 of the Act of 2004, in relation to payment by the applicant to the landlord of outstanding rent directing that there be paid to the landlord the following sums: €3,300 forthwith; €2,200 less a sum of €475, which it was agreed the applicant was entitled to deduct in respect of electricity consumption incurred by him, within 30 days; and €2,400 within 60 days. The foregoing direction was formalised in a determination order made by the board in February, 2006. The tribunal reconvened in February, 2006, and on that occasion the tribunal ruled in favour of the applicant that a purported notice of termination served by the landlord's agent on the applicant in March, 2005, did not comply with the relevant statutory requirement and, accordingly, was not valid. Following the reconvened hearing, the final determination of the tribunal was notified to the board in April, 2006. In that determination, the tribunal found in favour of the applicant that he had suffered loss of amenity as a result of the defective heating system in the property and awarded him €1,000 in respect thereof, against which there was to be set off the sum of €475 awarded by the interim direction referred to earlier. The tribunal also ordered the applicant to pay all arrears of rent, amounting to the sum of €8,400 at the date of the resumed hearing, all of the arrears to be paid within seven days of the making of the determination order. It also ordered that sums due and owing in respect of rent under the tenancy agreement should be payable as they fell due.
Miss Justice Laffoy then set out the "2006 disputes". After the ruling was made by the tribunal in February, 2006, that the purported notice of determination of March, 2005, was invalid but before the final determination of the tribunal of April, 2006, was made and the determination order of the board of April, 2006, was handed down, on February 23rd, 2006, the landlord notified the applicant of an increase in the monthly rent, a claim for back rent totaling €7,700 and pointed to the landlord's entitlement to terminate the tenancy for failure to pay rent if the failure was not remedied within a reasonable time. The applicant was notified that unless payment in full was received on or before March 10th, 2006, the landlord would proceed to terminate the tenancy. Two notices of termination dated March 13th, 2006, were served by the landlord on the tenant on that day. The first gave the reason for termination of the tenancy as the failure by the applicant to pay rent due to the landlord. April 10th, 2006, was designated as the termination date. The second gave the reason for termination as that the landlord required the property for his own occupation and April 24th, 2006, was designated as the termination date. On March 22nd, 2006, the applicant applied for dispute resolution to the board in relation to three disputes, which he referred to as the "A" dispute, the "B" dispute and the "C" dispute. The tenancy tribunal heard the above disputes and delivered its determination on October 6th, 2006. At the hearing, the applicant objected to the tribunal as constituted. He also made a preliminary application to the effect that, by virtue of the application of s. 86 of the 2004 Act, the tribunal should not consider any application in relation to either rent or the notices of termination. In relation to that submission, the tribunal found as follows:
"Section 86, which is designed to protect the status quo while a dispute is pending, did not apply. The requirements of s. 86(2) were satisfied, as the tenancy agreement provided that a rent increase could occur from October 1st, 2005, under clause 8, the provision being freely negotiated between the parties. Section 86 provides that no termination of tenancy may be effected, and none was in the case. The Act of 2004 does not prohibit the serving of a notice of termination arising from a wholly new cause of action. The provisions of s. 86(3) did not apply as the prior disputes, which were the subject of the determination of April 13th, 2006, and the determination order of April 19th, 2006, referred to a termination based on different grounds and was not, therefore, 'a dispute relating to the validity of the [notice of termination] concerned' set out in that sub-section."
Miss Justice Laffoy then turned to the determinations of the tribunal and board on the 2006 disputes. The tribunal made a finding of fact that the applicant was in breach of the two determination orders of February and April, 2006, in relation to payment of rent. What the applicant had termed the "A" dispute was his contention that the purported rent increase was invalid. On this contention the tribunal found that the notice of rent increase was valid and that the landlord had a right to levy such increase under the tenancy agreement. It also found that the determination order of April, 2006, did not operate to place a permanent stay on any further rent increase contemplated by the tenancy agreement, which had been found to constitute a binding agreement in the proceedings on the 2005 disputes. The determination order of the board, which was also dated October 6th, 2006, embodied those findings. It determined that the applicant should pay rent at the rate of €750 per month. On what was termed the "B" dispute, in broad terms, the applicant challenged the adequacy of the demand for arrears of rent contained in the letter of March 7th, 2006, to give rise to an entitlement to serve a notice of termination and the validity of the first notice of termination of March 13th, 2006, contending that, by virtue of s. 67 of the Act of 2004, the giving of fourteen days notice was a condition precedent to the service of a valid notice of termination and that such notice had not been given. In relation to those contentions, the tribunal pointed to the letter of February 23rd, 2006, and found that it was in compliance with s. 67(3) of the Act of 2004, which requires that 14 days shall have elapsed from receipt of a notice notifying that an amount of rent due has not been paid prior to issuing a notice of termination based on grounds of arrears of rent. The tribunal found that the first notice of termination of March 13th, 2006, served on the applicant in respect of arrears of rent was properly served and valid in all respects. On what was termed the "C" dispute, in broad terms, the applicant challenged the validity of the second notice of termination of March 13th, 2006, in reliance, inter alia, on s. 86. Alternatively, he contended that the landlord's personal circumstances rendered it inequitable for the notice of termination to be upheld on the basis that the landlord required the property for his own occupation. The tribunal found that clause 7(1) of the tenancy agreement had been freely negotiated between the parties and that the landlord had properly exercised the "break" clause as he intended to reoccupy the property for his own use. The tribunal also found that the exercise of the break clause by service of the notice of termination caused the period certain of the applicant's occupancy under the tenancy to fall short of the two-year duration set out in s. 66 of the Act of 2004 as requiring 56 days' notice and that the appropriate notice was 42 days. The tribunal also found that the second notice of termination of March 13th, 2006, pursuant to s. 34.4 of the Act of 2004 was valid. As regards the "B" dispute and the "C" dispute, the determination order of the board dated October 6th, 2006, determined that the two notices of termination were valid and that the applicant and all persons residing in the property should vacate the property within 28 days from the date of issue of the determination order.
Miss Justice Laffoy, having set out the background, referred next to matters raised in the course of the proceedings. In considering the court's jurisdiction under section 123(3) of the Act, Miss Justice Laffoy stated that s. 123(3) provided that any of the parties concerned in dispute resolution under the 2004 Act may appeal to the High Court from a determination of the tribunal on a point of law. In addressing the issue as to which of the 22 items particularised by the applicant were points of law for determination by the court, counsel for the board prefaced his submissions by making two general observations. Firstly, he referred to the multiplicity of proceedings which had been initiated by the applicant in relation to his tenancy. Secondly, it was submitted that if the applicant had what might be loosely termed a judicial review point, the time to object was before the tribunal. Therefore a challenge to the make-up of the tribunal should have been made at the time of its appointment. On that point, Miss Justice Laffoy noted that while it was clear from the transcript that the applicant did challenge the make-up of the tribunal appointed to deal with the 2006 dispute at the July, 2006, hearing, he did not pursue that matter by way of judicial review. Aside from that argument, counsel submitted that what s.123(3) was concerned with was an error in the decision, not an error of jurisdiction. Addressing the alleged manifest errors of law identified by the applicant in particulars, counsel for the board accepted that certain of the items raised points of law in the sense of s. 123(3). The applicant submitted that the determination of the tribunal included its processes. Its rules were rooted in statute and an applicant was entitled to rely on them being properly complied with. Having heard the submissions, Miss Justice Laffoy ruled (and dealt with at length in the judgment) which items raised by the applicant constituted points of law which were justiciable under s. 123(3) of the Act of 2004.
Miss Justice Laffoy made general observations on the validity of the tribunal's determination and the board's determination order of October 6th, 2006. Miss Justice Laffoy quoted s. 86 of the Act and stated that its purpose was to maintain the status quo between a landlord and a tenant pending the determination of a dispute referred to the board for resolution. Although the 2005 disputes were still pending in February and March, 2006, and were not finally determined until the determination order of April 19th, 2006, was made, in the court's view s. 86 did not act as a bar to the landlord taking the initiatives which became the subject of the 2006 disputes for the following reasons:
(a) In relation to the "A" dispute, para. (b) of sub-s. (1) of s. 86 had no application because the 2005 disputes did not involve any dispute relating to "the amount of rent payable".
(b) In relation to the "B" dispute, the notice of termination in issue, the first notice served on March 13th, 2006, fell within the ambit of para. (c) of sub-s. (2), so as to disapply sub-s. (1), in that -
(i) it did not fall within the ambit of sub-s. (3), because there was no dispute pending in relation to the validity of that notice or the right of the landlord to serve it, and
(ii) while served after the 2005 disputes were referred, the required period of notice to be given was 28 days and that period of notice was given.
The tribunal had ruled that a purported notice of termination served by the landlord on the applicant on March 18th, 2005, was invalid. Clearly, the landlord accepted that ruling. Nothing in s. 86 prevented the landlord from mending his hand and serving a 28-day notice of termination on the ground of failure to pay rent due.
(c) In relation to the "C" dispute, sub-s. (1) of s. 86 precluded the termination of the tenancy being effected on foot of the second notice of termination dated March 13th, 2006, prior to the board making its determination on the 2005 disputes, but it did not preclude the service of the notice.
Turning to the substance of the "A" dispute the alleged invalidity of the rent increase was premised on failure to comply with s. 22 of the Act. The rent increase provided for in the tenancy agreement to which the landlord was to be entitled if the applicant extended the tenancy from October 1st, 2005, while agreed at the outset, was not to come into effect until the happening of an event, the extension by the applicant of the tenancy beyond October 1st, 2005. The effect of the operation of that element of the agreement fell within the ambit of s. 24(2)(b) of the Act, so that such effect is deemed a review of the rent under Part 3. Therefore s. 22 applied when the landlord sought to increase the rent in February, 2006, and 28 days' notice was required under s. 22. As the required notice was not given, the rent increase did not have effect. Accordingly, Miss Justice Laffoy said that the reasoning of the tribunal on the "A" dispute was not correct in law. The board erred in law in determining that a valid notice of increase of rent was served by the landlord on February 23rd, 2006.
Miss Justice Laffoy ruled that as regards the "B" dispute, the provision of the Act governing the requisite period of notice for termination where the tenant was in default is s. 67 which provides for termination by the landlord for failure by the tenant to comply with the obligations of the tenancy. Pursuant to s. 67, where a landlord is terminating a tenancy for failure to pay rent, two steps have to be taken to give the requisite period of notice: first, the landlord must notify the tenant that an amount of rent has not been paid and allow 14 days to elapse from the receipt of that notice; and, secondly, if the amount concerned has not been paid within the period of 14 days, the landlord must give the tenant 28 days notice of termination. In Miss Justice Laffoy's view, the landlord properly implemented both steps. The finding of the tribunal that the letter of February 23rd, 2006, complied with s. 67(3) was correct, but that did not necessarily determine the validity of the first notice of termination dated March 13th, 2006. While compliance with s. 67(2) and (3) was all that would have been required to terminate a tenancy to which Part 4 did not apply, it was not all that was required to terminate a Part 4 tenancy, because s. 57(b) provided that the requirements set out in Part 5 for valid termination of a tenancy are "in addition to the requirements" of Part 4 with regard to the termination of a Part 4 tenancy. It was held by the tribunal on January 27th, 2006, that the applicant held under a Part 4 tenancy. Such tenancy could only have been terminated in accordance with s. 34. Where a landlord was terminating in reliance on failure of the tenant to comply with any of his obligations, other than failure which in general terms amounts to anti-social behaviour, to come within ground 1 of the Table in s. 34, certain conditions stipulated in that ground must be complied with. Additionally, having established the existence of ground 1, the landlord must serve notice of termination giving the required notice by reference to s. 67(2) and (3). The tribunal did not expressly address the issue of compliance with the conditions stipulated in ground 1 of s. 34 in its findings. However, the landlord was alive to them and the explanation given to the court for the service of the letter of March 7th, 2006, was that it was served for the purpose of complying with those conditions stipulated in s. 34.1.
Miss Justice Laffoy said that the tribunal did not adjudicate on whether the letter of March 7th, 2006, which post-dated the notification for the purpose of s. 67(3) and only allowed three days for remedying the failure, complied with the requirements of ground 1 of s. 34. Miss Justice Laffoy was not satisfied that the existence of ground 1 was established by the landlord. In the circumstances, notwithstanding the egregious breach by the applicant of the terms of his tenancy and of the interim determination order made on February 15th, 2006, and notwithstanding that the applicant did not pinpoint the precise infirmity in the landlord's invocation of ground 1 in s. 34, it was not possible to hold that the first notice of termination of March 13th, 2006, was validly given. The only courses open to the court under s. 123(5) were to let the determination order of October 6th, 2006, stand or to vary it. Despite having considerable sympathy for the landlord, Miss Justice Laffoy came to the conclusion that the determination as to the validity of the first notice of March 13th, 2006, could not stand. In relation to the "C" dispute, and, indeed, the "B" dispute, the starting point was the finding by the tribunal that the applicant's tenancy was a Part 4 tenancy. Section 33 of the 2004 Act provided that a Part 4 tenancy may not be terminated save in accordance with s. 34. Section 34 sets out six grounds on which a tenancy may be terminated. The ground invoked by the landlord to which the "C" dispute related (the "B" dispute having related to ground 1) was ground 4. Section 34 expressly provided that a Part 4 tenancy may be terminated "on one or more of the grounds" set out in the Table if notice of termination giving the required period of notice is served and the notice cites as the reason for termination "the ground or grounds concerned" and in the case of ground 4 contains a statement in the terms of paras. (a) and (b). Where a tenancy is being terminated on ground 4 the required notice is governed by s. 66 of the Act of 2004. That section provided that, where the duration of the tenancy is one year or more but less than two years, the notice period is 42 days. Miss Justice Laffoy said that for the purposes of Part 5 of the Act, in which s. 66 is to be found, the expression "duration of tenancy" has a specific meaning which is defined in s. 61(2). That provision was not adverted to in the Tribunal's determination. The applicant's tenancy came into existence on September 22nd, 2004. The notice of termination in reliance on ground 4 was served on March 13th, 2006. Accordingly, the duration of the tenancy for the purposes of the application of s. 66 was one year or more but less than two years, so that the requisite notice period was 42 days. Assuming that on March 13th, 2006, the applicant was not holding under a fixed-term lease for a term extending beyond April 24th, 2006, the second notice of termination dated March 13th, 2006, which provided for 42 days notice, gave the required notice to terminate the tenancy on ground 4 in s. 34. That assumption, that it was not a fixed-term lease, was correct. Provided the contractual right to "break" the tenancy was exercised in a manner compatible with the invocation of ground 4, the contractual right did not constitute "contracting out" of Part 4 of the Act of 2004, which is prohibited in s. 54. The landlord did so exercise his contractual right in serving the second notice of March 13th, 2006. Moreover, s. 58(3) of the 2004 Act, to the extent that it precluded the use of the notice of termination procedure to shorten the duration of a fixed-term lease, had no application.
Miss Justice Laffoy, concluding that the board, in determining that the second notice of termination dated March 13th, 2006, was valid, was correct in law and stated that the determination order dated October 6th, 2006, would be varied to provide that one valid notice of termination was served by the respondent landlord on the applicant tenant on March 13th, 2006, in respect of the tenancy of the dwelling 14 The Orchard, Crosshaven, Co Cork, that is to say, the notice served because the landlord required the dwelling for his own occupation.
Otherwise the determination order was to stand.
Solicitors: Matheson Ormsby Prentice (Dublin) for the respondent; Ahern Roberts Williams O'Rourke & Partners (Cork) for the notice party.
Kieran O'Callaghan, barrister.