Private residential landlords and tenants would be wise to take notice of the first wrongful termination order which has been granted in terms of the Private Housing (Tenancies) Scotland Act 2016.
The ability of a tenant to claim a wrongful termination was introduced by parliament as a counter-balance to the increased number of grounds on which a landlord could validly terminate a Scottish Private Residential Tenancy (“SPRT”).
The law
An SPRT can now be terminated on the basis that the landlord intends to move into the let property within three months of terminating the tenancy. Given that this ground relies on the intention of the landlord, proof of that intention often relies on the representations of the landlord to the tenant or tribunal. If the tenant does not move out then the landlord will need to prove their intention before they can get an eviction order. This should include the landlord giving written or oral evidence stating that their intention is genuine. However, while the landlord in most cases will be speaking the truth, there is undoubtedly opportunity for the landlord to mislead in order to secure the eviction. This is where wrongful termination orders can be useful for tenants.
If, after the tenant has left the property, the tenant can prove that the landlord deliberately misled the tenant or the tribunal about their intentions then the tenant can apply for a wrongful termination order. If the tenant’s application is successful then the landlord will be ordered to pay the tenant a financial award of up to six times the monthly rent of the former tenancy.
A landlord who does not intend to move into the property is therefore taking a substantial financial risk if they decide to nevertheless serve a notice based on that alleged intention. Thankfully, it would appear that landlords in general do not attempt this approach. No award for wrongful termination was granted in the three years since the Scottish Private Residential Tenancy regime began. However, the case of Rodriguez-Ortega v Dominguez-Lopez does now establish that the wrongful termination procedure has teeth and can bite.
The case
The landlord, Mr Dominguez-Lopez obtained an eviction order in July 2019 on the basis he intended to move into the property with his wife and child. This seemed very odd to the tenant, Mr Rodriguez-Ortega, because the landlord was apparently moving from his current 3-bedroom property into the let flat which was in fact a studio. However, the landlord gave evidence to the tribunal that he intended to renovate the studio flat and accordingly the tribunal found his intention to be apparently genuine.
After the order was granted, it was discovered that Mr Dominguez-Lopez did not actually renovate or move into the property as he claimed he would. In fact, he found a new tenant who moved into the let property less than a month after Mr Rodriguez-Ortega left. The supposed intention to move in was clearly fabricated to get Mr Rodriguez-Ortega out of the property.
Mr Rodriguez-Ortega raised an application for wrongful termination and the tribunal agreed Mr Dominguez-Lopez had deliberately misled it to obtain an eviction order. The wrongful termination order was therefore granted.
The decision
The tribunal awarded the tenant three times the monthly rent (out of up to six months’ rent). The decision about the size of the award was based on the following factors:
- The amount of rent
- Whether the tenant was in rent arrears prior to the tenancy being terminated
- Whether the landlord had maintained their dishonest position and for how long
- The “gravity” of the dishonesty.
These factors are not set out in the SPRT legislation and accordingly this is the first time a tribunal has stated what factors it may consider when making the financial award.
Interestingly, while the tribunal noted that the tenant had acted wrongfully by “trashing” the let property before leaving, this was not stated to influence the decision. It was based on the landlord’s actions alone.
Implications for landlords
This recent case emphasises the importance to landlords of the need to ensure that they can prove they have an objectively genuine intention to move into the property – before and after recovering possession. For other similar grounds such as where the landlord intends to sell the property, this decision is likewise relevant.
It should be noted that tenants might carefully watch what the landlord does after they recover possession. Any actions on the landlord’s part which suggest they never intended to move into or sell the property might lead to a wrongful eviction order being pursued and granted.
At the same time, it’s worth noting that it is permitted for the landlord to change their intentions after they recover possession. If a landlord has genuine reasons for changing their mind then wrongful termination orders cannot be awarded against them. But the question of whether there was a genuine change of mind relies again on the landlord’s witness evidence. Accordingly, the tribunal will be the one to make a decision on whether the landlord has misled the tenant or not. The safest option, of course, is to follow through with the original intention where possible or else accept there is a risk the tenant might come back seeking a financial award.
Rodriguez-Ortega v Dominguez-Lopez might be the only wrongful eviction case for some time. However, this depends on whether landlords heed its warnings and also whether tenants are well advised of their right to pursue wrongful termination orders after they have been evicted.
Adam Gardiner is a solicitor in the Dispute Resolution team and he’d be happy to help if you would like to discuss this article or any other dispute issues.
