No Further Payments” — One Clause, Two Hearings

Dear friends,

Let me share an interesting and instructive case. A tenant was inconsistent with payments and refused to pay for water. We filed an application seeking payment of the water arrears.

There are two key points in this case.

First, the tenant argued that we filed the wrong application. We filed an L2 application one day before the tenant returned the keys to the landlord. If he had already moved out (not in possession), we would have had to file an L10 and serve the documents on the tenant ourselves, which would have been problematic because the landlord did not know where the tenant was moving. The landlord contacted me a couple of days before the key handover, and we were able to file the application on an urgent basis.

At the hearing, the tenant claimed that he had actually moved out earlier, removed all his belongings, and no longer lived there, and that on September 6 he simply returned to hand over the keys. He argued that he was not in possession of the unit on September 5, when I filed the application, and therefore I had no right to file it. The adjudicator did not agree with this argument.

Second, the parties had signed a so-called “cash for keys” agreement. Under this agreement, the tenant was to move out on September 30 and was allowed to stay in July and August without payment. The agreement contained a clause stating: “No further payments as part of this agreement.”

Because of this clause, the matter lasted more than a year and required two hearings. At the first hearing, there was not enough time to fully address what was meant by “no further payments.”

The tenant argued that this meant he owed nothing to the landlord, that the landlord had waived the utility arrears, and was now taking a contrary position. Our position was that it meant the landlord would not make any further payments to the tenant to get him to move out, without affecting any other obligations, and that there were no discussions about waiving the water arrears. The adjudicator agreed with our interpretation.

The takeaway: if you are signing an N11 with a tenant as part of a cash for keys arrangement, do not write anything by hand on the form. It is better to prepare a separate document that supplements the N11 and clearly sets out the terms of the agreement in detail. Ideally, this should be done with a paralegal or a lawyer.

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