Published tribunal order
Tenancy Tribunal case 4597249 — Exemplary damages
Decided 4 Dec 2023 · Published 4 Dec 2023 · Application 4597249
- Exemplary damages
Party names are redacted in the official published order.
Order
- The parties’ names and identifying details must not be published.
- [The landlord] must immediately pay [the tenants] $3,445.44, calculated as set out in the table below. DescriptionTenant Bond and rent paid in advance$3,425.00 Filing fee reimbursement$20.44 Total award$3,445.44
Reasons
1
- The tenants 2 attended the hearing in person.
- The property manager/letting agent attended for the landlord’s agent.
- The tenants claim the landlord failed to return their pre-tenancy bond and rent payments, breached its obligations by “consistently misrepresenting the law and proper contract-making procedure”, and failed to lodge their bond. They seek orders for return of their bond and rent in advance, exemplary damages, and payment for their costs for “for time lost at work in order to seek legal advise, research, gather documentation”.
- The parties want this decision released without delay, so I these reasons are consciously brief. Background
- The tenants applied for a tenancy at the premises to commence on 27 May 2023 by filling out a “Pre-Tenancy Application Form”. That form among other things asks for referees who could “provide a reference about your credit- worthiness”.
- The property manager accepted their application on condition the tenants paid the bond and one week’s rent in advance. The tenants paid the sums requested. However, after the tenants received the proposed tenancy agreement, they withdrew their application.
- The property manager insisted the tenants were contractually bound to proceed with the tenancy. If so, the tenants repudiated the contract. On that basis, the property manager kept the tenants’ bond and rent in advance. Nonetheless, the landlord did not lodge the bond with the Bond Centre.
- The issues for determination are: a. Was there a tenancy contract? b. Did the landlord fail to lodge the bond? c. Did the landlord breach its obligations in respect to the contracting process? d. Should the Tribunal order costs in favour of the tenants? 1 I heard this matter on 1 December 2023. 2 Under s 2 of the Residential Tenancies Act 1986, “tenant” includes “a prospective tenant’. The same extension of meaning applies to “landlord”.
Was there a tenancy contract?
Legal principles
- The six essential elements for a valid and enforceable contract are offer, acceptance, consideration, intention to create legal relations, and capacity. 3
- An offer must be made with “[s]ufficient certainty as to...the proposed essential terms”. 4
- Essential terms for a residential tenancy contract include, the weekly rent, the address, the parties to the contract, commencement date of the tenancy, and the period of the tenancy, the type of the tenancy including whether the tenancy was for a fixed period or was periodic (ongoing but terminable by the tenants giving 28 days’ notice). Discussion
- The tenants say that they decided against continuing with a tenancy agreement for two reasons. Firstly, when the draft tenancy agreement came through it was a for a 12-month fixed terms and they did not want to be contractually bound for that amount of time. Second, they had explored the Auckland Council’s flood susceptibility data and found the premises were at risk of flooding in the event of extreme weather conditions such as the Anniversary Weekend floods of January 2023.
- The tenants say there was no contract because they were unaware that the tenancy would be for a fixed term when the filled out the pre-application form. Nor did they have an intention to be contractually bound without knowing all of the essential terms of the contract and being reasonably assured the premises were not prone to flooding.
- The property manager says she verbally told the tenants that the company always offered tenancies for a fixed term of one year, and then on negotiable terms thereafter. She considers the tenants simply got cold feet. The premises have never had a flooding problem, so the tenants’ concern was misplaced. 3 Ian Bassett Contract Law in New Zealand – Lawyers’ Handbook (Southern Cross Publishing, Auckland, 2007 at 3. 4 Ibid.
- The tenants deny the property manager told them the term would be for a fixed term. The tenant who primarily dealt with the property manager gave evidence under promise that she was unaware the proposed tenancy would be for a fixed-term. The Tribunal examined the tenant and property manager cross- examined her.
- I found the tenant’s evidence credible. There is no documentary evidence that contradicts her assertion that she was unaware the tenancy agreement would have a term making it a fixed term tenancy.
- The landlord has not proved on the balance of probabilities that the tenants were aware the tenancy agreement would be for a fixed term of 12 months. Conclusion
- It follows, the essential terms of the proposed tenancy were not sufficiently certain for the tenants’ submission of the Pre-Tenancy Application to be an offer. Therefore, the property manager’s acceptance of the tenants application did not conclude the contract.
- Nor did the tenants’ payment of bond and rent in advance “to secure the place” 5 change the nature of the tenants’ application. Rather, the property manager’s email containing the draft tenancy agreement contained the essential terms of the proposed tenancy. That was an offer. But the tenants did not accept the offer.
- I find there was no contract.
- The landlord must return the tenant’s bond and rent in advance.
Did the landlord fail to lodge the bond?
- A landlord must send any bond payment to the Bond Centre within 23 working days after the payment is received. 6
- Breaching this obligation is an unlawful act for which the Tribunal may award exemplary damages up to a maximum of $1,500.00. 7
- The landlord committed an unlawful act by failing to lodge the bond. 5 Property manager’s email dated 1 May 2023. 6 See s 19(1) Residential Tenancies Act 1986 (RTA). 7 RTA, s 19(2), Schedule 1A.
- Where a party has committed an unlawful act intentionally, the Tribunal may award exemplary damages where it is satisfied it would be just to do so, having regard to the party’s intent, the effect of the unlawful act, the interests of the other party, and the public interest. 8
- I am not satisfied it would be just to award exemplary damages in this case. The parties fell into dispute. There was in fact no tenancy, so the “bond” technically did not have to be lodged. The tenants had not signed the bond form as required under s 19(1)(b) so the property manager did not have an “approved form signed by the landlord and the tenant” which the RTA requires for the bond to be lodged.
- The property manager says she will ensure the tenants’ money will be promptly released to the tenants once the Tribunal’s order is released. I do not consider the property manager intended to improperly deal with the tenants’ money.
- An order for exemplary damages would be inappropriate in the circumstances.
Did the property manager mislead the tenants in the contract discussions?
- The tenants suspect the property manager dishonestly tried to bind them to a contract and kept their money without legal justification.
- I am not satisfied the property manager acted in a deliberately misleading way.
- Rather, the property manager did not understand the law. In this case, the contract would have been complete when the tenants returned the proposed tenancy agreement signed and dated. The property manager’s email was the offer; if the tenants had returned the agreement signed and dated, there would have been acceptance, and there would have been a contract.
- The property manager had difficulty accepting the Tribunal’s indication that there was no contract. My clear impression was that the property manager was wedded to her misguided belief that the tenants were contractually bound.
- I am not aware of any breach of the RTA in respect to the landlord’s actions. Sometimes people misunderstand their legal obligations. This was one of those times.
- I do not find any basis for any order due to the property manager’s actions. 8 RTA, s 109(3). Tenants’ costs?
- Under s 102 of the RTA, the Tribunal has no general power to award costs to or against any party to proceedings before it, except in limited circumstances that do not apply here. The Tribunal is primarily deals with lay litigants (not legally qualified people), and it is understandable that parties’ litigation costs are to be borne by them.
- The tenants having been substantially successful in their claim, the Tribunal orders the landlord to reimburse them for the cost of the filing fee. 9 Non-publication
- Both parties seek an order for non-publication of their identifying details.
- The Tribunal must, on the application of a party that has wholly or substantially succeeded in proceedings, order that the party’s name or identifying particulars not be published, unless the Tribunal considers that publication is in the public interest or is justified because of the party’s conduct or any other circumstances of the case.
- Both parties have substantially succeeded in the proceedings. The tenants succeeded in obtaining an order for return of their money. The landlord successfully resisted claims for exemplary damages. I do not consider that publication is in the public interest or is justified because of the parties’ conduct or any other circumstances of the case.
- The applications for non-publication are allowed.