Published tribunal order
Tenancy Tribunal case 4661136 — Exemplary damages at 6A Waiau Street, Torbay, Auckland 0630
Decided 30 Apr 2024 · Published 30 Apr 2024 · Application 4661136
- Exemplary damages
- Property damage
Party names are redacted in the official published order.
Order
- Given the personal nature of some of the matters traversed in this Order, and also recognising that steps have been taken to mitigate the chance of further breaches of the landlord’s obligations, with managers having been appointed to manage her rental portfolio, I direct that the parties’ names and identifying details be suppressed.
- [The landlord/s] must pay [The tenant/s] $20,072.53 immediately, calculated as shown in the table below:
Reasons
- Both parties attended the hearing.
- With the Tribunal’s prior approval, the landlord was represented by counsel. The landlord attended though was clearly struggling to hear all that was said. Her attorney participated by way of a “Teams” link to her counsel Background
- A case conference was held, which resulted in an Order giving directions being issued on 11 January 2024 (“the January Order”).
- The January Order noted: “With no disrespect to the landlord it will be important to clarify that she has the capacity to instruct counsel and/ or a representative. If there are such issues identified by counsel, the matter should be allocated a 60 minute teleconference before me to address the future conduct of the proceedings.”
- The specific directions given in the January Order regarding that issue were not able to be complied with. Ultimately, the Tribunal was advised that the landlord has been assessed as lacking the capacity to instruct counsel. The Enduring Power of Attorney in favour of her daughter was formally activated and she instructed [The landlord’s representative]. The Tribunal approved the landlord’s appearance through her representative.
- To assist the parties’ preparation for the hearing, the January Order noted the issues identified at the case conference and the parties’ positions on those issues, though on the basis that without the landlord having had legal advice, she could not be held to any positions taken.
- The hearing addressed the issues in the sequence outlined in the January Order, as below. Nature of Claims
- The tenant’s application involves claims for compensation and claims for exemplary damages. Before assessing the tenant’s claims individually, it is worth noting the distinction between those two categories of remedy.
- Compensation may be claimed by a party to a tenancy agreement where the other party has breached their obligations under the agreement or under the RTA, causing loss. That loss might be monetary, or may be less direct, for instance by reducing the benefit of the agreement to the other party. As the remedy is compensatory in nature, questions of intent or blameworthiness are not the focus.
- Some breaches are defined in the RTA as constituting unlawful acts. Where an unlawful act has been committed intentionally, exemplary damages may be awarded up to the maximum specified in Schedule 1A RTA.
- In considering whether to award exemplary damages, the Tribunal must have regard to the criteria in s.109(3) RTA, which are: “(a) the intent of that person in committing the unlawful act; and (b) the effect of the unlawful act; and (c) the interests of the landlord or the tenant against whom the unlawful act was committed; and (d) the public interest.”
- Awards of exemplary damages are not intended to compensate the other party but are punitive in nature, intended to impose a penalty for the commission of an unlawful act. As is clear from the s.109(3) criteria above, the Tribunal must have regard to questions of intention, blameworthiness and deterrence.
- In the absence of confirming evidence, it would not be proper for me to assume that the landlord’s current lack of capacity means that, at the relevant times during the tenancy, she could not have formed intent for the purposes of s.109(3). The Agreement.
- The tenant alleges that she was not provided with a copy of the tenancy agreement and that the agreement did not include information specifically required by s.13A RTA.
- At the case conference the landlord believed that there was a more complete copy of the agreement that she would be able to supply for the hearing. She now confirms that the copy provided by the tenant is the complete agreement.
- Section 13A RTA requires that a landlord include in the agreement certain specified information. That information includes: a. an insulation statement (s.13A(1A)); b. a healthy homes compliance statement (s.13A(1CA)); c. an insurance statement (s13A(2));
- Failure to provide that information is, in each case, an unlawful act for which exemplary damages of up to $750.00 may be awarded, (s.13A(1F) and Schedule 1A RTA).
- None of that information was provided in the agreement. The landlord has thereby committed an unlawful act.
- Counsel for the landlord submits that the Tribunal should take into account the landlords age, which he says makes it more difficult to keep abreast of her obligations under the RTA as a landlord. He also says that the breaches were technical in nature, did not profit the landlord and caused no loss to the tenant.
- I accept that the landlord’s omissions may have been unintentional to the extent that she may not have intended to commit an unlawful act. However, intention for the purposes of s.109(3) relates to the act or omission itself, not to the intention to act unlawfully. The landlord intended to have the tenant sign the agreement, which did not contain that required information.
- It is also difficult for the landlord to rely on ignorance of her obligations under the RTA, when she is the landlord of several other rental properties and clearly ought to have been aware (either herself or through her supports) of her legal obligations.
- The breach is more than technical in nature. The intention of s.13A is to assist tenants making informed decisions about residential premises before committing to rent them. Here, the landlord’s later statement to the tenant that “.... the cottage you were considering renting, now part of another dwelling, was built in the 1920’s and could not be insulated in the walls and ceilings.......”. may well have been material to the tenant in deciding whether to rent the premises.
- Nor is the absence of a Healthy Homes Compliance statement inconsequential when the absence of information about compliance and the premises’ failure to comply was at the heart of the issues before the Tribunal.
- The failure to provide an adequate agreement is on one view, a single omission, though comprising an unlawful act for each failure to provide an item of specified information.
- In my view an award of $750.00, being the maximum award for a single breach, adequately recognises the commission of multiple unlawful acts within a single overall omission.
- No separate award is made for the tenant’s claim that she was not provided with a copy of the agreement. Bond
- A landlord is required to lodge the tenant’s bond with the Bond Centre within 23 working days of receipt. Failure to do so is an unlawful act for which exemplary damages of up to $1500.00 may be awarded (s.19(1)(b), (3) and Schedule 1A RTA).
- It is not disputed that the tenant paid a bond and that the bond was not lodged with the Bond Centre. The tenant’s bond was returned to her by the landlord after the tenancy ended.
- By failing to lodge the bond with the Bond Centre the landlord has committed an unlawful act
- In considering whether to award exemplary damages, I take into account the landlord’s evidence that the bond was held securely and available to the tenant through the tenancy and was returned to her in full at the end of the tenancy. I accept there was no intent to use retention of the bond to the tenant’s disadvantage.
- Nevertheless, failure to lodge a bond breaches a fundamental obligation, of which the landlord, as landlord of multiple tenancies, must have been aware. It is not a new requirement.
- In those circumstances I consider it just to award exemplary damages equal to 1/3 of the maximum specified. Condition of the premises/ Healthy Homes compliance
- The tenancy began on 1st October 2022.
- In terms of the Residential Tenancies (Healthy Homes Standards) Regulations 2019, the premises were required to comply with Healthy Homes standards, 90 days after commencement date.
- From early in the tenancy, the tenant raised with the landlord concerns about the warmth of the premises. A request made by the tenant on 10 October 2022 for the landlord to consider installing a heat pump, was declined.
- Before the start of the next winter, in May 2023, the tenant requested that something be done about the draughts and gaps around the windows. The parties met in early June. On 8 July 2023, the tenant wrote to the landlord setting out her concerns about the cold at the premises, increased heating costs, damage to her property from mould and health issues she was suffering.
- After an initial, largely dismissive response (which may have come via the landlord’s support person), it was agreed that a Healthy Homes assessment would be undertaken.
- That assessment was carried out by [Healthy homes assessor], who provided a report dated 8 August 2023. That report assesses the premises as: a. non compliant with the moisture ingress and drainage standard, due to lack of a ground moisture barrier; b. non compliant with the draught stopping standard due to the presence of gaps around exterior joinery; c. non compliant with the ventilation standards with no extraction in the kitchen or bathroom. d. non compliant with the heating standard, lacking any adequate heating. e. compliant with the insulation standard, though noting “Whilst the ceiling insulation is noted as compliant, there is only insulation across the central section of the ceiling, leaving the outer sections without insulation. In the areas of no insulation, there is a clear presence of mould- see attached photo showing a clear line between insulated and uninsulated ceiling. This needs attention as the house is not healthy under these conditions.”
- At the case conference the landlord expressed an intention to challenge the Healthy Homes report. The report's author [Healthy homes report writer] was issued a witness summons to attend the hearing. Before the hearing the landlord indicated that the report would not be challenged and [Healthy homes report writer] was not called as a witness. Claims relating to condition of premises
- Section 45 RTA provides that the landlord shall - “..provide and maintain the premises in a reasonable state of repair having regard to the age and character of the premises and the period during which the premises are likely to remain habitable and available for residential purposes;” (s.45(1)(b)); and “..comply with the healthy homes standards” (s.45(1)(bb))”
- Breach of those obligations is in each case an unlawful act, for which exemplary damages of up to $7,200.00 may be awarded.
- The tenant claims compensation for: a.damage to her possessions from mould; b.increased heating costs; c.laundry fees for cleaning mould contaminated clothing; d.dump fees for disposing of mould contaminated property; e.buying window seals to use against draughts; f.the impact on her use and enjoyment of the premises.
- The tenant also seeks exemplary damages for breach of the landlord’s obligation to: a.maintain/ repair the premises; and b.ensure the premises complied with healthy homes standards. Compensation claims
- The tenant has provided comprehensive evidence, with photographs showing the mould damage to her possessions and evidence of the replacement cost for the damaged items. The list of claims is set out in the schedule to this Order.
- Counsel for the landlord says that there is insufficient evidence before the Tribunal to establish: a.the cause of any mould damage to the tenant’s possessions; b.the extent of mould damage caused to particular items of property; c.the pre-existing age and condition of particular items of property; d.the need for any mould damaged property to be destroyed (rather than cleaned).
- To establish her claim, the tenant must bring evidence to prove on the balance of probabilities (more likely than not) that the damage to her possessions was caused by the landlord’s breach. She must also prove the loss caused.
- The evidence shows that the premises failed to meet Healthy Homes standards designed to prevent dampness and moisture. There was no ground moisture barrier, no extraction in moisture producing areas (kitchen and bathroom) and unacceptable draughts allowing moist external air to enter, making it difficult to keep the premises warm and dry. No adequate form of heating was provided. The [Healthy homes assessor] report notes the unhealthy presence of ceiling mould, despite the premises’ compliance with the required standard.
- While I accept the age and character of the premises as relevant factors, all of those failings, which the landlord was required to rectify, seem to me likely to have contributed to the presence of dampness and cold in the premises.
- In reply to questions from me and from counsel for the landlord, the tenant gave clear evidence as to the steps taken by her to try and minimise problems with damp and mould. The tenant says she bought and used an air conditioner/ dehumidifier, regularly aired the premises, never dried washing inside and regularly cleaned the mould (except on the ceiling, which she could not manage).
- I find it proved on balance, that the primary cause of the conditions that led to damp and mould growth in the premises, were inadequacies in the premises themselves.
- Counsel for the landlord rightly questions whether there is sufficient proof of the extent of the damage and of the tenant’s loss.
- The photographic evidence provided by the tenant shows mould damage, to varying degrees, to the possessions for which compensation is claimed. The tenant’s evidence, which I have no reason to disbelieve, is that all of the items for which claims are made, have been destroyed. The tenant has provided evidence to indicate the risk of mould spores being transported to a new residence, if embedded in her belongings.
- Given the proven extent of mould contamination to some of her belongings, I find it was reasonable for the tenant to consider it necessary to destroy other belongings that were contaminated by mould, even if not as severely.
- The evidence provided by the tenant of replacement cost I find credible. The tenant’s compensation claims are approved as made except that: a.in relation to the shoe rack and bed, there appears to be a duplication, as the loss of the existing item as well as the cost of the replacement item are claimed; b.the small fan heater the tenant bought was for a room other than the main room, which heating standards relate to, and the tenant has retained that heater. I do not find purchase of that heater to represent a loss caused by the landlord’s breach.
- Counsel for the landlord is correct in pointing out that allowance needs to be made for the existing age and condition of the tenant’s possessions. The tenant is entitled to be put in the position she would have been but for the landlord’s breach, not better or worse off. The tenant’s evidence is that all those possessions were at most only two or three years old and were in good condition.
- In my view, a discount of 25% from replacement value is appropriate to recognise their existing age and condition in calculating compensation for their loss.
- I find it proved on balance that as a result of the landlord’s breach the tenant was also required to spend additional money on trying to clean the mould damaged possessions and dispose of damaged goods. I accept the basis on which the tenant has calculated that compensation. The claims are reasonable.
- The tenant should be reimbursed the cost of having bought window seal tape to try and address the draught issues.
- I also accept that it is more likely than not that the tenant will have incurred increased electricity charges from endeavouring to heat premises not compliant with draught stopping, heating, ventilation or moisture ingress standards. I find the compensation claimed to be reasonable and I accept the basis on which the tenant has calculated the compensation claimed.
- The tenant claims compensation equal to the whole of the rent paid during the tenancy, for the impact of the landlord’s breaches.
- As noted above, compensation may be awarded for indirect losses if the other party’s breach has reduced the benefit of the contract to the claiming party. That is the case here. The landlord’s breach of her obligation to provide adequate premises has reduced the benefit of the agreement for the tenant, who has not had, as she was entitled to, healthy and compliant premises to live in. I take into account as well the tenant’s claims about the health effects she experienced from living in a cold, damp and mouldy environment and find it more likely than not, that her living environment at least contributed to those effects.
- The impact of those issues on the tenant’s use and enjoyment of the premises will have varied over the term of the tenancy, depending to some degree on the season and weather conditions.
- Despite the undoubted issues caused for the tenant by inadequacies with the premises, there will have been a benefit to her from occupying the premises for the period she did, which also needs to be accounted for.
- Any assessment of compensation of this nature can only be broadly assessed. Considering the evidence overall and taking into account the awards of exemplary damages made in this Order, I find that reimbursing the tenant for 1/3 of the rent paid by her during the tenancy, as well as compensating her for her direct losses, would be just. Exemplary damages
- The inadequacies in the premises that led to its failure to comply with Healthy Home standards, are the same as those which might support a claim that the landlord failed to ensure the premises were kept in an adequate state of maintenance and repair.
- Awarding exemplary damages for breach of both s.45(1)(1) and 45(1)(bb) would effectively doubly penalise the landlord for the same omissions.
- In considering the s.109(3) criteria, counsel’s submission again is that the landlord’s failure to meet her obligations was through ignorance of her obligations, not any ill intent. Counsel points to the steps taken by the landlord to bring the premises to compliance upon becoming aware of the premises’ shortcomings. Counsel notes that the landlord has already arranged the appointment of property managers for her rental portfolio, so submits that no “deterrence” element is required in any award.
- Those are relevant factors. For the same reasons as indicated earlier in this Order, given the fundamental nature of the breaches and that the landlord is landlord of other premises, there is though, only a limited mitigation in her ignorance of legal obligations.
- What the evidence shows is that the tenant entered into a residential tenancy agreement with the landlord, under which she had a legal right to expect her rent to be paying for a safe and healthy home (at least by the HH compliance date 90 days after the tendency started). Instead, with no forewarning in the agreement, the premises proved to be non compliant with all relevant Healthy Homes standards (except insulation, with the health caveat noted by [Health homes report writer]).
- From the outset the tenant was raising concerns about the cold. Her property was damaged, she became sick and was required to engage in what were sometimes difficult discussions with the landlord and the landlord’s representative to try and have those issues addressed.
- The landlord’s intent may have reflected lack of awareness, but when the tenant legitimately raised issues about the premises’ compliance, there was pushback by (or on behalf of) the landlord from a legally incorrect position.
- The impacts on the tenant from the unhealthy nature of the premises have been significant.
- Again, the public interest requires that landlords be aware of and comply with such fundamental obligations.
- The landlord has breached her obligation to ensure that the premises comply with each of the specific Healthy Homes standards requirements, except those relating to insulation. Remediation work was also required there. Each breach comprises an unlawful act.
- From another perspective the landlord’s omissions constitute one fundamental failure to ensure the premises’ compliance with HH standards.
- I approach the award of exemplary damages on the same basis as I approached the award under s.13A (contents of the agreement) ie. that an award of the maximum damages for a breach of that obligation reflects that several specific unlawful acts have been committed, as well as the other criteria addressed above. Termination of the Tenancy
- After the [Healthy homes assessor] report had been received, the landlord issued the tenant a notice dated 17 August 2023 (“the termination notice”), as follows: “This letter is to advise you that you are required to quit the premises at 6A Waiau St. Torbay by 17 September 2023 for remedial work to be carried out on the buildings and surrounds. This will take considerable time and the property will remain off the market until this work this completed”
- The tenant claims that the termination notice is unlawful because: a.it was retaliatory; b.it did not give a sufficient period of notice; and c. it lacked grounds, because the required remediation work could have been done without requiring her to vacate.
- Under Section 60AA a landlord must not give a notice to terminate the tenancy or apply to the Tribunal for such an order, knowing they are not entitled to do so.
- Breaching that obligation without a reasonable excuse is an unlawful act for which exemplary damages may be awarded up to a maximum of $6500.00. See section 60AA and Schedule 1A Residential Tenancies Act 1986.
- Giving a termination notice which is declared to be retaliatory is an unlawful act for which exemplary damages may be awarded, up to a maximum of $6,500.00. See section 54(2), (3) and Schedule 1A Residential Tenancies Act 1986.
- For a notice to be declared retaliatory, the tenant must prove that in terminating the tenancy, the landlord was motivated wholly or partly by the tenant exercising a right under the tenancy agreement or any Act, or by any complaint against the landlord. See section 54(1) Residential Tenancies Act 1986.
- The landlord’s property manager gave evidence. Her evidence is that she was instructed by the landlord to advertise the premises for rent on the basis that they would be available from 28 October 2023. She says that the landlord then withdrew the instruction, as the landlord had found someone to rent the property privately.
- Evidence provided by the landlord shows that remediation work to adjust the wooden joinery and apply a ground moisture barrier was done before the property manager was formally appointed in February 2024. Since then, the kitchen extractor and bathroom ventilation have been installed with tenants in occupation. The property manager is unable to confirm (and inexplicably does not have a copy of the tenancy agreement) commencement date for the new tenancy or whether the premises are now confirmed as Healthy Homes compliant.
- It is not disputed that the notice of termination was invalid, in giving in sufficient notice.
- I infer that the basis for the termination notice being given was s.51(2)(f) which allows termination of a periodic tenancy on 90 days’ notice where, “extensive alterations, refurbishment, repairs, or redevelopment of the premises are to be carried out by the landlord or owner, and—(i) it would not be reasonably practicable for the tenant to remain in occupation while the work is undertaken; and (ii) the work is to begin, or material steps towards it are to be taken, within 90 days after the termination date”
- [Healthy homes report writer] has provided a statement in which he expresses the view that the work required to bring the premises to Healthy Homes compliance could reasonably have been undertaken with the tenant remaining in occupation. That view appears to be corroborated by evidence provided by the landlord about the remediation work now done, none of which would appear to require termination of the tenancy.
- I find it proved on balance that there is no lawful basis for the tenancy to be terminated under section 51(2)(f).
- Despite the remediation work being the apparent justification for the notice, the landlord instructed the property manager to find a new tenant immediately, without any of that remediation work having been arranged or undertaken. I can only assume that it was just this tenant that the landlord did not want to be occupying the property while any remediation work was carried out.
- I find it more likely than not that the termination notice was motivated at least in part, by the tenant having raised those compliance issues with the landlord and was therefore retaliatory.
- The consequence for the tenant in raising and pursuing entirely legitimate concerns about the state of the premises and the landlord’s compliance with her obligations, was to receive notice to vacate on unlawful terms. The vacate period given was clearly unreasonable. That is exactly not the response required by the RTA.
- In issuing the termination notice, the landlord committed more than one unlawful act. I follow the same approach as previously in awarding the maximum damages for the one act of issuing the notice, recognising that the breach was egregious and comprised more than one unlawful act. Moving costs
- The tenant says that a consequence of her being issued with the termination notice was that she incurred moving costs for which she should be compensated.
- Counsel for the landlord makes the fair point that those costs would inevitably have been incurred by the tenant in any event, when moving from the premises, so they are not caused by the landlord’s breach.
- There is forced to that argument, but I also accept the tenant’s position that the tenancy was ended unlawfully so she should not have had to move. Any later termination would be after proper, lawful and adequate notice, giving her the opportunity to arrange her move less hastily and in a way that might have mitigated the costs.
- Weighing those considerations, I find that while the landlord is not wholly responsible for the tenant’s moving costs, a contribution should be made by her to recognise that fair opportunity was not given to the tenant to limit those costs. Breach of Right to Quiet Enjoyment
- The tenant claims compensation for what she says was the landlord’s breach of her right to quiet enjoyment of the premises.
- As noted in the January Order it is not alleged that the landlord entered the dwelling improperly.
- The tenant does say however that the landlord and her support person visited the property several times without notice, in circumstances where they should have known the tenant would find it disturbing and of which she should have been given prior notice.
- Section 48 provides that a landlord may only enter premises with notice as prescribed in that section. For the purposes of that provision, “premises does not include land or facilities.”
- The landlord was not obliged to give notice before entering onto the “land or facilities” but was still required to do so in a way that respected the tenant’s right to “reasonable peace, comfort or privacy” (s.38)
- The tenant gave evidence of one occasion in particular when she says the landlord and her support person, without notice, went underneath the premises. The first the tenant was aware of their presence was when she heard noises from underneath her floor.
- I find that to be a breach of the tenant’s right to reasonable peace, comfort and privacy in her enjoyment of the premises. Had there been clear evidence of repeat behaviour of that nature, I would have considered awarding compensation.
- Given the compensation and damages awarded to the tenant for breach of the landlord’s other obligations I do not consider that an additional award for this isolated breach would be just.
- As the tenant has substantially succeeded with her claim, I reimburse the filing fee.