What was the outcome of Tenancy Tribunal case 4662572?

The tribunal order states: By declaration, the premises, in the context of this tenancy, is an unlawful

How much money was awarded in case 4662572?

Compensation: $1,200.00 awarded to tenant; Rent Arrears: $4,371.42 awarded to landlord

What type of tenancy dispute was case 4662572?

The primary dispute was Rent arrears.

Where can I read the official tribunal order for case 4662572?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9586764-Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 4662572?

The tribunal order states: By declaration, the premises, in the context of this tenancy, is an unlawful

How much money was awarded in case 4662572?

Compensation: $1,200.00 awarded to tenant; Rent Arrears: $4,371.42 awarded to landlord

What type of tenancy dispute was case 4662572?

The primary dispute was Rent arrears.

Where can I read the official tribunal order for case 4662572?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9586764-Tribunal_Order.pdf.

Unit/Flat G, 8B Target Road, Totara Vale, Auckland 0629 Tenancy Tribunal Case 4662572 — Rent arrears

Claims and awards in Tenancy Tribunal application 4662572 — net $3,171.42 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Landlord	Tenant	Reason
Rent arrears to 31 October 2023	$4,371.42		Rent arrears to 31 October 2023
Compensation		$1,200.00	Compensation
Total award	$4,371.42	$1,200.00
Net award	$3,171.42
Total payable by Tenant to Landlord	$3,171.42

Claims and awards in Tenancy Tribunal application 4662572 — net $3,171.42 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Landlord	Tenant	Reason
Rent arrears to 31 October 2023	$4,371.42		Rent arrears to 31 October 2023
Compensation		$1,200.00	Compensation
Total award	$4,371.42	$1,200.00
Net award	$3,171.42
Total payable by Tenant to Landlord	$3,171.42

Order

By declaration, the premises, in the context of this tenancy, is an unlawful premises.
The tenancy of Steven Reid at Unit/Flat G, 8B Target Road, Totara Vale, Auckland 0629 is terminated, and possession is granted to Veenahari Investments Limited, at 9am on 18 December 2023, subject to the following: a. The tenant may terminate the tenancy earlier by giving no less than 1 week notice in writing. b. The tenant must pay rent on time. If the tenant fails to pay rent within 2 working days of the due dates: i.The tenancy at Unit/Flat G, 8B Target Road, Totara Vale, Auckland 0629 will terminate early and the landlord will have immediate possession of the premises.
Steven Reid must pay Veenahari Investments Limited $3,171.42 immediately, calculated as shown in the table below:

Reasons

Both parties attended the hearing.
The landlord has applied for termination of the tenancy, rent arrears and refund of the bond.
The tenant seeks a declaration that the tenancy is an unlawful residential premises, and seeks reimbursement of the rent paid. Background
The tenant has resided at the premises since 2019. Initially, there was a commercial lease. In February 2022, the parties entered into a residential tenancy agreement.
The premises is a studio apartment (“the studio”). It is surrounded by commercial units, and was originally part of the storage area of the bakery unit.
In 2019 that premises was converted to a residential unit. Resource Consent was granted as a permit for “workers accommodation”, intended for the use of someone carrying out business on the same site. The change of use of the premises from commercial to residential was consented and the work has a certificate of code compliance. The premises has a health homes certificate.
Essentially, the premises can be lawfully occupied, as a residential unit, by any person working or carrying out business in one of the commercial units at the same address.

Does the tenant carry out business on site?

It is common ground that the tenant is not employed by any of the businesses at the site.
The tenant says he has never operated his own business from the premises.
The landlord says the tenant has undertaken work from the garage he leases next to the premises, including carpentry and toy making.
The tenant accepts that up to the 2021 covid-19 lockdown he did work from home, making toys. This was on an employment basis. He would be supplied with all materials to craft the toys at home.
The landlord also suggested that the tenant ran a mechanic’s business from the address. The evidence he pointed to, to support that, was the storage of tyres and various car parts, together with seeing the tenant and his friends working on vehicles at the premises.
The tenant denies this. He says the tyres are motorbike tyres used by his son, and that cars and motorcycles are a hobby. Prior to an accident that left him wheelchair bound he rode motorcycles as a hobby.
I find that the tenant does not carry out business from the site.
I accept that the work on vehicles and the machinery and other items stored in the garage relate to the tenant and his son’s hobbies, rather than any commercial enterprise.
The carpentry work was harder to determine. However, on balance, I consider this was more likely in the nature of part time work, done from home, rather than an independent business. The tenant remained in receipt of a benefit from Work and Income New Zealand and supplemented that with additional casual work. I accept the tenant’s evidence that he was supplied with materials and other items by the person he made the toys for, which is more in the nature of an employment relationship.
Further, I accept the tenant’s evidence that this work dried up with the covid-19 lock downs and the associated impact on businesses in 2021. This was prior to the signing of the tenancy agreement in February 2022.

Is the premises an unlawful residential premises?

Section 78A(2) of the Act states: For the purposes of this Act, unlawful residential premises means residential premises that are used for occupation for a person as a place of residence but— (a) that cannot lawfully be occupied for residential purposes by that person (whether generally or whether for the particular residential purposes for which that person is granted occupation); and (b) where the landlord’s failure to comply with the landlord’s obligations under section 36 or 45(1)(c), ..., has caused the occupation by that person to be unlawful or has contributed to that unlawful occupation.
“Residential premises” is defined in section 2(1) of the Act as any premises used or intended for occupation by any person as a place of residence, whether or not the occupation or intended occupation for residential purposes is or would be unlawful
“Premises” is defined in section 2 of that Act as including: (a) Any part of any premises; and (b) Any land and appurtenances, other than facilities; and (c) Any mobile home, caravan, or other means of shelter placed or erected upon any land and intended for occupation on that land.
Section 36 of the Act states that: The landlord shall take all reasonable steps to ensure that, at the commencement of the tenancy, there is no legal impediment to the occupation of the premises for residential purposes.
Section 45(1)(c) states that: (1)The landlord shall – ..... (c) Comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises;
The studio occupied by the tenant is clearly a residential premises, in that it is a part of the premises, used for occupation as a place of residence. Put simply, it was intended that the tenant live in the premises, and the tenant did, in fact, live there.
The question is whether the premises can be lawfully occupied as residential premises, either generally or for the particular residential purposes for which the tenant occupied it, and whether the landlord’s failure to comply with either section 36 or section 45(1)(c) caused or contributed to the unlawfulness of the occupation.
In the present case, the particular residential purposes concerned is the occupation of the premises by someone not carrying out business on the same site.
While the premises can be occupied, generally, for residential purposes, as the building has Council consent for residential use, an issue arises when looking at the occupation of the unit by this particular tenant (who is not carrying out business on the site).
Given both limbs of section 78A(2) must be satisfied before a premises is deemed an unlawful residential premises, it is useful to consider section 36 and 45(1)(c) when considering whether the use of the premises in this particular manner is unlawful, as if the occupation of the premises is unlawful as a result of either section, it will be likely that the landlord’s failure to comply with those sections contributed to the unlawfulness of the occupation.
Section 45(1)(c), in this case, requires consideration of whether then landlord has complied with the provisions of the Resource Management Act 1991, which allows a territorial authority to place conditions on the issuing of a resource consent. In this case, the resource consent permitted use of the premises as workers accommodation, not general residential use.
The landlord’s evidence was that there was a change to the Auckland Unitary Plan in 2019 (after the resource consent was granted) which would allow the premises to be occupied by anyone. He had provided an opinion – in the form of a letter from Emacs (qualified planners) to the Council – which supports this. The Council would appear to accept that, as a letter dated 4 July 2023 indicates that all conditions have been complied with. However, there is still a process to follow, and fees to be paid, the formally remove the condition.
Accordingly, I consider that the landlord has not complied with the conditions of the resource consent and the Resource Management Act 1991, and consequently has failed to comply with section 45(1)(c) of the Act.
The failure to comply, in my view, makes occupation of the studio by this tenant unlawful.
Accordingly, the premises is an unlawful residential premises.
Returning then, to section 78A of the Act. Section 78A provides that where the Tribunal declares the residential premises to be unlawful, it must not make an order for rent arrears or compensation against the tenant unless, having regard to the special circumstances of the case, it would be unjust not to make the order.
The Tribunal may, but does not have to, grant an application by the landlord for termination for rent arrears.
The Tribunal may order the return of all rent paid by the tenant, although it may deduct an amount from that sum if, in the special circumstances of the case, it would be fair to do so. The Tribunal may also make a work order requiring the landlord to remove any impediment to lawful occupation or to comply with any building, health or safety requirements.

Are there special circumstances warrant a reduction in the amount awarded?

Section 78A of the Act was introduced in 2017 in response to two High Court decisions 1 relating to the jurisdiction of the Tribunal to determine applications relating to unlawful residential premises. At the time of introduction of the Bill, the then-Minister for Building and Constructions, the Hon Nick Smith referred to what he described as the “abhorrent” practice of renting out unconsented, non- compliant and unsafe properties to tenants. He noted: So the purpose of this part of the bill is to ensure that where landlords do rent out inappropriate properties, there is the capacity to hold those landlords to account. ... My view is that the amendments in this bill that make it plain that the tribunal has full jurisdiction over unlawful residential premises will strengthen the regulatory environment and ensure that those people who attempt to rent out such properties are held accountable.” 1 One of which was the decision of Parbhu v Want [2018] NZHC 2019 replied on by the landlord in submissions. This decision has been replaced by the new legislation.
I consider that the public policy behind the introduction of section 78A is: a. To hold landlords to account for choosing to expose tenants to the health and safety risks of renting out unconsented or non-compliant properties; b. To disincentivise the practice; and c. To ensure landlords don’t profit from the practice.
That said, by allowing the Tribunal to the discretion to reduce the amount awarded to tenants under s78A, I consider that Parliament intended there to be a distinction be drawn between premises that were unlawful on the basis of some type of regulatory technicality, but which were otherwise safe, healthy homes, and those property which created risks to health and safety.
In the present case, I consider that the amount order should be reduced to take into account the fact that the premises is consented for residential purposes, and other than the breach of the condition on the resource consent, the studio is a warm, dry and safe premises appropriate for residential use. The tenant has had the benefit of the occupation of the without significant complaint. I consider it relevant that the tenant has not made claims in relation to the condition of the premises.
I consider that an award of refund of rent is appropriate to reflect the fact that this is an unlawful premises, and the landlord should have been aware of that. However, I consider that a reduction in the amount awarded to take into account the factors set out above is warranted.
I consider that an award of $1,200.00 is appropriate.

How much is owed for rent?

The landlord seeks an order for rent arrears and termination of the tenancy.
The landlord seeks payment of $4,371.42 in rent arrears as at the date of hearing. I am mindful of the provisions of s78A and the prohibition on making an award for rent arrears against the tenant, unless having regard to the special circumstances of the case, it would be unjust not to make the order.
Given my finding that this premises was an unlawful one was for technical reasons, I do consider there are special circumstances justifying the making of an order for rent arrears. The tenant has had full use of the premises for the period the landlord is claiming rent arrears. The condition of the premises is acceptable, and it meets the healthy homes standards.
Accordingly, I consider the amounts ordered are proved.

Should the tenancy be terminated?

Rent was at least 21 days in arrears on the date the application was filed. Ordinarily, termination of the tenancy would be mandatory in these circumstances, pursuant to section 55(1)(a) of the Act.
Having determined that this is an unlawful residential premises, termination of the tenancy for rent arrears is not mandatory.
In the circumstances, given the extent of the rent arrear, I do not consider that it would be inequitable to terminate the tenancy.
Accordingly, the landlord’s application for termination of the tenancy is granted.
That said, I am mindful of the difficulties the tenant has had in finding alternate accommodation, given his access requirements. I am prepared to allow a longer than usual time to termination.
That is conditional on the tenant paying rent in full and on time. Filing fee
As both parties have been partially successful, I make no orders in relation to the filing fees paid.

Tenancy Tribunal case 4662572 — Rent arrears at Unit/Flat G, 8B Target Road, Totara Vale, Auckland 0629

At a glance

Tenancy Tribunal case 4662572 — Rent arrears at Unit/Flat G, 8B Target Road, Totara Vale, Auckland 0629

At a glance

Award balance

Claims & awards

Order

Reasons

Does the tenant carry out business on site?

Is the premises an unlawful residential premises?

Are there special circumstances warrant a reduction in the amount awarded?

How much is owed for rent?

Should the tenancy be terminated?

Topics & place

Residential Tenancies Act sections

Key findings

Property management

Frequently asked questions

Award balance

Claims & awards

Order

Reasons

Does the tenant carry out business on site?

Is the premises an unlawful residential premises?

Are there special circumstances warrant a reduction in the amount awarded?

How much is owed for rent?

Should the tenancy be terminated?

Topics & place

Residential Tenancies Act sections

Key findings

Property management

Frequently asked questions