Published tribunal order
Tenancy Tribunal case 4678510 — Tenancy dispute
Decided 10 Apr 2024 · Published 10 Apr 2024 · Application 4678510
- Cleanliness
- Property damage
- 14-day notice
Party names are redacted in the official published order.
Order
- An application for suppression has been made in this case, and the Tribunal orders suppression of the Tenant and Landlord names and identifying details. 2. 3.
Reasons
Background
- The tenancy began on 14 June 2009 and ended on 1 August 2023.
- The property is a three-bedroom house on approximately 10 acres of land, most of which is in mature trees and bush.
- The tenancy was terminated by the landlord on the grounds that the property was going to be put onto the market for sale.
- The landlord did not re-take possession immediately after the end of the tenancy. There were numerous car wrecks on the property. The landlord allowed the tenant extra time to remove the wrecks. The landlord took possession after the majority of the wrecks were removed, in or around October 2023.
- The landlord carried out methamphetamine testing after re-taking possession. The initial composite test was positive for methamphetamine at a very high level.
- The landlord’s application was filed on 7 September 2023. The application sought methamphetamine related costs (at that time, testing costs) and the cost of removal of car wrecks.
- The first Case Conference hearing took place by phone on 7 November 2023. Adjudicator King made an order by consent that the tenants would remove the three remaining wrecks from the property within 7 days of the date of the order, and if they failed to do so they would pay the landlord $1725.00. The hearing was adjourned.
- On 21 December 2021 Adjudicator King made a second order scheduling a full day in-person hearing and stating that if the tenants wished to filed a cross application they should do so within 14 days.
- The tenants filed a cross-application on 9 January 2024.
- The applications were scheduled for a full day hearing in [Event location suppressed] on 14 March 2024.
- Both parties attended the hearing. [The property manager] represented the landlord. Landlord application Methamphetamine
- The landlord holds insurance for methamphetamine contamination costs, with a policy limit of $50,000.00 and an excess of $650.00.
- Methamphetamine contamination, at levels that necessitate de-contamination cleaning, constitutes damage to the premises.
- Tenants are liable for damage that occurs during the period of the tenancy.
- To recover methamphetamine testing and de-contamination costs, the landlord must establish (to the standard of ‘more likely than not’) that the contamination occurred during the tenancy and that the extent of contamination necessitated de-contamination cleaning.
- The most common means for landlords to establish that contamination occurred during the tenancy is to carry out a test before the start of the tenancy and then carry out another test at the end of the tenancy.
- Methamphetamine testing between tenancies is now commonplace in [The region]. However, that was not the case in 2009 when this tenancy began.
- No testing was done before the start of this tenancy.
- At the end of the tenancy the landlord carried out a standard composite test.
- The result was positive at a level of 82.2 micrograms per 100cm2.
- The landlord arranged for detailed testing. I was provided with a copy of the detailed test results. Thirty-one areas were sampled. All the samples were positive for methamphetamine, at levels ranging from 0.82 micrograms (second garage) to 107 micrograms (lounge).
- During the tenancy the landlord installed a heat pump, and extraction fans in the kitchen, bathroom, and laundry. All those surfaces were tested at the end of the tenancy. All were positive for methamphetamine at high levels. The kitchen extraction fan was positive at a level of 62.7 micrograms.
- The fact that there was contamination at high levels on surfaces that were not in the property when this tenancy began is conclusive proof that contamination occurred after the commencement of this tenancy.
- The tenants noted that there was a period of approximately two months after they vacated the property before the landlord re-took possession. It is unclear whether they secured the house at that time. They returned to the property regularly over the next few weeks, but only to exterior in order to remove car wrecks.
- The fact that the testing was not carried out immediately after the end of the tenancy introduces the theoretical possibility that contamination could have occurred after the tenants moved out. The standard of proof that applies in the Tenancy Tribunal is the civil standard of “more likely than not”.
- The tenants occupied this property for 14 years. It was ‘vacant’ for approximately 8 weeks before the landlords re-took possession. The possibility that someone may have found out that the property was empty, moved into it to manufacture methamphetamine, avoided detection while the tenants came and went retrieving wrecks, and then moved out before the landlords took possession, is extremely unlikely.
- I am satisfied that it is more likely than not that the contamination occurred during the period of this tenancy.
- As noted above, methamphetamine contamination at levels that necessitate de- contamination constitutes damage to the premises.
- Since 2018 the Tenancy Tribunal has applied the recommendations made in a May 2018 report prepared by the Prime Minister’s Chief Science Advisor, Professor Sir Peter Gluckman. Professor Gluckman concluded that methamphetamine contamination at levels below 15 micrograms per 100cm2 did not require de-contamination if the contamination was the result of methamphetamine use.
- Professor Gluckman recommended de-contamination of any areas of contamination above 1.5 micrograms per 100cm2 if there is evidence of methamphetamine manufacture. The lower threshold for manufacture is because of the risk of the presence of precursor chemicals associated with methamphetamine manufacture.
- The District Court upheld the Tenancy Tribunal’s use of the Gluckman Report recommendations in Full Circle Real Estate Ltd v Piper [2019] NZDC 4947.
- In this instance I am satisfied that it is more likely than not that methamphetamine manufacture took place at the premises having regard to: a. The very high levels of contamination throughout the property. The Gluckman Report notes that contamination at levels above 30 micrograms is an indicator that it is likely that manufacture has occurred. In this property 9 of the 32 samples exceeded this level and the highest level was 107 micrograms. b. The three samples taken in the kitchen showed levels of 67.2 micrograms (extractor fan), 80.3 micrograms (door), and 49.6 micrograms (window frame).
- The detailed test report shows that all but five of the samples evidenced contamination at levels above 1.5 micrograms per 100cm2.
- Therefore, de-contamination cleaning was necessary in this instance.
- The cost of detailed testing and then further testing after de-contamination cleaning is a direct and reasonably foreseeable consequence of the methamphetamine contamination for which the tenants are liable. In this instance there were several attempts at de-contamination cleaning before the contamination were brought down to an acceptable level.
- “Remediation” includes the disposal of chattels that have soft or permeable surfaces, and painting.
- [The witness], a consultancy specialising in methamphetamine and other contaminants in residential properties, participated in the hearing as a witness. [The witness] stated that re-painting is a part of remediation in properties with high levels of contamination because the solvents used in the de-contamination process damage painted surfaces. The heat pump was replaced because the porous plastic surface cannot be effectively cleaned. The level of contamination on the heat pump was 2.91 micrograms. The stove was also replaced. The stove was not tested. [The witness] explained that the stove was replaced because: a. It is generally less expensive to replace the stove rather than test it, clean it, and re-test it. b. It is appropriate to take a cautious approach to remediation of parts of the house where there is contact with food. c. Given the high readings in the kitchen and the high likelihood of methamphetamine manufacture, the stove was almost certainly contaminated at a high level.
- In summary, I find that: a. It is proven, to the standard of more likely than not, that methamphetamine contamination occurred during the tenancy. b. It is proven that the contamination methamphetamine manufacture (or attempted manufacture) occurred during the tenancy. c. The levels of contamination necessitated de-contamination. d. The tenants are liable for costs associated with the de-contamination, which can include de-contamination cleaning, testing, and remediation. Methamphetamine contamination - calculation of landlord’s loss
- As noted above, the landlord holds insurance cover for methamphetamine contamination with a policy limit of $50,000.00 and an excess of $650.00.
- The owner made a claim with their insurer, [The insurance company].
- [The insurance company] paid directly the following costs: Decontamination cleaning ([The cleaning company]): $10,235.00 Pre-decontamination testing ([The testing company]): $3,573.93 Post decontamination testing ([The testing company]) x 3: $5,916.07
- [The insurance company] then produced a “Reinstatement – Scope of works” report detailing the ‘remediation’ part of the work. The 24-page report details all the works involved in remediation and the cost of the work. The total is $43,838.33.
- On the basis that the total cost of the claim would exceed the $50,000.00 policy cap, [The insurance company] “cash settled” the balance. The amount paid to the owner (net of the direct payments listed above) was $30,273.00.
- This is detailed in an email from [The insurance company] to the owner dated 30 January 2024.
- The tenants are not liable to the landlord for losses that the landlord has recovered from their insurer.
- The tenants are liable for proven costs / losses over and above the amount that the landlord has received from their insurer.
- [The property manager/s] schedule of costs shows that the owner has paid for: Carpet removal and dumping $394.00 Initial composite test $366.85 First detailed test $3,852.28 “Tenancy support” $297.85 Power (cleaning and remedial work) $410.30
- In terms of these costs: a. I accept that carpet removal and disposal is part of the de-contamination work. b. The initial composite test was part of the landlord preparing to put the property on the market for sale. The landlord would have borne that cost whether the result was positive or negative. This is not an additional cost that the landlord has incurred as a consequence of the contamination. c. The detailed test was only necessary because the composite test was positive. It was essential for the landlord to have this test done to ascertain the extent of contamination. The landlord can recover this cost in full. d. Power use for de-contamination cleaning can be recovered in full. Power use for remediation work, in so far as the work involves replacing old chattels with new chattels (including paintwork) must be subject to depreciation because it is a necessary part of the work that the landlord would be required to do (and pay for) if the chattel had worn out through ordinary use. On the information available to me it is not possible to accurately apportion the power costs between de-contamination cleaning and chattel replacement. I will assess the recoverable amount as two- thirds of the actual cost. e. The tenants are not liable for the ‘tenancy support’ cost. The Tenancy Tribunal has no power to award costs (meaning the costs of preparing for and attending Tenancy Tribunal hearings) to any party, except in certain limited circumstances, none of which apply in this instance.
- The balance of the claim is for remediation costs, based on [The insurance company/s] “Remediation – Scope of works” report.
- The report details the remediation work required on a room-by-room basis. The report lists the cost of each aspect of the work. The sub-total of the costs is $31,504.37. To that cost is added 10% for “overhead” and then another 10% for “margin”, and then GST.
- It appears that the costings are based on generic figures used by the insurance industry rather than an estimate provide by a tradesperson who viewed this property.
- The majority of the cost is painting. The costs that are not painting are: preparation work including general cleaning, replacement of exhaust fans and ducting (kitchen, bathroom, laundry), replacement of the stove, replacement of an aluminium venetian blind (laundry), replacement of the heat pump, and replacement of carpet tiles (hallway). The total of these non-painting costs (exclusive of overhead, margin, and GST) is $10,825.04.
- If a tenant causes damage to a chattel and it is not economic (or not possible) to repair the damage, it is necessary and appropriate for the landlord to replace that chattel with a new one. However, when considering the extent of the tenant’s liability, the Tribunal will take into account the age of the chattel. This is because if a tenant is required to pay the full cost of a replacing an aged chattel, the landlord will receive an unintended betterment. This is the principle of depreciation.
- The landlord understood this principle and helpfully provided a depreciation schedule showing the purchase price, date of purchase, and depreciated value of the heat pump and the stove. The figures set out in the schedule are clear, accurate, and reasonable, and I will use these figures (depreciated value of $1,958.00 for the heat pump and $1,329.00 for the stove) for these items.
- Depreciation must also apply to the claim for replacing exhaust fans and ducting (x 3), the venetian blind, the carpet tiles, and (crucially) the painting.
- All parts of a property have a life expectancy. A landlord can expect to re-paint the interior walls of a property every 5-10 years as a consequence of fair wear and tear. This tenancy began in 2009. At the hearing [The property manager] did not have any information about when the walls were last painted. The tenants stated that they were painted in 2011, which means that the paint was approximately 12 years old when the tenancy ended.
- The age of the venetian blind, carpet tiles, and exhaust fans and ducting is unknown. I understand that the fans in the kitchen and laundry were fitted during this tenancy, therefore sometime after July 2009. These are reasonably long lifespan items. The Remediation report gives a price of $283.95 for replacing each exhaust fan and $287.09 for replacing each set of ducting (plus overhead, margin, and GST). The fact that the cost is exactly the same for the kitchen extraction fan, the laundry fan, and the bathroom fan indicates the generic nature of these figures. I am assuming that these are new replacement costs – nothing in the report indicates that depreciation has been factored in. The total cost for replacement of all three fans and ducting, including GST, is $2,383.81. The tenants expressed concerns about the overhead and margin costs in the remediation report. Those costs were not well explained, but in my view a claim for $2,383.81 for replacement of three exhaust fans and vents seems fair and reasonable.
- The Report gives a price of $644.26 to replace the carpet tiles in the hallway and $1,060.47 to replace the carpet tiles in bedroom 3. These figures are exclusive of overhead, margin, and GST. I do not know the age of the existing carpet. There is no evidence that the carpet was replaced during this tenancy which means that the existing carpet / carpet tiles were at least 14 years old. This is beyond the usual life expectancy of all but the most expensive types of carpet. I assume that the prices in the report are based on new replacement.
- I can only assess the tenants’ liability based on the information available to me. As noted above, in assessing the tenants’ liability I must take into account depreciation. My finding is that the proven liability for remediation costs after depreciation is $11,148.57, calculated as follows: Remediation description Claim after depreciationBasis of calculation General (cleaning, electrical work etc) $2,490.63Work detailed under heading “General” in remediation report. No depreciation applies. Replace heat pump$1,958.00Per landlord’s schedule Replace stove$1,329.00Per landlord’s schedule Replace exhaust fans and ducting x 3 $2,145.43Per the remediation report less depreciation of 10% Replace venetian blind$110.77Per the remediation report less depreciation of 50% Replace carpet tiles$237.21Per the remediation report less depreciation of 90% Painting$2,877.53Per the remediation report less depreciation of 90% Total:$11,148.57
- Therefore, the landlord’s proven claim for methamphetamine related costs losses is $15,668.38, calculated as follows: Description Amount Carpet removal and dumping$394.00 Detailed test$3,852.28 Power$273.53 Remediation costs$11,148.57 Total:$15,668.38
- The proven claim is less than the amount that the owner has received from their insurer. Therefore, I find that the landlord has not suffered an uninsured loss that can be recovered from the tenants. Car wreck removal
- The claim seeks $1,725.00 to remove a car wreck and parts.
- [Tenant 1] did not dispute that he brought approximately 150 wrecks onto the property during the tenancy. He submitted that: a. When the tenancy began the property was very untidy and overgrown. The landlord gave them a two-week rent waiver at the start of the tenancy to reflect this. b. There were already wrecks on the property when they moved in. They were not concerned about this at the time. c. At the end of the tenancy the landlord asked them to remove all of their wrecks, which they were willing and able to do. The process was difficult and took a long time because of the challenging driveway and the fact that it was winter. d. At the Tenancy Tribunal hearing in December 2023 [The property manager] told them that there were three more vehicles left. He returned to the property and removed four more vehicles.
- [The property manager] submitted that she returned to the property sometime in January 2024 ([The property manager] could not confirm the date) and discovered a half-buried wreck and buried car parts. [The property manager] provided photographs of this.
- [Tenant 1] submitted that the wreck is not one of his. It is half buried and in very poor condition. [Tenant 1] submitted that this is one of the wrecks that was on the property when the tenancy began.
- The landlord has the burden of proof.
- There is no evidence about the condition of the property in 2009 apart from the oral evidence of [The tenant/s].
- [Tenant 1]’s actions since the end of the tenancy show that he has taken all reasonable steps to remove the wrecks that he brought on to the property.
- It is not proven that the wreck shown in [The property manager/s] photograph was brought onto the property by [Tenant 1].
- This part of the claim is dismissed. Tenant application Introduction
- The tenant filed a cross-application on 9 January 2024. The application raises two issues – compensation for work on the driveway and for trimming trees. The compensation claimed by the tenants ($7,755.00) related to the driveway only.
- At the hearing [The property manager] submitted that she had not received a copy of the tenants’ cross-application and she was not aware of it. The cross- application names the owner of the property as the landlord / respondent, and therefore the copy of the cross-application was sent to the owner. [The property manager] questioned why the tenants would name the owner as respondent and not [The property management company] as agent, but I note that the landlord’s application also names the owner as the landlord and applicant.
- All parties are entitled to reasonable notice of any claim. At the hearing I gave [The property manager] the option of an adjournment. [The property manager] elected to waive the requirement for notice and proceed.
- I explained to the tenants that their only quantified claim is to do with the driveway. [Tenant 1] submitted that they paid a contractor to trim the trees, but he accepted that there is no record of those payments. That part of the tenants’ claim cannot proceed. Driveway maintenance
- The property has a steep, metalled driveway, approximately 200m long.
- [The tenant/s] submitted that the driveway was challenging from the beginning of their tenancy. They raised the issue with their property manager at the time, and after approximately a year the landlord arranged for some concrete strips to be laid at the beginning of the driveway.
- This helped, but a driveway of this length and gradient requires maintenance to prevent degradation due to traffic and weather.
- [Tenant 1] submitted that the landlord did not arrange for any maintenance of the driveway during the 14-year tenancy, so he took care of it himself. That involved using a digger / grader, filling potholes, replacing metal, etc.
- [The property manager] submitted that the tenants were given a reduced rent on the understanding that they would take care of some of the maintenance including the driveway. [Tenant 1] submitted that there was no such agreement. The only agreement was the two-week rent waiver at the start of the tenancy because of the cleaning and tidying up required.
- Section 45(1)(d) of the Residential Tenancies Act 1986 states that the landlord must compensate the tenant for any reasonable expenses incurred by the tenant in repairing the premises where: a. The state of disrepair has arisen otherwise than as a result of a breach of the tenancy agreement by the tenant and is likely to cause injury to persons and property or is otherwise serious and urgent; and b. The tenant has given the landlord notice of the state of disrepair or has made a reasonable attempt to do so.
- [Tenant 1]’s claim represents compensation of approximately $550.00 per year to maintain the driveway. [Tenant 1] acknowledged that he had no evidence around how many hours he spent maintaining the driveway. [Tenant 1] also acknowledged that some of traffic on the driveway was bringing on the car wrecks, which was a commercial activity relating to his panel beating business. [Tenant 1] submitted that he set his compensation claim at a low level to reflect these factors.
- My findings are: a. There is no evidence of the tenants giving notice to the landlord of the state of disrepair of the driveway, but: i. The driveway required regular scheduled inspection and maintenance. ii. The landlord had no plan in place to maintain the driveway. iii. Apart from laying the concrete strips in or around 2010, there is no record of the landlord spending any money on maintaining the driveway. b. There is no evidence that the driveway got to the state that it was “likely to cause injury to persons or property”, but it certainly would have got to that state if the tenants had not maintained it. c. The fact the driveway remained useable for the duration of the tenancy is evidence that the tenants spent time maintaining it. d. There is a basis for some compensation to the tenants for carrying out a task that was the legal responsibility of the landlord. However, it is appropriate to take a conservative approach to assessing compensation on the grounds that: i. There is no evidence about the actual time spent by the tenants. ii. The tenants took responsibility for this work without communicating to the landlord, and it was reasonable for the landlord to assume that the tenants were willing to do the work. e. Having regard to those factors I will award compensation of $2,000.00. Filing fee, name suppression, bond
- Both parties were partially successful in their applications. The landlords proved that methamphetamine contamination occurred during the tenancy but did not prove that the tenants have a liability above and beyond what the owner received from their insurer. The tenants proved that they are entitled to compensation for maintaining the driveway.
- Each party will bear their own cost of the filing fee.
- Both parties sought name suppression. On the basis that both parties were successful in part, and having regard to the interests of the parties and to the public interest, I will grant name suppression to both parties.
- The bond will be released to the tenants.