What was Tenancy Tribunal case 4696169 about?

The tribunal order states: By way of declaration: the landlord misrepresented this tenancy as a four

How much money was awarded in case 4696169?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 4696169?

The primary dispute was Exemplary damages.

Where can I read the official tribunal order for case 4696169?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9669468-Tribunal_Order_Redacted.pdf.

What was Tenancy Tribunal case 4696169 about?

The tribunal order states: By way of declaration: the landlord misrepresented this tenancy as a four

How much money was awarded in case 4696169?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 4696169?

The primary dispute was Exemplary damages.

Where can I read the official tribunal order for case 4696169?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9669468-Tribunal_Order_Redacted.pdf.

97B Ellice Street, Mount Victoria, Wellington 6011 Tenancy Tribunal Case 4696169 — Exemplary damages

Order

By way of declaration: the landlord misrepresented this tenancy as a four bedroomed property.
The claim for compensation is dismissed.

Reasons

The tenants have applied for compensation exceeding $30,000 in the basis that they consider they were misled regarding the home they rented for three years. They say that one of the bedrooms breached the Housing improvement Regulations 1947 (the Regulations) as it was only 5.28 sqm and Regulation 8(2) requires all bedrooms to be no less than 6 sqm.
They consider the landlord misled them into thinking that the room was lawfully compliant when they rented it to them as a four bedroomed property. Therefore, they say they should have only paid market rent for a three bedroomed property as opposed to a four bedroom.
The landlord submits that the room is lawful because when measured with the adjoining cupboard it does exceed 6sqm by 0.25sqm. Accordingly, they consider they were lawful in renting this property out as a four bedroomed home.
The questions for the Tribunal are therefore? a. Has the landlord breached the law in renting out this property as a four bedroomed home? b. If so, what compensation should the tenants receive? Has the landlord breached the law in renting out this property as a four bedroomed home?
Firstly, I consider Mr Buck’s submission that the calculation of the room should include the wardrobe. I note that the wardrobe is outside of the bedroom but perpendicular to the bedroom with its door just next to the bedroom door.
The landlord’s submission as to why the cupboard should be included is that the cupboard was always used and intended to be used by this bedroom, and given its positioning, is obviously part of the room.
[The applicant/s] say that there was no other hallway cupboard space other than this one and some space under the stairs, therefore it is not appropriate to include the area as part of the bedroom. He says the initial tenant in the room did use it for her belongings but only from necessity as the room was so small.
Regulation 8 does not give any guidance as to calculating the area of a bedroom other than to say that if there is an area that has a ceiling of lower than 1.5m then that area should not be included. This reference does however indicate that calculations should only take into account usable space.
I am not satisfied that there is any reason why the square meterage of the cupboard should be included in the calculation of the bedroom. It is clearly a hallway cupboard and should be treated as such.
No other evidence has been provided by the landlord to demonstrate that the “fourth” bedroom was lawfully compliant, despite being provided with time post hearing to do so. Accordingly, I find that the fourth bedroom is less than the required 6 sqm by the Regulations.
I am also satisfied that the home was advertised to these tenants as four bedrooms and knowingly rented out by the landlord to these tenants for use as four bedrooms. The landlord did argue that they should not be held responsible for the way in which tenants use the rooms of a home. I do not accept that argument in this situation for the following reasons: i. The property was advertised as being four bedroomed. This is the pertinent point here. ii. If the landlord had not wanted the tenants to use the fourth bedroom as a bedroom, they were under an obligation to ensure they did not, or at least explain it was legally too small to be used as a bedroom and then leave it to their discretion. iii. The tenants’ evidence is that when they discussed the letting of the property with the letting agent, they were clear they would be using four bedrooms for five people. The landlord did not have evidence to contradict this.
Section 36 of the Residential Tenancies Act 1986 (RTA) 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.
Accordingly, it was the landlord’s responsibility to ensure that there was no legal impediment to the occupation of the premise as a four bedroomed dwelling as that is what they advertised and contracted for. They have failed in this responsibility here. Essentially, they were not entitled to advertise or rent this out as a four bedroomed premise as it is only suitable as a three bedroomed home according to the Regulations.
The tenants are however excluded from making an application for exemplary damages on the basis that the landlord breached s45(1)(c) of the RTA to comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises. This preclusion is because of s109(2)(b) of the RTA which prevents an application for exemplary damages being made more than 12 months after the date of commission of the unlawful act. This tenancy commenced with on 19 February 2020 which is more than 12 months ago.
They are also precluded from making an application pursuant to s25 of the RTA for a declaration that the rent they were charged exceeded the market rent as the tenancy has already ended. Section 25 refers to the rent payable or to become payable and therefore does not apply to concluded tenancies.
I therefore turn to the tenants’ claim for compensation on the basis of misrepresentation. S78(1)(g) of the RTA allows the Tribunal to vary or set aside an agreement that was induced by fraud, misrepresentation or mistake.
The law relating to misrepresentation is now largely codified in New Zealand, in ss.35 and 37 of the Contract and Commercial Law Act 2017, although the common law still also remains relevant. Essentially, as encapsulated in s.35 as far as damages are concerned, if a party to a contract has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made to them by or on behalf of another party to that contract, they shall be entitled to damages from that other party in the same manner and to the same extent as if the representation were a term of the contract that has been broken. The representation however must be one of fact, not opinion. The representation must be false, and it must relate to a matter of present or past fact, not one which relates to the future.
To summarise, for there to be an actionable misrepresentation the following elements must be present: a. A false representation b. The misrepresentation must have been made by one party to the other. c. The party who made the misrepresentation must have intended for the other party to rely on it. d. The misrepresentation must induce the party to enter the contract.
Here the tenants submit that the misrepresentation was that the property could be used as four bedrooms legally. I accept this argument on the basis that the landlord advertised the property as four bedroomed. This coupled with the landlord being a professional property management company which is to be assumed to be aware of their responsibilities under the law (in particular section 36 of the RTA), meant that the tenants could reasonably rely on the property having four lawful bedrooms.
I also find that this misrepresentation was made by the landlord to the tenants with the intention that they could rely on it, i.e., they could fill four bedrooms. These tenants were looking for a four bedroomed home, therefore they relied on it having four lawful bedrooms.
Accordingly, I find that the property was misrepresented to the tenants.

What compensation should be awarded?

Compensation claimed, and awarded, must flow naturally from the breach and be reasonable. It is a well-accepted principle when awarding damages that, so far as money can do it, the injured party shall be put in the same position as they would have been in, but for the breach of the tenancy agreement. Liability exists for foreseeable losses flowing from the breach of a tenancy agreement.
Further, as a matter of law, a tenant is not entitled to compensation for losses which, had they taken steps to mitigate, they would not have suffered.
The situation here is that for the first two years of the tenancy, a tenant lived in the room and paid rent for it. When the second tenant moved out in early 2022 [The applicant/s] and his partner increased the amount of rent they paid, and used the room for their study. They did this so they would effectively have sole use of the top story of the house.
[The applicant/s] did submit that they could not find anyone to rent the room after the second tenant moved out, but I do not find this claim substantiated in evidence to the required evidential standard, which is the balance of probabilities.
In November 2022 [The applicant/s] was working at Tenancy Services and realised through his work that bedrooms are required to be certain sizes. It was at this stage they realised the bedroom may not be in compliance with the Regulations.
He raised the issue with his property manager and was told that they were aware of the Regulations. However, he took it no further and nor did the landlord. [The applicant/s] says this response to their concerns by the landlord made them want to move out and so they took steps to do so. It was not however until July the following year that they were able to.
Mr Buck says they were not told by the tenants that the issue with the bedroom was why they wanted to move out. Other than the enquiry in November 2022, they were not aware it was an issue for them. He has provided an email from [The applicant/s] when he gave his notice stating that it had been “wonderful to live” in the property and they were “sad to leave”.
Subsequent to this tenancy they were not able to find replacement tenants and so over a matter of weeks had to reduce the rental price and also reduced the number of bedrooms from four to three. Mr Buck says this was because as they were reducing the rent they reduced the number of occupants in line with that, and did so by reducing the advertised bedrooms. I accept the reasoning for this action but note that the tenants seeing the advertisement for a 3 bedroomed home at a much reduced rental to theirs, has resulted in them feeling aggrieved at the situation.
Having thoroughly assessed all of the evidence, I do not find it substantiated that the tenants have suffered any material loss from the landlord’s misrepresentation. They saw the size of the room before they accepted the tenancy. They used it as a bedroom for two years and then a study; a change they made by choice. They did not raise the issue extensively with the landlord during the tenancy nor did they provide them with any opportunity to deal with the situation.
Accordingly, I do not find an award of compensation justified in the circumstances and the claim must be dismissed. Suppression
The tenants have applied for suppression and as they were successful in my finding that the property was misrepresented to them, I approve that claim. 1

Tenancy Tribunal case 4696169 — Exemplary damages at 97B Ellice Street, Mount Victoria, Wellington 6011

At a glance

Claims & awards

Tenancy Tribunal case 4696169 — Exemplary damages at 97B Ellice Street, Mount Victoria, Wellington 6011

At a glance

Claims & awards

Order

Reasons

What compensation should be awarded?

Topics & place

Residential Tenancies Act sections

Key findings

Frequently asked questions

Order

Reasons

What compensation should be awarded?

Topics & place

Residential Tenancies Act sections

Key findings

Frequently asked questions