Published tribunal order
Tenancy Tribunal case 4748412 — Exemplary damages
Decided 11 Mar 2024 · Published 11 Mar 2024 · Application 4748412
- Exemplary damages
Party names are redacted in the official published order.
Order
- The tenant’s name and identifying details including the tenancy address must not be published.
- must pay [the tenant] immediately, calculated as shown in table below:
Reasons
- The tenant attended the hearing in person.
- The landlord attended by telephone.
- Gareth Morgan, the property manager and Belinda Rutten, head of property management for Barfoot & Thompson attended in person for the landlord’s agent.
- The tenant claimed the landlord failed to comply with her Healthy Homes Standards (HHS) 1 obligation and failed to maintain the premises to a reasonable standard of repair. She seeks compensation and exemplary damages. She had originally sought work orders, but the landlord has already completed the repairs that the work orders asked for. Background
- The tenancy began on 1 October 2022.
- The tenant is a solo mother who has two children, one of whom suffers from epilepsy and a related condition, autoimmune encephalitis, which makes him vulnerable to infections that could damage his brain.
- When the parties signed the tenancy agreement, the house did not yet comply with all the HHS, but under the Regulations compliance was not required until the 120 th day after the tenancy began, which was 29 January 2023. The tenancy agreement records that the premises required kitchen and bathroom extractor fans and draught stopping work before the premises would comply with the HHS.
- On about 19 November 2022 the Auckland region suffered extreme thunderstorms accompanied by intense downpours leading to flooding and property damage.
- By 24 November 2022, the tenant noticed that water had leaked into the laundry room downstairs. The leaking persisted even once the worst of the weather passed. On 4 December 2023, she emailed the property manager: [W]e have had more water leak; it wasn’t completely flooded like last time so we can clearly see it is coming from this wall and through the bottom stair...there was only very minor rain last night and still leaking. 1 The standards set out by the Residential Tenancies (Healthy Homes Standards) Regulations 2019
- On 9 January 2023, the landlord’s contractor found a blocked drain and unblocked it. It was hoped that might alleviate the leaking, but it didn’t.
- During the Auckland Anniversary weekend, the Auckland region suffered destructive rains causing catastrophic flooding in many areas. The laundry flooded more severely than previously. On 1 February 2023, the tenant responded to the property manager’s query about whether the laundry had flooded: Yes it flooded and poured out the door, managed to dry all the floor but the lower step and walls are still damp (but his been an issue since before the flood), the water was coming out through retaining wall too next to house...
- On 2 March 2023 she emailed the landlord: I was hoping you might have an update on the situation of downstairs. I’m wiping away mould every 2 days from the walls, the smell of wet dirty carpet/wood is getting stronger by the day...and its concerning for health reasons.
- On 7 November 2023, the tenant emailed: Just wondering if there is any update on what is happening with the walls and stairs downstairs that are sodden and mould still forming on the walls every few days... the stench when you walk in is gross and is a real health risk...I know I have brought this up many times but i assumed it would have been actioned by now.
- The tenant also claims for the landlord failing to maintain the carpet in the dining room. It wore at the edges to the point the carpet tacks holding the carpet edges were exposed. On 7 November 2023, the tenant emailed the property manager: Also the carpet nails upstairs which have been exposed since i moved in and im constantly having to tell me kids to stay away from because their feet get cut by them. When [the landlord] was over she said a plain for, but nothing has happened and it’s just getting worse...An update to know what is going with these would be much appreciated.
- The water infiltrated the wall linings and the lower step of the stairway. The lower parts of the walls were eventually cut out and replaced. The main cause of the flooding was traced to the block retaining wall being faulty. The back of the wall had to be dug out and waterproofing remediation work done. The work was completed on 23 December 2023 at a cost of about $17,000.00.
- The landlord did not carry out the HHS compliance work within the 120-day period. However, she did have two of the extractor fans installed by 31 May 2023 and the third by 5 July 2023. The draught stopping was completed by 14 June 2023.
- The issues for determination are: a. Did the landlord fail to maintain the premises in as reasonable state of repair? b. Did the landlord fail to meet their HHS obligations? c. Should exemplary damages be awarded against the landlord?
Did the landlord fail to maintain the premises?
- The laundry water ingress problem first presented prior to 24 November 2022. The landlord’s contractors could not isolate the cause of the leak. It was only after the massive downpours in late January 2023 that the seriousness of the problem was exposed, and the source was correctly identified. It took the landlord’s contractors until the end of the year to fully remedy the problem. Legal principles
- Under s 45(1)(b) of the Residential Tenancies Act 1969 (RTA), landlords must maintain the premises in a reasonable state of repair. That provision provides: 45 Landlord’s responsibilities (1) The landlord shall— (a) ... (b) 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...
- Breaching this obligation is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. 2
- Landlords are liable for defects that they have knowledge of. They must repair defects within a reasonable time once they acquire such knowledge. As the author of Residential Tenancy Law in New Zealand explains: 3 The landlord’s obligation of repair is not absolute. A landlord does not have to foresee a latent and unobservable defect before it causes damage... A landlord 2 Residential Tenancies Act 1986 (RTA), s 45(1A) and Schedule 1A 3 Stewart Benson Residential Tenancy Law in New Zealand (2018) Thomson Reuters at 6.18. therefore must repair within a reasonable time after knowledge of the need for repair: 4 “...the obligation of the landlord, under s 45, is to investigate and repair a defect brought to its attention within a timeframe which is reasonable in the circumstances and as to what that time is, I think, depends not only on the gravity of the problem but also on the objective evidence of the attempts made by the landlord to investigate, and put right, whatever the problem might be...”
- Landlords also have an obligation to repair things that are apparent from observation: 5 However, notice from the tenant is not needed if the landlords knew of the need for repair or the need for repair is apparent from observation... Water ingress
- The landlord was aware of the leaking from about 24 November 2022 and the much worse leaking from about 2 March 2023.
- On the face of it the nine month delay to locate and stop the cause of the leak and fully remediate the premises is excessive. However, it needs to be borne in mind that the Anniversary Weekend rainfall caused catastrophic damage throughout Auckland and locating, and fixing leaks can be notoriously difficult. Because of the widespread destruction throughout Auckland, it was difficult to get contractors to do the work.
- The problem was a fundamental one which cost the landlord nearly $20,000.00 to remedy.
- Despite the delay, I find the repair was completed within a reasonable time. I do find however that the premises was not maintained to a reasonable standard of repair.
- The landlord “failed” to maintain the premises in a reasonable standard of repair, but the failure was not intentional. That being so, exemplary damages are not available for the breach.
- The tenant did however suffer significant loss of amenity. While the laundry was the only room downstairs, it was open to the rest of the house. The odour and the moisture rose to the rest of the house and the laundry itself was in an unsatisfactory state to fully use. 4 Collins v Professionals Hutt City Ltd DC Wellington CIV 2009-085-1431, 24 February 2010 at [15]. 5 See n 3.
- I calculate the tenant’s loss of amenity at two percent from 24 November 2022 to 1 February 2023 and five percent for laundry from 2 February to 23 December 2023.
- The landlord has compensated the tenant $1,050.00. Allowance is made for that.
- The tenant in this case suffered emotional harm which is not fully captured by the order for compensation for loss of amenity. She was greatly worried about her son’s health which she justifiably believed was threatened by the moisture and mould the leaking caused.
- The Tribunal in Palmer v Housing New Zealand (No 2) 6 held that when assessing the quantum of general damages, the Tribunal must consider the following factors: a. The nature of the breach; b. The duration of the breach; and c. The effect of the breach on the party.
- In Sun v Kang [2023] NZDC 24786 the District Court held: [69] Ultimately any assessment of damages will be based on all the circumstances of the case including (but not intending to make a prescriptive list) the intentions of the landlord; whether there was a lawful purpose which sat behind the conduct; the conduct of the tenant; the effect on the tenant; whether the conduct was ongoing, whether there were any aggravating or mitigating factors from both the landlord or tenant.
- Taking account of these factors, I make a further allowance of $1,000.00 to account for the tenant’s emotional harm. 7 Carpet wear
- The landlord also failed to repair the carpet in a timely way.
- The landlord saw the carpet wear for herself on about 27 March 2023, but it took until December for the carpet to be repaired.
- I set the loss of amenity at one per cent of the weekly rent.
- The landlord’s failure was intentional. While she had bigger fish to fry (in particular the leak), and important distractions in her personal life, those did not relieve her of the obligation to address maintenance issues that were brought to her attention. 6 Palmer v Housing New Zealand (No 2) Auckland TT 2378/92, 25 August 1993. 7 See
- 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.
- Exemplary damages are available for the breach. These will be considered below alongside consideration of exemplary damages for breach of the HHS.
Did the landlord fail to meet their HHS obligations?
- At the beginning of the tenancy, the premises did not meet the draught stopping or the ventilation standards. Significant draught stopping work was needed and the premises needed three extractor fans. The landlord had 120 days, until 29 January 2023 to meet the standards but failed to do so.
- The tenancy agreement plainly acknowledges the premises did not comply with the HHS. The landlord was therefore well aware of her obligations at the beginning of the tenancy.
- The property manager emailed the landlord on 14 February 2023, “We still need to complete all the outstanding healthy homes requirement. We are now over due with this can be charged heavy nines for none compliance.”
- Despite this reminder, there was still a considerable delay in compliance. Two of the extractor fans were eventually installed on 31 May 2023 and the third by 5 July 2023. The draught stopping was completed by 14 June 2023.
- For each of the extractor fans and for the draught stopping the Tribunal orders one percent of the weekly rent for loss of amenity (four per cent in total, but applied individually to each item).
- Breaching these HHS obligations is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. 8
- The landlord was preoccupied with the major leak to the premises. She also had pressing personal circumstances. Aside from the usual life stresses and demands, she was living overseas, was planning a wedding, and her father was suffering from a serious health condition.
- Nonetheless, the landlord’s omission to ensure the home complied with the HHS occurred with knowledge of the breach.
Should the Tribunal order exemplary damages?
8 RTA, s 45(1A)
- The landlord’s concerns amount to an explanation for the undue delay in bringing the premises up to HHS compliance but do not excuse it. That is also the case with the landlord’s failure to have the badly worn carpet repaired.
- 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 interest of the other party, and the public interest. 9
- The landlord’s intent was at the lower end of the scale towards forgetful oversight rather than cynical avoidance. The effect of the unlawful acts on the tenant was moderately severe. Their impact was exacerbated by the leaking issue which made the premises damper than they otherwise would have been. It is in the tenant’s interests that an award of exemplary damages is made. The public interest favours an award of exemplary damages because they have the ability to deter would-be perpetrators from breaching their obligations. If the Tribunal does not penalise landlords for non-compliance, there will be less disincentive for landlords to comply.
- Considering those factors, I have determined that exemplary damages of $1,500.00 is appropriate. Filing fee
- The landlord should reimburse the tenant for the filing fee because she has substantially succeeded in her claim. Non-publication
- The tenant is granted non-publication of her name and identifying details including the tenancy address because she has substantially succeeded in her claim, and I do not consider that publication is in the public interest or is justified because of the tenant’s conduct or any other circumstances of the case. 10