Published tribunal order
Tenancy Tribunal case 4758511 — Exemplary damages
Decided 29 Apr 2024 · Published 29 Apr 2024 · Application 4758511
- Exemplary damages
- Healthy homes
Party names are redacted in the official published order.
Order
- Simon Muirhead must pay [The tenant] $320.44 immediately, calculated as shown in table below.
- Mr Muirhead is to pay the bond of $1,400.00 immediately to [the tenant’s] account number [number suppressed].
Reasons
- Both parties attended the hearing.
- The tenant has applied for compensation/exemplary damages, refund of his bond and reimbursement of the filing fee following the end of his tenancy.
- The tenant withdrew his claims during the hearing for compensation for failure to keep written records and contracting to evade the Act. He confirmed he had misunderstood what these claims related to when he made his application and in hindsight has made them in error.
- The landlord made a counterclaim during the hearing to set off rent arrears he says [the tenant] owed and compensation for cleaning following the end of the tenancy. I heard these claims with agreement of the parties.
- The landlord also claimed that the Tribunal has no jurisdiction to hear \ [the tenant’s] claims as the nature of the relationship is one of flatmate and not tenant because the section 5(1)(n) of the Residential Tenancies Act 1986 (“RTA”) exemption applies. Jurisdiction: does s5(1)(n) of the RTA apply?
- The Act does not apply to premises that continue to be used, during the tenancy, principally as a place of residence by the landlord or owner of the premises, or by any member of the landlord’s or owner’s family. (See s 5(1)(n) of the Residential Tenancies Act 1986 (RTA)).
- It has been held by the District Court that to give effect to the Act’s true intent and meaning, the exemptions in section 5 should be interpreted strictly and not liberally. 1
- Where, in any proceedings before the Tribunal, any party contends that the Act does not apply in respect of any tenancy of any residential premises, it shall be for that party to establish the facts upon which it is contended that the Act does not apply (s 10 of the RTA).
- The issue that I must determine is whether the relationship was a flat sharing agreement of premises shared with the landlord. If so, then the exclusion in s5(1)(n) will apply.
- The District Court in Musson v Dobrisek defines flatmates as “a co-operative arrangement whereby, in a functional sense, all occupants are on same footing in that they have exclusive occupation of their own rooms and shared use and occupation of common areas such as kitchens” 2 but notes that “the legal position of people quite legitimately described as flatmates can vary considerably” 3 and “the use of the word "flatmate" does not in itself define the nature of the legal relationship between a flatmate and any landlord. The word is no more than a convenient label reflecting a f1mctional reality; and it remains necessary to ascertain the legal nature of the relationship on the basis of the evidence” 4 . 1 Adams v Massey University (Palmerston North TT 43/94, 10 October 1994). 2 Musson v Dobrisek DC Lower Hutt CIV-2006-032-36, 5 May 2006 at [22]. 3 Musson v Dobrisek, as above n2. 4 Musson v Dobrisek as above n2 at [24].
- In reaching my finding I must consider whether the nature of the relationship is recording in writing and in the absence of a written agreement between the parties, if the relationship was, in substance, a flat sharing agreement.
- Section 4 of the Act reads: “This Act applies to every tenancy for residential purposes except as specifically provided.” Prima facie, the premise at 2A Elizabeth Street, Freemans Bay, Auckland (the premise) were used for residential purposes and as such as a starting point is covered by the Act, unless a section 5 exemption applies, and the parties did not contract back into the Act.
- “Tenancy” is defined in section 2 of the Act as follows: “tenancy, in relation to any residential premises, means the right to occupy the premises (whether exclusively or otherwise) in consideration for rent; and includes any tenancy of residential premises implied or created by any enactment; and, where appropriate, also includes a former tenancy ....”.
- Section 5 of the Act contains the exceptions to the Act. Relevantly, s 5(1)(n) of the Act provides: “...where the premises, not being a boarding house, continue to be used, during the tenancy, principally as a place of residence by the landlord or the owner of the premises or by any member of the landlord’s or owner’s family.”
- The Landlord argued that he had taken legal advice and been informed that the s5(1)(n) of the RTA exception applies because: aHis primary place of residence is the upstairs part of the premise; bHe is willing to allow the tenant access to the hot tub and swimming pool that forms part of his areas of the premise; and cThe self-contained flat the tenant lives in does not have a full kitchen facility.
- The parties confirmed: dThe one bedroom self-contained flat contains laundry facilities, a ensuite, a kitchenette with sink and a hob for cooking on but not an oven and a separate entrance to that of the main house above it; eThere is no separate power or water meters, so the utilities and internet/sky TV were all included in the rent; fThe tenant could access the hot tub, which was located outside and the pool (located in the landlord’s house) with the landlord’s permission as these facilities were not included in the rent but the landlord was willing to share them if the tenant wanted to use them at anytime; gThere is no separate fire wall between the house and the self- contained flat, but the walls are all concrete, and the Council had not given the landlord consent to the flat to be deemed a separate dwelling when he was building the premise. Hence only one power and water meter for the premise; and. hThey did not share dining, lounge and laundry facilities, both had access to and use of the yard and driveway. They also confirmed that their separate parts of the premise were locked and were not accessible each by the other.
- Section 10 of the Act states: “Where, in any proceedings before the Tribunal, any party contends that this Act does not apply in respect of any tenancy of any residential premises, it shall be for that party to establish the facts upon which it is contended that this Act does not apply.”
- A 2020 Tribunal decision has similarities to the situation here. In Nie v Zhao 5 , the premises were a separate area located beneath the landlord’s residence containing a bedroom, a makeshift kitchen, living space and a separate entry. A door from a corridor leading upstairs was locked preventing the tenant’s access upstairs. Other than using the laundry and two rooms downstairs for storage, the landlord did not share the house with the tenant. In that case, the Tribunal found that the exclusion in s 5(1)(n) did not apply.
- Consistent themes running through cases decided by both the Tribunal and the District Court appear to be: a. the extent of any sharing of living facilities (such as cooking, bathroom, sitting room and laundry); b. the extent of any free and unimpeded access by the tenant to premises occupied mainly by the landlord; c. the nature of the tenant’s area and whether it is fully or partly self- contained and whether it is exclusive.
- The Landlord has not proven, on the balance of probabilities, that s 5(1)(n) applies. Even though the landlord continued to use the premise as his principal place of residence during [the tenant’s] tenancy, he has failed to prove that the flat [the tenant] occupied was not a separate premise to the rest of the house or that all occupants were on same footing in that they had exclusive occupation of 5 Nie v Zhao [2020] NZTT North Shore 4277894. their own rooms and shared use and occupation of common areas. Although there was one building, I am satisfied after looking at photographs of the house and hearing evidence from both parties that there were two separate and distinct household units.
- I find that the evidence is overwhelming that the tenant had exclusive occupation of what was a self-contained flat including a bathroom, kitchenette, living and sleeping area. No one else accessed that area to share with him and he would have regarded it as his flat. In theory, there was no reason why he would need to go elsewhere for any of these facilities. He had his own separate access to come and go from his premises. No part of his premises was shared with the landlord.
- I find that the exclusion in s 5(1)(n) does not apply and therefore that I have jurisdiction to deal with the application. The Tenant’s claims Failure to provide a written tenancy agreement
- [The tenant/s] claims the landlord has not ensured the tenancy agreement is in writing and/or did not sign the tenancy agreement and provide a copy to the tenant.
- A landlord must ensure the tenancy agreement is in writing, signed and a copy provided to the tenant prior to the tenancy commencing. See section 13 Residential Tenancies Act 1986.
- Breaching this obligation is an unlawful act, for which the Tribunal may award exemplary damages up to a maximum of $750.00. See section 13(4) and Schedule 1A Residential Tenancies Act 1986.
- The landlord accepted that it did not provide a written and signed tenancy agreement to the tenant as he thought the relationship was one of flatmate rather than tenant. I find the landlord has committed an unlawful act by not providing a written tenancy agreement to the tenant. It is of note that even if I had been satisfied that the true nature of the relationship was one of flatmate, which I am not, a flat sharing agreement should have been provided to [the tenant] so that the terms and the conditions governing the relationship are clear to both parties.
- Where a party has committed an unlawful act intentionally, the Tribunal may award exemplary damages where it is satisfied that 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. See section 109(3) Residential Tenancies Act 1986.
- I find it would be just to require the landlord to pay a sum of $500.00 in exemplary damages because: a. The landlord should have reasonably known that he is required by law to provide the tenant with a written and signed tenancy agreement and he did not provide this. He intentionally chose not to enter any sort of formal written arrangement with the tenant. b. The tenant is entitled to rely on his statutory right to a written and signed tenancy agreement that contains his and the landlord’s rights and obligations and without any sort of formal agreement he had no idea how to give notice or how much notice to give among other things; c. It is in the interests of the tenant to receive exemplary damages for the landlords’ breach; and d. it is in the public interest for landlords’ to be penalised as a disincentive to breaching their obligations provide a written and signed tenancy agreement for the protection of both parties’ interests. Failure to lodge the bond with the Bond Centre
- [The tenant/s] claims the landlord has not lodged the bond with the Bond Centre within the required time.
- A landlord must send any bond payment to the Bond Centre within 23 working days after the payment is received. See section 19(1) Residential Tenancies Act 1986.
- Breaching this obligation is an unlawful act for which the Tribunal may award exemplary damages up to a maximum of $1,500.00. See section 19(2) and Schedule 1A Residential Tenancies Act 1986.
- The landlord did not lodge the bond at all at any time during the tenancy. I find he has committed an unlawful act.
- 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. See section 109(3) Residential Tenancies Act 1986.
- Landlords are required to understand their responsibilities to tenants and I am satisfied the landlord should have reasonably known that the bond had to be submitted to the Bond Centre within 23 days after her receipt of it. The obligations placed on a landlord to put the bond into the Bond centre on trust for the tenant is an obligation the Tribunal takes seriously. The bond is owned by the tenant, until the parties agree that all or part of the bond can be paid to the landlord to cover proven debts.
- I find it would be just to require the landlord to pay a sum of $500.00 in exemplary damages because: a. The landlord intentionally held on to the bond and did not submit it to the Bond Centre; b. The tenant is entitled to rely on the Bond Centre protecting the bond money that has been placed in it on trust for the tenant’s benefit, unless it is proven the tenant owes the landlord a debt that both parties agree can be paid by the Bond Centre to the landlord or on order from the Tribunal. The tenant’s money was not protected by the Bond Centre (a third independent party) during his tenancy and it should have been; c. It is in the interests of the tenant to receive exemplary damages for the landlord’s breach; and d. it is in the public interest for landlord’s to be penalised as a disincentive to breaching their obligations pay the bond received into the Bond Centre promptly for the protection of both parties’ interests. Failure to provide healthy homes information
- [The tenant/s] claims that the landlord has breached his obligations under section 13A(1CA) of the Residential Tenancies Act 1986.
- Under section 13A(1CA), a landlord must include in the tenancy agreement a statement, made and signed by the landlord, that, on and after the commencement of the tenancy, the landlord will comply with the healthy homes standards as required by section 45(1)(bb) or 66I(1)(bb) (as the case may be); and including the information (if any) prescribed by regulations under section 138B(5). The Residential Tenancies (Healthy Homes Standards) Regulations 2019 require that the landlord provides a statement in each tenancy agreement that confirms that the premises complies with each of the healthy homes standards or why the premises are subject to any lawful exemptions.
- The requirement that the landlord’s statements under 13A(1CA) be signed by the landlord is in addition to the requirement under section 13(1) that the landlord sign the tenancy agreement.
- Breaching the landlord’s s13A(1CA) obligations without a reasonable excuse is an unlawful act for which exemplary damages may be awarded up to a maximum of $750.00. See section 13A(11F)(a) and Schedule 1A Residential Tenancies Act 1986.
- The landlord has not provided the tenant with a signed healthy homes statement as he is required to do by law. The tenants had no idea when they took on the tenancy, whether the premises were healthy homes compliant and whether any exemptions apply to the premises.
- I find the landlord has committed an unlawful act.
- 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. See section 109(3) Residential Tenancies Act 1986.
- The tenants claim the premise does not meet the healthy homes standards.
- I am satisfied the landlord intentionally failed to provide the tenant with the required completed and signed healthy homes statements, prescribed by sections 13A(1CA) and 45(1)(bb) of the RTA, and it would be it would be just to require the landlord to pay a sum in the nature of $150.00 of exemplary damages, because: a. The landlord should have reasonably known it had to comply with the Residential Tenancies (Healthy Homes Standards) Regulations 2019 and intentionally did not; b. The impact on the tenant of the landlord not providing this information is that he took on the tenancy for a premise that he did not know met the healthy homes standards and may not have taken the tenancy if they had known the premise may not comply with all of the healthy homes standards but was denied that opportunity; c. It is in the interests of the tenant to be compensated for the landlord’s failure to provide signed proof to the tenant that the rental premises meet all of the healthy homes standards; d. It is in the public interest to penalise landlord’s that intentionally breach the law and fail to provide signed healthy homes standards statements that meet the requirements set out in the Residential Tenancies Act 1986 and the Residential Tenancies (Healthy Homes Standards) Regulations 2019. Failure to comply with Health Homes Standards
- [The tenant] claims that the landlord has breached the landlord’s obligations under section 45(1)(bb) of the Residential Tenancies Act 1986 (RTA), which requires compliance with the Residential Tenancies (Healthy Homes Standards) 2019 (HHS). [The tenant/s] considers that the landlord has failed to comply with the HHS ventilation, moisture and drainage, insulation, and heating standards.
- Compliance dates for the HHS vary depending on the tenancy: a. For private rentals i. If the tenancy commenced between 1 July 2021 and before 28 August 2022, the rental must comply within 90 days of the commencement of any new or renewed tenancy; or ii. If the tenancy commenced between 28 August 2022 but before 3 March 2025, the rental must comply within 120 days of the commencement of any new or renewed tenancy. iii. All private rentals must comply by 1 July 2025. b. All boarding houses must comply by 1 July 2021. c. All houses rented by Kāinga Ora and registered Community Housing Providers must comply by 1 July 2024.
- The HHS does provide exemptions in specific circumstances.
- Breaching any of the HHS obligations is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. See section 45(1A). Failure to comply with the ventilation standard
- [The tenant/s] claims that the landlord has breached the obligations under section 45(1)(bb) of the Residential Tenancies Act 1986 by failing to ventilate the premises in accordance with the Residential Tenancies (Healthy Homes Standards) 2019 (HHS).
- The ventilation standard sets out minimum expectations around windows and doors, and in particular the area of doors and windows that are openable. The standard also requires that each kitchen and bathroom have extractor fans installed with a minimum defined extraction capacity.
- The tenant claimed the extractor fan in the ensuite was not functioning fully and not enough to adequately keep the ensuite dry and free from moisture and mould. Further, there had regularly been water running down the ensuite wall and that kept the room damp and mouldy. He also claimed there was no opening window in the ensuite. In addition, he claimed there was no ventilation in the kitchen and no opening window.
- The landlord provided evidence that the premise contained an industrial grade ducted ventilation system that provided more than adequate ventilation in the flat, that the premise had been signed off as meeting the HHS when it was built 6 years ago, and that there are opening windows within 2 metres of the ensuite and kitchenette that when opened with the ducted ventilation system on the flat would stay dry and free from mould. In addition, an extractor fan has been installed in the ensuite. The landlord contended that the tenant simply never opened any windows and that he did not use the ducted ventilation system as it is a bit noisy. ‘
- The tenant confirmed he did use the ducted ventilation system but it did not keep the flat dry. he also confirmed that he had not told the landlord about the water he says ran down the walls, except for the time the cleaner caused a flood in his ensuite, which she cleaned up the same day as it occurred.
- I am satisfied the flat meets the ventilation standard and dismiss the tenant’s claim for exemplary damages for breaches of the ventilation standard. Failure to comply with the insulation standard
- [The tenant/s] claims that the landlord has breached the obligations under section 45(1)(bb) of the Residential Tenancies Act 1986 by failing to insulate the premises in accordance with the Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016.
- From 1 July 2019, all residential premises must be insulated to a minimum standard. Where the premises were insulated before 1 July 2016, the ceiling insulation must have an R-value of at least 1.9 (or 1.5 for houses of a brick or concrete block construction). The underfloor insulation must have an R-value of at least 0.9. The insulation must be in reasonable condition.
- Where insulation is installed after 1 July 2016, the minimum R-value for ceiling insulation is 2.9 in Zones 1 and 2, and 3.3 for Zone 3 (Zone 3 covers the South Island and central North Island). The minimum R-value for underfloor insulation is 1.3.
- There are exceptions to these requirements, for example, where it is not reasonably practicable, or where there is a habitable space above or below the ceiling or floor that would otherwise have to be insulated.
- The landlord gave photographic and oral evidence that proved the flat had pink batts in between the concrete block sections throughout the walls and under the flooring. In addition, the landlord gave evidence that he is a builder and the flat complied with all the HHS when it was signed off by the Council.
- The tenant was not able to disprove the landlord’s oral and photographic evidence.
- I am satisfied the flat meets the insulation standard and dismiss the tenant’s claim for exemplary damages for breaches of the insulation standard. Failure to comply with the heating standard
- [The tenant/s] claims that the landlord has breached the landlord’s obligations under section 45(1)(bb) of the Residential Tenancies Act 1986 (RTA), which requires compliance with the Residential Tenancies (Healthy Homes Standards) 2019 (HHS). [The tenant/s] considers that the landlord has failed to comply with the HHS heating standard.
- Compliance dates for the HHS vary depending on the tenancy: a. For private rentals i. If the tenancy commenced between 1 July 2021 and before 28 August 2022, the rental must comply within 90 days of the commencement of any new or renewed tenancy; or ii. If the tenancy commenced between 28 August 2022 but before 3 March 2025, the rental must comply within 120 days of the commencement of any new or renewed tenancy. iii. All private rentals must comply by 1 July 2025. b. All boarding houses must comply by 1 July 2021. c. All houses rented by Kāinga Ora and registered Community Housing Providers must comply by 1 July 2024.
- The heating standard requires landlords to provide one or more ‘qualifying heaters’, with a capacity to heat the room to a required level. The heating standard defines what a qualifying heater would be and confirms that certain types of heaters are unacceptable heaters for the purpose of the HHS.
- The heating standard requires that heaters in the particular tenancy have a minimum heating capacity. An on-line calculator has been produced in order to determine what level of heating is required for any particular premises, and that can be found at https://www.tenancy.govt.nz/heating-tool/
- The HHS does provide exemptions in specific circumstances.
- The landlord provided photographic and oral evidence during the hearing that proved the flat has a large air conditioner that heats and cools. The tenant claimed he was unaware it heated as well as cooled so had not used it. He also said he was not provided with the remote for the air conditioner.
- The landlord gave photographic evidence on his laptop that the remote was on a shelf near the air conditioner and had the tenant raised his heating issue during the tenancy he would have shown the tenant how to use the air conditioner to heat the flat.
- The tenant confirmed that he had never raised any of the HHS issues until he made his application to the Tribunal as he did not have a written agreement, is new to New Zealand from the USA and did not know if he might be evicted for raising any issues with the landlord.
- I am satisfied the flat meets the heating standard and dismiss the tenant’s claim for exemplary damages for breaches of the insulation standard. Failure to comply with the moisture and ingress standard
- [The tenant/s] claims that the landlord has failed to comply with the HHS moisture ingress and drainage standard.
- The moisture ingress and drainage standard requires that buildings comprising residential tenancies must have efficient systems to drain storm water, surface water and ground water, and that includes gutters, downpipes and drains. The Standard requires a ground moisture barrier when there is an enclosed subfloor space.
- The landlord gave photographic and oral evidence that proved the flat complied with all the HHS when it was signed off by the Council, including that it met the moisture and ingress standard. He confirmed to the Tribunal that the flat has efficient systems to drain storm water, surface water and ground water, and that includes gutters, downpipes and drains. He also confirmed the flat complies with the requirement for a ground moisture barrier when there is an enclosed subfloor space.
- The tenant was not able to disprove the landlord’s oral and photographic evidence.
- I am satisfied the flat meets the moisture ingress and drainage standard and dismiss the tenant’s claim for exemplary damages for breaches of the insulation standard. The Landlord’s counter claims
How much is owed for rent?
- The tenancy ended on 9 August 2023. The landlord provided rent records which prove the amount owing at the end of the tenancy. Specifically, the tenant’s last rent payment was made on 21 July 2023, which covered the rent due to 4 August 2023. The parties agreed that the tenancy ended on 9 August 2023. The parties also agreed that the rent was $500.00 in arrears at the end of the tenancy.
Did the tenant comply with their obligations at the end of the tenancy?
- At the end of the tenancy the tenant must leave the premises reasonably clean and tidy, remove all rubbish, return all keys and security devices, and leave all chattels provided for their benefit. See section 40(1)(e)(ii)-(v) Residential Tenancies Act 1986. The tenant is required to replace worn out smoke alarm batteries during the tenancy. See section 40(1)(ca) Residential Tenancies Act 1986. The tenant must also replace standard light bulbs.
- The landlord says the tenant did not leave the premises reasonably clean and tidy, and that the premise required a deep clean as there was dirt, human and dog hair and a dirty shower. The landlord provided a written statement from the cleaner that cleans the main house regularly that stated the premise was not left in a reasonably clean and tidy condition.
- The landlord did not have entry or exit inspection photographs or an invoice to prove his claims that the premise was not left in a reasonably clean and tidy state.
- The tenant stated he had cleaned the premise thoroughly before vacating and that the premise was in a reasonably clean and tidy state, but not immaculate.
- The landlord has not provided sufficient evidence to support his claim for $300.00 compensation for the cleaning costs he incurred at the end of the tenancy. His counterclaim for compensation is dismissed accordingly. Reimbursement of the filing fee
- Because [the applicant] has wholly succeeded with the claim I must reimburse the filing fee.