Published tribunal order
Tenancy Tribunal case 4797337 — Exemplary damages at 6 Broughton Street, Whanganui East, Whanganui 4500
Decided 13 May 2024 · Published 13 May 2024 · Application 4797337
- Exemplary damages
Party names are redacted in the official published order.
Order
- The application for rent reduction is dismissed.
- The application in relation to asbestos is dismissed.
- Kirsten Price and Scott McGill must pay [the tenant/s] the sum of $1,840.44 immediately as calculated below:
Reasons
- Both parties attended the hearing which took place on 9 April 2024.
- The tenants have made claims for breach of the Healthy Homes Standards, alleging breaches of the ventilation standards for lack of extractor fans, and failure to remove a corrugated asbestos panel in the garden. There was also a delay in fixing the oven. The tenants requested a rent reduction as compensation.
- The tenants also seek exemplary damages for the landlord’s failure to comply with the HHS and for failure to lodge the bond within the prescribed period.
- Before the hearing, the parties had attended a mediation at which the landlords had agreed to obtain a Healthy Homes Standards report (HHS report). That HHS report was available the day before the hearing. It contained some inconsistencies and so at the hearing, the landlord was asked to provide further clarification in relation to the insulation and ventilation information. That has now been provided in accordance with directions made.
- The onus of proof is on the tenants to establish their claims; the standard of proof is on the balance of probabilities. Rent reduction
- The tenants sought a reduction in rent because of the landlord’s failures. They alluded to comparisons with other rental properties in the region.
- The tenants say that Information provided by tenancy services indicates that a three-bedroom property similar to this one typically commands a rental rate of $480 - $500 per week. In this instance the rent is $530 per week.
- Section 25(1) provides that on an application made by the tenant, the Tribunal may, on being satisfied that the rent payable or to become payable for the tenancy exceeds the market rent by a “substantial amount”, make an order reducing the rent to an amount, to be specified in the order, that is in line with the market rent.
- Although compensation as a proportion of rent is sometimes ordered, the Tribunal does not make an order a reducing rent without the necessary evidence regarding market rental rates.
- The information provided by the tenants does not establish that the tenancy exceeds the market rent by a substantial amount. The application for a rent reduction is dismissed. Failure to lodge the bond
- Section 19 of the Residential Tenancies Act 1986 (the Act) requires the landlord to lodge any bond with “the department” (currently Tenancy Services under the Ministry of Business and Innovation) within 23 working days.
- The tenancy agreement was signed on 7 August 2023 and the tenancy commenced for a 12-month fixed term on 18 August 2023. There is no dispute that the tenants paid the bond at the time the tenancy started. The landlord did not have the bond lodgement form ready for signature by both parties. The bond needed to be lodged no later than 19 September 2023.
- On 20 September 2023 the landlord emailed the tenants advising that they had not forgotten about the bond. On 30 September the parties signed a bond lodgement form. On 19 October, the tenants discovered that it had not been lodged and asked the landlords to do so. They replied that they would lodge it the following week after payday. After receiving a notification from the Bond Centre, the landlord lodged the bond on 24 October 2023. That was more than a month late.
- The landlord explained that they had been distracted by moving house themselves and a family member recovering from surgery. They did not know why they had referred to “payday” in the text; the funds were available.
- Although such personal factors might explain a delay of lodging a bond as soon as it is received, the requirement to lodge a bond within a month is not onerous. If family matters mean that a landlord is not able to discharge their responsibilities under the Act for more than two months, they should consider whether they need to engage an agent to take care of matters for them.
- When the tenants raised the matter with the landlord, there was absolutely no excuse not to make the payment immediately.
- Failure to lodge a bond in accordance with the provisions of section 19 is an “unlawful act”. Section 109 provides that where a person has committed an unlawful act, the Tribunal may order payment of exemplary damages if the other party has applied for them. The Tribunal must decide if it would be just to require the landlord to pay a sum, taking into account: a. the intent of that person in committing the unlawful act; b. the effect of the unlawful act; c. the interests of the landlord or the tenant against whom the unlawful act was committed; and d. the public interest.
- I am satisfied that it would be just to require the landlord to pay exemplary damages. Had the matter been rectified as soon as brought to the landlord’s attention, the landlord’s explanation that the omission was unintentional would have carried more weight. The landlord’s attitude eroded the tenants’ trust and made them worry about where their money was. There is a public interest in reminding this landlord and other landlords of their responsibilities with the tenants’ money.
- The maximum exemplary damages allowable for a breach of section 19(2) under the Schedule 1A is $1,500. I have decided that on this occasion the sum of $500 is an appropriate award. Oven
- The tenants discovered there was an issue with the oven. The grids on the sides of the oven which hold the racks and trays were unstable, meaning that hot items could fall when trying to get them out of the oven. This created a safety issue.
- The tenants notified the landlord of this issue on 25 September 2023. On the 28 th the landlords said they would view it which they did. On 18 October they updated the tenant that they were awaiting repairs and there was a further three week delay. The oven was repaired on 9 November 2023.
- Section 45(1)(b) requires landlords to provide and maintain the premises in a reasonable state of repair. Failure to do so is an unlawful act and may attract an order of exemplary damages.
- I find that the landlords responded in a timely manner and the issue was no fault of theirs. An order for exemplary damages is not warranted. However, the tenants could not safely use their oven for approximately six weeks and so compensation is appropriate. The rent includes the oven, but the tenants could not safely use the oven. I order $120 compensation, representing $20 per week from the time of notification until it was rectified. Door handles
- On 19 October the tenants advised that some internal door handles had fallen out. There was no response until 5 November. They were then fixed on 9 November.
- The landlord should have taken steps to attend to this earlier. It is not surprising that the tenants would have felt concerned. However, I have decided that the delay and the nature of this issue are not significant enough to warrant compensation. Healthy Homes Standards
- Section 45 of the Act sets out the standard responsibilities of a landlord. They include complying with all Healthy Homes Standards (see section 45(1)(bb)).
- Since 1 July 2019 all residential tenancies have had to comply with the Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016. This tenancy began on 18 August 2023 and so the Residential Tenancies (Healthy Homes Standards) Regulations 2019 (HHS regulations) apply. The tenancy had to comply with the following standards within 120 days of the start of the tenancy: 1 a. Heating 1 Regulation 12A Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016 b. Insulation c. Ventilation d. Draught-stopping standards e. Moisture ingress and drainage.
- The tenancy began on 18 August 2023 and so compliance was required no later than 15 December 2023. The tenants say that they were led to believe that the premises complied with the HHS at the start of the tenancy.
- After becoming concerned at the failure to lodge the bond, the tenants decided to confirm some other matters. On 24 November they emailed the landlords asking for a copy of the Healthy Homes Report. Under section 123A, the landlord is required to keep copies of relevant information, including the records or other documents that relate to the landlord’s compliance with the HHS and that are prescribed by regulations under section 138B(5).
- Section 45(1AC) also provides that if the tenant requests the HHS information, the landlord must provide that information to the tenant within 21 days. That information was therefore due on 14 December 2023.
- The landlords did not comply with the tenant’s request. The Act does not require the landlord to have an independent assessment undertaken, but that is a common practice. The Act simply requires the landlord to retain relevant information and to provide it on request to the tenant.
- In this instance the landlord had a quote from Comfortmaster dated 2 June 2020 for underfloor insulation. The client’s name is blacked out, but the address is for this tenancy. According to the landlord’s HHS statement that was signed on 6 December 2020 that insulation was installed on 2 June 2020 and inspected on 1 June 2023. Because it is a quote, rather than an invoice, on its own, it does not contain information that relates to the landlord’s compliance with the HHS.
- Because it seems no other documents existed at the time that the tenants made their request, I find that there has not been a breach of section 45(1AC).
- The landlords said that at the start of the tenancy, they had some awareness that the regulations had changed since they last rented the property out.
- Section 13A sets out the minimum requirements of the contents of a tenancy agreement. Under section 13A(1A) the tenancy agreement must include an insulation statement signed by the landlord and under section 13A(1CA) a statement signed by the landlord that the property complies with the HHS or will comply within the prescribed period, in this case, 15 December 2023. Failure to include the relevant statements in the agreement is an unlawful act (see section (1F)) and attracts a maximum award of exemplary damages of $750. The tenant has not sought exemplary damages under this section and so I make no order on this occasion, but the landlords are urged to educate themselves on the current obligations of a landlord.
- In the meantime, the tenants filed an application with the Tribunal. The parties attended mediation and on 8 December the landlords agreed to obtain a HHS report.
- The inspection took place on 19 February 2024. A report dated 8 April 2024 from RH Consultants Limited (the HHS Report) was submitted to the Tribunal the evening before the hearing which occurred on 9 April 2024. Asbestos
- In the garden there is a frame that has been used for climbing plants. The tenants became disconcerted when they realised that the large panel on the frame is made from asbestos. The tenants’ request to have the panel removed has been declined.
- Although it is understandable that the tenants were concerned to discover that there was asbestos in the garden, they have not produced any evidence to show that it is unsafe. The Health and Safety at Work (Asbestos) Regulations prohibit work involving asbestos except in prescribed circumstances and set out precautions that must be in place if such work is to be carried out. There is no standard regarding asbestos in the HHS regulations.
- The landlord understands that if asbestos is not disturbed, it is unlikely to present a health risk. In the absence of any evidence from the tenant to the contrary, I do not find any reason to order the landlord to remove the asbestos. This claim is dismissed. Insulation
- From 1 July 2019, all residential premises must be insulated to a minimum standard. The HHS regulations set out the requirements.
- 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.
- Breaching this obligation is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. See section 45 (1)(A) and Schedule 1A RTA.
- According to the overview in the HHS Report, the insulation was not compliant. It reads: Insulation - Ceiling - Current rental regulations require ceiling insulation to be a minimum of 120mm thick. An additional layer of insulation will be required to comply.
- The landlord’s response was that they had been told that the property was exempt from the requirements because it has a monopitch roof. There is insufficient space for a person to get in between the roof and ceiling. From the photographs, there is evidence of insulation batts. The landlords do not know when or how they were installed. They said they had been told that the area was inaccessible.
- Later in the HHS report, under the heading “Certificate”, it is recorded that “Exemption applies”, followed by the following recommendation: Confirmation of exemption by third party can be found attached to this report. THIS Healthy Homes NZ Ltd has not sighted the works completed, therefore, any queries regarding the compliance of this section of the Tenancy Services Healthy Homes regulations should be directed to the third party responsible for the remediation.
- The report notes that the floor insulation exceeds minimum requirements. There was no confirmation of exemption by third party attached to the report.
- The landlords said that at the time they had the floor insulation installed, they were told by the firm, Comfortmaster, that the ceiling was exempt because the property has a monopitched roof.
- The landlords were given a further opportunity to provide the evidence from Comfortmaster that the property was exempt and the tenants could respond.
- The landlord provided a statement from Brent Thomas, a director of Kensair, which used to be the parent company of Comfortmaster, before that part of the business was sold. In 2020 Mr Thomas was responsible for managing the Comfortmaster part of the business. He has reviewed the documentation including the quote referred to above. He said that having reviewed the photographs of the house, and considering there is no quote in the ceiling section of the quote, it is obvious to him that this is because the ceiling is inaccessible. It is his view that it is not reasonably practicable to instal insulation in the ceiling, as provided in regulation 19(1) of the HHS regulations.
- The tenants’ response to this statement was that regulation 19 was not relevant, but it seems that they were looking at the Residential Tenancies Act, rather than at the HHS regulations. In any event, they had no evidence to show that the insulation did not comply and accordingly I make no finding of non-compliance of the insulation HHS regulations. Ventilation
- The tenants claim that the landlord has breached the landlord’s obligations under section 45(1)(bb) of the Residential Tenancies Act 1986 (RTA). They consider that the landlord has failed to comply with the HHS ventilation standard because of the lack of mechanical ventilation in the bathroom and kitchen.
- 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 HHS does provide exemptions in specific circumstances.
- Breaching this obligation is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. See section 45(1A).
- The HHS report found that the kitchen and bathroom ventilation did not comply because of the lack of mechanical extraction.
- As with the insulation, later in the report under the heading certificate is the following: Confirmation of exemption by third party can be found attached to this report. THIS Healthy Homes NZ Ltd has not sighted the works completed, therefore, any queries regarding the compliance of this section of the Tenancy Services Healthy Homes regulations should be directed to the third party responsible for the remediation
- The landlords produced a typed statement from a Bruce Cook, electrician, who said that he had inspected the property and found that there was a vented hood over the stove, but it was too high and so it is not reasonably practicable to install a fan. The hood could not be lowered because of the window next to the stove.
- He also said that it was not reasonably practicable to install a fan in the bathroom because there is no ceiling access to install wiring and ducting and the bathroom has an opening window.
- Because of the discrepancy with the HHS report, I directed the landlords to provide a signed statement from Mr Cook setting out his experience as an electrician, knowledge of the HHS, when the kitchen and bathroom were viewed and reasons for any exemptions for compliance with the ventilation standard for the tenancy.
- This statement was duly provided, and covered his experience and knowledge of the HHS. He explained that he had been asked to undertake some electrical work at the tenancy in May 2023, when the house was vacant, and it was in that context that he was asked about the mechanical ventilation for the two rooms. His advice was also noted on the invoice that was sent including that along with an invoice dated 31 May 2023, a copy of which was produced.
- Having considered the evidence I find that the tenant has not proved that the tenancy does not comply with this standard. Moisture ingress
- During the course of the inspection it was discovered that there was a leaking pipe and so the property failed the moisture and ingress standard. The landlords promptly had that matter fixed.
- Non-compliance with this standard is an unlawful act. Exemplary damages of up to $7,200 may be ordered. I am satisfied that for an unknown period the property was not compliant with the moisture ingress standard. This had no impact on the tenants. The landlords attended to it promptly. Unlike the other standards, it is difficult to know how long there had been a leak, and therefore whether it had been compliant during the early part of this tenancy. Taking into account the matters to be taken into account in ordering exemplary damages, under section 109, I have decided it would not be just to make such an order in relation to this issue. Draught-stopping
- The HHS assessment identified that there was an issue with a gap at the bottom of window in one bedroom.
- The landlords had the issue rectified on the Thursday before Easter, which was 28 March 2024.
- The draught stopping standard requires that residential premises be free from unreasonable gaps and holes that are not an intentional part of the building, which allow draughts to arise.
- Breaching this obligation is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. See section 45(1A).
- In this case I have determined that in respect of one window, the property did not comply at the time of the HHS inspection and likely did not comply from the start of the tenancy on 17 August 2023 until 28 March 2024, a period of just over 7 months. I therefore find Kirsten Price and Scott Mcgill 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 interest of the other party, and the public interest. See section 109(3) RTA.
- Although the landlords were not aware of the gap in the window before the HHS report, they ought to have been. This would have been visible. The landlords had not undertaken an assessment of the property before the tenants moved in or within the compliance timeframe required under the Act. Accordingly, I find that the unlawful act was intentional.
- The impact on the tenants was not at the most serious end of the scale, but the occupant of that bedroom has reported that the room is much warmer how that it has been fixed.
- It is important that this landlord and other landlords are reminded of their obligations under the RTA and therefore an order of exemplary damages is warranted. The maximum amount allowable is $7,200.
- I have determined that an order of $1,200 is appropriate for the failure to comply with the draught stopping standard.
- Because [The applicant/s] has substantially succeeded with the claim I have reimbursed the filing fee.