What was Tenancy Tribunal case 4832478 about?

The tribunal order states: [The landlord/s] must pay [The tenant/s] $4,546.44 immediately, calculated as

How much money was awarded in case 4832478?

Compensation: rent refund - unlawful…: $4,526.00 awarded to tenant; Filing Fee: $20.44 awarded to tenant

What type of tenancy dispute was case 4832478?

The dispute type was not classified.

Where can I read the official tribunal order for case 4832478?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10777690-Tribunal_Order_Redacted.pdf.

What was Tenancy Tribunal case 4832478 about?

The tribunal order states: [The landlord/s] must pay [The tenant/s] $4,546.44 immediately, calculated as

How much money was awarded in case 4832478?

Compensation: rent refund - unlawful…: $4,526.00 awarded to tenant; Filing Fee: $20.44 awarded to tenant

What type of tenancy dispute was case 4832478?

The dispute type was not classified.

Where can I read the official tribunal order for case 4832478?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10777690-Tribunal_Order_Redacted.pdf.

Unit/Flat 1, 185A Dey Street, Hamilton East, Hamilton 3216 Tenancy Tribunal Case 4832478 — Tenancy dispute

Tenantcheck Insights

Reasons

Claims and awards in Tenancy Tribunal application 4832478 — net $4,546.44 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Tenant	Reason
Compensation: rent refund - unlawful premises	$4,526.00	rent refund - unlawful premises
Filing fee reimbursement	$20.44	Filing fee reimbursement
Net award	$4,546.44
Total payable by Landlord to Tenant	$4,546.44

Both parties attended the hearing. [Tenant 1] represented himself and [Tenant 2]. [The landlord’s lawyer] as appeared as Legal Counsel for the landlord, with [The landlord’s representative/s] (property managers) also attending. The property managers confirmed the landlord/owners knew about the hearing and the claim but did not want to attend.

The tenants claim: a) the premises were unlawful and seek compensation and exemplary damages b) the landlord has breached the Healthy Homes Standards (HHS) c) the rent exceeded the market rent d) the notice to terminate the tenancy was retaliatory.

The tenancy premises (‘granny flat’) consisted of a living room with a kitchen, one bedroom and a bathroom. The kitchen consisted of a bench with a sink and set in induction cooktop, a microwave and an extractor fan. There was no oven. The granny flat was part of, and under the same roof as, a larger separate dwelling, however there was no internal access between them. The other part of the dwelling (‘house’) consisted of a living room, three bedrooms, kitchen, bathroom and garage which incorporated a laundry. A wall in the tenant’s living room adjoined the house’s garage and a wall in the tenant’s bedroom adjoined the houses’ kitchen.

The house was also tenanted under a separate tenancy agreement. Are the tenant’s premises unlawful residential premises?

Section 78A Residential Tenancies Act 1986 (RTA) provides that the Tribunal can determine if premises are unlawful residential premises. That term is defined in s 78A as: (2) For the purposes of this Act, unlawful residential premises means residential premises that are used for occupation for a person as a place of residence but— (a) that cannot lawfully be occupied for residential purposes by that person (whether generally or whether for the particular residential purposes for which that person is granted occupation); and (b) where the landlord’s failure to comply with the landlord’s obligations under section 36 or 45(1)(c) ... as relevant, has caused the occupation by that person to be unlawful or has contributed to that unlawful occupation.

Section 36 states: “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.”

Section 45(1)(c) states: “The landlord shall – comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises;”

The first question under s 78A to consider is whether the premises are residential premises that can be occupied as a place of residence. The granny flat is clearly residential premises 1 as it is part of the premises 2 at 185a Dey Street and was used by the tenants as their place of residence during their tenancy for around 2 years and 8 months. The granny flat does not share any facilities with and is separate to the house, which is occupied by others under a separate tenancy agreement.

The next question is whether the premises cannot be lawfully occupied as residential premises, either generally or for the particular residential purposes for which the tenants occupied it (s 78A (2)(a)), and whether the landlord’s failure to comply with either section 35 or section 45(1)(c) caused or contributed to the unlawfulness of the occupation (s 78A(2)(b)).

The tenant alleges the granny flat was unlawful residential tenancy premises as: a) there was no firewall between the granny flat’s living area and the house’s garage, or the granny flat’s bedroom and the house’s kitchen, and b) the granny flat had a kitchen, but the floor plan with the Hamilton City Council (HCC) stamp “Building Unit approved” does not show a kitchen in the granny flat.

The tenant made a Local Government Official Information Act request (LGOIMA) HCC on 23 October 2023 whether “the kitchen in the granny flat was consented or not, or if there is a firewall between the tenancies”. HCC responded: The mentioned Granny Flat, Kitchen and Firewall between the tenancies were not part of the Building Consent and there is no Firewall between the tenancies. The owner has started the process to apply for a Building Consent for the Kitchen and Firewall.

The tenancy was terminated under a 90 day notice given on 17 October 2023 by the landlord so that a fire wall could be installed and on the basis that the work needed meant it would not be reasonably practicable for the tenant to live there when the work was being done.

After work to install the firewall commenced the tenant was told by the property manager that HCC had made a mistake and that a builder had inspected and verified there was a firewall between the garage and the granny flat’s living area. The tenant sent another LGOIMA request to HCC in May 2024 after the tenancy ended, which set out that he had been told a builder had verified the existence of the firewall, seeking information from the council about when it was installed. The HCC response did not differ from its earlier response: 1 s2, RTA defines ‘residential premises’ as “any premises used or intended for occupation by any person as a place of residence, whether or not the occupation or intentional occupation for residential purposes is or would be unlawful” 2 The definition of ‘premises’ in s2 includes “any part of any premises” There was no mention of any firewall installation on the Building Consent documents supplied to Hamilton City Council for the construction of the New Dwelling Attached garage at 1/1185a Dey Street, Hamilton.

In relation to the kitchen, the tenants said there was a “bad smell” that sometimes was akin to a sewerage smell, from the kitchen sink and the bathroom basin. They used a product every 2-3 weeks to kill the bacteria and the smell. The tenant raised his concern that if the kitchen was not consented then the plumbing was probably also not be part of the building consent.

The landlord’s submissions and evidence is that: • the landlord/owner received a notice to remedy from HCC relating to the firewall in early October 2023. The notice followed a “bin audit” undertaken by HCC. 3 • the neighbouring property, 185b Dey, was built and sold under the same house and land package as 185a Dey Street and had also received a Notice to Fix. The properties, which are owned by different owners, are identical except that they are the mirror image of each other. A LGOIMA request was made to HCC by the owner of 185b Dey Street, which the property managers state established HCC a) had information on file verifying the existence of a firewall between the granny flat and house in that property, and b) did not have all the documents it should have in its file for 185b. As both properties were built by the same builder at the same time, and as the existence of a firewall is verified in HCC records for 185b, it is likely that HCC does not have all of the correct documents uploaded to 185a’s file. • the owners believe there was a fire wall in place as the plans provided when they purchased the property show the fire wall. However, after receiving the Notice to Fix, the owners arranged for a firewall to be installed. When the builder started the work required to install the fire wall he discovered a firewall was in place with a fire rating of 30 minutes. An email on 15 April 2024 from the builder to the property manager states: As discussed, we can confirm the following was found installed at both 185a and 185b Dey St. Wall between single bedroom dwelling and garage: 1 x 13 mm standard + 1 x 10 mm standard Gib sheets on both sides. The ceiling linings consists of 13 mm plasterboard. This configuration including the ceiling will provide a FFR of 30 mins. Link to GIB fire rated systems table: https://www.gib.co.nz/assets/Uploads/GIB-Fire-Rated •HCC has not been able to confirm or deny that it has not scanned the correct documents into the file for 185a Dey Street. Both the property managers and 3 That is, an audit as to whether the premises at 185a Dey Street were entitled to one or two sets of rubbish/recycle bins the owners believe they have not as what is showing in HCC’s records is not what has actually been built. •Two sets of bins were delivered to 185a and 185b Dey Street by HCC. It is the property managers understanding that if HCC did not recognise the granny flat as a consented dwelling only one sets of bins would have been delivered to both 185a and 185b Dey Street. •1/185a Dey Street, being the address used by the granny flat occupants, is a recognised address, as is 2/185a Dey Street, being the address used by the occupants of the house. •In relation to the kitchen, even though it did not have an oven, the property managers had no reason to doubt it was consented. It had a bench top convention oven/microwave which they said was not unusual. The tenants had not raised during their tenancy that there was any issues regarding smells coming from the kitchen sink or the bathroom handbasin, and the property managers had no knowledge prior to the hearing of this issue. •The property managers said that to the best of their knowledge the granny flat was fully consented.

I find the tenants’ evidence together with the Notice to Fix issued by HCC to the owner raises doubt that the property has the required HCC building consent and/or resource consent necessary for the granny flat to be a separate residential dwelling. The two HCC LGOIMA responses, the HCC “approved” floor plan (which I believe is part of the building consent for that dwelling), and the Notice to Fix are persuasive evidence that the granny flat cannot be occupied lawfully for residential purposes as a separate dwelling under s78A as it does not comply with all building legislative requirements.

The onus of proof then shifts to the landlord to prove that appropriate HCC consent/s were obtained.

I find the landlord’s evidence falls short of proving on the balance of probabilities, being the civil onus of proof that applies, that the necessary consents were obtained from HCC for the following reasons: a) I had a number of questions regarding the builder’s statement at the hearing, as I found the wording was not conclusive regarding the existence of the firewall; it relied on the reader to follow a www. link to a fire rated systems table; and it contained a photograph that was not sufficiently explained. The statement did not address the existence or otherwise of a firewall between the granny flat’s bedroom and the house’s kitchen. b) Even if there was a fire wall in the property between the granny flat’s living room and the garage, I am left questioning whether the firewall met the particular certification and building standards required. These issues were raised at the hearing and the respondents were given opportunity to have the builder called during the hearing so his evidence could be clarified, but the respondents chose not to do so. c) In the event there is a firewall in the premises that does not mean that the building consent allowed for the granny flat to be a separate dwelling or that the building consent required the fire wall. d) The property managers referred to what they had been told by the property owners and HCC, as well as to documents, such the plans etc the owners had received when the purchased the property. Without presenting the documents referred to and having witnesses attend to give direct evidence the landlord’s evidence was second hand and could not be given much weight 4 . e) No documentary evidence, including any documentary evidence, explaining the presence of a kitchen in the living room was provided. The floor plan with HCC’s “Building Unit Approved” stamp on it does not show a kitchen in the granny flat living room, yet there is one there. f)I am not persuaded that the reason HCC documentation, showing the property has the correct building and resource consents for the granny flat to be a separate dwelling, is not on HCC’s file is because the Council has not uploaded the correct documents to the file. While I accept that from time-to- time Council records may not be correct, the overall failure of the landlord to provide evidence alluded to in the hearing does not enable me to be convinced that this is the case.

Therefore I find that the tenant’s evidence, as the more persuasive and credible evidence, establishes that the granny flat cannot be lawfully occupied as separate residential premises as there is no persuasive evidence of a building consent and/or a resource consent being granted which entitled the granny flat to be used as a separate dwelling.

Under the second part of s78A(2) the landlord must have caused or contributed to the unlawful occupation by either a) failing to 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 (s 36 RTA), or b) failing to comply with all building, health or safety enactments (s 45(1)(c), RTA).

The property manager says to the best of their knowledge the granny flat had all of the necessary consents to be lawfully occupied as a separate dwelling at the start of the tenancy. They stated their understanding was that the owner also believed that was the case, having bought the property from the builder as a land and building package. The property managers understood from the owner that 4 Opportunity to adjourn to have witnesses attend and for documents to be presented was given, but that opportunity was declined.: the plans provided by the builder/seller showed the granny flat as a separate dwelling.

However I find it is reasonable to expect that the owner had undertaken sufficient due diligence in buying the property to know that the correct consents were in place. If that was the case the owner should have copies of those consents and should have been able to provide them at the hearing, which they did not.

Likewise the property manager should have ensured the granny flat was consented to be occupied as a separate dwelling. The property manager states its management authority with the owner includes a warranty from the owner that this is the case. I accept the warranty and the existence of a separate power meter and set of rubbish/recycling bins from the Council have led the property manager to the conclusion that there was no legal impediment to the separate occupation of the granny flat.

After all the evidence was heard regarding whether the premises was unlawful premises or not, the property managers accepted on behalf of the owners that the premises was unlawful premises. The property managers said the owners did everything they could to right the situation as soon as they were advised of the issue but that due to the costs involved they had decided to make the property into one dwelling rather than going to the expense of working through the requirements of the HCC to enable the granny flat to be separate residential premises. Compensation where premises are unlawful premises

The tenants seek all of the rent they have paid to the landlord for the premises refunded ($45,260.00).

Where it finds unlawful residential premises under section 78A(4), the Tribunal may order the landlord to pay the tenant: (i) the whole of the sum found to have been paid by way of rent for the period for which the Tribunal is satisfied that the premises are or were unlawful residential premises; or (ii) an amount that is the sum referred to in subparagraph (i) less any amount that the Tribunal is satisfied, having regard to the special circumstances of the matter, including the nature of the premises, it is fair to deduct

I consider that section 78A(4)(a)(ii) should apply to this case because applying section 78A(4)(a)(i) would be unfair to the landlord, as the tenant has had some amenity and benefit from living at the property.

At this point I must carefully weigh what amount of rent it is fair to deduct. Other than taking into account the nature of the premises, “the special circumstances” that I must have regard to are not stated in the RTA. However other Tribunal decisions have consistently weighed the following factors: • The landlord’s motivation for renting the property and their conduct during the tenancy • The tenant’s motivation for renting the property and bringing the claim and the length of time she lived in the property • The benefits received by both the landlord and the tenant in renting the property • The seriousness of any regulatory breaches that make the premises unlawful • Any other breaches by the landlord • Any detriment or loss suffered by the tenant • The purpose of s 78A in ensuring landlords do not unfairly profit from unlawful premises and the public interest in discouraging unlawful tenancies • Any other compensation or exemplary damages that are ordered

The premises was built new in 2014 and had double glazed windows. A Heathy Homes Assessment carried out on 23 October 2019 shows the premises complied with all HHS. The tenants lived at the premises for around 2 years and 8 months, until the tenancy ended as the landlord gave notice to terminate on the basis that extensive renovation work was to be carried out and it would not be reasonably practical for the tenants to live there while the work was done. The intended renovation work was the installation of required firewalls in the property.

The property was in overall good condition. The tenants raised the following two issues as part of their tenancy application, neither of which were raised with the property manager during the tenancy: a) there was a bad smell from the kitchen sink and bathroom basin, which they thought may have been caused by plumbing that was not consented as the kitchen sink was not shown on the plans. b) condensation occurred on the ranchslider, which in their view was a ventilation issue. However I am not persuaded the condensation was any more than usually occurs on doors and windows in the Waikato, rather than as some inherent problem with the construction of the premises 5 .

The tenants filed their claim several months after their tenancy ended, and in reliance of information given to them by the tenants in the house. The neighbouring tenants, according to the tenants have long raised the issue of the absence of a firewall with the landlords. An email from the neighbouring tenant states that when a roof space insulation check was done, the neighbouring tenant was advised there was no firewall. The neighbouring tenant has not given 5 refer further discussion and my findings below a date when that happened but says he has raised it with the property managers since the start of the tenancy.

The tenant says they were scared and concerned about their safety in the property, particularly as their bedroom was adjacent to the house’s kitchen and there was no firewall between the rooms. The neighbouring tenant’s statement sets out that their oven was faulty from the day they moved in and that it took some months before the landlord fixed it. The landlord’s evidence is contrary to this: that the oven was replaced through ACC due to the neighbouring tenant’s need to have an oven situated lower than the oven that was installed and a style suitable for use by a person in a wheel chair.

When the termination notice was given the tenants asked if they could remain at the property. The tenant said this was because the notice required them to move out in the New Year which was not convenient and that the premises were well located for their work. The tenants had chosen to stay at the property after receiving their first LGOIMA response from HCC.

In Presland and Co. Trustee Company Limited and Fiona Tugaga v None [2022] NZDC 21087, Judge DJ Clark in considering a claim under s 78A found that he was entitled to consider the nature of the unlawful breach committed in conjunction with the benefits the tenants received during the tenancy in determining whether the rent rebate ordered 6 . That case involved a boarding house and was similar to this case in that it was found that there was no firewall between units. The similarity stopped there in that Judge Clark, as did the Tribunal, found the premises to be significantly dilapidated and in a condition that “could not be described as anything other than in a total state of disrepair” 7 . In that case Judge Clark found the Tribunal’s award of a rent refund of 30% of the total rent that was due was appropriate.

Prior to Presland, Judge DJ Clark had heard appeals of Tenancy Tribunal decisions involving compensation ordered where premises were found to be unlawful premises under s 78A. He had substantially reduced the amounts the Tribunal had awarded in several cases where technical breaches meant the premises were unlawful, but that the premises were “otherwise safe and sound”. In Chen v Kumar 8 , the Tribunal’s order of $20,000 was quashed and substituted to an order of $2,000 which as around 3 per cent of the total rent paid. Like wise in Kemp v Elliott 9 Judge DJ Clark an order for 70 per cent of the rent to be refunded to an award of $2,000 which was also around 3 per cent of the rent paid. 6 Ibid at [84] 7 Ibid at [63] 8 [2022] NZDC 7783 9 [2022] NZDC 17792

The facts in this case differ from Chen and Kemp as the firewall issue and the existence of kitchen facilities not consented are more than just a technical breach 10

Weighing all of the above factors, I find special circumstances exist to award less than a full rent reduction. I consider an award of 10 per cent of the rent paid is an appropriate amount to order. Accordingly the landlord is to pay $4,526.00 to the tenants.

Are the tenants entitled to exemplary damages as the premises are unlawful?

The tenants have also applied for an award of exemplary damages as the premises are unlawful.

Under s 78A(5) the Tribunal has the discretion to award exemplary damages, even if the tenant does not apply for just an order. However in the circumstances of this case I find the rent reduction order I have made under s 78A is sufficient remedy.

As part of the rent refund award made I have considered that s 78A addresses a concern that landlords do not unfairly profit from unlawful premises and the public interest in discouraging tenancies of unlawful premises. These factors call for the rent reduction to be set at a level that deters landlords from running the risk of renting out unlawful premises by depriving them of any unfair rental profit. Therefore I find the exemplary damages aspect of punishing and deterring has already been considered in the award made.

Accordingly I decline to make an order for exemplary damages.

Has the landlord breached the HHS relating to ventilation?

The tenant claims the HHS have not been met as the sliding door in the living room suffers from condensation. The tenant says the glass gets very foggy and wet to the extent that they removed the curtains from the door to stop them getting mouldy.

A landlord has an obligation to comply with HHS under section 45(1)(bb) of the Residential Tenancies Act 1986 (RTA). Compliance dates for the HHS vary depending on the tenancy.

In this instance as the tenancy commenced before 1 July 2021 and is a periodic tenancy, compliance is not required until 1 July 2025. Therefore the landlord has not breached the HHS requirements. 10 in Kemp for example, a final Code Compliance Certificate inspection had been passed but the fee had not be paid so the CCC had not been issued.

In relation to the condensation issue I am not satisfied that any breach by the landlord has occurred. As set out above I find the condensation occurring in the tenancy is not due to any breach by the landlord. The room has adequate ventilation in that windows can be opened and there is an extractor fan in the kitchen.

This part of the claim is dismissed. Market Rent Application

The tenants claim they were paying more than the market rent for the tenancy.

Under section 25(1) RTA where the Tribunal is satisfied the rent payable exceeds the market rent by a substantial amount, it may make an order reducing the rent to an amount that is in line with the market rent.

Section 25(4) provides that a market rent order may not take effect any earlier than the date of the application or any later than 30 days after the date of the order.

Accordingly this application is moot as, even if the tenants prove the rent was more than the market rent, the Tribunal is not able to make any order reducing the rent as the tenancy ended three months before the tenants filed their application. Retaliatory Notice

Section 54 RTA provides that the Tribunal may declare a termination notice to be retaliatory, and of no effect, if: [I]n giving the notice, the landlord was motivated wholly or partly by the exercise or proposed exercised by the tenant of any right, power, authority, or remedy conferred on the tenant by the tenancy agreement or by this or any other Act or any complaint by the tenant against the landlord relating to the tenancy.

The tenant claims the landlord’s notice to terminate dated 17 October 2023 was retaliatory and wholly or at least partly motivated by their request for a firewall to be installed.

This claim is also a moot application. The tenants vacated before they filed their application and the granny flat is now part of the tenancy for the house.

In any event I am satisfied that the termination notice was not retaliatory. The landlord had received a Notice to Fix from HCC. Such a notice requires the landlord to take action or face potential prosecution. At the time the notice was given, the landlord intended to carry out the necessary work to meet the requirements of the notice, which was to install a firewall. The work involved required to install the firewall meant work had to be done to the granny flat living room wall and the ceiling. I am satisfied that the living room would have been considered a work site and that the granny flat would not have been able to be occupied while the work was being done from a health and safety perspective. . Application fee

As the tenants have been mainly successful in their application reimbursement of the application fee is awarded. Suppression

The tenants have applied for suppression of their name. As they have been wholly successful in their claim, suppression is granted.

The Tribunal may grant name suppression of the name or any identifying particulars of any party or witness “having regard to the interests of the parties and the public interest” (s 95(4), RTA). Having regard to the public interest I find there may be some legitimate public interest in the proceedings, however I am satisfied that the landlord has accepted the premises cannot be separately rented and has altered the premises so that the granny flat is part of the larger premises. For that reason I grant suppression of the landlord’s name.

Reasons

Claims and awards in Tenancy Tribunal application 4832478 — net $4,546.44 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Tenant	Reason
Compensation: rent refund - unlawful premises	$4,526.00	rent refund - unlawful premises
Filing fee reimbursement	$20.44	Filing fee reimbursement
Net award	$4,546.44
Total payable by Landlord to Tenant	$4,546.44