Published tribunal order
Tenancy Tribunal case 4874367 — Exemplary damages
Decided 18 Feb 2025 · Published 18 Feb 2025 · Application 4874367
- Exemplary damages
Party names are redacted in the official published order.
Order
- An application for suppression has been made in this case, and the Tribunal orders suppression of the names and identifying details of the parties and of the other occupants of the premises.
- [The landlord/s] must pay $2,530.44 immediately, calculated below:
- The Bond Centre must pay the remaining bond of $224.52 to the tenants equally.
- This Order supersedes and replaces the Tribunal’s Order dated 11 December 2024, to extend suppression to both parties and witnesses.
Reasons
- Both parties attended the hearing.
- Both parties had approved representatives. The Claims
- The landlord confirms that its counter claim is withdrawn. The remaining bond is released to the tenants equally, as with the uncontested bond paid to them previously.
- The tenants’ claims are that the landlord breached it’s obligations by failing to: a. lodge the tenants’ bond as required; b. provide the tenants with a copy of the agreement; c. provide required information in the agreement namely; i. insurance information ii. insulation information iii. HH compliance information iv. a list of provided chattels v. a copy of Body Corporate rules d. ensure the premises complied with Healthy Homes standards; e. charge a fair rent for the room occupied by the tenants; f. consent to assignment of the tenants’ interests in the tenancy. Background
- The owner of the premises and the landlord named in the tenancy agreement is [The landlord/s]. It is a limited liability company. [The directors] are the company’s shareholders and directors.
- The premises were bought principally is a means of providing good quality accommodation for [the directors] sons while they studied in [City].
- [The directors] sons were given significant autonomy in terms of who they chose to share the premises with.
- [The directors]’ son [Tenant 3] occupied the premises throughout this tenancy. In the Order he is referred to as “[Tenant 3]”. No disrespect is meant by using his given name, it is simply to avoid confusion with the landlord’s director [Director 1].
- Because [Tenant 3] lived in the premises, an issue was raised by the landlord as to whether the Tribunal had jurisdiction to determine these claims, or whether the tenancy was excluded from the RTA by s.5(1)(n).
- The Tribunal’s Order dated 22 May 2024 determined that the Tribunal has jurisdiction to determine the claims, for reasons set out in that Order. Background
- Following discussions in October 2022, it was intended that the tenancy would begin from 1 February 2023 for a one year fixed term ending on 31 January 2024. That is the term specified in the agreement.
- The two other tenants identified in the agreement are [Tenant 3] and [Tenant 3]’s friend [Tenant 4].
- It was later agreed, because the tenants had existing tenancy obligations they couldn’t get out of, that they would join [Tenant 3] and [Tenant 4] in the tenancy from May 2023.
- The tenants shared the downstairs bedroom and downstairs bathroom. [Tenant 3] and [Tenant 4] each had a bedroom on the third level and shared a bathroom on that level. Each of the four tenants paid 25% of the total rent of $840.00 per week.
- As addressed more comprehensively later in the Order, the tenants moved out in mid-November but continued to pay rent to the end of the fixed term. Agency
- It will be helpful to determine this issue the outset as it has implications for how other claims should be considered.
- The tenants’ position is that there was no direct communication between the landlord and them until 21 December 2023, after the tenants had moved out. They say they then got [Director 2’s] details from [Tenant 3] and contacted her to ask for a copy of the agreement.
- The tenants’ evidence is that [Tenant 3] instructed them that they should deal only with him about the tenancy and that they were never given the name or contact details for the landlord or [The directors] until after they had moved out.
- They say [Tenant 3] made it clear that all communication relating to the tenancy, including having the agreement signed, completing the bond form, payment of rent, notification of inspections and everything else, was to be through [Tenant 3].
- The tenants point out that in her evidence, [Director 2] agrees that “[Tenant 3] was able to choose who could live at the property with him”.
- The tenants’ position is that those circumstances meant that [Tenant 3] was acting as the landlord’s agent, having a role “......very similar to how a property manager acts.” They say that as a consequence, the landlord, as principal, is responsible for any of [Tenant 3]s actions with respect to the tenancy.
- Before the jurisdiction hearing [Tenant 3] made his position clear that, “I have received tenancy tribunal information in the mail, but I wish to inform you that I am not the landlords agent. Therefore will not be attending this hearing.”
- The 22 May Order noted that “[Tenant 3] does not wish to be heard but that does not prevent his being called by either party as a witness”. Neither party chose to do so.
- [Tenant 3]’s pivotal role in communications between the landlord and the tenants is consistent with the role of a property manager acting as agent for a landlord. It is equally consistent with his being a “head tenant”, rather than agent for the landlord. That is not an uncommon arrangement.
- Fundamentally, [Tenant 3] signed the tenancy agreement as a tenant of the landlord company. It is not consistent with the principles of agency that he be legally liable to the landlord under the agreement for the tenants’ obligations, while at the same time being agent for the landlord under the same agreement.
- I do not find that [Tenant 3] was the agent of the landlord for the purposes of the tenancy.
- The four tenants signed the agreement. They had a joint and several liability, by which they each had a responsibility to the landlord to ensure performance of the tenants’ obligations under the agreement and the RTA.
- Equally, the landlord had a contractual relationship with each of the tenants, by which it had a responsibility, to each of them, to ensure performance of its obligations under the agreement and the RTA.
- It is not sufficient for the landlord to say that it has met its obligations to all of the tenants by meeting its obligations to some, or one of them. Bond
- A landlord must provide a receipt for any bond payment received and 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 tenants’ contribution to the bond was $1,260.00. The evidence shows that their contribution was paid over 4 payments, by deposit to the landlord’s account: • $60.00 on 22 October 2022 • $510.00 on 1 March 2023 • $90.00 on 3 March 2023 • $600.00 on 8 May 2023.
- I find it proved on balance that the landlord did not issue a receipt for those payments and that the bond was not lodged with the Bond Centre until 12 June 2023.
- The landlord thereby 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.
- In assessing those criteria, I take into account that: a. while those requirements apply to any sum received by way of bond, the landlord lodged the bond within 25 working days of the final bond payment being made; b. the landlord’s evidence is that the bond was lodged immediately the bond form was received from [Tenant 3] (that is not the point at which the obligation to lodge the bond arises); c. the landlord had a significant amount of the tenants’ bond money ($660.00) for a lengthy period without accounting for it or lodging it; d. the bond was lodged and has (eventually) been released to the tenants, so no substantive loss has been caused; e. the obligation to give a receipt for rent under s.29(4) is met if the payment is made direct into the landlord’s bank account for rent, so here the bond payment having been made in that way, the risk to the tenants from not having not been given a receipt was mitigated; f. there is a clear public interest in landlords being aware of and meeting such core obligations as dealing correctly with a tenant’s bond.
- In those circumstances I consider that a modest award of exemplary damages would be just. Providing the Agreement
- 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 evidence is that the tenancy agreement was given by [Tenant 3] to [Tenant 4] who signed it and dropped it to the tenants for them to sign. There is a dispute about the content of the agreement they were given to sign, which is dealt with later in this Order.
- The tenants’ evidence is that after they had signed it, they gave the tenancy agreement to [Tenant 3], who the landlord had arranged to have the agreement completed, on 1 November 2022. They say they did not then receive a copy of the completed agreement, until they asked for a copy from [Director 2] on 21 December 2023.
- That evidence is consistent with (though not proved by) communications provided in evidence: • [Tenant 3] to the tenants by txt on 1 November 2022 “Did yall sign the bond and tenancy agreement?” • the tenants to [Tenant 3] by txt on the same day, “also [Tenant 3] do u want us to drop off form today” • The tenants to [Director 2] by e-mail on 21 December 2023, “I’m [Tenant 1] im one of the tenants alongside [Tenant 2] we have met a few times.......can you please send us a copy of our tenancy agreement. I would greatly appreciate it.”
- The dates given for the tenants’ signatures are 19 and 20 October 2022. The date given for the signatures of [Tenant 3] and [Tenant 4] is 19 October 2022.
- [The directors] say that, “It was agreed that [Tenant 3] would take the forms to [City] to get signed. [Tenants 1 and 2] were not available so it was agreed they would sign the forms and return them to [Tenant 3]. [Tenant 3] thought the girls returned the forms to him but could not remember or locate them, he assumed under the time pressures he left them storage. Once [Tenant 3] moved into the premises he unpacked but was unable to locate them. [Director 2] said she would bring down new forms for them to sign. When [Tenants 1 and 2] moved in in May they presented [Tenant 3] with the forms much to his relief. [Director 2] processed the bond lodgement form the day after she received it”
- That is consistent with [Director 2] having signed the agreement on 12 June 2023, also the day the bond was lodged.
- It seems clear to me that [The directors] have no direct knowledge of what happened regarding signing of the tenancy agreement. They have not chosen to have [Tenant 3] give evidence and I must necessarily place more weight on the evidence given directly by the tenants, that they signed and returned the agreement to [Tenant 3] on 1 November 2022, than on their hearsay evidence about what [Tenant 3] told them.
- Either way, the landlord’s obligation was to ensure that the tenants were provided with a signed copy of the agreement before the tenancy began. I find it proved on balance that the tenants did not get a copy of the agreement until they themselves requested it from [Director 2] after they had vacated.
- Accordingly, I find that the landlord committed in unlawful act. For the reasons noted above it is not sufficient for the landlord to say that it relied on [Tenant 3], as one of the tenants, to meet that obligation. That obligation was owed by them to these tenants.
- Considering the s.109(3) criteria referred to above: a. the evidence does not provide any obvious justification for the landlord’s breach; b. the evidence is clear that [Director 2] was happy to provide a copy of the agreement to the tenants on request and I have no doubt would have done so earlier if asked; c. as a consequence, the tenants had no contact details for the landlord without going through [Tenant 3]; d. the public interest requires that landlords are aware of and meet such fundamental obligations as to provide the tenants with a copy of the agreement which establishes their landlords/ tenant relationship.
- In those circumstances I consider that in a modest award of exemplary damages would be just. Content of the agreement
- Section 13A RTA requires that the landlord provide specified information in a tenancy agreement. That information includes: i. information about the insulation installed at the premises; ii. a statement of compliance with Healthy Homes standards; iii. confirmation of whether the premises are insured and the excess applicable to a claim; iv. a list of any chattels provided.
- Section 16B requires that where the premises are part of a Body Corporate, a copy of the Body Corporate rules must be provided.
- Failure to provide that information is in each case an unlawful act for which exemplary damages of up to $750.00 may be awarded.
- Two versions of the tenancy agreement have been proved in evidence. One is a copy signed by the four tenants but not by the landlord, which is a 6 page document that does not contain the prescribed information mentioned above.
- The other version is a 24 page document signed by [Director 2] for the landlord, which contains those particulars.
- [Tenant 4] gave evidence by phone. He says that his recollection is that the agreement he was given to sign and which he then gave to the tenants to sign was very much larger than a 6 page document. In evidence is a copy of the photos he took of that agreement for his records. It comprises 8 pages, larger than the 6 page version but he says he only took a copy of the important bits. He says the photo itself shows a number of other pages that he did not bother to copy.
- For their part, the tenants say that they can only recall being given, and having signed, a small document, hence their having referred to it as a “form” in their txt to [Tenant 3] on 1 November 2022 (se para 41 above).
- Because it was unclear from the evidence which version of the agreement was provide to the tenants by [Director 2[ when they requested it on 21 December 2023, leave was given to the tenants to provide a copy of the attachment to [Director 2’s] e-mail. That attachment has been provided and it is a copy of the short version.
- This is the tenant’s claim and accordingly there is an obligation on the tenants to provide evidence that proves their claim on the balance of probabilities.
- The landlord should be in a position to provide the Tribunal with a copy of a compliant agreement, signed by the landlord and provided to the tenants - whether signed by the tenants or not (s.13(2)(b)). The landlord cannot provide that evidence and when the tenants request a copy, the copy provided was of a non-compliant agreement.
- On balance I find it more likely than not that the agreement provided to the tenants to sign did not contain all the prescribed content
- In considering whether to make an award of exemplary damages for that breach, the Tribunal must also take into account s.137A RTA which in essence prevents the award of multiple pecuniary penalties for the same conduct.
- In my view the appropriate approach is to regard the landlord’s failure to provide the tenants with a signed copy of a compliant agreement, including the prescribed content, as in substance one breach, but a fundamental one so that an award, but only one award, of exemplary damages should be made but at the top of the scale. Healthy Homes Compliance
- Section 45(1)(bb) requires that landlord ensure that premises are compliant with Healthy Homes standards.
- 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 agreement acknowledges that compliance date for his tenancy was 1 February 2024.
- The “full agreement” certifies the premises as having R2.4 Pink Batts ceiling insulation installed, the insulation having been installed in 2009. The landlord provided a Healthy Homes inspection report from Healthy Homes Check New Zealand (“HH report”) which reports the ceiling as being insulated with Pink Batts to R 2.9.
- The full agreement certifies the premises as being compliant with the Healthy Homes heating standard, having an assessed required heating capacity of 5.2 kW with the main living room having a 5.8 kW heat pump provided. The HH report assesses the premises as compliant with the Healthy Homes heating standard, with an assessed required heating capacity of 3.8 kW with a 5.8 kW heat pump installed.
- The tenants point out the inconsistency between the insulation described in the agreement and the HH report and the inconsistency in the assessed required heating capacity for the premises in the agreement and the HH report.
- The tenants suggest that additional or replacement ceiling insulation was installed after the tenancy ended.
- They say that the HH report records the windows as a double glazed when in fact they are single glazed and say that affects the calculation of the required heating capacity.
- For those reasons, the tenants say that there is no reliable evidence to confirm the premises’ compliance with those standards.
- The author of the HH report was not available to give evidence at the hearing. Opportunity was given to both parties to provide questions to be put to the author of the report, on the basis that when answers to those questions were provided, if either party so required, he hearing would be resumed to allow a cross examination on those answers. The answers having been provided, both parties confirmed that no examination is required.
- In response to the questions put, the HH report author says: a. Insulation – “...the ceiling insulation was an average nominal stabilised thickness of 120 millimetres which for Pink Batts equals R value rating of
- 9. The ceiling insulation was in good condition and looked to be the original to when the property was built. Modern insulation has a 50 year warranty if installed correctly and there is no indication that this was installed incorrectly.” b. Heating – “The two mistakes I can see here are the window which was entered as 2.58 metres high instead of 1.58 and the double glazed windows which were single glazed. Due to the relative size of the heated area the window does not change the required heating number. The double glazing is a common problem with the MBIE heating assessment tool. That will assume the type of glazing it thinks which should be in the house even if it is contrary to the type used on the 1st window. I've attached a new heating assessment including these items and the heating is higher than the required allowance (4 kW) required with a 5.8 kW heat pump”
- While I can understand the questions raised by those discrepancies between the agreement and the HH report, I do not find it proved that the landlord breached its obligation to ensure the premises complied with Healthy Home standards. Rent 83 The tenants say that it was unfair that they were required to pay 25% each of the total rent for the premises, when they shared one room. It seems that under a previous tenancy for the premises 40% of the same total rent was paid by a couple occupying bedroom 3 rather than the 50% required of these tenants.
- The rent charged by the landlord was for the premises as a whole, and was $1,840.00 per week. No evidence has been provided to suggest that the total rent for the premises was substantially more than a market rent, for the purposes of s.25 RTA.
- How that total rent payable under the agreement was apportioned between the tenants, was a matter between them, not a matter determined by the landlord or by the agreement.
- As that is not an issue between the landlord and the tenants but between the tenants, it is not an issue over which the Tribunal has jurisdiction. That claim is dismissed. Assignment
- On 3 October 2023 one of the tenants messaged [Tenant 3], “We are wanting to go home, are we fixed or periodic?”
- [Tenant 3] asked [Director 2] who said, “They are fixed so have to keep paying the rent even if they are not here” The tenants correctly point out that the response from [Director 2] did not take knowledge either the landlord's obligation to take reasonable steps to mitigate if tenants want to end their fixed term early or that tenants have assignment rights under s.43B RTA.
- Section 43B(1) says: “A tenant may, at any time during the tenancy, assign the tenancy—(a) with the prior written consent of the landlord; and (b) in accordance with any reasonable conditions attached to that consent by the landlord.”
- Under s.43B(4), “If a tenant makes a written request for the landlord’s consent to an assignment and the request identifies, and includes contact details for, the proposed assignee, the landlord must respond in writing to the request within a reasonable period of time.” A landlord’s failure to do so is an unlawful act for which exemplary damages of up to $1,500.00 may be awarded.
- The tenant’s claim that through [Tenant 3]’s unwillingness to consider suitable replacement tenants, as the landlord’s agent, the landlord committed an unlawful act and should also compensate the tenants for rent paid from 12 November 2023 to the end of the fixed term on 31 January 2024. They say that the room they continued to pay for was used by [Tenant 3] and [Tenant 4] after they moved out and that a replacement tenant, a friend of [Tenant 3]’s, coincidentally, was ready to move in from 1 February 2024, the day after the fixed term ended on 31 January 2024.
- A tenant’s assignment rights under s.43B relate to assignment of the tenancy. This tenancy was a tenancy between [The landlord company] as landlord and [Tenant 3], [Tenant 4] and these tenants, jointly, as tenants.
- What the tenants wanted to do was not to have the whole of that tenancy assigned to new tenants but for themselves as two of the four tenants to be replaced under that agreement.
- The Tenancy Services website puts the difference this way: “If a tenant needs to move out but the tenancy will continue for the tenants who remain, the most straightforward way to do this is for the tenant(s) and the landlord to agree to replace one tenant with another. This is a ‘variation’ of the tenancy agreement, or a ‘change of tenant’. Before leaving, the departing tenant will need written agreement from the other tenant(s) and the landlord. If 1 or all the tenants in a tenancy agreement are leaving, the whole agreement can be transferred to someone else (a new group of tenants can include some of the same tenants as an existing group of tenants). This is called an ‘assignment’. The tenant(s) must get the landlord’s written consent to do this, and the landlord cannot withhold consent unreasonably.”
- The tenants could have asked the landlord to agree to assignment of the tenancy from them, [Tenant 3] and [Tenant 4], to the new proposed tenants, [Tenant 3] and [Tenant 4]. That did not happen.
- While I accept that process may have been made more difficult by the landlord’s failure to provide the tenants with an agreement containing the landlord’s details, even had a request been made by the tenants in terms of s.43B, the landlord would necessarily have had to seek agreement from [Tenant 4] and [Tenant 3] as the co-tenants, before any such assignment could be implemented.
- I do not find that the landlord has breached its obligations under s.43B. Mitigation
- The tenants’ wish to vacate the premises and end their rent obligation before the end of the fixed term, breached their obligations to the landlord under the agreement.
- Section 49 provides that , “Where any party to a tenancy agreement breaches any of the provisions of the agreement or of this Act, the other party shall take all reasonable steps to limit the damage or loss arising from that breach, in accordance with the rules of law relating to mitigation of loss or damage upon breach of contract.”
- The landlord was aware that the tenants wanted to move out. That is apparent from [Tenant 3] communication with [Director 2].
- That triggered an obligation on the landlord to take reasonable steps to mitigate the loss caused by their doing so. There is no evidence of any steps having been taken by the landlord to mitigate the situation. Its’ response, through [Director 2] was simply that “They are fixed so have to keep paying the rent even if they are not here” .
- In these circumstances, reasonable mitigation steps would have included giving correct information to [Tenant 3] about the options for the tenants to leave the tenancy, as outlined in Paragraph 86. It would have been reasonable to let [Tenant 3] know that there it had an obligation to mitigate the loss by being reasonable about replacement tenants being found.
- The evidence suggests there were other suitable flatmate(s) could have moved in before the fixed term and who might have done so if facilitated by the landlord rather than the landlord having giving said the tenants simply had to keep paying to the end of the fixed term.
- While there is considerable speculation involved and this is primarily an issue between the tenants, I do find that: a. the landlord did not meet it obligation to the tenants to take reasonable steps to mitigate the loss caused by their wish to vacate before the end of the fixed term; and b. had it taken the reasonable steps available to it, it is more likely than not that other tenant(s) could have moved in before the end of the fixed term.
- As this is the tenant’s claim to prove, I must be conservative in the assessment of the likely loss caused by the landlord’s breach. I assess the figure as 3 weeks x $420.00 (the tenants’ share of the rent).
- Because [The tenant/s] have had claims upheld, I reimburse the filing fee.