Published tribunal order
Tenancy Tribunal case 4915493 — Exemplary damages
Decided 10 Oct 2024 · Published 10 Oct 2024 · Application 4915493
- Exemplary damages
Party names are redacted in the official published order.
Order
- Te Whanau O Waipareira Trust must pay [the tenant] $8,761.01 immediately, calculated as set out in the table below:
Reasons
- Both parties attended the hearing.
- The tenant applied for compensation and exemplary damages for the landlord’s breach of its section 45(1) of the Residential Tenancies Act 1986 (“RTA”) obligations to the tenant, retaliatory/unlawful notice and reimbursement of the filing fee, following the end of her tenancy. Background
- The tenancy commenced on 12 July 2017.
- The apartment the tenant rented was owned by the landlord for the duration of the tenancy but until 1 May 2023 the tenancy was managed by a third-party property manager. From 1 May 2023, the landlord took back the management of the property.
- When the landlord took over the management of the tenancy, it conducted a number of investigations into issues the tenant had been having throughout her tenancy, that it had been unaware of until it had a healthy homes assessment done on 30 May 2023.
- The 30 May 2023 healthy homes assessment report shows that there were significant issues with the premise and that it required immediate and urgent attention to the fix gaps around the ranch slider that let cold draughts into the premise, wall leaks that had caused a crack and bulge in the wall and water to leak into the lounge when there was an easterly wind prevailing. In addition, the carpet and underlay were damp from the period leaks and the house did not comply with the healthy homes heating standard.
- The tenancy commenced prior to the healthy homes’ standards coming into force. but from 1 July 2019 all residential premises had to be insulated to a minimum standard as follows: a. 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; and b. Where insulation was 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 insulation 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 premise the tenant rented was built before 1 July 2016 and there was no suggestion by either party to this proceeding that the premise did not comply with the applicable insulation standard. The issue was how wet/damp the insulation in the ceiling, walls and under floor may have been from the periodic leak in the lounge.
- The landlord was concerned at the number and complexity of the issues the 30 May 2023 healthy homes assessment report highlighted and the urgency with which the assessor required the landlord to remediate these issues.
- The landlord says it owns two of the seventeen apartments in this complex, that the building is leaky building and that the body corporate has been, and still is, in a protracted legal battle with the developers. This had meant that the body corporate has been reluctant to allow any apartment owners to undertake structural related works on their apartments until the litigation with the developer has concluded.
- The landlord proved it had been in communication with the body corporate and the body corporate’s lawyers and that the body corporate had stone wall the landlord and not kept it up to date with any progress of lack thereof in relation to potential remediation of the leaky building issues or rebuilding of the complex.
- The landlord produced evidence that showed it acknowledged the conditions the tenant was living in as soon as it became aware and that it engaged builders and electricians to try to remediate the poor living conditions the tenant had been living in for some time.
- The landlord’s builder investigated the cracked wall and leak issue on 11 July 2023 and provided a scope of work to remediate these issues on 24 July 2023. The remediation could have only ever been a temporary fix as the source of the leaks was the structural building issues that were outside of the landlord’s builder authority to address.
- The landlord considered having the crack and leak in the lounge wall fixed, as well as the wet carpet and underlay, but as long as the source of the problem was not addressed the apartment would soon experience the same leak related issues with the next heavy rain during a prevailing easterly wind.
- The tenant had also been asking about heating, as the apartment was cold and there was no source of fixed heating. The landlord promised at varying times to have a heat pump installed by March 2024, but were prohibited from doing so because of the leak-based issues with the walls making the installation unsafe and the landlord’s inability to get the necessary authority from the body corporate to allow the installation.
- The landlord was not as good at communicating the reasons why it could not install fixed heating in the time frame it had promised.
- It says it investigated other fixed sources of heating, but a wall heater was the only option, and it did not meet the heating capacity required for the room in accordance with the healthy homes heating standard. The landlord says it was reluctant to install a wall heater that was not healthy homes compliant and would not take the chill out of the lounge room.
- The landlord kept trying to find ways to improve the standard of the tenant’s living environment as best it could. It kept hitting brick walls.
- On 23 August 2023, Jason Wong went to tenant’s apartment and offered her a rent reduction to $400.00 per week from 28 August 2023 to recognise the loss of amenity, stress and inconvenience she was living with as a result of a leak that the landlord could not address and its inability to install a heat pump until the wet walls were remediated.
- They tenant accepted the reduced rent if the landlord addressed the heating issue when it could. The landlord committed to having a heat pump installed by March 2024. On that basis the tenant accepted the rent reduction and awaited the installation of the heat pump.
- The$130.00 per week rent reduction continued until the end of the tenancy (41 weeks).
- The landlord found it was still unable to install the heat pump by March 2024 and that it was not going to be able to address the leak related issues for the tenant until the body corporate’s litigation with the developers had concluded. The landlord did not clearly articulate this to the tenant, who continued to wait for and follow up the landlord about timing for the installation of the heat pump.
- On 18 March 2024, the tenant followed the landlord up about the heat pump and was told about the complexity of installing one. Specifically, that needed permission from the body corporate to run wires through the wall to install the heat pump and the body corporate would not authorise this.
- On 15 May 2024, the landlord then conveyed to the tenant it was still looking at other potential heating options.
- The next communication the tenant says she received from the landlord was on Friday 24 May 2024 at 4:46pm. It was a letter terminating her tenancy with 90 days’ notice. The reason given for the notice was that the apartment complex was not safe or healthy for any of its occupants and the landlord needed to undertake extensive alterations, refurbishment, repairs, or redevelopment of the premises that required the premise to be vacant.
- This came as a shock to the tenant as she had been living in these conditions for the majority of her tenancy.
- She says she was confused as the landlord was made aware of the extent of the repair and maintenance issues with the apartment on 30 May 2023 and that it had not met its Housing Improvement Regulations 1947 obligations to ensure the apartment was free from dampness or its s45(1)(b) of the RTA obligations to provide and maintain the premises in a reasonable state of repair for well over a year.
- The landlord says it knew it could not get the apartment to the healthy homes required standards by 1 July 2025 and it was not happy that the tenant was going to have to continue living in substandard and cold conditions for another winter when it had no ability to remediate these issues for her. It says it was its concern for her safety and wellbeing that it decided to terminate the tenancy and leave the apartment vacant until the body corporate reached a resolution about the building’s structural issues.
- The tenant considered the termination of her tenancy to be retaliatory because the termination notice came 9 days after her last follow up about the heating and there had been no change to the conditions she had lived in for well over a year under the landlord’s direct management. Breach of s45(1) obligations to the tenant
- [The tenant] claims that the landlord has breached their obligations under section 45(1)(b) and (c) of the RTA.
- Under section 45(1)(b) of the RTA, a landlord must provide and maintain the rental premise in a reasonable state of repair. This means the landlord has an obligation to investigate and repair a defect brought to its attention, within a timeframe that is reasonable in the circumstances. In Collins v Professionals Hutt City Ltd, the Wellington District Court held “what that time is depends not only on the gravity of the problem but also on the objective evidence of the attempts made by the landlord to investigate, and put right, whatever the problem might be”. 1
- There is an obligation to repair, even if the tenant has notice of the state of repair of the premises when entering a tenancy agreement.
- A tenant may give a landlord 14 days’ notice to remedy a breach of the RTA and/or any relevant enactment in relation to buildings, health and safety, but should do so in good faith and to remedy a real and significant breach 2 . However, notice from the tenant is not required if the landlord knew of the need to repair 3 or the need for repair was apparent from observation 4 .
- There is also failure to repair if the repair is ineffective, non-complaint or unsafe 5 . 1 Collins v Professionals Hutt City Ltd DC Wellington CIV-2009-085-1431, 24 February 2019 at [15]. 2 Brough v Housing NZ Ltd NZTT1848/1, 27 May 202 at [13]. 3 Berghan v Ponsonby Property Management Ltd trading as L J Hooker [2015] NZTT Manukau 2845 at [9]- [11]. 4 Barfoot & Thompson Ltd v Casey DC Auckland CIV-2005-004-1762, 7 November 2007 at [4].
- Under s45(1)(c) the landlord must also comply with any relevant enactment in relation to buildings, health and safety. This includes a requirement for the landlord to comply with s15 of the Housing Improvement Regulations 1947 (HIR) that places an obligation on a landlord to ensure the rental premise is free from dampness and s7(2)(b) of the HIR’s which requires that the kitchen in a rental premise shall have adequate means of preparing food and of cooking food, both by boiling and by baking.
- Breaching any of these obligations is an unlawful act for which a maximum award of exemplary damages up to a maximum of $7,200.00 may be awarded. See section 45(1A) and Schedule 1A Residential Tenancies Act 1986.
- General damages may also be awarded in the form or rent reductions, water rates reductions or compensation for the stress, inconvenience and loss of amenity suffered by the tenants or reimbursement for actual costs incurred by the tenant that should not have been borne by him/her/they.
- The evidence proves that the landlord, despite its best attempts to investigate and remediate the leak related and heating issues with the apartment, were unable to successfully resolves these issues. This was for reasons outside of their control, being the larger structural issues with the complex and the issues they faced at trying to get permission from the body corporate to implement even temporary fixes to urgent issues.
- I find the landlord has committed an unlawful act because it left the tenant living in unlawful living conditions, well after it became aware of how bad those conditions were. It negotiated a rent reduction to offset some of the loss of amenity, stress and inconvenience she was suffering, but found itself unable to ensure the apartment was dry and warm.
- 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.
- I am satisfied the landlord did not intentionally fail to repair and maintain the apartment. As such, it would be inappropriate to award the exemplary damages sought. In addition, the tenant agreed to continue to live in the apartment after the landlord checked whether she wanted to remain living in the substandard conditions post 27 August 2023 for reduced rent.
- I have reviewed the rent rebate provided by the landlord to compensate her for the loss of amenity, stress and inconvenience she continued to suffer by 5 Staife v Aegis Trust [2016] NZTT Auckland 3314 at [31]. choosing to remain living in the apartment. I find the tenant should have received a further rent rebate as follows: a. $439.14 for the period 1 to 30 May 2024, being $106.00 per week for 4 weeks and one day; b. $2,161.39 for the period 31 May 2023 to 27 August 2023, being $170.00 per week for 12 weeks and 5 days; and c. $1,640.00 for the period 28 August 2023 to 11 June 2024, being $40 per week for 41 weeks.
- The parties have agreed at today’s hearing that these additional rent rebates are fair and reasonable compensation for the level of loss of amenity, stress and inconvenience the tenant suffered over this period, particularly living in such cold and damp conditions in the extremely cold winter months of 2023. Retaliatory or Unlawful Notice
- On 24 May 2024 the landlord gave the tenant a notice ending the tenancy on 22 August 2024. The tenant claims the notice is retaliatory.
- For a notice to be declared retaliatory, the tenant must prove that in terminating the tenancy, the landlord was motivated wholly or partly by the tenant exercising a right under the tenancy agreement or any Act, or by any complaint against the landlord. See section 54(1) Residential Tenancies Act 1986.
- Giving a termination notice which is declared to be retaliatory is an unlawful act for which exemplary damages may be awarded, up to a maximum of $6,500.00. See section 54(2), (3) and Schedule 1A Residential Tenancies Act 1986.
- On examination of all the evidence before me today, I find the notice was not retaliatory. The landlord ended the tenancy as it did not want the tenant to continue living in unhealthy conditions that it had no ability to remedy in the foreseeable future.
- I do however find that the notice was unlawful. The landlord admitted that it knew it was not going to be able to undertake any extensive alterations, refurbishment, repairs, or redevelopment of the premises within 90 days after the termination date. It was aware at the time it gave the tenant notice that it would not even be able to take any material steps towards undertaking the required repairs and maintenance within 90 days after the termination date because it was hamstrung by the body corporate awaiting the outcome of its litigation with the developers. It had no realistic timeframe for when this litigation may end and the wider structural issue with the building addressed.
- I find that the landlord has breached its obligations under section 60AA.
- Under Section 60AA a landlord must not give a notice to terminate the tenancy or apply to the Tribunal for such an order, knowing they are not entitled to do so.
- Breaching any of these obligations without a reasonable excuse is an unlawful act for which exemplary damages may be awarded up to a maximum of $6500.00. See section 60AA and Schedule 1A Residential Tenancies Act 1986.
- The landlord admitted at today’s hearing that it did issue notice terminating the tenancy when it did not have grounds to do so, and it accepted that in doing so it had 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.
- I am satisfied it would be just to require the landlord to pay a sum of $4,500.00 in exemplary damages (roughly to thirds of the maximum available) because: a. The landlord knew it was not going to undertake the repairs and maintenance, within 90 days from the 22 August 2024, that it said it could not do with the tenant living there; b. The tenants suffered the stress and inconvenience associated with having to move, including funding her relocation costs, and having to move along way from where she works in order to secure suitable alternative accommodation; c. It is in the interests of the tenants to receive exemplary damages for the stress and inconvenience they suffer when their tenancy is unlawfully terminated; and d. It is in the public interest for landlord’s to be penalised as a disincentive to breaching their requirement to terminate tenancies in a lawful manner. Reimbursement of filing fee
- Because [the tenant] has substantially succeeded with the claim, I have reimbursed the filing fee. Name suppression
- The tenant applied for non-publication of her name and identifying details.
- The Tribunal must, on the application of a party that has wholly or substantially succeeded in proceedings, order that the party’s name or identifying particulars not be published, unless the Tribunal considers that publication is in the public interest or is justified because of the party’s conduct or any other circumstances of the case.
- The tenant has substantially succeeded in her proceedings. I do not consider publication is in the public interest or justified because of the tenants conduct or any other circumstances of the case.
- Non-publication is ordered.