Published tribunal order
Tenancy Tribunal case 4917149 — Rent arrears
Decided 18 Oct 2024 · Published 18 Oct 2024 · Application 4917149
- Rent arrears
- Exemplary damages
- Leaks
Party names are redacted in the official published order.
Order
- Te Aomarie May Arani, Troy Arani, Shanan Arani, and Tsar Melua Kearns must pay [the landlord] $5,524.67 immediately, being rent arrears to 5 June 2024.
- Te Aomarie May Arani, Troy Arani, and Tsar Melua Kearns must pay [the landlord] $4,728.21 immediately, being rent arrears from 6 June 2024 to 11 August 2024 of $3,638.92, water rates of $1,068.85, and the application filing fee of $20.44.
- The tenant application 4917149 is dismissed.
- The previous order dated 5 August 2024 is replaced by this order. No stay on proceedings remain.
Reasons
- Both parties attended the hearing. Ms Tsar Kearns represented the tenants. Two calls to Te Aomarie Arani went unanswered. Ms Kearns also unsuccessfully tried to contact her. An email from Ms Arani was received after the hearing had concluded, noting the missed calls. Ms Kearns will be able to update her on the hearing.
- The tenants had applied for market rent adjustment and compensation. Exemplary damages were also sought. The tenant application was in the names of Tsar Kearns and Te Aomarie Arani only.
- The landlord had applied for rent arrears and water rates against all four tenants and has provided rent records which prove the amount owing. A prior order dated 5 August 2024 ended the tenancy on 11 August 2024 and ordered rent arrears (less the bond) but placed a stay on any enforcement of the monetary order in favour of the landlord until this continuation hearing concluded. This hearing was delayed until now at the request of the landlord.
- The landlord withdrew all other claims at this hearing. This was appropriate as the other claims are significant and the details and sizable evidence bundle were received later than timetabled in the previous adjourning order. There will not have been enough time for the tenants to review and prepare any defence to the claims. The landlord preferred to conclude this application regarding rent arrears and water rates and any further landlord claims will be made via a fresh application.
- For the benefit of both parties, a party who brings a claim to the Tenancy Tribunal must prove on the balance of probabilities (more likely than not) that their version of events took place. Contemporaneous documents such as emails, texts and photographs are often helpful in making factual findings, especially where facts are disputed or there are gaps in the recollection of the parties.
- The issue of evidence at Tenancy Tribunal hearings was considered by the District Court in Kaipo v Clarke & McCarthy (DC) TT233/02. Judge Mather stated: “...[the applicant] needs to be reminded that like anyone who brings an application before a Tribunal or a Court, it is incumbent upon the applicant to provide the evidence necessary to prove the case. If the applicant fails to do that, then their application will be dismissed whether it has merit or not because it is up to the applicant to provide the necessary evidence. It is not up to the other parties and it is certainly not up to the Tribunal to extract evidence.”
- In the decision that follows I may not have referred to all the oral testimony and other evidence presented, but the parties should know it has been considered.
- This tenancy commenced 3 November 2923. The landlord as owner had previously lived at the premises for some five years. Tenant application Market rent
- The tenant has applied for a market rent assessment, seeking $14,000 refunded as overpaid rent.
- Sections 25(1) and (3) Residential Tenancies Act 1986 provide: (1) On an application made to it at any time by the tenant, the Tribunal may, in accordance with the succeeding provisions of this section, 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. (3) For the purposes of this Act, the market rent for any tenancy shall be the rent that, without regard to the personal circumstances of the landlord or the tenant, a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy, taking into consideration the general level of rents (other than income-related rents within the meaning of section 2(1) of the Public and Community Housing Management Act 1992) for comparable tenancies of comparable premises in the locality or in similar localities and such other matters as the Tribunal considers relevant.
- The tenant must prove on the balance of probabilities that the rent exceeds market rent by a “substantial amount”. The term 'substantial' is not defined in the RTA, but it is the opposite of ‘minor’ or ‘insignificant’. Some earlier Tribunal cases suggested a 'rule of thumb' of 10% over market rent. However, a rule of thumb based on a specific percentage has no legal status and is not appropriate where rents rise at a rate significantly above income inflation.
- The test for market rent is the amount “a willing landlord might reasonably expect to receive and a willing tenant might reasonably expect to pay for the tenancy”.
- The concept of the 'market' is constrained by the requirement that both parties be 'willing', and that the rent meets their 'reasonable' expectations. These terms are not defined by the Act. The Oxford English dictionary defines willing as: "having a ready will; disposed to consent or comply; ready to do (what is specified or implied) without reluctance"; and reasonable as "having sound judgement; sensible ... not asking for too much ... not extravagant or excessive; moderate".
- The factors the Tribunal may have regard to are “the general level of rents ... for comparable tenancies of comparable premises in the locality or in similar localities and such other matters as the Tribunal considers relevant”.
- The evidence for comparable rents is usually based on advertisements for similar premises in the locality. This evidence has its limitations. Although advertisements usually list the essential features of the property advertised, there is often limited qualitative information available for comparison. Also, advertisements only cover houses currently on the market and do not necessarily reflect the overall level of rents charged for existing similar tenancies in the area.
- It is also common for parties to refer to the 'market rent' statistics published by Tenancy Services. These statistics cover the rents charged for tenancies where bonds have been lodged over the preceding 6 months. The statistics include median rent as well as upper and lower quartile.
- The Tribunal may also consider “such other matters as [it] considers relevant” to market rent. In Housing New Zealand v Hobman (DC Lower Hutt, TT89/97, 27 November 1997) the Court said the other factors to be considered must be of the same kind as the preceding specified factors. It is arguable however that the term ‘other matters’ is broad enough to cover any anything relevant to the ‘reasonable’ expectations of a ‘willing’ landlord or tenant.
- Section 25(4) RTA 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. The order may last for up to 6 months in the case of a periodic tenancy, or for such shorter period the Tribunal specifies.
- The rent was $1450.00 per week. No comparative data was provided by the tenants but assessing the latest rent statistics provided by Tenancy Services revels:
- Based on the photographs available it would appear an assessment of this property as being around the median rent would be appropriate.
- The tenants have two challenges in this claim, the first is the lack of evidence of rent being excessive to usurp the above data, the second is their application was lodged 21 June 2024 and any order would only be effective from that date at the earliest. Significant rent arrears already existed at that time.
- I consider it more likely the tenants actually sought compensation for landlord failures to maintain.
- It is well settled that, the landlord’s obligation under s 45 RTA is to investigate and repair a defect brought to its attention within a timeframe which is reasonable in the circumstances, and as to what that time is, depends on the Redacted - redacted House SizeActive bonds Lower Quartile Median Rent Upper Quartile 5+ bedrooms24$1,000$1,520$1,658 gravity of the problem but also on the objective attempts made by the landlord to investigate, and put right, whatever the problem might be.
- Furthermore, a tenant has a statutory duty to advise of any defects under section 40(1)(d) RTA. Therefore, a tenant should promptly notify a landlord of any defects and a landlord should be given a reasonable opportunity to remedy the defect before being liable for any failure to do so. This requirement has some bearing in this matter.
- The tenant application requested the following maintenance. I have copied below each the landlord’s written response.
- upgrade fire alarms.
- have gas fire checked and provide written instructions of use.
- repair floor to ceiling large broken window in dining area
- repair or safely cover up power points and light fittings
- secure downstairs backdoor to reduce flimsiness
- repair leaking tap in kitchen
- A Healthy Home Report dated 27 July 2024 was provided by the tenants. The landlord had responded in detailed annotations to the report and with some photos of her own. The actual report was instigated by a third-party, Beth and David Reid. Ms Kearns advised the tenants had met them through a personal engagement and they subsequently provided encouragement to the tenants to address a number of claimed deficiencies at the premises. The HHS Report was commissioned and prepared for David Reid. Such a report is more typically commissioned for the benefit of a landlord to ensure relevant compliance, ideally before a tenancy commences. A number of issues raised in the report were disputed by the landlord as being a reality of the tenant behaviours or actions rather than any landlord failure. The inspection occurred almost nine months into the tenancy.
- Concerningly, Ms Kearns said the tenants were encouraged by the Reids to stop paying rent due the problems cited. This they did, hence the significant rent arrears and subsequent financial stress for the landlord. Ms Kearns said contact with them has since ceased, although she said they are seeking some recovery from the tenants for costs they incurred.
- Given the timing of the report late in the tenancy, and considering the responses of the landlord, I do not find the report was conclusive on any significant failure to maintain that should attract compensation. Further, there was no written evidence of timely tenant notice that would satisfy me that the landlord had been appropriately notified of legitimate maintenance issues as they arose and that should have been more promptly attended to.
- The involvement of the local council was instigated by Beth Reid. In a series of emails provided the property was discussed as concerns regarding the property condition were raised. An inspection was conducted on 25 June 2024. The last email on the subject was sent by Hilgard Muller (council officer) to the landlord on 5 August 2024. They stated:
- I do not find the tenants have established sufficient grounds for compensation for failure to maintain.
- Section 85(2) RTA provides that the Tribunal shall determine each dispute according to the general principles of law relating to the matter and the substantial merits and justice of the case, but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities. I have also considered other aspects of the tenancy, as evidenced, in establishing an equitable threshold for maintenance before any compensation might be awarded. Bond lodgement
- Te Aomarie May Arani and Tsar Melua Kearns claims the landlord has not lodged the bond with the Bond Centre within the required time.
- A landlord must send any bond payment to the Bond Centre within 23 working days after the payment is received. See section 19(1) Residential Tenancies Act 1986.
- Breaching this obligation is an unlawful act for which the Tribunal may award exemplary damages up to a maximum of $1,500.00. See section 19(2) and Schedule 1A Residential Tenancies Act 1986.
- A bond is the tenants’ money and must be lodged with the Bond Centre within the statutory time limit to protect the tenants’ interests. Lodging a bond is not a conditional obligation but a mandatory one and it is in the public interest that landlords fulfil their obligations under the Act.
- The landlord did not lodge the bond. I find she committed an unlawful act.
- The failure to lodge the bond must be intentional for exemplary damages to be awarded. Therefore, damages will not be awarded where non-lodgement is a genuine oversight, rather than an intentional act (Chief Executive for Housing New Zealand v Walls [1993] NZTT Auckland 548/92).
- In Birch v Otautahi Community Housing Trust [2020] NZDC 17667 the Court said this: In considering whether an order of exemplary damages should be made, the Tribunal must first look at the intention of the person against whom the order is sought. As the Tribunal in Chief Executive, ex parte Edmondson v Walls TT548/92 said: Before an award of exemplary damages can be made the threshold question for the tribunal to answer is whether the unlawful act has been committed ‘intentionally’. In my view negligence does not equate to intention, and for the tribunal to be satisfied that a party has ‘intentionally’ committed an unlawful act evidence must exist which would justify the Tribunal in coming to the conclusion that the party committing the unlawful act has in fact turned his or her mind to the act and deliberately set about to commit it.
- 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 have considered the reasons for not lodging the bond as provided by the landlord. I accept she had sent the bond lodgement form to the tenants but it was not returned. The subsequent holiday period may have impacted on her failure to later chase this up and it was negligent not to do so. It is also clear in messages provided that the tenants requested the landlord use some of the bond for rent during the cash-constrained holiday period. Having considered the background and operation of this tenancy I do not consider any landlord intention is established; therefore, no exemplary damages are awarded in this instance. Landlord application Rent arrears
- The rent arrears were established in the previous order of 5 August 2024 as $14,963.59. This was reduced by $5,800 being the bond retained by the landlord, meaning a final rent arrears amount of $9,163.59 was ordered. That monetary order is superseded by this order of the same amount. This order, however, apportions the rent arrears liability into two groupings. This reflects the exit of one tenant before the end of the tenancy. The first period calculated includes rent in lieu of notice for that tenant. Water rates
- The landlord provided water invoices and a summary that established the water rates outstanding as $1,068.85. Bases on the plumber’s report regarding a possible leak, I do not find any grounds to reduce this amount due to unrepaired leaks. Filing fee
- Because the landlord has substantially succeeded with the claim, I have reimbursed the filing fee. Suppression
- Section 95A RTA states regarding suppression orders that 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 landlord requested suppression in her application. As she has been substantially successful, suppression is ordered.