Claim for Compensation and Exemplary Damages Dismissed

__________________________________________________________________________________ 5100068 1

[2025] NZTT 5100068

TENANCY TRIBUNAL AT DUNEDIN | TE TARAIPIUNARA RETIHANGA KI ŌTEPOTI

APPLICANT: [redacted]

Tenant

RESPONDENT: [redacted]

Landlord

TENANCY ADDRESS: [ADDRESS], [POSTCODE]

ORDER

1. The application by [NAME] for compensation is dismissed.

2. The application by [NAME] for compensation is dismissed.

3. The application by both tenants for exemplary damages is dismissed.

4. By way of declaration the property was not an unlawful residential tenancy, but a lawful residential tenancy with an unlawful attempted conversion.

Reasons:

5. All parties attended both hearings, the landlord’s barrister attended the second hearing.

6. On 6/12/2024 [NAME] applied for compensation of $1,000.00 for moving costs and replacement of chattels.

7. The compensation amount was amended at the original hearing to approximately $4,500.00.

8. [NAME] also sought exemplary damages of $7,000.00 for breach of healthy homes standards.

__________________________________________________________________________________ 5100068 2

9. The tenancy was for a fixed term from 9/2/2024 to 8/2/2025 at $510.00 rent per week.

[NAME] have standing to bring her application?

10. [NAME] left the premises as at 11/11/2024 due to a Family Violence Withdrawal Notice, and the tenancy was assigned to [NAME].

11. By notice dated 5/12/2024 the Dunedin City Council placed a dangerous building notice on the premises due to non-consented building work which had undermined the basement foundations.

12. The evidence supports that the work undertaken in the basement was carried out, at the request of the landlord, by the previous tenant.

13. [NAME] moved out on 5/12/2024, he reached an agreement with the landlord about compensation and the landlord refunded the bond.

14. Although not initially a party to the application [NAME] confirmed at the original hearing that he wished to be a party.

15. I consider the joint tenancy of [NAME] and [NAME] ended when she vacated the premises due to the family violence withdrawal process initiated by her.

16. [NAME] suggested part of the reason she vacated the tenancy before the end of the fixed term was because of the state of the premises, there is no objective evidence to support that this was the case.

17. The claim for compensation by [NAME] against the landlord for moving costs and replacement chattels fails because she was no longer a tenant when the tenancy abruptly ended.

Is [NAME] entitled to compensation?

18. I find the claim by [NAME] for compensation for moving costs and replacement chattels also fails.

19. The reason for this is that [NAME] and the landlord agreed in writing on 7/12/2024 on the amount of compensation to be paid as a result of the early ending of the tenancy.

20. The evidence provided by the landlord supports that he paid $1,549.35 to [NAME], which includes the $358.35 paid for the removal truck, and refunded the bond.

21. Further the landlord advised [NAME] he was no longer obligated to pay rent, despite the rent being in arrears when the tenancy ended.

22. I am persuaded by the documentation provided by the landlord that [NAME] agreed to all the terms of the compensation payment.

__________________________________________________________________________________ 5100068 3

23. Moreover, I am not satisfied by the evidence that the claim for $4,500.00 compensation for replacement chattels is reasonable.

24. No objective evidence has been provided to support the amount claimed and in particular the age of the refrigerator claimed by the tenant is not supported by the notice on the appliance.

25. In addition, and despite being advised by [NAME] that he could dispose of the goods and chattels left at the premises the landlord has confirmed that all the belongings left at the premises are still there, except for rubbish and he is happy to arrange for these to be returned.

26. If the parties are unable to agree on a timeframe for return of the goods, then the landlord may dispose of the possessions pursuant to section 62A.

Did the landlord breach his obligations?

27. The tenants claimed exemplary damages for lack of a working and unsafe oven in the premises and failure to comply with healthy homes standards.

28. In support of the claim the tenants submitted that there was no extractor fan in the kitchen, guttering overflowed and there was no moisture barrier.

29. On the other hand, the landlord provided a copy of the Healthy Homes Standards Compliance report dated 9/10/2024.

30. The landlord submitted that after an inspection on 7/3/2024 all work had been completed except for the draught excluders which [NAME] had indicated he would undertake.

31. Following a later inspection the landlord suggested that when he discovered the tenant had not completed the work, he had a professional company do so which happened on 20/9/2024.

32. Further the landlord submitted that, although he considered the oven was in working order, he replaced it on 23/2/2024.

33. Under section 45, a landlord must, among other matters, provide and maintain the premises in a reasonable state of repair and comply with any relevant enactment in relation to buildings, health and safety.

34. Section 45(1)(bb) requires compliance with the Residential Tenancies (Healthy Homes Standards) 2019 (HHS). [NAME] and [NAME] considers that the landlord has failed to comply with the HHS draught stopping standard.

35. Breaching any of these obligations is an unlawful act for which exemplary damages may be awarded up to a maximum of $7,200.00. See section 45(1A) and Schedule 1A Residential Tenancies Act 1986.

__________________________________________________________________________________ 5100068 4

36. Compliance dates for the HHS vary depending on the tenancy:

a. For private rentals

i. If the tenancy commenced between 1 July 2021 and before 28 August 2022, the rental must comply within 90 days of the commencement of any new or renewed tenancy; or

ii. If the tenancy commenced between 28 August 2022 but before 3 March 2025, the rental must comply within 120 days of the commencement of any new or renewed tenancy.

iii. All private rentals must comply by 1 July 2025.

37. As the tenancy began on 9/2/2024 the compliance date for HHS compliance for this tenancy would have been 8/6/2024.

38. 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.

39. There is no dispute that the draught stopping was not completed until after the required compliance date.

40. I find the landlord has committed an unlawful act.

Was the property an unlawful residential tenancy?

41. The tenants submitted that the house had been “condemned” by the Dunedin City Council ([NAME]) and as such [NAME] had been “forced” to move out before the end of the tenancy.

42. In support of their claim for a refund of rent the tenants provided a copy of the [NAME] building inspectors investigation report dated 5/12/2024.

43. The report suggested that due to removal of clay from the basement “Several of the clay stumps are showing signs of cracking”. The [NAME] issued an immediate Dangerous Building Notice for the premises.

44. In response, the landlord sought an opinion from a structural engineer and provided a copy of his report dated 2/5/2025.

45. The engineer gave evidence, via telephone, of his site visit to the premises with the [NAME] building inspector and opined that he did not believe the Dangerous Building Notice was necessary.

46. Rather the engineer suggested that a Notice to Fix was more appropriate to allow the landlord to undertake remedial work in order to obtain a certificate of acceptance for the excavation work.

47. The engineer noted that:

__________________________________________________________________________________ 5100068 5

“The excavations had not undermined the perimeter foundations, the gravity load bearing was unaffected. The internal pile gravity load bearing had also not been compromised. It was solely the soil lateral capacity that had been compromised.”

48. In addition, the engineer confirmed that during the site inspection he did not notice any movement in the upstairs floors and all the piles were intact.

Law

49. There is extensive jurisprudence as to what constitutes an unlawful residential premise.

50. Section 77(2)(ac) sets out that the Tribunal has jurisdiction to determine whether any premises are, or were at any material time, unlawful residential tenancies as defined in section 78A(2)

51. Under section 78A(2) “unlawful residential premises” are defined as residential premises that are used for occupation for a person for 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)… has caused the occupation by that person to be unlawful or has contributed to that unlawful occupation.

52. Under section 36 a landlord must take all reasonable steps to ensure at the beginning of the tenancy there is no legal impediment to occupation of the premises by the tenant.

53. Section 45(1)(c) provides, among other matters, that a landlord must comply with all requirements in respect of buildings, health, and safety under any enactment applying to the premises.

54. Residential premises are defined in section 2 as any premises used or intended for occupation by any person as a place of residence, whether or not that occupation or intended occupation for residential purposes is or would be unlawful.

55. The definition of premises includes, among other things, any part of any premises.

__________________________________________________________________________________ 5100068 6

Discussion

56. When considering unlawful residential premises, the question is whether the premises can be lawfully occupied either generally or for a particular residential purpose for which the tenant occupied it.

57. In addition, the Tribunal must look at whether the landlord failed to comply with sections 36 or 45(1)(c) which caused or contributed to the unlawfulness of occupation.

58. Section 40 of the Building Act 2004 provides that a household unit, being a building intended for residential occupation, must have a building consent and be certified as being compliant by having a code compliance certificate.

59. In cases where the Local Authority has advised that the whole premises, not just part, had not been consented for residential purposes the Tribunal has found the premises were unlawful residential tenancies. These premises, such as converted garages or sleepouts were self-contained and exclusively the subject of a tenancy agreement and were unlawful residential premises.

60. However, this is not the case here where the tenants rented a lawful residential premise where some unlawful excavation work had been undertaken to convert the basement to a bedroom .

61. Put another way the excavation of the basement into a bedroom without the appropriate consent does not make the whole premise an unlawful residential premise, but rather a lawful residential premise, with an attempted unlawful conversion.

62. The public policy behind section 78A was to discourage landlords from renting out properties that were unconsented or unlawful and had therefore never been subject to meeting the legal requirements to ensure their safe and healthy occupation by tenants.

63. In tenanting a property that cannot be lawfully occupied for residential purposes a landlord is not only profiting from illegal conduct but is potentially placing a tenant’s health and safety at risk.

64. It was not aimed at a regulatory failure of a premise that is otherwise a lawful residential premise.

65. However, this does not mean a landlord can escape liability for renting unconsented premises. Rather this failure is covered by sections 45 and 36.

Should compensation be awarded for breaches of the landlord’s obligations and loss of amenity?

66. The landlord is in breach of section 45(1)(c) because he has not complied with all enactments that apply to the premises, the Building Act 2004 in particular.

__________________________________________________________________________________ 5100068 7

67. Section 36 requires a landlord to take all reasonable steps to ensure, at the commencement of the tenancy, there is no legal impediment to the occupation of the premises for residential purposes.

68. The evidence supports that the landlord knew there was no consent for the excavation of the basement for conversion as a bedroom.

69. The result of the excavation led to the abrupt ending of the tenancy after the [NAME] issued the Dangerous Building Act notice.

70. In those circumstances I consider the lack of consent was a lawful impediment to the tenant occupying the premises from the beginning of the tenancy.

71. When the Tribunal declares residential premises are unlawful it may order the return of all rent paid by a tenant, although it may deduct an amount from that sum if in the special circumstances of the case it would be fair to do so.

72. The landlord relied on section 121 of the Building Act 2004 and the engineer’s report and submitted that the premises were not a dangerous building.

73. In particular the suggestion from the engineer that the only possibility of damage would arise from a seismic event, that is an earthquake.

74. Despite the breaches of sections 36 and 45(1)(c) I consider there are special circumstances in this case not to refund any rent.

75. The reasons for this are because of the report of the engineer that he did not believe the building was dangerous and the suggestion that the [NAME] only maintained the Dangerous Building Notice for administrative reasons to allow the landlord to immediately remedy the situation.

76. In addition, the landlord took immediate and reasonable steps to remedy any effect on the remaining tenant, [NAME], by coming to an agreed settlement, which included moving costs, arrears, and confirmation there were no ongoing obligations.

Should exemplary damages be awarded?

77. As the landlord has committed an unlawful act by failing to comply with all Healthy Homes Standards within the required timeframe I must consider the issue of exemplary damages.

78. 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.

79. Exemplary damages under the Act are different from compensation. The provision of such damages is designed to punish and deter; Attorney-General

__________________________________________________________________________________ 5100068 8

(Commissioner of Crown Lands) v [COMPANY] (HC CIV 2010-412-134).

80. In making an award of exemplary damages I need to consider the four matters set out in section 109(3).

81. First, I need to consider the intent of the landlord.

82. For intent there must be actual knowledge of the breach. In a recent case the District Court confirmed that intentional means “in the sense of deliberately and in full knowledge” [NAME] Zealand Limited TA Strata Property Management v Sweeney and Sundahl [2021] NZDC 16182.

83. I consider an inference can be drawn from the evidence that the landlord did not intentionally fail to comply with the healthy homes standards for ventilation.

84. While the landlord knew about the requirements, I am persuaded that he genuinely relied on the undertaking by the tenants to do the work.

85. Section 49 provides that where a party to a tenancy agreement breaches any of the provisions of the agreement or Act, the other party must take all reasonable steps to limit the damage or loss arising from that breach.

86. The evidence supports that the tenants knew the draughts needed attention, agreed to do the necessary work but failed to do so.

87. The failure of the tenants is a breach of their obligation to mitigate loss, and it would be unconscionable to award exemplary damages in such circumstances.

88. No filing fee is awarded because the tenants have been unsuccessful with their claim.

89. Suppression is not available to the tenants under section 95A because they did not succeed with the proceedings.

[NAME]

21 May 2025

__________________________________________________________________________________ 5100068 9

Please read carefully: Visit justice.govt.nz/tribunals/tenancy/rehearings-appeals for more information on rehearings and appeals.

Rehearings You can apply for a rehearing if you believe that a substantial wrong or miscarriage of justice has happened. For example: • you did not get the letter telling you the date of the hearing, or • the adjudicator improperly admitted or rejected evidence, or • new evidence, relating to the original application, has become available.

You must give reasons and evidence to support your application for a rehearing. A rehearing will not be granted just because you disagree with the decision. You must apply within five working days of the decision using the Application for Rehearing form: justice.govt.nz/assets/Documents/Forms/TT-Application-for-rehearing.pdf

Right of Appeal Both the landlord and the tenant can file an appeal. You should file your appeal at the District Court where the original hearing took place. The cost for an appeal is $260. You must apply within 10 working days after the decision is issued using this Appeal to the District Court form: justice.govt.nz/tribunals/tenancy/rehearings-appeals

Grounds for an appeal You can appeal if you think the decision was wrong, but not because you don’t like the decision. For some cases, there’ll be no right to appeal. For example, you can’t appeal: • against an interim order • a final order for the payment of less than $1000 • a final order to undertake work worth less than $1000.

Enforcement Where the Tribunal made an order about money or property this is called a civil debt. The Ministry of Justice Collections Team can assist with enforcing civil debt. You can contact the collections team on [PHONE] or go to justice.govt.nz/fines/civil-debt for forms and information.

Notice to a party ordered to pay money or vacate premises, etc. Failure to comply with any order may result in substantial additional costs for enforcement. It may also involve being ordered to appear in the District Court for an examination of your means or seizure of your property.

If you require further help or information regarding this matter, visit tenancy.govt.nz/disputes/enforcing- decisions or phone Tenancy Services on [PHONE].

Mēna ka hiahia koe ki ētahi atu awhina, kōrero ranei mo tēnei take, haere ki tenei ipurangi tenancy.govt.nz/disputes/enforcing-decisions, waea atu ki Ratonga Takirua ma runga [PHONE] ranei.

https://www.justice.govt.nz/tribunals/tenancy/rehearings-appeals https://www.justice.govt.nz/assets/Documents/Forms/TT-Application-for-rehearing.pdf https://www.justice.govt.nz/tribunals/tenancy/rehearings-appeals/ https://www.justice.govt.nz/fines/about-civil-debt/ https://www.tenancy.govt.nz/disputes/enforcing-decisions https://www.tenancy.govt.nz/disputes/enforcing-decisions http://www.tenancy.govt.nz/disputes/enforcing-decisions/

__________________________________________________________________________________ 5100068 10

A manaomia nisi faamatalaga poo se fesoasoani, e uiga i lau mataupu, asiasi ifo le matou aupega tafailagi: tenancy.govt.nz/disputes/enforcing-decisions, pe fesootai mai le Tenancy Services i le numera [PHONE].

Reasons: