Tenant Entitled to Sublet Under RTA - Tenancy Tribunal Decision

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[2025] NZTT 4642550, 5153395

TENANCY TRIBUNAL AT HAMILTON | TE TARAIPIUNARA RETIHANGA KI KIRIKIRIROA

APPLICANT: [redacted]

Tenant

RESPONDENT: [redacted] [NAME] of [COMPANY], [NAME]

[COMPANY]

TENANCY ADDRESS: 27/27A/[ADDRESS], Tamahere, RD 3, Hamilton 3283

ORDER

1. The Tribunal makes the following declarations:

a) All the property/premises including the cottage, main house, and flat referred to in the Licence to Occupy (LTO) dated 29 April 2021 are residential premises for the purposes of the Residential Tenancies Act 1986 (RTA).

b) The LTO is a residential tenancy agreement to which the RTA applies.

c) [NAME] is entitled to sublet any or all the houses, subject to the [COMPANY]’s consent (consent not to be unreasonably withheld) and to collect and keep the full gross rental.

d) [NAME]’s tenancy is subject to the sub-tenancy of the flat already in existence as of 17 March 2022 (the date of [NAME]’s death) with [NAME] having the benefit of that tenancy as sub-[COMPANY].

e) [NAME] as the tenant is not liable for the cost of repairs and maintenance including water damaged carpet in the flat and main house, the repair of a leaking tap and a crack in the shower in the main house.

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f) [NAME] as the tenant has no liability for rates or other general outgoings such as insurance despite the LTO stating that she does.

2. The tenant’s application for the following orders is dismissed:

a) That the [COMPANY] immediately provides [NAME] all tenancy agreements and rental records entered after 17 March 2022 by the [NAME] or by [NAME] together with evidence of the payments.

b) That all rent collected in respect of the flat be paid to [NAME] (less any proper charges and deductions made).

c) That [NAME] receive any other rental income received from the premises from 17 March 2022

d) Damages in the form of lost rental for the main house at the rate of $850.00 per week.

e) Exemplary damages for the [COMPANY] demanding the tenant pay rates and other outgoings – a prohibited transaction.

f) Compensation and /or exemplary damages for the [COMPANY]’s breaches of the tenant’s quiet enjoyment of the premises.

g) Interest under the Interest on Money Claims Act 2016.

3. The [NAME]’ application is dismissed.

Reasons:

1. I heard these applications on 13 February 2025. [NAME] attended as did [NAME] for [COMPANY] ([NAME]). [NAME], widow of the settlor of [COMPANY] attended with her counsel [NAME]. I adjourned the hearing part-heard for counsel for the tenant to provide further submissions addressing the orders sought and for the respondent [NAME] to reply.

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2. I received submissions and reply submissions according to the time table I set. The hearing was to conclude on 7 March 2025, but I extended the timetable for submissions and further evidence. The hearing concluded on 24 March 2025.

Background

3. The hearing I held was by way of rehearing ordered by His Honour Judge Spiller dated 8 October 20241.

4. The issue determined by the Court was whether an agreement between [NAME] and the [NAME] of [COMPANY] (trust deed dated 8 June 2008) described as a LTO in respect of the property at 27/27A/[ADDRESS], Tamahere, Hamilton owned by the Trust was a residential tenancy agreement under the RTA. [ADDRESS] held that it was.

5. The issues raised by these applications go beyond the rights and obligations of the parties under the RTA. There are broader issues about the interpretation of the deed of trust itself and the Contracting Out agreement under the Property (Relationships) Act 1976 that [NAME] entered on 29 April 2021 the same day as the LTO was entered.

6. I began the hearing by noting these complexities. I invited submissions as to whether the Tribunal should transfer the applications to the District (or High) Court under sections 83(2) or 103 RTA. The parties preferred to remain within the Tribunal’s jurisdiction but accepted the limitations in terms of the orders the Tribunal can make on the facts.

7. The Tribunal has no jurisdiction to make orders in relation to the interpretation of deed of trust, nor the interpretation of the Contracting Out agreement. Its jurisdiction here is limited to the LTO which for the purposes of the RTA is the residential tenancy agreement. In ordering a rehearing, Judge Spiller has confirmed that the Tribunal has jurisdiction. Inherent in that finding is that there is a residential tenancy agreement between the parties.

The orders sought by the tenant

8. The tenant seeks the following declarations:

• That all the property/premises including the cottage, main house, and flat referred to in the LTO dated 29 April 2021 are residential premises.

• The LTO is a residential tenancy agreement to which the RTA applies.

1 see [NAME] v [COMPANY] and [NAME], as [NAME] of [COMPANY], and [NAME] [2024] NZCS 24220

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• That [NAME] is entitled to sublet any or all the houses, subject to the [COMPANY]’s consent (consent not to be unreasonably withheld) and to collect and keep the full gross rental.

• That [NAME]’s tenancy is subject to the sub-tenancy of the flat already in existence as of 17 March 2022 (the date of [NAME]’s death) with [NAME] having the benefit of that tenancy as sub-[COMPANY].

• That [NAME] as tenant is not liable for the cost of repairs and maintenance including water damaged carpet in the flat and main house, the repair of a leaking tap and a crack in the shower in the main house.

• A declaration that the tenant has no liability for rates or other general outgoings.

9. The tenant seeks the following orders:

• That the [COMPANY] immediately provides [NAME] all tenancy agreements and rental records entered after 17 March 2022 by the [NAME] or by [NAME] together with evidence of the payments.

• That all rent collected in respect of the flat be paid to [NAME] (less any proper charges and deductions made).

• Any other rental income received from the premises from 17 March 2022.

• Damages in the form of lost rental for the main house at the rate of $850.00 per week.

• Exemplary damages for the [COMPANY] demanding the tenant pay rates and other outgoings – a prohibited transaction.

• Compensation and /or exemplary damages for the [COMPANY]’s breaches of the tenant’s quiet enjoyment of the premises.

• Interest under the Interest on Money Claims Act 2016.

• Costs.

10. After the hearing both parties provided further evidence and submissions. I have considered everything placed before the Tribunal even if I do not specifically refer to it.

Relevant legal considerations

11. The following sections of the RTA are directly applicable

45 [COMPANY]’s responsibilities

(1) The [COMPANY] shall—

(a) provide the premises in a reasonable state of cleanliness; and

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(b) provide and maintain the premises in a reasonable state of repair having regard to the age and character of the premises and the period during which the premises are likely to remain habitable and available for residential purposes; and (ba) comply with all requirements in respect of smoke alarms imposed on the [COMPANY] by regulations made under section 138A; and

(bb) comply with the healthy homes standards; and (bc) [Repealed]

(bd) comply with all requirements in respect of contaminants imposed on the [COMPANY] by regulations made under section 138C(3)(c); and

(c) comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises; and

(d) if the premises do not have a reticulated water supply, provide adequate means for the collection and storage of water; and

(e) compensate the tenant for any reasonable expenses incurred by the tenant in repairing the premises where—

(i) the state of disrepair has arisen otherwise than as a result of a breach of the tenancy agreement by the tenant and is likely to cause injury to persons or property or is otherwise serious and urgent; and

(ii) the tenant has given the [COMPANY] notice of the state of disrepair or made a reasonable attempt to do so; and

(f) take all reasonable steps to ensure that none of the [COMPANY]’s other tenants causes or permits any interference with the reasonable peace, comfort, or privacy of the tenant in the use of the premises.

40 Tenant’s responsibilities

(1) The tenant shall—

(a) pay the rent as and when it is due and payable under the tenancy agreement; and

(b) ensure that the premises are occupied principally for residential purposes; and

(c) keep the premises reasonably clean and reasonably tidy; and (ca) comply with all requirements in respect of smoke alarms imposed on the tenant by regulations made under section 138A; and

(d) notify the [COMPANY], as soon as possible after discovery, of any damage to the premises, or of the need for any repairs; and

(e) on the termination of the tenancy,—

(i) quit the premises; and

(ii) remove all his or her goods from the premises; and

(iii) leave the premises in a reasonably clean and reasonably tidy condition, and remove or arrange for the removal from the premises of all rubbish; and

(iv) return to the [COMPANY] all keys, and security or pass cards or other such devices, provided by the [COMPANY] for the use of the tenant; and

https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6866584#DLM6866584 https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS215508#LMS215508 https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6866584#DLM6866584

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(v) leave in or at the premises all other chattels provided by the [COMPANY] for the use of the tenant.

(2) The tenant shall not—

(a) intentionally or carelessly damage, or permit any other person to damage, the premises; or (ab) cause or permit any interference with, or render inoperative, any means of escape from fire within the meaning of the Building Act 2004; or

(b) use the premises, or permit the premises to be used, for any unlawful purpose; or

(c) cause or permit any interference with the reasonable peace, comfort, or privacy of any of the [COMPANY]’s other tenants in the use of the premises occupied by those other tenants, or with the reasonable peace, comfort, or privacy of any other person residing in the neighbourhood. (3) Where the tenancy agreement specifies a maximum number of persons that may ordinarily reside in the premises during the tenancy, the tenant shall ensure that no more than that number ordinarily reside in the premises at any time during the tenancy.

12. Section 85 RTA is important in this case for reasons I will explain. So, I will set it out in full:

85 Manner in which jurisdiction is to be exercised (1) Subject to the provisions of this Act and of any regulations made under this Act, the Tribunal shall exercise its jurisdiction in a manner that is most likely to ensure the fair and expeditious resolution of disputes between landlords and tenants of residential premises to which this Act applies.

(2) The Tribunal shall determine each dispute according to the general principles of the 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.

Compensation and exemplary damages

13. The Tribunal may award compensation to a tenant for losses arising from a proven breach or breaches by the [COMPANY] of their statutory responsibilities. Compensation is generally awarded for actual losses and sometimes for less tangible effects of proven breaches such as a loss of enjoyment of the tenancy and the accompanying stress and anxiety.

14. In Birch v Otautahi Community Housing Trust2 the District Court confirmed that the Tribunal must consider the following factors when deciding to award compensation:

2 [2020] NZDC 17667

https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM306035

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• The nature of the breach; • The duration of the breach; and • The effect of the breach on the party.

15. Exemplary damages are different. They are designed to punish and to deter. They are like a fine.

16. Exemplary damages are awarded at the Tribunal’s discretion when one party has proved that the other party has committed a defined unlawful act. If that is proven, and before the Tribunal may award exemplary damages, it must take account of the factors set out in section 109 RTA.

17. In Birch 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.

If the Tribunal considers that the person against whom the order is sought has committed the unlawful act intentionally, the Tribunal must then consider whether it would be just to require that person to pay exemplary damages, taking into account:

(a) The intention of the person (b) The effect of the unlawful act; (c) The interests of the party against whom the unlawful act was committed; and (d) The public interest.

Other considerations

18. When the Tribunal makes decisions, it is charged with a significant responsibility. The decisions it makes affect people’s lives directly both financially and emotionally.

19. While the Tribunal is principally guided by case law, it can look more widely for guidance on principles relevant to the decision-making process. Important too is that the Tribunal is not a de facto Court of general civil jurisdiction. It has its own jurisprudence.

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20. In 2024, [NAME] (now Associate [NAME]) published his book Logic in the Wild.3 He explains how logic informs reasoning across science, religion, and, for the present purposes, law. He explains how logic applies to address (and resolve) conflict in thought and action.

21. Work such as his is important because it can guide decision makers towards making just and fair decisions. He explains a form of logic known as ceteris parabus logic. Ceteris parabus means ‘all things being equal’.

22. In the matters before me, the tenant’s submissions are based on this kind of logic. Her argument goes something like this. The RTA provides sanctions for certain actions by a [COMPANY]. The [COMPANY] committed those actions against her as a tenant. Therefore, the [COMPANY] (the [NAME] of the Trust) should be sanctioned.

23. While logical, the enquiry is not that simple. What if all things are not equal? What if there are other relevant considerations that disrupt that kind of logical analysis?

24. The RTA recognises that this kind of logic might not always lead to a just outcome. That is why I set out section 85 RTA in full. That section directs the Tribunal to consider the substantive merits and justice of the case, to ensure the fair resolution of the dispute.

Discussion

25. As I observed at the hearing, this case involves competing claims (and emotions) as between the late [NAME]’s widow and his son, each of whom has suffered a bereavement, but each of whom has separate interests.

26. [NAME] has been and are a trustee up to the date of the hearing, [NAME] informed me that [NAME] had agreed to the company retiring as a trustee and intended to sign the necessary documents to give effect to the retirement of the company as co-trustee on the day of the hearing.

27. This order has named both [NAME] and [NAME] as [NAME] to reflect the legal position as at the date of hearing. Probably (if the deed recording the retirement of [NAME] as trustee has been signed as was suggested) the order will have little or no effect on [NAME] as trustee. But it must be and is included as a party.

28. The [COMPANY]’s cross application cannot succeed. [NAME] confirmed that [NAME] as trustee did not support or agree with the application. [NAME] accepts that he cannot act alone when there are joint [NAME]. He noted that the issues he

3 McGill-Queen’s University Press.

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wanted addressed would essentially be addressed by the Tribunal’s finding on the tenant’s application. I agree with that.

29. For completeness, I dismiss the [COMPANY]’s application for orders against [NAME].

30. So then, what of [NAME]’s application as a tenant under the LTO that the District Court has determined is a residential tenancy agreement between her as tenant and the [NAME] of the Trust as [COMPANY]?

31. The only orders that the Tribunal can, or will, make are by way of the declarations [NAME] seeks, though one is restricted. That is the declaration that [NAME]’s tenancy is subject to the sub-tenancy of the flat already in existence as of 17 March 2022 (the date of [NAME]’s death) with [NAME] having the benefit of that tenancy as sub-[COMPANY]. [NAME] will have the benefit of that tenancy as sub-[COMPANY] (as the LTO provides) for reasons described below, the Tribunal is not prepared to make a retrospective order.

32. The declarations are that:

• All the property/premises including the cottage, main house, and flat referred to in the LTO dated 29 April 2021 are residential premises. Why? Because that is the effect of Judge Spiller’s order.

• The LTO is a residential tenancy agreement to which the RTA applies. Why? Because Judge Spiller has found that is the case.

• [NAME] is entitled to sublet any or all the houses, subject to the [COMPANY]’s consent (consent not to be unreasonably withheld) and to collect and keep the full gross rental. Why? Because that is what the LTO says should happen.

• [NAME]’s tenancy is subject to the sub-tenancy of the flat already in existence as of 17 March 2022 (the date of [NAME]’s death) with [NAME] having the benefit of that tenancy as sub-[COMPANY]. Why? Because that is what the LTO provides for. But no account of retrospective rent or profits is ordered.

• [NAME] as the tenant is not liable for the cost of repairs and maintenance including water damaged carpet in the flat and main house, the repair of a leaking tap and a crack in the shower in the main house. Why? Because those are [COMPANY] responsibilities under section 45 RTA. Landlords cannot contract out of their RTA responsibilities.

• [NAME] as the tenant has no liability for rates or other general outgoings. Why? Because those are not tenant liabilities under the RTA for a residential tenancy. Landlords cannot impose obligations on tenants that are not permitted by the RTA.

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33. The Tribunal will not make the substantive orders sought – an account of profits for rent from and after 17 March 2022; any other rental income; damages in the form of lost rental; and interest. Why? Because in the overall context of this trust/relationship property dispute it would be unjust to do so considering the section 85 RTA directives and probably beyond the Tribunal’s jurisdiction.

34. If the tenant wanted orders of that nature, she could have made an application to a Court of general (or specific) jurisdiction. By choosing to remain within this Tribunal’s jurisdiction she is limited in the kind of relief she can reasonably claim. I was careful to clarify that with counsel at the start of the hearing. I offered to transfer the proceedings to the District (or High) Courts. The offer was declined.

35. Because of the unclear nature of the relationship between the [NAME], who is both tenant and sub-[COMPANY] (she having the right to sublet the premises and enjoy the income she receives), retrospective orders would offend the section 85 RTA directives. The legal status of the parties for the purposes of the RTA was not immediately clear. The Tribunal first declined jurisdiction. It required an appeal before the status of the parties was determined.

36. In terms of the application for exemplary damages, the Tribunal could not find that the [COMPANY] (the [NAME]) turned their minds to committing unlawful acts and deliberately set about to commit those acts (as referred to in Birch). Nor does it find compensable breaches of quiet enjoyment in this case. The overall context and the relationships involved must be considered.

37. The Tribunal’s declarations therefore clarify the position of the parties and will apply from now on. [NAME] is a tenant of the Trust, and the [NAME]) can set the rents (which must not exceed market rents) she must pay for all the residential premises on the property. She then may rent the premises in her capacity as sub-[COMPANY]. And just as she as a tenant can look to the [NAME]) of the Trust to fulfil their [COMPANY] responsibilities under section 45 RTA, so too can her sub-tenants look to her as their [COMPANY] to fulfil her responsibilities under that section as well.

Result

38. The application for declarations as to the rights and responsibilities of the parties is successful.

39. The orders sought by the tenant (as distinct from the declarations) are dismissed.

40. The [COMPANY] ([NAME]’) application is dismissed.

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Costs

41. The Tribunal’s preliminary view is that costs should lie where they fall in this case. However, if costs are pursued, I will provide a timetable for submissions on application.

Comment

42. This decision does not advance the position of the parties greatly, but it clarifies their relationships as [COMPANY]/tenant and sub-[COMPANY]/sub-tenant under the RTA. Essentially, the broader issues remain.

43. What was the intention of the settlor [NAME] when he settled the Trust. How did he want his widow’s financial position to be guaranteed? In that aspects of the LTO conflict with the provisions of the RTA how does that conflict get resolved taking the settlor’s intentions into account?

44. The Tribunal cannot decide those matters. Unless, the parties can find a way ahead, which will require co-operation and sensible compromise, it is likely that an application to the High Court in its equitable jurisdiction will be inevitable, or that some other outcome will eventuate.

[NAME]

9 June 2025

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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 [COMPANY] 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/

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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].

45.

[NAME]

09 June 2025

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Reasons: