cost recovery
📖 What is cost recovery? Meaning and definition
In New Zealand tenancy law, cost recovery allows a party, such as a landlord or unit owner, to claim back various expenses from another party, typically a tenant or another unit owner. These costs can include things like unpaid levies, solicitor's charges, manager's charges, interest, and filing fees, as seen in cases involving the recovery of unpaid levies. It also extends to expenses for rectifying breaches of tenancy agreements or operational rules, such as the cost of cleaning, rubbish removal, or engaging a locksmith if keys are not returned.
The Tenancy Tribunal has the power to award these costs, ensuring that the party who suffered the loss due to the other's default is compensated. For example, if a tenant fails to leave a property reasonably clean and tidy, the landlord can recover the costs of professional cleaning and rubbish removal. Similarly, if a unit owner does not pay their levies, the body corporate can recover the levies themselves, along with associated legal and administrative costs.
The Tribunal considers whether the claimed costs are actual and reasonable. While parties can submit evidence of their expenses, such as time records or invoices, the Tribunal exercises discretion in awarding costs. The goal is to put the successful party back in the position they would have been in had the breach or default not occurred, by covering the direct expenses incurred as a result.
📋 Requirements
- A party must have incurred actual and reasonable costs.
- The costs must be directly related to another party's breach of obligations or failure to comply with rules.
- Evidence of the incurred costs, such as invoices or time records, should be provided.
- The claim for costs must be made to the Tenancy Tribunal.
📝 Procedure
- A party applies to the Tenancy Tribunal for recovery of unpaid amounts, interest, and costs.
- Both parties may attend a hearing to present their case and submissions.
- The Tribunal assesses whether the claimed amounts and costs are proved and reasonable.
- The Tribunal issues an order for the payment of the awarded costs and other amounts.
💡 Examples
- A landlord successfully recovered $749 from a tenant for cleaning and rubbish removal after the tenant left the premises untidy and full of rubbish.
- A body corporate was awarded over $9,000, including unpaid levies, solicitor's charges, manager's charges, interest, and the filing fee, from a unit owner who failed to pay their levies.
- A unit owner was ordered to pay $3,570.33 to another party for reasonable costs incurred due to a breach of operational rules under the Unit Titles Act 2010.
- A landlord recovered $177 for locksmith charges after a tenant failed to return the keys to the property upon vacating.
📚 Legal basis
- Unit Titles Act 2010
❓ Frequently asked questions
What kind of costs can I recover?
You can recover actual and reasonable expenses directly caused by another party's failure to meet their obligations. This might include costs for cleaning, rubbish removal, locksmith services, unpaid levies, and associated legal or administrative fees.
Do I need to provide proof of my expenses?
Yes, it is important to provide evidence of your incurred costs, such as invoices, receipts, or detailed time records, to support your claim for cost recovery at the Tenancy Tribunal.
Can I recover solicitor's charges?
Yes, solicitor's charges can be recovered as part of costs, as demonstrated in cases where the Tenancy Tribunal has awarded solicitor's charges for levy recovery and hearing time.
What if the other party doesn't pay the ordered costs?
If the Tenancy Tribunal orders the other party to pay costs and they do not comply, you may need to take further steps to enforce the order, which could involve applying to the District Court.
Is there a limit to the amount of costs I can claim?
The Tenancy Tribunal will only award costs that are deemed actual and reasonable. While there isn't a fixed upper limit, the Tribunal exercises discretion to ensure the awarded amount is justified by the expenses incurred due to the breach or default.
Can I recover the filing fee for my application?
Yes, if you are wholly successful with your claim, the Tenancy Tribunal may order the other party to reimburse your filing fee, as it is considered a cost incurred in pursuing the application.