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Rental damage law change needed

Landlords are calling for a law change following a Tenancy Tribunal ruling which they say illustrates the problems with a new rule on tenant damage of rental properties.

Thursday, September 15th 2016, 1:00PM 5 Comments

by Miriam Bell

In the ruling in question, a Tribunal adjudicator found in favour of a Foxton tenant who let her dogs urinate in the house – even though the tenancy agreement had specified no pets were allowed.

The damage was such that carpets throughout the house had to be replaced.

However, the adjudicator found that, although the tenant had breached the agreement, it had not been established that the tenant had intended to damage the carpet.

For this reason, the tenant did not have to pay for the replacement of the carpet.

Tekoa Trust property manager David Russ said the tenant had hidden the dogs when the property was inspected and had covered up the carpet damage.

It was only after the tenant moved out that the extent of the damage was discovered, he said.

“The property was not a dive: it was one of our higher end properties prior to the tenancy. So, as responsible landlords, we feel the ruling is insulting. We would never let out a property in that condition.”*

Russ said the case was not an isolated one and that some Tribunal adjudicators seemed biased in favour of tenants in such cases.

The situation was growing worse due to the Tribunal’s adoption of a new rule regarding tenant liability for damages.

It followed the Court of Appeal decision in the Holler vs Osaki case which left residential landlords liable for accidental damage caused by tenants.

According to the Tribunal’s new rule, if it is established that damage to a rental property was due to carelessness, rather than deliberate or criminal behaviour, and the landlord has insurance, the tenant does not have to pay for the damage.

Russ said the way the damage to the property would have been assessed by their insurance company would have left them with a vast excess which made a claim pointless.

“It is a totally unworkable situation under the new rules. Tenant damage is becoming impossible to deal with.

“For example, one ruling we had was that multiple holes in the walls of a property were accidental. There were no holes in the wall before the tenancy. How are multiple holes in the wall over a short time period an accident?

“The government really needs to step in and sort it out with a new law.”

Landlords have been expressing their concerns about the issue since the Court of Appeal released its decision back in April.

Auckland Property Investors Association president Andrew Bruce said the Foxton case was outrageous and made you question what was going on.

He said the situation beggared belief and that government intervention was necessary.

“There needs to be a political resolution of some type. Perhaps there needs to be changes to a relevant law like the Residential Tenancies Act.”

Some individual tenants might avoid paying for damage as a result of the current environment, he said.

“But no-one really wins out. In fact, it will be more vulnerable tenants and families who will suffer most in the end.”

This was because landlords will simply get increasingly tough in their tenant screening and selection processes.

“If a landlord suspects a potential tenant might be problematic or if there is any indication of past problems in that tenant’s record, they will err on the side of caution and go for someone else.

“That will make finding rental accommodation very difficult for some people, particularly more vulnerable people.”

Ultimately, the situation was likely to exacerbate the current rental accommodation shortage as landlords stepped back and got more cautious, Bruce said.

*Russ has applied for a rehearing and is also appealing the decision to the District Court.

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Comments from our readers

On 16 September 2016 at 10:02 am jpaynter said:
this is a ridiculous decision. The tenant broke the terms of the agreement and damage directly resulted from this. I wonder at the instructions and training adjudicators are getting that they seem oblivious to correct applying both the law and commonsense. I had a similar but very minor decision go against me when clearly again the adjudicator was incorrect in the ruling. I think we as landlords and as tax and rate payers and as responsible citizens need to know the training and directives given to adjudicators (particularly in the light of the perverse outcomes experienced).
On 19 September 2016 at 8:21 am Mac Union said:
Has anyone considered contacting this guy and crowd funding his appeal as its in all our interest to get this corrected promptly ? we could all chip in $10 or so . personally I'm sick of all the stupid decisions made in our justice/adjudicatory system.
On 19 September 2016 at 3:25 pm MeganEMills said:
Whether something is deliberate is surely a judgement about the person's intentions. I don’t see how a tenant’s intentions should be evaluated differently to anybody else’s. Case law has given some clear guidance on how to judge someone’s intention in the absence of an admission. In Lloyds Bank Ltd v Marcan and others [1973] 2 All ER 359 the Court confirmed, at pages 367-8, the following principles:

(i) A person’s intention is a question of fact;

(ii) Actual intention may be proved by direct evidence of a person’s state of mind (e.g. an admission), or be inferred from surrounding circumstances and conduct of the person;

(iii) To this end, intent may be imputed on the basis that a person must be presumed to intend the natural consequences of his/her own acts although such a presumption may be rebutted by other evidence.

Therefore, with respect to damage caused by the negligence or recklessness of tenants, absent any other evidence to rebut it, it must be presumed that tenants intend the natural consequences of their acts.

If a tenant’s act was to leave animal urine on the carpet the natural consequence of not cleaning it up properly is damage to the carpet. Therefore one must presume that the tenant intended to damage the carpet - unless they can produce other evidence that rebuts that presumption.

That's not impossible - such evidence might be, for example, that they were in hospital and didn’t even know about the urine. Or, somewhat outlandishly, that they had read a research paper (which they can cite and produce) that “proved” that urine is beneficial to carpet and that was their honestly-held belief at the time they left the urine in the carpet.

Has this argument been explored in this case and, if it has, what was the rebuttal provided by the tenant and/or alternative reasoning offered by the Court regarding why the above wouldn't apply in this case to determine whether damage to the carpet was intentional (that is, deliberate).

If any of you are lawyers and know the answer to this, please let us all know? And if it wasn't explored at Court, but you think perhaps it should have been, perhaps we should let Mr David Russ know...

Thanks and kind regards,
Megan Mills
On 19 September 2016 at 5:22 pm MeganEMills said:
Whether something is deliberate is surely a judgement about the person's intentions. I don’t see how a tenant’s intentions should be evaluated differently to anybody else’s. Case law has given some clear guidance on how to judge someone’s intention in the absence of an admission. In Lloyds Bank Ltd v Marcan and others [1973] 2 All ER 359 the Court confirmed, at pages 367-8, the following principles:

(i) A person’s intention is a question of fact;

(ii) Actual intention may be proved by direct evidence of a person’s state of mind (e.g. an admission), or be inferred from surrounding circumstances and conduct of the person;

(iii) To this end, intent may be imputed on the basis that a person must be presumed to intend the natural consequences of his/her own acts although such a presumption may be rebutted by other evidence.

Therefore, with respect to damage caused by the negligence or recklessness of tenants, absent any other evidence to rebut it, it must be presumed that tenants intend the natural consequences of their acts.

If a tenant’s act was to leave animal urine on the carpet the natural consequence of not cleaning it up properly is damage to the carpet. Therefore one must presume that the tenant intended to damage the carpet - unless they can produce other evidence that rebuts that presumption.

That's not impossible - such evidence might be, for example, that they were in hospital and didn’t even know about the urine. Or, somewhat outlandishly, that they had read a research paper (which they can cite and produce) that “proved” that urine is beneficial to carpet and that was their honestly-held belief at the time they left the urine in the carpet.

Has this argument been explored in this case and, if it has, what was the rebuttal provided by the tenant and/or alternative reasoning offered by the Court regarding why the above wouldn't apply in this case to determine whether damage to the carpet was intentional (that is, deliberate).

If any of you are lawyers and know the answer to this, please let us all know? And if it wasn't explored at Court, but you think perhaps it should have been, perhaps we should let Mr David Russ know...

Thanks and kind regards,
Megan Mills
(If you get this twice, apologies. I tried to refresh the page after submitting it a while ago with what I thought was no problem and it said "Sorry, there was a problem submitting your request". If this is a double-up, please ignore it? Thank you.)
On 22 September 2016 at 3:32 pm KeenReader said:
Yes I will contribute towards a crowd funded appeal if someone sets one up.

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