Reckless damage by tenants not intentional

Tuesday 16 January 2018

Extensive cigarette damage to the carpets of a rental property, which had a ban on smoking in the tenancy agreement, qualifies as accidental damage by the tenants, the High Court has ruled.

By Miriam Bell

Christchurch landlord Susan Linklater leased a rental property to a group of young people but the tenancy was ended early because of the damage the tenants did to the property.

The damage included graffitiing walls, breaking spouting, damaging curtains, changing a lock, smoking inside and burning the carpets with cigarettes.

Linklater made insurance claims for some of the damage, paying a $1,100 excess for the claims, and also went to the Tenancy Tribunal, which awarded her some costs for damages.

But Linklater appealed to the District Court as she felt the tenants should also pay her the insurance excess she had paid and to replace two carpets which were insured, but where the excess meant it was not economic to claim on insurance.

The District Court dismissed her appeal so Linklater went to the High Court where she argued the District Court was wrong to apply the Holler v Osaki decision to the case.

In her view, the damage was not accidental, but caused by the recklessness of the tenants, while some damage was caused by intentional breaches of the tenancy agreement, namely smoking inside the house.

As part of her argument, she referred to a case where a District Court judge overturned a Tribunal ruling which found that a tenant was not responsible for the carpet damage caused by letting her dogs urinate in her rental property.

But, in a recent decision, Justice Gerald Nation overturned Linklater’s appeal in favour of the tenants, saying the District Court had not erred in its interpretation.

Further, he questioned whether the District Court judge in the dog urine damage case had used the right legal basis to find the damage was caused “intentionally” by the tenant – although he said it wasn’t up to him to decide what the test for intentional damage should be.

The High Court decision confirms that the only way tenants will be held liable for insured damage is where it can be proved that damage by the tenant was intentional, rather than accidental.

Linklater says she is disappointed by the High Court decision as it essentially means there are no consequences for tenants if they breach clauses in tenancy agreements and cause damage.

“Going to the High Court was never about the money. I wanted clarification on the law and what constituted intentional vs careless damage and if there was a continuum which included reckless damage.

“But it seems there isn’t. The damage is either careless (and no fault) or intentional. There is no in-between, no leeway in the definition.”

Tenancy law as it now stands doesn’t respect private property and doesn’t create a sense of responsibility in tenants, she says.

“How do you encourage tenants to look after a property when there are no consequences for breaching tenant agreements and causing damage?”

Linklater says that 99.9% of the tenants she deals with are fair and reasonable people who will pay up for damage they have caused, but it is the rogues out there who are the problem.

“Yet the biggest impact of this ruling, and the law as it stands, will be on the very people the Tribunal is supposed to protect. It will become much harder for tenants from groups perceived as likely to cause damage – like young people/students and people with children - to find rental properties.”

With such a high threshold for intentional damage, many landlords are likely to either reconsider their insurance policies or take their property out of the traditional rental pool, she adds.

Tenant liability for damage to rental properties has been a hot topic since the Court of Appeal handed down its controversial ruling on the Holler vs Osaki case.

A series of subsequent decisions, of which this is the latest, have left landlords calling for a change to the law.

The previous government acknowledged there was a problem and tried to tackle it in the Residential Tenancies Amendment Bill (No. 2) which is currently making its way through Parliament.

Read more:

Tenant damage law change 

Tenant damage ruling overturned 

No tenant liability under new rules 

Comments from our readers

On 18 January 2018 at 10:47 pm michaeljakob said:
I sold one of my properties because the 'law', for lack of another word, is a rubber stamp for tenants to run riot and leave the landlord out of pocket. The courts are clearly out of touch nad some of the judges presiding in them need to be shown the door as average people expect the stupidity which causes so much pain to end. Sadly this nonsense keeps happening and tenant comfort keeps adding costs to landlords who are expected to pay with no increase in rent applicable to recoup these nonsense costs. I provide nice clean accommodation for tenants and what I get back is insulting. And then you have the mentally challenged creating new laws on top of that. I suspect I will sell my other property in the next couple of years as this has become a mug's game. Then tenants can take their homelessness to the government where it belongs. Good luck. Enough is enough!
On 25 January 2018 at 12:24 pm betweenrockandhardplace said:
Yes suffering because of this myself no pats cats ripped holes in 4 year old carpet. I will go to tribunal to reclaim excess. Ladies, gentlemen we must keep pushing this button until the nonsidence becomes evident. I have a possible solution for these issues where the words we use trip us up. There's a gap between careless and intentional it is neglegence Those listening, we need another category negligent (not taking the proper precautions or care). This would help us all out and make the system more rational. Phil Landlord

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