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

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