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.