APIA Blog

RSS Feed

How a hard-line approach to Tribunal claims can end up hurting you

Wednesday, April 21, 2021

On the awarding of legal costs by the Tenancy Tribunal

RE: Thomas and other v Novus Vita Limited [2021] NZTT Wellington 4266110, 4266355

The basis of the Tenancy Tribunal is for parties in a dispute to achieve a just outcome swiftly and inexpensively. Lawyers do not generally get involved and as such, the Tribunal isn’t often concerned with issues relating to the award of legal costs. In saying that, s102 of the Residential Tenancies Act (the RTA) does give some scope for it to do so in limited circumstances.

In Thomas, the tenants are awarded $1,000 as a reasonable contribution towards a $5,766.10 legal fee they have had to incur in relation to the proceedings. As tenancy laws become increasingly complex, it is not entirely unfathomable for the legal profession to interact with Tribunal cases going forward. Unpacking the adjudicator's reasoning to award costs in this instance could prove to be helpful for both landlords and tenants. 

 

Facts

This cross-application dispute addresses several issues. For the purpose of this piece, we will only concern ourselves with those facts that are to do with the award of legal costs.

  • Tenants are young first-time renters;
  • The landlord’s applications include an allegation of thief and financial gain from an illegal sublet, monetary claim in excess of $50K plus an unspecified amount for exemplary damage and compensation for emotional damage;
  • On top of being landlords and tenants, the parties were also, for some time, neighbours and the boundaries of the both types of relationships were often blurred in the parties' interactions with each other; and
  • The landlord is largely unsuccessful with the majority of her substantive claims.
 
The law 

Without much specificity, s102 loosely provides a pathway for the Tribunal to award reasonable costs to a party that is represented by counsel in connection to the proceedings. While Adjudicator Lash acknowledges the limitation of the RTA (being 'silent as to the parameters of the Tribunal's discretion in awarding costs'), she is explicit about being guided by the prevailing practice of the District and High Court that is for the unsuccessful party to make a reasonable contribution to the successful party's costs. She goes on to reference the 'shopping list' of factors in Holden v Architectural Finishes Ltd [1997] 3 NZLR 143 that the Courts have relied on in determining costs. 
 

The analysis and outcome

The first question the adjudicator asks herself is whether it was reasonable for the tenants to instruct counsel. She considers the quantum and seriousness of the landlord’s claims, the tenants’ youth and inexperience and the emotional impact the dispute has had on both parties and answers the question in the affirmative. Given that the landlord is ‘not successful in the majority of her substantive applications against the tenants’, the adjudicator is in a position to consider whether cost should be awarded and if so, how much?

She outlines the common law principle that the party ‘seeking costs based on actual costs must establish that the costs incurred are reasonable rather than excessive.’ The tenants incurred a total of $5,766.10 in legal fees. She goes on to cite a leading text on the matter indicating most awards fall within the 40-70% range of actual costs.

Applying the test from Holden, the adjudicator considers: 

  • Length of hearing: 1.5 days
  • Sum of money involved: $50K or more is substantial for young tenants;
  • Importance of issues: all allegations and claims made were sufficiently serious as to have significant consequences on the other party;
  • Legal and factual complexity: the dispute involves several legal issues and disputed facts;
  • Whether arguments lacking substance were advanced: while the Tribunal has no jurisdiction to preside over the landlord’s allegation of thief, the adjudicator acknowledges that the landlord did have some evidential basis for all claims;
  • Degree of success achieved by parties: the landlord was mostly unsuccessful in her applications.
and arrived at the conclusion that though solicitor-client costs are seldom awarded, in this instance it would be appropriate for the landlord to contribute $1,000 (less than 20%) towards the tenant's legal bill. 

 

Observation

Though we cannot say for sure, the language of the order would suggest that had the landlord taken a softer stand in relation to her counter-claims, excluded the allegation of thief (which the Tribunal had no jurisdiction to preside over anyway) and had conducted her relationship with the tenant in a strictly professional manner (i.e. that of a landlord and tenant only without asking for/expecting personal favours throughout the tenancy) then perhaps the Tribunal would be less inclined to find a reasonable basis for the tenants to instruct counsel and therefore removing the issue of costs all together. 

 


 


Recent Posts


Tags

short-term rental Kris Pedersen Mortgages and Insurance apia Question and answer water bill tenant capital gain rent financial advisers act ring-fencing quiet enjoyment airbnb CCC wealth creation debt to income extractor fan Gluckman positive cash flow asbestos cash-flow Case study tenancy services Guest blog shortland chartered accountants legal auckland council television inspection khh lvr cgt Must knows principal and interest anti-social behaviour boarding house auckland relationship re agent ventilation off the plan holiday house building income meth tax HSWA warren buffett Holler interest rates fixed-term tenancy Sponsored post personal growth property subdivision bond Must know legal cost inflation Q&A robert kiyosaki privacy management housing bubble ocr rent arrears tenancy tribunal watercare development debt enforcement wins anz Property (Relationships) Act data security beginner investor investment strategy letting Tribunal case study property apprentice insulation warm up new zealand Level 4 investor scotney williams reserve bank Standards New Zealand house prices p lab trademe DTI return unitary plan election 2017 rtaa2020 election2020 rta reform equity RTAA 2019 LIM nzpif commerce commission recycling equity property management TCIT cat structure Investment tip Editor's Choice trespass opes partners rent increase finance rta bad tenant twg report minor dwelling bond form clnz rental market Zodiak Management housing package market rent termination housing affordability maintenance ask an expert buying rules will buyer's agent heat pump rent control barfoot and thompson RBNZ travel bubble business Investor story government first home buying damage sale and purchas covid-19 daikin market interest deductibility mortgage Market report education interest only sublease Jeff Bezos retaliatory notice early termination smoke alarm heating negotiation insurance property maintenance trust short term rental kiwibuild property value shower dome productivity landlord CoreLogic property cycle heater mindset advice brightline initio HHS renovation worksafe How to meth contamination winz speculator HHGA banking bankruptcy buying skill shortage ird Landlording yield tenancy issues interest limitation parry v inglis letting fee rental wof gluckman report partners sale and purchase

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo