What was the outcome of Tenancy Tribunal case 4452888?

The tribunal order states: Dean Ivan Ormsby must pay Tauranga City Council $3,960.44 immediately,

How much money was awarded in case 4452888?

Filing Fee: $20.44 awarded to landlord; Property Damage: $5,000.00 awarded to landlord

What type of tenancy dispute was case 4452888?

The primary dispute was Property damage.

Where can I read the official tribunal order for case 4452888?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9276255-Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 4452888?

The tribunal order states: Dean Ivan Ormsby must pay Tauranga City Council $3,960.44 immediately,

How much money was awarded in case 4452888?

Filing Fee: $20.44 awarded to landlord; Property Damage: $5,000.00 awarded to landlord

What type of tenancy dispute was case 4452888?

The primary dispute was Property damage.

Where can I read the official tribunal order for case 4452888?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9276255-Tribunal_Order.pdf.

618 State Highway 29, Tauriko, RD 1, Tauranga 3171 Tenancy Tribunal Case 4452888 — Property damage

Claims and awards in Tenancy Tribunal application 4452888 — net $3,960.44 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Landlord	Reason
Repairs (contribution	$5,000.00	Repairs (contribution
Filing fee reimbursement	$20.44	Filing fee reimbursement
Net award	$3,960.44
Total payable by Tenant to Landlord	$3,960.44

Claims and awards in Tenancy Tribunal application 4452888 — net $3,960.44 NZD. Amounts reconciled from the published order (claims sum and net total). Verify on MoJ.
Claim	Landlord	Reason
Repairs (contribution	$5,000.00	Repairs (contribution
Filing fee reimbursement	$20.44	Filing fee reimbursement
Net award	$3,960.44
Total payable by Tenant to Landlord	$3,960.44

Order

Dean Ivan Ormsby must pay Tauranga City Council $3,960.44 immediately, calculated as shown in table below.
The Bond Centre is to pay the bond of $1,060.00 (3406423-003) to Tauranga City Council immediately.

Reasons

Both parties attended the hearing.
The landlord has applied for termination, compensation and exemplary damages for methamphetamine use at the premises. The issue of exemplary damages was not pursued at the hearing.
The initial claim was for compensation of $73,503.87. This was subsequently reduced to either $24,658.22 or $11,118.95.
A termination order was made by consent on 21 December 2022.
Following the hearing, it became apparent that TCC had not provided a full copy of the repair scope (only the odd-numbered pages were provided). The partial document referred to the overall repair costs, but some of the details for individual rooms were missing). A full copy was requested and provided. A copy was sent to the tenant, and he was given 7 days to advise whether he wished to comment on the full document. No response was received within that timeframe. Background
The tenancy started in 2014.
A baseline methamphetamine test in 2017 established a low-level of contamination across 5 rooms (0.02-0.9μg/100cm 2 ).
A further test in November 2022 produced readings of 4.3μg in the dining room,
5μg in the hallway, 22μg in the master bedroom, 9.1μg in the kitchen, and 30μg in the lounge. Two other rooms (the bathroom 9.5μg and toilet 7.6μg) were not tested in 2017, so there is no baseline for them. Law
Tenants are liable for the cost of repairing damage that is intentional or which results from any activity at the premises that is an imprisonable offence. Tenants are liable for the actions of people at the premises with their permission (ss 41 and 49B(1) RTA).
Damage is intentional where a person intends to cause damage and takes the necessary steps to achieve that purpose. Damage is also intentional where a person does something, or allows a situation to continue, knowing that damage is a virtual certainty (Guo v Korck [2019] NZHC 1541).
A landlord must prove that damage to the premises occurred during the tenancy. If this is established, to avoid liability, the tenant must prove they did not carelessly or intentionally cause or permit the damage.
There are currently two sources of guidance on the issue of a safe level of methamphetamine contamination in residential premises. In June 2017 Standards New Zealand published NZS 8510:2017. The standard recommended a maximum contamination level of 1.5μg/100cm 2 for high use areas where contamination has resulted from both consumption and manufacture. It recommended a higher level of 3.8μg/100cm 2 for limited use areas.
In May 2018 Professor Sir Peter Gluckman, the then Prime Minister's Chief Science Advisor, released a report "Methamphetamine contamination in residential properties: Exposures, risk levels, and interpretation of standards”. The report noted that there is a lack of scientific evidence to prove that low-level third-hand methamphetamine exposure poses a health risk to humans. It stated that guidelines should be proportionate to risk and that exposure to a level below 15μg/100cm 2 was unlikely to have an adverse effect. It recommended retaining the level of 1.5μg/100cm 2 where contamination resulted from manufacture, due to the risk posed by harmful chemicals used in the process.
The District Court has held that remediation should be carried out in accordance with the prevailing guidelines at the time (Diamond Real Estate Limited v Allan [2017] NZDC 833, Judge Kellar).
The Tribunal has generally applied the Gluckman recommendation. This approach was approved by the District Court in Full Circle Real Estate Limited v Piper [2019] NZDC 4947, where the Court stated (at para [36]): The Tenancy Tribunal was in a difficult position. The best state of knowledge of risk to human health from methamphetamine contamination available to the adjudicator was the Gluckman Report. It would have been bold for the adjudicator to have ignored that report in favour of the New Zealand Standard given that the Gluckman report represents the current scientific knowledge on the risk to human health from methamphetamine contamination in dwellings.
The District Court took a similar approach in Acme Realty Limited v Hogg and others [2021] NZDC 3231, where the Court referred to the Full Circle case and held that, because NZS 8510:2017 has not been adopted into law, the Tribunal was not bound to apply the 1.5μg standard.

Is the tenant responsible for the damage to the premises?

The tenant denied using methamphetamine at the house and said the contamination was caused by his flatmate (although the bedroom used by the flatmate returned a reading of 0.47μg). Even if this is correct, the law provides that he is still liable for his flatmate’s actions as if they were his own.
The tenant also raised the fact that the test in the master bedroom was taken from his headboard, which he says he bought secondhand. This is a valid point, as the contamination on the headboard could have occurred outside the tenancy premises. It is not clear why a personal chattel was tested rather than the room itself, and I have disregarded the reading in the master bedroom. I have also disregarded the readings in the two rooms not tested in 2017.
That leaves only one room contaminated over the Gluckman level: the lounge at 30μg, which is a very high reading.

Is the amount claimed proved?

The claim is comprised of $7,429.00 for cleaning, $3,688.97 for testing, $7,780.25 for refurbishment (25% of the gross total of $31,121.33), and $5,760.00 for staff costs. The latter component of the claim was not pursued at the hearing, reducing the total to $18,898.22.
The refurbishment cost is comprised of a base figure of $20,462.78, plus a 15% overhead of $3,069.42, a 15% margin on those two amounts of $3,529.83, and GST of $4,059.30.
As an alternative, the Council calculated a figure of $11,118.95, comprising 15% of the $20,462.78 repair cost, the whole of the 15% margin and 15% mark-up, and GST.
The Council has insurance cover for methamphetamine damage. The total cover available is capped at $20,000.00 and there is an excess of $25,000.00. Based on a loss of $42,239.30, the insurer has paid out $17,239.30. It has paid $7,429.00 directly to the cleaning contractor and $3,688.97 to the testing company. It has paid a balance of $6,121.29 to the Council towards remediation costs.
Whether a claimant has insurance cover is usually regarded as irrelevant to compensation claims. However, a claimant cannot obtain double-compensation for their losses. Therefore, if they receive both an insurance pay-out and compensation from the party at fault, they must refund their insurer any payment towards their insured losses received from the other party. The situation is different under the RTA with respect to careless damage, but not for intentional damage. In practice, landlord claims for methamphetamine damage are usually limited to the amount of any uninsured losses, and insurers seldom require the insured to claim for insured losses under their right of subrogation.
Here insurer has paid the cleaning and testing contractors directly and has not sought to recover those payments. In a practical sense, these losses have been covered by insurance and it is notable that the Council’s alternative calculation excludes these costs. Compensation will therefore be limited to a portion of the remediation costs. In this respect, it is reasonable to follow the usual rule and disregard the insurance pay-out of $6,121.29.
Based on my finding that only one room exceeds the level recommended in the Gluckman Report, the question arises whether the whole house needs to be remediated, or just the room contaminated above 15μg/100cm 2 . The Gluckman Report states: Remediation is certainly warranted if high levels of methamphetamine are present that are indicative of manufacturing activity or excessive smoking. Levels >30 μg/100cm 2 are considered by forensic experts to signify that manufacture is likely to have taken place. Testing for lower levels that still suggest relatively high levels of smoking (e.g. >15 μg/100cm 2 ) could be used to identify specific areas of contamination that warrant remediation. Remediation includes removal of all potentially porous materials or items (furnishings, carpets) and cleaning of the contaminated surfaces, using the NZS 8510:2017 standard as a guide. Where lower levels are detected, remediation is often not justified. However, as low levels cannot definitively rule out manufacture, remediation down the [sic] 1.5 μg/100cm 2 standard may be prudent if there is also sound reason to suspect previous meth lab activities. This would only be a precautionary measure to remove other toxicants that may be present but not measured.
Although the reading in the living room is 30μg/100cm 2 (the level said to be indicative of manufacture), there is no other evidence of manufacture, and it is therefore reasonable to proceed on the basis that the reading reflects a very high level of use. Where the evidence is of a high level of smoking, the Gluckman report recommends testing to identify “specific areas” in need of remediation.
If compensation were to be based on remediating the whole house, then a substantial deduction for betterment and depreciation would need to be taken into account. The house in question is located in an isolated position in the Kopurererua Valley. The Council has a long-term plan to restore the valley to a wetland reserve. Although the house may be demolished, it is more likely to be repurposed as a base for workers involved in the restoration.
The Tribunal uses a variety of sources for assessing depreciation, including IRD guidelines and the rates used by Kāinga Ora. The age of the items being replaced, and the applicable guidelines are as follows: wallpaper and painted walls 12 years (10-12 years), curtains 8 years (8 years), stove 13 years (8-15 years), vinyl 8 years (10-18 years), and carpet 8 years (10-12 years).
Based on these guidelines, some of the items are at or near the end of their usable life, and the remainder have only a modest amount of usable life left. Calculating depreciation is not an exact science, and taking into account considerations such as opportunity cost, the figure of 15% used in the Council’s alternative calculation is more realistic that the figure of 25% used in its primary calculation.
It is usual to apply depreciation to all of the cost components (in this case that would include the 15% overhead and 15% margin). An adjustment would need to be made for the carpet, as a 50% deduction is incorporated into the figures and obviously it would wrong to double-depreciate the carpet. Taking these factors into account, the resulting figure is just over $5,000.00.
If compensation is based on just remediating the lounge room, betterment is less of a factor, as fixing just one room has less of an effect on increasing the value of the premises as a whole. Nevertheless, a similar deduction to the 50% applied by the insurer to the carpet would be appropriate for the other items remediated. This achieves a very similar result to a calculation based on 15% of the total; just under $5,000.00.
Given the similarity of the outcome based on the alternative methodology, I find that $5,000.00 is a reasonable contribution towards the remediation costs. Filing fee
Because the Council has largely succeeded in principle, although only partially in relation to quantum, I have reimbursed the filing fee. J P Smith 13 September 2023

Tenancy Tribunal case 4452888 — Property damage at 618 State Highway 29, Tauriko, RD 1, Tauranga 3171

At a glance

Tenancy Tribunal case 4452888 — Property damage at 618 State Highway 29, Tauriko, RD 1, Tauranga 3171

At a glance

Award balance

Claims & awards

Order

Reasons

Is the tenant responsible for the damage to the premises?

Is the amount claimed proved?

Topics & place

Residential Tenancies Act sections

Key findings

Frequently asked questions

Award balance

Claims & awards

Order

Reasons

Is the tenant responsible for the damage to the premises?

Is the amount claimed proved?

Topics & place

Residential Tenancies Act sections

Key findings

Frequently asked questions