In 2009, tenants Kenji and Tieko Osaki caused substantial damage to their rented home when Mrs Osaki left a pot of oil unattended on the stove, resulting in a fire breaking out through the property. The property was repaired through the landlord’s insurance, but the insurance company decided to take action to recover the cost of the damage from the Osakis.
The case went through the Tenancy Tribunal, which held the Osakis liable. The Osakis appealed to the District Court where it was held that tenants should be protected by the Property Law Act, which says commercial tenants won’t be held liable for damage they’ve caused if the landlord has insurance to cover the damage. The insurance company then appealed and took the case right through to the Court of Appeal, which upheld the District Court’s decision.
As a result of the Osaki case, the current legal position in New Zealand is that a tenant won’t be liable for unintentional damage if the landlord is insured.
The implications of this ruling have most recently been seen in a Foxton case where the Tenancy Tribunal ruled that a tenant, who let her dog urinate and defecate in the house she was renting, was not liable to pay damages even though there was a no pets policy in place. The Tribunal said that, while it was accepted that the tenant intentionally breached the agreement by allowing a dog onto the property, the landlord had not established that the tenant intended to damage the carpet.
While it is understandable that the Court would want to safeguard tenants who cause unintentional but severe damage from financial ruin, it is questionable as to whether they have achieved this or whether they have just increased the risk of rental property damage and placed the financial burden for tenant damage onto the property owner.
The continuing flow on effect from this ruling is uncertain.