In February 2014, the New Zealand High Court upheld a District Court appeal in the case Holler & Rouse v Osaki, that a landlord’s insurer could not recover the cost of damage to a property by the tenant. It argued that, in principle, there is no difference between a residential and a commercial tenancy. This went against a Tenancy Tribunal ruling that under the Residential Tenancies Act 1986 (RTA), tenants could be held liable for the cost of damage to a property.
Currently, the Property Law Act 2007 (PLA) grants immunity to commercial tenants under sections 268 and 269. However, section 142.1 of the RTA states that: “Nothing in Part 4 of the Property Law Act 2007 applies to a tenancy to which this Act applies.” Nevertheless, the High Court ruling has set a precedent that residential tenants have the same immunity from suit as commercial tenants have.
The Osaki case was appealed in November 2015 but a ruling has not yet been made. Depending on the outcome it could have significant consequences for landlords and result in situations where costs cannot be recovered from the tenant when damage or loss is the result of a tenant’s negligence. The difficulty is where the line will be drawn: currently, where damage is caused by tenant negligence, such as a broken window or burn marks on a bench, the cost can be recovered from the tenant. If the Osaki appeal is upheld, the cost of negligent damage may fall fully on the landlord.
For you are interested in further reading on the Osaki case, please click on the following links: