We have noticed a lot of our tenant clients making claims to the Tenancy Tribunal seeking exemplary damages.
The Tenancy Tribunal statistics show that tenants are much more likely to seek exemplary damages in the Tribunal than landlords.
We think it is important that everyone understands what exemplary damages are and when they might be ordered.
So, what are exemplary damages?
Exemplary damage awards are awards of money that one party is ordered to pay another. (1)
In the context of tenancy matters, exemplary damages are not about compensating a party that may have lost some money and is seeking that money to be repaid back to them, for example when a person has had to pay relocation costs, power or water connections costs.
The law allows for compensation to be paid as well as exemplary damages.
Exemplary damages are about penalising a landlord or tenant for serious breaches of their legal obligations. It is like a good telling-off and to make sure the party penalised behaves from then on. The Courts have said exemplary damages are intended to punish the party acting unlawfully. (2)
When are exemplary damages awarded?
Exemplary damages will not be awarded lightly.
The Tenancy Tribunal will look at several different factors when making a decision about exemplary damages, such as:
- The intent of that person in committing the unlawful act. For example, if the claim is against a landlord the Tenancy Tribunal will need to consider if the landlord deliberately acted unlawfully. A Landlord who is doing their best to comply with their legal obligations is unlikely to have exemplary damages awarded against them.
- The effect of the unlawful act and the interest of the person who is seeking exemplary damages, i.e. if in the case of a tenant seeking exemplary damages, they can explain the significant impact the unlawful act has had on them or their whānau and tamariki.
- The public interest. The Tenancy Tribunal will consider the overall interest to society that poor performing landlords (or irresponsible tenants) are deterred from acting unlawfully.
A party must apply for exemplary damages within 12 months of the unlawful act being committed – so for example, you cannot apply for exemplary damages 3 years after the issue occurred. It is highly unlikely the Tenancy Tribunal will consider a request for exemplary damages outside of that 12 months’ time frame.
What are unlawful acts and how much will be awarded?
The Residential Tenancies Act 1986 lists a whole lot of unlawful acts that either party can do which would warrant exemplary damages and what they can be awarded for. The list of unlawful acts are in Schedule 1A of Act.
The Act also sets out the maximum amounts available for an award of exemplary damages. The maximum amounts are set out in the schedule and the maximum amounts vary depend on how severe the unlawful act is, for example:
- Unlawful discrimination has a maximum amount of $6,500.00. This might be relevant if you felt you were refused a rental because of your gender, sexual orientation, religious beliefs, race or colour, nationality, ethnicity, origin or citizenship, physical or mental disability or illness, age, being on a benefit, or because you have children.
- A tenant’s harassment of another tenant or a neighbour has a maximum amount of $3,000.00.
- A landlord failing to meet obligations in respect of cleanliness, maintenance, smoke alarms, the healthy homes standards, or buildings, health, and safety requirements has a maximum amount of $7,200.00.
- A landlord giving retaliatory notice of termination or acting to terminate tenancy without grounds has a maximum amount of $6,500.00.
These are examples of more serious unlawful acts which would attract higher awards.
The takeaway:
The takeaway from all of this is to understand that exemplary damages are not automatically or easily awarded, and it pays to check whether an unlawful act has been committed when asking for exemplary damages in an application to the Tenancy Tribunal.
(1) Section 109 of the Act
(2) Rookes v Barnard [1964] AC 1129 (HL) and Auckland City Council v Blundell and Thomson [1986] 1 NZLR 732 (CA) at 704