Tenancy Tribunal Case: Extensive Damage

This case study highlighted what happens when damage to a rental premises is deemed to be intentional, and how a landlord is compensated when depreciation and the estimated useful life of assets is considered.

The Facts:
The landlord sought costs for replacing the carpet at the end of the tenancy as the tenant had kept dogs in the house and the carpets had been soaked with dog urine. Although carpet cleaning had been attempted, given the extent of the urine contamination, the carpets needed replacing because the urine smell remained.

The Law:
The landlord must prove that damage to the premises occurred during the tenancy and is more than fair wear and tear. The tenant shall then have an opportunity to prove the damage was not careless or intentional damage. (Section 49B of the Residential Tenancies Act).

Tribunal Decision:
The Tribunal noted that there are several decisions from the District and High Courts where it has been confirmed that where there is more than 1 or 2 episodes of urination, the contamination is considered to cause extensive damage. If the tenant is aware of the ongoing issue, this takes the further damages into the intentional category.

In considering the depreciation and age of the carpet, the landlord should be returned to the position that they would have been in had the tenant not breached their obligations. The carpets were around 4 to 5 years old at the end of the tenancy, this is around halfway through their economic life in a rental property. Therefore, the tenants were ordered to pay half of the replacement costs.

The Decision:
Carpet replacement cost of $1,147.60 awarded to the landlord. The 2019 High Court case, Guo v Korck, is the leading case in assessing whether damage is intentional. In this case, “damage is intentional where a person intends to cause damage and takes 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 certainty.”

Landlords should keep the case of Guo v Korck in mind when assessing whether damage is accidental or intentional, and the estimated useful life of an asset should also be considered when assessing its current value.