Unconsented Building Alterations

Dunedin landlord wins rent refund. District Court appeal, Nov 20 2017

Report by Chris Matthews – www.tenancy.co.nz

Dunedin landlord Vic Inglis has won a landmark appeal at the Dunedin District Court. Inglis v Parry (2017) NZDC 26365.
Inglis was ordered to refund his former tenant Natalie Parry $10,960.44 of rent after she took him to the Tenancy Tribunal following the discovery the layout of the house was altered from the original plans submitted to the council. This decision is just the tip of the iceberg. Dozens of landlords have been ordered to pay back tenants full rent refunds for non-consented premises over the past 12-18 months, sometimes totalling tens of thousands of dollars.

In all of these cases, the Adjudicators cited the Anderson v FM Custodians high court judgement from 2013 as the binding precedent. However, Dunedin District Court judge Kevin Phillips has distinguished Anderson v FM case from the Parry v Inglis decision. The Parry v Inglis decision will have far-reaching consequences for thousands of landlords who may have non-consented work.

So why did Judge Phillips found in favour of Inglis the Landlord? This is due to the fact that the tenant didn’t suffer from any detriment, the renovations to the property were completed to such a standard that the landlord was able to get a COA (Certificate of Acceptance) on short notice, and that it was proven that the work had been done to a very high standard.

“The tenant did not suffer any detriment of any kind as a result of what was a technical breach”, Phillips said. “There did not appear to be any consideration given as to whether or not the tenant was unjustly enriched by the order that was made by the tribunal.”

Judge Phillips also said that the Adjudicator in the Inglis case, J Wilson, incorrectly ruled that the premises were not a ‘residential tenancy’. “It is my view that the finding of the Tribunal in relation to the premises not constituting residential premises because of the conversion of the downstairs area not being authorised by a building consent was incorrect in the factual circumstances of these particular parties,” he said.

“The Adjudicator also in my view misdirected herself to the law that applies.” The law that Judge Phillips is referencing is Section 137 of the Residential Tenancies Act 1986. Section 137 alludes to the fact that you cannot enter into a contract that contravenes the provisions of the Act, and that any money paid under an unlawful contract is recoverable to the tenant.

 

Reasons why Inglis won the appeal – by Scotney Williams

• Anderson’s case can be distinguished on its facts. In other words, the facts were so different between the cases that it was wrong to apply the principle of law in Anderson’s case to the Inglis case.
• This Tenancy Tribunal and (other Tenancy Tribunals) had applied “obiter“ (a comment said in passing) made by the judge as if those comments were creating a binding precedent when it should not have done so. The comments were not part of the official reasons (ratio) for the decision and as such, were only persuasive on the District Court and by implication should have been only persuasive on the Tenancy Tribunal.
• The Tenancy Tribunal was wrong to interpret technical illegality as changing the status of the term “residential premises”.
• The Tenancy Tribunal was wrong to hold that the COA which was issued soon after the hearing did not legitimize the status of the dwelling. The District Court found that the granting of a COA did mean that the premises were compliant right from the beginning of the tenancy and were not breach of Section 45(1)(c) RTA.