Significant Anderson v FM Custodians decision could signal change of tide




– Report by Chris Matthews

A Tenancy Tribunal Adjudicator in Christchurch has delivered an order that could signal the days of full rent refunds for tenants are numbered.

The Anderson v FM Custodians High Court judgement from 2013 has caused havoc in the residential rental industry over the past 12 months.

Following that decision, many tenancies have been rendered unlawful because of non-consented work.

Consequently, a growing number of tenants have been awarded full refunds of rent, sometimes totalling tens of thousands of dollars.

But Adjudicator Armstrong has gone against the tide, saying in a Tenancy Tribunal order that the tenants weren’t entitled to a full refund of rent.

“This order comes as a welcome relief for landlords who have been reeling from the tide of the decision adopting the Anderson approach,” tenancy consultant Scotney Williams said.

“This decision swims against that tide and casts doubt on the rationale in the Anderson case.”

Adjudicator Armstrong acknowledged that the tenants, Bethani Edwards and Brett Townsend, rented a dwelling off Wongeoon Vast Limited that had neither a building consent nor a resource consent.

But unlike other Adjudicators, Armstrong argued Section 137 of the Residential Tenancies Act 1986, has been misinterpreted.

“I would find it very difficult to accept that Parliament intended that the Tribunal must order a landlord to repay to a tenant all rent paid by the tenant in every case where, for whatever reason, the premises could not be lawfully occupied by the tenant,” Armstrong wrote in this order.

Section 137

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 the contract is recoverable to the tenant.

Armstrong argues that Section 137, subsection 4, refers to money paid provided by the tenant “for the tenancy”.

“The conclusion that I have come to is that the expression “for the tenancy” is intended to refer to payments such as premiums for a tenancy or other payments not in the nature of rent.”

“Rent is generally regarded as payment for the use and occupation of the premises rather than for the “tenancy” as such.

“Payment “for the tenancy” is more apt to refer to payment for the granting of the tenancy rather than payment in the nature of rent.”

As a result, Armstrong ordered the bond of $1,180 to be paid to the tenants.

“Only a further appeal from either side will clarify the uncertainty which now exists”, Williams, from the Tenancy Practice Service, said.

Multiple tenants have been awarded full rent refunds over the 12-18 months.

The most infamous case involved Dunedin landlord Vic Inglis, being ordered to pay back his former tenant Natalie Parry nearly $11,000

Inglis has appealed the decision to the District Court, in a judgement that will be eagerly anticipated by the tenancy industry.