Landlords Beware: Navigating Exemplary Damages under the Residential Tenancy Act

Introduction

Landlords, often juggling numerous responsibilities, need to be aware of the risks of exemplary damages being awarded against them under the Residential Tenancy Act (RTA). Exemplary damages, viewed as fines rather than compensation, can be imposed by the Tenancy Tribunal as a deterrent for “unlawful acts” committed by landlords. Recent cases have highlighted an alarming trend where these damages are not only levied for breaches but also multiplied by the number of tenants affected, significantly raising the stakes for non-compliance.

Understanding Exemplary Damages

Exemplary damages can be awarded against a landlord as a penalty for failures such as inadequate insulation and ventilation, the absence of a written tenancy agreement, and failure to lodge bonds. In cases where there is clear evidence of a landlord committing unlawful acts, adjudicators readily issue exemplary damages orders.

Multiplication of Damages

Surprisingly, adjudicators have been awarding exemplary damages not just per breach but per tenant affected. For instance, if a boarding house landlord faces a $500 exemplary damages claim for failing to lodge bonds and has ten boarders, the damages could amount to 10 times $500 – $5,000. This underscores the importance of strict adherence to the RTA and the consequences of not doing so.

Ignorance is No Defence

Proactive engagement from landlords is required so that they comprehend and fulfil their obligations. Ignorance of the law is not a defence, and it is crucial for landlords to familiarize themselves with the rules, especially those specific to boarding houses under the RTA.

Apart from standard landlord obligations, the RTA provides specific boarding house rules that landlords must adhere to. Failure to comply may trigger claims, and the Ministry of Business, Innovation, and Employment (MBIE) can make claims on behalf of tenants, adding another layer of scrutiny.

Quantum and Mitigation

The RTA sets maximum limits for exemplary damages per individual breach. For example, a landlord failing to ensure a tenancy agreement is in writing, signed and provided to a tenant, can be ordered to pay exemplary damages of a maximum of $500. Landlords who can demonstrate a sincere effort to comply with their legal obligations may present evidence to the Tribunal in the hopes of reducing the amount to be awarded. It is recommended that landlords who are under investigation by MBIE cooperate and show their best efforts to remedy any breaches, as such actions may be considered by the tribunal and may mitigate the potential quantum awarded

Conclusion

Boarding house owners must remain vigilant and proactive in understanding and fulfilling their legal obligations to avoid falling foul of the Residential Tenancy Act. The multiplication factor of exemplary damages, coupled with an increasing focus on compliance, emphasizes the need for due diligence and ongoing commitment to maintaining a safe and compliant living environment for tenants.