Good News For Landlords

High Court judgement -
Pet damage precedence

A tenant has been made liable for the replacement of carpet despite the tenant succeeding in an appeal at the District Court – Guo v Korck.

The Facts

The landlord agreed to the tenant having dogs at the property under the tenant’s assurance that the dogs were house trained. The tenants agreed to getting the carpets cleaned and the property fumigated.
At the end of the tenancy it was found that the carpets needed replacing as there were several stains throughout the house.

1st Hearing

The Tenancy Tribunal ruled against the tenant agreeing that the damage was intentional because it had happened repeatedly.
The tenant was ordered to pay for the replacement of the carpet due to the damage from their pets.

2nd Hearing

The tenant appealed the tenancy tribunal decision in the District Court which disagreed and turned the decision stating that as the landlord had approved the pets, they should have expected some damage.
The District Court agreed that due to the Pet Clause being in the tenancy agreement, the landlord assumed the risk that the property would be damaged by the pets. The landlord then appealed to the High Court.

3rd Hearing

In the High Court, the judge ruled that having a pet clause in an agreement did not exonerate the tenants for
paying for repeated pet damage.

The High Court disagreed with the District Courts interpretation, stating;
“It’s also reasonable to conclude that the Korcks knew, after a few episodes of the dogs urinating inside that further damage was certain if the dogs remained inside. The damage could have been mitigated. It was not”.
“I also accept Mr Guo’s submission that permitting the dogs on the premises under the terms of the tenancy agreement did not mean that he assumed all risk of damage”.

The presence of a clause in the tenancy agreement allowing pets did not mean that the landlord was liable for damage that was intentional.
The tenants were made liable for $10,000 to replace the carpet and associated court costs.

Why is a High Court judgement significant?

Landlords can now be more confident allowing pets in their rental property. Having a clause that allows pets does not exonerate the tenant from pet damage that happens repeatedly and would not otherwise be covered by insurance:
The Tribunal recorded that Mr Guo was not insured for intentional damage. Before me, Mr Guo provided a letter from his insurer, AMI, informally stating that there is no cover under the policy for what they termed “intentional damage”:
The first stain could be considered accidental damage and a claim may be considered subject to the policy excess $2,500 (sic). The rest of the stains were likely resulted from ongoing letting dog running free indoors and therefore were intentional.

This High Court judgement is now precedent, binding decisions in the Tenancy Tribunal over all pet damage cases where there is repeated damage, whether there is a pet clause in the tenancy agreement or not.

Interesting reading/precedence:

Precedence had been established in 2016 in a case Tekoa Trust v Stewart when the tenancy tribunal ordered that damage to the property by a dog (that was not permitted in the tenancy agreement) was not intentional. This was appealed in the District Court and won by the landlord and the tenant was ordered to pay for the replacement of the carpet and other costs. The difference in these cases was that the tenancy agreement in the Guo v Korck case allowed pets, whereas the Tekoa Trust v Stewart case in 2016 did not.

Tekoa Trust v Amanda Stewart [2016] NZDC 25578

Published 30 March 2017

Appeal from tenancy tribunal — cost awards — definition of intention. An appeal was allowed against a Tenancy Tribunal decision in which a claim for costs against the tenant for damage to carpet and loss of rent had been declined. Focusing on the legal interpretation of intention it was found that the tenants actions in continuing to allow a dog to enter the property, with the knowledge that it would continue to urinate and that the resultant damage was virtually certain, were intentional. The respondent was ordered to pay for lost rental, replacement carpet costs and court filing costs. Judgment Date: 15 December 2017.