A couple who lived in their neighbour's townhouse rent-free for 18 months after their accommodation insurance ran out has been ordered to pay $52,943 in arrears to their former landlord. Photo / NZME
A couple who lived in their neighbour's townhouse rent-free for 18 months after their accommodation insurance ran out has been ordered to pay $52,943 in arrears to their former landlord. Photo / NZME
A couple who believed having no written tenancy agreement would allow them to live rent-free in their neighbour’s townhouse after their insurance coverage ran out were sadly mistaken.
Neil and Angela Cameron owned a townhouse next to Peter Randle’s on Harts Creek Lane at the Clearwater Resort, near Christchurch. Both properties were damaged by the Canterbury earthquakes.
Repairs to the units, which were part of a small body corporate (BC) and insured by IAG New Zealand under the organisation’s policy, were done in stages, with Randle’s the first to be fixed.
When work on the Camerons’ home, which they bought after the earthquakes, began in July 2018, Randle’s had been repaired and was vacant, so it was agreed they would rent the unit for $800 a week while theirs was fixed.
However, there were significant delays in completing the work, which resulted in the Camerons living in their neighbour’s townhouse rent-free for about 15 months after their accommodation insurance coverage reached its limit.
In January 2023, more than two years after the Camerons vacated the unit in July 2020, Randle filed a claim with the Tenancy Tribunal seeking $52,943 in rent arrears.
The couple counterclaimed, alleging they had no obligation to pay the arrears because they did not agree to pay it and any liability they might have had was settled by their full and final settlement payment.
They also submitted that the tribunal had no jurisdiction to decide the applications as no written residential tenancy agreement existed between them and Randle.
In its July decision, which the Camerons have since challenged, the tribunal described the couple’s assertion that they could live rent-free until their house was ready if insurance didn’t cover the cost as “surprising”.
“It would mean that the landlord was bound to allow them to occupy the premises, rent-free, for an indeterminate time,” the ruling stated.
“The parties could have expressly agreed that rent ceased to be payable, or was waived, but there was no such agreement.”
The tribunal found a rental agreement, for an indeterminate term, existed and that Randle had proven his claim. It dismissed the Camerons’ application.
“The landlord owned the premises, and the tenants were aware of that.
“Regardless of who else was involved in making the arrangements, it was the landlord who granted the tenants the right to occupy the premises. No one else had the right to do so.”
A landlord has been awarded almost $53,000 in rent arrears by the Tenancy Tribunal after his neighbours lived rent-free in his townhouse for 15 months, while theirs was repaired when their accommodation insurance ran out. Photo / 123RF
A rental agreement of $800 a week, for approximately six months, was negotiated by the BC’s management company, Wentworth Thompson Limited (WTL). Its insurance policy covered the first 31 weeks’ rent, of $24,800, the decision detailed.
Around January 2019, after the insurance ran out, WTL contacted the Camerons seeking $5400 to cover the rent for the remaining 6.75 weeks they were expected to occupy the house.
In response, the Camerons offered $4800 as full and final settlement, but they didn’t receive a reply and no money was paid at the time.
The repairs to their own house, however, were not completed until July 15, 2020, and the couple had not paid any rent for about 15 months.
Messages between the parties showed it was understood the rent would be $800 a week for the entire time the couple occupied the unit, the ruling stated.
“In this case, the tenancy ended when the tenants vacated and the landlord took back possession.”
The tribunal rejected the argument that the Camerons were personally exempt from paying rent because the insurance would cover it.
“Everyone concerned was aware that the alternative accommodation benefit under that policy for the tenants had a $25,000 limit, which was reached after 31 weeks.
“The tenants have not identified any other policy that they expected would indemnify them for the rent, and plainly there is no policy that provides such an indemnity.”
Offering and actually paying some rent had also undermined their argument, the ruling stated.
Correspondence also showed the couple accepted Randle was entitled to rent payments but they continued to hold others, including the management and insurance company, responsible for paying it.
“It was known that there was no insurance cover available for the rent and so the tenants must have understood that they had the legal obligation to pay the rent.
“Obviously, they believed that there were others who should indemnify them, but that does not affect their obligation.”
Just because Randle filed his claim with the tribunal, three years after the last rent payment and more than two years after the Camerons left his unit, didn’t support their claim that they had no obligation to pay, the tribunal said.
“The fact that the landlord did not take any steps to recover rent from the tenants is not nearly enough.
“The landlord explained that he was waiting for the dust to settle on the repairs before he addressed the payment of rent with the tenants.”
The Camerons were ordered to pay Randle rent arrears of $52,94 by July 24, 2023.
The Camerons told NZME they were very unhappy with the ruling.
The couple have appealed the decision to the District Court, where they believe the case should have been heard in the first place due to the complexity of the issues and number of other parties involved.
They have also asked for a rehearing in the Tenancy Tribunal and been granted a stay of execution until that application is heard.
“The landlord is due rent, but not from us,” they said in a statement.
Leighton Keith joined NZME as an Open Justice reporter based in Whanganui in 2022. He’s been a journalist for 20 years covering a variety of topics and rounds.
