[2018] NZTT Manukau 4140080
TENANCY TRIBUNAL AT Manukau

APPLICANT:

SUNRISE PROPERTY MANAGEMENT AND SERVICES
LIMITED Iris Wai Lau
Landlord

RESPONDENT:

How Seng Lee and Serene Ong
Tenant

TENANCY ADDRESS: 10 Glencullen Place, Dannemora, Auckland 2016

ORDER
1. Serene Ong is joined as a relevant party being a joint tenant to the tenancy.
2. How Seng Lee and Serene Ong, the tenants of the premises situated at 10
Glencullen Place, Dannemora, were operating an Airbnb business from the
premises by subleasing a room to guests in breach of both the tenancy
agreement and section 44 of the Residential Tenancies Act 1986. This practice
has ceased. The tenants are to refrain from operating an Airbnb business from
the premises in future.
3. How Seng Lee and Serene Ong must pay SUNRISE PROPERTY
MANAGEMENT AND SERVICES LIMITED Iris Wai Lau $1,222.94 immediately,
calculated as shown in table below.

Description
Compensation for sublease breach
Filing fee reimbursement
Total award
Total payable by Tenant to Landlord

Landlord
$1,202.50
$20.44
$1,222.94
$1,222.94

Tenant

4. The application for termination of the tenancy is dismissed.

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 Reasons:
1. A hearing was convened on 2 July 2018. Ms Iris Lau attended the hearing in
person for the landlord, Sunrise Property Management and Services Limited. Mr
How Seng Lee attended as the tenant and on behalf of the other joint tenant, Ms
Serene Ong. The Tribunal heard the respective positions of the parties in full.
The Tribunal reserved its decision to consider in detail the technical issues raised.
Having now carefully considered the significant submissions made by the parties
and the evidence, the Tribunal’s decision follows.
2. The parties entered a fixed term tenancy agreement for a term from 16 March
2018 to 15 March 2019.
3. The landlord claims that the tenants rented out a room at the property situated at
10 Glencullen Place, Dannemora, on Airbnb in breach of the provision in the
tenancy agreement prohibiting subleasing.
4. The landlord claims compensation of $1,722,94 for the breach, being
reimbursement of the filing fee ($20.44), administration cost to the owner
($287.50), insurance reinstatement ($115.00), compensation due to distress
($1,000.00) and account of profit generated ($300.00). In addition, the landlord
sought termination of the tenancy.
5. The issues to be determined are:
a) Did the tenants breach a provision in their tenancy agreement by subleasing a
room in the property on Airbnb?
b) If so, is the landlord entitled to termination of the tenancy?
c) What, if any compensation, is the landlord entitled to?
6. I will address the issues in turn. In general, the onus or burden of proving a
particular claim rests with the party who is making that claim (in this case, the
landlord). The standard of proof, or level of evidence, required is “on the balance
of probabilities”. In other words, the party proving the claim must establish with
evidence that their claim is “more probable than not” or “more likely than not”.
Did the tenants breach a provision in their tenancy agreement by renting out a
room in the property on Airbnb?
7. Section 44 of the Residential Tenancies Act 1986 (RTA) allows a provision in a
tenancy agreement prohibiting a tenant from assigning, subletting or otherwise
parting with possession of the premises during the term of a tenancy without the
landlord’s consent.
8. It is not disputed that the tenancy agreement between the parties expressly
prohibited subleasing, stating:
“The tenant shall not, without prior written consent from the landlord or
property manager:
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 1. Assign, sublet or part with possession of the premises belonging to the
landlord.”
9. Section 2 RTA defines the premises as including “any part of any premises".
10. In June 2018, the owner became aware through their insurance company that the
tenants were operating an Airbnb business from the premises. The owner
contacted its agent, Ms Lau of Sunrise Property Management and Services
Limited, with concerns about that. On 6 June 2018, the landlord’s agent served
the tenants with a 14-day notice requiring the tenants to remedy the breaches of
subleasing, using the premises for purposes other than residential, exceeding the
maximum number of people residing at the premises and misleading the owner to
enter the tenancy agreement by providing false information (that the property
would be for family use only).
11. The tenants do not dispute that they had signed up with Airbnb on 22 March 2018
to host guests in a room at the property. Airbnb is an online marketplace where
guests go to find a bed to stay and hosts list their room/property for rent. The
tenants’ understanding was that because they were not making the whole of the
premises available to guests they were not subleasing and were therefore not in
breach of their obligations to the landlord. They did not however wish to lose the
tenancy and immediately unlisted the premises with Airbnb on 8 June 2018 and
cancelled future bookings.
12. The issue of tenants conducting Airbnb businesses from rented premises has
attracted a large volume of public attention. It is clearly an area of significant
concern for landlords who, like the applicant in this case, worry about people they
have no knowledge of being in the premises, the prospect of increased wear and
tear from a succession of short term occupiers and the risk that the arrangements
will void their insurance cover.
13. The Tribunal has considered the question on several occasions – see Nice Place
Property Management Limited v Ogbourne and Couzens TT Wellington 4046775
and 4052902 (15 February 2017), Ioannou v Drummond TT Wellington 4117151
and 4118265 (21 February 2018), Lincoln Darling Real Estate Limited v Hoang TT
Dunedin 4120222 (28 March 2018), Realty List & Sell Limited v Henry TT Taupo
4068303 (7 April 2018) and Nice Property Management Limited v Paterson TT
Wellington 4115779 & 4114640 (26 April 2018). In that decision the Tribunal
found that the tenants in that case, by hosting Airbnb guests in the premises were
subleasing those premises. In that case the tenants moved out and the Airbnb
guests had occupation of the whole of the premises. However, the Tribunal was
not called upon in that case to determine whether the use of one room for Airbnb
hosting constituted subletting.
14. In my view, there is a measure of consensus that offering Airbnb guests
occupation of the whole rented premises constitutes a subleasing of those
premises. The question I have to look at is whether the position is any different
where only part of the premises are made available and particularly where, as in
this case, the Airbnb “host” remains in the premises throughout the guest’s stay?
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 15. Whilst the RTA does not define “subletting”, case law, common use and dictionary
usage of “subletting” is consistent in defining it as a situation where a tenant
accommodates others in a property in return for rent in some form, whilst still
retaining responsibility for the tenanted property.
16. Black’s Law dictionary by Garner, Bryan A, 99 edition, defines sublease as a
“lease by a lessee to a third party, conveying some or all of the leased property
for a shorter than or equal period to that of the lease, who retains the rights and
responsibilities of the lease…”
17. Tenancy Tribunal decisions reinforce that a sublessor is where a tenant continues
to pay rent to the landlord and remains liable under the tenancy agreement (see
Wilkie v Stevens DC May 1993, at p3.)
18. In the decision of the Supreme Court of Victoria in Swan v Uecker and Greaves
[2016] VSC 313, much of the Court’s discussion concerned whether an Airbnb
guest is given an exclusive right of occupation of the premises, as a factor in
considering whether their occupation of the premises was as a sub-lessee or
licensee (like a hotel guest). At paragraph 44 of the decision His Honour Croft J
said:
“Finally, in this context and in the context of the broader considerations flowing
from the authorities which have been considered, I am of the view that the
hotel room analogy is not appropriate in the present circumstances. The
evidence and the provisions of the AirBnB Agreement indicate, in my view,
that although the occupancy granted to the AirBnB guests was, in this case,
for a relatively short time, the quality of that occupancy is not akin to that of a
“lodger” or an hotel guest. Rather, it was the possession—exclusive
possession—that would be expected of residential accommodation generally.
In the present circumstances, it is no different from the nature of the
occupancy—the exclusive possession—granted to the tenants, the
Respondents, under the Lease from the Applicant. They have, by means of
the AirBnB Agreement, effectively and practically passed that occupation, with
all its qualities, to their AirBnB guests for the agreed period under the AirBnB
Agreement”.
19. The Tribunal in the decision of Realty List & Sell Limited v Henry (above), has
commented that the analysis in Swan v Uecker and Greaves applies equally to
the position of guests whose contract grants them occupation rights to only part of
the premises.
20. The Tribunal in Lincoln Darling Real Estate Limited v Hoang (above) found that
“by letting out part of the premises through Airbnb the tenant breached the
prohibition on assignment, subletting or parting with possession”.

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 21. Thus far, I am satisfied that the tenants hosting Airbnb guests in the property and
giving them exclusive rights to possession and occupation of parts of the property
was subleasing and parting with possession of “any part of any premises”. I find
the subleasing of a room in the property was a clear breach of both the RTA and
the tenancy agreement.
22. It follows that the 14-day notice was properly issued by the landlord in respect of
that claimed breach.
If so, is the landlord entitled to termination of the tenancy?
23. Under section 56 RTA, the Tribunal may make an order terminating a tenancy if
either party has breached any provision of the tenancy agreement. In the case of
a breach capable of remedy, notice must be given allowing a party in breach at
least 14 days to remedy the breach. The breach must be of such a nature and
extent that it would be inequitable to refuse to terminate the tenancy.
24. To give some immediate certainty to the parties I indicated before ending the
hearing that I would not be making an order terminating the tenancy under section
56.
25. The tenants took immediate steps to comply with the notice by making sure no
further bookings could be made.
26. The matters specified in the notice concerning subletting and the number of
occupants of the premises (including future bookings) had been fully addressed
by the date of hearing.
27. The landlord had no objective evidence that the premises were still being let out
other than to the tenants and their family.
28. In those circumstances, I do not consider it inequitable to refuse an order
terminating this fixed term tenancy.
What, if any compensation, is the landlord entitled to?
29. The Tribunal can order a party to pay to the other party such sum by way of
damages or compensation as the Tribunal shall assess in respect of the breach of
any express or implied provision of the tenancy agreement or any provision of
RTA (section 77(1)(n) RTA)
30. The landlord and owner suffered loss as a result of the tenants’ breach in several
ways. The loss suffered was the strain and worry over what had happened, the
breach of trust and deception by the tenants, loss of insurance cover, and wear
and tear on the premises from the unknown number of people living at the
property during the period from 22 March 2018 to approximately 7 June 2018.
31. The calculation of their loss of $1,722,94 was as follows:
i)

compensation for subleasing breach due to distress ($1,000.00)

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 ii)
iii)
iv)
v)

administration cost to the owner ($287.50)
insurance reinstatement fee ($115.00)
account of profit ($300.00)
reimbursement of the filing fee ($20.44)

32. I consider it is reasonable to award the landlord and owner some compensation
for the subleasing breach.
33. The tenants disagreed with the amount of compensation sought by the landlord.
The tenants state they had made an initial offer of reimbursement of the insurance
reinstatement fee of $100.00 plus GST to settle the landlord’s claim without
having to come to the Tribunal. This was not accepted by the landlord so they
increased their offer to $500.00 but this was also not accepted.
34. In the case of Nice Place Property Management Limited v Ogbourne and
Couzens (above), the Tribunal discussed the difficulty of determining the amount
of compensation, especially when the loss was largely the owner’s mental
distress and suggested there was a general band within which there was a fair
and objective measure. In that case, the compensation awarded was $1,000.00.
35. In the case of Lincoln Darling Real Estate Limited v Hoang (above), the Tribunal
noted that when determining compensation, it is important to focus on the breach,
but it was not the sole consideration. The Tribunal also took into account the
value of rent received by the tenant and the scale of the business operation.
Here, the length of time the tenant had undertaken the letting and rent received
was significant and the compensation awarded was $2,000.00.
36. Generally, for a breach at the lower end of the scale where there is no monetary
loss but inconvenience, awards tend to be in the region of $100.00 to $450.00.
Where there is a greater degree of inconvenience and mental stress awards in
the mid-range of $450.00 to $1,000.00 are common. At the higher end of the
scale where the breach is significant and there is hardship, aggravation,
humiliation and fear, awards have been $1,000.00 to $2,000.00
37. In the circumstances and taking into account the landlord’s evidence, I consider
an award of compensation for the subleasing breach in the mid-range scale of
$800.00 is warranted and reasonable.
38. It is accepted that in exceptional circumstances, a claim for an account of profits
for breach of contract could be awarded taking into consideration the commercial
nature of the subletting which has occurred. I find there is insufficient evidence
before the Tribunal to uphold the landlord’s application for an account of profits
($300.00). I note there is no evidence of the profit made by the tenants. This
aspect of the landlord’s claim is dismissed.
39. I accept that the other costs sought by the landlord, administration costs to the
owner ($287.50) and insurance reinstatement ($115.00), are reasonably
foreseeable costs incurred as a direct result of the breach. I therefore consider it
reasonable to award these costs.
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 40. In summary, the tenants are to pay the landlord the amount of $1,202.50 as
compensation for the subleasing breach, calculated as follows:
Compensation for sublease breach
Administration costs to owner
Insurance reinstatement fee
Total compensation awarded

$800.00
$287.50
$115.00
$1,202.50

41. I do not consider the filing fee an actual loss incurred by the landlord. Awarding of
reimbursement of the filing fee is at the discretion of the Tribunal has under
section 102 RTA. Having said that, on the fundamental point concerning the
subleasing claim, the landlord is correct. I accordingly order that the tenants
reimburse the landlord the filing fee of $20.44 paid for filing the application.
Publishing order
42. The tenant requested that the order not be published as he was concerned about
adverse consequences and the impact this would have on their ability to secure
another tenancy.
43. All orders are published unless there are persuasive reasons why they should not
be. I am not satisfied that this is the case here, and I have therefore published this
order.

J Setefano
16 August 2018

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