An Auckland landlord has been left with a $400,000 repair bill after their million dollar rental’s occupants ran a cannabis growing operation that sparked a major fire.
Yet the tenants will now contribute just $800 to directly help with the insurer’s repair costs, a recent Tenancy Tribunal decision showed.
The tenants will, however, have to fork out another $22,000 to cover unpaid rent and other minor expenses incurred by the property owner.
Tenant Hiep Tuan Luu told the tribunal hearing he didn’t know the home was being used to grow cannabis because he hadn’t been living there.
Instead, he had been illegally sub-letting it to a friend.
That ultimately led to the Flat Bush home – which has a $1.1 million council valuation – catching alight on November 30 last year.
The fire badly damaged one of the rental’s bedrooms as well as its roof cavity, bathroom and hallway.
Smoke, soot and heat damage scarred the rest of the property.
Fire crews rushing to put out the flames also quickly discovered something else.
Two of the rentals’ rooms had been set up as cannabis growing operations with added lighting and ventilation equipment installed, Police and Fire and Emergency NZ confirmed.
They were powered by a botched, home-made effort at running extra wiring to the electricity supply, fire investigators said.
This had been connected “to the electricity supply before the meter and bypassed the circuit board, causing the wiring to become overloaded”, Tenancy Tribunal adjudicator Mike Edison said.
Investigators subsequently concluded “the fire was caused by a poorly wired electrical diversion to supply the cannabis grow operation”.
Tenant Luu claimed no knowledge of the fire’s cause.
He had initially signed up to rent the property on a fixed term lease from July 6, 2019, to July 6, 2020 together with fellow tenant Pham Thuy Thi.
However, Luu told the tribunal hearing Thi pulled out of the agreement shortly after it was signed.
That meant Luu was unable to afford the tenancy on his own, he said.
As a result, on July 9 last year, he moved out and sublet the property.
“Mr Luu says he sublet the property to help a friend, who had unknowingly put him in this situation,” adjudicator Edison said.
“He says he did not know cannabis was being grown at the property, or know that the subtenants were involved with drugs.”
Luu told the hearing he would call round to the property to collect rent – which Luu set at a higher rate than that which he paid the landlord – from the subtenants but would not go inside.
He said he only went inside the rental during an inspection last October with property managers Barfoot & Thompson because his friend had travelled to Vietnam and asked him to be there.
Adjudicator Edison accepted that the Barfoot & Thompson inspection report showed there was no sign of a drug operation running in the house at the time of the October inspection.
However, Edison said Luu and Thi remained responsible for what happened at the property.
Luu had never sought to remove Thi’s name from the tenancy agreement, nor ask permission to sublet the rental, Edison said.
“The purpose of requiring tenants to obtain the landlord’s permission before assigning, subletting, or parting with possession, is to enable the landlord to regulate who lives in the property,” he said.
“This protects the landlord from having the premises used in an inappropriate way, or by an undesirable occupier.
“In this case, the landlord was deprived of that opportunity.”
Because the rental owner had insurance to cover the estimated $400,000 worth of damage, Edison ordered Luu and Thi to only pay an $800 contribution to the repairs.
This would cover the owner’s $800 insurance excess payment, Edison said.
With six months remaining on the fixed term lease, Edison also ordered Luu and Thi to pay $21,188 in unpaid rent.
Luu claimed it was unfair to ask him to pay the rent because the rental owner’s insurer had already paid out $20,000 in lost rental income.
However, Edison said it was “a general principle” that insurance payouts did not reduce a tenants’ liability to pay rent.