Can You Still Bank on “But They Had Somewhere To Live”?
“The tenant had somewhere to live. They can’t expect all their rent back.”
As reassurance goes, it’s pretty… reassuring. Short, logical, and considerably more pleasant than multiplying the weekly rent by three years. You can see why the idea has stuck. The property might not have been lawful to rent out, but the tenant still had a home so the landlord should be able to keep something. That’s been the way in renting land for the last few years. Until, possibly, now.
Earlier this month, the High Court gave property managers a reason to revisit that reassurance. In While v Moffitt*, a tenant who paid $113,825 in rent over three years and was awarded a $4,000 refund received permission to take questions about the rent-refund rules to the Court of Appeal. The Court has not ordered a full refund or decided that the existing approach is wrong. It has decided that questions about how the law works deserve another hearing.
For your next owner conversation, the useful distinction is this: there may be reasons an owner can keep some rent. That does not justify promising they will never have to repay all of it.
The case, without the legal obstacle course
Troy While rented a unit downstairs from his landlords’ home for more than three years. The landlords did not have the required consent for a second dwelling. Mr While sought his rent back and also alleged that an overhanging deck and conservatory were unsafe. Before this latest judgment, the case had already been through three stages:
Tenancy Tribunal: Awarded him a $4,000 rent refund.
District Court: Upheld that refund and added $1,000 in exemplary damages, an additional award to penalise the landlords.
High Court: Dismissed his further appeal in March 2026.
Mr While nevertheless persisted.
And on the 10th of September, Justice Gardiner identified a genuine legal question being the inconsistent awards and consequences that extend beyond this tenancy and gave Mr While permission to appeal to the Court of Appeal
Can the landlord keep some rent because the tenant had a home?
That is the practical question owners will recognise. To understand why it is back in play, you need two pieces of the legal background.
First, the Act allows a full refund. Section 78A allows the Tribunal to order repayment of all rent for the period the premises were unlawful. It also allows a smaller refund where it considers a deduction fair in light of “special circumstances”, including the nature of the premises (s 78A(4)(a)).
Second, earlier decisions have taken the tenant’s accommodation into account. Courts have considered that benefit alongside what made the property unlawful and the condition of the premises when allowing landlords to keep some rent. The result depended on the facts of the tenancy.
Here is the complication. The Courts and the Tribunal have drawn on an earlier Court of Appeal case, Want v Parbhu, which rejected automatic full repayment for incidental failures to meet legal requirements, regardless of the benefit the tenant received. But that case dealt with a different section of the Act, not s 78A. As such, Justice Gardiner found there was a genuine question about how s 78A should work, what counts as “special circumstances”, and how that earlier decision should influence the answer.
So we have neither a new guarantee of full refunds nor a guarantee against them. We have a legal question important enough for the Court of Appeal to consider.
Check the promise before you check the property
Somewhere along the way, “you may be able to keep some rent” can become “you won’t have to repay it all”. A possibility acquires the confidence of a guarantee. No additional legal work required. That reassurance can start looking like “legal advice” very quickly. An owner may put off checking a conversion, decline advice or take a harder line in a dispute because they believe the financial downside is limited.
That is why I would start with what we tell owners. Have we explained a possible outcome, or accidentally sold them certainty?
A Tribunal award is not a price list for non-compliance. What one landlord was allowed to keep does not tell us what the next landlord will keep.
You can check the property without predicting the appeal
The legal question can wait for the Court of Appeal. An unanswered question in a property file can often be investigated now.
There is an important distinction here. “Unlawful residential premises” has a specific legal meaning: broadly, the premises cannot legally be lived in as they are being used, and the landlord’s failure to meet certain obligations has caused or contributed to that situation (s 78A(2)). A missing document does not, by itself, prove the property is unlawful. It may simply mean you need more information.
For a conversion or layout with an unresolved consent question, the next step might be a records check. If the records do not answer the question, someone qualified may need to assess them.
The Court of Appeal is unlikely to organise your property files as a courtesy. Equally, an unanswered question does not automatically mean the owner needs to fund building work.
The next sensible purchase may be information. Find out whether anything needs fixing before deciding what to spend.
If there is already an immediate safety concern or a legal duty to act, address it now. An unresolved appeal is no reason to wait.
Make the next “yes” easier
Imagine an owner who has called a conversion “just a paperwork issue” for years. They have also been told that the tenant having a home would protect them from a full refund. Asking that owner to investigate can lead to a couple of one-two blows: there’s the cost of investigating and then there is the dent to the ego for admitting they were wrong all along.
That will not explain every hesitation. But there is a way to manage this risk without making the owner admit they are wrong:
“The tenant having somewhere to live has helped landlords argue for smaller refunds. But I wouldn’t promise that it protects you from repaying all the rent. This appeal will examine how the rules should work. For your property, let’s start by checking what was approved.”
Then make the request specific. “Check compliance” sounds like a project with no obvious end; a defined first step is easier to assess:
What we know: The documents we have do not show whether this layout was approved.
What we need to find out: Whether other records answer that question or we need specialist advice.
What we are asking you to approve: A records check with agreed tasks, a cost limit and a date to discuss the findings.
The owner can see what they are buying and when the next decision comes. You have given them a manageable way to investigate, without declaring the property unlawful or asking for a blank cheque. If an owner refuses a necessary step, recording that refusal does not fix the problem or necessarily protect you. You should get advice about your own position.
Give owners a reason to choose you beyond the rent appraisal
“Peace of mind” is a popular promise in property management. Unfortunately, it is literally what E-V-E-R-Y-O-N-E else is offering. This decision gives you a more useful conversation to have with prospective owners. When there is an unresolved consent question, you can show them how you handle uncertainty before asking them to trust you with the property.
Suppose a owner says, “The downstairs unit has always been rented out.” You could let that reassurance pass. Or you could say:
“That tells us its rental history. It doesn’t establish what was approved. Before we recommend letting it, let’s identify which records we need and whether someone qualified needs to assess them. I can explain that first step and its cost before you commit.”
Now the owner has experienced something more useful than a claim that you are proactive. They have seen you notice a gap, explain it without creating a panic, and make the next decision manageable. The subtle commercial move is to change what they are comparing. Alongside “What rent can you get?” and “What is your fee?”, you have introduced another question: “Who will help me make a sound decision when the answer isn’t obvious?” This need not become a free technical audit. Agree what your management review covers, what requires specialist advice and who pays for it.
It also tells you something about the owner. Someone who welcomes a sensible check may be a better fit for your service than someone who insists that you stop asking questions. Winning the instruction is only the beginning of working with them.
You cannot predict how the Court of Appeal Justices will eventually rule on Mr While’s application. You can make your approach clear enough for an owner to decide whether it is worth paying for.
Three useful moves this week
You do not need to declare an emergency across the rent roll. Start with the advice you give and the questions you already know are unanswered:
Review the reassurance: Explain why an owner might keep some rent. Do not promise that a full refund cannot happen.
Define the next check: For a known consent or use question, identify what information is missing, who can assess it and what the owner needs to approve.
Make it part of the service: Where a consent or use question is unresolved, show existing and prospective owners how you establish the facts and recommend the next step. Give them a specific example of your judgment, rather than another assurance that you are proactive.
While v Moffitt has opened an important legal question; this judgment has not answered it. You can still help owners make better decisions while that question is unresolved.
“Here is what we know, here is what we need to check, and here is what I recommend next.” That is useful advice an owner can act on. It also lets them see the judgment they are paying you for.
*This article analyses Gardiner J’s leave decision in While v Moffitt [2026] NZHC 2780, dated 10 September 2026. Unless another case is named, paragraph references are to that judgment. It provides general information and professional-practice commentary; advice about a particular property requires its facts and relevant records.
