A tenant ran a brothel in a rental home. The landlord took the case to the tribunal — and lost. Here is what New Zealand law says...

A Wellington tenant was providing sexual services in her rented home.

The landlord sought compensation from the tenant through the Tenancy Tribunal, but lost.

How did this happen?

A recently published Tenancy Tribunal ruling shows that property management company Earle brought a claim against tenant Jo (Kelly) Lien for “illegally” providing sexual services at a rental property in Mt Cook, Wellington. During the tenancy, three sets of furniture were damaged, the curtains became mouldy and the kitchen hob sustained burn marks.

Property manager Lionel Earle told the tribunal that he initially knew nothing about Lien's sex work. He only found out when police told him they had received a complaint and were “investigating whether this brothel was legal”.

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Earle then questioned Lien, who admitted providing sexual services at the rental property.

Earle told Lien that this type of business was not permitted at the property. Lien replied that she would have to end the tenancy if she could not continue her work. The parties then agreed to terminate the tenancy agreement.

Earle's property management company subsequently applied to the Tenancy Tribunal for exemplary damages over Lien's allegedly illegal provision of sexual services at the rental property. Earle also sought a share of the profits from the sex work, but later withdrew that second claim.

However, the Tenancy Tribunal said the Prostitution Reform Act 2003 allowed brothels to operate anywhere, provided they complied with district planning rules. Wellington City Council did not require resource consent for a “home occupation”.

In this case, there was insufficient evidence that the brothel operated by tenant Lien breached any district rules, and no evidence that it was operating illegally. The allegation that the tenant had used the property “for an unlawful purpose” was therefore not established, and the landlord's claim for exemplary damages was dismissed.

However, Lien had caused damage to the rental property: three sets of furniture were damaged, the curtains were mouldy and the kitchen hob had burn marks.

The Tenancy Tribunal upheld the landlord's claim to have the property restored to its original condition, awarding Earle's property management company NZ$1854 in compensation.