But, after discussion with Mitrovic, WDC agreed the work could and should be deferred until after the end of the tenancy on November 13.
The tenants took their case to the Tenancy Tribunal, raising issues relating to the septic tank leak and the premises being unlawful - it did not have a code of compliance certificate. They also sought a refund of their bond.
In a decision released last week tribunal adjudicator Nicholas Blake said, while Mitrovic had taken "prompt, reasonable, and appropriate" steps after being made aware of the issue, compensation should be considered.
The tribunal ordered Oakura Investment to pay the pair $250 compensation for loss of amenity over the sewage leak at the property and that their $1000 bond be refunded to them.
"The problem was unpleasant for the tenants to have to live with, and it impacted, at least to some extent, with their use and enjoyment of the premises," Blake said.
The septic tank was located well away from the house, but the fact that raw sewage leaked from the tank "is per se a health and safety issue", the decision said.
He said, the council's agreement to deferring the remedial work confirmed Mitrovic's view that the leak was minor, and the health and safety risk was minimal.
Mitrovic also acknowledged he was aware before the start of Hunapo and Thompson's tenancy that the dwelling did not have a code of compliance certificate.
Mitrovic told the tribunal that at that time he understood the council would issue a certificate for a historical building consent. That policy had been changed relatively recently, Mitrovic said, and when he became aware of the change he began the process to obtain a certificate.
A council building inspection on August 31 found a number of issues to be fixed before the code of compliance could be issued. These included the need for a tempering valve on the wetback and construction issues with both the deck and the sub-floor.
Mitrovic submitted the issues were relatively minor, and the only faults that potentially had any health and safety implications were the temperature control on the wetback, and a non-compliant set of stairs.
Blake said under the Residential Tenancies Act, landlords must take all reasonable steps to ensure that, at the start of a tenancy, there is "no legal impediment to the occupation of the premises for residential purposes".
The fact the property did not have a code of compliance certificate was an impediment to lawful occupation by Thompson and Hunapo, Blake said.
"Mr Mitrovic's understanding was that there was no way to remove that impediment. Mr Mitrovic proceeded with the tenancy anyway," Blake said.
''My finding is that the premises were unlawful residential premises for the duration of the tenancy.''
Blake said in this instance the unlawfulness was more technical than substantial and the building work required to obtain a code of compliance certificate was relatively minor.
"The tenants had the use and benefit of the premises, and the amount of rent charged was below market value. I also acknowledge that Mr Mitrovic has taken proactive and appropriate steps to obtain a code of compliance since becoming aware that was possible," he said.
"Having regard to these factors, my finding is that holding the tenants not liable for the proven rent arrears is appropriate compensation for the tenant and appropriate penalty for the landlord."
Blake dismissed the landlord's claim for rent arrears of $3650.
