Rotorua landlords Stephen and Jasu Bhana ordered to pay costs, damages for unsafe living conditions

The decision said "the most serious issue" was dampness, with black mould found in bedrooms. Photos / Supplied

Cockroaches so bad they affected electrical appliances, rodents, faulty appliances and electrical fittings, a cracked toilet bowl causing wastewater to overflow, missing drawers, cupboards and doors, and black mould and dampness so severe it forced families out of bedrooms to sleep huddled in lounges. Reporter Kelly Makiha reveals how the Tenancy Tribunal has punished a trust run by longtime Rotorua landlords for an "ongoing pattern" of behaviour to avoid the rules.

A Rotorua trust represented by Stephen Bhana and his sister Jasu Bhana has been ordered to pay more than $16,000 in damages and costs for having tenants in unsafe living conditions.

The Tenancy Tribunal has also ordered the Bhanas, on behalf of Ranolf Trust, to undertake substantial repair work to three Rotorua properties under investigation in order to address maintenance and water tightness issues.

The tribunal's decision has described the trust's actions as displaying an "ongoing pattern of behaviour". It said the landlords committed multiple breaches of the Residential Tenancies Act.

Jasu Bhana did not want to comment on the Tenancy Tribunal decision when approached by the Rotorua Daily Post. Photo / Andrew Warner

The action started in July 2019 and ended with the decision being released to the parties in September last year. The tribunal's decision has only just been released to the Rotorua Daily Post Weekend.

The tribunal action was taken by the Ministry of Business, Innovation and Employment after one of the tenants complained the floor under the carpet was wet. The names and identities of the tenants have been suppressed.

An investigation found several issues at three of the units in the block of four owned by the trust. The tribunal decision outlined the conditions the three lots of tenants were living in.

It included dangerous and unsanitary rubbish left in the driveway of the properties, cockroaches that damaged the electrical appliances, rodents, broken power points, a rusty oven, only one element working on a stove, no smoke alarms, lack of adequate insulation, leaks, running toilets, a cracked toilet bowl causing wastewater to overflow, only cold water going into washing machines and a kitchen missing cupboard doors, drawers and doors.

In one case, a man's small child became trapped in a bathroom because a door handle broke.

The decision said "the most serious issue" was dampness, with black mould found in bedrooms, mouldy walls and ceilings, swollen skirting boards and ceilings, swollen and cracked window linings, blocked gutters, leaking windows, rotting timber and damp conditions that forced tenants to throw away bedding and clothes because of a musty smell.

Mould and broken toilets were among the concerns. Photo / Supplied

Dampness in the bedrooms of one of the units forced one tenant to sleep in the living room with her children.

In the decision, tribunal adjudicator John P Smith said there were health issues with the children and the tenant had to supply her own heater.

"For several months she had to cope without a properly working stove, with faulty power points and running extension cords to the kitchen. This was not a safe environment with young children," Smith said.

The decision said Stephen Bhana tried to tell the tribunal the tenants engaged in "copycat" behaviour to extort compensation from him and claimed they threw water on the floor.

The decision said the properties were subject to Dangerous and Insanitary Building Notices issued by the Rotorua Lakes Council in 2017. The trust obtained building consent to complete remedial work and the notices were lifted throughout 2018 and 2019. At the time of the tribunal hearing, the fourth unit in the block still had a notice attached to it and remedial work was still to be undertaken.

The decision said the trust had continued to avoid regulatory requirements since the notices were lifted, causing the ongoing issues.

Stephen Bhana argued to the Tenancy Tribunal the tenants were in rent arrears and therefore the trust was not required to carry out any repairs.

"Mr Bhana's interpretation of this provision is plainly wrong," Smith said in the decision.

Stephen Bhana was an experienced landlord and had managed the units off and on since they were built in the 1980s and had managed seven other rental properties for up to 10 years, Smith said.

"It is, therefore, a matter of great concern that he is promoting such a misconceived idea that any breach by a tenant, no matter how minor or unrelated, would relieve a landlord of their statutory obligation to maintain the premises," Smith said in the decision.

The decision found the trust intentionally breached its obligation to maintain the units in a reasonable state of repair. It detailed four previous Tenancy Tribunal decisions involving the trust where it was found as a landlord to have failed.

The case showed a "pattern of behaviour" on the part of the trust to breach the duty to maintain premises in a reasonable state of repair, breach regulatory requirements and make "unfounded claims against the tenants".

The decision outlined how Stephen Bhana tried to get one of the tenants to back out of the court action and after that discussion ended in an argument, Stephen Bhana then issued the tenant with a 90-day eviction notice.

Rubbish dumped outside the flats. Photo / Supplied

"There is a clear pattern of behaviour around this time, involving all three tenants of the trust, encouraging or pressuring them to withdraw support for MBIE's proceedings," Smith said in the decision.

The tribunal awarded two of the tenants $5000 each and the third $3000 in exemplary damages. The remaining costs included $2000 in costs, $1410.90 in witness expenses and $61.32 in three filing fees.

MBIE acting national manager of the Tenancy Compliance and Investigations Team, Dan Herlihy, told the Rotorua Daily Post Weekend it took the action to the Tenancy Tribunal as the units were unsafe and a danger to the health and wellbeing of the families and young children living there.

There were mould and dampness issues. Photo / Supplied

"This decision sends a strong message to landlords that there is no excuse for not complying with tenancy law and the penalties for not doing so are high, especially when there is clear evidence of a pattern of non-compliant behaviour."

The flats have long been the centre of controversy after the High Court ordered that they and two other neighbouring blocks also owned by the Bhana family trusts be sold to recoup debts.

Court documents at the time showed the liquidation sale was stopped after a lengthy legal wrangle when a last-minute payment of $300,000 was made, meaning the flats could remain in the Bhanas' trust's ownership.

The trust has now lodged an appeal against the tribunal's latest decision in the Rotorua District Court. A date for the hearing has yet to be set.

A MBIE spokeswoman said its records showed the tenants were paying $500 a week each for the two-bedroom units in 2019. She said two of the tenants no longer lived there.

The third tenant has confirmed to the Rotorua Daily Post he is still living at the property with a woman and a small child but he didn't want to discuss the court case further.

Rotten windowsills were discovered. Photo / Supplied

His property had no front sliding door or window. The sliding door area was instead half-covered with a piece of wood and a sheet. The window was covered with a heavy piece of black card.

Jasu Bhana, when approached by the Rotorua Daily Post Weekend, said she and her brother did not want to comment.