Holler & Rouse v Osaki — what it means for landlords (and how the law changed)

By Sanjay Joy. Published on 27/08/2025.

What happened at the property

In March 2009, tenants at a rented home in Auckland put a pot of oil on the stove, left it unattended for a few minutes, and a fire caused significant damage to the house. The landlords were insured with AMI, which paid for repairs reportedly totalling about $216,000. AMI then sought to recover those costs from the tenants.

What the landlord (via the insurer) did — and the Tenancy Tribunal’s initial order

Acting in the landlords’ name under its subrogation rights, AMI took the tenants to the Tenancy Tribunal, arguing the tenants’ careless use of the premises breached their duties under the Residential Tenancies Act (RTA) and seeking the repair costs. The Tribunal found for the landlord/insurer at first instance (i.e., the claim succeeded in the Tribunal.)

Grounds relied on at the Tribunal: that the tenants were responsible for intentionally or carelessly damaging the premises (RTA s 40), so they should pay for the loss.

How the tenants responded — appeals through the courts

The tenants appealed. The District Court accepted that the “exoneration” provisions in the Property Law Act 2007 (PLA ss 268–269) protect tenants where the landlord holds insurance for the peril, even if the damage was caused carelessly. The High Court upheld that outcome in 2014.

AMI (in the landlords’ name) obtained leave to appeal again. On 15 April 2016, the Court of Appeal in Holler & Rouse v Osaki confirmed that the PLA’s exoneration provisions apply to residential tenancies as general principles of law and are not inconsistent with the RTA. In short: if the landlord is insured for the relevant peril (e.g., fire) and the damage is accidental/careless, neither the landlord nor their insurer can recover those repair costs (or the excess) from the tenant.

The Tribunal’s practice changed immediately

Following the Court of Appeal decision, the Principal Tenancy Adjudicator issued Practice Note 2016/1 to guide adjudicators: where the landlord is insured and damage is more than fair wear and tear but caused accidentally/carelessly, the tenant is exonerated (subject to narrow exceptions for intentional, criminal, or insurance-defeating conduct).

Why the case mattered — the precedent

Holler v Osaki set a clear precedent: residential tenants are not liable for insured, accidental/careless damage to rental premises, and insurers cannot sidestep that by suing tenants in the landlords’ names. That principle reshaped day-to-day Tribunal outcomes across New Zealand.

Parliament steps in — the law change that followed

Because Osaki heavily limited landlord/insurer recovery for careless damage, Parliament legislated. The Residential Tenancies Amendment Act 2019 (commenced 27 August 2019) inserted new rules (now in RTA ss 49A–49E) that partly reverse and standardise liability:

• Tenants remain fully liable for intentional damage (or imprisonable offences) and where insurance money is irrecoverable because of the tenant’s act/omission.
• For careless damage, tenants’ liability is capped at the lesser of four weeks’ rent or the landlord’s insurance excess (per incident).
• Landlords must disclose insurance details to tenants on request, and tenants cannot be required to pay the excess beyond that cap.
• Note: These tenant-liability provisions were enacted in 2019 (Residential Tenancies Amendment Act 2019). The 2020 amendment focused on different policy areas (e.g., termination rules and fixed-term changes). Many commentators (and the Government’s own impact analysis) explicitly link the 2019 changes to the outcomes triggered by Osaki.

Key takeaways for Invercargill & Southland landlords

• If a tenant (or their guest) carelessly causes damage and you’re insured, your recovery is generally limited to the lesser of your excess or four weeks’ rent per incident. Intentional damage remains fully recoverable.
• Tribunal adjudicators continue to apply the Osaki principles and the 2019 statutory rules when deciding landlord claims for damage. Good evidence (condition reports, photos, invoices, policy excess) remains essential.
• Clear insurance disclosure and well-drafted tenancy documents help reduce disputes — and set expectations with tenants up front.

If you’re a landlord in Invercargill, Gore, or wider Southland, Holler v Osaki still shapes what you can recover when a tenant causes damage. Since 2019, the RTA caps liability for careless damage and requires insurance transparency. As your local experts, Pride Property Management can help you structure your tenancies and insurance disclosures to protect your investment and reduce costly disputes.

Disclaimer

This article is general information for landlords and is not legal advice. For specific situations, please contact us for tailored guidance.

Ready to protect your investment? Book a free 15-minute landlord consult with Pride Property Management (Invercargill & Southland). We’ll review your tenancy agreement, insurance settings, and entry/exit processes so you’re aligned with Osaki and the RTA 2019 rules — and set up to avoid surprises. Call 0800 001 659 or message us via the contact form to get started today.