Remedies when a tenant profits from unlawful sublease on Airbnb: Nice Place Property Management Ltd v Paterson

Abstract

In Nice Place Property Management Ltd v Paterson [2018] NZDC 20936, a New Zealand court recently ordered a tenant to pay their landlord the roughly NZ$7,500 profit that the tenant had made while subletting the premises via Airbnb in breach of their lease. The orthodox position is that an account of profit for breach of contract is available only in exceptional cases. We argue that Nice Place is not such an exceptional case. However, we suggest that a court could make an award of ‘negotiating damages’, which are compensatory in nature, to reflect the landlord’s loss of the right to control the use of their land. This approach could result in a sum less than, or possibly more than, the tenant’s actual profit.