David Russ of Tekoa Trust took his case to court after the Tenancy Tribunal ruled last year that his tenant, Amanda Stewart, was not liable for damage caused by her dogs urinating throughout the Foxton house she rented.
The tribunal based its decision on the landmark "Osaki" court case, in which tenants who accidentally set fire to their rental house did not have to pay for the damage.
Landlords around the country became concerned that if they had insurance, the tenant would not have to pay even in cases of carelessness.
However, the Palmerston North District Court has overturned the tribunal's decision and ordered Stewart to pay about $3790 in carpet replacement costs, court costs and lost rent.
Judge David Smith said he was "of the view" that the tribunal adjudicator was wrong for concluding the damage was unintentional.
Not only had the tenant breached a no-dog clause in her tenancy agreement, but she had continued to let them in after perhaps a couple of accidents.
Fairfax Media was unable to contact Stewart, who did not attend the case.
Russ said he was "pretty happy with the outcome".
"Common sense has prevailed."
He said there was a big difference between damage based on a pot fire and damage which was allowed to happen.
"People have to be responsible for their actions."
Tenancy expert Scotney Williams of tenancy.co.nz said the appeal case would help both landlords and tenants by clarifying the meaning of unintentional damage.
"The decision being a district court decision creates binding precedent at the Tenancy Tribunal for similar cases", he said.
He said the District Court used a passage from the Brookers Summary Offence, a legal text book, to support its decision.
"Conduct will be intentional when it is deliberate, and not accidental, and [resulting damage] will be intentional if the defendant meant to cause it or (probably) knew it was going to result," the court order said regarding the reference.
Building and Construction Minister Nick Smith has proposed to change the current law so a tenant would be liable for damage of up to four weeks of rent or, if it was more, the landlord's insurance excess.
The law change is currently going through consultation.