Andrew Fletcher and Song Fletcher; v Luke Bunbury

NCAT Consumer and Commercial|2015-03-12

THE APPLICATION

Application RT 14/56568 was lodged on 24 November 2014 by Mr and Mrs Fletcher ("the Tenant") who occupied the rental property under a residential tenancy agreement with Mr Bunbury ("the Landlord"). The Tenant seeks an order that rent payable for the rental property is excessive due to the reduction or withdrawal of services pursuant to s 44 of the Residential Tenancies Act 2010 ("RTA").
This application was subsequently amended to include a claim for compensation for losses and damages in the amount of $19,332.50 suffered as a result of mould in the rental premises. The Tenant claims losses amounting to $19,332.50 for the cost of mould remediation ($16,500.00), transport of goods ($1,182.50), mycologist assessment ($1,650.00). The Tenant has agreed to accept the jurisdictional order making limitations of the Tribunal.
Application RT 14/60601 was lodged by the Tenant on 12 December 2014 and seeks repayment of the rental bond.
Both applications were listed for hearing on 12 March 2015. Mr and Mrs Fletcher attended and the Landlord was represented by his agent Harbourline Real Estate. Ms Shipley and Ms Hayes attended for Harbourline Real Estate.
Both parties had previously filed folders of documents in accordance with the Tribunal's directions. The documents were referred to in the course of the hearing.

BACKGROUND AND EVIDENCE

On 23 March 2013 the Landlord and Tenant entered into a written residential tenancy agreement in relation to this three bedroom house at Greenwich ('the Rental Property').
The agreed rental was $930.00 per week.
The Tenant made it known that they desired a longer-term lease. At the time the Fletchers had a young daughter (under 2 years) and were expecting another baby in July. Mrs Fletcher was on maternity leave but was to return to work in February 2015. The Tenant wished to take a longer-term lease as the property was convenient for travel to work and to the childcare facility they had chosen for when Mrs Fletcher returned to work.
The Landlord agreed to a two year fixed term.
A four week rental bond ($3,720.00) was paid.
Prior to signing the residential tenancy agreement the Tenant attended an open inspection on 16 March 2013. Ms Hayes and Mr Ringrose of Harbourline Real Estate, were in attendance.
The Tenant was told by Mr Ringrose that the landlord lived overseas. This was untrue. The Landlord actually lived next door, and his father lived on the other side of the Rental Property.
It seems highly likely that the Landlord had attended the Rental Property on the morning of the inspection as the Tenant reports that a scented candle was burning during the open inspection, and the agents deny bringing a candle to the property. This is relevant in that the Tenant came to believe that the candle was intended to disguise the damp odour in the property.
At the open inspection the Tenant noted discolouration of the ceilings but was told by Mr Ringrose that this was simply old paintwork. This was later found to be the result of mould growth.
An ingoing inspection report was prepared.
The Tenant took photographs at the commencement of the tenancy. These show discoloration and spots on the ceilings of the kitchen and lounge. The Tenant says a musty odour was apparent in the premises and that this odour would keep returning after the property had been ventilated.
The Tenant's baby was born in July, some four months after they had commenced occupation of the premises.
Mrs Fletcher says she became increasingly concerned about nasal irritation and allergic symptoms she and her daughter were suffering when inside the house.
Mrs Fletcher says she attempted to ameliorate the effect by cleaning the property and keeping windows open to the greatest extent possible. The front windows at ground level had no security or insect screens and could not be left open when the baby or her young daughter were sleeping in these rooms. However, she did leave the windows of the main bedroom open as well as the windows at the back of the house, namely the windows in the lounge and the sliding door that opened from the dining area to the back deck.
By early April 2014 the Tenant became very concerned that the family were experiencing allergic reactions to the damp and mould in the house. Mr Fletcher inspected the crawl space underneath the house (under Bedroom 3) and found it to be very damp with obvious efflorescence coming from the brick pillars (photographs provided). From this point they moved their daughter out of Bedroom 3. Bedroom 3 was not used after 11 April 2014, nor were the wardrobes in Bedrooms 2 or 3 which were affected by mould.
On 11 April 2014 the Tenant reported the problem in writing to Harbourline Real Estate. Ms Hayes and a handyman, Bhadur Naran attended the premises later that day. The Tenant, the agent and the Landlord all conferred at the property. The agent suggested that the Tenant obtain a dehumidifer.
On 12 April 2014 the Tenant purchased a dehumidifier (Bing Lee Invoice in the sum of $345.00) and commenced using it in the Rental Premises.
On 13 April 2014 the Tenant wrote to the agent noting that inspection had found that the crawlspace under the house has a significant mould and dampness issue. The Tenant stated: "Mould in such concentrations, presents a significant health concern. We require the crawlspace mould issue to be rectified including the safe treatment and removal of the mould and installation of mechanical ventilation by 25 April 2014". In addition the Tenant asked that security locks be put on windows in bedrooms 2 and 3 and the bathroom to allow greater ventilation. The Tenant asked that this be done by 9 May 2014.
On 14 April 2014 Ms Shipley inspected the property.
On 17 April 2014 the Landlord's agent arranged for a leaking pipe under the sub-floor of the bathroom to be fixed.
On 21 and 26 April 2014 the Landlord attended in person to inspect the mould and dampness issues.
On 30 April the Landlord arranged for a builder to inspect the sub-floor. The builder, DKM Constructions Pty Ltd installed 10 vents in the sub-floor walls on 15 and 16 May 2014 at a cost of $1,683.00 including GST (invoice dated 19 May 2014).
On 26 May 2014 the Landlord and Tenant discussed the damp/mould issue. The Tenant reported that the vents had not alleviated the issue. The Tenant claims the Landlord said there was nothing more he could do. It appears that both Tenant and Landlord came to the view that the Tenant should look for alternative accommodation if this property was no longer appropriate for them.
On 27 May 2014 the Tenant informed the Landlord that they would commence looking for another property.
On 28 May 2014 Harbourline Real Estate recommended a property at Naremburn to the Tenant. The Tenant wrote back on 31 May 2014 stating that they had looked at the property but it was too far from the train station.
On 30 May 2014 Mrs Fletcher consulted the building surveyor at the Lane Cove Council ('the Council') regarding rectification of rising damp. The advice she received caused her to conclude that proper remediation of rising damp would be a costly undertaking.
The Tenant says they attended open inspections every Saturday thereafter attempting to find suitable accommodation.
On 29 August 2014 Harbourline Real Estate recommended another property at Greenwich to the Tenant. The Tenant wrote back on 3 September 2014 thanking the agent but declining as the condition of the kitchen and bathroom did not meet their requirements.
The Tenant located alternative accommodation in November 2014 and on 14 November 2014 delivered a 14 day termination notice to the Landlord's agent. The notice cites the complaints regarding dampness and mould made by the Tenant, the failure of remedial work to effectively address the problems and the ongoing effect of these issues on the Tenant. The Tenant stated that they would vacate the premises on 29 November 2014.
Mrs Fletcher says she spoke to the Landlord on 18 November 2014 to ascertain his agreement that they would vacate without penalty. The Landlord was not prepared to agree to this and told the Tenant that all communications should be through the agent.
On 19 November 2014 the Tenant asked the Environmental Health Officer for the Council to inspect the premises. He provided a report dated 21 November 2014. The report notes mould residue on the ceiling and walls and wardrobes of three bedrooms, hallways and kitchen and that the void under the house was in a damp state with poor cross ventilation. He found paint bubbling consistent with rising damp spreading up supporting walls.
On 24 November 2014 the Tenant filed an application for rent reduction.
On 21 November 2014 the agents advised the Tenant that they could terminate the tenancy without penalty provided they restore the lawn. The Tenant felt this was an unfair demand. Firstly, the lawn was in poor condition when they moved in to the Rental Property. Secondly, the Landlord had agreed from the outset to provide gardening services. The gardener employed by the Landlord serviced the Landlord's property, the rental property and the property belonging to the Landlord's father. The Tenant felt that while the gardener gave attention to the other two properties only scant attention was given to the rental property and the lawn continued to deteriorate.
On 26 November 2014 the Landlord filed a cross claim.
On 27 November 2014 the premises were inspected by Mycolab Pty Ltd (Mycolab). Preliminary findings were delivered on 28 November 2014, to the effect that the property was highly contaminated by mould and not suitable for habitation. The report made various recommendations including that the Tenant have all their goods decontaminated.
Mycolab provided a written report dated 3 December 2014, which sets out their findings in full (Mycolab Report). The report concluded that: "The property is considered a Grade 4 Building Contamination as per the Australian Mould Guidelines (AMG-2010-1), whereby visible mould growth occurs on greater than 25% or more than 10m2 on interior surfaces; this means that the house is not fit for habitation until mould remediation has been completed. No personnel/occupants should enter the property without the appropriate full Personal Protective Equipment…"
The Mycolab Report goes on to recommend that mould remediation work be performed by a certified mould remediator and further that the Tenant's contents be cleaned by HEPA vacuuming and mould removal solutions and that porous items be disposed if remediation is not possible.
On 29 November 2014 the Tenant had their goods delivered to Dcon Air Supply for decontamination. This work was performed at a cost of $16,500.00 (Invoice dated 17 December 2014). The Tenant also paid transport costs to have the goods delivered to Dcon Air Supply.
On 8 December 2014 the agent issued the Tenant with an invoice for a break lease fee in the sum of $3,720.00.
After the Tenant had vacated the property the Landlord had mould remediation work carried out at the property. This work was carried out by the firm, Mould Rescue and involved HEPA vacuuming of all surfaces, followed by wiping with a mould cleaning solution, and scrubbing and stain removal of wardrobes to remove mould stains. This treatment was required in all three bedrooms, formal lounge, family/dining room and hallway. All windows were steamed to remove built up condensation marks. The Landlord paid $1,980.00 (including GST) for this work (Invoice dated 30 December 2014.
The Tenant's claim in summary is that from the commencement of the tenancy the house was affected by rising damp, which facilitated the growth of mould. Build up of condensation in the house required their constant attention. They were not familiar with mould and it was only as a result of increasing physical symptoms that they took further steps to investigate the problem. Their inspection of the crawl space on 11 April 2014 confirmed their suspicions regarding rising damp. They then complained in writing to the Landlord. They say the Landlord's rectification did not adequately address the rising damp problem and nothing was done to remove the existing mould. At the end of May 2014 it was made clear to them that the Landlord would not undertake costly rectification work. From this time they commenced looking for another property to rent. They could not use Bedroom 3 or the wardrobes in Bedrooms 2 and 3 from April until the end of the tenancy. Their goods required mould treatment before they could be relocated to their new accommodation. The Tenant incurred costs amounting to $19,332.50 - mould remediation ($16,500.00), transport of goods ($1,182.50), mycologist assessment ($1,650.00).
The Landlord's response is that the Tenant had ulterior motives for leaving the property and has sought to use the issue of mould and damp as an excuse. Further it is alleged that the Tenant misused the property by failing to ventilate it properly and thus contributed to the damp/mould issue. The Landlord claims that all required repairs were carried out promptly. Further the Landlord says the Tenant did not complain about these issues in the period May - November 2014 and their actions in remaining in the property are inconsistent with their alleged health concerns.

DECISION

The Tenant has provided a meticulously detailed case. Mr and Mrs Fletcher both attended the hearing and gave evidence on affirmation. They were impressive witnesses.
Mr Bunbury lives next door to the rental property and had more direct contact with the Tenant than is often the case when a landlord has a managing agent. Mr Bunbury did not attend to give evidence but did provide a brief Statutory Declaration.
I have considered all documentary evidence as well as the testimony of the witnesses in making my decision.
On the basis of the evidence provided I find that the Rental Property was affected by rising damp giving rise to high levels of condensation and facilitating the growth of mould in the premises.
I find there was evidence of mould at the commencement of the tenancy although the significance of this was not understood by the Tenant. The Landlord seems to accept that mould is a reasonably common occurrence in the area.
I find that the Tenant did not misuse the property but rather made appropriate efforts to ventilate the property and reduce humidity. No one would expect that a house is left constantly open day and night without any security screens or even insect screens. Similarly, one would not expect parents to allow their young children to sleep in rooms on the ground floor with windows open and no security or fly screens. The Tenant requested windows locks on 14 April 2014 so that ventilation could be increased. This request was ignored. I accept the Tenant's testimony that windows were kept open to the greatest extent possible, that condensation was constantly being wiped away from surfaces and that other measures were taken to reduce humidity, such as use of a dehumidifier, damp rids and a condenser dryer.
It is clear that the Landlord and his agent did take notice of the Tenant's complaint and made an immediate inspection of the Rental Property. The Landlord did have vents put in the sub-floor. This work was completed some five weeks after the Tenant's complaint.
I find that the Tenant and Landlord conversed about the problem after the vents were put into the sub-floor. The Tenant made it clear that this had not solved the damp/mould. The Landlord took no further steps to investigate or remedy the situation. In particular he did not investigate possible contamination within the premises despite the Tenant's complaints about the affects on their health.
The Landlord took no action to remove mould until the Tenant vacated. The Landlord then had HEPA vacuuming and mould removal works performed throughout the house. I have to assume that he felt the work was necessary at this point and that it was worth the money spent in carrying out those works.
I find that following communications between the Tenant and Landlord late in May 2014 it was agreed that the Tenant would look for alternative accommodation. The Landlord must have communicated this to his agent as they sent the Tenant an email regarding an alternative premises on 28 May 2014. I believe it was quite clear to both parties that the Tenant would move and why that was occurring. I accept that over the ensuing months the Tenant attended many open inspections and actively searched for a new home. The agent confirmed at the hearing that the Tenant had asked for a copy of their rental ledger on different occasions.
The Tenant was particular in their requirements. This was also why they had sought a two year lease of this premises. They were juggling a number of considerations regarding Mrs Fletcher's return to work and the accessibility of public transport and the childcare facility they had already booked. Further, given their current predicament it seems they were cautious about moving into a property that could have similar maintenance issues. In my view the fact that it took them some time to find a property is understandable.
The Landlord says the Tenant did not complain about the mould from May - November 2014, but did ask for other repairs to be done. I note that the other repairs are what might be considered urgent repairs. For example, the complaint that the kitchen sink tap spout had broken and that water would rush out when the tap was turned on, and the complaint that the pipe to the dishwasher was leaking. The Tenant had made their complaint regarding the damp/mould issue, what more could be said about this? It seems they were resigned to moving out of the property as soon as they could find something suitable.
The Tenant has two heads of claim. First, the Tenant claims a rent reduction on the basis that they were unable to use one bedroom and much of the wardrobe space from April 2014 until the end of the tenancy. This claim is made pursuant to Section 44 RTA.
Secondly, the Tenant claims damages, being primarily the cost of having their goods decontaminated. Pursuant to section 187 RTA the Tribunal may order the payment of compensation for breach of a residential tenancy agreement.
In a separate application the Tenant seeks return of the rental bond. The presumption is that the rental bond will be repaid to the Tenant at the end of the tenancy unless the landlord makes a claim on the bond. Here the Tenant seeks return of the bond. The Landlord did not contest this at the hearing. The Tribunal may make orders regarding a bond pursuant to s 175 RTA. This being uncontested I will order that the bond be paid to the Tenant in full.

Excessive rent claim

Section 44 (1)(b) set out below empowers the Tribunal to alter the rental payable under a residential tenancy agreement in certain circumstances. 44 Tenant's remedies for excessive rent (1) Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders: (a) an order that a rent increase under an existing or proposed residential tenancy agreement is excessive and that, from a specified day, the rent for residential premises must not exceed a specified amount, (b) an order that rent payable under an existing or proposed residential tenancy agreement is excessive, having regard to the reduction or withdrawal by the landlord of any goods, services or facilities provided with the residential premises and that, from a specified day, the rent for residential premises must not exceed a specified amount.
A claim under this provision must be made before the end of the tenancy s 44(3) RTA. However the relevant period of rent reduction can predate the application as was confirmed by the Supreme Court in considering the equivalent provision of the Residential Tenancies Act 1987 (Roads and Traffic Authority v Joy Swain and Terence Gold and Residential Tenancies Tribunal of New South Wales, NSWSC 181 (7 May 1997)).
The Tenant did apply for a rent reduction prior to the end of the tenancy. Accordingly, the Tribunal has jurisdiction to consider this claim. The Tenant claims the rent should be reduced for the period 11 April 2014 to 28 November 2014, this is a period of less than 12 months (s 44(6)).
I accept the Tenants evidence that it was not possible to use Bedroom 3 from April 2014 until termination of the tenancy. I find that this was the result of rising damp from the cavity below causing mould spores to affect the room. The Landlord was made aware that Bedroom 3 could not be used from April 2014. The Tenant's position is substantiated by the Mycologist's report that found high levels of fungal spores in this room. The Landlord's own evidence indicates that it was necessary to have mould remediation carried out in this room as well as other rooms. The Landlord has not adduced any evidence that would cause me to question whether this room was in fact useable over the period in question. I also find that the Tenant was unable to use the wardrobes in Bedrooms 2 and 3 during this period.
Section 44(5) provides some guidance on issues to be considered by the Tribunal in deciding whether rent is excessive. This includes the general market level of rentals for similar properties. The Tenant has provided information of median rental for a 3 bedroom home ($920.00 per week) and a 4 bedroom home ($1,250.00 per week) in Greenwich as evidence of the value of one bedroom. This is a reasonable attempt to provide evidence of the value of a bedroom given the difficulty of finding market rental of a two bedroom home in Greenwich. Two bedroom apartments in the Greenwich area would be substantially less than $930.00 per week but would also lack some of the amenity of a house. I have taken this into consideration as well as the basic floor plan that depicts Bedroom 3 as the smallest bedroom in the house. I find that the Tenant did not have use of Bedroom 3 or the wardrobe space in Bedroom 2 from 11 April 2014 to 28 November 2014 and that during this period the rent should be reduced to $700.00 per week.
I note that s 47 RTA provides that a tenant may make a written request to a landlord that the landlord repay to the tenant any amounts paid that are not required to be paid under the residential tenancy agreement. Any such request may be made during or after termination of the tenancy agreement (s 47(2) RTA). The landlord must pay such amount within 14 days of the written request (s 47(3)).

Compensation for breach of residential tenancy agreement

The Tenant claims to have suffered loss as a result of the Landlord's failure to keep the premises in a reasonable state of repair.
Section 63(1) RTA states that a landlord must provide and maintain the residential premises in a reasonable state of repair, having regard to the age of, rent payable for and prospective life of the premises. This provision is an implied term of every residential tenancy agreement (s 63(4) RTA).
The landlord's obligation to repair arises after the landlord has been put on notice of the need to repair. Once notice is received by the landlord, a breach of section 63 will only occur if the landlord fails to carry out any necessary repairs within a reasonable time Northern Sandblasting Pty Ltd v Harris (1997) 146 ALJR 254.
In this case I believe it is possible that the Landlord was aware of a damp problem at the commencement of the tenancy. However, he may not have appreciated its significance and little evidence has been presented regarding the state of the premises at this time.
However, the issue was clearly brought to the Landlord's attention in April 2014. The Tenant provided a written detailed account of the problem in emails dated 11 April and 13 April 2014. From this point in time the landlord had a duty to ensure the property was in a reasonable state of repair. The Tribunal has previously determined that the landlord has a strict obligation to ensure that repairs are carried out Dupont v Lawrence RTT 97/022753.
The Landlord responded to the Tenant's complaint by installing sub-vents. However, it is not sufficient for the landlord to make efforts which are ultimately ineffective in remedying a defect. It would appear that the Landlord's attempt to rectify the transmission of damp and the growth of mould was not effective, based on the Tenant's evidence, the Mycology Report, the Council report and the Landlord's later mould remediation report/invoice.
I find that the Landlord did not address the problem of damp/mould appropriately and accordingly has breached his obligation to keep the Rental Premises in a reasonable state of repair, having regard to the age of, rent payable and prospective life of the premises.
The conclusions of the Mycolab Report are quite alarming.
In accordance with the recommendations made in the Mycolab Report, the Tenant proceeded to have their goods professionally decontaminated as a matter of urgency. In doing so the Tenant incurred transport costs and decontamination costs in excess of $15,000.00.
It appears that the Mycolab Report was obtained to assist the Tenant defending a claim brought by the Landlord for break lease fees. The Landlord's claim has not been pursued. It is arguable that the cost of the Mycolab Report should be characterised as costs of the litigation which should be borne by the parties in a matter such as this. It is not necessary for me to rule on this as the costs of the decontamination work and the transport costs alone exceed the order making power of the Tribunal in this instance.
I find that the Tenant has incurred costs exceeding $15,000.00 and that these costs have resulted from the failure of the Landlord to take appropriate steps to deal with the mould problem brought to his attention in April 2014.
Section 187(4) provides a limitation on the amount that the Tribunal can order is paid under this section. 187 (4) The Tribunal must not make an order for: (a) the payment of an amount that exceeds the amount (if any) prescribed by the regulations for the purposes of this section, or (b) the performance of work or the taking of steps the cost of which is likely to or will exceed the amount (if any) prescribed by the regulations for the purposes of this section.
Clause 23 of the Residential Tenancies Regulation 2010 sets out the quantum applicable to section 187(4). 23 Monetary limit of jurisdiction of Tribunal: s 187 (4) (a) of Act The amount prescribed for the purposes of section 187 (4) (a) of the Act is: (a) if the order is with respect to a rental bond, $30,000, or (b) in any other case, $15,000.
There is some uncertainty about the meaning of clause 23. For the present purposes my view is that a money order for compensation is limited to $15,000.00. The claim for the return of the bond to the Tenant is separate.
I find that the Tenant is entitled to an order for compensation for costs sustained from the landlord's breach of the residential tenancy agreement in an amount exceeding $15,000.00. The Tenant has accepted the jurisdictional limits of the Tribunal and I will order that the Landlord pay the Tenant the amount of $15,000.00, being the monetary limit imposed upon the Tribunal. S Corley General Member Civil and Administrative Tribunal of New South Wales 14 April 2015

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 July 2015

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