Legislation cited: Residential Tenancies Act 1997 ss 38, 46, 71, 83, standard term 52

Cases cited: Dangar & Anor v Mansour and Anor [2016] ACAT 61

Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185

Martins Camera Corner v Hotel Mayfair Ltd [1976] 2 NSWLR 15

Segretti v Mens and Boys Fashions Pty Ltd [2015] NSWCATCD 70

Watson v Gaudion [2009] ACAT 15

Texts/Papers

Cited: Anforth, Christensen and Taylor, Residential Tenancies Law and Practice NSW, 5th ed

1. On 4 July 2015 the applicant, Mr Jason Bills (Tenant), commenced a residential tenancy agreement (tenancy agreement) to rent a one bedroom, first floor apartment located in a development on Eastlake Parade in the Kingston Foreshore area (apartment).
2. The tenancy agreement was for a fixed term for the period of six months from 4 July 2015 to 4 January 2016. The rent was $495 a week, to be paid fortnightly in advance.
3. By way of an application filed 21 March 2016, the Tenant seeks compensation and damages arising from the tenancy as follows:
   • (a) A rent reduction for failure of heating within the apartment for the period July, August and September (12 weeks) of 65% of the total rent paid for that period, totalling $3,861.00.
   • (b) A rent reduction for breach of the Tenant's quiet enjoyment of the property by reason of noise for the period 4 July 2015 to 4 January 2016 (26 weeks, 2 days) of 30% of the total rent paid during that period, totalling $3,903.00.
4. A third claim arising from the applicant's inability to use the carpark was settled prior to hearing.

1. The hearing took place on 31 May 2016. The applicant represented himself. The respondent (Lessor) was represented by Ms Ashleigh McGregor and Ms Natisha Denham from McGrath Estate Agents (Agent). Both parties relied on written submissions and documents. The Tenant gave oral evidence and was cross examined.

The first issue - alleged failure of the heating system

1. The Tenant claims that through the entirety of the tenancy, which included the winter months of June, July and August 2015, the apartment was without adequate heating. The Tenant's evidence to the Tribunal was that, throughout this period, the apartment was so cold he had to, for example, watch television while huddled on the couch wearing woollens and wrapped in blankets.
2. The Tenant first advised the Agent that the heating was not working by way of an email of 19 July 2015:

...the heating does not appear to be working. I note that it was marked "N" on the condition report - is there a known problem?

1. The Agent arranged for a technician from J T Electrical and Plumbing (JTep) to attend the apartment on 30 July 2015. The evidence of the Agent was that JTep was the company that installed the heating in the apartment complex, and that they had used the company before.
2. The Tenant's version of what happened when the technician attended the apartment was set out in his written submissions as follows:

After the Lessor's Agent arranged a tradesperson, an investigation was carried out in the apartment on 30 July. After setting the heater to 27 degrees for half an hour prior to the tradesperson arriving, the temperature of the apartment as measured by the tradesperson on arrival and in my presence was 16.9 degrees C. It was measured with a digi-therm. I left to work and asked the tradesperson to contact me with his findings. I was never contacted.

1. The Tenant's oral evidence was that the technician did not get back to him. This was not disputed.
2. Although the technician did not report back to the Tenant, the technician did supply a brief report to the Agent on the afternoon of the visit, 30 July 2015 (JTep Report). The JTep Report provides (quoted exactly):

Technician attend to diagnose and rectify issue with heating/cooling system, due to tenant reporting the system was not functioning properly in heating.

Technician checked over system and checked operations, found system work in normal parameters. The apartment had 22deg C after 30 minutes of use with an outdoor temperature of -4deg C.

The technician suggests the unit's needs to be programmed to start operating around 1 hr prior to getting up in the morning. Or turn temperature down to 18deg at night and leave on.

Both units must run together due to return air design.

Fan speed in lounge room must be on high to have sufficient airflow.

1. Unfortunately, the technician was not called to give evidence, although the parties were offered an opportunity to do this, but declined. This created a deficiency in evidence, but there is nothing in this report that is necessarily contrary to the Tenant's written statement, at least if one assumes, consistent with the wording, that the technician set the temperature to 22 degrees Celsius upon arrival and waited half an hour to determine whether it was working.
2. The next day, 31 July 2015, the Tenant emailed one of the Agent's officers, Ms Lawless, and advised that it "c_ontinues to be cold in the unit_."
3. Ms Lawless replied to the Tenant later that day. Some of the information in her emailed response was not in the response set out in the JTep Report:

I have spoken to JTep who have advised that the system is working fine and the issue is that one of the outlets needs to be lowered so that there is more air flow coming out. The technician is going to call you on Monday to arrange this.

1. This email appears to imply that there was something amiss with the setup of the system, and that the technician would need lower one of the outlets.
2. The Agent's representatives at hearing could not clearly explain Ms Lawless' advice. As Ms Lawless was not available to give evidence and the JTep officer was not called to give evidence by either party, the Tribunal was unable to get any clarification from the Agent as to the apparent problem with the vents.
3. Further to this email, the Tenant drew the Tribunal's attention to a photograph of the unit on an advertisement published by the Agent. The Tenant stated that the picture clearly showed that the vents were located above the cupboards, along a wall, and were "incapable" of being "lowered". The Tenant further contended that the vents were poorly located, and he then purported to give some technical evidence as to the cause and consequences of this. His overall submission was that JTep had installed the air conditioning system improperly and therefore the technician was motivated to say that the system was functioning properly, when it was not, to cover this up.
4. I asked the Tenant what expertise he had to give evidence about the technical operation of the heating system. He explained that he was a property manager of some years experience, and his job involved looking at heating issues, but conceded that he did not have any technical qualifications. He also agreed that this technical evidence had not been filed in advance and that the Agent had not seen it or had an opportunity to take instructions about it.
5. As a consequence of the Tenant's submissions on these points, I suggested to the parties that this matter be adjourned so that the relevant JTep technician could be called to give evidence as to the state and design of the heating system and the accuracy of his report. The Tenant was not agreeable to this course of action because it would cause delay. The Tenant instead submitted that he would not seek to rely upon his technical evidence as to the effectiveness of the vents, or the allegations about the motivations of the JTep representative. Accordingly, I did not need to consider that evidence further and I have not done so.
6. I do, however, accept that the JTep technician was to call to make a time with the Tenant to adjust the airflow, and that he did not contact the Tenant until sometime later.
7. The next conversation between the Tenant and a JTep technician was on 4 August 2015. A copy of a JTep technician's report of that conversation was in evidence. I do not need to repeat it in full, but in summary the technician reported that he advised the Tenant that the system was working within normal parameters. The Tenant said in reply that the technician was wrong, and that he could get someone else to fix it.
8. Later on 4 August 2015, the Tenant contacted the Agent and advised that JTep was "making false statements". He requested that the Agent come and look at the heating "instead off palming off responsibility to everyone else".[1] The Agent's representative refused, stating that they relied upon "qualified tradespeople for relevant maintenance".
9. There is no evidence before the Tribunal that the conversations between the Tenant and the Agent went any further following this exchange.
10. The Tenant's evidence to the Tribunal was that the lack of heating remained unbearable. He told the Tribunal, in effect, that he contacted other experts to enquire whether they would come and look at the heating and provide a report, but the experts advised him that all they would do is take a digi-therm to the apartment and measure the temperature, and that he could do that himself. He therefore did so.
11. On 26 September 2015 the Tenant conducted his own experiment to show that the heating was not working. He detailed this process to the Tribunal during his oral evidence, and filed a number of supporting photographs. In summary, the experiment was at follows:
    • (a) The Tenant purchased a digi-therm device.
    • (b) At 8:46 am on 26 September 2016, he placed the digi-therm device in the living room and recorded the temperature - at this time, it was 18.1 degrees Celsius in the living area, with an external temperature of 13 degrees Celsius.
    • (c) At 8:51 am he set the heating system to 24 degrees Celsius.
    • (d) After five minutes, the temperature in the living room reached 19.1 degrees Celsius.
    • (e) After ten minutes the temperature in the living room had reached 19.9 degrees Celsius.
    • (f) After 30 minutes the temperature had reached 20.4 degrees Celsius.
12. The Tenant presumably terminated the experiment shortly thereafter.
13. The Tenant contended that this experiment showed that, even in much warmer weather, and with ample time, the Apartment's heating:

....did not reach the Lessor's Agent's stated 22 degrees C, despite a 17 degree hotter outdoor temperature, confirming the system remained unrepaired.[2]

1. In other words, the Tenant contended that the temperature in the Apartment could not reach the 22 degrees Celsius that the JTep technician allegedly recorded during his visit on 30 July 2015.
2. During the hearing, Ms McGregor and Ms Denham made the point that this experiment was conducted without witnesses or independent verification. They suggested that it could have been fabricated. Certainly, this is possible. But the Tenant gave much of this evidence under oath and there is no evidence to suggest, or reason to believe, that he gave anything other than an honest account of the experiment. I therefore accept that the experiment was carried out in the manner described, and with the results recorded by the Tenant.
3. However, I do not accept that the experiment proves that the Apartment cannot reach 22 degrees Celsius. Indeed, I am not convinced that the experiment proves anything more than is plainly obvious from its results - that is, under the conditions of the experiment, on that one day, the Apartment did not reach 22 degrees Celsius within half an hour of operating the hearing. It is simply not possible for me to draw, from this experiment alone, a conclusion that, because the heating system did not raise the temperature in the apartment to 22 degrees Celsius in the half an hour allowed on 26 September 2016, it was not capable of raising the room to that temperature at all.
4. There is an additional complicating factor in this case. At the end of the hearing, the Tenant accepted that he did not, at any time, try the remedies suggested by the technician in the JTep Report ie. he did not try:
   • (a) programming the units to start operating around 1 hour prior to getting up in the morning, or turning the temperature down to 18 degrees at night and leaving it on;
   • (b) running both units together; and
   • (c) turning the fan speed in lounge room to high.
5. The Tenant gave two reasons for his failure to follow these instructions.
6. First, the Tenant submitted that it was not reasonable for him to follow such a "complicated set of rules and pre-set schedules"[3] in order to maintain the heat level in his apartment. I do not accept that the instructions in the JTep report are unduly complicated or unreasonable.
7. Second, the Tenant's evidence was, in effect, that he knew the instructions would not work, and therefore it was not worth trying. He further stated that his experiment on 26 September 2015 proved that it would not have worked, even if he had tried it. As stated above, I do not accept that the experiment proves that the heating was incapable of reaching 22 degrees Celsius. It may be that, if the technician's instructions were followed, the results of that experiment would have been different. The Tenant does not know, because he declined to try.
8. The only expert evidence before the Tribunal is that of the JTep technician, as set out in the JTep Report. It is unfortunate that the JTep representative was not called to give evidence, but there is nothing in the Tenant's evidence that is contrary to that in the JTep Report. In the absence of any evidence to the contrary, I accept that operating the system in accordance with the technician's instructions may well have remedied any deficiency in the heating system.
9. The Tenant is the applicant in these proceedings. He must prove his case on the balance of probabilities. The Tenant was, at least from 29 July 2015, given instructions as to how to use the heating system. He declined to follow those instructions. In such circumstances, I am not satisfied, on the balance of probabilities, that there was any deficiency in the heating system caused by anything other than the Tenant's failure to follow the instructions as to how to use it properly.
10. I decline to award any compensation for the failure of the heating system.
11. For completeness, I note that section 38 of the Residential Tenancies Act 1997 (RT Act) provides as follows:

A person who, apart from this section, would be entitled to compensation under this Act is not entitled to the compensation, or part of it, if the loss, or part of the loss, to be compensated could have been reasonably avoided.

1. Even if that the technician's instructions would not have completely remedied any heating deficiency, they may well have mitigated it, and reduced the Tenant's discomfort. In such circumstances, even if I were satisfied that the heating system had been in some manner deficient, the Tenant's failure to try mitigating the alleged defects by maximising the efficiency of the heating system would need to be factored into any assessment of damages. On the Tenant's own experiment, the temperature reached 20 degrees Celsius, which was far from intolerable. In the circumstances, even if I had been satisfied that the heating system was not fully functional, I would not have awarded any compensation.

Ground 2 - misleading statements in relation to location

1. The Tenant's second claim is that his quiet enjoyment of the property was compromised by the significant noise arising from:
   • (a) a 'gastropub' (the Pub) beneath the building, and
   • (b) a fan in the Pub that operated for excessive amounts of time, creating unreasonable noise.
2. The majority of the evidence at the hearing on this issue related to the Pub, rather than to the fan, but some emails were in evidence that illustrated the problems the Tenant had with the noise from the fan. I will deal with that first.
3. The Tenant first raised concerns about "noise intrusion through the slab from the retail tenant below" as early 6 July 2016, only two days into the Tenancy.[4] He first raised his concerns about noise from the fan on 7 July 2015. [5]
4. The fan appears to have been used in the kitchen area of the Pub. Some of the correspondence on file between the Tenant, the Agent, the owner's corporation and the Pub's manager indicates that there was a problem with the fan, and that it had been running overnight. Once the issue was brought to the attention of the owner's corporation and the Pub's manager, the fan ceased to be operated at night from around 25 July 2015.[6] Still, there was clearly some degree of noise nuisance at night during the period from 6 July 2015 to 14 July 2015.
5. The Tenant provided an email from a current resident, Ms Lockwood, stating that even after the Pub agreed to turn off the exhaust fans at night, they continued to be noisy from "6m [sic] to midnight"[7].
6. In around October, the Tenant made a further complaint about 'buzzing'. The Agent arranged for an electrician to attend to apartment. He did so for 45 minutes, but was unable to hear any noise. The electrician advised that the Tenant could contact him at any time to resolve the issue, and the Agent passed on this advice.[8] There is no evidence that the Tenant availed himself of this offer, or that he made any further complaint about the noise from the fan.
7. The second source of noise from the Pub was that occasioned by its patrons, by the music played, and by the live entertainment a couple of nights each week.
8. The Tenant's evidence was that, when entering into the residential tenancy agreement, he relied upon representations in an advertisement by the Agent which stated that the property was:[9]

Quietly positioned on the picturesque Kingston Foreshore...

1. The Apartment was certainly not in a location that could readily be described as 'quiet', and the Agent, quite rightly, did not suggest otherwise. Instead, the Agent's response was as follows:

Prior to the tenant entering into the tenancy ... the majority of the surrounding commercial spaces had been filled with tenancies (mainly restaurants or bars) therefore it is not unreasonable to expect there is noise associated with the location. The tenant also advised in his submission that he owns an apartment on the foreshore, therefore it would seem he was not unfamiliar with the area when he entered into a tenancy agreement. Our advertisement did mention that the property was "Quietly positioned on the Kingston Foreshore" as this has been described as a peaceful location by a number of occupants. Our advertisement also includes that there are "Shops, cafes, parklands and city transport within meters".

1. Put another way, the Agent argued that the Tenant must have known what he would be renting and was not in fact misled. The Agent also contended that the presence of the Pub would have been evident from a visual inspection. Although not expressly argued, the tenor of the Agent's submission was that the words 'quiet enjoyment' were 'mere puffery' and not something that could reasonably be relied upon, particularly given the location.
2. In further support of this, the Agent's representatives submitted that the advertisement also made reference to "shops, cafes, parkland and city transport within meters", and that the ready access to shops and nightlife was one of the reasons people choose to live on the Kingston Foreshore in the first place.
3. All this, I accept, to a point, but there to be a significant difference between renting an apartment that is within walking distance of 'shops and cafes', and renting a first floor apartment that is directly above a Pub with late opening hours and live music.
4. Was the Tenant aware that the premises below the Apartment was a pub when he moved in? The Tenant denied that he was. The Agent suggested this denial was not reasonable and that I should not accept the Tenant's evidence on this point. The Agent also suggested that any person taking a reasonable degree of care for their own interests should have realised that the surrounding retail tenancies were going to be noisy.
5. There was some conflicting evidence from the parties about just how obvious it was that the ground floor of the apartment complex housed a pub. The Tenant suggested a potential tenant could enter the building without noticing the ground floor tenancies. The Agent said this was impossible. At the invitation of the Tenant, I looked at pictures of the premises from Google Maps and also the pub's website. My observation is that it would be obvious to any person who undertook even the most cursory examination that the ground floor of the premises housed a casual eating establishment with outdoor seating. On any common sense view, one must expect that an apartment located above such an establishment would experience a certain amount of noise, particularly on Fridays and Saturdays. However, I also accept the Tenant's evidence that he did not realise the premises was actually a pub - as opposed to, for example, a cafe or a restaurant. I accept that he did not realise that the ground floor venue would be open to midnight (or later) several nights a week, and that it would have live music and all the exuberant conduct associated with that kind of entertainment.
6. In these circumstances, I am of the view that to describe the Apartment as 'quietly positioned' was misleading. I am also satisfied that the Tenant was misled.
7. But what remedy is available to the Tenant?
8. The Tenant relies upon sections 46 and 83 of the RT Act, and clause 52 of the Standard Residential Tenancy Terms (Standard Terms) in Schedule 1 to the RT Act.
9. Section 46 of the RT Act provides a right of rescission for a tenant who has been misled into entering into a residential tenancy agreement:

On application by a tenant, the ACAT may terminate a residential tenancy agreement if satisfied that the agreement was induced by a false or misleading statement of the lessor

1. In other words, a tenant who does not get what he or she bargained for is not required to maintain the tenancy, and is not liable for the usual penalties that would attach to ceasing the tenancy early. However, the Tenant in this case did not exercise this right during the tenancy. His evidence to the Tribunal was that he was unaware of this right.
2. The Tenant's failure to exercise this remedy may, in part, be due to his reliance on information provided by the Agent. On 7 July 2015, the Tenant wrote to the Agent, stating that noise from the retail tenancy below his apartment was keeping him awake all night, and enquired as to whether he could "move out without penalty". The Agent responded that he could not "leave without penalty".[10] There is no evidence before the Tribunal as to any further discussions on this point. The Tenant apparently made no further enquiries as to his rights.
3. In hindsight, it is perhaps unfortunate that the Agent did not take a more proactive approach to resolving the dispute at this stage. After all, it should have been clear from these very early emails that the Tenant was dissatisfied with the noise level in the apartment. However, it must be noted that the Tenant did not, at this stage, suggest that he had been misled. Whether the Agent could, or should, have done more to advise the Tenant of the full legal situation is not a matter that is currently before this Tribunal.
4. In any case, whatever the reason, the Tenant did not exercise his rights under section 46 of the RTA Act during the tenancy. He cannot do so now that it has ended.
5. The question therefore turns to whether he is entitled to compensation for the period in which he endured noise and disruption during the tenancy.
6. In this regard, the Tenant relies upon clause 52 of the Standard Terms. This clause provides:

52 The lessor must not cause or permit any interference with the reasonable peace, comfort or privacy of the tenant in the use by the tenant of the premises.

1. Section 83 of the RT Act provides that ACAT may make the following orders in relation to an application about a tenancy dispute or occupancy dispute:

(d) an order requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement or occupancy agreement;

1. Did the Lessor, or its agent, 'cause' or 'permit' the noise from the Pub to interfere with the Tenant's 'quiet enjoyment' of the Apartment, such that there was a breach of clause 52 of the Standard Terms?
2. The essence of a covenant for quiet enjoyment is that a tenant be permitted to "peaceably hold and enjoy the demised premises without interruption by the lessor or persons claiming through or under him" (emphasis added).[11] Traditionally, this has meant that, in order to be actionable, the breach must have been by the lessor, or a person acting on the lessor's behalf or with the lessor's authorisation.[12] So, for example, a lessor may be liable for such things as inconvenience caused by a independent contractor carrying out repairs to the premises[13], or noise or nuisance caused by a neighbour who is also the lessor's tenant[14], or a disturbance caused by some act or omission of the lessor, such as a failure to clear drains and pipes.[15] However, I cannot find any case where a lessor has been found liable for a breach of this covenant by reason of the actions of a third party over which the lessor has no influence or control.
3. Recently, in Dangar & Anor v Mansour and Anor [2016] ACAT 61 Senior Member Lennard suggested that the concept of 'quiet enjoyment' may have broadened to impose upon a lessor an obligation to protect a tenant:

11. Traditionally the covenant for quiet enjoyment protected the tenant from direct interference by the lessor. However, recent decisions and legislative reforms have extended the types of interference from which a lessor is obliged to protect a tenant. The quiet enjoyment of premises is interfered with if the tenant's ordinary and lawful use and enjoyment of the premises is substantially or materially disturbed. It is not necessary that the physical possession of the premises by the tenant be interrupted. The breach does not have to render the premises entirely unfit. It is enough if the premises are materially less fit for use for their ordinary or usual purposes. Interference may be by act or omission. Interference with quiet enjoyment is a question of fact.

12.A wide range of conduct has been found to amount to interference with quiet enjoyment: failure to carry out repairs; carrying out of repairs; violent and abusive behaviour; noise alone and failure by the lessor to take steps to prevent others from causing interference with quiet enjoyment. [citations omitted]

1. Notwithstanding this breadth, in each of the cases relied upon by the Senior Member in her reasons in Dangar, there was something that the lessor could or should have done to mitigate or ameliorate the nuisance, or to protect the tenant. At no time in these proceedings did the Tenant point to something that the Lessor or Agent could have done, or omitted to do, to ameliorate the noise.
2. There is some case law to indicate that a lessor may be liable where an owner's corporation breaches a tenant's quiet enjoyment, or at least that a lessor cannot 'hide behind' a recalcitrant owners corporation.[16] Again, however, it was not seriously contended by the Tenant that the owners corporation was in some way negligent or recalcitrant. Where there was an issue, namely the fan being operated at night, it was dealt with promptly. No evidence or submissions were put to the Tribunal about what further steps the owners corporation, the Lessor or the Agent, could or should have taken. I cannot find the Lessor liable on this basis.
3. Accordingly, I am not satisfied that the Lessor or the Agent 'caused' or 'permitted' interference with the quiet enjoyment of the Tenant in a manner that could amount to a breach of clause 52 of the Standard Terms. Accordingly, there is no basis upon which I can order the Lessor to pay compensation to the Tenant under section 83(1)(f) of the RT Act.
4. For these reasons, I dismiss the application.

[1] Application for resolution of a dispute filed on 21 March 2016, attachment 5

[2] Application for resolution of a dispute dated 21 March 2016, applicant's statement [8]

[3] Application for resolution of a dispute dated 21 March 2016, applicant's statement

[4] Application for resolution of dispute dated 21 March 2016, attachment 15

[5] Application for resolution of dispute dated 21 March 2016, attachment 16

[6] Respondent's response dated 14 April 2016, attachments 3-5

[7] Application for resolution of dispute dated 21 March 2016, email from Linda Lockwood, attachment 18

[8] Respondent's response dated 14 April 2016, attachment 6

[9] Application for resolution of dispute dated 21 March 2016, attachment 14

[10] Application for resolution of dispute dated 21 March 2016, attachment 16

[11] Goldsworthy Mining Ltd v Federal Commissioner of Taxation [1973] HCA 7; (1973) 128 CLR 199 at 214 per Mason J. Also Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185 at [35] per Gallop, Hill and Gyles JJ

[12] Anforth, Christensen and Taylor, Residential Tenancies Law and Practice NSW, 5th ed [2.30.3]

[13] Worrall v Commission for Housing of ACT [2002] FCAFC 127

[15] Martins Camera Corner v Hotel Mayfair Ltd [1976] 2 NSWLR 15

[16] Anforth and Christianson, op cit. [2.50.5]