Bunbury v Fletcher

The decision at first instance

1. The Tribunal provided written reasons for the decision on 14 April 2015. After summarising the claims made by the parties, the Tribunal outlined the background to the dispute and the evidence presented at the hearing, which included documentary evidence from both parties and oral evidence from Mr and Mrs Fletcher on affirmation. There was a statement made by Mr Bunbury but he did not attend the hearing to give evidence.
2. It is convenient to summarise the background to the proceedings, much of which was not in dispute, to give context to the findings made by the Tribunal.
3. Mr and Mrs Fletcher commenced occupation of the premises in March 2013. Prior to signing the lease they inspected the premises and noticed discolouration on the ceiling and paintwork but said they did not appreciate the significance of the mould problem at this time. Their child was born in July 2013. Mrs Fletcher gave evidence that she became increasingly concerned about nasal irritation and allergic symptoms which she alleged she and her baby were experiencing. She attempted to ventilate the premises but said that this did not alleviate the problems. On 11 April 2014 Mr and Mrs Fletcher reported their concerns about mould in the house to the managing agent. This is not in dispute. They moved their baby into another bedroom and gave evidence that, thereafter, the third bedroom was not used by them. It is apparent from Mr Bunbury's Notice of Appeal and written submissions he does not accept this.
4. After the written complaint there were a number of communications between Mr and Mrs Fletcher and the managing agent and between Mr and Mrs Fletcher and Mr Bunbury about the mould in the house. A leaking pipe under the bathroom was repaired and Mr Bunbury attended the premises in person to inspect the mould on 21 and 26 April 2014. Mr Bunbury arranged for a builder to inspect the sub floor of the premises and caused 10 vents to be installed in the sub-floor walls. According to Mr and Mrs Fletcher this did not alleviate the problem.
5. There is dispute about whether Mr Bunbury could have done more but there is no contest that Mr and Mrs Fletcher informed Mr Bunbury that they would commence looking for another property. Relevantly, the Tribunal noted at [29] and [30] as follows: 29 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 as this property was no longer appropriate for them. 30 On 27 May 2014 the Tenant informed the Landlord that they would commence looking for another property.
6. The managing agent recommended a number of alternative properties but it was not until 14 November that Mr and Mrs Fletcher located what they considered to be suitable alternative accommodation. They delivered a 14 day termination notice on 14 November 2014 but, before vacating, arranged for the premises to be inspected by mould specialists, Mycolab Pty Ltd (Mycolab).
7. Mycolab provided a written report dated 3 December 2014. Mr and Mrs Fletcher relied on the report in the proceedings at first instance and the conclusions and recommendations in the report are set out in the reasons for decision at [41] to [43]. In summary, the report concluded that the property was "not fit for habitation until mould remediation has been completed". The report also recommended that the contents of the house be decontaminated. Mr and Mrs Fletcher followed this recommendation and retained a firm called Dcon Air Supply to undertake the decontamination. Their goods and furniture were delivered to Dcon Air Supply on 29 November 2014. The cost of the decontamination was $16,500 and the cost of transportation was $1,182.50. The Mycolab report cost $1,650. The total costs incurred were therefore $19,332.50 and this was the subject of Mr and Mrs Fletcher's claim for compensation.
8. After Mr and Mrs Fletcher vacated the property mould remediation work was carried out by Mr Bunbury using a contractor at a cost of $1,980.
9. The Tribunal summarised the disputes between the parties at [47] and [48] of the reasons.
10. Mr and Mrs Fletcher contended that the premises were affected by rising damp at the commencement of the tenancy but their suspicions about the problem were not confirmed until they conducted their own physical inspection underneath the house in April 2014. They complained to Mr Bunbury's managing agent on 11 April 2014. Rectification work was undertaken by Mr Bunbury but this did not resolve the issue and when it was clear he would not undertake the costly rectification work required to free the premises of mould and rising damp, they started to look for alternative accommodation. In the meantime, they did not use bedroom three and the wardrobes in bedrooms two and three. Their goods required decontamination and they incurred significant costs.
11. In contrast, Mr Bunbury contended that Mr and Mrs Fletcher had ulterior motives for leaving the property, their complaint about rising damp was an excuse and they failed to properly ventilate the property, which contributed to the problem. Mr Bunbury carried out required repairs properly. Mr and Mrs Fletcher did not complain about rising damp from May to November 2014 and their action in remaining in the property was inconsistent with their health concerns.
12. The Tribunal accepted the contentions of Mr and Mrs Fletcher and found at [49] that they presented a "meticulously detailed case" and were 'impressive witnesses". The Tribunal further found that the property was affected by rising damp and that Mr and Mrs Fletcher knew about the problem at the commencement of the lease but did not understand the significance at this time. They did not misuse the property by failing to properly ventilate and in fact took steps to alleviate the problem (at [52] to [54]). The Tribunal found at [55] that Mr Bunbury did take notice of the complaint and took steps to remediate but that this did not resolve the problem. Mr Bunbury did not take action to remove the mould until Mr and Mrs Fletcher had vacated the premises even though this was his obligation (at [57]).
13. The Tribunal dealt with the contest between the parties about the failure of Mr and Mrs Fletcher to vacate the premises at [58] to [60]. The Tribunal found it was "understandable" it took Mr and Mrs Fletcher some time to find suitable alternative accommodation given their needs. While the Tribunal accepted Mr and Mrs Fletcher did not complain further about the mould and rising damp in the period from late May to November 2014, the Tribunal nonetheless concluded Mr and Mrs Fletcher had already made their complaints and were resigned to moving out. It is clear the Tribunal did not consider this was inconsistent and noted at [60] "what more could be said about this?"
14. In dealing with Mr and Mrs Fletcher's claim for excessive rent (at [64] to [69]), the Tribunal accepted the evidence of Mr and Mrs Fletcher that they were unable to use the third bedroom and the wardrobes in bedroom two and three, found that Mr Bunbury was made aware of this from April 2014. The Tribunal further found that this was a result of the rising damp, which was substantiated by the Mycolab report and the mould remediation undertaken by Mr Bunbury after Mr and Mrs Fletcher vacated the premises.
15. In assessing the appropriate level of rent, the Tribunal had regard to information provided by Mr and Mrs Fletcher about comparisons between the median rent for a three-bedroom house and a four-bedroom house and explained how the assessment was made at [68] as follows: 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 three-bedroom home ($920 per week) and a four-bedroom home ($1250 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 Greenwich in the Greenwich area would be substantially less than $930 per week but would also lack some of the amenity of the house. I have taken this into consideration as well is a basic floor plan that depicts bedroom three as the smallest bedroom in the house. I find that the Tenant did not have use of bedroom three or the wardrobe space in bedroom two from 11 April 2014 to 28 November 2014 and that during this period the rent should be reduced to $700.00 per week.
16. The Tribunal considered Mr and Mrs Fletcher's claim for compensation at [70] to [84]. The Tribunal found that once Mr and Mrs Fletcher provided a detailed account of the problems with the premises, being from 11 and 13 April 2014, Mr Bunbury had a duty to ensure the property was in a reasonable state of repair. Relevantly, the Tribunal stated: 76 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 prospects of life of the premises. 77 The conclusions of the Mycolab report are quite alarming. 78 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.
17. The Tribunal noted the jurisdictional limit for compensation and, while satisfied that Mr and Mrs Fletcher had incurred costs of $19,332.50, found that Mr and Mrs Fletcher were entitled to an order for compensation for costs sustained by Mr Bunbury's breach of the residential tenancy agreement for $15,000. The Tribunal also ordered the return of the bond.

Grounds of appeal and submissions of the parties

1. Mr Bunbury does not complain about the reasons for decision, which are lengthy and detailed, or the conduct of the hearing. He accepts he had an adequate opportunity to present his case. His complaint is that the decision was not fair and equitable. Mr Bunbury set out his grounds of appeal in his Notice of Appeal and they can be summarised as follows: 1. Mr and Mrs Fletcher were aware of the mould at the commencement of the lease yet did not complain for over a year. Their delay may have exacerbated the problem. 2. When Mr and Mrs Fletcher complained, immediate action was taken by him to address the issue and Mr Bunbury offered to undertake further work if required. 3. Mr and Mrs Fletcher were unhappy with the mould remediation and said they would vacate the property. However, they did not do so for seven months and this was inconsistent with their stated concern about health risks. This was also consistent with the fact that they did not complain further about mould or rising damp from May 2014. This led Mr Bunbury to conclude the mould issue had abated. It was unreasonable for Mr and Mrs Fletcher to delay in vacating the property when his managing agent had attempted to find suitable alternative accommodation for them.
2. In the Notice of Appeal, confirmed in oral and written submissions, Mr Bunbury stated that he sought leave to appeal on the grounds that the decision was not fair and equitable. He particularise these grounds, which were in addition to his general grounds of appeal, as follows: 1. The reduction applied by the Tribunal of 25% was excessive as the value attributed to the third bedroom was incorrectly calculated. In calculating the loss of the bedroom by reference to a four-bedroom house was unfair because four-bedroom houses frequently have other improvements and amenities. A more appropriate method of assessing the loss would have been to compare three-bedroom and two-bedroom houses which, according to evidence provided by Mr Bunbury at the appeal hearing, would have been in the vicinity of $80-$100 per week. Mr Bunbury also noted that he disputed the factual finding of the Tribunal that Mr and Mrs Fletcher did not use bedroom three. 2. According to Mr Bunbury it was unfair for the Tribunal to allow rent abatement in circumstances where Mr Mrs Fletcher remained in the property for seven months after the mould issue was first identified as a problem. Mr Bunbury contended that if Mr and Mrs Fletcher had vacated the premises in April or May 2014 they would have avoided any health issues they believe they were being exposed to but chose to stay. Mr Bunbury also referred to the evidence before the Tribunal that the managing agent invited Mr and Mrs Fletcher to visit what he considered were comparable properties but they refuse to do so. According to Mr Bunbury, there was excessive delay in vacating the property which is inconsistent with their claims of concern about a serious health risk. 3. The order for compensation for decontamination of the goods was unfair because the cost was incurred without consultation with Mr Bunbury or his agent. Moreover, no objective proof was provided that decontamination was necessary, no advance notice was provided, no competitive quotes were provided and Mr and Mrs Fletcher may have exacerbated the issue by prolonging their stay after they expressed a desire to vacate.
3. Mr and Mrs Fletcher opposed leave to appeal on the basis that Mr Bunbury had not demonstrated the decision of the Tribunal at first instance was not fair and equitable and that the submissions and grounds of appeal sought to restate the matters that already put before the Tribunal at first instance by his representative. In respect of the specific grounds raised by Mr Bunbury, Mr and Mrs Fletcher responded as follows: 1. Mr Bunbury has provided irrelevant rental data as evidence to support his argument about the value of the loss of bedroom three given that the data provided relates to an unknown location, relates to two-bedroom houses, does not include any data for three-bedroom houses and was for an unknown period. Mr and Mrs Fletcher had presented the best evidence available at the time and neither Mr Bunbury nor his agent provided any evidence to refute this. The Tribunal considered multiple factors and provided reasoning for the rent reduction in the amount applied by the Tribunal of $230, which was significantly lower than the $330, being the difference between the median rental of a three-bedroom and four-bedroom house. 2. Mr and Mrs Fletcher denied the assertion that they had unreasonably delayed vacating the premises and further stated that they would have vacated earlier if they had been aware of the extent of the mould as disclosed in the report from Mycolab. This report was not obtained until late November, early December 2014. Mr and Mrs Fletcher also contended that it was clear from the Tribunal's written reasons that the issues raised by Mr Bunbury in the appeal were also raised at the hearing and were assessed by the Tribunal before making its decision. 3. Mr and Mrs Fletcher contended that their action in undertaking the decontamination was appropriate having regard to the findings in the Mycolab report. They also contended that Mr Bunbury had an obligation to provide and maintain the premises in a reasonable state of repair and in failing to do so they suffered loss. They followed the recommendations of Mycolab and obtained a quotation for decontamination, which was provided to Mr Bunbury and his agent on 28 November 2014. Mr Bunbury did not offer an alternative solution.
4. In written submissions dated 15 July 2015, Mr and Mrs Fletcher further contended that Mr Bunbury had not established he may have suffered a substantial miscarriage of justice because his grounds of appeal were predominantly a restatement of his case put forward at first instance by his agent. They had presented extensive evidence to support their case, Mr Bunbury was given the opportunity to put forward his case and was now attempting to put forward evidence and submissions that were not raised by his agent at first instance.
5. Mr and Mrs Fletcher also raised issues about further breaches alleged to have been made Mr Bunbury (not argued or referred to by the Tribunal at first instance) and his failure to comply with directions made by the Appeal Panel for the conduct of the hearing. As these matters were not relevant to our determination of the critical issue in the appeal, namely whether we should give leave to appeal, it is not necessary for us to address these issues.

Consideration

1. Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the CAT Act) provides that an internal appeal may be made against a decision of the Tribunal as of right on any question of law or with leave of the Appeal Panel on any other grounds.
2. Schedule 4, cl 12 states that an Appeal Panel may grant leave to appeal a decision of the Consumer and Commercial Division only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable (cl 12(a)), or 2. the decision of the Tribunal under appeal was against the weight of evidence (cl 12(b)), or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceeding under appeal was being considered) (cl 12(c)).
3. In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarised by the Appeal Panel at [71] and [79] as follows: [71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred."
4. The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban an Appeal Panel of the Tribunal conducted a review of the relevant cases at [65] to[79] and concluded at [84]: 84. The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
5. Mr Bunbury relies on cl 12(a) of Schedule 4, namely that the decision was not fair and equitable, to found his application for leave.
6. Having considered each of the matters raised by Mr Bunbury in his Notice of Appeal (as explained in further detail in his written submissions), we are not satisfied that a substantial miscarriage of justice may have occurred. The Tribunal made findings that were reasonably open on the available evidence. There is no suggestion the Tribunal made factual errors that were mistaken or unreasonably arrived at or that the Tribunal went about the fact finding process in an unorthodox manner. The Tribunal conducted a hearing, reviewed evidence and made findings based on the evidence. Mr Bunbury does not agree with those findings and he contends the Tribunal should have reached a different outcome. This does not establish that the decision was not fair and equitable.
7. We deal with each of the matters raised by Mr Bunbury below.
8. Mr Bunbury submitted that Mr and Mrs Fletcher knew about the mould issues when they commenced occupation. This does not preclude recovery of compensation for breach of the obligation to maintain the premises in a reasonable state of repair. This is expressly provided in s 63(2) of the RTA and was referred to by the Tribunal in the reasons, properly in our view, in response to Mr Bunbury's submission. Indeed the Tribunal found Mr and Mrs Fletcher were on notice of the mould but did not understand the significance of the problems until April 2014. The Tribunal accepted their evidence on this issue and while Mr Bunbury is sceptical about this, there was no evidence put forward by him, or his agent, to contradict this finding. This finding was therefore open to the Tribunal and we reject this ground.
9. The Tribunal found that Mr and Mrs Fletcher had not misused the premises, an issue raised both at first instance and on appeal, by failing to ventilate the premises. The Tribunal accepted the evidence of Mr and Mrs Fletcher that while they were in occupation of the premises they had used humidifiers, attempted to ventilate the property and requested that Mr Bunbury install bars on the windows as a security measure, which was refused. The Tribunal dealt with this matter at [54] of the reasons. The finding made by the Tribunal on this issue was clearly open to the Tribunal based on the evidence of Mr and Mrs Fletcher. This ground is rejected.
10. The Tribunal was also satisfied that Mr and Mrs Fletcher had not unreasonably delayed in vacating the property. It is apparent from the reasons that Mr and Mrs Fletcher's evidence on this issue was accepted by the Tribunal. The finding was clearly open to the Tribunal and Mr Bunbury and his representative had the opportunity to test their evidence at the hearing below.
11. Mr Bunbury contended that the fact Mr and Mrs Fletcher remained in the premises was inconsistent with their stated health concerns. He disputes the compensation order made. We reject Mr Bunbury's submissions on this issue. It is also relevant to note that the Mycolab findings about the seriousness of the mould contamination were not available until late November 2014. Mrs Fletcher submitted that if they had known about the results earlier they would have vacated immediately. There is considerable force to this submission.
12. In considering the order for compensation, the Tribunal had regard to the evidence from Mycolab that the premises were "uninhabitable" and the fact that Mr Bunbury had himself caused decontamination to be undertaken after Mr and Mrs Fletcher vacated the premises. There can be no contest that Mr and Mrs Fletcher incurred costs of over $15,000 in paying for decontamination, which was recommended by Mycolab. It would be inconsistent for Mr and Mrs Fletcher to incur such significant costs if they were not concerned about the health risks. As such, there is nothing about the Tribunal's findings on this issue or the outcome in ordering compensation and rent abatement that discloses "an injustice that is reasonably clear".
13. Mr Bunbury contended that the rent reduction was excessive, not only because he disputed the measure proposed by Mr and Mrs Fletcher but he disputed their assertion that they did not use bedroom three from April 2014. We reject these submissions.
14. On the question of how the assessment of rent should be made, the Tribunal relied on the available evidence, which it discounted significantly. Mr Bunbury did not provide any evidence at the hearing to contradict this evidence. He has now sought to rely on new material but there is no suggestion this evidence was not available at the time of the hearing or that Mr Bunbury did not have the opportunity to present this evidence at the hearing in response to the evidence filed and served by Mr and Mrs Fletcher. We are also persuaded by the submissions made by Mr and Mrs Fletcher that this data is of limited assistance in any event. The provenance and relevance of the data is unclear.
15. The Tribunal made an assessment of the appropriate rent by adopting the methodology outlined at [68]. This assessment was open to the Tribunal. Similarly, the finding that Mr and Mrs Fletcher did not use bedroom three after April 2014 was also open to the Tribunal. The finding is referred to in [67]. Relevantly, the Tribunal noted that Mr Bunbury had "not adduced any evidence that would cause me to question whether in fact this room was in fact useable over the period in question."
16. Mr Bunbury contended that finding he had breached his obligations was unfair because he had been attentive to Mr and Mrs Fletcher's requests, had investigated the issue and in late May 2014 had offered to undertake further work. In this regard, Mr Bunbury referred the Appeal Panel to evidence from the hearing at first instance, being a copy of SMSs between he and Mr Fletcher, including the following: Mr Fletcher: Hi Luke unfortunately the repairs have not been successful and based on our conversation there are no further plans to alleviate the issue. We continue to experience health symptoms and are still unable to use the 3rd bedroom. Thus we have decided to start searching for alternative accommodation. Please let us know how you want to proceed. Thanks Andrew. Mr Bunbury: Andrew this is fine. However, please note I am willing to contemplate further work - it seems u do not have any suggestions that may resolve. I will have the agent come back on terms given your decision to break. Luke
17. The Tribunal considered this issue and at [74] to [77] concluded that given Mr Bunbury was on notice of the mould problem he had an obligation to rectify the issue from April 2014. His efforts to remedy were ineffective, as evidenced by the Mycolab report and Mr Bunbury's own actions to remediate after Mr and Mrs Fletcher vacated the premises. Mr Bunbury's submissions suggest that the obligation was on Mr and Mrs Fletcher to find a solution. This misconceives the obligation of a landlord under s 63 of the RTA. We therefore reject this ground.
18. Having regard to these matters, the Tribunal is not satisfied there has been an injustice that is reasonably clear or that it would be unjust to allow the decision to stand. This is a case where the Tribunal at first instance made a number of findings that were reasonably open based on the evidence and after a contested hearing. Mr Bunbury does not agree with these findings or orders but this is not enough to justify leave to appeal.

Conclusion

1. For these reasons, the Appeal Panel refuses leave to appeal. The appeal is therefore dismissed. 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: 09 September 2015