The tenants sought compensation for the period from the commencement of the tenancy to when the Rent Control Notice took effect.

The landlord submitted that the agent had not brought to her attention the defects noted in the ingoing inspection, and that she had only become aware upon receiving the findings of the Housing Safety Authority in March and had since been attempting to remedy them.

Held, allowing the application and ordering compensation:

• The tenants suffered inconvenience and loss and amenity in the premises from the commencement of the tenancy until May 2025;
• The landlord was in breach of her obligations under ss 67A and 68 of the Residential Tenancies Act 1995 at the commencement of the tenancy. In light of the ingoing inspection report and the agent's knowledge of the defects at the start of the tenancy, the Tribunal did not accept that the landlord was unaware of the defects at the commencement of the tenancy. The landlord is assumed to have knowledge of matters of which the agent has knowledge for the purposes of the duty to repair;
• Section 67A imposes a positive duty on a landlord to ensure that the premises meet minimum housing standards, a landlord cannot simply profess to a lack of knowledge as to whether or not the premises meet the standards.
• In assessing compensation for loss of amenity, significant weight was attributed to the Rent Control Notice as evidence of an expert in the field. The Tribunal followed the calculations that had been made in the Notice on the basis that the defects significantly impacted upon the amenity of the premises.

Residential Tenancy - Tenant application for compensation - Landlord obligations - Obligation to repair - Duty to act with reasonable diligence - Consideration of compensable defects - Minimum housing standards - Inconvenience and loss of amenity

Residential Tenancies Act 1995 ss 67A, 68, 110

Varricchio v Wentzel [2016] SASC 86

The applicants appeared in person accompanied by Ms Salamanca, RentRightSA, who also appeared in person

The respondent appeared in person accompanied by Mr Huang, AC Real Estate, who also appeared in person

Compensation & Related Orders - Tenant application - Repairs

Made under the Residential Tenancies Act 1995 ss 67A, 68, 110

1. Ms Burgess and Mr Legget are tenants of Ms Liu under a residential tenancy agreement for the purposes of the Residential Tenancies Act 1995 (the Act). They applied to the Tribunal on 31 March 2025, seeking compensation and/or repairs in respect of things which they considered to be defects in the state of repair of the premises.
2. The Tribunal conducted a hearing on 12 May 2025. Mr Moskos of the South Australian Housing Safety Authority (HSA) provided evidence of the involvement of that agency. A Housing Improvement Order and a Preliminary Rent Control Notice had already been issued. Mr Moskos foreshadowed that a Rent Control Notice was about to be issued. I adjourned the matter and issued directions; I refer to the document dated 12 May 2025.
3. The hearing was resumed on 23 June 2025.
4. I view the following as the central and undisputed facts of the matter:
   1. The tenancy commenced on 10 October 2024. The agreement was for rent of $600.00.
   2. The ingoing inspection report indicates many ways in which the premises were at that time in less than good condition.
   3. The tenants communicated with the agent regarding the defects that they observed.
   4. Following an inspection on 14 March 2025, HSA issued a Housing Improvement Order and a Preliminary Rent Control Notice on 31 March 2025. The Housing Improvement Order listed 37 "defects" (instances of the property not meeting the minimum housing standard).
   5. After a re-inspection on 16 April 2025, HSA issued a Rent Control Notice which fixed the maximum rent that could be charged for the premises at $337.50 per week, with effect from 15 May 2025.
   6. The Rent Control Notice remains in force.
   7. The HSA has been communicating with the landlord and intends to reinspect shortly. In any case, the Housing Improvement Order and Rent Control Notice are due to be reviewed by 1 July 2025. The Rent Control Notice may be varied based on the condition of the premises at that time.

1. The Act imposes two related duties on a landlord in relation to the state of premises at the commencement of a residential tenancy agreement:
   • under s 67A(1), the landlord "must ensure that the premises comply with the prescribed minimum housing standards under the Housing Improvement Act 2016 on or before the day on which the tenant enters into occupation of the premises".

• under s 68, the landlord "will ensure that the premises, and ancillary property, are in a reasonable state of repair at the beginning of the tenancy and will keep them in a reasonable state of repair having regard to their age, character and prospective life".

1. In my experience of matters at the Tribunal, a typical ingoing inspection report rates all aspects of the relevant property as clean and in good condition. Few reports indicate any lesser ratings. I take this as indicating that, by and large, landlords/agents are mindful and observant of the landlord's duties in relation to the condition of premises at the start of a tenancy. In this case, as noted, the ingoing inspection report contains a large number of entries indicating ratings less than good.
2. Many of the defects listed in the Schedule to the Housing Improvement Order relate to matters reported by the tenants at the start of the tenancy, and all are of a nature that suggest that they are the product of deterioration or of historical practices that no longer meet minimum housing standards, rather than sudden occurrences. I infer that the state of the premises at the commencement of the tenancy was substantially the same as the state observed by the HSA, and as listed in the Schedule to that agency's Housing Improvement Order.
3. Ms Liu's evidence was to the effect that she had not personally been made aware of the defects until she received the Housing Improvement Order and had been actively working to remedy them since then. She said that the agent had not made her aware of the matters noted in the ingoing inspection report.
4. Under s 68 of the Act, a landlord is not in breach of the duty to repair unless the landlord has notice of the defect and fails to act with reasonable diligence to remedy it. There are several reasons why this provision does not shield Ms Liu from liability here. Firstly, s 67A imposes on a landlord a positive duty to ensure that the premises meet minimum housing standards; the landlord cannot simply profess to a lack of knowledge as to whether or not the premises meet the standards. Secondly, if a landlord has an agent, and the agent has knowledge of defects, for the purpose of the relevant duty, the landlord has knowledge of the defects and the duty to repair applies.
5. In any case, the defects are generally of types that would be apparent on an ordinary inspection, and indeed, many are indicated or specified in the ingoing inspection report. A landlord is taken to have notice of defects that would be apparent on inspection: Varricchio v Wentzel [2016] SASC 86.
6. It follows from the above that I find the landlord to be in breach of her obligations under ss 67A and 68 at the commencement of the tenancy. The continued existence of the defects as at 15 May 2025 without any evidence of reasonable diligence on the landlord's part to remedy those defects resulted in the tenants suffering inconvenience and loss of amenity in the premises from the commencement of the tenancy until 14 May 2025 and beyond. The tenants are entitled to be compensated for that loss.

1. In the first hearing I opined, and the tenants accepted, that the effect of the Rent Control Notice, in reducing the weekly rent from $600.00 to $337.50 from 15 May 2025, meant that the Tribunal needed to consider compensation only in relation to the period before that date.
2. A Rent Control Notice, while in force, has lawful effects that restrict the operation of some rights otherwise available under the Act. The Tribunal has no power under the law over such an order. If and when it is revoked by the HSA, the landlord has a 60 day "window" in which to give notice of a rent increase from the present $337.50 per week, or else be subject to the other section 55 restrictions on rent increases.
3. As directed, the tenants quantified their claim for the period before the Rent Control Notice. They claimed under eight heads, the first of which was a claim for compensation equivalent to the rent reduction imposed by the Rent Control Notice, for the period from the commencement of the tenancy to 14 May 2025. The other claims were for specific types of inconvenience or cost flowing from the defects.
4. I view the Rent Control Notice as evidence of the opinion of an expert in the field of housing conditions as to the impact of the observed defects on the amenity of the premises as a whole, based on the first-hand observations and assessments by that expert. I consider that to be evidence of great weight. The Rent Control Notice had the effect of reducing the rent by 43.75%.
5. In seeking to assess compensation for loss of amenity, a common approach is to assess the percentage of the entire amenity of the premises that has been lost to the tenants as a result of the defect. This is not at all a mathematical approach intended to arrive at the single precisely correct answer; it necessarily involves many judgments based on the assessor's subjective experience. Almost inevitably, the result is a range of percentages, all of which appear to be reasonable answers.
6. Based on my experience, I view the percentage reduction effected by the Rent Control Notice, 43.75%, as falling within, but certainly well towards the upper end of, the reasonable range of compensation for the combination of defects. In my experience, an award of compensation equivalent to 43.75% of the rent is a large award. However, as noted, that quantity was the result of an expert's direct viewing of the premises, which I consider to be evidence superior to any indirect evidence available to me.
7. I consider an award of compensation equivalent to 43.75% of the rent, from 10 October 2024 to 14 May 2025 to be a reasonable outcome, but given the countervailing considerations noted above, I considered that that amount of compensation should cover all forms of inconvenience and loss suffered by the tenants as a result of the landlord's breach. I put this to Ms Burgess and Ms Legget, together with my calculation of the amount as $8,100.00, and they accepted my reasoning.
8. Ms Salamanca pointed out that compensation for a tenant in an ongoing tenancy is typically applied as a rent credit, and assuming the rent remains limited to $337.50 a week, $8,100.00 would exceed the amount of rent payable to the end of the present term. Also, Ms Burgess submitted that she and Mr Legget are seeking alternative accommodation and are permitted to move out without incurring break lease charges.
9. If a tenancy ends with a tenant in credit for rent, then the tenant is entitled to a refund of that credit, subject to other amounts to which the landlord is entitled under the agreement.

1. The landlord must pay to the tenants the sum of $8,100.00. This must be done by crediting the rent record forthwith.
2. If the landlord fails to comply with any of the above orders then the tenant may contact the Tribunal in writing and request an urgent hearing.