Chang v Wang

Relevant law

1. Clause 41 of the agreement states that the tenant must pay a break lease fee if they end the agreement before the fixed term. The amount payable under that clause in this case is four weeks rent (because more than half of the fixed term had expired). Section 107 of the Residential Tenancies Act 2010 (NSW) (RTA) provides that the Tribunal may order compensation to be paid to the landlord if a tenant abandons the premises. The maximum amounts that may be ordered for an agreement made before 23 March 2020 are the same amounts as in clause 41 of the agreement.
2. The tenant claims the property was not habitable for the reasons set out below. If that was the case:

• section 98 of the RTA applies if the property was uninhabitable because of a breach of the agreement by the landlords; or
• section 109 of the RTA applies if the agreement was frustrated because the premises were uninhabitable for a reason other than a breach of the agreement by the landlords or tenant. In either case, if the premises were uninhabitable, the tenant was entitled to end the agreement. The provisions for a break lease fee for early termination in clause 41 would not apply and the landlords would not be entitled to compensation.

1. To determine the application, the Tribunal considered whether the tenant was entitled to terminate the agreement early because the premises were uninhabitable. If not, it must determine the amount, if any, that the landlords are entitled to receive as compensation under section 107.

Consideration of evidence, findings of fact and application of the law

Evidence considered

1. The Tribunal considered documents provided by both parties and oral evidence provided at hearing by Ms Chang and Mr Mostronardo.

Chronology

1. On 22 May 2021, the dishwasher in the premises was replaced. On 17 June 2021, the tenant advised the agent that the dishwasher leaked. On 21 June 2021, the agent advised the tenant that it would be fixed.
2. The tenant's evidence is that a contractor phoned her the following day and advised they were in the apartment building to fix the dishwasher. However, she was working and could not let them in. She said she asked them to give her notice before returning.
3. The landlords said the contractor had arranged the time with Ms Chang but she had forgotten about the appointment and was working. They also claim she advised the contractor that she would call back to make an appointment.
4. She said the leak was not significant when she went to Brisbane with her family on 23 June 2021 for school holidays. She said the contractor contacted her during the holidays and she advised him when she expected to return to NSW. However, she could not return home as scheduled. She said she could not fly back to Sydney because of the COVID lockdown and could not return by car because she has a medical condition that makes it difficult to be in a car for a lengthy period.
5. The agent said that both the contractor and the tenant did not advise of the delay in the repair and on 16 August 2021 they found the property had flooded. The agent contacted the tenant and the building manager tightened a hose in the dishwasher. The contractors found that the issue was resolved on the following day. The agent engaged a carpet cleaning company and by 25 August it had extracted standing water, steam cleaned the carpet; treated mould on surrounding walls; applied a mould and microbial treatment to the carpet and underlay; used drying equipment for 24 hours to dry the carpet and a dehumidifier for seven days.
6. On 26 August 2021, the tenant's husband returned to the property. The tenant's evidence is that he found that there was mould in the property and she requested the landlords provide a cleaner. A cleaner attended the property on 4 September 2021 to clean mould off some areas of the property but did not perform the work. The landlords say that he reported that the tenant's husband was not concerned with mould and instructed him to do general cleaning. On 14 September 2021, another cleaner attended the premises with a list of cleaning tasks related to mould provided by the tenant.
7. On 2 October 2021, the tenant returned to NSW and her evidence is that she found that the property was not inhabitable because of mould. She contacted the agent again and another cleaner attended the property on 7 October 2021. Later that day, the tenant advised that the cleaning was inadequate because the cleaner had not bought a ladder and could only clean what she could reach. She advised the agent that she intended to end the tenancy when she found other accommodation. She said that she would let the agent know when she was moving out.
8. On 8 October 2021, the agent acknowledged the email and asked her to advise of her of the date to vacate when she could. The agent advised the tenant would be "technically" breaking the lease. However, she noted that she said the property was uninhabitable. On the same day, the tenant notified the agent that she was terminating the lease from 25 October 2021 "under section 109". The agent acknowledged the notice of termination.
9. The tenant said she and her family could not live in the property because they had skin allergy problems (urticaria and itchiness) from the mould. She said that her general practitioner advised her to move out and provided a report from her to the Tribunal. She also provided a report from a psychologist stating the mould problem was causing her anxiety.
10. On 10 October 2021, the tenant advised that there was a leak from the window in the master bedroom and that she would now be leaving on 18 October 2021.
11. On 14 October 2021, the agent acknowledged receipt of the new termination notice and advised again she was "technically" breaking the lease. She said she was waiting for instructions from the owner as to whether he would claim the "2 weeks break lease fee". (The Tribunal notes this is the maximum amount payable for residential tenancy agreements made after 23 March 2020 for break lease fees where half of the fix term has expired.)
12. On 15 October 2021, the agent wrote to the tenant and advised that she found the property was habitable when she inspected it on 11 September 2021. She said she found some minor mould spots in the lounge room and acknowledged the leak in master bedroom as "worrisome". She advised the tenant she was liable to pay the two week break lease fee "but he will meet you half way and request you pay 1 weeks break lease fee".
13. On 18 October 2021, the tenant vacated the premises.
14. At hearing, the agent advised there was no further maintenance on the property before it was let only 18 days after the tenant vacated. She said the tenants have not complained of mould or advised of any skin allergies.

Were the premises uninhabitable?

1. Residential premises will be fit for habitation if they can be used and dwelt in by a tenant with safety and reasonable comfort having regard to contemporary standards (Menashi v Ly [1997] NSWRT 162). This test is reasonably high and a finding that premises are not habitable will not be made lightly (De Soleil v Palmhide P/L [2010] CTTT 464). For example, in the Tribunal's view, the small spot of mould found by the agent is not sufficient to make that finding.
2. In this case, the tenant has claimed that she and her family could not live safely in the premise because of mould. The Tribunal accepts that mould grew in the premises during her absence because of the flood. The premises were uninhabitable from the time of the flood until at least 25 August 2021 when the carpet cleaners completed their work. It has regard to the extensive work performed by those contractors to remedy that issue before she returned from Brisbane. In the Tribunal's view, the landlords had completed all recommended actions to remedy the mould issue caused by the flood at that time. The question for the Tribunal is whether, despite those efforts, the premises remained uninhabitable when the tenant terminated the tenancy on the second occasion on 14 October 2021.
3. The tenant has provided photos of mould growing on soft furnishings, on a musical instrument and on chairs. She also told the Tribunal that she threw out dishes left in the property because of mould. There is no evidence to demonstrate that the mould on these items grew after the work performed for the landlords, including the cleaning. It was a matter for the tenant to deal with personal belongings that had been affected (by cleaning or replacing them). The Tribunal is not satisfied based on the state of those belongings that mould continued to grow in the apartment when she terminated the tenancy despite the actions of the landlords.
4. The tenant also provided a photo of some mould growing on a window sill. Again, it is not clear when the tenant took the photo. However, the tenant noted in emails to the agent there was heavy rain expected in the week after she notified of the leak in the master bedroom. The mould in the photo is not unexpected if there were sustained heavy rain and it appears that it could easily be cleaned. Again, the Tribunal does not find that this evidence demonstrates that the property was uninhabitable when the tenant terminated the agreement.
5. There was a continuing leak in the master bedroom. This was a longstanding issue that had not been adequately addressed. This is not satisfactory but there is nothing to indicate it previously caused a mould issue and the tenant did not allege that was the case. On its own, it does not make the property uninhabitable.
6. In the Tribunal's view, the extent of the work performed for the landlord makes it unlikely that mould continued to be a problem. It also accepts the landlords' evidence that they rented the premises 18 days after the tenant vacated to tenants who have had no problem with mould and gives weight to it. The Tribunal is satisfied on that evidence that there was no medium or long term problem and infers that the work performed had resolved the issue by the time the tenant served the termination notice. It finds that property was habitable at that time. The Tribunal finds the agreement was not frustrated and that the tenant did not have a right to terminate the agreement under section 109 of the RTA.
7. For completeness, the Tribunal is satisfied the landlords responded to the notice of the leak in the dishwasher and to the resulting flood "with reasonable diligence to have the repair carried out". In that case the Tribunal finds they were not in breach of the duty in section 63 of the RTA "to maintain the premises in a reasonable state of repair". In that case, the tenant was not entitled to terminate the agreement under section 98 of the RTA.

Break lease fee/compensation

1. In that case, the Tribunal may order compensation to the landlords under section 107 of the RTA for the early termination of the tenancy. The power to make such an order is discretionary and there will be some cases where it is not appropriate to make an order or where it is not appropriate to make an order for the amount set out in the terms of the residential tenancy agreement (see for example Hughes v De Silva; De Silva v Hughes [2019] NSWCATCD 86). To that extent, section 107 prevails in this case if there is any inconsistency between it and clause 41 of the agreement (Talbot-Price v Jacobs [2008] NSWCA 189).
2. In the Tribunal's view, it would be unjust to order the full amount payable under clause 41 of the agreement. The agent advised the tenant that she would owe a break lease fee of two weeks rent on two separate occasions. The agent was acting for the landlords in all her dealings with the tenant. The tenant was therefore entitled to rely on her advice. In addition, as noted above, the premises were rented quickly and the landlords lost only 18 days rent. They have not lost the four weeks rent that would be payable under clause 41. In that case, the Tribunal determines the amount owing as compensation for early termination of the lease is two weeks rent. That is $1,300.

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: 14 March 2022