mixed. Both applications dismissed. Tenants' claims for rent repayment, abatement, termination under s 109 and compensation dismissed for failure to prove landlord breach, lack of statutory preconditions, and...
Key principles
The landlords did not breach their obligation under section 52 of the Residential Tenancies Act 2010 (NSW) to provide the premises in a state fit for habitation because, although...
Section 45 and section 47 remedies for reduction or repayment of rent do not apply where rent was payable under a valid tenancy and where statutory preconditions (a written...
A tenant's termination notice given under section 98 and surrender of possession in accordance with that notice effects termination under section 81(2); the Tribunal cannot...
No break fee is payable where a fixed-term tenancy is validly terminated for a permissible reason (here, valid section 98 notice and return of possession under s 81(2)); and the...
Issues before the court
Did the landlords breach the statutory obligation under section 52 RT Act to deliver possession in a state fit for habitation?
Are tenants entitled to repayment or abatement of the rent paid under the tenancy (s 45, s 47 RT Act)?
Plain English Summary
NCAT dismissed both the tenants' and landlords' applications. The Tribunal found the property had latent damp and some pre-existing mould, but it was not uninhabitable when the tenants took possession. The tenants' acute symptoms were linked to carpets that remained saturated after the tenants' chosen carpet cleaner left them wet; this was not caused by the landlords. Consequently there was no landlord breach, and tenants could not recover paid rent or compensation; their attempt to invoke frustration or s 45/47 remedies failed. The landlords could not recover a break fee because the tenants validly terminated under s 98 and surrendered possession; their compensation claim for carpet replacement was time-barred and inadequately evidenced.
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Could the Tribunal terminate the tenancy under s 109 (frustration) where tenants had already issued a s 98 termination notice and surrendered...
Are the landlords entitled to a break fee and compensation for carpet replacement?
This case concerned two companion applications in the NSW Civil and Administrative Tribunal (Consumer & Commercial Division) about a short-lived tenancy at a three-storey dwelling at Burraneer. The tenants, Joseph and Kim Duffey, entered a fixed-term tenancy commencing 6 April 2019. Prior to possession the tenants arranged for carpets to be steam cleaned by their chosen contractor on 3 April 2019. The carpets on level 2 remained wet after cleaning. The tenants moved possessions in on 6–9 April and began to experience respiratory and related symptoms in the following days. They installed dehumidifiers and air purifiers, but perceived the level 2 internal environment as damp and musty. A medical practitioner recommended relocation because of a mould allergy; building biologists reported extensive mould contamination in some localized areas (wardrobes and kitchen under-sink), and laboratory spore counts classified these as 'extreme contamination' for particular samples.
The tenants vacated to family accommodation on 18 April 2019, issued a section 98 (breach) termination notice on 9 May 2019 nominating 26 May 2019 as the termination date, and returned keys on 25 May 2019. They sought Tribunal orders for repayment of $8,050.00 rent, compensation for a variety of losses, and termination under section 109 (frustration). The landlords, Kris and Valentina Tuntevski, cross-applied for a break fee and compensation for alleged carpet damage caused by the tenants' cleaner. Hearing occurred 25 October 2019 before General Member P French; decision delivered 14 January 2020: both applications dismissed (Reasons).
Why the court decided this way
The Tribunal’s decision rests on layered factual findings and statutory constraints.
Habitability and landlord breach (statutory duty s 52 RT Act): The court accepted that there was latent damp and three localized areas of active mould on possession [4], [11]. That obliged landlords generally to maintain the premises. However, the Tribunal applied the established habitability test (Menashi/Proudfoot), premises must be usable and capable of being dwelt in with safety and reasonable comfort according to contemporary standards [11]. The Tribunal concluded that, notwithstanding pre-existing damp and localized mould, the premises were not uninhabitable when possession passed. The mould problems were remediable and did not render the dwelling uninhabitable in law [4], [13].
Causation, what produced the acute symptomatic environment: The Tribunal expressly found that the principal proximate cause of the tenants’ illnesses in the two weeks after possession was persistently wet carpets on level 2 which had not dried after the tenants' chosen carpet cleaner had finished. That saturated condition produced the pathogenic environment leading to symptoms [15]–[16]. Crucially, the court found no evidence that the carpets were wet before the cleaning, nor signs indicating long-term saturation from subfloor dampness; tests of underlay and smoothedge did not show deterioration; experts’ methodologies and conflicting readings were weighed; the only reasonable inference was inadequate extraction by the cleaner, not landlord fault [16]–[17].
Procedural/statutory prerequisites and remedies: The tenants sought rent repayment under s 45 and s 47 and termination under s 109. The Tribunal ruled these remedies unavailable because s 45 applies only where premises become unusable otherwise than by breach (frustration), s 47 requires a prior written request and a 14-day response window (which the tenants did not satisfy), and s 109 is inapplicable to a tenancy terminated for landlord breach by a s 98 notice (the tenancy had already terminated under s 81(2)) [5], [3], Tenants' application Consideration [1]–[7].
Landlords’ claims: The landlords’ claim for a break fee failed because the tenants validly terminated under s 98 and returned possession consistent with s 81(2); the Tribunal noted the landlords could have sought relief reversing the termination by a s 111 application within statutory time, but did not [Landlords' application Consideration [1]–[4]]. The landlords’ carpet replacement claim was dismissed as time-barred under s 190(1)/Reg 22(9) (applications must be made within three months of awareness of breach), filed 7 days late, and lacking adequate evidence, there was no invoice, insufficient proof of damage, and the only expert relied on made inconsistent findings [Landlords' application Consideration [5]–[8]].
The Tribunal therefore dismissed the tenants’ and landlords’ applications on mixed substantive and procedural grounds.
Before and after state of the law
Before: The law as applied in NSW tribunals required landlords to provide premises fit for habitation and supplied statutory mechanisms (ss 43–47, 52, 81, 98, 109, 190 RT Act etc.) that create both substantive rights and procedural preconditions for remedies like rent abatement, repayment, termination, and compensation. Menashi v Ly and Proudfoot v Hart establish the habitability test; Briginshaw governs civil standard and quality of evidence.
After: This decision applies and clarifies those established principles to a common fact pattern, latent damp plus an aggravating tenant action (wet carpets), emphasising three points:
Habitability is assessed at the time of possession, and latent damp plus localized mould does not automatically equal uninhabitability if remediation is feasible [11], [13].
Causation matters: where tenants’ choices create or materially exacerbate the symptomatic environment (here saturated carpets), the landlord is not liable for subsequent health consequences [15]–[17].
Statutory preconditions and time limits in RT Act are strictly applied by the Tribunal: s 47 written-request requirement; s 45 applicability only outside breach; s 190 three-month window for landlord claims, with extension only in exceptional cases and for fairly arguable claims [Tenants' application Consideration; Landlords' application Consideration].
Thus the decision consolidates existing law rather than changing it. It is a cautionary precedent on evidence, causation and procedural timeliness in tenancy mould disputes.
Key passages with plain-English translation
"The evidence does establish that there was a latent mould problem ... but it did not render the premises uninhabitable." [4]
Plain English: There was pre-existing mould in parts of the house, but not so bad that the house could not be lived in legally; the mould could have been fixed.
"I am satisfied that it was this environment that was causative of the illnesses experienced by the tenants and their children." [15]
Plain English: The Tribunal concluded the family's health problems were caused by the very wet carpets, which created the mouldy conditions, not by the landlord failing to make the house habitable.
"Section 45 ... only operates in circumstances where premises become wholly or partly uninhabitable otherwise than as a result of a breach." [Tenants' application Consideration para 1]
Plain English: The rent-reduction law only applies where things like fires or floods make the home unusable, not when the landlord is alleged to have broken the tenancy agreement.
"No break fee is payable ... which was the issuing by the tenants of a termination notice under 98 ... and the return of possession ..." [Intro para 9]
Plain English: If tenants validly end the lease and give the keys back under the law, they do not have to pay a break fee.
"The landlords' application ... made outside the time period permitted by section 190(1) ... and there are insufficient grounds to justify time being extended." [Intro para 10; Landlords' application Consideration]
Plain English: The landlords sought money too late under the law, and they did not show a good reason to allow the late claim.
What fact patterns trigger this precedent
Patterns that will attract application of this decision's reasoning:
Tenants complain about mould/damp present on possession but there is evidence that the mould was localized and that remediation was practicable.
There is an intervening tenant action that plausibly created or materially worsened the indoor environment (for example, wetting of carpets through cleaning, failure to ventilate, or introduction of visibly contaminated furniture).
Tenant termination via a breach-based statutory notice (s 98) followed by return of possession, with the landlord later alleging the termination was improper.
Landlord attempts to assert damage or compensation claims launched beyond the three-month statutory window without adequate explanation or contemporaneous evidence.
Tenant applications for rent repayment without satisfying s 47 (no prior written demand) or seeking rent abatement under s 45 for an alleged breach-based uninhabitability.
Where these facts exist, tribunals will closely scrutinise causation, pre-existing conditions versus new aggravations, and adherence to statutory preconditions and time limits.
How later courts have treated it
This decision is a tribunal (NCAT) decision applying established authorities. It applies tests from Menashi, Proudfoot, Roberts and procedural authorities such as Jackson. Subsequent decisions in the Tribunal will likely cite this case where similar fact splits (latent defects plus tenant-induced exacerbation) appear. The approach emphasises:
Detailed fact-finding on causation and contemporaneous physical indicators (smoothedges, underlay, humidity readings).
The necessity for tenants and landlords to act promptly: tenants must provide landlords a reasonable chance to remedy; landlords must commence claims within statutory time frames.
As an NCAT principal judgment, it is persuasive within NSW tribunals and will be used by practitioners to argue causal attribution and to counter overbroad claims for rent repayment or compensation absent strict compliance with statutory requirements. (Note: do not infer later appellate treatment absent citation to subsequent authorities.)
Still-open questions
Degree of remediation feasibility: The Tribunal relied on expert remediation steps being practicable. There remains room for dispute where remediation would be costly, protracted or safety-critical; what degree of remediation feasibility will still permit a finding of habitability may be fact-sensitive.
Interaction of tenant health vulnerabilities with habitability test: The decision applied an objective habitability test with 'contemporary standards' but where tenants have known heightened sensitivity (documented allergy), how much more protective must premises be? The court recognised the tenant’s allergy but still found no uninhabitability. Future cases with more severe or documented medical evidence might test this boundary.
Evidentiary limits for expert reports: The decision criticised limitations of non-invasive assessments and conflicting expert methodologies. There is an unresolved question about minimum standards of expert inspection and reporting necessary to prove causation or long-term structural dampness in Tribunal proceedings.
Adequacy of tenants’ mitigation obligations: The judgment criticised tenants for not allowing time for remediation and for the manner of their retreat. The precise obligation of tenants to allow reasonable remedial opportunity before issuing a s 98 notice could be explored further.
Extension of time discretion: The Tribunal declined to extend the landlords’ late claim absent exceptional circumstances and a fairly arguable case. The precise contours of ‘exceptional circumstances’ in tenancy disputes remain fact-specific.
Practical takeaways for practitioners: assemble contemporaneous photos, clear expert reports with invasive inspection where needed, comply strictly with statutory preconditions (s 47 requests, time limits under s 190), and focus on causation: identify the proximate source of any symptomatic environment and be prepared to demonstrate which party’s conduct caused or materially contributed to it.
Judgment (8 paragraphs)
[1]
Introduction
There are two applications before the Tribunal in these proceedings.
The first application in time is an application by Joseph and Kim Duffey (the tenants) for orders pursuant to sections 45, 47, 52, 187(1)(d) and 190 of the Residential Tenancies Act 2010 (RT Act) that would require Kris and Valentina Tuntevski (the landlords) to refund them all of the rent that they paid under a residential tenancy agreement, which was $8,050.00, on the basis that the premises was uninhabitable due to mould contamination, and pay them a total of $10,229.00 in compensation in respect of several heads of damage and loss they contend that they incurred due to the landlords' breach of the residential tenancy agreement in failing to pass possession of the premises to them in a state fit for habitation. The tenants also seek an order under section 109 of the RT Act terminating the residential tenancy agreement on the ground that the agreement was frustrated because the premises was uninhabitable due to mould contamination. This application was made to the Tribunal on 2 July 2019 (the tenants' application).
The tenants' application for a termination order under section 109 of the RT Act is misconceived because the tenancy terminated on 26 May 2019 following the issue by the tenants to the landlords of a termination notice which cited as its grounds breach of the agreement by the landlords (section 98 of the RT Act). The tenants returned possession of the premises to the landlords in accordance with that notice. The agreement was thus terminated in accordance with section 81(2) of the RT Act. The Tribunal has no power to retrospectively terminate a tenancy that has already ended by operation of law. Although the issue is not reached, nor could the Tribunal terminate the residential tenancy agreement under section 109 in the circumstances of this case because the section only applies where the agreement is frustrated by external events, not as a result of a breach of the residential tenancy agreement.
For the reasons set out in more detail following the Tribunal has also determined that the tenants have not established on their evidence that the landlords failed to pass possession of the premises to them in a state fit for habitation in accordance with the obligation imposed by section 52 of the RT Act.. The evidence does establish that there was a latent mould problem at the premises when possession passed and that there were also three relatively isolated areas of active mould activity. That mould problem enlivened the landlords' general obligations to provide and maintain the premises in a reasonable state of repair, but it did not render the premises uninhabitable. There is no doubt on the evidence that the tenants and their children experienced discomfort and illness due to damp and mould in the premises in the two weeks immediately after they moved in. However, the evidence before the Tribunal establishes that the most likely cause of the internal environment that produced these pathogens were the persistently wet carpets in the three bedrooms of the second level of the residence. Those carpets were left wet by the tenants' carpet cleaning contractor. The pathogenic environment therefore did not result from conduct by the landlords in breach of their obligation to provide the premises in a state fit for habitation. As there was no breach of the residential tenancy agreement by the landlords, the tenants claims for compensation for damage and loss consequent upon such a breach are not maintainable.
The tenants applications for orders under sections 45 and 47 of the RT Act that would require the landlords to repay them all of the rent they paid under the residential tenancy agreement during the period they occupied the premises are misconceived. The tenants were parties to a residential tenancy agreement with the landlords pursuant to which they were required to pay this rent in return for possession of the premises. The tenants had possession of the premises for the whole period they paid rent. There is therefore no basis upon which it can be said that this rent was "not required to be paid" by the RT Act or the residential tenancy agreement for the purposes of section 47. Additionally, the Tribunal does not have jurisdiction to make such an order in the circumstances of this case. The power to make such an order only arises after a written demand has been made by a tenant for the repayment of rent and the landlord fails to comply with this request within 14 days. The tenants did not make a written request of the landlords for the repayment of rent prior to their institution of these proceedings. Section 45 of the RT Act empowers the Tribunal to order the abatement of rent in circumstances where a residential tenancy agreement is frustrated by external events, and not as a result of a breach of the residential tenancy agreement. It therefore has no application in the circumstances of this case.
The tenants' application has therefore been dismissed in its entirety.
The second application in time is an application by the landlords under section 107 of the RT Act that would require the tenants to pay them a break fee of $2,398.25 in respect of their abandonment of the residential premises before the end of the fixed term of the residential tenancy agreement. The landlords also apply for an order pursuant to section 51(3)(b), 187(1)(d) and 190 of the RT Act that would require the tenants to pay them $4,165.00 in compensation for the costs they will incur in replacing the carpets of the premises which they allege were fatally damaged by the tenants' carpet cleaner. This application was made to the Tribunal on 2 September 2019 (the landlords' application).
For the reasons set out following, the landlords' application has also been dismissed in its entirety.
No break fee is payable by a tenant if a fixed term residential tenancy agreement is terminated for a permissible reason, as it was in the circumstances of this case, which was the issuing by the tenants of a termination notice under 98 of the RT Act, and the return of possession of the premises to the landlords in accordance with that notice.
The Tribunal does not have jurisdiction to consider the landlords' application for a compensation order in relation to alleged damage to the carpets of the premises by the tenants' cleaning contractor because the application was made outside the time period permitted for the making of such an application and there are insufficient grounds to justify time being extended.
[2]
Procedural history
The tenants' application was first listed before the Tribunal in a Group List for Conciliation and Hearing on 26 July 2019. Both tenants and both landlords attended that listing of the application in person. In accordance with the Tribunal's usual practice where both parties are present in person at the first listing of an application, the parties were provided with the opportunity to attempt to resolve the dispute cooperatively with the assistance of a Tribunal conciliator. Those efforts were not successful. As a consequence, when the parties returned to the hearing room following the conciliation, the Tribunal adjourned the application to a Special Fixture Hearing and issued directions to the parties for the filing and exchange of the documentary evidence that they intended to rely upon in the lead up to that hearing.
It does not appear that the landlords, at that time, contemplated filing a related application. In any event, no orders were made in relation to the filing or submission of evidence in a related application. However, the landlords did subsequently file such an application, which was listed for Conciliation and Hearing in a Group List on 16 September 2019. Mr Tuntevski and Mr Duffey both attended that hearing of the application in person. It appears that there was another opportunity for them to participate in conciliation but this did not resolve the dispute. As a consequence, the Tribunal adjourned the landlords' application for a special fixture hearing together with the tenants' application. No additional directions were made for the filing and exchange of documentary evidence in relation to the landlords' application.
[3]
Evidence before the Tribunal
Both parties responded to the directions made by the Tribunal for the filing and exchange of their documentary evidence in relation to the tenants' application. Both parties relied upon these documents in relation to both the tenants' and the landlords' applications. The tenants' bundle was marked Exhibit T1, and the landlords' bundle was marked Exhibit L1. Mr and Ms Duffey and Mr and Ms Tuntevski each attended the hearing in person, and each gave evidence under a solemn promise to tell the truth. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.
[4]
Material facts and contentions of the parties
The dispute arises from a residential tenancy agreement that was made on 20 March 2019. It was a fixed term agreement of 12 months duration which was initially expressed to commence on 8 April 2019 and end on 8 April 2020. However, for reasons explained following, the term of the agreement was later varied to commence on 6 April 2019 and end on 6 April 2020. The agreement is in standard form. The rent payable under the agreement was $1,150.00 per week, payable in advance. The number of occupants approved to live at the premises was four. In this respect the tenants intended to live at the premises with their two children.
The standard form clause 41 Break Fee clause was omitted from the agreement by being struck through. In its place there is a Special Condition concerning the break fee that would be payable for any non-permissible early termination of the fixed term agreement. That clause is in the following terms:
Break fee policy: The Landlord and Tenant agree that if the Tenant was to end the Lease prior to the Lease expiry for reasons outside of those permitted in the Residential Tenancies Act 2010, the Tenant is required to:
(a) continue to pay rent until the day prior to the new Tenants Lease start date.
(b) Pay the Letting Fee normally payable by the Landlord to the Agent, which is equivalent to one week's rent + GST
(c) Pay any related Advertising Costs in order to facilitate the prompt re-letting of the property. This may or may not be payable depending on the Agent's advice/method of re-letting advertising.
At the start of the tenancy, the tenants were required to provide the landlords with a rental bond of $4,600.00, being the equivalent of four weeks' rent. The rental bond was deposited with Rental Bond Services. During the three weeks after the tenants returned possession of the premises to the landlords on 24 May 2019 the landlords refused to consent to the release of the bond because they claimed that the tenants' removalist had caused damage to the timber floors of the premises. The landlords sought the rectification of this damage and to retain the bond as security whilst this occurred. That dispute was subsequently resolved and does not feature in the dispute that is now before the Tribunal. Following the resolution of that dispute, and despite the claims now asserted by the landlords in these proceedings, the rental bond was released in full to the tenants without further objection by the landlords.
[5]
Consideration
The tenants seek an order under section 45 of the RT Act that would require the landlords to repay them $8,050.00 in rent they paid during the period they had possession of the property. This application is misconceived.
Section 45 provides a remedy by way of reduction in rent in circumstances where a residential tenancy agreement is frustrated. It provides:
45 Remedies for reduction of rent on frustration of residential tenancy agreement
(1) The Tribunal may, on the application by the landlord or tenant, make an order determining the amount of rent payable if the rent is abated under section 43(2).
(2) The Tribunal may order that -
(a) from a specified day, the rent for the residential premises must not exceed a specified amount, and
(b) the landlord must repay to the tenant any rent paid by the tenant since the specified day that is in excess of the specified amount
Section 43 sets out circumstances in which rent is to be reduced: Section 43(2) provides that one of these circumstances is where premises become unusable. It relevantly provides:
Premises unusable The rent payable under a residential tenancy agreement abates if residential premises under a residential tenancy agreement are -
(a) otherwise than as a result of a breach of an agreement, destroyed or become wholly or party uninhabitable.
It is the tenants' case that the damp and mould issues at the premises constitute a breach of the residential tenancy agreement by the landlord in failing to pass possession of the premises to them at the start of the tenancy in a state fit for habitation. Section 45 therefore cannot apply. It only operates in circumstances where premises become wholly of partly uninhabitable otherwise than as a result of a breach of a residential tenancy agreement.
In the alternative, the tenants apply for an order under section 47 of the RT Act that would require the landlords to repay all the rent they paid under the residential tenancy agreement. Section 47 is in the following terms:
47 Tenant's remedies for repayment of rent and excess charges
(1) Requests to landlord: A tenant may make a written request to the landlord that the landlord repay to the tenant any rent, or other amounts, paid by the tenant that are not required to be paid under this Act or the residential tenancy agreement.
(2) A request may be made during or after the termination of a residential tenancy agreement.
(3) A landlord must, within 14 days of a written request by a tenant, repay to the tenant the amount of any rent or other amount paid in excess of the amount payable by the tenant under this Act or the residential tenancy agreement.
(4) Tribunal orders: A tenant may apply to the Tribunal for an order for the repayment of rent or any other amount paid by the tenant if a written request by the tenant for payment is not complied with by the landlord within 14 days.
(5) The Tribunal may order that rent or any other amount be repaid to the tenant if it finds that the rent or amount was not required to be paid by the tenant under this Act or the residential tenancy agreement.
[6]
Consideration
The landlords' application for an order that would require the tenants to pay a break fee must be dismissed because the residential tenancy agreement terminated for a permissible reason. That is, the tenants issued the landlords with a valid notice of termination under section 98 of the RT Act on the ground that the landlords were in breach of the residential tenancy agreement and the tenants returned possession of the premises to the landlord in accordance with that notice: section 81(2) of the RT Act.
Section 98(4) and Regulation 22(3) of the RT Act provide that the landlords had seven days from the service of that termination notice on them to apply to the Tribunal for an order revoking the notice. No such application was made.
The gravamen of the landlords' complaint about the tenants' termination notice is that there was no basis upon which the tenants could issue the notice because the landlords' were not in breach of the agreement. That being the case the landlords could have applied to the Tribunal under section 111 of the RT Act for an order declaring that the termination notice was not given in accordance the requirements of Part 5 of the RT Act. The RT Act does not specify a time period within which such an application may be made, so Rule 23(3)(b) of the Civil and Administrative Tribunal Rules 2014 applies. Such an application may be made within 28 days of the applicant becoming entitled to make the application. That was on 9 May 2019 when the landlords were served with the tenants' termination notice. The landlords therefore had until 6 June 2019 to make such an application. As noted above, the landlords' application to the Tribunal was not made until 2 September 2019, and it did not seek an order under section 111 of the RT Act.
The Tribunal has the power to amend an application under section 53 of the NCAT Act. It also has an obligation imposed by section 38(4) of the NCAT to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. In an appropriate case this power and obligation would result in the Tribunal amending the application to better reflect its substance. However, this is not an appropriate case for the exercise of this discretion because the amended application, even if time were to run from the date the application was made, would be almost 3 months out of time. While the Tribunal does have discretion under section 41 of the NCAT Act to extend the time in which an application may be made, only exceptional circumstances would justify an extension of time being granted after such a long period of delay. In this case there are no such exceptional circumstances, and in fact, there is no reasonable explanation for the delay.
[7]
Conclusion
For the foregoing reasons both the tenants' and the landlords' applications must be dismissed.
[8]
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: 29 March 2022
Both applications dismissed. Tenants' claims for rent repayment, abatement, termination under s 109 and compensation dismissed for failure to prove landlord breach, lack of statutory preconditions, and causation issues. Landlords' claims for break fee and carpet replacement dismissed: no break fee payable because tenancy validly terminated by tenant notice and surrender, and landlord compensation claim was time-barred and lacked satisfactory evidence.
The residential premises is a three storey, free standing dwelling on land overlooking Burraneer Bay at Burraneer. The top two levels are the residence and the lower level has a double garage and storage area. The home has four bedrooms. The main bedroom (bedroom 1) is on the second level and has an associated ensuite bathroom and walk-in robe. On that level, there is also a study and living area which opens onto a balcony. The other three bedrooms are located on the middle level, along with the kitchen, laundry, an open plan lounge and dining area that opens onto a verandah, and another living area at the rear of the house which opens onto an outdoor entertaining area. Each of the bedrooms and study has a carpet floor covering. There are timber floor coverings in the dining and living areas. There are front and rear gardens. The home is south facing with a north facing back yard. The home is built on a slope which has been partially excavated to accommodate the double garage, the rear section of which is subterranean as a result (the property).
Prior to entering into the residential tenancy agreement the tenants inspected the property twice, on 15 and 16 March 2019. They did so in the company of Ms Duffey's parents. On both occasions the property was occupied by former tenants who did not vacate until on or about 1 April 2019. The inspection on 15 March 2019 was a private inspection arranged and attended by the landlords' agent, Mr Stuart Payne, who is the licensee of a real estate agency trading as Burraneer Bay Real Estate. It lasted almost 1 hour. The inspection on 16 March 2019 was an open inspection conducted by a property manager, Mr Luke Payne. It is not in issue that at both inspections Ms Duffey stated to Messrs Payne that she wanted reassurance that the premises was not affected by damp and mould as she had a mould allergy and also had allergic sensitivity to chemicals. Nor is it in issue that the Messrs Payne said to Ms Duffey in response that their agency had not received any complaint or report about damp and mould from the then current tenants. Mr Stuart Payne also stated to Ms Duffey the property was well ventilated, including the sub-floor garage and storage area.
During the inspection conducted on 15 March 2019 Ms Duffey noticed that there was some mould on a blind in bedroom 1. It is not in issue that she told Mr Stuart Payne that this blind would have to be replaced if she and Mr Duffey were successful in their application to lease the property. The tenants do not contend that they noticed any damp or mould smell at the property at either inspection, or that they noticed any damp or mould, other than on the upstairs blind. It is convenient to note at this point that Mr Tuntevski replaced the mould affected upstairs blind in accordance with Ms Dufffey's request on 3 April 2019 prior to the start of the tenancy.
Following their inspection of the premises, the tenants made an application to lease the property which was approved.
On or about 1 April 2019 Ms Duffey became aware from the landlords' agent that the then current tenants were obliged to have the carpets of the premises steam cleaned prior to their departure from the property. She also learned that this work was to be carried out by a carpet cleaning contractor recommended by the landlords' agent using standard cleaning chemicals. Due to her chemical sensitivity, Ms Duffey requested the agent to arrange for the carpet be cleaned instead by a carpet cleaning contractor of her choice, Maryanne and Mario Muscat, who conduct a business under the trading name "Organic Carpet Cleaning" and who use organic cleaning products. The agent conveyed that request to the then current tenants, but they refused to agree to it, apparently because the cost of that service was $65.00 higher than the cost of the service quoted by the landlords' contractor. The issue was resolved by the agent arranging for the then current tenants to pay to the landlords the $195.00 that the landlords' contractor had quoted for the service, which was then credited to Mr and Ms Duffey's account. Mr and Mrs Duffey then arranged for the carpets to be steam cleaned by Organic Carpet Cleaning at their own expense. That work was carried out on 3 April 2019 commencing at approximately 9:00am. The landlords' agent provided Ms Duffey with keys to the property to facilitate access by the carpet cleaner.
At 2:00pm on 3 April 2019, apparently some hours after Organic Carpet Cleaning had completed the work, Ms Duffey attended the property to inspect the carpets. She observed that the level 3 carpet was dry, but that the level 2 carpets remained quite wet. As a consequence, the tenants requested, and the landlords' agent agreed, that they could retain the keys to the premises until close of business on 4 April 2019, so that they could air the house and dry the carpets with fans. The fans were left on overnight but the carpets remained wet the following morning, and despite the house being open and the fans being in operation all day that day, they remained so at 4:30pm. This resulted in the tenants requesting that they retain the keys to facilitate the drying of the carpets over the next day. However, the landlord's agent refused to agree to this, insisting that the property be locked and the keys returned, which is what occurred.
As a consequence, on 5 April 2019, the tenants negotiated to commence the lease from the following day, 6 April 2019, so that they could continue with their efforts to dry the carpets. When the tenants took possession of the property on 6 April 2019 the level 2 carpets remained wet. In an effort to dry the carpets the tenants installed three dehumidifiers, one in each of the level two bedrooms. On 9 April 2019 they also installed two air purifiers in an attempt to eradicate a damp and musty smell that was permeating level 2 of the premises. On 10 April 2019 the carpets remained wet and the damp and musty smell persisted. As a consequence, the tenants purchased another dehumidifier and another two air purifiers and installed these on level 2 in a further attempt to dry the carpets and eradicate the damp and musty odour. The tenants submit that the combined noise emitted by these machines was seriously disruptive of their peace.
It is not clear on the evidence if, and if so, when, the carpets on level 2 did dry out before the tenants returned possession on 26 May 2019. In the tenants' submissions it is stated that the carpets remained wet on 10 April 2019 and that the property remained affected by dampness (and mould) on 18 April 2019 which is the date they ceased to occupy the premises.
There is a dispute between the parties as to whether the landlords fulfilled their obligation under section 29 of the RT Act to prepare and provide to the tenants a Start-of-Tenancy Condition Report. The landlords' agent contends that it did so on the landlords' behalf and left copies on the kitchen benchtop for the tenants' attention on or about 5 April 2019. The tenants deny that. In any event, there is a Start-of-Tenancy Condition Report for the premises in the landlords' bundle which is signed by the landlords' agent and dated 1 April 2019. In the "health issues" section of that report it is stated that the premises does not have any signs of mould or dampness. "Wood rot" is noted at the bottom of the laundry and main bathroom door frames. The contents of this Condition Report otherwise have no bearing on the issues for determination in this proceeding.
The tenants commenced moving into the property on 6 April 2019 but the majority of their possessions did not arrive until 9 April 2019 and they did not personally occupy the premises until that date. They contend that Mr Duffey developed a sore throat, "foggy brain" and "respiratory discomfort and disruption" on 6 April 2019 in the course of moving their possessions into the property. They also contend that upon their arrival at the property on 9 April 2019 they noticed a "damp" smell in the kitchen and kitchen cupboards, "an old musty" smell in the bedroom 3 cupboards, and a "damp smell" in bedroom 2. As a consequence the tenants engaged a professional cleaner to clean and dry the kitchen and its cabinetry and (as noted above) they installed air purifiers in bedrooms. The tenants submit that because the carpets on level 2 remained wet, they were obliged to lay mattresses in the wooden floor of the level 2 living area near the kitchen and sleep there. This is where the tenants and their children continued to sleep until they ceased to personally occupy the property on 18 April 2019.
In cross-examination of the tenants by Mr Tuntevski issue was taken with the tenants' decision to sleep on the floor of level 2, rather than occupy bedroom 1 on level 3 on the basis that there was no issue that the carpet on that level was dry and the area was not affected by damp. No direct answer was given by the tenants to this line of questioning, and no particular explanation for this decision emerges elsewhere in the evidence.
The tenants submit that on 10 April 2019 Ms Duffey developed similar symptoms to those which Mr Duffey was experiencing, being "respiratory discomfort and disruption, foggy brain, burning tongue sensation and fatigue". They also submit that on that date their 9 year old son, Joshua, developed a cough, which persisted up to 15 April 2019 when he was taken to see the tenants' doctor, Dr Redden. The tenants submit that on 17 April 2019 their other son, Daniel, aged 5, developed breathing problems and cough symptoms which worsened over the course of the evening into convulsions. Daniel attended Dr Redden for consultation the following day.
As a result of his examinations of Joshua and Daniel, Dr Redden recommended that the tenants and their children seek alternative accommodation immediately. He also wrote a letter "To Whom it May Concern" dated 18 April 2019 which states as follows:
Mrs Duffey suffers from a mould allergy and experiences severe and intolerable symptoms when exposed to mould. Her current accommodation arrangements have caused her to come into contact with mould in her home due to the building she is living in being affected by damp. As her current symptoms are severe and intolerable, I believe that it is imperative that she should move immediately into alternative accommodation.
The other members of her family, who also suffer from allergic problems or mould sensitivity, are also affected by significant symptoms which are likely to be due to mould exposure. Again, I feel it is imperative for them to immediately move to alternative accommodation.
On 3 August 2019 Dr Redden also wrote another letter addressed "To Whom it May Concern" about Ms Duffey's mould allergy. That letter states as follows:
Ms Kim Duffey has objective evidence of mould allergy, with evidence of acute allergic reaction at the time of the blood tests provided. This suggests that she has had an acute allergic reaction to mould.
Attached to this letter is a pathology report of a blood sample collected on 9 February 2018 and reported on 16 February 2018 which appears to report high sensitivity to grass pollen and Alternaria alternata (fungus).
The tenants have also submitted into evidence a Statutory Declaration made by Dr Redden dated 3 August 2019, which states as follows:
I am a medical doctor and general practitioner. I have been working as a medical doctor since 1990, and have worked in general practice since 1992. I have the professional qualifications of MBBS, FRACGP and am a general practice supervisor of GP registrars. I have been the family doctor for Ms Duffey and her family since 2016 and they have attended this practice since 21012. I have no personal relationship with Ms Duffey or her family outside of our professional relationship. The letters provided to her in regard to her symptoms was based on objective medical findings.
The tenants submit that due to their concern about the damp and musty odour at the property, and it potential health impact, they arranged for a "Building Biologist", Ms Kelly Abeleven, who is associated with a business operating under the trading name "Building Biology" to attend the property on 17 April 2019 to undertake a "Healthy Home Assessment". The report arising from that assessment is in evidence. In that report Ms Abeleven states that she is qualified to provide the opinion she gives because she has completed an Advanced Diploma if Building Biology and Mould Testing through the Australian College of Environmental Studies. She also states that she is IICRC (presumably, the Institute of Inspection, Cleaning and Restoration Certification) Certified in Water Damage Restoration.
The scope of the inspection is ascertained from reading different sections of the report. Level 3 of the property, the roof, roof space and garage were not inspected. Spot checks only were carried out for moisture in the walls and floors. The assessment was non-invasive and involved a visual inspection accessible areas of the house and the measurement of spot relative and wood moisture content levels in various locations using a Protimeter.
In the opening section of her report, which is headed "Observations and Recommendations" Ms Abeleven states:
Mould odour was detected upon entering the home when walking past the garage, when entering the kitchen and when opening the bedroom 1 wardrobe. Entry to the garage was not possible due to client's storing their items in front of the door of the garage to avoid possessions being contaminated. The window of the garage was open and a strong odour was coming from this area when walking past.
…
Observations and health hazards identified in the home at the time of the inspection include:
Previous moisture intrusion to garage, water damage from water proof membranes in bathrooms, and chronic dampness around and under the kitchen sink providing ideal conditions for mould growth
Visible suspect mould in wardrobe of Bedroom 1 and in cupboard under the kitchen sink. …
A strong damp, earthy and musty smell present in several areas of the residence. The damp, musty odour noted in the garage level of the home tends to arise from microbial volatile organic compounds (MVOCs) produced by gram negative bacteria and fungi
Drainage related issues - water accumulating adjacent or under the building from excessive rainfall, moisture wicking through the foundation causing subfloor dampness and dampness in the lower level concrete slab and inadequate drains.
Lack of mechanical ventilation in both bathrooms. Roof space ventilation - water condensing under the roof cladding may arise from humidity generated from bathing, cooking and laundering where the exhaust fans in these rooms are ducted directly to the roof space.
Sub-floor moisture. The estimated rate of evaporation from a 93m3 normal subfloor soil is 45 litres of moisture per day. Subfloor moisture at the property may be due to:
Limited number of subfloor vents/grilles. Lack of cross ventilation in subfloor
Topography of the land. The house is built into a hill and the ground level is higher than the ground level under the home in some areas
Poor ground water drainage immediately around the home. Water is not diverted away from the building
Subfloor moisture may result in high roof space moisture levels if there is an open path through the wall cavity between the subfloor and the roof space.
In a section of her report headed 'Testing - Moisture Mapping" Ms Abeleven states that the door frames of both bathrooms were "wet" at the time of her inspection. She measured Wood Moisture Equivalent readings of 25.6 in the hallway bathroom which she notes represents "fungal growth conditions". She also states that she observed peeling paint and (water) damaged timber in both bathrooms. Ms Abeleven also states that she recorded Relative Moisture Content readings of up to 528 on the hallway bathroom tiles next to the shower, which she notes represents "wet" conditions which are conducive to mould growth.
Ms Abeleven also notes the following visual observations:
Water damage around the dishwasher (figure 1)
Water damage around the braided water hose in bedroom 1 (figure 2)
Suspect visible mould under the kitchen sink which was also associated with a strong odour (figure 3)
Water ingress into the kitchen benchtop from the kitchen sink (figure 4)
Water damage and possible wood rot to a bathroom door frame (figures 5, 7 and 8)
Suspect visible suspect mould on bedroom 1 wallpaper (figure 9)
Suspect visible mould which was also associated with a strong odour in the bedroom 1 wardrobe (figures 10 and 11).
Apart from these comments the balance of Ms Abeleven's report appears to be constituted by commentary about damp and mould, its health risks, and building methods and materials that are non-specific to the property or her inspection of it. It is also not clear from Ms Abeleven's report how she was able to conclude that the subfloor area (presumably, meaning the garage storage are) had been previously subject to water penetration and had high moisture content when she did not inspect the interior of this area of the property. Similarly, it is not clear on what basis she could make any comment about the roof space ventilation. It would also appear that Ms Abeleven's observations about mould in the wardrobe of bedroom 1 must be a reference to a bedroom on level 2 of the property because she expressly states that she did not inspect the "top floor of the home".
There is a dispute between the parties as to why the level 2 carpets did not dry (or took so long to dry). In its advertising materials Organic Carpet Clean states that its carpet cleaning machines extract 90% of the water after the clean, and the carpet usually dries within 1 to 2 hours. On 6 April 2019 Ms Duffey telephoned Ms Muscat to advise that the level 2 carpets had not dried and to request her advise. The details of that conversation are set out in an undated signed statement made by Ms Muscat which is in evidence:
I Maryanne Muscat of Organic Carpet Cleaning have been in operation with my husband Mario Muscat since July 2012.
I was contacted by Kim Duffey to steam clean 4 rooms of carpet organically at 7 Willaburra Rd, Burraneer. We completed this job on 3rd April 2019. …
We used our standard cleaning process which is steam cleaning and our machine extracts 90% of the water again so we don't leave carpet very wet. On a nice day the carpets should dry within 2-3 hours depending on what type of carpet it is also.
Kim contacted me a couple of days after the cleaning as she was concerned that the carpets on the ground level had not dried, though she noted that the upper level had dried within the expected time - i.e. 2 hours.
I advised Kim that this was unusual, however, thought that it may have had something to do with the large rock underneath the house - which was visible as I was leaving the property, as this rock would not allow the required airflow to assist in the carpets drying. I advised Kim to leave all the windows open and try to have a good air flow throughout the house to get the carpets dried.
We have been in operation for 7 years and have never had this happen to anyone. I believe there was a lot of moisture due to the large rock under the house.
The landlords contend that the carpets did not dry because the tenants' carpet cleaning contractor left the carpets too wet. They further contend that it was the wet carpets which caused the premises to become affected by mould.
On 18 April 2019 the tenants and their children left the premises to stay with Ms Duffey's parents. Ms Duffey notified the landlords' agent of that fact during the day advising that the internal environment was making the tenants and their children sick. On 27 April 2019 the tenants advised the landlords' agent by email that they did not intend to return to live at the premises and that they sought to negotiate the early termination of the lease on reasonable terms. On 29 April 2019 the landlords' agent agreed to readvertise the property for lease and indicated that the Special Condition break fee clause contained in the residential tenancy agreement would apply, in particular that the tenants would continue to be obliged to pay rent until a lease with a new tenant commenced.
On 9 May 2019 the tenants issued the landlords with a standard form termination notice specifying 26 May 2019 as the termination date. The ground for termination cited in the notice was breach of the agreement by the landlords (section 98). The breach is not particularised on the face of the notice. However, in the covering email to the landlords' agent which enclosed the notice, the tenants state as follows:
We hereby give notice to terminate our residential tenancy agreement for [address of premises]. This notice is given in accordance with the Residential Tenancies Act 2010, section 98. We are providing the required 14 days' notice and as per the Tenant Trust Ledger Report we have paid up to 26 May 2019.
We will be vacating the property prior to 26 May 2019 as the property was not provided to us in a reasonable state when we moved in and we have the following safety concerns:
Water damage visible around the dishwasher
Water damage visible around downstairs bathrooms
Significant mould under kitchen sink
Significant suspect mould in the garage
Suspect mould in the wardrobe of bedroom 1
Signs of rising damp on the external property
A strong damp, earthy and musty smell present in several areas of the house
These concerns pose a health risk to us as well as a risk of contaminating our possessions. The dampness had an immediate detrimental effect on the health of all 4 members of our family and whilst residing in the house for the short time of 12 days, we all developed symptoms associated with mould exposure. These concerns have been supported by a Building Biologist and our family doctor.
The tenants engaged a removalist to remove all their furniture and other possessions from the premises on 16 May 2019, and a professional cleaner to clean the premises on 25 May 2019. They returned the keys to the premises to the landlords' agent at 3:30pm on 25 May 2019. It is not in issue that the tenants paid a total of $8,050.00 in rent during the period they had possession of the premises.
Prior to returning possession, the tenants arranged for a further "mould and moisture assessment" of the property by a building biologist on 17 May 2019. This inspection was carried out by Ms Jeanette Williams who is the Principal Consultant for a business trading as Building Biology Sydney. A report produced by Ms Williams based on her inspection, which is styled as an "Expert Witness Report" and dated 23 May 2019 is in evidence. In that report Ms Williams states that she holds a Bachelor of Business and an Advanced Diploma of Building Biology and that she has worked as a Building Biologist since 2011. The assessment was conducted using a handheld Humidity and Temperature meter, a Protimeter, a Protimeter Dual-Function Moisture Meter and AEML Surface Tape Lifts. Ms Williams made the following (pertinent) findings:
Subfloor
The soil in the subfloor was damp to touch
There was efflorescence on the soil in the subfloor
There was a strong musty odour in the subfloor, even with the garage door open
The surface temperature of the underside of the timber floorboards exposed in the subfloor was within 2.3oC of the dew point temperature recorded in the subfloor. This indicates a risk of condensation at the underside of the floorboards. …
Bedrooms
There was a moderate musty odour in Bedrooms 2, 3 and 4, all located on the entry level and directly above the soil subfloor.
…
There was extensive visible mould inside the wardrobe of Bedroom 2 on the inside of the wardrobe door covering an area > 1m2. This was confirmed by a later laboratory test which also determined that the spore count was 18,480 count/cm2. Such a spore count is classified extreme contamination according to the Australian Mould Guidelines 2010.
There was extensive visible mould inside the wardrobe of bedroom 3 on the back wall papered wall covering an area of > 2m2. This was confirmed by a later laboratory test which also determined that the spore count was 32,340 count/cm2. Such a spore count is classified extreme contamination according to the Australian Mould Guidelines 2010.
Kitchen
One of the braided water hoses in the kitchen under sink cabinet was rusted. This is the likely source of moisture in this cabinet.
Water damage to cabinet above dishwasher
Visible suspected mould at dishwasher seal
There was extensive visible mould inside the kitchen under sink cabinet. This was confirmed by a later laboratory test which also determined that the spore count was 52,360 count/cm2. Such a spore count is classified extreme contamination according to the Australian Mould Guidelines 2010.
Bathrooms
There was evidence of wood rot at the bottom of the doors frame at the entrance to the main bathroom
Tiled floors in both bathrooms recorded maximum relative moisture content indicating potential issues with water proofing and /or plumbing leaks
Suspected mould at window of main bathroom
Elevated relative moisture content levels were recorded on the outside on the eastern wall below the main bathroom window and bedroom 2 window
There was evidence of rising damp in the eastern wall of the garage
The lower wall outside the kitchen had slightly elevated levels of moisture
Elevated relative moisture content levels were recorded on the kitchen backsplash to the right of the taps.
Elevated wood moisture equivalent levels were recorded at the bottom of the timber door frames to both bathrooms on the entry level.
Kitchen under-sink sample
The dominant genera in sample 1: Kitchen under-sink cabinet was Cladosporium (100%) which contains species known to be allergenic.
The likely reason for mould in the kitchen cabinet was the rusted braided water hose creating a slow leak in the enclosed cabinet. In addition, lack of ventilation in enclosed spaces increases the risk for fungal activity …
Zero hyphal fragments and the extent of visible mould indicate that the mould sampled was unlikely to be the result of the recent short tenancy of Kim Duffey and family
Bathroom 2 Wardrobe
The dominant genera in sample 2: Bedroom 2 inside wardrobe door was Aspergillus/ Penicillium - like (100%) which contain species that are known to be either allergenic and/or mycotoxin producers.
The likely reason for mould in the Bedroom 2 wardrobe was the location above the subfloor which had high levels of humidity (relative and absolute) and a risk for condensation on the underside of the floor boards. In addition lack of ventilation in enclosed spaces increases the risk for fungal activity.
The extensive mould contamination on the inside of the wardrobe door was indicative of conditions that support fungal activity over the long term and highly unlikely to be due to cross contamination from items brought into the home since 9th April 2019.
Bedroom 3 Wardrobe
The dominant genera in sample 3: Bedroom 3 back of wardrobe on wallpaper was Aspergillus / Penicillium - like (100%) which contain species that are known to be either allergenic and/or mycotoxin producers.
The likely reason for the mould in the bedroom 3 wardrobe was the location above the subfloor which had high levels of humidity (relative and absolute) and a risk for condensation on the underside of the floor boards. In addition, lack of ventilation in enclosed spaces increases the fungal activity … Wallpaper is also a common substrate for mould and is at higher risk when there is limited air flow therefore reducing evaporation rates.
This extensive mould contamination on the wallpaper at the back of the wardrobe was indicative of conditions that support fungal activity over the long term and highly unlikely to be due to cross contamination from items brought into the home since the 9th April 2019.
Low concentration of hyphal fragments and the extent of visible mould indicate that the mould sampled was unlikely to be the result of the recent shot tenancy of Kim Duffey and family
Summary and opinions of the expert
Due to the significant amount of visible mould growth; elevated moisture reading in building materials in various areas of the property; elevated internal and subfloor relative humidity recordings; elevated internal and subfloor absolute humidity recordings; elevated subfloor dew point temperature; poor subfloor drainage; evidence of dampness in the subfloor; and the presence of musty odour, it is the opinion of the expert (Jeanette Williams) that the property at [address of premises] is adversely affected by high levels of mould and moisture.
This is further evidenced in the independent laboratory report results that recorded "Extreme Contamination: in samples taken from three different surfaces within the property. The absence of Hyphal Fragments in the kitchen sample and the low Hyphal Fragments in the Bedroom 3 wardrobe sample indicate that the mould sampled was the result of long term conditions that were supportive of fungal activity and was unlikely to be the result of the recent short tenancy of Kim Duffey and family.
The extent of the surface mould in the under-sink kitchen cabinet, the back of the wardrobe doors in bedroom 2 and the wallpaper in the wardrobe of bedroom 3 also indicate that the mould sampled was unlikely to be the result of the rent short tenancy of Kim Duffey and family.
Extensive water damage in both bathrooms on the entry level were due to long term water ingress and not as a result of the recent short tenancy of Kim Duffey and family.
It is the opinion of the expert … that the property [address] was contaminated by mould due to long term favourable conditions conducive to fungal activity. …
Ms Williams then outlines a four step process for remediating the mould contamination she found, which include engaging an engineer or hydrologist to determine if there are any drainage issues affecting the property, engaging a plumber to check for leaking pipes, replacing the braided water hoses in the kitchen and main bathrooms, replacing the dishwasher seal, removing all water damaged building materials, and then professional mould remediation. Ms Williams also recommends, that in the event that the tenants relocate, they do not take "visibly mould affected items" with them and that they "seek the advice of a professional remediator before taking items from the home to prevent cross contamination.
Purporting to act on Ms Williams' advice, on 23 and 24 May 2019 the tenants disposed of various items of clothing, equipment and furnishings including two refrigerators and six shelving units. There are photographs of some of the items disposed of in the tenants' evidence. None of these photographs depict mould on these items.
Among the items of furniture the tenants brought into the property on or about 9 April 2019 were two wood veneer chests of drawers which were placed in the study on level 2. The landlords' agent took photographs of this furniture when he attended the property on 9 May 2019, and these photographs have been included in the documentary evidence submitted by both parties. Both chests of drawers appear to have water stains and there is a substance covering much of their surfaces which appears to be mould or mildew. The landlords contend that this establishes that it was the tenants who introduced mould to the house.
I did not understand the tenants to dispute that there is some form of fungal material covering the chests. In a Statutory Declaration the tenants' expert, Ms Williams, made on 6 August 2019 she makes the following comments:
I did view the piece of furniture in the photo, and it was located next to the kitchen when I inspected the property.
I did not test the mould on the furniture and therefore cannot comment on the genera or species of mould present.
It is my professional opinion that the mould contamination within the property could not have been caused by the tenants or their furniture …
The landlords have submitted into evidence an Indoor Environment Assessment/Quotation prepared by Mr Anthony Putral who is the director of a business trading as Mould Werx which is dated 19 August 2019 and which is based on an inspection of the property carried out on 7 August 2019. Appended to that report is an Interactive Training International Certification document that certifies that Mr Putral is a person in good standing with the Interactive Training Institute and has qualified by service and examination for the ITI Certification in the following areas: Complete Advanced Structural Drying; Complete Water Damage; Complete Carpet Care; Complete Stone, Hard Floor and Masonry; Complete Mould Remediation; Complete Fire and Smoke Restoration; and, Complete Odour Control.
Mr Putral's report states the following findings:
Sensory Observation
Level of contamination
Low-level mould contamination
Extent of contamination
Contamination found internal
Contamination found in subfloor/rear of garage
Relative Humidity levels
On the day of inspection initial internal humidity (RH) levels were between 54 - 61%
Internal humidity level was around the recommended 60% mark at the time of inspection
[figures 2 - 7 are photographs of a Protimeter showing various humidity level readings)
Air intake/circulation
Adequate intake/circulation throughout at time of inspection
Bathroom exhaust fans were working adequately
Rangehood was vented externally
Flyscreens were installed
Visible efflorescence
No visible efflorescence on structure internal
Subfloor/Cellar
Garage door was open at time of inspection
No mechanical ventilation system in the sub/floor/garage
[Figures 8 -12 are photographs that depict the Subfloor area and state:]
Figure 08: Subfloor/garage relative humidity - 59.8%
Figure 09: Found mould contamination on damp soil on rock at rear of garage
Figure 10: Large passive vents were installed on Eastern side and Western side walls
Figure 11: AG line and water pit installed at edge of rock
Visible contamination
[Figures 13 to 23 are captioned photographs of visible mould and state]
Figure 13: Light mould contamination in kitchen cupboards - sink base cabinet
Figure 14: Light mould contamination in kitchen cupboards - sink base cabinet
Figure 15: Mould contamination on shelves in built-in robe in bedroom 3
Figure 16: Mould contamination on frame in built-in wardrobe in bedroom 3
Figure 17: Mould contamination on ceiling between blind and window
Figure 18: Mould contamination in vanity in bathroom
Figure 19: Mould contamination on rubber seal of dishwasher
Figure 20: Mould contamination on shelves in built-in wardrobe in bedroom 2
Figure 21: Mould contamination on drawers in built-in wardrobe in bedroom 2
Figure 22: Mould contamination on back of mirror door of built-in wardrobe in bedroom 2
Figure 23: Mould contamination in vanity in bathroom next to bedroom 2
Carpet/Underlay/Smoothedge
[Figures 24 and 25 are photographs that depict the carpet and state:]
Figure 24: No rust found on nails of smooth edges
Figure 25: Carpet and underlay was clean - no visible evidence of mould contamination
Mould Odour
No mould odour noticed at time of inspection
…
Moisture readings
Moisture readings taken throughout the property were all within acceptable levels at the time of inspection
Building issues
No major building issues
Front bathroom door trim is rotten - possibly leak from shower recess
Conclusion
Mould contamination present at isolated areas at time of inspection.
From our experience, it is not unusual and highly likely that the carpet cleaner arranged by the previous tenant, Kim Duffey, had used too much water, didn't extract enough water and left the carpets saturated. The remaining liquid then penetrates through to the underlay and substrate creating the perfect conditions for mould to grow.
If carpet is not thoroughly dried within 48 hours after cleaning it becomes classifiable as a Category 2 water damage. It now needs to be treated as water damage and the required water damage restoration process should be undertaken immediately. Failure to do so will result in the ideal environment for mould growth and rapidly emit pungent odours. At this stage replacement of the carpet and underlay is common practice.
As for the claim made by the building biologist that the subfloor is the cause of the carpet not drying, this claim is incorrect and not possible. The floor is primarily well above the ground below (floor area to total air volume ratio is excellent and adequate passive vents are installed. Furthermore, the way the readings were taken on the day is not in alliance with best industry practice (meter must be held in the air, not on soil surface)
In addition, we tested multiple points across the underfloor timbers in the garage using a Drieaz Hydrosensor II which returned no identification of elevated moisture content. The same results were also found within the house.
Mr Putral makes nine recommendations for remediation, including Lysis Silber treatment of the interior and subfloor of the property, physical decontamination of the areas affected by mould, HEPA filtration during the reclamation process, improving internal fresh air intake and circulation, the use of dehumidifiers, rectification of shower recess waterproofing issues, replacement of rotten bathroom door trims, and the installation of an active subfloor ventilation system.
The tenants' reliance upon section 47 is also misconceived. The section only applies where a tenant pays a landlord rent or other monies not owing to the landlord under a mistake or law or fact. That is not the case here. The rent the tenants seek to have repaid to them was payable according to the terms of the residential tenancy agreement they entered into with the landlords. Additionally, and in any event, the Tribunal has no jurisdiction to deal with this element of the tenants' claim because the order making power contained in section 47(5) is only enlivened after a tenant has made a written request to a landlord for the repayment of rent or other money not owed (section 47(1)) and the landlord fails to comply with that request within 14 days (sections 47(3) and 47(4). In this case the tenants made no such written request to the landlord before making their application to the Tribunal.
The section of the RT Act most apposite to the tenants claim for the repayment of rent is section 44(1)(b) which empowers the Tribunal to order that rent is excessive and to reduce rent where goods, services, and facilities provided with the residential premises are reduced or withdrawn. However, an application for an order under that section may only be made before the end of a tenancy: section 44(3). In this case the tenants' made their application to the Tribunal after the residential tenancy agreement had ended. The application therefore cannot be amended for consideration under section 44(1)(b).
The remaining alternative is to consider the tenants' claim for repayment of rent as a compensation claim in relation to their alleged loss of amenity of the premises. However, that requires the tenants to prove that this damage and loss arises from a breach of an obligation the landlords had to them under the residential tenancy agreement. For the reasons set out following no such breach has been established on the evidence so there would be no utility in amending the application to consider the rent repayment claim on this alternative basis.
The tenants apply for an order under section 109 of the RT Act terminating the residential tenancy agreement on the basis that the agreement was frustrated because the premises was uninhabitable due to damp and mould. This application is misconceived.
Section 81 of the RT Act sets out the circumstances in which a residential tenancy agreement terminates. Section 81(1) provides that this is only in the circumstances set out in the RT Act. Section 81(2) provides that one such circumstances is where a landlord or tenant gives a termination notice in accordance with the RT Act and the tenant gives vacant possession of the residential premises.
In this case the tenants issued the landlords with a termination notice on 9 May 2019 specifying 26 May 2019 as the termination date. That notice was given under section 98 of the RT Act which provides that a tenant may give a landlord a termination notice on the ground that the landlord has breached the residential tenancy agreement. There is no issue as to the validity of the termination notice or as to its manner of service (the landlords do not accept that they were in breach of the agreement, but that is a different issue). The tenants returned possession of the premises to the landlords in accordance with that notice by delivering the keys to the landlords' agent on 25 May 2019. The residential tenancy agreement thus terminated in the circumstance specified by section 81(2) of the RT Act. The Tribunal has no power to terminate a residential tenancy agreement that has already terminated by operation of law, or to retrospectively change the basis upon which the agreement was terminated.
Although the issue is not reached, the Tribunal would not have had the power to terminate the residential tenancy agreement under section 109 in the circumstances of this case in any event. Section 109 only applies, relevantly, in circumstances where residential premises under a residential tenancy agreement become wholly or partly uninhabitable otherwise than as a result of a breach of the agreement: section 109(1). That is, where there is some intervening or supervening event over which neither the landlord nor tenant has any control. As I have already stated, it is the tenant's case that the landlords breached the residential tenancy agreement by failing to pass possession of the premises to them in a state fit for habitation, contrary to section 52 of the RT Act. Section 109 does not apply where there has been a breach of the residential tenancy agreement.
The tenants apply for orders that would compensate them for the costs they incurred in moving in and out of the premises, for the cost of equipment that they purchased to deal with the damp and mould at the premises, for the cost of the reports that they obtained concerning damp and mould issues, and for the cost of two refrigerators and shelving that they disposed of because they believed them to be contaminated by mould.
The Tribunal's power to order compensation under the RT Act only arises where a party to a residential tenancy agreement suffers damage and loss as a result of the breach of the residential tenancy agreement by the other party. It is thus necessary, first, for the tenants to establish that the landlords committed such a breach. If that is established, the tenants must then prove that the damage and loss they allege was a reasonably foreseeable consequence of the breach: Hadley v Baxendale (1854) 9 Exch 341. The tenants bear the onus of proving their case to the civil standard of proof, which is the balance of probabilities: Briginshaw v Briginshaw (1938) 60 CLR 336. This standard of proof was described by Lord Denning in Miller v Minister for Pensions [1947] 2 All ER 372 [at 374] as requiring the Tribunal to be satisfied that an alleged fact was "more probable than not". However, the Tribunal must "feel an actual persuasion of [the alleged fact's] occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality" … [the occurrence or existence of the fact must be established]… to the reasonable satisfaction of the Tribunal": Briginshaw [at 361-2].
As has been stated several times now, the landlord obligation that is engaged by the tenants' case is the obligation to provide the residential premises to a tenant in a in a state fit for habitation. That obligation is codified in section 52(1) of the RT Act. The temporal focus for the performance of the obligation is the date on which possession of premises passes from the landlord to the tenant.
The test for 'habitability' of residential premises was authoritatively stated by the former Residential Tribunal in Menashi v Ly [1997] NSWRT 162 drawing on a decision of the Court of Appeal of the United Kingdom in Proudfoot v Hart (1890) 25 QBD 25. In brief, the term refers to a 'state of repair of the premises [such that] it might be used and dwelt in not only with safety, but with reasonable comfort, by the class of persons by whom and for the sort of purpose for which, they were occupied' 'having regard to contemporary standards'. That test was affirmed by the Appeal Panel of this Tribunal in Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 at [117]. The test of un-inhabitability is a difficult one to satisfy and will not be lightly found by the Tribunal: De Soleil v Palmhide P/L [2010] NSWCTTT 464.
I am not satisfied on the evidence before me that there was any breach of this obligation by the landlord. The evidence does establish that there was a latent damp problem in several areas of the premises which had the potential to propagate mould that that there were three specific, but localised, areas of the premises with a severe mould infestation when the tenants took possession of the premises. Although it is clear that the tenants brought some items of mould infested furniture into the premises, Ms Abeleven, Ms Williams and Mr Putral's reports all indicate long-term, pre-existing damp latency and some specific areas of pre-existing mould in premises. I therefore do not accept the landlords' contention that it was the tenants who introduced mould to the premises. However, I do find that the tenants conduct in introducing mould affected furniture and causing the level 2 carpets to be saturated exacerbated the pre-existing problem.
The pre-existing damp latency and active mould growth present when possession passed reasonably engaged the landlords' obligation to maintain the premises in a reasonable state of repair, but it did not render the premises uninhabitable. There is no evidence that the severe mould infestations could not be treated, or that the latent damp areas could not be rectified. Ms Williams and Mr Putral both outline in their reports a series of practical steps that would have been capable of satisfactorily remediating these issues within a reasonable time, with the exception of the drainage of the subfloor area. However, Ms Abeleven and Ms Williams do not conclusively determine that there is a structural problem with drainage away from and under the subfloor area. They speculate that this may be the case and recommend investigation by an engineer or hydrologist.
The tenants first put the landlords on notice that there were mould and damp issues at the premises by email to the landlords' agent on 18 April 2019 which was the day they ceased to occupy the premises. The focus then became the terms upon which an early termination of the residential tenancy agreement would be negotiated. The tenants did not provide Ms Abeleven's report to the landlords' agent until 6 May 2019, which was after they had notified the landlords' agent that they would not be returning to the premises and after both parties had accepted on or about 29 April 2019 that the residential tenancy agreement would be terminated. The tenants submit that the landlords' agent was slow to respond, unsympathetic to their concerns and did not offer to find a solution to the problem following their contact with him on 18 April 2019. That is denied by the landlords. But even if it were true it is not sufficient for the Tribunal to determine that the landlords refused to carry out necessary repairs, or failed to do so within a reasonable time. The landlords were given no time by the tenants to carry out the specific repairs and remediation recommended by Ms Abeleven before they determined to terminate the residential tenancy agreement. That report was provided to the landlords' agent only for the purpose of determining the terms upon which the tenancy would end, not for the purpose of identifying the repairs the tenants required the landlords to carry out. There can be no breach of the landlords' obligations to provide and maintain premises in a reasonable state of repair in these circumstances.
The evidence establishes to my satisfaction that the damp and pathogenic environment on level 2 of the premises in the two weeks after the tenants took possession of the premises was caused by the saturated carpets in bedrooms 2, 3 and 4 on that level which did not dry over the whole of this period. This circumstance must be distinguished from the latent damp and specific mould infestations that were present in the premises when the tenants look possession. I am satisfied that it was this environment that was causative of the illnesses experienced by the tenants and their children, which I do not doubt were discomforting and distressing for them.
But the saturation of the carpets did not result from any breach of the residential tenancy agreement by the landlords. The carpets were made wet by the tenants' carpet cleaning contractor. There is a dispute between the parties as to why they remained wet and would not dry. The only reasonable conclusion that can be drawn from the evidence is that this was because insufficient liquid was removed from the carpets during the cleaning process and they were left saturated. I arrive at this conclusion for the following reasons.
There is no evidence whatsoever that the carpets were wet or damp prior to the tenants' carpet cleaning contractors' attendance at the premises. Mr Putral's invasive inspection of the underlay and smoothedges of the carpets on Level 2 did not reveal any rust to the smoothedge metal studs or any discolouration, rot, dampness, or other water related deterioration of the underlay. If the level 2 underfloor was persistently damp one would reasonably expect to see such signs. Nor did the tenants and the other members of their family who inspected the premises in the pre-contract period notice any dampness in the carpets. Ms Williams concludes based on the moisture and humidity readings she took in the garage subfloor area that there was potential for condensation on the lower surface of the level 2 underfloor area. However, she did not note any actual wetness or signs of long-term exposure to moisture on the underfloor. Her conclusions are challenged by Mr Putral who opines that there is subfloor area is satisfactorily ventilated. The condition of the carpet smoothedges and underlay indicates that if there was a potential for condensation on the lower surface of the floor that potential did not actuate to such an extent that it caused any deterioration in the upper surface floor environment. For the same reasons it cannot be the case that pre-existing dampness in the floor was the reason the carpets did not dry.
As there was no breach by the landlords of their obligation to provide the premises to the tenants in a state fit for habitation, the tenants' compensation claims are not reached.
For the foregoing reasons the tenants' application must be dismissed in its entirety.
The landlords' application for an order under section 51(3)(b), 187(1)(d) and 190 of the RT Act for an order that would require the tenants to pay them $4,135.00 in compensation for the costs of replacing the carpets of the residential premises must also be dismissed on the basis that the application has been made outside the time period permitted by section 190(1) of the RT Act and Regulation 22(9) of the RT Regulation. In this respect an applicant for an order in relation to a breach of a residential tenancy agreement must be made within three months of the applicant becoming aware of the breach.
In this case, the tenants returned possession of the premises to the landlords on 26 May 2019. It is not in issue that prior to that date there was a dispute between the parties in relation to the cleaning of the carpets by the tenants' contractor on 3 April 2019. By that date the landlords had asserted that the contractor left the carpets excessively wet damaging them and giving rise to damp and mould in the premises. That being the case, the landlords had until 26 August 2019 to make an application to the Tribunal in relation the tenants' alleged breach of the agreement, but did not do so until 2 September 2019. They thus did so 7 days outside the time period permitted.
This is a relatively short day. However, before the Tribunal's discretion to extend the time in which the application may be made is engaged the landlords' must also provide a reasonable explanation for the delay, and establish that their claim is fairly arguable, such that strict compliance with the time limit would work an injustice: Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [22]. In this case, no reasonable explanation for the delay emerges from the evidence. The application for a compensation order was not made until the landlords' filed their documentary evidence in response to the tenants' application on 4 September 2019. There was no prior demand by the landlords that the tenants pay compensation for carpet damage, and in particular, there was no end-of-tenancy dispute about the condition of the carpet per se (as there was in relation to alleged tenant damage to the floor boards for example). The carpet dispute configured only in relation to the reason for the presence of damp and mould in the premises. In this context, objectively viewed, the reason for the delay is that the landlords have asserted the claim merely in response to the tenants' claims against them, rather than on a bona fide basis. That does not constitute a reasonable explanation for the delay.
However, the decisive issue is that the claim rests on a bare assertion rather than on any satisfactory evidence. It is therefore does not have reasonable prospects of success and in these circumstances there would be no utility in extending time. The only evidence that supports the claim is the opinion of Mr Anthony Putral of Mould Werx, who carried out the inspection of the premises on 7 August 2019. In the conclusion of his report, dated 19 August 2019, he states the following:
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From our experience, it is not unusual and highly likely that the carpet cleaner arranged by the previous tenant, Kim Duffey, had used too much water, didn't extract enough water and left the carpets saturated. The remaining liquid then penetrates through to the underlay and substrate creating the perfect conditions for mould to grow.
If carpet is not thoroughly dried within 48 hours after cleaning it becomes classifiable as a Category 2 water damage. It now needs to be treated as water damage and the required water damage restoration process should be undertaken immediately. Failure to do so will result in the ideal environment for mould growth and rapidly emit pungent odours. At this stage replacement of the carpet and underlay is common practice.
There is no foundation for this opinion set out in Mr Putral's report, and it is a conclusion that appears contrary to the findings he made during his inspection. In this regard his report states (with associated images) with respect to the carpet in Figures 24 and 25 respectively, "no rust found on nails of smooth edge" and "carpet and underlay was clean - no visible evidence of mould contamination". In other words, Mr Putral made no finding or observation that there was any damage to the carpet or its underlay.
Even if the landlords had established breach by the tenants of their obligation not to cause or permit negligent damage to the carpet, no satisfactory evidence of loss has been filed to justify the compensation order sought. Again the amount of compensation claimed is a bare assertion of the cost of replacement of the carpet. There is no invoice or quotation that supports this claim and there is no other evidence that would permit the Tribunal to assess the claim. For example, there is no evidence as to the original purchase and installation cost of the carpet or of its age.
For the foregoing reasons the landlords' application must be dismissed in its' entirely on the basis that the Tribunal does not have jurisdiction to deal with it, both elements having been made outside the time period permitted for the making of such an application.