Hill v Green

NCAT Appeal Panel|2022-07-06

REASONS FOR DECISION

This is an appeal by a tenant from a decision of the Tribunal concerning two applications commenced by her against her landlord.
In the tenant's first application, she was partly successful and partly unsuccessful.
She succeeded in obtaining an order that the landlord perform his obligation to keep the premises in a reasonable state of repair; she succeeded in obtaining an order that the landlord utilise the rights he had to compel the relevant body corporate to investigate and repair certain work to common property responsible for water ingress into the rented premises; and she succeeded in obtaining a rent reduction for the landlord's breach of his obligation to keep the premises in a reasonable state of repair.
The tenant was unsuccessful in seeking an order for compensation for the landlord's breach of the covenant of quiet enjoyment; and she was unsuccessful in obtaining any orders in relation to mould the tenant alleged had arisen in the premises (as a result of the landlord's breaches of his obligations).
In the tenant's second application, she was unsuccessful in obtaining the one order sought in that application, namely a declaration that the landlord's termination notice (referred to in the proceedings as the "third termination notice") was retaliatory and therefore of no effect.
The appeal, as originally filed, concerned the Tribunal's orders in relation to those parts of the tenant's applications upon which she was unsuccessful.
Grounds 1 and 2 of the appeal, which solely concerned her second application, were expressly withdrawn at the commencement of the hearing of the appeal. Accordingly, that part of the appeal is dismissed. Accordingly, these reasons address the balance of the appeal, namely Grounds 3 - 6.

Background

In 2018 the parties entered into a residential tenancy agreement for a residential apartment in a strata titled apartment building in Drummoyne NSW (the "premises").
Disputes arose between the parties which resulted in a series of proceedings being brought in the Tribunal by either the tenant or the landlord dating back to at least September 2019.
On 28 September 2021, the tenant lodged an application (being the first application referred to earlier in these reasons) seeking orders under the Residential Tenancies Act 2010 (NSW) (the "RTA") for: 1. compensation of $10,000 under s 187(1)(d), for breaches of her right to quiet enjoyment of the premises caused by the landlord's alleged failure to undertake repairs, resulting in anxiety, inconvenience, disappointment and embarrassment; and/or 2. a reduction of the rent payable under the tenancy agreement by 30% from 1 September 2021 onwards under s 44(1)(b) on the ground that the rent was excessive due to the reduction or withdrawal of goods, services or facilities provided with the premises through the alleged failure of the landlord to carry out repair works at the premises; and 3. a work order under s 65 that the landlord carry out balcony waterproofing repairs, carpet replacement works and mould treatment works at the premises.
The Tribunal held that the landlord had breached his obligation to keep the premises in a reasonable state of repair and had breached the covenant of quiet enjoyment. In both respects the Tribunal found that the breaches had resulted in water entering the premises.
As a result of the Tribunal's findings the Tribunal ordered that the rent be reduced for the amounts and for the periods specified in its orders.
The Tribunal declined to award the tenant any compensation for the landlord's breaches additional to the reduction in rent. In relation to the claim for compensation the Tribunal said: "164 For the reasons that I have described above, the tenant's right to seek compensation in this case is subject to a limitation period of 3 months before the date the claim was filed which limits her claim for compensation to damage that was first identified since 28 June 2021, onwards. 165 I note here also that the applicant has not produced much in the way of evidence to demonstrate that she has suffered the anxiety, inconvenience, disappointment and embarrassment that she has alluded to in her application form. For example, she has produced no evidence to demonstrate that she has suffered particular episodes of anxiety on any particular days, or that she has sought any particular treatment to deal with episodes of anxiety, or the underlying cause of that anxiety. Similarly, she has not produced any substantive evidence to demonstrate to the Tribunal that she has suffered any compensable disappointment or embarrassment. As the applicant has the burden of proving her losses, I do not consider those parts of her claim to be proved. 166 Any inconvenience that the applicant has suffered from the landlord's breach of his duty to keep the premises in reasonable repair, or his breach of the applicant's right of quiet enjoyment, has been addressed by the rent reduction that I have allowed, as described above. That rent reduction that has been awarded above for the reduction by the landlord of goods, services and facilities provided with the premises included an element for the reduction or withdrawal of the applicant's amenity in using the premises. l am satisfied that this element of inconvenience was one of the elements of amenity that was reduced or withdrawn by the landlord as a result of his breaches of the repair obligation and the quiet enjoyment obligation in the tenancy agreement. 167 I am therefore not satisfied that the applicant has otherwise suffered any other loss that should be separately compensated. Accordingly, I decline to make an award of compensation in favour of the applicant. 168 Separately, and for completeness, if it had been proven that the applicant has suffered any such loss or damage as claimed, then I would also have declined to award compensation in her favour on the ground that the applicant has not taken appropriate steps available to her in order to mitigate the loss and damage which she claims to have suffered. 169 In addition to nominating the landlord as an "interested person" s 226(1)(d) of the SSM Act also nominates that "a person having an estate or interest in a lot or an occupier of a lot" is an interested person. The applicant is an occupier of the premises. Through being a tenant under the tenancy agreement, she also has (and has had at all material times) an estate or interest in the premises that gave her standing to bring proceedings against the owners corporation in the Tribunal under s 232 of the SSM Act. However, as far as the evidence before the Tribunal discloses, the applicant has not at any stage pursued her complaints directly with the owners corporation or brought any such proceedings against the owners corporation either separately or In conjunction with the proceedings that she has brought against the landlord in order to resolve her complaints about the repairing of the common property around the premises to correct the water leaks. In my view, it would not be appropriate for the Tribunal to order that the landlord pay compensation to the applicant in circumstances where the applicant has not taken those steps to pursue the matter directly with the owners corporation.
In those passages the Tribunal referred to the relevant time limitation (at [164]), a lack of evidence (at [165]), that no loss was suffered that should be separately compensated to the rent reduction (at [166]-[167]) and that the tenant had failed to mitigate her loss (at [168]).
The tenant submitted that the Tribunal erred in relation to the first, second and fourth of those passages, but not the third. Those challenges were reflected in Grounds 3, 6 and 4 of the appeal respectively. Those grounds of appeal were: 1. Ground 3 - The Tribunal erred in concluding that the appellant could only seek compensation for loss arising from damage first identified in the 3 months prior to the application having been lodged. 2. Ground 4 - The Tribunal erred in concluding that the appellant had failed to mitigate her loss by failing to make an application against the owners corporation under the Strata Schemes Management Act. 3. Ground 6 - The Tribunal's conclusion that there was no substantive evidence of the appellant having suffered any compensable disappointment or embarrassment was against the weight of evidence.
The appellant had also sought orders for the treatment of mould she alleged had arisen in the premises as a result of the water penetration which had occurred. The Tribunal dismissed that claim. The Tribunal said: "117 I now turn to the claim for an order for mould treatment works. By her application form, that claim is based on 2 documents - a report from The Mould Doctor from an inspection conducted on 22 April 2021, and the All Aces quote, dated 3 September 2021. 118 The Mould Doctor Report has not been produced in evidence in these proceedings. The Tribunal is therefore unable to consider it for the purposes of these proceedings. Further, the evidence establishes that the carpet in the premises was dried, treated for mould and fungus and deodorised since that report was issued. 119 The All Aces quote relied on by the applicant (dated 3 September 2021) arrives at a price of $5,662.70 GST for a mould treatment based on a scope of works that includes: JOB DESCRIPTION: Scope of works: Top Down Mound treatment for all interior surfaces. Upholstery, Bed & Mattress to be cleaned and sanitised for mould. Carpet, Underlay and Smooth Edge to be disposed of correctly. Drying equipment to be installed. The evidence suggests that there may have been an associated report from All Aces dated at about the same time as this quote, which may have set out that company's findings about the existence (or otherwise) of mould in the premises. As that report has not been produced by the applicant in her evidence, l infer that the report would not have assisted her case in these proceedings. 120 The presentation of a quote for that work to be done does not prove that there is any growth of mould in the premises, or that (if there is a growth of mould in the premises) it arose from the landlord's breach of his repair obligation under s 63. Accordingly, l am not satisfied from the All Aces quote that the premises have been affected by mould since the carpet was treated last year. 121 The ultimate conclusion that I reach is that there is no evidence of any growth of mould in the premises since I made My First Decision. Consequently, l am not satisfied that there is a mould problem with the premises that has arisen from the landlord's failure to comply with his obligations under s 63 of the RT Act and clause 18.3 of the tenancy agreement. I therefore decline to make orders for the landlord to undertake mould treatment or to replace the carpet or repaint the premises as claimed by the tenant."
The dismissal of that claim is the subject of Ground 5. Ground 5 was: Ground 5 - The Tribunal's conclusion that the failure of the appellant to file evidence of mould reports regarding the premises meant that that evidence would not have assisted the appellant was not fair and equitable.
It is convenient to set out our reasons for decision for Grounds 3, 4 and 6 first, before turning to Ground 5.
Before turning to those Grounds it is apt to note that Grounds 3 and 4 involve questions of law and so leave to appeal is not required. Grounds 5 and 6 require leave to appeal.

Ground 3

The appellant's submitted that the Tribunal erred in concluding that the appellant could only seek compensation for loss arising from damage first identified in the three months prior to the application having been lodged. The focus of this ground is the time at which damage was suffered.
Her submissions were different. Her submissions focused on the time at which the landlord breached his obligations, a distinctly different issue.
The combined effect of s 190(1) of the RTA and r 39(9) of the Residential Tenancies Regulation 2019 (NSW) is that a landlord or a tenant may apply to the Tribunal for an order in relation to a breach of a residential tenancy agreement within three months after the applicant becomes aware of the breach. The focus is on the time the applicant becomes aware of the breach.
The appellant's submissions were to the effect that the Tribunal gave no consideration of the proper characterisation of the respondent's breach of the agreement, namely whether the breach was an ongoing breach or a once-and-for-all breach. The appellant submitted that a breach by a landlord of an obligation that persists despite continuing knowledge of the issue can be properly characterised as a continuing breach of the agreement, a proposition which could be correct depending on the obligation and the alleged breach(es).
Read fairly, the Tribunal's reasons disclose that the Tribunal, at least inferentially, accepted that the respondent's breaches were ongoing and a continuing breach of the agreement. That is apparent from [164] of the Tribunal's reasons.
The Tribunal's reasons at [164] could have been better expressed because they refer to the time damage was "identified" (which we take to mean suffered) rather than when the breach occurred (which is the focus of the RTA and the regulation). However, in a case such as this, the damage could only be incurred at the same time as, or after, the relevant breach. Therefore, if a breach occurred on 29 June 2021, then the damage it caused could only have been suffered that day or possibly later, but not before.
Thus, by focusing on the damage suffered on and from a date three months before the application was commenced, the Tribunal implicitly accepted that the respondent's breaches were continuing (as the appellant submitted on appeal) and that there were breaches starting from a point in time within the limitation period.
The Tribunal's wording that the appellant's claim was limited to damage that was first "identified" since 28 June 2021 (being three months before the filing of the first application) contains the necessary implied finding that there were breaches during the same period.
In those circumstances the Tribunal did not err as submitted by the appellant and this Ground is not accepted.

Ground 4

The appellant submitted that the Tribunal erred in concluding that the appellant had failed to mitigate her loss by failing to make an application against the owners corporation under the Strata Schemes Management Act.
This submission must be accepted.
In relation to the obligation to mitigate ie. to act reasonably to reduce one's loss and damage, the Appeal Panel in So v Dou [2022] NSWCATAP 179 summarised some of the parameters of that obligation. The Appeal Panel said: "34. At [135-35] in Halsbury's, and in relation to the test of reasonableness (in taking steps to reduce the loss), the authors say (footnotes omitted): 'The reasonableness of the plaintiff's notional or actual response to the defendant's wrong is a question of fact to be determined in the light of all the circumstances of the case. In commercial cases, the 'ordinary course of business' sets the standard of reasonableness. More generally, the standard of reasonableness is not set at a high level since the defendant is a wrongdoer. Nor is the plaintiff's response to the defendant's wrong judged with the critical eye of hindsight. Rather, plaintiffs are entitled to consider their own interests before determining how the defendant's damages should be minimised, or, where relevant, how third party interests should be accommodated. Thus, on the one hand, plaintiffs will not generally be required actively to promote the interests of the wrongdoer; nor to place at undue risk their property, money, reputation, persons or other rights …' (Emphasis ours) 35. The authors noted that the standard of reasonableness is not set at a high level. In Earth Civil Australia Ward CJ in Eq referred to, at [2157] and with apparent approval, the plaintiff's submission that: 'The plaintiffs point out that even at common law mitigation is not weighed 'in nice scales at the insistence of the party whose breach of contract had occasioned that difficulty' (citing Banco De Portugal v Waterlow & Sons Ltd [1932] AC 452 at 506 per Macmillan LJ).' 36. In Karacominakis v Big Country Developments Pty Ltd & Ors Big Country Developments Pty Ltd v Chadlace Pty Ltd & Ors J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors Hollingsworth & Anor v Big Country Developments Pty Ltd & Ors [2000] NSWCA 313 Giles JA, with whom Handley and Stein JJA agreed, summarised the general principles - all of which are applicable in this case in our opinion - at [187]. His Honour said: 'A plaintiff who acts unreasonably in failing to minimise his loss from the defendant's breach of contract will have his damages reduced to the extent to which, had he acted reasonably, his loss would have been less. This is often misleadingly referred to as a duty to mitigate, although the plaintiff is not under a positive duty. The plaintiff does not have to show that he has fulfilled his so-called duty, and the onus is on the defendant to show that he has not and the extent to which he has not (TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130). Since the defendant is a wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did (Banco de Portugal v Waterlow and Sons Ltd (1932) AC 452; Pilkington v Wood (1953) Ch 770; Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd (1976) 1 NSWLR 5).'"
An injured person is not obliged to mitigate their loss by embarking on uncertain litigation as the Tribunal in this case implicitly held.
In Segenhoe Ltd v Akins (1990) 29 NSWLR 569 Giles J (as his Honour then was) held as much at 582-583: "In fulfilling its obligation to mitigate its loss, Segenhoe is only required to act reasonably, and the standard of reasonableness is not high in view of the fact that DHS is the wrongdoer: see Banco de Portugal v Waterlow [1932] AC 452 at 506; Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5; McGregor on Damages, 14th ed (1980) par 233. In particular, Segenhoe was not obliged to take the risk of bringing uncertain litigation against the shareholders. Thus, in Pilkington v Wood [1953] Ch 770, the purchaser of land brought proceedings against his solicitor when the title turned out to be defective: the solicitor contended that the purchaser should have mitigated his damage by suing the vendor on an implied covenant of title, but this contention was rejected because it was not clear that the purchaser had a good right of action against the vendor. Harman J said (at 777) that "the so-called duty to mitigate does not go so far as to oblige the injured party, even under an indemnity, to embark on a complicated and difficult piece of litigation against a third party". And, in London and South of England Building Society v Stone [1983] 1 WLR 1242 at 1262-1263; [1983] 3 All ER 105 at 121, Stephenson LJ said, in relation to the contention by a negligent valuer of a security that the secured lender should have enforced a personal obligation against the borrower: '… If, as I think and the judge thought, that is only available to the valuer as mitigation, the valuer must prove it was reasonable and when the court has to decide that question of fact, the lenders' conduct in not taking steps to reduce the loss will not be weighed in nice scales at the instance of the party who has occasioned the loss: see what Lord Macmillan said of the plaintiff's conduct in taking positive steps to reduce his loss in Banco de Portugal v Waterlow & Sons Ltd. I bear in mind the illustrations given in McGregor on Damages, 14th ed (1980) pars 234-241, of which [counsel for the lender] relies on paragraphs 236, 238, 239 and 240; and I accept these principles as established by authority and applicable to this case: (1) a plaintiff need not take the risk of starting an uncertain litigation against a third party, for which Pilkington v Wood is authority: and that includes litigation which may be reasonably certain to result in judgment for the plaintiff but there is no certainty that the judgment will be satisfied … (3) a plaintiff need not act so as to injure innocent persons, and (4) need not prejudice its commercial reputation.' (Citations omitted.)" [Emphasis by underlining ours]
It is tolerably clear that any proceedings the appellant brought against the body corporate would have been uncertain as to outcome, complicated (at least factually) and difficult (for a non-legally qualified and unrepresented person).
The Tribunal also erred in (inferentially) holding that the failure to mitigate operated as a complete defence (at [169]). It does not, as authorities referred to in So quoted above establish.
Finally, the Tribunal erred in failing to make any findings of fact to the effect that had the appellant litigated as the Tribunal suggested, she probably would have succeeded and probably would have obtained a particular result. Mitigation is a question of fact, and factual findings would need to have been made in order for this defence to have succeeded.
Ground 4 is upheld.

Ground 6

The appellant submitted that the Tribunal's conclusion that there was no substantive evidence of the appellant having suffered any compensable disappointment or embarrassment was against the weight of evidence.
Against the weight of evidence means that the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal that it can be said that the conclusion was not one that a reasonable Tribunal member could reach - Collins v Urban [2014] NSWCATAP 17 at [77].
This ground is inapt to the Tribunal's finding.
What the Tribunal really found at [165] was that the appellant had not produced sufficient evidence to persuade it that she had suffered the anxiety, inconvenience, disappointment and embarrassment that she had alluded to in her application form.
On the appeal the appellant took us to only one piece of evidence in support of her submission, namely a report by a physiotherapist dated 10 November 2021. In that report the physiotherapist, who was not treating the appellant but said she saw the appellant for Pilates twice a week, set out in narrative and summary form complaints made by the appellant to her about the "impact" the respondent's breaches had been having on her and some observations by the physiotherapist as to the appellant's stress, energy and agitation levels.
This report was not mentioned in the Tribunal's reasons, it is true, but the report is unconvincing other than perhaps being corroborative of the appellant's evidence of the effect on her of the respondent's breaches.
The physiotherapist disclosed no qualifications or experience with mental health issues, did not disclose the dates of the various complaints nor was she more precise with what complaints were made at what times. A fair reading of the report suggests she was including periods of time from before the relevant time limitation ie. before 29 June 2021 because she referred to "through these proceedings". Proceedings between the parties date back to September 2019.
The Tribunal's real point at [165] is that there was no expert evidence from someone with appropriate qualifications in mental health to the effect that, beyond the feelings one would feel as a result of the inconvenience and reduction in amenity the Tribunal referred to in [166], the appellant suffered something greater which required the assistance of a psychiatrist, psychologist or even a GP with some qualifications in that area.
The appellant was compensated for the inconvenience and reduction in amenity caused by the respondent's breaches. The physiotherapist's report did not prove any damage beyond that, and the Tribunal was not persuaded by the appellant's oral evidence, unsupported by any expert evidence from a qualified medical practitioner or at least evidence that such a practitioner had administered treatment for such complaints or that damage beyond that inconvenience and reduction in amenity was caused. There is no appeal from that finding.
That is, a claim for reduction of rent and a claim for compensation may overlap and could lead to double compensation. In Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9, in a passage approved by Basten JA in Makowska v St George Community Housing Ltd [2021] NSWSC 287 at [46] (a decision from which leave to appeal was refused), the Appeal Panel said at [86]: "That is not to suggest that a claim for damages for loss of quiet enjoyment and an order for the reduction of rent are mutually exclusive forms of relief. Depending on the claims made, there may be facts common to both types of claim which would need to be taken into account in order to avoid double compensation. For example if the premises (or part thereof) cannot be used in the manner intended or its use is in some way impaired by reason of a landlord's breach, it may be inappropriate to both reduce the rent and make an award of damages for loss of use."
It is readily apparent that the Tribunal was alive to the possibility of double compensation and hence made the finding it did in [167] that it was not satisfied that the appellant had suffered any other loss that should be separately compensated from the reduction in rent she received for the inconvenience and reduction in amenity referred to.
Therefore, we are not persuaded that the Tribunal erred in relation to Ground 6 and leave to appeal is refused.

Ground 5

The appellant submitted that the Tribunal's conclusion that the failure of the appellant to file evidence of mould reports regarding the premises meant that the evidence the appellant sought to tender would not have assisted the appellant was not fair and equitable.
On the appeal it became clear that there was no report from the Mould Doctor contrary to what the appellant had informed the Tribunal. Rather there had been a quote, a type of document unlikely to have assisted the appellant's case because it would not have set out the facts, reasoning process and opinions of a suitably qualified person on the relevant factual issues.
Be that as it may, the inference the Tribunal drew (that the missing quote would not have assisted the appellant's case), and even though its absence was apparently caused by the respondent's breach of orders to produce it, was not critical to the outcome of the case. The inference is never otherwise mentioned in the Tribunal's reasons and seems not to have played any or any significant part in the reasoning process of the Tribunal.
Therefore, we are not persuaded that the Tribunal erred in relation to Ground 5 and leave to appeal is refused.

Orders

The appellant has succeeded in relation to Ground 4 but has not succeeded in relation to the other Grounds. Success solely on Ground 4 does not alter the result of the case. That is because the question of mitigation only arises if the appellant was prima facie entitled to compensation (which would be reduced if she had failed to mitigate her loss). As no compensation was awarded there was nothing to mitigate.
Accordingly, the appeal should be dismissed and leave to appeal refused because the grounds requiring leave had no prospects of success for the reasons we have given.
We make the following order: 1. Appeal dismissed. 2. Leave to appeal refused.

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: 04 August 2022

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