Lazarevska v Ozturk

Procedural history

1. The Application was first listed before the Tribunal for Conciliation and Hearing on 22 November 2016. The Applicant attended in person. The landlord was represented by his Managing Agent, Mr Baradan. In accordance with the Tribunal's usual practice where both parties are present, prior to the Tribunal hearing the matter, the parties were provided with the opportunity to attempt to resolve the dispute in conciliation with the assistance of a Tribunal Conciliator. Those efforts were not successful. When the parties returned to the hearing room, the Tribunal adjourned the Application for hearing and issued directions for the filing and exchange of documentary evidence prior to hearing.
2. Order 3 of the Orders made by the Tribunal on 22 November 2016 required the tenant to file and serve her documentary evidence by 6 December 2016. She did not do so. On 8 December 2016 the landlord's Managing Agent wrote to the Deputy Divisional Registrar to complain about the tenant's non-compliance with Order 2. This resulted in the Deputy Divisional Registrar writing to the tenant on 9 December 2016 urging her to comply with this order. The tenant responded to the Deputy Divisional Registrar stating that she was under the impression that the proceedings had been finalised because the Respondent's name had been amended at the hearing on 22 November 2016.
3. The tenant was present in person on that occasion and thus is likely to have had the benefit of the Tribunal Member providing an explanation of the Orders made at the end of the hearing. It is thus difficult to understand how the tenant fell under such a misapprehension. In any event, as a result of her interaction with the Deputy Divisional Registrar the tenant later filed and served her documentary evidence. This was received by the Tribunal on 5 January 2016 and by the landlord's Managing Agent on 3 January 2016.
4. On 9 January 2016 the landlord's Managing Agent wrote to the Tribunal to object to the tenant filing and serving her evidence other than as directed by the Tribunal. The tenant's evidence included a number of documents related to the inspection of the residential premises by Liverpool City Council Building and Compliance Officers and to a proposed demolition order to be issued by Liverpool City Council in relation to the residential premises which had a degree of sensitivity for the landlord. Objections were also made to these documents on that account. The Deputy Divisional Registrar replied to that correspondence later that day advising the Managing Agent that any non-compliance with procedural directions would be considered by the Tribunal at the hearing of the Application.
5. The landlord complied with Order 4 of the Tribunal's Orders of 22 November 2016 by filing and serving his evidence on 13 December 2016. This was prior to the landlord receiving the tenant's documentary evidence. At the commencement of the hearing, Mr Baradan complained that the landlord had thus had no opportunity to file evidence in response to the tenant's evidence. Mr Baradan indicated that he considered this had the potential to give rise to unfairness to the landlord. He indicated that he intended to rely upon additional documents to rebut the tenant's evidence at the hearing, in the event that the tenant was permitted to rely upon the documents she had filed and served in January 2017.
6. After hearing from the parties on this issue, the Tribunal determined to allow the tenant to rely upon the documentary evidence she had filed and served on the landlord. It did so to give effect to the obligation imposed upon it by section 38 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) which requires that the Tribunal take such measures as are reasonably practicable to ensure that parties have a reasonable opportunity to be heard (sub-section 38(5)(c)) and to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in a proceeding (sub-section 38(6)(a)).
7. However, in order to avoid any procedural unfairness to the landlord, and to provide the landlord with an equal opportunity to be heard, the Tribunal made orders permitting either party to file and serve any further documents on which they relied by 6 February 2017, and any submissions in response to any documents filed and served by the other party by 13 February 2017. The parties were directed to consider any material filed and exchanged and to notify the Divisional Registrar by 20 February 2017 if they wanted any further oral hearing in relation to these documents and submissions, otherwise the hearing would be finalised on the papers after that date. By these means, consistent with the guiding principle contained in section 36 of the NCAT Act that is to be applied in all aspects of the Tribunal's practice and procedure, which is to facilitate the just, quick and cheap resolution of the real issues in dispute, the Tribunal was able to avoid adjourning the hearing and establish a process for bringing the matter to finality.
8. The landlord has filed and served additional documentary evidence and submissions. The tenant has not done so. Neither party has requested any further oral hearing of the Application. The proceeding is thus being finalised on the basis of the oral evidence given by the hearing on 30 January 2017 and otherwise on the documentary evidence submitted by the parties.

Evidence before the Tribunal

1. The tenant's documentary evidence comprises a Notice of Proposed Order No 2 (a) pursuant to sections 121B and 121H of the Environmental Planning and Assessment Act 1979 issued by Liverpool City Council in respect of the residential premises requiring demolition of those premises and a covering letter both undated; a Notice of Entry issued pursuant to sections 119A-119E of the Environmental Planning and Assessment Act 1979 by Liverpool City Council in respect of the residential premises requiring Mr Ozturk to provide access for the purpose of a detailed inspection, which is undated; a copy of a Liverpool Council Building Inspection (Complaints) register in respect of the residential premises for the period 14 September 2016 to 28 November 2016; an undated report from Illawarra Restorations concerning mould at the residential premises; a copy of the tenant's rent ledger for the period of the tenancy; photographs of water leaks and mould at the residential premises; copies of email correspondence between the tenant and various representatives of the landlord's Managing Agent during the period 23 August 2016 to 11 October 2016; copies of electricity accounts dated 1 August 2016 and 17 October 2016 and payment records for that account; and copies of payments made for internet services supplied to the residential premises.
2. The landlord's documentary evidence comprises a copy of the residential tenancy agreement that subsisted between the landlord and tenant; a copy of a NSW Fair Trading rental bond lodgement notice; a copy of the tenant's rent trust ledger; copies of repair request forms completed by representatives of the Managing Agent in response to the tenant's notifications of odour, water leaks and mould at the residential premises dated to 28 June 2016, 16 August 2016, 25 August 2016 and related correspondence and work orders and quotations; a copy of the termination notice served on the landlord by the tenant which is dated 5 September 2016 and a covering letter from the tenant of the same date; a copy of an email exchange between the tenant and the Managing Agent dated 23 September 2016 concerning overpaid rent; photographs of the residential premises taken at the final inspection; copies of correspondence to Liverpool City Council from a planning consultancy firm on behalf of the landlord advising that it had been retained to prepare a building certificate and development application for use of the residential premises as a secondary dwelling for consideration by council dated 8 November 2016 with associated invoices for this work and preliminary plans.
3. Ms Lazarevska gave oral evidence under affirmation. Mr Baradan also gave oral evidence under affirmation.

Material facts

1. The material facts to emerge from the evidence may be summarised as follows: 17.1 The fixed-term RTA was terminated by mutual agreement between the landlord and the tenant effective from 10 September 2016. The tenant gave the landlord vacant possession of the residential premises on that date. 17.2 Prior to agreeing to terminate the RTA by agreement, the tenant had served a Notice of Termination of the tenancy on the landlord by notice dated 5 September 2016. The ground for termination specified in the Termination Notice is "Early termination without compensation to landlord." However, that ground has no relevance in the circumstances of this case. It appears that the tenant actually sought to rely upon section 109 of the RT Act on the basis that the premises had become wholly or partly uninhabitable and had ceased to be lawfully usable as a residence. In any event, no issue as to the validity or otherwise of that Termination Notice arises in this case because the RTA was terminated by agreement following the issue of that Notice. 17.3 The landlord released the tenant from any obligation to pay a break fee due to the early termination of the RTA, and raised no objection to the tenant being refunded the whole of her rental bond. 17.4 There is no issue between the parties that the residential premises were at the time the RTA was entered into, and for the whole of the period of the tenancy, premises which had been erected without development consent and without a construction certificate. It was thus premises susceptible to an order pursuant to an order under Part 6, Division 2A of the Environmental Planning and Assessment Act 1979 that it be demolished on these grounds. 17.5 Mr Baradan gave evidence that the landlord purchased the lot on which the residential premises is situated about 7 or 8 years ago. He said the landlord engaged a builder to construct the secondary dwelling in 2010. He said the landlord believed that the builder had obtained development consent and a construction certificate on his behalf prior to construction. Mr Baradan says the landlord was shocked to learn that the secondary dwelling was erected without a construction certificate or development consent being obtained. 17.6 By letter and draft Notice dated 7 October 2016 Liverpool City Council issued Mr Ozturk with a Notice of intention to serve an order under sections 121B and 121H of the Environmental Planning & Assessment Act 1979 that would require the residential premises to be demolished. Subsequent to receiving that Notice Mr Ozturk has engaged a planning consultant to prepare a building certificate and development application for the secondary dwelling for consideration of Liverpool City Council in order to avert a final demolition notice being issued. The matter is not resolved at the time of the hearing. 17.7 It would appear that Liverpool City Council was alerted to the illegality concerning the construction of the residential premises by the tenant after she gave vacant possession on 10 September 2016. The tenant has filed in her evidence a copy of a Liverpool City Council Building Inspection (Complaints) register which shows that she first made contact with Council to complain about the residential premises on 14 September 2016. The notes taken on the register record that the tenant contacted Council to complain about the "conditions of [the] structure/plumbing and compliance" and that she had reported her concerns to the landlord's Managing Agent but "no repairs were completed property" (sic). This triggered a compulsory inspection of the residential premises by Liverpool Council Building and Compliance Officers. 17.8 In her oral evidence, the tenant stated that she knew from early September 2016 that the residential premises was an "illegal" structure because she had confronted the landlord directly with that proposition when she met him on or near the residential premises one day and he had admitted it to her. The tenant was unable to pinpoint the date of that interaction. However, she stated it was a primary factor in her decision to give the landlord notice terminating the RTA. 17.9 The tenant contends that for the whole of the tenancy the roof of the residential premises was prone to leaks which resulted in repeated water ingress to the residential premising during periods of wet weather and in a serious and extensive mould infestation in the residential premises. She also contends that the sewer pipes were prone to blockage and emitted a foul odour for the whole period of the tenancy. 17.10 There does not appear to be any dispute between the parties that the roof of the residential premises was in poor condition and prone to leaks in wet weather. In this respect the landlord's evidence includes a quotation for the replacement of the roof dated 5 September 2016 provided by a roofing contractor which includes the following statement: "[f]ollowing inspection of the granny flat at this property, we advise that the only way we would be able to guarantee the roof remains watertight is to carry out a full roof replacement due to its current condition." 17.11 There is, however, controversy between the parties about the extent of the sewer problems and odour, water leaks and mould, and the diligence with which the landlord carried out repairs to the residential premises during the period of the tenancy. 17.12 The evidence establishes that the tenant first contracted the Managing Agent to report a problem with the sewerage on 28 June 2016. She reported a foul odour emanating from the laundry and bathroom drains. In response to this report the Managing Agent arranged for a plumber to attend the residential premises on 6 July 2016. The invoice submitted by the plumber itemises the work performed at that time as "[b]locked drain clearance." In her oral evidence, the tenant contended that the foul odour continued after this repair was performed. 17.13 The tenant next contacted the Managing Agent on 2 August 2016 to report that the toilet was blocked and that sewerage was flowing from a drain into the backyard of the primary dwelling on the lot. This was apparently the second occasion the toilet had become blocked and required clearance. The details of the other occasion are not in evidence. The Managing Agent arranged for a plumber to attend the residential premises that day to fix the problem. The invoice submitted by the plumber itemises this work as "[c]ut out faulty drainage line under granny flat. Supply and fit new 4" drainage line and reconnect lines to give fall." It appears that this work also resolved the odour problem that the tenant had been complaining about up to that point. 17.14 The tenant next contacted the Managing Agent on 3 August 2016 during wet weather to report a water leak from the ceiling in the interior of the residential premises near the front door. The Managing Agent referred this issue to the landlord who later advised that he had arranged for a repair to be carried out on 7 August 2016. There is no dispute that a contractor attended the residential premises to carry out this repair on that day. 17.15 The tenant next contacted the Managing Agent on 15 August 2016 to report a serious mould infestation in the kitchen of the residential premises and leaking water in the bathroom and on the verandah. The Managing Agent referred these issues to the landlord. It is not in dispute that this resulted in the landlord arranging for a contractor to attend the residential premises on or about 18 August 2016 to clean away the mould and paint over the affected areas. However, it does not appear that this work involved any treatment of the affected areas (other than painting) to prevent mould regrowth. The contactor also carried out repairs to the plumbing to stop the water leaks in the bathroom and on the verandah. 17.16 After this work was completed the tenant emailed the Managing Agent on 23 August 2016 as follows (apparently attaching photographs): "[p]lease see the mould that was painted over last Thursday. As you can see it is still there. I'm not asking for it to be painted over again, just reporting it as I will not take responsibility for this. Please note as an existing problem." 17.17 The tenant next contacted the Managing Agent on Thursday 24 August 2016 to report that the water leaks near the front door and on the verandah had recurred and that there was now a further water leak from the kitchen ceiling above the kitchen sink. There was some delay in a tradesman attending the residential premises to in inspect this problem as the tenant was away from home over the following weekend and was not available or willing to provide access to the residential premises during this period. A contractor attended the premises on 31 August 2016. This resulted in the appraisal set out at paragraph 17.9 above. The contractor concluded that the whole roof of the granny flat required replacement at a quoted cost of $4,000.00. This work was immediately approved by the landlord. It had not been carried out prior to the tenant giving vacant possession.

Applicable law

1. The Tribunal's power to make an Order that requires a party to a RTA pay the other party compensation is found in sub-section 187(1)(d) of the RTA. Without limiting the Tribunal's power to make an order as to compensation, sub-section 187(2) provides that compensation may be ordered, relevantly, for any breach of a RTA. However, sub-section 187(4) provides, relevantly, that the Tribunal must not make an order for the payment of an amount that exceeds the amount prescribed by the regulations for the purpose of section 187 of the RT Act. In this respect Regulation 23 of the RT Regulation provides that the prescribed limit on the Tribunal's Order making power under section 190 of the RT Act is $15,000.00. The value of tenant's claim is at the prescribed monetary limit on the Tribunal's order making power provided in sub-section 187(4) of the RT Act and Regulation 23 of the RT Regulation.
2. Section 187 of the RT Act sets out order making powers of the Tribunal. Those powers do not exist in abstract. They are only enlivened when a substantive provision of the RT is engaged. In this case the relevant provision is section 190 of the RT Act, and its corresponding provisions in the RTA. Section 190 provides: 190 Applications relating to breaches of residential tenancy agreements (1) A landlord or a tenant may apply to the Tribunal for an order in relation to a breach of a residential tenancy agreement within the period prescribed by the regulations after the landlord or tenant becomes aware of the breach or within such other period as may be prescribed by the regulations. (2) An application may be made: (a) during or after the end of a residential tenancy agreement, and (b) whether or not a termination notice has been given or a termination order made. (3) A landlord's agent may make an application on behalf of a landlord.
3. Regulation 22(9) provides that the prescribed time limit for the making of an application under sub-section 190(1) is within three months after the applicant becomes aware of the breach.
4. Having heard the tenant's claim, I am satisfied that it properly rests on the landlord's alleged breach of sub-section 49(1), section 50, and sub-section 52(1) of the RT Act, and their corresponding provisions in the RTA that subsists between the parties.
5. Sub-section 49(1) of the RT Act provides that a landlord must take all reasonable steps to ensure that, at the time of entering into the RTA, there is no legal impediment to the occupation of the residential premises as a residence for the period of the tenancy. Sub-section 49(1) is made a term of every residential tenancy agreement by operation of sub-section 49(3) of the RT Act.
6. Section 50 of the RT Act deals with a tenant's right to quiet enjoyment and and reasonable peace and comfort of residential premises. It relevantly provides: 50 Tenant's right to quiet enjoyment (1) A tenant is entitled to quiet enjoyment of the residential premises without interruption by the landlord or any person claiming by, through or under the landlord or having superior title (such as a head landlord) to that of the landlord. (2) A landlord or landlord's agent must not interfere with, or cause or permit any interference with, the reasonable peace, comfort or privacy of the tenant in using the residential premises. … (3) ... (4) This section is a term of every residential tenancy agreement.
7. Sub-section 52(1) of the RT Act provides that a landlord must provide the residential premises in a reasonable state of cleanliness and fit for habitation by the tenant. This is made a term of every residential tenancy agreement by operation of sub-section 52(4) of the RT Act.

Consideration

1. The first issue for the Tribunal to consider is whether the tenant has made her application to the Tribunal for an order in relation to the landlord's alleged breaches of the RTA within the time period allowed by sub-section 190(1) of the RT Act and Regulation 22(9) of the RT Regulation, which is within three months of her becoming aware of the breach. As noted above, the tenant made this application to the Tribunal on 13 October 2016.
2. In relation to the tenant's allegation that the landlord was in breach of his obligation under sub-section 49(1) of the RT Act, the evidence establishes that the tenant first became aware of the illegality in the construction of the residential premises in early September 2016. Her application to the Tribunal for an order in relation to this breach was made on 13 October 2016. It has therefore been made within the time period permitted.
3. In relation the tenant's allegation that the landlord was in breach of his obligations under section 50 and sub-section 52(1) of the RT Act, the evidence establishes that the tenant first complained about odour emanating from the drains of the residential premises on or about 28 June 2016. Work was done to unblock the drains on 6 July 2016. It is reasonable to allow the tenant a period of 14 days to 13 July 2016 to reach the conclusion that this work did not resolve the problem, and to become aware that the landlord was in breach of his obligations under the RTA. The tenant's application for an order in relation to this alleged breach is thus also within the time period permitted by sub-section 190(1) of the RT Act and Regulation 22(9) of the RT Regulation. The tenant's allegations in relation to water leaks and mould date from 3 August 2016. The application for orders based on the landlord's breach of the RTA in relation to these issues is therefore also clearly within time.
4. The landlord's obligation under sub-section 49(1) is to take all reasonable steps to ensure that, at the time of entering into the residential tenancy agreement, there is no legal impediment to the occupation of the residential premises as a residence for the period of the tenancy. There is no dispute that there was a legal impediment to the occupation of the residential premises as a residence at the time the RTA was formed. The residential premises had been erected without a construction certificate or development consent being obtained. It could not lawfully be used as a dwelling.
5. The issue is whether the landlord took reasonable steps to ensure that this legal impediment did not exist. In this respect the landlord, through Mr Baradan, claims that he relied upon his builder to obtain a construction certificate and development consent for the residential premises. He claims to have been shocked to learn that this was not the case. The tenant disputes this account. She contends that the landlord admitted to her in early September 2016 that he knew the residential premises was an 'illegal' structure.
6. The landlord is the registered proprietor of the land on which the residential premises is situated. He would thus be required to initiate (or authorise) any application for a construction certificate or development consent for building works to be carried out on that land. The landlord must reasonably be taken to have known that he did not ever initiate or authorise the making of such applications. If it is the case that the landlord relied upon his builder to make these applications and obtain these approvals on his behalf, without any inquiry or oversight from him, then it was not reasonable for him to do so. However, I find the landlord's account very difficult to believe. It is inherently more likely that the landlord knew at all material times that the residential premises had been erected without a construction certificate or development consent being obtained. If that is not the case it is the result of his reckless disregard of his legal obligations as a registered proprietor of the land.
7. On this analysis I am satisfied that the landlord did not take reasonable steps to ensure that there was no legal impediment to the occupation of the premises as a residence at the time the RTA between the parties was formed. In this respect, the tenant has established that the landlord breached sub-section 49(1) of the RT Act and its corresponding provisions in the RTA that subsisted between the parties.
8. The next issue to consider is if the tenant incurred any damage and loss as a result of this breach. In this respect, the tenant is required to establish that any damage and loss she asserts was a reasonably foreseeable consequence of, or flows naturally from, the breach. The tenant is not entitled to be compensated for damage and loss that is unrelated to (or remote from) the breach: Hadley v Baxendale (1854) 9 Ex 341.
9. It is important to observe that Liverpool City Council took no action in relation to the residential premises during the period of the tenancy. Its inspection of the residential premises was triggered by a complaint made by the tenant after she gave vacant possession. The draft demolition notice served on the landlord by Liverpool City Council was not issued until 7 October 2016, just over 4 weeks after the tenant had vacated. The tenant was thus not compelled to leave the residential premises because of any order requiring her removal issued by Liverpool City Council, or any other relevant authority, on the landlord. The tenant left of her own volition.
10. The tenant claims that her discovery that the residential premises were an 'illegal structure' in early September 2016 was a major factor in her deciding to terminate the tenancy before the end of the fixed term. In this respect, in issuing the termination notice to the landlord the tenant purported to rely upon section 109 of the RT Act which includes as a ground for termination premises ceasing to be lawfully usable as a residence.
11. At the time the tenant issued this notice she had experienced, over at least a ten week period, serious problems with the drains, including a blocked toilet and overflowing sewer, a leaking roof, leaking water pipes and mould at the residential premises. I am satisfied that it was reasonable for her to associate these problems with the fact that the residential premises had been constructed without a construction certificate or development consent being obtained. That is, I am satisfied that it was reasonable for the tenant to conclude in these circumstances that the construction of the residential premises was defective. In my view it was thus not unreasonable for her to conclude that she should vacate the residential premises on the basis that they could not lawfully be occupied, notwithstanding that at that point no action had been taken by Liverpool City Council to declare the premises non-compliant with environment planning and assessment regulations and subject to demolition.
12. On this analysis, it follows that any damage and loss the tenant incurred in terminating the RTA early flows naturally from the landlord's breach of sub-section 49(1) of the RT Act and its corresponding provisions in the RTA.
13. The next task is to identify with some precision what the tenant's damage and loss was on the early termination of the RTA. The tenant contends that her damage and loss includes the whole of the rent she paid to the landlord during the period of the tenancy, which was $3,840.00. This claim rests on the proposition that the landlord's failure to ensure that the residential premises could be lawfully occupied as residence was a "fundamental breach" of the RTA which has the legal effect of the RTA being void from the beginning (void ab initio). As such, it is said, there has been a total failure of the consideration under the contract and the tenant is thus entitled to compensation in the amount of rent she paid. I note that there is learned commentary that supports these propositions: Anforth, A, Christensen, P, and Bentwood, S, Residential Tenancies Law and Practice in New South Wales, 6th Edition, 2014 [at 2.49.2]. This commentary relies upon the common law and cases decided by predecessors of this Tribunal under an ancestor provision to section 49 of the current RT Act: Moore and White v The Lesbian Space [1997] NSWRT 154; Chymiak v Marshall and Baldwin [2007] NSWCTTT 579; Dalitz and Reed v Falzon [2012] NSWCTTT 305.
14. With respect, I do not consider this to be an accurate statement of the law, at least as it now stands. The landlord's obligation to take reasonable steps to ensure that there is no legal impediment to the occupation of residential premises as a residence is a statutory obligation made a term of every RTA by operation of sub-section 49(3) of the RT Act. It is part of an exclusive statutory scheme that prescribes the form and content of residential tenancy agreements. There is no statutory basis to be found in this scheme for the concept of a "fundamental term" or "fundamental breach" that would give rise to a different basis upon which damages would be awarded for breach of sub-section 49(1) as distinct from any other breach of an obligation by a tenant or landlord.
15. Moreover, subject to my findings in relation to the landlord's breach of the tenant's right to quiet enjoyment (as to which see following) there was not, in any practical or concrete sense, a total failure of consideration. The tenant occupied the residential premises as a residence for a period of 12 weeks. There was real value, or a tangible benefit, in that occupation which the tenant freely accepted. The tenant would be unjustly enriched if the Tribunal were to conclude that she is entitled to retain the value of that occupation and be compensated in amount equivalent to all the rent she paid for it: Pavey and Mathews Pty Ltd v Paul (1987) CLR 221; Australian and New Zealand Banking Group Ltd v Westpac Banking Corporation 1988) 164 CLR 662. The landlord is entitled to obtain and retain fair value from the tenant in the form of rent for the consideration of occupation of the residential premises that did, as a matter of fact, pass to her under the RTA notwithstanding that he was in breach of his obligation to take all reasonable steps to ensure that, at the time of entering into the residential tenancy agreement, there is no legal impediment to the occupation of the residential premises as a residence for the period of the tenancy: Pavey and Mathews Pty Ltd v Paul (1987) CLR 221.
16. The damage and loss arises from the landlord's breach of this obligation is that the tenant actually incurred as a result of the necessity of vacating the residential premises before the end of the fixed term. In this respect it is arguable that the tenant would be entitled to the compensated by the landlord for such things as her removal expenses, any costs associated with the connection and disconnection of utilities, any loss of remuneration from employment arising from the need to take time off work to move, and the like. However, in this case the tenant has not particularised any such claims or submitted any evidence to prove them. There is thus no basis in the evidence upon which the Tribunal could compensate her for any such damage and loss.
17. It may be arguable that the tenant is entitled to be compensated for some portion of rent she paid for the residential premises due to sewerage, plumbing, roof and mould problems she experienced which may have arisen from defects in the construction of the residential premises. However, for reasons that will emerge, I consider that these issues are better characterised as a breach by the landlord of the tenant's right to quiet enjoyment and to reasonable peace and comfort of the residential premises. I have awarded the tenant compensation for the damage and loss she incurred as a result of that breach. Consequently, I do not consider the matter further in the context of the landlord's breach of sub-section 49(1) of the RT Act.
18. Sub-section 52(1) of the RT Act imposes an obligation on a landlord to "provide" residential premises to a tenant in a reasonable state of cleanliness and fit for habitation. This obligation to provide residential premises in a state fit for habitation is to be distinguished from the landlord's obligation to take reasonable steps to ensure there is no legal impediment to the occupation of residential premises as a residence. The latter deals with the legality of the occupation of premises as a residence. Sub-section 52(1) deals with the fitness of residential premises for habitation.
19. In his oral evidence and submissions on behalf of the landlord, Mr Baradan placed considerable emphasis on the promptness with which the landlord carried out repairs to the residential premises when notified by the tenant of issues with the sewer, drains, roof and plumbing leaks and mould. While there may be an issue with the effectiveness of some of the repair and rectification carried out by the landlord, there is no doubt on the evidence that prompt action was taken to deal with the issues the tenant reported. If it were the landlord's obligation to maintain the residential premises in a reasonable state of repair (section 63 of the RT Act), that was engaged in this case, this argument may have some force.
20. However, the obligation to maintain the premises in a reasonable state of repair must also be distinguished from the obligation imposed on a landlord by sub-section 52(1) of the RT Act. Sub-section 52(1) stipulates that a landlord must provide the residential premises in a state fit for habitation. In other words, this obligation must be fulfilled at the time the landlord passes possession of the residential premises to the tenant. The obligation imposed on a landlord by sub-section 52(1) is a strict or absolute obligation ("must"). It therefore does not matter if residential premises are capable of being made habitable if repairs are carried out in the course of the tenancy. If the premises is not fit for habitation at the time possession of it passes to the tenant the landlord's obligation is breached.
21. In relation to this element of the tenant's claim, the key question for the Tribunal to determine is therefore whether the premises were reasonably clean and in a reasonable state of repair, such that they were fit for habitation, when possession of it passed from the landlord to the tenant.
22. In its prior consideration of the scope and content of the obligation imposed upon a landlord by section 52(1) of the RTA the Tribunal and its predecessors have developed two 'tests' for the habitability of residential premises. These tests are the "risk of injury test" and the "reasonable comfort test". The question of whether or not residential premises are "habitable" turns on whether they "might be used and dwelt in not only with safety but also with reasonable comfort" by the tenants: Proudfoot v Hart (1890) 25 QBD 420, judged by contemporary standards: Menashi v Ly [1997] NSWRT 162. It is a serious matter for the Tribunal to find that residential premises are uninhabitable and such a conclusion should not be drawn lightly: De Soleil v Palmhide P/L [2010] NSWCTTT 464.
23. In this case the evidence establishes that the tenant first complained about an odour emanating from the drains of the residential premises on 28 June 2016. This was 10 days after she took possession of the premises. Allowing the tenant a few days to discern that is odour was serious and persistent rather than transitory, I am satisfied that this problem was present when possession of the premises passed to her.
24. The tenant first complained about water leaks from the roof and plumbing of the residential premises on 3 August 2016 and then again on 15 and 24 August 2016. It would appear from the report provided by the roofing contractor dated 5 September 2016 that these leaks occurred at least in part because the roof of the residential premises was in very poor condition. It may reasonably be assumed that it was in that condition when possession passed to the tenant.
25. The tenant first reports mould growth at the residential premises on 15 August 2016 in association with the water leaks she also reported at that time. There is no suggestion in the tenant's evidence that there was any mould growth at the residential premises prior to that report. I can thus not be satisfied that the residential premises were affected by mould at the time possession of it passed to the tenant. However, it is clear the premises were susceptible to develop mould due to the serious water ingress issues from the roof and plumbing leaks.
26. The issue for the Tribunal to determine is therefore whether the issues with the sewerage, drainage, plumbing and roof were sufficiently serious as to render the residential premises, or any part of them, uninhabitable at the commencement of the tenancy having regard to the legal principles that apply to the making of such a determination.
27. I am satisfied on the evidence that they were. The blocked toilet and overflowing sewerage is an issue that goes to the safety of the residential premises as a whole. Overflowing sewerage has the potential to create disease. It is clear from the plumber's report on the work performed on 2 August 2016 that these problems arose from defective sewer drainage which was present from the commencement of the tenancy. The foul odour that emanated from the drainage of the residential premises up to 2 August 2016 also had a serious impact on the amenity of the whole of the residential premises such that they could not be occupied with reasonable comfort by the tenant, particularly when judged by contemporary standards. I do not reach this conclusion lightly. The tenant's evidence to this effect is compelling.
28. The latent defects in the roof which caused repeated water leaks during wet weather, the recurring leaks in the plumbing, and the mould growth which affected the kitchen/living room and front porch also meant that those areas of the residential premises could not be occupied with reasonable comfort, and with respect to the mould, safety. I do not reach this conclusion lightly. The tenant's evidence to this effect is compelling.
29. For completeness, I note that Mr Baradan submitted that the residential premises could not reasonably be considered uninhabitable as the tenant lived in it in fact for a period of approximately 12 weeks. I am not satisfied that the mere occupation of premises by a tenant renders it inhabitable for the purpose of sub-section 52(1) of the Act. There are many exigencies of life that may render it impossible for a tenant to vacate premises notwithstanding that they are uninhabitable. The tests for habitability are safety and reasonable comfort, not mere occupation of premises.
30. Having reached this conclusion, the next issue for consideration is whether the tenant suffered any damage and loss as a result of the landlord's breach of his obligation to provide the premises in a state fit for habitation. In this respect I consider the tenant to be in the same position as that outlined on the issue of damage and loss in relation to the landlord's breach of sub-section 49(1) above. That is, the landlord would arguably be liable to pay the tenant compensation for costs that may have been associated with her having to move from the premises, and for the cost of personal effects and furnishings damaged by leaking water and mould. However, the tenant has failed to particularise or file any evidence to prove such an entitlement. The Tribunal cannot make any order for compensation in the absence of particulars and evidence.
31. The tenant is also entitled to be compensated for the loss in the value of her occupation of premises that arises from them being uninhabitable. However, for the reasons outlined above, in the circumstances of this case, the tenant is not entitled to recover the whole of the rent she paid for her occupation of the residential premises in compensation for the landlords breach of his obligation to provide the premises in a state fit for habitation because this would lead to her unjust enrichment. The landlord is entitled to obtain and retain fair value for the consideration he did provide to the tenant under the RTA. I assess the tenant's loss in value of her occupation of the residential premises in the context of the landlord's breach of his obligation to provide the tenant with quiet enjoyment of the residential premises.
32. It remains to consider if the landlord breached his general obligation under section 50 of the RT Act give the tenant quiet enjoyment of the residential premises. In this respect, sub-section 50(2) imposes a strict (or absolute) obligation on a landlord not to interfere with, or cause or permit an interference with, the reasonable peace, comfort or privacy of the tenant in using the residential premises. The obligation is breached and the landlord may be liable to compensate a tenant for such a breach even in circumstances where the breach arises from the landlord carrying out necessary repairs in a responsible manner: Worrall v Commissioner for Housing of ACT [2002] FCAFC 127.
33. The word "reasonable" in sub-section 50(2) qualifies the extent of the landlord's obligation. A tenant's right to quiet enjoyment is not breached by mere inconvenience - a serious or substantial interference with the right must be established: Southward London Borough Council v Tanner [2001] 1 AC 1; McC v Director of Housing [2009] VCAT 2748.
34. The evidence establishes that there was a foul odour emanating from the drains of the residential premises from on or near the commencement of the tenancy up to 2 August 2016. It also establishes that there were two serious blockages of the toilet during this period, and one occasion in which sewer pipes burst or overflowed releasing raw sewerage onto ground adjacent to the residential premises. I am satisfied that this constituted a substantial interference with the tenant's reasonable comfort of the residential premises during this period. I accept that the landlord acted promptly to carry out repairs when these issues were reported to him. However, the fact that repairs were carried out does not avoid the landlord breaching the tenant's right to quiet enjoyment.
35. The evidence also establishes that there were multiple and recurring water leaks into the residential premises from on or about 2 August 2016 up to the date the tenant gave vacant possession. The damp caused by water ingress to the residential premises resulted in a serious mould infestation in the kitchen /iving area on or about 16 August 2016, which was not fully eradicated up to the end of the tenancy. I am satisfied that the water ingress and mould also constituted a substantial interference with the tenant's right to quiet enjoyment. Again, the landlord did not avoid committing this breach through his efforts to carry out repairs.
36. I note that the extent of the mould in the residential premises was the subject of some controversy between the parties. The tenant contended that it was present in a number of locations in the kitchen/living area of the premises and that it recurred after it was cleaned and painted over on 16 August 2016. The photographs the tenant submitted in support of this element of her claim appear to bear this out. Mr Baradan contended that the mould was confined to one corner area of kitchen only and was eradicated on 16 August 2016. He said that the tenant's photographs have a tendency to exaggerate and mislead in this respect.
37. On the evidence before me I am satisfied that there was a very serious mould infestation in the kitchen/living area of the residential premises from early- to mid-August 2016. I also note that the residential premises is a small secondary dwelling of five rooms (including the bathroom). The kitchen and living room are combined. Consequently, the appearance of mould and its odour had a greater impact in this relatively confined space than would be the case in a larger dwelling.
38. I also note that Mr Baradan went to some pains to defend the claim on the basis that the landlord did carry out repairs promptly and stood ready to carry out further repairs, including to replace the entire roof of the premises. As noted, breach of the tenant's right to quiet enjoyment may occur in spite of the landlord's attempt to rectify the breach. Repair work, and the tradespersons who carry out this work, interfere with the tenant's peace and privacy.
39. Having found that the landlord was in breach of his obligation not to cause or permit any interference with the reasonable peace, comfort and privacy of the residential premises, the Tribunal must consider if the tenant experienced a reasonably foreseeable form of damage and loss as a result of this breach for which she is entitled to be compensated.
40. In this instance the tenant's damage and loss sounds in the deprivation of the full value and benefit of her occupation of the premises she bargained for when she entered into the RTA: Fawzi El-Saiedy v NSW Land and Housing Corporation [2011] NSWSC 820. Her enjoyment of the premises and their amenity was diminished and interrupted. She experienced discomfort, inconvenience, disappointment and distress. This damage and loss flows naturally from the breach. It is a form of non-economic loss for which the tenant is entitled to be compensated.
41. On the evidence before me I assess that the impact of the landlord's breach of the tenant's right to quiet enjoyment was to reduce the value and benefit of the consideration provided by the landlord to the tenant under the RTA by one-third. On this basis, I assess the compensation to which the tenant is entitled as the equivalent of one-third of the rent she paid while the RTA remained on foot. This is $1,280.00.
42. In this respect I note that this is not a case where the tenant was unable to occupy the residential premises at all or in part. She continued to occupy and use all parts of the premises. Her quiet enjoyment of the residential premises was seriously diminished but it was not extinguished. For completeness, I note that I would have reached the same conclusion as to the tenant's compensable loss, had I dealt with the question in the context of the landlord's breach of his obligation to provide the residential premises to the tenant in a state fit for habitation.

Conclusion

1. It follows from these reasons that the tenant is entitled to an order pursuant to sub-section 187(1)(d) of the RT that will require the landlord to pay her compensation in the amount of $1,280.00. This is to be paid within 14 days. P French General Member Civil and Administrative Tribunal of New South Wales 31 March 2017 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: 01 June 2017