Lennon v Finegan

NCAT Consumer and Commercial|2023-11-20|Before: Aid Co P

Introduction

The tenant's application is dated 28 July 2023. Pursuant to section 44(1)(b) of the Residential Tenancies Act 2010 (NSW) ("the Act") he seeks an order that rent is excessive due to the reduction or withdrawal of goods, services or facilities provided with the residential premises.
The tenant contends that a storage room, measuring 3.3 x 3.1 metres, was included in the lease of the premises at Hereward St, Maroubra ("Hereward St"), however, has since been withdrawn and is used by the landlord. The tenant seeks a reduction in the rent from $1100.00 to $900.00 per week.
At the hearing and in written submissions, the tenant referenced s 18 of the Australian Consumer Law 2010 (NSW) ('ACL') regarding misleading or deceptive conduct, claiming that the advertising of the premises and the tenancy agreement itself contained false representations and amount to misleading or deceptive conduct.
Via the tenant's written submissions sent on or around 11 September 2023, the landlord was aware of the alleged breach of s 18 and addressed this briefly in her submissions in response.
However, the tenant has never sought leave to amend his application to claim a breach of the ACL, and he has not been granted such leave. Nor did his written submissions identify any remedy pursuant to the ACL.
Section 236 of the ACL does allow for a remedy of damages (i.e. compensation) due to a breach of s 18. However, the tenant's written and oral submissions have always identified the outcome sought as an order for a rent reduction i.e. that, from a particular day, the rent for the premises must not exceed a specified amount. This is not the same as an order for compensation.
Therefore I do not consider that it would be in the interests of justice between the parties to consider the applicant's submissions regarding the ACL. I have only considered and determined the tenant's claim pursuant to the Residential Tenancies Act 2010 (NSW).

Appearances

The tenant appeared in person at the hearing and gave sworn oral evidence. He relied on one bundle of documents received by the Tribunal on 11.9.23. These documents were admitted into evidence, subject to weight and relevance and marked as Exhibit T.
At the hearing the tenant sought to submit further documents, but this application was refused by the Tribunal. Oral reasons were provided at the hearing.
Ms Reid and Mr Pose appeared on behalf of the landlord and both gave sworn oral evidence. They relied on one bundle of documents received by the Tribunal on 25.9.23. These documents were admitted into evidence, subject to weight and relevance and marked as Exhibit L.

Jurisdiction

There is no dispute that the Tribunal has jurisdiction to hear and determine this matter, since there is a tenancy agreement between the parties. The application was made before the end of the tenancy as required by s 44(3).

Does the storage room form part of the residential premises?

The tenant has the onus of proving his claim on the balance of probabilities.
Section 5 of the Act defines residential premises as: 'any premises or part of premises (including any land occupied with the premises) used or intended to be used as a residence.'
The landlord denies that the storage room was ever part of the residential premises, and that it was with good will that the landlord allowed the tenant to use her storeroom for a period of time.
I accept the sworn evidence of the landlord's agent that the landlord always regarded the storeroom as her own and did not believe that it was included in the tenancy agreement. I accept that the storeroom key was provided to the tenant by the agent in error.
I also accept that the tenant believed the storeroom did form part of the residential premises, pursuant to the tenancy agreement.
In other words, the parties were mistaken about the other's intention regarding the storeroom when the contract was made.
However, it is not the parties' personal understanding of whether the storeroom was part of the premises that it relevant. When interpreting the terms of a written contract, the Tribunal must adopt an objective approach.
In Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd [2004] HCAT 52; 219 CLR 165 at [40] the High Court said: 'It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. … The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.'
The contract between the parties is dated 11 April 2023 and was signed by both parties on 4 April 2022. The tenancy commenced on 12 April 2023.
Considering both the text of the agreement and the surrounding circumstances, I am satisfied that a reasonable person would have understood the storage room to form part of the residential premises: 1. While the storeroom was not among the features listed in the rental advertisement, it was prominently depicted on the floor plan which was used to promote the premises, including its dimensions. 2. The landlord referenced the disclaimer which appeared below the floor plan. It states relevantly: 'Plans shown are for presentation purposes only and are not to be part of any legal document … Interested parties should make their own enquiries.' I do not accept the landlord's submission that it was therefore unreasonable for the tenant to rely on the floorplan as indicative of the premises for rent. The disclaimer is barely visible. It is unrealistic to expect a prospective tenant to query whether every room or feature on a promotional floor plan are included in the residential premises. The reasonable assumption is that they are. 1. Whilst not explicitly included in the tenancy agreement (as was the garage), the storeroom was not excluded either, despite the tenancy agreement providing a storeroom as an example of part of the premises which might be excluded. 2. While the storeroom is not noted at all in the Ingoing Condition Report, I do not consider this relevant in interpreting the contract because the Report is dated 12 April 2023 i.e. after the formation of the contract.

Was there a reduction or withdrawal of facilities by the landlord?

Section 44 of the Act states relevantly: '(1) Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders - … (b) an order that rent payable under an existing or proposed residential tenancy agreement is excessive, having regard to the reduction or withdrawal by the landlord of any goods, services or facilities provided with the residential premises and that, from a specified day, the rent for residential premises must not exceed a specified amount.
The distinction between a 'withdrawal' and 'reduction' in goods services and facilities for the purposes of s 44(1)(b) was discussed by an Appeal Panel of the Tribunal in Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 at [124] where it is said: 'As to what constitutes a reduction, in our view this means the goods, services or facilities are of a qualitative or quantitative standard which is less than what a landlord is required to provide under a residential tenancy agreement. On the other hand, a withdrawal suggests there must be a removal or inability to use the particular goods, services or facilities. That is, the goods services or facilities or part of them are no longer available to a tenant.'
There is no dispute that on or about 13 April 2023, just after the tenancy commenced, the tenant discovered that the storeroom contained someone else's personal items and he notified the agent.
On 14 April 2023 the agent replied that the items belonged to the landlord and that the storeroom was not included in the tenancy.
From approximately 14 April 2023, the landlord permitted the tenant to use a 'small space' of the storeroom (cover letter from N G Farah, Exhibit L). The exact size of the usable space was not in evidence.
On 7 July 2023 the landlord notified the tenant that she required the use of the full storeroom and directed the tenant to remove his property.
On 23 July 2023 the tenant removed his property from the storeroom.
The absence of a facility to which a tenant was contractually entitled at the commencement of a tenancy can constitute a reduction or withdrawal of the facility (see e.g. Moroko v Cojay Holdings Pty Ltd [2022] NSWCATCD 79).
I find as follows: 1. From 12 April 2023 to 23 July 2023 there was a reduction of the facilities provided in the tenancy by the landlord because only a small part of the storeroom was available for the tenant's use; and 2. Since 24 July 2023 there has been a withdrawal of the storeroom by the landlord.

Is the rent payable under the tenancy agreement excessive?

Relevant law

Section 44(1)(a) relevantly provides: '(5) The Tribunal may have regard to the following in determining whether a rent increase or rent is excessive - (a) the general market level of rents for comparable premises in the locality or a similar locality, (b) the landlord's outgoings under the residential tenancy agreement or proposed agreement, (c) any fittings, appliances or other goods, services or facilities provided with the residential premises, (d) the state of repair of the residential premises, (e) the accommodation and amenities provided in the residential premises, (f) any work done to the residential premises by or on behalf of the tenant, (g) when the last increase occurred, (h) any other matter it considers relevant (other than the income of the tenant or the tenant's ability to afford the rent increase or rent).'
Not all these factors are required to be considered and the weight to be attached to each is a matter for the Tribunal in the circumstances of each case. There is a wide discretion to be exercised judicially but without a requirement to adopt any particular method of determining the fair rent. The Act does no more than provide a list of matters for consideration and leaves it to the Tribunal to determine whether any or any particular weight should be given: Randy River Health and Beauty Aid Co P/L t/as Middlerock Village Park v CTTT [2007] NSWSC 1142.
The reduction or withdrawal of facilities has to be considered as part of the totality of goods, services and facilities provided with the premises, and any reduction in rent awarded by the Tribunal must be proportionate to the value of these facilities relative to that totality (see, e.g. Mazengarb v Sethi [2021] NSWCATCD 51).
An excessive rent order is limited to 12 months (s 44(6)).

Consideration and findings

Both parties provided evidence of comparable rents.
Section 44(5)(a) requires attention to both: 1. 'comparable premises' which calls attention to the size and facilities of the premises; and 2. the 'locality' or a 'similar locality' of the premises.
The Hereward St premises has 3 bedrooms, the master with a built in wardrobe. It has one bathroom, a lock up garage and 'multi-purpose room' which the agent explained in evidence is a combined dining/loungeroom. It is very close to Maroubra beach, local amenities and public transport.
All the properties submitted by both parties are in the same locality as Hereward St, close to Maroubra beach, local amenities and public transport.
None of the landlord's premises are exactly comparable with Hereward St in terms of facilities. For example, all except one have only 2 bedrooms. The rent for the properties ranges from $920.00 per week to $1150.00 per week. No property includes a separate storeroom.
In terms of facilities, the property submitted by the tenant is comparable to Hereward St in that it also has 3 bedrooms. However, unlike Hereward St it has a large balcony. It does not include a storeroom. It is advertised at $880.00 per week.
Overall, the evidence of comparable properties submitted by the parties does not greatly assist the Tribunal in determining whether the rent is excessive.
Mr Pose for the landlord did give oral evidence that in his experience the storeroom is worth between $50.00 and $100.00 per week.
I also take into consideration: 1. The small size of the storage room relative to the overall premises; 2. The tenant's evidence that the storeroom is of significant value to him. The premises, including the garage, otherwise has minimal storage space. In particular, the tenant requires use of the storeroom to store his surfboard and bicycles which are currently in the loungeroom; 3. The difficulties the tenant has been experiencing with the hot water system since April 2023, while noting the landlord's evidence that the repair has now been ordered; and 4. The tenant was contractually entitled to full use of the storeroom as part of the residential premises for the agreed rent of $1100.00 per week. The tenant has been deprived of all, or most of, the storeroom since the start of the tenancy. It is fair and just that the rent reflects this.

Conclusion

Doing the best I can on the evidence before me I find that the rent of $1100.00 per week is excessive and that the rent should not exceed $1025.00 per week, from the commencement of the tenancy for the maximum period of 12 months.

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: 05 August 2024

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