Miller v St George Community Housing

Jurisdiction

1. For the following reasons I am satisfied that the Tribunal has jurisdiction to hear and determine this application.
2. The tenant signed a Residential Tenancy Agreement (RTA) with the Department of Housing of NSW on 17 May 1991.
3. On 1 April 2019 the respondent took over the management rights of the tenancy. The tenant chose not to sign a new RTA with the respondent.
4. The respondent says it accepts that it is 'responsible to provide Tenancy and Property Management services for the building in which [the tenant] resides.'
5. The tenant is paying rent to the respondent.
6. The Tribunal is satisfied that the respondent is the landlord of the tenant's premises (see also Reisner v Bridge Housing Limited [2019] NSWCATAP 109).

The Relevant law

1. I include relevant provisions of the Act and case law below.

Compensation

1. The Tribunal's power to make an order that requires a party to a residential tenancy agreement to pay the other party compensation is found in sub-section 187(1)(d) of the Act.
2. Although section 187 sets out the order-making powers of the Tribunal, those powers do not exist in abstract. They are only enlivened when a substantive provision of the Act is engaged, for example, a breach of the RTA.
3. In other words, for the tenant to obtain compensation, she must prove on the balance of probabilities that the landlord has breached its obligations under the RTA or under the Act, and that the landlord's breach caused the damage or loss.
4. The landlord's breach need not be the dominant, effective or real cause of the tenant's loss: it is sufficient that the breach is a cause (Fitzgerald v Penn (1954) 91 CLR 268 at 273; Alexander v Cambridge Credit Pty Ltd (1987) 9 NSWLR 310 at 361).
5. Any damage and loss claimed as a result of the breach must be a reasonably foreseeable consequence of that breach: Hadley v Baxendale [1854] 9 Ex 341.
6. In Pacorp Holdings Pty Ltd v Waller [2017] NSWCATAP 167, the Appeal Panel said: 'provided that some evidence of loss or damage has been produced, difficulty of assessment is not a bar to the assessment of damages, and where precise evidence is not available, the court or tribunal must do the best it can.'

Mitigation by the tenant

1. If the tenant establishes breach by the landlord of the landlord's obligations under the RTA and/or relevant sections of the Act, the landlord will not be liable for compensation or damages if the tenant has not taken all reasonable measures to mitigate her loss (British Westinghouse Electric and Manufacturing Company Limited v Underground Electric Railways Company of London Limited [1912] AC 673; BM & JA Holdings Pty Limited v Clarence Street Developments Pty Limited [2012] NSWSC 1236).
2. The landlord bears the onus of proof in respect of the issue of failure to mitigate. As was held in Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd (1976) 1 NSWLR 5 at 9: 'Although a plaintiff cannot recover full loss consequent upon a defendant's breach of contract, where he could have avoided such loss by taking reasonable steps, nonetheless a defendant who seeks to rely upon a failure to mitigate must show that the plaintiff ought, as a reasonable [person], to have taken certain steps for the purpose of doing so.'

Landlord's obligation to provide and maintain the premises in a reasonable state of repair

1. Section 63 of the Act relevantly states: 63. Landlord's general obligation (1) A landlord must provide and maintain the residential premises in a reasonable state of repair, having regard to the age of, rent payable for and prospective life of the premises. (2) … (3) A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant's breach of this Part. (4) This section is a term of every residential tenancy agreement.
2. The landlord's obligation to repair arises after the landlord has been put on notice of the need to repair. Once notice is received by the landlord, a breach of section 63 will only occur if the landlord fails to carry out any necessary repairs within a reasonable time: Northern Sandblasting Pty Ltd v Harris (1997) 146 ALJR 254.

Tenant's right to quiet enjoyment

1. Section 50(1) of the Act relevantly provides that a tenant is entitled to quiet enjoyment of residential premises without interruption by the landlord.
2. Section 50(2) relevantly provides that a landlord, or landlord's agent, must not 'interfere with, cause or permit any interference with, the reasonable peace, comfort or privacy of the tenant.'
3. In Kork v Merheb [2021] NSWCATAP 349 (16 November 2021) the Appeal Panel described the meaning of 'quiet enjoyment', citing Yeldham J in Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd [1976] 2 NSWLR 15 at 23 as follows: 'I take the relevant law in relation to the covenant for quiet enjoyment to be correctly set out in Halsbury's Laws of England, 3rd ed., vol. 23, pp. 605, 606, pars. 1298, 1299 in these terms: "The covenant for quiet enjoyment operates according to its terms to secure the tenant, not merely in the possession, but in the enjoyment of the premises for all usual purposes; and where the ordinary and lawful enjoyment of the demised premises is substantially interfered with by the acts or omissions of the landlord or those lawfully claiming under him, the covenant is broken, although neither the title to, nor the possession of the land may be otherwise affected...'

Emotional distress

1. In a number of decisions, the Tribunal has recognised mental distress which is not consequential upon physical injury or psychiatric illness (including disappointment, distress and frustration, or indignation due to the breach of an agreement) as a compensable head of damage.
2. Such damage is not caught by the restrictions on non-economic loss contained in section 16 of the Civil Liability Act 2002 (NSW): Torpey v Stewart [2021] NSWCATAP 248; Hyndes v Maddak Pty Ltd [2021] NSWCATAP 302; Rurik v Travers [2020] NSWCATAP 242).

Onus of proof

1. It is well established that the tenant bears the onus of proof regarding the above provisions to the civil standard of proof, being more likely than not to have occurred on the balance of probabilities.
2. However, if the landlord claims that the state of repair of the premises is caused by the tenant's breach, the landlord bears the onus of proving this on the balance of probabilities.

Liability of the respondent for the actions of the previous landlord

1. Ms Larosa gave evidence that she first reported water running down the walls and mould in the premises 13 years ago: 'Mum had to get rid of everything because of the mould. I called Housing at that time. There was no response. I kept calling them. Mum was constantly ringing up and saying, "Can you do anything about the mould?"'
2. At that time the Department of Housing of NSW was the landlord.
3. In Makowska v St George Community Housing Ltd [2021] NSWCATAP 198, the Department of Housing assigned the management rights of the tenancy to St George Community Housing in a similar, or same, arrangement as the applicant's, also effective 1 April 2019.
4. The Appeal Panel at [43-44] upheld the decision by the Tribunal: 'St George is not liable for the actions of [the Department of Housing] with respect to the appellant's lease prior to 1 April 2019. The Tribunal determined, in effect, that a crystallised obligation under the lease, as a matter of contract law, cannot be assigned from one person to another. It can be transferred by a novation, but there is no evidence, and no suggestion, that a novation agreement has been entered into. The Tribunal found that the notice provided to the appellant dated 1 April 2019 did not, and could not, operate as an assignment by [the Department of Housing] to St George of [the Department of Housing's] past obligations to the appellant. The Tribunal determined that St George is not liable for the actions of [the Department of Housing] in relation to the residential tenancy agreement prior to 1 April 2019. We agree.'
5. There is no suggestion that a novation agreement was entered into in the present case.
6. It follows that even if the Tribunal were to accept Ms Larosa's evidence, and, further, find that the Department of Housing of NSW had breached its obligations owed to the applicant, the respondent would not be liable for the Department's breach.
7. Therefore, this decision will consider evidence of any breaches by the landlord only after 1 April 2019, the date that the respondent assumed management of the tenancy.

A key issue

1. The tenant claims that the landlord failed to respond to reports of water and mould in the premises.
2. The landlord accepts that there was mould in the premises. Ms Cordero confirmed this in her oral evidence.
3. However, the mere existence of mould in the premises about which the landlord has notice is not sufficient by itself to establish a breach. As is evident to many Sydney residents, sometimes mould is not the fault of anyone, but the unfortunate reality of living in a warm locality of above-average humidity.
4. In cases where the Tribunal has found in favour of a tenant and awarded compensation for damage caused by mould, the evidence established the presence of a physical defect to the premises: see, for example, Capponi v Bridge Housing Limited [2021] NSWCATCD 17; Kazacos Investments Pty Ltd atf Kazacos Investments Trust v Maher [2021] NSWCATAP 219; Andrew Fletcher and Song Fletcher; v Luke Bunbury [2015] NSWCATCD 60; O'Brien v Carlo-Stella [2022] NSWCATCD 12.
5. A key issue for determination is therefore the cause of the mould.

Tenant's evidence and submissions

1. The tenant contends that: 1. The mould and moisture were caused by physical defects in the premises, including leaking roof, inadequate natural light and blocked gutters; 2. A large tree near her mother's unit limited the natural light that could enter the premises; 3. The guttering of the unit block was clogged with leaves and plants growing inside. It would overflow during heavy rain. 4. After the premises were cleaned of mould and repainted by the landlord the mould soon reappeared; 5. Around the same time she saw water continuously running down the wall of her mother's bedroom. She reported this by telephone to Mr Gambino, who replied: 'I will check with the contractor what's going on. There's a bigger problem on the roof we need to fix.'

The landlord's evidence and submissions

1. The landlord: 1. Denies that the mould and moisture were caused by a physical defect to the premises; 2. Contends that the mould and moisture were caused by 'environmental factors' i.e. a La Nina event which delivered increased rainfall; 3. Relies on an article from The Guardian dated 21 June 2022 reporting on a La Nina event: 'Sydney had its wettest summer for 30 years in 2021-22 and its wettest March on record. It's already received more than 126% of its average rainfall this year.'
2. When questioned by the Tribunal, and referring to the Tribunal's order for the repair of the roof made by consent of the landlord on 17 August 2022, Ms Cordero argued that the moisture and mould were not caused by the defective roof because the tenant's premises is not located on the top floor, but in the middle level of the unit block.

Findings

1. I am satisfied that there was significantly increased rainfall in Sydney during the relevant period. No doubt this was a contributing factor to the mould and moisture in the tenant's premises.
2. However, for the following reasons I am satisfied that the physical defects to the property (specifically the roof, gutters and downpipes) were also a cause of the mould and moisture.
3. The Roof Report prepared by the landlord's contractor and dated 18 July 2022 indicates that the repairs to the roof were extensive and included the repair or replacement of the following: metal roof sheets; apron/ barge capping; and boot flashing (Exhibit A, page 37).
4. Further, the report indicates that: 1. Roof tiles were broken; 2. Excess tree debris was removed from under the roof and soaker flashings; 3. Gutters were cleaned and downpipes unblocked; 4. Trees were overhanging.
5. The Tax Invoice submitted at the conclusion of the roof repairs and dated 31 August 2022 evidences that the roof, guttering and downpipes were leaking in places.
6. For the following reasons I reject Ms Cordero's submission that, because the tenant's unit is not on the top storey of the building, the water and mould in her unit were not caused by the above defects: 1. The damage to the roof, gutters and downpipes was evidently extensive and likely capable of causing significant moisture ingress and mould growth that extended to the tenant's unit on the level below; 2. The landlord's willingness to consent to orders on 17 August 2022 to repair the roof and prevent water ingress down the tenant's walls is consistent with the structural defects being the cause of the moisture and mould.
7. I accept Ms Larosa's evidence that the large tree close to the tenant's unit inhibited natural light to the premises. The landlord did not present evidence to contest this.
8. I find that the excessive shade from the tree likely contributed to the growth of mould. In this respect I note the written submission by the landlord: 'Mould cannot grow in dry and brightly lit areas, so improving ventilation and light are an important step in preventing mould from becoming a problem.' (Exhibit A, page 15).

Did the landlord breach its obligations under section 63 the Act?

1. Both parties agreed in oral evidence that a representative of the landlord inspected the premises regarding mould and moisture on 30 March 2022.
2. For that reason, Ms Cordero submitted that the tenant first reported mould and moisture sometime in early 2022.
3. A telephone log by the landlord records that Ms Larosa telephoned the landlord on 24 March 2022 reporting a leak and mould in the premises and requesting an inspection by the landlord (Exhibit A, page 52).
4. Ms Larosa gave evidence that: 1. She reported the blocked gutters to the landlord in early 2022; 2. She reported mould and water in the premises to her mother's then caseworker at St George, Mr Uli Kioa, in 2021: 'I was on the phone to him constantly in 2021 about mould and water running down the walls, especially in the bedroom. He did come out and look in 2021 and promised to do something. But he didn't.' 1. The tenant's caseworker, Mr Gambino, and Filipe Alves on behalf of the landlord, inspected the premises on 30 March 2022. Ms Larosa was present. 2. At that inspection the landlord's representatives told her that they would repair the walls. Ms Larosa replied: 'The whole place needs repair, not just the walls. Would you let your Mum live like this?'
5. Documents provided by the landlord evidence that: 1. A Senior Social Worker from Northern Sydney Local Health District wrote to the landlord on 27 April 2022 saying in part: '… both moisture and mould [are] impacting on her well-being. Mrs Miller's housing presents a risk to both her health and her belongings. We respectfully request that action be taken as a matter or urgency, to address the issues with mould and water ingress in this property.' (Exhibit A, 54) 1. On 28 April 2022 Ms Larosa telephoned the landlord to report the 'ongoing mould issue'; the tenant's hospitalisation due to the mould; damage to furniture caused by mould; and the difficulties she was experiencing contacting 'Uli' (the tenant's then case worker) (Exhibit A, page 53); 2. On 3 May 2022 Ms Larosa emailed the landlord with photographs of mould in the premises and on furniture (Exhibit A, page 27); 3. On 12 May 2022 an Occupational Therapist from Royal North Shore Hospital wrote to Mr Gambino: 'Mrs Jean Miller, the tenant of the above address, is currently an inpatient at RNSH with an exacerbation of her chronic respiratory disease. As you are aware there is a mould issue in Mrs Miller's unit and for her to discharge home she requires a safe living environment. Can you please address this issue as soon as possible as Mrs Miller is now medically cleared for discharge home?' (Exhibit A, page 55).
6. Around May 2022 the landlord repainted the whole of the interior of the premises with mould inhibiting paint, removed the carpet and replaced it with vinyl (Exhibit A, page 14).
7. The landlord disputes that the tenant and/or Ms Larosa reported the mould and moisture in 2021: 1. Ms Cordero referred to internal emails in October 2021 regarding repair requests by the tenant which did not include mention of mould (Exhibit A, page 70); 2. A list of Work Orders for 2021 and 2022 include no mention of mould (Exhibit A, page 15).
8. The Tribunal questioned whether a Work Order is the equivalent of a report by the tenant: Ms Cordero: 'Yes. Every time a tenant requests a repair it results in a Work Order.' Tribunal: 'If a tenant calls up and says, "There's mould", will that result in a Work Order?' Ms Cordero: 'No. Because of the increase in mould reports during La Nina, we wouldn't automatically create a Work Order but send someone to investigate whether it is a structural issue.'
9. The report regarding the condition of the metal roof, gutters and downpipes and providing a scope of repairs is dated 18 July 2022 (Exhibit A, page 37).
10. The invoice to the landlord from the roofing contractor indicates that that remedial work to the roof, gutters and downpipes was completed by 14 August 2022. This appears to be confirmed by photographs of the roof dated 15 August 2022 (Exhibit A, pages 38-45).
11. A scope of works was prepared for the installation of a new kitchen on 20 May 2022 (Exhibit A, page 33).
12. The kitchen was 'measured up' on 15 September 2022 and the tenant 'signed off' on her selection of material for the kitchen on the same day (Exhibit A, pages 34 and 71).
13. Ms Cordero gave evidence that the kitchen was completed in late October or early November, notwithstanding the Tribunal's consent order of 17 August 2002 that it be completed by 1 October 2022.
14. The landlord did not obtain an arborist's report regarding the large tree, notwithstanding the Tribunal's consent order on 17 August 2022.
15. As Ms Larosa explained at the current hearing, that order was made to assess whether the tree could be removed or pruned to allow natural light into the tenant's premises.
16. However, on 14 September 2022, Ms Cordero emailed Ms Larosa and said relevantly in relation to that order: 'We will not be obtaining an arborist report, the tree identified by Ms Miller is adjacent to the balcony and the edge of the tree canopy is estimated 5m away and does not pose any safety risk.' (Exhibit A, page 71)
17. Ms Cordero submitted that: 1. The landlord was always responsive to requests for repairs; 2. The respondent took over 'reactive and planned maintenance' of the premises on 1 July 2021; 3. Prior to that date, the respondent's role was limited to 'auditing' the repair and maintenance work which was managed by NSW Housing and its contractor, Broadspectrum. The respondent was 'limited in its commitment to time frames', including 'planned or project work' such as that requested by the tenant.

Findings

1. On the balance of the evidence outlined above I make the following findings.
2. I am not satisfied that the landlord's Work Orders function to record reports by the tenant of mould and moisture. Rather they are - as the name plainly indicates - records of when the landlord ordered work to be conducted on the premises. On Ms Cordero's own evidence, a tenant might report mould, but this would not necessarily generate a Work Order.
3. I do not accept that the tenant's omission to report mould and moisture in October 2021 when she did report other maintenance issues supports the landlord's submission that the first report was not until early 2022.
4. On the issue of when mould was first reported, I prefer the evidence of Ms Larosa who presented as a credible witness, clear and firm in her recollection.
5. I am satisfied that: 1. Ms Larosa reported mould and moisture in the tenant's premises on several occasions during 2021; 2. Mr Kioa on behalf of the landlord attended the premises some time in 2021 to inspect the mould. No remedial action was taken by the landlord at that time.
6. Even if the respondent's role prior to 1 July 2021 was limited to 'auditing' the repair and maintenance work which was managed by NSW Housing and its contractor, I am satisfied that after that date the respondent failed to take any immediate remedial action.
7. The next occasion the landlord inspected the premises for mould and moisture was on 30 March 2022, in response to another report by Ms Larosa on 24 March 2022.
8. Further reports to the landlord were made in April and May 2022, highlighting the impact of the mould on the tenant's well-being and damage to personal property.
9. The interior of the premises was repainted in May 2022, however, no work to remediate the structural defects to the building occurred at that time. The response of the landlord could best be described as cosmetic.
10. Within 2 weeks the mould and moisture returned to the property and Ms Larosa notified the landlord.
11. Remedial action to address the underlying cause of the mould and moisture was not initiated until about 18 July 2022 when the roofing, gutter and downpipe inspection occurred. This was at least 3 months after the inspection in March 2022 and many months after the notifications and inspection in 2021.
12. The landlord provided no explanation for the time taken to initiate the remediation of the structural defects causing the mould.
13. Given the multiple reports to the landlord over an extended period of time and given that the landlord was well aware of the damage caused by the mould and moisture, having twice inspected the premises, I find that the landlord unreasonably delayed in initiating the roof, gutter and downpipe repairs.
14. Once those repairs were initiated, they were completed within a reasonable period of time.
15. The landlord unreasonably failed to investigate whether increasing natural light in the premises was possible by arranging an arborist report about the large tree, in contravention of the Tribunal's order.
16. Once the installation of a new kitchen was scoped on 20 May 2022, it took another 5 months or more for the kitchen to be installed, notwithstanding the Tribunal's consent order that it be completed by 1 October 2022.
17. Ms Cordero submitted that the timeframe was due to the tenant refusing access to the contractor, however, this was disputed by Ms Larosa.
18. I am not satisfied on the balance of probabilities that the landlord failed to act with reasonable diligence in relation to the kitchen.
19. In conclusion, the Tribunal finds that the landlord's unreasonable delay in initiating the remediation of the roof, gutter and downpipe defects, as well as its failure to seek arborist advice about the large tree adjacent to the tenant's premises, are serious breaches of the landlord's obligation pursuant to section 63 of the Act.

Did the landlord breach the tenant's right to quiet enjoyment pursuant to section 50 of the Act?

1. For the following reasons I am satisfied that the landlord has breached section 50 of the Act.
2. The tenant's claim relates to the emotional distress she has suffered as a result of the mould infestation. Her distress is not consequential upon physical injury or psychiatric illness and is therefore not captured by the restrictions in the Civil Liability Act 2002.
3. I accept Ms Larosa's evidence that the tenant's enjoyment of the premises and their amenity was substantially diminished and interrupted due to living with extensive mould and moisture in the premises, exacerbated by the landlord's failure to remediate the problem in a timely and diligent manner.
4. Ms Larosa described the impact on the tenant's well-being as 'horrendous'. She would 'cry all the time'. 'She lived in that place for more than 30 years. It was her home. It was devastating. The worst part was that she couldn't understand why she was being treated badly when she has always looked after the place and paid her rent. "What have I done? Why aren't they being nice?"'
5. I find that the tenant experienced discomfort, inconvenience, disappointment and emotional distress. This was exacerbated by the fact that she is an elderly lady in her 80's.
6. I am satisfied that this is damage which flows naturally from the landlord's breach. It is a form of non-economic loss for which the tenant is entitled to be compensated.

Mitigation by the tenant

1. The landlord made no specific submissions regarding the tenant's mitigation of her loss.
2. I accept Ms Larosa's evidence that the tenant made reasonable attempts to ventilate the premises and that Ms Larosa and her husband regularly cleaned the mould using sugar soap.

Non-economic loss

1. The tenant's discomfort, inconvenience, disappointment and emotional distress as a result of the landlord's breaches were significant and ongoing for around 2 years.
2. I take into account the fact that the landlord provided the tenant with two rent credits in June and July 2022, worth approximately $1300.00
3. The Tribunal concludes that the tenant is entitled to an order under sub-section 187(1)(d) of the Act that will require the landlord to pay her compensation in the amount of $3000.00 for this damage.

Economic loss

1. The tenant claims compensation for the loss of furniture caused by the mould. She provided photographs of the items (Exhibit B, pages 4 to 7).
2. The landlord provided a Statutory Declaration of Mr Filipe Alves who attended the inspection on 30 March 2022. It deposes that mould was not present on the tenant's furniture but was merely dust that was removed by a brush of the hand (Exhibit A, page 16).
3. Ms Larosa strongly disputed Mr Alves' evidence. She gave evidence that: 'I went and got some cleaner and I showed him that it wouldn't come off.'
4. I accept Ms Larosa's evidence that the landlord's breach of section 63 caused mould damage to the tenant's furniture. She was a credible witness and I prefer her evidence to that of Mr Alves who did not attend the hearing to answer questions regarding his evidence.
5. The mould damage to the tenant's furniture is confirmed by photographs (Exhibit A, page 27; Exhibit B, page 7).
6. Neither the tenant nor Ms Larosa retained receipts of the damaged items or provided examples of the value of comparable items.
7. However, Ms Larosa gave specific evidence of the purchase price and purchase dates of the damaged items which provide some basis for the assessment of compensation. Specifically: 1. A three seater leather lounge and 2 leather arm chairs, purchased new in approximately 2017 for around $2900.00; 2. One large and one small timber buffet, purchased new in approximately 2013 for $3000.00; 3. A timber corner shelf purchased new around 2013 for approximately $300.00; 4. A long, low lying television cabinet purchased new in 2017 for $700.00; 5. A rug purchased from Bunnings in around June 2022 for approximately $200.00.
8. Most of the above items were purchased by Ms Larosa and gifted to her mother.
9. Ms Larosa gave evidence that an ensemble bed purchased in 2010, bedside tables and the bed surround, as well as a large amount of clothing were also damaged by the mould and had to be thrown away. However, she was unable to provide an estimate of the value of these items, or their age.
10. I accept Ms Larosa's evidence about the value of the items lost to the mould. It was not contested by the landlord.
11. Doing the best I can on the evidence available, and factoring in depreciation of 50% for all items (with the exception of the new rug), I find that $3650.00 is appropriate compensation for the tenant's non-economic loss.

Orders

1. It follows that the Tribunal orders: 1. The landlord is to pay the tenant the amount of $6,650.00 on or before 10 April 2023. 2. The application is otherwise dismissed.

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

Amendments 18 August 2023 - Formatting amendments. 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: 18 August 2023