Mishra v SMSF Investment One Pty Ltd

Mishra v SMSF Investment One Pty Ltd - [2023] NSWCATCD 80 - NSWCATCD 2023 case summary — Zoe

[4]

Bond

It is for the landlord to establish a valid claim on the bond (see Pearson v Clark [2016] NSWCATAP 134 at 71).
In the current matter the landlord is seeking to claim the following items from the bond: Cleaning $1682.50
In order for the landlord to succeed in the claim on the bond in this matter they must prove on the balance of probabilities and with evidence a breach by the tenant of either a term the tenancy agreement or the RT Act.
Sections 51(3)(b) and (c) of the RT Act set out the obligations of a tenant when giving back vacant possession of the premises to the landlord. Those sections of the RT Act require the tenant on giving vacant possession to: 51(3)(b) leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, and if there is a condition report, as set out in the condition report applicable to the premises when the agreement was entered into", and 51(3)(c) leave the residential premises in a reasonable state of cleanliness, having regard to the condition of the premises at the commencement of the tenancy.
In order to establish a breach of s 51(3) the Tribunal usually compares the ingoing verses the outgoing condition reports and any other evidence of the condition of the premises.
There was some conjecture by the applicant in relation to the ingoing condition report. As noted above, the applicant initially became a tenant by way of a transfer of tenancy, signing a "Transfer of tenancy" form on or about 10 May 2022. This is permitted by s 74 of the RT Act which states: 74 Transfer of tenancy or sub-letting by tenant (1) A tenant may transfer the tenancy under a residential tenancy agreement to another person or sub-let the premises to another person, if the landlord gives written consent to the transfer or sub-letting.
Subsequent to this the applicant signed a further Residential Tenancy Agreement with the landlord on or about 20 July 2022. This agreement contained an addition term at clause 57 of the agreement as follows: Additional Term - Previous Condition Report 57 The parties agree that the condition report dated 19/12/2011 and carried out to record the state of repair and condition of the residential premises under a previous tenancy agreement between the landlord and the tenant, forms part of this agreement.
Clause 32 of the Residential Tenancies Regulation 2019 "RTR" says that a condition report from a prior RTA may be used again in certain circumstances. It states: 32 Condition reports from preceding agreement may be used again A landlord and a tenant are exempt from the operation of section 29(1)-(3) of the Act if - (a) the landlord and the tenant enter into a new residential tenancy agreement for residential premises already occupied by the tenant under a previous residential tenancy agreement, and (b) the landlord and the tenant agree that a previous condition report for the residential premises is to apply for the purposes of the tenancy created by the new residential tenancy agreement.
The Tribunal considers that the requirements of clause 32 of the RTR were met when the parties entered into the Residential Tenancy Agreement dated 20 July 2022. This is because firstly, the premises were already occupied by the applicant under a previous residential tenancy agreement (by way of a transfer of tenancy). Secondly, that the parties expressly agreed to the use of the previous condition report in that tenancy, as evidenced by clause 57 of the residential tenancy agreement.
Therefore, based on the evidence of the landlord including the ingoing and outgoing condition reports, the at the end of the tenancy, the invoices and quotes and other documents the Tribunal finds that there has been a breach by the tenant of their obligations under s 51(3)(c) of the RT Act. The ingoing report notes that the premises are clean. The outgoing report notes that many items are "dusty" and "dirty" and/ or are unclean.
Having found a breach of the obligations under s 51(3) of the RT Act the Tribunal then needs to consider what amount of compensation is fair and reasonable in the circumstances. Compensation should only place the landlord in the position they would have been in but for the breach. As noted in the matter of Welch v Luke; Luke v Welch [2019] NSWCATCD 72 ("Welch") at 36 "In doing so the Tribunal will consider whether the Landlord has mitigated their damages, whether the damages claimed are proportionate and what depreciation is to be taken into account".
As noted in the matter of Welch v Luke; Luke v Welch [2019] NSWCATCD 72 ("Welch") at 35: The Landlord has the onus of establishing a claim to part or whole of the rental bond. Any such claim will generally be supported by invoices which show the actual damage sustained by the landlord. Further, any such claim must take depreciation into account. A landlord may be compensated for the actual loss suffered but will not receive an additional benefit, that is they are not entitled to a "new for old" assessment of damage."
The applicant alleged that he should not be responsible for much of the cleaning costs due to wear and tear.
As noted in the matter of Welch v Luke; Luke v Welch [2019] NSWCATCD 72 ("Welch") at 31-35: 1. "The concept of fair wear and tear was considered by the Appeal Panel in the matters of Elhassen v Ayoub [2018] NSWCATAP 34 and Patricia Panico v Carolyn Crompton and Rodney Jennings [2015] NSWCATAP 110. In both cases the Appeal Panel cited Alamdo Holdings Pty Limited v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWCA 224, in which the Court of Appeal referred to Haskell v Marlow [1928] 2 KB 45 "[R]easonable wear and tear means the reasonable use of the house by the tenant and the ordinary operation of natural forces". The Appeal Panel noted that it follows that both natural forces and the actions of tenants can constitute wear and tear. 2. In the Panico case the Appeal Panel also noted that the Tribunal must consider whether at the time vacant possession is given by the tenants the condition of the residential premises and the need for repair arises from the failure of the landlord to carry out necessary repairs; or the tenants' use of the premises and/or any breach of the tenants' obligations under Section 51(1) and (2) of the RT Act. 3. If the tenants have intentionally or negligently caused damage or the wear and tear is not "fair", the tenants are liable to compensate the landlord for the cost of repairs. 4. Fair wear and tear is to be assessed objectively (Adoncello v Sazdanoff [2006] NSWCTTT 577, Fitzpatrick v Wu (RTT01/16425) and means damage or deterioration that arises from the reasonable use of the premises by the tenant for its intended purpose and/or the ordinary operation of natural forces, with 'fair' being an objective standard based on prevailing community standards.
The landlord was claiming 30 hours of cleaning totalling $1682.50 from the bond. The Tribunal considers that this claim is excessive based on the ingoing and outgoing report.
As noted in the matter of Vasales v Li [2021] NSWCATAP 295 at [29(3)]: The requisite standard is that commonly prevailing among the tenants of comparative premises and that the issue should not be approached from the standpoint of the fastidious and obsessive landlord: Pancio v Crompton & Jennings [2015] NSWCATAP 110. In Pancio v Crompton & Jennings [2015] NSWCATAP 110 the Appeal Panel at [24] applied the principles set out in Adoncello v Sazdanoff [2006] NSWCTTT 577 where the Tribunal referred with approval to the following statement in Fitzpatrick v Wu (RT 01/16425): "… It is the concept of "fair wear and tear " which causes the disputes in these matters and in particular whose standards determine whether wear and tear is fair" ... Given that the section is intended to have application to premises generally in NSW, Parliament could not have intended that the standard of "fair" wear and tear be the subjective standard of each individual landlord. Presumably Parliament had in mind something more objective in nature. In the absence of any guidance on the point from the Supreme Court and having regard to the apparent absence of consideration on the point in other decisions of the Tribunal, the present Tribunal takes the view that the requisite standard is that commonly prevailing among the tenants of comparative premises and that the issue should not be approached from the standpoint of the fastidious and obsessive landlord."
The obligation on the tenant contained in section 51(3)(c) is to leave the premises "in a reasonable state of cleanliness". The Tribunal considers that an amount of $841.25 is appropriate in the circumstances for the tenant's breach and in order to return the property to a "reasonable state of cleanliness". There is insufficient evidence to prove that the premises required cleaning costing $1682.50 equating to 30 hours, or over 4 days of cleaning, in order to bring it up to the standard at the beginning of the tenancy when comparing the ingoing and the outgoing condition reports. Additionally, the Tribunal notes that the cleaning was conducted approximately 9 days after the tenant had vacated the premises.
The Tribunal does not consider that the concept of "fair wear and tear" is applicable to the cleaning costs claimed by the landlord. The tenant suggested that he was not responsible for the costs of cleaning, for example, the oven and blinds due to them having depreciated past their useful life. This submission is misconceived. Depreciation is applied by the Tribunal when assessing the compensation payable for the replacement of damaged items. It is not relevant to cleaning costs. The oven and blinds in the premises may well have outlived their depreciable value, but the landlord is still entitled to have them left in a clean condition.

[5]

compensation claim

The tenant sought compensation from the landlord in the total amount of $2600 made up of the following: 1. $500 for treating mould and using towels to dry out and spray the floors with mineral oil. 2. $100 to fix the lock on the bathroom door 3. $100 to repair the entrance way handrail. 4. $1900 rent abatement due to the premises being destroyed or partly or wholly uninhabitable.
In order for the applicant to succeed in his compensation claims he needs to prove on the balance of probabilities and with evidence a breach by the landlord of either a term of the residential tenancy agreement or some section of the RT Act. The Tribunal will examine each of the items claimed by the applicant separately.
In relation to the claims for $500 for treating mould and $100 respectively for repairs to the bathroom door and entrance way handrail it appears that this may be based on a failure to repair by the landlord.
Section 63 of the Residential Tenancies Act 2010, 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) A landlord's obligation to provide and maintain the residential premises in a reasonable state of repair applies even though the tenant had notice of the state of disrepair before entering into occupation of the residential premises. 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.
For the applicant to succeed in relation to this part the compensation claim he must establish on the balance of probabilities and with evidence a breach of s 63 of the RT Act by the landlord.
The obligation of the landlord 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 s 63 will only occur where the landlord fails to carry out any necessary repairs within a reasonable time.
As noted in the matter of Tuckwell v Ientile [2022] NSWCATCD 124 at [70]: The principles applicable to whether or not there has been a breach of s 63 (1) have been considered by the Appeal Panel on many occasions, including Murarer v Andresson [2016] NSWCATAP 15 at [11]-[16] and Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 at [115]-[121]). The test is objective and once the landlord knew or should reasonably have known of the need to repair the repair must be carried out within a reasonable time and is not excused by conduct or delay caused by tradespersons or suppliers.
In relation to the claims by the applicant for replacement of a handrail in the entrance way of the premises, the tenant did not report this issue to the landlord during the tenancy. The Tribunal cannot therefore find that the landlord has breached s 63 in relation to the handrail issue because this issue was not brought to the landlord's attention. Further, the applicant has not provided any proof of the quantum that he is seeking in this regard such as receipts or invoices for materials etc. Therefore, this portion of the claim is dismissed.
In relation to the claim of $100 for the lock on the bathroom door, the tenant has also not provided any evidence to support the amount claimed. Even if a breach was found in relation to this issue, there is insufficient evidence of the loss suffered by the tenant. Accordingly, this portion of the claim is also dismissed.
Similarly, in relation to the claim of $500 for treating mould and using towels to dry out and spray the floors with mineral oil, the applicant has not provided any evidence to support the amount claimed or itemised how this amount has been arrived at. There is again insufficient evidence of the loss claimed to have been suffered by the applicant. Therefore, this portion of the claim is dismissed.
In relation to the claim of $1900 for rent abatement due to the premises due to the premises being destroyed or partly or wholly uninhabitable the applicant appears to be alleging a breach of s 63 and or s 52 of the RT Act which states: 52 Landlord's general obligations for residential premises (1) A landlord must provide the residential premises in a reasonable state of cleanliness and fit for habitation by the tenant.
The Tribunal has 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 residential premises are "habitable" turns on whether the premises "might be used and dwelt in not only with safety but also with reasonable comfort" by the tenants, see Proudfoot v Hart (1890) 25 QBD 420, judged by contemporary standards see: Menashi v Ly [1997] NSWRT 162.
In the matter of De Soleil v Palmhide P/L [2010] NSWCTTT 464 the Tribunal said that it is a serious matter for it to find that residential premises are uninhabitable and such a conclusion "should not be drawn lightly".
In the current matter there is no evidence to suggest that at the time possession was given to the tenant that the premises were in such a state that they could be considered to be "uninhabitable". Further there is no evidence to suggest that during the course of the tenancy that the premises became "partly or wholly uninhabitable". There is no evidence from a builder, engineer, mould specialist or any other expert to attest to the fact that the premises were in fact in a state that could be considered to be "uninhabitable".
The applicant bares the onus of proving his claim on the balance of probabilities and with evidence. The applicant needs to prove both liability and the quantum (or amount) of his claim. Based on the evidence, the Tribunal is not satisfied that the applicant has discharged this onus in relation to the items which form his claim. Accordingly, the compensation claim by the tenant is dismissed.

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Cases Cited (9)