Mulcair v Callum

Notice of Appeal and history of appeal proceedings

1. The Notice of Appeal was date stamped as filed on 19 September 2023 in the Sydney Registry of the Tribunal. However, it is an agreed fact that the appeal was lodged at the Wollongong Registry of the Tribunal on 15 September 2023 (but not stamped at that time). Therefore the appeal was filed in time, being 14 days from the date notice of the decision was given to the landlords: see r 25(4)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (Rules).
2. The landlords said that the appeal should be allowed and the application dismissed. Alternatively, orders were sought to set aside the Tribunal's decision and remit the proceedings for rehearing.
3. Broadly, the landlords said that the Tribunal: 1. erroneously found there was a reduction or withdrawal of goods, services and facilities; 2. failed to properly take account of factors in the legislation relevant to the application; and 3. did not provide adequate reasons. A lengthy document was attached to the Notice of Appeal providing a detailed explanation of the claims made. Written submissions were also provided.
4. As necessary, the landlords sought leave to appeal. The landlords referred to procedural unfairness, the introduction of new evidence and the increase in the amount of the rent reduction sought by the tenants from their original claim as points of challenge. The landlords said: 1. The decision was not fair and equitable. The reasons do not contain an analysis to show how the factors in s 44(5) of the RT Act were taken into account. The landlords referred to the decision of the Tribunal in Becker v Priestley [2022] NSWCACD 167 (Becker) saying that s 44 applies where there is a reduction or withdrawal of any goods, services and facilities. In that case the Tribunal had accepted that by inspecting the premises beforehand the tenant ought to have been aware of any issues. "For fairness and equity, these relevant legal principles ought to have been applied" to the present dispute. The landlords said that they had provided "extensive evidence of repairs expenditure, but it was overshadowed by disproportionate weight being placed on video evidence rather than expert report to establish true context showing water leaks were resolved by the repairs". Lastly, the landlords said that, although they had received the tenants' evidence, their "understanding of the evidence was that it was information to be relied on by the tenants to argue their case, but not to add to the claim itself". In this regard, the landlords said that the rent reduction claim put forward at the hearing relied on matters not identified in the original application. 1. As to the weight given to evidence by the Tribunal, the landlords referred to an expert report "done at the end of tenancy finding no evidence of significant water leaks and that ceilings were in pristine condition as per when they were renovated and painted prior to the tenancy (with the exception of cracks in bathroom ceiling, which were existing prior to the tenancy due to the previous year's water leak damage that was repaired prior to tenancy)." This evidence was inconsistent with the Tribunal's finding of ongoing water leaks, that finding based on video evidence "showing a single point in time of leak in bathroom and laundry (as per decision)". Of this video evidence the landlords say it showed "a water leak in laundry and bathroom", a conclusion recorded in the reasons. However, they say they never received or viewed the video evidence. Further, the Tribunal was wrong to "extrapolate" this evidence to a finding of consistent leaks in the majority of the house given its inconsistency with the evidence provided by the landlords. The landlords also made reference to an expert report that "also included references to the previous inspection that was carried out last year when actual water leaks did occur and resulted in significant damage to ceilings including staining, cracking and sagging". Additional weight should have been given to this evidence. 1. As to new evidence, this is predominantly found in Appendix C to the Notice of Appeal. A second copy of this material is found in the landlords' bundle (AB) filed 25 October 2023 pursuant to the Appeal Panel's directions for hearing. It consists of an affidavit of Olga and David Mulcair and various attachments thereto. New evidence is also found in Appendix A1 of the landlords' bundle: see e.g. AB 36-37.
5. In addition to the new evidence, the landlords filed evidence from the original hearing together with the sound recording and transcript extracts (including the residential tenancy agreement at AB 139 and following).
6. As necessary, we will refer to the lengthy submissions and evidence below.
7. The tenants filed a Reply to Appeal and written submissions.
8. The tenants said there was no procedural unfairness, noting the landlords had been permitted to file additional documents during the hearing. Of the video evidence, which the landlords said was provided late, the tenants said this had been provided to the landlords' agent during the tenancy. Whether or not the agent had provided the video evidence to the landlords, it had been available to the landlords for some time and there was no prejudice.
9. As to the new evidence, the tenants say this was reasonably available at the time of the original hearing and should not be accepted in the appeal. Otherwise, the Tribunal identified the evidence provided by the parties, the facilities and amenities to be provided and appropriately found a relevant reduction or withdrawal occurred and/or that there had been an interruption to quiet enjoyment and any impact from neighbours.
10. As to the decision in Becker, this was "vastly different" to the present situation, in which there was "ample evidence in support of all issues".
11. In short, the tenants said the appeal should be dismissed.
12. The appeal was heard on 15 November 2023. The parties appeared in person and made oral submissions. Again, as necessary, we will refer to these submissions below.

Tribunal's reasons

1. The residential tenancy agreement (agreement) was in respect to a 2 bedroom house with a garage and garden for a rental of $595 per week. The agreement was for a term of 6 months commencing 9 December 2022 until 8 June 2023: at [3].
2. The tenancy ended on 15 June 2023 when the tenants vacated the property and the rent was fully paid.
3. Having identified the evidence upon which the parties relied, including evidence admitted late, the Tribunal noted that orders were sought under s 44(1)(b) of the RT Act for a reduction of rent arising from the following: 1. For the period 9 December 2022 to 7 March 2023, the restricted use of the garage as no access could be gained for the tenants' car down the driveway due to overgrown shrubs, the yard not being fully fenced, privacy issues arising from lack of curtains in some rooms and inadequate external lighting on the rear deck and in the driveway. 2. For the period 8 March 2023 to 9 June 2023 for the continuing issue of the yard not being fully fenced. 3. The period 9 December 2022 to 15 June 2023 for mould and cleaning issues in most rooms of the house and the external studio. 4. The period 31 December 2022 to 12 May 2023 (when the roof was replaced) for water leakage through a number of rooms.
4. The Tribunal noted that a separate claim for compensation was not pressed by the tenants.
5. Ultimately, the Tribunal determined that the rent reduction of 20% was appropriate for the period 9 December 2022 to the end of the tenancy on 15 June 2023: at [14].
6. In doing so, the Tribunal made the following findings: 1. The house was an old house, in fair condition. It had minor defects and one major defect at the beginning of the tenancy as recorded in the Optimal Building Inspections report dated 11 November 2022. In addition, at that time the premises were not clean, there was some mould and the garden down the driveway was overgrown: at [13]. 2. A subsequent inspection report prepared by the landlords' agent dated 31 March 2023 indicated there were water leaks, the studio was unable to be used due to mould and a very musty smell, cladding to the studio was water damaged, there was water leaks in the toilet, water leaks in the laundry and cupboards and drawers in the kitchen were "flaking and separating cornices": at [13]. 3. The tenants had two dogs, which were "approved indoor pets". However they could only obtain access to the back garden "on leads due to the gaps in the fence". This was despite the property being advertised as "a fully fenced backyard". The Tribunal was satisfied that the failure to repair the fence was a breach of s 63 of the RT Act: at [15]. 4. The Tribunal accepted the tenants' photographs showing "bushes down the driveway were overgrown from the beginning of the tenancy, and as such they were unable to drive the car into the garage at the back of the property without concern that their car would be scratched by the bushes". In doing so, the Tribunal rejected the landlords' submission that it was the tenants' responsibility to trim back prior to commencement of the tenancy. The Tribunal found that the state of affairs continued until 7 March 2023 "when the trees and bushes were trimmed back and easy access to the garage for the car was available": at [16]. 5. The Tribunal found there were water leaks through the property during heavy rain which occurred in the period 30 December 2022 until 12 May 2023. The Tribunal accepted the tenants' oral evidence that these were reported to the landlords' agent promptly and regularly through the tenancy. In reaching this conclusion the Tribunal also relied on various evidence from the tenants being an email dated 30 December 2022, video footage of water leaks in mid-January and on 9 February 2023 as well as "Job Sheets" for: 1. plumbing repairs (dated 12 January 2023); 2. a repair because 'laundry light is leaking water again'; and a note dated 12 May 2023 recording that 'another roof leak location above the dining room, bathroom appears to be leaking again also, unable to use bathroom light as it is leaking water through the light fitting again". In short, the Tribunal found that the "tenants' evidence is corroborated by comments in the routine inspection report about water leaks": at [17]. 1. The garage leaked, and its use as a storage facility was impacted by this fact. The Tribunal accepted oral, video and photographic evidence of the tenants "that the back of the garage wall regularly leaked when it rained": at [18]. 2. The Tribunal found that external lighting was not working in the carport area and rear deck, this state of affairs continuing until 27 February 2023 when repairs were affected. The Tribunal referred to an email dated 30 December 2022 in which the tenants raise this issue. The Tribunal found that the time to repair was "unreasonably long" and constituted a breach of the landlords' obligations under s 63 of the RT Act. Again, the Tribunal found this lack of lighting would affect the tenants' use of the deck and carport area: at [19]. 3. The landlords breached the agreement by not providing blinds or curtains to windows within the house. The Tribunal accepted that the agent for the landlords had agreed with the tenants that curtains "would be rehung once the tenancy was accepted and the tenants had to follow this up in a number of emails". While the tenant ultimately washed and rehung living room curtains on about 28 February 2023, the Tribunal found that the landlords failed to meet their obligation concerning the provision of blinds and curtains as agreed with by their agent: at [20]. 4. The Tribunal found there was mould in the premises from the beginning of the tenancy, relying on photos provided by the tenants. These photos included photos taken on 19 December 2022 showing mould on kitchen cupboards, shower recesses, on conduits, bathroom door, overhead cupboards in the bedroom and the rear studio. The Tribunal accepted the tenants' oral evidence that they were constantly cleaning the mould and that they had repeatedly asked the landlords to do so (which did not occur). The mould in the house resulted in a "loss of amenity and the loss of quiet enjoyment of the premises from the beginning of the tenancy (when ingoing photos of the tenants show mould issues) until the end of the tenancy": at [21]. 5. Finally, the Tribunal also found there was mould and the smell of mould which resulted in the tenants being unable to use the studio for the tenancy. The routine inspection report of the agent corroborated this evidence, that report stating: Studio has mould inside on the right side of the door, the room has a very musty smell even though it is being aired. The tenants cannot use this area due to the strong odour. The cladding/board externally is discoloured due to water damage and is green. At [21]-[22].
7. After the hearing had concluded, the landlords apparently wrote to the Tribunal objecting to what was described as "cumulative calculated rent reductions". The landlords said they were unaware of the increased amount sought. The Tribunal rejected this challenge, noting there was no suggestion the landlords would have prepared their case differently. On this aspect we note the original application, filed 7 June 2023 (before the tenancy ended) did not specify the amount of money which the tenants said should be repaid in connection with the excessive rent claim.

Consideration

1. There is a right of appeal on a question of law, otherwise leave to appeal is required: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
2. As to leave to appeal, Sch 4 cl 12(1) of the NCAT Act requires that the landlords show they may have suffered a substantial miscarriage of justice because the decision was not fair and equitable, against the weight of evidence or there was significant new evidence that was not reasonably available at the time the decision under appeal was made. Collins v Urban [2014] NSWCATAP 17 sets out the principles applicable to the grant of leave.
3. In relation to the new evidence, this aspect of the appeal can be dealt with shortly. It is clearly evidence that was available at the original hearing and should be rejected: see Sch 4 cl 12(1)(c) of the NCAT Act and Al Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111.

General observation

1. Before considering the remainder of the appeal, it is useful to set out the legislation and some of the principles applicable in determining a claim under s 44(1)(b) of the RT Act.
2. Section 44 of the RT Act provides: 44 Tenant's remedies for excessive rent (1) Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders - (a) an order that a rent increase under an existing or proposed residential tenancy agreement is excessive and that, from a specified day, the rent for residential premises must not exceed a specified amount, (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. (2) Time limit for excessive rent increase applications An application for an order that a rent increase is excessive must be made within the period prescribed by the regulations after notice of the increase is given. (3) Applications on withdrawal of goods or services A tenant may, before the end of a tenancy, make an application that the rent is excessive, having regard to the reduction or withdrawal of any goods, services or facilities provided with the residential premises, even if those goods, services or facilities were provided under a separate or a previous contract, agreement or arrangement. (4) Determination of excessive rent For the purposes of making an order under this section, the Tribunal may declare that amounts payable under a contract, agreement or arrangement under which goods, services or facilities are provided to the tenant are rent. (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). (6) Effect of excessive rent order An order by the Tribunal specifying a maximum amount of rent - (a) has effect for the period (of not more than 12 months) specified by the Tribunal, and (b) binds only the landlord and tenant under the residential tenancy agreement or proposed residential tenancy agreement under which the rent is payable. Note - A tenant under a social housing tenancy agreement may also apply for an order that rent is excessive if a rent rebate is cancelled (see section 141(1)).
3. An application under s 44(1)(b) of the RT Act needs to be considered in the context of the landlord's general obligations under the residential tenancy agreement in question, including obligations concerning repairs and maintenance and ensuring the premises are fit for habitation.
4. Section 52 relevantly provides: 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. (1A) Without limiting the circumstances in which residential premises are not fit for habitation, residential premises are not fit for habitation unless the residential premises - (a) are structurally sound, and (b) have adequate natural light or artificial lighting in each room of the premises other than a room that is intended to be used only for the purposes of storage or a garage, and (c) have adequate ventilation, and (d) are supplied with electricity or gas and have an adequate number of electricity outlet sockets or gas outlet sockets for the supply of lighting and heating to, and use of appliances in, the premises, and (e) have adequate plumbing and drainage, and (f) are connected to a water supply service or infrastructure that supplies water (including, but not limited to, a water bore or water tank) that is able to supply to the premises hot and cold water for drinking and ablution and cleaning activities, and (g) contain bathroom facilities, including toilet and washing facilities, that allow privacy for the user. (1B) For the purposes of subsection (1A)(a), residential premises are structurally sound only if the floors, ceilings, walls, supporting structures (including foundations), doors, windows, roof, stairs, balconies, balustrades and railings - (a) are in a reasonable state of repair, and (b) with respect to the floors, ceilings, walls and supporting structures - are not subject to significant dampness, and (c) with respect to the roof, ceilings and windows - do not allow water penetration into the premises, and (d) are not liable to collapse because they are rotted or otherwise defective. … (4) This section is a term of every residential tenancy agreement.
5. Section 63 provides: 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.
6. In Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 (Roberts), the Appeal Panel considered the relationship between ss 44(1)(b) and the obligation to repair and provide premises fit for habitation. At [113]-[124] the Appeal Panel said: 113 There is no doubt a landlord is under an obligation to carry out all repairs necessary to maintain the premises in a reasonable state of repair: see s63 of the RT Act. The obligation to repair includes an obligation to make good and maintain internal surfaces affected by mould which is caused by defects in the exterior of the premises. An order for repairs can be made by the Tribunal under s63(2) of the RT Act in circumstances where the landlord has notice or ought reasonably be aware of the need for repairs but fails to act with reasonable diligence to have the repair carried out: see s65(3) of the RT Act 114 Where this does not occur, an act or omission by the landlord giving rise to the state of disrepair can amount to a reduction or withdrawal of goods, services or facilities. 115 Whether there has been a breach of the obligation to repair and what is the nature of the breach depends upon the circumstances giving rise to the complaint and the actions of the landlord in rectifying the defect. 116 In Finn v Finato (Tenancy) [2004] NSWCTTT 179 the Consumer Trader and Tenancy Tribunal (CTTT) considered the obligations of a landlord to provide and maintain the premises in a reasonable state of repair and the meaning of the expression "fit for habitation", an expression also used in the Residential Tenancies Act, 1987. At [18]-[19], the CTTT said: 16 Section 25(1)(a) of the Residential Tenancies Act 1987 requires the landlord to provide a property in a reasonable state fit for human habitation. Section 25(1)(b) imposes a duty of the landlord to provide and maintain the property in a reasonable state of repair having regard to the age of the premises and the amount of the rent payable during the prospective life of the premises (Roberts and Bell - 00/40837). In a previous case the Tribunal held that the requirement for habitability was a minimum condition beyond which the state of disrepair could not fall. The premises were also badly affected by rising damp and mould causing the tenant to complain about the problem (Edwards and Savires RT01/38788). 17 I refer to "Residential Tenancies Law and Practice New South Wales' (2001 edition 4th) at page 73 where the learned authors state that the objective test is one of contemporary standards in assessing habitability as determined by the tribunal in previous decisions (Lam and Lu RTT90/008960). 18 The leading decision which guides the Tribunal in relation to this standard of habitability is Summers v Salford Corporation [1943] AC 283 in which Lord Atkin said: "If the state of the repair of the house is such that by ordinary user damage may naturally be caused to the occupier either in respect of personal injury to life or limb or injury to health, then the house is not in all respect fit for habitation..... it is clear that premises may be unfit for human habitation even though it is physically possible for a tenant to reside in the premises." 19 In McLeish v FT Eastment & Sons Pty. Ltd (1970) 91 WN (NSW) 268 CA the Court in reliance upon Proudfoot v Hart (1890) 25 QBD 42 considered the words "fit for habitation" and "tenantable repair " and whether there was a difference . This is relevant to a consideration of section 25(1) of the Act, which imports both concepts. The Court stated: "must both import such a state as to repair that the premises might be used and dwelt in, not only for safety , but for reasonable comfort, by the class of persons by whom and for the sort of purpose for which, they were to be occupied.....The conclusion I draw... is that the landlord is obliged to hand the premise over to the tenant, at the commencement of the lease, in a reasonable state of repair having regard to its age, rent payable and the prospective life of the premises, and the state of the repair must at least meet the minimum standard inherent in the contemporary understanding of the term " fit for habitation". 117 That is, the CTTT concluded that the obligation to maintain includes ensuring the premises do not fall below a particular state of repair. That minimum level is that the premises are fit for habitation, namely that the residential premises can be used and dwelt in not only safely but also with reasonable comfort, being the state of the premises which a landlord is required to provide at the commencement of a residential tenancy agreement. 118 In the case of mould, its continuing existence within the premises, particularly for an extended time, can result in the premises not being fit for habitation. In such circumstances there is a breach of the obligation to maintain and the fact that the mould is caused by a number of other defects does not relieve a landlord from liability arising from the mould. 119 That is not to suggest that the mere existence of the mould at any point in time gives rise to a liability in the landlord. Rather, it is the nature and extent of the defect that must be considered in evaluating whether or not the failure to maintain the premises in a reasonable state of repair has been breached because the premises are not fit for habitation. 120 Further, if the nature of the defect is such that the quiet enjoyment of the premises is affected, again there may be a breach of the residential tenancy agreement, even if the repairs were otherwise effected with reasonable diligence. Such a breach can itself amount to a reduction of goods, services or facilities by the landlord. 121 In Worrall v Commissioner for Housing of ACT [2002] FCAFC 127, the Full Court of the Federal Court of Australia considered the equivalent provision for quiet enjoyment under the Residential Tenancies Act, 1997 (ACT). Having referred to the provision similar to s63 of the RT Act and the landlord's obligation to repair arising from term 55 of the residential tenancy agreement, the Court dealt with a submission that a breach of the covenant for quiet enjoyment can only occur if a landlord acts unreasonably. The Court said at [68] and following: 68 In none of the terms is it suggested that, to enliven the lessee's rights under terms 86 or 87, it should be determined that the lessor had acted unreasonably or failed to comply with term 55 so as to be in breach of the lease. It is also true that, under the general law, there may be a breach of the covenant for quiet enjoyment by acts performed by or under the control of the lessor which are otherwise lawful. Indeed, the offending acts may have been such that to have refrained from doing or permitting them would have breached other lawful obligations of the lessor. 69 An illustration of such a situation, somewhat analogous to the present, is Owen v Gadd [1956] 2 QB 99. The lessors had let a ground floor shop to the lessee. To effect repairs to the upper floor, they caused scaffolding to be erected. They did what they could to minimise inconvenience to the lessee. They completed the repairs within a fortnight. The scaffolding hindered, but did not prevent, access to the lessee's premises. It obscured his display of wares to some extent. 70 Lord Evershed MR noted that the repairs were both necessary and urgent. The scaffolding, though necessary, as His Lordship concluded at [107], to enable the repairs to be carried out, nevertheless amounted to an interference properly able to constitute a breach of the covenant for quiet enjoyment: "It was said by Mr. Chapman ... that there could be no breach of the covenant for quiet enjoyment unless there was what he called an actual physical interruption into or upon the premises demised on the part of the landlords or some persons authorized by them by their actually entering upon or invading the premises, or by, e.g. the interruption thereon of water emitted from the landlords' premises elsewhere. In my judgment, that submission is not justified by the authorities. I do not think that there is any sufficient warrant for such a limitation [upon the statements of Fry LJ in Sanderson v Mayor of Berwick-on-Tweed (1884) 13 QBD 547]. Concluding, therefore, as I do, that in this case the judge was entitled to find as a fact that the interference was substantial and that there was no principle of law which disqualified him from concluding as he did, I think that this appeal must fail ..." 71 Romer LJ agreed, adding however at 108: "Then comes the question whether the degree of interruption be such as to constitute a ground for legal complaint or whether it should be merely dismissed on the ground of its being of a temporary character or on the ground of de minimis. That appears to me to be essentially a question of fact to be determined by the judge who tries the action . . . I cannot see that the judge's finding should be displaced by the considerations on which Mr Chapman relied, which may be summarized in this way: that the work of external repair which the lessors put in hand was reasonably necessary, that it was efficiently done and was done with all reasonable speed. I do not think that those considerations are really relevant to the question of whether there has been a breach of the tenant's contractual rights under the covenant for quiet enjoyment ..." 72 Birkett LJ also agreed. 73 To similar effect was the more recent decision of this Court in Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185. It had, in that case, been contended that failure to repair or maintain the premises' exhaust system was, if anything, a breach of the covenant to repair, not of the covenant to give quiet enjoyment. Further, though not relevant for present purposes, it was contended that the relocation of the fan powering the system had taken place before the lessee became the tenant. The principle adopted, per Hill J at [37], was that: "... there will be a breach of the covenant for quiet enjoyment where the ordinary and lawful enjoyment of the demised premises is substantially interfered with by the acts of the lessor or those lawfully claiming under him, whether or not the title to the land or the possession of the land is otherwise affected. Whether what is complained of amounts to a substantial interference will be a question of fact. A breach may result either from acts of commission or omission by the landlord." 74 There are two conclusions which follow from the cases cited, not only by Hill J, but also by Higgins J at first instance in the Hawkesbury Nominees case. The first is that acts committed or authorised by or on behalf of the lessor may derogate from the grant even if the acts or omissions affect the quiet enjoyment of the premises only indirectly (see also Telex (Australia) Pty Ltd v Thomas Cook & Son (Australasia) Pty Ltd [1970] 2 NSWR 257; Haig v Chesney [1925] SASR 82; Aldin v Latimer Clarke, Muirhead & Co [1894] 2 Ch 437; Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207; Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1). 75 The second is that, whilst interference with the normal use of premises arising from failure to repair will breach the covenant of quiet enjoyment (see Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd [1976] 2 NSWLR 15), it is no answer to a complaint of breach of the covenant that it was a result of work required by statutory or other lawful authority (see Reid House Pty Ltd v Beneke (1986) 5 ACLC 451). Nevertheless, to be a breach of the covenant there must be a substantial inference with the tenant's quiet enjoyment. That is no different, in substance, from the "significant" diminution referred to in s 71 of the Act. 76 It was open to the Tribunal to have concluded that the conduct of the respondent's contractors, though both lawful and in pursuance of its obligation to repair and necessary to prevent what otherwise would have been a breach of its obligations to maintain the appellant's quiet enjoyment of his premises, could amount to a breach of that covenant. It follows that, insofar as the Tribunal and Crispin J would seem to deny or qualify that proposition, they were in error. It is not an error that affects their ultimate conclusion. It was not relied upon as a reason for concluding that the interference with the use and enjoyment by the appellant of the demised premises was not "significant" or "substantial". 122 Consequently, each of these circumstances can, if they amount to a reduction or withdrawal of goods, services or facilities by the landlord, entitle the Tribunal to make an order to reduce the rent. 123 In Eliezer v Residential Tribunal and Ors [2001] NSWSC 1092 McClellan J considered what constituted goods, services and facilities in respect of a similar provision in the Residential Tenancies Act, 1987. His Honour said at [37]: With respect to s 47, I agree with the construction of the Residential Tribunal of the words "goods, services or facilities provided". In my opinion, s 47(1) is confined to the physical and other facilities, goods or services, provided within, or as part of, the tenanted property, and only if the landlord reduces or withdraws those facilities does an obligation arise. In circumstances where there has been a reduction in the quality of the amenity to be enjoyed in the tenanted premises by the actions of a third party, a complete stranger to the tenanted property, no breach of s 47(1) can occur. 124 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.
7. In short, a failure to repair and maintain may give rise to a reduction of goods, services or facilities provided with the residential premises.
8. In saying so, we note the age etc of the premises, which is relevant to the obligation to repair (see s 63(1)), does not displace the obligation of a landlord to provide premises in a reasonable state of cleanliness and fit for habitation by a tenant as required by s 52(1) of the RT Act.
9. Rather, the obligations under ss 52 and 63 need to be considered together in determining whether there has been a relevant reduction in goods, services or facilities in the residential premises.

Appellants' grounds

1. The landlords' first contention is that the Tribunal was in error in concluding there had been a relevant reduction or withdrawal of goods, services or facilities insofar as there were pre-existing defects in the residential premises at the commencement of the residential tenancy agreement.
2. Reliance was placed upon the decision of the Appeal Panel in Pan v Malveholm [2021] NSWCATAP 101 (Pan).
3. In short, the landlords submitted that if there is a defect at the commencement of the residential tenancy agreement, s 44(1)(b) cannot apply as there is no relevant "reduction or withdrawal by the landlord". The decision in Becker was also relied upon on this point.
4. In their written submissions filed 25 October 2023 at para 5.1 and following, the landlords noted the findings of the Tribunal that certain of the matters about which complaint were made were existing at the commencement of the tenancy. They included a complaint concerning holes in the fence and the driveway being overgrown.
5. The landlords also said there was a term in the agreement being an acknowledgement by the tenants that they had conducted their own physical inspection of the property, that the tenants are not relying on any advertising or representations by the agent, that the property meets the requirements of the tenants and that they agreed to lease the property in its current condition: see AB 162. Consequently, claims could not be made for pre-existing defects.
6. The tenants, in their submissions in reply filed 9 November 2023, at para 32 and following, said that the landlords' submission that s 44(1)(b) of the RT Act could not apply to defects present at the commencement of the tenancy was incorrect.
7. They submitted that the section "requires a comparison between what was promised as 'the premises' and the state of the premises at the time in issue. The determination must then be made as to whether the landlord caused or permitted the reduction or withdrawal. For example, where the landlord's breach of the agreement was a cause of the reduction, then the rent reduction may be available". Reference was made to the decision of Roberts at [124].
8. The tenants say that there is an objective standard as to the state of the premises. At para 38 and following, the tenants continued: 38 Importantly, the state of the premises should be judged from the objective indications of the parties and what the tenants were on reasonable notice of, not necessarily the actual state of the premises having regard to the landlord's subjective knowledge. This is because the meaning of the contractual clause (referring to the residential premises), must be constructed [sic] giving effect to the objective intention of the parties: A contract means what a reasonable person having all the background knowledge of the "surrounding circumstances" available to the parties would have understood them to be using the language in the contract to mean. (Byrnes v Kendle [2011] HCA 26 at [96]). 39 A reasonable person can rely on the minimum habitability standards and requirement that the premises be in a reasonable state of repair (e.g. things are not broken), as the starting state of the 'premises' from the commencement date of the tenancy. 40 For example, a tenant can rely on the promise that the premises is in reasonable repair to presume that an Internet port on a wall is working at the start of the tenancy agreement, unless the landlord informs them otherwise. 41 While the factual state of the premises is highly relevant in determining the agreed state of 'the premises' under the contract, the obligations imposed by the Residential Tenancies Act provide a minimum agreed standard of condition (see e.g. Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 [116]-[119]). 42 Any reduction below this agreed standard of the residential premises constitutes a withdrawal or reduction of goods, services or facilities, which can result in a rent reduction under s 44(1)(b) (provided the Tribunal then finds the rent is excessive having regard to that withdrawal or reduction. 43. Alternatively, if the Tribunal finds that s 44(1)(b) refers only to the state of the premises at the date of contractual conception, instead of as a term defined by the objective knowledge of the parties, the rent reduction remains available to the Respondents as the Appellants withdrew the services promised under the contract. 44 The contract was entered into on or about 25 November 2022. At this point, the Appellants promised to fulfil their obligations under ss 52 and 63, regardless of the move into the property on 9 December 2022. The Appellants of complying with ss 52 and 63. This had a continuing effect on the premises, which justified the rent reduction order. 45 If the Tribunal finds that the rent reduction under s 44(1)(b) cannot be awarded, the Respondent should be granted an extension of time (given the high prospects of success and continuing nature of the issues) to pursue the matter as an order for compensation for loss of amenity, which can be ordered by the Tribunal for the breaches identified by the Member at first instance.
9. As is evident from the above submissions, the issue addressed by the parties on this topic is whether, on the proper construction of s 44(1)(b) of the RT Act, the Tribunal was entitled to make an order reducing rent in respect of defects existing at the commencement of the tenancy. This raises a question of law for which there is a right of appeal: see s 80(2)(b) NCAT Act.
10. It is clear from the Tribunal's reasons, that the order made reducing rent from the beginning of the agreement included defects or deficiencies present in the premises from the beginning of the agreement. These included the overgrown driveway, holes the fence of the backyard and mould: see e.g. Tribunal Reasons at [15], [16] and [21].
11. Consequently, if the Tribunal was incorrect in its interpretation of s 44(1)(b), namely that it could make an order under that section in connection with defects existing at the commencement of the tenancy, the orders made 1 September 2023 should be set aside.
12. In our view the Tribunal was correct in its interpretation of s 44(1)(b).
13. That subsection requires the Tribunal to determine if rent payable under "an existing or proposed residential tenancy agreement" is excessive by reason of a relevant reduction or withdrawal by the landlord of any goods, services or facilities provided with the residential premises. The use of the word "proposed" contemplates that the agreement which the Tribunal is required to consider may not yet have commenced.
14. The terms of the residential tenancy agreement identify what goods, services and facilities are to be provided. This will include goods services and facilities which meet terms implied into the residential tenancy agreement under ss 52 and s 63 of the RT Act.
15. The Tribunal is then entitled to consider: 1. "any fittings, appliances or other goods, services or facilities provided with the residential premises": s 44(5)(e) RT Act; and 2. "accommodation and amenities provided in the residential premises": s44(5)(e) in determining whether there has been a relevant reduction
16. As explained in Roberts, insofar as the goods or facilities are in a state of disrepair, a failure to repair the goods or facilities on a timely basis may amount to a relevant reduction or withdrawal. This is because the act by a landlord of failing to repair effectively reduces or withdraws the goods or facilities.
17. There is no reason to confine the operation of s 44(1)(b) to goods or facilities falling into disrepair after the residential tenancy commences. The text of the section does not support such a limited construction. Further, the text does not support a construction that goods, services or facilities required to be supplied by a landlord under a residential tenancy agreement, but never supplied during the currency of such an agreement, could not give rise to a relevant reduction or withdrawal for the purpose of that subsection.
18. The use of the word "provided" suggests a comparison is to be made between of what is provided with what was promised. It does not suggest the Tribunal is prevented from considering what is provided at the date the residential tenancy agreement commences, the date possession is given to a tenant or at any particular date until the tenancy comes to an end.
19. Rather, where promised goods, services or facilities are never provided or where goods and facilities provided are in a state of disrepair at commencement of the residential tenancy agreement, the act of failing to supply at all or supplying in a state of disrepair or in a limited fashion and not taking corrective action may, itself, constitute a relevant reduction or withdrawal from that which was promised under the residential tenancy agreement.
20. Our analysis is consistent with what the Appeal Panel said in Roberts at [124], namely: "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 (emphasis added). 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."
21. That is, a reduction or withdrawal is to be considered in the context of the obligation of supply upon the landlord under the relevant residential tenancy agreement.
22. In the subsequent case of Pan, the Appeal Panel said at [42]: The Tribunal appears to have found that the leaks existed from the commencement of the tenancy. If so, those leaks and any mould then present would need to have been taken into account because s 44(1)(b) only applies to a "reduction or withdrawal" of services or facilities. Section 44 does not establish some standard of condition against which premises are to be judged, such standards are expressed elsewhere in the RTA such as in, for example, ss 52 and 63.
23. In so far as the Appeal Panel in Pan was suggesting that there could never be a reduction or withdrawal of goods or facilities if the defect or state of disrepair or absence of goods or facilities existed at the commencement of the tenancy, we would respectfully disagree. While we accept that s 44 "does not establish some standard of condition against which the premises are to be judged", it does make clear that the "existing or proposed residential tenancy agreement" contains the obligations of the landlord as to the goods, services and facilities to be provided. These obligations include obligations implied by the RT Act.
24. It is against these obligations that reduction or withdrawal is to be assessed, the Tribunal being entitled to have regard to the factors set out in s 44(5) of the RT Act in making such a determination.
25. Finally, the decision in Becker does not alter our view. The statement in Becker at [20] was made in the context of a complaint concerning the French doors, which the Tribunal described (at [14(e)]) as "no security on French doors in master bedroom or ventilation". The Tribunal found the facilities were as existed at the commencement, as recorded in the incoming inspection report. Consequently, there was no relevant reduction or withdrawal. In reaching this conclusion, there was no suggestion that the residential tenancy agreement there in question required particular facilities to be provided.
26. Having reached this conclusion, that is not an end of the present appeal.
27. The landlords say that the Tribunal failed to "take into account properly factors in the legislation and did not provide adequate explanation for the reasoning or interpretation". They also seek leave to appeal, saying "the claim of volumes of water entering in most rooms of the house, consistently over 5 months during 33 separate rain events, was unlikely if the ceilings were pristine before and after tenancy" and that "disproportionate weight" was given to video evidence which "would not be extrapolated to the entire house for the duration of the tenancy".
28. By this, we take the landlords to be contending the Tribunal made that the following errors: 1. that the facts found did not support a conclusion that there had been a relevant reduction or withdrawal; and 2. the decision was not fair and equitable because the Tribunal failed to separately consider each of the alleged defects and whether the Tribunal's analysis in connection with their overall effect on the use and habitability of the premises in the context of orders under ss 44(1)(b) of the RT Act was correct.
29. In order to assess these contentions, it is useful to set out the steps usually required in assessing a claim for rent reduction rising from a failure to repair.
30. First, as stated above, under s 44(1)(b) it was necessary for the Tribunal to identify what were the obligations of the landlords under the residential tenancy agreement concerning the residential premises and the provision of goods, services and facilities.
31. Secondly, the Tribunal was required to identify any breaches in connection with those obligations.
32. Thirdly, the Tribunal was required to determine whether any defects in or repairs required to the subject goods or facilities resulted in a relevant reduction or withdrawal. Insofar as facilities are concerned, this required the Tribunal to be satisfied that: 1. there had been an inability to use or enjoy the particular facilities in whole or in part; 2. the inability arose because of the landlord's conduct, being a failure to supply relevant facilities, make good defects or correct any breaches affecting the use and enjoyment thereof: Eliezer v Residential Tribunal and Ors [2001] NSWSC 1092 at [37].
33. Whether the rent is excessive is then assessed having regard to relevant factors including those specified in s 44(1)(5) of the RT Act.
34. Fourthly, insofar as there are discrete matters, each said to give rise to a separate reduction or withdrawal of goods, services and facilities, ordinarily for each matter the Tribunal needs to assess any rent reduction in terms of cause and effect in the context of the amount by which rent is to be reduced and the period for which such reduction should apply. In addition, an overall assessment should be made to ensure the cumulative amount of any rent reduction is not excessive. Any separate award for compensation for particular breaches relevant to the matters raised in connection with an order that the rent is excessive should also be taken into account in assessing the overall appropriateness and reasonableness of the proposed order for rent reduction. In this regard, see eg the comments of Basten J in Makowska v St George Community Housing Ltd [2021] NSWSC 287 at [43]-[47], particularly [46].
35. Applying these principles, it seems to us the Tribunal was in error in the following respects.
36. The Tribunal found there were holes in the backyard fence. However, in our view, this finding was not enough to establish there had been a relevant withdrawal or reduction. Rather, the Tribunal needed to find that the residential tenancy agreement contained a term to the effect that the landlord was agreeing to supply a facility in the form of a fenced backyard suitable for and capable of containing dogs and that the defects in the fence and failure to repair it within a reasonable time effectively amounted to a reduction or withdrawal of this facility.
37. As is evident from the submissions which we received, in the hearing at first instance, the tenant suggested that the premises were advertised as a "fenced backyard". The landlords relied on the fact that the residential tenancy agreement made no reference to a fenced backyard and had a clause stating that the written document contained all be terms of the residential tenancy agreement.
38. The Tribunal did not make relevant findings as to these matters and what was agreed. Having made a finding concerning what was advertised the Tribunal did not go on to determine if it was a term of the contract or what the obligation was.
39. Notwithstanding we were provided with a transcript of the proceedings at first instance, we are not in a position to make relevant findings on appeal as it does not seem this matter was adequately identified or explored in relevant evidence.
40. Similarly, there was a deficiency in the manner in which the Tribunal analysed the claim for a rent reduction concerning the driveway being overgrown with vegetation.
41. The residential tenancy agreement, at AB 161 provides: Lawns & gardens The tenant acknowledges that the lawns & gardens are to be maintained to at least the standard they are at the commencement of the tenancy. The tenant acknowledges that the lawn edges have been done, the lawns and the gardens are free of weeds and rubbish at the beginning of the tenancy.
42. The agreement then records, at AB 162: Further additional term The tenant agrees that they have conducted their own physical inspection of the property and are not relying on any advertising or representations by the agent. The tenant also agrees that the property meets their requirements, and agrees to lease the property in its current condition.
43. Absent any express agreement between the parties, a matter not otherwise dealt with by the Tribunal, it seems to us that the fact the driveway may have been overgrown does not mean there was a relevant reduction or withdrawal of facilities, namely the provision of driveway access to the garage. As the landlord had no ongoing obligations concerning lawns and gardens, we are not satisfied there was any withdrawal or reduction within the meaning of s 44(1)(b) of the RT Act.
44. Next was the finding concerning the garage.
45. Here the Tribunal found that because the studio had mould and could not be used for its intended purpose, the garage could not be used as a storage area for those goods as the back wall leaked when it rained: Tribunal Reasons at [18]. The Tribunal did not suggest the garage could not be used for parking a motor vehicle.
46. In reaching the above conclusion, the Tribunal does not appear to have considered Addendum A of the agreement (AB 161) which provides: Garages and Carports If the premises includes a garage or carport, the garage/carport is provided for the purpose of parking a motor vehicle only and not for storage of goods. The tenant agrees that any storage items placed within the garage/carport are done so at the tenants [sic] own risk.
47. In these circumstances, even if there was a failure to repair, the facilities constituted by the garage were not relevantly reduced or withdrawn.
48. In respect of the above three matters, it seems to us that the facts as found do not support the conclusion there has been a relevant reduction or withdrawal within the meaning of s 44(1)(b) of the RT Act. This raises a question of law: Collector of Customs v Agfa-Gavaert Ltd [1996] HCA 36; (1996) 186 CLR 389; (1996) 141 ALR 59; (1996) 71 ALJR 123 referring to Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287. Alternatively, the Tribunal did not apply the appropriate test in determining whether the rent was excessive: John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13]. Finally, to the extent necessary, leave to appeal should be granted as we are satisfied the landlords may have suffered a substantial miscarriage of justice.
49. In respect of the water leaks, our reading of the reasons suggests that the leaks occurred in various locations, that repairs were undertaken and, from time to time there were rainfall events which caused water ingress in particular locations throughout the premises. This included water leaking through light switches which may have amounted to a reduction or withdrawal of goods, services or facilities.
50. However, the findings of the Tribunal do not suggest that the premises or parts of the premises were continually unusable throughout the whole of the period for which a rent reduction order has been made. Rather, the reasons suggests that there was water ingress on days when it rained and, in some cases, identified problems repeated themselves during subsequent rain events. Further, the reasons suggests that repairs were done which did correct some of the problems.
51. As to mould, aside from the studio, the rent reduction for this item appears to be based on the finding by the Tribunal that the "tenants repeatedly asked for the mould to be cleaned but it wasn't" and that the Tribunal accepted "the tenants' oral evidence that they were constantly cleaning the mould but couldn't reach high areas such as the ceilings and overhead cupboards".: Tribunal Reasons at [21].
52. However, there was no finding as to the cause of the mould or that, if properly cleaned, the problem would not have persisted. Further, if a proper cleaning of the premises may have removed the mould problem, the fact the tenants did not do so may weigh against a conclusion that there had been a relevant reduction or withdrawal.
53. Finally, in relation to the blinds and curtains, the Tribunal found at [20] "that some windows were meant to have coverings which were not put back up until the tenants washed and rehung living room curtains on about 20 February 2023". This seems to have been a factor which the Tribunal took account in determining the amount of the rent reduction. It is unclear why, if all that was required was to wash and rehang the window coverings, allowance should be made for this matter in determining whether the rent is excessive. While it can be accepted that there may have been a breach of the agreement, if the term of the agreement was that the "curtains would be rehung once the tenancy was accepted", it is difficult to see how there was a withdrawal of relevant facilities when they were, presumably, available for use if washed and placed over the windows.
54. In respect of each of these matters, namely the mould issue and the window covering issue, it seems to us that the landlords may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or was against the weight of the evidence. Consequently, we would grant leave to appeal on this issue.

Orders

1. In light of our findings, the next issue is what orders should be made to finalise this appeal.
2. In our view, the approach taken by the Tribunal and the state of the evidence is such that we should not proceed to substitute our own views as to the outcome of these proceedings. Rather, the orders made by the Tribunal should be set aside in the proceedings be remitted for redetermination by differently constituted Tribunal.
3. In reaching this conclusion, we have had regard to the fact that, even if a rent reduction order should not have been made, a number of the matters to which the tenants refer could constitute breaches for which they may be entitled to an order for compensation. This was the point made at para 45 of the tenants' submissions referred to in our reasons above.
4. At [10] of the Tribunal's Reasons the Tribunal said the "tenants confirmed they did not press any amount for compensation". If correct, this may have been a reason for us to dismiss certain aspects of the tenants' application insofar as it related to a rent reduction claim.
5. However, we are not satisfied that the concession recorded by the Tribunal was in fact made. The transcript of the hearing is found at AB 63 and following. At AB 71, the following exchange occurred between the Tribunal and the tenants: Member: So are there is there a compensation claim? Ms Benton: We weren't going to unless the owner put in theirs. Member: I know but I can't deal with it on that basis. I will deal with the others in a moment but you can't turn up to a formal hearing and say now we might be doing this because of that the matter wasn't set. The notes that I've looked at umm just say rent reduction. Mr Gregory: Member we've had approximately $1000 worth of items either damaged through the water in the house or from mould where it was located and in the cupboards. Member: But are you claiming that? And if so, where is it set out that that's what your claim is so I … Mr Gregory: No member we are not claiming that. Member: So they are. The orders that you're seeking to rent back into those various periods with the ancillary order. That the rent gets the refund for the excess amount and all your. (Sic). Mr Gregory: that's right. Member: Rent is paid up-to-date when you. Mr Gregory: Yes Member.
6. On one view, the concession made only related to the claim for compensation for $1000 worth of personal items. It was not a concession to the effect that no claim for damages was made concerning the failure to repair or make good defects in the residential premises and the facilities provided.
7. As we have decided to set aside the original orders, it seems to us that the tenant should not be prohibited from pursuing these matters. Rather, orders should be made setting aside the orders of the Tribunal made 1 September 2023 on terms that the tenants may to apply to the Tribunal at first instance to amend the claim and/or the parties may seek to adduce further evidence in relation to the matters in dispute.
8. The Appeal Panel makes the following orders: 1. To the extent necessary, leave to appeal is granted and the appeal is allowed. 2. The orders made 1 September 2023 are set aside. 3. The proceedings are remitted to the Consumer and Commercial Division for rehearing by a differently constituted Tribunal, the parties being permitted to adduce further evidence and/or the respondents (tenants) being permitted to apply to the Tribunal to amend the claim if thought appropriate. 4. The issue or whether any amendment to the application is necessary or should be permitted is a matter to be determined by the Tribunal on remittal.

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: 26 February 2024