Novoa v Lu; Lu v Lopez

The background

1. On 16 February 2018, the parties entered into a residential tenancy agreement in respect of the premises which provided for a rental bond of $2,400.00.
2. On 13 March 2018, the rental bond of $2,400.00 was lodged with Rental Bond Services with the number K791789-3.
3. On 31 January 2020, the parties entered into a residential tenancy agreement in respect of the premises for a period of 12 months commencing on 17 February 2020 at a rent of $600.00 per week and a rental bond of $2,400.00 (the 31 January 2020 residential tenancy agreement).
4. On or about 16 February 2021, the tenants vacated the premises.

The procedural history

1. On 7 March 2021, the tenants as the applicants commenced proceedings RT 21/10503 against the landlord as the respondent by filing an application in which they seek an order under s 175 of the Residential Tenancies Act 2010 (NSW) (RT Act) for the return of the rental bond.
2. On 30 March 2021, the landlord as the applicant commenced proceedings RT 21/14359 against Mr Lopez as the respondent by filing an application in which she seeks orders under ss 175 and 187 of the RT Act for the payment of the rental bond and for compensation.

The hearing

1. On 13 July 2021 at 2.45pm, the hearing took place by telephone. The tenants represented themselves. Mr L Ge (Mr Ge), who was the landlord's agent during the currency of the residential tenancy agreement, represented the landlord. The landlord was also present.
2. The tenants relied on the statutory declaration of Mr Lopez made on 11 May 2021 (the Lopez statutory declaration) and the attached unsigned routine inspection report dated 16 February 2021 (the 16 February 2021 inspection report) which was admitted into evidence without objection (Ex A1):
3. The landlord relied on the bundle of documents provided to the Registry on 17 March 2021 which was admitted into evidence without objection (Ex R1) and includes the following documents: 1. the 31 January 2020 residential tenancy agreement; 2. the routine inspection report dated 16 February 2021 and signed on 17 February 2021 by Mr Ge (the 17 February 2021 inspection report); 3. quote #184 of RenoPro Solutions dated 4 March 2021 for $4,950.00 inclusive of GST for the replacement of the kitchen marble benchtop (the RenoPro quotation); 4. invoice #207 of RenoPro Solutions dated 4 March 2021 for $165.00 inclusive of GST for the provision of the RenoPro quotation (the RenoPro invoice).
4. The landlord did not cross-examine Mr Lopez.
5. Mr Ge gave oral evidence, and was cross-examined by Mr Lopez and Ms Lopez.
6. The tenants and the landlord made oral submissions.

The issue

1. The issue which arises for decision is whether the tenants or the landlord should be granted relief under the RT Act.

Whether the tenants or the landlord should be granted relief under the RT Act

Introduction

1. The dispute between the parties is whether the tenants breached the 31 January 2020 residential tenancy agreement by damaging the kitchen marble benchtop of the premises.
2. During oral submissions the landlord indicated that she was not claiming $4,950.00 as set out in the RenoPro quotation because she was not going to replace the kitchen marble benchtop, but was claiming $1,000.00 for its repair.
3. Before considering this issue it is appropriate to set out the applicable statutory provisions and legal principles, and summarise the evidence of the parties.

The applicable statutory provisions and legal principles

1. At the end of a tenancy the tenant must comply with the requirements of s 51(3) of the RT Act which relevantly provide that the tenant is to remove their goods, leave the premises as nearly as possible in the same condition, fair wear and tear excepted, and in a reasonable state of cleanliness, remove all rubbish, and return the keys to the landlord. Section 51(3) refers to the ingoing condition report as a point of reference.
2. The landlord and the tenant must comply with ss 29 and 30 of the RT Act in relation to the preparation of ingoing and outgoing condition reports. The purpose of the condition reports is to record the condition of the property at the commencement and the end of the tenancy in a similar manner and degree of detail. Section 30(1) contains a rebuttable evidentiary presumption concerning condition reports. If a condition report is signed by both landlord and tenant it is presumed to be a correct statement of the state of repair or general condition of the residential premises on the day specified in the report, in the absence of evidence to the contrary. Section 30(2)(b) provides that this evidentiary presumption does not apply to any statement in the report about which the tenant makes a written dissenting comment on the copy of the report completed by the tenant and retained by the landlord. Section 30 does not render a condition report completed by only one party and not signed by the other party inadmissible, or unable to be relied upon, to establish the condition of the premises at the relevant time: Hall v Hawkins [2015] NSWCATAP 197 (Hall) at [60]-[64].
3. Matters that may be the subject of a rental bond claim are set out in s 166 of the RT Act and include outstanding rent, and the reasonable cost of repairs to or the restoration of, the residential premises or goods leased with the premises, as a result (other than fair wear and tear) caused by the tenant and the reasonable cost of repair, having regard to the condition of the premises at the commencement of the tenancy. In determining damages and the reasonable cost of repairs the Tribunal will apply guidelines as to the depreciation of fixtures and fittings in rental properties of the Australian Taxation Office: Australian Taxation Office, Guide for rental property owners, June 2020.
4. 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 Crompton and Jennings [2015] NSWCATAP 110 (Panico). In both cases the Appeal Panel cited Alamado Holdings Pty Ltd 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.
5. In Panico at [21]-[22] 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 tenant's use of the premises and/or any breach of the tenants obligations under s 51(1) and (2) of the RT Act. If the tenant 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 the repair.
6. Fair wear and tear is to be assessed objectively 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: Adoncello v Sazdanoff [2006] NSWCTTT 577.
7. The landlord has the onus of establishing the claim.
8. The Tribunal must consider whether the tenant has acted in an intentional or negligent manner or whether damage has come about through normal use of the property and should be classified as fair wear and tear. If the Tribunal finds that the tenant is responsible for damage then the Tribunal must determine the quantum of damage. In doing so the Tribunal will consider whether the landlord has mitigated their damage, whether the damages claimed are proportionate and what depreciation is to be taken into account.
9. Quotations are not necessarily insufficient evidence to prove quantum of loss. It will depend on, among other things, the nature of the work to be done, the nature and content of the quotation, the circumstances in which it was prepared, the genuineness of the quotation and the expertise or experience of the person who prepared it. Each case should be considered on its own facts. There is no general rule that quotations cannot be relied upon to establish quantum of loss or damage: Hall at [79].

The tenants

1. In the Lopez statutory declaration Mr Lopez has stated: "I began a 12 month lease on February 16th, 2018, at the following address [address omitted]. This lease contract was renewed after offer by the landlord for another 2 years. I always paid rent on time and took care of the apartment as if it were mine, after all routine inspections conducted by the real state they never found any damage or problem. On February 16, 2021, the contract ended and I delivered the apartment clean and in the same condition that I received it 3 years before (not taking into consideration obvious wear & tear that ANY lived in property would accrue). This can clearly be seen in the final inspection report dated February 16, 2021 which is attached and there is no reported damage. 4 days after I vacated the unit, on 20th of february 2021,1 received a call from the real state (sic) agent informing me that there is damage tothe kitchen marble benchtop - to be specific 2 cracks. They were requesting it to be changed, they ended up sending me a quote of the repair for the amount of $4950. The landlord has demanded I pay the full amount of $4950. This damage is something that I did not cause and therefore it is not my responsibility. I request to know which year the benchtop was installed? The building is at least 18 years old. This is clear cut case of wear & tear. The fact the landlord has instructed the agent to claim the full amount from my bond is quite frankly appalling hence why I am appealing to the Tribunal at this time. I delivered the apartment and they received it as recorded in the final outgoing inspection report that I attached. Below are some reasons why it can cause cracks in the benchtop. An incorrect installation since the cracks are next to the sink, according to the photos that the land lord sent me. Building vibrations can cause cracks in Stone benchtops. Is a new development construction next door. It is very common for cracks or even fissures to form around sinks as they are often cut thinner. It's clear that it is not my responsibility given the age of the property for me to have to wear such a ludicrous charge and it does not seem fair to pay for damage that I have not done."
2. The 16 February 2021 inspection report relevantly contains: 1. in the column headed "Undamaged" for the row "benchtops/tiling" for the kitchen a positive answer, and in the column headed "Comments" for the same row refers to two photographs (nos 23 and 24) which are date stamped "16/02/2021" and do not depict any damage to the kitchen benchtop; 2. no entry in the sections headed "General Comments" and "Repairs and Maintenance".

The landlord

1. The 17 February 2021 inspection report relevantly contains: 1. in the column headed "Undamaged" for the row "benchtops/tiling" for the kitchen a negative answer, and in the column headed "Comments" for the same row the words "cracks by the sink" and refers to two photographs (nos 23 and 24) which are date stamped "16/02/2021" and do not depict any damage to the kitchen benchtop. 2. in the sections headed "General Comments' and "Repairs and Maintenance" entries including "The cracks on the bench top by the sink".
2. In his oral evidence Mr Ge said that he completed the 16 February 2021 inspection report and took the accompanying photographs. He said he gave the 16 February 2021 inspection report to Mr Lopez on 16 February 2021, and made revisions on the following day which became the 17 February 2021 inspection report.

Consideration

1. I am not satisfied that the landlord has established that the tenants breached s 51(1)(d) of the RT Act by intentionally or negligently causing or permitting damage to the kitchen benchtop. The evidence of Mr Lopez in the Lopez statutory declaration was unchallenged. Further, I am not satisfied as to the veracity of the 17 February 2021 inspection report in circumstances where no reason was provided for the issue to Mr Lopez of the contradictory 16 February 2021 inspection report on the previous day.
2. If, contrary to my finding, I had been satisfied that the landlord had established that the tenants breached s 51(1)(d) of the RT Act by intentionally or negligently causing or permitting damage to the kitchen benchtop, I would not have awarded any compensation. Having made the concession that she was not going to replace the kitchen marble benchtop, the landlord had no evidence as to the nature of the repairs that she intended to undertake and their cost. She provided no basis for these repairs costing $1,000.00.

Conclusion

1. Having regard to the findings I have made, the tenants are entitled to an order under s 175 of the RT Act for the return of the rental bond and accrued interest.

Orders

1. I make the following orders: 1. Rental Bond Services is directed to pay the tenants, Javier Ricardo Lopez Novoa (also known as Javier Ricardo Lopez) (First Applicant) and Jenny Marcela Lopez Novoa (also known as Jenny Marcela Lopez) the whole bond plus interest of Rental Bond number K791789-3; 2. proceedings RT 21/14359 are 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 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: 16 August 2021