O'Brien v Carlo-Stella

NCAT Consumer and Commercial|2021-12-08

decision

The proceedings arise out of a residential tenancy agreement between Ricky O'Brien and Galia Ayala ("the tenants") and Ernesto Carlo-Stella ("the landlord").
The tenancy commenced on 5 April 2017 for twelve months and the tenancy continued on a periodic agreement until the tenants vacated on 22 October 2021.
The application was lodged on 8 October 2021 for a rent reduction pursuant to Section 44(1)(b) of the Residential Tenancies Act 2010 (NSW) ("the Act") and an order reducing the rent on the basis the property was uninhabitable pursuant to Section 52. The tenants have applied for a rent reduction of $400 per week for twelve months. The rent was $790 per week. The tenants confirmed they accepted the jurisdictional limit of the Tribunal of $15,000.
The matter was heard in a virtual hearing room on 8 December 2021.
Both tenants appeared at the hearing. Mr O'Brien gave sworn oral evidence on behalf of the tenants. The tenants provided documents dated 27 October and 12 November 2021. The landlord had received those documents. They included the following:- 1. Chronology 2. Floor plan showing where the tenants had identified mould in the property 3. Emails between the landlord and the tenants in September 2017 4. Photographs including photographs of the linen closet, gutters, personal items with mould growth, mould on walls including the bedrooms 5. Emails from 18 March 2021 to 22 September 2021 6. Additional photographs of shower and structural issues
The landlord was represented by Mr Basil Carlo-Stella who has Power of Attorney and Mr Julian Carlo-Stella who gave sworn oral evidence as he primarily managed the property on behalf of the landlord. The landlord provided documents dated 25 November 2021. The tenants confirmed they had received those documents. They included the following:- 1. Overview of tenancy by landlord 2. Landlord's response to the tenants' evidence 3. Chronology 4. Rapid Building Inspections report dated 29 September 2021 5. Access Property Services Pty Limited Building Condition report of 26 October 2021 6. Correspondence between landlords and tenant 7. Property photos during various periods including those provided by the tenant on 31 October 2021 showing mould on clothing 8. Residential Tenancy Agreement 9. Ingoing condition report

Applicable law

Under Section 63(1) of the Act a landlord has an obligation to keep premises in a reasonable state of repair having regard to the age of the premises, rent payable and prospective life of the premises. The landlord is not in breach if the state of disrepair is caused by the tenant's breach. Relevant principles have been discussed in many decisions of the Tribunal, including Bannister v Cheung [2014] NSWCATCD 105 and Fuller v NSW Land and Housing Corporation [2013] NSWCTTT 648.
If the Tribunal is satisfied the landlord has breached their obligation to keep the property in a reasonable state of repair or fit for habitation, the Tribunal can, under Section 44(1)(b) make an order that the rent payable under a tenancy agreement, having regard to the reduction or withdrawal by the landlord of any services or facilities not exceed a specified amount.
Section 44 says as follows:- "(1) Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders (a) … (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)… (3) Applications on withdrawal of goods or services A tenant may, before the end of a tenancy, make an application that 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. … (5) For the purposes of making an order under this section, 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 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) (6) Effect of excessive rent order An order by the Tribunal specifying a maximum amount of rent- has affect for the period (of not more than 12 months) specified by the Tribunal, ……"
Pursuant to Section 52 a landlord has general obligations to provide premises in a reasonable state of cleanliness and fit for habitation by the tenant. Fit for habitation includes that a property is structurally sound, has adequate ventilation, and is not subject to significant dampness.
The application was made prior to the end of the tenancy so is within time for an application pursuant to Section 44.

Evidence

The tenants provided a chronology of issues in relation to moisture and damp and mould in the property. There were some issues with the subfloor and gutters and a blocked drain during 2017 and 2018. The tenants said the only issue that was dealt with during that period was the plants that had grown from under the house and into the main living area during May 2018. The tenants in their oral evidence say there were high levels of moisture in the property dating back 17 months prior to the end of the tenancy. When they had complained about damp, a handyman was sent to fix the problems but they were never properly repaired.
On 26 June 2020 the tenants emailed the landlord's about mould and other maintenance issues. The tenants say they were ignored when they said there was a water leak from the bathroom. At that time the tenants purchased a dehumidifier and an air purifier. The walls were marked with damp and they had stopped using two of the bedrooms and moved a substantial amount of clothing and wardrobes out of the bedrooms as their goods were getting damaged. Further they only used the top shelves of the linen cupboard and left the bottom three shelves unused to prevent damage and moisture build up in an effort to mitigate loss. Further, they ran the demudifier non-stop to prevent mould build up in an effort to mitigate loss. They also say they opened windows during the day to ventilate the property.
The landlords provided a letter from Steven Younes outlining the repairs that were done after being advised of the issues including cleaning the mould from the walls and installing sub-floor fans and reglazing and resealing the bathtub. He said it had been done around the middle of 2020. The landlord in his chronology said it was done between September and November 2020. The tenants in their chronology say the repairs were completed in November 2020.
The invoice from R. Zarb & Sons Pty Limited dated 15 November 2020 indicates the supply, wire and installation of underfloor ventilation was completed on 11 November 2020 at a total cost of $4,400.
The tenants gave some oral evidence about the extent of the mould at that time and it is reflected in their correspondence with the landlord at the time, with photos attached to the email of 26 June 2020 showing mould in linen closet and on main bedroom wall. They also referred to mould in the bathroom. There was also mould on clothing evidenced in some photographs provided by the tenants.
On 20 November 2020 the tenants again raised issues about damp and Mr Basil Carlos-Stella attended the property on 26 November 2021. According to the landlord's chronology (p013 of the landlord's documents) at that time the tenants were advised to ventilate the property and to remove items from the wardrobe.
On 18 March 2021 the tenants notified the landlords about ongoing issues with the gutters being in a state of disrepair.
On 12 July 2021 the tenants notified the landlord of rotting timber in the house. They also referred to moisture and rising damp causing an unpleasant smell in the property. They also advised the ceiling fan in the bathroom had stopped working and was likely to cause an ongoing problem. The landlord confirmed the email had gone to junk mail so there was no response to that correspondence.
On 20 August 2021 the tenants followed up the issue after finding more mould in bedrooms. The tenants were becoming increasingly concerned with the effect of the damp on their children and the living conditions of the property. The landlord organised quotes for repairs. It was not until this stage that the landlord said he was aware there were some ongoing issues with damp. At that stage Sydney was in lockdown and it was difficult to get tradesmen to attend to inspect the property.
A quote dated 20 September 2021 from Beltam Projects was provided to the landlord in the sum of $48,125.00 for rectification of damp and maintenance repairs on the property.
On 20 September 2021 the tenants followed up again as no work had been done and on 22 September 2021 the landlord advised they were obtaining a further quote. At that time the landlord said in his email of 20 September:- "I want to be very clear. When you give me a list of items to repair, I am sending the handyman to quote those items and those items only. It is not an opportunity for you to provide him with a wish list." On 22 September 2021 the landlord advised the tenants he believed the quote was exorbitant and would be seeking another quote.
On 29 September 2021 the landlord arranged for Rapid Building Inspections to attend the property and provide a report. In that report Rapid said that they would strongly recommend a further inspection after items were removed. They observed moisture staining on the ceiling and recommended contacting a hygienist in regard to the mould. They regarded the mould and damp issues as a major defect. They also found a temporary structure support in the subfloor. They also found in accordance with their report major internal wall issues relating to mould and high moisture readings. Undulating and uneven floors were noted. There was wood rot in parts of the floors. There were high moisture readings and leaks in the bathroom.
On 30 September 2021 a mould cleaner attended the property and the tenants said they were advised the property was unsafe. The landlord disputed this saying the mould cleaner had no expertise to say that was the case.
On 1 October 2021 the tenants gave notice that they would be vacating the property and requested a rent reduction due to mould and structural issues with the property.
On 22 October 2022 the tenants vacated the property.
On 26 October 2021 Access Property Services Pty Limited attended the property on behalf of the landlord and provided a report after the tenants had vacated the property. They noted the property had been cleaned and there was no mould present. In that report the professional opinion was mould would have been caused by a number of factors including rising damp, lack of natural ventilation, tightly packed clothes, use of gas heaters and appliances and use of an unducted washing machine and dryer. They also said keeping the house closed and not running a dehumidifier would also contribute to mould growth.
The two primary issues the landlord raised in relation to the tenants claim is the landlord was not on notice of the need for repairs and there was not sufficient mitigation of loss and/or use by the tenants of the property contributed to the damage. In particular he believed there was excessive clutter in the property.
Further, the landlord says the tenants claims that they were not sleeping in the bedrooms is not supported by the evidence. When the inspections took place all the rooms appeared to be in use. So far as the landlord was aware the whole house was being used. In the original building inspection report on page 54 and through to page 65 the evidence showed all rooms were being used.
The tenants dispute the landlords claim. They say they ran a dehumidifier almost constantly from June 2020 and kept the property well ventilated. Significant issues with clutter arose from the requirement to move items to areas of the house not affected by mould. This contributed to clutter and they believed the photographs were taken in a way to show the property in a light that would indicate clutter, for example there was a photograph of the top shelf of the linen cupboard, but none of the empty bottom shelves that were not used due to mould. In particular this had some bearing on the report provided by Access Property Services Pty Ltd as they did not observe the property when it was being lived in and they were misled by the photographs provided by the landlord. The report saying mould was contributed to by the use of a gas heater and unducted washer dryer. Neither of those were used by the tenants and reflected a misunderstanding of the tenancy. Therefore the report could not be relied upon in their view.

FINDINGS

There is evidence of mould in the property over a long period of time. Despite the attempts to fix the issues in November 2020 the mould and damp issues were not resolved satisfactorily. I accept however there was a failure to advise the landlords until June 2021 of the ongoing issues with the damp. A landlord cannot be responsible for withdrawal of services if at the time they are not on notice of the existence of any issue. It would be reasonable to expect that after the repairs on 11 November 2020 and the subsequent inspection on 26 November 2020 that if no further issues were raised the problems had been resolved.
The landlords on their own evidence said the property had not been relet at the time of the hearing to allow for repainting, redoing some flooring and removing tiles to attend to waterproofing in the bathroom. It is clear that there were damp issues that had to be attended to at the end of the tenancy. I prefer the report of Rapid Building Inspections given they attended the property when it was occupied so had a clear picture of the state of the property. The report provided by Access Property Services was done after the tenants had vacated, after a mould clean had been done and they did not appear to have taken any moisture readings in the property. I also find the quote from Beltam Projects dated 20 September 2021 indicated that they found significant mould in the property and additional subfloor ventilation was required. The building quotes and inspection reports support the tenants' ongoing complaints about the mould and damp in the property.
I accept the tenant's evidence that they lost use of parts of the property arising from the damp, and this was particularly difficult during the COVID lockdown in 2021 as they were all working and studying from home and the bedrooms had issues with damp.
I find that the initial issue in relation to damp in the property problems raised on 26 June 2020 were not resolved until 11 November 2021. Section 44(5) of the Act sets out certain matters which the Tribunal may have regard to when determining whether rent is excessive.
There is no evidence before the Tribunal from either party as to the general market level of rents of comparable premises in the locality or similar locality or of the landlord's outgoings. The tenant argues that the rent should be reduced because of the state of the rental premises. The argument is persuasive. During the course of the tenancy the condition of the premises deteriorated and the tenants asked the landlord to carry out repairs. On the other hand, during the tenancy there was only one rental increase. The invoices showed there was some money spent on repairs, however repairs were often delayed and not done within a reasonable time frame.
Taking into account these issues I find for the period from 26 June 2020 to 11 November 2021 there should be a rental reduction of $100 per week amounting to a sum of $1,972.02 (138 days x $14.29 per day = $1,972.02). I rely on the photographs of the tenant showing the mould in the property and their oral evidence at the hearing. They also had to incur the cost of running a humidifier for that period.
After the repairs done on 11 November 2020 there was no further correspondence by the tenants to indicate there were ongoing damp or mould issues with the property. I cannot find there is a withdrawal of services where the landlord is not on notice that the repairs of November 2020 had not resolved the damp issues in the property. Although there was an attendance by the landlord at the property on 26 November 2020 as the tenants said there was ongoing damp, they did not advise the recommendations by the landlord had not resolved the ongoing issues.
From 12 July 2021 when the tenants again raised issues with damp, there was significant delay. The fact that the original email to the landlord went to junk mail does not absolve the landlord from their obligations. That there were subsequent delays as the tenant followed up during the time of the COVID lockdown again is not an issue for which they are responsible. In the circumstances there was at that stage a significant issue with damp in the property. That is clearly evidenced by the report from Rapid Inspections. The landlord's did not assist circumstances in writing to the tenant and describing their request for repairs as a "shopping list". In the circumstances, I find there should be a rental reduction in the sum of $250 per week from 12 July 2021 to the end of the tenancy on 22 October 2021 amounting to a sum of $3,642.42. (102 x 35.71 per day = 3,642.42). The building report reflects the extent of the mould in the property at the time and I consider the reduction is reasonable in the circumstances. This amounts reflects that the rent had not increased in that period, however the tenants have established on the evidence there has been a failure to maintain and repair the premises in accordance with the landlord's obligations under the tenancy agreement which has resulted in a reduction or withdrawal of goods, services or facilities provided with the premises. The fact that they chose to vacate the property in October 2021 indicated the extent to which the damp had begun to affect the amenity of the property.
In regard to the claim by the tenant's that the property is not fit for habitation, I find that the tenant's had lived with the damp for some period, so it would appear there was a level of damp that they considered acceptable given the general condition and age of the property. In their correspondence of 20 August 2021 the tenants say they are prepared to use the rent to undertake some repairs. There is no suggestion at that time by the tenants that they believed the property was uninhabitable but it supports the claim that repairs were required. I find that there was a failure to undertake repairs as required, however the extent of the mould and damp was not evidenced such that I found the property uninhabitable.
The total to be paid by the landlords to the tenants is $5,614.44 to be paid on or before 21 February 2021.

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: 15 March 2022

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