Parker v Lowe

Procedural history

1. The application was first listed before the Tribunal, differently constituted, on 3 May 2022 for Conciliation and Hearing in a Group by AVL in a VMR in accordance with NCAT's COVID-19 Revised Hearing Procedure as it was then in force. The tenant appeared at that listing of the application in person. The landlords were represented at that listing by a Property Manager of their Managing Agent, Mr Inton Chandra. In accordance with the Tribunal's usual practice where both parties are present at the first listing of an application the Tribunal attempted to assist the parties to resolve the dispute co-operatively. However, those efforts were not successful. As a consequence the matter was adjourned to a Special Fixture Hearing and directions were given to the parties for the filing and exchange of the documentary evidence that they intended to rely upon at that hearing.

Evidence and hearing

1. Both parties have complied with the Tribunal's directions for the filing and exchange of their documentary evidence. The tenant filed two bundles of documents on 28 April 2022 (prior to the first listing) and on 12 May 2022. These bundles are identical except for an additional (last page) in the bundle filed on 12 May 2022. The bundle filed on 12 May 2022 was marked Exhibit A1. The landlords filed a bundle of documents on 19 May 2022. It was marked Exhibit R1.
2. The Special Fixture Hearing was listed for a 90-minute hearing on 28 June 2022. However, the hearing could not be completed on that occasion. The matter was adjourned part heard and completed at a further Special Fixture on 20 July 2022. Both Special Fixture Hearings were conducted by AVL in a VMR in accordance with NCAT's COVID-19 Revised Hearing Procedure as it was then in force.
3. The tenant attended both Special Fixture hearings in person and gave oral evidence in his own cause under affirmation. Mr Inton Chandra, Property Manager, attended both Special Fixture Hearings on behalf of the landlords and gave oral evidence under affirmation. Ms Robyne Lowe, landlord, attended the second Special Fixture Hearing in person and gave oral evidence in the landlords' cause under oath. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.

Material facts

1. The dispute arises from a tenancy that commenced sometime before 2017. There are no details about the initial agreement in the evidence of either party.
2. In or about the end of 2018, the property was sold to the current landlords with settlement of that sale occurring in January 2019. This prompted the subsisting residential tenancy agreement to be varied to a fixed term agreement of 52 weeks duration that was made on 1 February 2019. This agreement commenced on 13 February 2019 and was expressed to end on 11 February 2020. There is reference in the evidence of both parties to an intention by the landlords to require the tenant to enter into a further fixed-term agreement of 6 months duration upon the lapse of this agreement. However, no such agreement has been placed into evidence. It appears that the tenancy has continued periodically after 11 February 2020 up to the present.
3. The rent payable under the fixed term agreement made on 1 February 2019 was $1,100.00 per fortnight ($550.00 per week). On 26 April 2021 the residential tenancy agreement was varied to provide that the rent payable for the premises on from that date would be $480.00. The context in which that variation was made was the midst of the COVID-19 pandemic. However, it does not appear that the reduction was agreed on the basis that the tenant was a COVID-19 financially impacted tenant. Rather, the evidence is that the variation stemmed from the landlords' acceptance of the tenant's claim that his rent was excessive due to the decline in rents payable for equivalent premises in the locality due to the COVID-19 pandemic. By a Rent Increase Notice dated 11 February 2022 the landlords increased the rent to $540.00 per week with effect from 12 April 2022. As noted above, that rent increase was originally a subject of these proceedings. However, in the context of the proceedings the landlords withdrew the notice on 9 April 2022 before it came into effect. The rent payable for the premises therefore remains $480.00 per week.
4. The rented premises is an apartment in a building in Potts Point owned under Company Title. It comprises one bedroom, one bathroom, kitchen, and living/dining area. There is access to a shared external laundry. Other than an oven and cooktop no appliances are provided with the premises. There is no specific information in evidence about the age of the apartment, but it is clear from the photographic evidence of both parties that it is of some age. In their submissions the landlords refer to the kitchen as being "original" and the bathroom as being "updated". The bathroom may have been renovated at some time but it is clear from the condition of the fixtures (which show signs of corrosion) that this was not recent. The kitchen is modest, being a short bench with sink on top. The bench has three cupboards and two drawers underneath. Otherwise, kitchen storage is limited to open shelves above and opposite the sink. The bedroom has a free-standing wardrobe robe of some age and dilapidation. There are vinyl floor coverings which, judging by their appearance, are of considerable age.

The excessive rent issue

1. When he filed his application, the tenant sought excessive rent orders covering the whole period of the tenancy. However, the Tribunal's power under s 44(1)(b) of the Act to declare that rent is excessive due to the reduction or withdrawal by a landlord of goods, services and facilities provided with the rented premises is limited to a 12-month period by s 44(6)(a). Faced with that reality, at the outset of the first Special Fixture Hearing, the tenant amended his application to apply for excessive rent orders covering the period 12 February 2021 to 11 February 2022. As set out above, two rent rates were payable during this period: $550.00 per week up to 25 April 2021, and $480.00 per week after that date.
2. The tenant contends that the rent was excessive by 100% of the rent payable during this period because of the state of disrepair and dilapidation of the rented premises, which he contends had a very serious impact on his comfort and amenity in the use of the premises. The landlords contend that to the extent the premises was in a state of disrepair and dilapidation this was reasonable given that the tenant was paying an under-market rent. The landlords also dispute the claimed impact of the condition of the premises on the tenant's comfort and amenity.
3. In Roberts v Aboriginal Housing Office [2017] NSWCATAP 9 at [123] an Appeal Panel cited with approval a decision of McClellan J in Eliezer v Residential Tribunal and Ors [2001] NSWSC 1092 in which his honour held at [37] with respect to an antecedent provision to s 44(1)(b) of the current RT Act that the words "goods, services and facilities provided" are confined to the physical and other facilities, goods or services, provided within, or as part of, the premises and that the section is only engaged if it is the landlord (as opposed to a third party) who reduces or withdraws those facilities. As to the distinction between the terms 'reduction' and 'withdrawal' the Appeal Panel held at [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.
4. In relation to this element of the claim I make the following findings of fact on the evidence before me (which I do not understand to be in any real contest): 1. Up to the end of November 2021 a total of 13 holes were cut into the cornices in each of the rooms of the premises exposing the interior of the ceiling. These holes were partially repaired in late November 2021 except in the hallway but were not sanded or painted. After the end of November 2021 several holes remained in the hallway cornice up to on or about 5 May 2022 when these were repaired, and all the affected areas were sanded and painted. These holes had been cut in or about August 2019 to facilitate the Company's installation of new electrical wiring. 2. The bedroom blind was broken up to the end of November 2021 at which time it was either replaced. 3. Various tiles in the kitchen were broken and had fallen off the wall (these were repaired in May 2022). 4. The bedroom light/fan was broken between on or about 18 March 2021 and on or about 21 May 2021. The lounge room light/fan was broken between on or about 1 June 2021 and on or about 11 October 2021. 5. The vinyl floor coverings were torn and had become unstuck to the floor. 6. The doors on the bedroom wardrobe were broken.
5. There is no issue that each the above concern goods, services, and facilities provided by the landlords to the tenant as components of the rented premises.
6. Section 63 of the Act provides that a landlord has a general obligation, which is expressed as a strict "must", to 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. Although it is not necessary for me to determine that goods, services, or facilities were reduced or withdrawn by the landlord due to a breach of the residential tenancy agreement, I am satisfied that this is the mechanism by which the landlords have reduced or withdrawn goods and facilities in this case; that is, by breaching their obligation to maintain the premises in a reasonable state of repair.
7. In this respect, each of the items I have referred to above were the subject of repeated complaint by the tenant to the landlords' agent in which he requested repair or replacement of the item. There can be no issue in these circumstances that the landlord was on notice, or ought reasonably to have been on notice, as to the need for the repair. 1. The landlords contend that the repairs took time because of COVID-19 related lockdowns, availability of trades, a particular contractor's accident, and with respect to the hallway cornice, difficulties in sourcing the cornice design necessary to carry out the repair. They also contend that they both experienced personal issues during part of 2021 which impacted on their ability to manage the rented premises. With respect to the condition of the vinyl floors and bedroom wardrobe they contend that they had no obligation to replace these as that would amount to a capital improvement not a repair. 2. For the purposes of s 44(1)(b) the reason why goods, services and facilities are reduced or withdrawn by the landlord is not relevant. It is only necessary for the tenant to establish that there was a reduction or withdrawal in fact. I deal with the landlords' contention that they were not obliged to do anything about the vinyl floor coverings and wardrobe below and reject it.
8. I find that the blind and light/fans were withdrawn from the tenant's use during the periods specified. In relation to the other items, I am comfortably satisfied that the tenant's use of these items was reduced to a level significantly below that required to be provided by a landlord under a residential tenancy agreement.
9. The landlords' contention that the condition of the cornices resulted in no loss of amenity for the tenant cannot be accepted. These holes were seriously unsightly, and they allowed dust and detritus to fall into the premises from the ceiling cavity. The later partial repair of these holes was also unsightly. The landlords were obliged to provide the rented premises with intact, sealed ceilings.
10. Similarly, the broken and missing tiles in the kitchen area were seriously unsightly and inconsistent with the standard of wall finish that a tenant is entitled to receive from a landlord under a residential tenancy agreement.
11. I am also satisfied that the vinyl floor coverings are in a condition that is significantly below that required to be provided by a landlord under a residential tenancy agreement. They are very old, torn, and have become detached from the floor underneath. The tenant has given evidence, which I accept, that the floors are very difficult to clean because they lift while being vacuumed, and that they present a trip and slip hazard.
12. Additionally, I am satisfied that the bedroom wardrobe is in a condition significantly below that required to be provided to a tenant under a residential tenancy agreement. It is seriously dilapidated, and its doors are partially detached which has a serious impact on its function.
13. Having made those findings, it falls to the Tribunal to determine if the rent payable for the premises was excessive during the period nominated by the tenant due to the reduction and withdrawal of these goods and facilities. Section 41(5) provides that the Tribunal, may, relevantly, to the circumstances of this case, have regard to the following factors in determining whether the rent is excessive without limiting the factors that may be considered: the general market level of rents for comparable premises in the locality or similar locality and the state of repair of the premises.
14. Both parties have filed various examples of one-bedroom properties listed for rental in the locality. Based on the examples they have filed, the landlords contend that the tenant has, since 26 April 2021, been paying significantly less than the market rent value, which they state is in the range of $550.00 to over $600.00. The tenant challenges the comparators the landlords rely upon, contending that in each case these examples are of significantly higher quality than the rented premises. I have carefully reviewed the comparative examples in the evidence of both parties and am comfortably satisfied that the market value rent claimed by the landlords is not maintainable. Each of the comparators is a significantly superior property to the rented premises. They include amenities not included with the residential premises and appear recently renovated. None are in dilapidated condition. All have superior function in terms of cabinetry and other fittings.
15. I do not understand the landlords to contend that the tenant was paying other than a market rent up to 25 April 2021 at the rate of $550.00 per week. In any event I am satisfied on the evidence that he was. The rent was reduced to $480.00 per week after that date and up to the end of the rent reduction period sought by the tenant. It is important to note that this reduction was not because the tenant had experienced a COVID-19 financial impact. It was a reduction negotiated in the context of the pandemic because of the tenant's contention that rents in the locality had dropped due to the impact of the pandemic. This was thus a renegotiation of the market rent. None of the evidence before me persuades me that $480.00 remains other than a market rent for a one-bedroom unit of this standard in the locality.
16. It follows from this conclusion that the reduction or withdrawal of goods and facilities I have found is a factor of the rent actually paid by the tenant rather than any under-market value he already has the benefit of.
17. To determine by what amount rent was excessive it is necessary to consider the goods and facilities that were withdrawn, and the impact of this, in the context of the totality of goods, services and facilities provided with the residential premises.
18. Having regard to that, the tenant's claim that the rent was excessive by 100% cannot be accepted. He continued to have the use of all areas of the rented premises during the period in question, notwithstanding that he had a broken bedroom blind, and the light/fan in the bedroom and lounge room did not work for part of the period.
19. I will allow that the rent was excessive by 20% over the whole period claimed by the tenant. This involves an element of smoothing to avoid a multitude of excessive rent orders (some items were reduced or withdrawn for specific period, or not for the whole period). However, I am satisfied that a reduction of this amount is proportionate to the loss of consideration of possession the tenant experienced over the whole period relative to the rent he paid.
20. Consequently, I will order that rent is not to exceed $440.00 per week on and from 12 February 2021 to 25 April 2021 and $384.00 on and from 26 April 2021 to 11 February 2022. As this involves retrospective excessive rent orders, and the tenant has already paid all rent owing for these periods, I will liquidate the orders and require the landlords to pay the tenant the amount he has paid in excess which I determine to be $5,151.71.

The compensation for non-economic loss issue

1. The tenant claims $15,000.00 (being the prescribed limit on the Tribunal's order making power imposed by s 187(4) of the Act and Regulation 40(b) of the Residential Tenancies Regulation 2019 (NSW)) in compensation for non-economic loss, being his distress and disappointment, that he contends resulted from the landlords' failure to maintain the premises in a reasonable state of repair. In this respect he contends that in addition to the loss of, or reduced use of, the premises he experienced due to its state of disrepair and dilapidation, the condition of the premises, the failure of the landlords to reasonably respond to his repeated complaints about that condition, and the landlords' decision in February 2022 to increase the rent to $540.00 despite that condition has had a serious emotional impact on him.
2. An order under s 44(1)(b) is referrable to the rent paid by the tenant. It therefore involves a form of economic loss suffered by the tenant, being the loss of consideration of possession of the premises relative to the rent paid. Distress and disappointment are distinct heads of non-economic loss that are not duplicative of the remedy provided by s 44(1)(b): Makowska v St George Community Housing Ltd [2021] NSWSC 287 at [46].
3. I note in respect of this element of the claim that the landlords' obligation to maintain the premises in a reasonable state of repair is a continuous one that is breached when the landlord is on notice as to a state of disrepair. This breach continues until the state of disrepair is remedied.
4. An application in relation to a breach of a residential tenancy agreement must be made within three months of the applicant becoming aware of the breach unless the Tribunal extends the time in which the application can be made pursuant to s 41 of the Civil and Administrative Tribunal Act 2013 (NSW). As noted above this application was made on 4 April 2022 and is therefore maintainable in respect of the three-month period prior to that date absent an extension of time being given.
5. The principles governing the exercise of discretion to extend the time in which an application can be made were distilled by an Appeal Panel of the Tribunal in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22. In short summary, time limits are to be strictly enforced unless to do so would work an injustice to an applicant. Relevant considerations include the length of the delay, the explanation for the delay, any prejudice that would be suffered by the respondent if time were to be extended, and the merit of the applicant's claim. With respect to this last issue if the delay is relatively short it is necessary for the applicant to show that their case is arguable. If the delay is extensive, they must show that it has substantial merit.
6. In this case, there is an insufficient basis for the exercise of discretion to extend time because no satisfactory explanation could be given by the tenant as to why he did not make his application in respect of any earlier period within the three-month period permitted. The tenant seeks to pursue compensation for breach over several years. That involves a very substantial delay in the making of the application which is prejudicial to the landlords because of their potential financial exposure if time were to be extended. The tenant's compensation claim does have substantial merit, but this factor alone does not outweigh the other considerations.
7. Having regard to the tenant's evidence I am satisfied that the landlords continuing breach of the obligation to maintain the premises in a reasonable state of repair did cause him substantial disappointment and distress during the period from 4 January 2022 up to the date he lodged his application. I accept the tenant's evidence that living in the premises in its state of disrepair had a serious emotional impact on him. During this period, he made repeated complaints about the state of disrepair to which he received no or unsatisfactory responses, essentially up until he made his application to the Tribunal. I accept that it was seriously disappointing and distressing for the tenant to have to institute legal action against the landlords to have necessary repairs carried out. Despite that state of disrepair, he was served with a notice that the rent was to be increased by $60.00 per week. I accept that this was very distressing for the tenant because it required him to institute proceedings in order to prove that this increase could not be justified having regard to the state disrepair of the property, and its comparative quality in the market place.
8. Having regard to the severity of the distress and disappointment the tenant suffered due to the state of disrepair of the premises, I will allow him $2,500.00 in compensation for that non-economic loss.

The repair issues

1. The tenant originally sought several orders for repairs, but as noted above, various repairs were carried out by the landlords prior to the final Special Fixture Hearing. Two issues remain outstanding, which are whether the tenant is entitled to an order that would require the landlord to replace the vinyl floor coverings and the bedroom wardrobe.
2. I do not understand there to be any real issue as to the state of dilapidation of these assets. In any event, as I have found above, the vinyl floors are considerable age, are torn in some places, and they have become unstuck from the floor beneath which makes it difficult for them to be cleaned (they lift when being vacuumed) and creates a slip and trip hazard. The bedroom robe is also in a state of dilapidation and disrepair with most of its doors being partially or wholly detached.
3. I note that the condition of the vinyl floor coverings and the wardrobe have been the subject of repeated complaint by the tenant to the landlord's agent since at least February 2019. There can thus be no issue for the purposes of s 65(3A) of the Act that the landlords have been on notice, or ought reasonably to have been on notice, as to the need to 'repair' these assets.
4. The landlords' contention is that the condition of these assets does not engage their obligation to "repair", because the replacement of these items is a capital improvement which falls outside the scope of that term.
5. This understanding of the scope of the landlord's covenant to maintain premises in a reasonable state of repair is misconceived. The vinyl floors and wardrobe are existing rental assets provided with the residential premises. The maintenance of these assets requires their replacement when they have reached the end of their reasonable period of usage, which by their present condition, they have in this case. The replacement of a rental asset which has no residual value with a new asset of a similar kind does not constitute a capital improvement to premises. It is a process of maintenance for which a landlord is responsible.
6. This is in contrast, for example, to the replacement of the asset with an asset of significantly better quality, such as a floating timber floor in place of a vinyl floor, or to the provision of a new asset not originally included with the residential premises, such as air-conditioning or a dishwasher in this case. These would constitute capital improvements that fall outside the scope of the obligation to maintain premises in a reasonable state of repair.
7. It is reasonable for the landlords to be required to replace the vinyl floors and wardrobe having regard to the age of, rent payable for and prospective life of the premises. In this respect, as explained above, I am satisfied that the tenant pays a market rent for the premises having regard to similar rental properties in the locality. He is thus entitled to have the premises maintained to a reasonable standard. The premises may be of some age but there is no suggestion that it will cease to operate as residential premises in the foreseeable future. There is no evidence that the premises is about to be demolished, or that the landlords plan a major renovation of it in the short term, for example, that would make the replacement of these assets now uneconomical or pointless.
8. For the foregoing reasons I am satisfied that the tenant is entitled to orders that will require the landlords to replace the vinyl floors of the apartment and the bedroom wardrobe with new equivalent assets.

Orders

1. For the foregoing reasons, I make the following orders: 1. The rent payable for the residential premises was excessive and shall not exceed $440.00 per week on and from 12 February 2021 to 25 April 2021. 2. The rent payable for the residential premises was excessive and shall not exceed $384.00 per week on an from 26 April 2021 to 11 February 2022. 3. Orders (1) and (2) are liquidated. 4. The landlords, Robyne and David Lowe, are to pay the tenant, Kieran Parker, $7,651.71 immediately, being: 1. Liquidation of orders (1) and (2): $5,151.71, and 2. Compensation for distress and disappointment: $2,500.00. 1. The landlords must at their own expense cause the following work to be carried out in a proper and trade-person-like manner before 31 October 2022: 1. Replace the vinyl floor coverings in the rented premises with at least an equivalent new floor covering. 2. Replace the bedroom wardrobe with an at least equivalent new wardrobe. 1. The application is otherwise dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 11 September 2023 - Formatting amendments. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 September 2023