Rodrigo v Zhang

Grounds of appeal

1. The appellant originally challenged the Tribunal's decision in relation to all amounts awarded.
2. In relation to the break fee, the appellant said that a report provided by the landlord should not have been accepted into evidence, that the opinions offered in that report were based on an examination done one month after the premises were vacated and that evidence provided by the tenants should have been accepted as demonstrating the existence of mould in the premises which was the fault of landlord. The tenant also said that the six-week break fee should not apply as the unit was not vacant for more than a two week period.
3. In relation to the second point, it was an agreed fact between the parties at the appeal that a new tenant in fact took possession of the premises 34 days after the tenants vacated the premises.
4. In relation to the award for damages and repairs, the appellant challenged the award on the basis that the Tribunal failed to make any findings or identify any facts that establish the tenant "influenced or participated in the said damage". The appellant also challenged the finding because the landlord failed to provide two or three quotes and that repairs were carried out by the landlord's father Mr Brian Shirley from STS Technical Services.
5. In relation to the award for rent arrears, the appellant contended that the tenants were entitled to set-off an amount of $149 for a kitchen pantry which had been purchased and installed by the tenants and was to remain as part of the furnishings. The grounds of appeal asserted that this entitlement arose under a verbal agreement. Secondly, the appellant contended that the tenants were entitled to set-off an amount of $80 for a second storage cage that was agreed but not provided pursuant to the residential tenancy agreement.
6. In the Reply to Appeal, the landlord responded as follows.
7. The landlord said that she was not in breach and the notice given under section 98 of the Act was not valid and the tenants were not entitled to vacate the premises. Further, the landlord said that the evidence provided by the landlord's expert (Putralis report) should be accepted in preference to the evidence provided in a report from Mycolab.
8. In relation to the damages claim, the landlord said: "Three quotes were obtained by the owner. The cheapest quote was given the work. The other quotes totalled $980 and $1200. These can be submitted to the Tribunal at any time."
9. The Appeal Panel notes that two of the three quotes do not appear to have been provided to the Tribunal as evidence in the original proceedings.

Submissions

1. At the hearing of the appeal, the appellant made submissions to the same effect as set out in the Notice of Appeal, save that the unpaid rent issue was resolved in part.
2. In relation to the mould issue, the appellant submitted that the tenants had taken action to air the premises in the manner the Putralis report suggests was necessary but that this action did not alleviate the condition of mould on the premises.
3. In relation to the rent arrears, the appellant agreed that rent of $834.71 was outstanding as at the time he vacated the premises. However, he asserted the amount outstanding should have deducted from it and amount of $149 and $80. The $149 was the amount he paid for a kitchen pantry for the premises and the $80 related to the cost of renting a second storage cage. The appellant asserted the landlord had agreed to compensate him for a kitchen pantry and a second storage space. Part of the unpaid rent arose because the appellant made deductions from rent payments due of $530.00 as follows: 1. 149.00 on 31 May 2014 (amount paid $381.00): see appellants documents page 57 2. $10.00 on 25 June 2013 (amount paid $520.00): see appellants documents page 54 3. $10.00 on each of 19 July, 4 July, 20 July, 2 August, 12 August and 20 August 2013 (amount paid on each day $520.00): see appellants documents page 55 4. a further short payment of $10.00 on 11 July 2013: see agent's tenant ledger respondents bundle page 100.
4. The Tribunal had rejected the appellant's assertion these deductions had been agreed: see decision page 4, last line.
5. In relation to the damages claim, the appellant accepted there were two scuff marks on a wall but otherwise submitted the damage was not proven and the amount awarded of $700 was excessive. The appellant also submitted that other scuff marks on the walls had been cleaned off. The appellant again submitted that only one quote had been issued, not three quotes.
6. There was damaged paint, where it had split. The appellant submitted this was caused by the mould and the breach by the landlord. The appellant also submitted the tenants were not responsible for various damage depicted in photographs that were before the Tribunal below. These photographs were also placed before the Appeal Panel..
7. In reply, the landlord made the following submissions.
8. The landlord said that it was common for there to be differential moisture levels in the premises but the difference in the subject premises arose from the tenant's use of the premises. The landlord relied on evidence that the premises were seen to have been significantly heated and that towels were placed over various ventilation areas.
9. The landlord also relied on the following facts: 1. that the current tenant was not experiencing the same problems; 2. the premises were new and the occupation certificate issued on completion stated they complied with all requirements; and 3. that various photographic evidence and the outgoing condition report do not show the presence of mould.
10. In relation to the break fee, while the landlord accepted that a new tenant had been found after 34 days, the landlord submitted that issue of mitigation did not arise and that the effect of the agreement was that the break fee was an agreed sum payable in accordance with clause 41.1 of the agreement.

Consideration

1. As noted in the earlier decision of the Appeal Panel, the decision the subject of the appellant's appeal is an internally appealable decision: see at [17].
2. The entitlement to appeal is regulated by section 80 of the Civil and Administrative Tribunal Act, 2013 (NCAT Act) and by clause 12 of schedule 4 of the NCAT Act. It is convenient to repeat these provisions.
3. Section 80(2) of the NCAT Act provides: "(2) Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance-with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance-as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.
4. Clause 12 of Schedule 4 of the NCAT Act provides: 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
5. Some of the issues raised in this appeal are questions of law and others are not. Where leave of the Appeal Panel is required, the provisions of clause 12 of Schedule 4 apply and to obtain leave the appellant must show he may have suffered a substantial miscarriage of justice in order to obtain leave.
6. The requirements for the grant of leave and what is meant by a substantial miscarriage of justice was considered by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17.
7. It is convenient to deal with the appeal in relation to the break fee and the damages and repairs separately.

Break fee

1. In relation to the break fee claim the appellant raised the following contentions: 1. the Tribunal should have rejected the report by Putralis and accepted the evidence of the tenant in regard to the existence of the mould and the landlord being responsible thereof (i.e. the alleged breach of the agreement by the landlord); and 2. the landlord was not entitled to the break lease fee as a fixed sum and, in any event was obliged to mitigate her loss and damage and account for the fact a new tenant was found in 34 days.
2. The notice given by the tenants, to the landlord, in their email dated 15 August 2013 advising that they were vacating the premises was in the following terms : Afternoon David, Well frustratingly and more so worryingly due to serious Health concerns relating to the increasing growth of Mould within our unit, as of today we officially give you two weeks with "Notice of intention to vacate the premises". To say that we are disappointed with how this has been handled would be an understatement. This situation should have been addressed and rectified weeks ago. But we feel that it been placed in the all "too hard basket". In the meantime we have had to sleep with constant dampness seeping through into the rooms, mould festering under our bed, sons cot and furniture and an increasingly strong mildew smell throughout. As a result we have spent several hours cleaning and disinfecting the premises As you would be aware the effects of being in an environment long term such as this is harmful to an adult and can be deadly to a baby. We are now in the process of relocating ASAP! Given the situation, should we find a place within the two weeks, we would hope that you would happily agree to have the bond released and transferred over to the new agent without delay. As we have clearly stated to you on a number of occasions, we have had no intention to move again anytime soon. This move now comes at unnecessary cost incurred, both in time and money. King Regards, Shane C. Rodrigo"
3. The Tribunal dealt with the tenants' claim at pages 5 and 6 of the reasons for decision. In the first paragraph of page 5 the Tribunal refers to the landlord's obligation to provide and maintain the residential premises in a reasonable state of repair having regard to the age, rent payable and prospective life of the premises. In the following paragraph, the Tribunal noted that the landlord must provide the premises in a reasonable state of cleanliness and fit for habitation by the tenants. In this regard the Tribunal referred to section 52 of the RT Act and clause 18.1 of the residential tenancy agreement. The latter clause requires the landlord: "18.1 to make sure that the residential premises are reasonably clean and fit to live in; ….. 18.3 to keep the residential premises in a reasonable state of repair, considering the age of, the rent paid for and the prospective life of the premises;"
4. In the next paragraph the Tribunal makes reference to the evidence that was placed before it by the appellant, which included photographs and DVD video depictions of the main bedroom and the 'baby room' and responses from the landlord's agent to request that the 'problem' be addressed in a timely manner. The Tribunal went on to say the following: There is no evidence (such as from an independent building consultant) that there are structural issues causing rising and lateral damp (i.e. ground moisture rising up the brick wall), or that there is poor sub-floor ventilation or moisture in the sub-floor area, or that the weep-holes or the air vents at the base of the strata scheme building require clearance.
5. The Tribunal then went on to describe the evidence submitted by the landlord, which included the Putralis Report, the occupation certificate of the strata building and the evidence of the present tenant of the premises, Mr Amini that there was no mould problem or any structural indicators that could legitimately be identified as precursors to any existing mould contamination.
6. As we have noted the Tribunal found, after considering all the evidence and submissions, that the tenants, who bore the onus of proof, had: "[failed] to demonstrate any act or omission that could be characterised as a breach by the landlord of the obligation to repair and maintain or to provide clean premises which are fit for habitation as provided by the [Act]." In regard to the possible causes of the mould and moisture the Tribunal observed and found: 1. there was no evidence of poor sub-floor for ventilation or moisture in the subfloor area, or that the weep-holes for the vents at the base of the strata scheme building require clearance: see decision page 5; 2. that the Putralis report observed that there tends is to be significantly higher internal humidity levels when compared to outside readings when the apartment is not given adequate fresh air intake/circulation: see decision page 5; 3. there was evidence from the present tenant that there is no mould problem or any structural indicators that might be "precursors to any existing mould contamination": see decision page 5; 4. the building has no structural issues that cause or are likely to cause damp and mould in the premises: see decision page 6; 5. while there may have been mould in the premises, it was caused by high humidity inside the premises that is conducive to the growth of mould: see decision page 6; 6. this was a phenomena over which the landlord had no control. Rather the tenant had "more control because they could have taken steps to ensure the premises were properly ventilated or de-humidified (that is using the de-humidifier function on the air conditioner)": see decision page 6; and 7. the mould in the premises were related to very high ambient moisture content, unrelated to any building standards or maintenance issues: see decision page 6.
7. In our view, the findings and conclusions reached by the Tribunal were open to it on the evidence before it. As we have noted, the Tribunal did not reject the tenants' evidence in regard to the existence of mould and moisture as depicted in the photographs tendered by the tenants. What was not accepted was that this was due to a failure by the landlord to meet her obligations under the lease.
8. Nor do we accept the contentions of the appellant that the Tribunal should have rejected the Putralis Report. Even though it was prepared after the tenants vacated the premises it was clearly relevant in that it addressed the following structural matters relating to the premises and the whole building and provided the following opinions and observations: 1. the premises were structurally sound with walls, ceilings and floors all in good order; 2. moisture readings taken throughout the structure all returned acceptable results on the day of the inspection; 3. there were no signs of efflorescence and therefore no signs of long term moisture incursion through the structure; 4. there was no evidence of mould contamination around window frames in the bedrooms; 5. window frames in bedrooms are an area where mould growth is regularly found and is related directly to poor internal ventilation combined with sustained high internal humidity levels; 6. humidity levels on the day of inspection was slightly below the recommended level of 60%, with outside humidity significantly lower; 7. the higher humidity levels can be directly attributed to the absence of any fresh air intake/circulation due to the part to the premises being unoccupied at the time of inspection; 8. there were no structural indicators that could be identified as precursors to any existing mould contamination (none in fact being present) or any previous mould contamination said to have existed; 9. the apartment tended to have significantly higher internal humidity levels when compared to the outside readings when the apartment is not given adequate fresh air intake/circulation; 10. this variation between inside and outside would be increased if the occupant utilising the premises continued to have the doors and windows closed; and 11. the importance of fresh air intake and circulation when humidity levels are high cannot be understated.
9. As we have noted, the Tribunal also had before it the evidence of the premises before and after the appellants were in possession. This evidence included the signed occupation certificate issued 18 February 2013 and the incoming inspection report dated 16 May 2013 confirming the premises did not have defects or exhibit signs of mould prior to the tenants occupying the premises and evidence of the subsequent tenant, Mr Amini. Also relevant was the tenancy only operated for a short period of time, about three months.
10. Accordingly, the Appeal Panel is not satisfied that the decision made by the Tribunal was against the weight of evidence or was not fair and equitable. Consequently, there has been no substantial miscarriage of justice and leave to appeal this part of the decision is refused.
11. The next question for determination is whether the Tribunal erred in finding that the landlord was entitled to recover the entirety of the four week lease break fee on the basis of the tenants having terminated, or vacated the premises early. .
12. In the last paragraph on page 4 of its reasons for decision the Tribunal said it was satisfied that the landlord was entitled to the break fee sought by reason of section 104(4)(a) of the RTA and clause 41.1 of the tenancy agreement. In our view, the reference to section 104(4)(a) is clearly a typographical error and should read section 107(4)(a). The Tribunal also said that a break fee was payable, unless the tenants established they were entitled to break the fixed term tenancy early because of the landlord's breaches. As we have noted, the Tribunal was not satisfied the tenants had established a breach of the agreement.
13. Section 107 of the Act provides that if the premises are abandoned by a tenant a break lease fee may be payable if a residential tenancy agreement so provides. Section 107 is in the following terms: 107 Landlord's remedies on abandonment (1) The Tribunal may, on application by a landlord, order a tenant to pay compensation to the landlord for any loss (including loss of rent) will caused by the abandonment of the residential premises by the tenant. (2) The landlord must take all reasonable steps to mitigate the loss and is not entitled to compensation for any loss that could have been avoided by taking those steps. This subsection does not apply in the case of a fixed term agreement that provides for the payment of a break fee. (3) The compensation payable by a tenant under this section in respect of a fixed term agreement is the amount of the applicable break fee for the tenancy, if the agreement provides for the payment of a break fee. (4) The "break fee" for a fixed term agreement for a fixed term of not more than 3 years is: (a) an amount equal to 6 weeks rent if less than half of the fixed term had expired when the premises were abandoned, or (b) an amount equal to 4 weeks rent in any other case.
14. Clause 41 of the residential tenancy agreement between the parties provided as follows: "41. The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of the following amount: 41.1 if the fixed term is for three years or less, six weeks rent if less then a half the term has expired or four weeks rent in any other case,"
15. There is no dispute that the residential tenancy agreement between the parties was for a term of 12 months and they vacated the premises after three months and 15 days (see [1] and [2] of the earlier decision). That is, the agreement was a fixed term agreement and the tenant's vacated the premises before half the term of the agreement had expired. The weekly rent payable under the agreement was $530.00 per week and it was not disputed that six weeks rent amounted to $3,180:00.
16. As noted above, subsection 107(2) of the Act imposes a statutory obligation upon a landlord to mitigate the loss and damage in circumstances where the premises are abandoned and the fixed term agreement does not provide for the payment of a break fee.
17. Absent provision for a break fee, a landlord would ordinarily be entitled to recover damages equivalent to the rent lost from the date of abandonment until the end of a fixed term agreement, subject to any obligation to mitigate the loss and damage. The landlord would also be entitled to recover the costs incurred in securing a new tenant including the costs of advertising the premises.
18. Subsection 107(3) provides that the break fee is the amount payable as compensation if the residential tenancy agreement so provides. Unlike subsection (2), there is no duty imposed upon the landlord to mitigate the loss and damage under subsection (3). Rather such is expressly excluded where a break fee is agreed: see section 107(2). Instead the compensation the landlord can recover under this subsection is fixed and the landlord has no entitlement to any further compensation in respect of the tenant abandoning the premises such as incidental costs of advertising etc.
19. The only other amount that may be payable in the nature of compensation for loss of rent is an occupation fee if the tenant's goods are left on the premises: see section 107(7) of the Act. Such a claim was not made in the present case.
20. Accordingly, in our view, the Tribunal did not err in awarding compensation to the landlord in accordance with subsection 107(3) of the Act and clause 41.1 of the agreement without any deduction for rent earned by the landlord in consequence of re-tenanting premises after 34 days.
21. Consequently, the appellant's appeal in relation to the break fee must fail.
22. Because the Appeal Panel has determined no error was made by the Tribunal in that there was no conduct of the landlord which constituted a breach of the landlord's obligation to provide premises that were reasonably clean and fit to live in and/or were in a reasonable state of repair, the Tribunal's findings in regard to the tenants' (appellant's) claim for a refund of their bond also fails.

Damages and Repairs

1. At the bottom of page 3 of its reasons for decision, the Tribunal referred to the general obligations of a tenant as set out in section 51 of the RT Act, including the obligation set out in subsection (3) when vacant possession is given to the premises. That subsection provides as follows: (3) On giving vacant possession of the residential premises, the tenant must do the following: (a) remove all the tenant's goods from the residential premises, (b) leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, and, if there is a condition report, as set out in the condition report applicable to the premises when the agreement was entered into, (c) leave the residential premises in a reasonable state of cleanliness, having regard to the condition of the premises at the commencement of the tenancy, (d) remove or arrange for the removal from the residential premises of all rubbish, having regard to the condition of the premises at the commencement of the tenancy, (e) return to the landlord all keys, and other opening devices or similar devices, provided by the landlord to the tenant
2. On page 4 of its reasons for decision the Tribunal set out the nature of its task in determining whether the tenants had left the premises as nearly as possible in the same condition, fair wear and tear excepted, as they were at the commencement of the agreement. The appellant has not raised any criticism of the matters identified by the Tribunal as relevant to consider on this aspect of the Tribunal's reasoning.
3. The evidence as to the agreed state of the premises in the incoming inspection report confirms that there were no defects in the painting in the lounge room wall and bedroom 2 nor any wall damage adjacent to the cupboard at commencement of the agreement
4. Mr Amini, the new tenant, gave evidence that he observed damage repaired by SFS Technical Services.
5. The appellant concedes there was scuff marks on walls, some of which the appellant says he rectified. Some other damage is denied. However, the fact of some damage is conceded. The respondent and her witnesses (including the subsequent tenant Mr Amini) gave competing evidence.
6. The quote from STS Technical Services (STS) records the work carried out at the cost of $700. No evidence challenging these costs appears to have been provided by the tenants at the original hearing. Nor is there evidence on appeal to suggest the tenants sought to cross examine anyone from STS.
7. The Tribunal, in its reasons on page 5, referred to this evidence and accepted the amount of the STS invoice as reasonable and that the damage was "beyond fair wear and tear". The invoice provided is evidence which the Tribunal was entitled to rely as evidence of the cost to make good damage: see Kang v Khan [2014] NSWCATAP 48.
8. Absent other evidence to rebut this evidence as the reasonable cost of repairing the damage, it was open to the Tribunal to accept this evidence and make an award for $700.00.
9. Consequently, in our view the appellant has also failed to establish that the Tribunal's decision to make an award of $700.00 in regard to repairs and damage is unfair or inequitable or against the weight of evidence.

Unpaid rent and the claimed set off for the kitchen pantry and second storage cage.

1. The appellant agreed at the appeal that rent of $834.71 was unpaid. He asserted deductions had been made for the kitchen pantry and second storage cage by reason of an agreement with the respondent. The Tribunal rejected both claims for deduction and found there was no agreement. In relation to the kitchen pantry, the fact a text message may have been sent by the appellant advising the respondent a deduction of $149.00 had been made (see appellant's bundle page 38) does not mean there was an agreement or that the Tribunal's conclusion was wrong. As to the storage cage deduction, no storage cage is noted on the residential tenancy agreement (see "inclusions" in agreement - respondent's documents page 5). Further, the respondent expressly rejected the appellant's proposal to include any deduction to the rent for the storage cage claim being made: see appellants documents page 40). Having regard to the evidence referred to above this conclusion of the Tribunal that there was no agreement in respect of deductions made to rent payments due is not shown to be wrong. In these circumstances the Appeal Panel is satisfied the award of $834.71 for unpaid rent was correct and this ground of appeal fails.

Conclusion in regard to Leave to appeal

1. In summary we have found that the appellant has failed to establish that the Tribunal erred in its findings in regard to the six week break fee and the award for damages and repairs. Nor has the appellant established that the findings or the decision of the Tribunal was not fair and equitable, or against the weight of evidence. Accordingly, the appropriate order are that leave to appeal is refused and the appeal is dismissed.

Costs of Appeal

1. The respondent has sought costs of the appeal. Such an application is regulated by s60 of the Civil and Administrative Tribunal Act, 2013. This requires a claimant for costs to demonstrate special circumstances.
2. The appeal is not shown to be hopeless or otherwise vexatious. It raised significant issues of law concerning the duty to mitigate. In so far as leave to appeal was required, consideration of the evidence and the arguments put forward by the parties do not support a view that special circumstances exist to warrant an order for costs. Accordingly the claim for costs by the respondent is dismissed.

Orders

1. The Tribunal makes the following orders: 1. Leave to appeal is refused. 2. The appeal is otherwise dismissed. 3. No order as to costs. 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: 02 June 2015