Veale and Batten v Liu

BACKGROUND

1. A written residential tenancy agreement between Ms Bracewell and Mr Batten (as tenants) and the respondent (as landlord) was entered into commencing on 21 February 2015. It was a fixed term agreement, expiring on 21 August 2015. The residential tenancy agreement is now a periodic agreement. The rent for the property is $590.00 per week, and the property is a 3 bedroom unit in a strata block. The strata block is relatively new. Ms Bracewell no longer resides in the property. Mr Batten resides in the property with 2 other occupants, Ms Veale and Ms Stewart.

THE CLAIM

1. The applicant seeks the following compensation: 1. A rent reduction of $421.40 per week from 12 July 2015 onwards. 2. The cost of replacing damaged footwear (shoes and a pair of 'thongs'); a bookcase; a backpack; and a hat in the sum of $687.55. 3. Costs of medication and preparing matter for hearing in the sum of $168.90.

APPLICANT'S DOCUMENTS

1. The applicant filed and served documents which were admitted into evidence. It is unnecessary to individually list each document. The salient documents included: 1. The written residential tenancy agreement; 2. A statement of Mr Batten dated 27 August 2015; 3. A medical certificate of Dr Pavan dated 17 August 2015 in respect of Ms Veale; 4. An undated statement of Ms Stewart; 5. Handwritten notes of Ms Veale made when a plumber, of P J Martin Plumbing, attended the property on 17 July 2015; 6. A letter from agent of the landlord to all residents of the strata unit dated 7 August 2015 regarding a proposed inspection by a builder in respect of maintenance dated 7 August 2015; 7. Handwritten notes of Ms Veale dated 14 August 2015 when an agent of the landlord, Mr Tong, inspected the premises; 8. Handwritten notes of Ms Veale dated 17 August 2015 when a mould 'specialist' Mr Putral, attended the property; 9. An undated letter of Ms Veale (which Ms Veale asserted was attached to an email sent to the landlord's agent on 24 July 2015 after an inspection of the property by the agent on 24 July 2015) setting out mould, mildew, condensation and ventilation issues with the property; 10. Photographs of the residence and the belongings of the occupants taken during the period from 13 July 2015 to 17 August 2015; 11. An email from Ms Veale to the landlord's agent dated 19 July 2015 setting out issues requiring repair. In particular, the email refers to condensation problems and "an infestation of what we thought were fruit flies"; 12. Emails between the parties for the period from 22 July 2015 to 24 August 2015; 13. A schedule of items that the applicant asserts was mould or mildew damaged, and requires replacement, with estimates of the value of the items; and advertisements for what the applicant asserts is the replacement cost of the items. The applicant claims $687.55 for the cost of replacement items; 14. A schedule of costs in respect of the applicant preparing the matter for hearing and taking time off work so that tradespersons could attend the residence.

RESPONDENT'S DOCUMENTS

1. The landlord relied upon photographs taken at the ingoing inspection dated 15 January 2015.

APPLICANT'S EVIDENCE

1. The majority of the applicant's oral evidence was given by the occupant Ms Veale. Ms Veale did not state when she first occupied the property, but the emails contained in the applicants' documents indicate she was an occupant in the property on 6 March 2015, and it appears she was an occupant in the property from the commencement of the tenancy.
2. Ms Veale's evidence can be summarised as follows:
3. When the tenancy commenced, there were issues regarding the toilet (unable to "full flush" the toilet; a missing cupboard door; a toilet roll holder missing in one bathroom (their being 2 bathrooms in the residence); a drainage issue in a bath. The issues were reported to the agent on 16 February 2015. Emails were sent to the agent dated 6 March 2015 and 16 March 2015. The repairs were completed within 1 month. The Tribunal was informed that no claim for rent reduction, repairs or compensation was made in respect of these issues.
4. On 12 July 2015, Mr Batten and the occupants encountered significant condensed water in the premises. Water was "running down walls"; pooling of water on the floor and adjacent to a window sill; and condensation cupboard doors; condensation on wardrobe doors; and condensation above the range hood in the kitchen. Ms Veale reported the issue to the landlord's agent immediately by email and subsequently by telephone;
5. On 14 July 2015, the agent of the landlord attended the premises and was shown the problem regarding condensed water in the premises;
6. On 17 July 2015 a plumber, arranged by the landlord, attended the premises. The plumber orally told Ms Veale there were ventilation problems in the unit, and that there were "sewer flies" around the drains in the bathroom and laundry, which the plumber orally asserted were "coming from the laundry pipe";
7. On 19 July 2015 Ms Veale emailed the property manager informing him of what the plumber and told her, and reported mould in the premises. The email refers in detail to there being puddles of water on the floor on the hallway floor; puddles on tiles near the balcony door; and "incredible amounts of condensation on the glass and windows". The email also makes reference to the existence of "sewer flies";
8. On 24 July 2015 there was a further inspection of the property by the property manager, who promised that the water condensation and ventilation problems would be fixed;
9. On 5 August 2015, a new property manager of the landlord emailed Ms Veale, and made suggestions regarding dealing with mould issues;
10. On 6 August 2015, Ms Veale sent a further extensive email to the property manager setting out water condensation and mould/mildew issues with the property. Further emails refer to asthma/ breathing issues experienced by Ms Veale and Ms Stewart;
11. On 12 August 2015, the property manager emailed Ms Veale notifying her that a mould expert, Mr Putral, would be attending the property, and also offering "relocation" to another property;
12. On 17 August 2015, Mr Putral attended the property. Ms Veale's version of what he told her is set out in the notes Ms Veale took, which were part of the documentary evidence;
13. Ms Veale requested that the landlord provided copies of the report of the plumber and Mr Putral, but the reports were not sent.
14. On 4 August 2015, a builder attended the premises (arranged by the landlord). He suggested to Ms Veale that a de-humidifier be provided to reduce the amount of moisture in the air.
15. Ms Veale stated that the water condensation; and mildew had a significant effect on the amenity of the property. She stated the tenant and occupants would mop up water with towels each morning; sheets and pillowcases were consistently damp; furniture and clothing was damp; and shoes and clothes were mildew damaged. Ms Veale stated that there was no mould on ceilings or walls but some mould on window sills. She stated that the tenant and occupants had placed buckets in wardrobes; left windows open when possible; and used the air-conditioner to try to remove moisture from the air.

PHOTOGRAPHIC EVIDENCE

1. The photographs taken by Ms Veale show significant pooling of water in areas of the property; water condensation on walls; and personal items with mildew growing on them (in particular, a hat, shoes, backpack; bag; and 'thongs').

RESPONDENT'S EVIDENCE AND SUBMISSIONS

1. Mr Ng did not dispute the evidence of Ms Veale and accepted that the property had a ventilation problem that had resulted in excessive water condensation, but that the applicants had not mitigated their loss because they could have taken greater measures to ventilate the property by leaving doors and windows open. Mr Ng submitted that the tenant's claim for a reduction of rent was excessive.

JURISDICTION

1. There is no issue that Mr Batten and the respondent are in the relationship of tenant and landlord. Proceedings have been filed within the relevant limitation period in Regulation 22 of the Residential Tenancies Regulation 2010 and in any event Section 44 of the Act allows a tent to make a claim under that provision prior to the end of the tenancy (although any orders for rent reduction cannot exceed 12 months).

APPLICABLE LAW

1. 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 for the premises; and prospective life of the premises. However, pursuant to Section 65(3) of the Act, the landlord's obligation under Section 63(1) is not breached unless the landlord is on notice, or reasonably should be on notice, of the need to repair, and the landlord has failed to act with reasonable diligence to conduct repairs. 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.
2. If the Tribunal is satisfied that the landlord has breached the obligation under Section 63(1) of the Act to keep the premises in a reasonable state of repair, it can award a tenant a rent reduction for loss of amenity due to the breach under Section 44(1)(b) of the Act (Fuller v NSW Land and Housing Corporation [2013] NSWCTTT 648; and comparative decisions of the Tribunal discussed in Anforth, Christensen and Bentwood Residential Tenancies Law and Practice NSW 6th ed [2014] at pp 334-338.
3. Pursuant to Section 10 of the Act, a person who is not listed on a written residential tenancy agreement as a tenant is only a "tenant" within Act (including as a sub-tenant) if there is a written agreement between the occupant and the tenant. Pursuant to Section 18 of the Act, any written residential tenancy continues on the same terms and conditions as a periodic agreement upon the expiration of the fixed term.

APPLICATION OF LAW TO FACTS

1. The Tribunal is satisfied that for the period from 12 July 2015 to 22 September 2015, the residential premises had significant dampness problems. The photographs taken by Ms Veale during the period from July to August 2015 show the pooling of water in the premises; very significant condensation of water; and mildew damage to clothes and personal items. The evidence of Ms Veale and the written evidence of Mr Batten and Ms Stewart was that the premises was consistently damp and there were odours of dampness. The landlord did not challenge the evidence of the applicants in any significant way regarding the issue of dampness.
2. The Tribunal is satisfied that the applicant has proved the respondent breached its obligation under Section 63 of the Act, by failing to take measures to improve the ventilation of the premises and reduce the significant water condensation and dampness of the premises. The Tribunal is satisfied that a landlord acting with reasonable diligence would have conducted repairs within 3 weeks of the issue being reported on 12 July 2015. There is limited evidence as to what measures the landlord should reasonably have taken, as there is no clear evidence of the cause of the dampness problem (the landlord having not filed and served any reports by the experts who inspected the property). There is no evidence of any water leak in the premises. However, the Tribunal is satisfied that the landlord could have taken measures such as the installation of more effective exhaust fans, and the provision of a de-humidifier to ameliorate the unreasonable amount of water pooling; water condensation; and dampness.
3. Notwithstanding the above, it is notable that the tenant and the occupants did not experience any problems with dampness and water condensation in the period between 21 February 2015 and 12 July 2015 (i.e. the end of summer; autumn; and the beginning of winter). Further, there is no evidence that the extent of the dampness and water condensation has caused mould problems. Further, the tenant and occupant were able to use all the rooms of the premises, and the evidence of Ms Veale (and the written evidence of Mr Batten and Ms Stewart) indicates that a significant component of the loss of amenity was the need to clean up the water pooling and water condensation each morning.
4. After considering the oral evidence of Ms Veale, and the written evidence of Mr Batten and Ms Stewart, the Tribunal is satisfied that the dampness and water condensation has caused loss of amenity. The Tribunal is not satisfied the landlord has proved that the applicant failed to mitigate loss. The evidence of Ms Veale was that she, Ms Stewart and Mr Batten took measures to reduce the dampness and water condensation. The Tribunal is satisfied that by way of compensation, there should be a rent reduction under Section 44(1)(b) of the Act.
5. In calculating compensation by way of a rent reduction under Section 44(1) (b) of the Act, the Tribunal has a wide discretion. Each case depends upon its particular facts and circumstances. The application filed with the Tribunal claims a rent reduction equivalent to 71.3% of the rent. The Tribunal is not satisfied the evidence of loss of amenity justifies such a significant rent reduction. The Tribunal has considered comparable decisions of the Tribunal. For example, in Timms and Simpson v Adams [2012] NSWCTTT 53 the Tribunal awarded a tenant a retrospective rent reduction equivalent to 33.33% of the rent in respect of premises that were significantly mould affected due to inadequate ventilation. In Fuller v NSW Land and Housing Corporation [2013] NSWCTTT 648 the Tribunal awarded the tenant a rent reduction equivalent to 30% of the rent payable for the premises under Section 44(1)(b) of the Act in circumstances where the property was significantly affected by dampness over a number of years. The Tribunal is satisfied on the evidence that: 1. The tenant and occupants put the landlord on notice of the need to repair due to water condensation and water pooling in the residence on 12 July 2015; 2. A reasonable period to conduct repairs to reduce the condensation and water pooling would have been 3 weeks (i.e. by 3 August 2015); 3. The failure to conduct repairs with reasonable diligence within a 3 week period constitutes a breach of Section 63 of the Act; 4. The tenant and occupants suffered a loss of amenity of the premises due to having to repeatedly clean up water condensation and water pooling; musty smells; and mildew on various items of the occupants shoes; hat; a backpack; a bag; and a pillow; 5. There should be a rent reduction pursuant to Section 44(1)(b) of the Act for the period from 3 August 2015 to 22 September 2015 (i.e. a period of 7.1 weeks); 6. The appropriate amount for a rent reduction is $129.80 per week representing a 22% rent reduction; 7. The landlord has not proved that the tenant and occupants have failed to take reasonable measures to mitigate loss (i.e. reasonable measures to avoid the loss of amenity). The landlord bears the onus of proof in respect of failure to mitigate. The evidence of Ms Veale was that the tenant and occupants took measures to increase ventilation of the property when possible; and cleaned up the water pooling and water condensation immediately. The Tribunal is not satisfied the landlord has proved to the requisite standard of proof the tenant and occupants failed to mitigate any loss.
6. The amount of compensation for a rent reduction under Section 44(1)(b) of the Act for the landlord's breach of Section 63 of the Act is $921.58.
7. The Tribunal is not satisfied the tenant and occupants have proved breach of Section 63 of the Act by the landlord in respect of the existence of 'sewer flies'. The Tribunal is not satisfied that the oral comment by the plumber to Ms Veale that the mites were "sewer flies" and that they came from a "pipe" in the premises is sufficient to prove a breach of Section 63 of the Act by the landlord in respect of the condition of the pipes in the premises.

Compensation for Mildew Damaged Personal Items

1. The tenant and the occupants claimed $687.55 in respect of such items. There was some photographic evidence of a hat, a bag, a backpack, a pillow; and shoes being affected by mould. However, there was no evidence as to who owned the goods. Most of the goods appeared to be owned by the occupants, Ms Veale and Ms Stewart. By reason of the operation of Sections 10 and 18 of the Act, the Tribunal has no jurisdiction in respect of compensation for the goods of Ms Veale and Ms Stewart, as they were not listed as tenants on the lease when it was a fixed term agreement, nor was there any evidence of a written sub-tenancy agreement between themselves and Mr Batten, and the fixed term agreement continued as a periodic agreement on the same terms after the expiration of the fixed term agreement.
2. In any event, the Tribunal is not satisfied that there is sufficient evidence regarding the ownership of the items; the age of the items; the extent of damage to the items; the replacement cost of the items; and an appropriate rate of depreciation to make any award for compensation in respect of the items, notwithstanding the provisions of Sections 10 and 18 of the Act.

Compensation for Cost of Preparing the Proceedings, and Taking Time Off Work

1. Pursuant to Section 60 of the Civil and Administrative Tribunal Act 2013, no costs can be awarded unless there are 'special circumstances'. The Tribunal is not satisfied that there are any 'special circumstances' sufficient to order the landlord to pay for the tenant and occupants costs in preparing the matter in the Tribunal.
2. In respect of the tenant and/or occupants being compensated for taking time off work so that the agent of the landlord and/or tradespersons could attend the premises, the Tribunal is not satisfied that (1) there is sufficient evidence of actual loss by way of the provision of evidence from the employer and/or wage records; and (2) in any event, such a loss is too remote to be compensated for breach of contract (i.e. the landlord's breach of Section 63 of the Act) under the principles of Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145.

Compensation for Medical Treatment

1. The Tribunal is not satisfied that compensation should be awarded for the cost of medication or medical treatment in respect of respiratory issues to Ms Stewart or Ms Veale. Ms Stewart is not a party to proceedings. As discussed above, by reason of the operation of Sections 10 and 18 of the Act, the Tribunal has no jurisdiction in regard to the occupants (but it does have jurisdiction in respect of the tenant Mr Batten). In any event, the Tribunal is not satisfied that the medical evidence is sufficient to justify an order for non-economic loss or medical expenses, applying the principles discussed in Fuller v NSW Land and Housing Corporation [2013] NSWCTTT 648.

Repairs to Premises

1. The tenant and occupants seek a general order that the landlord repair the premises to eliminate the water pooling, water condensation and dampness of the premises. There is no evidence of a water leak into the premises, and no evidence as to what is the cause of the water pooling, water condensation, and dampness. The type of repair submitted by the tenant and occupants as appropriate is the provision of a portable de-humidifier. The premises has reverse cycle air-conditioning which when operated may also reduce the amount of moisture in the air.
2. As the tenant has proved breach of Section 63 of the Act by the landlord, and no repairs have been performed, the Tribunal is satisfied that it is appropriate to make a repair order in respect of the elimination of unreasonable water pooling, water condensation, and dampness. However, the Tribunal is not satisfied that it is appropriate to order the landlord to provide a portable de-humidifier. The landlord may chose do so, to comply with the repair order, or it may take other measures. There was no water pooling, water condensation, and dampness in the warmer months, and there may be no issue over the summer months, with the problem confined to the colder months. However, if the landlord fails to comply with the repair order, the tenant may renew the proceedings in accordance with Schedule 4 Clause 8 of the Civil and Administrative Tribunal Act 2013.

Ongoing Rent Reduction

1. Under Section 44(1)(b) of the Act the Tribunal has the discretion to order a rent reduction into the future pending repairs to the premises being performed, provided the total period of the rent reduction does not exceed 12 months. The Tribunal is not satisfied on the evidence that the amenity issues with the property are so severe that a rent reduction order should be made for a future period. However, as discussed above, if the landlord fails to conduct repairs as set out in the orders of the Tribunal, the tenant may renew the proceedings, or the tenant may have a fresh cause of action under Sections 63 and 44 of the Act.

Payment of Rent to the Tribunal

1. The Tribunal is not satisfied on the evidence that it should exercise its discretion under Section 187(1)(g) of the Act that rent be paid to the Tribunal rather than the landlord until repairs are performed. Such an order has a significant impact upon the relationship between the parties, and is not to be lightly made. The Tribunal is not satisfied that the nature of the breach of Section 63 of the Act by the landlord is sufficiently severe to justify an order that rent be paid to the Tribunal.
2. As Mr Peter Batten is the tenant in the written residential tenancy agreement, the order regarding rent reduction is made in favour of Mr Batten rather than jointly and severally with the occupant Ms Veale. G J Sarginson General Member Civil and Administrative Tribunal of New South Wales 20 November 2015 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: 08 January 2016