Yang v NSW Land and Housing Corporation

NCAT Consumer and Commercial|2016-02-05

reasons for decision

The matter was listed for hearing at the Tribunal in Sydney on 5 February 2016. Mr McDonald, tenant's advocate, of Inner Sydney Tenant's Advice and Advocacy Service, appeared for the applicant ('the tenant'). Leave had previously been granted by the Tribunal for the tenant to be represented in the proceedings, pursuant to Section 45 of the Civil and Administrative Tribunal Act 2013. The tenant appeared and gave evidence with the assistance of a Mandarin interpreter.
Mr Akkermans appeared for the respondent ('the landlord').
Proceedings were filed in the Tribunal on 26 November 2015. Pursuant to orders of the Tribunal on 9 December 2015, the tenant was granted leave to file and serve an amended claim. The amended claim sought the following orders: 1. Leave to extend the limitation period under Regulation 22 of the Residential Tenancies Regulation 2010 ('the RT Regulations') to file the proceedings, pursuant to Section 41 of the Civil and Administrative Tribunal Act 2013; 2. The landlord pay the tenant $11,159.64 pursuant to Section 187(1) (d) or Section 61(2) of the Residential Tenancies Act 2010 ('the RT Act') for the cost of replacing water damaged goods and possessions of the tenant. 15 items were particularised in the amended claim; 3. A rent reduction of 100% for the period between 23 June 2015 and 6 May 2015 in the total sum of $199.10 pursuant to Section 44 of the RT Act; 4. A rent reduction of 15% for the period from 7 May 2015 to 5 February 2015 in the total sum of $194.13 pursuant to Section 44 of the RT Act; 5. The landlord conduct repairs to eliminate a small dripping leak in the second bedroom of the premises, and perform painting and (where necessary) rendering of internal walls to address all water damage;
The amended application by the tenant also makes reference to the provisions of Section 61(2) of the RT Act.

BACKGROUND

The dispute arises out of a water leak into the residential premises, which occurred at some time between 16 May 2015 and 23 June 2015. The tenant resides in the top floor of a high rise tower block of units in Surry Hills. There is a second tower block at the same address. The tower blocks are known as the 'John Northcott Estate'. The landlord is the owner of the blocks. A written residential tenancy agreement between the parties commenced on 11 April 2011. The tenant resided in the property prior to 11 April 2011, with her late husband, and the tenancy was transferred to her on his death. The rent payable for the premises (as at the date of hearing) is $100.30 per week.
The tenant went to China on 16 May 2015. When the tenant returned on 23 June 2015, there had been a water leak into the premises which caused damage to her goods and belongings. The tenant alleges that the water leak was attributable to the landlord's failure to keep the property in a reasonable state of repair, in breach of Section 63 of the RT Act.

APPLICANT'S DOCUMENTS

The tenant filed and served documents in accordance with Tribunal directions. The tenant's documents relevantly included: 1. A chronology of events; 2. A statement dated 11 January 2016; 3. Photographs of the residence and water damaged belongings; 4. A letter of demand from the tenant to "building management" dated 4 July 2015; 5. A letter from Ms Vella a "consultant" of Marsh Pty Ltd (insurance brokers) dated 11 August 2015 denying liability. The letter states that Ms Vella is a "consultant on behalf of NSW Land and Housing Corp" (sic); 6. Advertisements downloaded from the internet in respect of the cost of a replacement sofa; replacement bedding; a replacement mattress; replacement cushions; a replacement bed frame; replacement blankets; and replacement curtains; 7. A tax invoice dated 14 March 2010 in the sum of $600.00 in respect of the cost purchasing a queen size mattress (which the tenant alleged was damaged by the water leak); 8. Tax invoices in respect of items of clothing that the tenant purchased in 2015 after the water leak; 9. Documents of the landlord entitled "Inspections Summary", "Inspection Dataview Details", "Work Orders Summary"; and "SRQ details" which lists tenant complaints; inspections conducted by the landlord; and repairs conducted in respect of the tower blocks; 10. Medical report of Dr Law (psychiatrist) dated 12 October 2015; 11. Medical report of Mr Wong (psychologist) dated 29 June 2015; 12. Medical report of Dr Xu (General Practitioner) dated 30 June 2015; 13. NSW Family and Community Services 'Housing Pathways Medical Assessment' dated 13 October 2015 completed by Dr Chan (GP);

RESPONDENT'S DOCUMENTS

The landlord filed and served documents in accordance with Tribunal directions. The landlord's documents relevantly included: 1. A written submission (half page) dated 29 January 2016; 2. Public Liability Claim Notification form (undated); 3. Letter to the tenant dated 22 July 2015 from the landlord stating that the tenant's claim for compensation due to water damage had been referred to the landlord's insurance broker, Marsh Ltd, on 21 July 2015 and that the tenant should contact Marsh Ltd; 4. Letter from Ms Vella of Marsh Pty Ltd sated 11 August 2015 denying liability for the claim; 5. Emails of the landlord dated 27 August 2015 regarding the tenant providing further information to Marsh Pty Ltd to review the decision to decline liability; 6. Email of the landlord dated 16 October 2015 regarding review of the decision to decline liability. Relevantly, the email states the tenant has been referred to Redfern Legal Centre for advice; 7. Email from Ms Becker of Marsh Pty Ltd dated 19 October 2015. Relevantly, the email states that the insurer continues to deny liability as "our client cannot be held liable for the alleged actions of third party construction companies". 8. 3 photographs taken by Mr Akkermans on 13 July 2015 (which had not been served, but were tendered at the hearing after leave was granted).

APPLICANT'S EVIDENCE

The tenant's evidence predominately derived from her written statement, which she adopted under oath. The tenant's evidence is summarised as follows:
The tenant left for a 5 week trip to China on 16 May 2015. Prior to departing for China, she informed the landlord of her trip, and executed an 'Appointment of Agent' form to provide the landlord with a contact person while she was away;
Prior to departing, the tenant "was not aware of any problems with water coming through the roof of the building into my unit";
The tenant returned to Sydney on 23 June 2015. When she arrived home, the residence smelt "foul"; a number of her belongings were wet; there was dirty water present on the floor; and condensation on the windows and walls. The tenant could also hear "repair work going on above the ceiling";
The tenant immediately went downstairs to "a temporary office that Housing NSW (sic) and its contractors had set up while they were doing repairs to the roof of the building". The tenant reported the water leak to "Joe" who was a "manager";
"Joe" came upstairs with the tenant and inspected the unit. He took photographs and the tenant took photographs on her phone;
"Joe" told the tenant to write down the damaged items and told her she would be compensated;
The tenant stayed with friends for 2 weeks, and returned during the day to clean the residence. She moved back into the residence after 2 weeks, but because the smell was still strong, only stayed "some nights";
Repairs continued to be performed on the roof and there was still water leaking into the second bedroom. The tenant called the landlord and reported the leak. No representative of the landlord came to repair the leak;
On 30 June 2015, the tenant took more photographs of her belongings, before placing them in bags. The tenant thought it prudent to keep the bags until she obtained compensation, but when she attended the landlord's office 1 week later, the landlord said she could throw the bags away;
Attempts (using a friend who spoke good English) were made to contact "Joe". "Joe" said he would again inspect the unit, but didn't come, and others at the "office" of the contractor said to contact the landlord;
On 29 June 2015 the tenant attended the local office of the landlord. She was advised to write a statement if she claimed compensation. The tenant submitted a claim for compensation. The landlord said they would inspect the property in "two weeks";
On 13 July 2015 2 representatives from the landlord attended the premises for an inspection. The tenant showed the representatives of the landlord the leak in the second bedroom;
In mid-August 2015 the tenant received a letter from Marsh Ltd declining the claim for compensation. She attended the landlord's office to dispute the letter, and was told the claim would be re-submitted;
On 7 September 2015 representatives of the landlord attended the premises for an inspection;
After further attendances at the landlord's office, the tenant was told on 21 October 2015 her claim for compensation was denied, and told to get legal advice. She subsequently attended Redfern Legal Centre, who assisted her to lodge proceedings in the Tribunal;
The "small leak" in the second bedroom was "still there in December 2015". The tenant asserted that it "doesn't leak anymore" but there remains damage to the ceiling;
The tenant asserted that her belongings that had been water damaged were as follows: 1. Two sofas (one a 2 seater and the other a 3 seater). The tenant attempted to clean and dry them, but they had to be thrown out. The cost of the sofas when purchased was approximately $2,600.00. The sofas were 5 years old; 2. A pair of dining chairs; 3. A silk queen quilt set (for the bed in the second bedroom), including quilt cover; quilt; bedspread; flat sheet; and pillow cases. The quilt set was approximately 4.5 years old and had been purchased for approximately $1,500.00; 4. A second silk quit cover set (for the bed in the main bedroom), which were approximately 4.5 years old and had been purchased for approximately $1,200.00; 5. A queen mattress. The mattress was approximately 6 years old. The tenant has attempted to clean the mattress, but it still smells. The tenant has not yet replaced the mattress as she cannot currently afford to do so; 6. Items of clothing. The tenant had replaced the items at a cost of $114.90; 7. Two pairs of shoes. The tenant replaced the shoes at a cost of $119.90; 8. The metal bedframe of the bed in the second bedroom, which was rusted and discoloured due to water damage. The bedframe was approximately 4.5 years old and had been purchased for approximately $200.00; 9. A double sized cotton blanket over the bed in the second bedroom. The blanket was approximately 3.5 years old and had been purchased for approximately $130.00; 10. 4 cushions on the bed in the second bedroom. The cushions were approximately 3 years old; 11. A single sized electric blanket. The electric blanket was approximately 6 years old; 12. A queen sized electric blanket. The electric blanket was approximately 4.5 years old; 13. Curtains on 3 of the windows of the unit. The curtains were double curtains with lace. The curtains were approximately 4.5 years old, and had been purchased from a specialist curtain shop for approximately $2,500.00 to $3,000.00.
In oral evidence, the tenant emphasised that the premises smelt very bad when she returned from China, and she had spent a significant amount of time cleaning the premises before the landlord inspected the premises on 13 July 2015.

Applicant's Documentary Evidence In Respect Of Complaints of Other Tenants and Inspection and Maintenance of the Roof of the Premises

As set out previously, the tenant relied on records of the landlord entitled "Inspections Summary", "Inspection Dataview Details", "Work Orders Summary"; and "SRQ details". The tenant's advocate stated that such documents had been obtained under the Government Information (Public Access) Act 2009 ('the GIPA Act'). Relevantly the documents state as follows: 1. On 8 May 2014 (the date being evidenced in the records by the terminology "status date") there was a complaint by a tenant regarding a water leak as follows: "Re 9577128/1-report indicates new membrane seal required to stop roof leaks into units below; have received complaint…please chase up as tenant will continue to call every time there is rain"; 2. On 11 November 2014 there was an inspection by the landlord. The entry in the landlord's records states: "INSPECT-Roof needs major repair. Report lodged on /1. Also noted on 9888983/1. Membrane of roof has lifted and in bad condition. Affecting units. Please action and report on outcome"; 3. On 28 May 2015 there was notification of a water leak. The entry in the landlord's records states: "Spotless advised water has poured through ceiling membrane. Membrane has failed. Please inspect."
The documents of the landlord also make other references to tenant's complaining of water leaks, including leaks from the roof of the block of units, but it is unclear from the records of the dates on which such complaints were made.

RESPONDENT'S EVIDENCE

The evidence of Mr Akkermans can be summarised as follows: 1. The 2 blocks of units at the site had been built in the 1960's; 2. Both blocks required an "upgrade". Money was allocated in the landlord's budget, and contract put out to tender. The roof of the block in which the tenant resided was to be re-membraned. Work commenced in 2015. The reason that repairs of the roof were conducted was not due to complaints by tenants of water leaks, but due to the age of the premises; 3. In June 2015 there was a storm. The roofing contractor did its best to cover the roof, but a number of tenants residing in the top floor of the block in which the tenant's residence was located experienced water leaks. The State Emergency Service was called by other tenants and other tenants reported water leaks to the landlord but there were no complaints of significant damage; 4. Mr Akkermans attended the inspection on 13 July 2015. There had been a water leak, but the premises were not flooded. The ceiling was not significantly damaged, and did not collapse. According to Mr Akkermans, the degree of damage was not as severe as indicated by the tenant. Mr Akkermans did not believe there was over $11,000.00 worth of damage to the tenant's belongings; 5. The landlord had encouraged the tenant to lodge a claim with the landlord's public liability insurer, and had encouraged the tenant to obtain legal advice; 6. Mr Akkermans believed the repairs sought by the tenant had been completed, or were in the process of being completed.

APPLICANT'S WRITTEN SUBMISSONS

The written outline of submissions of the tenant's advocate does not address the issue of breach of Section 63 of the RT Act, nor the issue of extending the limitation period. Oral submissions were made on those issues. The submissions exclusively deal with the issue of 'betterment', and whether the Tribunal should award compensation for the cost of replacing water damaged goods and belongings by reference to the cost of new replacement items. The tenant's submissions can be summarised as follows: 1. Although the Tribunal may apply a discount for 'betterment' (i.e. so that the tenant is not overcompensated for breach by the landlord by the award of damages based on the cost of new replacement items, rather than a depreciated amount to take into account the age and condition of the goods), there should be no discount for betterment if the tenant had no reasonable choice other than to replace the damaged items, and the amount claimed is not extravagant (Hyder Consulting (Australia Pty Ltd v Wilh Wilhemsen Agency Pty Ltd [2001] NSWCA 313 per Sheller JA at [47]; Slough and Quinton v Jameison and Long [2013] NSWCTTT 154; Yeates and Singh v Kent Transport Industries Pty Ltd [2013] NSWCTTT 101; 2. The tenant had no reasonable choice but to dispose of her goods as they were waterlogged and water damaged by reason of the water leak into the premises. The tenant had reported the incident as soon as she returned from China, and retained the damaged items in plastic bags until told by the landlord that she could throw them out; 3. The tenant had provided quotes for items of similar style to the damaged goods and possessions, and where the tenant obtained more than one quote, she provided the cheapest quote; 4. The majority of damaged goods and possessions were purchased by the tenant when she and her husband moved into the unit, and the intention was that the goods would not require replacement; 5. The tenant is of limited financial means; 6. It would be inappropriate apply depreciation principles applied by the Tribunal in cases involving compensation to landlords for the cost of repairs by reason of breaches by tenants of their obligation under Section 51(3) of the RT Act to the facts of this matter, as the tenant's goods and belongings are not capital for investment purposes.

JURISDICTION

There is a residential tenancy agreement between the parties, and the Tribunal has jurisdiction pursuant to the RT Act.

FACTUAL MATTERS NOT IN DISPUTE

The Tribunal is satisfied the following facts are not in dispute: 1. The roof of the premises required maintenance (although the parties were in dispute as to whether such maintenance was due to previous complaints by tenants in respect of water leaks; or the age of the roof; or both); 2. In 2015, such maintenance (being a re-membrane of the roof) commenced; 3. At a date in either late May 2015 or June 2015, there was a water leak through the roof of the premises into the residence of the tenant, causing water damage to the tenant's goods and belongings (although the extent of the damage, and whether the tenant was entitled to compensation from the landlord and/or a rent reduction remained in dispute).

APPLICABLE LEGAL PRINCIPLES

The landlord's obligation in respect of repair of the premises is set out in Section 63 of the RT Act as follows: 63 Landlord's general obligation (1) A landlord must 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. (2) A landlord's obligation to provide and maintain the residential premises in a reasonable state of repair applies even though the tenant had notice of the state of disrepair before entering into occupation of the residential premises. (3) A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant's breach of this Part. (4) This section is a term of every residential tenancy agreement.
The landlord's obligation to keep residential premises in a reasonable state of repair is ameliorated by the provisions of Section 65(3) of the RT Act as follows: 65 Tenants remedies for repairs … (3) The Tribunal must not determine that a landlord has breached the obligation unless it is satisfied that: (a) the landlord had notice of the need for the repair or ought reasonably to have known of the need for the repair, and (b) the landlord failed to act with reasonable diligence to have the repair carried out. …"
Section 61(2) of the RT Act is referred to in the amended application by the tenant. The provision provides as follows: 61 Tenant's remedies relating to access to premises … (2) The Tribunal may, on application by a tenant, order the landlord or the landlord's agent to pay compensation to the tenant for damage to or loss of the tenant's goods caused by any person in the exercise of a power of the landlord or landlord's agent to enter residential premises under this Act or the residential tenancy agreement."
The obligation of a landlord to conduct repairs is not strict liability in the sense that, immediately upon there being damage, a defect, or a failure of a structural component of the premises, the landlord is immediately liable. Rather, there must be sufficient information to put a reasonable landlord on notice of a defect in the premises that requires repair or maintenance; and if so, the landlord must carry out the repairs or works with reasonable expedition (Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 370-371; Sakauo v Williams [2005] NSWCA 405). The obligation of the landlord to maintain premises in a reasonable state of repair is a duty that focusses on the condition of the property, not whether the landlord took reasonable measures to have the repair completed by engaging suitably qualified tradespersons (Moore v Tidy (1992) unreported SASC 13 August 1992; Lyras v Siataga [2013] NSWCTTT 627 at [16]-[17]).
If the tenant proves breach of Section 63 of the RT Act, and such a breach has caused damage or loss to the tenant (including loss of amenity of the premises) the tenant may be liable for compensation by way of a rent reduction under Section 44(1)(b) of the RT Act; compensation under Section 187(1) of the RT Act; and (if repairs have not been conducted) an order that the landlord conduct repairs under Section 65(2) of the RT Act.

Limitation Period

The limitation period for taking proceedings in the Tribunal for breach of the RT Act is set out in Regulation 22 of the RT Regulations. There is no limitation issue in respect of the tenant's claim for a rent reduction under Section 44(1) (b) of the Act, as the proceedings were commenced whilst the tenancy remains on foot, and the tenant is not seeking an order for a rent reduction does not exceed the 12 month maximum period pursuant to Section 44(6) of the RT Act.
However, pursuant to Regulation 22 (9) of the RT Act, the tenant's claim for repairs under Section 65 of the RT Act and compensation under Section 187(1) of the Act in respect of damage to her goods and belongings has a relevant limitation period of 3 months from the date that the tenant became aware of the breach. In this matter, the tenant's knowledge of the alleged breach by the landlord in respect of the failure to keep the property in a reasonable state of repair occurred on 23 June 2015 when she returned to the premises from her trip to China. The 3 month limitation period to commence proceedings expired on 23 September 2015, unless the Tribunal extends the limitation period pursuant to Section 41 of the Civil and Administrative Tribunal Act 2013.
Section 41 of the Civil and Administrative Act 2013 states as follows: 41 Extensions of time (1) The Tribunal may, of its own motion or on application by any person, extend the period of time for the doing of anything under any legislation in respect of which the Tribunal has jurisdiction despite anything to the contrary under that legislation. (2) Such an application may be made even though the relevant period of time has expired."
The principles applicable to whether or not the Tribunal should exercise its discretion under Section 41 of the Civil and Administrative Tribunal Act 2013 to extend any limitation period are set out in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [22]. The relevant criteria to consider are: 1. The length of the delay; 2. The reason for the delay; 3. Whether there is a fairly arguable case; 4. The extent of prejudice to the other party by reason of the delay; 5. If the explanation for the delay is less than satisfactory, or there is substantial prejudice to the respondent by reason of the delay, the merits of the case.

Salient Issues for Determination

In this matter the salient issues regarding whether or not the tenant can establish on the balance of probabilities that the landlord breached Section 63 of the RT Act are: 1. Whether the roof of the premises was in a reasonable state of repair prior to the water leak; 2. If not, whether the landlord had notice, or should reasonably have been on notice, of the need to conduct maintenance and/or repairs; 3. Whether the landlord failed to act with reasonable diligence in conducting repairs and/or maintenance to the roof of the premises; 4. If so, whether the landlord's failure to conduct or maintenance and/or repairs with reasonable diligence caused the water leak; 5. If the tenant has established breach, whether the tenant is entitled to the remedies sought in the proceedings.

Extension of Time

The Tribunal is satisfied the limitation period for the tenant to seek repairs under Section 65 of the RT Act, and to seek compensation for damaged goods and belonging under Section 187 of the RT Act should be extended. The tenant has provided an explanation for the delay. The tenant is an elderly person, and English is her second language. The tenant was initially under the belief that the contractor of the landlord would compensate her, and was subsequently advised by the landlord to lodge a claim against the public liability insurer of the landlord. A period of time expired before she was notified that her claim had been denied, and a further period expired whilst she resubmitted (with the encouragement of the landlord) the claim to the insurer, which was again denied. Under such circumstances, it is reasonable that the tenant waited a number of months before obtaining advice in respect of her rights under the RT Act, and then commencing proceedings.
The delay in commencing proceedings is not particularly lengthy. The landlord has not identified any prejudice by reason of the delay. The tenant has a fairly arguable case. Accordingly, the Tribunal is satisfied the criteria to extend the limitation period pursuant to Section 41 of the Civil and Administrative Tribunal Act 2013 have been met.

Breach of Section 63 of the RT Act

From the information contained in the documents the tenant obtained from the landlord, and the oral evidence of the representative of the landlord, the Tribunal is satisfied that the landlord had received complaints from tenants (although not the applicant) regarding water leaks from the roof of the residential block of units on 2 occasions in the 12 month period between May 2014 and May 2015; that the landlord had determined that maintenance and repair of the roof was required by way of replacement of the roof membrane; that the landlord engaged contractors to perform such work; that such contractors set up an office at the residential block of units whilst the work was being performed; and that on or about 28 May 2015 water leaked through the roof of the residential block of units whilst the landlord was in the process of having the roof membrane replaced.
The Tribunal is satisfied that there is sufficient evidence to infer that it was the water leak on or about 28 May 2015 that entered the ceiling of the unit in which the tenant resided, and caused damage to her goods and possessions.
There is a paucity of evidence in respect of the maintenance work that was being performed on the roof of the residence prior to the water leak. No evidence was provided to the Tribunal to identify the precise date the work commenced or how much work had been performed prior to the water leak into the tenant's residence. No evidence was provided as to what measures the contractor of the landlord had taken to secure the roof to prevent water leaks whilst the maintenance work was being performed. No evidence was provided regarding the magnitude of rainfall prior to the water leak, or that there was a storm that was so severe that there were no reasonable measures the landlord's contractor could have taken to prevent the water leak from occurring.
While the tenant may have obtained some further factual information by way of the issue of a Summons to Produce Documents on the landlord and/or the contractor of the landlord who performed the maintenance and repair works on the roof of the residential block of units, the landlord could have provided pertinent evidence on the relevant factual issues set out above without difficulty. In respect of the process of the drawing of inferences to establish facts, the Tribunal is to weigh the factual evidence according to the ability of a party to adduce such evidence, and where facts are peculiarly within the knowledge of a party who does not provide evidence of such facts, slight evidence may be sufficient (Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371). The Tribunal is satisfied that the landlord was on notice the roof required maintenance work because it was at risk of leaking, and was in the process of conducting such work at the time of the water leak that entered the residential premises of the tenant.
The next issue is whether the maintenance and repairs were conducted with "reasonable diligence". "Diligence" is defined by the Macquarie Concise Dictionary (6th edition) as "constant and earnest effort to accomplish what was undertaken; persistent exertion of body or mind". What is "reasonable" depends upon the particular circumstances of the case. A roof that is in good repair and not at risk of leaking (other than in respect of extreme storms) is vital to premises being in a reasonable state of repair.
In circumstances where the landlord was on notice the membrane of the roof was in a state of disrepair for a period of 12 months prior to the water leak into the tenant's premises, and had engaged contractors who were in the process of replacing the membrane the Tribunal is satisfied that the repair work should reasonably have been completed prior to the water leak into the tenant's premises, and if it was not completed, the landlord should have taken all reasonable measures to ensure the roof was waterproof whilst the repairs and maintenance was being performed. The Tribunal is satisfied the tenant has proved the landlord failed to act with "reasonable diligence" pursuant to Section 65(2) of the RT Act and that the landlord failed to keep the premises in a reasonable state of maintenance and repair pursuant to Section 63 of the RT Act.

Quantification of Tenant's Claim for Compensation for Damaged Goods and Possessions-The Concept of 'Betterment'

The guiding principle for assessing damages is that a party is to be put in the same position, not in a better or worse position, that the party would have been in had the breach not occurred. The tenant submits that the tenant should be compensated for her water damaged goods and belongings on the basis of the cost of purchasing new replacement items and there should be no discount for 'betterment'. The tenant relies upon the decisions of Hyder Consulting (Aust) Pty Ltd v Wlh Wilmemsen Agency Pty Ltd and Anor [2001] NSWCA 313 ('Hyder Consulting'); Slough and Quinton v Jameison and Log [2013] NSWCTTT 154; and Yeates, Singh v Kent Transport Industries [2013] NSWCTTT 101.
Hyder Consulting involved the assessment of damages for breach of contract (and negligence) where a pavement at industrial premises collapsed after 4 years. The owner of the premises sued the architect and engineer, who were involved in the construction of the pavement, in the District Court, and obtained damages against both, inter alia, for the full cost of replacing the pavement. The engineer appealed the judgment and the architect cross appealed. Relevantly, it was argued that the trial judge erred by not reducing damages by 20% to take into account the owner of the premises had the benefit of the use of the pathway for 4 years out of a likely 20 year life span of the pavement (i.e. the pavement would have to be replaced 20 years after construction in any event). The Court of Appeal (Sheller JA and Giles JA in separate judgments, Meagher JA dissenting) held that the trial judge had not erred by awarding the owner the full cost of replacing the pavement, without deduction for 'betterment'.
Sheller JA discussed the authorities pertaining to 'betterment'. At para [54] Sheller JA stated: "In my opinion, if a defendant negligently damages or destroys the plaintiff's property, and there is no evidence that the plaintiff had any reasonable choice other than to replace or repair what had been damaged or destroyed, the cost of replacement or repair, provided it is not extravagant, is recoverable. In each case it is a question of fact". In support of the conclusion that there should be no deduction for 'betterment', Sheller JA pointed out that it was a "speculative proposition" that a new pavement might last longer than the pavement that had collapsed (at para [55]).
Giles JA also discussed the relevant authorities pertaining to 'betterment', including the judgment of Moffitt P in Hoad v Scone Motors Pty Ltd (1977) 1 NSWLR 88. At para [107], Giles JA stated: "The reasons of Moffitt P make clear that each case depends upon its own facts. The general principle of restitution in integrum, so that a plaintiff should be compensated for its loss, but not overcompensated, is undoubted. Its application will vary according to the circumstances. In the present case the owner was entitled to a sound pavement, and from the time the pavement was laid the pavement failed and the owner did not have a sound pavement. It had to be replaced, and the owner could not replace it with a sound four year old pavement…If any allowance in favour of the architect is to be made, I do not think it should be by the crude percentage discount suggested by the owner".
The authorities regarding 'betterment' have again been recently considered by Ball J in Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd [2016] NSWSC 50. That case also involved pavement laid at an industrial site, which severely cracked over a period of time and the owner of the site sought damages for the cost of replacing the pavement. Ball J discussed the issue of 'betterment' at paras [133]-[140]. At para [133] Ball J stated: "In determining whether a discount to an award of damages is appropriate on the ground of betterment, each case must be considered on its own facts: Harbutt's 'Plasticine' Limited v Wayne Tank and Pump Co Limited [1970] 1 QB 447 per Widgery LJ at 472-3; Paper Australia v Ansell [2007] VSC 484 at [369]. In addition, in considering the facts of a particular case, the court must have regard to two countervailing policy considerations. On one hand, the court is concerned not to award to a successful plaintiff a windfall to which he or she is not entitled: Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency [2001] NSWCA 313 per Meagher JA at [22]. On the other hand, the court takes into account the potential inconvenience that a plaintiff may be placed under where a discount for betterment is made, by being in effect forced to undertake unplanned capital expenditure as a result of the defendant's wrongful conduct: Harbutt's 'Plasticine' Limited v Wayne Tank and Pump Co Limited [1970] 1 QB 447 per Widgery LJ at 473".
Ball J declined to reduce damages for the cost of replacing the pavement on grounds of 'betterment'. The "principal reasons" (at paras [137]-[138]) were that the life of the original pavement compared to a replacement pavement was "speculative", and replacement of the pavement would allow the industrial site to continue to operate with minimal disruption.

Authorities of the Tribunal on the Issue of Betterment

The applicant relies on the decisions of the Tribunal (any reference to 'Tribunal' in this decision includes the predecessors of NCAT) in Slough & Quinton v Jamieson & Long [2013] NSWCTTT 154 ('Slough') and Yeates, Sing v Kent Transport Industries [2013] NSWCTT 101 ('Yeates'). Both decisions are by Senior Members of the Tribunal.
Slough was a residential tenancy matter, where a hot water system at residential premises had burst, causing water damage to the goods and possessions of the tenant. The Tribunal found the landlord in breach of Section 63 of the RT Act and Clause 18.3 of the residential tenancy agreement. The Tribunal awarded the tenant $5,802.62 for the cost of replacing goods and possessions; based on a schedule ('item K') prepared by the tenant, and made no deduction for betterment. At para [64] the Senior Member stated: "I asked the applicants some questions about the list in item K. They satisfied me that in some cases the values in item K were replacement values and in some cases a market value had been used. I am satisfied that the books that they claim to have been water damaged were damaged to such a degree they are unusable in their damaged state. In some cases, limited to underwear, brand new items had been damaged".
At para [68] the Senior Member found that the tenant had "no reasonable choice" but to replace the water damaged goods and possessions. However, upon close analysis of the decision, it does not appear that the Senior Member awarded the tenant the cost of replacing goods and possessions on the basis of 'new for old', because the tenant was not claiming replacement of all items on the basis of 'new for old'. Rather, the Senior Member, on the facts of the case, accepted that the evidence of the tenant regarding various items of "replacement value" and "market value" depending upon the age of the goods damaged, were appropriate to compensate the tenant for the breach by the landlord. The reference in the decision to the principle of "betterment" must be placed in this context.
Yeates was a consumer claim matter where a removalist had damaged the goods of the consumer by failing to act with due care and skill. The Tribunal awarded the consumer $14,013.85 in damages. Importantly, in respect of items that were damaged beyond repair, it was only in respect of clothing that the consumer claimed damages on the basis of the cost of purchasing new items. Replacement of other items was claimed on a depreciated basis, applying the Australian Tax Office depreciation schedule. At paras [17]-[19] the Senior Member stated: "I was satisfied on the evidence provided as to the purchase price of the items that were not repairable or where it was not economical to repair them by reference to the purchase price and by application of the Australian Tax Office depreciation schedule was a fair estimate of the loss suffered in relation to those items. While initially having some concern about allowing for the full purchase price of the clothing, in the end, I was satisfied that the appropriate course was to allow the full amount as this represented a reasonable estimate of what cost the replacement items would be. Given the type of clothing which was damaged (slouch hat, ties, belts, formal dresses, business suites, leather jackets and so forth) in my view it is appropriate to award replacement costs for those items. I do not consider that there should be a discount for betterment (see Hyder Consulting (Australia) Pty Ltd v Wilhelmsen Agency Pty Ltd (2001) NSWCA)."
Neither the decisions of the Tribunal in Slough and Yeates, nor the submissions of the tenant's advocate, discuss the numerous authorities of the Tribunal involving the assessment of damages for a tenant whose possessions have been damaged by the failure of a landlord to keep premises in a reasonable state of repair. Many of the decisions involve the goods and possessions of a tenant being damaged by mould.
In Palumbo v Tomlinson [2012] NSWCTTT 109, the Tribunal awarded a tenant compensation for mould damaged furniture, bedding, clothes and belongings (including a golf bag and exercise equipment) on the basis of the cost of both new and second hand cost of replacement items (depending on the particular item), less a depreciated amount for the age of the goods that required replacement (paras [33]-[59]). In Aboutaleb v Al-Hayek [2011] NSWCTTT 378, the Tribunal awarded a tenant compensation for mould damaged furniture, bedding, clothing and belongings taking into account depreciation for 5 years use of the bedding, and the second hand value of the belongings (at para [69]). In Rolls v NSW Land and Housing Corporation [2010] NSWCTTT 458 the Tribunal held that were a tenant's goods are destroyed "the amount of the loss is usually fixed by reference to the second hand market value i.e. taking into account depreciation of the second hand goods" (at para [59], citing Cachia v Kniepp (RTT 91/006944).

Assessment of Compensation for the Tenant's Water Damaged Goods and Possession

I am satisfied on the evidence of the tenant that the 15 items identified in the "Schedule: Particulars of Monetary Claim" annexed to the Amended Application have been water damaged and either have been replaced (in respect of shoes and clothes) or require replacement.
I am satisfied that it is appropriate to assess damages to the tenant taking into account depreciation for the age of the goods that were water damaged and require replacement. I do not regard the principle enunciated by Sheller JA at para [54] of Hyder Consulting as applicable in this case. The value of the tenant's belongings depreciated over the period she owned the belongings. Unlike the plaintiffs in Hyder Consulting and Tzaneros Investments, the tenant has the ability to purchase second hand goods to replace the items that were water damaged. The authorities of the Tribunal referred to above support the approach that the depreciated value of the goods (either by way of the current second hand value of the goods less depreciation, or the cost of new goods less depreciation) should be the touchstone for assessing replacement cost, not the full cost of new items (notwithstanding the tenant's evidence she obtained the "cheapest quotes" for such items).
Further, the approach of the Tribunal in Slough should not be misconstrued as a finding that a tenant who has goods damaged by reason of the breach of contract of the landlord is entitled to the cost of replacing goods on a 'new for old' basis. The decision of the Senior Member not to apply a discount for 'betterment' is referrable to the facts of the particular case, and the evidence provided by the tenant on the "replacement value" and "market value" of the goods. The decision of the Tribunal in Yeates is consistent with the principle that a deduction for depreciation should be taken into account, other than (on the facts of that particular case) the cost of replacing items of clothing, and also does not support the proposition that compensation should be calculated on a 'new for old' basis.
No evidence has been provided by the tenant of the second hand cost of the goods and belongings that require replacement due to being water damaged. The only evidence is in respect of the cost of new replacement items. The tenant has replaced shoes and clothing with new items, at a total cost of $234.80. Considering the moderate cost of the replacement items, and consistent with the approach in Yeates, I do not reduce the amount of these items to reflect depreciation.
The remainder of the items set out in the Schedule total $10,924.84. Such items include furniture, bedding and curtains. Again, only quotations regarding the cost of new items have been adduced as evidence, not second hand items. The tenant's evidence is that the items were purchased "4 or 5" years ago. As discussed above, there should be a deduction applied for depreciation (i.e. the loss of value of the goods over time before they were damaged) to avoid the tenant being overcompensated for the breach by the landlord (Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency [2001] NSWCA 313 per Meagher JA at [22]).
In respect of depreciation, I am not satisfied in the circumstances of this matter that it is appropriate to apply the Australian Tax Office depreciation scale for fixtures and fittings in leased premises (set out at pp. 351-355 of Anforth, Christensen and Bentworth Residential Tenancies Law and Practice NSW 6th Ed (2014). The depreciation scale is often applied in respect of assessment of damages to a landlord where a tenant has breached Section 51(3) of the RT Act.
However, personal belongings of the tenant are not a capital investment from which the tenant derives income, and to apply the depreciation scale in the circumstances of this matter would create an injustice. Under the depreciation scale, the lifespan for linen is 5 years and window curtains is 6 years, which if applied to this matter, would construe the tenant's damaged curtains and linen as worthless. Further, some of the types of goods and belongings damaged are not listed in the depreciation scale in any event.
In all the circumstances of the matter, I am satisfied that it is appropriate to reduce the amount of $10,924.84 claimed by the tenant for the replacement cost of goods and belongings by 50% to reflect the depreciated value of the damaged goods and possessions (such goods and possessions being 4 to 5 years old). Accordingly, in respect of the tenant's claim for water damaged goods and belongings, I award the tenant $234.80 for the cost of replacing clothes and shoes; and $5,462.42 for the cost of replacing furniture, bedding, linen, mattresses and belongings set out in the Schedule.

Tenant's Claim under Section 61 of the RT Act

Section 61 of the RT Act is inapplicable as there is no evidence the water leak was caused by the landlord, or the landlord's contractor, entering the premises of the tenant and accordingly no order is made under Section 61 of the RT Act.

Tenant's Claim for a Rent Reduction under Section 44(1) (b) of the RT Act

I am satisfied the tenant has suffered a loss of amenity of the residential premises by reason of the landlord's breach of Section 63 of the RT Act. The relevant principles for assessing compensation by way of a rent reduction are discussed in Veale and Batten v Liu [2015] NSWCATCD 138 at para [30]-[36]. The tenant's evidence was that she was confronted by a foul stench due to the water leak and water damaged goods and belongings when she returned from China. She spent a number of weeks cleaning the premises and resided with friends for a period of two weeks whilst attending the premises to clean it. The foul smell has been ongoing, according to the tenant.
The Tribunal accepts that the tenant's loss of amenity was significant due to the water leak. The tenant seeks a rent reduction of 100% for a two week period, and 15% for the period thereafter until the date of hearing. Due to the moderate rent the tenant pays as a social housing tenant, the amount of the rent reduction in total comes to an amount of less than the total amount of $400.00.
In circumstances where the evidence of the applicant is that the property was in a poor condition after the water leak, with water on the floor; wet goods and belongings; a very strong odour; and she could not reside in the property for 2 weeks whilst undertaking her own cleaning of the property, I am satisfied there should be a rent reduction under Section 44(1) (b) of the RT Act in the amount claimed by the tenant.

Repair of the Premises

The landlord accepted that the premises required repairs, but was unsure if such repairs had been conducted. The landlord did not seriously cavil with the repair orders sought by the tenant. I am satisfied a repair order should be made in accordance with Section 65 of the RT Act as sought by the tenant, with such repairs (if not already conducted) to be conducted and completed on or before 21 days from the date of this decision.

CONCLUSION

For the above reasons, I am satisfied the tenant has proved breach by the landlord of the landlord's obligation under Section 63 of the RT Act, and the tenant is entitled to an order for compensation, rent reduction, and repairs as set out in the above orders. G J Sarginson General Member Civil and Administrative Tribunal of New South Wales 27 April 2016 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: 29 June 2016

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