Afluk v The New South Wales Land and Housing Corporation

[2024] NSWDC 521

District Court

New South Wales

Medium Neutral Citation:

Afluk v The New South Wales Land and Housing Corporation [2024] NSWDC 521

Hearing dates:

4 July 2024

Date of orders:

12 November 2024

Decision date:

12 November 2024

Jurisdiction:

Civil

Before:

Cole DCJ

Decision:

(1) The plaintiff's claim is dismissed.

Catchwords:

LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — Repairs – Landlord alleges premises damaged by fire as a result of negligent acts of subtenant for which the tenant is vicariously liable – Landlord seeks damages for cost of repairs to premises – whether the tenant has a contractual or statutory obligation to repair or to pay for repairs – whether the fire was the result of negligence

Legislation Cited:

Civil Liability Act 2005 (NSW)

Housing Act 2001 (NSW)

Residential Tenancies Act 2010 (NSW)

Residential Tenancies Bill 2010 (NSW)

Cases Cited:

CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384

Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55

Cooper, Cooper and Morgan v Westpac General Insurance Limited (ACN 003 719 319) [2007] ACTCA 20

Project Blue Sky In v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362

Vincentia MC Pharmacy Pty Ltd v Australian Community Pharmacy Authority [2020] FCAFC 163; (2020) FCR 397

Category:

Principal judgment

Parties:

Natiq Bardan Afluk trading as Natiq Bardan Afluk (Plaintiff)
The New South Wales Land and Housing Corporation (Defendant)

Representation:

Counsel:
Mr D Allen (Plaintiff)
Mr D Elliott (Defendant)

Solicitors:
Taylor Rose (Plaintiff)
McCabes (Defendant)

File Number(s):

2023/75381

Publication restriction:

Nil

JUDGMENT

1. The New South Wales Land and Housing Corporation (“the Corporation”) is constituted under Part 3 of the Housing Act 2001 ("the Housing Act”). The Corporation is a statutory body representing the Crown (see s 6(4) of the Act).

2. The functions of the Corporation are set out is s 8(2) of the Housing Act:

(2)  The Corporation has the following functions—

(a)  to acquire land for present or future residential development and for public purposes,

(b)  from time to time, as prevailing circumstances require, to develop and make available, or to make available for development by others, such of the land so acquired as the Corporation considers necessary or expedient for residential development and for public purposes.

3. Ms Byles owned a residential property in Casula, New South Wales. On about 12 December 2013, the Corporation leased the property from Ms Byles. The terms of the lease were set out in a Standard Form Residential Tenancy Agreement (“the Lease”) under the Residential Tenancies Act 2010 (“the Residential Tenancies Act”). It is common ground that the lease was a “residential tenancy agreement” under the Residential Tenancies Act.

4. On 26 June 2014, Ms Byles sold the property to Mr Afluk, the plaintiff, subject to the lease to the Corporation.

5. The Corporation subleased the premises to Mr Ibrahim (“the tenant”), as it was entitled to do under clause 6.1 of the lease.

6. On 13 September 2018, a working smoke alarm on the first floor of the property was inspected and tagged by a third party appointed by the Corporation.

7. On 8 October 2018, there was a fire on the property which caused substantial damage to the property.

The Claims

8. The claims in the Statement of Claim are based on the following allegations of fact which are set out in paragraph 11.4(c) of the Statement of Claim:

The Tenant and/or his invitees and guests (whose actions the Tenant and Defendant are liable for):

(i)   Connected a double adaptor (the Double Adapter), which is not recommended and had no overload protection, to a power socket (the Power Socket) outlet in the garage of the Property.

(ii)   Plugged an extension lead made of 0.5mm 2 cable (the Extension Cord) into the Double Adapter.

(iii)   Connected a charger to the Double Adapter, thereby permitting up to 20amps to flow through the Double Adapter and Extension Cord without protection overload.

(iv)   Connected a refrigerator to the Power Socket in addition to the Extension Cord.

(v)   Caused or otherwise enabled the charging device connected into the Double Adapter to overheat or malfunction and start the Fire, or alternatively caused or otherwise enabled devices connected to the Extension Cord to overheat or malfunction (as a result of not having any overload protection through the use of the Double Adapter) and start the Fire.

Breach of the lease

9. Mr Afluk seeks damages from the Corporation for breach of the lease. Mr Afluk pleaded that the Corporation was in breach of clause 15.4 of the lease, which provided:

15.   The tenant agrees:

…

15.4   not to intentionally or negligently cause or permit any damage to the residential premises.

10. Mr Afluk also pleaded that the Corporation was in breach of s 51 of the Residential Tenancies Act, which provides:

51   Use of premises by tenant

(1)  A tenant must not do any of the following—

(a)  use the residential premises, or cause or permit the premises to be used, for any illegal purpose,

(b)  cause or permit a nuisance,

(c)  interfere, or cause or permit any interference, with the reasonable peace, comfort or privacy of any neighbour of the tenant,

(d)  intentionally or negligently cause or permit any damage to the residential premises,

(e)  cause or permit a number of persons to reside in the residential premises that exceeds any number specified in the residential tenancy agreement.

(2)  A tenant must do the following—

(a)  keep the residential premises in a reasonable state of cleanliness, having regard to the condition of the premises at the commencement of the tenancy,

(b)  notify the landlord of any damage to the residential premises as soon as practicable after becoming aware of the damage.

(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.

(4)  In this section—

residential premises includes everything provided with the residential premises (whether under the residential tenancy agreement or not) for use by the tenant.

(5)  This section is a term of every residential tenancy agreement.

11. In his amended statement of claim (“the Statement of Claim”), as further amended at the hearing, Mr Afluk alleges that the Corporation, in breach of the lease and s 51(1) of the Residential Tenancies Act:

• Negligently caused or permitted damage to the property.

12. In the Statement of Claim, in paragraph 12, Mr Afluk claims the cost of repairs for the damage caused by the fire, which is estimated at $405,250.00 and the loss of rental income from 10 March 2019 at $2,172.61 per month. Interest was also claimed.

13. Mr Afluk further pleaded the following:

24.   Further, it was an express term of the Contract, clause 17.2, that when the Contract ended, and before giving vacant possession to the Plaintiff, the Defendant would leave the Property as nearly as possible, fair wear and tear excepted, in the same condition as at the commencement of the tenancy.

25. Clause 17.2 is the express incorporation of an obligation imposed by section 51(3)(b) of the Residential Tenancy Act 2010 (NSW).

26.   “Tenancy” is a defined term in the Contract, meaning “the right to occupy the Property”.

27.   Accordingly, the “commencement of the tenancy” was the commencement of the Contract, 22 December 2013.

28.   At the commencement of the tenancy, the Property had erected on it a dwelling which had not been damaged by fire and smoke as pleaded above.

29.     On or about 10 March 2019, the Contract ended.

30.   When the Contract ended the Defendant did not leave the Property as nearly as possible, fair wear and tear excepted, in the same condition as at the commencement of the tenancy.

31.   The Defendant instead left the Property damaged by fire and smoke.

32.   Accordingly, the Defendant breached clause 17.2 of the Contract.

33.   By reason of the breach of the Contract the Plaintiff has suffered loss and damage as claimed in paragraph 12.1 and 12.2 above.

(Note: In the Statement of Claim, the lease between Mr Afluk and the Corporation is referred to as the Contract).

14. Clause 17.2 of the lease provided:

17.   The tenant agrees, when this agreement ends and before giving vacant possession of the premises to the landlord:

…

17.2   to leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, as at the commencement of the tenancy, …

Negligence

15. In the Statement of Claim, Mr Afluk pleads that the tenant owed a duty of care to Mr Afluk. It is alleged that the tenant, in breach of his duty of care:

• Failed to take reasonable care to ensure that the smoke detector/alarm was functioning properly,

• Failed to take reasonable care to ensure that the smoke alarm did not cease to function,

• Failed to take reasonable care when using electrical outlets in the property,

• Failed to take reasonable care when using the Extension Cord,

• Failed to take reasonable care when using the Plug Board,

• Failed to take reasonable care to ensure that the Extension Cord was not overloaded,

• Failed to take reasonable care and ensure that the Plug Board was not overloaded,

• Failed to take reasonable care and ensure that electrical devices attached to the Plug Board did not overheat or malfunction,

• Failed to take reasonable care and ensure that an electrical fire did not start through the incorrect or inappropriate use of electrical devices including the Extension Cord and/or the Plug Board.

16. Mr Afluk alleged that the risk of the alleged breaches of duty was foreseeable and not insignificant, and it was foreseeable that the likely damage would not be insignificant.

17. Mr Afluk relies on s 5D(1)(a) or (b) of the Civil Liability Act 2005:

5D   General principles

(1)  A determination that negligence caused particular harm comprises the following elements—

(a)  that the negligence was a necessary condition of the occurrence of the harm (factual causation), and

(b)  that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability).

18. In his Statement of Claim, Mr Afluk pleads that the Corporation is vicariously liable for the negligent conduct of the tenant under the lease and under the general law.

19. Mr Afluk pleads that the Corporation is vicariously liable to him under clause 16.3 of the lease and s 54(1) of the Residential Tenancy Act for the act or omission of the subtenant if the subtenant’s act or omission would be in breach of the lease had it been done or omitted by the Corporation. Mr Afluk further pleads, in relation to his negligence claim, that the Corporation is vicariously liable to him for the conduct of the subtenant, both under the lease and under the general law.

The Defence

20. In its Defence, the Corporation admits that it had held the lease over the property since 2013 and subleased it to Mr Ibrahim. The Corporation pleads that Mr Ibrahim occupied the property until about 8 October 2018.

21. The Corporation says that Mr Afluk resumed possession of the property on about 14 March 2019.

22. The Corporation admits that there was a fire on the property on 8 October 2018 and that, at the last inspection of the property before 8 October 2018, there had been a working smoke alarm and the property had been reasonably fit for purpose and occupation.

23. Broadly, the Corporation denies that it is in breach of the lease and further denies that it or the tenant was negligent or that it was liable for any negligence of the tenant. The Corporation denies that Mr Afluk is entitled to any relief.

24. The Corporation relies on clause 16.3 of the lease, which said:

16.   The tenant agrees:

16.3   that the tenant is responsible to the landlord for any act or omission by a person who is lawfully on the residential premises with the tenant’s consent and the act or omission would be in breach of this agreement if done or omitted by the tenant,

25. The Corporation admits paragraphs 25 to 29 of the Amended Statement of Claim (see [13] above).

26. In its Defence, the Corporation says:

30.   In response to paragraph 30 of the Statement of Claim, the Defendant:

(a)   says that it is an express terms of the Contract that the Plaintiff must ensure that the Defendant has vacant possession of the residential premises at all times during the term;

Particulars

Section 49(2) of the Residential Tenancies Act 2010 (NSW)

(b)   says that it is an express terms of the Contract that the Plaintiff must provide a residential premises that is fit for habitation by the tenant;

Particulars

Clause 18.1 of the Contract

Section 52(1) of the Residential Tenancies Act 2010 (NSW)

(c)   says that it is an express term of the Contract that the Plaintiff 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;

Particulars

Section 63 of the Residential Tenancies Act 2010 (NSW)

(d)   says that prior to 8 October 2018, the Plaintiff provided the Defendant with vacant possession of the residential premises that was fit for habitation and was in a reasonable state of repair having regard to the age of, rent payable for and prospective life of the premises;

(e)   says that on or about 8 October 2018, a fire started at the Property which caused damage to it (the Fire);

(f)   says that from 8 October 2018:

(i)   the residential premises was not fit for habitation and was not in a reasonable state of repair having regard to the age of, rent payable for and prospective life of the premises;

(ii)   the Plaintiff failed to repair and maintain the premises and restore it to a state that it was fit for habitation and in a reasonable state of repair having regard to the age of, rent payable for and prospective life of the premises.

(g)   says that by reason of the above, the Plaintiff breached the clauses of the Contract pleaded at subparagraphs (a) to (c) above;

(h)   says that by reason of the above, the Defendant was not able to leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted when the Contract was entered into.

27. The Corporation denied that it breached clause 17.2 of the lease. The Corporation also denied that the plaintiff has suffered loss and damage as claimed in the Amended Statement of Claim.

28. The Corporation pleaded that Mr Afluk contributed to any loss suffered by him by contributory negligence, in that he has, since 8 October 2018, failed to take any steps, or any adequate steps, to mitigate his loss, so that the damage has worsened and the property has deteriorated further. The Corporation pleaded that Mr Afluk had failed to remove the soot or smoke residue from surfaces in the premises and had failed to take steps to arrest the deterioration of the premises.

29. The Corporation pleaded that Mr Afluk had failed to mitigate his loss by failing to take steps to restore the premises to render them habitable and capable of being let on the rental market.

30. The Corporation pleaded that, if Mr Afluk succeeds in his claim, the Civil Liability Act 2002 Part 4 will apply so that the claim is an “apportionable claim” and the subtenant will be a concurrent wrongdoer and only a portion of the loss and/or damage claimed should be apportioned to the Corporation.

The Evidence

31. The plaintiff, Mr Afluk, bears the onus of proving his case on the balance of probabilities.

32. Mr Afluk must prove that the subtenant negligently caused or contributed to the starting of the fire or the damage caused by the fire in order to succeed in his claim of a breach of the lease by negligence and also to succeed in his negligence claim in tort.

Mr Afluk’s evidence

33. It was Mr Afluk’s evidence that he received a phone call from NSW Police on 8 October 2018 and that the caller told him that there was a fire at the property.

34. On 9 October 2018, Mr Afluk visited the property. He took photographs of the property, which were exhibited to his affidavit. The photographs show, among other things, extensive smoke damage throughout the ground floor rooms and in the garage, where the fire began. There is some structural damage to the house.

35. Mr Afluk provided a report from NSW Fire and Rescue dated 16 April 2021 which said, relevantly:

On arrival flames were issuing from window on grnd level left hand side of garage. Crews took a line of hose & attacked fire from this window, then entered front door on left hand side to better attack the fire from a half opened sliding door in the kitchen which opened into the garage.

Crews also entered front door to conduct search of both levels of house finding no persons home.

After talking to occupant it was concluded that the fire had started in the garage due to an electrical fault. Area of origin was at the back left hand corner of the garage where there was a fridge & what appeared to be a battery charger along with an extension cord plugged into the power point. With the battery charger being the possible point of origin.

There was some structure damage to the garage & the contents were destroyed by the fire with remainder of grnd level suffering heat & smoke damage along with the 2^nd level.

…

I revisited the house on the 14^th February 2021 & found the house had not been repaired. On inspection I found a heat damaged smoke detector on the 2^nd level attached to the ceiling above the stairs with an expiry date of March 2023 attached. I also noticed a tag attached from Broadspectrum with a date of 13/9/18. There was also a tag attached to the main switch board with the same date which would indicate that the detector was checked on this date.[sic]

36. Mr Afluk also provided a tender for rectification works for the property from AHT Building Services dated 1 October 2021, for a total of $405,250.

37. Mr Afluk said that he had been unable to obtain finance to fund the rectification works.

Expert Evidence

38. Mr Biasetto, a real estate agent, provided a report dated 18 December 2023 and was called to give oral evidence. In his report, Mr Biasetto estimated the reasonable rent that the landlord may have received by renting out the property if it had not been damaged by fire, from 10 March 2019 until the date of the report. Mr Biasetto’s estimate was as follows:

11 March 2019 to 10 March 2020 $2383.33 per month.

11 March 2020 to 10 March 2021 $2600.00 per month.

11 March 2021 to 10 March 2022 $2860.00 per month.

11 March 2022 to 10 March 2023 $2925.00 per month.

11 March 2023 to the current date $3033.00 per month.

I take the “current date” to be the date of the report, 18 December 2023.

39. The plaintiff called Mr Elie Abou Chaya, an electrical engineer. The defendant called Mr John Graham, an electrical/mechanical engineer. A joint report of both experts was tendered. Mr Chaya and Mr Graham gave oral evidence concurrently.

40. Mr Chaya and Mr Graham agreed that the phone charger (“the charger”) plugged into a double socket by means of a double adapter in the garage of the property was the most likely source of the fire. An extension cord was also plugged into the double adapter at the time and a fridge was plugged in to the other socket of the double socket.

41. In Mr Graham’s opinion, it is likely that the charger was faulty, leading to it combusting. Mr Chaya thought it was possible that the charger was faulty.

39. Neither party had any evidence of the brand or origin of the charger. In Mr Chaya’s opinion, it is more likely that a “non-genuine” brand of charger will catch fire than a mainstream brand. Mr Chaya inspected the fire damaged charger, and was unable to tell what brand it was, but based his opinion that it was non-genuine on his finding that it was the most probable cause of the fire. In oral evidence, Mr Chaya said:

I’m saying to you why, why the charger start fire, because it was overheated. Why it is overheated was some damage or inside the charger, some component, could be capacitor, could be resistors, could be transistor, could be anything, could, could overheated and not, not function properly and start the, and start the, the heat to build up inside the, the charger.

43. Mr Graham disagreed. He does not believe that a “non-genuine” brand of charger is any more likely to combust than a mainstream brand of charger. Mr Graham said that, in order to determine precisely why the charger failed it would have to be taken to a laboratory and dissected, piece by piece, and the components examined under a microscope to see where there has been arcing or where a hot joint has caused erosion. That process has not been undertaken. In oral evidence, the following exchange took place:

Elliott:   Mr Graham, can I just ask you what’s your – just to respond to that – what’s your view?

Graham:   No, you can’t tell by looking at it. There was no forensic investigation carried out on it to actually determine what actually caused the, the charger to fail. Whether it’s genuine as in Apple, Samsung or whatever compared to a Targus or a no name, they’re all switch mode power supplies. They all function very similar. The, the more expensive one has better battery reconditioning control as in charging, it monitors what’s happening with the battery, but the, the primary side of it is the switch mode power supply. It operates the same.

44. Mr Graham was asked, in oral evidence, what could cause a charger to catch fire. He said:

Graham:   Outside influences such as a, a power surge, which is an overvoltage, electronic component failure or a, or a hot joint, which is a …A hot joint is a bad connections, so it’ll be where, where either a leg of a say transistor goes into the circuit board. Due to the heat cycles of the transformer, every time you use an electronic device it produces heat and then it cools down and you have, you have a copper track with, with solder and there’s a piece of tin metal where it goes through so it’s this contraction and expansion, eventually the solder joint from being really tight breaks away and you get a hot joint and that hot joint will always result in some arcing.

…

Graham:   …Arcing is, is where there’s a, there’s a spark jumping between the circuit board and the, and the, the conductor, whatever that may be – it could be a transistor leg, it could be, you know, the power coming into the board, so that, that creates, that creates a bit of heat and the, the voltage, there’ll be a voltage shock there, so what happens according to Ohm’s law is that current will then be increased to bring the power back up to the power requirement to operate that device, and it, it ends up being self-perpetuating until you have a thermal runaway event and that results in a fire.

45. Mr Graham said that this could be from damage occurring between uses or just normal wear and tear. It could also be from poor soldering at the time the charger was made. Mr Graham said that it would not be apparent to the user of the charger that the charger was faulty.

46. Mr Graham considered both the situation where there was a phone plugged in to the charger and a situation where nothing was plugged in to the charger, and he said:

Graham:   …If there was a phone being or an item plugged into it being charged, then I would say most likely [it was a thermal runaway event]. If there was no phone or anything plugged into it, then I’d, I’d be assuming it’s probably more a problem with potentially the cable itself, only because it, it certainly on almost no amperage, waiting for a load to come onto it.

Allen:   Assuming there was no phone plugged into the charger, can you explain to me how you believe the fire started?

Graham:   Most likely cause is a breakdown of insulation inside the cable itself, the cable that plugs into your phone or iPad, whatever it is. Followed by that, you can have a, you can have electronic failure of the power supply itself which would again result in a fire. Actually, if I can, if I can rephrase that. I’d say probably 50/50 chance.

47. Mr Graham said that, in both cases, the first thing that happens is arcing which generates a spark which begins the fire. In both cases the arcing can happen in chargers or cables of any age, without any outward indication of there being any fault in the charger or cable.

48. Mr Chaya and Mr Graham agreed that the double adapter was not the cause of the fire. The double adapter was able to be used as it was being used under the relevant Australian Standard.

49. In Mr Chaya’s view, the smoke detector was probably not operational at the time of the fire. The basis for this view was that the neighbours in a brick veneer residence five metres away did not hear the smoke detector go off. Mr Chaya noted that the sub-tenant was not home at the time of the fire.

50. Mr Graham inspected the smoke detector in the garage of the property. It was within its 10 year life cycle, was hard wired and had an in-built battery back-up. Mr Graham saw no reason to suspect that the smoke detector was not working at the time of the fire.

51. As to the cause of the fire, I accept Mr Graham’s opinion, with which Mr Chaya partly agreed. Mr Graham was much clearer and gave more detailed evidence about the events which could happen to the charger and the cable to cause a fire.

52. As to the smoke detector, it was damaged by the fire. I accept Mr Graham’s evidence that there is no reason to doubt that it was working immediately prior to being damaged by the fire. The fact that a neighbour said that they did not hear it or did not notice it does not prove that it did not go off before it was damaged.

Conclusion on the facts

53. I find, on the balance of probabilities, that the fire arose either from a fault inside the charger or a fault inside the cable attached to the charger. I find that neither the fault inside the charger nor the fault inside the cable would have been apparent to the user of the charger and the cable.

54. The plaintiff has not established on the balance of probabilities that the smoke detector was not working immediately before the fire.

55. The plaintiff has not proven that either the subtenant or the Corporation was negligent and therefore has not proven that the Corporation was in breach of the lease on account of negligence. The claim in contract based upon the allegation of negligence fails, and so does the claim in tort.

The alleged breach of clause 17.2 of the lease and s 51(3)(b) of the Residential Tenancies Act

56. The plaintiff argued that the Corporation was in breach of clause 17.2 of the lease and s 51(3)(b) of the Residential Tenancies Act, both of which require a tenant, upon vacating premises to which they apply, to leave the premises “as nearly as possible in the same condition, fair wear and tear excepted” as when the residential tenancy agreement was entered into.

57. The subtenant was unable to resume his occupation of the property after the fire. The Corporation continued to pay rent as the head lessee for a further five months before terminating the lease. The Corporation took no steps to rectify the fire damage to the property and did not activate any process to compel Mr Afluk to rectify the fire damage. The premises remain in their fire damaged state.

58. The plaintiff argued that the Corporation could have complied with clause 17.2 of the lease and s 51(3)(b) of the Residential Tenancies Act by either seeking an order from NCAT under s 65 of the Residential Tenancies Act that Mr Afluk undertake specified repairs, by seeking an investigation and an administrative order from the Secretary under s 65C of the Residential Tenancies Act or by undertaking the work itself.

59. The plaintiff acknowledged that s 52(1) of the Residential Tenancies Act obliges the landlord to provide residential premises in a reasonable state of cleanliness and fit for habitation by the tenant. The plaintiff also acknowledged the landlord’s obligations under s 63 to provide and maintain the premises in a reasonable state of repair.

60. Section 65(2) of the Residential Tenancies Act empowers NCAT to make an order that a landlord carry out specified repairs “only if it determines that the landlord has breached the obligation under this Act to maintain the residential premises in a reasonable state of repair…”. Section 65(3A) says:

65   Tenants’ remedies for repairs—Tribunal orders

…

(3A)  The Tribunal must not determine that a landlord has breached the obligation unless it is satisfied that the landlord had notice of the need for the repair or ought reasonably to have known of the need for the repair.

The plaintiff argued that NCAT could only determine that a landlord had breached the obligation to maintain the premises if the landlord had notice of the need for repair or ought reasonably to have known of the need for repair.

61. I find that Mr Afluk knew of the need for repair on the day of the fire, which was 8 October 2018, when he spoke to a member of the NSW Police on the telephone. He visited the house the next day and saw the extent of the need for repair for himself.

62. There is no obligation on a tenant under the Residential Tenancies Act to make an application to NCAT under s 65(2), and neither is there an obligation on a tenant to undertake repairs, in the absence of negligent or deliberate damage, whether or not the repairs are urgent and whether or not there is an opportunity or a right to claim reimbursement for the cost of the repairs.

63. The plaintiff argued that the Corporation had a further “remedy” under s 65C of the Residential Tenancies Act, which was to apply in writing to the Secretary (Commissioner of Fair Trading) seeking an investigation as to whether Mr Afluk had breached his obligation under s 63 of the Residential Tenancies Act. The process provided for under s 65C can result in the making, by the Secretary, of an administrative order called a “landlord rectification order” requiring the landlord to carry out specified repairs to the premises. It is an offence under s 65C(8) to fail to comply with such an order.

64. There is no obligation upon a tenant to seek an investigation and a landlord rectification order under s 65C of the Residential Tenancies Act.

65. It was argued on behalf of the plaintiff, in effect, that the Corporation had elected not to seek a “remedy” under either s 64(3A) or s 65C of the Residential Tenancies Act, and that the consequence was that, at the end of the tenancy, the Corporation was in breach of s 51(3)(c) of the Residential Tenancies Act and clause 17 of the lease and therefore liable to the landlord for the cost of remediating the damage caused by the fire.

66. In meeting the plaintiff’s argument about clause 17.2 of the lease and s 51(3)(b) of the Residential Tenancies Act, the Corporation relied on the following rules of statutory construction (in summary):

1. A provision is to be construed as that it is consistent with the language and purpose of all of the provisions of the statute (Project Blue Sky In v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]),

2. The starting point of the exercise of statutory construction is the text, whilst at the same time regard is had to its context and purpose (SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at [14] (SZTAL)),

3. Context should be considered at the first stage and should be regarded in its widest sense (CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at 408),

4. Consideration of context and purpose may recognise that some other meaning may be suggested (SZTAL),

5. Consideration of the context and purpose of a provision includes consideration of legitimate secondary material (Vincentia MC Pharmacy Pty Ltd v Australian Community Pharmacy Authority [2020] FCAFC 163; (2020) FCR 397 at [46]-[48]),

6. The High Court said in Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55 at [39]:

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.

67. The Corporation argued that s 51(3)(b) of the Residential Tenancies Act does not impose a strict liability upon a tenant. The obligation, in its terms, requires a tenant to leave the premises in “as nearly as possible in the same condition” as at the commencement of the tenancy. In this matter, it was said, it was not possible because of a fire which was not the result of a deliberate act or negligence on the part of either the tenant or the subtenant.

68. The Corporation pointed out that the effect of the plaintiff’s argument, if accepted, would be that the tenant would be responsible for any damage to the property during the tenancy, however caused, in circumstances where the Residential Tenancies Act clearly places upon the landlord the responsibility for repairs made necessary by events which are not the result of a breach of the Residential Tenancies Act or the lease by the tenant (or subtenant). Such an outcome would be contrary to the rules of statutory construction relied upon by the Corporation.

69. The Corporation pointed out that no support could be found for such an interpretation of the Residential Tenancies Act in the explanatory material which accompanied the Residential Tenancies Bill 2010.

Consideration

70. The decision of the ACT Court of Appeal in Cooper, Cooper and Morgan v Westpac General Insurance Limited (ACN 003 719 319) [2007] ACTCA 20 (“Cooper”) dealt with a fire at a rented house in Chiefly, in circumstances where the applicable legislation and the applicable lease were very similar to those in the present matter. The ACT Court of Appeal found, in Cooper, that it had not been proven that the fire was caused by any deliberate or negligent act of the tenant. The ACT Court of Appeal said, at [25] – [29]:

25.   Counsel for the respondent submitted that the covenant in clause 55 to “maintain” the premises in a reasonable state of repair should be construed as requiring the lessor to do routine or minor maintenance work, but not to repair substantial damage to the property, whether due to fire or some other accident.  It was argued that the clause had to be construed in the context of other covenants in the lease, including those contained in clause 64 which, on its face, clearly applied to damage of that kind.  Fire damage could not be regarded as “fair wear and tear” and did not fall within any other exception to the covenant in clause 64(b) requiring the tenants to “leave the premises …in substantially the same condition as the premises were in at the commencement of the Tenancy Agreement”.  If the appellants’ contention were to be adopted, the clause would have to be read down to such an extent that it ceased to have any practical utility.

26.   We are unable to accept this argument.  As counsel for the appellants pointed out, clause 55 immediately follows the covenant in clause 54 requiring the lessor to provide the premises in a reasonable state of repair at the start of the tenancy.  In this context, the covenant to “maintain” the premises in a reasonable state of repair obviously requires the lessor to ensure that they remain in that state.  There is nothing in clause 55 to suggest some limitation on the scope of the work that the lessor may be required to comply with this covenant.  Furthermore, clause 59 makes it abundantly clear that the lessor is required to repair serious fire damage.  This covenant is, of course, subject to the exception provided by clause 56, which relieves the lessor of any responsibility to repair damage caused negligently by the tenant.  However, as mentioned earlier, we are not satisfied that the damage at issue in this case fell within this exception.

27.   Clause 64 does not purport to impose any covenant to repair and is not in its terms inconsistent with clause 55.  It appears under the heading “Tenant to look after the premises” and immediately after clause 63.  That clause requires the tenants to refrain from intentionally or negligently damaging the premises or permitting such damage, to notify the lessor of any damage, take reasonable care of the premises, and to keep them reasonably clean, having regard to their condition at the time of the commencement of the tenancy and the normal incidents of living.  Clause 64 (a) then requires the tenants to leave the premises in substantially the same state of cleanliness, removing all of their belongings and any other goods brought onto the premises during the duration of the tenancy agreement.  Clause 64(b) adds the further requirement that they leave the premises in substantially the same condition as they were in at the commencement of the tenancy agreement, fair wear and tear excepted.  We do not accept that this further covenant can only be directed toward requiring the tenants to effect repairs.  It might be directed to other matters such as requiring tenants who have altered the premises to restore them to their original condition.  The issues in the present case do not require us to define its scope.  It is, we think, sufficient to observe that there is no reason to assume that this somewhat vaguely worded covenant was intended to supplant the plain meaning of the words contained in clause 55.

28.   It should also be noted that the lease was in a form prescribed by the Residential Tenancies Act 1997 for use throughout the ACT.  We think it is most unlikely that this statutory form of lease was intended to make tenants liable for the rectification of any major damage caused to their lessors’ premises, irrespective of whether it had been attributable to any fault on their part.  Such an approach would presumably have required tenants of houses destroyed in the Canberra bushfires in January 2003 to rebuild them so that the lessors or their insurers would not be out of pocket.   It is difficult to imagine any social policy that might have warranted such an approach and even more difficult to accept that it should be taken to have been implemented without clear expression.

29.   In our opinion, the obligation to repair the damage caused by the fire in the present case fell upon the lessor and there was no basis for imposing liability on the appellants.

71. By a similar process of reasoning, in this matter, s 63 of the Residential Tenancies Act obliges the landlord to provide and maintain the premises in a reasonable state of repair. Clause 18 of the lease is to the same effect. When premises are damaged through no fault or negligence of the tenant, the landlord immediately becomes obliged under s 63 and clause 18 to repair the damage so as to restore the premises to a reasonable state of repair.

72. The Residential Tenancies Act defines “urgent repairs” to include work needed to repair fire damage in s 62(h) and clause 19 of the lease adopts that definition. Both the Act and the lease provide for a mechanism by which a tenant can arrange urgent repairs and then recover up to $1,000 from the landlord for the cost of those repairs.

71. A tenant may apply under s 65 of the Residential Tenancies Act for an order from NCAT compelling the landlord to undertake repairs if the premises have not been maintained in a reasonable state of repair. A tenant may also, alternatively, seek an administrative order from the Secretary compelling the landlord to undertake repairs under s 65C of the Residential Tenancies Act.

72. The scheme of the Act is clear, and it is echoed in the lease. The landlord is obliged to maintain the premises in a reasonable state of repair (except when damage is caused by the tenant, in breach of the lease), and the obligation of the tenant in s 51(3)(b) of the Act and clause 17.2 of the lease to leave the premises in the same condition that they were in at the commencement of the lease, fair wear and tear excepted, assumes that the landlord has complied with the obligation to repair throughout the tenancy. Neither s 51(3)(b) of the Act nor clause 17.2 of the lease, either expressly or impliedly, imposes an obligation on the tenant to undertake the repair of damage to the premises which did not result from a breach of Part 3 of the Residential Tenancies Act by the tenant and was not the result of a deliberate or negligent act by the tenant.

73. I reject the plaintiff’s argument.

Summary and Orders

76. The plaintiff has not established, on the balance of probabilities, that the fire which damaged the property the subject of the lease was caused or contributed to by any deliberate or negligent act of the tenant or the subtenant. The plaintiff’s claim in negligence and for breach of statutory duty on the basis of alleged negligence has not been made out.

77. I have rejected the plaintiff’s argument that s 51(3)(b) of the Residential Tenancies Act or clause 17.2 of the lease place an obligation upon the tenant to repair all damage, however caused, to the premises prior to giving vacant possession to the landlord. I have determined that, in the circumstances of this matter, both the Residential Tenancies Act and the lease place the obligation to repair the property upon the landlord.

78. The following order will issue:

1. The plaintiff’s claim is dismissed.

79. I will hear the parties as to costs.

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Decision last updated: 12 November 2024