Goodall v Harris & Anor (Residential Tenancies) - [2024] ACAT 95

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

GOODALL v HARRIS & ANOR (Residential Tenancies) [2024]
ACAT 95

RT 536/2024; RT 811/2024

Catchwords: RESIDENTIAL TENANCIES – rental bond dispute – final inspection conducted by owner’s agent – owner subsequently discovers damage to curtains - owner precluded from seeking compensation for damages from tenants –section 30A of the Residential Tenancies Act 1997

RESIDENTIAL TENANCIES – damage to unit – flooding from upstairs unit – loss of bathroom and laundry facilities – nature of owner’s obligation to repair – compensation for loss of amenities for period commencing after 4 weeks within which owner must make repairs

Legislation cited: Residential Tenancies Act 1997 23A, 30A, sch 1, standard terms 55, 57
Cases cited:Costanzo & Anor v McFarlane (Residential Tenancies) [2024] ACAT 75
Edwards v Izzard (Residential Tenancies) [2024] ACAT 91
Girmez & Anor v Lovell (Residential Tenancies) [2024] ACAT 47
Hlubucek v Sinodinos [2007] ACTRTT 12
Morton v Tetteh-Achim (Residential Tenancies) [2022] ACAT 96

Tribunal: Senior Member R Arthur

Date of Orders:  16 December 2024
Date of Reasons for Decision:         16 December 2024
Date of Publication:  23 December 2024
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          RT 536/2024
BETWEEN:
ROD GOODALL
Applicant/Lessor

AND:
DANI HARRIS

First Respondent/Tenant
LUKE MADDEN
Second Respondent/Tenant

TRIBUNAL:Senior Member R Arthur
DATE:16 December 2024

ORDER

The Tribunal orders that:

ACT Rental Bonds on behalf of the Territory is directed to release the bond to the tenants.
The application is otherwise dismissed.
………………………………..

Senior Member R Arthur

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 811/2024
BETWEEN:
LUKE MADDEN

First Applicant/Tenant
DANIELLE HARRIS
Second Applicant/Tenant

AND:

ROD GOODALL
Respondent/Lessor

TRIBUNAL:Senior Member R Arthur
DATE:16 December 2024

ORDER

The Tribunal orders that:

The lessor is to pay the sum of $600 to the tenants within 28 days of this order.

………………………………..

Senior Member R Arthur

REASONS FOR DECISION

Before the Tribunal are two applications, which were heard together. The applicant in the first is Rod Goodall (the lessor), who is the lessor of apartment premises in Kingston. He seeks to be paid from the $814.30 bond as compensation for damage to curtains occasioned by the tenants while they were in occupation. Luke Madden and Danielle Harris (the tenants) are the applicants in the second matter claiming compensation for loss of amenity because of flooding in the bathroom/laundry during their tenancy.
At the hearing of the two matters, Mr Goodall represented himself, assisted in that regard by Ms B Purnell-Santos and Ms H Sampson, representatives of the managing agent for the premises. Mr Madden and Ms Harris represented themselves. All attended in person where the lessor and each of the tenants gave evidence and were cross-examined at the hearing.
Apart from matters which have noted, there was no significant dispute about the facts. I regarded the evidence of each of the parties as credible. Their differences were in respect of the inferences to be drawn from the facts as they understood them.
The tenancy commenced on 24 March 2023. The events in question occurred towards the end of the lease period, and at the conclusion the lease on 6 May 2024.

The curtains

Up until mid-February 2023, the lessor and his family had been in occupation of the premises. He says that after they moved out, the premises were unoccupied until 24 March when the tenants moved in. In December 2023, prior to moving out, the lessor purchased new curtains for the living room. He said that they were a more expensive curtain which had a backing designed to exclude light. The Entry Condition Report records the curtains as being “clean, undamaged, working”.
On the afternoon of 6 May 2024, being the last day of the lease, a representative of the managing agent for the premises conducted a final inspection. The tenants were not present but acknowledge that they were aware of the inspection and could have attended if they wished to. The representative completed the End of Lease Condition Report (EOL Report), and in the evening of that day sent copies to each of the lessor and the tenants. The completed EOL Report described the curtains as “clean, damaged, working”, the damage being noted as “Damage to railing, chipped paint and scrapes”. A copy of the EOL Report was Annexure B to the witness statement of Mr Madden, signed and dated on 7 May 2024[1].
[1] Exhibit A4
The lessor says that on reading the EOL Report he felt that there was something not right in relation to the living room curtains, such that early next morning he attended the premises. He saw that the curtains had been damaged as well as the railing. He regarded the damage to the curtains as significant and notified the managing agent during the day.
The managing agent notified the tenant that she would conduct a further inspection the next day. In the meantime, however, the tenants had signed the EOL Report.
The lessor asserts that the curtains were damaged beyond repair, probably because they had been put in a washing machine for cleaning. As a result, they had stiffened, had numerous breaks where folds had occurred and had shrunk in length by about 60 mm. He obtained a quote for replacement in the amount of $814.30.
The tenants say that they did not put the curtains in a washing machine, but had the premises cleaned professionally which included dusting and vacuuming of the curtains.
Both the lessor and tenants arranged for the curtains to be inspected on their behalf by persons experienced in the curtain industry. Unfortunately, neither gave evidence at the hearing, though both provided short written reports which were in evidence. As a result, although I accept that the curtains needed replacing, I was not able to determine the cause of the deterioration in their condition.

Importance of the final inspection and EOL Report

The function of the final inspection and ensuing EOL Report in determining the condition of the premises (and specific parts of them) at the end of the lease is well established in the ACT,[2] consistently with the position adopted in other jurisdictions.
[2] A survey of the cases is below.
In short, the condition of the premises as stated in an EOL Report and agreed to by the parties is evidence of their condition at the end of the lease. The rationale behind this is that it is important that parties know where they stand when the lease comes to an end. For this reason, the Residential Tenancies Act 1997 (the RT Act) and the standard lease it enshrines,[3] provide for joint inspections at the beginning and end of leases and the making of condition reports which are binding on the parties unless one party was unable to attend a final inspection and had a reasonable excuse for not doing so[4].
[3] The Standard Terms in Schedule 1 to the RT Act
[4] RT Act sections 29, 30, 30A; standard terms 21,22,23,23A
In the course of the hearing, when explaining this rule to the parties, I mentioned that there may be exceptions, including a situation in which a particular defect was not noticeable at the time of inspection but became so later, and it needed an expert to explain the occurrence. The lessor, reasonably, submitted later that only an expert could be expected to notice the damage in this case and that the representative of the managing agents could not be expected to have that expertise. The point does not assist the lessor, however, for the reason that he was able to discern the damage. He was also in a position to attend the final inspection himself, but had chosen to delegate this function to the managing agent. If this was something that only an expert could discern, and he had that expertise, then he ought to have attended the inspection. Otherwise, he is, as is normally the case, bound by the actions of his agent.
In previous cases, lessors have been allowed to bring evidence to contest the evidence established by a condition report. That is because of the need for finality when a lease has ended. In some cases, the period between the end of the lease and finalisation of the EOL Report and the discovery of a defect has been quite short. In this case, the period is very short.
This issue has been considered in several ACAT decisions. In Edwards v Izzard in 2016 (Edwards),[5] the tribunal, after noting that section 30 (2) of the RT Act provided for evidential weight to be given to an ingoing condition report, observed that there is no provision in the Act that sets out the evidential weight to be given to an outgoing condition report. It noted, citing a 2007 decision in Hlubucek v Sinodinos (Hlubucek),[6] that it is well established that a report of a final inspection that was attended by both the lessor and the tenants, and agreed to by both, is accepted by the tribunal as evidence of the condition of the premises at the end of the tenancy. In Hlubucek, it was said:
The Tribunal has accepted that a there must be finality about the condition of the premises at the end of the tenancy. See for instance Yandle v Katsoulis and Young v Forsyth [2003] ACTRTT. A lessor cannot add additional items after the final inspection that the lessor discovers need repairing, cleaning or restoring unless such further discovered items would not have been visible at the time of the final inspection. Even in those later circumstances, there has to be a finite limit to the time in which a lessor can discover such a need and add an item to the list. Once the tenants have vacated the premises they have no control over what happens in and to the premises and should not continue to be held responsible for matters that could have occurred after they vacated the premises.
[5] [2016] ACAT 9
[6] [2007] ACTRTT 12
The Tribunal in Edwards noted[7] that:
In Verscheure & Bradbury v Richards and Retmock[8] the Tribunal held that the lessor cannot raise any additional items after the final inspection if the items would have been visible at the time of the inspection.
A slightly more liberal approach was adopted in Martins v Zhang where it was held that an oversight at the time of inspection would not preclude later addition of the item overlooked in certain circumstances; (citation omitted)

and concluded:[9]
[Although] additional latitude may, and should, be given where there was damage that was not capable of being identified by a visual inspection… The final inspection report should be considered a starting point for any assessment of damage… Obviously, the longer the time between the end of the tenancy and the identification of the damage, the harder it will be for a lessor to meet this evidentiary burden.
[7] At [59]-[60]
[8] [2009] ACAT 11
[9] At [61]

The decision in Edwards was published in August 2016. Very shortly afterward, section 30A was inserted into the RT Act:
30A Final inspection and condition report—end of tenancy
(1)     A lessor must, together with the tenant, carry out an inspection of the premises at the end of the residential tenancy agreement.
(2)     The lessor must, together with the tenant, complete and sign a condition report based on the inspection.
(3)     However, a party may complete and sign the condition report in the absence of the other party if the party has given the other party a reasonable opportunity to be present when the report is completed and signed.
The explanatory statement in relation to section 30A states:
This clause inserts a new provision requiring a final inspection and condition report to be completed at the end of a residential tenancy agreement. New section 30A requires the end of tenancy inspection and condition report to be completed by the lessor and tenant jointly as the intention of this amendment is to assist in managing end of tenancy disputes about the condition of the premises. An end of tenancy condition report may still be completed in the absence of the other party provided the other party has been given reasonable opportunity to be present. A tenant would not be penalised for signing the condition report, other than in respect of not having an input into what is included in the evidence about the condition of the property. If the parties cannot agree on the condition report, then there will be provision on the form for each party to make their own observations about the condition of the premises (emphasis added).
The sentence emphasised in this extract makes clear the primacy of the final inspection and the report based on it in determining the condition of the premises at the end of a tenancy. This is evident in the observation that a tenant would not be penalised for signing a report, apart from not having had input into the report. It follows from this that the lessor is not penalised at all, because they have carried out the inspection and created the report.
Because of the provision, an inspection which the tenant has not had a reasonable opportunity to attend, will not have such primacy – indeed, because it is the lessor’s responsibility to initiate the process,[10] the lessor may be precluded from relying on it at all.
[10] S 30A (1) puts the obligation of initiate the process on the lessor
In 2022 the Tribunal in Morton v Tetteh-Achim[11] said[12] that section 30A:
…makes it clear that once a final inspection is completed in the presence of the tenant, and the outgoing condition report is signed by the tenant and in this case the lessor’s agent, that comprises the evidence of the property at the end of the tenancy.
[11] [2022] ACAT 96
[12] At [18] – elaborated on at [21]-[23]
In 2024 the Tribunal in Girmez & Anor v Lovell,[13] the Tribunal held[14] that the effect of s 30A is to:
…make clear that if there is an inspection between the lessor (which includes one of several joint lessors, or an agent of the lessor) and the tenant (which includes one of several common tenants, or an agent of the tenant) then it is only that inspection that a condition report can be “based on” under subsection (2).
[13] [2024] ACAT 47
[14] [2024] ACAT 47 at [33]
Later in 2024, the Tribunal in Costanzo & Anor v McFarlane[15] put the matter another way:
The outgoing condition report acts as an agreement between the parties as to the condition of the property upon the vacating of the tenant. This agreement cannot be unilaterally amended by the lessors after the tenant has already agreed to be bound by the original condition report which includes photographs of the condition of the property at the time of exit.
[15] [2024] ACAT 75 at [27]
The early decisions were uniform in their statement of the need for finality, with some latitude given to lessors who later discovered further damage or defects. Since amendment of the RT Act and the Standard Terms, that latitude has been cut off. There may be an exception in the case of a defect that could not, as opposed to was not, discovered on inspection but later became manifest (it is difficult to think of an example) – but then proving that it was caused by the tenant would present an almost insuperable difficulty.
The effect of section 30A and its mirror Standard Term 23A as indicated in the decisions of the tribunal since it was enacted is that:
(a)A condition report must be based on:
(i) An inspection at which both the lessor and the tenant, or their representatives are present, or
(ii) An inspection at which one party (or representative, was present and to which the other party had been given a reasonable opportunity of attending.
(b)Only defects or damage identified in a condition report based on a final inspection can be claimed by the lessor as giving rise to compensation.
(c)Once the condition report has been signed by both parties, neither party can contest the correctness of its content.
Although not arising directly out of the authorities referred to above, the need for finality precludes any further inspection once a condition report based on the first inspection has been created and given to the other party.
While the regime may have elements which appear to be harsh it is not arbitrary or unfair – because they initiate it, lessors control the process and can protect their interests by ensuring that the final inspection is conducted in a manner which protects those interests.
In this case, the curtains (apart from the railing) are not identified in the EOL Report as being damaged, that report was based on the inspection undertaken by the lessor's agent and has been signed by the lessor’s agent and the tenants dated 7 May 2024.
The quote produced by the lessor for the supply and installation of new curtains does not identify a component attributable to the damage to the railing. I have no other means of quantifying what compensation would be appropriate and consequently can make no award.
Accordingly, the lessor’s application must be dismissed.

Compensation for flooding

The premises were a two-bedroom apartment. The tenants used the master bedroom and its ensuite and the bathroom, with their 15-year-old son having the other bedroom and the bathroom. The bathroom had a shower, and included a washing machine and tub, and a dryer.
Around midday on 26 January 2024, water flowed for about an hour from an apartment on the floor above into the bathroom through the ceiling light and the dividing wall between the hallway and bathroom damaging the light fitting and adjacent ceiling plaster.
The tenants notified the property manager, then a woman named Peta, who notified the lessor in a phone call the next day.
A flooding event of this kind had happened previously. The lessor knew to contact the owner of Unit 91 on the floor above and did so in emails on 29 and 30 January 2024. The lessor and the owner, a woman named Nadia, arranged for Nadia to organise an electrician to check on the damage to the light fitting and its repair and to have the ceiling repaired.
An electrician attended on 1 February 2024 and removed part of the light fitting, telling the tenants that he could not replace it until the plastering had been done. He told the tenants that they should be sparing in the use of the bathroom and laundry until then because of the possible hazard around water interacting with an exposed electrical fitting. A cable was left dangling down from the ceiling to around shoulder height, ending in exposed wires.
The bathroom did not have any windows. As is required under the building code, ventilation was provided by an exhaust fan which operated when the ceiling light was switched on.
The tenants decided not to use the shower and the dryer because of the steam/condensation that would be produced and their concern about the electrical hazard, as well as the risk of mould. They put in a portable lamp plugged into a wall socket so that their son could use the toilet and the bathroom vanity. It was necessary, however, for him to shower in the parents’ ensuite. Mr Madden was able to take washing to his workplace. I accept that this response by the tenants to the situation was genuine.
On 15 February 2024, the lessor asked Peta whether the tenants were able to use the bathroom and laundry, and says he was told that they were doing so with the aid of a portable light. The tenants deny that they said such to Peta but say that she did come to the premises a couple of times. Unfortunately, the source of Peta’s information is not known, as she did not give evidence – presumably because she was no longer in the employ of the agency.
After communication between the lessor and Nadia on 15 and 16 February 2024 about the availability of a plasterer at 8:00am on Saturday, 17 February 2024, but who would not then be available for another three or four weeks, the tenants were given 24 hours notice of the time at which the plastering work would be done. That time was not possible for the tenants. They said, however, that they could be home on any workday in the next three or four weeks if work was arranged in that time.

On 5 March 2024, Peta asked the lessor whether any progress in arrangements for the plastering and electrical work had been made, reporting that the tenants were willing to be flexible about dates and times.
A plasterer attended the premises on 26 March 2024 and carried out the first stage of the plastering repair, saying that he would need to return when it was dry to sand it back before painting.
On 11 April 2024, the electrician returned to reinstall the light fitting. The plasterer completed his work in early May.
In the meantime, on 8 April 2024, the tenants had given notice ending the tenancy.
In his correspondence, and in his evidence and submissions at the hearing, the lessor criticised the tenants for not keeping him informed of their circumstances.
That criticism was unwarranted. I accept the evidence of the tenants, who dealt only with the managing agent Peta, that they thought that the delays were the result of difficulties in getting tradesmen and wanted to be helpful to the lessor in progressing his insurance claim. They conveyed their concern about the dangling cable, but otherwise did not push for work to be done. They thanked Peta when the plastering was eventually done at the end of March 2024.
The criticism was also misplaced. It was no doubt convenient for the lessor to leave the repair arrangements to Nadia, as it is convenient to suggest that he would have pushed for the work to be done more quickly if the tenants had notified him of their circumstances. On both counts, however, the lessor is avoiding his own responsibility.
The statutory tenancy agreement between the parties provided at clauses 55 and 57 of the Standard Residential Tenancy Terms states:
Lessor to make repairs
55 (1) The lessor must maintain the premises in a reasonable state of repair having regard to their condition at the commencement of the tenancy agreement. (2) The tenant must notify the lessor of any need for repairs.
(3) This section does not require the tenant to notify the lessor about anything that an ordinary tenant would reasonably be expected to do, for example, changing a light globe or a fuse.
57 Subject to clause 55, the lessor must make repairs, other than urgent repairs, within 4 weeks of being notified of the need for the repairs (unless otherwise agreed).
Put simply, the legal position in relation to repairs during a tenancy is that:
(a)The lessor has overall responsibility for seeing that the premises are kept in repair.
(b)The tenants must notify the lessor when repairs are needed.
(c)On being notified, the lessor must complete the repairs within four weeks.
The word ‘must’ means effectively that there are no excuses (except, perhaps, impossibility) for not doing what is required.
The obligation on the tenant means that the lessor’s overall responsibility is not engaged until he has been notified, but that responsibility must then be discharged in 4 weeks. If it is not, the lessor is in breach of the agreement.
Whether a lessor personally takes on the repair work, or engages somebody else to do that, it remains the responsibility of the lessor, and the lessor alone, to ensure that the work is done. In this case, the lessor's insistence that Nadia take responsibility for the repairs was understandable, but it risked compromising the discharge of the lessor's contractual obligation, as happened.
Leaving the matter in the hands of Nadia had other consequences:
(a)The tenants reasonably assumed that the tradespeople would report to the lessor or his agent as to what they had done.
(b)The lessor on the other hand knew nothing because the tradespeople presumably reported only to Nadia.
(c)The lack of information coming to the lessor's attention no doubt contributed to his false belief that everything was in hand.
(d)And, if in fact it was not necessary for the tenants to curtail the use of the bathroom and laundry, the inappropriate lines of communication worked to preclude them from finding out.
In the result, after 4 weeks from 26 January 2024 elapsed, the lessor was in breach of his repair obligation, entitling the tenants to payment of compensation.
The tenants have claimed compensation for their inconvenience in the amount of $1,573, being a 25% reduction in rent from 26 January to 11 April 2024 – a period of 76 days. That translates into a reduction of $20.60 per day, the rent being $580 per week over the period.
I propose to order compensation in the amount of $600 (rounded) for the following reasons.
While the daily disruption for the tenants was significant, I do not think it is represented by the proportion 25%. I think 15% is more appropriate, resulting in a daily figure of $12.42.
I also do not consider that the period of 76 days is appropriate. In my view, the stipulation that repairs must be completed within 4 weeks attempts to strike a balance, in circumstances where the need for repairs is not the fault of either party to the lease – allowing the lessor a reasonable time in which to complete the repairs without unnecessarily disrupting the tenants in the meanwhile. Accordingly, I would cut the 76-day period by 28 days, the result being the rounded figure of $600 as an award of compensation to the tenants.
Accordingly, the orders of the Tribunal for RT 536/2024 are:
(a)ACT Rental Bonds on behalf of the Territory is directed to release the bond to the tenants.
(b)The application is otherwise dismissed.
Accordingly, the orders of the Tribunal for RT 811/2024 are:
(a)The lessor is to pay the sum of $600 to the tenants within 28 days of this order.

………………………………..

Senior Member R Arthur

Applicant/Lessor:	In person
First Respondent/Tenant:	In person
Second Respondent/Tenant:	In person