Knueppel v Zarpas - [2004] SADC 162

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Under Residential Tenancies Act 1995)
KNUEPPEL v ZARPAS
Judgment of His Honour Acting Judge Kitchen
25 November 2004
LANDLORD AND TENANT
Residential Tenancies Act - apppeal from order of Tribunal dismissing tenant's claim for compensation - whether landlord has notice of those defects which a reasonable inspection before the commencement of the tenancy would have revealed.
Residential Tenancies Act 1995, referred to.
Reliance Permanent Building Society v Harwood-Stamper (1944) 1 Ch. 362; Northern Sand-Blasting Pty Ltd (1996-1997) 188 CLR 313, considered.

KNUEPPEL v ZARPAS
[2004] SADC 162

This is an appeal, pursuant to Section 41 of the Residential Tenancies Act 1995 (the Act), by a tenant against an order made by the Residential Tenancies Tribunal (the Tribunal) dismissing the tenant’s application for orders that the landlord pay compensation to the tenant.
The appellant entered into an oral tenancy agreement to rent a “dugout” house premises at Lot 925 Hallion Street, Coober Pedy commencing on 8^th August 2001 at a rent of $110 per week.
In a letter to the respondent dated 23^rd October 2002 the appellant provided a list of fixtures and fittings in the premises the repair of which she claimed was necessary for the health and safety of the appellant and her young children. The respondent resided in New South Wales. The letter was sent by registered post to the respondent at her address in New South Wales known to the appellant. The appellant did not receive a reply. On 28^th November 2002 the appellant wrote to the Tribunal setting out her complaints concerning the premises and seeking an order that the respondent carry out repairs, and pay compensation for the unsatisfactory condition of the premises. On 29^th November 2002 the appellant’s letter to the respondent was returned to the appellant unclaimed.
On 16^th December 2002 the appellant filed with the Tribunal an application dated 12^th December 2002 seeking orders:
·“Landlord to carry out repairs and maintenance
·Compensation/rent reduction of $20 per week from August 2001 until the repairs are effected
·Landlord to reimburse $100 on each two monthly water bill issued by DCCP from first bill (approximately August 2001-October) until repairs are effected.”
The Tribunal sat in Coober Pedy on 7^th January 2003 to hear the appellant’s application. Both the appellant and the respondent gave evidence before the Tribunal. There is no transcript of the proceedings.
The appellant’s case was that at or soon after the time she entered into the tenancy agreement she spoke to the respondent on the telephone who told her that she should speak to one Jianni Nickalou if she had any difficulties concerning the premises. The appellant claimed that in the period of 12 months preceding October 2002 she had asked Jianni Nickalou to carry out repairs to the premises but he had not done so, and her attempts to contact the respondent by telephone about defects in the premises had been unsuccessful. The appellant then wrote to the respondent the letter dated 23^rd October 2002.
The respondent’s case to the Tribunal was that she did not give any authority to Jianni Nickalou to act on her behalf in relation to the premises and that she did not receive the letter dated 23^rd October 2002 from the appellant.
Section 68(1) of the Act provides that it is a term of a residential tenancy agreement that the landlord “will ensure the premises and ancillary property are in a reasonable state of repair at the beginning of the tenancy and will keep them in a reasonable state of repair having regard to their age and prospective life”; the obligation imposed upon the landlord applies even though the tenant had notice of the state of disrepair before entering into occupation. Section 68(2) provides that the landlord is not in breach of the obligation to repair unless the landlord had notice of the defect requiring repair and failed to act with reasonable diligence to have the defect repaired.
After referring to s68 of the Act the Tribunal member found that the respondent:
“Was unaware of and did not receive advices of any difficulty with the premises prior to early December 2002 when apprised of the tenant’s complaint by a tenancy officer. I accept that they immediately attempted to arrange inspections of the subject premises. They also instructed tradespersons to attend the premises for the purpose of inspection and repair. The tradespersons were unable to access the premises.”
The member went on to record that he was not satisfied the respondent knew of the defects and failed to act with reasonable diligence to have the defects repaired.
The Tribunal member found that the respondent did not comply with the obligation pursuant to Regulation 7 of the Regulations under the Act to provide to the appellant an inspection sheet at the time the tenancy agreement was entered into.
In his assessment of the appellant the Tribunal member said that she gave her evidence in an agitated, excitable and exaggerated manner and he therefore had “singular reservations whether the list of defects to which she refers were as serious as she would have me accept”. He also found it curious that the appellant could not contact the respondent earlier than October 2002.
The appellant and the respondent having agreed the relationship of landlord and tenant had broken down, an order was made for possession of the premises to be given and taken on 20^th January 2003. The appellant’s claim for compensation was dismissed.
In her notice of appeal the appellant appealed against the order dismissing her claim for compensation. The grounds of appeal are:
“1.     Further evidence
2.     Witnesses
3.     Tribunal Officer errored (sic) in not ordering inspection of the premises.
4.     The Tribunal Officer gave undue weight to the testimony of the landlord.
5.     The Tribunal Officer, without basis, discredited the testimony of the appellant.”
When the appeal was called on the appellant said that she had wanted to call before the Tribunal a Mr Woon who could give evidence about the state of the premises throughout the period the appellant was in occupation, but when the matter was heard by the Tribunal Mr Woon was overseas and the appellant did not know she could have asked for an adjournment. The appellant also submitted she should be permitted to adduce evidence that was not available to her at the Tribunal hearing concerning the quantity and cost of water used at the premises during her occupation by reason of allegedly faulty or defective fittings and fixtures.
Pursuant to s4 of the Act I determined to rehear evidence taken before the Tribunal and hear the additional evidence described by the appellant. The hearing of the appeal was adjourned to a later date.
When the appeal resumed, both the appellant and the respondent gave evidence. The appellant did not call Mr Woon; the appellant’s explanation was that she was not sure why he had not attended to give evidence, suggesting there was some communication problem.
The appellant has four young children. Her evidence is that she had difficulty finding premises to rent in Coober Pedy. Eventually she was taken to the respondent’s premises by one Julie Eslamatis, the mother of Jianni Nickalou; Jianni Nickalou had been a tenant of those premises.
The appellant said that the premises, a dugout, to which Ms Eslamatis had a key were in darkness because the electrical power had been disconnected, and she could see nothing of the inside of the premises. As I said earlier in these reasons an inspection sheet was not prepared as required by the regulations under the Act; there was no inspection.
The appellant moved into the premises about one or two weeks after her first visit to them. She had been told the name of the landlord and was given by the former tenant, Jianni Nickalou, a bankbook into which the rent was to be paid.
When the appellant moved into the premises in about August 2001 the power supply had been reconnected. She said she noticed taps in the kitchen, laundry and bathroom could not be turned fully off, and they dripped or trickled; some of the taps were corroded; the toilet cistern ran continuously because of the absence of a float; when flushed, the toilet pedestal drain expelled water into the toilet area; in the laundry the under-sink drainage pipes were defective causing water to escape into the sink cupboard; an outside tap continuously leaked; a lock to a window could not be effectively operated because of a displaced window pane; the external door leading into the laundry had neither a lock nor a handle so the premises could not be secured – the appellant said she was told by the previous tenant, Jianni Nickalou, that he had broken open the door on an occasion he had forgotten his keys. The appellant listed other defects she found in the premises. Her evidence is that the complete list is part of the letter she wrote to the respondent on 23rd October 2002.
The appellant said that in about the week she went into occupation of the premises, she had occasion to speak to the respondent on the telephone concerning a form which it was necessary for the respondent, as landlord, to sign so that the appellant could apply to Centrelink for rent assistance. The respondent resided in Sydney; the appellant said she obtained the respondent’s telephone number from Julie Eslamatis, or her husband George. The respondent’s evidence is that in that telephone conversation she told the respondent that the external door to the laundry could not be locked, the air-conditioner was not working, that water was leaking from most of the taps, and from the toilet and the dugout needed other repairs as well. The appellant said the respondent told her “If there were any repairs to go to Jianni, which is the son of George and Julie … her words were if there were any repairs to be done or whatever repairs there were especially when if Jianni did do any damage or whatever, she said if there were any repairs to be done I should go to Jianni and see Jianni about it, because he was the previous tenant – whatever, they were friends and Jianni and his father George too … especially she mentioned Jianni had to do the repairs but if I had trouble to get him or whatever to go to George, too, that is both of them, but Jianni should do the repairs”.
The appellant said she spoke to Jianni informing him the respondent had said he had to do the repairs and that Jianni told her he would come to the premises and repair the door, the air-conditioner, the leaking taps and see what other repairs had to be done. The appellant’s evidence is that Jianni came to the premises, did some work on the air-conditioner, moved to a shed (or took away) some of his property which he had left in the premises, but did nothing else, either then or on the six or seven subsequent occasions she asked him to do the work.
The appellant said she tried, unsuccessfully, to speak to the respondent on the telephone prior to March 2002 at the number she had previously called, which she understood was a video store. Then in March 2002 her call to the number was answered by a “girl” who said the respondent was in Bali. The reason for the call to the respondent on that occasion, the appellant said, was that she had had to urgently call in a handyman to replace a kitchen tap which could not be turned off at all. The appellant paid $25 for the replacement tap and the installation of it (exhibit P2). She said that in relation to the repairs to taps and other fittings and fixtures that were needed, her requests to Jianni were met with no response and in October 2002 she wrote her letter to the respondent dated 23 October 2002.
As to the $25 paid for a tap replacement, the work was not carried out by a licensed person, therefore the appellant is not able to recover from the respondent, pursuant to s.68(3) of the Act, the amount paid.
The appellant’s principal claim for compensation concerns the water consumption during the period of her occupancy of the premises commencing in August 2001. The appellant’s evidence is that there was a considerable loss of water from leaking taps. The appellant produced to the Tribunal a printout from the records of the water authority (The Coober Pedy Council) showing that between 16 August 2001 and 14 October 2002, 439.7 kilolitres was consumed at the premises. At the hearing of the appeal the appellant also wished to rely upon:
(a) the water consumption at the premises to the date she gave up occupancy of them in January 2003 and
(b)the water consumption in premises in Burke Street, Coober Pedy where she resided between 22 January 2003 and 4 December 2003 after quitting the respondent’s premises.
As to (b) the appellant’s evidence is that the premises are similar to those she occupied as the respondent’s tenant (I will refer to those as Hallion Street) and her ordinary domestic water usage, plus watering plants would have been the same as that for the same purposes at Hallion Street.
The Hallion Street consumption to 23 January 2003 was 575.3 kilolitres, an average of 33.84 kilolitres per month; the water consumption at Burke Street to 4 December 2003 was 176.8 kilolitres, an average of 16.07 kilolitres per month.
In her evidence the appellant said that for water consumed at Burke Street “I know that I had paid half, a bit more than half, at least a minimal, a third less than I paid in the other place. … I do know that my water bill has gone down about half to a third, it has, third, two-thirds, has one-third to a half gone down.” (T86)
The respondent’s evidence is that the last time she had been in the premises before the appellant went into occupation was in December 2000.
The respondent agreed that the appellant spoke to her on the telephone in August 2001 in relation to a Centrelink form; she said that on that occasion the appellant told her the house could not be secured because the laundry door could not be properly locked. The respondent denied that anything else concerning the house was mentioned by the appellant, although in cross-examination of the appellant the respondent said “I don’t recall you telling me” about the water. She said she told the appellant that Jianni was responsible for the broken door (in the laundry) and he must repair it. The respondent’s evidence is that a new lock had been fitted to the laundry door in December 2000 and that in the telephone call by the appellant, the appellant said that Jianni had broken the lock.
It is the case, as the respondent agrees, that the appellant’s letter to her dated 23^rd October 2002 was correctly addressed to the respondent at premises where she resided in Ingleburn, New South Wales. The respondent’s evidence is that she did not receive the letter and she had no knowledge of it until a copy was provided to her by an officer of the Tribunal after the appellant contacted the Tribunal in November 2002.
The respondent and her husband inspected the premises on 8^th January 2003 for about 30 minutes. She said, as to the list of defects contained in the appellant’s letter dated 23^rd October 2002, she found the lock in the laundry door was broken; the washing line was broken; a tap in the bathroom dripped and screws to secure the electrical power points were loose, and a shower tap was broken; the air cooler motor was found under the verandah; when it was flushed the toilet leaked from the near-floor seal which had split; the exhaust fan in the kitchen ceiling was non-operable because it had never been connected, but fumes were taken away by a separate range hood; the oven door would not close because the door springs were “stretched”; the switches to the electrical power point in the lounge room were broken and a fan (in the same room I infer) operated only on the high setting. The respondent said she did not see an outside tap to be dripping, she did not check the laundry taps or fittings (she thinks that her husband did) and neither was the shed inspected – she said there wasn’t adequate time; because a gas cylinder was not connected to the stove she was not able to check the operation of the hot plates. The respondent agreed that there was no smoke detector, no safety switch in the electrical box or a cover for the box – none of those things had ever been installed.
The respondent said that her sister had been into the premises in May 2001 after Jianni Nickalou moved out; asked whether she was given a report about the condition of the premises, the respondent said “They did not report to me that there was anything wrong”.
By s110(1) of the Act, the Tribunal has the power to order a person to make a payment, which may include compensation, for inter alia a breach of the Act or a Residential Tenancy Agreement, but it may not award compensation for damages arising from personal injury.
I earlier referred to s68(1) of the Act. The Section reads:
“68. (1) It is a term of a residential tenancy agreement that the landlord-
(a)will ensure that the premises, and ancillary property, are in a reasonable state of repair at the beginning of the tenancy and will keep them in a reasonable state of repair having regard to their age, character and prospective life; and
(b) will comply with statutory requirements affecting the premises.
. The obligation applies even though the tenant had notice of the state of disrepair before entering into occupation.”
By Clause 7(1) of the Regulations under the Act:
“7. (1) At the time that a residential tenancy agreement is entered into, the landlord (or his or her agent) must complete and provide to the tenant two signed copies of an inspection sheet in a form determined by the Minister, or in a form that satisfies the requirements of the form determined by the Minister and that in particular
…
(b)provides comprehensive details of fixtures, furniture and other contents in the premises; and
(c)provides for the condition of the premises and the fixtures, furniture and other contents of the premises to be described by both the landlord and tenant, both at the time of commencement and termination of the agreement.”
…
The respondent did not comply with that Regulation; that failure constitutes an offence, punishable by a fine (Regulation 15).
If the defects complained of by the appellant were present and apparent in the premises at the time the tenancy agreement was entered into, is the respondent not liable unless it can be proved she had notice of them either before or after the agreement was entered into, notwithstanding that the respondent failed to comply with Regulation 7? Or does the requirement for notice only apply to defects, requiring repair, first occurring or discovered after the agreement is entered into? This depends, in my opinion, upon what is meant by “ensure” in s68(1).
Reliance Permanent Building Society v Harwood-Stamper (1944) 1 Chancery at 362 was a case heard by Vaisey J in which his Lordship was required to construe the Building Societies Act, 1939 by s10 of which “where a property is mortgaged to a building society, any person entitled to exercise a power of sale, statutory or express, must take reasonable care to ensure that the price at which the estate is sold is the best price which can reasonably be obtained”; his Lordship wrote (at page 373):
“The word ‘ensure’ has puzzled me a good deal. I think it is used in the common and colloquial sense in which ‘making sure’ is used, that is as equivalent to ascertaining or satisfying oneself, and does not mean anything in the nature of warranty or guarantee”.

If that is the sense in which “ensure” is used in s68 then before the tenancy begins the landlord (or at least some person on his behalf) must inspect the premises to ascertain the state of repair in order that the landlord is in a position to make sure they are in a reasonable state of repair at the beginning of the tenancy. That state of disrepair which such an inspection would reveal to a reasonable observer, the landlord has notice of. Any state of disrepair which occurs after the beginning of the tenancy, the landlord will not know of unless either the landlord ascertains it by subsequent inspection or the tenant informs him of it. This construction accords with the common law duty of care of landlords to tenants, and members of the tenants household, injured by a defect in the landlord’s premises; see eg Gaudron J in Northern Sand-Blasting Pty Ltd v Harris (1996-1997) 188 CLR 313 where Her Honour wrote (359-360) that until the tenancy commences:
“… the landlord is … in a position to ascertain and control the state of the premises; the tenant and members of his or her household have no such ability and are dependent upon the landlord for their safety, save to the extent that they become aware of existing dangers … Once a lease has commenced, it seems to me that, in relation to defects which are not present at the commencement of a lease but develop during its term, a landlord’s duty extends only to remedying those defects of which he or she is or ought to be aware … however, different considerations apply in the case of defects which are present at the beginning of a lease.
Having regard to the control, which at the beginning of the lease, a landlord exercises over the state of the premises and, also, the extent to which members of the household are then dependent upon the landlord for their safety, a landlord’s duty at that point cannot, in my view, be limited to defects of which he or she is aware … (there is) a duty to inspect and, also a duty to remedy those defects which give rise to a foreseeable risk of injury”.
In my opinion s68, on its proper construction, means that a landlord has notice of those defects requiring repair which would reasonably have been discovered upon an inspection carried out by or on behalf of the landlord at the beginning of the tenancy; a landlord who fails to act with reasonable diligence to repair such a defect will be in breach of the term incorporated into the tenancy agreement by s68. As to any defect, requiring repair, which occurs or develops during the tenancy agreement, a landlord is not in breach of the tenancy agreement unless it is proved that the landlord has notice of that defect and failed to act with reasonable diligence to repair it.
The Tribunal member dismissed the appellant’s claim on the ground that the respondent had no notice of the defects of which the appellant complained. In my opinion:
(a)as to those defects requiring repair which were present at the beginning of the tenancy and discoverable upon reasonable inspection, the Tribunal member was in error.
(b)as to those defects which occurred after the beginning of the tenancy I see no reason to differ from the Tribunal’s finding, that is, Jianni Nickalou was not the respondent’s agent authorised to receive on the respondent’s behalf notice of defects, and the appellant’s letter to the respondent dated 23 October 2002 was shown not to have been delivered to the respondent.
The telephone conversation between the appellant and the respondent in August 2001, was prompted by the appellant’s need to have the respondent complete a form concerning the appellant’s claim for rental assistance. I do not accept the appellant’s evidence that she embarked upon itemising to the respondent a list of defects. There is no doubt the defect in the door to the laundry was mentioned. Except that the respondent said she specifically remembered the door, her evidence is that she was not aware there was anything else wrong with the house although she seemed less confident concerning “the water” as to which she said she did not recall the appellant telling her about that.
Except for the matter of the door I am not persuaded the appellant is accurate in her evidence of what it was she told the respondent; there was some discussion about the person Jianni, but I consider that was only in the context of the laundry door.
I find that the landlord is in breach of the tenancy agreement by reason of the following defects which were present at the commencement of the tenancy, discoverable upon a reasonable inspection before the commencement of the tenancy and were not repaired by the respondent.
(a)     Dripping or running taps.
(b)     Under sink laundry plumbing was leaking.
(c)     The toilet near-floor seal was leaking.
(d)     No lock on the outside door to the laundry.
(e)A hot point on the gas stove was inoperable, and the door closing springs were defective.
(f)     The speed of a ceiling fan could not be regulated.
(g)     The doors to the laundry, kitchen and a bedroom were missing.
(h)A large upstairs window was not secured to the frame and the lock was inoperable.
(i)     A power point in the big room upstairs was inoperable.
(j)     An exhaust fan in the kitchen was inoperable.
(k)     The air cooler was in a state of disrepair.
(l)     An outside washing line was in a state of disrepair.
(m)Doors to the shed and the central post to which the doors were to be secured were in a state of disrepair.
(n)There was no smoke alarm, no safety switch in the fuse box and no cover for the outside fuse box.
I am not satisfied that the following defects were present at the commencement of the tenancy, or if they were, that they were discoverable on reasonable inspection.
· The bath leakage; the nature of it was not described. The plaintiff said the value of the quantity of water lost from it had been calculated at $50.00 per month.
· A plastic tap in the shower; that broke away during the tenancy.
The appellant’s evidence concerning water leakage focussed on the laundry, the bathroom and the toilet. The respondent did not inspect the laundry, she did find a leaking tap in the bathroom, although she did not test the ability of the bath to hold water, and she agreed that water escaped from the floor seal of the toilet on flushing.
In the period of her occupation of the premises at Burke Street the appellant consumed 176.8 kilolitres of water in the period from the 7^th January 2003 to the 4^th December 2003 a period of 11 months; that is an average of 16.07 kilolitres per month. During the period of her occupation of Hallion Street her consumption between 16 August 2001 and 15 January 2003 was 545.3 kilolitres an average of 33.84 kilolitres per month.
If the appellant’s evidence as to the purpose for which her water consumption at Burke Street was used is accurate, then the considerably greater consumption at Hallion Street supports her evidence of there having been water leakage problems at the commencement of her tenancy of the premises at Hallion Street. There is no reason why her evidence on the topic should be rejected as inaccurate.
I calculate the price of water to have been about $3.75 per kilolitre. As I said earlier I am not satisfied that the leaking bath was reasonably discoverable were there to have been an inspection of the Hallion Street premises before the tenancy commenced; to run water into a bath to test whether there is any leakage is not a step I would identify as part of such an inspection. From some source the appellant was provided with a calculation that $50.00 worth of water leaked from the bath each month. At $3.75 per kilolitre that is the equivalent of approximately 13.3 kilolitres per month. The average consumption at Hallion Street was 17.77 kilolitres per month greater than at Burke Street; deducting the wastage from the bath produces 4.47 kilolitres a month which at $3.75 per kilolitre aggregates $285.00, over the period the appellant was in occupation of the Hallion Street premises.
The respondent claims that the appellant failed to pay rent for the last four weeks of her tenancy, a total of $440.00. The appellant initially rejected that claim, acknowledging that only three weeks was unpaid, but at the end of the hearing she said “well, it can be four weeks or it can be three weeks, I can’t remember 100%. It’s possible, I’m not going to argue about it.”
The calculation made earlier to arrive at $285.00 is inexact, not based on any certain ground and is subject to a number of imponderables concerning the water usage at Burke Street. However, having regard to the order of that figure, the other defects in need of repair, as I have identified them, which an inspection before the tenancy began would have more likely than not revealed, in my view there should have been an award for compensation for the appellant against the respondent. Non-repaired defects, other than those relating to excessive water use, are not susceptible to any precise or even measured assessment; in my view they are to be characterised largely as comparatively small but they very irritatingly impinged upon the appellant’s use and enjoyment of the premises.
I assess compensation in the sum of $440.
The order of the Court is:
1.The order of the Tribunal made on 3 February 2003 dismissing the appellant’s claim for compensation is quashed and in lieu thereof it is ordered that the respondent do pay the sum of $440 compensation to the appellant which is to be set off against the sum of $440 owed by the appellant to the respondent for rent.
2. Each party to bear their own costs of the appeal.