Peters v ACT Housing
[2006] ACTRTT 6
•18 January, 2006
Irena Peters – v.- Commissioner for Housing for the ACT ACTRTT6 [2006]
CATCHWORDS
Rent reduction
Rebated rent
Compensation
Landlords failure to repair
ISSUES
Whether the Tribunal has power to award compensation for distress and inconvenience for a landlords failure to repair.
Whether the rebated rent or the market rent forms the contractual rent
LEGISLATION
Residential Tenancies Act 1997 (ACT)
sections: 6A, 71. 104(1)(d)
prescribed terms: 54, 55, 56, 57
CASES CITED
The Progressive Mailing House P/L v Tabali P/L (1985) 157 CLR 17;
The Estate of Tanya Humphries v The Commissioner for Housing in the ACT [2003] ACTSC 40;
“Residential Tenancies Law and Practice in NSW” Anforth, Thawley and Christensen at [1.8][2.25.1][2.25.2][2.25.3];
Ahluwalia v Robinson [2003] NSWCA 175;
Gray v Queensland Housing Commission 1004 QSC 226;
McKinnon v Kirdy [2003] QSC 302;
Cheshire and Fifoot “Law of Contracts in Australia” 7th ed at [1.29][4.12][6.9][9.2];
Brooker industries P/L v Wilson Parking (Qld) 1982;
Re Residential Tenancy Tribunal of NSW and Henderson: Ex parte Defence Housing Authority 1997 146 ALR 495;
Newmacq Community Housing Co Ltd v Hofferts [2004] NSWCTTT 74;
Robinson v Harman 1848 1 EX 850 at 855,
Commonwealth v Amann Aviation P/L Ltd 1991 174 CLR 64;
O'Brien v Dunsdon 1965 39 ALJR 78;
Sellars v Adelaide Petroleum N/L 1994 179 CLR 332
Case Reference Number: RT 1600 of 2005
Re: 4/97 Batchelor Street, Torrens ACT 2607
Decision
The respondent pay the applicant $1440.00 forthwith.
Member: A. Anforth
Date: 18 January, 2006
STATEMENT OF REASONS
The tenant holds a tenancy from the Commissioner for Housing in respect of flat 4 Bungaree Court, 97 Batchelor Street, Torrens in the ACT. The tenancy commenced on 12 February 2002 at a fortnightly rent of $260.00.
On 19 September 2005 the tenant, through her solicitors at the Welfare Rights and Legal Centre, lodged an application with the Tribunal seeking various repairs of her flat and monetary compensation. The Statement of Particulars annexed to the Application read:
1.Please Identify the Issues In Dispute, for example, payment of rental arrears or that the lessor/grantor fix a broken heater.
The Applicant has a residential tenancy agreement with the Respondent relating to a property at 4/97 Batchelor Street, Torrens ACT 2607, which commenced on 12 February 2002 (Attachment A). The Applicant has sought repairs to the property as specified in paragraph 3 below. The repairs sought by the Applicant have not been carried out by the Respondent in contravention of clause 57 of the prescribed terms of the tenancy agreement.
2.Please state the nature of relief you seek (what sort of order you want the Tribunal to make), for example, an order that the tenant/occupant pay rental arrears or the lessor/grantor fix the broken heater.
a. The Applicant is seeking the following repairs and maintenance to the property:
i.Repaint all damaged walls and ceilings and replace existing damaged carpet with equivalent carpet throughout flat (water damage resulting from leaking roof repaired 19 April 2004);
ii. Fix broken oven door;
iii. Repair the leaking window in the bedroom;
iv. Fix tap on bath;
v. Repair frames of the flyscreens in the bedroom, living room and kitchen; and
vi. Repair wobbly rail on back stairs.
b. The Applicant is also seeking compensation in accordance with section 104 the Residential Tenancies Act 7997(the Act) for two sofas, which were damaged when the roof leaked.
c. The Applicant is also seeking a reduction in rent in accordance with section 71Act.
.3. Please give a brief history of the dispute, (why you are making the application) If you are claiming money please show calculations and total amount claimed.
a. Details of outstanding Repairs:
i.Repaint all damaged walls and ceilings and replace existing damaged carpet with equivalent carpet throughout flat - water damage resulting from leaking roof repaired 19 April 2004
The property flooded on four occasions between the commencement of the tenancy on 12 February and April 2004, causing damage to the walls, the carpet and the Applicant’s sofas. The carpet has water stains and the underlay has become mouldy, causing the carpet to break up in some sections (Attachments S to Z - original - provided at the hearing). The walls are stained and the paint has lifted from the wall above the lounge room light switch (Attachment R, and Attachments AA to DD - original photographs will be provided at the hearing).
Details of notice given to Housing ACT:
The Applicant first raised issue of water damage to walls and ceiling at the time the residential tenancy agreement commenced (12 February 2002). A staff member of Housing ACT told her that the damage would be fixed within two weeks. This was not done.
The property flooded on four occasions between the commencement of the tenancy and April 2004. After each occasion, the Applicant called Housing ACT and requested that they repair the leak (Attachment B).
The flooding caused damage to the carpet and stained the walls and ceiling. It also damaged two sofas, which became waterlogged and mouldy.
On 11 April 2003, Bronwyn Pike of Housing ACT inspected the property and was shown the water damage (Attachment C).
The leak in the roof was repaired on 19 April 2004.
On 16 June 2004 Kevin Hardy and Katherine Izzard of Housing ACT inspected the property. The Applicant understands that they noted that the property required repairs, recarpeting and repainting (Attachments D and E).
Housing ACT sent a painter to the Applicant's property on 27 April 2004. The Applicant has asthma and is unable to remain in the property while it is being painted. The Applicant was given only two or three days notice of the painter's arrival. As it was very cold at the time, she was unable to leave the flat to avoid the paint fumes and was concerned that the paint would take longer to dry in the cold conditions. In addition, the painter told the Applicant that he had been instructed to paint only some of the water-affected areas. Consequently, she telephoned Housing ACT in the painter's presence to discuss these problems. Housing ACT kept the Applicant on hold for 50 minutes before hanging up on her. The painter had to leave to start another job and the repairs were not carried out.
Following this, Deborah Perry, a social worker from Woden, subsequently made three telephone calls on the Applicant's behalf to her Housing Manager, Graham Hawkins, to notify him that the water damage to the paintwork and the carpet still needed replacing (Attachment F). On 9 December 2004, Mr Hawkins attended the property and agreed that the property would be repainted and recarpeted. This has not yet occurred.
On 26 April 2005, Housing ACT was issued with a Notice to Remedy which requested that the water damaged walls and ceilings be repainted and mouldy carpet be replaced (Attachments H, I and J).
On 7 June 2005, Gordon Anderson, a supervisor from Transfield, acting on Housing ACT's behalf, inspected the property. The Applicant showed Mr Anderson the water damage to the paintwork and carpets and asked that the damage be repaired.
On 23 June 2005, Housing ACT was issued with another Notice to Remedy which again gave notice of the need for water damaged walls and ceilings to be repainted and mouldy carpet to be replaced (Attachment N).
On 5 September 2005, Ms Peters was diagnosed with pneumonia. She attributes this to her exposure to the mould in the carpets. Her General Practitioner has requested that Housing ACT replace the carpet and paint the walls. A copy of this letter was faxed to Graham Hawkins of Housing ACT on 9 September 2005 (Attachment P).
ii. Fix broken oven door
The oven door no longer opens as the control panel has slipped and blocks the oven door. In addition the light inside the oven no longer works.
Details of notice given to Housing ACT:
On 7 June 2005, Gordon Anderson, a supervisor from Transfield, acting on Housing ACT's behalf, inspected the property. The Applicant showed Mr Anderson the broken oven and asked that it be repaired.
On 23 June 2005 Housing ACT was issued with a Notice to Remedy which complained of the broken oven door and requested its repair. To date the oven has not been repaired (Attachment N).
iii. Repair the leaking window in the bedroom.
The window in the bedroom leaks and there is often water in the track of the window frame on the inside of the window.
Details of notice given to Housing ACT:
The Applicant notified Housing ACT of the leak during inspections by Housing ACT staff on 11 April 2003, 27 April 2004, 16 April 2004 and 9 December 2004 Attachment K).
Housing ACT arranged for repairs to the window on 21 March 2005 so that it opens smoothly, but did not repair the leak.
On 26 April 2005, Housing ACT was issued with a Notice to Remedy requesting that the leak be repaired (Attachment H).
On 7 June 2005, Gordon Anderson, a supervisor from Transfield acting on Housing ACT's behalf, inspected the property. The Applicant showed Mr Anderson the leaking bedroom window and asked that it be repaired.
On 23 June 2005, Housing ACT was issued with a further Notice to Remedy, which requested repairs to the leaking bedroom window (Attachment N).
iv. Fix tap on bath
One of the taps in the bath is broken - the handle comes away when the tap is turned off or on.
Details of notice given to Housing ACT:
On 7 June 2005, Gordon Anderson, a supervisor from Transfield acting on Housing ACT's behalf, inspected the property. The Applicant showed Mr Anderson the leaking bedroom window and asked that it be repaired.
On 23 June 2005, Housing ACT was issued with a Notice to Remedy, which requested repairs to the broken tap (Attachment N).
v. Repair frames of the flyscreens in the bedroom, living room and kitchen.
The frames of the flyscreens in the bedroom, living room and kitchen are damaged and in need of replacement. In their current state they allow insects to enter the property and the bang loudly in the wind.
Details of notice given to Housing ACT:
On 7 June 2005, Gordon Anderson, a supervisor from Transfield acting on Housing ACT's behalf, inspected the property. The Applicant showed Mr Anderson the damaged fly screens and asked that they be repaired.
On 23 June 2005, Housing ACT was issued with a Notice to Remedy which requested repairs to the damaged fly screens (Attachment N).
vi. repair wobbly rail on back stairs
The rail for the stairs at the back door has come loose and needs to be repaired. This damage was caused by contractors, acting on Housing ACT's behalf, who recently repaired a section of concrete outside the back door.
Details of notice given to Housing ACT:
On 7 June 2005, Gordon Anderson, a supervisor from Transfield acting on Housing ACT's behalf, inspected the property. The Applicant showed Mr Anderson the damage to the handrail and asked that it be repaired.
On 23 June 2005, Housing ACT was issued with a Notice to Remedy, which requested repairs to the wobbly rail (Attachment N).
vii. Fix the sliding door to the bathroom
The sliding door to the bathroom has swollen due to the excessive moisture in the property, resulting in difficulty sliding the door open and closed.
Details of notice given to Housing ACT:
On 18 August 2005, Housing ACT was issued with a Notice to Remedy which requested that the swollen door be repaired (Attachment O).
viii. Repair the tiles in the bathroom
There are tiles in the bathroom that are coming away from the wall and need to be fixed.
Details of notice given to Housing ACT:
On 18 August 2005, Housing ACT was issued with a Notice to Remedy which requested repairs to the tiles in the bathroom (Attachment O).
b. Compensation for damaged sofas
The applicant had two sofas which were damaged when the roof of the property leaked. The sofas became waterlogged and mouldy, and were disposed of in 2003 (Attachment H). The Applicant seeks compensation for the loss of the sofas in accordance with section 104 (d) of the Act.
Details of calculation:
The applicant purchased the sofas in 1995 for approximately $1,200. Please see the attached statement from the applicant's son, Slawomir Makula, who was present when the sofas were purchased, witnessed the damage and was present when they were disposed of.
c. Reduction in rent
i. The Applicant seeks a reduction in her rent under section 71 of the Residential Tenancies Act 1997 (the Act) due to the loss of amenity she has experienced from the commencement of her tenancy to date and continuing until the repairs specified in this application are completed.
ii At the commencement of the tenancy, Housing Act charged a market rent of $130 per week. The market rent is currently calculated at $180. The Applicant paid a rebated rent as follows:
- From 12 February 2002 - 17 August 2002 paid $49.45 per week
- From 18 August 2002 until 22 February 2003 paid $50.80 per week.
- From 23 February 2003 until 23 August 2003 paid $51.65 per week.
- From 24 August 2003 until 28 February 2004 paid $52.95 per week
- From 29 February 2004 until 26 February 2005 paid $54.50 per week.
- From 27 February 2005 until present paid $56.70 per week.
iii. The Applicant seeks a rent reduction of 50% calculated on the rebated rent from the commencement of her tenancy to date and continuing until the repairs specified in this application are completed. This application is made on the basis that the Applicant experienced a loss of amenity from the time the tenancy commenced as the water stains and leak were present at the time she moved in. Housing ACT were aware of the water damage from the commencement of the tenancy.
iv. Under section 71 of the Act, the Tribunal has the power to order a reduction in the rental rate payable under a residential tenancy agreement where the tenant's use or enjoyment of the premises has diminished significantly as a result of one or more of a number of factors.
v. The Applicant submits that the Tribunal has to power to make consecutive orders under section 71 of the Act. The Applicant further submits that, while each consecutive order made under section 71 must not continue in excess of 12 months (in accordance with section 71(3)(b)), the Tribunal must be able to make consecutive orders with a total operational period in excess of 12 months to allow the intent of section 71 to be properly realised.
vi In report number 8 of the Community Law Reform Committee of the ACT entitled 'Private Residential Tenancy Law \ the Committee decided at paragraph 486 that the Tribunal should have the power to 'order a reduction in rent for the loss in value of facilities to the tenant due to ... failure to repair. ' The Committee went on to specify the intended scope of this power in paragraph 487, stating that:
'The Tribunal should be able to order a retrospective reduction in rent to commence from the date on which the proposed Act requires the lessor to make repairs and the lessor fails to do so... '
and then continuing by specifying that:
'The reduction in rent should continue until the lessor repairs or restores the facilities or earlier as the Tribunal considers appropriate. '
(emphasis added)
vii. In other words, it was the intention of the Committee that the power to order a rent reduction should be both retrospective and prospective - that is, it should extend from the date on which the lessor fails to meet his/her obligation to repair to the date on which the repairs are finally completed. The Committee goes on to make recommendation 104 in these terms.
viii. In the Explanatory Memorandum to the Residential Tenancies Bill 1997, the then section 70 (now section 71) was described as intended to implement recommendation 104. The Explanatory Memorandum goes on to endorse the Committee's view of the scope of the section and to specifically state that 'the Tribunal should be able to order a retrospective reduction in rent to continue until the cessation of interference' (emphasis added).
ix. It is clear that both the Committee and the Legislature intended that the Tribunal should have the ability to impose a rent reduction which spans the entire period of the breach, from the lessor's initial failure to make repairs (or withdrawal of facilities) until the lessor has fully discharged (or met) his/her obligations. The Explanatory Memorandum goes on to emphasise this point by specifying that the rent reduction should encompass the entire period of breach even where there have technically been a number of separate breaches, rather than a single, continuing breach:
'The Tribunal should be able to deem separate acts of interference as continuing interference by the lessor as it considers appropriate and order a reduction in rent accordingly. '
x. The emphasis in the Explanatory Memorandum is on allowing the Tribunal to determine the extent of its orders by reference to the resolution of the breach(es) in question, rather than any artificial timetable.
xi. Section 139 of the Legislation Act 2001 (ACT) states that the Tribunal must prefer an interpretation that would best achieve the purpose of the Act over any other interpretation, whether or not the Act's purpose is expressly stated in the Act. The purpose of the Residential Tenancies Act 1997 is not expressly stated within the text of the Act itself. It is to be found in the report of the Committee and the Explanatory Memorandum. Both documents are clear that a rent reduction is envisaged as continuing from the time of the breach until the time it is remedied by the lessor.
xii. An interpretation of section 71 which limits the Tribunal to the power to make one order of 12 months' duration would have ramifications which are at odds with both the Committee and the Legislature's stated intention.
xiii. For example, in the situation where the lessor first failed to make repairs 11 months prior to the Tribunal hearing, the Tribunal's orders could only continue for 1 month beyond the date of the hearing, regardless of whether the repairs are completed within that month. If the repairs were not completed, there would be no remedy available to the tenant, as the only remaining action would be a finding that the lessor had breached the orders of the Tribunal; an action which delivers no remedy to the tenant.
xiv. Indeed, there may be situations where the Tribunal cannot order a rent reduction to cover the period in which the repairs must take place. For example, in the above situation it may be that the repairs required are so extensive that one month from the date of the hearing is not sufficient to complete the repairs. On the limited interpretation, the Tribunal would not have the power to extend the rent reduction beyond one month even where its own orders might envisage the repairs taking longer than this period.
xv. In such a situation, if the Tribunal was not able to make a second 12 month order to cover the period until the repairs are completed, the intention of the Committee and the Legislature would be subverted.
xvi. In the NSW jurisdiction, the NSW Court of Appeal has preferred an interpretation which limits a similar section in the Residential Tenancies Act 1987 (NSW) to orders of 12 month's duration (Roads and TrafficAuthority v Swain (1997) 41 NSWLR 452). The Appeal Court's reasoning was that the 12 month limitation was intended to '...limit ...how much a landlord should be prejudiced by a tenant’s failure to exercise their legal rights' within a reasonable time frame (Meagher JA at 457). The Applicants make two observations regarding this position. Firstly, the NSW position should not be adopted in the ACT, where the Explanatory Memorandum and Committee report indicate a clear intention that the length of time taken to remedy the breach should be the determining factor. While balancing the interests of the parties may be an important general consideration, the specific intention of the ACT Legislature with regard to rent reductions is clearly to extend the Tribunal's power from the first moment of breach to the point at which the breach is finally remedied. It is this specific delineation of scope that should guide the Tribunal.
xvii. Secondly, an interpretation which permits multiple 12 month orders does not negate the possibility of balancing the interests of the parties. It is clear that the tenant has a duty to mitigate his or her losses (section 38 of the Act), particularly by not delaying seeking orders from the Tribunal to the point where the lessor is disadvantaged by the delay. However, the appropriate point to consider the competing interests of the parties is not at the point of statutory interpretation, as the positions of the parties and the mitigating actions required to meet the section 38 duty will vary from case to case. Instead, the Tribunal should consider the issue of mitigation at the point at which it considers:
(1) whether to make a rent reduction order at all; and
(2) how many consecutive orders to make.
xviii. By way of illustration - in the above example, the tenant has delayed taking action in the Tribunal for eleven months. If there is no particular reason for this delay, it may be that the Tribunal would decide that the tenant had failed to mitigate his or her losses and make a reduced order on that basis, or decide to only make only one 12 month order. On the other hand, if the tenant delayed taking action because s/he made repeated attempts to bring the repairs to the lessor's attention and reasonably relied on the lessor’s assurances that the repairs would be undertaken in the near future, it may be that the Tribunal would find that there has been no failure to mitigate. In other words, imposing an absolute 12 month limit to allow a measure of 'balance' between the parties may in fact do the opposite and unfairly disadvantage a party.
xix. In the current proceedings, the applicants submits that she cannot be said to have failed to mitigate her losses, as she actively campaigned to have the repairs carried out by the lessor throughout the period in question. It may be that a tenant who requests repairs once, then drops the matter for some years before seeking the assistance of the Tribunal may have failed in her duty to mitigate her losses. However, a tenant who has regularly reminded the lessor of the need for repairs and waited patiently for the lessor to carry out the repairs should not be penalised for relying on the lessor's assurances that the repairs will be carried out shortly, especially where (as in the current case) the tenant is on a low income and an application to the Tribunal involves a non-recoverable application fee.
xx. While it is important that lessors are not ambushed by tenants, there is no suggestion in the current case that the Respondent has been ambushed or otherwise prejudiced by the delay in making an application to the Tribunal - on the contrary, the Respondent has been granted ample time to effect the repairs requested. On this basis, the Applicant submits that she is entitled to a rent reduction for the entire period from the point at which the Respondent first failed to meet its obligation to complete repairs to the date on which the repairs are finally carried out.
Annexed to the application were the following documents:
(a) A copy of the rental agreement
(b) A copy of the Housing Manager Maintenance Request of 22 April 2002 containing the notation “there is a leak in the lounge room. There is evidence of leak stains on the ceiling”.
(c) A letter from the Commissioner to the tenant dated 31 March 2003 seeking to make arrangements for a client service visit to the premise to inspect the need for repairs.
(d) A letter from the Commissioner to the tenant dated 3 June 2004 seeking to make arrangements for a client service visit to the premise to discuss any outstanding issues.
(e) A Routine Property Inspection Report by the Commissioner’s staff dated 16 June 2004 containing the notation “asthmatic-no painting check on computer for work order…water damage to ceiling and carpet in lounge”
(f) A telephone note dated 24 Nov 2004 from the Commissioners office recording of a request on behalf of the tenant for discussions on the water damage issue.
(g) A record from the Commissioner’s office dated 26 April 2005 of a request on behalf of the tenant to fix the oven.
(h) A file note from the Commissioners files indicating that that repairs to window did not proceed on 15 April 2005. The note further indicated that the carpets and painting work had also not been done.
(i) A letter dated 26 April 2005 from Welfare Rights and Legal Centre to the Commissioner requesting repairs. The letter read:
I enclose a notice to remedy relating to the above properly. As you will see, I have requested that the following repairs are carried out within 14 days:
• repaint all walls and ceilings;
• replace existing damaged carpet with equivalent carpet throughout flat;
• repair trip hazards in exterior concrete paths; and
• repair leaking window in bedroom.Please note the following important information about the repairs:
Painting the flat
I require all of the walls and ceilings in the flat to be repainted, as the water damage in the flat is extensive.
As I am asthmatic, I will require notice of the painter's arrival so that I can leave the flat until the paint has dried and the fumes have dispersed. I have made arrangements to leave my property if required, during the 14-day period of the notice. However, if the painter cannot be arranged within this period, I will require two weeks notice of the painter's arrival in order to make alternative arrangements.
Replacing the carpet
I require that the existing carpet be replaced with an equivalent carpet. The existing carpet is 70% wool and 30% acrylic. This is necessary as the flat is very cold and the insulation provided by the carpet is important to my health.
Compensation for damage to furniture
I am also seeking $ 1 ,200 in compensation from Housing ACT for water damage to my two sofas, which were ruined when the ceiling of the living room leaked. I have disposed of the sofas, as it was not possible to dry them out and they became mouldy.
The two damaged sofas were purchased in Sydney for approximately $ 1 ,300. I have enclosed a supporting statement regarding their value from my son, who was with me when I purchased them in 2000 and helped me to dispose of them once they were damaged.
If you have any questions or wish to give notice of trades people entering the property, please write to me at the above address or contact me by telephone after 2.00pm on weekdays on 6286 2201.
(j) A Statutory Declaration from Slawomir Makula, the son of the tenant which read:
1.I am the son of Irena Peters of Unit 4 Buncaree Court 97 Batchelor Street Torrens ACT 2607
2.During the period May to July 1995 my mother purchased two sofas for around $1,200, a receipt for which cannot be located or duplicate obtained from the original vendor due to long elapse of time.
3.Throughout 2002 and 2003, water leaking from the ceiling at my mother’s premises at Torrens caused substantial damage to these sofas (water logging and extensive water stains) and the carpet, necessitating removal of the sofas and their replacement.
4.In the spring of 2003, I have purchased for my mother a second hand sofa and an armchair for $520, to replace the water damaged sofas. These items were obtained from a private vendor in Sydney, without a receipt being issued. On delivery of these replacement sofa and armchair, the water damaged sofas were taken to the tip, as they could not be used for any other purpose.
(k) A Notice To Remedy given by the tenant to the Commissioner on 26 April 2005 concerning the failure of the Commissioner to carry out repairs. The Notice and its attachment read:
Take notice that you have beached the Residential Tenancy Agreement between Irena Peters & Housing ACT by way of:
· failing to make the repairs specified in schedule A within four weeks of receiving notice of the need for the repairs as required by clauses 55 and 57 of the prescribed terms.
In accordance with clause 91 (a) of the Schedule to the Residential Tenancies Act 1997 ("the Act") you are required to remedy the breach within 14 days of service of this notice (that is, by 10 May 2005),
If the breach is not remedied within the required 14 days, I will, in accordance with the Act, make application to the Residential Tenancies Tribunal for orders remedying this breach, including compensation.
If you require any further information please contact me on 6286 2201.
Annexure A
· Repaint all walls and ceilings and replace existing damaged carpet with equivalent carpet throughout flat - water damage resulting from leaking roof repaired 19 April 2004
Details of notice given to Housing ACT;
I first raised issue of water damage to walls and ceiling at the time the residential tenancy agreement commenced (12 February 2002). A staff member of Housing ACT told me that the damage would be fixed within two weeks. This was not done.
The flat flooded on four occasions between the commencement of the tenancy and April 2004. After each occasion I called Housing ACT and requested that they repair the leak.
The flooding caused damage to the carpet and stained the walls and ceiling, It also damaged two sofas, which became water logged and mouldy.
On 11 April 2003, Bronwyn Pike of Housing ACT inspected the property and was shown the water damage, The leak in the roof was repaired on 19 April 2004,
On 16 June 2004 Kevin Hardy and Katherine Izzard of Housing ACT inspected the property. I understand that they noted that the property required repairs, recarpeting and repainting.
Housing ACT sent a painter to my property on 27 April 2004. 1 have asthma and am unable to remain in the property while it is being painted. I was given only two or three days notice of the painter's arrival. As it was very cold at the time, I was unable to leave the flat to avoid the paint fumes and I was concerned that the paint would take longer to dry in the cold conditions. In addition, the painter told me that he had been instructed to paint only some of the water affected areas. Consequently, I telephoned Housing ACT in the painter's presence to discuss these problems. Housing ACT kept me on hold for 50 minutes before hanging up on me. The painter had to leave to start another job and the repairs were not carried out.
Following this, Deborah Perry, a social worker from Woden, subsequently made three telephone calls on my behalf to my Housing Manager, Graham Hawkins, to notify him that the water damage to the paintwork and the carpet still needed repairing. On 9 December 2004, Mr Hawkins attended my property and agreed that the property would be repainted and recarpeted. Tills has not yet occurred.
· Repair trip hazards in exterior concrete paths.
Details of notice given to Housing ACT:
I notified Housing ACT that the concrete required repairing during an inspection of the property by Bronwyn Pike on 11 April 2003. An occupational therapist's report commissioned by Housing ACT and dated 17 June 2003 also gave notice of the need for repairs to the concrete. The concrete has not yet been repaired.
· Repair the leaking window in the bedroom.
Details of notice given to Housing ACT:
I notified Housing ACT of the leak during inspections by Housing ACT staff on 11 April 2003, 27 April 2004, 16 April 2004 and 9 December 2004.
Housing ACT has subsequently arranged for repairs to the window so that it opens smoothly, but have not repaired the leak.
(l) A file note from the Commissioners office recording a chronology of maintenance:
History of Events
·16 Jun 2004 HM reported ceiling, wall and carpet water damage
·17 Jun 2004 Audit request sent for assessment
·11 Aug 2004 Fault logged for heater from tenant
·24 Aug 2004 Audit carried out
·09 Dec 2005 HM went out at the request of tnt to check window as it was still
leaking. HM maintenance request submitted for the silk tree to be removed, concrete to be repaired and the window leak to be fixed.
·22 Feb 2005 Audit request to E. Brown. Audit request emailed to TSL F/O
Gordon Anderson to assess water damage
·22 Feb 2005 Follow up- E. Brown. TNT called the call centre about silk tree
being removed Discount tree is going to attend.
·15 Apr 2005 property services were contacted re: Assessment and repairs
Property services informed us that the work orders for the window did not proceed and the TSL were arranging another contractor to complete the work. Once the works are complete they will re-assess the carpets and painting.
·01 Mar 2005 CSV. Booked for 07 Apr 2005 Irena not home.
·28 Apr 2005 2nd try for CSV
(m) A letter from Dr Kruger (GP) of 8 June 2005 which read:
This is to certify that Irena Peters needs to live in dry and warm house due to her chest and joints conditions.
If you can not fix her flat maybe you can provide a different accommodation.
(n) A Notice to Remedy of 23 June 2005 to the Commissioner which read:
The following repairs need to be completed within 14 days of the date of this notice:
· The rail for the stairs at the back door has come lose and needs to be repaired'. This damage was caused by the contractors who recently repaired the concrete outside the back door.
· The window in the bedroom is still leaking - there is currently water in the track of the window frame on the inside of the window.
· All walls and ceilings in the flat require repainting as a result of the flooding of the-property, between February 2002 and April 2004.
· The carpet and underlay throughout the flat require replacing with carpet and underlay of equivalent warmth as the existing carpet and underlay are mouldy and damaged as a result of the flooding of the property between February 2002 and April 2004.
· The oven door has dropped on its hinges and does not open unless the door is supported by hand from underneath.
· One of the taps in the bath is broken - the handle comes away when the tap is turned on or off.
· The frames of the flyscreens in the bedroom, living room and kitchen are damaged and are in need of replacement. In their current state, they allow insects to enter the property.
I have not received a response from Housing ACT regarding my letter dated 26 April 2005 which sought compensation for the damage to the sofas as a result of the flooding of my flat between February 2002 and September 2003.
If the above matters are not remedied within the required 14 days and the issue of compensation addressed, I will, in accordance with the Act, make application to the Residential Tenancies Tribunal for orders remedying this breach, including the compensation sought in my letter dated 26 April 2005.
(o) A letter from Welfare Rights and Legal Centre on behalf of the tenant dated 19 August 2005 which read:
In accordance with clause 55 (2) of the residential tenancy agreement, I give notice, on behalf of my client Irena Peters, that the following repairs need to be carried out in her property.
1.The sliding door to the bathroom has swollen due to the excessive moisture in the property. This must be repaired as it is not possible to slide the door properly; and
2.There are tiles in the bathroom which are coming away from the wall and need to be fixed.
I ask that you arrange for these repairs to be carried out within 4 weeks of receiving this notice, as required under clause 57 of the residential tenancy agreement.
If you have any questions or wish to give my client notice of trades people entering her property, please do not hesitate to contact me.
(p) A letter from Dr Kruger dated 5 September 2005 which read:
This is to certify that Mrs Peters developed pneumonia. Her asthma got much worse. I believe that you can help with fixing her flat or providing a new accommodation. Could you please change her wet carpet and paint to walls.
(q) A document entitled “Works for specific property” recording a history of maintenance to the property.
(r) A series of 12 photographs of the carpets, walls and ceiling of the premises.
The Commissioner filed a Response to the tenants claims which read:
Response
1.The Respondent lessor agrees the Applicant Tenant entered into a Residential Tenancy agreement with it on 12 February 2002.
History of the Matter
2.At the commencement the tenancy, the Respondent's representative carries out an ingoing inspection. In accordance with the requirements of the act, a copy of that inspection is provided to the tenant for her to comment on. Annexed hereto and marked "A" is a true copy of the inspection report carried out by the Respondent's representatives. No copy of the report signed by the tenant can be located
3.The Lessor does not admit any problems with the premises were raised at the initial inspection, nor that any promises were made to carry out works in 2 weeks.
4.A further inspection of the property is carried out approximately 90 days from the Commencement of the tenancy. It would appear that this inspection took place approximately 22 April 2002. As a result of the inspection, the HM raised a number of items of work to be done (this document is attachment B to the Application) Attachment B is not evidence, as the Applicant contends, that she advised the Respondent of a number of floods to the premises. The respondent contends that this document is evidence of the state of the property at that time, in particular that the leak was relatively minor.
5.A further inspection of the properly was carried out on 11 April 2003. Annexed hereto and marked "B" is a copy of a report of that inspection. The Respondent notes the paintwork is marked as "G" (good) and the tenant has signed the report. The Respondent disputes that annexure C to the application shows that Ms Pike, who carried out the inspection was aware of the water leaks as contended by the applicant and says the report referred to above speaks for itself.
6.On 10 June 2003, the Respondent raised a number of items of work to repair the leak in the ceiling, including replacing missing tiles. The tenant missed a number of appointments to show the damage to the tradesman, but the work was carried out before 1 March 2004. Annexed hereto and marked "C" are copies of the Lessor's computer printout in relation to this repair and the two missed appointments.
7.A further inspection took place on 16th June 2004. The report of this inspection is Annexure E to the Application. The Respondent notes that issues of painting and water damage to the ceiling and carpet were noted. However, the Respondent contends that this does not imply that the property requires recarpeting and repainting.
8.The Respondent has no record of the dealings with the painter on 27 April 2004. The respondent further notes that the reference to the phone call from Debra from Community linkages was not until November 2004, i.e. some 5 months after the painter episode.
9.The Respondent agrees that Mr Hawkins attended the premises on 9th December 2004, but says that was only in relation to a silk tree, damaged concrete and the leaking window.
10.The Respondent attempted to arrange a further Inspection on 31 March 2005. but after negotiations it was delayed until 2 June 2005. At this inspection, Mr Hawkins agreed to re-raise work orders for painting, carpet and heating assessment. Mr Hawkins contemporaneous file note in relation to this inspection is Annexure "D"
11.The Respondent notes the letter of 26th April and the attached Notice to Remedy and the subsequent Notice to Remedy dated 23 June 2005. The majority of the required works were raised by the Lessor to it's TFM on 7 June 2005. Annexed hereto and marked "E" is a copy of the assessment form.
12.The information concerning the specific repairs requested is set out in the table attached to this response.
The Claim for compensation for the Sofas
13.The Respondent does not admit liability to compensate the Applicant for the alleged loss of the sofas, and says that the Applicant's disposal of the allegedly damaged sofas precludes the respondent from begin able to respond to the claim. In any event, the value of the sofas needs to be heavily depreciated to compensate for over 7 years of use.
Submissions on the Law
Limits of Rent Reduction
14.At paragraph 54 of the judgement, the Full Federal Court in Worrall v. Commissioner for Housing /2002] FCAFC 127 the Court cited, with approval, paragraph 486 of the Community Law Reform committee report and stated that s. 71 carried into effect the intention expressed in that paragraph.
Paragraph 486 states:
The Committee considers that the Tribunal should have the power to award compensation for property or financial loss only. In particular, the Tribunal should not have the power to award compensation for personal suffering due to the failure of the lessor to make repairs (refer to paragraphs 994-995), However, the Committee considers that the Tribunal should have the power to order a. reduction in rent for the loss in value of facilities to the tenant due to their withdrawal or failure to repair. In some cases the reduction could be the equivalent of the weekly cost of hiring replacement facilities. In an extreme case the tenant should be able to receive a 100% reduction in rent if the tenant is forced to find temporary alternative accommodation as a result of the premises becoming unliveable.
15.It is also noted that paragraph 488 of the Report cites a list of example for which a reduction in rent may be allowed as follows:
Loss of appliances supplied With the tenancy, due to the landlord's failure to repair within the required timeframe
Loss of toilet and washing facilities
Loss of furniture, curtains and carpets
Loss of electricity or water supply
Loss of use of garden, courtyard, storage or parking facilities
Withdrawal by the lessor of any of the above16.It is submitted that the genus of these items clearly involves the loss of use of an item that requires either use of the items elsewhere, or specific remedial measures while the item is not there or function (for example, a lack of carpet may require the wearing of shoes, and may also require extra heating. It is submitted that the genus does not include mere cosmetic issues, nor a more general claim for "stress, annoyance etc". this, it is submitted, is consist with the use of the words "Compensation for loss..." in Section 104(d).
17. While it is accepted that this is not the position in NSW, and the are some arguments as to the futility of making damages orders so limited, the Lessor respectfully notes that the Tribunal is bound to follow the decision of Worrall being a decision of a superior Court in the ACT. (see also Sonia Jones v. Commissioner for the Australian Capital Territory [2003] ACTSC 52)
18.In addition, the NSW Act clear uses the word "compensation" in s. 16(2)(d), in contradistinction to "compensation for loss" as it appears in the ACT Act.
19.To the extent that subsequent decisions of this Tribunal have found to the contrary, especially Greenhill v. Commissioner for Housing [2004] ACT RTT 7, the Lessor respectfully submits they are wrongly decided.
Rent Reduction
20.The Respondent submits that, in considering a rent reduction under s_ 71, the Tribunal is limited to considering the market rent, and cannot order a reduction from the rebated rent actually payable by the Tenant-
21 The Supreme Court of the ACT in Commissioner for Housing v. Key [2003] ACTSC 101 noted the Tribunal could not deal with rebates where the Court said:
21.I agree with the submission of Mr Christensen for the Commissioner that neither s 67 nor s 104 of the Act empowers the Tribunal to direct the Commissioner in the exercise of his powers or discretions under the Program. The Act, as I perceive it, is concerned to provide a mechanism for regulation of the relations between lessors and tenants generally in respect of the use and occupation of premises as residences. The orders contemplated by s 67 of the Act are capable of taking effect notwithstanding an assignment or sublease whereas the right to apply for a rebate under the Program, as the extracts quoted above make clear, is personal to the tenant who applies for the rebate and is not usually available after an assignment or sub-lease of the relevant premises,
22.Although this passage specifically refers to s. 67 and 104 (and not 71) it is submitted the position in respect of s. 71 is the same. It would be strange for the Act not to consider the rebate for 2 sections, and then to allow it in another (s 71), at least without express words.
23.It is noted that the expression" rental rate payable", as used in section 71(3) is the exact expression used in Section 67.
24.This is the position taken by this Tribunal - see Greenhill v. Commissioner for Housing [2004] ACT RTT 7 at paragraph 25.
25.A similar position is taken with the equivalent provisions in New South Wales (see Paragraph [1.8] of Anforth, Thawley & Christensen.)
26.It also follows from the quotation from Worrallset out above that the measure of loss for a reduction in rent is the reduction in the value of the bargain, rather than damages for "personal suffering".
27.Accordingly, if the Tribunal accepts a rent reduction is appropriate, such a reduction should come off the market rent, not the rebated rent.
Successive Periods of Rent Reduction
28.The operative part of Section 71 of the Act states:
71 Reduction of existing rent
(1)On application by a tenant, the tribunal shall order a reduction in the rental rate payable under a residential tenancy agreement if it considers that the tenant's use or enjoyment of the premises has diminished significantly as a result of any of the following:
a)the loss or diminished utility of an appliance, furniture, a facility or a service supplied by the lessor with the premises as a result of—
(i) the withdrawal of the appliance, furniture, facility or service by the lessor; or
(ii) the failure by the lessor to maintain the premises and any appliance, furniture or facility supplied with the premises in a reasonable state of repair, having regard to their condition at the commencement of the residential tenancy agreement; or
(iii)the failure by the lessor to provide and maintain such locks or other security devices as are necessary to ensure that the premises are reasonably secure;
b) the loss of the use of all or part of the premises;
c) interference with the tenant's quiet enjoyment of the premises or the tenant's ability to use the premises in reasonable peace, comfort and privacy by the lessor or any person claiming through the lessor or having an interest in, or title to, the premises.
(3) A reduction in the rental rate ordered under subsection (1) shall—
a) take effect from the day on which the tenant's use or enjoyment of the premises diminished, or such later date as the tribunal specifies; and
b) remain in force for such period, not exceeding 12 months, as is specified by the tribunal.
29.The relevant limitation is s.3(b), which, on it's face, limits a rent reduction to 12 months.
30.It is submitted that, as this section is clear on its face, and there is no ambiguity, extrinsic evidence to determine it's meaning is not admissible. The Respondent contends the "golden rule" i.e. that a provision of an Act has it's natural meaning, and only that meaning, if that meaning is the only available meaning, is continued in the law of the Territory by Section 137(3) of the Legislation Act. Section 138 confirms this, and it is submitted s. 139 only has application if there is an ambiguity or if the apparent meaning leads to an absurdity.
31.To the extent that the intention of the section is relevant, it is submitted that one of the purposes of the RTA was to provide an appropriate forum where tenancy matters could be decided, so as to provide more certainty to the parties and avoid "self help"
32.In addition, it is noted that the twelve-month provision does not appear in either of the Recommendations referred to in the Explanatory Memorandum of the Act. It is submitted that this indicates the legislature, by specifically including the clause, when it was not included in the recommendations, deliberately did so, and meant it to have it's usual meaning.
33.On the equivalent provision in NSW, the Supreme Court held that a similar limitation was part of the Act's balancing the rights of lessors and tenants (RTA v. Swain(1997) 41 NSWLR 452) This position has never been seriously disputed by the NSW Tribunal (see Anforth, Thawley & Christensen at [2.49.1]
34.Such a provision, putting a time limit on an order, would have the effect of encouraging parties to bring their actions in the tribunal promptly and not sleep on their rights, so that the issue can be dealt with by the Tribunal and appropriate orders made so that both parties are aware of where they stand. Accordingly, it is submitted that even using a purposive interpretation would still mean the section be given a meaning to restrict the duration of an order to 12 months.
35.It is also noted that s. 3(a) takes effect from the date the tenant's use or enjoyment of the property is diminished, not the date of any notification of the tenant (although a tenant's failure to notify may bring the tenant in breach of Prescribed term 63(b). Given a situation where a lessor can be liable for a breach before being notified, it is submitted that the limitation of one year is an appropriate response to balance the interest of the lessor and tenant.
36.It is further submitted that the intention of the 12 months limitation was to provide a time to enable repairs to be carried out, and to provide a "stick" in the nature of rent reductions, to encourage the lessor to have the work carried out promptly.
37.The lessor notes the issues raised in paragraph (xiii) and following of the Applicant's submissions, but submits:
(a) there are other remedies available to the Tribunal in the circumstances that the repairs could not be carried out prior to the end of the 12 month period,
(b)that a tenant who permits defects to continue for eleven months, even with constant reminders, is likely to have failed to mitigate their own loss (see Fenton, Neist and Baker v. de Andrade [1999]ACTRTT 21 and Watson v. Douglas & Xavier [1999]ACTRTT23
Can the Applicant Claim Damages as well as a rent Reduction
38.It is noted that the Applicant does not appear to seek damages in her application, and is specifically only seeking compensation for the loss of the sofas.
39.The lessor submits it is trite law that the Applicant can only recover one set of damages, whether they be from rent reduction or damages under s. 104. to the extent that Greenhill appears to award both, it is submitted it is incorrectly decided - it is submitted that it cannot be appropriate to award a complete refund of rent, on the basis of the properly being uninhabitable, and then to award contractual damages in addition (there may be an argument for tort damages, but those are beyond the jurisdiction of the Tribunal.
40.However, the Lessor further submits that general damages under s. 104 cannot be awarded for an action commenced under s. 71. The lessor submits that the inclusion of s. 71 is intended exclude the more general power to award damages where there is no impediment to an application under s. 71, for example, where the tenancy has ended and there is no value in continuing rent reductions.
Annexed to the Commissioner’s Response was:
(a) A copy of the Ingoing Condition Report dated 7 February 2002 but unsigned by the tenant, recording the property to be generally good condition
(b) A copy of a Routine Property Inspection Report dated 11 April 2003, signed by the tenant which contains the notation:
“she finds floor very slippery in kitchen/bathroom. Kitchen cupboard are falling hinges are damaged need to be re-tightened. Shelves are falling under sink. Kitchen taps leak from tap mountings.”
(c) A file note from the Commissioners files recording a complaint of water damage on 1 March 2004.
(d) A work order dated 4 March 2004 from the Commissioners record for a tradesman to carry out water damage repairs, including replacing roof tiles and guttering
The Commissioners response included the following table commenting specifically on the tenants claims:
Item Notified Duration of non-repair Lessor's comments Repaint walls Noted at inspection 16 June 2004 Copies of photographs do not assist in understanding the problem. However, the Lessor contends the marks are merely cosmetic. Assessment raised at the time. Carpets Noted at inspection 16 June 2004 Not clear of extent of damage. Majority of the problem appears cosmetic, except small portion shown on photo T. Assessment raised at the time. Broken Oven Door Raised with Mr Anderson on 7 June 2005 Window in bedroom First clear notification is on 9 December 2004 Repaired on 21 March 2005 Bath tap Raised with Mr Anderson on 7 June 2005 and included in subsequent NTR Flyscreens Raised with Mr Anderson on 7 June 2005 and included in subsequent NTR Back Stair rail Raised with Mr Anderson on 7 June 2005 and included in subsequent NTR Bathroom Sliding door NTR 18 August 2005 Tiles in bathroom NTR 18 August 2005
On 8 November 2005, the matter was before the Tribunal. Ms Dalley, solicitor appeared for the tenant and Mr Christensen appeared for the Commissioner. By consent the matter was adjourned to 24 November 2005 for directions. At the time the parties representatives advised that the issues of law raised in the present matter overlapped with those to be determined in another matter before the Tribunal on the same date, Kiternas v Watts - ACTRTT4 [2006]. Ms Dalley was also involved in that matter.
It was agreed between the parties that the issues of law would be determined in the context of the Kiternas claim and then would be applied to the present matter. This course of action was seen to promote economy of time and resources for all concerned. To that end it was agreed that Mr Christensen would appear amicus curiae in the Kiternas matter his submissions to be on the relevant issues of law in that context.
10. On 24 November 2005 Ms Dalley and Mr Christensen each appeared. They advised that agreement had been reached on some but not all of the repairs issues. The parties requested that the Tribunal list the matter for hearing on the issues of fact whilst awaiting the outcome of the Kiternas matter pertaining to the relevant issues of law.
11. On 22 December 2005 Ms Dalley filed the following submissions on behalf of the tenant:
The Applicant makes the following further submissions:
Rebated Rent
1.By Application dated 19 September 2005, the Applicant seeks a rent reduction under section 71 of the Residential Tenancies Act 1997 (‘RTA’).
2.The Applicant is (and has been at all material times) in receipt of a rent rebate under the terms of the Housing Assistance Act 1998 (HAA) and the Public Rental Housing Assistance Program 2005. Under this program, the Applicant’s rent is effectively subsidised by the Commonwealth. The Applicant qualifies for this program by virtue of her low income.
3.At the commencement of the tenancy, Housing Act charged a market rent of $130 per week. The market rent is currently calculated at $180. The Applicant paid a rebated rent as follows:
·From 12 February 2002 – 17 August 2002 paid $49.45 per week
·From 18 August 2002 until 22 February 2003 paid $50.80 per week.
·From 23 February 2003 until 23 August 2003 paid $51.65 per week.
·From 24 August 2003 until 28 February 2004 paid $52.95 per week
·From 29 February 2004 until 26 February 2005 paid $54.50 per week.
·From 27 February 2005 until present paid $56.70 per week.
4.The Applicant seeks a rent reduction of 50% calculated on the rebated rent from the commencement of her tenancy to date and continuing until the repairs specified in this application are completed.
5.Section 71 of the RTA provides the Tribunal with the power to ‘order a reduction in the rental rate payable under a residential tenancy agreement’ [emphasis added]. The RTA does not define the phrase ‘rental rate payable’.
6.The Respondent submits that the phrase ‘rental rate payable’ should be interpreted to mean the market rent payable for the property, not the rebated rent.
7.The Applicant accepts this position but submits that such an interpretation should not mean that a tenant on a rebated rent is unable to seek a rent reduction at all, nor that the outcome of any such application should be affected by the tenant’s status as a person receiving a rent rebate.
8.The Applicant notes that the decision in Commissioner for Housing v Key[1] states that the Tribunal does not have the power under section 67 of the RTA to direct the Commissioner for Housing with respect to the operation of the HAA. His Honour found that the right to a rent rebate was a right personal to the tenant in which the lessor and the Tribunal play no part.
[1] [2003] ACTSC 101
9.While the Applicant agrees with His Honour’s finding regarding the Tribunal’s powers, she submits that this finding is significant to section 71 only to the extent that it identifies the focus of the RTA as being the ‘regulation of the relations between lessors and tenants generally’ (paragraph 21). In other words, a section of the RTA such as section 71 has as its focus the rights and obligations of the lessor and the tenant. Thus, in the case of section 71, where a breach of a lessor’s obligation occurs, the tenant is granted the right to a remedy for that breach, without reference to the tenant’s status as a person in receipt of a rent reduction.
10.The Applicant submits that there is nothing in the decision of Key which could be construed as authority for the proposition that tenants in receipt of rent rebates are not eligible for rent reductions under section 71. The only relevant finding in the decision is that the Tribunal has no power to direct the exercise of the Commissioner’s powers under the HAA and must therefore make its decision with reference only to the lessor’s breach and the tenant’s loss.
11.A rebated rent is effectively one where the market rent of the property in question is effectively subsidised by the Commonwealth. The tenant pays a part of the market rent (equal to 25% of the tenant’s income). The fact that the tenant is only personally paying part of the rent should not be a barrier to the tenant receiving a rent reduction, although it may affect the amount of the reduction.
12.We note that it is necessary to separate the Commissioner for Housing acting in its capacity as lessor and the Commissioner acting in its capacity as a body authorised to grant rent rebates. For the purposes of the RTA, the Commissioner is a lessor. The decision that the Commissioner was not covered by the RTA in Key is limited to those aspects of the Commissioner’s operations which relate to its powers under the HAA. Key is not authority for the proposition that the Commissioner is permitted to escape from the consequences of a breach merely because it has also exercised its powers in granting a rent rebate to the lessor. This view was accepted by this Tribunal in Greenhill v Commissioner for Housing of the ACT:
‘The decision [in Key] does not limit the ability of this Tribunal to order a rental rebate under section 71 RTA 1997 as long as in doing so the Tribunal does not direct the Commissioner in the exercise of his powers and discretions under the HAA 1987.’[2] (paragraph 24)
[2] [2004] ACT RTT 7 at paragraph 24
13.The Applicant submits there is nothing in the HAA or the Program which would affect the award of a rent reduction. We note that the Respondent has not pointed to any power or discretion under the HAA which it says is affected by the award of a rent reduction by the Tribunal. The Applicant submits that, while it is clear that the Tribunal cannot interfere in the decision to grant a rent rebate, or the level of that rebate, it does have the power to make orders reducing rent where a lessor has breached the lease. The existence of a rebated rent is not sufficient to remove the Commissioner for Housing in its capacity as a lessor from the jurisdiction of the Tribunal under section 71.
14.In Greenhill, this Tribunal decided that the existence of a rebated rent was immaterial to the outcome of the application for a rent reduction. The Member found that:
‘…in such an extreme case as this, the Tribunal orders under section 71(1) RTA 1997 that the Applicant's rental rate payable under the residential tenancy agreement be reduced by the amount of 100% of the market rent payable under the residential tenancy agreement for the period end of 4 August 2003 to 3 October 2003 and the Respondent credit that reduced rent to the Applicant's rental account with the Respondent.’ [3]
[3] ibid at paragraph 25
The Tribunal then ordered that 100% of the rebated rent paid by the Applicant should be repaid to the Applicant by the Commissioner.
15.In accordance with this approach, the Applicant submits that the practical outcome of an application for a rent reduction should not be affected by the tenant’s status as a person on a low income (and thus in receipt of a rent rebate). In other words, where a tenant on a rebated rent makes an application for a rent reduction and a rent reduction of 50% of the market rent is awarded, that reduction should be applied evenly to all components of the ‘rental rate payable’, including the component actually paid by the tenant. Thus, where the market rent for a property is $100 per week and the tenant pays a rebated rent of $50 per week and an order is made of a rent reduction of 50%, that reduction should be calculated as 50% per $1, meaning a weekly reduction of $50.00 for the entire market rent and a rent reduction of $25.00 in real terms for the tenant (ie: 50% of each dollar actually paid by the tenant).
16.The Applicant makes this submission on the basis that there is no intention in the RTA to create a distinction in compensation outcomes between two classes of tenants on a basis which is irrelevant to the criteria for awarding a rent reduction, namely, the tenant’s receipt of a rent rebate. The Applicant submits that such a distinction would be contrary to the rules of statutory interpretation set out in the Human Rights Act 2004 (ACT) (‘HRA’). Section 30 (1) of the HRA states that when ‘working out the meaning of a Territory law, an interpretation that is consistent with human rights is as far as possible to be preferred.’
17.Section 8 (3) of the HRA specifies that:
‘Everyone is equal before the law and is entitled to the equal protection of the law without discrimination. In particular, everyone has the right to equal and effective protection against discrimination on any ground.’
18.The Applicant submits that when considering the interpretation of the scope section 71 where a rent rebate has been granted, the Tribunal must, as far as possible, prefer an interpretation which does not create a discriminatory distinction between two classes of persons. Interpreting section 71 as in some way imposing a bar to a rent reduction to tenants with a rebated rent would create such a distinction by denying a remedy to a class of tenants on the basis of an irrelevant consideration (eligibility for a rebated rent).
19.By way of example – the position of a tenant with a rebated rent is similar to the position of a tenant in a private tenancy whose rent is partially subsidised by a third party (for example, an employer). The rent actually payable by the tenant in the private tenancy is less than the market rent, due to a private arrangement between the tenant and the third party. If the private tenant then fails to meet the terms of that arrangement (for example, resigns from her employment), then the tenant is liable for the entire market rent. Indeed, such a tenant was always liable for the entire market rent – but was saved from having to meet the entire liability by virtue of the private arrangement.
20.Similarly, a tenant on a rebated rent has an agreement with the Commissioner in its capacity as the holder of powers under the HAA that she will only pay part of the rent owing on the property in question. In the event that the tenant ceases to qualify for the agreement, or fails to meet its terms by not supplying regular income information etc, she, like the private tenant, will become liable for the market rent of the property. Like the private tenant, the only thing standing between the tenant and liability for the entire market rent is the separate ‘subsidy’ arrangement.
21.However, interpreting section 71 to exclude tenants in receipt of a rebated rent would create a distinction between these two classes of tenant. The former would be entitled to a rent reduction. The latter would not, despite the fact that the tenant’s loss may be otherwise identical.
22.The Applicant submits that such an interpretation is not consistent with the right to equality before the law set out in section 8 of the HRA, and as such should not be the Tribunal’s preferred interpretation.
23.Section 28 of the HRA states that:
‘Human rights may be subject only to reasonable limits set by Territory laws that can be demonstrably justified in a free and democratic society.’
24.The Applicant submits that there can be no justification for such a distinction in the context of section 71 where the nature of the lessor’s omission and the loss experienced by the tenant are the criteria for determining whether and to what extent a rent reduction should be ordered. The tenant’s economic status is not a factor relevant to that analysis, and therefore should not be artificially imported into section 71 via the phrase ‘rental rate payable’. Where there is no justifiable reason for discrimination against a group of tenants, the Tribunal must prefer an interpretation which avoids such discrimination and allows for equality of protection and restitution under the law for tenants on rebated rents.
25.The hypothetical public tenant described in paragraph 22 above who experiences a loss of amenity arising from the withdrawal of a facility (for example, a non-functioning toilet) will experience the same level of discomfort and inconvenience as the hypothetical tenant described in paragraph 21 above in the same circumstances. In these circumstances, the rent actually paid to the lessor by the tenant is irrelevant to the question of the loss suffered by the tenant as a result of the withdrawal of services.
26.Indeed, it could be argued that there is a strong public policy argument that the tenant on a rebated rent should be able to obtain the full rent reduction as the tenancy is being sustained partially through public funds. In a sense, the loss of amenity to the tenant is also a loss to the subsidising third party (whether private or the Commonwealth) which has invested funds in ensuring that the tenant is adequately housed. While the funds for the rebate program are administered by the Commissioner for Housing, those funds have come from the Commonwealth and should not be spent where the bargain for which they are providing is diminished by the Commissioner’s failure to meet the terms of its own agreement.
27.The Applicant further submits that, where the operation of section 71 provides a tenant with a lessor overall rate of compensation by virtue of the fact that the tenant qualifies for a rebated rent (eg: receives only $25.00 reduction instead of the $50.00 she would receive if she were paying the market rent) the Tribunal has the power to order compensation for any loss not covered by the rent reduction under section 104 of the RTA (see below).
Alternative powers to award compensation
28.In her Application dated 19 September 2005, the Applicant submitted that the Residential Tenancies Tribunal has the power to make multiple orders for a reduction in the rental rate payable under a residential tenancy agreement under section 71 of the RTA. To this effect, it commends to the Tribunal the previous submissions made in this matter by the Applicant.
29.However, if:
i.the Tribunal does not have the power to make multiple orders for a reduction in rent and the total rent reduction available in relation to a given breach of a residential tenancy agreement is limited to a maximum of 12 months; or
ii.the Tribunal finds that the tenant is not entitled to a rent reduction or is entitled to a reduced rent reduction because the tenant is in receipt of a rebated rent,
the Applicant submits that the Tribunal has the power under section 104 of the RTA to make orders for compensation for any loss, either to the extent that such loss does not attract redress under section 71 or as an alternative compensatory measure to be used instead of section 71.
30.Specifically, the Applicant submits that section 104 gives the Tribunal the power to make orders in relation to loss of any kind arising from a breach of a residential tenancy agreement, including compensation for non-economic loss (see paragraphs 28 – 34 below).
31.The Applicant submits that the wording of section 104 of the RTA specifically negates the operation of the generalia specialibus rule of statutory interpretation. In the chapeau to section 104, the powers given to the Tribunal under that section are specifically expressed to be ‘…in addition to any other order it is empowered to make…[emphasis added]’. The wording used in this section is significant, as it points to a clear intention to provide a power to the Tribunal independent of (‘in addition to’) any other power provided in the RTA. This construction is reinforced by section 104(d), which gives the Tribunal the power to make an order ‘…requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement…[emphasis added]’. The Applicant submits that the inclusion of ‘loss of rent’ in this power indicates that the section 104(d) powers are intended to operate in addition to (and concurrently with) other powers in the RTA, such as sections 62 and 107 which empower the Tribunal to order compensation for loss of rent in various circumstances.
32.It follows that the Tribunal has the power to make orders under section 104 without reference to limitations on its powers to make orders in other parts of the RTA. In other words, section 104 is expressly construed as a catch-all power to allow the Tribunal to make orders where it appears appropriate to the Tribunal to do so, without reference to the content of other sections of the RTA. In the same way that the Tribunal can make orders for ‘loss of rent’ despite the existence of sections 62 and 107, the Tribunal can also make orders regarding ‘any other loss’ despite the fact that such loss may also be covered by other sections of the RTA (eg: section 71).
33.The Applicant submits that the broad drafting of section 104 reflects the need to empower the Tribunal to avoid situations where a tenant has experienced loss as a result of a breach by the lessor, but is not entitled to compensation for that loss due to a technicality or limitation elsewhere in the RTA.
34.Section 104(d) gives the Tribunal power to make orders with regard to ‘compensation for loss’. It is an established principle of contract law that compensation for loss operates, as far as possible, to place the applicant in the same position as though the contract had been performed.[4]
[4] Wenham v Ella (1972) 127 CLR 454
35.The present Member sitting in the Residential Tenancies Tribunal of NSW considered the definition of ‘compensation’ in Eldridge v Brunger and Callender[5]. He found that ‘compensation is based on the indemnity principle, which requires the injured party be paid compensation to the extent of the loss suffered, but not more’[6]. The Applicant submits that the obverse construction is also true – that the injured party is entitled to compensation to the full extent of the loss suffered, and no less.[7]
[5] [1997] NSWRT 116
[6] ibid at 4 - 5
[7] Of course, once an entitlement to compensation for breach is established, the duty to mitigate loss may reduce the quantum of compensation available in a particular matter. However, mitigation is not a relevant consideration at the point of determining an entitlement to compensation per se.
36.If section 71 is considered to:
i.limit available compensation to a maximum of 12 months’ rent reduction; or
ii.limit the available compensation by limiting the rent ‘payable’ under section 71 to the rebated rent only; and
iii.operate in such a way that the Tribunal is unable to make further orders in relation to an application under section 104,
then the Tribunal may be faced with situations where the Applicant has an entitlement to compensation for loss arising from a breach which cannot be compensated in full by the Tribunal.
37.One such circumstance is the case of a tenant who has lost the use of a facility for a period in excess of 12 months, such as the scenario set out at paragraphs 11 and 12 of the Applicant’s original submissions.
38.Another scenario occurs where a tenant has sustained a loss which exceeds the total rent payable under the residential tenancy agreement. This may be particularly the case where the period of the tenancy has been brief and the tenancy comes to an end as a result of the breach.
39.In both of these scenarios, it is clear that a narrow reading of the Tribunal’s powers under sections 71 and 104 will result in situations where a tenant, through no fault of his or her own, will not be entitled to compensation for part of his or her loss. Although it is true that tenancy law generally attempts to balance the needs of both the tenant and the lessor,[8] in each of the scenarios above, the limitations in section 71 could operate to limit a tenant’s damages even where there is no prejudice to the lessor requiring balance, for example:
[8] This is an argument which appeared in the decision of the NSW CA in Roads and Traffic Authority v Swain (1997) 41 NSWLR 452 at 457 and was approved in the decision of the current Member sitting in the NSW Residential Tenancies Tribunal in Bollingmore v Stojanovski (RTT 97/000732) at 13.
(a) where an application for a rent reduction is delayed beyond 12 months due to delays in the Tribunal process;
(b) where a rent reduction is sought for a breach which requires repairs over a future period in excess of 12 months; or
(c) where the tenant’s loss exceeds the value of the rent paid to date and the tenancy has come to an end.
40.For the principles of compensation to be properly met, it is necessary for the Tribunal to have an additional and concurrent power to address the entirety of the tenant’s loss in the circumstances of each breach. For this to occur, the Applicant submits that:
(a) the Tribunal has the power to make multiple orders each being of no more than 12 months duration under section 71 and the rent ‘payable’ for the purpose of calculating the rent reduction is the market rent of the property; or, in the alternative,
(b) the Tribunal, after making an order for a rent reduction of up to 12 months’ duration, may make a further order under section 104 compensating the tenant for any loss which exceeds the value of the compensation available under section 71; or, in the further alternative,
(c) the Tribunal can determine that it is not appropriate in the circumstances to award a rent reduction under section 71 and instead award compensation under section 104.
41.The Applicant submits that the Tribunal’s ability to use section 104 as an alternative to section 71 may be seen by implication in Worrall v Housing Commissioner for the ACT.[9] In this case, the applicant sought a reduction of rent under section 71 for an alleged breach of clause 52 of the prescribed terms of his residential tenancy agreement. In the alternative, he sought compensation for loss under section 104(d). The decision of the Tribunal in the first instance[10], Crispin J of the ACT Supreme Court at second instance[11] and Miles, Ryan and Higgins JJ of the Federal Court of Appeal[12] each appeared to assume the availability of compensation under section 104(d) in the alternative in a case where section 71 was invoked as the primary remedy. By inference, it appears that the various Courts and Tribunal accepted that compensation could be awarded under section 104(d) as an alternative to a rent reduction under section 71. Similarly, this Tribunal awarded compensation under section 104 in addition to a rent reduction in Greenhill (paragraph 35).
[9] [2002] FCAFC 127
[10] Worrall v Housing Commissioner for the ACT (ACT Residential Tenancies Tribunal, unreported 31 July 2000) at 8
[11] Worrall v Housing Commissioner for the ACT [2001] 163 FLR 414 at para 19
[12] Op Cit at para 47
42.While it is true that there is a decision in NSW which questions the Tribunal’s ability to award compensation where a rent reduction is available, the Applicant submits that the position is not clear in that jurisdiction.
43.In Bollingmore v Stojanovski,[13] the present Member, sitting in the NSW Residential Tenancies Tribunal, found that there were difficulties in that jurisdiction in applying the general compensation power in section 16 of the Residential Tenancies Act 1987 (NSW) (‘NSW Act’) where the rent reduction provisions also applied. The Member identified two problems with a concurrent application of the two powers:
[13] (RTT unreported 97/000732)
(a) the generalia specialibus rule, which provides broadly that a specific provision will prevail over a general provision; and
(b) the decision of the NSW Court of Appeal in Roads and Traffic Authorityv Swain and Anor[14] that the Tribunal could not order a rent reduction in excess of 12 months’ duration as a result of the need to balance the rights of tenants and lessors.
[14] (1997) 41 NSWLR 452 at 457
44.The Applicant submits that the generalia specialibus rule does not apply to section 104 of the RTA as the drafting of that section specifically envisages the power operating in a manner unfettered by the limitations of other, more specific provisions of the RTA (see paragraphs 33 and 34 above). We note that section 16 of the NSW Act does not contain an equivalent statement of independent operation to that found in the chapeau to section 104 of the RTA. Given this, the issue of generalia specialibus may well be a relevant consideration in the NSW jurisdiction, but does not apply in the context of the explicit wording of section 104 of the RTA.
45.The decision of the NSW Court of Appeal in Swain dealt with an appeal from a decision of Rolfe J in the NSW Supreme Court on a question of whether the NSW Residential Tenancies Tribunal had discretion to decide not to terminate a tenancy under sections 64 and 65 of the NSW Act. In particular, the decision focused on the application of section 64(2)(c), which provides that the Tribunal must consider the circumstances of the case when deciding whether to terminate a tenancy.
46.The Court of Appeal endorsed Rolfe J’s conclusion that the Tribunal was not bound to terminate a tenancy where the Tribunal found that the circumstances of the case did not warrant termination. One of the factors in His Honour’s decision was the prospect of a tenant losing an entitlement to the full value of a rent reduction under sections 47 and 49 by means of an application to terminate by the lessor.[15]
[15] Swain v Roads and Traffic Authority (NSWSC unreported 22 March 1995 BC9504317) at 27
47.Beyond this conclusion, there is very little consideration in the decision of Rolfe J of the interplay between rent reduction and compensation, save the following obiter dicta:
(a) that the time limitation in section 16 did not affect the Tribunal’s ability to hear an application for rent reduction under sections 47 and 49, as an application for rent reduction may be heard ‘at any time’ while the tenancy is on foot;[16] and
[16] Ibid
(b) that the entitlement to compensation cannot be carried from premises to premises and that monetary compensation cannot be awarded in lieu of a rent reduction.[17]
[17] Ibid
48.The Court of Appeal likewise did not comment directly on the interplay between section 16 and sections 47 and 49, but did accept the argument that the Tribunal could not order a rent reduction in excess of 12 months’ duration as a result of the need to balance the rights of tenants and lessors.[18] With regard to this position, the Applicant refers to her submissions in paragraph C(i) – (xx) of the Application dated 19 September 2005.
[18] Op Cit at 457
49.The Applicant submits that there is nothing in the judgement of either the Supreme Court or the Court of Appeal which states that monetary compensation is not available for any loss for which a rent reduction is not granted or not available. Indeed, the concern of Rolfe J appears to be that the tenant’s full entitlements should be available, regardless of intervening matters such as an application to terminate.[19]
[19] Op Cit at 27
50.This view is consistent with the Applicant’s submission that compensation for loss arising from breach should be complete except where there is a failure to mitigate. The Applicant further submits that mitigation is not a factor to be considered when determining whether compensation can be awarded – mitigation is to be considered when determining the quantum of loss.
51.In any event, the Applicant notes that there are significant differences in the rent reduction provisions of the NSW and ACT legislation.
52.Sections 47 and 49 of the NSW Act provide that the Tribunal may ‘determine that a rent is excessive, having regard to the reduction or withdrawal by the landlord of any goods or services….’ This construction is significantly different to section 71 of the RTA, which does not require a determination that the rent demanded is excessive. The ACT provision is couched in terms of a more compensatory nature – the Tribunal may order a rent reduction ‘if it considers that the tenant’s use or enjoyment of the premises has diminished significantly as a result of [the matters set out in subparagraphs (a) to (c)]’. In NSW, section 49 must be read in conjunction with section 48, which sets out a number of factors to be considered when determining whether a rent is excessive. None of these factors consider the extent of loss to the tenant arising from breach.
53.In NSW, the question is one of the suitability of the level of rent given the value of the property and facilities actually provided. It is, in effect, a rewriting of the contract itself to properly reflect the value of the bargain. In the ACT, the question is one of the degree of loss actually suffered by the tenant – the Tribunal may order a reduction only where the tenant has suffered a significant diminution of his/her use and enjoyment of the premises which constitutes ‘a substantial interference with, or a significant lessening of freedom in exercising, the tenant’s rights.’ [20] The decision in Worrall makes it clear that the simple loss of a facility is not sufficient to attract a rent reduction – the loss suffered must be ‘significant’.[21] There is no such requirement on the face of the NSW Act – it may be possible for a rent reduction to be ordered under section 49 of the NSW Act even where the tenant has suffered no significant diminution of his or her use of the property as a result of the withdrawal of a service or facility.
[20] section 71(2) RTA
[21] Op Cit at para 43
54.In light of this, the Applicant submits that the NSW authority regarding rent reductions should not be followed in the ACT. The purpose of a rent reduction under section 71 is to provide a form of compensation to the tenant. The Applicant submits that the differences between the two Acts are sufficient to make the NSW authorities unhelpful on this point.
Scope of the power to award compensation under section 104
55.The Applicant further submits that the Tribunal has the power to compensate an applicant for both economic and non-economic loss arising from a breach of a term of a residential tenancy agreement, in particular, for a breach of clauses 52, 54 and 55 of the prescribed terms.
56.In Baltic Shipping Co v Dillon (The Ship Mikhail Lermontov),[22] the High Court considered the scope of compensation for loss in the context of a breach of contract. Mason CJ, Toohey and Gaudron JJ (with whom Deane, Dawson and McHugh JJ agreed on this point) held:
[22] (1993) 176 CLR 344
‘Damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom of molestation.’[23]
[23] Ibid at 365 and 366
57.This category of ‘contract for enjoyment’ identified by the majority of the High Court is called to mind by clause 52 of the prescribed terms of the schedule to the RTA, which expressly includes a prohibition on the lessor interfering in the ‘reasonable peace, comfort or privacy of the tenant in the use by the tenant of the premises’. Given that residential tenancy agreements are essentially contracts for a home, with all the emotional and psychological benefits which attach to a home, it seems clear that the express term set out in clause 52 indicates that a residential tenancy agreement is a contract ‘… the object of which is to provide enjoyment, relaxation or freedom of molestation.’
58.It has been accepted in NSW that a contract for a residential tenancy is just such a contract for enjoyment. In Strahan v Residential Tenancies Tribunal of NSW,[24] Dowd J found that the Residential Tenancies Tribunal of NSW had the power to award compensation for non-economic loss in accordance with the principal in Baltic Shipping Co:
[24] (NSWSC unreported 12 September 1998)
‘As I have indicated above, it is my view that loss of amenity, inconvenience, disappointment, distress, embarrassment and mud and dust throughout a house, inability to have visitors, having to clean repeatedly and a general inability to enjoy a house are matters which are clearly compensable in terms of the principles in Baltic Shipping.’ [25]
[25] Ibid at para 16. Justice Dowd also relied on the decision of Abadee J in Residential Tenancies Tribunal of NSW v Offe (unreported NSW Supreme Court 1 July 1997), which was subsequently overturned by the Full Court of the Supreme Court of NSW in Offe v Residential Tenancies Tribunal of NSW (unreported NSW CA 29 October 1997) on the issue of whether the Supreme Court had standing to make a decision ex parte. Abadee J’s decision was criticised by the Appeal Court on the grounds of standing only – the conclusion drawn by His Honour from Baltic Shipping was not directly challenged.
59.The view of Dowd J was later upheld by Master Harrison of the NSW Supreme Court in Reiss & Anor v Helson & 2 Ors.[26]
60.This construction of the residential tenancy agreement is consistent with the position for common law leases that a breach of the covenant of quiet enjoyment may give rise to non-economic loss.[27]
61.The Applicant submits that the case law position is consistent with the drafting of sections 104(d), which provide for compensation for ‘any other loss caused by the breach’, and 71, which provides for a rent reduction to compensate for ‘interference with the tenant’s quiet enjoyment of the premises, or the tenant’s ability to use the premises in reasonable peace, comfort and privacy’. The language used in sections 71 and 104 shows a clear intention to encompass non-economic loss in the range of compensation available under these sections.
[26] [2001] NSW SC 486 at para 53
[27] see Campbell J in Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 at [153]-[160] and also Southwark LBC v Tanner [2001] 1 AC 1 at 7 and 10 in the UK jurisdiction
12. On 22 December 2005 Ms Dalley appeared as did Mr Christensen.
13. The parties jointly tendered a number of documents, each of which have been referred to above, as a “tender bundle”
14. The parties advised that agreement had been reached concerning the need for repairs to the following items and asked that a consent order to that effect be made by the Tribunal:
(a) the oven
(b) the window in the bedroom
(c) the tap in the bathroom
(d) flyscreens
(e) rails on the back stairs
(f) the sliding door to the bathroom
(g) tiles in the bathrooms.
15. The remaining issues for determination concerned the claim for rent reduction for loss of use of part of the premises and associated distress and inconvenience arising from the water damage.
16. The Tribunal heard oral evidence and submissions on these issues.
17. The tenant gave evidence that the leaking roof commenced shortly after the start of the tenancy in February 2002 and that there was already evidence of water stains on the ceiling from the first day of the tenancy.
18. The tenant said that the leaking occurred in a major way on 4 occasions between 12 February 2002 and April 2004. She said that each leak was reported to the Commissioners office.
19. Mr Christensen disputed the evidence relating to some leaks, but conceded that the Commissioners records showed a knowledge of some evidence of leaks in the ceiling on 22 April 2002, 1 March 2004 and 16 June 2004. The Commissioners Routine Inspection Report of 11 April 2003 records problems with slippery floors. A report of 17 June 2003 from Ms Humphries to the Commissioner records the tenants complaints of leaking ceilings.
20. The repairs to the ceiling were carried out by the Commissioner on 20 May 2002, 10 June 2003 and mid 2004, albeit unsuccessfully. Effective repairs were not finally carried out until May 2005.
21. Photographs taken in June 2003 tendered in evidence showed widespread staining on the ceilings, walls and carpets.
22. Mr Christensen for the Commissioner, rightly conceded that the Commissioners own files corroborated part of the tenants assertions and showed a history of general cognisance of the leakage problem.
23. The Commissioner did not finally and adequately deal with the matter until May 2005.
24. The Tribunal found as a fact that the water stains to the ceiling were visible from the commencement of the tenancy, and therefore the Commissioner was on notice of the potential defect from the first day of the tenancy. The Tribunal accepted the evidence of the applicant that she had suffered significant inundation on 4 occasions. On each occasion she had reported it to the Commissioners office.
25. The tenant gave evidence that on each of these four occasions her furniture and personal property were wet and she had to move these things around the flat to avoid the parts of the ceiling which were leaking. The wetness to the ceiling, walls and carpets remained for various periods following each flooding and required the tenant to take action to attempt to dry the carpets and her furniture. The periods varied from 1 week to 4 weeks.
26. The Tribunal found as a fact that the tenants quiet enjoyment of the premises had been substantially disturbed during these four periods of leakage. The Tribunal accepted that an average of 2 weeks of substantial disturbance per flooding was reasonable, giving an overall period of 8 weeks.
27. These findings of fact raised the issues of law canvassed above concerning whether the tenant was entitled only to a rent reduction for the 8 week period or whether she was also entitled to compensation for the distress and inconvenience arising from the landlords failing to repair. If the tenant were to received only a rent reduction for the 8 week period, then the issue arose as to whether the reduction was from the rebated rent or the market rent.
28. Ms Dalley asked to be allowed to file a supplementary written submission on these issues. Leave was granted to both parties to file submissions if they so chose.
29. The matter was then reserved.
30. On 23 December 2005 Ms Dalley filed the following further supplementary submissions:
The Applicant makes the following submissions:
Rebated Rent
1. Section 71 of the RTA provides the Tribunal with the power to ‘order a reduction in the rental rate payable under a residential tenancy agreement’ [emphasis added]. The RTA does not define the phrase ‘rental rate payable’.
2. The Applicant submits that the phrase ‘rental rate payable’ should be interpreted to mean the rent actually owed and payable by the tenant, regardless of whether that rent is a rebated rent. In other words, where a tenant in receipt of a rebated rent makes an application for a rent reduction, the reduction should be taken off the rebated rent, as opposed to the full market rent of the property.
3. A tenant who is entitled to a rebated rent is not required to pay the market rent for a property. For practical purposes, the rental rate payable by a tenant on a rent rebate is 25% of that tenant’s income. While the rebate continues, the tenant is not liable for the difference between the rebated rent and the market rent. In other words, at no point is the difference between the rebated rent and the market rent actually ‘payable’.
4. In addition, section 71 of the RTA is couched in terms which make the purpose of a rent reduction clearly compensatory in nature[28]. Calculation of compensation requires an analysis of the position of the applicant – her losses, her liabilities and her acts of mitigation. It does not involve notional values. Even where the financial calculation involves the quantification of loss which is not overtly financial (such as loss of the use of facilities), the calculation is made with reference to the actual facts of the case. It therefore follows that the calculation of the rent upon which the reduction is to be based should be the actual rent payable by the tenant (being the rebated rent), not a notional rent which is never actually paid by the tenant (the market rent).
[28] Which is in contrast to the NSW Residential Tenancies Act 1987 – see paragraphs 51 – 54 of the Applicant’s supplementary submissions dated 22 December 2005.
5. The Applicant makes this submission on the basis that there is no intention in the RTA to create a distinction in compensation outcomes between two classes of tenants on a basis which is irrelevant to the criteria for awarding a rent reduction, namely, the tenant’s receipt of a rent rebate. The Applicant submits that such a distinction would be contrary to the rules of statutory interpretation set out in the Human Rights Act 2004 (ACT) (‘HRA’). To this end, we commend paragraphs 16 to 25 of the Applicant’s supplementary submissions dated 22 December 2005.
6. In addition, the Applicant notes that the wording of section 71 is highly significant. The NSW Residential Tenancies Act 1987 uses significantly different wording – under that Act a rent reduction is to be calculated on the basis of the ‘rent payable under a residential tenancy agreement’. This phrasing deliberately encompasses rent payable under the terms of the residential tenancy agreement. The RTA has no such stipulation – the appropriate sum is simply the ‘rental rate payable’ with no reference to the residential tenancy agreement. The Applicant submits that this omission is significant, and means that the NSW authorities on this point should be treated with caution.
7. In addition, the Applicant submits that the operation and purpose of the NSW rent rebate provisions are sufficiently different to the operation and purpose of the rent rebate provisions of the RTA that comparisons between the two should be cautious at best. This point is explained further in paragraphs 51 – 54 of the Applicant’s supplementary submissions dated 22 December 2005.
8. The Applicant therefore submits that the Tribunal should interpret the phrase ‘rental rate payable’ in section 71 of the RTA to mean the rebated rent payable by the tenant in cases where such a rebate has been granted.
9. In the alternative, the Applicant makes the submissions contained in her supplementary submissions dated 22 December 2005.
31. No further submissions were lodged by the Commissioner.
Reasons:
32. A lease at common law is a contract, governed by the common law of contract, save to the extent that there is inconsistent legislative intervention (The Progressive Mailing House P/L v Tabali P/L (1985) 157 CLR 17).
33. A residential tenancy agreement in the ACT confers an exclusive right of occupancy on the tenant (prescribed terms 52 and 53) and accordingly is a lease at common law (The Estate of Tanya Humphries v The Commissioner for Housing in the ACT [2003] ACTSC 40.)
34. Contracts between the Commissioner for Housing and his/her tenants in the ACT are residential tenancy agreements within the meaning of the Act.
35. When a premise is leased at common law for residential purposes, the terms of the lease include all the facilities and services forming part of the premises which are either expressly or implicitly understood by the parties to form part of the premises.
36. The landlord’s duty to repair premises is to be found in prescribed terms 54-57 of the Act which form terms of the residential tenancy agreement and therefore have contract status. Those prescribed terms read:
54. The lessor shall provide the premises, including furniture, fittings and appliances (unless excluded in writing in the Tenancy Agreement):
(a)fit for habitation;
(b)in a reasonable state of repair;
(c)in a reasonable state of cleanliness; and
(d)in a reasonably secure condition.
55. (1) The lessor shall maintain the premises in a reasonable state of repair having regard to their condition at the commencement of the Tenancy Agreement. The tenant shall notify the lessor of any need for repairs.
(2) Subclause (1) does not apply to premises—
(a)in respect of which the Commissioner for Housing is the lessor; and
(b)to which a periodic agreement of the kind referred to in subsection 4 (5) of the Residential Tenancies Act relates;
until 1 July 2000.
57. Subject to clause 55, the lessor shall make repairs, other than urgent repairs, within 4 weeks of being notified of the need for the repairs (unless otherwise agreed).
37. These provisions impose two separate duties on the landlord:
(a) to hand over the premises at the commencement of the tenancy in a reasonable state of repair. Defects in the premises existing at the commencement of the tenancy are colloquially referred to as “patent defects”
(b) to maintain the premises during the tenancy in a reasonable state of repair. Defects arising only during the tenancy are colloquially referred to as “latent defects”.
38. At the commencement of the tenancy a landlord has actual or constructive notice of all patents defects which were discoverable by a reasonable and diligent inspection of the premises. The landlords duty in this respect falls short of requiring the landlord to have the premises inspected by tradesperson, but includes all that is evident from a diligent visual inspection (such as water stains marks on the ceilings and walls) (“Residential Tenancies Law and Practice in NSW” Anforth, Thawley and Christensen at [2.25.1]; Ahluwalia v Robinson [2003] NSWCA 175)
39. During the tenancy the landlord’s duty to repair arises when the tenant puts the landlord on notice of the defect, after which time the landlord has a reasonable time to carry out the repairs (Anforth, Thawley and Christensen at [2.25.2]; Gray v Queensland Housing Commission 1004 QSC 226; McKinnon v Kirdy [2003] QSC 302)
40. The adjective “reasonable” in this context refers to the state of repair of the premises and does not qualify nature of the actions or efforts required of the landlord (Anforth, Thawley and Christensen at [2.25.3]).
41. Prescribed term 54 and 55 are framed in mandatory terms, i.e. the landlord “shall” provide and maintain the premises in a reasonable state of repair. It is therefore not a defence to the Commissioner, or any landlord, to plead that reasonable steps were taken to rectify either patent or latent defects. The test is whether these defects were in fact remedied such as to leave the premises in a reasonable state of repair.
42. The above approach to the application of prescribed terms 55-57 is consistent with the common law of contract which does not recognise “best efforts” or a “reasonable attempt” as a substitute for the exact performance required under contracts (Cheshire and Fifoot “Law of Contracts in Australia” 7th ed at [9.2]).
43. In the present case the Commissioner was on notice of the water leaking problem from the start of the lease. The water stains on the ceiling were patent for all to see. At that point the Commissioner’s duty extended to having tradespersons check the soundness of the ceiling for leaks to ascertain the source of the problem. The Commissioner did not do this.
44. The tenant put the Commissioner on notice on a number of occasions during the lease concerning the ongoing problem, including notice of the four inundations of her premises.
45. The Commissioner did not act to remedy the problem. Whatever the internal bureaucratic problems or processes the Commissioner encountered are not the point. The internal workings of the Commissioners office are not a defence to a claim for breach of contract arising from a failure to carry out repairs pursuant to prescribed terms 55-57.
46. The Tribunal found as a fact that the landlord was in breach of its duty contained in prescribed terms 55-57 of the Act to repair the premises. As a consequence the tenant suffered a partial loss of use of the premise for a period of about 8 weeks in all.
47. The tenant is entitled to a rent reduction for that period at a rate to be fixed by the Tribunal.
48. The Tribunal incorporates by reference into this decision the reasons given in Kiternas v Watts ACTRTT4 [2006] to the effect that:
(a) the Tribunal has the power to order compensation pursuant to section 104(1)(d) as the alternative to an order for rent reduction pursuant to section 71
(b) the Tribunal has the power to order compensation pursuant to section 104(1)(d) in lieu of an order for rent reduction pursuant to section 71.
49. The tenant is in receipt of a rental rebate from the Commissioner pursuant to which she pays less than the market rent for the premises. The parties have raised with the Tribunal whether any rent rebate should be calculated on the basis of the rebated rent or the market rent and how that deduction should then apply to the tenant.
50. This raises several issues:
(a) whether the rebated rent or the market rent is in fact the contractual rent under the residential tenancy agreement which forms the datum for the rent reduction
(b) if the market rent is the contractual rent for the purposes of section 71, does the percentage rent reduction apply to reduce the market rent or the rebated rent
(c) whether there is in fact a legislative lacuna affecting section 71 in the context of rebated rent which justifies recourse to an order under section 104(1)(d).
51. The starting point for the consideration of the issue at (a) immediately above, is the recognition that a residential tenancy agreement is a contract at common law. The terms of a contract at common law may be oral or in writing, express or implied. Section 6A(2) of the Residential Tenancies Act 1997 replicas this part of the common law.
52. An essential term of any lease at common law is the amount of the consideration payable. In terms of tenancy agreement the consideration moving from the landlord is the exclusive right to occupancy given to the tenant, and the consideration moving from the tenant is the rent payable.
53. It is open to the parties to a contract to frame an essential term by reference to a default position to be varied in the event of the occurrence of a particular contingency or agreed procedure, as long as that contingency has sufficient certainty surrounding it (Cheshire and Fifoot [6.9]; Brooker industries P/L v Wilson Parking (Qld) 1982
54. It is thus open to the parties to a lease to agree on a market rent which is to apply in default of the occurrence of a particular contingency or agreed procedure.
55. It is open to the parties to a lease to agree that the rent will be a specified market rent subject to the tenant making successful application for eligibility under a particular statutory scheme, and that if the tenant is successful in that application the rent will be reduced to a lesser, but equally certain amount.
56. It matters not that the reduced rent may be below market rent. Consideration need only be something of value to the parties and need not reflect any objectively assessed sufficiency test (Cheshire and Fifoot [1.29][4.12]).
57. In the present case the tenant was offered and accepted, a tenancy with the Commissioner commencing on 12 February 2002 on the terms that a default market rent of $260.00 applied. The contract explicitly provided:
I acknowledge that this tenancy is granted on the basis on my application for public rental housing including all information given to the Commissioner in relation to that application…..
58. The reference to the tenants application for public rental housing is a reference to her application under the Public Rental Housing Assistance Program made pursuant to section 12(1) Housing Assistance Act 1987. The Program is a species of delegated legislation having the status of law. This Program works on a means test basis and provides for a rebated rent to be charged to eligible person in lieu of the market rent.
59. Clause 17 of the Program provides that a tenant may apply for eligibility and if successful the Commissioner “must” grant the rebate. The rebate is not a matter for the Commissioner’s discretion, either the tenant is successful or they are not. and therefore no uncertainty concerning the rent level is introduced into the contract.
60. If the tenant’s rebate application is successful the Commissioner is required by law to reduce the level of rent payable.
61. On entering the tenancy contract the tenant was well aware of her rights to make application under the Program. The right to avail herself of the terms of the Program was explicitly recorded in the lease. The existence of the rental rebate was an inducement for the tenant to enter the lease in the first instance.
62. The Commissioner maintains that the contractual rent always remains the market rent and that the right to a rebate upon successful application under the Program is some how a separate transaction between the parties. This argument does not commend itself to the Tribunal in the light of the blindingly obvious facts (rightly conceded by the Commissioner) that:
(a) the rebate rent under the Program is accepted in full satisfaction of the rent obligations under the lease:
(b) the access to rental rebate is the single most important reason why people on low income seek tenancies with the Commissioner;
(c) the Program functions on a means tested basis for the very reason of restricting access and inducement to people on low income who qualify for rental rebates.
63. Furthermore, the Commissioner actually conducts itself in affairs before the Tribunal on the premise that the rental rebate is the lawfully due rent. In cases where a tenant is in rent default, the Commissioner may serve a Notice to Remedy and then a Notice to Vacate if the tenant is 2 weeks or more in rent arrears. If the rent arrears is calculated with the market rent forming the datum then every tenant of the Commissioner’s on rebated rent would automatically be in arrears after the first fortnight of the tenancy because they paid only the rebated rent and not the market rent.
64. Notwithstanding this fact, the Commissioner quite properly takes the view that the contractual rent is the rebated rent and the relevant rent arrears must be assessed on this basis. Thus once a tenant has eliminated the rebated rental arrears the default is remedied.
65. The fact that the administrative right associated with the Program vest in the Administrative Appeals Tribunal and not in this Tribunal is irrelevant. It is common for lease contracts to contain terms for the resolution of disputes, including the setting of rent levels, in one judicial forum or another. For example the Magistrates Court exercises such jurisdiction in commercial leases in the ACT. There is no suggestion that the existence of such a power in the court negates the existence of the rent as a contractual provision. The right of review in the AAT is simply the equivalent for low income tenants in the ACT.
66. In the Tribunal’s view is it highly artificial to pretend that the rental rebate program is a separate transaction between the same parties to the lease but which forms no part of the lease. It is in its very nature the inducement for the tenant to enter the lease and defines the quantum of the rent payable. Putting the danger of social biases to one side, the government stands in no different position to private landlords in relation to tenancy contracts (Re Residential Tenancy Tribunal of NSW and Henderson: Ex parte Defence Housing Authority 1997 146 ALR 495). The mere fact that the rebated rent may be a subsidy from the public purse is about as relevant as any attack on the lawfulness of the tax deductibility of superannuation payments for high income earners by reason of the fact that those deductions also constitute a (major) subsidy from the public purse.
67. On that premise the Tribunal finds that the contractual rent is the rebated rent. If follows that the datum for any rent reduction is the rebated rent.
68. The Tribunal is cognisant of a divergence of view on this matter in the NSW jurisdiction with the preponderance of view favouring the market rent as the contractual rent (Anforth, Thawley and Christensen at [1.8]; Newmacq Community Housing Co Ltd v Hofferts [2004] NSWCTTT 74). The present Tribunal respectfully disagrees with that predominant view.
69. The Tribunal notes that the tenant was not deprived of the whole of the use of the premises during the water inundation, although the level of her distress and inconvenience was high. Throughout the period spanned by these events the tenants rebated rent was about $51.00 per week If the Tribunal ordered a percentage rent reduction based on the rebated rent then the level of compensation to the tenant would be low. For example a 50% reduction sought by the tenant in her application would produce compensation of only $25.50 per week for the distress and inconvenience of being;
(a) in a constant state of inundation over 8 weeks
(b) with furniture wet and stacked into such dry spots as could be found
(c) with bucket to catch water
(d) having to mop up after each inundation.
70. The fundamental principle for assessing damages for breach of contract at common law is that the innocent party is entitled to that level of damages which will place them in the same position had the contract been performed (Robinson v Harman 1848 1 EX 850 at 855, Commonwealth v Amann Aviation P/L Ltd 1991 174 CLR 64 at 128). Damages are usually assessed at the date of the breach (Amann.)
71. The level of damages are assessed on the basis of prevailing general standards in the community having regard to the subjective experience of the aggrieved party (O'Brien v Dunsdon 1965 39 ALJR 78).
72. A tribunal of fact must do the best it can with the evidence available to determine the level of damages. Mere difficult is not a grounds for a tribunal not undertaking that task (Amann at 125; Sellars v Adelaide Petroleum N/L 1994 179 CLR 332 at 349)
73. The question then becomes, what level of compensation would be reasonable having regard to prevailing general standards in the community and the facts of this case.
74. In the Tribunal’s view to offer a member of the community $25.50 per week for the distress and inconvenience suffered in their home, as set out in paragraph 69 above, would not be reasonable according to prevailing community standards and would be frankly insultingly tokenistic and therefore not in accordance with the law or good public policy.
75. Herein lies one of the policy deficiencies underpinning the use of percentage rent rebates as a mode of compensation. The Tribunal repeats what it said on this topic in Kiternas.
76. The Tribunal does not believe that even a 100% rent rebate for the 8 weeks based on the average rebated rent payable by the tenant of $51.25 (ie the total sum of $410.00) would take the matter beyond the tokenistic. For that reason the Tribunal has determined to deal with the matter by recourse of section 104(1)(d) and allow the sum of $1440.00 which is the equivalent of 8 weeks of the current market rent applicable to the lease.
ORDERS:
The Respondent pay the Applicant the sum of $1440.00 forthwith.
A. Anforth
Member
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