Phillips v Le and Wanlin Holdings Pty Limited

[2019] NSWCATCD 87

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Phillips v Le and Wanlin Holdings Pty Limited [2019] NSWCATCD 87

Hearing dates:

1 July 2019

Date of orders:

15 July 2019

Decision date:

15 July 2019

Jurisdiction:

Consumer and Commercial Division

Before:

J Rose, General Member

Decision:

The whole of the application in proceedings RT19/16911 is dismissed because the Tribunal is not satisfied at the civil standard of proof (being the balance of probabilities) that grounds exist for the orders sought to be made.

Catchwords:

LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) - Standard of proof - Dismissal

Legislation Cited:

Australian Consumer Law

Civil and Administrative TribunalAct 2013 (NSW)

Consumer, Trader and Tenancy Tribunal Act 2001 (NSW)

Property, Stock and Business Agents Act 2002 (NSW)

Property, Stock and Business Agents Regulation2014 (NSW)

Residential Tenancies Act 2010 (NSW)

Residential Tenancies Regulation 2010 (NSW)

Swimming Pools Act 1992 (NSW)

Cases Cited:

Bhandari v Laming [2015] NSWCATAP 224

Carnley v Grafton Ngerrie Local Aboriginal Land Council [2010] NSWSC 837

Cogan v King [1998] NSWRT 352

De Soleil v Palmhide Pty Limited [2010] NSWCTTT 464

Felice v Cutting [1992] NSWRT 70

Gray v Queensland Housing Commission [2004] QSC 276

Hall v Hawkins [2015] NSWCATAP 197

Hampel v South Australian Housing Trust [2007] SADC 64

Hearn v Lake Illawarra Park Pty Limited [2013] NSWCTTT 206

Kjoller v Tailford [2016] NSWCATAP 4

McCarthy v Isgai [2009] NSWCTTT 643

Mohr v Marks [1991] NSWRT 172

Morgan v Liverpool Corporation [1927] 2 KB 131

Peebles v Mayfield [2013] NSWCTTT 337

Proudfoot v Hart (1890) 25 QBD 42

Roland Rosenbach v Stewart Harris [2014] NSWCATCD 233

Sonya Pham (Cyclical Pty Ltd) v Terry (Tenancy) [2011] NSWCTTT 476

Summers v Salford Corporation [1943] AC 283

Swinburne v Puco Pty Limited (1995) NSWRT 86

Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56

Category:

Principal judgment

Parties:

Katrina Phillips and Mark Phillips (Applicants)
Yen Hsiao Lu (First Respondent)
Wanlin Holdings Pty Limited (Second Respondent)

File Number(s):

RT19/16911

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. The Applicants and the first-named Respondent in these proceedings were parties to a residential tenancy agreement dated 15 November 2018 (the Agreement). In these reasons I will refer to:

1. the Applicants as the "Tenants";

2. Katrina Phillips, the first-named Applicant as “Mrs Phillips”;

3. Tiffany Heggie, a witness called by the Tenants, as “Ms Heggie”;

4. the first-named Respondent as the “Landlord";

5. the second-named Respondent (who is the Landlord's managing agent for the Premises) as the “Agent”; and

6. Tracy Le, the Property Investment Manager with the Agent, as “Ms Le”.

I do not intend any disrespect to any person in doing so.

2. I will also refer to:

1. the Civil and Administrative Tribunal Act 2013 (NSW) as the “NCAT Act”;

2. the Residential Tenancies Act 2010 (NSW) as the “RT Act”; and

3. the Property, Stock and Business Agents Act 2002 (NSW) as the “PS&BA Act”.

3. Under the Agreement, the Tenants leased the Landlord’s premises at [ADDRESS REDACTED] Street, Eagle Vale, NSW (the Premises) for an initial term of 6 months starting on 16 November 2018. The Agreement and the tenancy under it came to an end 16 weeks and 3 days later, on 11 March 2019, when the Tenants vacated the Premises after being served with a non-payment termination notice.

4. After the tenancy came to an end, the Landlord applied in Tribunal proceedings number RT19/13309 to have the Tenants’ bond paid to the Landlord. That application was withdrawn and dismissed on 8 April 2019, with an order that Rental Bond Services pay the bond and any accumulated interest on it to the Tenants.

5. Not leaving matters there, the Tenants commenced these proceedings the following day, 9 April 2019. At the group list hearing on 2 May 2019 the Tribunal made orders for the parties to exchange their evidence, with the matter to be set down for this hearing.

6. For the reasons that follow, I am not persuaded that the Tenants have made out the grounds of their claim to the civil standard of proof, being the balance of probabilities. Accordingly, the application must be dismissed.

Appearances

7. Mrs Phillips represented both Applicants at the hearing before me on 1 July 2019. Ms Le represented both Respondents. I am satisfied that Ms Le had authority to appear for both Respondents.

Jurisdiction

8. I am satisfied that there was a residential tenancy agreement between the parties regulated by the RT Act, and that I have jurisdiction to hear and determine this dispute about that Agreement. I am satisfied that the monetary amounts claimed by the Tenants are within the monetary jurisdiction of the Tribunal, as limited by clause 23 of the Residential Tenancies Regulation 2010 (the “RT Regulation”).

9. As I set out in part O. below, I am not satisfied that I have jurisdiction to make the orders sought in respect of the alleged contravention by the Agent of rules of conduct under the PS&BA Act, and I decline to do so.

The Tenants’ Claim

10. By the application in these proceedings (as updated to the date of the hearing) The Tenants claim compensation under section 187(1)(d) of the RT Act, together with ancillary orders under section 188(3) of the same Act. The Tenants allege that the Landlord breached the RT Act and the Agreement as follows:

1. the Landlord has not paid interest on the bond under the order made by the Tribunal on 8 April 2019, which the Tenants assess at $368;

2. the Premises were not provided reasonably clean and fit for habitation in accordance with section 52(1) of the RT Act; and

3. the Landlord did not comply with its statutory obligations regarding safety in accordance with section 52(3) of the RT Act.

11. As the moving parties, the Tenants have the burden of proving all of the claims made in their application the civil standard of proof, being the balance of probabilities. As to proof of facts, I respectfully adopt the following words of Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]:

“When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2).”

12. The Tenants assert that they are entitled to compensation or an abatement or reduction of rent under ss44(1)(b) and/or 45 of the RT Act for items (2) and (3), equal to 40% of the rent paid (i.e., $4,416.00).

13. The Tenants also allege that they are entitled to compensation and/or ancillary orders on the grounds that:

1. the Tenants have incurred $100 in time in repairing a flyscreen door at the Premises;

2. the Tenants have incurred costs and personal time valued at $950.40, associated with the previous Tribunal proceedings and these proceedings;

3. the Agent has breached the rules of conduct prescribed in the regulations under section 37 of the PS&BA Act, for which the Tenants claim $1,500.00 in compensation.

14. The total amount claimed is therefore $7,338.00.

The Evidence

15. The Tenants relied on the bundle of documents lodged with the Tribunal on 26 April 2019, as served on the Respondents. There was no objection to that bundle and I admitted it as Exhibit "A1". Exhibit A1 included:

1. tables setting out the breaches alleged, and the compensation sought;

2. a statement made by the Tenants, dated 23 April 2019;

3. a timeline of events, prepared by them;

4. the front page of the Agreement;

5. a statement made by Ms Heggie, dated 17 April 2019;

6. a copy of the Agent’s ingoing condition report, on which the Tenants had written dissenting comments;

7. screenshots of the Tenants’ computer, concerning the transmission of that dissenting condition report by email to the Agent on 27 November 2018;

8. records of telephone contact and emails and SMS messages exchanged with the Agent between 18 November 2018 and 8 April 2019;

9. the Tenants’ application to retrieve the bond; and

10. the Landlord’s application, and the order made, in Tribunal proceedings RT19/13309.

16. The Respondents relied on the bundle of documents lodged with the Tribunal on 23 May 2019, as served on the Tenants.

17. It became apparent early on at the hearing that the copies of the Respondent’s bundle provided to the Tribunal and the Tenants were not identical, and I gave the parties time at the hearing to sort out those differences. When that was rectified, the Tenants objected to 2 documents in the Respondents’ bundle: (i) the Agent's statement, which was unsigned; and (ii) the outgoing condition report from the previous tenancy of the Premises, dated 4 October 2018, which had not been provided to the Tenants.

18. I allowed the Respondents to rely on both documents: the Agent’s statement because Ms Le would shortly adopt it and verify the contents of it under oath; and the outgoing condition report because it was primarily comprised of photographs which the parties could examine together, if needed, if any of them were relied on.

19. Consequently, the Respondents’ bundle was admitted as Exhibit "R1". The bundle as admitted included:

1. a witness statement prepared by the Agent (Ms Le);

2. a redacted copy of the managing agent’s agreement, confirming the Agent’s authority to defend these proceedings for the Landlord;

3. the Agreement;

4. the Agent’s ingoing condition report, dated 15 November 2018, with supporting photographs;

5. the Tenant’s completed (but unsigned) acknowledgement of receipt of the Agreement, the Agent’s ingoing condition report and the keys to the Premises, dated 16 November 2018;

6. records of telephone contact and emails and SMS messages exchanged with the Tenants between 18 November 2018 and 8 April 2019;

7. photographs taken at the Premises during an inspection on 20 November 2018;

8. the tenant trust ledger and outgoing condition report for the previous tenant at the Premises, who vacated at about the end of September 2018, with supporting photographs;

9. contact details for Eagle Vale police station (who Ms Le said in her statement said that they had no record of the Premises being used for a drug lab);

10. invoices for amounts incurred by the landlord in October and November 2018, for lawn mowing, carpet cleaning; replacement of missing smoke alarms and installation of a new shower head at or before the commencement of this tenancy;

11. the Tenants’ vacation notice;

12. a key return form, dated 11 March 2019;

13. the Agent’s outgoing condition report dated 12 March 2019, with supporting photographs;

14. the tenant trust ledger for the Tenants’ tenancy;

15. an invoice for cleaning the premises and patching and repairing holes in walls at the end of the Tenants’ tenancy;

16. “before and after” photographs of the repairs undertaken by the Landlord’s contractor at the end of the Tenants’ tenancy; and

17. correspondence concerning the conduct of these proceedings.

20. Mrs Phillips, Ms Heggie and Ms Le all verified their witness statements under oath.

21. In her statement, Ms Phillips said that:

1. while helping the Tenants into the Premises on 18 November 2018, Ms Heggie notified Mrs Phillips of drug residue and damage in the house, which Ms Heggie photographed;

2. on the same day, Mrs Phillips emailed the Agent to notify them of the damage to the Premises and of her concerns about potential security or safety problems that existed in the Premises due to the evidence of a drug house operation;

3. on 20 November 2018, Mrs Phillips advised Ms Le and a person she brought with her of her concern that the house was a drug house and says that she showed them:

• burn marks on the floor where different type and colour carpet was replaced;

• “drug residue” in stairs and bannisters, in the bathroom tub, in light sockets and on windows;

• sticky walls, where aluminium foil had been stuck to walls and windows;

• “hydro lights” and alarm systems in the wardrobes; and

• evidence on double doors with locks on door frames.

4. a tradesman came to fix the shower head “that had been removed to place a hose into”;

5. on 27 November 2018 Mrs Phillips sent her condition report comments to Ms Le by email, with photos of the Premises;

6. the Tenants fell behind with their rent on or about 24 January 2019; during email correspondence about this Ms Le was “becoming rude and unhelpful”;

7. the tenants received the termination notice on or around 26 February 2019;

8. on 28 February 2019 Mrs Phillips sent an email to the Agent, advising that the Tenants were terminating the Agreement due to their acceptance of social housing; in doing so she “reminded” Ms Le of the state of the property in November 2018 and stated that the Agent should take the Tenants’ comments on the ingoing condition report into account;

9. Mrs Phillips returned the keys and repaid the remainder of the rent on 11 March 2019;

10. Mrs Phillips was not given a reasonable opportunity to be present at the final inspection; over subsequent days, Ms Le demanded payment of $1,460 for items raised by Mrs Le after that inspection, including the repair of the rear sliding flyscreen door;

11. Ms Le did not give the Tenants a chance to rectify damage before obtaining quotes to conduct the repair works;

12. Ms Le replied to her correspondence “with brashness” and indicated “her unprofessional conduct”, and that she was “refusing to work within the law once again and being unreasonable”;

13. On 16 March 2019 Mr Phillips attended the Premises and fixed various concerns that had been raised by the Agent, including by repairing the rear sliding flyscreen door; and

14. On 18 March 2019 the Tenants sought refund of the bond, but their request was rejected by the Agent.

22. In her statement, Ms Heggie stated that she was helping the Tenants move into the Premises on *20* November 2018 (Mrs Phillips had said it was on 18 November). While moving through the house she noticed that the walls had sticky reside on them, and she found drug residue on the carpet, in light switches, in window seals, in the staircase railing, and that she found traces of aluminium sheeting and sticky tape, as well as mis-placed carpet “where underneath there was obvious that it was burnt down through the sub-floor”, including a hole in the loungeroom. She said she also found holes in walls and doors, evidence of double door hinges, left behind hydro-lighting and door alarm systems. Ms Heggie said that she then alerted the Tenants of these findings and “expressed my concern”. Finally, Ms Heggie used Mrs Phillips phone to photograph the Premises.

23. Conversely, Ms Le said in her statement that:

1. the Tenants called her on 18 November 2018 and advised her of their conclusions that the Premises had “drug signs”;

2. Ms Le inspected the Premises on 20 May [sic] 2019 at around 11am to midday, to check on the Tenants’ findings. At the inspection, she asked Mrs Phillips, “How do you know that this was drugs used?”, and Mrs Phillips replied by showing her some tiny green dust near the handrail on the stairs and some brown marks on the bedroom door frame;

3. the Tenants rejected an offer to clean the Premises, and the only work noted to be done was to replace the showerhead;

4. the Tenants had a big dog that was not disclosed on the rental application or at the lease signing;

5. at no time did the Tenants request a “health report”, verbally or in writing;

6. there was no police report on the issue of the Premises being used for drugs, nor any complaints from the last 2 tenancies before the Tenants’ application;

7. the carpet at the Premises was steam cleaned before the keys were handed over to the Tenants;

8. the relationship between the Tenants and the Agent was “stirred up” since the rent fell behind and the agent tried to control rent arrears; this left the Agent no choice to yell out “it is not our job to tell Mission employment that your rent is behind…” during one telephone conversation with Mrs Phillips;

9. the Agent served a non-payment termination notice on the Tenants on 13 February 2019, nominating a termination date of 6 March 2019;

10. the Agent errantly overlooked the paragraph in the Tenants’ email of 7 March 2019 (by which they gave their notice of their intention to vacate the Premises) about the Tenants being offered public housing; this was the reason why the Agent errantly claimed a lease break fee from the Tenants in subsequent correspondence;

11. when the keys were returned on 11 March 2019, the Agent’s key return form was completed to note that the Tenants were offered to be on-site at the final inspection of the Premises and that the Tenants responded “no” to that offer;

12. the Tenants email replies to the outgoing inspection report sounded “aggressive”;

13. the Tenants were offered 3 days from the outgoing inspection to repair items raised in that inspection before the bond would be claimed on, but the Tenants were not available until the following Saturday;

14. the negotiation dragged on because the Tenants at first refused to accept responsibility for the items claimed;

15. on 8 April 2019, after those proceedings had been commenced, the Agent notified the Tribunal that $120 was no longer being claimed from the bond and that the whole bond should be refunded to Housing to repay the housing bond loan; and

16. the rental bond was a housing bond loan to the Tenants, and was returned directly to Housing, so it is not appropriate for the Tenants to claim interest on the bond.

24. No witness gave any further oral evidence. Consequently, the matter falls to be determined on the documentary evidence, including the competing versions of the inspection reports, the witness statements, the photographs taken by both parties and the email and SMS correspondence in the parties’ bundles of documents. I have carefully examined all of the evidence in both parties’ bundles incoming to the decisions set out below.

The Facts not in contest

25. From the evidence provided by both parties and the arguments made by them at the hearing, the following facts were not in contest. I am satisfied that those facts should be accepted as having occurred.

26. On 15 November 2018 the Agent conducted an ingoing condition inspection of the Premises and prepared the ingoing condition report which is at tab “C” of Exhibit R1 (“the Agent's ingoing condition report”). The Agent took a substantial number of photographs of the Premises at the time it conducted that inspection. Copies of those photographs were attached to the Agent’s ingoing condition report, as prepared by the Agent.

27. Also on 15 November 2018, the Landlord and the Tenants entered into the Agreement. At about the time of entering into that Agreement the Agent provided to the Tenants a copy of the Agent's ingoing condition report. Mrs Phillips initialled the foot of each page of the Agent’s ingoing condition report and handed it back to the Agent at that time.

28. The tenancy began on 16 November 2018. The Tenants collected the keys to the Premises on that date.

29. The Tenants paid to the Agent a rental bond of $1,760, equal to 4 weeks’ rent. The rental bond was lodged with Rental Bond Services on 17 November 2018. (Rental Bond Services confirmed that the Tenants’ bond remained there as recently as 19 March 2019.)

25. On about 18 November 2018 the Tenants moved into the Premises. They were assisted by Ms Heggie.

26. On about 18 November 2018 Mrs Phillips telephoned the Agent and said that they had found signs of drug residue at the Premises.

27. On 20 November 2018 Ms Le attended the Premises. She was admitted inside by the Tenants for the purpose of inspecting the signs of drugs that the Tenants had referred to. [That much is agreed, but what happened during that inspection is not.]

28. By January 2019 the Tenants had fallen into arrears with their payments of rent under the Agreement. At about that time the Tenants were being assisted by Anglicare about their unpaid rent, and about the possibility of obtaining social housing accommodation.

29. In February 2019 the Agent served a termination notice on the Tenants in respect of the non-payment of rent. The Tenants responded to that notice on 25 February 2019. While they disputed the validity of the termination notice, they elected to vacate the premises in response to it and nominated 11 March 2019 as the date they would return the keys.

30. On 11 March 2019 the Tenants vacated the Premises and returned the keys to the Agent, as foreshadowed. In doing so, the Tenants brought the Agreement and their tenancy to an end under section 81(2) of the RT Act. The Tenants’ rent was also paid up to 11 March 2019.

31. On 12 March 2019 the Agent (specifically, Ms Le) inspected the Premises. The Tenants were not present for that inspection. [There is a dispute about whether the Tenants had indicated to the Agent that they did not want to be on-site for that final inspection. I do not need to resolve that issue for the purpose of determining this dispute.]

32. On 14 March 2019, after inspecting the Premises, the Agent sent an email to the Tenants notifying them of 5 issues that they had identified with the condition of the Premises, as it had been left. The items identified included some minor cleaning issues, a hole in the lounge room wall and a damaged rear sliding flyscreen door. [Part of the Tenants’ claim relates to time spent repairing that door, and I will return to that item below.]

33. Correspondence ensued between Tenants and the Agent over the following days about those issues. There is no issue about what was said in that correspondence. The Tenants assert that the tone and implication of matters stated in that correspondence establish their claim that the rules of conduct were breached.

34. On or about 16 March 2019 the Tenants also uplifted the keys for the Premises from the Agent and attended to the items raised by the agent in their email of 14 March 2019.

35. On 18 March 2019 the Landlord commenced Tribunal proceedings RT19/13309, by which she claimed that the Tenants’ bond should be paid to her. She withdrew those proceedings on 8 April 2019, at which time they were dismissed. Her withdrawal of the proceedings came too late to prevent the Tenants from appearing at the Group List hearing that day.

36. At that hearing on 8 April 2019 the Tribunal made an order that Rental Bond Services refund the bond to the Tenants with any accrued interest.

37. As noted above, the Tenants then began these proceedings the following day.

The facts in dispute

43. The Tenants make the following allegations of fact which the Respondents do not accept:

1. That the Premises were used as a “drug lab” or a “drug house” by previous tenants, who left signs of that use as set out in the Tenants’ statement, as noted above.

2. That at the commencement of the tenancy the Premises were not provided reasonably clean or fit for habitation because they were left with drug residue from the Premises previously being used as a drug lab.

3. That the Premises did not comply with “mandatory safety standards”, although the standards concerned were not identified and the subsidiary facts supporting that claim were not set out in the Tenants’ evidence.

4. That on 27 November 2018 the Tenants provided to the Agent, by email, a copy of the ingoing condition report on which they had made various changes to reflect the condition of the Premises at the start of the tenancy.

5. That the rear sliding flyscreen door was damaged at the commencement of the tenancy, so that the repair of it was the Landlord’s responsibility.

6. That, in breach of the code of conduct under the PS&BA Act, the Agent:

1. did not know the Act and Regulations;

2. did not comply with fiduciary obligations arising as an agent;

3. did not act honestly, fairly and professionally with the Tenants;

4. misled or deceived the Tenants in negotiations or a transaction;

5. did not exercise reasonable skill, care and diligence; and

6. engaged in high pressure tactics, harassment or harsh or unconscionable conduct in their communications with the Tenants at the end of the tenancy.

44. In addition to denying those claims, the Respondents allege:

1. The Premises was a brand-new 4 -bedroom brick home when the Agent was first retained, in February 2016.

2. The previous tenants vacated the Premises at about the end of September 2018. At that time the Agent arranged for work to be done at the premises, including lawn mowing and hedge trimming, cleaning of the carpets (which were described as having “heavy” soiling, with certain stains being impossible to remove, and wear and tear) and the supply and installation of smoke alarms.

3. The Tenants’ condition report of 27 November 2018 was not transmitted to the Agent, as alleged.

4. By operation of clause 46 of the Agreement, the Tenants had accepted the Agent’s ingoing condition report, as they did not return the Agent’s condition report, with any dissenting comments, within the 7 days permitted by s. 30 of the RT Act.

45. Resolution of the claim requires the Tribunal to determine, amongst other things:

1. the condition of the Premises at the commencement of the tenancy – in particular, whether they were reasonably clean and fit for habitation;

2. the condition of the Premises at the end of the tenancy – in particular, whether the flyscreen door was damaged during the tenancy in a way that makes the repair of it the Tenants’ responsibility, or if the repair of it was the Landlord’s responsibility;

3. whether the Tenants’ claims were brought within time; and

4. the subsidiary facts that exist that might constitute grounds for the Tenants claim for compensation for their costs.

The condition of the premises at the beginning and end of the tenancy

46. The condition of the Premises is relevant to 2 aspects of the Tenants’ claim:

1. Firstly, the condition of the Premises at the start of the Agreement is relevant to establishing whether the Premises were fit for habitation at the beginning of the tenancy.

2. Secondly, the condition of the Premises at the start and end of the Agreement are relevant issues in determining who was responsible for repairing the door claimed by the Tenants.

(a)   The relevant law on condition

47. As noted in Felice v Cutting [1992] NSWRT 70, an inspection report is supposed to be an objective record agreed to by the parties at the time the tenancy commenced as to the state of premises. It is a document of primary evidence to which great weight can be given.

48. Sections 29-31 of the RT Act provide a scheme for the preparation of ingoing and outgoing condition reports, for the purpose of establishing that objective record. Relevantly:

1. the landlord/his or her agent is required to complete a condition report relating to the condition of the premises before or when a residential tenancy agreement is given to a tenant for signing, and to give 2 copies of it to the tenant when the tenant signs the agreement: ss29(1) and (2).

2. The tenant is required to complete and give one copy of that condition report to the landlord no later than 7 days after receiving it and both parties are required to retain a copy of the report: s. 29(3).

3. When the residential tenancy agreement is terminated, the landlord/their agent must complete the copy of the condition report retained by either party under the section in the presence of the other party, or after giving the other party a reasonable opportunity to be present when it is completed: ss. 29(4) and (5).

4. The condition report is to be in the form prescribed by the regulations: s. 29(6).

5. A condition report that is signed by both the landlord and the tenant is presumed to be a correct statement, in the absence of evidence to the contrary, of the state of repair or general condition of the premises on the day specified in the report, save for matters that could not have reasonably been discovered on inspection, or matters where the tenant has made a dissenting comment on the copy of the report completed by them and retained by the landlord: s. 30.

6. The statutory presumption is rebuttable by evidence to the contrary: s. 30(1).

7. The statutory presumption in s. 30 does not apply to any matter that could not have reasonably been discovered on a reasonable inspection of the premises, or to any statement in the report about which the tenant makes a written dissenting comment on the copy of the report completed by the tenant and retained by the landlord: s. 30(2). [This is not to say that the dissenting comment prevails. The issue simply returns to the common law position in this event.]

49. As the Appeal Panel noted in Hall v Hawkins [2015] NSWCATAP 197, at [61]-[64] (the underlining is mine):

1. Section 30(1) contains a rebuttable evidentiary presumption concerning condition reports. If a condition report is signed by both landlord and tenant it is presumed to be a correct statement of the state of repair or general condition of the residential premises on the day specified in the report, in the absence of evidence to the contrary.

2. At least three significant features of this presumption flow from the terms of s. 30(1). First, the presumption only arises if the condition report “is signed by both the landlord and the tenant”. If it is not signed by both parties, the fact that the other party was given a reasonable opportunity to be present when the report was completed under s. 29(5) is irrelevant. In other words, giving the other party a reasonable opportunity, in accordance with s. 29(5), to be present at a termination inspection and the completion of the condition report does not attract the operation of the presumption in respect of that report. …

3. Secondly, s. 30(1) establishes only a rebuttable evidentiary presumption that certain information is correct. This follows from the inclusion of the qualifying words “in the absence of evidence to the contrary” in the subsection. Section 30(1) does not render a condition report completed by only one party and not signed by the other party inadmissible, or unable to be relied upon, to establish the condition of the premises at the relevant time. In so far as a party uses a form similar to a condition report to record that party’s observations as to the state of the premises at the relevant time, it can be relied upon and the Tribunal should treat it as it would any other record of observations by a witness.

4. Thirdly, s. 30(1) does not deprive evidence, other than a condition report signed by both parties, of cogency or reliability. The statement made by the Tribunal below that “[a]lthough photos can be useful evidence, the most cogent evidence is a compliant condition report” may be true in a particular case, but that will depend on all of the evidence considered in the particular circumstances of the case. Such a statement is not correct as a proposition to be applied in all cases or even as a general rule to be applied without regard to all of the evidence. Section 30(1) does not provide a basis for rejecting or ignoring photographic or other evidence as to the state of the premises at the relevant time, where that evidence happens not to be contained in a condition report signed by both the landlord and the tenant.

   50. At common law, in the absence of the statutory presumption, the condition of the Premises on any particular date is an issue of fact to be determined by the Tribunal based on the evidence before it. Where the statutory presumption does not apply, the Tribunal normally adopts the approach suggested by the Appeal Panel in Kjoller v Tailford [2016] NSWCATAP 4 at [30]-[34]:

5. Just because an outgoing condition report does not comply with s. 29(4) of the Residential Tenancies Act, that does not mean that no weight can be attributed to it when a claim for damages is made. …

6. … Giving “no weight” to the condition report was an error of law. That evidence deserved some weight.

…

1. … The evidence needs to be sufficient to persuade the Tribunal, on the balance of probabilities, that the tenant had not left the residential premises as nearly as possible in the same condition, fair wear and tear excepted ... as when the agreement was entered into. … the Tribunal should … identif[y] and evaluate[] all the evidence that had some probative value and given reasons for accepting or rejecting that evidence. …

   51. However, it must also be remembered that the parties agreed to modify the operation of the common law between them by clause 46 of the Agreement. That clause provided:

2. Where the landlord has in compliance with the Residential Tenancies Act 2010 provided the tenant with the landlord’s signed condition report and the tenant has not returned the condition report within 7 days of receipt the tenant will be deemed to have accepted the condition report.

46.1.   The condition report will form part of and be included in this agreement.

52. With the above principles and agreements in mind, I have weighed and compared the competing evidence about the condition of the Premises at the beginning and end of the Agreement. I have also weighed and considered the observations made by the parties, as disclosed in the parties’ evidence. I have also weighed the observations recorded by the parties against the photographic evidence provided by both parties. I set out below my findings of fact in respect of them.

(b)   Findings on condition

53. Firstly, the Agent’s ingoing condition report dated 15 November 2018, as set out in Exhibit R-1, was signed by the first-named Tenant but not by the Landlord or the Agent. Accordingly, the presumption in s. 30 does not apply to that document.

54. Equally, clause 46 of the Agreement does not apply either, as there is no evidence that the landlord “provided the tenant with the landlord’s signed condition report” … “in compliance with the Residential Tenancies Act 2010”, as required by that clause.

55. I am not satisfied that the Tenants’ modified version of the Agent’s ingoing condition report was transmitted to the Agent as the Tenants allege. Having carefully reviewed the Tenants’ evidence, particularly in the light of the Agent’s denial of having received it, I am not satisfied on the balance of probabilities that the modified version of the Agent’s ingoing condition report was received or retained by the Agent. The Tenants documentary evidence only suggests that the email enclosing the report was saved to drafts. The Tribunal accepts the Agent’s denial of receipt in preference to Mrs Phillips’ bare assertion that it was sent, which is not corroborated in any way. Consequently, to the extent that the presumption may have arisen under s. 30(1), I am not satisfied that it was countermanded in the manner provided for in s. 30(2)(b).

56. As I am not satisfied that clause 46 of the Agreement or any statutory presumption applies, I have determined the condition of the Premises on each relevant date on the balance of probabilities on the principles in Kjoller v Tailford [2016] NSWCATAP 4, described above. This has required me to give weight to the Agent’s inspection reports as evidence, amongst the Tenants’ comments, the other statements, photographs and the tradesman’s quotations and invoices that are in evidence, having regard to the words of Emmett J in Warner v Hung (No 2) [2011] FCA 1123, cited above.

57. The Premises were cleaned in October 2018, shortly before the tenancy began. At that time, the lawns were mowed, the back hedges were trimmed, and the carpets were cleaned. The Agent also had two smoke alarms replaced. Shortly after the tenancy began the Agent had the broken showerhead in the bathroom replaced. The Tribunal accepts the tax invoices furnished by the Agent as evidence that this work was undertaken.

58. Neither Mrs Phillips nor Ms Heggie have qualified themselves in their evidence to have any specialised training, study or experience that enables them to identify or give expert evidence about whether what they saw was specifically drug residue, as opposed to any other substance. I do not accept them to have any specialised experience to diagnose the presence of drug residue or the prior use of the premises from ordinary observations. I also do not accept them as having any relevant expertise on how a drug lab or drug house is normally laid out, for them to form the conclusions suggested about why the shower head was broken or removed, or the other matters she refers to, as being specifically a result of the Premises being used as a drug house or drug lab. That opinion evidence should have been led from a suitably-qualified expert.

59. Additionally, Ms Heggie’s evidence that she found drug residue all over the carpet is at odds with the evidence, just accepted, that the carpets at the premises were cleaned shortly before the tenancy began.

60. I am therefore not satisfied that the evidence establishes that the Premises were previously used as a drug lab or drug house, as claimed.

61. I have also weighed the observations recorded by the parties against the photographic evidence taken on 15 November 2018 and enclosed with the Agent’s ingoing condition report. That evidence shows (and I accept):

1. the Premises were reasonably clean when the photographs were taken.

2. the Premises were in a good condition when the photographs were taken, save for:

1. the showerhead in the bathroom, which was lying in the corner of the shower;

2. some stains and wear marks on the carpet;

3. parts of the carpet which had been patched, as shown in the Agent’s photographs;

3. in particular, the stairway was reasonably clean;

4. contrary to Ms Heggie’s evidence, the wardrobes were clear and free of heat lamps, alarms and any other items;

5. the rear flyscreen door was in good order, and the flyscreen mesh in it was properly fitted and apparently without holes; and

6. one smoke alarm was still missing (which was later replaced by the Landlord).

62. On balance, the Tribunal prefers and accepts the Landlord’s evidence about the state of the premises at the commencement of the tenancy. I am satisfied that the Premises were in the condition set out in the Agent’s ingoing condition reports and as shown in those photographs at the commencement of the Tenants’ tenancy.

63. In coming to this conclusion, it has not been necessary for the Tribunal to rely on either the Agent's reported conversation with Eagle Vale police or the outgoing condition report for the previous tenancy, dated 4 October 2018.

64. The Tenants gave no evidence about the condition of the Premises at the end of their tenancy. Their only evidence relating to that issue addressed only the correspondence with the Agent and the events that occurred after they vacated, once they had received the Agent’s outgoing condition report.

65. The Agent’s outgoing condition report dated 12 March 2019, as set out in Exhibit R-1, was not signed by either party. The presumption in s. 30 therefore does not apply to that document, either. Consequently, the condition of the Premises at that date also falls to be considered on the common law tests described above.

66. The Agent’s outgoing condition report noted the following relevant matters:

1. there was damage to a wall in the loungeroom that was not noted in the Agent’s ingoing condition report;

2. the rear door in the kitchen/dining room had a broken/damaged flyscreen;

3. floors in the kitchen/dining room, laundry and bathroom, and the laundry tub, needed cleaning;

1. some items of the Tenants’ property were left behind in the kitchen.

67. These observations were verified by photographs taken by the Agent at the time of their inspection.

68. The Tribunal accepts the Agent’s outgoing condition report and photographs, as described above, as accurately establishing the condition of the Premises when the Tenants vacated it – and in particular the damaged condition of the flyscreen door.

69. With these matters now established, I now turn to the Tenants’ specific claims.

The fitness for habitation claim

70. This part of the Tenants’ claim fails because:

1. it is out of time; and

2. it has otherwise not been proved to the Tribunal’s satisfaction on the balance of probabilities.

(a)   The fitness for habitation claim is out of time

71. A tenant’s right to apply to the Tribunal for an order in relation to a breach of a residential tenancy agreement is set out in s. 190 of the RT Act. By that section, a tenant may apply to the Tribunal within the period prescribed by the regulations after the tenant becomes “aware” of the breach or within such other period as the regulations may prescribe. Provided it is made within time, the application may be made during or after the end of a residential tenancy agreement: s. 190(2).

72. Regulation 22(9) of the RT Regulations fixes the period allowed for making an application for an order in relation to a breach of a residential agreement to be within 3 months after the applicant becomes aware of the breach. It is not necessary to establish actual knowledge for this purpose. It is sufficient that the party ought to have known about the breach within that time: Peebles v Mayfield [2013] NSWCTTT 337 at [30].

73. The Tenants filed their application on 9 April 2019. Consequently, only breaches which occurred within the 3 months before that date (that is, from 9 January to 9 April 2019) can be taken into account in these proceedings.

74. It is clear on the evidence that the Tenants had actual knowledge of the facts constituting the alleged breaches of s. 52(1) and (3) by no later than 18 November 2018. That is the date they telephoned the Agent to complain about the condition in which the Premises were provided at the start of the tenancy and to assert that the Premises were unsafe and not reasonably clean. On Ms Phillips’ evidence, Ms Heggie notified her that day that she had found drug residue in the house and took photographs of it. Ms Phillips then called Ms Le to express her concern about the potential security or safety problems that existed in the property because of the prior operation of the Premises as a drug house.

75. The time for bringing an application in respect of those matters began to run at that point. It expired on 18 February 2019. For this reason alone, the Tenants’ claim for compensation for the alleged breaches of ss 52(1) and (3) must fail.

76. While section 41 of the NCAT Act provides the Tribunal power to extend this time, I decline to make such an order as:

1. the Tenants have not sought such an order;

2. the Tenants have not explained the delay in bringing this application: on the evidence, the issue fell into complete abeyance from 20 or 27 November 2018 until the Tenants chose to vacate the Premises at the end of February 2019; and

3. for the reasons set out below, I am not satisfied that the claim that the Landlord breached s. 52(1) of the RT Act has been made out in order to justify extending time for the Tenants to rely on that breach.

(b)   Were the premises provided in a reasonable state of cleanliness and fit for habitation by the Tenants?

77. Despite finding that this claim is out of time, I have nevertheless considered the merits of the Tenants’ application.

1. The relevant law

78. Section 52(1) of the RT Act provides:

A landlord must provide the residential premises in a reasonable state of cleanliness and fit for habitation by the tenant.

79. This is a term of every residential tenancy agreement (s.52(4) RT Act).

80. The Appeal Panel stated in Bhandari v Laming [2015] NSWCATAP 224 at [38]-[39] that:

1. The obligation to provide residential premises fit for habitation is mandatory and, according to language used in the provision, unqualified. Relevantly, the obligation is not expressed to be contingent on reasonable steps or to be dependent on the landlord being at fault or having control over the event or circumstance affecting the state of the premises. This is in contrast with the obligation on the landlord to provide and maintain the residential premises in a reasonable state of repair (s 63 RTA) and the obligation that arises in respect of the tenant’s entitlement to quiet enjoyment of the residential premises (s 50 RTA). The landlord’s obligations under sections 50, 63 and 52 (in relation to the state of cleanliness of the residential premises) are mandatory and ongoing but qualified by the concept of reasonableness.

2. Section 52 is expressed in clear and unqualified terms because the fitness, or otherwise, of residential premises for habitation is at the core of the subject matter of the agreement. Imputing the concept of reasonable steps or reading down the provision is not only inconsistent with the clear language of s. 52 but may lead to an unfair outcome. This can be illustrated by the effect that reading down or qualifying the obligation would have on a tenant, who finds themselves bound by a fixed term lease where there is a defect, albeit outside the control of the landlord, which makes the residential premises uninhabitable. ...”

   81. The term “fit for habitation” is not new to the RT Act. It has been a part of the common law for a long time. The habitability standard is concerned with minimum safety standards, going to both structural and health issues: Proudfoot v Hart (1890) 25 QBD 42. Premises are habitable where that the state of the premises does not represent a threat to life, limb or health of the tenant: Morgan v Liverpool Corporation [1927] 2 KB 131 at 145.

   82. Alternatively, the term “habitable” has been held to “[import] some reference to what we call humanity or humaneness” and is of “wide and elastic” meaning to take account “the needs and circumstances of poor people living in confined quarters”: Summers v Salford Corporation [1943] AC 283 at 292.

   83. In Gray v Queensland Housing Commission [2004] QSC 276, the Queensland Supreme Court concluded that “if the state of repair is such that injury is to be expected, or will naturally occur, from the ordinary use of the premises, they cannot be regarded as fit for human habitation”.

   84. In Hampel v South Australian Housing Trust [2007] SADC 64, Milsteed J stated (at [63]):

"In my opinion, a house is unfit for human habitation if an occupier could be expected to suffer physical injury or injury to health from the ordinary use of the premises. It may be so unfit for any reason. The risk to health or safety may arise because the premises are in a state of disrepair or dilapidation or because of a lack of facilities such as the provision of adequate water, light, ventilation, and so on."

85. The Tribunal stated in Sonya Pham (Cyclical Pty Ltd) v Terry (Tenancy) [2011] NSWCTTT 476 (the underlining is mine):

1. … The Tribunal has considered the issue of `fit for habitation' in a number of cases that suggest the following propositions:

-   `fit for habitation' means at least that the premises may be lived in without risk of `personal injury to life or limb or injury to health'.

-   `fit for habitation' sets an objective standard;

-   the phrase must be judged by contemporary standards;

-   whether the premises, or part of the premises, are fit for habitation depends on the known use to be made of them by the tenants; and

-   the premises may not be `fit for habitation' even though the landlord was unaware of the facts which lead to this conclusion.

86. In McCarthy v Isgai [2009] NSWCTTT 643 the Tribunal found that premises were not uninhabitable only because of stains on carpets, as the stains were barely noticeable and were simply fair wear and tear.

87. Lastly the Tribunal noted in De Soleil v Palmhide Pty Limited [2010] NSWCTTT 464, that the test of uninhabitability was a difficult one to satisfy and should not be lightly found by the Tribunal.

1. Application of the law to the facts as found

88. The Tenants continued to inhabit the Premises throughout the term of the Tenancy – without complaining about the condition of the premises from 20 or 27 November 2018, until they elected to vacate the Premises in late February 2019.

89. I am not satisfied on the evidence that the Premises were unfit for human habitation or unsafe. I am not satisfied on the evidence that the Premises represented a threat to life, limb or health of the Tenants. The evidence does not suggest that injury is to be expected, or will naturally occur, from the ordinary use of the Premises.

90. To the contrary, I am satisfied on the evidence, as described above, that the Premises were reasonably clean and fit for habitation when they were provided at the commencement of the Tenants tenancy.

(iii)    Quantum

91. It is not necessary to consider quantum because of the findings that I have made. I pause here to record, however, that the Tenants have produced no evidence to establish that they have suffered loss or damage in the amount claimed (being 40% of the rent paid over the 16 weeks of the tenancy) is appropriate having regard to the condition in which the Premises were let at the commencement of the tenancy.

92. I do not accept that this claim, which is unsubstantiated by any evidence, is necessarily an appropriate measure of any loss that the Tenant would have suffered had I found that the Premises were uninhabitable. Indeed, it would have been difficult to make any award of damages on the evidence proffered by the Tenants, given that the Tenants continued to inhabit the Premises with no apparent ill effect on their health or safety disclosed in the evidence.

The failure to comply with statutory obligations claim

(a)   The claim is out of time

93. This claim is also out of time for the reasons set out above. I am also satisfied on the facts as found that the Tenants became aware of the facts that give rise to the claim on or about 18 November 2018, and that the time for bringing this claim expired on or about 18 February 2019.

94. Again, while section 41 of the NCAT Act provides the Tribunal power to extend this time, I decline to make such an order as:

1. the Tenants have not sought such an order;

2. the Tenants have not explained the delay in bringing this application; and

3. for the reasons set out below, I am not satisfied that the claim that the Landlord breached s. 52(3) of the RT Act has been made out in order to justify extending time for the Tenants to rely on that breach.

(b)   Did the Landlord fail to comply with statutory obligations relating to health or safety of the premises?

95. For the following reasons, the answer to this question is “No”.

1. The relevant law

96. Section 52(3) of the RT Act provides:

A landlord must comply with the landlord’s statutory obligations relating to the health or safety of the residential premises.

Note. Such obligations include obligations relating to swimming pools under the Swimming Pools Act 1992.

97. This is also a term of every residential tenancy agreement (s.52(4) RT Act).

98. There is very little caselaw on s. 52(3). However, it is clear that the statutory obligations referred to in that subsection include obligations expressly imposed by statute on the Landlord in his, her or its capacity as landlord, or obligations expressly imposed by statute on the landlord in his, her or its capacity as the owner of the subject premises.

99. The obligations under the Swimming Pools Act 1992 (NSW) referred to in the note accompanying the subsection are an example of an obligation imposed on the landlord in his, her or its capacity as owner of the premises. Subsection 7(1) of that Act, for example, provides that the owner of the premises on which a swimming pool is situated must ensure that the swimming pool is at all times surrounded by a child-resistant barrier (being a fence or a wall) that separates the swimming pool from any residential building situated on the premises (and from any place adjoining the premises), that is designed, constructed, installed and maintained in accordance with standards prescribed by the regulations. The obligation in s. 7(1), and the standards they refer to, both have a relationship with the health or safety of the subject premises.

100. To the extent that s. 52(1) of the RT Act requires a landlord to provide premises fit for habitation, and the test of fitness for habitation relates to health or safety of the subject premises, then s. 52(1) could be argued to be one of the obligations to which s. 52(3) refers. That analysis does not take the issue very far because it does not discern a difference between what the Parliament intended by enacting s. 52(1) and what else it might have intended by enacting s. 52(3). Unfortunately, the Explanatory Notes prepared when the bill was before the Parliament in 2010 do not take the issue any further, either.

101. It is clear that, in order to satisfy the onus of proof under s 52(3), the tenant making the claim must prove that:

1. The landlord is subject to a specific statutory obligation relating to the health or safety of the subject premises. Legal obligations that are not contained in a statute do not count. Generalised statements of what the law is, or should be, will also not be sufficient.

2. There is a particular state of affairs at the premises, for which the landlord is responsible under that obligation.

3. That state of affairs does not comply with that specific statutory obligation.

1. Application of the law to the facts found

102. I repeat the findings of fact set out above.

103. During the course of the hearing, the Tenants sought to refer generally to “mandatory safety standards” under the Australian Consumer Law, arguing that Landlord had breached those “standards” and s. 52(3) by “exposure to harmful chemical residues”, “non-disclosure of a serious health hazard, such as a property containing harmful chemical residue as a result of being a former clan lab”, “failure to produce [a] report”; and lack of “fit[ness] for human habitation”.

104. The Tenants did not at any stage identify any particular statutory obligations relating to the health or safety of the Premises that are binding on the Landlord, either as landlord or as owner of the Premises.

105. The reference to the Australian Consumer Law appears misguided. The provisions of the Australian Consumer Law dealing with safety standards do not apply to landlords in respect of residential premises. The Australian Consumer Law generally (but not exclusively) relates to the provision of consumer goods and consumer services. Part 3-3, in particular, deals only with the safety of consumer goods and “product related services” (which are services defined by reference to their relationship to consumer goods) for which the Commonwealth Minister has made a safety standard.

106. Without the Tenants having identified a particular statutory obligation relating to health and safety of the Premises, I am not able to find that any obligation has been breached. Accordingly, this part of the claim must fail.

The claims for rent abatement and rent reduction

107. The claims for rent abatement under ss 43(2) and 45 of the RT Act, and for a rent reduction under s. 44(1)(b) of the RT Act both fail because:

1. On my findings above, the Premises were reasonably clean and fit for habitation at the relevant times;

2. Under s 44, the Tenants have failed to establish that the Landlord has breached a relevant obligation in the agreement (either s 52(1) or s 52(3)); and

3. Separately, neither section applies in the facts of this case.

108. I will deal with each claim separately.

(a)   Abatement of rent

109. Section 43(2) of the RT Act provides (the underlining is mine):

1. Premises unusable

The rent payable under a residential tenancy agreement abates if residential premises under a residential tenancy agreement are:

(a)   otherwise than as a result of a breach of an agreement, destroyed or become wholly or partly uninhabitable, or

(b)   cease to be lawfully usable as a residence; or

(c)   appropriated or acquired by any authority by compulsory process.

110. Section 43 operates automatically if subsections (a), (b) or (c) are satisfied. Section 45(1) of the RT Act then provides:

1. The Tribunal may, on application by the landlord or tenant, make an order determining the amount of rent payable if the rent is abated under s.43(2).

2. The Tribunal may order that:

(a)   from a specified day, the rent for the residential premises must not exceed a specified amount, and

(b)    the landlord must repay to the tenant any rent paid by the tenant since the specified day that is in excess of the specified amount.

111. Section 43(2)(a) is concerned with abatement of rent where: (i) the premises are rendered wholly or partly uninhabitable; (ii) that occurred during the term of the tenancy; and (iii) it occurred in the absence of a breach of an agreement by the landlord or tenant, so as to amount to a frustration of the Agreement. The Appeal Panel stated in Bhandari v Laming [2015] NSWCATAP 224 at [39] (the italics is in the original, the underlining is mine):

“... the rent abatement provisions (ss 43(2) and 45 RTA) apply to supervening events where premises become wholly or partly uninhabitable, otherwise than as a result of breach. Relevantly, the remedy for reduction of rent under s.43(2) is expressly stated in s. 45 to arise in respect of the frustration of a residential tenancy agreement. Accordingly, this provision would not apply in circumstances where the premises are unfit at the outset.

112. Sections 43(2) and 45 do not apply in this case because the Tenants assert that the Premises were uninhabitable at the commencement of the tenancy. The Tenants do not assert that the Premises became uninhabitable during the term of the tenancy. On the principle in Bhandari v Laming [2015] NSWCATAP 224 at [39], stated above, a claim cannot be made under s. 43(2) and 45 in these circumstances.

113. Separately from that, the operative part of s.43(2)(a) requires a determination about whether the premises are wholly or partly “uninhabitable” without being a breach of the residential tenancy agreement. If the premises become uninhabitable due to a breach of the residential tenancy agreement by either party, then the innocent party’s remedy lies elsewhere in the RT Act: Mohr v Marks [1991] NSWRT 172.

114. However, the Tenants assert that the premises were uninhabitable due to a breach of the Tenancy agreement – the Landlord’s obligations in s. 52(1) and (3) of the RT Act. That assertion is inconsistent with the express requirements of s. 43(2)(a).

115. Further, for the reasons that I have set out above, I am not satisfied on the evidence that the Premises were uninhabitable (wholly or in part) when they were let to the Tenants. For that matter, I am also not satisfied that they became uninhabitable during the term of the tenancy, either.

116. A claim under s. 43(2) and 45 cannot succeed in these circumstances.

(b)   Reduction of rent due to withdrawal of services (etc)

117. Section 44 separately provides that the Tribunal may make an order that rent payable under an existing residential tenancy agreement is excessive in certain circumstances. Those circumstances relate specifically to the withdrawal of goods, services or facilities by the landlord from the tenant, either at the beginning of the tenancy or during the term of the tenancy.

118. Section 44 provides in part (the underlining is mine):

44 Tenant's remedies for excessive rent

(1)    Excessive rent orders.

The Tribunal may, on the application of a tenant, make any of the following orders:

(a)    …,

(b)    an order that rent payable under an existing or proposed residential tenancy agreement is excessive, having regard to the reduction or withdrawal by the landlord of any goods, services or facilities provided with the residential premises and that, from a specified day, the rent for residential premises must not exceed a specified amount.

1. Time limit for excessive rent increase applications

…

(3)    Applications on withdrawal of goods or services.

A tenant may, before the end of a tenancy, make an application that the rent is excessive, having regard to the reduction or withdrawal of any goods, services or facilities provided with the residential premises, even if those goods, services or facilities were provided under a separate or a previous contract, agreement or arrangement.

(4)    Determination of excessive rent.

…

(5)    The Tribunal may have regard to the following in determining whether a rent increase or rent is excessive:

(a)    …

119. The Tenant has the onus of proving that the rent for the Premises, with those goods, services or facilities withdrawn or reduced, is above the 'general level of rents for comparable properties' – i.e., other properties in that state: see Swinburne v Puco Pty Limited (1995) NSWRT 86, cited with approval in Roland Rosenbach v Stewart Harris [2014] NSWCATCD 233, so that the Tribunal can determine that the rent is “excessive”.

120. The most common case in which a reduction or withdrawal of services by the landlord occurs is where the landlord fails in his or her duty to carry out repairs to services or facilities with the consequential loss of service or facility to the tenant. That can occur because the landlord provided the premises in a defective state at the commencement of the tenancy, or because the landlord failed to repair a defect that arose during the tenancy: Cogan v King [1998] NSWRT 352.

121. For the reasons that I have set out above, I am satisfied that the Premises were reasonably clean and fit for habitation when they were let to the Tenants. I have not been satisfied the Landlord failed to comply with the statutory obligations complained of under s. 52, as alleged. Consequently, I am not satisfied that the Tenants have proved that the Landlord withdrew or reduced any goods, services or facilities to attract the operation of s. 44.

122. Separately from that, I am satisfied that the Tenants did not make their application before the end of their tenancy, as required by s 44(3). They made their application on 9 April 2019, just under 1 month after the tenancy ended. Consequently, they cannot bring this claim.

123. While section 41 of the NCAT Act provides the Tribunal power to extend this time, I decline to make such an order as:

1. the Tenants have not sought such an order;

2. the Tenants have not explained the delay in bringing this application; and

3. for the reasons set out above, I am not satisfied that the claim that the Landlord breached s. 52(1) or (3) of the RT Act has been made out in order to justify extending time for the Tenants to rely on that breach for the purposes of s. 44(1)(b) of the RT Act.

The claim for repairing the flyscreen door

124. The Tenants claim compensation of $100 for their time in repairing the flyscreen door at the Premises after the end of their tenancy. They assert that the Landlord was obliged to repair the door.

125. I am not satisfied that the grounds for this claim have been made out.

(a)   Findings of fact

126. As I have stated above, I find that the flyscreen door was undamaged at the commencement of the tenancy.

127. After the Tenants vacated the Premises on 11 March 2019, the Agent identified that the flyscreen door was damaged, with the mesh having come off and needing replacement. The Agent informed the Tenants of this by email to the Tenants on 14 March 2019.

128. The damage to the door claimed by the Agent was verified by several photographs showing on pages 12 and 13 of the outgoing condition report prepared by the Agent. The agent noted at page 10 of the report “Rear door need an adjustment Flyscreen was broken/damaged”.

129. By s. 51(3)(b) of the RT Act, the Tenants were obliged to leave the Premises as nearly as possible in the same condition as they were in at the commencement of the tenancy, fair wear and tear excepted. I am satisfied on the evidence that the Tenants did not return the rear flyscreen door to the Landlord in the condition required by that section. The Tenants did not seek to argue that the change in condition was due to wear and tear, and I am not satisfied that it was caused by to that.

130. Consequently, I am satisfied that it was the Tenants’ responsibility to repair the flyscreen door or to compensate the Landlord for the change in its condition. The Tenants have since repaired the door to the Landlord’s apparent satisfaction.

131. As the repair of the door was the Tenants’ responsibility, I am not satisfied that the Tenants are entitled to any compensation from the Landlord for repairing the flyscreen door. This part of the application also fails.

132. Separately, the Tenants have provided no evidence to enable the Tribunal to assess the amount of any loss or damage suffered by them, should the Tribunal have found otherwise. No evidence was led to establish the work done to repair the door; the time taken to repair the door; or the opportunity cost for that time; or some other applicable rate which should be used to measure the amount of the Tenants’ claimed loss. The claim for $100, while small, was wholly unexplained on the evidence. Consequently, the Tribunal would not have made any award beyond nominal damages if this claim had otherwise been established.

The Interest Claim

133. The Tenants claim interest on the rental bond of $1,760 for the period since 8 April 2019, when the order was made for Rental Bond Services to refund the bond to the Tenants. The interest claimed for 32 days amounts to $368, or $11.50 per day, suggesting an annual interest rate of 238.5%.

134. The Tenants base their claim on s. 173 of the RT Act and Regulation 25 of the RT Regulations. As I set out below, those provisions do not empower the Tribunal to award interest against a Landlord on a rental bond for the period following the date of an order that the bond be paid out, as the Tenants contend – let alone at the rate suggested by the Tenants. Consequently, this part of the application should be dismissed.

(a) The relevant law

135. Section 173 provides (the underlining is mine):

173 Payment of interest by Secretary on rental bond amounts

(1) The Secretary must pay interest on an amount of rental bond paid if the regulations provide for the payment of interest.

(2) The regulations may prescribe the rate and manner of payment of any such interest.

(3) No other interest is payable on an amount of rental bond.

136. “Secretary” is defined in RT Act s. 5 to mean the Commissioner for Fair Trading, Department of Finance, Services and Innovation or, if there is no person employed in that role, the Secretary of the Department of Finance, Services and Innovation. It does not mean the Landlord.

137. Regulation 25 further provides (the underlining is mine):

25 Interest payable on rental bonds: s. 173 of Act

(1) The Secretary is to pay interest on an amount of rental bond paid.

(2) The prescribed rate at which interest is payable on a rental bond is the rate payable (as at the last day of the month for which the interest is being calculated) by the Commonwealth Bank of Australia on an Everyday Access Account balance of $1,000.

(3) The interest is to be compounded on 30 June and 31 December in each year.

138. The provisions are intended to require the Department of Finance (and not a landlord) to pay, to the party ultimately entitled to claim the rental bond, basic interest on rental bonds for the period that they are retained by the Department.

(b)   Application of the law to the facts as found

139. Consistent with those provisions, the order made on 8 April 2019 required Rental Bond Services (and not the Landlord) to pay the bond and any accrued interest to the Tenants.

140. The Tenants have not established any ground on which the Tribunal may order the Landlord to pay the interest claimed. Accordingly, this part of the claim also fails.

The claim for time and expenses incurred in tribunal proceedings

141. The Tenants claim $950.40 as compensation for their time and expenses incurred in these proceedings and in the previous proceedings commenced by the Landlord. They quantify their claim as follows (the emphasis is in the original):

2x preparation documents = $500.00

1 x Day, time wasted 08 April 2019

$25 average daily wages x daily hours worked = $200.00

1 x Day, time wasted Court Date TBA [this hearing]

$20 average daily wages x daily hours worked = $200.00

Court fees = $50.40

142. Beyond the claims made in these proceedings. the Tenants have not pointed to any ground on which the Landlord would be separately obliged to compensate the Tenants for these items. The Tenant’s claim for these amounts is properly understood as a claim for costs – both of these proceedings and for the previous proceedings. I have considered the claim on this basis.

(a)   The relevant law on costs

143. Section 60 of the NCAT Act provides (the underlining is mine):

60 Costs

(1)    Each party to proceedings in the Tribunal is to pay the party's own costs.

(2)    The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.

(3)    In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:

(a)    whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

(b)    whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c)    the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d)    the nature and complexity of the proceedings,

(e)    whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f)    whether a party has refused or failed to comply with the duty imposed by section 36(3),

(g)    any other matter that the Tribunal considers relevant.

(4)    If costs are to be awarded by the Tribunal, the Tribunal may:

(a)    determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.

(5)    In this section:

"costs" includes:

(a)    the costs of, or incidental to, proceedings in the Tribunal, and

(b)    the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.

144. The duty imposed by section 36(3) is the duty to co-operate with the Tribunal to give effect to the guiding principle of facilitating the just, quick and cheap resolution of the real issues in the proceedings.

(b)   Findings

145. As noted above, the Landlord waived her claim to receive $120 from the bond at the last minute before that application was due to be heard by the Tribunal on 8 April 2019.

146. The Agent took steps as soon as possible after that to withdraw the application in proceedings RT19/13309 from the Tribunal before the hearing. However, as matters occurred, the withdrawal does not appear to have been communicated to the Member before he heard the matter on 8 April 2019 and dismissed the proceedings because of a lack of appearance by the Landlord.

147. The Tribunal’s order dismissing those proceedings took effect that day: NCAT Act, s. 61.

148. I am not satisfied on the law or the evidence that it should make any costs order in respect of the proceedings RT19/13309:

1. Firstly, because those proceedings are not before the Tribunal in these proceedings. The Tribunal in these proceedings has no jurisdiction to award costs in respect of those proceedings.

2. Secondly, because of the operation of the general rule in NCAT Act, s. 60(1);

3. Thirdly, because the Member hearing the proceedings on that day did not do so.

4. Fourthly, the evidence does not permit the Tribunal, as presently constituted, to determine whether special circumstances existed in those proceedings to warrant an order for costs. Special circumstances do not arise merely because an applicant began proceedings, only to withdraw them at or shortly before the first return of them before the Tribunal.

149. I am also not satisfied on the evidence provided by the Tenants that circumstances have been established to entitle the Tenants to costs of these proceedings either:

1. Firstly, because of the operation of the general rule in NCAT Act, s. 60(1);

2. Secondly, because the Tenants have been wholly unsuccessful in their claim in these proceedings.

3. Thirdly, because none of the grounds set out in NCAT Act s. 60(3) have been made out.

4. Fourthly, because the evidence does not otherwise suggest that any special circumstances exist to justify making a costs award in the Tenants’ favour.

150. The Tribunal therefore declines to make any award in favour of the Tenants on this part of the claim.

The claim for breach of the PS&BA act rules of conduct

151. Lastly, section 37 of the PS&BA Act authorises the regulations made under that Act to prescribe rules of conduct to be observed by a licensed agent or registered person in the course of the carrying on of business or the exercise of functions under their licence or certificate of registration.

152. The Tenants claim that the Agent has breached rules of conduct numbered 1-5 in Schedule 1 of the Property, Stock and Business Agents Regulation 2014 (the PS&BA Regulation). The relevant rules in Schedule 1 of the PS&BA Regulation provide as follows:

1 Knowledge of Act and regulations

An agent must have a knowledge and understanding of the Act and the regulations under the Act, and such other laws relevant to the category of licence or certificate of registration held (including, laws relating to residential tenancy, fair trading, competition and consumer protection, anti-discrimination and privacy) as may be necessary to enable the agent to exercise his or her functions as agent lawfully.

2 Fiduciary obligations

An agent must comply with the fiduciary obligations arising as an agent.

3 Honesty, fairness and professionalism

(1)    An agent must act honestly, fairly and professionally with all parties in a transaction.

(2)    An agent must not mislead or deceive any parties in negotiations or a transaction.

4 Skill, care and diligence

An agent must exercise reasonable skill, care and diligence.

5 High pressure tactics, harassment or unconscionable conduct

An agent must not engage in high pressure tactics, harassment or harsh or unconscionable conduct.

153. The Tenants claim $1,500 in compensation for those breaches. The Tenants argue that the Tribunal should determine this claim by an ancillary order made under s. 188(c) of the RT Act.

154. While a licensee or registered person who without reasonable excuse contravenes a rule of conduct as prescribed is guilty of an offence: PS&BA Act, s. 37(2), the Tribunal does not have jurisdiction under that Act to punish an agent for that contravention. Those proceedings are normally brought in a court.

155. The RT Act does not apply to the conduct of the Agent under the PS&BA Act, as the matters complained of are not a residential tenancy agreement as defined in the RT Act. That being the case, the Tribunal does not have the jurisdiction to make orders under the RT Act in respect of that conduct.

156. Further, as said by the Tribunal in Hearn v Lake Illawarra Park Pty Limited [2013] NSWCTTT 206 at [24] (the underlining is mine):

“… ancillary orders are, in effect, [orders] which are subordinate to, some other decision. They are not primary orders, but are made to facilitate or support the principal orders. As the Tribunal has no jurisdiction to make the principle orders sought under s. 14(3) of the [Residential Parks Act 1998], it is not within its power to make ancillary orders.”

157. See also Carnley v Grafton Ngerrie Local Aboriginal Land Council [2010] NSWSC 837, where the Court found that an order was ancillary:

“…because it depends upon and supports, order 1. It is not the principal order establishing an entitlement to relief”.

The Court there found that the order concerned was procedural in nature, so it was supported by s. 26 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), as then in force.

158. On the weight of the authorities cited above, and from a literal textual reading of “ancillary” in s 188(3), I am not satisfied that the orders sought by the Tenants concerning that conduct are properly described as “ancillary orders” under that subsection. This is particularly so given that I will not be making any other orders in the Tenants’ favour in these proceedings: there are, as a result, no principal orders for the proposed orders to support.

159. For these reasons, I am not satisfied that I have the jurisdiction to make the orders sought by the Tenants in respect of the alleged contravention of the rules of conduct under the PS&BA Act.

160. Accordingly, this part of the Tenants’ claim must also fail.

Conclusion and orders

161. For the above reasons I am not satisfied at the civil standard of proof (being the balance of probabilities) that grounds exist for any of the orders sought to be made.

162. I therefore make the following order:

1. The whole of the application in proceedings RT 19/16911 is dismissed because the Tribunal is not satisfied at the civil standard of proof (being the balance of probabilities) that grounds exist for the orders sought to be made.

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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 06 August 2021