Pick v McDonald
[2025] VCC 1247
•9 September 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-22-02486
| ADRIAN PICK | First Plaintiff |
| and | |
| GABRIELLE PICK | Second Plaintiff |
| V | |
| ANTHONY McDONALD | First Defendant |
| and | |
| BRIDGET McINTYRE | Second Defendant |
---
JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5-7, 9, 12 and 16 August 2024 | |
DATE OF JUDGMENT: | 9 September 2025 | |
CASE MAY BE CITED AS: | Pick & Anor v McDonald & Anor | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 1247 | |
REASONS FOR JUDGMENT
---
Subject:RESIDENTIAL TENANCY
Catchwords: Mould outbreak at rented property – whether mould caused by landlords’ alleged failure to keep the property in good repair – alternatively, whether mould outbreak due to the tenants’ alleged failure to maintain the property in reasonable condition – cross- claims for compensation
Legislation Cited: Residential Tenancies Act 1997 (Vic); Evidence Act2008
Cases Cited:Gration v C Gillan Investments Pty Ltd [2005] 2 Qd R 267
Jones v Dunkel (1959) 101 CLR 298
Kneuppel v Zarpas [2004] SADC 162
Natty v Breen [2018] VCC 1477
Northern Sandblasting Pty Ltd v Nicole Anne Harris (an infant by her next friend Pamela Harris) (1997) 188 CLR 313
Payne v Haine (1847) 16 M & W 541
Proudfoot v Hart (1890) 25 QBD 42
Shields v Deliopoulos [2016] VSC 500
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr W Thomas | McCabes Lawyers |
| For the Defendants | Mr H C McAvaney | Lamplugh McIntosh Lawyers |
Table of Contents
(1) Overview and summary
(2) Factual background
(3) Pleadings and procedural history
(4) Witnesses
Lay witnesses 11
Expert witnesses 12
Mould Experts 13
Structural and Civil Engineering Experts 16
FG James report
(5) Legal principles relating to s68 of the Residential Tenancies Act 1997 (‘RTA’)
(6) Issues for consideration
Issue 1: What were the defendants’ obligations with respect to the property under:
(a) the rental agreements; and
(b) the RTA?
Issue 2: Were any of the terms of the rental agreements invalid pursuant to s27 of the RTA? 26
Issue 3: In or around September, October and November 2020, was the property subject to the damage identified 28
Issue 4: Was the damage (if proved) caused by the defendants’ acts or omissions 30
Issue 5: If so, did the defendants breach:
(a) their obligations under the rental agreements;
(b) further or alternatively, the RTA,
and thereby cause the plaintiffs to suffer loss and damage?
Issue 6: What is the quantum of the plaintiffs’ loss and damage? 36
Issue 7: Did the property have issues which restricted air flow into and out of the property (‘ventilation issues’) 39
Issue 8: Were any such ventilation issues exacerbated by alterations to the property? 41
Issue 9: Did the plaintiffs know, or should have known, that the property had ventilation issues (if proved) because of the matters in Issues 7 and 8? 42
Issue 10: Was the property susceptible to increased levels of moisture in the subfloor, timber flooring and habitable space (‘moisture issues’)? 42
Issue 11: Were any such moisture issues exacerbated by alterations to the property? 45
Issue 12: Did the Property show signs of water damage predating the defendants’ tenancy? 47
Issue 13: Did the plaintiffs know, or should have known, that the property had moisture issues (if proved) because of:
(a) the matters in Issues 10 to 12 above;
(b) the defendants reporting to RT Edgar in February 2019 that the floorboards down the hallway and in the kitchen had separated?
Issue 14: If the plaintiffs knew or ought to have known of the ventilation issues and moisture issues (if proved), were the plaintiffs required to discharge their duty under section 68 of the RTA to inspect the property before the defendants’ tenancy to make sure it had various features identified? 50
Issue 15: If the plaintiffs knew or ought to have known of the ventilation issues and moisture issues (if proved), were the plaintiffs required to discharge their duty under section 68 of the RTA to inspect the property during the defendants’ tenancy to make sure it had the features in Issue 14 above? 52
Issue 16: Did the plaintiffs breach their duty under section 68 of the RTA? 53
Issue 17: In or around September, October and November 2020, were the defendants’ possessions inside the property subject to extensive mould damage? 61
Issue 18: Was the mould damage caused by the plaintiffs’ breach of their duty under section 68 of the RTA? 62
Issue 19: What is the quantum of the defendants’ loss and damage?
(7) Conclusion and disposition
HER HONOUR:
(1) Overview and summary
1On 29 September 2020, an extensive outbreak of mould was discovered at a property located at 660 Orrong Road, Toorak (‘the property’). At the time, the plaintiffs (‘the landlords’) were renting the property to the defendants (‘the tenants’). By this proceeding, the landlords and tenants make competing claims against each other arising from the mould incident.
2The landlords claim the tenants did not maintain and clean the property adequately and their neglect was the cause of the mould outbreak. The landlords seek damages in the sum of $360,978.87.[1] This sum comprises various costs incurred to repair and renovate the property, together with loss of rent from September 2020 to April 2022.
[1]Exhibit “P2” – Landlords’ Schedule of Quantum - The landlords reduced their claim for damages at trial to this amount down from the sum originally pleaded of $454,000
3Conversely, the tenants claim the landlords failed to keep the property in good repair, which resulted in the outbreak of mould. The tenants seek damages from the landlords totalling $245,033.65, representing replacement costs of damaged goods, repairs, and storage costs.
4For the reasons that follow, I find that the tenants did not breach their obligations regarding maintenance of the property and that their conduct did not cause the mould outbreak. The landlords’ claim against the tenants will be dismissed.
5I was not satisfied the tenants proved the landlords failed to keep the property in good repair in breach of their obligations under s68 of the Residential Tenancies Act 1997 (Vic) (‘RTA’). The tenants did not establish on the evidence led that the landlords had actual or constructive notice of a defect in the property, which the landlords were required to repair. Whilst there was considerable expert evidence given at trial about the prevailing conditions at the property that may have led or contributed to the outbreak of mould, the evidence fell short of proving the landlords’ actions or inactions caused the outbreak. Consequently, I will dismiss the tenants’ counterclaim against the landlords save as to the claim for a refund of a bond paid in the sum of $8,500.
(2) Factual background
6The property was built in 1905. The landlords purchased the property in 1999. They lived there between 1999 and 2015 as owner/occupier. In 2002, the landlords added a conservatory, landscaped the garden and built a perimeter fence. They also did internal work including installing blinds. In 2013, they re-tanked and rebuilt two bathrooms.
7In 2015, the property was vacant for a time before the landlords let the first plaintiff’s parents live at the property for no charge.
8On 20 May 2016, the tenants entered into a residential rental agreement with the landlords (‘the first rental agreement’) and paid a bond in the sum of $8,500. Ms Pick was named as the landlord. The tenants moved into the property shortly afterwards with their young children.
9On 8 September 2016, the first defendant (Ms McIntyre) emailed the managing agent of the property reporting some concerns about the property. Ms McIntyre said:
We really need a fan put in the laundry as you can see with the condensation (pictures below in laundry) this is now causing more smell throughout the house which we’ve had three people comment on now in the last week. So an exhaust fan would be great ASAP otherwise the paint will peel from the walls.
We’ve owned an old Victorian before and a lot of the time the smell that we are experiencing here from our experience … it’s just lack of air flow under the boards but I think we need that looked at too as I don’t want my family getting ill as a result of it. We had to install fans under the house to get rid of the smell at our Kooyong Rd house.
The smell is quite intense at the front of the home here and seems to be getting worse. You can see on the boards in certain places where moisture is present………
10On 9 September 2016, the agent raised the matter with Ms Pick, who sent an email in response stating:
There was a rising damp issue in the house, which was obvious due to “cupping” of the floor boards, when we vacated the house and left it through Winter. We had this looked into, it was the lack of heating in the house, once the heating was turned on, the floorboards recovered somewhat. Please advise what evidence the tenants have noticed that would indicate that there is rising damp in the house? Then, with the symptoms of rising damp to work with, we can have things investigated.
This advice was relayed to Ms McIntyre.
11Ms Pick asked for advice about what type of trades deal with rising damp. Ms Andrews of RT Edgar replied on 16 September 2016. She said in relation to the rising damp that she had used a company called FG James in the past with very good results and their price was reasonable. Ms Andrews continued: “If you like I could ask them to attend and report”.
12Acting on the agent’s recommendation, Ms Pick instructed Ms Andrews on 16 September 2016 to arrange a rising damp inspection by FG James.
13In early October 2016, the tenants left the property for two-and-a-half weeks over the school holidays. On their return, they discovered their sons’ schoolbags and hats were covered in mould. The schoolbags were sitting on the floor in their sons’ bedroom. The hats were in the bedroom drawers and had not been used since the preceding winter term. Ms McIntyre notified the agent on 2 October 2016 about the issue and asked her to advise the owner again. She said they needed a fan in the laundry and were not prepared to wait on the rising damp issue much longer.
14On 4 October 2016, Ms Haines notified the second defendant (Mr McDonald) that FG James, a damp specialist, had been instructed to attend the property and investigate the issue.
15On 14 October 2016, surveyor G Lewis of F.G. James Pty Ltd attended the property and prepared a report (‘FG James report’).[2] In the observations section, the report noted:
There have been traces of mould on some of the sheltered areas of the bedroom as a result of residual condensation.
…
We note the laundry with dryer facility is not equipped with an extract fan. This is a major shortcoming & has the potential to generate up to five liters per hour into the household air.
…
The occupant has noticed mustiness in the house. The rear paving is over the level of the sub-floor ground. The sub-floor condition has been assessed as under-ventilated. There is insufficient air circulating under this house to effectively dispel damp odour from the ground & the foundation walls. Sub-floor ventilation is probably the most significant factor contributing to the success of a suspended timber floor. We recommend reforming the sub-floor ventilation as per the sketch plan attached.
[2]Court Book (‘CB’) 1013
16The FG James report contained six recommendations across three categories, being laundry ventilation, high-wall ventilation and sub-floor ventilation. The cost quoted for the proposed works was $4,719.
17FG James sent a copy of the report to RT Edgar on 14 October 2016. Ms Pick gave evidence that she saw the FG James report at about the time it was provided to the agent. She said that Ms Ella Haines, the agent from RT Edgar had said to her “you don’t have to do anything” with respect to the FG James report.[3] Ms Haines did not recall this conversation.
[3]Transcript (‘T’) 279, Lines (‘L’) 1-3
18Ms Haines wrote to the tenants on 21 October 2016 advising that the FG James quote was very substantial in nature. She said that in trying how best to proceed, she had suggested the owner come along to the routine inspection which was due this month. Ms Pick did attend the property on 27 October 2016 with Ms Haines for the scheduled routine inspection.
19The landlords approved the cost of an extraction fan in the laundry on 27 October 2016, being the first item recommended in the FG James report. An extraction fan in the laundry was subsequently installed at the landlords’ cost. It is common ground that this is the only recommendation from the FG James report that was implemented.
20Over the course of the tenancy, RT Edgar prepared routine condition reports approximately every six months. These were prepared following an inspection of the property. The first report dated 25 May 2016 is described as an entry condition report. It is a very comprehensive report comprising some 79 pages, including a large number of photos. The report gives a very detailed description of each of the rooms at the property. None of the subsequent reports noted any concerns about the tidiness or cleanliness of the property until after the mould outbreak in September 2020.
21The tenants entered into a second residential tenancy agreement with Ms Pick as landlord on 7 September 2018 (‘second rental agreement’) for a further term of 12 months, which subsequently became a month to month tenancy.
22No further mould issues occurred over the course of the tenancy until the outbreak some four years later in September 2020. Ms McIntyre did not report any complaints about mould during the intervening period. There were some other issues that emerged in the meantime. In January 2017, Ms McIntyre reported that leaves were entering through the roof windows in the sunroom. Ms Haines told her this was a tenant’s responsibility. In December 2018, a cornice fell in one of the bedrooms without warning. In February 2019, a large crack opened up on one wall and another crack was forming on another. It was also reported that the floorboards in the kitchen and hallway had begun to separate. In August 2019, a heater system broke down. Over the course of the tenancy, the tenants complained about an inability to open jammed windows and the absence of flywire covering the windows. Ms McIntyre sent an email to Ms Haines on 19 February 2019, in which she said, “I don’t want to be held responsible for the deterioration of the house because it’s clear it’s all due to weather and age”.
23On 11 February 2020, Venture Plumbing issued an invoice to RT Edgar for cleaning the gutters at the property. The parties agreed that gutter cleaning was the responsibility of the landlords. Venture Plumbing conducted a further clean of the gutters on 26 October 2020, after the mould incident. It was noted in their invoice that the gutters were very full and they recommended the gutters be done at least once a year.
24Following the commencement of the COVID-19 lockdown in about March 2020, the tenants left the property to live predominantly at their farm in the Yarra Ranges. They did, however, make regular trips back to the property for overnight and other short-term stays. Ms McIntyre prepared a list of the dates of her family’s return to the property. These dates are set out in the particulars to paragraphs 16 of the tenants’ amended defence and counterclaim dated 14 November 2022.
25On the evening of 28 September 2020, Ms McIntyre returned to the property with her son after an absence of approximately six weeks. In the morning they woke to find the property and its contents covered in mould. Ms McIntyre described it as follows:[4]
… it was like a Pandora’s box. It was just every cupboard we opened, vanity units, linen cabinets, drawers, bookcases. I mean, aside from growing along the kitchen floorboards and on some of the walls - I mean, it was behind a lot of the drawers and beds. It was everywhere.
[4]T124, L23-28
26Following the discovery of the mould outbreak, the tenants immediately moved back to their farm.
27The tenants sent an email to Ms Haines on 29 September 2020 informing her of the mould outbreak and seeking her guidance on the matter. Ms Haines notified Ms Pick the same day and told her that she would engage the Mould Doctor to attend at the property to give a detailed report on the cause and solution.
28On 5 October 2020, Mr Tim Davis of Skyline Building Group and Mr Adam Beard of First Response Restoration inspected the property on behalf of the landlords’ insurer and provided reports.
29On 6 October 2020, Ms Haines prepared a condition report. The report noted the extent of the mould, but did not make any comments about the cleanliness or tidiness of the house. The only part of the house where Ms Haines could see actual mould was on the blinds in the glass atrium. The gutters were identified as being full and needed to be cleaned. The glass atrium had a plant growing through it that needed removal. Leaf litter and weeding was flagged as an issue. The tenants explained to Ms Haines that the gardener had not been able to attend due to COVID-19 restrictions and would be attending on 12 October 2020.
30Ms Haines also sent an email on 6 October 2020 to the tenants attaching a breach of duty notice to remedy. The notice alleged the tenants had failed to report that the gutters were full and needed to be cleaned. In addition, the tenants had not cleaned up leaf litter around the house which had resulted in moisture issues which caused the mould.
31On 6 October 2020, Mr Brian Murphy (‘Murphy’), a certified occupational hygienist, conducted a property and contents assessment. He prepared a report dated 12 October 2016 that related to water damage and mould. He confirmed that water damage and subsequent mould existed throughout the property structure and contents. The majority of the mould could be classified as condition 3, which is actual mould.
32A representative from the Stonnington Council attended the property on 7 October 2020. The Council’s Environmental Health Officer wrote to the second defendant (Mr McDonald) on 8 October 2020 advising that the condition of the property, including green mould, rendered it unsuitable for human habitation.
33On 12 October 2020, the landlords applied to VCAT for immediate termination of the tenancy.
34The tenants removed a number of their contents from the property on 14 October 2020.
35On 15 October 2020, Mr John Liddell, managing director of The Mould Doctor, attended the property and prepared a report.
36Mr Owen Boak (‘Boak’) of Elements Speciality Cleaning & Restoration (‘Elements’) attended the property on 29 October 2020 at the tenants’ request. He prepared a report dated 1 November 2020 which noted visible mould throughout the property.
37On 10 November 2020, Elements provided an estimate to the tenants to collect all mould-affected contents sorted by salvageability status and to restore any salvageable items. On the same day, SkipBins Online issued an invoice to the first defendant for the use of a 12-cubic-metre skip bin, as well as for the collection of nine mattresses and bases. The tenants subsequently engaged a removalist on 14 October 2020 to remove the contaminated items.
38The tenants vacated the property on 15 November 2020. They commenced a proceeding at VCAT on 19 November 2020 against the landlords seeking compensation.
39On 19 November 2020, Ms Haines prepared a residential tenancy exit condition report. Her report made various observations about the cleanliness of the property.
40The extent of the mould was further reported on by Murphy, in his report dated 3 December 2020. He noted that water damage and subsequent mould existed throughout the property. In section 9 of his report, he outlined the affected areas. These included the laundry, sunroom, windowsills/skirting boards, formal lounge, between the formal lounge and the kitchen, the living room, the first bedroom, the master bedroom and the third bedroom.
41In around mid-2021, Quantum Restoration Services Pty Ltd completed the mould remediation work. Quantum had earlier provided a report dated 25 November 2020 which provided a quotation for remediation works at the property.
42On 2 August 2021, Murphy issued his post-remediation verification report.
(3) Pleadings and procedural history
43On 19 November 2020, the tenants commenced proceeding No R2020/35116 at VCAT seeking an order for compensation against the landlords under the RTA.
44The landlords commenced this proceeding by writ on 28 June 2022. Mr Pick is the registered proprietor of the property. He holds the property on constructive trust for Ms Pick. There was no issue raised at trial as to the latter’s capacity to enter into the relevant tenancy agreements as beneficial owner.
45On 8 September 2022, His Honour Judge Woodward (as he then was) made orders striking out the VCAT proceeding and referring it to the County Court.
46The statement of claim lists a number of alleged acts or omissions on the part of the tenants which resulted in the mould damage to the property. By reason of these acts or omissions, the tenants failed to:
(a) take reasonable care to avoid damaging the property in breach of s61 of the RTA and clauses 3(a) and 3(b) of the rental agreement.
(b) give notice as soon as practicable upon being aware of damage to the property in breach of s62 of the RTA and clause 3(c) of the rental agreement;
(c) keep the property in a reasonably clean condition in breach of s63 of the RTA and clause 4(b) of the rental agreement; and
(d) adequately maintain and water the garden area in breach of clause 32 of the rental agreement.
47The landlords claimed loss and damage totalling $454,000.63 and attached a schedule setting out details of their losses as at 28 June 2022. They allege the tenants are required to indemnify them for their loss and damage pursuant to clause 14 of the rental agreement. The landlords also seek an order for compensation pursuant to ss 210(1) and 212(1) of the RTA.
48The tenants filed an amended defence and counterclaim on 14 November 2022. They plead that neither of the tenancy agreements signed on 20 May 2016 or 7 September 2018 were in the standard form prescribed by s26 of the RTA. They say further that clauses 3(a) and (b), 4, 14 and 31 of the first rental agreement and clauses 3(a) and (b), 4, 14 and 32 of the second tenancy agreement are invalid, pursuant to s27 of the RTA. The reason being that these clauses purport to have the effect of excluding, restricting or modifying the application of the RTA, which is impermissible.
49The tenants allege the damage to the property was wholly due to the plaintiffs’ failure to maintain the property contrary to s68 of the RTA in that the premises were not in good repair.
50By counterclaim, the tenants plead that the property had a number of issues described as ventilation issues and moisture issues. The tenants make a claim for loss and damage pursuant to the alleged breach of s68 of the RTA, as well as clauses 2(a) and 10 of the residential tenancy agreement. They seek an order for compensation pursuant to ss210 or 472(1)(f) of the RTA, alternatively, damages for breach of the residential tenancy agreement.
51The landlords filed a reply and defence to counterclaim on 10 January 2023. They alleged that the growth of mould in the house was caused solely by the conduct of the tenants, in that they failed to perform adequate regular upkeep of the house during 2020, which resulted in moisture ingress due to:
(a) overgrown gardens and shrubbery adjacent to the house;
(b) gutters filled with leaves and debris;
(c) vegetation growing internally into the sunroom via the gutters;
(d) the tenants taking extended absences from the property during 2020 which has resulted in reduced airflow within the property and a failure to identify early signs of mould development within the house, which would have allowed steps to be taken to prevent further mould growth.
The landlords deny the tenants have any entitlement to the loss claimed and do not admit the quantum of alleged loss particularised in the schedule annexed to the counterclaim.
(4) Witnesses
Lay witnesses
52Ms Pick gave evidence on behalf of the plaintiffs. The defendants each gave evidence. They called the managing estate agent of the property at the time, Ms Haines, formerly of RT Edgar Pty Ltd.
53The tenants submitted that a Jones v Dunkel [5] inference should be made because of the landlords’ failure to call various witnesses. This included Mr Pick and various so called first responders, such as loss adjusters retained by the landlords’ insurer and other trades persons retained by the landlords. These persons were listed in paragraph 45 of the tenants’ written closing submissions.
[5]Jones v Dunkel (1959) 101 CLR 298
54I do not consider it was necessary for Mr Pick to have been called. Ms Pick was the person who actively engaged with the agent and gave instructions. Mr Pick’s role was limited to approving financial expenditure at the property. Nor do I consider that the landlords would reasonably be expected to have called the loss adjusters retained by their insurer or the other parties identified by the tenants. Accordingly, I am not persuaded a Jones v Dunkel inference should be drawn.
Expert witnesses
55The landlords and tenants each called three expert witnesses. Four can be described as ‘mould experts’ and two are structural and civil engineers.
56The landlords called the following expert witnesses:
(a) Dr Cameron Jones (‘Jones’), Director of Biological Health Services and microbiologist, who prepared two written reports dated 14 December 2020 and 13 January 2021.
(b) Murphy, Managing Director of EHS Assess and Certified Occupational Hygienist, who prepared three written reports dated 12 October 2020, 3 December 2020 and 2 August 2021.
(c) Mr Ian Fleming (‘Fleming’) of MCS Group, civil-engineer and registered builder, who prepared a written report dated 15 January 2024.
57The tenants called the following witnesses:
(a) Dr Wesley Black (‘Black’), Director of Biotopia Environmental Assessment Pty Ltd, microbiologist and ‘Mold Removal specialist’, who prepared a written report dated 13 February 2023.
(b) Boak, Founder of Elements, who prepared a written report dated 1 November 2020 and undertook remediation work for the landlords.
(c) Mr Hugh O’Brien (‘O’Brien’) of BSS Group, structural engineer, who prepared two written reports dated 22 June 2023 and 4 January 2024.
Mould Experts
58Jones, Murphy, Boak and Black (‘mould experts’) participated in an expert conclave on 6 and 15 June 2023, 4 September 2023 and 6 October 2023. The mould experts prepared a joint report of the conclave of experts and provided oral evidence at trial.
59The mould experts agree on the existence and extent of the 2020 mould growth and that the following factors contributed to the origin and cause of the mould growth:[6]
(a) Laundry leak;
(b) Roof leaks/roof plumbing
(c) Water ingress through glass panelling;
(d) Property being absent;
(e) Property not being cleaned during absent periods;
(f) Subfloor moisture;
(g) Type and age of the building;
(h) Atrium structure;
[6] CB 1103-1104
60The mould experts also agree that the following wetting events occurred, leading to the presence of moisture in the property, which is a necessary condition for mould growth:[7]
(a) Water ingress through the roof plumbing;
(b) Water ingress through the glass panelling of the sunroom potentially through one of the windows in the conservatory which may have been left open throughout the period of the tenants’ absence from the property;
(c) Current and historical leaks in the laundry;
(d) Water ingress into the subfloor and surrounds;
[7] Ibid 1104-1105
61The mould experts agree that the above events were exacerbated by:
(a) The type and age of the building, being a 120 year-old property constructed on blue stone footings, shallow subfloors and middling ventilation;
(b) Evidence of general wear and tear and insufficient daily upkeep of the property including overgrown gardens and shrubbery, gutters filled with debris and leaf matter, vegetation growing internally into the sunroom via the gutters, and settled dust throughout.
(c) The property being vacant in 2020.
62However, the mould experts disagree on the extent to which the above factors caused the 2020 mould growth and the actions that should have been taken by the tenants and landlords. Jones and Murphys’ evidence is generally that the mould growth was caused by the tenants’ acts or omissions, whereas Boak’s and Black’s evidence is generally that the mould growth was caused by the landlords’ acts or omissions.
63Jones and Murphy both opine that the main cause of the 2020 mould growth was the tenants’ intermittent tenancy between April and October 2020, which meant there was inadequate ventilation, cleaning, gardening, and maintenance of the property. Murphy opines that this, in combination with the elevated moisture load and high humidity during winter and spring months, caused the mould.[8] Jones considers additional key factors to be the tenants’ failure to address the leak in the laundry, clean windows, and report obvious signs of moisture accumulation on the wallpaper. Jones also raised the possibility that the tenants’ furniture was already mould-affected when it was brought into the home.[9]
[8] Ibid 345
[9] Ibid 1103
64Jones and Murphy do not consider that there were any additional actions that the landlords should have taken prior to or during the tenants’ occupancy to prevent mould growth.[10]
[10] Ibid 1108-1110
65Boak and Black consider the main cause of the 2020 mould growth to be elevated moisture emanating from the subfloor.[11] Both Boak and Black agree that the moisture pre-dated the tenants’ occupation of the property and that cupping in the floorboards was evidence of the elevated moisture.[12]
[11] Ibid 1104
[12] Ibid 744, 769
66Black provides a list of actions that could have been taken by the landlords to prevent the 2020 mould growth:[13]
(a) investigating the cupped floorboards, including opening up the subfloor and ideally testing moisture, mould, odours, etc.;
(b) checking for rising damp and dampcourse problems;
(c) drying and remediating the subfloor;
(d) fixing the cause of water ingress in the subfloor, including the leaking laundry sink;
(e) installing a fan in the laundry and ensuring all other fans were serviceable and compliant;
(f) ensuring drainage around the house was fit for purpose.
[13] Ibid 1107-1108
67Boak agrees that these works could have been completed by the landlords to prevent the mould growth and opines that, at a minimum, the recommendations from the FG James Report should have been followed.[14] Black does not agree with the FG James recommendations.[15]
[14] Ibid 1108
[15] Ibid 781-784
68Black and Boak both agree that there is nothing the tenants should have done since any preventative measures were extensive and beyond a tenant’s responsibility.[16]
[16] Ibid 1110
Structural and Civil Engineering Experts
69Fleming and O’Brien participated in an expert conclave on 18 July 2024 and produced a joint report of structural and civil engineering experts conference.
70Fleming and O’Brien both agree that, if there was adequate ventilation and no water ingress in the property, the 2020 mould growth would not have occurred.[17] They both identify ventilation and moisture issues in the property, but neither expert definitively states the cause of the 2020 mould growth. Overall, the key difference is that Fleming’s view is that a main cause of the mould growth was the tenants’ absence in 2020, whereas O’Brien opines that there was fundamental structural issues with the property.
[17] Ibid 1267
71Fleming and O’Brien agree that there were ventilation issues in the subfloor, and that alterations to the property contributed to this.[18] Fleming and O’Brien also agree that there was cupping in the floorboards in 2019, which suggests moisture in the subfloor, but that this was not a cause of the 2020 mould growth.[19]
[18] Ibid 1265
[19] Ibid 1275-1276
72Fleming and O’Brien agree that the landlords should have investigated wall cracks and separation of floorboards because this could have revealed excessive moisture in the subfloor, which the landlords could have then rectified.[20]
[20] Ibid 1288-1290
73Fleming and O’Brien agree that the tenants’ absence in 2020 could have contributed to the mould growth. However, Fleming opines that this was the main cause of the mould growth,[21] whereas O’Brien opines that this was a minor contribution.[22]
[21] Ibid 1283
[22] Ibid 1019
74Fleming and O’Brien disagree on the extent of the property’s ventilation issues. O’Brien’s opinion is that there are widespread ventilation issues in the property, whereas, Fleming’s opinion is that the ventilation issues are confined to the subfloor.[23] O’Brien considers that a cause of the ventilation issues were the construction practices circa 1905 (when the property was constructed), whereas Fleming does not consider this to be a factor.[24]
[23] Ibid 1260
[24] Ibid 1261
75Fleming and O’Brien agree that there appeared to be rising damp in the property. Fleming opines that this would be unlikely to cause mould growth, whereas O’Brien’s evidence is that it would have contributed to the incident in some respect.[25]
[25] T496, L12-T497, L5
76O’Brien’s opinion is that alterations to the property and historical construction practices led to water ingress, whereas Fleming maintains that while there was water ingress in the subfloor, the source was unclear.[26]
[26] CB 1269-1272
77O’Brien does not consider inadequate maintenance to be a cause of the 2020 mould growth. Fleming initially agreed,[27] however, in oral evidence noted that he had since observed photographs of the vegetation growing into the sunroom which indicates a lack of maintenance and could have contributed to mould growth.[28] Fleming also opines that once the tenants became aware of moisture ingress, they should have opened windows, used exhaust fans and not have left the property unattended for significant periods of time.[29]
[27] Ibid 1277
[28] T505-506
[29] CB 1285
78O’Brien considers that the landlords could have prevented the mould growth by undertaking remediation works to ensure adequate ventilation,[30] undertaking a Condensation Strategy Plan to be issued with the lease,[31] and following the recommendations of the FG James report.[32] Fleming disagrees with the recommendations from the FG James report and opines that introducing more ventilation into a building is risky, but does agree that further investigation was required by the landlords at the time that the FG James report was issued.[33]
[30] Ibid 1266
[31] Ibid 1282
[32] Ibid 1285-1286
[33] T515-516
79The experts also gave evidence concurrently at trial divided in the mould and structural engineers groups. In the course of their oral evidence, the experts made some concessions and/or expanded upon matters contained in their written reports. Consequently, the totality of the experts’ evidence needs to be assessed taking into account the matters they referred to when giving their oral evidence.
FG James report
80The use to which the Court could put the report provided by FG James on 14 October 2016 was the subject of considerable argument at trial. As already noted, the FG James report made various recommendations, including those regarding ventilation to the sub-floor.
81The landlords note the tenants do not plead that the FG James report put the landlords on notice of those issues. Nor was it included in the statement of issues filed with the Court. As became apparent during the course of the trial, the tenants do seek to rely upon the FG James as constituting notice to the landlords of an issue which the landlords should then have investigated.
82The landlords claim the FG James report does not establish that there was notice on the part of the landlords. A number of reasons are set out for this, namely that the FG James quotation cannot be used to prove the truth of its contents because:
(a) each of the statements made in the quotation is a previous representation within the meaning of the Evidence Act 2008;
(b) those statements are therefore not admissible to prove the existence of facts that their maker can reasonably be supposed to have intended to assert;
(c) no relevant exception to the hearsay rule applies. In particular the maker of the document it appears, G Lewis, was not called to give evidence;
(d) insofar as the report contains observations about the condition of features of the house, such as the sub-floor and advice to perform remedial works, the opinion rule makes those statements inadmissible;
(e) no relevant exception to the opinion rule applies in which nothing is known about G Lewis, including that the opinions in the quotes are based on his or her specialised knowledge based on study, training or experience.
83Given these matters, the FG James report cannot be used to prove as a fact that in October 2016 there were various issues with the sub-floor regarding under-ventilation.
84The statements in the FG James report are not relevant for any purpose that is not a hearsay purpose or not as an opinion. If evidence of the statement is not relevant it is not admissible.
85The landlords note the tenants conceded they do not rely on the FG James report to prove its contents and or as an opinion.[34] If that be the case, the report cannot be used to prove there were issues with ventilation or moisture in the sub-floor that the landlords had to rectify.
[34]T276, L5 ꟷ T277, L20
86The landlords submitted that if the FG James report is not to be used for the purpose of proving those matters, its relevance is unclear. Further, the report should in any event be excluded under s135 of the Evidence Act, alternatively, its use should be limited under s136. This is on the basis of unfair prejudice to the landlords that outweighs the probative value of the evidence. The prejudice identified is the fact that the author, G Lewis, is unable to be cross-examined on the contents of the report. No evidence was given, nor was it suggested that G Lewis was unavailable to give evidence.
87Further, if the FG James report is admissible to prove that Ms Pick was on notice of issues with ventilation and moisture in the sub-floor as at October 2016, it did not establish that fact. Ms Pick’s evidence is that she enquired of Ms Haines at the time the report was provided what she had to do to comply with the Act, being the RTA, and Ms Haines told her she did not have to do anything.[35]
[35]T278 and T257-258
88Ms Pick was not challenged on this recollection of this conversation. Ms Haines was asked about it but could not recall the conversation. Accordingly, the landlords say that the fact Ms Pick was specifically told she did not need to follow the recommendations, shows that she was not on notice that any other action was required at the time. There was no reference to there being a rising damp problem in the FG James report. The tenants do not allege that mould in September 2020 was caused by rising damp.
89In the tenants’ closing submissions,[36] the tenants state that the FG James report is not used to prove the truth of the facts about which opinions are expressed, i.e. that the property had inadequate ventilation. Those facts were proved elsewhere, namely, by the structural engineers who agreed that the property had inadequate sub-floor ventilation. Additionally, the tenants say it is not used to prove the fact that the recommended remedial steps would have resolved the ventilation issues. Fleming, for example, did not agree with the recommendations in the report on the basis that it was risky to introduce more sub-floor ventilation into a home where the problem had not been fully identified. Whilst O’Brien agreed the landlord should have followed the recommendations in the FG James report, he proposed a scope of work which differed from that which FG James had recommended. O’Brien’s opinion, with which Fleming agreed, was that following those recommendations would have assisted in the improvement of reduction of the risk and consequences of mould, but the property would still be at risk due to issues of moisture ingress.
[36]Paragraph [69]; see also T276
90The tenants say that the FG James report is evidence of the fact that the author of the report held and expressed this opinion, which bears on the question of whether the landlords were on notice of the sub-floor ventilation issue. Having been given the report which raised the problem with sub-floor ventilation, it must follow that the landlords were on actual notice of the problem, regardless of whether the opinion expressed is accurate.
91The tenants also rely on the fact that the FG James report was provided to the experts and they made conclusions about it in their reports and were cross-examined on it. Therefore it is necessary for the Court to have regard to the FG James report for the purpose of understanding the evidence given by each expert. Once evidence has been admitted for a purpose, it may also be used to prove the fact in respect of which the opinion is expressed.[37]
[37]Section 76C of the Uniform Evidence Act and commentary in Odgers, Uniform Evidence Law at EA77.60 and the authorities cited therein.
Analysis
92The parties in the end did not differ significantly as to the use to which the FG James report could be used. The tenants agreed its contents could not be used as proof that the steps recommended in the report needed to be done.
93In the absence of the author of the report being called, it is hearsay. If led for a non-hearsay purpose, it would be admissible under s60 of the Evidence Act. It does form part of the factual matrix of events and Ms Pick acknowledged that she received it from the agent. The tenants rely upon it to argue that the landlords were consequently on notice of an issue which they say the landlord should then have investigated. The acceptance of that argument depends upon what a landlord is required to do under s68 of the RTA and what constitutes notice of a defect which a landlord is required to repair.
94I will allow the FG James report into evidence but will limit its use under s136 to being admissible only as evidence that the report was obtained and provided to Ms Pick. It is not admissible as proof that the steps outlined in the report were required to be done or that the sub floor ventilation was in fact inadequate.
(5) Legal principles relating to s68 of the RTA
95Section 68 of the RTA provides:
(1)A residential rental provider must ensure that the rented premises are provided and maintained—
(a)in good repair; and
(b)in a reasonably fit and suitable condition for occupation.
(1A)Subsection (1) applies—
(a)whether or not the renter was aware of any disrepair at the rented premises before entering into occupation of the premises; and
(b)despite the amount of rent paid by the renter; and
(c)despite the age and character of the rented premises.
(2)A residential rental provider is not in breach of the duty to maintain the rented premises in good repair if—
(a)damage to the rented premises is caused by the renter's failure to ensure that care was taken to avoid damaging the premises; and
(b)the residential rental provider has given the renter a notice under section 78 requiring the renter to repair the damage.
(3)If a residential rental provider owns or controls rented premises and the common areas relating to those rented premises, the residential rental provider must take reasonable steps to ensure that the common areas are maintained in good repair.
(4)The residential rental provider must ensure that any person who carries out any repairs or works to discharge the residential rental provider's duty under subsection (1) is a suitably qualified person.
96Both parties relied upon Shields v Deliopoulos (‘Shields’) as being the leading authority on this section.[38]
[38][2016] VSC 500
97Shields concerned an appeal to the Supreme Court from a VCAT decision. One of the grounds of appeal focussed on whether there was an erroneous construction of a landlord’s obligations under s68 by limiting the scope of the duty to maintain the premises in good repair to the commencement of the tenancy. Daly AsJ held this was an error as the duty to maintain premises in good repair arose not just upon the entry into the lease but continued throughout the tenancy.
98In considering the proper construction of s68, Her Honour made the following observations:
(a) The duty imposed upon a landlord to ‘ensure that rental premises in good repair’ is strict and absolute, and imposes an obligation upon a landlord to identify and rectify any defects of which they are aware or ought to be aware.[39] The word “ensure” is synonymous with “make sure”.[40]
(b) Section 68 can be described as imposing a ‘composite duty’ in that the landlord must put the premises in good repair in order to maintain the premises in good repair.[41]
(c) The term ‘good repair’ means ‘tenantable repair’ or ‘reasonably fit and suitable for occupation’. This may be referrable to the age and character of the relevant premises. However, it cannot ordinarily be qualified by the state of repair at the commencement of the tenancy, regardless of the state of repair, or the rent payable.[42]
[39]Shields v Deliopoulos [2016] VSC 500 [30]
[40]Ibid, [31]-[32], quoting Gration v C. Gillan Investments Pty Ltd (‘Gration’) (2005) 2 Qd R 267
[41]Ibid [36], quoting Payne v Hayne (1847) 16 M & W 541, 544
[42]Ibid [38], citing Proudfoot
99Her Honour referred to Proudfoot v Hart [43] (‘Proudfoot’) as authority that ‘good repair’ means ‘tenantable repair’. Lord Esher MR observed in Proudfoot that ‘tenantable repair’ is “such repair as, having regard to the age, character, and locality of the house, would make it reasonably fit for occupation of a reasonably minded tenant of the class who would be likely to take it”.[44]
[43] (1890) 25 QBD 42
[44]Shields [52]; Section 68(1A)(c) provides that the Court cannot have regard to the age and character of the property.
100Unlike this case, Her Honour did not have to consider what defects the landlord was aware or ought to have been aware of as it was readily apparent there were defects given a condition report prepared at the start of the tenancy. The premises in question were clearly in a parlous state.
(6) Issues for consideration
101The parties submitted an agreed list of compendious issues for consideration taken from the wording used in the pleadings. I have therefore applied this format although as will be seen from the following reasons, some of the issues raised are somewhat hypothetical and do not ultimately resolve the fundamental questions of breach, causation and loss.
Issue 1: What were the defendants’ obligations with respect to the property under:
(a) the rental agreements; and
(b) the RTA?
102The tenants had obligations under the two relevant rental agreements.[45] Each of the rental agreements was for a term of 12 months but continued on as periodic tenancies after the expiry of those terms. The terms of the second rental agreement continued to operate throughout 2020 until the termination of the tenancy on 15 November 2020, when the tenants moved out.
[45]CB 1341 and CB 1360
103Pursuant to the rental agreements, the tenants were required to:
(a) make sure care was taken to avoid damaging the property;[46]
(b) give notice to the landlords as soon as reasonably practicable upon becoming aware of damage to the property;[47] and
(c) keep the property in a reasonably clean condition during the tenancy.[48]
[46]Clause 3(a) of the Rental Agreements
[47]Ibid clause 3(b) and 3(c)
[48]Ibid clause 4(b)
104In addition, the rental agreements contained the following terms:
(a) the tenants agree to indemnify the landlords for any loss or damage caused by failing to ensure care was taken to avoid damaging the property by them or anyone on the premises with their consent (clause 14); and
(b) on the commencement of the second rental agreement, fully and regularly maintain and water the garden area, including the trees and shrubs, mow the lawn and remove all garden rubbish from the property (clause 32).
105The tenants were under similar obligations pursuant to the RTA, namely:
(a) to ensure that care was taken to avoid damaging the rented premises;
(b) to give notice to the landlords as soon as practicable upon becoming aware of damage to the rented premises, specifying the nature of the damage; and
(c) to keep the rented premises in a reasonably clean condition, except to the extent that the landlords were responsible under the rental agreements for keeping the premises in that condition.[49]
Issue 2: Were any of the terms of the rental agreements, which purported to require the defendants to:
(a) take reasonable care to avoid damaging the Property (clauses 3(a) and 3(b));
(b) upon becoming aware of damage to the Property, give notice to the plaintiffs of such damage as soon as practicable (clause 3(c));
(c) keep the Property in a reasonably clean condition during the tenancy (clause 4(b));
(d) indemnify the plaintiffs for any loss or damage caused by failure to ensure that care was taken to avoid damaging the Property by the defendants or anyone on the Property with their consent (clause 14); and
(e) fully and regularly maintain and water the garden area, including the trees and shrubs, mow the lawn and remove all garden rubbish from the Property (clause 31)
[49]Residential Tenancies Act 1997 (Vic), historical version 95 incorporating amendments as at September 2020; see ss61(1), 62 and 63.
invalid pursuant to s27 of the RTA?
106Section 27 provides that a term of a tenancy agreement will be invalid if it purports to “exclude, restrict or modify” or purports to have the effect of excluding, restricting or modifying, the application to the agreement of any provision of the Act or the exercise of a right conferred by the Act.
107The landlords submit that the tenants’ contention that the terms of the rental agreements are invalid under s27 of the RTA is misplaced.[50]
[50]Defence, paragraph [6]
108The landlords contend that the terms of the rental agreements simply re-state the tenant’s duties under s61 to s63 of the RTA. Consequently, they did not exclude, restrict, or modify those duties. The clause which appears to be in dispute between the parties is clause 14. This clause provides that the tenants must indemnify the landlords for any loss or damage incurred in consequence of failing to take care to avoid damaging the property. The obligation to indemnify reflects the compensation that will be payable by the tenants under the RTA for breaching that duty in any event.[51] I consider the landlords’ position to be the correct one. In my view, clause 14 is not excluding, restricting or modifying any provision of the RTA in breach of s27. Further, the landlords are able to claim compensation if there had been a breach under s210 of the RTA.
[51]Sections 210 and 212 of the RTA
109The other clause referred to was clause 32 in the second rental agreement. This clause imposed an obligation upon the tenants to maintain and look after the garden, the lawn and remove all garden rubbish from the property. This did not appear in the first rental agreement. The landlords submit this obligation is not something which excludes, restricts or modifies any obligation under the RTA. It is merely identifying which party is responsible for maintaining part of the property and what the scope of that maintenance involves. It is said that such terms are common under rental agreements.[52] The prescribed standard form tenancy agreement in the regulations prior to 2021 expressly provides for the addition of terms.[53] It was not suggested that clause 32 was invalid. However, the tenants submitted that, as a matter of construction, it would not extend to specialised tasks such as pruning high trees and cleaning out gutters. Again, I prefer and accept the landlords’ submissions on this point and consider there is nothing objectionable regarding clause 32. In any event, there did not appear to be any dispute at trial that cleaning gutters and pruning high trees was a responsibility that fell upon the landlords.
[52]Referring to Consumer Affairs Victoria Renters Guide setting out obligations upon renters, including keeping the garden tidy.
[53]Residential Tenancies Regulations 2019 (Vic) (repealed and in effect from 29 March 2021). Under the heading “Additional Terms” these do not take away any of the rights and duties included in the RTA and may be set out in this section
110In their final written submissions, the tenants submitted that if the landlord’s case was that the provisions of the rental agreements precisely mirrored the effect of the provisions of the RTA, then they remain valid.
Issue 3: In or around September, October and November 2020, was the property subject to the following damage:
(a) mould growth in the lounge room, sitting room, sunroom and bedrooms;
(b) plant growth into the sunroom from the roof guttering;
(c) unmaintained gardens leading to leaf litter, weeds and overgrown plants;
(d) gutters full of leaf litter;
(e) cracked and damaged Masonite wall in the garage; and
(f) water damage in the laundry?
111The tenants maintain the property was subject to a significant mould outbreak in around September, October and November 2020. Ms McIntyre first detected the outbreak of mould on 29 September 2020. Ms Haines of RT Edgar prepared a condition report on 6 October 2020 and prepared a further report on 19 November 2020, being a residential tenancy exit condition report. The tenants noted that there was a significant distinction between the two reports. The first report noted that there was mould on the tenants’ personal effects, but the only part of the house Ms Haines was able to see mould on was the blinds in the glass atrium. She observed there were plants in the sunroom, full gutters and the garden required tidying up. There were no observations as to a cracked and damaged Masonite wall in the garage or water damage in the laundry. These appear only in the subsequent exit report of 19 November 2020.
112The landlords’ response to Issue 3 is that the tenants caused the mould by failing to maintain the property in the sense of providing regular upkeep and failing to keep the property in a reasonably clean condition in 2020, when they were primarily living at their property in the Yarra Ranges.
113In support of this alleged failure, the landlords rely upon:
(a) photographs taken in the sunroom in October 2020, which showed vegetation growing into the sunroom from outside through gaps in the windows. This was reported in the 6 October 2020 Condition Report and was still visible in the later Exit Condition Report dated 19 November 2020;
(b) that the vegetation growth in the sunroom appears to have developed as a result of overflowing gutters. Whilst it was accepted that the landlords were required to pay for gutter cleaning as and when needed, this required them to be notified by the tenants that the gutters needed to be cleaned. The gutters were cleaned in February 2020, about one month before the tenants moved to the Yarra Ranges property;
(c) that the gutters appear to have filled up as a result of leaf litter falling from the tree overhanging the sunroom. The photographs taken on October 2020 show the tree branches in full bloom and extending into to the gutter. It is said that the tenants were under an obligation under the second rental agreement to fully and regularly maintain the garden area, including trees and removing garden rubbish from the property;
(d) a range of instances, identified in the exit condition report, where the property has not been kept reasonably clean in relation to surfaces, walls and appliances. Whilst the report records the condition of the property in November 2020, the inference open, according to the landlords, is that at least some lack of cleaning is related to the period before the mould outbreak.
114The damage to the property identified in the sub-paragraphs above was reported upon in the condition reports of October and November 2020 with the result being that the answer to Issue 3 is yes. The next issue is the critical one, namely, whether the tenants caused the damage identified.
Issue 4: Was the damage (if proved) caused by the defendants’ acts or omissions in:
(a) failing to perform adequate regular maintenance of the Property, including cleaning and dust removal, which resulted in moisture ingress and the growth of mould within the Property;
(b) failing to clear the roof gutters of leaf litter and debris;
(c) allowing vegetation to grow internally into the sunroom via the external roof gutters;
(d) failing to appropriately water and maintain the garden area of the Property, which resulted in damage to:
(i)garden beds;
(ii)ornamental grasses;
(iii)hardscaping, including paving and other pathways;
(iv)the house, as a consequence of overgrown plants and shrubbery; and
(v)garden fixtures and structures, including artwork, ponds, gates, fences, sculptures and ornaments;
(e) failing to notify the plaintiffs of damage to the glass panelling in the sunroom, allowing moisture ingress into the property and consequent mould growth; and
(f) otherwise failing to take care to avoid damaging the property during the tenancy, which has caused miscellaneous damage to fixtures and fittings?
115The tenants say there is no evidence to show they failed to perform adequate regular maintenance of the property, including cleaning and dust removal, or that this resulted in moisture ingress and the growth of mould within the property. As a factual matter, there was no evidence of lack of cleaning or dust removal from the property. It is of significance that over the four years as a tenant there was no complaint made, or observation by the landlords, concerning the cleanliness or tidiness of the property. Ms McIntyre gave evidence, which was unchallenged, that she regularly returned to the property and attended to household duties, including cleaning, when she visited in 2020. The condition report of 6 October 2020 did not contain any observations about the cleanliness or tidiness of the property and noted that when Ms Haines visited the property, it did not look untidy or unkept internally. That observation only came about in the later exit report which was two months after the mould outbreak and after the tenants had moved out. Therefore, any of the issues which then appeared were attributable to events after the tenants’ departure.
116Further, the tenants submit there was no evidence of lack of household maintenance, (which was denied) led to water ingress, an essential prerequisite to mould outgrowth. The structural engineers reject the notion that the water ingress was linked to household maintenance. Black opined that an absence from a property might in fact reduce the amount of moisture because a house with many occupants is prone to humidity.
117The tenants had no responsibility for clearing the roof gutters of leaf litter and debris, which was a landlord’s responsibility. The tenants did not omit to do anything which they were obliged to do.
118As for the sunroom, the vegetation which grew in the sunroom came via the external roof gutters. The cleaning of the roof gutters was the landlords’ responsibility. Further, the evidence was that the tenants had previously complained about the mechanism which prevented the glass ceiling in the sunroom from shutting fully, but this was not addressed by the landlords. This provided a logical pathway for the vegetation to have grown internally.
119The structural engineers rejected the notion that water ingress is linked to garden maintenance.[54] Any general untidiness in the garden area was explicable by reference to the inability of the tenants’ gardener to attend the premises during lockdown.
[54]Joint structural report at paragraph [3]
120The question of failing to notify the landlords of the cracked sunroom is irrelevant. The structural engineers discounted this damage to the glass panelling in the sunroom as a material source of water ingress.[55] In any event, the tenants did notify the landlords as soon as they became aware of the issue, being simultaneously with the mould outbreak. There was simply no evidence this issue was present for a lengthy period of time beforehand.
[55]Joint structural report at paragraph [20]
121Finally, the tenants argued the alleged failure to take care to avoid damaging the property contained in sub-paragraph (f) was imprecise and ought to have been struck out.
122By contrast, the landlords relied upon evidence from Murphy when he attended at the property on 6 October 2020. He noted the overgrown gardens, and shrubbery and vegetation in the sunroom. His view was that mould was attributable to the type and age of the property and insufficient daily upkeep of the property which had been vacant for many weeks and months. He repeated these comments in his subsequent report dated 3 December 2020. He identified exacerbating features, both insufficient daily upkeep of the property and the property being largely vacant between winter and spring 2020.
123The landlords also relied on the evidence of Jones, to the effect the tenants’ failure to maintain regular upkeep of the property would encourage mould growth. His view was that the limited occupancy would result in little opportunity for regular cleaning and that the mould damage was preventable had the property been occupied.
124Jones and Murphy in the joint expert report were of the view that the primary cause of the mould was the tenants’ intermittent residency at the property and inadequate maintenance and cleaning at that time. Black had agreed that closing up the house and not occupying it for a period of time would materially affect humidity and hence mould growth. Fleming had also noted that vegetation growing in the sunroom through the window panes would add moisture and create a hothouse effect.
125The landlords argued in addition that the tenants failed to maintain the gardens during 2020 in breach of the second rental agreement. The landlords accepted that the COVID-19 pandemic restrictions meant that contractors such as cleaners and gardeners were generally unavailable in the months leading up to September 2020. The landlords also accepted that there were no condition reports during 2020 until after the mould outbreak. That meant that the landlords were limited to the extent to which they could prove the tenants failed to maintain the property and keep it clean during that time. They adduced the evidence that is within their power to adduce and the Court must assess it on that basis. It was said the growth of the vegetation in the sunroom should have been evident prior to September 2020. It was put to Ms McIntyre in cross-examination that she must have noticed it, which she denied. Regardless of the size of the growth, the landlords say that if it was there before mid-August a reasonable tenant should have noticed it and reported it in compliance with their obligations under s62 of the RTA and clause 3(b) of the second rental agreement.
126The exit condition report issued in November 2020 recorded instances of surfaces and areas that were in a visibly dirty condition at the end of the tenancy. Ms McIntyre had given evidence she had spent time cleaning the house when she returned to Melbourne. She denied she had done very little cleaning of the house in 2020 and also made reference to her practices regarding the maintenance and presentation of her homes, for example, the farm in the Yarra Ranges which had been featured in magazine articles. The landlords accept they have limited evidence available to contradict Ms McIntyre’s assertion she was cleaning the house regularly. It was put, however, that such assertions were not consistent with the state the property was left in at the end of the tenancy.
Analysis
127A difficulty about Issue 4 is the assumption made in the question that the failures alleged have resulted in moisture ingress and consequent mould growth. The latter aspect falls to be assessed taking into account the expert evidence led which is dealt elsewhere in these reasons.
128In terms of the alleged failures, I was not satisfied the landlords proved the tenants failed to maintain and clean the property, even allowing for the fact they were not in continuous occupation of the property in 2020 due to the COVID-19 pandemic. I accept Ms McIntyre’s evidence that she did return to the property at the times set out in the particulars to her claim, which was not disputed by the landlords. I also accept her evidence that she did clean the house on the occasions she was there during 2020. Her counsel described her as being very “house proud” which came across through her evidence and was reflected in the fact that her farm had been featured in magazines. The Court was not asked to make any adverse credit findings against her as a witness. The landlords accepted that they had no basis upon which they could dispute Ms McIntyre’s evidence on this topic other than to suggest because the property was unkempt in November 2020, an inference could be drawn that it was in that state earlier on.
129It is also significant that the landlords accept the tenants were not obliged pursuant to the terms of their lease to be in occupation of the property at all times. It was not suggested they were in breach of their lease by spending the majority of their time at their farm during the COVID-19 pandemic.
130As for the vegetation growing in the sunroom, Ms McIntyre’s evidence was that she had not observed it prior to September 2020. Again, I have no reason not to accept her evidence on this issue.
131The condition report of October 2020 noted that the garden was untidy and that the gutters needed to be cleaned. There was no probative evidence led regarding any of the precise failures alleged in sub-paragraph (d) of issue 4. I agree with the tenants that the allegation in sub-paragraph (f) is imprecise and was not established by the landlords.
132The landlords rely upon the exit condition report dated November 2020 as demonstrating a lack of cleanliness at the property. The exit report provided by the agent was some two months after the outbreak of mould was first observed. A considerable number of people including experts, loss adjuster assessors, council officers and other persons had attended at the property from September to November 2020. The property was also uninhabited from September 2020. Consequently, it is reasonable to conclude that the condition of the house in November 2020, following these events would have been less pristine than when the mould was first detected in late September 2020. There was a marked deterioration in the property referred to in the exit condition report compared with the October 2020 condition report, which was prepared shortly after the mould outbreak was detected.
133Prior to the COVID-19 pandemic, condition reports were provided on a six monthly basis, none of which referred to a lack of cleanliness on the part of the tenants. In fact, the six monthly reports consistently mentioned the tidiness of the tenants. Ms Haines gave evidence that she had no concerns about the tenants’ cleanliness.
134In my view, there was no persuasive evidence led to support a finding that the tenants did not clean and maintain the property up to September 2020 which in turn resulted in moisture ingress and the growth of mould. The cleaning of gutters was the responsibility of the landlords. Ms McIntyre was unaware of vegetation growing in the sunroom prior to September 2020. The remaining matters set out in sub-paragraphs (d) to (f) were also not proved on the evidence led so that the answer to issue 4 is no. That being so, the landlords did not establish that the damage to the property was caused by the tenants’ acts or omissions.
Issue 5: If so, did the defendants breach:
(a) their obligations under the rental agreements;
(b) further or alternatively, the RTA,
and thereby cause the plaintiffs to suffer loss and damage?
135In light of my earlier finding that the tenants did not breach of their obligations either under the rental agreements or the RTA, then the landlords’ claim for loss and damage is not made out.
Issue 6: What is the quantum of the plaintiffs’ loss and damage?
136If I am wrong about the preceding issues, then I will deal briefly with the landlords’ claim for damages.
137Ms Pick gave evidence that the landlords’ loss and damage was a consequence of the outbreak of mould and the tenants’ failure to maintain the garden. The particulars of loss and damage were set out in the landlords’ Schedule of Quantum which was annexed to the landlords’ final written submissions. It had been updated to include transcript references to Ms Pick’s evidence.
138In response to the landlords’ claim for gardening and landscape costs in the sum of $1,750, the tenants argued these costs were irrecoverable. The reason the property was not left with a tidy garden at the conclusion of the tenancy was because the landlords terminated the tenancy and provided a home which was unfit for human occupation. The landlords now seek to take advantage of their own unlawful termination of the tenancy and to say that the tenants did not complete gardening maintenance. But on the assumption that the tenants were in breach, then it seems to me that the landlords’ costs of repairing and landscaping the garden claimed are reasonable and should be allowed.
139The second item was the cost of utilities in the sum of $6,219.08. This amount was claimed as being the cost of the utilities incurred by the landlords whilst the remediation works were being undertaken. It also included a claim for the cost of a dehumidifier in excess of $5,000. These costs seem reasonable to me and I would have allowed them.
140The third item claimed is the cost charged by Quantum for mould remediation works in the sum of $52,318.66. There is no reason to doubt the contents of these invoices nor that the remediation works described were done and necessary to be done. That being so, I would have allowed those costs.
141The fourth item is for construction works in the sum of $115,593.43. The tenants argued the evidence appeared to be that the landlords had replaced their bathroom and kitchen. According to the tenants, no evidence had been led in support of the proposition that a full kitchen and bathroom needed to be replaced. The scope of work for remediation of the mould was limited and did not include a kitchen and bathroom renovation. The landlords are in fact claiming an upgrade to their property, noting that the kitchen had not been updated since the time the property was purchased in 1999. Ms Pick, however, did give uncontradicted evidence that because of the demolition works done by Quantum during the remediation of the property, it was necessary to replace the kitchen and laundry. Therefore, I would have allowed the claim made for the renovation costs in full.
142The fifth item was the costs of painting throughout the house in the sum of $33,009.90. Again, it seems to be that this was a necessary cost following on from the remediation works and would have been recoverable.
143The sixth item was for the costs of replacing curtains/blinds in the sum of $9,184.80. The landlords claimed the full value of replacing the blinds. The tenants submit this ignored the fact they were installed in 2002 and consequently, were twenty-two years old. Whether the tenants were required to reimburse damage will depend on the age of the property and its fittings or fixtures. The ATO Rental Properties Guide 2024 is the authoritative depreciation scale for rental properties. Window blinds have a twenty-year effective life. Accordingly, the tenants argue this item had no value. In final closing oral submissions, counsel for the landlords did not concede this item but made no submissions against the tenants’ argument. The tenants’ position seems to be correct so I would have disallowed the claim made for the cost of the blinds.
144The seventh item claimed is for loss of rent from September 2020 to April 2022, representing 20 months in the sum of $142,903. This claim is based on the proposition that the tenants would not have vacated the property despite being able to do so on one month’s written notice under the periodic tenancy but for the outbreak of mould. The landlords rely on the evidence of Ms McIntyre to this effect,[56] as well as Ms Pick’s evidence that the property was leased shortly after the end of the remediation works in April 2022.[57]
[56]See T16, L12-17, L3; T218, L8-21
[57]T266, L30 – T267, L11
145The tenants submit the loss of rent claimed rests on unproved assumptions. The loss of rent case was based on the proposition the tenants would, but for this event occurring, most likely have continued an occupation of the premises under the existing month-to-month lease. It was put that either the landlords or the tenants could have used their rights to terminate at any time. Ms Pick had given evidence that she wanted flexibility so that she could remove the tenants and for that reason preferred the periodic tenancy. She also said she might want to come back to the property if her marriage broke down or for some other scenario, including the ability to let her adult-aged children live there. She said to her agent in February 2020 that she was thinking she would like to move back to the house. No evidence was given about what market rate might be achievable if the tenants moved out, but Ms Pick gave evidence to the effect that the property had recently been on the market for rent since May with no success and a change in estate agents.
146Given the lease was a periodic one, either party could have terminated giving one months’ notice. Ms Pick wanted that flexibility in case her plans changed. Ms McIntyre’s evidence was to the effect that the property was convenient for the tenants at the time and mostly suited their needs. On the assumption the mould incident had not occurred, I assess the chance of the property continuing to be rented by the parties for a period of 12 months from September 2020 as likely. I would therefore have allowed the sum of $7,145.15 per month for 12 months being a total of $85,741.80 for loss of rent.
Issue 7: Did the property have issues which restricted air flow into and out of the property (‘ventilation issues’) due to construction practices in 1905, including:
(a) masonry in the internal walls extending into the subfloor below the property;
(b) a small clearance between the ground level and the base of the property, meaning less room for air to circulate within the subfloor; and
(c) insufficient external air vents?
147The landlords dispute that the property did in fact have any “ventilation issues” as alleged in Issue 7. The landlords argue that the evidence did not establish that the mould resulted from poor ventilation in the property. Fleming accepted there was inadequate ventilation in the sub-floor at the time of the incident. However, he said that the house itself was adequately ventilated as long as it was occupied. He also said that having more vents would not necessarily lead to a dry sub-floor if there was ongoing moisture ingress. He noted that the fact that the sub-floor might have been poorly ventilated did not mean that this would result in ventilation issues within the house itself.
148The landlords refer to O’Brien’s evidence. He had identified a number of features that he considered affected ventilation. However, he accepted in cross-examination that whilst he was trained to identify such features, including how they might lead to retention of moisture, he could not opine on the mechanism by which they would cause mould to develop.
149As for the tenants’ mould experts, Black and Boak, the landlords noted they had been asked to comment on issues relating to ventilation and what steps the landlords could have taken to improve it. However, neither of them were builders, nor engineers. That being so, their evidence arguably fell outside the exception to s79 of the Evidence Act as it was not wholly or substantially based on their specialised knowledge.
150Boak had said he would defer to a qualified builder or structural engineer on the topic of ventilation of a building. He accepted his opinions about ventilation were general commentary and would need to be substantiated by a full investigation. He also agreed that his opinions were not made by reference to any applicable standards or codes, including with respect to his opinion that the sub-floor vents were located at incorrect levels.
151Black never inspected the house. His opinions were based on reports from other people, none of whom were called to give evidence other than Murphy. He also had regard to photos, none of which showed the sub-floor or sub-floor vents, and what was described as the “general vibe”. Black referred to the Australian Standard 1668.2 which relates to mechanical ventilation in buildings, but ultimately agreed that it did not apply to the property as it was a house constructed in 1905.
152In response, the tenants noted that O’Brien and Fleming had agreed there was inadequate ventilation in the sub-floor of the property at the time of the incident. Their evidence was that the number of sub-floor vents were fewer than required by Australian Standards. In addition, it was likely that some of the ventilation holes in the internal sub-floor brickwork are blocked with heating ducts. However, this alone would not have led to a completely dry sub-floor if there was an ongoing source of water. O’Brien’s evidence was that these deficiencies were inherent in the construction. Fleming’s evidence was that buildings of this vintage usually had small crawl holes. However, ventilation of houses is not a new issue, and not a matter directly related to when the house was built. O’Brien was also concerned about the superstructure, i.e. the habitable space, given that the windows at the time of the incident were not operable and there were insufficient wall-vents. Eight new wall-vents had been inserted subsequent to the incident. Fleming was not concerned about the habitable space.
(e) dry building foundations?
191This issue is directed towards the obligations of the landlords to have the property in good repair before it was leased to the tenants.
192The landlords’ response to Issue 14 was that there was no evidence the property did not have any of the features referred to above. The evidence does not establish the property had poor ventilation (much less a working ventilation system the meaning of which is unclear), or that the foundations were not dry.
193The landlords did cause an extensive and through inspection of the property to be performed before the tenancy. This inspection is recorded in the entry condition report of 26 May 2016 which did not find any shortcomings in the property in relation to the matters identified in Issue 14.
194The basis upon which the tenants allege the landlords were required to satisfy themselves of the specific matters identified in Issue 14 in order to comply with s68 of the RTA is unclear. The obligation under s68 is to ensure the premises are maintained in good repair, which imposes an obligation to inspect and rectify defects of which they are aware or ought to be aware.[61]
[61]Shields [30]
195Even assuming the property did not have any of the features listed in Issue 14, there was no evidence that any of those issues actually caused the mould outbreak in September 2020.
196As for Issue 14(b) concerning the roof, the landlords noted the tenants indicated this issue is no longer pursued.[62]
[62]T522 – 523, L3
197In response, the tenants contend that this issue falls to be resolved by reference to what amounts to good repair within the meaning of s68. In Shields, Daly AsJ accepted that “good repair” means “tenantable repair” or “reasonably fit and suitable for occupation”.[63] The tenants submit that a property in good repair is one fit for the occupation of a reasonably minded tenant, and is one which is not susceptible to mould development.
[63]Shields [38]
198According to the tenants, under the first limb of the composite duty in s68, it was necessary for the landlord to inspect the property to determine whether it was susceptible to mould development. This would involve inspecting to see whether it had any moisture or ventilation issues. It was said this is a necessary incident of the s68 duty. This duty would then oblige the landlord to inspect the property to make sure it had the features referred to in subparagraphs (a) to (d) above. The tenants accept that the dry building foundations were not deemed relevant by the experts, being the matter referred to in subparagraph (e).
199The answer to this issue turns on the competing arguments about what a landlord is required to do both at the start of the tenancy and during its currency under s68. I deal with this topic in the response to Issue 16 below.
Issue 15: If the plaintiffs knew or ought to have known of the ventilation issues and moisture issues (if proved), were the plaintiffs required to discharge their duty under section 68 of the RTA to inspect the property during the defendants’ tenancy to make sure it had the features in Issue 14 above?
200This issue relates to the second aspect of the composite duty under s68, namely the obligations of the landlords to maintain the property in good repair during the currency of the rental agreement.
201In answer to this issue, the tenants argue the short answer is yes. It is said that the plaintiffs breached the duty because the mould contamination developed as a consequence of a sub-floor which was susceptible to moisture ingress and an inadequately ventilated house, defects of which the landlords were on notice either prior to or during the tenancy. It is said that both before and during the tenancy, the landlords breached s68 of the RTA by:
(a) failing to inspect the property upon notification of defects to ensure that it was in good repair, including by ensuring that it did not have any moisture or ventilation issues such as a working ventilation system and a system for preventing water ingress into the subfloor;
(b) failing to rectify any moisture and ventilation issues identified in that investigation;
(c) failing to notify the tenants that they needed to run the heating into order to prevent cupping of the floorboards; and
(d) otherwise failing to put in place a condensation control strategy if the property was so fragile that it required a particular kind of ventilation or maintenance strategy to prevent mould growth.
202In response, the landlords say that the evidence did not establish that they knew or ought to have known of any ventilation issues or moisture issues in the property. There was in fact no evidence there were any such issues in the property. The property did not have any of the specific features identified under Issues 14 and 15.
203As for the obligation to inspect the property during the tenancy, the landlords caused their property manager, RT Edgar, to produce condition reports every six months prior to the mould outbreak in September 2020. These reports did not find any shortcomings at the property in relation to the matters identified in Issue 15.
204As with Issue 14, the resolution of this issue turns upon the answer to the competing contentions about a landlord’s responsibility which is dealt with under Issue 16.
Issue 16: Did the plaintiffs breach their duty under section 68 of the RTA by amongst other things:
(a) failing to carry out inspections before and during the tenancy to satisfy themselves that the property had a working ventilation system, a system for preventing water ingress into the subfloor and dry building foundations;
(b) failing to remediate any ventilation issue at the start of the tenancy;
(c) failing to prevent water ingress into the subfloor;
(d) failing to instal moisture barriers;
(e) failing to remediate any moisture issues at the start of the tenancy;
(f) failing to take any remedial action during the tenancy with respect to cupping and crowning of floor boards, the roof windows of the sunroom and the bedroom windows; and
(g) failing to warn the defendants that, due to the ventilation issues and the moisture issues (if proved), if they left the property for an extended period, their possessions were at risk of suffering mould damage?
205The parties agree on the following legal principles concerning section 68:[64]
(a) the landlord has a duty to ensure that rental premises are maintained in good repair;
(b) that requires the landlord identify and rectify defects of which they are aware or ought to be aware; and
(c) the duty is a composite obligation, both at the start of the tenancy and during the tenancy.
[64]T623, L18-29
206The parties differ on the scope of the actions that should be undertaken by a landlord in order to comply with s68 of the RTA.
Tenants’ Submissions
207The tenants set out the following relevant principles deriving from Shields:[65]
(a) First, the imposition of a composite duty.
(b) Second, the duty to “ensure that rental premises are in good repair” is strict and absolute. This imposes an obligation upon a landlord to identify and rectify any defects of which they are aware or ought to be aware.
(c) Third, the term ‘good repair’ means ‘tenantable repair’ or ‘reasonably fit and suitable for occupation’.
[65]Tenants’ Written Closing Submissions [48]-[50]
208In Shields, Her Honour did not consider what is meant by “defects of which they are aware or ought to be aware”. That question was satisfied by a condition report prepared at the commencement of the tenancy which detailed copious amounts of defects.[66]
[66]Shields v Deliopoulos [2016] VSC 500 [30]
209When considering the question of whether the landlord ought to be aware of a defect, the tenants submit that the approach taken in Gration should be adopted.[67] Williams JA stated that:
The obligation imposed on a landlord by s103(2) of the 1994 Act to ensure that at the start of the tenancy the premises are in good repair would be no less onerous than the obligation in tort imposed by the common law of Australia on the landlord at the start of the tenancy.
[67]Tenants’ Closing Submissions [52]
210His Honour observed that this approach accords with the reasoning of Brennan CJ in Northern Sandblasting:[68]
I would hold the landlord in the present case to have owed a duty of care to the tenants and to their children to see that the premises at the time the tenants went into possession were as safe for their habitation as reasonable care and skill on the part of anyone could make them, excluding defects which could not have been discoverable by reasonable care of skill on the part of any person concerned with the construction, alteration, repair or maintenance of the premises.
[68]Gration v C. Gillan Investments Pty Ltd (2005) 2 QdR 267 [13]; Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313, 340
211In Northern Sandblasting, the High Court of Australia considered whether the landlord was liable for the electrocution of the tenant’s daughter by a stove in the rental property which had been defectively repaired. The tenant’s claim against the landlord succeeded in the tort of negligence, in that the landlord owed a duty of care to the tenants and to their children. The statutory claim under section 103(2) of the Residential Tenancies Act 1994 (Qld) was considered but the majority determined that it had no application – relief under this section is conferred to tenants as against the landlords, not on an individual who occupies the premises in some other capacity.
212The South Australian courts have similarly interpreted the South Australian comparable provision in a way consistent with the obligation in tort imposed by the common law on the landlord at the start of the tenancy.[69]
[69]See Knueppel v Zarpas [2004] SADC 162; Varricchio v Wentzel [2016] SASC 86
213This is also suggested to apply in Victoria, where Daly AsJ in Shields held that the relevant VCAT member’s interpretation of s68 was “inconsistent with the duty imposed at common law to take reasonable care to put and keep rental premises in a safe state of repair”.[70]
[70]Shields v Deliopoulos [2016] VSC 500 [30]
214In final oral submissions, the tenants said the relevant test under s68 on whether a landlord ought to have been aware is to be assessed by what would have been discoverable on an inspection by someone concerned with construction, alteration, repair and maintenance exercising reasonable care and skill. So not just a reasonable landlord but someone with a slightly elevated perception of these issues.[71] The tenants contend that the question of what “ought to have been aware” means is assessed by reference to the old common law authorities regarding negligence.[72]
[71] T543, L1-14
[72] T545-546, L1-10
Landlords’ Submissions
215The landlords address the following:
(a) First, the manner which the tenants pleaded their case under section 68.[73]
(b) Second, the scope of the duty under section 68 by reference to Shields.[74]
(c) Third, what it means to identify and rectify defects of which the landlord was aware, or ought to have been aware, both prior to and during the tenancy.[75]
[73]T619, L4-11
[74]T618, L14-21
[75]T618, L23-T619, L3
216First, the tenants have chosen to plead their case in a very particular way which is reflected in the statement of issues. It is pleaded by reference to a number of specific features of the building which are said to give rise to ventilation issues and to moisture issues.[76] For these reasons, the landlords are alleged to be aware or ought to have been aware of these issues because of those specific building features.[77]
[76]T619, L4-11
[77]T619, L13-16
217To overcome this, the framing of the tenants’ closing submissions suggest that landlords need to organise structural inspections by a skilled person who has construction and maintenance expertise before and during a tenancy to determine whether defects may arise due to the specific building features.[78] Without these structural inspections, landlords cannot comply with s68.[79]
[78]T621, L25-31-T622, L1-4
[79]T621, L8-11
218This proposition is surprising for two reasons:[80]
(a) What are the parameters for what the tenants are contending the landlord should have done in order to comply with the landlords’ obligations?
(b) What do the tenants need to prove in order to satisfy s68?
[80]T622, L6-13
219The landlords submit that tenants have to prove the following:[81]
(a) There must be a defect, namely, ventilation and moisture;
(b) The defect or defects caused the mould that broke out in September 2020;
(c) The landlords knew or ought to have known of the defect or defects before the mould outbreak and did not take any steps to fix those defects; and
(d) The tenants have suffered loss and damage, which is to be proved as a consequence of the breach.
[81]T622, L14-31
220The disagreement is what s68 requires the landlords to do in this case. By the tenants’ submissions, the landlords should have engaged a building inspector or a structural engineer before and during the tenancy to investigate possible defects.[82] This sets the standard too high for landlords – rather than identifying and rectifying defects of which the landlord is aware or ought to be aware, landlords are instead obliged to hunt for defects.[83]
[82]T623, L30-T624, L16
[83]T624, L25-T625, L5
221Second, in reference to Shields, Her Honour states that:
The duty is strict and absolute, and imposes an obligation upon a landlord to identify and rectify any defects of which they are aware or ought to be aware.
222Based on a reading of this paragraph, the landlords submit it is not necessary for the landlords to rectify defects that they are not aware of or have any reason to be aware of them.
223Moreover, Her Honour considers the meaning of the word ‘ensure’ in s68. Her Honour cites a portion of the judgment in Gration concerning this consideration. However, it did not identify the part of Gration in which Northern Sandblasting is discussed. Given the personal injuries nature of Gration, the landlords urge the Court to exercise caution in adopting a tort analysis and transplanting that to a residential tenancies context.[84]
[84]T628, L21-T629, L22
224Third, the landlords refer to Kneuppel v Zarpas (‘Kneuppel’),[85] a decision of the District of South Australia. His Honour, Acting Judge Kitchen sets out what “notice” and “knowledge” means for the purposes of the equivalent s68 as follows:
If that is the sense in which ‘ensure’ is used in s68 then before the tenancy begins the landlord (or at least some person on his behalf) must inspect the premises to ascertain the state of repair in order that the landlord is in a position to make sure they are in a reasonable state of repair at the beginning of the tenancy. That state of disrepair which such an inspection would reveal to a reasonable observer, the landlord has notice of. Any state of disrepair which occurs after the beginning of the tenancy, the landlord will not know of unless the landlord ascertains it by subsequent inspection or the tenant informs him of it. This construction accords with the common law duty of care of landlords to tenants, and members of the tenants household, injured by a defect in the landlords’ premises: see e.g. Gaudron J in Northern Sandblasting Pty Ltd v Harris…”[86]
[85] [2004] SADC 162
[86] Ibid [40]
225At paragraph 40, His Honour continued:
In my opinion s68, on its proper construction, means that a landlord has notice of defects, requiring repair which would reasonably have been discovered upon an inspection carried out by or on behalf of the landlord at the beginning of the tenancy; a landlord who fails to act with reasonable diligence to repair such a defect will be in breach of the term incorporated into the tenancy agreement by s68. As to any defect requiring repair, which occurs or develops during the tenancy agreement, a landlord is not in breach of the tenancy agreement unless it is proved that the landlord has notice of the defect and failed to act with reasonable diligence to repair it.
226Relying on this decision, the landlords argue there is no obligation placed upon them to identify and rectify defects which are not reasonably observable. Therefore, there is no obligation to engage an engineer to perform a structural assessment of the house purely as a precautionary measure in the event that something might emerge down the track.
Analysis
227What then is a landlord obliged to do to ensure that a rental property is in good repair? As referred to in Kneuppel, a landlord is required to repair defects which would have been reasonably discovered upon an inspection at the start. The landlord is deemed to have notice of a state of disrepair if it would have been apparent to a reasonable observer. During the tenancy, a landlord is required to repair defects which have been notified to the landlord in order to maintain the property in good repair.
228In this case, the landlords did undertake a comprehensive inspection of the property prior to the first rental agreement. The first entry condition report prepared by RT Edgar was some 79 pages and very detailed. No issues regarding moisture ingress or lack of ventilation was recorded by the estate agent who conducted the inspection. Ms Pick had previously lived in the property for 16 years before the tenants moved in and had not experienced any issues with mould. In these circumstances, I am satisfied that the landlords complied with their obligations to ensure the property was in good repair at the start of the tenancy.
229Thereafter, condition reports were prepared every 6 months, none of which reported issues with ventilation or moisture. In the absence of any notification from the agent and/or the tenants to the landlords, what more could the landlords have done? The landlords have to be made aware there is a problem in order to be placed on ‘notice’ of a defect that needs to be repaired. Significantly, apart from the mould incident in 2016, there was no further complaint relating to the presence of mould for the next four years until the outbreak in 2020. Ms McIntyre agreed in cross-examination that whilst she had made various complaints about the property, she did not report any mould issues after the 2016 incident.
230To all intents and purposes, the installation of the extraction fan as recommended by FG James appeared to have resolved the mould problem.
231I am satisfied on the evidence led that the landlords continued to comply with their obligations to keep the property in good repair during the course of the tenancy. I find the landlords were not on actual or constructive notice of any defect that they were required to repair during the currency of the tenancy. The allegation that the landlords must have been aware or ought to have been aware because of so called ventilation and moisture issues was not made out on the facts.
232Nowhere in s68 does it say that a landlord is obliged to go searching for defects either before or during the tenancy. The section requires landlords to repair defects of which they are aware or ought to be aware [87]– not to hunt for potential defects. I reject the tenants’ submission that it was a positive requirement for the landlords to have undertaken the various prescriptive matters listed in Issue 16 (and those listed in Issues 14 and 15), so as to ensure the property was in good repair. I also reject the proposition put forward by the tenants that a landlord must engage someone with sufficient building expertise to inspect the property both before and during the tenancy to investigate possible defects. This obligation proposed by the tenants does not find any support in the wording of s68 and nor does it follow from Her Honour’s findings in Shields. Further, such an obligation, if correct, would impose an unduly onerous and expensive task upon landlords which cannot have been the legislative intention.
Issue 17: In or around September, October and November 2020, were the defendants’ possessions inside the property subject to extensive mould damage?
[87] cf Shields [30]
233The answer to this question is yes. The landlords accepted that the tenants’ contents were clearly affected as a result of the mould outbreak in September 2020,
Issue 18: Was the mould damage caused by the plaintiffs’ breach of their duty under section 68 of the RTA?
234The resolution of this issue assumes the landlords breached s68 of the RTA. For the reasons already given, I am not persuaded that the landlords did breach their obligations under this section.
235Even assuming there was a breach on the part of the landlords, it has not been proved that the mould arose as a result of any such breach. The evidence led at trial was inconclusive as to how the mould outbreak actually occurred. A number of various and competing hypotheses were put forward by the experts but no expert witness was able to state categorically was the cause of the outbreak.
236The experts accept that mould occurs where there is excess moisture and a lack of ventilation. Despite a plethora of expert opinions, no one could say with any certainty what was the source of moisture ingress or that there was in moisture in the sub floor or in the habitable space in the house as at September 2020. As for ventilation, the lack of air vents might have contributed but Fleming said that additional vents would not assist if the source of the moisture ingress into the property was not identified. He described it therefore as being a “Band-Aid” solution. Any of the so called ventilation or moisture issues were not shown to have caused the mould outbreak in September 2020.
237In circumstances when no one can positively identify how the mould developed in the property, it was not established, in my view, that the actions or inactions of the landlords actually caused the mould outbreak. The evidence at trial did not prove that the property had ventilation or moisture defects that made the property susceptible to moisture ingress, which in turn had a causal connection to the mould outbreak.
238The requirement of causation is also reflected in the wording of s210 of the RTA which provides that compensation is payable when loss is suffered because of a breach of the Act. In my view, the necessary causal link between the alleged breach and resultant mould was simply not proved by the tenants.
Issue 19: What is the quantum of the defendants’ loss and damage?
239As the tenants’ claim against the landlords fails, it is unnecessary to assess the quantum of the losses clamed. But if I am wrong about this, then I will deal briefly with the categories of losses sought.
240The tenants’ losses were particularised in a schedule to their counterclaim. The losses were revised upwards in a schedule dated 29 July 2024.[88] The total sum sought was $245,033.65. In closing, the tenants said that this schedule should be read in conjunction with an aide memoire produced at trial. [89]
[88] CB 67-75
[89] Exhibit “D1”
241The tenants sought repayment of a bond they paid in the sum of $8,500. The landlords referred in passing to a Masonite garage wall being damaged and other minor damage which went to the right of the landlords to retain the bond. However, the evidence led about these matters was lacking both as to the nature and extent of any damage caused by the tenants, the costs of any repairs that might be required or were in fact paid. Ms McIntyre admitted that she and her husband had caused some minor damage to the property during their tenancy which would come out of the bond. [90]
[90] T197, L15-T198, L23
242I am unable to find what amount of the bond should be forfeited, if any, due to the lack of available evidence on the extent of damage caused by the tenants and associated cost to the landlords. Given the bond did form part of the tenants’ claim, the onus in my view then fell upon the landlords to identify what sum should be deducted from the bond to cover any necessary repairs. There was no evidence led about the costs of such repairs in which case the landlords did not discharge their onus. Accordingly, the tenants are entitled to a refund of the bond paid in the sum of $8,500.
243In the tenants’ closing submissions, they have identified seven categories of items of loss and damage, including the bond claim. I will deal briefly with the remaining six categories.
244The second category represented actual repair/restoration/disposal costs incurred by the tenants. I would have allowed the costs incurred for cleaning costs by the mould restoration specialist in the sum of $39,380. The removalist costs claimed in the sum of $11,778.60 represented the costs incurred to remove contaminated items from the property to a storage facility in Dandenong and for a period of storage. Those costs are reasonable, in my view, as is the claim for the cost of a skip bin in the sum of $1,644.88. Some other costs were listed in paragraph 140 of the tenants’ closing submissions. The total sought under this category was $60,942.93. I would have allowed this category in the sum claimed.
245The third category related to costs incurred to replace mould damaged items. The total sum sought was $3,464.61. These costs seem reasonable and I would have allowed them.
246The same goes for the fourth category claimed, being items where receipts were provided to show the value of the items damaged. Those amounts totalled $22,849.49.
247More problematic were the costs claimed in the fifth, sixth and seventh categories.
248Under the fifth category, Ms McIntyre has provided her estimate of the replacement cost of various items by conducting online searches to work out what each item would cost new. For example, she lists the cost of a new King size bed in the amount of $25,000; a new King single bed in the sum of $9,500 and a new couch for $12,000. On the subject of the beds, her evidence was that these had not been replaced due to the tenants’ inability to afford the cost. The total amount sought under this category is $59,065.20.
249The tenants say that categories six and seven can be dealt with together. The sixth category is where Ms McIntyre has listed out items which she and her solicitors have deemed to be equivalent to the items lost. The seventh category concerns items which by their nature are impossible to value independently so a bundled up estimate is provided.
250There is no doubt that a number of the tenants’ possessions were damaged by mould with the result that they had to be discarded or in some cases, repaired. It is the methodology by which the replacement costs have been calculated by the tenants which is attacked by the landlords as being a failure to properly prove the losses claimed. For the most part, Ms McIntyre, together with her lawyers, have sought to value those items by conducting internet searches of comparable items and producing a likely value based on their researches, The landlords claim that this is opinion evidence which Ms McIntyre is not qualified to give. The tenants argue that to the extent that the evidence is opinion evidence, Ms McIntyre can give that evidence as an exception to that rule under s78(b). I am not persuaded by their submissions that this exception applies. I take the view that the assessment by Ms McIntyre and her solicitors as to the estimated cost of the so called comparable items is opinion evidence which they are not qualified to give and therefore is inadmissible. I would not have allowed the items claimed in the sixth and seventh categories.
251The landlords argue that the losses claimed should have been the subject of a report from a loss adjuster or valuer. Further, the landlords argue the results of internet searches are inadmissible as hearsay referring to authorities in their final submissions in support of that contention. [91] They say in the alternative, that this evidence should be excluded under s135 of the Evidence Act because it is unfairly prejudicial and does not represent the market or fair value of those items. I agree with the landlords’ submission that the screen shots are inadmissible hearsay having regard to the authorities relied upon. I would have also excluded this evidence under s135 had it been necessary to do so. The end result is that I would not awarded compensation under s210 of the RTA, or damages under the second rental agreement, in respect of the items claimed by the tenants under the fifth category.
[91] Natty v Breen [2018] VCC 1477 [169] – [174] and the cases referred to therein
(7) Conclusion and disposition
252By reason of the foregoing, I will dismiss the landlords’ claim and the tenants’ counterclaim save as to the refund of the bond.
253I will hear from the parties on the form of orders to be made consequent upon these reasons, including costs. Subject to any submissions to be made about costs, my preliminary view is that the parties should each bear their own costs of the proceeding.
- - -
Certificate
I certify that these 66 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 9 September 2025.
Dated: 9 September 2025
Associate to Her Honour Judge A Ryan
0
7
0