Simsab Pty Ltd v Shaw

[2025] NSWCATCD 50

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Simsab Pty Ltd v Shaw [2025] NSWCATCD 50

Hearing dates:

7 April 2025

Date of orders:

23 June 2025

Decision date:

23 June 2025

Jurisdiction:

Consumer and Commercial Division

Before:

R Glover, General Member

Decision:

(1)     By consent, the Applicant has leave to amend the application to include a claim for rent payable during the term of the tenancy.

(2)     The Respondent is to pay the Applicant the sum of $4,800.

(3)     The balance of the Applicant’s claim is dismissed.

(4)     The Tribunal notes that the Applicant has already received the sum of $4,800 through payments made by the Respondent ($2,400) and having received half of the rental bond ($2,400). Those amounts are to be credited against the money order with the effect that no further payments are required to be made by the Respondent.

Catchwords:

LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — Termination — By tenant — Abandonment of premises — Rent and outgoings — Payment of rent — Rights and obligations of landlords and tenants

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Residential Tenancies Act 2010 (NSW)

Residential Tenancies Regulation 2019 (NSW)

Cases Cited:

Abdel-Messiv v Marshall [2017] NSWCATAP 136

Al-Basry v Maharaj [2022] NSWCATCD 9

Bhandari v Laming [2015] NSWCATAP 224

Cowling v Tran; Tran v Cowling [2022] NSWCATCD 128

Darren and Julie Patterson v David Dawson [2015] NSWCATAP 31

David v Langman [2021] NSWCATAP 360

Duffey v Tuntevski; Tuntevski v Duffey [2020] NSWCATCD 24

Imran v Zhang [2023] NSWCATD 159

Lethorn v Wagenheim [2020] NSWCATAP 199

Li v Bonestroo [2022] NSWCATAP 2

Moffatt v Muscat [2023] NSWCATCD 13

Panttalone v Jacobe [2021] NSWCATAP 418

Rathod v Liu [2019] NSWCATAP 80 at [60]

Rizk & Juma v Lai & Lai; Lai & Lai v Rizk & Juma [2023] NSWCATCD 137

Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9

Rodrigo v Shang (No 2) [2015] NSWCATAP 101

Seymour v Wu [2021] NSWCATAP 289

Srisivalingam v O’Leary [2023] NSWCATAP 40

Stewart v Wang [2024] NSWCATCD 70

Talbot-Price v Jacobs [2008] NSWCA 189

White v Di Lucca [2023] NSWCATAP 219

Texts Cited:

Anforth & Ors, Residential Tenancies, Law and Practice, NSW (8th ed, 2022, The Federation Press)

Category:

Principal judgment

Parties:

Applicant: Simsab Pty Ltd

Respondent: Haydn Eric Shaw

Representation:

Applicant: Mr Stamatatos (Agent)

Respondent: In person

File Number(s):

2024/00377010

Publication restriction:

Nil

REASONS FOR DECISION

1. These reasons concern a claim by the Applicant for the payment of a lease break fee in the sum of $4,800. The Respondent resists that claim.

The Hearing

2. These proceedings were listed for final hearing on 7 April 2025.

3. The Applicant appeared at the hearing by its managing agent, who was granted leave to appear. The Respondent appeared in person.

4. At the hearing, the Applicant relied on a bundle of documents, which included:

1. a summary of events;

2. a tenancy application form;

3. the residential tenancy agreement;

4. an ingoing condition report;

5. a tenancy ledger;

6. correspondence;

7. notice of termination; and

8. photographs.

5. The Respondent relied on an Affidavit sworn by himself with annexures, and a report by Shaw Building Solutions dated 31 August 2024. In relation to that report, on 11 December 2024 the Tribunal ordered its author to attend the hearing for the purposes of cross examination. That did not occur. The Respondent explained that he had attempted to secure the attendance of the author of the report but was unable to do so. In circumstances where the author of the report was not available for cross examination, the Applicant objected to the Respondent relying on that report.

6. During the hearing I exercised my discretion to permit the Respondent to rely on the report. I reached that conclusion for the following brief reasons. First, the order made by the Tribunal did not go so far as to say that the Respondent would not be entitled to rely on the report if its author did not attend the hearing. Secondly, I accept that the Respondent made some effort to secure the attendance of the author of the report. Thirdly, the key issue raised by the Applicant’s agent as the basis for cross examination was a doubt about the date on which an inspection was carried out by the author of the report. However, during the hearing the Applicant’s agent conceded that there was no dispute that the inspection had been carried out nor was there any issue raised as to the authenticity of the report itself. Rather, the issue was the date on which the inspection was carried out in circumstances where the Applicant had been served with the report on 11 December 2024. Fourthly, during the hearing, the Applicant’s agent did not identify any particular issue or matter within the report that he wished to cross examine the author about beyond disagreement with some of the conclusions in it in relation to the presence of mould within the premises. Finally, given that Applicant had been served with the report on 11 December 2024, it had had ample opportunity to obtain evidence in reply to it should it have wished to do so. I also had regard to the principles set out in ss 36 and 38 (including subs 38(4)) of the Civil and Administrative Tribunal Act 2013 (NSW).

7. However, the fact that the author of the report was not present to be cross examined is a matter that goes to the weight that may be given to the conclusions and opinions expressed in it.

8. In addition, oral evidence was given, and submissions were made, by both parties.

9. To be clear, the summary of the evidence relied on by the parties (and included in their respective bundles) set out in the preceding paragraphs is not intended to be exhaustive, to identify all documents contained in the parties’ bundles, or to summarise them. In determining the issues that arise in these proceedings, I have not found it necessary to refer to each step, communication, event, matter, or issue that occurred or arose during the tenancy. Nor I have found it necessary to refer to each item of evidence and submission made during the hearing. In those circumstances, that a particular issue, document, event or matter is not referred to in these reasons should not be understood as having been overlooked. I have, however, had careful regard all the material before the Tribunal in reaching the conclusions set out below.

The position of the parties

10. By its application, the Applicant seeks an order that the Respondent pay a lease break fee. The Respondent’s position was the tenancy had been validly terminated by him such that the circumstances in which a lease break fee is payable did not arise.

11. However, in Respondent’s Affidavit he sought:

1. a refund of the rental bond; and

2. refund of the rent paid “due to the property’s uninhabitable condition”.

12. No cross-application had been filed by the Respondent bringing any claim as against the Applicant.

13. The parties made clear that the issues between them were in relation to the amounts that had already been paid by the Respondent. As will be set out below, the Respondent paid $2,400 (a $1,200 holding deposit and $1,200 for one week’s rent), and the Applicant had received $2,400 of the rental bond following orders made by the Tribunal on 11 December 2024 (which were later set aside). The parties indicated that the issues in the proceedings were directed to whether the Applicant was entitled to retain that amount (as a lease break fee). The Respondent’s position was that if the Applicant was not entitled to a lease break fee, the $4,800 that the Applicant had received should be refunded to it as the rent payable should be reduced to zero having regard to the condition of the premises.

14. During the hearing, the Applicant sought leave to amend its claim to include a claim for rent during the period in which the Respondent was in possession of the premises in circumstances where the Applicant’s entitlement to recover a lease break fee had been put in issue. The Respondent consented to that amendment and accordingly, I grant leave to the Applicant to amend its claim to include a claim for rent.

Background facts

15. The Applicant was the landlord and the Respondent was the tenant pursuant to a residential tenancy agreement entered into on 28 August 2024 (Residential Tenancy Agreement). The premises that were the subject of the Residential Tenancy Agreement were a two-bedroom residential apartment located in Gould Street on Bondi Beach.

16. The Residential Tenancy Agreement had a fixed term commencing on 31 August 2024 and ending on 30 August 2025. The rent payable was $1,200 per week.

17. Prior to entering into the Residential Tenancy Agreement, the Respondent inspected the premises on 24 August 2024 and lodged an application from on 25 August 2024. On that form, the Respondent noted that he had viewed the property on 24 August 2024 and marked a “Yes” check box against the question “Property Clean”.

18. On 27 August 2024, the Respondent’s application was approved. The Applicant’s agent sent the Respondent an email informing him that his application had been approved. That email included the following statement:

The property is leased as in its current condition as per your inspection of the property on 24/08/24, you undertake to accept this property in its current condition by paying the holding deposit today using the Bpay details below.

19. The Respondent paid the “holding deposit” of $1,200 to the Applicant’s agent on 27 August.

20. As indicated above, on 28 August 2024, the parties entered into the Residential Tenancy Agreement.

21. The Tenant took possession of the premises on 31 August 2024. On that day, the Respondent was provided with a copy of an incoming condition report. That report was initialled on each page by the Applicant’s Agent (on 29 August 2024) and by the Respondent (on 31 August 2024). The Respondent made no notations or comments on the incoming condition report.

22. Notwithstanding that the Respondent made no notations or comments on the incoming condition report, later on 31 August 2024, the Respondent sent the Applicant’s agent an email that email stated:

After our meet I had half hour spare so I walked around the apartment and note the following to be done urgently prior to me moving in:

- repainting of walls – there are marks all over the walls internally throughout

- change of carpet in main bedroom as stains throughout

- deep clean throughout, signs of rust and dirt everywhere

- I note the balcony light is not working and signs of rust

- I note the fan dial in the main bedroom is falling off

- windows cleaned

-ceiling fans cleaned

- oven cleaned

…

As you know I am a landlord and I would not let my property in the state this is in. Until the above is done I will not be moving in and I expect a disbursement of my rent until such works are complete.

…

23. On 2 September 2024, Mr Miazzi (an employee of the Landlord’s agent) replied indicating that he had forwarded the Respondent’s email to the “senior property manager for advice”. The Respondent replied to that email, stating (among other matters):

…

As explained to you on the phone, as a landlord I am expected to do the below after each tenancy and certainly if my tenant handed back the property to me in this state I would take it out of their bond money which is what it is lodged with the RBO for claims like this.

I am not prepared to move into a place that is this dirty with stains and marks everywhere, particularly at the rent I am paying per week.

…

24. On 3 September 2024, there was a further exchange of correspondence between the Respondent and the Applicant’s agent, in which the Applicant’s agent stated:

…

Our painter went past the property yesterday to quote for painting.

The senior property manager has confirmed he has received the quote this morning, just need to discuss with the owner.

Like I advised you yesterday, you accepted the property in its current condition when you inspected it on the 24/8/24.

Nothing was raised during the application process.

I’m doing the best I can keeping you informed, I even took the time yesterday to clean up areas of concern you have raised (cobweb in lounge, both ceiling fans, spot at the back of the oven/x1 tray & marks on balcony wall).

…

25. On 4 September 2024, the Respondent sent an email to the Applicant’s agent which stated:

I am writing to express my serious concern regarding an ongoing mould issue at the property…

During my inspection on 31 August 2024, I have encountered a significant mould infestation in multiple areas of the property, including the lounge room, bathroom, and both bedrooms. This includes moult on ceiling fans, walls and window reveals to name a few. Despite the apparent cleaning that has been carried out, the mould continues to post a serious health risk to me. This I must stress, I believe is not simply a matter of routine maintenance but indicates underlying structural problems that were not disclosed to me at the time of signing the lease. I have photographs logged on 31 August 2024 that detail the same.

I have consulted health professionals, and they have advised that continued exposure to this environment could seriously affect my health and well-being. The presence of mould in a rental property is a serious breach of the landlord’s obligation under the Residential Tenancies Act 2010 (NSW) to provide and maintain the premises in a reasonable state of repair and to ensure that it is fit for habitation.

It is evidence that the underlying cause of the mould – likely due to moisture or structural issues – has not been adequately addressed. As you are aware, superficial cleaning is not a sufficient remedy for mould problems of this nature, as mould is likely to recur unless the root cause is property identified and resolved.

Given the severity of this issue, I request that a qualified professional be engaged to assess the property and carry out the necessary repairs to eliminate the mould at its source. This should include addressing any leaks, improving ventilation, and repairing any structural defects contributing to the mould growth, this includes the carpets, walls and windows.

Until the mould problem is fully rectified, and the property is safe for habitation, I will not be moving into the premises. Additionally, I expect to be compensated for the rent already paid during this period when the property is uninhabitable.

I kindly request a rent refund or a rent-free period until the issues are resolved. Please treat this matter with utmost urgency, as mould presents serious health risks, especially with prolonged exposure.

…

26. On 6 September 2024, the Respondent emailed the Applicant’s agent stating (emphasis in original):

I am writing to formally notify you of a serious issue with the property…which I leased on 31 August 2024 and yet to move in.

Further to thorough inspections of the property on 31 August 2024, I have discovered a severe mould infestation and leaks. The mould poses significant health risks, particularly as I have noticed it in areas such as the lounge room, bathrooms, bedrooms, walls, ceilings and windows. I believe the leaks could be the resulting issue of said mould.

Given the extent and severity of the issue, I believe it is not simply a matter of routine maintenance but indicates underlying structural problems that were not disclosed at the time of signing the lease. I have in turn consulted health professionals, and they have advised that continued exposure to this environment could seriously affect my health and well-being having existing health issues with asthma.

The presence of mould in a rental property is a serious breach of the landlord’s obligation under the Residential Tenancies Act 2010 (NSW) to provide and maintain the premises in a reasonable state of repair and to ensure that it is fit for habitation. Further after an additional inspection carried out today with one of the managers at your letting agents as requested by you, I note the refusal to carry out any urgent repairs to fix the issues.

Due to these circumstances and failure to maintain immediate repair, I am requesting an immediate termination of my lease without penalty, effective 31 August 2024 (back dated from discovery of the issues above).

27. Further correspondence passed between the Respondent and the Applicant’s agent between 7 and 11 September 2024, however, the next significant event that occurred was that on 12 September 2024. On that date, the Respondent sent the Applicant’s agent an email stating:

I am formally issuing this breach notice regarding the property…which I leased on 31 August 2024.

As previously communicated in emails sent on 31 August and several follow up communications, the property has a sever mould infestation and leaks, making it uninhabitable and posing significant health risks.

Despite my prior requests for urgent repairs, no adequate steps have been taken to rectify these health issues.

As per the Residential Tenancies Act 2010 (NSW), I am now providing you with 14 days from the date of this notice to remedy the breach and carry out the necessary repairs.

28. Attached to that email was a Notice to Terminate Tenancy Agreement (Termination Notice), which indicated that it had been issued pursuant to s 98 of the Residential Tenancies Act 2010 (NSW) (Act). The Termination Notice specified a termination date – i.e., the date on which the tenant is to vacate the premises – of 26 September 2024.

29. No application was made by the Applicant to revoke the Notice of Termination aside pursuant to s 98(4) of the Act, and no application was made by the Respondent for an order terminating the Residential Tenancy Agreement pursuant to s 103 of the Act. Rather, the Respondent returned the keys to the Applicant’s agent on 27 September 2024. The tenancy ended on that date.

30. As of the end of the Tenancy, the Respondent had paid:

1. $1,200 by way of a holding deposit, which was applied to the first week’s rent; and

2. $1,200 for a further one week’s rent.

31. On 8 November 2024, the Tribunal ordered that the rental bond be paid $2,400 to the Applicant and the balance to the Respondent. Although those orders were set aside on 14 November 2024 in circumstances where they were made in the Respondent, the Applicant has received $2,400 from the rental bond. Accordingly, the Applicant has received $4,800 in total from the Respondent. The Respondent has received $2,400 of the rental bond.

Jurisdiction

32. As indicated above, the Applicant and Respondent were parties Landlords and Tenants were parties to the Residential Tenancy Agreement. That agreement was governed by the Act, and the premises were within the meaning of residential premises for the purposes of the Act.

33. The substance of the Applicant’s claim in these proceedings (and the Respondent’s response to it) is the extent of the Respondent’s obligations to pay a lease break fee or rent at the end of the tenancy, and entitlement to the rental bond. I am satisfied that the proceedings were commenced within time: see ss 175(3) and 190 of the Act and cl 39 of the Residential Tenancies Regulation 2019 (NSW).

34. Accordingly, I am satisfied that the Tribunal has jurisdiction to hear and determine these proceedings.

Issues for determination

35. The Applicant’s claim (and the Respondent’s response to it) gives rise to the following issues:

1. Is the Respondent liable to pay a lease break fee?

2. Is the Respondent liable to pay rent for the period in respect of which the Respondent was in possession of the premises?

3. Who is entitled to retain the rental bond?

36. It may immediately be recognised that those issues are interrelated.

When is a “break lease fee” payable: General principles

37. Section 81 of the Act sets out the circumstances in which a Residential Tenancy Agreement will terminate. It relevantly provides (bold in original):

(1)   Termination only as set out in Act A residential tenancy agreement terminates only in the circumstances set out in this Act.

(2)    Termination by notice and vacant possession A residential tenancy agreement terminates if a landlord or tenant gives a termination notice in accordance with this Act and the tenant gives vacant possession of the residential premises.

(3)    Termination by order of Tribunal A residential tenancy agreement terminates if the Tribunal makes an order terminating the agreement under this Act.

(4)    Other legal reasons for termination A residential tenancy agreement terminates if any of the following occurs—

(a)    a person having superior title (such as a head landlord) to that of the landlord becomes entitled to possession of the residential premises,

(b)    a mortgagee of the residential premises becomes entitled to possession of the premises to the exclusion of the tenant,

(c)    a person who succeeds to the title of the landlord becomes entitled to possession of the residential premises to the exclusion of the tenant,

(d)    the tenant abandons the residential premises,

(e)    the tenant gives up possession of the residential premises with the landlord’s consent, whether or not that consent is subsequently withdrawn,

(f)    the interests of the landlord and tenant become vested in the one person (merger),

(g)    disclaimer occurs (such as when the tenant’s repudiation of the tenancy is accepted by the landlord).

38. Here, the Termination Notice was purportedly issued pursuant to s 98 of the Act, which provides:

(1)    A tenant may give a termination notice on the ground that the landlord has breached the residential tenancy agreement.

(2)    The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given.

(3)    The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement if it is a fixed term agreement.

(4)    The Tribunal may, on application by a landlord made before the termination date and within the period prescribed by the regulations, revoke a termination notice by a tenant if satisfied that the landlord has remedied the breach and that it is appropriate, in the circumstances of the case, to continue the tenancy.

Note—

The tenant may apply directly to the Tribunal on the ground of breach by the landlord for a termination order without first giving notice (see section 103).

39. Clause 51 of the Residential Tenancy Agreement deals with the circumstances in which a “lease break fee” will be payable. relevantly provided:

The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of the following amount if the fixed term is not more than 3 years:

51.1   4 week’s rent if less than 25% of the fixed term has expired,

....

This clause does not apply if the tenant terminates a fixed term residential tenancy agreement for a fixed term of more than 3 years or if the tenant terminates a residential tenancy agreement early for a reason that is permitted under the Residential Tenancy Agreement.

Note. Permitted reasons for early termination include destruction of residential premises, breach of the agreement by the landlord and an offer of social housing or a place in an aged care facility, and being in circumstances of domestic violence. Section 107 of the Residential Tenancies Act 2010 regulates the rights of the landlord and tenant under this clause.

40. As is made clear in the notation to that clause, it is subject to s 107 of the Act, which provides:

(1)   The Tribunal may, on application by a landlord, order a tenant to pay compensation to the landlord for any loss (including loss of rent) caused by the abandonment of the residential premises by the tenant.

(2)    The landlord must take all reasonable steps to mitigate the loss and is not entitled to compensation for any loss that could have been avoided by taking those steps. This subsection does not apply in the case of a fixed term agreement for a fixed term of not more than 3 years.

(3)    The compensation payable by a tenant under this section in respect of a fixed term agreement for a fixed term of not more than 3 years is the amount of the applicable break fee for the tenancy calculated under subsection (4).

(4)    The “break fee” for a fixed term agreement for a fixed term of not more than 3 years is--

(a)    if less than 25% of the fixed term had expired when the premises were abandoned--an amount equal to 4 weeks rent, or

(b)    if 25% or more but less than 50% of the fixed term had expired when the premises were abandoned--an amount equal to 3 weeks rent, or

(c)    if 50% or more but less than 75% of the fixed term had expired when the premises were abandoned--an amount equal to 2 weeks rent, or

(d)    if 75% or more of the fixed term had expired when the premises were abandoned--an amount equal to 1 week’s rent.

(5)    The amount of any money paid to a landlord by a tenant on terminating a fixed term agreement before the end of the fixed term or before otherwise abandoning the premises (other than money previously due to the landlord under the residential tenancy agreement) is to be deducted from any amount payable to the landlord under this section.

41. To the extent that there is any inconsistency between s 107 of the Act and the terms of the Agreement, s 107 of the Act prevails: see Talbot-Price v Jacobs [2008] NSWCA 189.

42. Accordingly, a “lease break fee” is only payable in circumstances where a tenant has abandoned the premises: Rathod v Liu [2019] NSWCATAP 80 at [60]; Lethorn v Wagenheim [2020] NSWCATAP 199 at [28]. However, the presence of the word “may” in s 107 provides that the Tribunal retains a discretion as to whether to order the payment of a “lease break fee” in any given case: see, e.g., Abdel-Messiv v Marshall [2017] NSWCATAP 136; Li v Bonestroo [2022] NSWCATAP 2 at [26]; Al-Basry v Maharaj [2022] NSWCATCD 9 at [70]. Thus, even in circumstances where a tenant has “abandoned” residential premises, there is no automatic right in a landlord to recover a “lease break fee”.

43. Section 106 of the Act sets out the circumstances in which an “abandonment” of residential premises will occur. It provides:

(1)    The Tribunal may, on application by a landlord, make an order declaring that the tenant abandoned the residential premises on a specified day.

(2)    The tenant is taken to have abandoned the residential premises on the specified day.

(3)    The landlord may take immediate possession of residential premises that have been abandoned by the tenant if there are no remaining occupants.

Note—

The residential tenancy agreement is terminated if a tenant abandons the residential premises (see section 81(4)(d)).

(4)    In determining whether a tenant has abandoned the residential premises the Tribunal may consider (but is not limited to considering) the following—

(a)    the failure by the tenant to pay rent under the residential tenancy agreement,

(b)    any evidence that the tenant no longer resides at the premises,

(c)     any failure by the tenant to carry out any obligations relating to the residential premises under the residential tenancy agreement.

44. In Darren and Julie Patterson v David Dawson [2015] NSWCATAP 31 cited with approval in Lethorn v Wagenheim [2020] NSWCATAP 199 at ([34]), the Appeal panel held (at [56]):

…abandonment occurs when a tenant vacates within the fixed term of a lease without the consent of the landlord or without a Tribunal order.

45. In Residential Tenancies, Law and Practice, NSW (8th ed, 2022, The Federation Press) the learned authors describe the concept of abandonment of a residential tenancy as follows (at [2.81.9]):

An abandonment occurs when a tenant unlawfully vacates the property during the term of the tenancy…

…

In the context of residential tenancies, an abandonment occurs when:

(a)   a tenant vacates within a fixed term without the landlord’s consent or without an order of the Tribunal; or

(b)   a tenant vacates within a periodic tenancy without giving the required notice.

Consideration of the Applicant’s claim

46. Although all of the issues raised by the parties in these proceedings are interrelated, it is convenient to first consider the question of whether the Applicant has established its claim to a lease break fee.

47. As set out above, on 12 September 2024 the Respondent served the Notice of Termination on the Applicant’s agent pursuant to s 98 of the Act, which nominated a termination date of 26 September 2024. The Respondent later vacated the premises on 27 September 2024 when it returned the keys to the Applicant’s Agent.

48. The Respondent says that he vacated the premises in accordance with the Termination Notice and accordingly the Residential Tenancy Agreement came to an end on 27 September 2024 pursuant to s 81(2) of the Act. The Respondent says that in those circumstances, he cannot be taken to have abandoned the premises within the meaning of s 106 of the Act such that the liability to pay a lease break fee pursuant to s 107 does not arise. The Landlord maintains an entitlement to claim a lease break fee.

49. A similar circumstance to that in the present case arose in Stewart v Wang [2024] NSWCATCD 70. In that case, a tenant served a notice of termination pursuant to s 98 of the Act on a landlord. No application to revoke the notice of termination was made, and the tenant vacated the premises in accordance with the notice. The landlord claimed a lease break fee. The tenant maintained that the tenancy had come to an end pursuant to s 98(4) of the Act such that it could not be said to have abandoned the premises to trigger a liability to pay a lease break fee.

50. The Tribunal considered the interaction between ss 98, 106 and 107 of the Act in such a circumstance, and held (emphasis added):

27. The interaction between s 98 and ss 106 and 107 is considered in Anforth & Ors, Residential Tenancies, Law and Practice, NSW (8th ed, 2022, The Federation Press) at [2.98.2]

It seems therefore that the legislative scheme is that a tenant may serve a termination notice alleging breach on the landlord’s part and vacate the premises, unless within seven days of receiving the notice the landlord applies to the tribunal for an order that the breach has been remedied and the tenancy should continue.

If the tenant’s notice is invalid for any reason, including the lack of merit in the grounds alleged in the notice by the tenant, then an abandonment will occur if the tenant vacates. This issue is dealt with under s 106.

28.   That is, unless there was a valid reason to terminate the tenancy, the tenancy can only be regarded as having come to an end due to abandonment: see Al-Basry v Maharaj [2022] NSWCATCD 9 at [69].

51. In Rodrigo v Shang (No 2) [2015] NSWCATAP 101, the Appeal Panel of the Tribunal considered an appeal from a decision of the Tribunal that raised similar considerations. Like this case, there the tenant had served a notice of termination pursuant to s 98 of the Act. No application to revoke the notice had been made by the landlord, and the tenant vacated the premises. At first instance, the Tribunal found that the tenant had failed to establish the breach of obligation by the landlord on which the notice of termination was based and that the tenant was therefore in breach of the agreement by vacating the premises early. In those circumstances, the Tribunal ordered the tenant to pay a lease break fee (see [4]-[8]). The tenant appealed that decision, including on grounds that the Tribunal had erred in ordering the payment of a lease break fee (see [9]). The Appeal Panel found no error in the approach adopted by the Tribunal at first instance (see [34]-[54]).

52. In my view, the construction of ss 98, 106 and 107 of the Act that emerges from those decisions is plainly correct. It would lead to absurd results if a tenant were able to bring a tenancy to an end by serving a notice pursuant to s 98 of the Act and vacating the premises in accordance with that notice in circumstances where the grounds for issuing the notice were not established (or perhaps non-existent).

53. Accordingly, it is necessary to consider whether the Notice of Termination issued by the Respondent was valid.

54. Section 82 of the Act sets out the requirements for termination notices. It provides:

(1)    A termination notice must set out the following matters—

(a)    the residential premises concerned,

(b)    the day on which the residential tenancy agreement is terminated and by which vacant possession of the premises is to be given,

(c)    if the notice is not given under section 84, 85, 96 or 97, the ground for the notice,

(d)    any other matters prescribed by the regulations.

(2)    A termination notice must be in writing and be signed by the party giving the notice or the party’s agent.

(3)    A termination notice for a periodic agreement may specify a day other than the last day of a period for the payment of rent as the termination date.

55. As set out in the passage immediately above, s 82(1)(c) required the Notice of Termination to set out the ground for the notice. No particular ground, other than “Breach of agreement” were set out in the Notice of Termination itself. Rather (as set out above) the email serving the Notice of Termination stated (emphasis added):

I am formally issuing this breach notice regarding the property…which I leased on 31 August 2024.

As previously communicated in emails sent on 31 August and several follow up communications, the property has a severe mould infestation and leaks, making it uninhabitable and posing significant health risks.

Despite my prior requests for urgent repairs, no adequate steps have been taken to rectify these health issues.

As per the Residential Tenancies Act 2010 (NSW), I am now providing you with 14 days from the date of this notice to remedy the breach and carry out the necessary repairs.

56. In Panttalone v Jacobe [2021] NSWCATAP 418, the appeal panel concluded that a termination notice that set out particulars of the alleged breach in an “annexure” complied with s 82(1)(c) of the Act (see [11]-[17]).

57. I am satisfied that by identifying that the notice was issued on the grounds of a breach of the agreement, together with the description of that breach in the email to which the notice was attached, the requirements of s 82(1)(c) were met. I am satisfied that the other requirements of s 82 of the Act were met.

58. The Notice of Termination was served by email, in accordance with clause 50 of the Residential Tenancy Agreement and s 223 of the Act. Accordingly, I am satisfied that the Notice of Termination was validly served.

59. Having regard to the principles set out above, the key question, then, is whether the ground on which the Notice of Termination was issued is established. It is plain from the email to which the Notice of Termination was attached that the ground on which it was issued is that the Respondent alleged that the Applicant was in breach of the Residential Tenancy Agreement as the premises were not fit for habitation due “severe mould infestation and leaks”. Although the Respondent made various other complaints in correspondence with the Applicant’s agent, that is the ground on which the Termination Notice was issued. It is that ground that must be examined in considering whether the Termination Notice was valid – not other issues that were raised by the Tenant but not identified as the ground on which the Notice of Termination was issued.

60. The obligation of a landlord to provide residential premises in a state fit for habitation is found in s 52 of the Act, which relevantly provides:

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

(1A)    Without limiting the circumstances in which residential premises are not fit for habitation, residential premises are not fit for habitation unless the residential premises—

(a)    are structurally sound, and

(b)    have adequate natural light or artificial lighting in each room of the premises other than a room that is intended to be used only for the purposes of storage or a garage, and

(c)    have adequate ventilation, and

(d)    are supplied with electricity or gas and have an adequate number of electricity outlet sockets or gas outlet sockets for the supply of lighting and heating to, and use of appliances in, the premises, and

(e)    have adequate plumbing and drainage, and

(f)    are connected to a water supply service or infrastructure that supplies water (including, but not limited to, a water bore or water tank) that is able to supply to the premises hot and cold water for drinking and ablution and cleaning activities, and

(g)    contain bathroom facilities, including toilet and washing facilities, that allow privacy for the user.

(1B)    For the purposes of subsection (1A)(a), residential premises are structurally sound only if the floors, ceilings, walls, supporting structures (including foundations), doors, windows, roof, stairs, balconies, balustrades and railings—

(a)    are in a reasonable state of repair, and

(b)    with respect to the floors, ceilings, walls and supporting structures—are not subject to significant dampness, and

(c)    with respect to the roof, ceilings and windows—do not allow water penetration into the premises, and

(d)    are not liable to collapse because they are rotted or otherwise defective.

(1C)    The Secretary may exempt any specified premises or any specified class of premises from the operation of all or any part of this section. An exemption may be unconditional or subject to conditions.

(2)    A landlord must not interfere with the supply of gas, electricity, water, telecommunications services or other services to the residential premises unless the interference is necessary to avoid danger to any person or to enable maintenance or repairs to be carried out.

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

Note—

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

(4)    This section is a term of every residential tenancy agreement.

61. Clause 19.1 of the Residential Tenancy Agreement contained relevantly identical obligations.

62. The word “provide” in s 52(1) of the Act indicates that he temporal focus for the performance of the obligation is the date on which possession of premises passes from the landlord to the tenant: see Duffey v Tuntevski; Tuntevski v Duffey [2020] NSWCATCD 24 at [65].

63. Therefore, for the Landlord to have been in breach of its obligations under s 52(1) of the Act, the premises must not have been fit for habitation at the start of the tenancy – i.e., on 9 January 2024: Bhandari v Laming [2015] NSWCATAP 224 at [37]; Srisivalingam v O’Leary [2023] NSWCATAP 40 at [59]; Imran v Zhang [2023] NSWCATD 159 at [17]-[19]; Rizk & Juma v Lai & Lai; Lai & Lai v Rizk & Juma [2023] NSWCATCD 137 at [65]-[71].

64. In Moffatt v Muscat [2023] NSWCATCD 13 at [30], the Tribunal described the general test for habitability of premises as follows:

The test at general law for the habitability of premises has remained in essential respects the same for more than 130 years, although the lens through which the test is viewed reflects contemporary standards. Residential premises will be fit for habitation if they may be dwelt in with safety and reasonable comfort having regard to contemporary standards of living: Proudfoot v Hart [1890] UKLawRpKQB 72; (1890) 25 QBD 42. However, premises will not be found uninhabitable lightly: De Soleil v Palmhide P/L [2010] NSWCTTT 464.

65. Similarly, in Cowling v Tran; Tran v Cowling [2022] NSWCATCD 128 at [34], the Tribunal described the test for habitability as follows:

A residential premises is fit for habitation if it is able to be used and dwelt in by a tenant with safety and reasonable comfort having regard to contemporary standards: Menashi v Ly [1997] NSWRT 162. The cases have stated that a finding of uninhabitability is a difficult test to satisfy and should not be found lightly: Bannister v Cheung [2014] NSWCATCD 105 at [20].

66. See also Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 at [117]; Imran v Zhang (supra) at [20].

66. The primary evidence relied on by the Respondent as establishing the grounds on which the Termination Notice was issued is the report of Shore Building Solutions. That report indicates that an inspection was done on 31 August 2024. Although doubt about the precise date on which the inspection was done was raised by the Applicant’s agent, I am satisfied that it was conducted at some stage between 31 August and 27 September 2025 when the Respondent was in possession of the premises.

67. As set out above, two matters were set out as the basis on which the premises were said to be not fit for habitation; a “mould infestation” and leaks within the premises.

68. Dealing first with the asserted “mould infestation”, the Shore Building Solutions report states that there were “signs of mould spores and particulate on the walls and ceilings surrounding the laundry, hallway and living area” and that “there are visual signs of mould spores that have formed on various locations of the walls and ceilings most notably in the living area and around the laundry”. However, no more detail than that is set out in the report, and no description beyond there being “signs” of mould spores or particulate is given. Only one image in the report is said to depict “mould spores” on a wall adjacent to the laundry area. However, the quality of the image does not enable me to identify mould spores or anything else other than discolouration. The Applicant says that the discoloration was caused by patching of the wall rather than mould.

69. Similarly, the images taken by the Applicant’s agent after vacant possession was given by the Respondent do not depict the presence of mould spores. Whilst the Respondent’s affidavit referred to images as having been attached; no such images were attached to the version of the affidavit lodged with the Tribunal.

70. I am not satisfied that the material in the Shore Building Services report establishes that there was a “mould infestation” within the premises so as to render them not fit for habitation. Even assuming (without deciding) that there was some evidence of mould spores in the premises at the commencement of the tenancy, the mere presence of mould does not, in my view, render premises unfit for habitation in accordance with the principles set out above. In order to determine whether the presence of mould rises to a level so as to render premises unfit for habitation, an assessment of the extent of mould within the premises must be undertaken. The material relied on by the Respondent does not, in my view, support a conclusion that the premises were so badly affected by mould so as to render them unfit for habitation.

71. The second basis on which the Respondent alleged the premises were not fit was said to be the presence of leaks. In this respect, the Shore Building Solutions report identified water ingress through windows in several locations throughout the premises, including:

1. Living room, in respect of which the report stated that there was “evident [sic] of an ongoing water leak which has not been rectified” and that there was damage to sills that “appears to be caused by water ingress”. In relation to the sliding windows in the living room, the report identified that “there has been a retrofitted weather seal mullion which hasn’t sealed the entire height of the window, this allows wind driven rain to enter the apartment, thus causing damage to the sill area”;

2. In the main bedroom, in respect of which the report stated that it was “obvious that the windows do leak…there are signs of efflorescence which has leached on the base of the window frames/sill…It is evident that these windows will leak when there is directional rain…”

3. In bedroom 2, in respect of which the report stated “it is obvious that the windows do leak” and that “it is evident that these windows will leak when there is directional rain…”

73. As set out above, s 52 of the Act contains a range of matters that are to be considered in determining whether residential premises are fit for habitation. Relevantly, s 52(1A) has the effect of deeming residential premises as being not fit for habitation unless they are “structurally sound”. Section 52(1B) – also a deeming provision – relevantly provides that residential premises are structurally sound for the purposes of s 52 of the Act only if (relevantly) the windows are in a reasonable state of repair and do not allow water penetration into the premises. The effect of those provisions is that if windows in residential premises permit water penetration, the premises will not be “structurally sound” for the purposes of s 52 of the Act and, in turn, they are to be taken as being “not fit for habitation” in accordance with s 52(1A) of the Act.

74. In the present case, I am satisfied – having regard to the content of the Shore Building Solutions report - that the windows in the living room and bedrooms of the premises allowed water penetration into the premises at the commencement of the tenancy. Accordingly, having regard to the effect of s 52 of the Act, the premises were not fit for habitation. It follows that I am satisfied that as of the commencement of the tenancy, the Applicant was in breach of its obligation pursuant to s 52 of the Act.

75. Having reached that conclusion, I am satisfied that the Termination Notice was valid as the grounds for it having been issued – namely, that the premises were not fit for habitation – has been established. As the Respondent vacated the premises in accordance with the notice, the tenancy came to an end on 27 September 2024 by operation of law: s 81(3) of the Act. In those circumstances, the Respondent cannot be said to have abandoned the premises within the meaning of s 106 and 107 of the Act.

76. Those conclusions having been reached, the occasion for the payment of a “lease break fee” by the Respondent does not arise. This aspect of the Applicant’s claim fails.

77. As indicated above, during the hearing the Applicant (with the consent of the Respondent) sought and obtained leave to amend its claim to include a claim for rent payable during the period in respect of which the Respondent was in possession of the premises. The Respondent, on the other hand, says that no rent was payable as the rent should be reduced to $0 having regard to the condition of the premises. In substance, the Respondent’s position is that the rent payable during the tenancy was excessive having regard to the condition of the premises.

78. The primary position is that a tenant is responsible to pay rent for each and every day that the tenant is in possession of residential premises: see, for example, s 33(1) of the Act; Residential Tenancy Agreement, cl 3.

79. The obligation of a tenant to pay rent is separate from the obligations of a landlord that arise under s 52 of the Act: White v Di Lucca [2023] NSWCATAP 219 at [45]-[55]; Seymour v Wu [2021] NSWCATAP 289 at [44]-[47]. In David v Langman [2021] NSWCATAP 360, the Appeal Panel held:

35.   …whilst the withholding of rent might be understandable in human terms, it was not legally justifiable. It is trite law that the obligation to pay rent is generally independent of the landlord’s obligations under a residential tenancy agreement.

36. As was said in Seymour v Wu [2021] NSWCATAP 289:

“44.    Be that is it may, as the Tribunal said, correctly in our view, the obligation upon a tenant to pay rent (see clause 3.1 of the 2014 Agreement) is separate from the obligation of the landlord to maintain the premises fit for habitation (RTA s 52) and in a reasonable state of repair (RTA s 63 and s 65), assuming Mr Seymour relies upon those sections.

45. The unilateral withholding of any amount of agreed rent is not a remedy available to a tenant unless the parties have agreed otherwise, there is a statutory abatement of rent, or an authorised deduction or abatement of the rent – Halsbury’s Laws of Australia, online edition, at [245-3090]; Chatfield and Another v Elmstone Resthouse Ltd [1975] 2 NZLR 269; Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd, NSWSC, unreported, 1 July 1998; (1998) 9 BPR 16,361.

46. As Mullighan J said in Debonair Nominees Pty Ltd v J & K Berry Nominees Pty Ltd [2000] SASC 244; (2000) 77 SASR 261 at 271:

“Liability to pay rent does not cease merely because the lessor has breached a covenant. The only deductions which can be made by the tenant are those authorised by statute or expressly permitted by the lease …”

See also Butt P, Land Law, 6th ed., Lawbook Co, 2010 at [15.94].

37.   Put another way, even if the Landlords were in breach of the agreement, the Tenants were still obliged to pay the full rent.

80. Therefore, the obligation of the Respondent to pay rent in accordance with the residential tenancy agreement does not fall away merely because I have found that the Applicant was in breach of its obligation pursuant to s 52 of the Act.

81. As I have observed above, the substance of the Respondent’s position is that the rent payable during the tenancy was excessive. Relevantly, s 44 of the Act provides (bold in original):

(1)    Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders—

(a)    an order that a rent increase under an existing or proposed residential tenancy agreement is excessive and that, from a specified day, the rent for residential premises must not exceed a specified amount,

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

(2)    Time limit for excessive rent increase applications An application for an order that a rent increase is excessive must be made within the period prescribed by the regulations after notice of the increase is given.

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

(4)    Determination of excessive rent For the purposes of making an order under this section, the Tribunal may declare that amounts payable under a contract, agreement or arrangement under which goods, services or facilities are provided to the tenant are rent.

…

82. In the present case, it is only s 44(1)(b) that can be relevant. However, an application for an order that the rent payable under a residential tenancy agreement may be is excessive under s 44(1)(b) of the Act (or s 44(1)(a) for that matter), must be made during the tenancy. Even if I were to treat the Respondent’s position as set out in his affidavit as an application for an order that the rent was excessive pursuant to s 44(1)(b), that application was not made during the tenancy. Accordingly, the Tribunal’s power to make such an order is not enlivened.

83. For completeness, I note that s 45 of the Act provides certain remedies to a tenant on frustration of a residential tenancy agreement. It provides:

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

(2)    The Tribunal may order that—

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

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

84. However, that power is not enlivened in this case as none of the circumstances in which rent may abate set out in s 43(2) of the Act arise. Similarly, none of the remedies set out in s 47 of the Act are available unless a tenant has paid rent when it was not required to do so by reason of the operation of the Act or under the terms of a residential tenancy agreement. That is not this case.

85. In those circumstances, the Applicant has established its claim for rent during the tenancy. Although the Respondent validly terminated the tenancy for a breach of the Applicant’s obligations pursuant to s 52 of the Act, having regard to the principles set out above that does not result in a circumstance where the Respondent is absolved from the obligation to pay rent. No application for orders pursuant to s 44(1)(b) of the Act was made during the tenancy, and no other claim has been brought against the Applicant to give rise to a circumstance where liabilities may be set-off against one another: see, for example, Seymour v Wu (supra) at [47].

86. For those reasons, I will order the Respondent to pay the Applicant rent for the period of the tenancy – a period of four weeks, or $4,800.

87. As indicated above, the Applicant has already received $4,800 through a combination of payments from the Respondent and having received $2,400 from the rental bond. Those amounts are to be credited against the money order that I will make such that no further payment need be made by the Respondent to discharge that liability. If follows that the Respondent is entitled to retain the other half of the rental bond that has already been paid to it.

Conclusion

88. For the above reasons, I will make the following orders:

1. By consent, the applicant has leave to amend the application to include a claim for rent payable during the term of the tenancy.

2. The Respondent is to pay the Applicant the sum of $4,800.

3. The balance of the Applicant’s claim is dismissed.

4. The Tribunal notes that the Applicant has already received the sum of $4,800 through payments made by the Respondent ($2,400) and having received half of the rental bond ($2,400). Those amounts are to be credited against the money order with the effect that no further payments are required to be made by the Respondent.

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

Registrar

Decision last updated: 13 August 2025