Whiteside v Mallett Street Pty Limited

[2023] NSWCATCD 169

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Whiteside v Mallett Street Pty Limited [2023] NSWCATCD 169

Hearing dates:

21 November 2023

Date of orders:

01 December 2023

Decision date:

01 December 2023

Jurisdiction:

Consumer and Commercial Division

Before:

P French, Senior Member

Decision:

(1) Pursuant to s 115(1) of the Residential Tenancies Act 2010 (NSW) the Tribunal declares that the termination notices dated 24 July 2023 and 6 September 2023 are of no effect because they are retaliatory notices.

(2) The rent payable for the premises was excessive from 30 June 2022 to 29 June 2023 and is not to exceed $700.00 per week for the period 30 June 2022 to 8 September 2022 and $840.00 per week for the period 9 September 2022 to 29 June 2023.

(3) Order 2 is liquidated. The landlord, Mallett Street Pty Limited must pay the tenants, Samuel Whiteside and Philippa Velhinho, $12,370.00 immediately.

(4) The application is otherwise dismissed.

Catchwords:

LEASES AND TENANCIES – Residential Tenancies Act 2010 (NSW) – excessive rent due to withdrawal or reduction in goods, services and facilities provided with residential premises – termination notices – retaliatory notice

Legislation Cited:

Residential Tenancies Act 2010 (NSW), ss 44, 52, 115

Residential Tenancies Regulation 2019 (NSW), s 39

Cases Cited:

Curry v Eftimovski [2023] NSWCATAP 290

De Soleil v Palmhide P/L [2010] NSWCTTT 464

Proudfoot v Hart (1890) 25 QBD 42

Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9

Steinbeck v McDonald [2015] NSWCATAP 90

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Samuel Whiteside (First applicant)
Philippa Velhinho (Second applicant)

Mallet Street Pty Limited (Respondent)

Representation:

Samuel Whiteside (Self-represented)
Philippa Velhinho (Self-represented)

Richardson and Wrench Pyrmont/Glebe (Respondent)

File Number(s):

2023/00381627 (Previously RT 23/35909)

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. Before the Tribunal was an application by Samuel Whiteside and Philippa Velhinho (the tenants) made on 5 August 2023 which sought the the following orders:

1. an order pursuant to s 115(1) of the Residential TenanciesAct 2010 (NSW) (the Act) that would declare that a Termination Notice dated 24 July 2023 served on them by the landlord’s agent under s 85 of the Act was of no effect because it is a retaliatory notice,

2. an order pursuant to s 44(1)(a) of the Act that a rent increase to $1,200.00 notified to them by a Rent Increase Notice dated 6 July 2023 is excessive,

3. an order pursuant to s 44(1)(b) of the Act that the rent payable for the premises was excessive between 30 June 2022 and 21 September 2023 due to the reduction or withdrawal of goods, services and facilities provided with the rented premises, and

4. an order pursuant to section 65(1) of the Act that would require the landlords to carry out specified repairs to the premises.

2. The orders sought at paragraphs (b) and (d) were not pressed at hearing. The order sought at paragraph (a) was also amended at the start of the hearing with leave of the Tribunal to also refer to a subsequent termination notice issued under 85 of the Act on 6 September 2023.

3. The Tribunal’s power to make excessive rent orders is constrained by s 44(6)(a) of the Act which provides that such an order can not exceed 12 months. I therefore directed the tenants to amend their application to specify the 12 month period in relation to which they sought an excessive rent order. This resulted in the tenants specifying the period 30 June 2022 to 29 June 2023. The order sought a paragraph (c) above was considered on this basis.

4. For the reasons set out following, I have determined that the tenants are entitled to a declaration that the termination notices served on them under s 85 of the Act are of no effect because they are retaliatory notices. I have also determined that the tenants are entitled to excessive rent orders spanning the period 30 June 2022 to 29 June 2023 because of their loss of use of part of the premises during the first period, and the substantial reduction in their amenity of the premises both during the first and the second periods which stemmed from significant water ingress into the premises due to building defects. The application has otherwise been dismissed.

Procedural history

5. The application was first listed before the Tribunal, differently constituted, for Conciliation and Hearing in person on 6 September 2023. The tenants attended that listing of the application. The landlords were represented at that listing by Ms S Stergiotis, a Property Manager in the employ of the landlord’s Managing Agent, which trades as Richardson and Wrench Pyrmont/Glebe. In accordance with the Tribunal’s usual practice where both parties are present at the first listing of an application the Tribunal attempted to assist the parties to resolve the dispute by Conciliation. Those efforts were not successful. Consequently, the application was adjourned to a Special Fixture Hearing. The Tribunal gave directions to the parties for the filing and exchange of the documentary evidence that they intended to rely on at the final hearing.

Evidence and hearing

6. Both parties have complied with the Tribunal’s directions for the filing and exchange of evidence (there was a short delay in the filing of the landlord’s evidence, but nothing turned on this). The tenants relied upon a bundle of documents filed on 20 September 2023. This was marked Exhibits A1. The landlord relied upon a bundle of documents filed on 6 October 2023. This was marked Exhibit R1.

7. The Special Fixture Hearing was conducted in person. Mr Whiteside and Ms Velhinho both attended the hearing, and both gave evidence under affirmation. Ms Stergiotis, Property Manager, attended the hearing on behalf of the landlord and gave oral evidence under oath. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.

Background facts

8. The dispute arises from a residential tenancy agreement that was first made on 16 August 2021. It was originally a fixed term agreement of 52 weeks duration which was expressed to commence on 16 August 2021 and end on 14 August 2022. On or about 13 July 2022 the landlord’s agent invited the tenants to sign a further fixed term agreement of 52 weeks duration commencing from 15 August 2022. The tenants declined to sign that agreement on the basis that they wanted repairs completed first. The tenancy has therefore continued on a periodic basis after the end of the initial fixed term.

9. The residential tenancy agreement authorises a maximum of 3 persons to ordinarily occupy the premises. When the residential tenancy agreement was made there were 3 tenant parties. The third tenant vacated the property in August 2022, allegedly due to the state of disrepair of her bedroom (as to which see following) (third tenant). The residential tenancy agreement was varied in September 2022 to remove her as a tenant party to the agreement. The tenants are unrelated adults who are in a ‘shared house’ arrangement. The tenants secured a third house mate for property on or about 12 October 2022.

10. On or about 16 August 2021 the landlord’s agent completed a Start-of-Tenancy Condition Report for the premises. The tenants were provided with copies of this report and returned a copy completed by them to the agent on or about 21 August 2022 (the Condition Report). It is thus a Report to which the presumption contained in section 30 of the Act applies. A copy of that Condition Report is in Exhibit R1.

11. I will return to the Condition Report in further detail following. However, in overview, the agent records the premises as being in undamaged condition (Undamaged “Y”) throughout, although various paint defects and marks to walls are noted in the comments section. In the section of the Report that concerns the “Minimum Standards” the agent ticked the “yes” box certifying that the premises was structurally sound, being in a reasonable state of repair, not liable to collapse because of rot or other defects, not subject to significant dampness, and not subject to water penetration. The tenants agreed to the agent’s stated condition except in relation to 3 items. A skirting board in the formal lounge/dining room is noted as missing on one wall., the window in bedroom 1 is noted as stuck/damaged and unable to be opened, and it is not agreed that there was a chandelier light in that room as noted by the agent. The tenants also comment that the laundry exterior door is water damaged, that the external toilet door is water damaged and rotting, that the roof over bedroom 1 is leaking that there is mildew and water damage to the ceiling and skylight, and that the window in that room is stuck and can’t be opened.

12. The rent initially payable under the agreement was $1,050.00 per week. I note that at the time the tenants applied for the property it was listed for rent at $995.00. However, they bid additional rent in order to secure the property. The rent was increased to $1,200.00 per week on and from 11 September 2023 in accordance with a Notice of Rent Increase dated 6 July 2023.

13. The rented premises is a two storey town house located in Camperdown. On the first level there is an ‘entry’ room, garage, loungeroom with an enclosed storage area, laundry and toilet. On the second level there are 3 bedrooms, one with an ensuite toilet, bathroom, open plan kitchen and dining room, and another lounge room. There is an enclosed, paved and partially covered courtyard at the rear of the premises. There is reverse cycle air-conditioning in 1 loungeroom and 1 bedroom, and a dishwasher.

14. On 30 June 2022 part of the roof of the premises suffered structural damage during severe wet weather, which resulted in substantial water ingress through the ceiling into a bedroom and its ensuite (bedroom 1) on the second level of the dwelling occupied by the third tenant. The tenants notified the landlord’s agent of the water ingress on 30 June 2022.

15. The landlord’s agent reported the roof damage and water ingress to the landlord on 1 July 2022 and sought instructions to engage a tradesperson. The landlord gave those instructions, and a work order was issued later that day,

16. Over the following weeks, during persistent wet weather, water continued to flow onto the ceiling of bedroom 1 causing the ceiling to sag to the point of imminent collapse. Water also fell into the bedroom from the ceiling onto the third tenant’s bed, clothing, and personal possessions. The third tenant temporarily vacated this room and the premises on 9 July 2022 because she apprehended the ceiling would collapse and because water was saturating and damaging her bed and possessions.

17. On 11 July 2022 a tradesperson organised by the landlord’s agent attended the premises to inspect the roof damage and water ingress. Some attempt was made to weatherproof the roof, but no work was carried out to the interior on the property.

18. On 15 July 2022 in the context of persistent rain, the tenants complained to the landlord’s tradesperson and agent again about continued water ingress into bedroom 1.

19. The landlord’s tradesperson attended the premises to carry out repairs to the roof on or about 18 July 2022. However, that repair was not successful. Water continued to leak into bedroom 1. The tenants notified the landlord’s agent that this was the case on 18 July 2022.

20. Also, on 18 July 2022 the tenants notified the landlord’s agent that the third tenant had vacated bedroom 1 and the property due to the risk of collapse of the ceiling and water saturation and damage of her bedding and possessions.

21. On 19 July 2022 the landlord’s tradesperson attended the property to install battens across the ceiling of bedroom 1 in an effort to prevent its collapse. No attempt was made to repair the water damage to the ceiling and interior of the bedroom. He attended the property again over the following days to carry out further work on the roof in an attempt to weatherproof it.

22. On 1 August 2022 the tenants notified the landlord’s agent that the third tenant would permanently vacate the property on 8 August 2022 and surrender her tenancy because her bedroom was uninhabitable. They requested a rent reduction due to the loss of use of the third tenant’s bedroom, and the consequent loss of her contribution to the rent (which was $350.00 per week).

23. Also, on 8 August 2022 the tenants notified the landlord’s agent that it had become evident that an adjoining bedroom (bedroom 2) had also suffered water damaged to its ceiling and walls with the result that large sections of paint and plaster were damp and detaching.

24. On 8 September 2022 the ceiling of bedroom 1 was replaced by the landlord’s contractor. No repairs were carried out elsewhere in the room or to any other part of the property.

25. Throughout the period August to October 2022 the tenants made repeated requests for further repairs to the premises to address water damage, damp, and mould and for a reduction in rent. In response to their rent reduction requests Ms Stergiotis requested additional justifications and photographs, and then the completion of application form, but the tenants received no substantive response to their requests. No further repairs were commissioned.

26. On 6 July 2023 Ms Stergiotis served the tenants with a rent increase notice that increased the rent to $1,200.00 per week from 11 September 2023. In response to the email enclosing that notice Mr Whiteside replied:

…

This notification for the rental increase has been received, we would like to request that the property owner is cc’d into this thread to streamline communication moving forward.

Throughout our tenancy, we have made numerous requests to repair damages and improve general conditions throughout the property which have been overlooked.

With the exception of emergency repairs, there has been almost no general maintenance work actioned to maintain the overall condition and presentation of the property.

As we have made R&W aware previously, the property is generally in fairly unmaintained condition, with rotten doors, mould, rotten/used window frames, holes in the walls from previous occupants, patchy/unfinished paintwork, missing/unadhered tiles in bathrooms, leaking plumbing, missing skirting boards, continual pest control issues from the student accommodation next door and peeling paint/plaster in almost every room.

We have made R&W aware of these issues over the course of our tenancy and the condition of many of these worsened over time due to inaction.

In particular, the deterioration of multiple rooms from water ingress and when the roof collapsed was not addressed. While the section of the ceiling that collapsed was replaced, all other damages including plasterwork, paintwork, water stains and ongoing mould issues persist after months of requests were ignored. Philippa and myself were never compensated or offered a reduction for the months that this bedroom was uninhabitable and the occupying tenant was forced to move out. There is extensive correspondence with you asking for assistance in resolving these matters at the time in which these conversations were drawn out for month, ultimately to never be repaired or reimbursed.

Please let us know over the next few days if the owner believes that the proposed rental increase is justified given the issues outlined. If so, we will have to take the matter to the tribunal to ensure that maintenance is performed and that the rent of $200 per week ($400 per tenant) is justified given the condition of the property.

…

27. Ms Stergiotis replied to Mr Whiteside’s email on 7 July 2022 stating in part that it was her understanding that all maintenance issues were resolved. She requested Mr Whiteside to forward an ‘email in point form of maintenance items which require repair’.

28. In response to that email on 10 July Mr Whiteside sent Ms Stergiotis 3 emails enclosing photographs of mould and water damage. In response Ms Stergiotis advised Mr Whiteside that she would be attending the property with a plumber at 9:00am the following day (Tuesday) to inspect the property for concealed water ingress. Mr Whiteside initially objected to this inspection because it was not available and inadequate notice had been given. He asked that the inspection take place on Wednesday afternoon. However, Ms Stergiotis insisted on 9:00am the following day on the basis that water ingress was an urgent repair that did not require notice.

29. In the early morning of 11 July 2023, Mr Whiteside sent Ms Stergiotis an email which contains 39 issues in dot point form to be inspected when she visited the property later that day. Many of the items on that list concern water damage, damp, and rot in various rooms. It is not in issue that during the inspection the plumber confirmed that the property was significantly affected by rising damp. Some but not all of the 39 issues on Mr Whiteside’s dot point list were inspected. Ms Stergiotis indicated that she would obtain quotations for some work and present these to the landlord for approval. Following the inspection Mr Whiteside emailed Ms Stergiotis to confirm his understanding of the outcome of the inspection, and to request that Ms Stergiotis arrange another inspection to look at those issue that had not been inspected.

30. In the following week a plumber attended the property to repair some, but not all, leaking plumbing.

31. On 24 July 2023 Ms Stergiotis emailed both tenants as follows:

I hope you are well.

We understand that the plumbing items were attended to last week.

Would you kindly confirm.

Also H&R maintenance have been engaged to urgently attend to assess and quote most remaining items on your repair list.

Please assist them.

As a separate matter, the owners will be taking back possession of the property Accordingly, we have served a 90 day termination notice while they consider their options for the property moving forward.

You can return the property anytime during the 90 day period.

32. On 26 July 2023 Mr Whiteside replied to this email setting out what plumbing repairs had been completed and what had not. He also states:

…

It is extremely disappointing that the owner has retaliated to these repair requests by issuing a termination notice.

As reliable long-term tenants, we had been very open communication with you regarding the condition of the property and outstanding repairs.

There was not an objection to the rental increase as long as the interior damage from water ingress was addressed, general repairs were actioned and the property was maintained to a reasonable state of repair. These issues were reported to you over a year ago with months of follow-up requests being ignored.

33. Later, 26 July 2023, Ms Stergiotis replied to this email as follows:

I will respond further next week, once I have quotes from trades regarding maintenance.

With respect to the termination notice, we wish to assure you, it is a separate commercial decision for the owner not relevant or retaliatory to maintenance items.

The owners are happy to attend to items which need repair, they are awaiting our trades quote from H&R.

34. On 5 August 2023 the tenants instituted these proceedings.

35. On or about 8 August 2023 the landlord’s agent received a quotation for remedial work to the property which was in the amount of $11,979.00. On 15 August 2023 Ms Stergiotis advised the tenants that this quotation had been approved by the landlord. On 17 August 2023 she further advised the tenants that the works would commence on 22 August 2023 and take approximately 5 days to complete. In fact, the remedial work commenced on 28 August 2023. The tenants sought a reduction in rent while these repairs were carried out, but this was refused.

36. On 6 September 2023 the tenants and Ms Stergiotis attended NCAT for Conciliation and Hearing. Prior to this offers and counteroffers of settlement had been made. Further attempts to settle the dispute were made with the assistance of NCAT’s Conciliator. The tenants also took advice from an (independent of NCAT) Tenant Advocate who apparently advised them to amend their application to seek an additional monetary amount from the landlord. The Conciliation was not successful which resulted in the tenant’s application being set down for hearing.

34. After the hearing Ms Stergiotis served the tenants with a further End of Periodic Agreement Termination Notice which required them to return possession of the premises on 6 December 2023.

Excessive rent order

38. The Tribunal’s power to declare that rent is excessive is found in s 44 of the Act, which provides, relevantly:

44   Tenant’s remedies for excessive rent

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

…

(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 mount.

…

(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.

…

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

(a)   the general market level of rents for comparable premises in the locality or a similar locality,

(b)   the landlord’s outgoings under the residential tenancy agreement or proposed agreement,

(c)   any fittings, appliances or other goods, services or facilities provided with the residential premises,

(d)   the state of repair of the residential premises,

(e)   the accommodation and amenities provided in the residential premises,

(f)   any work done to the residential premises by or on behalf of the tenant,

(g)   when the last increase occurred,

(h)   any other matter it considers relevant (other than the income of the tenant or the tenant’s ability to afford the rent increase or rent).

(6)   Effect of excessive rent order: An order by the Tribunal specifying a maximum amount of rent –

(a)   has effect for the period (of not more than 12 months) specified by the Tribunal,

…

39. Section 30 of establishes a presumption as to the correctness of a condition report that is signed by both a landlord and a tenant. In this respect it provides:

30   Condition report evidence of condition of premises

(1)   A condition report that is signed by both the landlord and the tenant is presumed to be a correct statement, in the absence of evidence to the contrary, of the state of repair or general condition of the residential premises on the day specified in the report.

(2)   This section does not apply –

(a)   to any matter that could not have reasonably been discovered on a reasonable inspection of the premises, or

(b)   to any statement in the report about which the tenant makes a written dissenting comment on the copy of the report completed by the tenant and retained by the landlord.

40. Section 52 of the Act codifies a landlord’s general obligations with respect to residential premises, including the minimum standards for habitability with which a landlord must comply. It is relevant to this aspect of the tenant’s claims. It provides, relevantly:

52   Landlord’s general obligations for residential premises

(1)   A landlord must provide the residential premises … 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

…

(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.

…

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

41. Section 63 of the Act codifies a landlord’s obligation to maintain premises in a reasonable state of repair. It provides, relevantly:

63    Landlord’s general obligation

(1)   A landlord must provide and maintain the residential premises in a reasonable state of repair, having regard to the age of, rent payable for and prospective life of the premises.

(2)   A landlord’s obligation to provide and maintain the residential premises in a reasonable state of repair applies even though the tenant had notice of the state of disrepair before entering into occupation of the residential premises.

…

42. At the outset I note that the application insofar as it sought an order pursuant to s 44(1)(b) of the Act was made before the end of the tenancy as required by s 44(3). The Tribunal therefore has jurisdiction to make the order sought.

43. The distinction between a ‘withdrawal’ and ‘reduction’ in goods services and facilities for the purposes of s 44(1)(b) was discussed by an Appeal Panel of the Tribunal in Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 at [124] where it is said:

124. As to what constitutes a reduction, in our view this means the goods, services or facilities are of a qualitative or quantitative standard which is less than what a landlord is required to provide under a residential tenancy agreement. On the other hand, a withdrawal suggests there must be a removal or inability to use the particular goods, services or facilities. That is, the goods services or facilities or part of them are no longer available to a tenant.

44. There can be no doubt on the evidence before me that bedroom 1 and its ensuite were withdrawn from the tenants use between 30 June 2022 and 8 September 2023. These rooms were initially subject to significant water ingress through their ceilings from the damaged roof, saturating bedding and possessions. The ceiling of the bedroom was then at risk of collapse. It was temporarily stabilised by the installation of battens on 19 July 2023. However, the bedroom and ensuite remained seriously damp and water damaged after that date. In this respect the tenants have filed several photographs which depict the state of the rooms during this period. They show the ceiling wet with large structural cracks, damp, water damaged cornices partially detached and affected by mould, and damp and water damaged walls. Paint and plaster on the ceilings and walls had bubbled and is subject to peeling and detachment.

45. Ms Stergiotis submitted that the bedroom could have been occupied again from the date the ceiling was stabilised with battens but I do not accept that submission. The ceiling and walls were damp and mouldy and awaited a major repair.

46. The common law test for the habitability of premises is that it is capable of being dwelt in with reasonable safety and comfort having regard to cotemporary standards, bearing in mind that uninhabitability will not be found lightly: Proudfoot v Hart (1890) 25 QBD 42; De Soleil v Palmhide P/L [2010] NSWCTTT 464. Sections 52(1A) and (1B) of partially codify the test for habitability of premises by specifying some minimum standards for habitability of rented premises. They include that premises be structurally sound, in a reasonable state of repair, not subject to significant dampness, and not liable to collapse. On any reasonable view bedroom 1 and its ensuite were uninhabitable between 30 June 2022 and 8 September 2022 having regard to the common law test and statutory minimum standards for habitability. With respect to the common law test, it is well established that damp and mould is potentially a serious risk to human health and thus not safe. Shedding plaster and paint is also a safety risk, even if it is accepted that the ceiling was stabilised against collapse by battens.

47. I also bear in mind with respect to the habitability of bedroom 1 and it’s ensuite that it is recorded in the Start of Tenancy Condition Report that the ensuite external window was defective and could not be opened. It was thus impossible to ventilate that room.

48. Although it was the water ingress and damage in bedroom 1 and its ensuite that first became apparent on and from 30 June 2022, I am satisfied on the evidence that significant dampness, water damage and mould had begun to develop in other parts of the premises, in particular in the bedroom adjoining bedroom 1 (bedroom 2). Again, the tenants have filed photographic evidence of this damage. It depicts extensive dark water stains to the ceiling of that room, large sections of the ceiling and walls where plaster and paint have detached and fallen, water damaged and mouldy cornices.

49. The tenant who occupied bedroom 2 did not move out from that room, but this does not mean that it was habitable on an objective basis. In any event, it must be accepted having regard to the evidence that the tenants’ use of this room was qualitatively reduced to a standard far below that required to be provided by a landlord under a residential tenancy agreement having regard to the common law test and statutory minimum standards for habitability.

50. Other areas of the premises to experience water damage from water ingress through the roof were the kitchen ceiling and walls, and the hallway/stairwell kitchen and walls. Again, this damage is illustrated in photographs submitted into evidence by the tenants. The damage is not as severe as that in bedrooms 1 or 2, but there is nevertheless evidence of dampness, paint and plaster shedding, and mould. I am satisfied on this evidence that the condition of these rooms is significantly qualitatively below the standard of habitability required to be provided by a landlord to a tenant under a residential tenancy agreement.

51. Apart from the ceiling of bedroom 1, the water damage, damp, and mould from water ingress through the roof was not rectified at any time before the end of the period the tenants seek rent relief. I accept the tenants’ evidence that the condition of the property deteriorated progressively due to the failure to carry out timely repairs particularly in respect of damp, paint and plaster detachment and mould. In this respect I note that the tenants have filed photographs of the remedial works in progress in August 2023. These photographs illustrate the extensive work that was required to rectify the damp and water damage. Extensive removal and replastering of ceilings and walls was required in various areas of the property and some cornices and windows required replacement. It is an obvious implication of the scale of the remedial works that the water damage to the property was serious and extensive. I am satisfied on this basis that the condition of the property prior to the remedial works constituted a serious qualitative reduction in the tenants’ use of the property.

52. I also accept the tenants’ evidence that as a result of the persistent and heavy rain through 2022 and 2023 the ground level of the property came to be seriously affected by rising damp which caused mould. In this respect the tenants have filed photographic evidence that depicts serious damp, paint and plaster detachment in the downstairs loungeroom, laundry, external toilet. Other serious water damage to the exterior entrance door is also depicted in these photographs (it is a particle board door which is disintegrating). I am satisfied that this condition also constitutes a further qualitative reduction in the tenants’ use of the premises below that required to be provided by a landlord under a residential tenancy agreement.

53. The landlords defend this element of the tenants’ claim on the following basis:

1. the third tenant could have moved to another room in the property while bedroom 1 and its ensuite were repaired. She did not need to move out.

Whether another room could be temporarily repurposed as a bedroom is not relevant to the question of whether bedroom 1 and its ensuite were withdrawn from the tenants’ use. Additionally, this was a household constituted by unrelated adults. It was not an intimate family household. It is not reasonable to expect that an unrelated adult would set up a bedroom in area of the property that is potentially in use or accessible to other unrelated adults.

2. the tenants’ claims about the condition of the property are exaggerated. The water ingress through the roof only caused minor inconvenience.

This submission is wholly unacceptable. For the reasons set out above I am satisfied that the property was very seriously affected by water ingress, damp, including rising damp and mould during the period they seek a rent reduction. The tenants have not exaggerated the deplorable condition of the property. It is the landlord that has attempted to deny and minimise that condition despite its objective reality.

3. the delay in the repair of the bedroom 1 ceiling was justified because the landlord needed to be sure that the weatherproofing of the roof was effective because incurring the expense of that repair.

The reasonableness or otherwise of delaying the repair of the ceiling on this basis has no bearing on the question of whether this room was withdrawn from the tenants’ use. The relief available under 44(1)(b) is not limited to circumstances in which the withdrawal or reduction is a result of a breach of a landlord obligation. It is potentially available in any circumstance where is conduct by the landlord that results in the withdrawal or reduction. As a matter of contract the landlord was obliged to provide that room to the tenants for their use. Objectively, the landlord could not fulfil that contractual obligation due to the condition of the room. That is sufficient for the purposes of s 44(1)(b). In any event, a landlord has a continuing obligation to provide premises to a tenant in a condition fit for habitation. That obligation was clearly breached in this case, even if it is arguable (and I do not say it is) that the obligation to repair was not because the landlord was acting with reasonable diligence to effect a repair.

4. most of the damage the tenants complain about was present at the start of the tenancy, as is reflected in the Start-of-Tenancy Condition Report. The subsequent condition of the property therefore could not constitute a withdrawal or reduction of anything.

The landlord warrants in the Start of Tenancy Condition Report that the premises satisfies the minimum standards for habitability contained in s 52(1A) and (1B) of the Act. In accordance with s 30 of the Act, the Tribunal is entitled to rely upon that statement as a correct statement of the condition of the property at that time. While there are extensive comments in the report about defective paint work and some comments that refer to historical water damage, there is no indication of active water ingress or rising damp.

I am thus satisfied that the condition of the premises as it developed from 30 June 2022 is a significant departure from the condition of the premises at the start of the tenancy and that this did constitute a withdrawal or reduction of the tenants’ use of the premises for the purposes of s 44(1)(b).

In any event, as s 63 of the Act makes clear, a landlord’s obligation to maintain premises in a reasonable state of repair operates even in circumstances where a tenant is on notice as to the state of disrepair at the time the residential tenancy agreement is signed. A persistent state of disrepair is thus capable in my view of attracting the operation of s 44(1)(b) due to breach of the agreement by a landlord.

54. I did not understand it to be in issue between the parties that the rent paid by the tenants at the material time for the dispute was a market rent. In any event I make that finding. In this respect the property was offered for lease at $995.00 per week, and the tenants bid $1,050.00 to secure it. It follows from this that any withdrawal or reduction in use of the premises the tenants experienced was a factor of the rent they paid rather than any under-market value they already had the benefit of.

55. In determining to what extent, if any, rent was excessive the Tribunal must consider the extent of loss of use of the premises in the context of the totality of goods, services and facilities provided with the rented premises and the impact of that loss of use on the tenants.

56. The tenants seek a reduction of 1/3^rd of the rent payable during the first period, being from 30 June 2022 to 8 September 2022, or $350.00 per week. That amount is based on the rent contribution of the third tenant who they contend was obliged to move out during this period due to the condition of her room. The rent that was payable by the third tenant is a relevant consideration but cannot be determinative of the amount of rent reduction to which the tenants are entitled in my view. The Tribunal must consider the reduction in use of the premises and its impact as a whole.

57. This is a large property with 3 bedrooms and 3 lounge areas among other rooms. Nevertheless, the water ingress, damp, and mould were not limited to bedroom 1 and its ensuite during the first period. Bedroom 2 and other areas of the property were also affected. The condition of the premises had a severe effect on the third tenant’s ability to occupy the premises, but it also had a serious negative impact on the amenity of the tenant who occupied bedroom 2. I am also satisfied that the damp and mould in other areas of the premises during this period had a more general negative impact on the amenity of all tenants.

58. Having regard to that I am satisfied that the tenants’ claim for a 1/3rd rent reduction during the period 30 June 2022 to 8 September 2022 in a reasonable one, and I will order accordingly.

59. In respect of the second period, 9 September 2022 to 29 June 2023, the tenants seek a reduction in rent of $210.00 per week. They arrive at this position by reducing the rent contribution payable by the tenant and other occupant of bedrooms 1 and 2 by 30% (or $105.00) per week due to the condition of those rooms. As I have said, the rent contribution paid by individual household members is a relevant consideration, but it is not determinative of the issue of by what amount rent was excessive.

60. Nevertheless, I am satisfied on the evidence I have set out above that the tenants continued to suffer a very serious reduction in amenity of the premises after 8 September 2022 when the ceiling of bedroom 1 was repaired. The condition of the property during this period fell significantly below that required to be provided by a landlord to a tenant under a residential tenancy agreement having regard to the requirements for habitability of rented premises. In this respect, there was extensive water damage, damp, and mould in bedrooms 1 and 2 and in other areas of the property.

61. Having regard to the whole of this condition, I am satisfied that the tenants’ claim that rent was excessive by $210.00 per week between 9 September 2022 and 29 June 2023 is a reasonable one. I will order accordingly.

62. It was not in issue that the tenants have paid all rent owing to the landlord in respect of the period 30 June 2022 to 29 June 2023 at the rate of $1,050.00 per week and had also paid all rent due up to the date of the hearing. In these circumstances it is appropriate to liquidate the excessive rent orders to a money order that will require the landlord to pay the tenants the excessive rent they have paid by operation of the excessive rent orders. That amount is $12,370.00.

Retaliatory eviction

63. The Tribunal’s powers with respect to evictions that are retaliatory are found in s 115 of the Act, which provides, relevantly:

115   Retaliatory evictions

(1) The Tribunal may, on application by a tenant … in relation to a termination notice –

(a)   declare that a termination notice has no effect, ..

…

if it is satisfied that a termination notice given … was a retaliatory notice ….

(2)   The Tribunal may find that a termination notice is a retaliatory notice … if it is satisfied that the landlord was wholly or partly motivated to give the notice or make the application for any of the following reasons –

(a)   the tenant had applied or proposed to apply to the Tribunal for an order,

…

(3)   A tenant may make an application to the Tribunal for a declaration under this section before the termination date and within the period prescribed by the regulations after the termination notice is given to the tenant.

64. Section 39(4)(a) of the Residential Tenancies Regulation 2019 (NSW) provides that the prescribed period for a termination notice given under s 85 of the Act is within 30 days after the termination notice is given.

65. This element of the dispute concerns two Notices of Termination (termination notice) issued to the tenants by the landlords’ agent under s 85 of the Act on 24 July 2023 and 6 September 2023 which required the tenant to deliver up vacant possession of the premises on 20 October 2023 and 6 December 2023 respectively. Insofar as it concerns the first termination notice, the application was made within 30 days of it being given. Leave to amend the application to incorporate the second termination notice was granted while this proceeding was on foot. Therefore, no limitation period arises in relation to that second notice.

66. If there was an application by the landlord for termination of the residential tenancy agreement based on the notice given on 24 July 2023 there may be an argument that this notice is no longer valid because it is superseded by the notice given on 6 September 2023. However, I am not considering such an application. The notices are intertwined for the purposes of the tenants’ s 115 application and therefore both need to be considered.

67. On their face, both termination notices comply with the requirements of s 85 and otherwise with the requirements of Part 5 of the Act. There is no issue before me that they were served on the tenants in accordance with s 223 of the Act. I thus proceed on the basis that, subject to the retaliatory eviction issue and what I have said above about the notice given on 24 July 2023, the termination notices are valid notices, validly served.

68. A termination notice issued under s 85 of the Act is commonly referred to as a ’90 day’ or ‘no-grounds’ notice. That is, such a notice does not require a landlord to cite a reason or motive for terminating the tenancy. However, it is well established law that such a notice operates subject to s 115(1): Curry v Eftimovski [2023] NSWCATAP 290 at [17] and the authorities cited there. Consequently, although the tenant bears the formal onus of proof in establishing that the termination notice is a retaliatory notice, the landlords’ defence to the application requires them to discharge the practical onus of establishing that the termination notice was not motivated by one or more of the reasons set out in s 115(2). That is because motive is the essence of the cause of action conferred by s 115.

69. Consideration of an application made under s 115(1) is a two-step process. The Tribunal must first determine if the impugned termination notice is a retaliatory notice by reference to the matters set out in s 115(2). If that is not found, that is an end to the matter. If it is found, then the discretion conferred by s 115 to declare the termination notice of no effect because it is a retaliatory notice is enlivened. The Tribunal must then determine, second, if such a declaration should be made as a matter of discretion: Steinbeck v McDonald [2015] NSWCATAP 90 at [29] to [33].

70. In relation to the termination notice given on 24 July 2023 I am satisfied that at the time that notice was given the tenants proposed to apply to NCAT for an order. That intention was communicated to Ms Stergiotis in Mr Whiteside’s email of 6 July 2023. He sets out in some detail in that communication what the grounds for such an application would be. In relation to the termination notice given on 6 September 2023 I am satisfied that the tenants had by that time made an application to NCAT for an order. That application was made on 5 August 2023 and it had first been listed for Conciliation and Hearing earlier in the day on 6 September 2023. The circumstances envisaged by s 115(2)(a) of the Act are thus engaged.

71. The issue is whether the landlords were wholly or partially motivated by those matters to issue the tenants with the termination notices. I am satisfied that it was. The first termination notice was issued 18 days after Mr Whiteside’s email of 6 July 2023 and in the context of an escalation in the dispute about the condition of premises which stemmed from that email. The second termination notice was issued on the day of the Conciliation and Hearing at NCAT and following the inability of the parties to reach a resolution of the dispute in Conciliation. There is thus close proximity between proposed and actual applications to NCAT and the termination notices being issued.

72. Ms Stergiotis states in her email communications with Mr Whiteside that the landlord has taken a ‘separate’, ‘commercial’ decision to terminate the tenancy which is ‘unrelated to the tenants’ demands for repairs, a rent reduction, and no rent increase. She also argued this position at the hearing. Nevertheless, the decision to terminate the tenancy was advised in the context of communications about those matters, and the termination notice appears to be attached to one of those communications. This gives rise to an irresistible inference that there is a causal connection between the two.

73. Essentially, the landlord’s defence to the tenants’ retaliatory eviction claim is:

1. the fact that it ultimately carried out all the repairs demanded by the tenants indicates that there was no causal link between these demands and the termination notices.

This contention cannot be accepted. The landlord only carried out repairs to the property upon an NCAT application being foreshadowed by the tenants, then instituted. There is no evidence that the landlord had any prior independent intention to carry out these repairs. Rather, during 2022 the landlord repeatedly failed to respond in any substantive way to the tenants’ requests for repairs and reduced rent, other than in relation to the replacement of the ceiling to bedroom 1. I am satisfied that the landlord only commissioned repairs because it came to view it was inevitable that the Tribunal would order those repairs once the matter went to hearing.

I am satisfied on this basis that the landlord was wholly motivated to give the termination notice in retaliation for the tenants taking the matter to NCAT. This included a desire to deprive the tenants of any benefit of an NCAT order in the event that they were successful in their application.

2. it was a commercial decision taken to allow the landlord time to consider its intentions with respect to the property.

This is an assertion made ipse dixit and it is implausible. There is no evidence that the landlord is contemplating the sale of property. In this respect, no selling agent has been approached to provide a market appraisal, and there is obviously no contract for sale of the property which requires vacant possession. There is no evidence of any intention by the landlord to develop the land on which the property is situated.

It was suggested that the landlord “may” decide to occupy the property itself. I note that the landlord is a corporate entity which is a subsidiary of larger corporation. I was not informed that there are any natural persons who are principals or associates of the landlord who require the property to occupy as a residence. There is no evidence as to the zoning of the property which indicates that the premises could be utilised for a commercial purpose, nor is there any evidence of a commercial reason why the landlord would need to relocate its’ operations to the premises.

The remedial works carried out by the landlords facilitate the use of the premises for occupation as a residence. I am satisfied that the most likely ‘commercial’ use of the property is thus for leasing as a rental property.

It is simply not commercially plausible that a rental property currently leased for $1,200.00 per week would be allowed to stand vacant without generating income while the landlord contemplated possible future uses for it. I am satisfied on this basis that the real reason the landlord issued the termination notices was to rid itself of whom it viewed as troublesome tenants because they proposed, then did, make an application to NCAT. I am satisfied that the landlord has an intention to continue to use the property for residential leasing rather than for any other commercial purpose.

74. It follows from these reasons that the tenants have discharged their formal onus of establishing that the landlord was motivated to give the termination notices by the tenants’ application to NCAT. The landlord has failed to discharge its practical onus of establishing that there was any other reason.

75. The second stage of analysis is therefore reached. I must determine as a matter of discretion whether the termination notice ought to be declared of no effect on this basis. I am satisfied that it should. It appears to me that the circumstances of this case involve exactly the sort of mischief that s 115 was enacted to address. It is an abuse of power by a landlord who is attempting to use its superior title in the property to defeat the tenants’ legitimate right to repairs, and to reduced rent while the premises remained in a state of serious disrepair, amongst other things. Such an abuse of power should not be permitted. I therefore declare the termination notices of no effect because they are retaliatory notices.

Orders

76. For the foregoing reasons, I made the following orders:

1. Pursuant to s 115(1) of the Residential Tenancies Act 2010 (NSW) the Tribunal declares that the termination notices dated 24 July 2023 and 6 September 2023 are of no effect because they are retaliatory notices.

2. The rent payable for the premises was excessive from 30 June 2022 to 29 June 2023 and is not to exceed $700.00 per week for the period 30 June 2022 to 8 September 2022 and $840.00 per week for the period 9 September 2022 to 29 June 2023.

3. Order 2 is liquidated. The landlord, Mallett Street Pty Limited must pay the tenants, Samuel Whiteside and Philippa Velhinho, $12,370.00 immediately.

4. The application is otherwise dismissed.

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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: 08 August 2024