Wickham v Agosti

[2015] NSWCATCD 35

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Wickham v Agosti [2015] NSWCATCD 35
Hearing dates:	3 February 2015
Decision date:	19 March 2015
Jurisdiction:	Consumer and Commercial Division
Before:	C R Xuereb, General Member
Decision:	The respondents shall pay to the applicants the sum of $5,714.29 within 28 days from the date of these orders. The amount referred to in order 1 may be credited against any rent arrears existing at the date of this order or any rent arrears accruing from the date of this order to the due date for payment.
Catchwords:	Landlord’s obligation to maintain residential premises, breach by tenant for non-payment of rent, effect of consent orders on claim for rent reduction, landlord’s notice of need for repair, balance between tenants’ rights and landlords’ rights following breaches by both parties
Legislation Cited:	Residential Tenancies Act 2010
Cases Cited:	Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Category:	Principal judgment
Parties:	John Wickham and Rebecca Wickham (applicants) Marcelo Agosti and Cintia Agosti (respondents)
Representation:	Applicants in person Anna Marten (Agent) for respondents
File Number(s):	RT 14/55191
Publication restriction:	Nil

REASONS FOR DECISION

Application

1. The applicants filed an application with the Tribunal on 14 November 2014 seeking an order under s 187(1)(d) of the Residential Tenancies Act 2010 (the RTA) against the respondents, as landlords. The amount of compensation sought is $13,397.05. The claim for compensation is made in respect of the consequences of a sewage back flow problem which occurred on 11 June 2014 at the premises occupied by the applicants, as tenants, under a Residential Tenancy Agreement dated 9 April 2014. The application also states that the sewage back flow problem occurred again on 18 September 2014.

2. The applicants allege that they were unable to use a major part of the residence for more than 20 weeks.

3. The claim pleaded in the application consists of four elements:

1. A claim for compensation for time expended by them in being present to facilitate, co-ordinate and manage contractors on-site and to store furniture and personal effects and time spent communicating by telephone and email in relation to the issues. The claim made in respect of this element is $4,140.00, being 69 hours of time expended at the rate of $60.00 per hour.

2. A 100% rent reduction for 9 days for the period 11 June 2014 to 19 June 2014 ($1,157.13)

3. A 50% rent reduction for 117 days for the period 20 June 2014 to 14 October 2014 ($7,521.35)

4. A 30% rent reduction for 15 days for the period 15 October 2014 to 29 October 2014 ($578.57)

Jurisdiction

4. The application is made under s 187(1)(d) of the RTA. The Tribunal has jurisdiction to hear and determine disputes brought under the RTA. There is no issue that the proceedings have been brought within the relevant time limits provided in Regulation 22 of the Residential Tenancies Regulation 2010.

Background

5. The applicants’ claim is brought under s 187(1)(d) of the RTA. Although not specifically pleaded, the claim for compensation appears to have been made for an alleged breach of s 63 of the RTA, which provides:

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.

(3)     A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant’s breach of this Part.

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

6. The parties entered into a Residential Tenancy Agreement (lease) on 9 April 2014. The lease was for a term of 52 weeks commencing on 9 April 2014 and ending on 8 April 2014. The lease noted that the premises were located on 25 acres and included 4 stables, a feed shed, a tack room and a round yard.

7. Both parties complied with directions made by the Tribunal on 3 December 2014 and provided extensive and detailed documentation in support of their cases. Both parties requested that the material furnished form part of the evidence. Oral testimony was also given by the parties to supplement the documents tendered.

Evidence

8. Sworn evidence was given by Rebecca Wickham on behalf of the applicants. John Wickham also provided some explanations and comments during the course of the hearing.

9. On behalf of the respondents, sworn evidence was given by Julie Notman. Ms Notman was the property manager of the respondents’ property at all relevant times, although she no longer has that function. The management of the property was transferred to Guardian Realty in or about October 2014. Anna Marten appeared on behalf of the respondents and also provided some explanations and comments during the course of the hearing.

10. It is common ground that on 11 June 2014 a sewage backflow occurred which resulted in sewage surcharge in the downstairs toilets/powder room. The surcharge escaped beyond the confines of the powder room and entered the entry area of the house and also entered part of the dining room and part of the main bedroom.

11. Prior to the sewage event, the respondents had served, on 29 May 2014, a Termination Notice of Residential Tenancy Agreement requiring the applicants to vacate the premises on 12 June 2014. The Termination Notice was based on the applicants’ breach of the lease as rent had remained unpaid for not less than 14 days at the time of service of the Notice. The respondents had filed an application for termination and possession and that application came before the Tribunal at Sydney on 27 June 2014 for a Conciliation Hearing. At the Conciliation Hearing the parties consented to a specific performance order which required the applicants to pay the respondents $5,400.00 for rent owed from 14 May 2014 to 27 June 2014. The consent order required the arrears to be paid by 3 unequal instalments, the last of which was due on 11 July 2014.

12. The Tribunal also made an order by consent that the applicants would continue to pay rent at the rate of $900.00 per week.

13. The respondents were permitted to re-list the application for termination and possession at any time before 27 September 2014 if the applicants breached the orders made on 27 June 2014. Mrs Wickham gave evidence that the consent orders made on 27 June 2014 were complied with. The respondents’ representative did not dispute that assertion.

14. It is also common ground that two further back flow incidents occurred – on 18 August 2014 and again on 15 September 2014. On these two occasions, the back flow surcharge did not go beyond the powder room and no further sewage escaped into any other part of the house.

15. Mrs Wickham gave evidence that the property comprises a house with 5 bedrooms, 4 stables, a round yard and a horse wash bay. The applicants keep 3 hobby horses on the land. One stable is used for storing the horse feed, another is used to store gardening equipment and the remaining 2 stables are not used by them.

16. The property also has a swimming pool and a garden shed. The shed is used for the storage of their children’s toys.

17. The applicants’ evidence about the extent of the damage and the time taken to repair that damage was uncontested by the respondent. The only issue which separated the parties was the amount of compensation payable.

18. The documents provided to the Tribunal by the applicants include a copy of an email sent from John Wickham to Anna Marten on 24 October 2014. In this email, the applicants asserted that they had expended 69 hours between them to facilitate the landlords’ contractors in undertaking the rectification works and to arrange the moving or storage of the applicant’s furniture. The rate charged for this 69 hours of time is based on Mrs Wickham’s hourly rate as a contract accountant. Mr Wickham has applied the same hourly rate, although he informed the Tribunal that the usual rate at which his company charges his services is $150.00 per hour. Mr Wickham is employed by a company which is controlled by him. Both Mr and Mrs Wickham stated that they suffered no actual loss of income, but sought to be compensated for the 69 hours of time which they expended.

19. A detailed time sheet was provided to support the applicants’ claims for their time.

20. It details time expended from as early as 9 April 2014 up to 29 October 2014. It lists time attendances as short as 2 minutes to attendances as long as 465 minutes. Most of the short attendances relate to brief telephone calls or emails or text messages. The larger attendances relate generally to being at home whilst works were carried out by tradesmen.

21. The applicants claim a 100% rent reduction from 11 June 2014 to 19 June 2014 due to sewage waste on the floor and the related offensive smell.

22. The respondents contend that the cleaning was undertaken on 12 June 2014 after the plumbing overflow was rectified on the previous night (11 June 2014). The carpet was cleaned by a carpet cleaner on 14 June 2014.

23. The applicants also asserted that in this first period the affected timber floor was left in place, with waste remaining under the floor allowing mould to form.

24. The applicants also assert that a large proportion of tiles were removed from the rear patio. The respondents state that the area of tiles removed were no more than 20 square metres and point out that the property is a 25 acre allotment.

25. The next period for which the applicants make a claim commences on 20 June 2014 and ends on 14 October 2014. The claim is based on the applicants’ reduced amenity because the damaged flooring remained in place until 10 September 2014, the use of the main living area and kitchen remained limited due to the removal of furniture and living items being removed until the new floor was installed on 14 October 2014. For some of that period, the replacement flooring was stored within the living area until the septic problems were rectified. The applicants also assert that a skip bin full of the affected flooring limited the use of the garage and driveway for a period.

26. The respondents state that the damaged flooring was removed on 21 August 2014, not 10 September 2014.

27. The respondents also state that the affected carpet was cut out and removed on 20 June 2014.

28. The respondents point out that there were old tiles under the removed timber flooring. The applicants acknowledge that was the situation but the tiles were soiled with glue and generally unattractive 1970s style tiles. During this period, the applicants seek a rent reduction of 50%.

29. The final period for which the applicants make a claim is from 15 October 2014 to 29 October 2014 and they assert that a 30% rent reduction should be available to them. The claim is based on the fact that the carpet in the main bedroom, lounge and formal dining rooms was not replaced until 29 October 2014.

30. The respondents state that the septic-affected carpet was small in area and was cut out and removed on 20 June 2014.

31. The evidence adduced by the applicants is that, as early as 9 April 2014, they notified the landlords’ agent that there was a problem with the sewerage/septic system.

32. A Tax Invoice dated 7 May 2014 from Superior Plumbing Solutions was produced in the respondents’ documents. The Tax Invoice contains a notation as follows:

Note - I believe that the drainage issue is caused by tree roots growing in a section of broken clay pipe between the outside of the building and the septic tank under the paves [sic]. There should be an outside gully installed to prevent in-house overflows. Also the line seems quite level at this point, the tank could use a pump out. I Recommend [sic] that this problem section of clay pipe be dug up and replaced with a new Pvc [sic] line. I was able to clear the line this time but it may become more difficult in the future. If a Quote is required for this repair job please let me know [sic]

33. When the sewage backflow occurred on 11 June 2014, Mr Wickham was overseas. He said that he was unemployed and had travelled abroad to locate work.

34. Mrs Wickham gave evidence that she and her husband were in no financial position to move out of the property. They were in substantial arrears in the payment of rent at the time that the septic backflow occurred and a Notice of Termination required them to vacate on 12 June 2014, the day following the sewage discharge. They had made no attempt to vacate the premises by the date specified in the Notice of Termination.

35. The applicants had been tenants of the respondents only since 9 April 2014. In the period between 9 April 2014 and 11 June 2014, the applicants had paid only $3,600.00 in rent. The Tenant Trust Ledger Report produced by the respondents’ agent shows that as at 11 June 2014, rent had been paid only to 14 May 2014, with $650.00 in hand.

36. Mrs Wickham also gave evidence that had they not been able to stay at the property, the cost of agistment would be in the order of $300.00 per week. However, she said that if the horses were agisted elsewhere the $300.00 payment would include feed and would also relieve the applicants of expending their time in checking and repairing the property’s fences, if necessary.

Determination

37. Section 65 of the RTA provides:

65   Tenants remedies for repairs

(1) Orders for which tenant may apply

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

(a)  an order that the landlord carry out specified repairs,

(b)  an order that the landlord reimburse the tenant an amount for urgent repairs carried out by the tenant.

(2) Orders for repairs

The Tribunal may make an order that the landlord carry out specified repairs only if it determines that the landlord has breached the obligation under this Act to 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.

(3)  The Tribunal must not determine that a landlord has breached the obligation unless it is satisfied that:

(a)  the landlord had notice of the need for the repair or ought reasonably to have known of the need for the repair, and

(b)  the landlord failed to act with reasonable diligence to have the repair carried out.

(4) Reimbursement for urgent repairs

The Tribunal may order that the landlord reimburse the tenant an amount for urgent repairs carried out by the tenant if it is satisfied that the landlord has failed to reimburse the tenant for the costs in accordance with this Division.

(5) Payment of rent into Tribunal

The Tribunal may order that all or part of the rent payable under a residential tenancy agreement be paid into the Tribunal until an order under this section has been complied with.

38. At the time of the occurrence on 11 June 2014, the respondents, as landlords, were on notice, or should have been on notice, that there was a need for the repair of the septic system. The Tax Invoice dated 7th May 2014 from Superior Plumbing Solutions made it clear that there should be an outside gully installed to prevent in-house overflows.

39. The Tribunal finds that, on the basis of the notation on the Tax Invoice, the respondents had notice for the need for a repair of the septic system and failed to act with reasonable diligence to have the repair carried out.

40. It follows that the respondents have breached their obligation under the RTA to maintain the residential premises in a reasonable state of repair.

41. Having found that the respondents have breached the Residential Tenancy Agreement and the RTA, the Tribunal must determine whether or not compensation should be payable and, if so, the amount of compensation which should be awarded.

42. The applicants’ first claim relates to a claim for $4,140.00, calculated at the rate of $60.00 per hour for 69 hours of time required for them to be present to facilitate, co-ordinate and manage contractors on-site, move and store furniture and personal effects from 7 rooms and time spent communicating by phone and email in direct relation to the issue.

43. Neither applicant lost any wages or other income. Mrs Wickham works from home for about 50% of her working hours. There is no evidence that during the times claims were made for being present at the premises to facilitate the attendance of tradesmen, either of the applicants were required to cancel any other arrangements to enable them to be at home.

44. In the High Court of Australia case of Commonwealth v. Amann Aviation Pty Ltd (1991) 174 CLR 64, Deane J said at [4]

… a plaintiff bears the onus of establishing the extent of his loss or injury which a plaintiff has actually sustained by reason of a wrongful act.

… a plaintiff must if he is to recover more than a nominal amount ...affirmatively establish assessable damage, that is to say, loss or injury which is capable of being measured in monetary terms.

45. The applicants are seeking to be paid at hourly rates which would be charged to their (or their company’s) clients in the course of a contractual arrangement to provide services, rather than seeking to be compensated for some actual loss which they have suffered. The applicants have failed to satisfy the evidentiary burden of proof that they suffered a pecuniary loss as a result of the respondents’ breach. Rather, the applicants are seeking payment at commercial rates for time they spent in dealing with their landlords’ agents and insurance assessors and the contractors who were engaged to repair the sewage problem. This aspect of the applicants’ claim is rejected and accordingly dismissed.

46. The next claim by the applicants is a 100% rent reduction for the period between 11 June 2014 and 19 June 2014.

47. To make such an order, the Tribunal would have to be satisfied that there was no part of the premises which could be used at all. There is no evidence to support such a finding.

48. The premises are located on 25 acres of land, comprise at least 5 bedrooms and a granny flat/rumpus room with stables and outside sheds. There are at least 2 bathrooms.

49. The claim for a 100% reduction of rent is patently excessive.

50. There is also another aspect of the landlord/tenant relationship which has to be considered by the Tribunal in assessing the applicants’ claim for this period.

51. The landlords had commenced proceedings to terminate the lease and obtain possession of the premises because of the applicants’ substantial arrears of rent prior to the sewage backflow event on 11 June 2014. To avoid the termination of the Residential Tenancy Agreement, for the non-payment of rent for the period from 14 May 2014 to 27 May 2014, the applicants and the respondents sought Consent Orders from the Tribunal which ordered the applicants to pay the arrears by three unequal instalments, the effect of which was that the arrears would be paid in full by 11 July 2014. These orders were made by consent on 27 June 2014. Clearly, at the time that the consent orders were made, the applicants were aware of the inconvenience and reduction in amenity which had been visited upon them in the aftermath of the sewage back flow on 11 June 2014.

52. The applicants did not want to vacate the premises because, on Mrs Wickham’s evidence, they were in no financial position to obtain alternative accommodation.

53. The Tribunal made an order by consent on 27 June 2014 that rent arrears would be paid under a payment plan which would allow the applicants to retain possession of the premises. It would be inequitable for the Tribunal to vary or modify that order made with the consent of both parties.

54. Accordingly, the applicants’ claim for a 100% rent reduction for the period 11 June 2014 to 29 June 2014 is rejected and that part of the applicants’ claim is dismissed.

45. The third claim made by the applicants is that there should be a 50% reduction of rent for the period from 20 June 2014 to 14 October 2014 (a period of 117 days).

46. The first seven days of the claim (from 20 June 2014 to 27 June 2014) fall within the consent order to pay the rent arrears made by the Tribunal on 27 June 2014. The claim made in respect of those days is rejected and dismissed.

47. Another consent order was made on 27 June 2014. The applicants agreed to pay rent at the rate of $900 per week, in accordance with the Residential Tenancy Agreement.

48. The consent order made in relation to future rent does not, in the Tribunal’s opinion, preclude the applicants from seeking compensation for a breach by the landlords. The consent order to pay future rent is to be in accordance with the Residential Tenancy Agreement. The Residential Tenancy Agreement binds both the applicants, as tenants, and the respondents, as landlords.

49. No doubt, it was to the advantage of the respondents to have the applicants remain in the premises as tenants, particularly during a period when the premises would have plainly been unlettable to any other tenant.

50. The Tribunal must balance the circumstances of the applicants in knowing that the deficiencies were in the premises against the circumstances prevailing in respect of the respondents who would be without any tenant if the applicants were to have vacated either voluntarily under the Notice of Termination or by order of the Tribunal.

51. The Tribunal is entitled to have regard to any matter it considers relevant (other than the income of the tenant or the tenant’s ability to afford the rent) in determining whether rent is excessive. This power is contained in s 44(5)(h) of the RTA.

52. The Tribunal considers that the fact that the applicants were aware of the deficiencies of the premises is a relevant matter. The Tribunal also considers relevant the applicants’ frank admission that they were in no financial position to obtain alternative housing and move from the premises.

53. The Tribunal also considers that the applicants’ continuing occupation of the premises was advantageous to the respondents and this is also a relevant matter. The respondents could not have reasonably expected any new tenant to take possession of the premises until the ground floor was properly restored.

54. Much emphasis was put by the respondents that the area of the house was only a relatively small component of the 25 acre allotment and that the any rent reduction should be determined in that context. The respondents also submitted that only part of the house was affected by the aftermath of the sewage surcharge.

55. The plans tendered into evidence by the respondents themselves established that as a result of the incident on 11 June 2014, every room on the ground level, except the garage and granny flat, were affected by the consequential works that were necessary, including the replacement of timber flooring in the kitchen, living room, dining room and foyer, as well as the replacement of carpet in the main downstairs bedroom, another living room and another dining room.

56. The applicants’ use of the house which they leased from the respondents during this period was severely compromised. To base a rent reduction by reference to the total area of the land on which the house stands, as put forward by the respondents, overlooks the dominant purpose of the tenancy – to provide residential premises for human habitation. The ground floor premises during the restoration phase were a construction site. The applicants did well to live without adequate flooring and in a state of disarray during this period.

57. On balance, the Tribunal determines that a rent reduction of $350 per week during this period of 110 days is the appropriate measure of compensation for the diminished facilities provided with the residential premises. This equates to $5,500.00.

58. The final claim made by the applicants is that there should be a 30% reduction of rent for the period from 15 October 2014 to 29 October 2014 (a period of 15 days).

59. Adopting the same principles as those applied to the claim for the period from 20 September 2014 to 14 October 2014, but noting that the diminution of facilities by that stage was of much lesser impact on the applicants, a rent reduction of $100.00 per week should be awarded as compensation. For the period of 15 days, this reduction equates to $214.29.

60. In summary, the rent reductions appropriate in all the circumstances based on the evidence provided by both applicants and respondents is $5,500.00 for the period 27 June 2014 to 14 October 2014 and $214.29 for the period of 20 September 2014 to 14 October 2014.

Orders

1. The respondents shall pay to the applicants the sum of $5,714.29 within 28 days from the date of these orders.

2. The amount referred to in order 1 may be credited against any rent arrears existing at the date of this order or any rent arrears accruing from the date of this order to the due date for payment.

**********

C R Xuereb

General Member

Civil and Administrative Tribunal of New South Wales

19 March 2015

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: 03 June 2015