Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Goodwin v Morgan [2021] NSWCATCD 4 Hearing dates: 23 February 2021 Date of orders: 7 May 2021 Decision date: 07 May 2021 Jurisdiction: Consumer and Commercial Division Before: S Hanstein, Member Decision: The landlord is to pay the tenant the sum of $2,371.45 within 14 days of the date of this decision. Catchwords: RESIDENTIAL TENANCIES – Landlord's obligation – Reasonable state of repair - Breach – Compensation Legislation Cited: Residential Tenancies Act 2010 Cases Cited: Murphy v Pitt [2017] NSWCATCD 44 Texts Cited: None Category: Principal judgment Parties: Sharon Goodwin (applicant) Mary Morgan (respondent) Representation: Applicant in person, Ms Ekert for the respondent File Number(s): RT 20/45819 Publication restriction: Nil reasons for decision 1. The applicant and the respondent were, respectively, the tenant and the landlord under a residential tenancy agreement. The first tenancy agreement between the parties commenced in March 2018. Most recently, a new tenancy agreement was entered into between the parties commencing on 2 April 2020, with a fixed term to 31 March 2021. The rental was $480 per week. 2. The tenant lodged this application with the Tribunal on 2 November 2020, claiming compensation for the landlord's failure to maintain the premises in a reasonable state of repair and a rent reduction or partial rent abatement because the premises were partly uninhabitable following a storm event on 26 October 2020. 3. The tenancy terminated on 9 November 2020, when the tenant vacated the premises. No break fee was claimed by the landlord. Legislation and legal principles 1. Relevant sections of the Residential Tenancies Act 2010 ("Act") are as follows. 2. Section 43(2) of the Act provides: (2) Premises unusable The rent payable under a residential tenancy agreement abates if residential premises under a residential tenancy agreement are— (a) otherwise than as a result of a breach of an agreement, destroyed or become wholly or partly uninhabitable, or (b) cease to be lawfully usable as a residence, or (c) appropriated or acquired by any authority by compulsory process. 1. Section 63(1) of the Act 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. 1. The Tribunal must not determine that a landlord has breached this obligation unless it is satisfied that the landlord had notice of the need for the repair or ought reasonably to have known of the need for the repair, and the landlord failed to act with reasonable diligence to have the repair carried out. 2. In Murphy v Pitt [2017] NSWCATCD 44, the Tribunal noted, at [28]: In determining damages to the tenants, the Tribunal must apply the guiding principle of putting the party in the same position it would have been, as far as money can, as if the contract had been performed, and not in a better or worse position (Commonwealth v Amman Aviation Pty Ltd [1991] HCA 54, (1991) 174 CLR 64). Loss arising by breach of contract must either (i) be caused naturally (i.e. in the usual course of events) or (ii) have been in reasonable contemplation of both parties at the time of entering into the contract as a type of loss that would probably arise from the breach (Hadley v Baxendale (1854) 9 Exch 341 at 354; 156 ER 145 at 151). The party claiming damages is under a duty to take all reasonable measures to avoid incurring loss, and is not entitled to damages for losses that reasonable measures would have avoided (known as the 'duty to mitigate'-see Clark v Macourt [2013] HCA 56 at [17], (2013) 304 ALR 220). The respondent bears the onus of proving failure to mitigate. Applicant's case 1. The tenant contends the roof of the premises was not maintained in a reasonable state of repair, and that the landlord was aware of the state of disrepair as the tenant had made at least eight reports of roof leaks during the tenancy. 2. The tenant's evidence included the following. During a storm event on 26 October 2020, water entered the premises, into the lounge room, dining room, toilet and third bedroom, affecting furniture and floor coverings. The SES attended, placed a tarp on the roof and replaced a few broken roof tiles, and advised the insulation in the roof cavity was wet. An electrician advised that the electricity was safe to use, but the premises could lose power at any time. He advised the toilet light and dining room lights should not be used, due to water ingress. Over the following days, water staining and mould appeared on ceilings and walls, the property had a damp smell, and there was peeling of paint on internal surfaces. No remediation work was carried out, and the tenant decided to vacate the premises, particularly as she was concerned about adverse health impacts on her son who has asthma. She vacated, and the tenancy terminated on 9 November 2020. 3. The tenant moved into a property that she had purchased. Her evidence was that she had intended to use that property as an investment property. Because she could not find another rental property on short notice when she decided to vacate the premises the subject of this dispute, she decided to move into her property. Consequently, she claims, she has lost the benefit of tax deductions and will be financially worse off (approximately $4,442 for the first year). 4. She also claims moving expenses of $2,000. No documentary evidence is provided in support of the claim. 5. The tenant's son attended two extra psychologist appointments to reduce the impact on his mental health of the sudden and dramatic move, and the tenant claims the cost of those appointments. No documentary evidence is provided in support. 6. The tenant also seeks compensation for damage caused to her belongings, a rent reduction or partial rent abatement, and loss of amenity or enjoyment of the premises - including time off work to attend to the initial storm issue, cleaning up the damaged items and removing water and mould, arranging the removal and destruction of damaged items, dealing with insurers and moving. A letter from the applicant's employer was provided stating the applicant had taken annual leave of 83.60 hours in the period from 6 November 2020. 7. The tenant had made a claim on her contents insurance for her damaged items but that was refused, on the basis that the roof at the premises had been in poor condition. Respondent's case 1. The landlord denies the premises were uninhabitable and considers it was the tenant's decision to move (which the landlord permitted without penalty), disputes the tenant's belongings have been destroyed, contends that the tenant should have mitigated her loss and disputes the amounts of compensation claimed. 2. The landlord provided a timeline of reports made by the tenant and repairs carried out. The documents included an invoice from a contractor dated 6 August 2020: -2 men investigated roof leaks and found that the roof has various sections of cracked ridge / hip pointing - the tile sarking is also deteriorating and also lapped incorrectly and allowing water to penetrate through various cracked tile pointing and drop onto rear right hand ceiling. - it seems as though driving rain is most likely able to drop through any terracotta tile joints as the roof is at a low pitch - it seems as though there is various sections of mould around the perimeter of the ceiling/wall gyprock. 1. The timeline also included that quotes had been requested for repair or replacement of the roof from August 2020 but, the landlord contends, there were delays in quotes being provided by contractors, particularly with the COVID 19 pandemic. Consideration 1. On the evidence before me, comprising the documentary evidence and oral evidence of the parties, I make the following findings. Reasonable state of repair 1. I am satisfied that, in breach of the obligation imposed by section 63 of the Act, the landlord failed 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, in respect of the roof. I place weight on the report from the landlord's contractor from August 2020. I am satisfied that the landlord had notice of the need for the repair and failed to act with reasonable diligence to have the repair carried out. Although it is apparent that the landlord had difficulty in obtaining quotes for the roof work, I am not satisfied the landlord acted with reasonable diligence to have the repair carried out. In light of the delays occurring, quotes could have been sought from other contractors and/or a temporary measure could have been put in place to prevent or reduce the possibility of water ingress. Nothing was done, notwithstanding the landlord being on notice of the issues, and significant water ingress has occurred. I am satisfied that the extent of water ingress was likely greater than it would have been otherwise, because of the state of disrepair of the roof and I am therefore satisfied that the tenant has suffered loss or damage as a result of the landlord's breach. I am satisfied the tenant is entitled to compensation as addressed below. 2. In light of this finding of a breach by the landlord, section 43(2) does not apply – that provision applies, relevantly, only if the premises become wholly or partly uninhabitable otherwise than as a result of a breach of the residential tenancy agreement. Compensation for damage to belongings 1. The tenant claims for a dining table, dining chairs, an art print and two storage cubes. 2. The dining table and chairs were purchased for $5,996 in 2011. The tenant claims a similar table would now cost $4,899; and has a quote for the chairs to be recovered, at a cost of $1,840. 3. The art print cost about $250 when purchased about six months earlier, although no documentary evidence is provided. The tenant has provided evidence of purchase of a different print, which she purchased as a replacement, for $320. 4. The storage cubes were about 12 to 18 months old, although no documentary evidence was provided. An advertisement for similar items, at $84 each is provided. 5. I am satisfied that the tenant has suffered loss or damage by these belongings being damaged or destroyed by the water ingress, and I am satisfied it is as a result of the landlord's breach. In assessing reasonable compensation for the tenant's loss, I note that the tenant is not entitled to "new for old", that it is appropriate that I consider the age and type of the items, and that I need to ensure the tenant is not put in a better position than she would have been in had there been no breach by the landlord. I note also that there is a partial absence of documentary evidence. Doing the best I can on the evidence before me, I am satisfied that an amount of $1,600 is reasonable compensation for these items, being roughly $1,500 for the dining suite - I have taken into account the age of the dining suite and that the chairs will now be recovered and so likely appear as new and last longer than they would have otherwise - and $50 each for the art print and the cubes. Rent reduction, stress, loss of enjoyment, loss of amenity 1. I am satisfied that, from the time of the storm event on 26 October 2020 to the time the tenant vacated on 9 November 2020, there was a significant loss of amenity or enjoyment of the premises. My understanding is that full rent was paid for this period. The tenant claims that she had to take time off work to deal with the water ingress and subsequent issues, to look after her son and for moving. The letter from her employer establishes, at most, two days annual leave up to the date she vacated. Respectfully, without wanting to appear to diminish the situation of the tenant's son, I am not satisfied that compensation should be allowed from the landlord for any additional issues arising from the tenant's need to care for her son with his particular needs. I am satisfied however there was significant loss of amenity and enjoyment from 26 October 2020. As I am satisfied the water ingress is a result of the landlord's breach, I am satisfied compensation should be allowed in an amount the reflects a 75% reduction in the rent for this period to cover the tenant's claim whether it is described as rent reduction, stress, loss of enjoyment and/or loss of amenity. I have calculated that as 15 days at $51.43 per day, giving a total of $771.45. If I am wrong in my understanding that full rent was paid up to 9 November 2020, the parties should adjust this amount accordingly. Moving costs 1. The tenant also seeks compensation for costs relating to moving to new premises, but no documentary evidence is provided. Given this application was lodged before the end of the tenancy, I would have reasonably expected the tenant to obtain and provide evidence in support of this claim. Also, the tenant's right to remain in the premises the subject of this application existed only until the end of the fixed term, so she may have been required to incur the costs of moving at the end of March 2021 in any event, and the full costs of moving would not be allowed on the present application. Overall, I am satisfied that the amount of compensation allowed under other parts of the claim is reasonable compensation for the tenant's loss or damage arising from the landlord's breach. In all the circumstances, but particularly the lack of documentary evidence, I am not satisfied any compensation should be allowed for moving costs. Psychologist appointments 1. No documentary evidence is provided to support this claim. Further, as noted above, I am not satisfied that compensation should be allowed from the landlord for any additional issues arising from the tenant's need to care for her son with his particular needs. It is not a loss caused naturally from the landlord's breach in not maintaining the premises in a reasonable state of repair and not a loss that would have been in reasonable contemplation of both parties at the time of entering into the contract as a type of loss that would probably arise from the breach. Loss of income from moving to investment property 1. I am not satisfied that any compensation should be allowed under this heading. 2. I am not satisfied on the figures provided by the applicant that she will sustain the loss claimed. For example, the figures do not appear to take into account that the home loan repayments would be payable whether or not the property was rented out by the applicant. Also, there is a degree of speculation involved, as it is unknown what other costs might be involved if the property were rented out. 3. Even if I am wrong about that, I am not satisfied that the loss of income is a loss caused naturally from the landlord's breach in not maintaining the premises in a reasonable state of repair. The tenant could reasonably have been expected to relocate to another rental property, with a short time in temporary accommodation if necessary, rather than moving to her investment property if she did not want to disrupt her financial plans for that property. It may be that the duty to mitigate may have required other rentals to be explored. Whilst the tenant's desire to settle quickly is understandable, particularly when she was considering the interests of her son, I am not satisfied that is something for which the landlord is responsible. I am also not satisfied it is a loss that would have been in reasonable contemplation of both parties at the time of entering into the contract as a type of loss that would probably arise from the breach, as it is a very unusual situation. Conclusion 1. The landlord is to pay the tenant the sum of $2,371.45 within 14 days of the date of this decision. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 July 2021