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Benchmark - Real Estate Cases & Commentary
Tenancy matters
    •  Compensation
        -  To landlord
            >  NEW Reasonable steps to mitigate loss
            >  Replacement of doors
            >  Damage caused by tenants
            >  Removal of ceiling insulation installed by tenant without consent
            >  Failure to alert tenant to state of walls prior to repainting
            >  Landlord must prove loss
            >  Landlord must first incur loss



Reasonable steps to mitigate loss 

The tenant applied to the Tribunal for orders that repairs be carried out at the rental premises, that the landlord pay compensation to the tenant up to the limit that the Tribunal was empowered to order (namely, $15,000.00), and that the rent be abated by 100%.

In March 2011, the Tribunal had ordered the landlord to carry out a number of repairs, and had ordered that the rent be reduced by 50%. The landlord did not comply with the repair order, even after the Tribunal extended the time for compliance. The Tribunal then ordered that the rent be reduced to 25% of its original amount, and that the rent be paid to the Tribunal until the repair order was complied with.

The landlord gave evidence that it did not have any funds to carry out the repairs, as it did not receive any Government funding, and its only source of funds was its rental payments, which were often not paid.

The Tribunal considered that a further order for repair, or a further extension of the original order to repair, would not serve any useful purpose.
The tenant claimed her costs of making the Tribunal applications and travelling to the Tribunal hearings. Usually, before the Tribunal, each party pays his or her own costs unless there are exceptional circumstances. The Tribunal, however, considered the circumstances in this case to be exceptional. The Tribunal therefore made an award of costs, to compensate the tenant for her application fees and her travel to the Tribunal hearings.

The tenant also asked for compensation for her non-economic loss, that is, her anxiety, distress, inconvenience, and loss of enjoyment of the premises.

The Tribunal considered whether the Civil Liability Act 2002 (NSW) prevented the tenant from claiming compensation for non-economic loss. This Act prohibits the awarding of compensation for non-economic loss arising out of personal injury unless the compensation exceeds a certain threshold (which was not exceeded in this case). Personal injury includes impairment of a person’s mental condition.

The Tribunal held that grief, anxiety, distress and disappointment all come within the definition of personal injury, and so compensation could not be awarded for these reasons. However, nuisance, inconvenience, discomfort, and loss of enjoyment of premises were not personal injuries, and so compensation could be awarded for these reasons. Therefore, the tenant was entitled to some compensation, but not the total amount she asked for.

On the basis of the nuisance, inconvenience, discomfort, and loss of enjoyment of premises caused to the tenant, the Tribunal awarded damages of $5,000.

The Tribunal did not reduce the rent further than it already had been, as it considered that the tenant should pay at least some rental for the premises.

Christensen v Morgan [2012] NSWCTTT 183



Replacement of doors
   

The tenant applied to the Tribunal for an order declaring that the term of the Residential Tenancy Agreement was void, because it was inconsistent with a term that was included in the agreement by s 21 of the Residential Tenancies Act 2010 (NSW).

The tenant also applied for an order that the condition report should be amended under s 31 of the Residential Tenancies Act, because of an alleged agreement by the tenant to pay the costs of the replacement of doors to the landlord.

Finally, the tenant applied for an order that the landlord repay to the tenant amounts that the tenant had not been required to pay under the Act.

The tenant appeared before the Tribunal by conference telephone and the landlord did not appear at all. The Tribunal had been satisfied that the landlord had received notice of the hearing and that the Tribunal had jurisdiction. Therefore, the Tribunal proceeded on an ex parte basis.

The Tribunal noted that the outgoing condition report signed by the tenant stated that the tenant had agreed to pay, on the completion of the tenancy, for four interior doors, a professional cleaning service and professional steam cleaning of the carpets.

The Tribunal held that the applicant was not required to give more than 21 days’ notice to terminate the tenancy under the Act, even if the Residential Tenancy Agreement provided for a longer period. The Tribunal pointed out that if a statute provides that a particular provision is included in the tenancy agreement, that provision cannot be replaced by an inconsistent provision agreed by the parties. Therefore, the tenant was entitled to repayment of the amount that he had overpaid, based on the longer period of notice.

The Tribunal held that the landlord was entitled to be compensated for replacement of the four doors, but not for the other amounts that he had claimed.

The Tribunal made orders for part of the bond to be paid to the landlord, and the rest to be paid to the tenant.

Jain v Matakaiongo [2011] NSWCTTT 623



Damage caused by tenants 

The tenants vacated the premises in March 2010. The landlord claimed compensation for a number of items of alleged damage that the tenants had done to the premises. The landlord claimed for damage to a kitchen benchtop, painting walls and ceilings, replacement of three chandeliers which the tenants had removed and stored in conditions where they were affected by rust, removing additional lights installed in a bedroom, re-sanding timber floors, and certain other items.

The landlord and tenant attempted conciliation, but this was not successful.

The Tribunal noted that, when a landlord applies to the Tribunal for compensation, the landlord bears the burden of proof on the balance of probabilities. Usually, the ingoing condition report is the primary evidence of the condition of the premises at the start of the tenancy, and the outgoing condition report is the primary evidence of the condition of the premises at the end of the tenancy. This was a case where the landlord was claiming for items that were not clearly covered by the ingoing and outgoing condition reports.

The landlord attempted to prove the condition of the premises at the start of the tenancy by relying on a letter from the previous owners of the property, which the previous owners had written after the tenant had vacated. The Tribunal did not accept the statements in this letter.

The Tribunal was not satisfied the kitchen benchtop needed to be replaced, or that the tenants had repainted the bedroom walls.

The Tribunal did find that the tenants caused the damage to the chandeliers. However, the landlord had provided no evidence of the value of the chandeliers at the start of the tenancy.

The Tribunal allowed the landlord compensation for the cost of removing the additional lights that had been installed in one bedroom.

The Tribunal allowed an amount for damage to the floorboards.

The Tribunal also awarded compensation for removal of a wall the tenant had built in the garage. The Tribunal pointed out that a tenant is not entitled to do such works, whether the tenant considers them an improvement or not.

Long v Paetzold [2010] NSWCTTT 509



 
Removal of ceiling insulation installed by tenant without consent 

After the lease of residential premises came to an end, the landlord applied to the Tribunal seeking compensation for damage to the premises and an order that the bond money be released to him.

The Tribunal noted that “the most bitter of disputes can develop when a tenancy comes to an end and the bond is disputed”.

The tenant had taken advantage of the Federal Government scheme to install roof insulation in the premises. The landlord removed this insulation after the tenant vacated and claimed the cost of removal. The Tribunal referred to the Residential Tenancies Act 1987, s 27(1)(a), which states that it is a term of every Residential Tenancy Agreement that the tenant may not affix any fixture, or make any renovations, alterations, or additions to the premises, except with the landlord’s written consent, or unless the Residential Tenancy Agreement provides otherwise.

In this case, the tenant did not have the landlord’s written consent. Therefore, the installation was a breach of the Residential Tenancy Agreement. The Tribunal therefore awarded the landlord the cost of removal.

The landlord also claimed the cost of repairing the garden wall. The landlord presented evidence that the wall had failed because of ruptured or blocked storm water pipes, and alleged that the tenant’s plants had blocked those pipes. The Tribunal found that the tenant had not intentionally or recklessly caused the blocking or rupture of the pipes, and so did not award the landlord compensation for repairing the wall.

The Tribunal also awarded costs for a number of minor matters.

Stojanovski v Meyer[2010] NSWCTTT 537



 
Failure to alert tenant to state of wales prior to repainting 

Landlords and agents should be familiar with the regulations outlining the procedure for completing incoming/outgoing inspection reports. A landlord must afford a tenant a reasonable opportunity to attend the final inspection and complete the outgoing report in the tenant’s presence. An outgoing inspection report will be of limited value in CTTT proceedings if it has not been properly prepared.

The landlord applied to the CTTT to retain an amount from the rental bond to cover part of the cost of re-painting the walls of the rented premises. The landlord claimed that the walls could not be cleaned after the tenant vacated because they were too soiled.

The tenant denied that the walls were dirty, and produced an email message from her cleaners confirming that they had undertaken a general clean of the walls after the premises were vacated.

The tenant claimed that she was not informed that the landlord was concerned with the condition of the walls until after the re-painting.The email correspondence between the landlord/agent and the tenant referred to additional cleaning of the carpet and curtains; however, there was no mention of the landlord’s concern over the cleanliness of the walls.

The landlord produced the incoming and outgoing inspection reports as evidence of the condition of the walls. The landlord admitted that she had not completed the report in the tenant’s presence, nor had she given the tenant an opportunity to make herself available for the inspection. This was in breach of the regulations. The landlord did not provide the tenant with a copy of the inspection report until she filed proceedings in the CTTT.

The CTTT held that the landlord had not proved that the walls were so dirty that they could not be cleaned. The CTTT gave little weight to the outgoing inspection report, in part due to the circumstances under which it was completed. It was also contradicted by the evidence of the tenant and the cleaners. The landlord was unable to show that she had raised any issue about the state of the walls with the tenant until after the re-painting had been completed. The CTTT ordered that the bond be refunded to the tenant with interest.

Hall Industries Pty Limited v Kelly NSWCTTT 163




Landlord must prove it has incurred a loss to succeed in a claim for compensation 

The landlord applied for compensation for the cost of replacing the carpet in residential premises. New carpets had been laid in the premises prior to the tenant leasing the premises. The tenant admitted that he had spilled wine on the carpet, and that the stain could not be removed completely. Before he vacated the premises, the tenant had arranged for the carpets to be cleaned.

The Tribunal rejected the landlord’s claim. The Tribunal held that the tenant had made efforts to clean the carpet at the end of the tenancy and that any stain left after that was fair wear and tear. The tenant’s obligation was only to leave the premises in as nearly the same condition, except for fair wear and tear. The Tribunal also held that there was no loss suffered by the landlord, since a new tenant had been found at the same rent. There was no evidence that the stain on the carpet was an issue for the new tenant.

The Landlord had not therefore proved that the carpet had been replaced, or needed to be replaced.

McCarthy v Isagai [2009] NSWCTTT 643 



Landlord must first incur loss 

The landlord applied for compensation against the tenant for arrears of rent, together with water charges, repairs costs, cleaning, pool treatment, locksmith services and rubbish removal.

The Tribunal allowed the landlord’s claims, except for the claim for rubbish removal. The landlord produced photographs which showed that items of furniture and other effects were left around the rented premises together with remnants of a demolished brick wall. The tenant’s evidence made it clear, however, that those items still remained on the property.

The Tribunal held that, because the rubbish had not been removed, the landlord was not able to recover any sum for rubbish removal or tipping fees.

Nazarenko v Simpson [2009] NSWCTTT 587