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Breach of agreement

Breach by the landlord

Your landlord will be breach of your tenancy agreement if they (or their agent) fail to comply with any of its terms: for example, the terms relating to access, reasonable peace, comfort and privacy, and repairs and maintenance. See the relevant sections on each of these terms for more detail.

Generally speaking, there are a number of possible remedies to a breach by your landlord:

  • Termination of the tenancy on grounds of the breach;
  • Compensationfor losses you’ve suffered as a result of the breach;
  • A rent reduction, if the breach amounts to a reduction or withdrawal of goods, services or facilities;
  • Tribunal orders (‘specific performance orders’, or SPOs) that your landlord stop breaching the agreement and do specific things to comply with their obligations; and
  • A Tribunal order that you pay rent to the Tribunal, rather than to your landlord.

Tip

Don’t withhold rent in response to a breach by your landlord. This is unlikely to resolve the problem, and you will probably end up in the Tribunal anyway, arguing about your breach – failure to pay rent – rather than the landlord’s breach. Instead, it’s better to apply for an order that you pay rent to the Tribunal.

Which remedies are available, and which remedy is best, will depend on the nature of the breach and your own circumstances and preferences.

Termination is dealt with in the section on Ending a tenancy. Each of the other remedies is discussed below. See also the section on the Civil and Administrative Tribunal for more about proceedings in the Tribunal.

Note that there are time limits on applying to the Tribunal about a breach: you should apply within three months of becoming aware of the breach (Residential Tenancies Regulation 2010 (RT Reg 2010), clause 22(9)).

Note also that the Tribunal cannot order payments of money over $15,000, or performance of work that would cost more than $15,000 (RT Act 2010 section 187(4); RT Reg 2010, clause 23). Larger claims must be pursued through the courts.

Compensation

Where you suffer a loss as a result of a breach by your landlord, you are generally entitled to be compensated by them to the value of your loss.

Note that you are legally expected to take reasonable steps to avoid (or ‘mitigate’) your loss. You are not entitled to compensation for losses that you could have avoided by taking reasonable steps. On the other hand, you are entitled to com- pensation for costs incurred in taking those steps. (So if Bryn, from the example above, noticed the water leaking, and could reasonably have moved or covered the wardrobe but instead just left it to get damaged, he may not be entitled to compensation. On the other hand, if Bryn had to get a removalist to help him move the wardrobe, he could claim compensation for the cost of the removalist.) You can seek compensation by writing a letter of demand to your landlord.

If you do not receive a satisfactory response, you can apply to the Tribunal for a compensation order (RT Act 2010 section 187(1)(d)).

Compensation for personal injuries

If your landlord’s breach results in you suffering a personal injury, you can seek compensation for your loss: both ‘economic loss’, such as lost wages, and ‘non-economic loss’, such as pain and suffering). Typical personal injury claims, however, are greater than the Tribunal’s $15,000 limit.

Also be aware of the Civil Liability Act 2002 (NSW) (the CL Act 2002), which sets complex limitations on liability for personal injuries – and rules out most small claims for non-economic loss altogether (that is, claims less than 15 per cent of the ‘most extreme case’ (CL Act 2002, section 16(1)).

If you are thinking about taking action against your landlord for a personal injury, you should get advice from a lawyer.

Compensation for disappointment and distress

The disappointment and distress you might feel as a result of your landlord’s breach is another form of non-economic loss. With a few exceptions, the law does not allow compensation for disappointment or distress – but tenants’ claims against landlords are one of the exceptions. This is because tenants specifically contract for the quiet enjoyment of a home.

However, claims relating to disappointment and distress are also subject to the limitations on compensation for non-economic loss under the CL Act 2002 – and because they tend to be for relatively small amounts, section 16 generally rules them out. There is, however, an exception: if the liability arises from a deliberate act done with intent to injure, the CL Act 2002 does not apply (section 3B(1)(a)). So, if you want to pursue compensation for disappointment and distress, be prepared to argue that your landlord’s breach was a deliberate act intended to cause injury.

There is also an argument that ‘inconvenience’, as distinct from disappointment and distress, may be a form of non-economic loss that is not subject to the limitations of the CL Act 2002. This argument, however, has not been tested before the courts.

In 2009, the NSW Court of Appeal held that claims for compensation for disappointment and distress were subject to the CL Act 2002 (Insight Vacations Pty Ltd v Young [2010] NSWCA 137 (Insight Vacations)). Before the Insight Vacations decision, the Tribunal regularly ordered compensation for disappointment and distress, on the basis that such compensation was not subject to the CL Act 2002. Since Insight Vacations, the Tribunal has made inconsistent decisions about compensation for distress and disappointment: in some cases it has refused to order compensation because of Insight Vacations; in others it has ordered compensation because of the section 3b(1)(a) exception; in yet others it has ordered compensation apparently without regard to Insight Vacations.

Rent reduction

Some types of breach – particularly relating to repairs and maintenance, or security – may have the effect of withdrawing or reducing goods, services or facilities provided with the premises (for example, a broken stove means that you cannot use it, and a mouldy carpet may mean that you cannot use the room it is in). Where this happens you may be able to seek a reduction in your rent.

The Tribunal can reduce your rent, by ordering that the current rent is excessive and that it must not exceed an amount specified by the Tribunal (RT Act 2010 section 44(1)(b)). The order will also specify the date from which the reduced rent applies; the period of the reduction can run up to 12 months. The Tribunal will consider the reduction or withdrawal of the goods, services or facilities, and may consider other factors, such as the general market level of rents, provided at section 44(5).

Note that applications for rent reductions must be made during the tenancy – not after termination (section 44(3)).

Alternatively, if you negotiate a rent reduction with your landlord or agent without going to the Tribunal, make sure you get in writing the amount and period of the reduction.

Specific performance orders

The Tribunal can order your landlord to stop acting in breach of the agreement (RT Act 2010 section 187(1)(a)). It can also order your landlord to carry out a term of your tenancy agreement (section 187(1)(b)), and can specify the work or other steps required to remedy a breach of the agreement (section 187(1)(e)). This is called a specific performance order (SPO).

When you apply for an SPO, consider also applying for an order that the rent be paid to the Tribunal (see below). If the Tribunal makes an SPO, ask to be allowed to have your application ‘relisted’ in case the landlord does not comply (this means you will not have to start over with a new application).

Paying rent to the Tribunal

The Tribunal can order that all or part of your rent is to be paid to the Tribunal until the agreement is performed (section 187(1)(f)). This is a useful and probably underused remedy that can give an SPO some ‘teeth’.

The Tribunal can also make this order pending a decision on a claim for compensation (and, if it makes an order for compensation, it can also order that rent paid to the Tribunal be put towards the compensation (section 187(g)).

Breach by the tenant

If you are in breach of a term of the tenancy agreement (for example, by damaging the premises, or failing to pay rent), there are a number of remedies that may be available to your landlord:

  • Termination;
  • Compensation; and
  • Specific performance orders.

For more about termination, see the section Ending a tenancy. Always keep in mind that a termination notice from your landlord does not, by itself, end your tenancy, and that the Tribunal has the final say on whether a tenancy will end.

For more about compensation and specific performance orders, see the sections under ‘Breach by the landlord’, above – the provisions of the RT Act 2010 discussed there apply alike to landlords and tenants. Note that landlords are never entitled to compensation for non-economic loss, because unlike tenants, they do not contract for enjoyment.

Note also a couple of ‘remedies’ that are not available during a tenancy:

  • ‘Lockout’ – your landlord is not allowed to lock you out or otherwise try to personally remove you from the premises. This is a breach of the Act, and a breach of your right to reasonable peace, comfort and privacy and quiet enjoy- ment. See the sections on Evictions and lockouts, and on ‘Quiet enjoyment’ in this section, for more detail.
  • Seizing your goods – this old remedy for rent arrears, known as ‘distress’, has been abolished in New South Wales for more than 80 years. Seizing your goods is a breach of your right to quiet enjoyment, and may be theft.
  • Listing you on a residential tenancy database – landlords and agents can list you only after your tenancy is terminated, and only for certain reasons (section 212).

This is new

The Residential Tenancies Act 1987 (NSW) (the RT Act 1987) had no provisions about residential tenancy databases. Under a rule of conduct under the PSBA Reg 2003, agents could not list you during a tenancy; this rule, however, did not apply to landlords.