[12] The phrase “wear and tear” has been common in leases and tenancy agreements for centuries (Taylor v Webb [1937] 2 KB 283, 302).In general, the ordinary meaning of the phrase is concerned with the consequences of ordinary, not extraordinary damage (JSM Management Pty Ltd v QBE Insurance (Australia) Ltd [2011] VSC 339, [36]). In the case of “wear”, this might mean, for example, fading paint work on internal and external walls caused by sunlight over time; “tear” refers to disrepair caused by a tenant through unintentional action or through the normal incident of a tenant’s occupation (Taylor v Webb [1937] 2 KB 283, 302). Depending on the specifics of the obligations outlined in a tenancy agreement, this might include the accidental ripping of an aged, worn fly screen. In summary, fair wear and tear, in the context of a residential tenancy, refers to damage or disrepair caused or resulting from ordinary use.

[13] The evidence before the learned Magistrate, about the walls and the bench top, concerned damage that fell outside the scope of fair wear and tear. For example, the Griffins attempted to repair damage to patches of the wall by using paint that did not match the original paint work. The Griffins accepted they had painted the walls but argued the paint they used matched the original. The learned Magistrate concluded the paint did not match. I am not persuaded there was any error in his assessment.

[14] Although this may have been done by the Griffins in an attempt to rectify damage, applying paint does not fall within the scope of ordinary use. It is a deliberate act; the Griffins have caused damage to the walls through that deliberate act.

[15] There was also evidence of other damage to the walls: blue biro and sticky tape. The use of the latter was specifically prohibited by the terms of the lease and, therefore, falls outside the scope of ordinary use. As for the blue biro, this might well be accepted as fair wear and tear, but the evidence indicates this is not the primary basis upon which the damages claim was based.

[16] The damage caused to the bench top falls into the same category; deep grooves possibly caused by the use of a knife without a chopping board, cannot be said to fall within the scope of ordinary use.

[17] Regardless of whether the damage was caused before the sixth and final tenancy commenced in May 2010, or during the period of that tenancy, the Griffins are liable for the damage. They were the only tenants occupying the premises under a tenancy agreement during the time the damage must have occurred. The Ginis would always have had the right to recover damage that fell outside the scope of fair wear and tear. The damage caused to the walls and the bench top does not fall into the category of fair wear and tear and regardless of whether the tenancy in question commenced in 2010 or 2007 the damage was caused by the tenants.

THE CORRECT APPROACH TO ASSESSING COMPENSATION

[11] Since the claim is a contractual one, the starting point for assessing compensation is usually that the innocent party should (as far as financially possible) be put in the position in which that party would have been if the contract had been properly performed.

[12] Therefore it is usually necessary to identify the contractual term that was breached. In a lessor’s claim at the end of a tenancy this is usually the tenant’s obligation to leave the premises and inclusions as far as possible in the same condition they were in at the start of the tenancy, fair wear and tear excepted.8 There are also obligations to keep the premises clean, having regard to their condition at the start of the tenancy9 and not maliciously damage, or allow someone else maliciously to damage the premises.10

[13] The innocent party’s right to claim compensation arises when the breach of contract has occurred. So in the case of damage to property in breach of contract, it is not a condition precedent to the claim that the innocent party has incurred expense by doing a repair.11 The tribunal erred in taking that approach.

[14] In the case of damage to property in breach of contract, the aim will be to compensate the innocent party for the diminution of the value of the property. The starting point for this assessment is usually the cost of repair.12 Consequential losses can also be recovered.

[15] In many instances which arise in bond claims, the tribunal will need to make adjustments to the cost of repair, whether actual or prospective, to produce a fair award.

[16] Damage to wooden floors are particularly difficult to assess. A common scenario is that the tenant has damaged part of the floor as in this case. Mindful that a localised repair may not produce a perfect result, the lessor might then obtain a quote for the refinishing of the whole floor. The tenant may argue that a localised repair is sufficient.

[17] In such a case to produce a fair result, the tribunal will need to balance a number of factors. If the lessor has done a localised repair but this has left some residual damage, then the lessor would recover the cost of that repair and an award to represent the diminution in the value of the property because of that residual damage.

[18] If the lessor has refinished the whole floor, then the tribunal will need to consider whether the floor is now in a better condition than it would have been if the tenancy agreement had been performed, that is to say if the premises had been returned in the condition they were at the commencement of the tenancy fair wear and tear excepted. If so, then there is an element of betterment. If it is fair to reduce the lessor’s compensation to allow for that betterment then it would need to be assessed. It is not always fair to reduce the lessor’s award for betterment, for example if a lessor has no alternative but to carry out a particular repair as a result of the tenant’s breach, or where there will be no current benefit.

[19] If no repair has yet been done, then the tribunal will need to consider what repair it would be reasonable for the lessor to do. If only a localised repair is reasonable then the tribunal would consider the likely cost of this and the likelihood of any residual damage to the floor. If refinishing the whole floor is reasonable then the tribunal would consider the likely cost of this and whether there would be any betterment and if so whether it would be fair to reduce the award because of this. Where matters are finely balanced, then there would be nothing wrong with taking a middle ground to produce a result fair to both parties.

[20] Consequential losses in such a case may arise if for example the lessor convinces the tribunal that reasonable repairs are definitely to be done but there would be a loss of rental income while they are being done.

[21] In some cases questions of causation, mitigation and foreseeability of loss (remoteness of damage) also arise.