Andrewartha v Weng

[2019] NSWCATCD 55

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Andrewartha v Weng [2019] NSWCATCD 55
Hearing dates:	14 June 2019
Decision date:	21 June 2019
Jurisdiction:	Consumer and Commercial Division
Before:	P French, General Member
Decision:	(1) The landlord, Vicky Weng, must pay the tenant, Ian Andrewartha, the sum of $1,014.79 within fourteen days of the date of these orders.  (2) The application is otherwise dismissed.
Catchwords:	RESIDENTIAL TENANCY: early termination of fixed term agreement - where landlord claims break fee otherwise in accordance with standard form clauses 41 and 42 – no alternative break fee available at law – overpaid rent – where rent cannot be appropriated for another purpose – where landlord has deducted break fee and compensation for end of tenancy cleaning from rent paid in advance – where tenant seeks an order for repayment of rent paid in advance at the end of the tenancy – exercise of discretion – where order for repayment of break fee would be contrary to the guiding principle and to equity, good conscience, and the substantial merits
Legislation Cited:	Civil and Administrative Tribunal Act 2013: ss 36; 38; 41 Civil and Administrative Tribunal Rules 2014: r 23 Residential Tenancies Act 2010: ss 13; 47, 81, 107
Cases Cited:	Abdel-Messih v Marshall [2018] NSWSC 648 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527 Felthouse v Bindley (1862) 142 ER 1037 Novakov v Carew [2017] NSWCATAP 194 Saqa v Kashro [2018] NSWCATAP 265 Ward v Williams [1955] HCA 4 Whitlock v Brew [1968] HCA 71
Category:	Principal judgment
Parties:	Ian Andrewartha (Applicant) Vicky Weng (Respondent)
Representation:	Applicant (self-represented) Richie Hrovat, Managing Agent, (for respondent)
File Number(s):	RT 19/15985
Publication restriction:	Nil

REASONS FOR DECISION

Introduction

1. This is an application by Ian Andrewartha (the tenant) for an order from the Tribunal pursuant to section 47 of the Residential Tenancies Act 2010 (RT Act) that would require Vicky Weng (the landlord) to pay him $1,160.00 being two weeks rent drawn from his account by her Managing Agent by automatic deduction after he returned vacant possession. This application was made to the Tribunal on 3 April 2019 (the application).

2. For the reasons set out following, the Tribunal has determined that the tenant is entitled to an order that will require the landlord to repay him $1,014.79 in rent that was standing to his credit at the end of the tenancy. The remainder of the application has been dismissed.

Procedural history

3. The application was first listed before the Tribunal in a Group List for Conciliation and Hearing on 23 April 2019. Mr Andrewartha attended that listing of the application in person. Mr Richie Hrovat, who is the licensee of the landlord’s Managing Agent, also attended on behalf of the landlord. In accordance with the Tribunal’s usual practice where both parties are present in person, prior to the case being called, the parties were offered the opportunity to attempt to resolve the dispute in conciliation with the assistance of a Tribunal conciliator. Those efforts were not successful. When the parties returned to the hearing room following conciliation, the Tribunal adjourned the application to a Special Fixture hearing and issued directions to the parties for the filing and exchange of their evidence.

Evidence before the Tribunal

4. The tenant did not respond to the Tribunal’s directions for the filing and service of further documentary evidence. He relied upon a copy of a single email he sent to the landlord’s Managing Agent on 4 December 2018 which he had submitted with his application. That email was marked Exhibit A1. The landlord did respond to the Tribunal’s directions for the filing and exchange of documentary evidence. The landlord’s bundle was marked Exhibit R1.

5. Mr Andrewartha attended the hearing in person and gave oral evidence under affirmation. Mr Hrovat and Mr Mathew Tziolas, Property Manager, attended the hearing on behalf of the landlord. Both also gave oral evidence under affirmation. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.

Material facts and contentions of the parties

6. The dispute arises from a residential tenancy agreement that was made on 14 September 2018. It was a fixed term agreement which was expressed to commence on 15 September 2018 and to end on 31 January 2019. The rent payable under the agreement was $580.00 per week, which the tenant paid fortnightly in advance. At the commencement of the tenancy, the tenant provided the landlord with a rental bond of $2,320.00, which was deposited with Rental Bond Services.

7. The residential tenancy agreement that subsisted between the parties is in standard form. It includes the following standard form clauses concerning the break fee that is payable on the early termination of the agreement:

Additional term – break fee

41.   The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of the following amount:

41.1   If the fixed term is for 3 years or less, 6 weeks rent if less than half the fixed term has expired or 4 weeks rent in any other case.

…

42. The landlord agrees that the compensation payable by the tenant for ending the residential tenancy agreement before the end of the fixed term is limited to the amount specified in clause 41 and any occupation fee payable under the Residential Tenancies Act 2010 for goods left on the residential premises.

8. The residential premises is a two bedroom apartment with a lock up garage in an apartment block in Marrickville. The tenant is the registered proprietor of an apartment in the same building. His purpose in renting the premises the subject of this dispute was to relocate from the apartment he owns while it underwent a major renovation.

9. The renovation of the apartment the tenant owns appears to have progressed ahead of schedule and it was ready for reoccupation by him on 9 December 2018. On or about 4 December 2018, the tenant had a conversation with Mr Hrovat in which he advised him of his intention to move out of the rented apartment commencing from 9 December 2019. The contents of that discussion are now disputed.

10. The tenant contends that he advised Mr Hrovat of his intention to move and that there was a discussion between them that a break fee may be payable. The tenant contends that he told Mr Hrovat that if a break would be payable he would retain the rented apartment until the end of the fixed term and invite interstate relatives to live in it up to the end of the term as a Sydney holiday for them. The tenant relies upon Exhibit A1 as proof of this contention. It is an email addressed to Mr Hrovat and has the address of the residential premises in the subject line. The body of the email states: “[a]s discussed I will be moving out of [address] starting Sunday 9/12/18. I see myself completely out by Tuesday 11/12/18. If the flat could be re-let before my lease expires it would be appreciated. However, if a penalty is to be applied, then I shan’t break the lease”.

11. The tenant contends that it was his understanding based upon his conversation with Mr Hrovat that Mr Hrovat would obtain the instructions of the landlord as to whether a break fee would be payable or not and let him know. He contends that when he received no reply to his email he assumed that the landlord had instructed that no break fee would be payable. He also contends that he concluded this because, after he moved out on 11 December 2018, Mr Hrovat advertised the apartment for lease and Mr Tziolas conducted an open inspection of the apartment on 27 December 2018. A new tenant was approved and commenced occupation under a residential tenancy agreement signed on 2 January 2019 following that single open inspection.

12. It is not in issue that the tenant returned the keys to the landlord’s Managing Agent on 2 January 2019, being the date the residential tenancy agreement with the new tenant commenced.

13. The tenant contends that as a matter of law the residential tenancy agreement was terminated by agreement between him and the landlord on 2 January 2019. He contends that, at law, he did not abandon the residential premises, and that no break fee is therefore payable by him to the landlord.

14. On behalf of the landlord, Mr Hrovat contends that he never agreed with the tenant that the residential tenancy agreement would terminate before the end of fixed term without penalty. He contends that it was always the case that a break fee would be payable. He contends that he told the tenant this orally both before and after the tenant’s email of 4 December 2018. He contends that although the landlord would have been entitled to a break fee equivalent to four weeks rent in the circumstances, he obtained instructions from the landlord to waive this entitlement and to only require the tenant to pay actual lost rent and fees incurred in re-letting the premises. He contends that he communicated this to the tenant on or about 5 December 2018 by telephone.

15. In support of this contention, Mr Hrovat has submitted into evidence a copy of an email he sent to the landlord on 5 December 2018, the contents of which are as follows:

Thanks for the chat this afternoon, as advised the tenant, Ian in your property is wishing to break the lease.

The lease terms are to expire 31st Jan for a rent of $580. I believe, the current value for this property would be around $530 to $540 we need to reflect on this reality. We could get a bit more come February. I note the $580 price was a bit high for the shorter nature of the lease.

The lease terms allows the landlord to charge a penalty up to 4 weeks.

The tenant advice is below. He is happy to pay the rent until a new tenant moves in.

I note that your costs to relet the property would be:

$33 lease fee

½ week letting fee

Any vacancy (which the tenant is prepared to pay)

The difference in achieved rent – ie $40 to $50 per week till the end of the lease.

These four costs – may well come to less than 4 weeks lease break fee, but they may not if we can’t find a tenant.

16. The tenant strongly denies receiving advice from Mr Hrovat that a break fee would be payable.

17. When the residential tenancy agreement commenced, the tenant consented to rent being paid by automatic deduction from his bank account. On 2 January 2019 the Managing Agent deducted $1,160.00 from the tenant’s account, being two weeks rent in advance. It is this deduction that the tenant disputes on the basis of his contention that the residential tenancy agreement had ended. In his oral evidence, Mr Hrovat submitted that this deduction had been made in error as a result of his agency’s failure to cancel the automatic drawing arrangement. He contends that this was an administrative oversight due to the Christmas/New Year holiday period. However, on behalf of the landlord, he asserts an entitlement to deduct a break fee and end of lease cleaning cost from the funds standing to the tenant’s credit on 2 January 2019.

18. On 9 January 2019, Mr Hrovat wrote to the tenant by email to advise him of the final reconciliation of his rental account. The subject line of the email is “[address of rented premises] – Final Refund/Bond Release”. The contents of the email are as follows:

I have assessed and broken down the final bond claim/refund for your tenancy.

Lease Break Fees

$33 = Lease fee for new tenancy

$215 + GST = Letting fee for new tenancy

$207.14 + Reduce rent for remainder of period till 31 January 19 (ie new tenancy was rented at $530/k)

Bond Claim – as per attached invoice/discussion/demonstration. This will be taken from the overpayment below.

$120 = final exit clean

Over Payment of Rent - as per attached ledger and to be refunded to your tenancy

$331.43 – truncated from your final payment on 19 Dec 18

$1160 – overpaid* on the 2nd Jan 19

* I note the overpayment occurred due to us not securing a new tenancy until the Christmas break and also the time of year also (our office was not open). Apologies for the inconvenience caused.

This equates to a refund to your tenancy of $916.29. PLEASE CONFIRM WHAT BANK ACCOUNT DETAILS YOU WOULD LIKE THIS REFUNDED TO.

I note in good faith I will also release the bond NOW to you also all claims will come from the overpaid rent.

…

19. The tenant did not respond to this email until 5 March 2019. (It appears that in the intervening period the tenant made an unsuccessful complaint to NSW Fair Trading about end of tenancy issues, but the details of this are not in evidence.) On that date the tenant wrote to the landlord, care of her Managing Agent, to demand the repayment of $1,160.00 in rent he claimed he had overpaid. That letter states as follows:

REPAYMENT OF OVERPAID RENT

I write in relation to my former tenancy at [address of premises]. My residential tenancy agreement ended on 2 January 2019 when I handed back the keys for the property.

However, on 2 January 2019 you took from my bank account the amount of $1,160.00, that being two weeks rent. As per section 47 of the Residential Tenancies Act 2010, I ask that you repay to me overpaid rent in the amount of $1,160.00. I ask that you make that payment by 19/3/2019.

I note that section 33(3) of the Act states that “A landlord, or landlord’s agent, must not knowingly appropriate rent paid by the tenant for the purpose of any amount payable by the tenant other than rent”. The money taken by you on 2 January 2019 was money taken as rent and you are not permitted to retain any part of it in satisfaction of amounts that you allege I owe in relation to the termination of my tenancy agreement.

My hope is that this matter can be resolved, however I reserve my right to make an application to the NSW Civil & Administrative Tribunal seeking orders against the landlord.

20. Mr Hrovat responded to the tenant’s letter by email on 5 March 2019. His email states as follows:

I am in receipt of the attached letter you hand delivered to my office – but I note I am unsure if you had received this correspondence (email that I know you had tabled fair trading) or comprehend it. This correspondence acknowledges the overpayment of rent as asks you to provide bank account details so we can refund you said monies. This has not been forthcoming to date so in good faith I will account to you by cheque as I can not refund your monies if you don’t provide EFT details as asked previously.

I note you will be refunded by cheque NOW from my office in the amount $894.79*. This will be sent to your home address [set out] as clearly not having the money is causing you some frustration, for that I apologise.

* you will note that this amount is different to tabled previously that is because the previous figure of $916.29 relied upon a letting fee that did not include the GST component on the Letting fee which is now been corrected. I note the vacating date was the 1st of January 2019, set in good faith, the day earlier than you returned the keys. Is $215 was firstly deducted for the letting fee (this needed to be $215 + gst + $236.50.

It is significant to note that the bond was refunded to you in full on 09 Jan 2019, and all deductions made for breaking the lease were deducted from overpaid monies (as per previous correspondence in Dec 2018 and Jan 2019). I note the reason for deducting the monies was done as a result of our office is closed during the Christmas and new year and we were not able to stop the deduction(s) in advance (mainly due to office closure and in truth the late confirmation of handover of the property).

If you are in dispute of the amount – I am happy to go over the explanation to you in my office – it is not necessary to take the matter further as the correspondence is quite clear. I note I was disappointed you decided to take this to fair trading as from their correspondence to us, we had no case to answer for. They in fact acknowledged how reasonable I had been note to charge the full 4 weeks lease break fee, as we were entitled to do so.

21. As at the date of the hearing, Mr Hrovat retains the cheque he refers to in his email of 5 March 2019 – the payment has not been accepted by the tenant.

Jurisdiction

22. There is no issue that the Tribunal has jurisdiction to deal with this application under the provisions of the RT Act. The application arises from a residential tenancy agreement to which the RT Act applies and it has been made within the 28 day time period from the date the landlord refused or failed to comply with the tenant’s request for the rent refund (see sections 47(1) and (3) of the RT Act) as required by Rule 23 of the Civil and Administrative Tribunal Rules 2014.

23. Although the application was made on 3 April 2019 quite some time after the tenancy had ended, such an application may be made “during or after” the termination of a residential tenancy agreement, and there is no time limit affecting when a (former) tenant may make a request to a landlord for amounts paid but not owed under a residential tenancy agreement.

Applicable law

24. Section 33(3) of the RT Act provides that a landlord, or landlord’s agent, must not knowingly appropriate rent paid by the tenant for the purpose of any amount payable by the tenant other than rent. Section 33(3) is made a term of every residential tenancy agreement by operation of section 33(4).

25. Section 47(1) of the RT Act provides that a tenant may make a written request to a landlord that the landlord repay to the tenant any rent, or other amounts, paid by the tenant that are not required to be paid under the RT Act or the residential tenancy agreement. A landlord must, with 14 days of a written request by a tenant, repay to the tenant the amount of rent or other amount paid in excess of the amount payable by the tenant under the RT Act or the residential tenancy agreement: section 47(3). If the landlord fails to do so, the Tribunal may order that rent or any other amount be repaid to the tenant if it finds that the rent or other amount was not required to be paid by the tenant under the RT Act or the residential tenancy agreement. Such an order is made under section 187(1)(c) of the RT Act. The Tribunal’s power to make such an order is at its discretion: Saqa v Kashro [2018] NSWCATAP 265 at [53]

26. Section 81 of the RT Act sets out the circumstances in which a residential tenancy terminates. A residential tenancy agreement terminates only in the circumstances set out in the RT Act: section 81(1). Relevantly to the circumstances of this case a residential tenancy agreement terminates if the tenant abandons the premises (section 81(4)(d)) or if the tenant gives up possession of the residential premises with the landlord’s consent, whether or not that consent is subsequently withdrawn (section 81(4)(e)). I also note that a residential tenancy agreement terminates if, relevantly, a tenant gives a termination notice in accordance with the RT Act and the tenant gives vacant possession of the residential premises: section 81(2).

27. Section 107 of the RT Act sets out the landlord’s remedies upon abandonment of residential premises by the tenant, (which includes the unilateral early termination of a fixed term agreement by a tenant). The Tribunal may, on application by a landlord, order a tenant to pay compensation to the landlord for any loss (including loss of rent) caused by the abandonment of the residential premises by the tenant: section 107(1). The Tribunal’s power to make such an order is at its discretion: Abdel-Messih v Marshall [2018] NSWSC 648 at [35]. The landlord must take all reasonable steps to mitigate the loss and is not entitled to compensation for any loss that could have been avoided by taking those steps. However, this does not apply in the case of a fixed term agreement that provides for the payment of a break fee: subsection 107(2).

24. If the residential tenancy agreement is a fixed term agreement, the compensation payable by the tenant under section 107 is the amount of the applicable break fee for the tenant, if the agreement provides for the payment of a break fee: section 107(3). The amount of any money paid by a tenant to a landlord on terminating a fixed term agreement before the end of the fixed term or before otherwise abandoning the premises (other than money previously due to the landlord under the residential tenancy agreement) is to be deducted from any amount payable to the landlord under section 107: subsection 107(6).

Consideration

29. Having regard to the tenant’s cause of action, the material facts and contentions of the parties, and the applicable law, the questions the Tribunal must pose and answer in order to determine the outcome of this application are as follows:

1. was any amount of rent paid in advance standing to the tenant’s credit on the date vacant possession of the premises was returned to the landlord?

2. how did the residential tenancy agreement end – by agreement between the tenant and landlord, or by abandonment of the premises by the tenant before the end of the fixed term?

3. if the premises was abandoned, is the landlord entitled to be compensated for any damage and loss she incurred as a result?

4. was the landlord entitled to deduct the cost of cleaning of the premises from any amount of rent paid to the tenant’s credit on the date of termination of the residential tenancy agreement?

5. having regard to the answers to these questions, what orders should the Tribunal make?

Rent standing to the tenant’s credit

30. As at the date of the hearing it is not in issue that on 2 January 2019 when the tenant returned possession of the premises to the landlord he had paid a total of $1,491.43 rent in advance, which was constituted by a pre-existing amount of $331.43 and $1,160.00 which was drawn from his bank account by automatic deduction on that date.

Did the tenancy end by agreement?

31. The residential tenancy agreement that subsisted between the parties is in writing. It was a fixed term agreement which was expressed to end on 31 January 2019. A residential tenancy agreement, including a variation to any such agreement, may be oral or in writing, or partly oral and in writing. It may also be express or implied: section 13(2) of the RT Act. However, where an oral variation to a written residential tenancy agreement is asserted, the party asserting the variation must satisfy the Tribunal according to contractual principles on the civil standard of proof that the variation was formed and that its terms are sufficiently certain so as to be capable of enforcement: see generally Whitlock v Brew [1968] HCA 71.

32. In this case, there is sufficient evidence before the Tribunal for me to conclude that the tenant offered to end the residential tenancy agreement before the end of the fixed term for consideration that he would pay rent until a new tenant was secured or otherwise up to the end of the fixed term. However, that is the only element of the purported variation to the residential tenancy agreement about which the Tribunal can be certain. Mr Hrovat asserts, and his email to the landlord of 5 December 2018 appears to confirm, that he did not accept the tenant’s offer on behalf of the landlord, but that he made a counter offer to the tenant which in effect would require the tenant to pay damages to the landlord for the early termination of the fixed term agreement on a common law basis rather than in accordance with clause 41 of the agreement. I am satisfied on the evidence that this counter offer was never accepted by the tenant, perhaps because he did not understand the meaning of what Mr Hrovat communicated to him. In this respect there is a contentious dispute between the tenant and Mr Hrovat as to who said what to whom, and as to when this was said, in relation to these matters. In the circumstances of this case the existence of this dispute is itself evidence that there was never any ‘meeting of the minds’ such that a variation to the residential tenancy agreement was concluded between the tenant and landlord as to the terms on which the residential tenancy agreement would end before the end of the fixed term.

33. The tenant relies upon his email to Mr Hrovat dated 4 December 2018 to prove that his asserted variation to the residential tenancy agreement was concluded. Such a conclusion is inconsistent with the objective facts and surrounding circumstances (Mr Hrovat’s email to the landlord dated 5 December 2019 and the landlord’s subsequent claim for a break fee on a common law basis). The tenant appears to assert that the fact that he received no written reply to this email from Mr Hrovat means that the landlord became bound by the terms he offered in that email by implication. That is, he asserts that the Tribunal should conclude that the landlord’s silence in writing amounts to an adoption of or acquiescence in those terms. This contention cannot be accepted.

34. First, such a conclusion is not open to me in the face of Mr Hrovat’s oral evidence that he communicated to the tenant on or about 5 December 2018 by telephone that a break fee calculated on a common law basis would be payable. Second, even if I were to accept the tenant’s evidence that Mr Hrovat did not tell him a break fee would be payable, the law does not permit the tenant to impose a positive obligation on the landlord to reject his offer to avoid a contract variation coming into effect: Felthouse v Bindley (1862) 142 ER 1037.

35. A contracting party cannot unilaterally alter the terms of the contract. The other party must by some positive conduct adopt the altered terms: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527. In this case, although the landlord moved quickly to secure a new tenant for the premises, such conduct is equally consistent with the tenant’s and Mr Hrovat’s contentions as to the terms on which the tenancy would end. That is, the positive conduct by the landlord in securing a new tenant does not prove that she agreed that the tenancy could end early without penalty. There is no other objective or surrounding evidence that would permit the Tribunal to conclude that the landlord’s silence in writing implies the adoption of or acquiescence in the terms proposed by the tenant.

36. For the foregoing reasons, I cannot be satisfied that the residential tenancy agreement was varied by agreement between the tenant and the landlord so as to permit its early termination without a break fee being payable.

37. For completeness, I note that there is no other lawful basis upon which the residential tenancy agreement could have ended before the end of the fixed term. It is not in issue that the tenant did not provide the landlord with a termination notice terminating the agreement before the end of the fixed term in accordance with Part 5 of the RT Act, and that in any event, there were no permissible grounds for doing so.

38. It therefore must be concluded that, at law, the tenant abandoned the premises on 11 December 2018 when he moved out. That tenant’s repudiation of the residential agreement had final effect on or about 2 January 2019 when he asserted a right to refuse to continue to pay rent under the agreement: cf Novakov v Carew [2017] NSWCATAP 194 at [25] to [51].

Is the landlord entitled to a break fee?

39. Clause 41 of the residential tenancy agreement that subsisted between the parties provided that if the tenant ended the residential tenancy agreement before the end of the fixed term of the agreement, he was obliged to pay a break fee. In this case, as the tenant ended the agreement in the second half of the fixed term, the break fee payable was expressed to be the equivalent of 4 weeks rent, which was $2,320.00.

40. The great difficulty for the landlord in this case is that she did not claim a break fee from the tenant in accordance with clause 41, and she was bound to do so by that clause and by the terms of clause 42. The landlord sought damages from the tenant for the early termination of the agreement on a common law basis. There is no clause of the residential tenancy agreement that would permit the landlord to claim a break fee on this alternative basis. Clause 41 is, in effect, a liquidated damages clause in which the parties agreed as to the damages that would be payable by the tenant on the early termination of the residential tenancy agreement when the agreement was made. The landlord cannot unilaterally vary that clause to claim damages on an alternative basis, even if doing so would be more beneficial to the tenant, as it was in this case. Such an outcome could only be achieved by a variation to the residential tenancy agreement agreed by both parties. As I have indicated above, I am satisfied that no such variation was agreed in this case.

41. In the result the landlord had no contractual or other lawful basis upon which she could claim from the tenant the break fee charges posted to the tenant’s rent account by her Managing Agent on or about 9 January 2019.

Cleaning charges

42. The landlord asserts a right to deduct from the rent the tenant had paid in advance as at 2 January 2019 $120.00 in compensation for cleaning of the premises at the end of the tenancy. It is clear from Mr Hrovat’s email to the tenant of 9 January 2019 that this deduction was made in lieu of a claim on the tenant’s rental bond for this amount, which was refunded in full.

43. Whether or not the landlord was otherwise entitled to claim such compensation from the tenant, section 33(3) of the RT Act does not permit the landlord to appropriate rent for this alternative purpose. This amount must therefore be reinstated as rent paid in advance to the tenant’s credit in the determination of this application.

What orders should the Tribunal make?

44. Section 47(5) confers discretion on the Tribunal to order that rent not owed under a residential tenancy agreement be repaid to a tenant by a landlord. That discretion is unfettered but must be exercised judicially having regard to the statutory scheme under which the discretion is conferred: Ward v Williams [1955] HCA 4. It must also be exercised having regard to the Tribunal’s guiding principle, which is the just, quick and cheap resolution of the real issues in dispute (section 36 of the Civil and Administrative Tribunal Act 2013 (NCAT Act)). The Tribunal is also required to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: section 38(4) of the NCAT Act.

45. In this case, on the facts as I have determined them, the tenant was liable to pay the landlord a break fee of $2,320.00 when he abandoned the premises on 11 December 2018. The landlord has in fact claimed a break fee of $1,756.64, being the rent the tenant paid up to 2 January 2019 ($1,160.00), which is not in dispute, and $596.64 in disputed other charges as outlined in Mr Hrovat’s email to the tenant dated 9 January 2019 (as subsequently amended by his email of 5 March 2019). The landlord had no legal right to claim a break fee on the basis that she has done so, but the tenant is clearly in a better position based upon what the landlord claims than he would be in if clause 41 of the residential tenancy agreement were to be enforced against him by the landlord.

46. The landlord has not sought to enforce clause 41 against the tenant, but at least in theory could still do so by way of an application to the Tribunal under section 175 or 190 of the RT Act. Both applications would now be out of time, but the Tribunal has discretion to extend the time in which such applications may be made under section 41 of the NCAT Act. Whether it would do so in the circumstances of this case, if such an application was made by the landlord, is not a matter for me to speculate about. The point is that there is at least the potential for the proliferation of this dispute through further litigation if it is not finally determined in the context of the present application.

47. The fact that the landlord has not claimed a break fee in accordance with the terms of the residential tenancy agreement does not prevent the Tribunal from considering her entitlement to a break fee in the exercise of its discretion under section 47(5) of the RT Act: cf Saqa v Kashro [2018] NSWCATAP 265 at [50]. I also note that it is permissible for a landlord to deduct a break fee from rent paid in advance on the date of abandonment of premises: section 107(6) of the RT Act. This is an exception to the section 33(3) prohibition on appropriation of rent for other purposes.

48. That being the case, and having regard to section 36 and 38(4) of the NCAT Act, I exercise the discretion conferred by section 47(5) of the RT Act to refuse to order the refund to the tenant of the $596.64 in disputed break fee charges he claims. Subject to any appeal, this will bring this dispute to finality justly, quickly and cheaply according to good conscience and the substantial merits of the case.

49. However, I am satisfied that the tenant is entitled to an order pursuant to section 47(5) that will require the landlord to pay him the balance of the rent standing to his credit on 2 January 2019, which was $1,014,79, including the $120.00 impermissibly appropriated as compensation for cleaning costs.

Conclusion

50. For the foregoing reasons, the landlord must pay the tenant $1,014.79 within 14 days of the date of these orders.

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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: 29 October 2019