Bartholomew v Pitman-Keys and Ors (Residential Tenancies)
[2022] ACAT 26
•28 March 2022
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
BARTHOLOMEW v PITMAN-KEYS & ORS (Residential Tenancies) [2022] ACAT 26
RT 671/2021
Catchwords: RESIDENTIAL TENANCIES – co-tenants – where one co-tenant left the premises before the end of the tenancy – application of a remaining co-tenant for departing co-tenant’s bond money to pay for repairs and rental arrears – whether repairs carried out in accordance with informal contract – whether intra-tenancy contract for payment of rent displaced by new understanding among co-tenants – whether first respondent relied detrimentally on new understanding – whether a Jones v Dunkel inference should be drawn from absence of one co-tenant as witness – whether applicant can be taken to have accepted a new understanding by silence
Legislation cited: Residential Tenancies Act 1997 ss 8, 9, 10, 35A, 35B, 72, 79, 83, standard terms 26, 63, 64, 72A, 72B
Residential Tenancies Amendment Act 2020
Cases cited:ACT Housing v Midgley [2001] ACTRTT 7
Jones v Dunkel [1959] HCA 8
Legione v Hateley [1983] HCA 11Lochrin v Jaiswal [2018] ACAT 78
O’Donnell v Reichard (1975) VicRp 89
List of
Texts/Papers cited: Allan Anforth, Peter Christensen and Christopher Adkins, Residential Tenancies: Law and Practice, New South Wales (Federation Press, 7th ed, 2017)
Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law, (Thomson Reuters, 3rd ed, 2009)
Tribunal:Senior Member M Hyman
Date of Orders: 28 March 2202
Date of Reasons for Decision: 28 March 2022
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 671/2021
BETWEEN:
LYDIA BARTHOLOMEW
Applicant/Tenant
AND:
CASSANDRA PITMAN-KEYS
First Respondent/Tenant
ERYNE SMITH
Second Respondent/Tenant
KATE PITMAN
Third Respondent/Tenant
TRIBUNAL:Senior Member M Hyman
DATE:28 March 2022
ORDER
Being satisfied the first respondent should pay $1169.20 to the remaining co-tenants ($1028.57 unpaid rent and $140.63 for repair of damage) the Tribunal orders that:
The remaining co-tenants (Ms Bartholomew, Ms Smith and Ms Pitman) are entitled to deduct from the bond required to be repaid to the leaving tenant ($800) the sum of $800, meaning they do not need to pay Ms Pitman-Keys any amount under section 35B(2)(a) of the Residential Tenancies Act 1997.
The first respondent is to pay $369.20 in compensation to the other three co-tenants by 7 April 2022.
………………………………..
Senior Member M Hyman
REASONS FOR DECISION
This case concerns a household of four people, one of whom appears as the applicant – Ms Bartholomew – and the other three of whom are the respondents. For clarity and ease of reading I will for the most part identify the parties by name rather than as applicant and first, second and third respondents.
In late 2020 Ms Pitman-Keys, the first respondent, decided to leave the household. The matter before me concerns an attempt by Ms Bartholomew to recover moneys that she says Ms Pitman-Keys owes. Ms Pitman-Keys disputes that she owes the amounts claimed. There are two amounts disputed: one concerns the cost of repairs to the flooring of one room; the other concerns the payment of rent.
At the time of signing the residential tenancy agreement the third respondent, Ms Pitman, was known as Penelope Kate Pitman-Keys; she subsequently changed her name to Kate Pitman, and it is by that name that I have identified her in this decision.
Ms Pitman-Keys and Ms Bartholomew were in a relationship[1] while the former was a tenant of the premises, as were Ms Pitman and the second respondent, Ms Smith. Towards the end of Ms Pitman-Keys’ period of residency she left that relationship and apparently took up another relationship, with Mr Paul Robertson, who represented her in the hearing. Ms Pitman was at some stage married to Ms Pitman-Keys, but that relationship ended in divorce, apparently at some time in 2021.[2] This changing pattern of relationships is relevant only insofar as it bears on the communications between and among the parties; as explored below, communication difficulties appear to have influenced how some matters proceeded at the time.
[1] Exhibit 2 at [13]-[14]
[2] Transcript of proceedings 16 November 2021, page 36
The three co-tenants other than Ms Pitman-Keys applied on 27 July 2021 for compensation in the amount of $1,309.84, made up of $281.27 for repairs to the floor and $1,028.57 in unpaid rent. The application sought to recover the money through Ms Pitman-Keys’ contribution of $800 to the bond plus $509.84 in compensation for breach of contract. Ms Bartholomew and Ms Pitman submitted an amended application seeking that amount on 9 September 2021. Shortly beforehand, Ms Smith applied to remove herself as an applicant, lodging a notice of discontinuance on 31 August 2021. On 7 September 2021 the Tribunal removed Ms Smith as applicant and joined her as second respondent. Ms Pitman also applied to remove herself as an applicant, and the same process was followed for her, joining her as third respondent.
The matter came before me for hearing on 16 November 2021. Ms Pitman-Keys appeared in person, with Mr Paul Robertson, who acted as her representative. Ms Bartholomew appeared by telephone, as did Ms Pitman. When contacted by telephone, Ms Smith chose not to participate in the hearing. Ms Bartholomew, Ms Pitman-Keys and Ms Pitman gave evidence and were cross-examined. Materials before me and taken into evidence comprised Ms Bartholomew’s amended application, with attachments; Ms Pitman-Keys’ response, also with attachments; two witness statements each by Ms Bartholomew (dated 9 September and 1 October 2021 and marked as Exhibits A1 and A2) and Ms Pitman (dated 9 and 30 September 2021, Exhibits A3 and A4), and a witness statement by Ms Pitman-Keys (dated 10 September 2021, Exhibit R1); and records from the lessors’ agent documenting the payment of rent (not assigned an exhibit number at the hearing but identified here as Exhibit A5).
An attempt was made by Ms Bartholomew to admit a further witness statement, by a Mr Alan Pryor, with the possibility of his being called as a witness, but Mr Robertson objected to the statement, and I declined to admit it, as it was immediately apparent that its content was of dubious relevance and potentially prejudicial. Mr Robertson also objected to the second witness statements of Ms Bartholomew and Ms Pitman; these were written as responses to Ms Pitman-Keys’ witness statement and also included a good deal of prejudicial material mixed in with some statements of fact. I admitted the two statements on the basis that I would limit my use of them to the factual material to be found within them. I have adopted a similar approach to Ms Pitman-Keys’ witness statement. The issues over the admission of evidence illustrate the way in which the emotions associated with the breakdown of relationships has coloured how the evidence has come forward. As will become clear, ultimately the issues to be decided are of limited ambit, and the evidence that is relevant to them is similarly constrained.
Issues
There are two issues before the Tribunal in this matter:
(a) What contribution Ms Pitman-Keys should make to the cost of repairing the floor.
(b) Whether Ms Pitman-Keys should pay rent for any period beyond 31 December 2020.
The legislative framework
The Residential Tenancies Act 1997 (the RTA) sets out the rights and obligations of lessors and tenants in respect of residential tenancies. Its focus is on the relations between lessors and tenants. The RTA provides that a residential tenancy agreement is taken to include the set of standard terms in schedule 1 to the Act.[3] The terms in the schedule, incorporated in the residential tenancy agreement between lessor and tenant, become the terms of the contract between them, and govern the operation of the tenancy. Parties to a tenancy agreement cannot contract out of the provisions of the RTA, and can contract out of the standard terms only as specified in the RTA.[4] The standard terms require the tenant to pay rent on time[5] and to take reasonable care of the premises, leaving the premises in substantially the same condition as at the start of the tenancy, except for fair wear and tear.[6]
[3] Residential Tenancies Act 1997 section 8
[4] Residential Tenancies Act 1997 standard term 3; sections 9 and 10 of the RTA set the parameters whereby parties may contract out of standard terms, and the constraints on doing so; these provisions are not relevant to the present matter.
[5] Residential Tenancies Act 1997 standard term 26
[6] Residential Tenancies Act 1997 standard terms 63, 64
Part 3 of the RTA deals with bonds, and division 3.4 concerns the release of bond money, but does not deal explicitly with present circumstances, where one co-tenant leaves a tenancy and one or more of the other co-tenants remain in the premises. Indeed the RTA, including the standard terms, was largely silent on the relations of co-tenants with each other until passage of the Residential Tenancies Amendment Act 2020, which introduced a new part 3A dealing with co-tenancies into the RTA, made some consequential amendments elsewhere in the RTA, and introduced two new clauses dealing with co-tenancies into the standard terms (clauses 72A and 72B).
The amendments commenced on 3 March 2021. They prescribe processes by which co-tenants can leave and join co-tenancies and provide for this Tribunal to resolve disputes between lessors and co-tenants, and among co-tenants. Section 35B deals specifically with a co-tenant’s recovery of a contribution to the bond; it reads as follows:
35B Repayment of bond to leaving co-tenant
(1) This section applies if—
(a)a co-tenant (the leaving co-tenant) stops being a party to a residential tenancy agreement—
(i)under section 35A; or
(ii)because of an ACAT order under section 35G (1) (a), (c) (ii) or (d); and
(b)a bond is held in relation to the agreement; and
(c)the leaving co-tenant paid some or all of the bond in relation to the agreement; and
(d)1 or more of the remaining co-tenants continue to be a party to the agreement.
(2) The remaining co-tenants must, not more than 14 days after the day the leaving co‑tenant stops being a party to the residential tenancy agreement—
(a)pay to the leaving co‑tenant an amount equal to the bond paid by the leaving co-tenant under the agreement; and
(b)notify the Territory that the leaving co-tenant has been paid under paragraph (a).
(3) The remaining co-tenants may deduct from that amount—
(a)any portion of rent unpaid by the leaving co-tenant; and
(b)other reasonable costs in relation to the premises.
Example—reasonable costs
for damage caused to the premises by the leaving co-tenant
(4) A leaving co-tenant is not entitled to payment of any other amount of the bond under the residential tenancy agreement.
(5) Subsection (2) does not apply if the amount that may be deducted under subsection (3) is more than the amount of the bond paid by the leaving co-tenant.
(6) A leaving co-tenant may apply to the ACAT for resolution of a dispute in relation to subsection (2) or (3) as a tenancy dispute even if the leaving co-tenant has stopped being a party to the residential tenancy agreement.
NoteThe ACAT may make orders requiring the payment of an amount to a person—see s 83 (c).
The RTA confers broad powers on this Tribunal in respect of residential tenancy disputes, including the power to order that an amount be paid to a person.[7] A party to a residential tenancy agreement may apply to this Tribunal for resolution of a tenancy dispute;[8] and ‘tenancy dispute’ is defined to include a dispute between co-tenants in a residential tenancy agreement.[9]
Evidence
[7] Residential Tenancies Act 1997 section 83(1)(c)
[8] Residential Tenancies Act 1997 section 79(1)
[9] Residential Tenancies Act 1997 section 72(1)
Most of the facts of the matter are not disputed. The four occupants of the house entered into a residential tenancy agreement on 28 January 2020, a fixed term agreement running for 52 weeks from 31 January 2020 to 28 January 2021;[10] each contributed $800 towards the bond, which accordingly totalled $3,200,[11] and each paid an equal share of $200 per week in rent. In November 2020 Ms Pitman-Keys told her co-tenants that she had decided to leave the premises. She moved out in stages: removing herself and some of her belongings first of all; then her remaining belongings were moved into the garage, so a house inspection could be undertaken; subsequently those belongings were removed from the garage and the garage key was returned; and later still various items belonging to Ms Bartholomew and taken away in error were returned, along with the key to the house.
[10] Application dated 27 July 2021, attachment 2
[11] Application dated 27 July 2021, attachment 1
While in the house, Ms Pitman-Keys kept two ferrets as pets, with the permission of the lessors apparently only for one of them. The floor of the room in which she had kept the ferrets sustained damage from the ferrets’ urine and from spillage of their drinking water. On 17 January 2021 there was a conversation between Ms Bartholomew and Ms Pitman-Keys, a transcript of which was provided by Ms Bartholomew.[12] It is not in dispute that they agreed that the cost of repairing the floor would be split evenly between them, and that the matter would proceed by the obtaining of quotes. None of those involved demur from the accuracy of the transcript as a record of what was agreed between the parties. The record reads as follows (“L” and “Lydia” refer to Ms Bartholomew; “C” and “Cas” refer to Ms Pitman-Keys):
[12] Application dated 27 July 2021, attachment 3; this is apparently a partial transcript of a video recording.
Lydia (L): Ok so damage in here
Cas (C): yep
L: I did some stuff to bring it back to flat so we could get through an inspection so I could put stuff on it.
C: yep
L: but it still needs to be repaired
C: yep
L: How do you want to do that
C: I don’t mind, how do you want to do it?
L: I don’t know I guess I will have to ring up a repair person and see what they say and get someone in and see what they charge.
L: Do you want me to get someone to do quotes, or do you want me to just get it done and tell you how much its going to cost.
C: No I prefer to do quotes
L: So do you want to ring up and get some quotes?
C: Yeah
L: OK
L: If they need to come in here I will do that, but don’t know if they will to do quotes. We do have the stripy things up in the shed.
C: OK
L: How do you want to cut the cost for it? How do you want to cover the costs for it?
C: I don’t know
L: You don’t know?
C: I am assuming we will split the costs, because it happened, it was both of our responsibility
L: So 50/50
C: Yeah
L: ok I agree with that
[errors in original]
Subsequently, on 27-28 January and 1 February 2021, Ms Smith had an exchange with the real estate agent representing the lessors regarding the need for repairs and the engagement of someone to undertake them.[13] On the basis of that exchange a source for replacement flooring materials was identified, and the materials were purchased at a cost of $281.27.[14]
[13] Application dated 27 July 2021, attachment 4
[14] Application dated 27 July 2021, attachment 9
The tenants proposed to engage the agents’ preferred tradesperson for the task, but it transpired that the preferred handyman was not available. The agents said that there would be no problem if an alternative tradesperson was engaged for the task.[15] On 16 February 2021 the three tenants sought a quote from a franchised handyman operation,[16] but there was a delay in receiving the quote, and while waiting for it the three tenants decided to undertake the repairs themselves. The quote was received three weeks after it was requested, on 10 March 2021; it was for $759.00,[17] not including the flooring materials, which the tenants had separately secured, and with the possibility of additional costs for repairing the walls after the skirting was removed and reinstalled.
[15] Application dated 27 July 2021, attachment 4
[16] Application dated 27 July 2021, attachment 6
[17] Application dated 27 July 2021, attachment 8
The three tenants proceeded to repair the flooring. Ms Bartholomew undertook most of the work, with some help from Ms Smith. Ms Bartholomew now seeks $281.27 from Ms Pitman-Keys, which is the entirety of the cost of the materials. Ms Bartholomew calculated the total cost of the repair as $281.27 for materials plus $327.36 for labour, the latter calculated on the basis that the co-tenants’ labour should be charged at the minimum wage. Ms Bartholomew explains the claim on Ms Pitman-Keys by saying that it is reasonable that the latter would bear the entire cost for materials but not have to pay for the labour of her former co-tenants. She said that her intention was to distribute the funds, once received, to the other two tenants according to their contribution to materials and labour. Ms Pitman-Keys is willing to pay $140.64, which is half the cost of materials, but declines to pay anything further.
Ms Pitman-Keys took a little time to remove all her belongings from the shared premises and complete the process of moving. On 10 December 2020 her belongings were moved from the room she had occupied and stored temporarily in the garage. On that day she had a discussion with Ms Pitman and Ms Smith which dealt, at least to some degree, with the question of when her obligation to pay rent would end. According to Ms Pitman-Keys the two co-tenants agreed that provided she had removed her belongings, apart from the fish tank, from the house itself, she would no longer have to pay rent, and could move her belongings from the garage at a time that suited her. According to Ms Pitman, her rental obligations would end once she had removed her belongings from the premises – that is, from house and garage – and had returned the keys. At about this time Ms Pitman-Keys paid her share of rent on the property up to 31 December 2020. The removal of the belongings went a further step on 17 January 2021, when Ms Pitman-Keys removed them from the garage and took them to her new premises. She returned the key to the house on 5 February 2021, through Mr Robertson. Ms Bartholomew seeks payment of rent on the property up to 5 February 2021; Ms Pitman-Keys believes that her rental payment to 31 December 2020 meets her obligations as tenant and that she owes no further rent.
It is not a matter of dispute that there were communication problems between the three remaining co-tenants and Ms Pitman-Keys. At some point in January 2021 it appears that Mr Robertson instructed the three remaining co-tenants that they should not contact Ms Pitman-Keys directly;[18] it also appears that in January 2021 some of the co-tenants contemplated apprehended violence orders against Mr Robertson.[19]
Consideration
Co-tenants under the RTA
[18] Transcript of proceedings 16 November 2021, pages 17-20
[19] Transcript of proceedings 16 November 2021, page 73
It is not at all uncommon for several people to share rental premises. Such arrangements are especially to be found, it appears, among students and young professionals. And it would not be unusual, perhaps, for some of the individual tenants to change over the course of a tenancy, as people come and go or their circumstances change. The RTA, as it stood before passage of the Residential Tenancies Amendment Act 2020, offered little recognition of co-tenancy arrangements and made little allowance for the flexibility that such practices require. Some twenty years ago the predecessor to this Tribunal in the residential tenancies jurisdiction, the Residential Tenancies Tribunal, confronted this problem and, following a detailed analysis, concluded in ACT Housing v Midgley[20] (Midgley) that one tenant among a group of co-tenants could not terminate a fixed term tenancy by unilaterally giving notice, but could repudiate a fixed term tenancy agreement, putting the lessor on election whether to accept the repudiation or confirm the agreement. The analysis drew on the common law of contract, on the limited options for ending a tenancy agreement set out in section 36 of the RTA and on case law elsewhere, especially in New South Wales.
[20] [2001] ACTRTT 7
When Ms Pitman-Keys left the premises at about the end of 2020 or early in 2021 the new provisions of Part 3A to the RTA were yet to enter into effect. Her departure was therefore not governed by the specific provisions introduced to allow tenancies to continue through the departure of a co-tenant and the arrival of a new co-tenant.[21] Even so, Midgley and other ACT cases dealing with related issues, such as Lochrin v Jaiswal[22] are readily distinguished from the present matter. In the first place, those cases were between lessor and tenant, whereas here the lessor is not a party, has not sought to be joined in the matter, and has continued to receive rent throughout. This dispute is entirely among the four co-tenants. And although each of the parties might have questioned the legal basis for Ms Pitman-Keys’ departure in late 2020 or early 2021, no party has done so. Further, after the co-tenancy amendments came into effect, Ms Pitman-Keys went through the process set out in section 35A of the RTA and sought to have her departure from the tenancy accepted by Ms Bartholomew and Ms Smith. This process only began on 21 June 2021; Ms Pitman-Keys stated that she did not receive a response from the lessors, the real estate agent acting on behalf of the lessors, or Ms Pitman.[23] It appears that Ms Pitman-Keys’ name remained on the tenancy agreement as a tenant until that process was complete.
[21] The introduction of the amendments was driven in part by the problems identified in Midgley – see Explanatory Statement to the Residential Tenancies Amendment Bill 2020.
[22] [2018] ACAT 78
[23] Exhibit R1, at [27]-[28] and response, attachment J
Meanwhile, the remaining co-tenants chose to resist returning Ms Pitman-Keys’ share of the bond, pending payment of her contribution to the repairs, and continued to hold that position until applying to this Tribunal.[24] The real estate agent advised that the bond currently held by the Office of Rental Bonds would need to be refunded to the four co-tenants, and then a new bond could be paid by the three remaining co-tenants.[25]
[24] Exhibit R1, at [22]-[26] and response, attachment I
[25] Response, attachment G
It is clear that although there was considerable delay in resolving the question of when Ms Pitman-Keys was no longer a tenant, that delay relates to her contractual relationship with the lessors rather than her intra-tenancy contract with the respondents. The co-tenants, after 5 February 2021, had agreed that Ms Pitman-Keys no longer had an obligation to pay rent, regardless of her continuing appearance on the residential tenancy agreement. Although Ms Bartholomew appears to have contemplated the possibility that Ms Pitman-Keys owes rent up to some later date, she did not press the point; the argument about rent falls within quite narrow parameters: the rent Ms Pitman-Keys was obliged to pay is either up to 31 December 2020 (as she herself asserts) or to 5 February 2021 (as Ms Bartholomew asserts), or possibly to some date between the two.
What is beyond dispute is that the application before the Tribunal is made under section 35B of the RTA; that section provides for exactly the present circumstances, where a co-tenant leaves rented premises, seeks repayment of bond money, and the remaining co-tenants wish to deduct amounts for unpaid rent and for damages. Subsection 35B(6) explicitly provides that an application to this Tribunal for resolution of a dispute under the section may be made even where the leaving co-tenant is no longer party to the tenancy agreement.
Repairs to the floor
Turning then to the issues under dispute, the facts concerning the arrangement between Ms Bartholomew and Ms Pitman-Keys for repair of the floor seem to be uncontested. What is at issue is how the agreement that they entered into on 17 January 2021 applies to those facts. In the first place, it is perhaps worth noting that the agreement related to how the co-tenants would meet their contractual obligations under the residential tenancy agreement. Standard terms 63 and 64 require the tenants to take care of the premises and leave them in the same condition as at the start of the tenancy, fair wear and tear excepted. The actions the tenants took to repair the floor give every appearance of having been undertaken in order to meet their obligations under the tenancy agreement. The informal agreement covering the repairs, in my view, was intended to be legally binding and was a contractual agreement between Ms Bartholomew and Ms Pitman-Keys. No submission has been made to the contrary.
The terms of the contract were sketchy and perhaps incomplete, but there is no reason to regard the uncertainties and incompleteness as so great as to void the contract (and no argument has been put to me that the contract is void for uncertainty or incompleteness). The scope of the work to be undertaken was clear, and the basis on which the costs would be shared equally so. The method by which the work was to proceed was not spelt out in detail, but it is clear from the transcript provided that quotes would be obtained. To my mind that carries an implication that there would be a process by which the parties would obtain and examine competing quotes, and then consult and agree on how to proceed; that is a well-known way of managing work of this kind, and the preference of Ms Pitman-Keys for obtaining “quotes” (in the plural) is an unmistakeable indication that this is what was intended. Indeed Ms Bartholomew put an alternative – that she might just “get it done” and advise the cost; but Ms Pitman-Keys responded “No I prefer to do quotes”.[26] In her oral evidence Ms Pitman-Keys set out her understanding that after quotes had been obtained there would be further consultation on how to proceed, exactly as outlined above.
[26] Transcript of proceedings 16 November 2021, page 11
A contract is only formed when its terms are sufficiently complete and certain. Where a term is left to be completed at a later time, the way in which it is to be finalised must be certain, otherwise the contract as a whole is rendered uncertain.[27] In my view, the way forward identified in the conversation between Ms Bartholomew and Ms Pitman-Keys was sufficiently clear and well understood, as a commonplace means of settling such issues, that the contract stands. Ms Bartholomew and Ms Pitman-Keys were bound by the agreed terms of their contract, and by the agreed means of determining the incomplete terms (i.e. who would do the work and the price).
[27] Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law (Thomson Reuters, 3rd ed, 2009), at [6.35]
In the event, however, Ms Pitman-Keys did not obtain any quotes; she explained that as she no longer lived at the property, she would not have been able to allow the tradespersons to enter and look at the damaged floor so that they could provide a quote. It was therefore Ms Bartholomew who obtained a quote – and one quote only – from a handyman franchise, although she did not wait for that quote to arrive and decided to proceed with doing the repairs herself. The decisions to purchase the materials (rather than rely on a tradesperson to obtain them) and to undertake the repairs herself were both taken without further consultation with Ms Pitman-Keys.
It had been agreed that costs would be shared, but there had been no agreement, or even discussion, about what might constitute ‘costs’ in the particular circumstances. It might perhaps have been expected that if a tradesperson had been engaged the cost of labour would have been included in the shared costs. But that would presumably occur only after quotes had been obtained and then consultation had occurred between Ms Bartholomew and Ms Pitman-Keys over how to proceed. It would have been open to the two to decide, for example, that the cost of a tradesperson was unduly high and that other options ought to be explored or pursued. If it had been agreed that the tenants themselves would do the work, it is to be expected that some arrangement might have been entered into on how Ms Pitman-Keys might contribute – whether by participating or by reimbursing her former co-tenants on some agreed basis, for example. That would have had the effect of supplementing and clarifying the terms of the informal contract.
In the absence of such discussions I do not think that the informal contract entered into by Ms Pitman-Keys and Ms Bartholomew obliges Ms Pitman-Keys to bear more than half the costs of the materials for repairing the floor. Ms Pitman-Keys has already undertaken to bear that cost, presumably on the basis that, whatever costs might be included, actual outlays for material would certainly be among them. Ms Bartholomew proposes that the costs be split so that Ms Pitman-Keys bears the entire costs of materials while she herself bears the costs of her own labour (and that of Ms Smith and possibly Ms Pitman). At the hearing Ms Bartholomew presented that breakdown as more reasonable than alternatives such as numerically equal contributions, especially as it avoided, in her contention, making Ms Pitman-Keys pay for Ms Bartholomew’s labour. I see this point as lacking relevance: Ms Pitman-Keys does not have to pay more than half the cost of materials because her contractual obligation extended only as far as those costs. Ms Bartholomew, in the end, proceeded with the option that was put to Ms Pitman-Keys and rejected by her – she did the work and advised of the costs after the event.
I reach that conclusion despite the contribution that Ms Pitman-Keys herself made to events by not acting on her promise to obtain quotes, and despite the evident communication difficulties between the parties. Ms Pitman-Keys explained her failure to obtain quotes by pointing to the difficulties she faced in allowing access to tradespeople when she was no longer resident at the premises.[28] That is an entirely reasonable point, but it should have been a reason for not taking on the responsibility at the discussion on 17 January 2021; and, once she realised she could not meet the responsibility she had taken on, it should have encouraged her to communicate her inability to Ms Bartholomew. Ms Pitman-Keys says she did precisely that,[29] but I am not persuaded that she did. There was no corroboration in the oral evidence, and no mention of it in the documentary record, and Ms Bartholomew is evidently an assiduous keeper of records.
[28] Transcript of proceedings 16 November 2021, page 58
[29] Transcript of proceedings 16 November 2021, page 58
It was not Ms Pitman-Keys’ failure to advise Ms Bartholomew that was fatal to the arrangement, however. The way forward was through the obtaining of quotes and by agreement on the next steps to be taken, and it was not critical whether it was one party or the other who obtained the quotes. And Ms Bartholomew simply took it upon herself to seek at least one quote. What was fatal to the arrangement was Ms Bartholomew’s proceeding from that point to take all the relevant subsequent decisions herself without further communication.
As for the breakdown in communications more generally, it is perhaps understandable that a couple whose relationship has come to an abrupt end might find communication painful or difficult. Ms Pitman said that she believed that Ms Pitman-Keys was no longer interested in the repairs, and did not wish to be involved any longer.[30] But there were additional factors at work: Ms Bartholomew and Ms Pitman-Keys entered into a contract for the repairs to the floor, and that contract was of a form that required them to keep communication channels open. If that was not possible, the contract should not have been entered into in the first place, or terms might have been agreed that avoided any further need to consult.
[30] Transcript of proceedings 16 November 2021, pages 37-41
Mr Robertson put Ms Pitman-Keys’ case in somewhat different terms – that by proceeding unilaterally Ms Bartholomew had denied Ms Pitman-Keys the opportunity of mitigating her losses. As I understand it, Mr Robertson’s argument is that Ms Bartholomew is seeking compensation for breach of contract. Ms Pitman-Keys could have mitigated any damages by steps such as contributing to the labour of repairing the floor, or by finding a more reasonable quote or cheaper materials. She was denied the opportunity of doing so.
A party seeking damages for breach of contract is expected to have taken reasonable and available action to mitigate the losses suffered; the central concept is that the aggrieved party is only entitled to those damages that were unavoidable.[31] The argument here would be that by not communicating with Ms Pitman-Keys, Ms Bartholomew did not allow her to take whatever action might have been available to her to minimise the amount she would have to pay for breach of contract. I find the argument a stretch, in that Ms Bartholomew did take action to reduce the cost of the repairs, by securing the materials cheaply and using her own labour for the task. It is not clear that a failure to communicate with Ms Pitman-Keys increased the costs of the repair, and for a mitigation claim to succeed it would usually require that the mitigating actions that might have been taken are clear and the effect of them plain. But I do not need to explore this point. For the reasons outlined earlier, I have concluded that Ms Bartholomew undertook the repairs when her actions in doing so were not covered by the terms of the contract with Ms Pitman-Keys, who is accordingly not liable for the labour involved.
[31] Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law, (Thomson Reuters, 3rd ed, 2009), at [27.45]-[27.65]
Ms Pitman-Keys owes Ms Bartholomew, Ms Pitman and Ms Smith $140.63 for the repairs to the floor.
Rental arrears
The extent of Ms Pitman-Keys’ rental obligations raises a different set of issues. Here the facts of the matter are in dispute. The parties agree that there was a discussion on 10 December 2020 regarding Ms Pitman-Keys’ departure from the property and the removal of her belongings, but they disagree on the content of that discussion and the interpretation that should then be applied.
Ms Bartholomew contends that on 10 or 11 December 2020 there was a discussion between Ms Pitman-Keys, Ms Pitman and Ms Smith, in which Ms Pitman-Keys was told that her rental obligations would come to an end once all her belongings were removed from the premises and the keys returned. A significant volume of her things was removed to the garage in the few days that followed; those effects remained there until 17 January 2021 when they were taken away; the remote for the garage was returned on that same day but the house key was returned only on 5 February 2021. Ms Pitman-Keys had paid rent up until 31 December 2020 and therefore, on this argument, owes rent from that date until 5 February 2021.
Ms Pitman-Keys agrees that a discussion took place on 10 December 2020, but contends that the agreement reached was that her rental obligations would cease once her property was out of the house. That occurred on 15 December 2020, when she moved her things out of the house and into the garage, and her rental payment made around that time took her rent up to 31 December 2020. That met any rental obligation she might have. On her behalf Mr Robertson advanced several supporting arguments: first, that the agreement reached on 10 December took the place from that day on of any intra-tenancy agreement regarding rental payments up to that time; second, in the alternative, that Ms Pitman-Keys had relied detrimentally on the agreement with Ms Pitman and Ms Smith and that the remaining co-tenants were estopped from asserting any inconsistent legal rights under the intra-tenancy contract; third, that I should draw an inference, of the kind arising in Jones v Dunkel,[32] that Ms Smith’s absence from the hearing and failure to give evidence about the discussion on 10 December means that her evidence would not have assisted Ms Bartholomew; and finally, that Ms Bartholomew’s extended silence on the question of Ms Pitman-Keys’ rental obligations implied acceptance either of the latter’s account of the 10 December meeting, or, alternatively, of the status quo in the payment of rent by the three remaining co-tenants after 31 December 2020.
[32] [1959] HCA 8; (1959) 101 CLR 298
Clearly what transpired at the meeting on 10 December 2020 is of central importance, and on that point the evidence is mixed. Ms Bartholomew herself was not present, having been obliged to attend her work that morning. Ms Pitman-Keys asserts that Ms Pitman made the key statement at that meeting, to the effect: “pay rent up until the 15th as long as everything is out of the house you don’t have to pay any more rent”,[33] following up with a specific promise that as long as her things were not in the house she could store them in the garage and move them over a longer period without incurring any rental obligation.[34]
[33] Exhibit R1 at [14]
[34] Exhibit R1 at [14]
Subsequently, Ms Pitman-Keys and Ms Pitman had an exchange of text messages regarding a rent payment by the former that Ms Smith, who handled rent payments for the tenants, said had been missed. Ms Pitman-Keys made the further rent payment (which covered the period 17-31 December 2020) and asked “so that’s my last one yeah?” to which Ms Pitman responded “Yeah that’s the last one”.[35]
[35] Response dated 10 September 2021, attachment C
Ms Pitman’s account of the meeting of 10 December 2020 is that she said words along the lines of “Once you have paid this fortnight’s rent, it will give you two weeks to take your stuff out [move out] and return the key and you won’t have to pay any more rent, does this sound ok?”, to which Ms Pitman-Keys agreed.[36] Ms Pitman explained the reference to the last rent payment in the exchange of text messages (which took place on 14 December 2020) as having taken place in the context of the expectation created in the 10 December meeting that everything would be moved out by the end of the period covered by the final rent payment.
[36] Exhibit A3 at [2]
The oral evidence given at the hearing by Ms Pitman-Keys and Ms Pitman supported, respectively, those two versions of the discussion on 10 December 2020. Ms Pitman-Keys explained that after Christmas 2020 she had travelled to Queensland, and on her return to Canberra had been obliged to quarantine. This had constrained her options for removing her belongings from the garage, which for that and other reasons had to be put off until 17 January 2021. On 17 January 2021 she had removed her belongings and returned the garage remote, but had forgotten to bring the house key. She subsequently discovered that her boxes of belongings included some things that belonged to Ms Bartholomew, and she returned these on 5 February 2021, through Mr Robertson, along with the house key.
Mr Robertson argued that what was agreed in the meeting on 10 December 2020 displaced any contractual obligation by Ms Pitman-Keys to her co-tenants with regard to rent. That raises the question of the rental obligations of the co-tenants. It is clear that up to 10 December 2020 the tenants followed the usual practice in joint tenancies where an intra-tenancy contract determines the obligation of each co-tenant; such arrangements are customarily informal and frequently do not appear in writing.[37] In the present instance, it is not in dispute that during the tenancy there was an agreement that each of the four co-tenants would pay $200 fortnightly in rent; after 5 February 2021, the three remaining co-tenants contributed on whatever basis they had agreed, and it appears that the lessors are receiving the same rent, in total, as before. What is unclear is how and when the transition from one intra-tenancy agreement to its replacement occurred.
[37] Allan Anforth, Peter Christensen and Christopher Adkins, Residential Tenancies: Law and Practice, New South Wales (Federation Press, 7th ed, 2017) at [2.3.7]
If I were to accept Mr Robertson’s argument and the evidence of Ms Pitman-Keys on this point, the discussion on 10 December 2020 created a new contract among the co-tenants, taking the place of that previously in operation. From after 31 December 2020, Ms Pitman-Keys would no longer owe rent on the shared premises, and the removal of belongings and return of keys, occurring after 31 December 2020, are incidental and have no bearing on the rental question. The replacement of one intra-tenancy contract with another, however, could only happen if all four of the co-tenants agreed. That would require me to be persuaded that Ms Pitman made an explicit statement that removal of Ms Pitman-Keys’ possessions from the house was all that was needed to end Ms Pitman-Keys’ rent obligations; that Ms Smith did not demur from that statement; and that Ms Bartholomew, who was absent, was informed of the discussion and accepted the undertaking by Ms Pitman. That does not align with the evidence of Ms Pitman and Ms Bartholomew, and there is no corroboration that Ms Bartholomew ever accepted the position – and that she would do so, given the evident heat of many of the discussions at that time, seems to require a leap of faith.
Mr Robertson said that Ms Pitman-Keys had relied detrimentally on the agreement arrived at in the discussion on 10 December 2020. It is my understanding that in adopting the language of detrimental reliance he is seeking an estoppel. In an estoppel one party (the representor) has led the other to make an assumption and the other (the relying party) has relied on that assumption; and if the representor acts inconsistently with the assumption the relying party will suffer detriment.[38] In the present matter the representor would be Ms Pitman, who according to Ms Pitman-Keys induced her to believe that her rental obligations would come to an end on 31 December 2020. The argument then is that Ms Pitman-Keys relied on that assumption, believing that she owed no more rent, and Ms Pitman is bound to act consistently with it. This appears to be asserted as a legal (rather than an equitable) estoppel, in which Ms Pitman, having induced an assumption that the intra-tenancy contract would be replaced as of 31 December 2020, would be estopped from asserting legal rights under the pre-existing contract.
[38] Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law, (Thomson Reuters, 3rd ed, 2009), at [9.20]
A number of problems are immediately apparent with that argument. In the first place, what statements were made at the discussion on 10 December 2020 is itself a matter of dispute; it is difficult to resolve which of the competing accounts of the meeting is more persuasive, and therefore equally difficult to determine the content of any assumption engendered by that discussion. For the estoppel to operate, I would need to find that, on the balance of probabilities, Ms Pitman gave the undertaking that Ms Pitman-Keys describes; the evidence does not allow me to do that. Second, Ms Bartholomew established in the course of cross-examining Ms Pitman-Keys that the latter understood that questions about who among the co-tenants paid how much rent were shared decisions taken by all the co-tenants and not by one of them on behalf of the others. It followed that Ms Pitman’s representation would need the agreement of Ms Bartholomew. It was therefore not reasonable of her to rely on Ms Pitman’s representation; unreasonable reliance on a representation has been held to prevent an estoppel.[39] Third, it is not the representor, Ms Pitman, who seeks to assert contractual rights; rather it is Ms Bartholomew, and there is no evidence showing her to be party to the representation. There is no estoppel.
[39] See for example Legione v Hateley [1983] HCA 11 at [6]-[7] (Brennan J)
It does not help the fact-finding in this matter that Ms Smith declined to participate, although it was of course her right not to do so (barring compulsion by subpoena, for example). Mr Robertson encouraged me to draw a Jones v Dunkel[40] inference from her absence. Such an inference may be drawn where a witness whose evidence might be expected to assist a party is not called; the inference is that the witness’s evidence, if it had come forward, would not have assisted the party calling it. In the present instance a Jones v Dunkel inference would require an assumption that Ms Smith is in the same camp as Ms Bartholomew, at least with regard to what happened at the meeting on 10 December 2020. But I do not think I have enough evidence to conclude that Ms Smith, who after all withdrew as an applicant, is in Ms Bartholomew’s camp; nor do I know the reason for her choosing not to participate in the hearing – it might have been because she feared Mr Robertson’s cross-examination, or because she wished the matter to be behind her, or for some other reason. Certainly there is no evidence before me to suggest that it was because she could not support Ms Bartholomew’s case, or that Ms Bartholomew had asked her not to attend. It was open to either side to call her as a witness, by subpoena if necessary. If things on 10 December proceeded exactly as Ms Pitman-Keys described, why would Mr Robertson not have subpoenaed Ms Smith to corroborate her account? In O’Donnell v Reichard[41] Gillard J noted that “…where it is equally open to both parties to call a witness and neither of them call the witness, it is matter of common sense that any criticism of one party’s failure to call the witness would be cancelled out by the criticism of the other party’s failure to call the witness”. Neither side called Ms Smith, and I cannot see that the picture of what she might have been expected to say as a witness is sufficiently clear that the inference urged upon me is one I can draw.
[40] [1959] HCA 8; (1959) 101 CLR 298
[41] [1975] VicRp 89
Mr Robertson also argued that Ms Bartholomew’s silence on the question of rent for the first half of 2021 implied her acceptance that Ms Pitman-Keys’ rental obligations finished at the end of 2020. This in my view is a far more forceful argument. What evidence there is fails to show any comment on Ms Pitman-Keys’ continuing rent obligations by Ms Bartholomew, or for that matter by Ms Pitman or Ms Smith, from January 2021 until July of that year. That silence apparently endured during the months when the floor was being repaired and questions about recovering the costs of repair from Ms Pitman-Keys were discussed among the remaining co-tenants. Mr Robertson argued that by remaining silent Ms Bartholomew can be taken to have accepted that Ms Pitman-Keys’ rental obligations had ended with the year 2020.
In contract law, where one party breaches a contract, the aggrieved party may under some circumstances terminate the contract. This can occur where the breach is of an essential term, or of a sufficiently important intermediate term, or where the breach is ‘fundamental’ to the contract.[42] It is hard to imagine anything more central to the intra-tenancy agreement in a house shared among co-tenants than the obligation to pay rent, so a failure to pay rent by a co-tenant would appear to put other co-tenants in a position to terminate their intra-tenancy contract. Where a party to a contract repudiates the contract – demonstrates through words or conduct an unwillingness or inability to abide by or continue with the contract – then the other party is put on election, and must choose whether to affirm the contract or terminate it.[43]
[42] Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law (Thomson Reuters, 3rd ed, 2009) at [21.15]
[43] Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law (Thomson Reuters, 3rd ed, 2009) at [22.05]
It is my understanding that Mr Robertson was contending that Ms Bartholomew’s silence in the first half of 2021 implied that she was either accepting that Ms Pitman-Keys had terminated the contract, or else electing to accept that she had repudiated the contract. But for a number of reasons some caution needs to be exercised in bringing these aspects of the law to bear on the intra-tenancy contract among the parties to the present matter. There is a period of five weeks at issue, as it is not in dispute that the contract was on foot up to 31 December 2020, and that it was no longer on foot after 5 February 2021. During that period, it is evident that despite no contribution to the rent from Ms Pitman-Keys, the rent continued to be paid in full to the lessors. There must have been some arrangement or understanding entered into among the three remaining co-tenants, but no evidence has come forward on the point and indeed the matter was not explored in the evidentiary stage of the hearing. But it would not, I think, be unusual, for co-tenants in a shared house, especially where there were close relationships among them, to exercise a degree of give and take in such matters. That this occurred here from time to time is evidenced by an exchange of text messages between Ms Pitman and Ms Pitman-Keys on 14 December 2020, in which Ms Pitman asks for the rent up to 31 December, noting that Ms Smith had paid it on Ms Pitman-Keys’ behalf.[44]
[44] Response dated 10 September 2021, attachment C
I cannot reach a clear finding on the outcome of the meeting of 10 December 2020. In the first place, the evidence I have is conflicting; second, I would need to know both the precise words used (there might for example be a difference between removing belongings from ‘the house’ and from ‘the premises’) and that those words were intended to have their legal meanings and significance. I do not believe that the evidence allows me that degree of precision. It appears that at that time the co-tenants were preoccupied with the house inspection that was about to take place, and any understanding arrived at with regard to rental obligations may well have been without the force and finality attached to it in the evidence of either Ms Pitman or Ms Pitman-Keys. And finally, even if I were reasonably sure about what might have been said, I do not have any reason to believe that Ms Bartholomew was accepting of anything agreed by the others.
The period that followed, after Ms Pitman-Keys’ return to Canberra and the end of her quarantine period, ran from 17 January to 5 February 2021. It is clear from the evidence that during this period there was a degree of tension between Ms Bartholomew and Ms Pitman-Keys.[45] The focus seemed to be on severing, finally and completely, the connections between Ms Pitman-Keys on the one hand and Ms Bartholomew and the premises they had previously shared, on the other.
[45] See e.g. response dated 10 September 2021, attachment E
Mr Robertson made the entirely valid point that Ms Bartholomew was silent on the question of rent until she took up the issue in July 2021. But in practice Ms Bartholomew cut communications almost entirely with Ms Pitman-Keys over the period, on every subject: having agreed on the sharing of costs for repairing the floor, she then kept almost completely silent until the task was complete, with fatal consequences for that agreement, as explored above. That silence was in part the result of the insistence by Mr Robertson and Ms Pitman-Keys that communication by Ms Bartholomew be through him only. The one communication appears to be an exchange of text messages between Ms Bartholomew and Mr Robertson on 5 February 2021, when Ms Bartholomew sent what amounts to a list of issues the two had covered in a discussion that arose as Mr Robertson returned the house key. There is no explicit mention of repairs to the floor and the only reference to rent is “You said that cas would not be returning rent money from early November as this was paid when we were still in a relationship”, a reference the significance of which seems obscure. Once the floor was repaired, Ms Bartholomew took up the rent issue and the repairs remuneration together as a claim against the bond.
I am reluctant to read too much into Ms Bartholomew’s silence, in the circumstances. I do not see the fraught period in January and early February, with evident tensions associated with relationship breakdown, as pointing to an acceptance by Ms Bartholomew that Ms Pitman-Keys no longer had any rental obligations. This was not a commercial contract conducted coolly by partners at arm’s length from one another with an eye on their respective financial interests; rather it was the end of an informal contract among intimate partners whose relationships had ended, with all the hurt, pain and difficulty that accompanies such change. Further, the silence displayed by Ms Bartholomew over the period 1 January 2021 to 5 February 2021 is equally consistent with both accounts of the discussion on 10 December 2020: I can see no reason why Ms Bartholomew might not have been willing to see Ms Pitman-Keys’ rental arrears continue to mount, in the circumstances that obtained.
I am sure that the intra-tenancy contract was on foot on 31 December 2020, and at an end after 5 February 2021; as noted earlier, I do not accept that it ended at 31 December 2020; and, given the heightened sensitivities, I do not think it ended on 17 January 2021, when Ms Pitman-Keys removed the rest of her belongings, but failed to return the house key. I accept that the return of the key on 5 February 2021 gave the remaining co-tenants the security that Ms Pitman-Keys no longer had access to the premises, and brought the intra-tenancy contract to an end.
Nor do I see that the delay that ensued before Ms Bartholomew sought repayment of rent was fatal to her case. She was not resting on her rights during this period, as the rent was one component in the wider claim also involving the repairs to the floor, and that remained a live issue until June 2021.
Ms Pitman-Keys owes rent in the amount of $1,028.57 for the period 1 January to 5 February 2021.
Conclusion
Ms Pitman-Keys has been successful in resisting the claim against her for repairs to the floor, but has not succeeded in resisting the claim for arrears of rent. The result is that the co-tenants are able to retain the entirety of her contribution to the bond ($800) and Ms Pitman-Keys must pay to her former co-tenants a further $369.20 in compensation.
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Senior Member M Hyman
| Date of hearing: | 16 November 2021 |
| Applicant: | In person |
| Respondents: | By telephone; ex parte the second respondent |
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