BRADY v WOODS (Residential Tenancies)

[2019] ACAT 54

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

BRADY v WOODS (Residential Tenancies) [2019] ACAT 54

RT 111/2019

Catchwords:  RESIDENTIAL TENANCIES – application for termination and possession – whether there was a valid notice to vacate – whether there was a fixed or periodic tenancy – whether the lessor intended to move into the premises – oral residential tenancies agreements

Legislation cited:     Residential Tenancies Act 1997 ss 6A, standard term 96

Cases cited:  Brambles Holding Ltd v Bathurst City Council [2001] NSWCA 61

Commissioner for Social Housing v Moffatt [2015] ACTSC 4

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988)14 NSWLR 523

Masters v Cameron [1954] HCA 72

Tribunal:      Senior Member J Lennard

Date of Orders: 18 June 2019

Date of Reasons for Decision:        18 June 2019AUSTRALIAN CAPITAL TERRITORY      )

CIVIL & ADMINISTRATIVE TRIBUNAL         )          RT 111/2019

BETWEEN:

GABRIELLE RUTH CARROLL BRADY

Applicant

AND:

IAN WILLIAM WOODS

Respondent

TRIBUNAL:            Senior Member J Lennard

DATE:         18 June 2019

ORDER

The Tribunal orders that:

1.        The application is dismissed.

………………………………..

Senior Member J Lennard

REASONS FOR DECISION

1.           Ms Brady (lessor) and Mr Woods (tenant) entered into a residential tenancy agreement in relation to premises in Barton, ACT on 16 January 2018. A copy of that agreement was before the Tribunal. The agreement had a fixed term from 29 January 2018 to 28 January 2019, at a weekly rent of $520.00.

2.           On 9 January 2019 the lessor, through her agent, wrote to the tenant giving notice of a rent increase to $540 from 1 March 2019. The penultimate paragraph of the letter stated:

As a valued tenant, your lessor would like to take this opportunity to offer you a new tenancy agreement for a further six (6) or twelve (12) months. Please let us know if you would like to take up this offer. Your current fixed term expires on [2]9 January 2019. It is proposed that this renewed tenancy will commence from the date of the rental increase, 1 March 2019.

3.           There was a period of negotiation between the tenant and the lessor’s agent.

4.           On 18 January 2019 at 10:00am the agent wrote to the tenant and stated:

The owner has responded to your counter-offer, and has considered your position. She would like to retain you as a tenant and have a mutually beneficial outcome. She would like you to sign a two year lease, at the $540.00 per week – but instead of the 4 weeks notice to vacate before January 2020, she would like the standard 6 weeks that is in the tenancy agreement (as in the break lease clause in the tenancy).

5.           On 18 January 2019 at 10:32am the tenant wrote to the agent:

In summary, ok with the $540 a week for a new two year lease provided it has a postings clause to cover CASA posting me anywhere other than Canberra which would require me to give 6 weeks notice or pay 6 weeks in lieu of notice. Without a postings clause I will elect to continue as permitted by legislation on a periodic basis and understand that this would enable the owner to give me six months notice to vacate come 29 January, or for me to give the owner 3 weeks notice at any time for any reason.

6.           On 18 January 2019 at 10:34am the agent wrote to the tenant: “that would be fine let me know when would be convenient for you to sign the lease?”

7.           On 18 January 2019 at 10:30pm the tenant wrote to the agent:

Thanks for your efforts to successfully conclude a new lease mutually agreeable to the owner and myself. For the avoidance of any doubt, understand it is agreed that the new standard lease will include the following essential terms and conditions:

•     Duration of the new lease to be 01 March 2019 to 29 February 2021,

•     Agreed weekly rental commencing 1 March 2009 to be $540 per week, payable monthly in advance from 1 March 2019, for the duration of my continued tenancy up to 29 February 2121 [2021]

•     ‘Posting Clause’ enabling me to give not less than 6 weeks’ notice to terminate the lease, or pay rent pro rata rent in lieu, if less than six weeks’ notice is given – should be posted by CASA to a location other than Canberra at any time,

•     One month’s rent as a ‘break cost’, should I need to break the lease for any other reason other than my being posted by CASA to another location, or I am unexpectedly forced to retire from CASA for documented serious ill health.

Assuming the above understanding is correct, if you send me a copy of the lease for my perusal next week, should be able to come into your offices morning of Thursday 31 January to sign the necessary documentation – if that is convenient.

In the meantime, I’ll plan on paying another month’s rent of $2259.52 on January 25 to cover the period 29 January to 28 February.

8.           In written submissions received 2 April 2019 the lessor states:

Mr Woods and I were negotiating for a fixed term lease via HPR and during this time I had also issued via HPR a Notice of Rent Increase. Negotiations failed, and without having the security of a fixed lease of $540 for a minimum year with no short break-the-lease clauses, I decided it was in my best interest to move back into my property and I advised HPR.

The evidence provided by the lessor included an email from the lessor to her agent sent on 18 January 2019 at 10:09pm which stated: “I’ve given it some thought, and I like to move back into my apartment. Please immediately retract my offer and hold-off from signing any contract.” On 21 January 2019, at 9:12pm and in response to this email, the agent informed the lessor that “the tenant had accepted your offer on Friday”.

9.           The lessor and the agent seem not to have turned their minds to whether the concluded negotiations and the acceptance by the tenant of the lessor’s offer had resulted in an agreement. Nevertheless, the agent advised the lessor that she was required to give four weeks’ notice from the expiry of the fixed term. At 11:30am on 21 January 2019 the lessor emailed to the agent stating that she was “not keen on the uncertainty that comes with a break-the lease contract” and indirectly gave instructions to issue a notice of termination.

10.         Despite these apparent instructions to issue a notice of termination, the agent emailed the tenant as follows:

The owner has called me today, and she appeared a bit anxious now with the lease having a built in release clause.

She has instructed me that she would like to possibly proceed with a notice to vacate, so she can move back into the property.

However, we have enjoyed having you as a tenant. I am checking to see if you would consider signing a standard lease without the posting/release clauses?

11.         I am satisfied on the evidence before me that the lessor, through her agent, and the tenant had concluded a contract prior to the lessor directing the agent to ‘hold off signing the contract’. The emails indicate that the agent, knew that the deal had been concluded and that he was negotiating with the tenant to amend the already agreed terms.

12.         The tenant responded to the lessor’s agent as follows:

Bit surprised the owner is anxious about a posting clause. Believe they are quite common in Canberra. Notwithstanding, no issue with a standard lease for the period 01 March to 20 December at $530 per week.

13. Section 6A of the Residential Tenancies Act 1997 (the RT Act) provides:

(a)   An agreement is a residential tenancy agreement if, under the agreement—

(i)      a person gives someone else (the tenant ) a right to occupy stated premises; and

(ii)     the premises are for the tenant to use as a home (whether or not together with other people); and

(iii)     the right is given for value.

(b)   The agreement may be—

(i)      express or implied; or

(ii)     in writing, oral, or partly in writing and partly oral.

14.         On 18 January 2019 the tenant and the lessor’s agent had concluded negotiations for a new fixed term tenancy and I am satisfied on the evidence before me that the parties had reached a consensus ad idem. The parties had reached finality in the terms of the contract and intended to be immediately bound to the performance of those terms, but intended to restate the terms in writing which would give clarity and precision, but the terms would not be different in effect. In the circumstances of the negotiation for renewal of an existing residential tenancy agreement, I am satisfied on the evidence before me that each party has assented to the contract. I note in particular, the tenant’s undertaking to pay one month’s rent, agreement to increase the rent at the commencement of the new term and the agent’s statement to the lessor in an email dated 21 January 2019, that the tenant “had accepted your offer on Friday”. At this point the lessor’s agent expressed the view that negotiations were concluded.

15.         Where the parties are in an ongoing commercial relationship and negotiating for a new contract to continue the relationship, the traditional analysis of offer and acceptance is not always useful, In recent case law a more practical approach is taken. In the circumstances of this case, where there is an ongoing relationship, there have been negotiations, the essential terms are agreed and an appointment to sign a lease to formalise the arrangement has been made, an objective bystander would observe that the lessor and tenant had entered into an express oral residential tenancy agreement. The intention to formalise the agreement by signing a written agreement does not detract from that conclusion.

16.         Once a contract is concluded any further negotiation cannot alter the terms of the contract unless these later negotiations amount to waiver, variation or discharge. There is no evidence before the Tribunal to support any of these possibilities. The evidence outlined in paragraphs 8, 9 and 10 above indicate that the tenant and the lessor (through her agent) were of the view that a fixed term had been negotiated and the lessor was backtracking and seeking to renegotiate the terms.

17.         The agreed residential tenancy would commence on 1 March 2019 and end on 29 February 2021, at a rent of $540 per week, contained a six week posting clause and a four week break lease clause. The agreement was finalised and to be reduced to writing and signed on 31 January 2019. There is no requirement for a residential tenancy agreement to be wholly in writing to be valid. Taking into account that this was negotiation to continue an existing agreement, and the detailed nature of the agreement, I am satisfied that a contract had been concluded on 18 January 2019.

18.         The formation of the second residential tenancy agreement between the parties gives rise to the following issues:

(a) If the first residential tenancy’s fixed term ended on 28 January 2019 and the second residential tenancy’s fixed term commenced on 1 March 2019, how should the period from 29 January to 28 February 2019 be characterised?

(b) If that period is characterised as a “periodic tenancy” is the notice to terminate valid?

(c) If the notice to terminate on the grounds that the lessor intends to move into the premises is valid then is the lessor:

(i)     estopped from denying the existence of the second residential tenancy agreement for a fixed term commencing 1 March 2019; or

(ii)    in anticipatory breach of the contract for the second residential tenancy agreement and therefore liable for damages?

19. The original residential tenancy agreement entered into between the parties in January 2018 provided at Item 9 the periodic tenancy commenced on 29 January 2019. The lessor and the tenant made no relevant submissions on this issue. The tenant, upon receiving the notice to vacate challenged its validity on the grounds that the lessor had no genuine intention to return to live in the premises. The RT Act does not define periodic tenancy. In the light of the differing periods for notice and termination contained in the standard terms, the term ‘periodic tenancy’ can only mean a residential tenancy agreement that is not a fixed term agreement.

20. The period from 29 January to 28 February 2019 must be examined in light of all the circumstances and in accordance with the purposes of the RT Act. I have formed the view that, in the circumstances of this matter, a statutory tenancy has arisen. That is, the fixed term tenancy has ended, a second fixed term tenancy will commence on 1 March 2019 and in the period between the two fixed term tenancies the agreement contains all the standard terms to the extent that the standard terms are not inconsistent with the circumstances of the parties. The tenant is protected from eviction, except for breach. If this is not the case then ACAT turns to consider the validity and effect of the notice to vacate.

21.         Clause 96 of the standard terms provides:

If there is a periodic tenancy, the lessor may serve on the tenant a notice to vacate giving 4 weeks’ notice if the lessor genuinely intends to live in the premises. The notice period commences on the day after the notice is served and ends at midnight on the last day of the 4 week period.

22.         The periodic tenancy period after the first residential tenancy agreement commenced on 29 January 2019. On 29 January 2019, the lessor served a notice to vacate on the tenant by email. In that email, the agent stated: “the date of effect is 26 February 2019… a vacate inspection will occur at 11am on Tuesday 26 February 2019.” The notice to vacate stated:

take notice that you are now required to vacate the said premises in 4 weeks of this notice being served on you. The tenancy shall end on Tuesday 26  February 2019, being the day that you will vacate the premises.

23.         The four weeks’ notice period commences on 30 January 2019 and concludes at midnight on 26 February 2019. 27 February 2019 is therefore the date of vacation.

24.         In written submissions the lessor concedes that the notice is poorly drafted and “does not clearly provide 4 weeks between the date of the notice and the date of the vacation”. The lessor further submits that the Tribunal has the power to correct a defect in a notice.

25.         A further issue is whether, at the time of service of the notice to vacate, the lessor genuinely intended to live in the premises. The tenant immediately objected to the notice on the basis that he did not accept that the lessor intended to reside in the premises. In his submissions to the Tribunal the lessor states: “At no time during the negotiations was the Owner’s intent to move back into [the premises] ever mentioned.”

26.         From 29 January to 11 February the tenant and the lessor continued negotiations to extend the tenancy to 17 May 2019, but these were not successful because the parties could not agree on the rent amount.

27.         The lessor provided a copy of a redacted statutory declaration provided to the tenant in response to his objection to the validity of the notice to vacate and his doubt that the lessor genuinely intends to reside in the premises. I place little weight on this document, as I cannot be satisfied that it is validly sworn and witnessed. The lessor asserts in this document that she was housesitting for friends from August 2018 and that the friends were returning to their house on 9 March 2019 and that “as I have no residence from 9 March and as I do not want to rent, I intend to move back into my property”. This does not accord with the conduct of the lessor in offering a new fixed term for six or 12 months, to commence on 1 March 2019, in the letter advising of a rent increase. Further, the email correspondence between the lessor and her agent shows that she was willing to enter into a two year fixed term up until she had doubts about the break lease clause.  Thus it would seem that on 9 January 2019, knowing that her friends were returning to their house in March 2019, the lessor was willing to enter into a new fixed term lease; and did not intend to move into her own premises at that time.

28.         The lessor submits that it is a question of fact whether the lessor intends to live in the premises and it is not for the Tribunal to examine whether this is reasonable. Those submissions are accepted. Taking into account the negotiations for a new fixed term tenancy, outlined above and in the absence of any explanation from the lessor as to the circumstances existing on 18 January 2019 which caused her to form the view that it was in her interests to move back into the premises, I cannot be satisfied, on the balance of probabilities, that at the time of serving the notice to vacate the lessor genuinely intended to reside in the premises. That the lessor is now residing with her parents and wishes to return to her own premises is not a factor relating to the question of whether that was her genuine intention at the time of serving the notice to vacate.

29.         Therefore I find that the notice to vacate is not valid: it does not give the required period of notice, and, I cannot be satisfied on the evidence before me that the lessor had, at the time of the notice, a genuine intention to return to live in the premises.

30.         If this was not the case and the notice to vacate was valid, or corrected by the Tribunal, then the serving of that notice in what I have described as the statutory tenancy period would be an anticipatory breach of the fixed term tenancy commencing 1 March 2019, and liable for damages. In the alternative the lessor would be estopped from denying the existence of the fixed term tenancy. Given my conclusions above there is no need to discuss these issues further.

………………………………..

Senior Member J Lennard

HEARING DETAILS

FILE NUMBER:

RT111/2019

PARTIES, APPLICANT:

Gabrielle Ruth Carroll Brady

PARTIES, RESPONDENT:

Ian William Woods

COUNSEL APPEARING, APPLICANT

Mr P Christensen

COUNSEL APPEARING, RESPONDENT

N/A

SOLICITORS FOR APPLICANT

N/A

SOLICITORS FOR RESPONDENT

N/A

TRIBUNAL MEMBERS:

Senior Member J Lennard

DATES OF HEARING:

4 April 2019