CAPITAL FIRST NATIONAL REAL ESTATE & SHARMA (Residential Tenancies) - [2010] ACAT 14

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

CAPITAL FIRST NATIONAL REAL ESTATE v SHARMA (Residential Tenancies) [2010] ACAT 14

RT 09/894
Catchwords: RESIDENTIAL TENANCIES – Damage to property by tenant – liability of parties

Legislation:Residential Tenancies Act 1997 (ACT)

Tribunal: Athol Morris Registrar

Date of Orders: 22 March 2010
Date of Reasons for Decision: 22 March 2010

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 09/894

BETWEEN:

CAPITAL FIRST NATIONAL REAL ESTATE
Applicant/Lessor

AND:

PRAFUL SHARMA &
MEENAKSHI SHARMA
Respondents/Tenants

TRIBUNAL: Athol Morris Registrar

DATE: 22 March 2010

ORDER

Respondents to pay applicant the sum of $13,905.
Office of Rental Bonds to release the sum of $803 to the applicant lessor from the monies held in this account.
Office of Rental Bonds to release $57 by way of fee to ACAT from the monies held in this account.

………………………………..

Athol Morris
Registrar

REASONS FOR DECISION

This matter comes before the ACAT on an application from the Office of Rental Bonds as to the disposition of bond monies held in respect of this lease.
In this decision, I use the words “lessor” to describe Mr Geoff Bentley, the owner of the property, as distinct from Capital First National Real Estate and Mr David Whittem, the principal of that firm, who is “the applicant”. I use the descriptor “the tenants” to describe Mr and Mrs Sharma, as distinct from Mr Sharma, one of the tenants, who represented the matter before ACAT in the hearing, and to whom in that capacity I allude to as “Mr Sharma”.
The facts in this case are as follows:
3.1The tenants entered into a lease over the property at 45A/17 Chandler Street ‘Miramar’, Belconnen in June 2005.
3.2At all relevant times, the property was managed by the applicant on behalf of the lessor.
3.3The tenants left the property at the end of August 2009.
3.4At the final inspection, and on the tenants vacating, the applicant and the lessor asserted that there was considerable damage to the property, such damage including inter alia:

3.4.1smoke damage to painted walls and ceiling of bedrooms, in particular, bedroom 2;
3.4.2serious fractures in the granite bench top in the kitchen;
3.4.3extensive water damage to the kitchen cupboards under the granite bench (agreed by all parties as being consequential upon the fracture);
3.4.4abrasion to the stove top in the kitchen, and chips to the side enamel on same;
3.4.5damage to the kitchen range hood;
3.4.6damage to the balcony screen door mesh necessitating replacement of same;
3.4.7extensive damage to lounge room curtains;
3.4.8soot and smoke damage to vertical blinds;
3.4.9damage to flyscreens;
3.4.10carpet damage including stains, and physical damage;
3.4.11other miscellaneous damage, such as towel rails, soap holders, etc;
3.4.12inadequate cleaning of the property upon vacating.

3.5The matter commenced as a residential leases bond dispute, but was not settled at conference. It was accordingly referred to a hearing. The hearing opened the wider issue of compensation for damage.
3.6Mr Sharma, representing the tenants, denied that the damage was the tenants’ responsibility, or that the tenants had had ample opportunity to rectify it.

3.7He also alleged that he (on behalf of the tenants) had reported the crack in the granite on 19^th February 2009.

The smoke damage was apparently extensive. Mr Bentley put into evidence a light fitting to the hearing that he had taken down from the ceiling, which clearly showed soot inside it, at the point behind where it would be visible to the room. The soot had entered between the light fitting and where it abutted the ceiling. The evidence given was that both the removalists and cleaners – employees of both the tenants and the lessor – inquired whether there had been a fire at the residence.

Mr Sharma equivocated about this. He initially rejected that there had been any improper burning of things in the unit, but ultimately agreed that at least the second bedroom had smoke residue, though he was at pains to point out that it was not very serious or extensive and in his opinion was readily able to be cleaned.
Mr Bentley gave oral evidence that his insurance company thought differently. They alleged that the unit appeared to have suffered fire damage, and that as such their tenant damage policy did not cover the situation.
Mr Sharma presented nothing to negate this evidence.
I am inclined to favour the evidence of Mr Bentley over Mr Sharma in this mater. I accept both that the damage necessitated repainting, and that Mr Sharma had not cleaned it up adequately.
The damage in the kitchen – the broken granite top, the stove, the cupboards and the range hood – are the tenants’ responsibility.
Mr Sharma sought to persuade me that he had in fact notified the damage to the bench top in a maintenance request note dated 19^th February 2009. He also in the same document mentioned that this had been previously reported, and that he would like an air-conditioner installed. With that report, was included an “Annual Tenant Survey” apparently completed and submitted on the same day.
Mr Whittem, principal of Capital First National, the applicant, gave evidence that he disbelieved that this document was contemporaneous. He based this on the fact that his company had not used the client survey forms for several years, and that whilst the tenants might have had an old one lying around (from the pack they were given early in their tenancy), it was not a document current or in use at 19^th February 2009.
He also stated that there was no record of any other report of the damage to the bench. In support of that proposition, he noted that the tenants in other matters had been very ready to call upon the agents to rectify many things, in his opinion not all of them reasonable.
His view was that the tenants made calls upon the applicant and the lessor rather more than he felt was appropriate.
I do not believe that Mr Sharma has been entirely truthful here. His prevarication however only goes to the consequential damage to the cupboards, not to the granite damage.
Mr Sharma grudgingly acknowledged that the damage to the granite was probably caused by the tenants, though not to the degree presented by the lessor.
The point here is that the granite bench damage was caused by the tenants. The tenants are thus liable for this, whether they are telling the truth about when it was notified. I note that Mr Bentley attempted to mitigate his damage by installing a lesser quality bench top when the tenants left the unit.
Mr Sharma sought to argue that the damage was fair wear and tear, although he presented no reason why this should be so considered other than that it was his belief. I do not agree. Unfortunate as it was, I regard the substantial damage to the bench as being over and above this rubric.
I queried whether this damage was covered by insurance. It seems from Mr Bentley’s evidence that his insurance only covered “malicious intent” damage, which this was held not to have been. Regrettable as this may be, there is no obligation on Mr Bentley to obtain insurance to cover unlucky or careless damage by his tenants. He is in effect carrying his own insurance.
The tenants could presumably have obtained insurance for themselves for this sort of thing. It appears that they have not done so.
I find the tenants liable for this damage.
The stove top and range hood were on the evidence left in very poor condition. The stove top, in particular, appeared to have had the enamel severely chipped. I accept that it was virtually new upon the commencement of the lease, and that it was unable to be cleaned at the end of the lease. I accept Mr Bentley’s evidence that repairs had been carried out by the tenant to the chipped enamel.
I do not know how such damage could be inflicted in a few years to a stove, but I would not accept that this case represents fair wear and tear. To do that much damage in that period requires a serious lack of care, bordering on recklessness.
The pictures in evidence of the items on the tenants’ departure do not indicate that there has been any adequate attempt to clean those items. I do not accept that the tenants were “not given a chance to clean” as Mr Sharma alleged. The tenants were not forced to leave in a hurry. They knew what is required of them. Mr Sharma gave evidence that they are landlords themselves, and they have been tenants in other properties. They know what is required of them. They did not do it.
I accept that the stove had been damaged beyond cleaning, and needed to be replaced.
I had some more difficulty with the question of the range hood. It was filthy, but possibly able to be cleaned. However, the economic cost of doing so professionally would likely be beyond the cost of its replacement. With some hesitation, I will allow this cost.
The balcony screen door was damaged. Mr Sharma alleged that it had never been opened, inviting me to infer that the tenants were not therefore responsible for its repair. I doubt this. It is not shown as a breakage in the original inventory. I assume therefore (s 30 of the Residential Tenancies Act 1997 (ACT) (‘the Act’)) that the tenants are responsible for the damage.
Regarding the curtains, screens and blinds, I accept that the curtains were unable to be cleaned. I accept that they were in “as new” condition when the tenants took over the unit. I allow this in full.
I note that the screens were repaired during the tenancy and were broken on leaving. I allow this cost also.
I note that the vertical blinds were cleaned and replaced. Had the evidence shown that they were beyond repair, I would have believed that. I think that they have had their useful life shortened, but no claim is made for this. I allow the repair and cleaning costs sought.
The carpets were new in 2004, shortly before the commencement of the tenancy. On the tenants’ vacating, the carpets on the evidence defied cleaning. Mr Sharma complained that he was not given a change to attempt to clean them. This argument I reject. The tenants had ample opportunity to clean the carpets, and although they were not given a “last chance” I consider that they had had ample opportunity.
It transpired that the professional cleaners could not clean the carpets either. In this case, I allow the full cost of the carpet replacement.
The overall cleaning of the property was clearly not adequate. To his credit, Mr Sharma did not actually dispute this. I allow the cleaning cost, and note that this is consented to.
This is an appropriate time to address Mr Sharma’s submission that he was not present at the final inspection, and that he had not had access to the premises after 24^th August 2009, although inspection was on 31^st August 2009.
As I understand Mr Sharma’s submission, he alleges that because the inspection showed defects found after he had vacated, I could not be certain that some person or persons unknown had not slipped into the unit and caused these defects after he no longer had control over the unit. He backed this assertion with the position that the inspections during his tenancy showed the tenants to be good, clean housekeepers.
I do not deny that the inspection reports are not indicative of a poor tenant. Also, the evidence seems to suggest that the applicants appear to have failed in their duty of care to their client by not conducting inspections over the calendar year 2009.
The incoming inventory and condition report of the agent, dated 18^th January 2005 and signed 25^th January 2005 suggests that the premises were in good condition. The occasional admission of defects in that document (scuffing in cupboards, noting of occasional stains) suggests that it was a fairly honest assessment of the residence.
The annotations of the tenant to that report suggest that the tenant knew what the document was about, and its purpose, as well as indicating that he was a fastidious person in respect of the quality and condition of the fittings.
A number of documents filed in this matter suggested to me that Capital First National Real Estate, the lessor’s agent, had carried out their duties as well as the owner might have wished. Although there is evidence of routine inspections up to and including 2008, there do not appear to have been any inspections in 2009. The tenor of the inspection reports suggests that the tenancy was unremarkable.
I note that an inspection report is not an end-of-lease report. One expects a higher standard at the end of a tenancy than during the tenancy. Nevertheless, one wonders why if there was so much propensity for damage, it did not manifest itself during the tenancy.
Turning to his submissions, Mr Sharma agrees with the claims for cleaning and vertical blind cleaning. I have already dealt with the issue of the flyscreens, and why I reject Mr Sharma’s position on those.
I found Mr Sharma’s position as to the matter generally troubling to say the least. Notwithstanding that he is not a lawyer, and could not reasonably be expected to present like one, his continual insistence on Mr Bentley producing purchase receipts for items in the residence that were alleged to have been damaged by the tenants is curious. It is not the tenants’ business how much the landlord paid for those items, or to a lesser extent, when he did so. The tenant does not acquire a right to damage items merely because they are old.
And the issue of reliance on the Taxation Office’s guidelines as to how items can be written off is likewise a red herring. Mr Bentley’s tax position is not any of Mr Sharma’s business. Mr Sharma cannot assume that Mr Bentley even claims the unit as a tax deduction, absent some knowledge or evidence to the contrary.
For the record, I completely reject the concept put forward by Mr Sharma that any responsibility he may have is not for repairs or replacement, but only for an amount equivalent to written down residuals.
I was impressed with Mr Bentley who appears to have sought to mitigate his losses, and “get on with it”. I was less happy with Mr Sharma’s approach and credibility.
In dealing with Mr Sharma’s contention that there is a gap in the chain of evidence linking the tenancy to the damage, I find that inadequate as the applicant’s performance of its duties vis-à-vis the lessor, it defies reason to assume that a person or persons unknown caused the damage complained of by the lessor.
To reach this finding, I have to effectively discount the quality of the applicant’s interim inspection reports. I do so. I am not asked to find this, but it would appear on the evidence that the applicant has failed in its duty of care to the lessor.
In short, there is damage to the unit. The evidence suggests that it appears to have been inflicted over a lengthy period. It does not bear the hallmarks of a break-in-and-trash operation in a short time. Rather, there are accrued stains, accrued water damage, accrued smoke damage and so on. The water damage to the cupboards and the food stains appear to have occurred over a period of time.
In these circumstances, I find that the damage complained of was caused entirely by the tenants, and whilst the applicant’s actions have led to a question of a break in the evidentiary chain, I do not accept that there has been an intervention of the sort suggested as possible by Mr Sharma.
The lessor has also asked for rent foregone by reason of the damage to the unit. I note that the lessor’s evidence is that as a result of the damage, the property was uninhabitable – or at least, unlettable – for a period of 22 weeks.
However, the lessor has elected to only claim for approximately 12 of these weeks, and of those, his insurance paid for 4 weeks and 5 days, although it charged him an excess of $200, which he claims back.
He seeks $3,080 in respect of rent foregone, and in addition, a sum of $200 in respect of the excess he paid his insurance company. I formally allow this sum ($3,280), noting that had he sought more, he may well have been entitled to it.
Turning to Mr Sharma’s other submissions, I need to look at the lease, and its nature.
53.A lease is a contract where 2 parties codify their bargain with each other in certain terms, with certain consideration and penalties on each side for failure of that consideration.
In the ACT, all residential leases are in the form set out in the Act, at Schedule 1. Although there is provision in the Act to add or delete terms and conditions, such is not a relevant consideration in this matter.
Turning to the lease agreement in this (and every ACT residential) matter, and passing rapidly over those aspects that are not in dispute (e.g. that there actually is a lease in the matter, and that the parties agreed to its terms) I turn to clauses 63 and 64, the terms of which I set out in full:
63 During the tenancy, the tenant must-
(a)not intentionally or negligently damage the premises or permit such damage; and
(b)notify the lessor of any damage as soon as possible; and
(c)take reasonable care of the premises and their contents, and keep them reasonably clean, having regard to their condition at the time of the commencement of the tenancy and the normal incidents of living.
64 The tenant must leave the premises –
(a)in substantially the same state of cleanliness, removing all the tenant’s belongings and any other goods brought onto the premises during the duration of the tenancy agreement; and
(b)in substantially the same condition as the premises were in at the commencement of the tenancy agreement, fair wear and tear excepted.

Mr Sharma argued in diminution of his responsibility under these sections that the lessor should accept that there had been matters in which the age and condition of the fittings should be considered. He also sought to rely on the concept of fair wear and tear.
Another issue raised by Mr Sharma was the power of ACAT to make orders penalising him for damage to the unit. He argued that the bond was there for that purpose, and that ACAT could not make – or at least had not every made – orders for monetary restitution over and above the amount of the bond.
This is quite wrong. In the first place, although subsection 31(a) of the Act allows deductions from the bond for damage caused by the tenant, it is not a limiting subsection. It does not say or imply “and that is all you can have”.
On the contrary, at section 83 of the Act, ACAT is specifically empowered to order (s83(c)) payment for an amount to a person, and perhaps more on point, (s83(d)) payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement.
Also, there is an abundance of cases in this jurisdiction that make orders for restitution to the landlord in respect of damage to the property. Without citing specifics, there is a sizeable number of cases at >
In these circumstances, I have no hesitation in stating that I have a power to recompense a landlord in the event that a breach of a residential tenancy agreement is proved.
I formally find that the tenant in this matter has breached clause 63 of the lease, and is liable to pay the landlord the assessed costs of such breach.
In this respect, I determine the claim of the applicant as follows:
63.1Damage to the Bench top and cupboards  $3,819
63.2Necessary painting  $2,700
63.3Curtain replacement  $1,389
63.4Vertical blind rehanging and cleaning  $88
63.5New carpet (no new underlay)  $2,760
63.6Flyscreens  $317
63.7Other general works  $105
63.8Cleaning  $250
63.9Loss of rent  $3,280
63.10TOTAL  $14,708

I order therefore that the tenant is liable to the lessor in the sum of $14,708.

For the record, I do not allow the lessor’s claims for unpaid rent – as it is unclear as to the exact day when the keys were handed back, and I understood the lessor not to press this claim, and the $1,000 he categorized as “personal costs”. These are unquantified and too general to be allowed.
I note that there has been no fee paid in this matter. Whilst these fees are sometimes waived, I do not feel that this is a case that merits such action. I consider that the tenants have had ample – and generous – opportunity to settle this matter on exceptionally reasonable terms without the need for ACAT’s decision. As the initial matter came before ACAT in the sum of $860 – an amount below $1,000, a fee of $57 will be levied in respect of this application payable by the respondents.
I note that there is $860 held in the trust account at the Office of Rental Bonds in this matter. I formally order that $803 of this sum be released to the applicant and $57 to ACAT as the fee payable.
The release of the balance of bond means that the tenants are liable to the applicant in the sum of $13,905.

………………………………..
Athol Morris

Registrar

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A FILE NO:

APPLICANT: CAPITAL FIRST NATIONAL REAL ESTATE
RESPONDENT: PRAFUL SHARMA & MEENAKSHI SHARMA

COUNSEL APPEARING: APPLICANT:
RESPONDENT:

SOLICITORS: APPLICANT:
RESPONDENT:

OTHER: APPLICANT: HARGREAVES, WHITTON, BENTLEY

RESPONDENT: MITTAL & SELF

TRIBUNAL MEMBER: A. MORRIS, REGISTRAR

DATE/S OF HEARING: 3 & 16 February 2010 PLACE: CANBERRA

DATE/S OF DECISION: 22 March 2010 PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )

COMMENTS: