Costanzo v McFarlane (Residential Tenancies) - [2024] ACAT 75

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COSTANZO & ANOR v MCFARLANE (Residential Tenancies) [2024] ACAT 75

RT 1212/2023
Catchwords: RESIDENTIAL TENANCIES – rental bond dispute – lessors claimed in full against bond for damage to premises and repairs – damage to wall, carpet, garage remote – arrears for rent and water usage – parties obligations under sections 30A, 34 and 34C of the Residential Tenancies Act 1997 – previous co-tenant prevented from joining as a party to the proceedings – discussion of fair wear and tear – tenant responsible for maintenance and repair invoice, the carpet, and arrears – bond released in full to lessors
Legislation cited: ACT Civil and Administrative Tribunal Act 2008
Residential Tenancies Act 1997 ss 23, 24, 25, 30A, 33, 34, 34C, 35A

Cases cited:Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd & Anor [2006] NSWCA 224
Bell & Bell v Boccola, Campbell & Lawrence (Residential Tenancies) [2009] ACAT 26
Burgin v Primrose (Tenancy) [2010] NSWCTTT 383
Cummings & Whitelum v Williams [2002] NSWRT 11
Konstantopoulos v R & M Beechey Carriers Pty Ltd [2011] NSWCA 388
2 Test Pty Ltd v Rajasingham (Tenancy) [2010] NSWCTTT 106
Fitzpatrick v Wu (2001) (unreported NSWRT 01/16425)

Tribunal:Member P Hatami
Date of Orders:  11 September 2024
Date of Reasons for Decision:      11 September 2024
Date of Publication:  19 September 2024

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 1212/2023
BETWEEN:
MARIA COSTANZO
First Applicant/Lessor
SAVERIO COSTANZO
Second Applicant/Lessor

AND:

CHER MCFARLANE
Respondent/Tenant

TRIBUNAL:Member P Hatami
DATE:11 September 2024

ORDER

The Tribunal orders that:

The respondent pay to the applicants $1,737.18 within 30 days from the date of these orders, being for the outstanding amount owed for repairs.
The application and counterclaim are otherwise dismissed.

………………………………..

Member P Hatami

REASONS FOR DECISION

This application was brought by the lessors seeking compensation as follows:
(a)$2,587.72 rental arrears.
(b)$580.78 balance of carpet replacement.
(c)$996.60 handyman cost.
(d)$175 application fee.
The Tribunal conducted a conference in this matter on 13 March 2024 and made directions to the parties to submit the material they intended to rely on to the tribunal and serve the same to each other. The respondent was directed to file a response setting out the orders she sought. The issue of the bond’s use and allocation was live between the parties from the commencement of these proceedings.
The respondent filed a response which included her claims in relation to the allocation of the bond by the lessors. At the hearing, the parties proceeded on the basis that the allocation of the bond was directly relevant to the application, and made submissions in relation to the allocation of the bond at the hearing. The Tribunal received evidence on the items that were deducted from the bond at hearing.
The Tribunal has determined that it is consistent with the objects of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) to treat the respondent’s submissions as a counterclaim pertaining to the allocation of the bond.
The bond was $3,400 and it was claimed in full by the applicants and allocated as follows:
(a)$1,500 — rendering of external wall;
(b)$1509.22 — cost of replacing the carpet;
(c)$205 — garage remote;
(d)$153.58 — water usage; and
(e)$32.20 — final ready.

Background

The tenancy started on 1 July 2021 and ended on 4 October 2023. The tenant gave the agents one month’s notice of her intention to vacate by email dated 4 September 2023. The property was co-tenanted by other parties during the course of the tenancy, but at exit, the tenancy was between the applicant and the respondent.

Bond

The tenant says she agreed to release part of her bond to pay for the final 2–3 weeks of rent, the garage remote, and water usage, for $2,946.30. The tenant says that this was communicated to Kim Stewart, one of the applicants’ real estate agents, by phone. The tenant also says that her ex-partner who attended the final inspection on behalf of the tenant also reiterated this to the agent at the final inspection. There is no other record of this arrangement between the parties.
The lessors retained the $3,400 bond in full. It was only when she contacted the real estate agents inquiring about the release of the balance of her bond that the tenant became aware that the bond had been claimed in full by the lessors.
The lessors say that they tried to contact the tenant on numerous occasions but were unsuccessful. The agents said at the hearing that the lessors were more concerned with the repairs than the outstanding rent, so the bond was used to address maintenance issues, and not to pay for the outstanding rent and the other items agreed to by the tenant and communicated to the agents.
The steps that must be followed in a bond release application are set out in sections 34 and 34C of the Residential Tenancies Act 1997 (RTA):
34 Bond release application—lessor’s obligations
(1) If a residential tenancy agreement is terminated, the lessor must give the tenant—
(a)a bond release application form signed by the lessor; and
(b)if the application includes a claim by the lessor for a deduction from the bond—
(i)a written statement of the reasons for the deduction; and
(ii)if the reasons include a reason mentioned in section 31 (a) or (b) (Deductions from bond)—a written estimate of the cost of the repairs or restoration.
(2) The lessor must give the signed bond release application to the tenant—
(a)if the application includes a claim for a deduction from the bond for a reason mentioned in section 31 (a) or (b)—10 working days after the day the residential tenancy agreement is terminated; and
(b)in any other case—3 working days after the day the residential tenancy agreement is terminated.
(3) If there are 1 or more co-tenants, the lessor’s obligation under subsection (1) is satisfied if the lessor gives the bond release application form to 1 of the co-tenants.
34C Bond release application—application by lessor
(1) A lessor may make a bond release application to the Territory—
(a)if—
(i)the lessor had given a tenant a bond release application form under section 34 (Bond release application—lessor’s obligations); and
(ii)the tenant has not given the signed bond release application to the Territory or lessor within 10 days or any longer period prescribed by regulation; or
(b)if, despite taking reasonable steps to do so, the lessor has been unable to give a bond release application form to a tenant under section 34.
(2) On receiving a bond release application from the lessor, the Territory must—
(a)give written notice of the application (a notice of application) to the tenant; and
(b)if the Territory does not receive a notice disputing the application from the tenant within 2 weeks after the day the tenant was given the notice of application—pay out of the trust account in accordance with the application the amount claimed as bond in the application.
(3) The amount paid out of the trust account must not exceed the amount of bond paid into the trust account in relation to the residential tenancy agreement.
There is much correspondence between the parties evidenced on file. There is no evidence, however, that the lessors contacted the tenant before allocating the bond to advise her what they proposed to use it for nor took reasonable steps to do so.
The lessors did not submit any evidence to show that they had complied with section 34 of the RT Act, and within ten days from the end of the tenancy provided the tenant with a statement of reasons for the deductions from the bond. The evidence submitted to this Tribunal shows that the tenant was informed of the reasons for the deductions from her bond in an email from the real estate agency dated 7 December 2023, some two months after the tenancy had ended.
The notice of the bond release application (notice of application) filed by the lessors (as per sections 33 and 34C of the RTA) was emailed to the tenant’s old work email address on 11 October 2023 by the ACT Revenue Office (ACT Rental Bonds). The tenant did not receive the notices from ACT Rental Bonds about the bond refund request, because they were sent to an old email address she was not using. The tenant says that she had informed the lessors of her new email address, but they failed to contact her on that address or update her email address with ACT Rental Bonds. The tenant communicated her notice to vacate to the agents on 4 September 2023 using her new email address. This indicates that, at least on that occasion, the agents were made aware of the tenant’s email address. The lessors say that they made numerous attempts to contact the tenant but were unsuccessful in their endeavors.
The notice of application listed a former co-tenant as a current tenant. The tenant provided evidence that the co-tenant vacated the property before the end of the lease, and had communicated this with the agents, who confirmed this change in an email and in the tenant composition at the property. Moreover, the tenant refunded the co-tenant her share of the bond and communicated this with the agents. That the co-tenant remained on the records of ACT Rental Bonds as a current tenant suggests that the agents did not update these records as required.
Sections 23 to 25 of the RTA deal with the deposit of the bond and the information required to be submitted by the party depositing the bond:
23 Deposit of bond by lessor
(1) The tenant must pay the bond to the lessor.
(2) Subsection (1) does not apply if the lessor and tenant agree that the tenant will deposit the bond with the Territory.
(3) If the tenant pays the bond to the lessor and not to the lessor’s agent, the lessor must, before the prescribed period ends, deposit with the Territory—
(a)the amount of the bond; and
(b)a notice in accordance with section 25.
Maximum penalty: 20 penalty units.
(4) If the tenant pays the bond to the lessor’s agent, the agent must, before the prescribed period ends, deposit with the Territory—
(a)the amount of the bond; and
(b)a notice in accordance with section 25.
Maximum penalty: 20 penalty units.
(5) An offence against this section is a strict liability offence.
(6) In this section:
prescribed period means—
(a)2 weeks after the day the lessor receives the bond; or
(b)if another period is prescribed by regulation—the prescribed period.
24 Deposit of bond by tenant
(1) If the lessor and the tenant agree to the tenant depositing the bond with the Territory—
(a)the tenant must deposit with the Territory the amount of the bond; and
(b)the tenant, or the lessor on the tenant’s behalf, must lodge a notice in accordance with section 25.
(2) Unless the lessor and the tenant otherwise agree, the tenant is not entitled to possession of the premises until—
(a)the tenant gives the lessor evidence that the bond has been deposited; or
(b)the Territory gives the lessor written notice that the bond has been deposited.
Note Under the Electronic Transactions Act 2001, s 8 (1), information required to be in writing may be given electronically in certain circumstances.
25 Notice about deposit
A notice under section 23 (3) (b), section 24 (1) (b) or section 26 must specify—
(a)the names of and addresses for service on the lessor and the tenant; and
(b)the address of the premises that are the subject of the residential tenancy agreement; and
(c)the rent payable under the residential tenancy agreement; and
(d)the amount of bond being deposited.
Note If a form is approved under s 133 (Approved forms—Minister) for a notice, the form must be used.
The lack of care taken by the agents to ensure that ACT Rental Bonds’ records were up to date in this regard leads me to find that, on the balance probabilities, it is more likely than not that the agents did not update the tenant’s details with the ACT Revenue Office, despite her informing them of her changed contact details. Their obligation to do so stems from their obligations under section 25 of the RT Act, to specify the names and addresses for service of the lessor and tenant. As the party making the deposit of the bond, the agents were responsible for ensuring that ACT Rental Bonds had the correct contact information for the tenant.
The lessors have been on notice that the tenant disputes the allocation of the bond to repairs and that she is not agreeable to the bond having been used as outlined in the agents’ email of 7 December 2023. She has maintained that she had expressly authorised the use of the bond for rent, water usage and garage remote. The lessors have had opportunity to submit evidence to show that they complied with section 34 and informed the tenant of the reasons for the deductions within ten days from the end of the tenancy.
The lessors have not provided this evidence and the evidence on file suggests that the first time the tenant became aware of the items her bond had been allocated towards was on 7 December 2023, two months after vacating. The lessors say that they attempted to contact the tenant but were unsuccessful. However, given the agents’ failure to update the tenant’s information or the tenant composition with ACT Rental Bonds, I am satisfied that, on the balance of probabilities, it is more likely than not that the agents failed to communicate this information to the tenant at her nominated email address, and she was therefore not properly notified as required by section 34.

Outgoing condition report

The exit inspection was conducted on 2 October 2023, and the outgoing condition report was provided to the tenant on 3 October 2023 at a meeting between the agents and the tenant’s ex-partner who had been asked by the tenant to attend the final inspection as her agent. The tenant’s ex-partner went through the property with the agent. What the tenant says that her ex-partner told her about the communications with the agents is sometimes at odds with what the agents say was discussed and with what is recorded in the outgoing condition report.
The respondent was not present at the final inspection, has no ongoing contact with her ex-partner, and the ex-partner was not available to give evidence. I therefore prefer the outgoing condition report as evidence of what was agreed between the parties pertaining to outstanding maintenance items.
Outside wall
The damage to the “exterior wall in barbecue area” was not included as an issue on the outgoing condition report. The lessor has submitted documents which include photographs of damage to the external wall taken after the exit inspection and outgoing condition report were completed. The most notable damage to the wall is a large hole. These images accompany a statement on the compliance of the wall with the Australian Standards for residential building. At the hearing, the agents indicated that they believe that hole was made by one of the lessors in an attempt to fix the wall himself.
The alleged damage to the wall (beyond the hole that was made by the lessor) is not apparent on the photographs in the outgoing condition report nor was the issue raised orally or in writing with the tenant.
Section 30A of the RTA makes it clear that once a final inspection is completed in the presence of the tenant, and the outgoing condition report is signed by the tenant and in this case the lessors’ agent, that comprises the evidence of the property at the end of the tenancy. It states:
30A Final inspection and condition report—end of tenancy
(1) A lessor must, together with the tenant, carry out an inspection of the premises at the end of the residential tenancy agreement.
(2) The lessor must, together with the tenant, complete and sign a condition report based on the inspection.
(3) However, a party may complete and sign the condition report in the absence of the other party if the party has given the other party a reasonable opportunity to be present when the report is completed and signed.
The explanatory statement in relation to section 30A states:
This clause inserts a new provision requiring a final inspection and condition report to be completed at the end of a residential tenancy agreement. New section 30A requires the end of tenancy inspection and 5 condition report to be completed by the lessor and tenant jointly as the intention of this amendment is to assist in managing end of tenancy disputes about the condition of the premises.
An end of tenancy condition report may still be completed in the absence of the other party provided the other party has been given reasonable opportunity to be present. A tenant would not be penalised for signing the condition report, other than in respect of not having an input into what is included in the evidence about the condition of the report. If the parties cannot agree on the condition report, then there will be provision on the form for each party to make their own observations about the condition of the premises.
There is nothing in the outgoing condition report before the Tribunal that indicates that there was damage noted to the external wall nor that any discussion or agreement was reached as to the repair to the external wall now claimed by the lessors.
The outgoing condition report contains photographs of the property including the wall in question. Upon reviewing these photographs, the Tribunal is not satisfied that the damage complained of has been recorded therein. As noted earlier, the hole in the wall that was made by the lessor is obvious in the later photographs which certainly warrant the subsequent repairs to the wall and which cannot be attributed to the tenant.
The outgoing condition report acts as an agreement between the parties as to the condition of the property upon the vacating of the tenant. This agreement cannot be unilaterally amended by the lessors after the tenant has already agreed to be bound by the original condition report which includes photographs of the condition of the property at the time of exit.
Therefore, the claim by the applicants for repair to the external wall is unsuccessful because it falls beyond the ambit of the final inspection and outgoing condition report and entails the repair of an area damaged by the lessor.
Other maintenance items
The lessors seek payment of a handyman invoice for $996.60, including $90.60 in GST, for the following items:
(a)“Replace mesh to screens” — $200;
(b)“Mesh” — $48;
(c)“Fix scratches to back laundry door frame” — $100;
(d)“Door Bog” — $8;
(e)“Paint back patio ceiling twice” — $300; and
(f)“Touch up walls and trim” — $250.
All the items charged for in the handyman’s invoice were noted on the outgoing condition report and agreed to by the respondent’s agent. The applicants are successful in the claim for this invoice for $996.60.

Carpet

The applicants are seeking the cost of replacing the carpet in one of the bedrooms. The parties agree that the carpet in this bedroom had significantly more wear than anywhere else in the house because of the regular use of a wheelchair in that room by the former co-tenant Zoe Bartlett. The outgoing condition report contains photographs of the condition of the carpet in this room. Ms Bartlett has also submitted, with her application to be joined to the proceedings, photographs of the carpet in that bedroom which were emailed to her by the agents.
From the photographs it is obvious that the area where the bed was located is several shades darker than the rest of the room, where there is obvious discolouration. According to the applicants’ agents, the property was new at the commencement of the lease and is in generally very good condition.
Application to be joined as a party to proceedings

An application was made at hearing by Ms Bartlett to be joined as a party to these proceedings. Ms Bartlett sought to be joined as a party because she was a co-tenant at the property from June 2021 until July 2022. Ms Bartlett submitted a statement stating that:
I have T10 complete paraplegia and am wheelchair bound. The use of my wheelchair resulted in wear and tear to my bedroom carpet...
The Applicants initially approached me (Feb 2023) to pay for replacing the carpet in the room I occupied....
I sort [sic] legal advice to understand my rights as someone with a disability as the wear had occurred due to my everyday use and to ensure that the request from the real estate was lawful and reasonable.
After receiving that legal advice, I informed them that I was not under any obligation to pay and that I did not accept that the tenancy agreement had been breached. …
I have never wanted to avoid any responsibility I have for the wear caused by my everyday use of the room, I just wanted to know what my rights were and what was being asked was appropriate. The Applicant should have included me as a party.
When the application was submitted (April 15, 2024), I was not included as a party even though the Applicant has previously stated the following in an email:
“Regarding the carpet damage, the owner’s contention is that it was specifically caused by the wheelchair. This argument is that Zoe should have taken necessary precautions, such as using protective plastic mats or similar measures, to prevent such damage. These precautions, they argue, fall within the tenant’s responsibility in fulfilling their duty of care. However, I’ve negotiated with the owner to arrive at a more equitable resolution, amounting to half of the initially claimed sum, i.e., $1045.)”…
The Applicants will argue that Cher or myself should have informed them that I used a wheelchair before I signed the lease. This assertion raises discrimination issues that I should be able to provide evidence on and argue. However, I am not a party to be able to put my case forward and be represented.
The outcomes of this hearing have the potential to impact people with disabilities and the requirements on them or people living with them to have to disclose their disability, and what constitutes fair wear and tear in this situation. From my reading and advice of others, these aspects have not been directly dealt with in proceedings at ACAT before and the reasoning and outcomes are therefore in public interest.
Joining a party to these proceedings
Ms Bartlett was a co-tenant from June 2021 until July 2022. She notified the lessors prior to leaving the tenancy. and this arrangement was approved by the lessors and agreed to by the tenant. Ms Bartlett complied with the requirements of section 35A of the RTA and has no further obligations under this residential tenancy agreement. Ms Bartlett ceased to be a party to the residential tenancy agreement upon giving the lessor notice and moving out of the property and cannot now be joined as a party in a dispute between the applicants and the respondent who remained the tenant at the date of exit and in relation to whose tenancy this application has been brought.
The respondent has said that she refunded Ms Bartlett’s bond back to her minus a small deduction to attend to some scuff marks. Ms Bartlett cannot now be brought into these proceedings and be held responsible under this residential tenancy agreement for damage caused to the property while she was a co-tenant. Although Ms Bartlett admits that the damage to the carpet resulted from her day-to-day use of the carpet, she is no longer a party to the residential tenancy agreement which has given rise to this dispute. Given that she is no longer a party to the agreement she cannot be joined or held responsible for issues between the applicants and the respondent in these proceedings.
Fair wear and tear
The tenant says that her ex-partner who attended the exit inspection told her that he and the agents agreed that the condition of the carpet was due to “fair wear and tear”. The tenant’s ex-partner was not made available to give evidence. The outgoing condition report notes the worn condition of the carpet and states that the tenant is responsible for suggesting alternatives to replacement and noting that the carpet is damaged and requires replacement.
There is also communication in an email dated 15 February 2023 between the agents and the former co-tenant Ms Bartlett, where the agents are seeking to recover the cost of replacing the carpet from her.
The tenant says that the carpet is worn, but that its condition is due to fair wear and tear, because the wear occurred through regular everyday use by Ms Bartlett in her wheelchair while she was a co-tenant.
In Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd & Anor,[1] and Konstantopoulos v R & M Beechey Carriers Pty Ltd,[2] the NSW Court of Appeal (in a commercial leases context) noted that “reasonable wear and tear” did not include deterioration in the premises that could be prevented by reasonable conduct on the tenant’s part.
[1] [2006] NSWCA 224
[2] [2011] NSWCA 388

40.The applicants suggested that the former co-tenant could have used plastic mats to protect the carpet from her wheelchair. This suggestion may have worked, or may have led to other issues, such as the sharp underside of the mat ripping up of the carpet or causing a tripping hazard. However, it is for the tenant to show that she took reasonable steps to mitigate the damage. No evidence of mitigation was offered in the submissions made by the applicant.
41.In Fitzpatrick v Wu (2001) (unreported NSWRT 01/16425) the Tribunal said the standard by which ‘fair wear and tear’ is assessed is an objective one. An objective assessment of the damage in this case is that the damage is beyond what would be expected in the regular use of carpet. Noting that the carpet throughout the rest of the house remains in good condition and does not require replacing.

In Cummings & Whitelum v Williams,[3] the tenant broke a windowpane when a stone was dislodged by her lawn mower, while she was mowing the lawn. The New South Wales Tribunal took a broad view of what is “negligent”, and concluded that:
[3] [2002] NSWRT 11
It is my opinion that in circumstances such as those now before me, a broad interpretation of ‘negligently’ should be applied. The damage to the glass panel was solely caused by the tenant’s act of mowing the lawn, and the landlord’s have not in any way caused or contributed to the damage. It is possible the damage could have been prevented had the mower had a catcher fitted, or if it was a younger model mower, or if the tenant had checked the lawn over for objects before mowing, however none of these events are an obligation of the landlord. I believe that it is not the intention of the Act, that in circumstances where the damage can in no way be attributed to the landlords, and the act of the tenant has directly caused the damage, that the landlord should effectively be held responsible for the damage…
The damage to the carpet is obvious and significant. Although the former co-tenant did not damage the carpet deliberately, the wear she caused with her wheelchair was significant and objectively foreseeable.
The tenant and the former co-tenant have submitted that the Tribunal ought to apply a different standard to the assessment of fair wear and tear in this case because Ms Bartlett caused the damage to the carpet through the everyday use of her wheelchair. It was suggested that it would be discriminatory to do otherwise.
The RT Act does not provide a framework for a different standard to be applied to damage caused in a residential property by tenants experiencing disabilities. It is regrettable that the cause of the damage in this case entails the use of a wheelchair for mobility but if a different standard was applied to individuals experiencing disabilities which were to allow more wear and tear beyond what is fair, it would more likely than not negatively impact individuals experiencing disabilities renting on the private rental market.
The parties agree that the damage caused to the carpet resulted from the wheelchair use which caused the carpet to become so worn as to require replacement. This occurred within a 12-month period. The Tribunal will apply a broad interpretation of negligent noting that it is more likely than not that Ms Batlett did not deliberately set out to cause damage to the carpet but it was reasonably foreseeable that daily use of a wheelchair on carpet would result in significantly more wear than otherwise. Despite Ms Batlett’s intentions the carpet was damaged beyond repair within a 12-month period through the use of her wheelchair and required replacement. This damage was beyond what can be accepted as fair wear and tear. The intention of the RT Act is not to hold the lessor accountable for damage which can in no way be attributed to the lessor and where the tenant directly caused the damage. The tenant is responsible for the cost of replacement of the carpet noting the age and condition of the carpet which was replaced.
The ATO depreciation tables for 2023 provide that the effective life of carpeting in accommodation is seven years. The applicants’ agents did not know exactly how old the carpet was but estimated that it was nearly new. The tenancy lasted for two and a half years, from July 2021 to October 2023. The Tribunal will therefore award the cost of replacement of the carpet by applying a three-year depreciation to the full cost of replacement. The invoice submitted by the applicants was $2,090, for supply and installation of new carpet, and the removal and disposal of the old carpet. The respondent is therefore responsible for $1,194.28 for the cost of replacing the carpet.

Conclusion

The total amount owed by the respondent to the applicants is $5,137.18, being for:
(a)$2,587.72 rent;
(b)$1,194.28 the carpet;
(c)$996.60 the handyman invoice;
(d)$205 the garage remote; and
(e)$153.58 water usage.
The tenant has already paid the lessors $3,400 through release of her bond.

Orders

The Tribunal orders that:
(a)The respondent to pay to the applicants $1,737.18 within 30 days from the date of these orders, being for outstanding amount owed for repairs.
(b)The application and counterclaim are otherwise dismissed.

………………………………..

Member P Hatami

Date(s) of hearing:	11 June 2024
Applicants:	Authorised representatives
Respondent:	In person