D'Ambrosio v Tyler (Residential Tenancies)
[2009] ACAT 33
•11 September 2009
AUSTRALIAN CAPITAL TERRITORY
CIVIL AND ADMINISTRATIVE TRIBUNAL
D’AMBROSIO v TYLER (Residential Tenancies) [2009] ACAT 33
RT 393 of 2009
Catchwords: RESIDENTIAL TENANCIES – rent strikes – equitable set offs – strict performance of the terms of a lease – cash payments of rent – lessors duty to repair not contingent on rent being paid
Residential Tenancies Act 1997 (ACT) ss 38, 71 & Schedule 1 (being prescribed terms 54-60, 86-87)
Hawkesbury Nominees P/L v Battik P/L [2000] FCA 185
Worrall v Commissioner for Housing in the ACT [2002] FCAFC 127
J & S Chan P/L v McKenzie [1994] ACTSC 1
Shevill v Builders Licensing Board [1982] HCA 47
Gumland Properties Holdings P/L v Duffy Bros Fruit Markets P/L [2008] HCA 10
British Anzani (Flexistowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137
Re Partnership Pacific Securities Ltd [1994] 1 QdR 410
Connaught Restaurants Ltd v Indoor Leisure Ltd [1994] 1 WLR 501
Knockholt P/L v Graff [1975] QdR 88
British Anzani (Flexistow) Ltd v International Marine Management (UK) Ltd [1979] 2 AER 1063
Batiste v Lenin [2002] NSWCA 316
Gibb Australia P/L v Cremor P/L [1992] ACTSC 68
Clambake P/L v Tipperary Projects P/L [No3] [2009] WASC 52
CBA v GS Developments P/L [2004] NSWSC 511
Gilsan v Optus [No3] [2005] NSWSC 518
Royal Parade Hotel P/L v Calmot P/L [2004] VSC 331
Luna Park (NSW) Ltd v Tramways Advertising P/L (1938) 61 CLR 286.
Weir “A Tenants Right Of Set off” (1994) 68 ALJ 857
Commercial Leases in Australia Duncan 5th ed (Thom)
Meagher, Gummow and Lehane’s “Equity, Doctrines and Remedies” 4th ed (Lexis) at chapter 37
Cheshire and Fifoot’s Law of Contracts 8th ed Seddon and Ellinghaus at p24;
Tribunal:Mr A Anforth(Senior Member)
Date: 11 September 2009
AUSTRALIAN CAPITAL TERRITORY )
CIVIL AND ADMINISTRATIVE TRIBUNAL ) No: RT 393 of 2009
BETWEEN:
MARIA D’AMBROSIO
Applicant/Lessor
AND:
JAMES TYLER
Respondent/Tenant
TRIBUNAL:Mr A Anforth (Senior Member)
DATE: 11 September 2009
ORDER
The tenant, James Tyler is to pay the lessor, Maria D’Ambrosio, the sum of $4753.30.
The Office of Rental Bond is to pay the whole of the bond of $1160.00 to the lessor for which credit is to be given to the tenant leaving the sum of $3593.30 to be paid by the tenant to the lessor on or before 1 November 2009.
……………………………..
Mr A Anforth
Senior Member
AUSTRALIAN CAPITAL TERRITORY )
CIVIL AND ADMINISTRATIVE TRIBUNAL ) No: RT 393 of 2009
BETWEEN:
MARIA D’AMBROSIO
Applicant/Lessor
AND:
JAMES TYLER
Respondent/Tenant
REASONS FOR DECISION
The lessor lodged an application with the Tribunal on 5 June 2009 seeking orders for rent arrears of $5603.30, the cost of an alarm removed from the premises by the tenant and the cost of repairing a hole in the wall where the alarm had been previously fitted. The application appended:
(a) a tenancy agreement in standard terms between the same parties dated 19 March 2008 signed by both parties for a fixed term of 12 months at rent of $330.00 per week;
(b) a rent ledger
(c) notices of demand dated 15 March 2009 for arrears of $4541.96 for rent and water and 17 May 2009 for arrears of $5603.30 for rent:
(d) water accounts in the sum of $566.00.
The matter was listed before the Tribunal on 7 July 2009. On that date the lessor appeared in person. There was no appearance of the tenant whose address for service was shown as being in Queensland. The Tribunal rang the tenant of its own initiative and he then participated in the hearing via telephone.
The lessor outlined her case. The tenant indicated his defence and that he wished to file a counter claim. The matter was adjourned to a formal hearing on 25 August 2009 and the following procedural orders were made:
1. That the Lessor is to file and serve by 28th of July, 2009:
(a) a rent ledger showing all payments
(b) a chronology of events relating to the tenancy and the alarm system
(c) details of the hole in the wall referred to in the claim
(d) invoices/quotes relied upon
(e) photos relied upon
(f) statements from all witnesses relied upon2. That the Tenant is to file and serve by 11th of August, 2009:
(a) his response to the above
(b) photos and invoices/quotes relied upon
(c) any counter claim with details of the claim
(d) statements of witness relied upon3. That the Lessor is to file and serve by 25th of August, 2009 a response to the counter claim.
4. That the matter is adjourned to Tuesday the 25th day of August, 2009 at 10.00am.
On 23 July 2009 the lessor filed:
(a)a chronology of events
(b)a statement from herself
(c)a statement from Alex D’Ambrosio
(d)photographs
The chronology read:
19 March 2005-
Tenancy begins
August/September 2005 -
tenant was pick up rent from a lady called Lyn from Grace Bros $2500 as tenant was behind in rent
1 9 March 2006 -
Tenant renews contract
2006-
Throughout 2006 tenant was never on time with payment of rent
19 March 2007-
tenant renews contract
30 August 2007 -
sent tenant Notice to Remedy Non payment of rent -gave 14 days notice, tenant was overdue $4337.49
Tenant eventually paid the outstanding amount.
18 March 2008-
tenant renews contract
Tenant wanted to pay by calendar month as he was paid monthly. This was agreed to
August 2008 -
tenant had house inspection and told tenant that I had not received rent for June and July
January 2009 -
Tenant told me that he would not be renewing contract as he was moving to Queensland.
Late February early March 2009 —
landlord tries to call tenant numerous times about outstanding rent and move out date (tenant had new number but did not provide it to Landlord mid March)
2 March 2009 -
Landlord sends letter to tenant.
10/11 March -
tenant contacts landlord and provides new contact details and said tenant would start paying rent.
1 5 March-
Landlord inspects house and tenant in passing said that tenant would be taking out his alarm system and stated that the landlord's alarm was in the cupboard. Landlord did not check further until after tenant moved out completely.
15 March 2009-
Tenant moves out. Tenant owed $6,103.30 in rent.
16 March 2009-
Landlord went back to house and landlord observed hole in wall (the hole was not present at house inspection). Landlord then checked all cupboards and walls and alarm was half missing.
23 March 2009 -
hole was fixed as house needed to be rented
28 March 2009 -
spoke to tenant about payment of rent. Tenant informed landlord that he had problems with e banking and that accounts were frozen.
Early April 2009-
landlord contacted tenant again in regards to rent.
17 April 2009-
tenant made one payment of $500. tenant's outstanding rent balance is $5603.3
5/6 May -
Landlord sent sms about rent - no reply from tenant.
1 3 May 2009 -
Landlord sent sms about rent - no reply from tenant.
17 May 2009-
Landlord sent letter about rent - no reply from tenant.
31 May 2009-
Landlord calls tenant. No reply. Landlord leaves message saying that the matter is now going to Tribunal.
5 June 2009 -
Landlord filed documents at the ACT Magistrates Court to start proceedings against tenant
7 July 2009 -
Application heard in ACT Civil and Administrative Tribunal - orders were made for Landlord to file and serve documents by 28 July 2009.
The statement from the lessor read:
1. I Maria D'Ambrosio am the applicant in this matter. I am the lessor of 90 Enid Lorimer Circuit Chisholm ACT.
2. Mr James Tyler is the respondent who is the tenant and is the subject to the claims mentioned in this Application.
3. The issue is dispute is that the respondent owes excess rent and water to of $5603.3.
4. James has been living in 90 Enid Lorimer Circuit Chisholm ACT since 19 March 2005.
5. James vacated the property on 15 March 2009
6. James has always had troubled with paying rent on time and I have always been flexible with James' payments as in the beginning of the lease James would eventually pay the rent.
7. During James' contract his rental payment was the following:
a. In 2005 James paid $290.00 per week,
b. In 2006 James paid $290.00 per week,
c. In 2007 James paid $310 per week,
d. In 2008 James paid $330 per week.8. After James had moved out I had numerous attempts to contact him about payment of the monies owed. I was unsuccessful and made an Application to the ACT Civil and Administrative Tribunal to start proceedings to claim monies owed by Mr Tyler.
HOLE IN WALL AND ALARM SYSTEM.
9. When James moved into the property there was an alarm system. James installed his own alarm system. At no stage did he ask me if he could do this and at no stage did he ask me to fix the alarm which was in the house when he started to rent.
10. On 15 March 2009 I inspected the property with James. I asked James if the alarm system was in the house. James said words to the effect "It should be unless Mel accidentally packed it”. I did not question this further nor did I look to see for myself.
11. On 16 March 2009 the day after James vacated the property I inspected the house again. I noticed that in the lounge room there was a hole in the wall. This was not there when I did the house inspection with James on 15 March 2009. The hole was approximately a golf ball in size. At the time I did not take a photo of the hole as I was in shock that it was there. My husband Alex D'Ambrosio witnessed the hole and has made a statement to this effect. I believe the hole is due to James removing his own alarm system out.
12. When I checked the cupboard for the old alarm only part of it was there as half of it was missing. At no stage did I have an alarm system that was half missing.
13. I have now since been back to the property and have taken a photo of the wall where the hole was, attached hereto and marked exhibit “1” are pictures of the wall where it has been patched up. I have not properly fixed the hole as I needed to give it a quick fix for tenants that were moving in. I have been looking into quotes for the wall. Attached hereto and marked exhibit “2” is a copy of the quote of how much the hole will cost to fix properly.
Monies owed:
1. Attached hereto and marked exhibit “3” are copy of my bank statements which show the payments made by James. Attached hereto and marked exhibit “4” are copies of personal ledger that I have written up which shows the rent paid by James since May 2008.
2. Attached hereto and marked exhibit “5” are copies of letters and I have sent to James about monies owed and overdue rent and water.
In addition to the notices to remedy that were annexed to the application filed in the Tribunal, the lessor exhibited to her statement a further notice to remedy dated 30 August 2007 in the sum of $4190 for rent and $147.49 for water.
The exhibited photos showed a clear patch in a wall of approximately 25cm x 25cm. The patch appeared to nothing more than the spac-filler applied to the hole and the surrounds. The job had not been levelled or painted.
The statement from Alex D’Ambrosio read:
1. I am married to Maria D'Ambrosio who is the Landlord of 90 Enid Lorimer Circuit Chisholm ACT.
2. James Tyler was the tenant and was living at the property from 2005 until early 2009.
3. During tenancy I have always witnessed that James has been late with payments.
4. On some occasions I have even called James myself as Maria is unable to contact him.
5. Maria has always been flexible with his payments as she understood that James did have a family to look after.
6. Towards the end of the tenancy Maria was having trouble in contacting James and monies that had reached up to $5000 owed to her in rent and water. I would often witness her trying to contact James by his mobile and he would not answer the phone. Maria would often leave voice messages for James to call her back on.
7. After James had left the property I had gone with Maria to inspect the property again.
8. In the lounge room we witnessed that there was a hole in the wall. Maria had told me that the hole was not there when she did the inspection with James the day before.
9. Attached and Marked Exhibit “1” is a quote to have the hole properly fixed.
10. I fixed the hole temporarily as new tenants were going to inspect the property.
10. The exhibit to the statement of Mr D’Ambrosio was a quote in the sum of $275.00 from Inside Out Projects for repair of the hole where the alarm control pad had been.
11. The tenant filed his response on 11 August 2009 which read:
Hole in wall
The landlord and I had inspected the property on the 15th March 2009, at this time there was no noted damage and the keys were handed to the landlord later on this day. No final condition report was filled out at this time/date. A number of suggestions were made to the landlord regarding improvements considered necessary prior to the house being relet. The landlord advised that a comprehensive refurbishment was to be carried out. The landlord appeared comfortable all through the inspection and did not make any comments with respect to any unsatisfactory conditions.
The only hole that I was aware of through out our entire tenancy was behind the front door. This hole was caused by strong winds when the front door was caught and slammed into the wall. It would not have happened if the landlord had not ignored my repeated requests to have a door stop installed. The hole was repaired prior to the final inspection on the 15th Mar. The only other hole that may be subject to this claim is the hole behind the alarm panel. This was roughly 20x40mm and was present due to the landlord's existing alarm system. I requested permission to remove my alarm system prior to vacating the premises. The landlord's panel was not installed again as their system was faulty. I dispute liability for the hole behind the alarm panel as this was present prior to our occupation of the premises.
In view of the friendly nature of the final inspection I find it hard to believe that the landlord was suffering from too much shock to take a photo of the wall. If not at the time of initial finding surely it could have been taken prior to having it repaired. A high percentage of people these days even have a camera equipped phone so it would not even be that much of an inconvenience.
Even though I am unsure of where the hole was located in the lounge room mentioned in 'Exhibit 1' I dispute any liability as the premises was in good condition prior to our handover.Alarm System
During our first week of tenancy at Enid Lorimer, permission was requested to install our personal alarm system in the premises. This was due to the fact that the system in the premises was not in operation. We had been the victim of numerous break-ins at our previous premises and the landlord gratefully gave us permission (verbally) to proceed. The original system was removed and remained in the hallway cupboard during the entire tenancy where it remained after we vacated the premises. As I had paid for and installed the alarm system, I requested permission and was granted approval to remove it prior to vacating the premises.
I don't understand what part of the landlord's system is 'half missing'. When I vacated the premises the system was complete. The original unit (main system), panel and detectors were there plus an additional detector that I installed when my system was installed. The siren and strobe unit was replaced with a new unit at this time also. New cabling was also put in place at this time as there was vermin damage the original cabling. This was all completed at no cost to the landlord.On the initial condition report (See attachment 'A') the Alarm system is not noted as part of the premises, therefore would not be considered a working fixture of the premises.
I dispute any liability to claims made in relation to the Alarm system.
Rental Arrears and Water
The landlord rarely provided receipts for cash rental payments that were made at her premises. This was a problem throughout the tenancy. I have no records for these cash payments which were made at various times where throughout the tenancy. At times during the tenancy I withheld rental payments as the only means of gaining contact with the landlord in order to request essential repairs. I withheld rental and water payments for the last three months of the tenancy in the hope of instigating a reasonable discussion so that neither party would be 'short-changed'. I understand this method was not a desired way to achieve this though it seemed to be the only way to get the landlord to make pro-active contact with us during our tenancy.
I admit that I did not pay rent for the last three months of the tenancy for the reason explained above.Response in counter-claim made against Ms Maria D'Ambrosio (the landlord) and Alex D’Ambrosio from James Tyler (the tenant) relating to rental arrears and damages compensation at 90 Enid Lorimer Circuit, Chisholm (the premises).
Counter Claim
After I had overcome the 'shock' of having the damages claims made against me I feel it only fair to seek compensation for some of the hardship suffered during the time at the premises. Details are in the following paragraphs.
Heating
During the period 12 August 2005 to 30 August 2006 we were not provided with working heating. Initially, the electric fan heaters included in the house provided a limited amount of heating albeit at high cost, but these heaters failed and were not repaired during the period mentioned. We reported the heating failure to the landlord immediately as we had a young family and it was during late winter and needed immediate attention. In late August 2005 an electrician was sent by the landlord and after inspecting the heaters advised that they were not repairable. (We managed during this period with the aid of heaters loaned to us by our next door neighbours who felt horrified that we were going to attempt to live through the winter with a young family with no heating.)
Despite our repeated requests, the problem was not rectified and it became increasingly difficult to contact the landlord so I with-held rent for some time until the landlord finally made contact with me (see Chronology provided by the landlord). Although the chronology fails to state why there was a rental arrears, it does collaborate the date. I understand that withholding rent is not a desired way to achieve attention; it seemed to be the only way to get the landlord to make contact with us. Eventually Alex (the landlord's partner) came around and demanded payment of the rent in a threatening manner. After some discussion, he eventually realized that there was a problem to address. I advised Alex that I would be more than happy to rectify the arrears should we be provided adequate heating. A lump sum was paid the following days in 'good-faith'. New heating was installed within a fortnight and the arrears were fixed the following fortnight.
I request compensation for the additional electricity consumption cost of using inefficient heating (we could not afford to purchase energy efficient heating for a temporary use and none was provided by the landlord). The electricity bill totals for quarters ending September 2005 and September 2006 were $737.37 and $970.82 respectively. Although the real cost would be higher, the first amount I wish to claim is the difference of these two bills, namely $233.45. (See Attachment 'B')Second I would like to be reimbursed for the connection fee for the gas as this was paid by my partner. Total $295.00. (See Attachment 'C')
Third I would like to be reimbursed for the period we were without heating. I have spoken to various agents in Canberra and they have advised a three bedroom ensuite premises with heating would be worth $ 10 to $20 more a week than a premise with out heating. Taking an average of $ 15.00 over the 54 weeks we were without heating I request compensation a total of $810.00.
The total of compensation requested with respect to the heating problems is $1338.45.
Ensuite Bathroom.
Over a period of 12 months, from the 4th January 2008 to 24th December 2008 the toilet in the ensuite was inoperable and became and the ensuite became a stinking cubicle of stagnant water preventing the use of the shower (we had to regularly pour a mix of disinfectant and fresh water down the cistern and receptacle to prevent this smell from becoming unbearable and making way into the master bedroom). As with the heating situation, numerous requests to have the toilet repaired remained unanswered.
On the same basis as the calculation for the rental difference in the heating case, I suggest that the rental difference for an ensuite house would be at least $10 per week higher than for no ensuite. I therefore request rental compensation for 50 weeks at $10 per week, a total of $500.
Rear Fence/Kitchen
After repeated requests, the landlord agreed to replace the rear fence which faces onto a wide walkway area. The fence was destroyed during the New Years Eve storms of 2007. The old fence was eventually removed, but the new fence was not erected for nine weeks. During this time we suffered considerable stress worrying about our children and belongings being removed from or leaving the safety of the back yard.
I would maintain that the rental for an unfenced house would be less than for a fenced house, and believe that some compensation would be claimable in this case. I have no means to estimate this and make no claim.
In a similar vein, the landlord ignored repeated requests to repair the dishwasher in the kitchen and to attend to defective tiles.
Summary
In summary, my counter claim would be a total of $1338.45 for heating and $500 for the ensuite, a total of $1838.45.
12. Exhibited to the tenants statement were:
(e) a residential tenancy agreement between the same parties for a 12 month fixed commencing on 19 March 2003 at a rent of $290 per week:
(f) an ingoing condition report dated 18 march 2005 showing the premises to be in good condition
(g) a letter from ActewAGL dated 15 Sept 2006
(h) an electricity account and a gas account for a period in 2006
13. On 21 August 2009 the lessor filed her response to the tenants submission and the response of her husband, Alex D’Ambrosio. The lessor express posted her response to the tenant. The lessor’s response read:
I Maria D'Ambrosio make the following statement in relation to Mr Tyler's statement as follows:
HOLE IN WALL/ALARM SYSTEM
1. In regard to the alarm system, the house was rented with an alarm. When Mr Tyler moved into the premises he installed his own alarm system where the hole is present. I do not recall giving permission to Mr Tyler that he could place his own alarm system in the house. At the time of the final inspection Mr Tyler asked if he could remove his alarm. I was not going to deny him to take his alarm as he had paid for it so I told him that he could. When I asked Mr Tyler where my alarm system was, he said that it was in the cupboard. The hole in the wall was caused from Mr Tyler removing his own alarm. I was unaware that in removing his alarm system, damage would be caused to the wall, and this was neither brought to my attention by Mr Tyler after the inspection.
2. The missing part to the alarm is the panel with the numbers. It is not present. Before tenancy began the alarm was whole and working. Prior to Mr Tyler renting the house, I had leased it through an agent for 4 years and at no time did the tenant ever say that the alarm was not working.
3. I would like to know where the number panel to the alarm is. Mr Tyler stated it was in the cupboard and it is not, as a result of this piece missing a hole exists in the lounge room near the front door. I rented the house with an alarm and it is only fair that the house be returned as it was when he started the tenancy.
4. Mr Tyler claims that he cannot understand why I would be in "shock" when seeing the hole. I was in shock as I am an honest person and would never damage someone else's property. I do have a mobile phone with a camera in it, however the camera is not of very good quality and the thought did not occur to me. My thoughts at the time was that it was too late as Mr Tyler had moved out already and that Mr Tyler was already overdue in his rent. Further, I was concerned he would not admit or pay for the damages of the wall, and was focused on seeing that rent owed was paid.
RENTAL ARREARS AND WATER
5. Mr Tyler used to pay his rent in cash. At those times receipts were provided to him. Attached hereto and Marked Exhibit "1" are copies of those receipts. Mr Tyler then switched to paying his rent straight into my bank account. Mr Tyler never asked for receipts and I never provided them to him as we would both have electronic banking records. Copies of all those payments are set out in my first statement of 22 July 2009 marked Exhibit 3 pages 5-16 and Exhibit 4 page 17.
6. If at any time Mr Tyler required receipts I would have gladly provided them to him. If I was aware that Mr Tyler was not providing rent monies as a result of me not providing receipts I would have provided them to him, however I do not believe that this would of changed the situation.
7. While Mr Tyler was paying in cash, he was also late in paying rent even though receipts were provided.
8. I provided letters to Mr Tyler when he was late with his rent as well as having verbal conversations with him. Mr Tyler was aware of the amount of monies due to me. As seen in my first statement in Exhibit 5 pages 18, 20, 21 and 22.
9. When Mr Tyler was behind in the rent I would call on occasions, however he always provided an excuse as to why I had not received the rent. The excuses included problems with net banking, frozen account, and wrong bank account details. I feel that the reason for lateness of rent was due to finance problems and that maintenance was just an excuse to buy more time to pay the rent.
10. In Mr Tyler's statement he admits that he withheld rent 'throughout' the tenancy due gaining contact for 'essential repairs' and had not been able to get in touch with me. I dispute this claim as set out in this statement and my statement of 22 July 2009. I would also point out that a clear pattern of not paying rent regularly and in full, was established throughout most of the tenancy. Before Mr Tyler had left the property in the months leading to the end of the tenancy agreement, I was concerned Mr Tyler had left the property as despite numerous contact attempts, I had not heard from him.
11. After Mr Tyler moved out of the premises, I had difficulty in contacting him, despite using communication means of text messages, phone calls and letters, It was not until I brought this matter to the tribunal that I heard about other problems about the tenancy.
HEATING
12. The property had two wall heaters in the house. Mr Tyler stated that his children were playing with the heaters and would like them removed.
13. New heating was installed, it was central heating at the cost of $4455 and at no point did I put the rent up. Attached hereto and Marked Exhibit "3" is an invoice for the heating. There was a delay in installing the new heater as we were waiting for installation of the gas line to the house.
14. The connection fee for the gas ($295) was taken out of the rent (monthly $1160) which was agreed to verbally. Therefore Mr Tyler paid $865. Attached hereto and Marked Exhibit "2"is that payment in my bank statement.
15. Mr Tyler did not bring this to my attention as an ongoing problem and never had I received anything in writing to say that it was a problem.
DISHWASHER/ FENCE
16. On renting the house there was an older dishwasher in the property, it was replaced. Mr Tyler never mentioned that he had a problem with the new dishwasher.
17. The fence was damaged during the Christmas period. I was away on holidays at the time. The fence was fixed as soon as I had arrived from holidays. I did state to Mr Tyler that I was on holidays and it would be fixed as soon as possible.
GENERAL
18. Over all Mr Tyler was a good tenant however he was always late with the rent, I feel that I have always been generous and flexible with the payment of rent. All I ask in return is that all the monies that are owed to me.
19. I agree that at the time of the final inspection the house was in good condition. However, day after inspection, I attended the property and there was a hole in the wall. No one else had entered the property during the period after the inspection and the next day when I attended and found the hole in the wall, other than Mr Tyler.
20. The house was always rented "below" market value of $20 or $30.
21. I dispute Mr Tyler's counter claims and seek that I be paid from Mr Tyler:
a. Full recovery of monies owed from rent and water $5603.30;
b. The hole in the wall $275; and
c. The cost in which I have incurred by taking this matter to tribunal $112 (filing of documents),
d. Total of $5990.30
14. Annexed to the lessor’s statement was a tax invoice dated 9 September 2006 for $4455.00 for the installation of a gas water heater.
15. The response by Mr D’Ambrosio read:
I Alex D'Ambrosio make this statement in response to Mr Tyler's statement as follows:
1. When Mr Tyler rented the premises there were two wall mounted heaters, after some time he complained of the heaters not working so we installed central gas heating. This did take time as we were waiting on the installation of the gas line to the house. I find it difficult that he says that the wall heaters did not work as in December last year when he was once again behind in rent he said he wanted the wall heaters removed as his kids would turn them on. I said I wouldn't remove the wall heaters but disconnect them. He was never with out heating.
2. The wall heaters may not of been efficient, however for a house of that age it is very common.
3. When speaking to James in December 2008 he stated what need fixing I then said words to the effect "if I was to fix all that you need would Maria receive all the rent that is owed to her" he said "no" . After James eventually paid his rent for November and December 2008 the ensuite toilet was also fixed. All it needed was a new rubber seal.
4. I found it difficult if it was such a prolonged period of time that he was waiting upon things to be fixed and it was such a problem why he did not write a letter of demand or complaint.
16. On 24 August 2009 the Registrar of the Tribunal rang the tenant to advise that the lessor had filed her response (set out above). The Registrar reported that there was no answer and a message was left for the tenant reminding the tenant of the hearing on 25 August and advising that the lessor had filed a response.
17. On 25 August 2009 the lessor appeared in person, there was no appearance by the tenant. The Tribunal had received no communication from the tenant concerning any difficulties with his appearance by phone on 25 August. The tenant had been informed orally of the hearing date at the previous hearing and the hearing date was contained in the procedural orders that had been sent to the tenant. The Tribunal again phoned the tenant of its own. There was no response. The Tribunal left a message on an answering service which informed the tenant of the hearing and that it would proceed in his absence. The message advised the tenant of his rights to apply to set aside any decision made in his absence if there was a good reason for his non-appearance.
18. At the hearing the lessor defined her claim as being:
(a)$5603.30 for rent and water after allowing for $500 paid on 17 April 2009.
(b)$275.00 for repair of the wall
(c)$112.00 for the Tribunal fee.
19. The lessor informed the Tribunal that:
(a)The tenant rang the lessor in January 2009 to inform the lessor that he was moving to Queensland but that he would pay the rent to the end of the fixed term on 15 March 2009:
(b)After the tenant left the premises the tenant’s partner remained in occupation:
(c)The tenant contacted the lessor to arrange an outgoing inspection of the premises on 15 March 2009 which both he and the lessor attended:
(d)The tenant retained the keys until 15 March 2009.
Consideration of the issues:
(a) The lessor’s claims:
20. The lessors claim for rent and water arrears is not denied by the tenant. The tenant admits a rent strike as a means of attracting the lessor’s attention for the purposes of having certain repairs undertaken. Given the nature of this defence raised by the tenant it is convenient to briefly review the law on the tenant’s right to engage in a rent strike in response to the lessor’s alleged failure to carry out repairs.
21. As a general proposition of law the rights and obligations in a residential tenancy agreement (collectively referred to as covenants) are independent. It is not the case that a breach of obligations by one party justifies a retaliatory breach by the other party (Hawkesbury Nominees P/L v Battik P/L [2000] FCA 185; Worrall v Commissioner for Housing in the ACT [2002] FCAFC 127]. The consequence of a retaliatory breach is simply that both parties are in breach of their respective obligations.
22. The first of the exceptions to the above principle is where the original breach [eg a failure to repair by the lessor] is of such a character as to amount to either:
(i) a repudiation of the lease; or
(j) a breach of a fundamental term of the lease at common law.
23. In this event the innocent party [i.e. the tenant] may choose to either:
(k) terminate the lease; or
(l) continue with the lease and make a claim for compensation for the breach
(J & S Chan P/L v McKenzie [1994] ACTSC 1; Shevill v Builders Licensing Board [1982] HCA 47; Gumland Properties Holdings P/L v Duffy Bros Fruit Markets P/L [2008] HCA 10).
24. But if the tenant, as the innocent party, elects to continue with the lease then the tenant must comply with the terms of the lease (i.e. it is not then open to the tenant to then engage with impunity in a rent strike or other retaliatory breaches of the lease).
25. The second possible except to the principle set out at paragraph 21 above arises from the application of the doctrine of “equitable set off”. Superficially put, this doctrine would permit compensation to which an innocent tenant may be entitled to be set off against any claim from the lessor, including a claim for rent arrears. Thus it would be open to a tenant to defend an action by the landlord for recovery of the premises for rent default by purporting to set off against the rent arrears any compensation claimed by the tenant in relation to any previous breach by the landlord. This would be the case even if the tenant’s claim for compensation is unliquidated (i.e. no court or tribunal has yet ruled on the matter and fixed a sum) (British Anzani (Flexistowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137; Re Partnership Pacific Securities Ltd [1994] 1 QdR 410).
26. The application of equitable set off to tenancies was the subject of academic writing by Weir “A Tenants Right Of Set off” (1994) 68 ALJ 857 at 863-65) in which the author noted various examples of when such set offs had been permitted on behalf of tenants for breaches by landlords in their duty to repair or for breach of quiet enjoyment (Connaught Restaurants Ltd v Indoor Leisure Ltd [1994] 1 WLR 501). It is clear enough from these authorities that such a set off may be available to tenants. The real issue concerns the circumstances in which the right arises in the tenant to an equitable set off.
27. The doctrine of equitable set off in its application to tenancies has a somewhat unclear history and an ambiguous application. The ambiguity is illustrated by the writings of learned author of Commercial Leases in Australia Duncan 5th ed (Thom) at p127 where the author:
(m) first acknowledges the principle that covenants in leases have independent operation (citing authorities other than those cited in paragraph 21 above); and then:
(n) cites Knockholt P/L v Graff [1975] QdR 88 to the effect that an equitable set off may be open to a tenant based on a landlord’s failure to carry out repairs to resist the landlord’s claim for recovery of the premises for rent arrears.
28. It appears to the presently constituted Tribunal that these two principles do not sit comfortably together. To permit an equitable set off to apply in the circumstances of Knockholt is to deny in a practical sense the independence of the “rent” and the “repair” covenants in the lease. Hence the importance in identifying the circumstances in which the equitable set off applies as an exception to the general rule that the “rent” and “repair” covenants are independent per paragraph 21 above.
29. The vexed issue of equitable set off is dealt with by the learned authors in Meagher, Gummow and Lehane’s “Equity, Doctrines and Remedies 4th ed” (Lexis) at chapter 37. The authors note that for an equitable set off to arise it is not sufficient that the purported set off arise out of the same transaction as the transaction that gives rise to the initial claim i.e. not just any breach by a landlord is sufficient to raise an equitable set off in favour of the tenant against rent arrears. The authors make the point that the cause of action underlying the purported set off must “impeach” or “go to the root” of the initial claim. Thus in the present case this translates to a requirement that the tenant’s claim based on the lessor’s failure to repair must “impeach” or “go to the root” of the lessor’s claim for rent arrears.
30. There is very little authority on the what constitutes an “impeachment” or “going to the root” of the lessor’s claim and the learned authors of “Equity, Doctrines and Remedies 4th ed” do not address the point other than in general terms.
31. The modern history of the application of equitable set off to tenancy claim starts with British Anzani (Flexistow) Ltd v International Marine Management (UK) Ltd [1979] 2 AER 1063. In that case Forbes J noted two restrictions on the application of the doctrine:
(o) that there be no common law remedy available to the defendant that seeks to rely upon the equitable set off;
(p) that the plaintiff’s original breach “goes to the “foundation” or “to the very root” of the claim that the plaintiff seeks to propound against the defendant.
32. In the tenancy context and for present purposes, the reference to the availability of a common law remedy in paragraph 31(a) immediately above, includes the tenant’s right at common law to sue to recovery of monies actually paid by the tenant for repairs where the lessor was obliged to do so and defaulted on that obligation (Batiste v Lenin [2002] NSWCA 316). This is not the same as the case where the tenant simply perseveres with the landlord’s failure to repair and later seeks damages for the inconvenience suffered. In these circumstances there is no relevant common law remedy for a tenant.
33. In British Anzani Forbes J said in relation to the “impeachment” criteria:
While I am satisfied that it is proper in principle to allow that a cross claim could be effective as an equitable set off against a claim for rent, it by no means follows that such a defence is available in all circumstances. The important qualifications is that the equity must impeach the title to the legal demand, or in other words go to the very foundation of the landlords claim…The landlords covenant to repair contained in the lease, if broken, might found, as has been seen earlier, the ancient common law defence to a claim for rent if the tenant had been forced to pay for repairs to maintain the premises in a state fit for the purpose for which they were let. If instead of paying for the repairs the tenant cross claims for damages for breach of the covenant, there is no common law defence, but there must, in my view, be an equitable right to set off the unliquidated damages…..
34. The Full Court of the ACT Supreme Court considered the application of equitable set off in Gibb Australia P/L v Cremor P/L [1992] ACTSC 68 (albeit not in the context of a tenancy). After discussing previous authorities that did concern tenancies, the court noted:
(q) there were no special rules in applying to equitable set offs to tenancy matters:
(r) the equity relied upon by the tenant to raise the set off must “impeach” or “go to the root of” the landlord’s claim to rent:
(s) a fail to give effect to the set off must be capable of working a “manifest injustice” on the tenant.
35. One case that does shed some light on when a landlord’s breach “impeaches” the landlords claim against a tenant for rent is Clambake P/L v Tipperary Projects P/L [No3] [2009] WASC 52. In this case the tenant suffered loss arising from a fire caused by negligence on the landlord’s part. Prior to fire the tenants were in rent arrears. The landlord sued for rent arrears to the date of the fire and the tenants defended, inter alia, by a claim for equitable set off by reason of the losses sustained in the fire. After reviewing the authorities on the issue the court held that the tenant’s losses from the fire did not impeach the claim for existing rent arrears (i.e. there were two separate claims). The court said:
167 One must be very cautious about drawing any general principle or recognising any common thread in these cases which provide examples of where a right of set-off in equity for a claim for damages has been recognised in answer to a claim for rent. This is because the situations in which the question might arise are very different and because the method of equity is to adapt the remedy to the special circumstances rather than by automatically applying any general rule. Nevertheless, it is clear that the manner in which the alleged set-off must directly relate to, or impeach, the plaintiffs' claim requires more than a countervailing cross-claim, even one arising out of the same transaction or relationship which generated the plaintiffs' claim.
168 In British Anzani (Felixstowe) Ltd for example, the rent against which the claim for damages was set off accrued due in respect of premises, part of which the tenant had to evacuate because of the defects which the landlord had failed to repair. Hence the benefit or enjoyment of the tenancy for which rent was being demanded was materially reduced, as said by Forbes J at 156 'render the premises unfit at least in part for the purpose for which they were let': see also Lambert Pty Ltd v Papadatos Pty Ltd (1991) 5 ACSR 468, 470 - 471 (McClelland J) to the same effect. Similarly, in Connaught Restaurants Ltd the set-off for damages for breach of the covenant of quiet enjoyment resulted from damages incurred during the term of the lease, resulting in severe disruption to the restaurant's business and consequent loss over a period during which the rent continued to accrue and was being demanded. The same effect of the set-off claim degrading the benefit of the consideration which was payable for the benefits conferred under the agreement with the plaintiff can be seen in Tomlinson v Cut Price Deli Pty Ltd [1992] FCA 555; (1992) 112 ALR 122. Even in similar cases where the cross-claim being put forward as constituting the equitable set-off deprives or reduces the value of the consideration flowing in return for the payment of rent an equitable set-off may not always result: Courage Ltd v Crehan [1999] 2 EGLR 146, 156. Other claims may be set off, such as for example, a set-off for earlier overpayments of rent due under a lease: Fuller v Happy Shopper Markets Ltd. Weir (op cit) makes reference to this feature of the set-off which must impeach or go to the root of the plaintiff's claim in his article at 68 ALJ 862 and suggests that this is the feature recognised in the Queensland decision of Knockholt Pty Ltd v Graff.
169 There is nothing in the fire claim for damages by Tipperary which resembles any of these examples. Tipperary was not deprived of the use of the leased premises at any time before the fire, nor was its occupation or possession of those premises disrupted, impeded or degraded so as to cause it to lose the benefit of the right of sole possession for which it was paying rent and other moneys under the lease or tenancy. Similarly, there is no suggestion of breach of covenants to repair, or other covenants by Clambake, which necessitated Tipperary to lay out money to remedy or reduce those breaches so as to preserve the benefits of its right of possession, thus giving rise to a set-off of the kind which has been recognised.
170 I appreciate that Tipperary asserts a very large loss because of the destruction of its property due to alleged breaches of duty by Clambake but I do not consider that that claim, large though it is, ever passes the point of being a cross-claim or counterclaim. There does not appear to me to be any basis upon which Tipperary could establish that its enjoyment of the premises, up to the point of their destruction by fire, had been reduced or degraded by the alleged breaches relied upon in the fire claim and, so, I see no basis for a set-off in equity in the present case, regardless of whether the set-off is a right to damages for breach of covenant of the lease, damages for negligence, nuisance, breach of statutory duty or for misleading or deceptive conduct.
36. The need for there to be a “manifest injustice” or something of that kind ( Cremor (supra)) to the tenant to justify the equitable set off was emphasised in CBA v GS Developments P/L [2004] NSWSC 511, Gilsan v Optus [No3] [2005] NSWSC 518. But this only shifts the attention to the issue of what constitutes “a manifest injustice”.
37. In considering what might constitute a “manifest injustice” in the context of a residential tenancy where the lessor is in default in carrying out repairs, it seems to the presently constituted Tribunal that:
(t) if the premises are rendered uninhabitable such that the tenant obtains no value under his or her lease, then it would be manifestly unjust to enforce any requirement for rent. However the Residential Tenancies Act 1997 itself provides that relief (prescribed terms 86-87) and so there is no need for a tenant to rely upon an equitable set off to that effect:
(u) if the premises are habitable but the lessor’s failure to repair causes inconvenience to the tenant, then at best there may be a right to partial equitable set off of rent. However the Residential Tenancies Act 1997 itself also provides that relief in the form a right to rent reduction (section 71)
(v) the tenant has further statutory and contractual rights to enforce the lessor’s duty to repair through the Tribunal, including a right for compensation for inconvenience suffered (prescribed terms 54-60);
(w) the tenant has the right to seek a retrospective rent decrease or compensation for a lessors failure to repair even after the lessor has commenced proceedings based on the rent default;
(x) a failure by a tenant to activate their right to seek redress against the lessor’s failure to carry out repairs may constitute a failure to mitigate losses on the tenants part (section 38 Residential Tenancies Act 1997).
38. For the purposes of equitable set offs, the question then becomes:
(y) where the tenant has a statutory and contractual right to seek redress for the lessor’s failure to repair and
(z) fails to do so
(aa) whether it is always, or even generally, “manifestly unjust” to permit the lessor to enforce his/hers statutory or contractual right to rent arrears and leave the tenant to bring their own separate counter claim if they so choose.
39. In the context of residential tenancies, the legislative scheme is intended to promote ease of access to the Tribunal to resolve disputes. There are government funded free tenant’s advice services. “Self help” remedies such as rent strikes (or lock outs by landlords) usually only impede the resolution of the dispute between the parties.
40. There are another two reasons why a “rent strike” in the guise of an equitable set off is not to be encouraged by the judicial bodies. The first reason is that the tenant may ultimately fail to prove the lessor’s breach in which case the rent strike is a fact of history and is repudiatory. The tenants then stands expose to the ramifications of the rent strike, namely eviction.
41. The second reason was illustrated in Royal Parade Hotel P/L v Calmot P/L [2004] VSC 331 where Osborn J noted the uncertainty element in a tenant being permitted to assess his/her own quantum of damages/compensation consequential on a breach by the landlord and then withholding rent to that extent. The risk is that the tenant may over estimate the value of his/her damages relative to the value assessed by the court or tribunal that finally hears the matter leaving the tenant then exposed to the ramification of the residual rent default.
42. For the above reasons, and putting to one side the circumstances where the lessor has a role to play in frustrating the tenant’s activation of his/her statutory/contractual rights, the presently constituted Tribunal is not persuaded that:
(bb) the legislature intended to encourage rent strikes by way of enforcement of a claimed equitable set off by a tenant
(cc) it is “manifestly unjust” to permit a lessor to maintain a claim for rent arrears where the tenant does not activate their rights to seek redress for a lessor’s failure to repair.
43. On the basis of the tenants admissions the Tribunal finds that the claim for rent and water arrears is substantiated and the tenant is to pay the lessor the sum of $5603.30 for these claims.
44. The lessor claimed for the hole in the wall. On the evidence before the Tribunal it seemed the following was in fact the case:
(a) at the commencement of the tenancy the hole was already in the wall, but was behind the lessor’s alarm system. The hole was there to facilitate the wiring to the alarm system:
(b) during the tenancy the lessor granted permission for the tenant to remove the existing alarm system and replace it with his own system which utilised the existing hole for wiring purposes.
(c) at the end of the tenancy the tenant removed his alarm and did not reinstall the lessors original alarm, thus leaving the hole exposed.
(d) at the end of the tenancy the tenant failed to deliver to the lessor the whole of the parts of the lessor’s original alarm system.
45. The lessor has claimed for the cost of repairing the hole which has already been partially undertaken. It seems from this that the lessor does not intend to reinstall an alarm system utilising the hole for wiring purposes. It is the lessor’s right to decide whether she will, or will not, reinstall the alarm.
46. If the lessor chooses not to reinstall the alarm then she is left with the same hole that existed at the start of the tenancy, which was not caused by the tenant. The tenant is only responsible for that damage to the premises that he “intentionally or negligently” caused (prescribed term 63) and this does not include the hole.
47. The lessor might have claimed for the value of missing parts of her original alarm system but she did not and thus there is no such claim for the Tribunal to consider.
48. For the above reasons the lessor’s claim for the cost of repairing the hole in the wall is dismissed.
(b) The tenant’s claims:
49. The tenant makes a vague assertion that he paid rent in cash for which no receipts were issued. He has not particularised or pressed this claim.
50. The Tribunal regularly hears such claims by tenants. It is an assertion easily made and difficult to refute. In general the Tribunal’s response is that intelligent and educated tenants are aware that when rent is paid in cash they should obtain a receipt. If such a tenant fails to do so or lacks interest in doing so, then they are in significant part the architect of their own problem.
51. The tenant claims that he was deprived of heating for the period of nearly 12 months from 12 August 2005 to 30 August 2006. The tenant says that there were two electric wall heaters which failed on or around 12 August 2005. No substitute heating was then provided by the lessor until the installation of ducted gas heating at the beginning of September 2006.
52. The tenant said that he supplied his own electric heating in this period via heaters obtained on loan from neighbours at no cost to himself. The tenant said that these heaters consumed more electricity then did the original wall heaters and he put into evidence the electricity accounts for the third quarter of 2005 (when the wall heaters were working) and the third quarter of 2006, which showed a difference in consumption of $233.45.
53. The tenant then claimed compensation for the loss of use of the heating in the same period.
54. It is trite law that the lessor was under a duty to repair the electric heaters upon receipt of notice of their failure. In accordance with prescribed term 57 Residential Tenancies Act 1997 the lessor should have completed the repairs within 4 weeks.
55. The lessor acknowledged their delay and attributed the delay to awaiting the installation of the gas heating. This is not a defence open to the lessor. The lessor’s duty to repair is one of strict liability not excused by private subjective motives. The learned authors of “Cheshire and Fifoot’s Law of Contracts” 8th ed Seddon and Ellinghaus at p24 put it thus:
Performance means exact compliance with the contract; anything short of such compliance is breach. A performance which is not exactly that specified in the contract is a breach of the contract even if it is of equivalent or greater value or utility….There are no degrees of breach when the issue is whether breach has occurred”
56. At page 373 the same learned authors put the proposition:
Failure to perform an obligation exactly as and when promised is a breach of the contract. Performance means precise compliance with the contract. An obligation is not discharged by its substantial performance…(Luna Park (NSW) Ltd v Tramways Advertising P/L (1938) 61 CLR 286)
57. The learned authors of “Contract Law in Australia” 5th ed Carter, Peden and Tolhurst at page 640 put the proposition thus:
For a party to be discharged by performance the performance must correspond exactly to the requirements of the contract….
58. The lessors failure to repair is a breach of the residential tenancy agreement. The real issue is the proper measure of compensation to the tenant.
59. The tenant was not without heating, albeit the tenant supplied the heating for himself. The tenant claims for both the additional cost of power to run the electric heaters borrowed from his neighbours and for compensation for the lack of heating. Obviously these two claims overlap and constitute double dipping.
60. As the tenant did in fact provide his own heating in accordance with his duty to mitigate his losses (section 38 Residential Tenancies Act 1997) his compensation is limited to the additional electricity consumed by the substitute heaters (if any) and nominal damages for the inconvenient imposed by the need for him to obtain the substitute heaters.
61. It is almost impossible to assess the additional electricity consumed by the substitute heaters. The difference in the two electricity bills for the third quarters of 2005 and 2006 could be accounted for by a host of factors not related to the heaters themselves.
62. The Tribunal proposes to award the tenant nominal damages for the distress and inconvenience of having to arrange alternative heating in the sum of $250.00.
63. The tenant asserted that he paid the connection fee for the gas connection. The lessor’s acknowledge this but asserted that the tenant was allowed a set off for rent for this sum. Therefore the set off for the gas connection cost has been factored into the claimed rent arrears. The Tribunal accepts that this was the case.
64. The tenant claims compensation for the lessor’s failure to repair the ensuite toilet which was blocked and unusable between 4 January 2008 and 24 December 2008. The tenant said it produced offensive smells. Although not entirely clear it seems from the statement of Mr D’Ambrosio that the lessor was aware of the problem with the ensuite but chose not to repair it unless and until the tenant paid his rent arrears.
65. This action by the lessors raises the same issue addressed above in relation to the tenant’s right to engage in a rent strike by way of self help. The fact that the tenant may be in breach of his duty to pay rent does not permit the lessor to deliberately refuse to honour her contractual obligations to carry out the repairs. The covenants of “rent” and “repair” are independent and the lessors failure to carry out the repairs is a breach that attracts damages/compensation to the tenant.
66. The tenant has assessed his compensation for this breach at $500. The Tribunal considers this to be a conservative estimate when viewed in the light of comparative verdicts and is therefore prepared to grant this claim.
67. The tenant claimed compensation for the lessor’s failure to repair the fence for 9 weeks (whereas prescribed term 57 gives the lessor 4 weeks). The tenant was anxious about his children wandering. The lessor attributed the delay to the fact that she was on Christmas holidays and had the repairs carried out after she returned from holidays.
68. The lessors duty of repair does not depend upon her own person convenience or upon subjective personal consideration. The lessors duty is one of strict liability in the sense that the lessor is required to perform in accordance with the lease and thus has 4 weeks in which to do the repairs. Nevertheless the breach is a minor one and the Tribunal allows the nominal damages of $100.00
Conclusion:
69. After allowing a set off for the sums awarded in favour of the tenant, the amount owing by tenant to the lessor is $4753.30.
70. The Office of Rental Bond is to pay the whole of the bond of $1160.00 to the lessor for which credit is to be given to the tenant leaving the sum of $3593.30 to be paid by the tenant to the lessor on or before 1 November 2009.
……………………………..
Mr A Anforth
Senior Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO: RT 09/393
APPLICANT: MARIA D’AMBROSIO
RESPONDENTS: JAMES TYLER
COUNSEL APPEARING: APPLICANT:
RESPONDENT:
SOLICITORS: APPLICANT:
RESPONDENT:
OTHER:APPLICANT: SELF
RESPONDENTS: N/A
TRIBUNAL MEMBER: MR A ANFORTH
DATE OF HEARING: 25 AUGUST 2009 PLACE: CANBERRA
DATE OF DECISION: 11 SEPTEMBER 2009PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
0
0