Environmental Collective Housing Organisation (Echo) Inc v Mathias
[2019] ACAT 9
•28 September 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
ENVIRONMENTAL COLLECTIVE HOUSING ORGANISATION (ECHO) INC v MATHIAS & ANOR (Residential Tenancies) [2019] ACAT 9
RE 213/2018
Catchwords: RESIDENTIAL TENANCIES – endorsement of additional terms under section 10 Residential Tenancies Act 1997 – house rules – amending house rules – the limit on the use of house rules in residential tenancies
Legislation cited: Residential Tenancies Act 1997 ss 8, 9, 10
Cases cited:Kotzbeck v Khoundavong [2018] ACAT 94
Tribunal:Senior Member A Anforth
Date of Orders: 28 September 2018
Date of Reasons for Decision: 22 January 2019
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RE 213/2018
In the matter of an application
pursuant to Section 9 of the
Residential Tenancies Act 1997 by:
RE:
ENVIRONMENTAL COLLECTIVE HOUSING ORGANISATION (ECHO) INC
Applicant
AND:
LAURA MATHIAS
First Respondent
SENDEN BLACKWOOD
Second Respondent
TRIBUNAL:Senior Member A Anforth
DATE:28 September 2018
ORDER
UPON the joint application of the lessors and the tenant for the endorsement of terms of the attached residential tenancy agreement that are inconsistent with the prescribed terms AND having had regard to the determined criteria AND UPON being satisfied that the inclusion of the said terms were not obtained by fraud or undue influence:
IT IS ORDERED:
1. That the following clause of the attached agreement is endorsed:
ADDITIONAL ENDORSED TERMS – SHARED PROPERTY
Common areas
101The tenant, the lessor and other residents in the property have a right of access, at all times, to the common areas of the property, subject to the Property Rules.
Property Rules
102The tenant agrees:
(a)that the Property Rules form part of this residential tenancy agreement;
(b)that any breach of the Property Rules is a breach of this residential tenancy agreement which may result in termination of the agreement; and
(c)that the tenant, her or his household members, and any guests or visitors must comply with the Property Rules to the extent that the tenant, household member, guest or visitor is reasonably capable of complying with them.
Alteration of Property Rules
103The Property Rules may be altered by the lessor:
(a)with 2 weeks’ notice to each tenant residing in the property, and after consultation with those tenants.
(b)with written notice to each tenant at the written request of all of the tenants residing in the property.
Goods left in common areas
104If the tenant leaves any goods in the common areas of the property after the tenancy has ended, the lessor may remove them and store them at the tenant’s expense. Toiletries, chemicals, perishable and dangerous goods will be disposed of immediately; other goods will be stored by the lessor for a period of 8 weeks. After 8 weeks, the lessor may dispose of the goods by way of donation to charity or destruction, provided reasonable attempts to contact the tenant have been made.
Utilities Contribution
105(1) Despite term 42(c), the lessor may require the tenant to pay a levy (the “Utilities Contribution”) for her or his reasonable share of the cost of shared electricity supply and consumption and the cost of shared water consumption in the property. The levy may be adjusted by the lessor, with 4 weeks written notice, once in each 12 month period.
(2) The Utilities Contribution is payable fortnightly at the same time that rent is paid, with the first payment to be made to the lessor on the commencement of the tenancy.
(3) The lessor must provide the tenant with copies of accounts relating to the consumption of shared electricity and water in the property and an explanation of the basis for calculation of the Utilities Contribution.
…………Signed…………
Senior Member A Anforth
REASONS FOR DECISION
1.The applicant is the lessor of residential premise in the Australian Capital Territory and the respondents are tenants. The parties have entered a residential tenancy agreement into the standard form set out in Schedule 1 of the Residential Tenancies Act 1997 (RTA).
2.The applicant is a social housing provider of accommodation in a multi-premises complex. The present tenancy relates to one of those premises. The premises share common property in the form of parking, paths, gardens, storage area, clothes lines and other things. The individual premises are not separately metered for water and electricity and so share a common account.
3.The residential tenancy agreement between the parties provides the tenants with the exclusive occupancy of their residential unit and a non-exclusive license to use the common areas.
4.The applicant has drawn up a set of Property Rules (more commonly known as ‘house rules’) to regulate the use of the common property and apportion the costs for utilities. These rules also regulate some aspects of the tenants’ use of their own residential unit, including the presence of pets and visitors.
5.The Property Rules provide that the applicant can unilaterally amend them at any time on two weeks’ notice. Although consultation with the tenants is required before any amendments, the consent of the tenants is not required. A breach of the Property Rules will constitute a breach of the residential tenancy agreement which could potentially lead to the eviction of the tenants.
6.The parties applied to the Tribunal to endorse proposed clauses 101-105 to the residential tenancy agreement under section 10 of the RTA. The clauses provide:
Common areas
101The tenant, the lessor and other residents in the property have a right of access, at all times, to the common areas of the property, subject to the Property Rules.
Property Rules
102The tenant agrees:
(a) that the Property Rules form part of this residential tenancy agreement;
(b) that any breach of the Property Rules is a breach of this residential tenancy agreement which may result in termination of the agreement; and
(c) that the tenant, her or his household members, and any guests or visitors must comply with the Property Rules to the extent that the tenant, household member, guest or visitor is reasonably capable of complying with them.
Alteration of Property Rules
103The Property Rules may be altered by the lessor:
(a) with 2 weeks’ notice to each tenant residing in the property, and after consultation with those tenants.
(b) with written notice to each tenant at the written request of all of the tenants residing in the property.
Goods left in common areas
104If the tenant leaves any goods in the common areas of the property after the tenancy has ended, the lessor may remove them and store them at the tenant’s expense. Toiletries, chemicals, perishable and dangerous goods will be disposed of immediately; other goods will be stored by the lessor for a period of 8 weeks. After 8 weeks, the lessor may dispose of the goods by way of donation to charity or destruction, provided reasonable attempts to contact the tenant have been made.
Utilities Contribution
105(1) Despite term 42(c), the lessor may require the tenant to pay a levy (the “Utilities Contribution”) for her or his reasonable share of the cost of shared electricity supply and consumption and the cost of shared water consumption in the property. The levy may be adjusted by the lessor, with 4 weeks written notice, once in each 12 month period.
(2) The Utilities Contribution is payable fortnightly at the same time that rent is paid, with the first payment to be made to the lessor on the commencement of the tenancy.
(3) The lessor must provide the tenant with copies of accounts relating to the consumption of shared electricity and water in the property and an explanation of the basis for calculation of the Utilities Contribution.
Legislative framework
7.Section 8 of the RTA provides that all residential tenancy agreements are to be in the standard form of Schedule 1. It must not contain any additional terms that are inconsistent with the standard terms unless that inconsistent term has been endorsed by the Tribunal under section 10 of the RTA:
8(1)A residential tenancy agreement—
(a) must contain, and is taken to contain, terms to the effect of the standard residential tenancy terms mentioned in schedule 1; and
(b) if the lessor and tenant agree—may contain a fair clause for posted people and
(c) if the agreement is a fixed term agreement and the lessor and tenant agree—may contain a break lase clause; and
(d) may contain any other term—
(i)that is consistent with the standard residential tenancy terms; or
(ii)that is inconsistent with a standard residential tenancy term if the term has been endorsed by the ACAT under section 10.
8.Any term that is inconsistent with the standard terms and has not been endorsed by the Tribunal under section 10 is void. A terms that is inconsistent with a provision of the RTA (other than a standard term) is void per se:
9(1)A term of a residential tenancy agreement is void if —
(a) it is inconsistent with a standard residential tenancy term; and
(b) it has not been endorsed by the ACAT under section 10.
(2)term of a residential tenancy agreement is void if it is inconsistent with this Act ( other than a standard residential tenancy
9.Section 10 RTA provides:
10(1)The parties to a residential tenancy agreement may apply in writing to the ACAT for endorsement of a term of the agreement (the inconsistent term) that is inconsistent with a standard residential tenancy term.
(2)If the parties apply for endorsement of the inconsistent term, the ACAT must do 1 of the following:
(a) endorse the inconsistent term;
(b) substitute the equivalent standard residential tenancy term for the inconsistent term.
(3)In making a decision under subsection (2), the ACAT must consider—
(a) the criteria determined under subsection (6); and
(b) whether the inclusion of the inconsistent term in the residential tenancy agreement was obtained by fraud or undue influence.
(4)The ACAT must not endorse a term that is inconsistent with this Act (other than a standard residential tenancy term).
(5)The ACAT must not endorse a term mentioned in section 15(5) in relation to a tenant unless satisfied that the tenant owes an amount to the housing commissioner.
(6)The Minister may determine criteria for subsection (3) (a).
(7)A determination is a disallowable instrument.
10.The power in section 10 applies where the parties seek the endorsement of a term that is inconsistent with a standard term as opposed to being inconsistent with a provision of the RTA itself. A term that is inconsistent with the RTA itself cannot be endorsed (section 10(4)).
11.There are no criteria determined by the Minister for the exercise of the power in section 10.
Consideration of the issues
12.The Tribunal had concerns about endorsing the additional terms set out in paragraph 6 above, principally because of the unilateral power of the lessor to amend the Property Rules. There was nothing to prevent the lessor from changing the Rules at any time in a manner prejudicial to the existing tenants.
13.For this reason a conference was convened with the parties. Ms Moylan appeared for the applicant and Ms Mathias appeared for the respondents. The Tribunal set out its concerns to the parties and explained to Ms Mathias as clearly as it could the nature of the risk she was taking in agreeing to the proposed endorsement.
14.The Tribunal explained that the key guiding principle is the extent to which the proposed endorsed term intrudes into basic tenant rights and referred to Kotzbeck v Khoundavong [2018] ACAT 94. The greater the intrusion and the more central the tenant’s right in question, the less likely the Tribunal is to endorse the term even with the tenant’s consent.
15.One of the statutory motivations for the enactment of the RTA and its interstate counterparts was the concern about the power imbalance between lessors and tenants. It was a conscious decision of the Legislature to curtail the freedom to contract in this subject matter. Putative tenants can agree to all manner of terms for reasons that are not apparent to the Tribunal, and the Tribunal cannot convene a hearing in each case to examine the tenant’s motives for the agreement. If the Tribunal were to permit progressive encroachment on basis tenant rights via the endorsement process then it might be that these agreed terms become the new norm for tenants competing for a tenancy. This would be an undesirable and unintended consequence of the section 10 power that was only intended to provide the flexibility to deal with the unusual cases.
16.Ms Mathias assured the Tribunal that she understood the nature of the unilateral power the endorsement provided the lessor and agreed with it. On that assurance the Tribunal endorsed the additional terms.
17.The Tribunal informed Ms Moylan that the lessor should not take this endorsement to mean that the same endorsement would necessarily be made in other cases, or that the endorsement applied to the other tenants in the complex. In each case it would be necessary to ensure that the tenant understood and agreed to the terms.
18.The other obvious problem with the utility of this endorsement is that it assumes that the same terms do apply to the other tenants in the complex or that they will agree to the same endorsement. The Property Rules by their nature and content regulate relations between the tenants, which is a multi-directional social transaction. If the lessor purported to apply the Property Rules (whether amended or not) to the tenants in the complex the rules would only be enforceable against the present tenants by force of the present endorsement; absent endorsements of the same terms for the other tenants then the Property Rules would not apply to them. This is an issue for the applicant.
19.The Tribunal raised with the applicant the potential practical issues that this kind of arrangement created and drew attention to the potential use of an ‘occupancy agreement’ in lieu of a residential tenancy agreement. Under occupancy agreements, endorsements are not required and house rules can be, and are regularly, inserted into agreements with the consent of the tenant alone.
20.The applicant has subsequently sought reasons for the decision for the endorsement. These are now set out above.
………………………………..
Senior Member A Anforth
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