Fabian Barbaro and Belinda Barbaro v Neil Hayter-Burgess and Katie Hayter-Burgess
[2014] NSWCATCD 188
•03 October 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Fabian Barbaro and Belinda Barbaro v Neil Hayter-Burgess and Katie Hayter-Burgess [2014] NSWCATCD 188 Hearing dates: 23 April 2014, 9 July 2014 Decision date: 03 October 2014 Before: J Lennard, General Member Decision: That the application is dismissed.
Catchwords: Unlawful payment prior to residential tenancy agreement Legislation Cited: Residential Tenancies Act 2010 (NSW) Category: Principal judgment Parties: Fabian Barbaro and Belinda Barbaro (applicants)
Neil Hayter-Burgess and Katie Hayter-Burgess (respondents)File Number(s): RT 14/12710 Publication restriction: Unrestricted
REASOSN FOR decision
APPLICATION
The application was made on 5 March 2014 for payment of an amount of $5,000.00 by the landlords to the tenants. The application asserted that $5,000.00 had been paid by the tenants as a premium in contravention of section 23 of the Residential Tenancies Act 2010 [the Act]. Section 23 sets out the payments which may be required by the landlord from the tenant prior to entering into a tenancy agreement. The Tribunal notes that in their oral and written submissions the applicants referred also to s 32 which deals with payments which may be required by the landlord from the tenant for continuing or renewing a tenancy agreement. The facts of this matter concern payments made prior to the entering into of a residential tenancy agreement.
The application also dealt with other matters between the parties. These were considered and dealt with in relation to the landlords' application in RT 14/16861 where orders were made on 23 April 2014 terminating the tenancy, ordering the tenants to pay arrears of rent and water usage in the amount of $9,421.80.
HEARING
The matter was first heard on 23 April 2014. At this hearing the applicants were represented by a legal practitioner. The matter was adjourned and directions were made.
The matter was heard on 9 July 2014. The applicants were self-represented and Mr Barbaro appeared in person. The respondents appeared by phone.
The applicants relied upon the written statement filed with the application, and Mr Barbaro gave sworn evidence to the Tribunal.
The respondents relied upon their written response to the statement files by the applicants. Mr Hayter Burgess gave oral evidence.
Mr Andrew Kon, the real estate agent who managed the premises during the tenancy agreement gave sworn evidence by phone.
SUMMARY OF BACKGROUND FACTS
In 2011 the premises were advertised for sale. The applicants wished to purchase the house and negotiations were commenced. The applicant proposed that they rent the premises for a period of three years, paying rent and a weekly payment towards the deposit under the contract, which would be released to the respondents. The respondents engaged a lawyer who prepared a contract for sale and a licence agreement pursuant to which the applicant would be able to occupy the premises for payment of a fee until the applicants' own home was sold and they were in a position to borrow the purchase price. No formal agreement was signed but the applicant made some payments to the respondents. The applicants experienced financial difficulties and were not able to complete the purchase or enter into occupation pursuant to the licence agreement. The applicants did not occupy the premises.
At the end of 2011 the respondents terminated the agreement and rented the premises to new tenants.
In May of 2013 the applicants became aware that the premises were being advertised for rent, contacted the managing agent and made an application to rent the premises. Mr Barbaro contacted Mrs Hayter-Burgess and stated that he was interested in renting the property for a period of three years and then would consider buying it at the end of the three years.
On 23 April 2013 the Mr Barbaro signed a letter acknowledging that he was indebted to the respondents in the amount of $20,000.00 for breach of the agreement to purchase the premises. A payment of $5,000.00 was made by the Mr Barbaro to the respondents.
On 7 May 2013 the parties signed an agreement that acknowledged that Mr Barbaro was indebted to the respondents to the sum of $15,000.00 in relation to a 'prior agreement to purchase' the respondents' premises. This agreement was drawn up by the solicitor for the respondents. The agreement provided at clause 2: in consideration of the Creditor withholding legal and/or court action, the Debtor agrees to pay the sum of $15 000.00 ("the debt") to the creditor.
The parties entered into a residential tenancy agreement, this agreement is dated 13 May 2013.
It is common ground between the parties that Mr Barbaro made a payment of $5,000.00 to the respondents at some time between 23 April 2013 and 7 May 2013. It is also common ground between the parties that no further payment was made pursuant to the deed of acknowledgement of debt signed on 7 May 2013.
JURISDICTION
The applicant asserts that he was made to sign the acknowledgement of debt and to pay the $5,000.00 as a precondition to the respondent landlord agreeing to enter into a residential tenancy agreement.
Section 23 of the Act limits the amounts payable by a tenant before entering into a residential tenancy agreement. Section 23 provides that before entering into a residential tenancy agreement a person must not require or receive from a tenant a payment other than a holding fee, rent, a rental bond and a fee for registration of the tenancy agreement pursuant to the Real Property Act 1900. Section 23 also provides that a person must not require or receive from a tenant the costs of the preparation of a written residential tenancy agreement.
Section 187 of the Act provides that the Tribunal may on application by a landlord or tenant make an order for the payment of money [s 187 (1) (c)]. The Tribunal has jurisdiction to make an order for the payment by the landlord to the tenant of any payment required or received in breach of section 23.
ISSUES
The issue to be determined by the Tribunal is whether the payment made by the applicant pursuant to the acknowledgement of debt is a payment prohibited by section 23.
The Tribunal notes that section 140 of the Act provide that a social housing tenant who has incurred a debt to the landlord in connection with a prior social housing tenancy agreement must enter into arrangements with the landlord for the payment of that debt.
The requirement for the payment of 'key money' or a premium by the tenant to the landlord is unlawful in NSW. A landlord may not require from the tenant a payment of any kind to secure or ensure the entering into of the tenancy agreement unless that payment is a holding fee, rent, a rental bond or a fee for registration of the tenancy agreement pursuant to the Real Property Act 1900.
The requirement that a party fulfil a pre-existing legal obligation unconnected to the tenancy agreement cannot of itself be covered by the provisions of section 23. The enforcement of an existing legal right is not unlawful.
The applicant is required to establish on the balance of probabilities that there is a direct connection between the payment of the $5,000.00 and the entering into of the tenancy agreement.
EVIDENCE
The Tribunal had in evidence before it a copy of the acknowledgement of debt signed by each party in May 2013. Clause 1 of that acknowledgement of debt states that the debtor agrees that he owes the creditor the sum of $15,000.00 in relation to a prior agreement to purchase the creditors' property situated at ******** Jerrabomberra. Clause 2 that acknowledgement of debt states that in consideration of the creditor withholding legal and/or court action, the debtor agrees to pay the sum of $15,000.00 to the creditor. The Tribunal notes that there is no reference made in the acknowledgement of debt to the entering into or giving effect of a residential tenancy agreement.
The Tribunal also had in evidence before it a copy of a letter written by the applicant and dated the 20 April 2013. This letter also acknowledges the debt and states I acknowledge that this agreement is separate to the lease agreement and has no bearing upon the current rent for Myrtle Close.
Mr Andrew Kon, a real estate agent who managed the property at the commencement of the residential tenancy agreement between the parties gave sworn evidence to the Tribunal. The applicant had asserted that Mr Kon had told him that if he did not sign the acknowledgement of debt then no residential tenancy agreement would be entered into. This was strenuously denied by Mr Kon and in the face of the Tribunal the applicant agreed that Mr Kon had not been involved in the execution of the debt agreement. Mr Kon gave evidence that he had received on 9 May 2013 an amount of money that represented four weeks rental bond and four weeks rent commencing the 13 May 2013. Mr Kon acknowledged that there had been other potential tenants, including the Canadian Embassy. Mr Kon gave evidence that he had been instructed by the respondents to proceed with the residential tenancy agreement with the applicants and he had done so.
Mr Hayter-Burgess gave sworn evidence by telephone that Mr Kon had been involved only in the negotiation of the residential tenancy agreement and had not been involved in the acknowledgement of debt document. The respondents gave further evidence that the acknowledgement of debt document had been drawn by a lawyer. Mr Hayter Burgess gave evidence that the debt was regarded as a separate issue to the residential tenancy agreement, although he acknowledged that he would not have been prepared to enter into a residential tenancy agreement with the applicant had the debt repayments not been settled.
CONCLUSION
On the evidence before it, the Tribunal is not satisfied that there was a direct connection between the entering into of the residential tenancy agreement and the payment of $5,000.00. The payment of the $5,000.00 was in compliance with the agreement and acknowledgement of debt and was in relation to a pre-existing debt owed by the tenant to the landlord. The consideration provided by the landlord for the execution of the acknowledgement of debt by the tenant was forbearance to sue.
There was no evidence before the Tribunal upon which the Tribunal could conclude that the landlord had imposed as a condition of entering into the residential tenancy agreement the requirement to pay the $5,000.00.
The Tribunal also considers the purpose of section 23 of the Act. The mischief which is meant to be cured by the prohibition upon the landlord in relation to payments required or received prior to entering into a residential tenancy agreement is the demand for 'key money' or for the payment of a premium by the tenant in order to secure the agreement. The application of section 23 of the Act to situations such as this would be an unacceptable extension of the provision.
ORDERS
The application is dismissed.
Jann Lennard
General Member
Civil and Administrative Tribunal of New South Wales
3 October 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 10 December 2014
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