Frank Eden v John McKay (Residential Tenancies)
[2010] ACAT 52
•29 June 2010
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
FRANK EDEN V JOHN McKAY (Residential Tenancies) [2010] ACAT 52
RT 10/426
Catchwords: RESIDENTIAL TENANCIES – unpaid rent – rental bond - friendly arrangement for rent free tenancy – change in the nature of occupation - inconvenience suffered by the tenant - deductions in relation to the amount payable to the landlord
List of legislation: ACT Civil and Administrative Tribunal Act 2008
Residential Tenancies Act 1997
Tribunal: Mr W G Stefaniak, Presidential Member
Date of Orders: 29 June 2010
Date of Reasons for Decision: 12 August 2010
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 10/426
BETWEEN:
FRANK EDEN
Applicant
AND:
JOHN McKAY
Respondent
TRIBUNAL: Mr W G Stefaniak, Presidential Member
DATE: 29th June 2010
ORDER
The Tribunal orders in respect of premises at 20 Petre Street SCULLIN
ACT 2614
- That the Office of Rental Bonds is directed to release the bond of $950.00 to the Lessor forthwith.
- Judgement for the Lessor in the sum of $2050.00 less $950.00 bond monies refund making a total of $1,100.00 payable by the Tenant to the Lessor.
- The Tenant allowed 28 days to pay.
………………………………..
Mr W G Stefaniak
Presidential Member
REASONS FOR DECISION
Factual context
I have been asked by Mr Peter Christensen of Hanstein Lawyers in a letter dated the 19th of July 2010 for reasons for decision in the above matter. I have now received the transcript of the proceedings to refresh my memory.
My reasons for decision can also be found between pages 71 and 78 of the transcript.
I shall attempt to summarise my reasons in a more succinct and erudite manner than can be found in the transcript.
Mr Eden and Mr McKay were friends. Mr Eden rented out his house at
No 20 Petre Street, Scullin, ACT to Mr McKay. The first twelve months or so of the tenancy, up until June 2009, was to be free. Mr McKay was to do about a day’s work for Mr Eden at this property and at others owned by Mr Eden (value approximately $360 per day). For this service, he would live rent free in the property in Scullin.The Scullin property was never a particularly fine property. Evidence before the Tribunal indicated that as at the 20th January 2008, it could have been rented out to approximately $345 per week (see Exhibit ‘A’ – letter from Rhonda Nuttall, Property Manager, Capital First National Real Estate).
In my decision, I indicated as at January 2009, a property in Scullin would fetch at least $370 per week in an average condition at that address. I did indicate because the property was not in an average condition that I would allow an automatic $50 deduction per week in relation to the rent. This was to cater for all the issues that the tenant knew about when he went into a more formal leasing arrangement in January 2009.
Issues
There were a number of issues before me in relation to this matter including whether the landlord or the tenant paid the plumber the $3000 provided by the landlord for plumbing expenses. On the evidence before me, I found on the balance of probabilities that it had been the tenant who probably paid the plumber on behalf of the landlord. At any rate, I was satisfied that the plumber had been paid because he certainly did not chase up the bill for the work that he had done.
As to whose responsibility it was to arrange and pay the plumber is a point.
I was satisfied after the plumbing job had been done, and after the landlord started collecting rent, that it was his responsibility to chase up any improvements that did need to be made to the plumbing.There were a number of issues in relation to the property. The tenant described the property as a “shit hole”. It was a colourful but perhaps not completely inaccurate description. I found it was something that he accepted in terms of paying a lesser rent than normal ($320 a week) after having lived there rent free for a year.
10.There was also evidence that his wife had lived there. So his partner lived there and moved out late December 2009 - early January 2010. There is further evidence that he paid up his rent until sometime in November 2009. The landlord claimed a total of $4941, of which the bond of $950 could be subtracted.
11.It was common ground that there was some 14 weeks’ rent that had not been paid. It was also accepted that the tenant should pay $50 towards electricity. This was something that I indicated earlier on I would order. I had to extrapolate what was a reasonable amount of rent to be foregone by the landlord. The tenant did not put in a counterclaim and merely stated that he would have been quite satisfied if the landlord’s claim was rejected in full. The last rent the tenant paid appeared to have been on the 22nd of November although the landlord stated that his rent effectively had not been paid from the 9th of November until the tenant moved out on the 2nd of February.
12.It was ultimately accepted that there was some 13 weeks’ of rent not paid.
13.After the plumbing had been done, there were continuing problems as
I indicated. I indicated in my judgment I was not quite sure when the toilet problem manifested itself in terms of its smell but it was something that could not be ignored. The smell I found had been basically there on and off from June 2008 onwards. Clearly, this was not a problem when the tenant lived there rent free but it became a problem when he was paying rent and some adjustments should be made for that.14.There were other issues, including the lack of hot water in the kitchen. The tenant had to boil a jug to get hot water. There were also issues in relation to the lack of lighting in the kitchen and the fact on four occasions he had to use a fair amount of electricity for about four days on each occasion to dry out rooms that had leaks as a result of heavy rain. Luckily for the landlord and the tenant, although not for Canberra, it was a very dry period of time during the term of this tenancy.
15.Evidence was given that not only the tenant lived there but also his adult son and his wife. Evidence also indicated that his wife actually liked the place and despite the problems, was happy to stay there initially. It was not until late December 2009 early January 2010 that she finally decided that she had enough and left.
My views about the issues
16.Tenant described the property as a “shit hole” but it was the property he was prepared to continue to live in and pay rent. It seems also that he was initially quite happy to do so even though he had properly indicated a number of problems, especially, the ongoing problems of sewerage, to the landlord. Whatever the understanding might have been between the parties, ultimately, nothing was done.
17.I feel that both parties should take some blame for this. I feel that the tenant should have more direct in saying to his friend, “ Look Frank! I do not care it is your problem. You fix it. I am now paying you rent.” The landlord, who indicated that at the times he went to the property he could not smell anything, should have realised that the issue was not going to go away because it had been raised with him on occasions by his tenant.
18.The arrangement with the sewerage plumbing had been made by the tenant in 2008. Once the tenant started paying the rent, I felt the landlord should have some responsibility for this. In relation to the leaks - the property was old and it was a flat roofed property. This obviously may well have been the cause of the leaks. The tenant, however, was somewhat inconvenienced by this, although this appeared to have been something he may well have been aware of. Again, he was living there for a considerable period of time rent free. I felt that there should be some quid pro quo in relation to this, because this was not a normal type of tenancy situation.
19.Relating the lights in the kitchen again, I thought there was inconvenience but not a major one and the lack of hot water was not a particularly big concern although it was an inconvenience. I indicated that had the rent been the market rent or close to the market rent, I would not have any difficulty in saying that there were so many things wrong that the tenant should have been given the amount the landlord is claiming. However, that was not the case.
Amount payable to the landlord
20.I have already deducted $2500, from what I believe the market rent of the property should be. Also, I think it is indicative that the tenant’s wife had had enough by late December – early January but not before then. Also the tenant indicated to the landlord in November of last year that he was a man of his word and he would fix up the landlord for the back rent. I find at that time that the tenant did intend to fix up the landlord for the back rent.
21.I also find that towards the end of December the tenant felt enough was enough. I think that this was round about the time that his wife clearly had enough. At this time he stated to the landlord that he wanted to go back to the old arrangement, and that he would do some work and not pay any more rent. Indeed when I summed up and said on page 76, he actually meant, and I accept, what he said at that stage was words to the effect “Look, let’s go back to the old arrangement where I can do some work for you and we’ll forget about the rent”. I went on to say that he did not say that that was what he meant. Mr McKay answered “Absolutely”. I then went to say (on page 76) “And some months later after you’ve left you indicated can you do some work for him rather than pay this rent. Your wife moves out early-January. You said that it was about 2 1/2 months or so before. I accept what she said. So I don’t agree with you there. I think she’s actually saying what it is.”
22.She had moved out in early January and clearly said that was enough. I went on to say that there were some key dates in relation to this matter and that the tenant was comfortable in continuing to pay the rent in November. I took him at his word then and that by the end of December he felt “Okay. That’s it.
I am out of here”.23.The $50 a week deduction, from what I believe the market rent would be, to $320 per week would take care of a number of things. It would take care of, for example, the lack of hot water in the kitchen which seemed to be a simple thing which took some six months to fix. This was an issue there when the tenant was living there rent free. But after the tenant started paying rent, it is well and truly encapsulated by the $50.
24.Also there were some 24 days where he had paid for electricity needed to dry the damp patches. I indicated in my reasoning that I already deducted some $2500 from what would be a market rent. This brought the rent down to what he was actually paying, i.e. some $320 per week.
25.I felt in the circumstances however that what the tenant had done and said and what his wife said effectively really spoke for itself. The tenant was comfortable repaying the rent owed in November. However, he had had enough by the end of December. His wife had got out in late December – early January.
26.I think a further fair deduction in the order of around six to six and a half weeks of the thirteen weeks the rent had not been paid is reasonable in all the circumstances. This of course is over and above the $2500 off the market rent which I believe was already taken into account in terms of the $320 a week rent paid and agreed to between the tenant and the landlord in January 2009.
I do not think the landlord is entitled to the full amount that he sought.27.I was happy to allow him some $2000, being rental for a little over six weeks, plus $50 for the electricity. I allowed the landlord $2000 as opposed to the $4460 plus interest and filing fees he was seeking. Already the tenant had the benefit of low rent. I think from his own admissions and the evidence given by his wife the crucial date here is late December – early January. This extrapolated to mean a little over six weeks’ unpaid rent that he was honour bound in his own words to pay. I think this is a fair result for the inconvenience the tenant suffered over and above what he could have been expected to put up with as a result of his private arrangement. It is consistent with what the tenant himself and his wife gave evidence in relation to when they felt enough is enough.
28.It is worth pointing out that this agreement was a private arrangement between friends, which is often dangerous. When things go wrong, they tend to go wrong disastrously. The landlord and the tenant got some benefits from the arrangements which lasted a year when the rent was not charged. The tenant did some work the landlord was happy with about one day a week. He costed his work at about $360. This would accord, in my view, with what the market rent per week would be for a place in Scullin in this area as at 2008. In January 2009, they went on for a more formal arrangement.
29.I feel the rent for a place such as this in a reasonable condition would be about $370 a week minimum. The real estate agent said that it would be about $345 as is 12 months earlier. I feel the rent of $320 certainly was indicative of a fair reflection of the fact that the place had problems. I think that the place had a few more problems than was reflected in the $320, hence, my acceptance of the part of the tenant’s argument that a further deduction should be made.
I did not think he is entitled to the full deduction he sought but for the reasons given I feel he should only have to pay some $2000 rent for the 13 week period he did not pay rent.30.A further reason for my decision was the fact that I had the benefit of hearing, from the landlord, the tenant, and the tenant’s wife. I was thus able to get a pretty full picture of what had occurred in the two year period.
Conclusion
31.I reiterate what I said in my oral judgment. One of the biggest problems we see in residential tenancy matters concerns friendly arrangements between mates which go wrong. It would have all been a lot simpler if a formal written arrangement had been made between the parties for the start.
32.In the circumstances, I feel the above result is a fair reflection of what was intended by the parties, what was actually regarded by the parties as fair at the time and accordingly, I made the order I did.
33.I allowed the tenant 28 days to pay. There is $1,100 actually owed, $950 remaining came out of the bond which I ordered to be paid directly to the landlord by the Office of Rental Bonds.
………………………………..
Mr W G Stefaniak
Presidential Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO:
APPLICANT: FRANK EDEN
RESPONDENT: JOHN McKAY
COUNSEL APPEARING: APPLICANT: Self represented
RESPONDENT:
SOLICITORS: APPLICANT: Mr Peter Christensen,
Hanstein Lawyers
RESPONDENT:
OTHER: APPLICANT:
RESPONDENT:
TRIBUNAL MEMBER: Mr W G Stefaniak, Presidential Member
DATE/S OF HEARING: 16 June 2010, and PLACE: CANBERRA
29 June 2010
DATE/S OF DECISION: PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
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