Gregory Mazzone v Neville Tomkins (Residential Tenancies)
[2009] ACAT 13
•1 June 2009
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
Gregory Mazzone v Neville Tomkins [2009] (Residential Tenancies) [2009] ACAT 13
RT 166 of 2009
Catchwords: RESIDENTIAL TENANCIES – Rent increases – Comparative market rents – Increased costs – Socioeconomic considerations
Residential Tenancies Act 1997 (ACT)
ACT Civil and Administrative Tribunal Act 2008 (ACT)
Commissioner for Housing v Key [2004] ACTCA 17
Commissioner for Housing v Key [2003] ACTSC 44
Chessa & Chessa v Commissioner for Social Housing in the Act [2008] ACTRTT (8)
Tribunal:Jennifer David, Senior Member
Date: 1 June 2009
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 166 of 2009
GREGORY MAZZONE
(Applicant/Tenant)
AND
NEVILLE TOMKINS
(Respondent/Lessor)
DECISION
Tribunal : Jennifer David, Senior Member
Date of Order : 23 April 2009
Decision :
That the increase of $35.00 per week is allowed under s68, to operate from the 1st of April, 2009.
…………………………….
Jennifer DavidSenior Member
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 166 of 2009
GREGORY MAZZONE
(Applicant/Tenant)
AND
NEVILLE TOMKINS
(Respondent/Lessor)
REASONS FOR DECISION
BACKGROUND
The Applicant sought a review of a proposed rental rate increase under section 68 of the Residential Tenancies Act 1997 (‘the Act’) in respect of premises at Unit 13, “Chamonix”, Kingston, ACT 2604.
The Lessor gave written notice of the proposed increase of from $345 to $380 per week on 31 January 2009, the increase to take effect from 1 April 2009. The Lessor noted that it was a full 12 months since the date of the last rental increase and said he had had regard to the CPI for privately owned rental dwellings over the last 12 months, 8.4%, to calculate the increase. There was no dispute that the period of notice given was greater than the prescribed period. At the hearing the Lessor stated he had calculated the increase on the basis of the 20% set out in section 68(2)(a) and (b) of the Act, which resulted in an increase of $34.90 that he rounded up to $35 per week.
In his Application, the Applicant sought a “rent increase in line with a socially acceptable/sustainable amount” and suggested the increase should be the general CPI increase for the same period, 3.7%, which would result in an increase of $15 per week. The Tenant, who has occupied the premises for approximately 6 years, said that past rental increases for this tenancy had not been excessive.
The Tenant sought written reasons on 30 April 2009. The Tribunal apologises for the length of time taken to provide these reasons. Unfortunately, due to an oversight, the transcript of the proceedings was only received by the Tribunal on 21 May 2009.
FINDINGS AND REASONS
Applicable Law –
Clause 35 of the Standard residential tenancy terms, Schedule 1 of the Act (the standard terms’), provides that the rent may not be increased at intervals of less than 12 months from the date of the last increase. There was no dispute that it was more that 12 months since the last increase during this tenancy.
Clause 38 provides that the lessor must give the tenant 8 weeks written notice of intention to increase the rent and include in the notice the amount of the increase and the date when it is proposed to take effect. There was also no dispute that the notice given by the Lessor fulfilled these requirements.
The Lessor referred to the role of the 20% increase on the Housing CPI in section 68(2) of the Act on several occasions. Under section 68(5) the “index number” referred to in section 68(2) means the rent component of the housing group of the Consumer Price Index (Privately Owner dwelling rent expenditure class) for Canberra published from time to time by the Australian statistician. At the date of the Lessor’s notice to the tenant of the increase, 31 January 2009, and on the date the increase was to take effect, 1 April 2009, the index number was 8.4% which equates with a rental increase of $34.90 on an original rental of $345 per week.
The section 68 of the Act provides:
68 Guideline for orders
(1) The tribunal must allow a rental rate increase that is in accordance with the standard residential tenancy terms unless the increase is excessive.
(2) For subsection (1)—
(a) unless the tenant satisfies the tribunal otherwise, a rental rate increase is not excessive if it is less than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later); and
(b) unless the lessor satisfies the tribunal otherwise, a rental rate increase is excessive if it is more than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later).
(5) In subsection (2):
index number means the rents component of the housing group of the Consumer Price Index for Canberra published from time to time by the Australian statistician.
The Tribunal notes that the 20% figure in Section 68(2) is only relevant to determining where the onus of proof lies to establish the excessiveness or non-excessiveness of the proposed rental rate increase (Commissioner for Housing v Key [2004] ACTCA 17). A rental rate increase below the figure is not automatically to be considered not excessive, nor is a rental rate increase above the figure automatically to be considered excessive. As Crispin J said (Commissioner for Housing v Key [2003] ACTSC 44 at para 8) the Tribunal’s task under section 68 is to:
“Determine which party bore the onus of proof, having regard to the rebuttable presumptions provided by subs (2), then to determine whether that onus had been discharged, having regard to the matters enumerated in subs (3) and then, if appropriate, to determine how much of the proposed increase should be allowed.”
10. In the present case because the proposed rent increase did exceed (by 10c per week) the 20% threshold, the Lessor bears the evidential onus. At the hearing, whilst the Lessor suggested he forgo the 10c per week, the matter continued with the proposed increase being $35.00 per week.
11. When considering whether it is satisfied whether a rental rate increase is excessive or not, the Tribunal must consider the matters listed in section 68(3)(a)-(i) of the Act. Section 68(3) provides:
“(3) If a tenant or lessor proposes that a rental rate increase is or is not excessive, the tribunal, in considering whether it is satisfied about the proposal, must consider
(a) the rental rate before the proposed increase;
(b) if the lessor previously increased the rental rate while the relevant tenant was tenant—
(i) the amount of the last increase before the proposed increase; and
(ii) the period since that increase;
(c) outgoings or costs of the lessor in relation to the premises;
(d) services provided by the lessor to the tenant;
(e) the value of fixtures and goods supplied by the lessor as part of the tenancy;
(f) the state of repair of the premises;
(g) rental rates for comparable premises;
(h) the value of any work performed or improvements carried out by the tenant with the lessor’s consent;
(i) any other matter the tribunal considers relevant.”
12. The Lessor particularly raised considerations (a), (c) and (g) in his submissions that the proposed rental rate increase was not excessive. He strongly submitted that the rental rate for the unit prior to the proposed increase ($345 per week) was substantially below the market rate for comparable properties in the same complex of units. The Lessor made written submissions dated 11 March 2009 and stated at the hearing that he had phoned several real estate agents who manage units in the same block of units at 15 Howitt Street, Kingston, told them he was the owner of Unit 13 and asked them for an indication of what the market level would be for a 12 month lease of a similar unit in the block. The Lessor listed the replies he received as:
Maloney’s Real Estate $430 per week
Elder’s Real Estate $390-$400 per week
Peter Blackshaw Real Estate $$400 per week average (the lowest
being $390 per week)
Independent Property Group $390 - $420 per week
13. The Lessor also perused the allhomes.com website and stated that the website only had 2 units in the same block advertised on 11 March 2009: Unit 40 for $400 per week and Unit 33 for $430 per week. He drew the conclusion from the above rental rates that the increase in rent for the tenant’s unit to $380 would still mean that the rental rate for the unit was from $10 to $50 per week below what real estate agents were asking for comparable units and what is the current market rental for identical properties in the same complex.
14. The Lessor submitted that his outgoings in relation to Unit 13 had increased over the previous 12 months: that the Body Corporate fees had increased by 15%, the Water and Sewerage rates by 7%, the general rates by 5.7% and the land tax had also increased. The Lessor acknowledged that he had had no outgoings for repairs and/or maintenance to the Unit during the previous 12 months.
15. Finally, the Lessor submitted that previous increases in the rental rate for the Unit had been less than the index number in each year and he had not increased the rental rate in one year. In 2007 he increased the rental rate by 6.14%, whereas the index number was 7%, so the increase was not even as high as the index number.
16. The Tenant strongly argued that the increase was of 10.5%, and, based on the index number of 8.4%, was excessive in the current climate of “wage and price restraint in these tough economic times and given the shortage of housing in Canberra is [what is]driving the 8.4% adjustment”. The Tenant said that the general CPI increase for the ACT at June 2008 was 7.37% which equates with an increase of $25.34 for a weekly rental of $345 and submitted that that would be a fairer increase to both parties.
17. The Tenant also stated that the Bureau of Statistics had listed a new CPI Index for the ACT on its website the night before the hearing: the new figure would result in an index figure of about 9.29%. The Tribunal refused to use this figure as the ACAT Registry was unable to obtain that figure from the Bureau during the hearing. More relevantly, the index number to apply is the number which was in force at the time of the Notice of Increase and at the time the increase would take effect, which is 8.4%. It would be inappropriate for the Tribunal retrospectively to apply a later issued index number.
18. The Tenant submitted that the cost increase to the Lessor would appear to be about $210 per annum, whereas the $35 per week increase would result in a rent increase of $1,820 for the year for the tenant. The Tenant termed this a profit increase and submitted that this was the result of a 20 year low in residential rental vacancies in the ACT. The Tenant submitted that comparing the increase just with rents being sought for properties now on the rental market was not fair. The comparison should be with rents being paid for Units let previously as well as rents being sought for properties on the market. These figures were not available at the hearing.
19. Finally, the Tenant submitted that “purely to give weight to what might allow for a greater increase by the landlord because of profiteering, I don’t mean that offensively and I apologise, in the current market would be unjust and unfair” and a violation of the Human Rights Act which “considers that there should be equality before the law and that people should be treated justly and fairly and equally before the law.”
20. The Tribunal sought information about any maintenance being outstanding for the premises, or any repairs or expenses the Tenant had carried out on the premises. There was no evidence of repairs and/or maintenance in the previous 12 months. The Lessor stated he had carried out any maintenance and repairs notified by the tenant in previous years. The tenant did not dispute this.
21. Whilst the Tribunal is sympathetic to the Tenant’s ‘social–engineering’ submissions, section 68(3) provides the factors the Tribunal must consider in determining whether a proposed rental rate is excessive. Section 68(3)(i) does provide that the Tribunal must also consider “any other matter the tribunal considers relevant”, however, the role of a Tribunal is not to balance the economic forces in the ACT, but to apply the terms of the Residential Tenancies Act 1997 and the ACT Civil and Administrative Tribunal Act 2008.
22. The Tribunal notes that in Commissioner of Housing v Key [2003] ACTSC 44 at para 31, Crispin J stated that the Tribunal is not obliged to explain what weight it gives to a particular factor set out in section 68(3) nor how each factor is taken into account in determining the extent to which a proposed rental rate increase should be allowed or disallowed.
23. After carefully taking into consideration the oral and documentary submissions and evidence presented and all of the factors summarised above for both the Lessor and the Tenant under section 68 (3) of the Act, the Tribunal finds that the proposed rental rate increase of $35 per week is not excessive. This is on the basis of what is just and fair to both the parties in the circumstances.
DETERMINATION
24. For all the above reasons, the Tribunal determines that a rental rate increase of $35.00 per week is to take effect from 1 April 2009, the date when the proposed increase would, apart from section 66, have taken effect.
Jennifer David
Senior Member
1 June 2009
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO: RT09/166
APPLICANT/S: GREGORY MAZONE
RESPONDENT/S: NEVILLE TOMKINS
TRIBUNAL MEMBER/S: MS J DAVID
DATE/S OF HEARING: 23 April 2009 PLACE: CANBERRA
DATE/S OF DECISION: 23 April 2009 PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
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