Hamilton & Anor v Zhang; Zhang v Hamilton & Anor (Appeal)

[2024] ACAT 3

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

HAMILTON & ANOR v ZHANG; ZHANG v HAMILTON & ANOR (Appeal) [2024] ACAT 3

AA 35/2021 (RT 852/2020); AA 3/2022 (RT 419/2021)

Catchwords:             APPEAL – RESIDENTIAL TENANCIES – damage to floating floor of premises – whether attributable to intentional or negligent action by tenants, or by failure to maintain the premises – rental arrears – whether increase in rent properly notified and in accordance with regulation

APPEAL – RESIDENTIAL TENANCIES – disposition of bond – arrears of rent – water bill – attempt by lessor to charge tenants for supply of water and sewerage services

List of Legislation: ACT Civil and Administrative Tribunal Act 2008 ss 7, 47A, 56, 79, 82

Residential Tenancies Act 1997 ss 8, 9, 10, 29, 30, 31, 64A, 64B, 64C, 65, 68, 83; standard terms 3, 35, 40, 44, 63, 64, 96

Subordinate 

Legislation cited:      ACT Civil and Administrative Tribunal Procedures Rules 2020 r 91

Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 s 3
Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 2) ss 4, 11
Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 3) s 6
Residential Tenancies Regulation 1998 s 5A

List of Cases:            Amer v Eriksson [2019] ACAT 108

Benson & Anor v Sawezuk & Anor [2016] ACAT 154
Hamers v South Canberra Holdings Pty Ltd ACN 606 747 602 Trading as Southside Village [2021] ACAT 71
Mansour v Dangar [2017] ACAT 49
Tankard & Anor v Ogbonna & Anor [2017] ACAT 72
Zhang v Hamilton [2021] (unreported, 3 June 2021)
Zhang v Hamilton [2022] (unreported, 15 March 2022)

Tribunal:Presidential Member H Robinson

Senior Member M Hyman

Date of Orders:  18 January 2024

Date of Reasons for Decision:   18 January 2024

AUSTRALIAN CAPITAL TERRITORY          )

CIVIL & ADMINISTRATIVE TRIBUNAL     )          AA 35/2021

BETWEEN:

PAUL JAMES HAMILTON

First Appellant

AMANDA HAMILTON

Second Appellant

AND:

MICHAEL ZHANG

Respondent

AUSTRALIAN CAPITAL TERRITORY          )

CIVIL & ADMINISTRATIVE TRIBUNAL     )          AA 3/2022

BETWEEN:

MICHAEL ZHANG

Appellant

AND:

AMANDA HAMILTON

First Respondent

PAUL JAMES HAMILTON

Second Respondent

TRIBUNAL:Presidential Member H Robinson

Senior Member M Hyman

DATE:18 January 2024

ORDER

In matter AA 35/2021, the Tribunal orders that:

1. Pursuant to Rule 91(c) of the ACT Civil and Administrative Tribunal Procedures Rules 2020, the parties be granted leave to rely on the additional evidence brought forward in the hearing of the appeal.

2. The appeal be allowed in part.

3. The order for compensation for damage to the timber floors of the subject premises be set aside and the application for compensation dismissed.

4. The order for payment of rental arrears be amended, so that by 28 days from the date of this order, the tenants must pay $105.93 to the lessor by way of rental arrears for the period from 8 June 2020 to 7 January 2021.

In matter AA 3/2022, the Tribunal orders that:

1. The order of 15 March 2022 be amended so that the Office of Rental Bonds be directed to pay $846.15 of the bond to the lessor and the remainder to the tenants.

………………………………..

Presidential Member H Robinson
For and on behalf of the Appeal Tribunal

REASONS FOR DECISION

1. These decisions are the outcome of two separate appeals in closely related matters, both relating to residential tenancies matters at the same premises. In matter AA 35/2021 (the earlier appeal), the appeal is by Amanda and Paul Hamilton (the tenants of the relevant premises, identified in this decision by name or otherwise as the tenants) against a decision of the Tribunal dated 3 June 2021. That decision resulted from an application by their lessor, Michael Zhang (identified by name or as the lessor) for compensation for damage to the premises and rental arrears. The decision dismissed the response and counterclaim that Mr and Mrs Hamilton had brought, and granted Mr Zhang’s application for compensation for damage to the floor of the premises, arrears of rent, and the tribunal filing fee. In matter AA 3/2022 (the later appeal), Mr Zhang appealed against a separate decision dated 11 March 2022. In that decision, the Tribunal (differently constituted from that in the 3 June 2021 decision) determined the disposition of the bond for the rented premises.

2. The ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) provides for matters to be heard together where the matters arise from the same or similar facts.[1] As the issues of fact in the two appeals are very similar, the two were heard together, the appeal hearings being on 28 February, 26 April and 2 June 2023. Mr Hamilton and Mr Zhang appeared as witnesses and were cross-examined. Ms Bridie Harders of Legal Aid represented Mr and Mrs Hamilton. Mr Zhang was self-represented. Mr Zhang has a reasonable command of English but has a hearing impediment. A Mandarin interpreter appeared remotely or in person at all the hearings.

   [1] ACT Administrative Tribunal Act 2008 s 56(a)

3. A volume of documentary evidence was filed by the parties; additional material was obtained under a subpoena issued by the tenants, and further material became available during the hearing. The great bulk of this material was filed in the context of the earlier appeal, and because both appeals dealt with the question of rental arrears, all the material relevant to that question and issues associated with it was common to both appeals. In the event, there was no evidence before the Tribunal that related only to the later appeal. The documentary material, covering both matters, is tabulated below.

Document	Date	Identified as
Original application by Paul and Amanda Hamilton to the tribunal, treated as response and counterclaim, with attachments 1-14	3 January 2021 (lodged on 4 January 2021)	Tenants’ original application
Witness statement of Paul Hamilton (including video of visit by Re-Seal)	2 August 2022	Exhibit A1
First statement by Ella Spaleta Green with attachment	1 August 2022	Exhibit A2
Material produced by Insurance Australia Limited under subpoena	Various	Exhibit A3
Decision of the Australian Financial Complaints Authority	20 July 2022	Exhibit A4
Email from Bridie Harders to tribunal making nine allegations of fraud against Michael Zhang	22 February 2023	Exhibit A5
Compilation of thumbnail photographs of house, marked up by Paul Hamilton	8 June 2018	Exhibit A6
Photographs of house, enlarged from thumbnails	8 June 2018	Exhibit A7
Second statement by Ella Spaleta Green, with meta data relating to Exhibit R5	22 May 2023	Exhibit A8
Original application by Michael Zhang to the tribunal, with attachments A-D	21 December 2020	Lessor’s original application
Letter to tribunal by Michael Zhang with attachments	Received by tribunal on 11 March 2021	Lessor’s letter of 11 March 2021
Letter to tribunal by Michael Zhang, with attachments	5 April 2021	Lessor’s letter of 5 April 2021
Attachments to letter of submission to ACAT dated 15 November 2022; including Attachments A-I	Various	Exhibit R1
Report by Oxy Plumbing Services	No date	Exhibit R2
Emailed inspection report from Oxy Plumbing Services	2 May 2021	Exhibit R3
Note from Canberra Health Services Neurology Clinic	2 June 2021	Exhibit R4
Letter of Michael Zhang disputing NRMA decision to decline claim	26 September 2021 (date disputed)	Exhibit R5
Electronic version of R5, with meta data	Exhibit R6

1. At the close of the hearing on 2 June 2023, the parties were invited to make written submissions. Submissions were received from Mr and Mrs Hamilton on 11 August 2023 and from Mr Zhang on 4 September 2023.

2. Transcripts of the hearings were provided to the parties to assist in the preparation of submissions. Mr Zhang made a separate submission on 17 July 2023, stating that in reading the transcript he had found that the interpretation had been at times either inaccurate or incomplete. He provided an amended version of several passages where he said that his case would be weakened if the interpreter’s version of his evidence were accepted.

3. The interpreters used at the Tribunal’s hearings are professionally accredited and sworn to interpret the proceedings to the best of their ability. The ACAT Act requires that the Tribunal’s procedures are “as simple, quick, inexpensive and informal as is consistent with achieving justice” and “are implemented … so that the cost to the parties and the tribunal is proportionate to the importance and complexity of the subject matter of the proceeding”.[2] The present proceedings are modest in scope, and it is doubtful that it would be proportionate to require a second interpreter to check the recordings and transcripts for accuracy. Nevertheless, it is plain from the transcript that there were some problems with the interpretation at the hearing of 2 June 2023. Accordingly, where Mr Zhang has suggested that there may be an error, a check has been made to see whether Mr Zhang’s version, if accepted, would have made a material difference, and, if so, to take his explanation into account.

   [2] ACT Civil and Administrative Tribunal Act 2008 s 7

4. These matters have taken a long and somewhat tortuous path from the initial applications to the final hearing. Mr Zhang made his initial application to the tribunal on 21 December 2020, seeking a total of $1,500 for repairs to the wooden floor of the rented premises, remedying problems in the garden, and arrears of rent (this was the start of matter RT 852/2020). On 4 January 2021, Mr and Mrs Hamilton lodged an application against Mr Zhang, seeking a 40% reduction in rent from the start of the tenancy and listing a number of issues on which they were in disagreement, including an increase in rent, maintenance issues, being charged for water and sewerage supply fees, and difficulties over inspections. The matter came before the tribunal several times with orders made for the matter to be prepared for hearing. The application by Mr and Mrs Hamilton was treated as a response and counterclaim to Mr Zhang’s original application. Orders on 28 January 2021 directed the tenants to pay rent at the increased rate of $720 per week until the hearing and ordered an inspection of the premises. Orders on 12 March 2021 required Mr Zhang to obtain a quote from a tradesperson for repairing the floor and an assessment of the likely cause of the damage and directed that he provide documentation and information regarding an insurance claim dating from June 2018. By the time the matter came before the tribunal on 3 June 2021, Mr Zhang’s claim was for $6,380 for repair of the floor, based on the quote he had now obtained, $370.96 in unpaid rent to 7 January 2021 and the tribunal filing fee of $75.

5. On 11 May 2021, ACT Rental Bonds referred to the Tribunal a dispute over disposition of the bond for the premises (this was the start of matter RT 419/2021). When the matter came to be heard, the status of the appeal application against the decision in matter RT 852/2020 was unresolved, and the Tribunal made a contingent decision that if the appeal went ahead, the bond dispute could then be relisted. The matter was relisted and then decided on 15 March 2022.

6. Mr and Mrs Hamilton lodged an application for appeal against the decision in RT 852/2020 on 1 July 2021. Mr Zhang lodged an appeal against the decision in RT 419/2021 on 21 March 2022. There were considerable difficulties in getting the matters before a hearing, and some additional time was lost.

The first appeal at first instance

1. When the hearing that was the subject of the earlier appeal took place on 3 June 2021, Mr and Mrs Hamilton failed to appear. The Senior Member hearing the matter contacted or attempted to contact each of them by telephone. Mr Hamilton had advised the tribunal on 27 May 2021 that he would be unable to appear for medical reasons, and had sought an adjournment, which was denied. Mr Hamilton contacted the tribunal again on 2 June 2001 and explained that he was undergoing medical treatment that day, that he was therefore unable to attend, and that Mr Zhang’s behaviour towards Mrs Hamilton had made her fearful of attending the hearing. As a result, neither would participate in the hearing that day.

2. Section 47A of the ACAT Act provides a list of ways in which the tribunal may proceed in the absence of a party. Section 47A(2)(d) gives as one of the options that the tribunal may “continue with the hearing in the absence of the party either generally or in relation to any relief claimed in the application”. Mr and Mrs Hamilton had lodged an application that the Tribunal was treating as a response and counterclaim to Mr Zhang’s application; the Tribunal concluded, on the basis of the available material and the telephone exchange with Mr Hamilton, that Mr and Mrs Hamilton were absent by their own decision, and accordingly dismissed the response and counterclaim for want of prosecution. The Residential Tenancies Act 1997 (RTA) allows the ACAT to order the payment of compensation for losses caused by the breach of a tenancy agreement.[3] Mr Zhang’s evidence being uncontested, the Tribunal accepted his claim and made orders that the tenants were to pay compensation of $6,825.96 in total, made up of $6,380 for damage to the floorboards and architraves, $370.96 in unpaid rent and the filing fee of $75, with a deadline for payment of 2 July 2021.

   [3] Residential Tenancies Act 1997 s 83(1)(d)

3. The ACAT Act makes provision for orders of the tribunal to be amended or set aside if the orders have been made in the absence of a party.[4] It was therefore open to Mr and Mrs Hamilton to apply to the tribunal to set aside the orders made on 3 June 2021 in their absence. They did not do this.

   [4] ACT Administrative Tribunal Act 2008 s 56(c)(i)

4. The ACAT Act also provides that where the tribunal has made a decision on an application, a party to that application may lodge an appeal on a question of fact or law.[5] It was therefore also open to Mr and Mrs Hamilton to lodge an appeal application in respect of the tribunal decision on 3 June 2021. They lodged such an appeal application on 1 July 2021. 

   [5] ACT Administrative Tribunal Act 2008 s 79; there are some exclusions not presently relevant

5. On 4 May 2022, in preparation for this appeal, Presidential Member Daniel made directions ordering (among other things) that any fresh evidence submitted by Mr and Mrs Hamilton be accompanied by submissions in support of the application for further evidence to be admitted, and that Mr Zhang file a response to those submissions. Those orders also directed that the appeal hearing should proceed as a review of the original decision unless the Appeal Tribunal were to decide otherwise.

6. The above sequence of events clearly raises the question whether the hearing should be a review of the original decision or rather a hearing de novo; and, if a review, whether additional evidence should be admitted.

7. The ACAT Act sets out in section 82 the options available when considering the form an appeal should take:

   (1) An appeal tribunal may, as the tribunal considers appropriate, deal with an appeal—

   (a) as a new application; or

   (b) as a review of all or part of the original decision on the application by the tribunal.

8. Rule 91(c) of the ACT Civil and Administrative Tribunal Procedures Rules 2020 allows an appeal tribunal to grant leave for the admission of new evidence.

9. The ACAT Act does not offer any specific guidance on the choice between a new hearing and a rehearing. In Mansour v Dangar[6] (Mansour), the Tribunal explored the principles underlying that choice as follows:

   20. … Section 82 of the ACAT Act provides that the appeal tribunal may either deal with the appeal as a new application (a hearing de novo/new hearing) or as a rehearing (review). In deciding the correct approach to take, the appeal tribunal is required by the ACAT Act to adopt a procedure which is as simple, quick, inexpensive and informal as is consistent with achieving justice, and the requirements of procedural fairness. Other than containing these overarching requirements, the legislation does not dictate how the choice between a new hearing or a rehearing is to be made. It is nonetheless an important procedural distinction, which may have substantive consequences.

   21.     For a new hearing, established principles dictate that the hearing starts afresh. Evidence may be given again, and additional evidence may be given. The appeal tribunal’s view on any question of fact or law is determinative of the issue. Any discretion to be exercised by the original tribunal is exercised anew by the appeal tribunal.

   22.     By contrast, for a rehearing, the appeal tribunal relies upon the evidence given to the original tribunal, supplemented by any additional evidence which the parties are given leave to adduce. The appeal tribunal’s findings on questions of law are determinative. The appeal tribunal will not lightly substitute its own findings of fact for the original tribunal’s primary findings of fact, but may be less constrained in relation to drawing inferences of fact. The appeal tribunal should not interfere with a discretionary decision unless satisfied that there has been an error in the exercise of discretion.

   23.     In practice, at the initial directions hearing the appeal tribunal will consider the nature of the questions asserted in the application for appeal, the conduct of the original hearing, and other relevant matters such as the availability of new evidence, to determine whether the appeal should proceed by way of rehearing or as a new application. Applications for appeal raising only questions of law or confined questions of fact are most expeditiously dealt with as a rehearing, occasionally with further evidence admitted in relation to areas of factual dispute. By contrast, where there appears to have been a real failure of process at the original hearing, such as a failure to hear both parties, the appeal might be heard as a new application. In such circumstances, this approach is often the simplest, quickest and most inexpensive way to achieve a fair and just outcome.

   (Citations omitted)

   [6] [2017] ACAT 49

10. In Amer v Eriksson,[7] Presidential Member Daniel addressed the question of whether new evidence ought to be admitted in an appeal as follows, drawing on the case law and established practice of courts and other tribunals:

    19.     The overarching principle to be applied when considering whether to allow new evidence on appeal is the interests of justice. The power “exists to serve the demands of justice” and is a “remedial” power.

    20.     It is not usually in the interests of justice to allow new evidence on appeal. To do so would be inconsistent with the appellate nature of the proceedings, and the public interest of finality in litigation. However, in a particular case it may be in the interests of justice to admit new evidence on appeal if there is an acceptable reason for the evidence not being brought at the original hearing and the new evidence would, or was likely to, have produced a different result.

    (Citation omitted)

    [7] [2019] ACAT 108

11. In a similar fashion, Presidential Member Robinson in Hamers v South Canberra Holdings Pty Ltd[8] (Hamers) considered an application by the appellant in that matter to have the appeal heard as a de novo hearing, first quoting the above decision, and then summarising as follows:

    In summary, the usual approach of the Appeal Tribunal is to conduct a rehearing or review on the evidence before the original tribunal, plus with fresh evidence that may be, exceptionally, admitted. However, where there has been a failure of process during the first hearing, for whatever reason, a new hearing may be the most appropriate means to address that.

    [8] Hamers v South Canberra Holdings Pty Ltd ACN 606 747 602 Trading as Southside Village [2021] ACAT 71 at [3[]

12. In the present circumstances, it is plain that the original hearing of the application was compromised by the absence of Mr and Mrs Hamilton.  They are to some degree the author of their own misfortune in this regard.  At the hearing of 3 June 2021, Mr Hamilton was yet to file any evidence relating to his medical condition and its treatment. Further, it is very apparent that Mr and Mrs Hamilton had been afforded very considerable leeway up to that point and had repeatedly failed to comply with the directions of the tribunal.[9]  Mrs Hamilton’s excuse for non-attendance was also unsupported by any probative evidence.

    [9] Transcript of proceedings dated 3 June 2021, pages 3, 4, 8, 9

1. During this appeal, Mr Hamilton was questioned about his absence on 3 June 2021, both by Ms Harders and, under cross-examination, by Mr Zhang. His explanation was that his medical treatment was decided at short notice; that he received notice on 2 June 2021 that he would undergo treatment the following day; that his condition was of such seriousness that he could not afford to absent himself from the treatment; and that the short notice made it difficult for him to reorganise the hearing process with the tribunal. He filed a medical certificate to the effect that he needed to undergo treatment every 28 days, and a letter from a treating facility, dated 2 June 2021, saying that his treatment had been scheduled for the following day.

2. Having had the benefit of hearing evidence from Mr Hamilton as to why he could not attend the hearing, the Tribunal is satisfied that Mr Hamilton had necessary medical treatment scheduled, for which he was given one day’s notice. We do not think that the Original Tribunal’s decision to hear the matter was in error having regard only to the limited material before it, and indeed, we note that Mr Hamilton’s own attitude and reticence to properly engage with the Tribunal contributed to the misunderstanding that arose. Nonetheless, it is clear on the evidence now before this Appeal Tribunal that Mr Hamilton was unable to attend the hearing for medical reasons, having been given only a day’s notice of his treatment, and that accordingly he had no opportunity to properly put his case before the Original Tribunal, nor to properly contest Mr Zhang’s.

3. In the present circumstances, the question of whether the evidence could have been available at the initial hearing is complicated by the absence of Mr and Mrs Hamilton from that hearing. Much of the “fresh evidence” sought to be relied upon was before the Original Tribunal, but as the Mr and Mrs Hamilton were not present, it was not pressed, and the evidence brought forward by Mr Zhang was accepted on an uncontested basis and hence without the kind of examination that would otherwise have occurred. It follows that in effect none of the evidence was heard in the full sense at the original hearing, including Mr Hamilton’s evidence as to the reasons for his absence.

4. Additionally, Mr and Mrs Hamilton make serious allegations of fraud by Mr Zhang, including in relation to representations made in documents filed in this tribunal and considered by the Original Tribunal. Given there is a clearly stated allegation that the original decision is tainted by fraud, it is appropriate that the allegations be properly considered, and that Mr Zhang be given a full opportunity to address them.

5. Accordingly, the Tribunal is of the view it is the interests of justice require that the matter proceeds with all the existing evidence, and any new evidence as considered appropriate by the parties, provided it is relevant.  Hence, while the primary goal of this Appeal Tribunal remains the identification of error, the limited material before both the original Senior Member and the Appeal Tribunal meant that the hearing of the first appeal, AA 35/2021, practically proceeded as a hearing de novo.

The later appeal at first instance

1. The later matter came before the tribunal as a bond referral, heard on 30 July 2021. The member conducting that hearing, aware that an appeal had been lodged against the earlier matter concerning water damage to the flooring of the premises, but that there was an open question whether the filing fee had been or would be paid, made a contingent decision discharging the bond to Mr Zhang if the fee were not paid (that is, if no appeal were properly made), but deferring a decision until the appeal was decided if the appeal were properly lodged, with the intention that the bond referral could be relisted once the appeal was decided.

2. On 15 March 2022, the tribunal resumed consideration of the bond referral. The RTA allows amounts to be deducted from a bond to compensate a lessor for repairs to the premises, rental arrears and various other costs.[10] On 15 March 2022, the Tribunal determined that of the $2,680 held by ACT Rental Bonds, $1,020.15 should be discharged to Mr Zhang and the remainder to Mr and Mrs Hamilton. This was calculated on the basis of arrears of rent claimed by Mr Zhang, using a weekly rental of $685, plus $150 for an unpaid water bill. Mr Zhang lodged an appeal application on 21 March 2022, arguing that a rent of $720 should have been used; and that the remainder of the bond should be discharged to him against the costs of repairing the floor of the premises. Given that both matters were now under appeal, the orders of 15 March 2022 were then stayed, and have remained so.

   [10] Residential Tenancies Act 1997 s 31

3. No application to admit new evidence in the later appeal has come forward, and both parties expressed themselves willing for the matter to be decided on the available material. The later appeal, therefore, is to be decided as a review of the matter at first instance, with the outcome depending on whether the decision was affected by an error of fact or law, under section 82(1)(b) of the ACAT Act.

Issues

1. The issues that require resolution in the two appeals are:

   (a)whether the damage to the wooden floors and nearby architraves in relevant parts of the premises was the result of a failure by the tenants to properly take care of the premises;

   (b)if so, what compensation should be paid by the tenants;

   (c)what arrears of rent and other amounts, if any, are owed by the tenants to the lessor; and

   (d)the disposition of the bond.

The legislative context

1. Schedule 1 to the RTA consists of a large number of standard terms; section 8 of the RTA provides, relevantly:

   (1)     A residential tenancy agreement for premises—

   (a)is taken to contain the standard residential tenancy terms set out in schedule 1—

   (i)for a fixed term agreement—as in force on the day the parties enter into the agreement; or

   (ii)for a periodic agreement—as in force from time to time

2. The residential tenancy agreement is a contract between lessor and tenant, with the terms of the contract consisting of the standard terms. Sections 9 and 10 of the RTA establish a procedure by which a residential tenancy agreement can have terms that differ from the standard terms, provided any new or amended terms inconsistent with the standard terms have been endorsed by the ACAT. No evidence has come forward suggesting that the tenancy agreement between Mr Zhang and Mr and Mrs Hamilton included any terms that had been put to the ACAT for endorsement.

3. Among the standard terms, those of greatest relevance in the earlier appeal are standard terms 63 and 64, which read as follows:

   63.     During the tenancy, the tenant must—

   (a)not intentionally or negligently damage the premises or permit such damage; and

   (b)notify the lessor of any damage as soon as possible; and

   (c)take reasonable care of the premises and their contents, and keep them reasonably clean, having regard to their condition at the time of the commencement of the tenancy and the normal incidents of living.

   64.     The tenant must leave the premises—

   (a)in substantially the same state of cleanliness, removing all the tenant’s belongings and any other goods brought onto the premises during the duration of the tenancy agreement; and

   (b)in substantially the same condition as the premises were in at the commencement of the tenancy agreement, fair wear and tear excepted.

The factual context

1. Much of the factual context for the two appeals is not at issue. Mr and Mrs Hamilton and their family moved into the premises, a four-bedroom house, on 12 June 2018. They signed a rental tenancy agreement with Mr Zhang on 8 June 2018, for a twelve month fixed term, at a rent of $670 per week, with the bond at $2,680. A year later, the agreement was renewed for a further twelve months, from 8 June 2019 to 7 June 2020. The rent for the second year was $685 per week. At the end of the second year, in June 2020, the tenancy agreement transitioned to a periodic agreement. The tenancy agreement signed in June 2019 includes five additional “supplementary” clauses which, according to their accompanying text, “supersede the conflicting clauses in the Tenancy Agreement”; one further supplementary clause, dated 12 September 2020, was added later.

2. On 21 March 2021, Mr Zhang gave the tenants a notice to vacate the premises, requiring them to vacate before Sunday 18 April 2021. The notice was made under standard term 96, giving the justification that Mr Zhang’s sister and her family were to move into the premises. The notice given was four weeks. The tenants vacated the premises on 21 April 2021.

3. A critical factor in the earlier appeal is the state of the wooden floor of the house at various times. It is not at issue that throughout the house, apart from the bathrooms and laundry, there was a wooden floor of the kind known as a “floating floor”. It is apparent from some of the photographic material provided for the hearing that the floor is composed of planks of laminated timber which are provided and laid already polished. It is common ground between the parties that by 12 September 2020 there was significant damage to some parts of the floor, and especially in the hallway. What is far less clear is the state of the timber floors at the start of the tenancy.

4. According to Mr and Mrs Hamilton, the floor in relevant parts of the premises was damaged when they moved in. Any damage at a later time in the tenancy was the result of a failure to maintain the property by the lessor or otherwise fair wear and tear.[11] According to Mr Zhang, there was no damage to the floor at the start of the tenancy, and the tenants, by their wilful or negligent behaviour, or failure to maintain the premises, caused damage to the floor in specified areas.

What was the state of the floor at the start of the tenancy?

[11] Final submissions filed on behalf of Mr and Mrs Hamilton dated 11 August 2023 at [17]

1. Reaching a conclusion on the state of the floor at the start of the tenancy is informed by documentary evidence relating to three insurance claims lodged by Mr Zhang. In about April or May 2018, Mr Zhang says he lodged a claim with his insurer, NRMA, about a spill from the dishwasher by the previous tenants, which he said affected the floor in the laundry, hallway and bedroom 4.[12] Later, when he inspected the premises, presumably in the context of the new tenancy taken up by Mr and Mrs Hamilton, he identified a burn mark in the lounge room floor, and notified NRMA, who treated the report as a separate claim.[13] Mr Zhang says that the insurer paid out $11,400 on 5 June 2018 on the two claims.[14]

   [12] Transcript of proceedings 26 April 2023, page 111, lines 10-42

   [13] Transcript of proceedings 26 April 2023, page 111, lines 26-30; page 104, lines 37-40

   [14] Transcript of proceedings 26 April 2023, page 111, lines 44-46; page 112, lines 1-9

2. In the papers filed by Mr Zhang there is a report by a company named Riverwall Constructions, dated 23 May 2018.[15] This report is headed “Customer Quotation No. [number redacted]” although the pages filed do not include a quote for the work set out in the report. That work includes the replacement of the floating floor in the kitchen/dining/living room (66 m²) and bedroom 4 (12 m²); according to the report, the damage to the floor, which is not described in any detail, arose from wear and tear, rather than “malicious damage”. The report emphasises that during repair and replacement the company would try to match the colour of the timber in the remainder of the house. It was Mr Zhang’s evidence at the hearing that he withdrew $5,000 in order to pay $4,500 to a tradesman to replace the timber floor in the two areas.[16] Mr Zhang was unable to produce an invoice or receipt in respect of this transaction, and was only able to identify the tradesman who did the work as “Kim”, without a surname or company affiliation.[17] Mr Zhang said the work was done during the period from 29 May to 8 June 2018.[18]

   [15] Exhibit R1, Attachment B

   [16] Transcript of proceedings 26 April 2023, page 112, lines 11-17; page 113, lines 13-18

   [17] Transcript of proceedings 26 April 2023, page 112, lines 21-43

   [18] Transcript of proceedings 26 April 2023, page 112, lines 21-23; page 114, lines 42-45; page 115; lines 1-5

3. The lessor and the tenants completed a condition report on 8 June 2018, a few days before the tenants moved in.[19] In that report, there is some general material relating to the premises as a whole, and then a room-by-room enumeration of the elements making up each room, with a description prepared by Mr Zhang and in some but not all cases, a responding comment by Mr and Mrs Hamilton. The lessor’s entry for the floor as a whole states that “Entire house floor is covered with timber floor except wet area, timber floor no scratch, no mark, no chips.” The comment in response is “lots of marks, chips and scratches”.

   [19] Exhibit A1, Annexure B

4. For the lounge room the lessor’s comment is “Floor covered by timber floor, clean, one chips”, with the response being “1 burn mark, laminate lifting”. The hallway floor is listed by the lessor as “Floor covered by timber, clean”; the tenants’ comment is “marked and bobbled [or ‘bubbled’] loose”. For the ensuite, the lessor’s summary is “Walls no marks” and “Floor covered by timber, clean, no scratches/chips/marks”; the tenants’ response was for the walls “marked/chipped” and for the floor “chipped”. For the family room the lessor’s description is “Floor covered by timber, tow marks and one chip, clean” and by the tenants “marks on floor”.

5. Mr and Mrs Hamilton provided photographic material in support of their assessment of the state of the premises at the start of the tenancy. A total of 132 thumbnail photographs were provided, capturing various aspects of the premises.[20] Some of these were marked for attention and eleven were provided in enlarged format.[21]

   [20] Exhibit A6

   [21] Exhibit A7

6. It is difficult to form a definite view of the state of the floor in relevant areas in June 2018 from the assembly of evidence set out above. The RTA provisions governing incoming condition reports are sections 29 and 30. Under section 29, a lessor must provide, within a day of the tenant taking possession, two copies of a completed and signed incoming condition report. The tenant must return a signed response within two weeks, which may include a response to the report. Section 30 relevantly provides that the report, and any response by the tenant, is evidence of the state of the premises at the start of the tenancy.

7. The incoming condition report is contemporaneous, but its use as evidence should be accompanied by some caution. Mr Zhang said during cross-examination by Ms Harders that he had “accepted” the comments by the tenants in the report; that is, he noted that even where he did not agree with the comments, he did not take issue so as to maintain good relations with his new tenants. But his answers under cross-examination were hedged about with qualifiers, and it would be an exaggeration to say that he admitted to simply accepting his tenants’ comments as entirely accurate. The RTA does not require that lessor and tenant resolve any differences between them; the process set out in section 29 of the RTA leads to a report with two sets of comments, one by the lessor and one by the tenant, and no requirement that any differences in perspective be reconciled. If the matter requires resolution at the end of a tenancy – for example before this tribunal – it is for the decision-maker at that time to decide what conclusion to draw. It is therefore in the interests of a lessor to put the most positive account of the premises forward, and of a tenant to draw attention to every blemish and imperfection; lessor and tenant can of course fortify their respective position by taking careful photographs. The incoming condition report needs to be understood in that context.

8. It seems, however, that the insurance payout in June 2018 did not lead to a major repair of the floor. If that had occurred less than eight days before the tenants moved in, surely it would have been reflected in the incoming condition report, both in the lessor’s comments and in those of the tenants. The Riverwall Constructions report seems to have been prepared in the context of an insurance claim, as it refers to Mr Zhang as “the insured”. It identifies the kitchen/dining/living room and bedroom 4 as needing the floor replaced (there is other damage, to the kitchen, letter box and garage also mentioned in the report). It is close to impossible that a new floor to the kitchen/dining area would, within eight days of being laid in unoccupied premises, need to be annotated by the lessor that it is chipped, and a similar comment might be made about bedroom 4. Nowhere in the report does it suggest that the floorboards were new.

9. It appears that Mr Zhang found other and better uses for the insurance payout. The evidence of withdrawal of $5,000 is evidence of that withdrawal, but not of the use to which the withdrawn funds were put. And the absence of the surname or business name of the tradesman, an invoice or a receipt, seems altogether too long a string of omissions.

10. This has a limited bearing on the matters at issue in the appeal, in that it appears that the repairs were to be done on parts of the house that are not subject to present claims of damage. But it does suggest that the timber floor to most of the house was not perfect at the start of the tenancy. And it reflects on Mr Zhang’s credit, not because he used the insurance payout for other purposes – such payouts are compensatory for the damage to the premises– but because he insisted with some vehemence during the hearing that he had undertaken the repairs to remedy the damage covered by the 2018 claim. Further, he said under cross-examination that the $11,400 was for both claims – for the damage caused by the dishwasher incident and also for the later claim for the burn mark.[22] Yet that payout occurred on 5 June 2018, before Mr and Mrs Hamilton had moved in or signed the tenancy agreement. Assessors came to the house weeks later to assess the burn mark, as attested in a text message asking Mr Hamilton to arrange for the assessors to visit on 26 June 2018.[23] These contradictions reflect poorly on Mr Zhang’s credit, to which we return later in this decision; his memory of the sequence of events may be hazy, five years after the event, but surely not his recollection of whether or not the repairs were done.

    [22] Transcript of proceedings, 26 April 2023, page 111, lines 32-46, page 112, lines 1-23

    [23] Exhibit A1, Annexure C

11. Mr Zhang made a further insurance claim, at the end of the tenancy, in April 2021. His insurer, NRMA, declined that claim. We return to that matter later in this decision. Mr Zhang was directed by this Tribunal on 12 March to provide a copy of his 2018 insurance claim or make a statement that he had made no such claim; he did not comply, although in evidence he said that he had given to the Tribunal all the documents in his possession that were covered by the direction. The only document that seems to be directly related to the 2018 claim is the Riverwall Constructions report. All that can be said, with any level of certainty, is that Mr Zhang lodged two claims in 2018; that at least one (the first) was paid out; that the repairs contemplated in respect of that claim do not appear to have been done; and that neither of those earlier claims appears to touch on the major area of damage in the present matter, namely the hallway.

12. The photographs, whether thumbnails or their enlargements, are of limited help in assessing the condition of the floor. The quality is insufficient to reveal much in the way of detail, and no clear conclusions can be drawn whether or not there is existing damage in the parts of the premises that are important in this case, and especially in the hallway. That task is made more difficult still because there is disagreement between the parties over the location of some areas appearing in the photographs. There are some places where the laminated top surface of the timber appears to have chipped away, notably in the kitchen/dining room. Damage of that kind is not apparent in the photographs identified as being the hallway. In a number of places in different parts of the premises, there are gaps at the end of pieces of timber, where an imperfect join to the next piece is noticeable. That may have implications for how readily the floating floor could be affected by exposure to water.

1. One item of evidence that bears on this question arises from the video material filed by Mr and Mrs Hamilton as part of their original application and also attached to Exhibit A1. In late September 2020, Mr and Mrs Hamilton engaged a plumber to investigate how the damage identified on the floors in the inspection of 12 September 2020 might have been caused. The video was taken by Mr Hamilton in September 2020 with Mr Zhang also present. At about 3 minutes 30 seconds into the video, there is an exchange, apparently between Mr Hamilton and Mr Zhang, in which Mr Hamilton asserts that the damage in the hallway, which is clearly visible, was in that state from the start of the tenancy. Mr Zhang responds “I know” before going on to take issue, possibly with the location of the damage identified in the incoming condition report, to which Mr Hamilton had made reference. While some of the audio is clear, some of it is confused and unclear, and not all of what Mr Zhang says can be clearly identified.

2. At first glance, Mr Zhang’s “I know” on the video might seem a compelling admission of Mr Hamilton’s thesis that the floor was damaged at the start of the tenancy. But it is important to recall Mr Zhang’s poor English and his hearing impediment. The video was taken by Mr Hamilton, for his purposes. The result certainly favours his case rather than Mr Zhang’s, but it does not deliver a knockout blow.

3. On all the above evidence, it is a reasonable inference to draw that there were imperfections at the start of the tenancy, in the floor at various points in the premises, including in the hallway, walk-in robe and family room. These imperfections are not likely to have been serious, for if that had been the case it is surely inevitable that the comments by the tenants would have been more strongly worded, and there would be photographs clearly showing the damage. The conclusion that can be securely reached is that, on the balance of probabilities, the floor of the relevant rooms – hallway, walk-in robe and family room – was not new on 12 June 2018 when the tenants moved in; that there were gaps at the end of some timber pieces where one piece joined to another; but that the imperfections were at most moderate.

What was the condition of the floor and associated timber when the tenants vacated the premises?

1. It is not in dispute that at the end of the tenancy there was damage to the timber floor of the premises. Mr Zhang identified three parts of the floor where there was damage: in the hallway, outside and reasonably close to the doorway to the main bathroom; in the walk-in robe to the master bedroom, where there was also damage to the architraves; and in the family room.

2. Mr Zhang provided photographic evidence of this damage, and it is not at issue that the damage in the hallway is clearly visible in the photographs, in three separate places. The damage in the walk-in robe is harder to discern, but there appears to be some loss of laminate at the end of one or perhaps two pieces of timber, and there are clearly visible marks at the architraves. In the family room the photographs appear to show two small chips at the end of two pieces of timber.

3. The damage to the timber surface in the hallway outside the main bathroom is the most visible and appears to be the most serious. Of the three places where the damage can be seen, two are at the end of a piece of the floating floor timbers, one about 0.5 m from the bathroom door and the other perhaps 1 m away from the door or a little further, and in a different direction. In each case it seems that a piece of the laminate has come away, exposing a few centimetres of the material underneath. The third area of damage is immediately outside the bathroom door, where chips in the laminate have appeared at the edges of the timber pieces, in two separate timbers.

4. Mr Zhang carried out inspections of the property on 12 September 2020 and 4 February 2021. The floor damage in the hallway was apparent in the first of those inspections and Mr Zhang provided photographs apparently taken at the inspection. His evidence is that the other two areas of damage were not visible at the first inspection but were apparent at the inspection on 4 February 2021, and once again he has provided photographs.

5. On the basis of the condition report from September 2020, Mr Zhang wrote to his tenants demanding that they remedy the damage to the floor and then allow him to inspect the premises to ensure that the repairs had been properly done. His evidence is that Mr and Mrs Hamilton refused his requests to carry out an inspection in October and December 2020. The inspection in February 2021 was carried out in compliance with orders of the Tribunal, made on 28 January 2021.

6. Mr and Mrs Hamilton vacated the premises in April 2021. Although no outgoing condition report appears to have been completed, it is reasonable to infer that the damage at the time of vacation was the same as, or very similar to, that reported from the inspection of 4 February 2021. Mr Hamilton said in evidence that he reported the damage to the floor to Mr Zhang on at least three occasions, and asked for it to be repaired,[24] but that Mr Zhang repeatedly procrastinated, saying that repairs would be done when the damage got worse. Mr Zhang said that no such report or request was ever made to him.[25]

   [24] Exhibit A at [8], [11], [12], [14]

   [25] Lessor’s letter of 11 March 2021, page 5

7. There is certainly damage to the floor, and that in the hallway outside the bathroom is quite noticeable. The damage to the floor in the ensuite, on the other hand appears, from the evidence, to be modest, and it is not at all clear whether the marks on the architraves simply require painting or are associated with some more structural damage. As for the chips in the family room, these appear to be very small and unlikely to be noticed under most circumstances.[26]

What caused the damage to the floor and architraves?

[26] Lessor’s letter of 11 March 2021, pages 2-5

1. There are two separate questions to be answered on causation: what the proximate cause of the damage was; and how the damage came about. The first asks whether the damage was caused by water or some other agent; the second asks, having determined the proximate cause, how that cause came to bear on the floor and cause the damage.

2. It seems to be a generally held conclusion that the damage outside each of the bathrooms was caused by water. Mr Zhang stated in a letter emailed to the tenants immediately after the inspection of 12 September 2020 that the damages in the hallway “are caused by water” and that the accompanying photographs “clearly show wet area on flooring surface”.[27] He also claimed at various times that an inspection of the damaged area revealed the presence of “fresh water” under and in the flooring material.[28]

   [27] Lessor’s original application, attachment of 3 pm, 12 September 2020

   [28] Exhibit R5, page 8

3. A number of tradespeople have visited and inspected the area, for a variety of purposes, and have commented on the damage. As noted earlier, Mr and Mrs Hamilton engaged a plumber, who visited the premises in late September 2020.[29] In the video of the visit, the attending tradesperson can be heard giving an opinion that the plumbing was not the source of any leak; that the membrane around the shower may have failed; and that the floor area (apparently meaning the wooden floor outside the bathroom) was wet and would absorb a good deal of moisture.[30] Under the name Andrew Towndrow, identified as an Assessor, a company named Re-seal Bathrooms provided a quote[31] for substantial work in refitting the shower screen and sealing any of the bathroom surfaces and joints through which water might otherwise leak. The quote is dated 26 October 2020.

   [29] Exhibit A1at [18]

   [30] Exhibit A1, video attachment

   [31] Tenants’ original application, Attachment 10

4. A note from Oxy Plumbing Services[32] states that there is no evidence of water pooling or of a burst or leaking pipe, but notes swelling of the boards at the door of both bathrooms. The report identifies the problem as water transfer from the bathrooms, either through foot traffic or from spilling or pooling of water. The report, which is very brief, has no name, no signature, and no date.

   [32] Exhibit R2

5. None of the authors of any of these reports were called to give evidence or made available for cross examination.

6. At the end of the tenancy, Mr Zhang lodged a new insurance claim with his insurer, NRMA. The NRMA sent Bay Building Services to assess the damage. The site visit took place on 27 April 2021. The report[33] includes a large number of photographs, but its text is very limited. The assessment of the cause of damage reads: “[b]ased on our site inspection we believe that the damage has occurred due to water overflow from the bathroom, ensuite and possibly laundry.” The report also notes that there was no evidence of a water leak identified. Damage to the flooring was identified in the hallway, master bedroom, bedrooms 3 and 4 and the walk-in robe. Bay Building Services submitted a quote to replace the floors of those rooms and to replace or repaint skirtings and walls.

   [33] Exhibit A3

7. Evidently a leak detection test was carried out at about the same time by an unrelated company. The report of that test is not included in the papers, but there is reference to the test not having identified any leaking pipes or membranes at the premises.

8. The third insurance claim that occasioned the assessment by Bay Building Services threw up some further complexities. The claim was denied by NRMA, with that outcome confirmed on internal review and confirmed again by the Australian Financial Complaints Authority (AFCA).[34] The documents came to light not because Mr Zhang filed them in response to the direction of the Tribunal that he should do so, but because Mr and Mrs Hamilton sought a subpoena to be issued to NRMA. The NRMA returned documents that related to the claim by Mr Zhang in April 2021. These documents include an assessment, dated 23 September 2021, of Mr Zhang’s request for internal review of the decline of his claim; and NRMA’s submission to AFCA in respect of Mr Zhang’s complaint to that body, dated 21 October 2021.

   [34] Exhibit A4

9. Mr Zhang made two claims in April 2021, one for repair of the floor, the other for unpaid rent. The reasons given by NRMA for the claims being declined were that first, they had been contacted by “the previous tenant” advising that the repairs sought were for damage that occurred in 2018 and had not been repaired; and that possibility was supported by comments in the incoming condition report and by the 2018 claim; and that the information about the repairs purportedly undertaken in 2018 was unconvincing. Accordingly, the NRMA concluded that Mr Zhang had failed to meet the onus that lay on him to demonstrate that the damage claimed had occurred by an insured event and made adverse findings about whether he had behaved with good faith to his insurer. The outcome was confirmed on internal review by NRMA, and subsequently by AFCA. A second reason given for rejecting the claims was that by making an application to this Tribunal, Mr Zhang had compromised the freedom of NRMA to recover its losses.

10. The NRMA papers suggest that Mr Zhang’s claim was phrased in terms of water leaking from the “vanity pipe”.[35] Mr Zhang says this was a misunderstanding arising from his accented English, and that his claim, made by telephone, was for a leak from a vanity “tap”.[36]

    [35] Exhibit A3

    [36] Mr Zhang’s final submissions dated 3 September 2023, pages 1-2

11. Mr Zhang continued to pursue the matter, by drafting a further letter which was purportedly sent to AFCA. This letter was brought to the attention of the Tribunal, and to that of Mr and Mrs Hamilton, only later in the proceedings, during the hearing, on 26 April 2023. There were a number of questions relating to how and when the letter came to be drafted and to whom it was sent, as explored later in this decision. But the letter, and indeed all the insurance papers, do not really change the picture. Mr Zhang was insistent over the misunderstanding of his reference to a pipe rather than a tap; but it is apparent that he cannot have had any first-hand understanding of how water came to leak onto the floating floor in the hallway. Further, in the letter to AFCA at Exhibit R5, Mr Zhang states that after Bay Building Group and the leak detection company had done their work, it had been discovered that water was leaking from the vanity pipe in the ensuite bathroom. That plainly raises a question about the earlier leak detection test, and leaves open the possibility of damage having occurred at an earlier time from such a leak.

12. If the proximate cause of the damage is accepted as water, how has that water come to affect the timber floor and caused the damage? A number of theories have been advanced. Mr Zhang claimed that the daughter of Mr and Mrs Hamilton told him she had left a tap on; the plumber engaged by Mr and Mrs Hamilton and Re-seal Bathrooms suggested a leak from a faulty membrane in the shower; Oxy Plumbing Services suggested either tracking of water through foot traffic or the result of one or more spills or pooling of water; Bay Building Services identified “overflow” as the cause; and as noted above, Mr Zhang’s letter purportedly sent to AFCA seems to suggest that there may have been a leaking pipe that went undetected.

13. Mr Zhang’s evidence regarding the suggestion by the daughter of Mr and Mrs Hamilton that a tap had been left on is not one to which any weight can be given. Mr Hamilton said that his daughter does not live at the premises, although he acknowledged that she spent time there and on occasion showered there. But Mr Zhang’s evidence is hearsay, and the daughter was not called as a witness. Mr Zhang says that at the 12 September 2020 inspection, water was visible in the photographs;[37] the photographs certainly show some reflections but that seems to be the gloss finish rather than standing water. Mr Zhang’s comments on “fresh water” being visible at the damage sites are puzzling: did he mean that the water was visibly moving in the layers of the laminate floor? Would that not imply a continuing release of water at some level, or else a very recent spill shortly before the inspection? And he has offered a diagnosis of how water might track between the various damage sites in the hallway, but he has not displayed to us the expertise that we would need if we wished to rely on that opinion.

    [37] Lessor’s letter of 11 March 2021, page 2

14. The Oxy Plumbing Services report has been called into question because it has no name on it and no date. The Bay Building Services conclusion that the damage was the result of “overflow” is of the most general kind, presumably extending to a range of spills or accidents, of various degrees of seriousness. The NRMA material notes that the main bathroom has a floor waste, which should have allowed spills to drain without entering the timbered areas; but it is possible that the slope of the floor to the drain was insufficient to drain a large flow adequately, and if that were the case, the issue could not be held against the tenants. Further, the Bay Building Services report might be called into question given that rooms where no damage is reported are included in their list of rooms requiring a new floor. The Re-seal suggestion regarding a faulty membrane seems inconsistent with the leak detection information obtained later.

The credit of the witnesses

1. In final submissions, each party has attacked the credit of the other. Mr and Mrs Hamilton suggest that Mr Zhang was an “evasive witness who was significantly lacking in credibility”; that he attempted to mislead the Tribunal; that he made false claims against his insurance policy; that he falsified some of the evidence that he filed in these proceedings; and that he was, in general terms, a “witness of limited credit”.[38]  Mr Zhang makes similar assertions against the credit of Mr Hamilton.[39]

   [38] Final submissions filed on behalf of Mr and Mrs Hamilton dated 11 August 2023 at [19]-[22]

   [39] Mr Zhang’s final submissions dated 3 September 2023 at [13]-[14]

2. It is certainly true that some questions might be asked about Mr Zhang’s credit. But Mr Zhang is working in a language that is not his own, of which he has a very imperfect command, especially the spoken language, and he reports that he also suffers from a hearing impediment. At times the hearing process was quite difficult for those reasons, and on the final day of the hearing, some issues with the interpreter did not make things any easier. We should also recognise that Mr Zhang did not have the advantage of the skilled representation available to Mr and Mrs Hamilton. Sometimes it seemed to us that Mr Zhang’s responses to questioning were affected by uncertainty and misunderstanding - although at other times he seemed to be intentionally evasive. There are some questions about Mr Zhang’s insurance claims, especially as he seemed to be reluctant to allow related papers to come to light; but he would not be the first person to test whether an insurer would be willing to pay out on a claim, and, as we have found, pinpointing the exact cause of the damage in this matter is not as straightforward as the final submission filed on behalf of Mr and Mrs Hamilton might suggest. Nor are we willing to draw the conclusion pressed on us by Ms Harders that the Oxy Plumbing Services note is a forgery: in the first place, it is not so advantageous to Mr Zhang as one might expect if he had fabricated it, and it is written with rather a better command of English than most of the material Mr Zhang has provided under his own name. Thus, we might not be willing to give the note a great deal of weight, but we are not prepared to regard it as fabricated.

3. Nevertheless, in a few areas, it is difficult to escape the conclusion that all is not as Mr Zhang says, and inevitably, that opens up the issue of Mr Zhang’s credit more generally. The first is Mr Zhang’s insistence that the flooring in several rooms had been replaced in the premises within about one week before Mr and Mrs Hamilton signed the tenancy agreement. For the reasons already advanced, this is simply not credible.

4. One aspect of Mr Zhang’s engagement with his insurer is undeniably fabricated. The NRMA papers make it clear that Mr Zhang claimed for lost rent in April 2021 on the basis that his tenants had vacated at short notice, so that he had insufficient time to find new tenants.[40] But the papers he has filed show that the tenancy ended at his initiative: he gave a notice to vacate to Mr and Mrs Hamilton, with four weeks’ notice (rather than the eight weeks to which they were entitled). So the departure of his tenants was at Mr Zhang’s door, as was the abruptness of that departure.

   [40] Exhibit A3, NRMA document dated 23 September 2021, page 1; NFCA’ submission to AFCA dated 21 October 2021, page 2

5. A third issue is the letter that Mr Zhang said he sent to AFCA. That letter came to light only towards the end of the day’s hearing on 26 April 2023; Mr Zhang produced the letter, which was dated 26 September 2021, and said initially that he sent it to NRMA in the context of seeking internal review of the decision to decline his claim. After it was pointed out that it had not been returned by NRMA in response to the subpoena, which sought all documents relevant to the claim, Mr Zhang said first that he had worked through a lawyer, and could not say with certainty that the lawyer had sent the letter to the NRMA; and then he asserted that the letter had been sent not to the NRMA but to AFCA.

6. Mr Zhang was ordered to provide the electronic copy of the letter and did so; the meta date associated with the letter established that it had been drafted on 17 September 2022, almost a year later than its purported date. Mr Zhang then said that he had amended the format of the letter on that date in order to minimise the number of pages when it was printed, but that the original of the letter had been drafted on the date on its first page i.e. 26 September 2021. He provided an electronic copy of what he said was the original of the letter, and an examination of its meta data displays 26 September 2021 as its date of creation. That is strong support for Mr Zhang’s explanation. And it is perhaps possible if Mr Zhang had created a new document by cutting and pasting from the original that the date of creation in the meta data might appear misleading.

1. There are, however, other reasons for viewing Mr Zhang’s evidence cautiously. He was ordered to produce evidence about his claims to the NRMA but did not do so; the information came to the Tribunal under subpoena issued at the request of Mr and Mrs Hamilton. Mr Zhang insisted that he had provided to the tribunal all the material in his possession, but as events made clear, he had an entire exchange with both the NRMA and with AFCA in relation to his claim. It does seem as if Mr Zhang was concerned to keep that exchange out of the proceedings.

2. There are also ways in which Mr Zhang took actions that were contrary to the RTA and disadvantaged his tenants. He added clauses to the tenancy agreement stipulating that these displaced the clauses in the standard terms where there was conflict.[41] This is inconsistent with standard term 3, which prohibits any attempt to contract out of the standard terms (except in accordance with the RTA). Section 9 of the RTA provides that any term inconsistent with the RTA is void, and any term inconsistent with a standard term is void unless endorsed by the ACAT under the procedure set out in section 10 of the RTA. We are not aware of any attempt by Mr Zhang to have inconsistent terms endorsed by the ACAT.

   [41] Tenants’ original application, Attachment 2

3. The notice to vacate issued by Mr Zhang to Mr and Mrs Hamilton, purportedly in accordance with standard term 96, was invalid. It gave the tenant s four weeks’ notice of the intention of Mr Zhang’s sister to move into the premises. Mr Zhang seems to have been using an outdated set of standard terms. From June 2020 the tenancy was periodic, and under section 8(1)(a)(ii) of the RTA, the standard terms applied as they were “in force from time to time”. The standard terms applicable when Mr Zhang issued the notice to vacate required eight weeks’ notice and that the notice be accompanied by a statutory declaration attesting to the intention of a family member to move into the premises.

4. The allegations against the credit of Mr and Mrs Hamilton focus first on their absence from the hearing in RT 852/2020 at first instance. The transcript gives the impression that Mr Hamilton did not treat the tribunal proceedings as a priority, but we do not view the sequence of events as reflecting on his credit. He has produced evidence that he has a condition that requires regular treatment, and that his treatment was scheduled at short notice for 3 June 2021. Mr Zhang’s final submission suggests that Mr Hamilton deliberately misled the tribunal to think that this was cancer treatment, when it was not. But it is plainly irrelevant whether the treatment was for cancer or some other condition, and in any case, it does not seem to us that any deception was practised or attempted. The other charges levelled at Mr and Mrs Hamilton amount to assertions that any evidence unsupported by independent corroboration must be false and indicative of dishonesty. If that were the case, neither party’s case would withstand examination.

5. We have not made any findings on credit. But we have exercised a strong preference for contemporaneous documentary evidence where available. We have relied on the incoming condition report to tell us the state of the floor at the commencement of the tenancy; we have relied on photographs taken on 12 September 2020 and 4 February 2021 to tell us the state of the floor later in the tenancy; and we have turned to the nearest thing to expert reports – the reports by tradesmen – to address questions of causation. The evidence is clearly imperfect and incomplete, but it is the best we have. We do not find that the evidence of Mr Zhang, or of Mr Hamilton, adds significantly to the certainty that we have on the crucial issues. Nor have the errors and incompleteness that Mr Zhang has identified in the interpretation process led us to a different outcome. We have reviewed his suggested changes, but even accepting his evidence without demur, we do not find ourselves led to a different set of conclusions.

Conclusion – floor damage

1. It is clear, therefore, that during the tenancy the condition of the floors worsened, especially in the hallway. The condition at the start of the tenancy was less than perfect, but there was visible damage by the end – indeed by September 2020. That damage resulted from the effects of water. But that is as far as the evidence persuasively allows us to go.

2. There are diverse opinions about how the damage appeared. Mr Zhang is certain that his tenants were negligent and left a tap on or otherwise spilt water on the floor. Mr and Mrs Hamilton say that the problem was there from the beginning of the tenancy and any worsening was either because Mr Zhang did not remedy the problem or from normal wear and tear.

3. One reason why we have found it difficult to reach a conclusion about the cause of the damage is that we have no evidence before us that speaks authoritatively about the robustness of floating floors. The floating floor in the premises is made of timber laminate, in which the ends of each timber piece are exposed because of the way the floor is laid, and that can be seen in the photographs, including those in Exhibit A6 – indeed at times the visible gap seems worryingly large to our (inexpert) eyes. It would seem logical that a structure of that kind might allow water ingress from even a small spill, and over time such events could lead to damage to the laminate. Expert evidence about floors of this kind might have been helpful to us in deciding how the damage was caused.

4. There does not seem to have been any deterioration in the hallway floor between the inspection on 12 September 2020 and that on 4 February 2021, perhaps suggesting that the damage came from one or more particular events involving significant quantities of water on the floor rather than small exposures on an ongoing basis. But there was a gap of more than two years between the incoming condition report in June 2018 and the inspection in September 2020, and only a further five months to the February 2021 inspection. The inspection report of 6 May 2019[42] is very brief and makes no reference to the floor of the premises. We are reluctant to draw any detailed conclusions about how the damage might have proceeded from one state to the other.

   [42] Exhibit R5, Attachment E

5. Accordingly, on the evidence available to us, on the balance of probabilities, we are not comfortable in arriving at the conclusion that Mr Zhang is urging on us. Standard term 63(a) prohibits a tenant from “intentionally or negligently” damaging the premises or permitting such damage, and standard term 63(c) requires the tenant to take care of the premises and to keep them clean, taking into account their condition at the start of the tenancy “and the normal incidents of living”. Term 63(b) requires the tenant to report damage to the lessor as soon as possible.

6. Mr Zhang has not advanced any evidence to persuade us of intentional damage by the tenants; his case rests, it seems, on our willingness to conclude that the damage occurred by negligence or that Mr and Mrs Hamilton failed to take care of the premises. It is well established in the case law that the onus in a case of this kind rests on the lessor to establish that the damage for which compensation is sought has occurred as a result of the actions or negligence of the tenant (see for example Tankard & Anor v Ogbonna & Anor,[43] at [8]). Mr Zhang has failed to satisfy that onus.

   [43] [2017] ACAT 72

7. Mr Hamilton says that he and Mrs Hamilton reported the damage and pressed Mr Zhang to repair it. Mr Zhang says that no such report or request was ever made. There is little concrete evidence in either direction. The inspection of 12 September 2020 certainly left both lessor and tenant aware of the damage. The video of the visit by the plumber engaged by Mr and Mrs Hamilton, and its having occurred at the instigation of the tenants, is evidence that the tenants at this stage were conscious of the need for something to be done.

8. In submissions, Mr Zhang argued that a number of possible explanations were mistaken – that the damage was there from the start of the tenancy, was caused by wear and tear, or arose from a leaking bathroom membrane, and he offered a detailed account in each case why these explanations were wrong.[44] But these arguments, no matter how convincing, do not assist him. The onus that lies on him is a positive duty to demonstrate that it is more likely than not that the damage to the floor arose from intentional or negligent behaviour by Mr and Mrs Hamilton, or from their failure to take proper care of the premises. In our view, he has not met that duty.

   [44] Lessor’s letter of 11 March 2021, pages 1-4

9. The tenants have advanced limited evidence for wear and tear. There are clearly several possible ways the damage might have occurred – slight damage to the floor might have worsened over time by wear and tear; or an accident or spill may have caused the problem in a single incident; or gradually worsening damage may have become noticeably more severe at some point because of particular events. But the evidence does not allow us to identify any of those possibilities, or any of the myriad others that speculation could fabricate, as being proven on the balance of probability. The only conclusion we can reach is that the lessor has failed to make out his case.

Rental arrears

1. In both appeals, questions arose about arrears of rent and other money that Mr Zhang says is owed to him. He has claimed rental arrears from the tenants and payment of one water bill. The rental amount takes into account a rental increase that he notified to Mr and Mrs Hamilton on 20 September 2020. Mr Zhang’s submissions in the later appeal also urge us to order that any monies owed under appeal AA 35/2021 be met through the disposition of the bond in appeal AA 3/2022. We return to that issue below.

2. The decision under appeal in AA 35/2021 deals with rental arrears from 8 June 2020 to 7 January 2021; the appeal in AA 3/2022 deals with the rent from 8 January 2021 to the end of the tenancy on 20 April 2021. On 20 September 2020 Mr Zhang notified the tenants that their rent was to increase from $685 per week to $720 per week, with the increase to begin from 16 November 2020.

3. Mr and Mrs Hamilton have opposed using a weekly rent of $720 as the basis for the calculation of rental arrears from 16 November 2020, supporting that position with three arguments: that the increase was inconsistent with an undertaking given by Mr Zhang; that the notice of the increase was not worded as required under legislation; and that the increase was in excess of that allowed. According to Mr Hamilton, the undertaking given by Mr Zhang was done in recognition of the impact of COVID-19 during 2020. He says that Mr Zhang later resiled from the undertaking, but that he should be held to it. He has argued that the wording of the notice of the increase uses “incorrect issue dates”. And he has applied the rent increase calculator to suggest that the regulated increase should have been limited to either $699.04 (on one calculation) or $703.26 (on another) rather than $720.[45]

   [45] Tenants’ original application, Attachments 6, 7, 8, 14

4. During 2020, emergency measures were introduced to assist lessors and tenants to navigate through the difficulties of the COVID-19 epidemic. The Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 was in effect from 22 April to 21 July 2020, the Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 2) (the COVID-19 Declaration No 2) from 22 July to 22 October 2020 and the Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 3) (the COVID-19 Declaration No 3) from 14 September 2020 to 22 April 2021. Under all three declarations, a lessor and tenant could agree to a temporary rent reduction.[46] Additionally, under the COVID-19 Declaration No 2, a lessor was not permitted to increase the rent under a tenancy agreement for the moratorium period where the household was COVID- 19 impacted (“moratorium period” and “impacted” are defined terms).[47]

   [46] Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 s 3; Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 2) s 4; Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 3) s 6

   [47] Residential Tenancies (COVID-19 Emergency Response) Declaration 2020 (No 2) s 11

5. On 11 May 2020, Mr Zhang offered to renew the fixed term agreement with Mr and Mrs Hamilton for a further year at an unchanged rent of $685 per week, in light of the epidemic.[48] Mr and Mrs Hamilton decided not to take up that offer and moved to a periodic tenancy after expiry of the fixed term on 8 June 2020. On 20 September 2020, Mr Zhang advised that from 16 November 2020 the rent would increase to $720 per week.[49]

   [48] Tenants’ original application, Attachment 7

   [49] Tenants’ original application, Attachment 6

6. The offer of 11 May 2020 cannot be understood as a rent reduction offer associated with COVID-19: there is mention of the epidemic, but no reduction in rent is offered, and there is no reference to the prescribed temporary rent reduction clause required under the emergency declarations. In any case, the tenants declined to accept the offer, which was for a fixed term. Once that had happened, it was open to Mr Zhang, in the context of a periodic tenancy, to increase the rent. Mr and Mrs Hamilton have not advanced any evidence to suggest that they were a COVID-19 impacted household or that the rental increase was in any way inconsistent with the emergency response declarations.

7. Part 5 of the RTA deals with rent increases. The rent increases that a lessor may impose are constrained by the legislation. Central is section 64B which reads as follows:

   (1)     A lessor may increase the rental rate under a residential tenancy agreement by an amount that is more than the amount prescribed by regulation only if—

   (a)the residential tenancy agreement allows the lessor to increase the rental rate by the amount; or

   (b)after the lessor gives notice under subsection (2), the tenant agrees, in writing, to the increase; or

   (c)the lessor obtains the ACAT's prior approval.

   (2)     For subsection (1) (b), the lessor must give the tenant a written notice stating—

   (a)the day the proposed increase takes effect (being a day at least 8 weeks after the day the notice is given); and

   (b)the amount of the proposed increase; and

   (c)whether the amount of the proposed increase is more than the amount prescribed under subsection (1); and

   (d)if the proposed increase is more than the amount prescribed under subsection (1)—that if the tenant does not agree to the increase, the lessor may only make the proposed increase with the prior approval of the ACAT.

8. The Residential Tenancies Regulation 1998 (the Regulation), section 5A, reads as follows:

   (1)     The prescribed amount is the amount worked as follows:

   (2)     In this section:

   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.

   PI means the percentage increase in the index number over the period since the last rental rate increase or since the beginning of the residential tenancy agreement (whichever is later).

9. Mr Zhang’s rent increase was the first increase in rent since it was set at $685 in June 2019, so the index applies since that date. The formula in section 5A of the Regulation gives the outcome that the rent on 16 November 2020 could be set at a maximum of $706 per week. The lessor’s proposed increase in rent to $720 was therefore obliged to abide by the requirements of section 64B, and the consent of the tenants was to be sought, by the requirements of section 64B(2) of the RTA. Mr Zhang’s letter accompanying the notice, which does not explicitly seek the agreement of the tenants to the rent increase, meets the requirement to advise of the amount of the increase and the date of effect is eight weeks after notice was given. But the notice and letter do not meet the requirements in paragraphs (c) and (d) that Mr Zhang advised that the increase was above that permitted, nor that the rent could only increase to $720 with the approval of the ACAT.

10. This Tribunal does not, generally speaking, determine the rent that a tenant pays to a lessor for rental premises. That is a matter for contractual negotiation between them. But the RTA provides for the Tribunal to intervene if a lessor increases the rent by more than the amount permitted by regulation, but only on a tenant’s application.

11. In the present instance, it appears that the rent increase by the lessor was in excess of that allowed and that the notice given to the tenants omitted significant information required by law to be included. The tenants did not seek the assistance of the Tribunal before the rental increase took effect, but they refused to pay the rent at the increased rate and they did raise the issue in their response and counterclaim, which was lodged as a tribunal application on 4 January 2021, nine weeks after the increase took effect.

12. The scheme of Part 5 of the Act, looked at as a whole, and in the context of the RTA more generally, is clear. The RTA limits how often rent may be increased,[50] and limits by regulation the extent of rent increases.[51] A lessor may increase the rent by more than that allowed by regulation, but only if the tenancy agreement so provides, or the tenant agrees in writing, or this tribunal approves the increase.[52] To obtain the tenant’s agreement, the lessor must provide certain information in writing, not only the increased rental amount and date of effect, but also that the amount exceeds that allowed by regulation and that if the tenant does not agree, the approval of ACAT is needed.[53] The tenant may then apply to this tribunal for a review of a proposed rental increase, but the application must be made more than two weeks before the date of effect of the increase, or, exceptionally, within two weeks.[54] A tenant who does not so apply is taken to have accepted the increase.[55] The effect of these provisions taken together is quite strict, in that a tenant who allows too much time to elapse and misses the deadline to apply for review is without recourse: Benson & Anor v Sawezuk & Anor.[56]

    [50] Residential Tenancies Act 1997 s 64A, standard term 35

    [51] Residential Tenancies Act 1997 ss 64B, 68; Residential Tenancies Regulation 1998, s 5A

    [52] Residential Tenancies Act 1997 s 64B(1)

    [53] Residential Tenancies Act 1997 s 64B(2)

    [54] Residential Tenancies Act 1997 ss 64C, 65

    [55] Residential Tenancies Act 1997 standard term 40

    [56] [2016] ACAT 154

13. The requirements imposed on a lessor by section 64B of the RTA are in mandatory terms: a lessor may increase the rent by more than the amount set in regulation “only if” one of the listed set of circumstances applies. If the lessor seeks the tenant’s permission, the lessor “must” give a written notice with the necessary content. It follows that if the prescribed process is not followed, the proposed rent increase is unlawful.

14. Where a rental increase above that allowed by regulation is proposed, challenged by a tenant, and then comes before this tribunal, the RTA provides guidance on how the difference of view is to be resolved.[57] The tribunal is provided with powers to resolve such a dispute, for example by allowing or disallowing some or all of the proposed increase. But these powers are only enlivened if the process in the RTA is followed, that is, if the tenant applies for review, having been informed of the increase and its excess over the amount allowed by regulation. If the process has not been followed, these powers are not available, and the inevitable outcome is that the proposed excessive rent increase is disallowed. The rent for the premises is $685 per week to the end of the tenancy.

    [57] Residential Tenancies Act 1997 s 68

1. On 28 January 2021, the Tribunal ordered that Mr and Mrs Hamilton pay rent at $720 per week until the hearing. Mr and Mrs Hamilton paid the rent at this higher rate (or some approximation to it) in February and March but did not make a final payment in April before vacating. Although the tenancy agreement set a weekly rent, Mr Zhang arranged for the rent to be paid on a monthly basis; this led to the rental payment for each month varying according to the length of the month. Mr and Mrs Hamilton appear to have arrived at a constant monthly payment that left them in arrears in some months and in credit in others. This has been taken into account in the calculation of the rental arrears undertaken below.

2. The rental increase on 16 November 2020 being of no effect, our calculation is that from 8 June 2020 to 7 January 2021 the rent owed was 30 weeks and four days at $685 per week, coming to $20,941.43. Mr and Mrs Hamilton paid $20,835.50, leaving arrears of $105.93. For the period from 8 January to 20 April 2021 the rent owed was 14 weeks and five days at $685 per week, coming to $10,079.29; Mr and Mrs Hamilton paid $9,233.14, leaving arrears of $846.15.

3. Mr Zhang has claimed an amount of $166.85 as an unpaid water bill. This amount appears on a water bill that Mr Zhang sent to his tenants on 3 December 2020, as the supply charge for water and sewerage.[58] The tenants paid the consumption part of the water bill but did not pay the supply charges. Mr Zhang added a clause to the tenancy agreement in June 2019 requiring the tenants to pay the water and sewerage supply charges, as well as water consumption charges. That clause is invalid. It is inconsistent with standard term 44, which assigns those charges to the lessor, and the inconsistent clause has not been endorsed by this Tribunal and is therefore void under section 9 of the RTA. It is void notwithstanding the agreement to it and signatures on it of the tenants. The RTA prohibits terms inconsistent with the standard terms except where the procedure set out in section 10 of the RTA is followed. Mr Zhang cannot recover this charge.

The disposition of the bond – appeal AA 3/2022

[58] Tenant’s original application, Attachment 5

1. It is clear therefore that in the later appeal, the Tribunal at first instance erred on one question of law - by granting to Mr Zhang the amount he sought on his water bill when he was not entitled to it. Accordingly, the appeal is upheld. The order made by the Tribunal on 15 March 2022 is set aside, and in substitution, ACT Rental Bonds is ordered to release $846.15 to Mr Zhang and the remainder of the $2,680 to Mr and Mrs Hamilton.

2. Submissions by Mr Zhang have argued that moneys held in the bond can be used to discharge some or all of any order made under AA 35/2021 as well as those under AA 3/2022. This is a misconception. A good deal of the evidence in these two appeals is common to both, but each of the two appeals is an appeal against the decision of the Tribunal in the matter at first instance. The only issues to be ventilated are those that arise from that first instance hearing. In AA 3/2022, the only issues raised and considered at first instance were the rental arrears from 8 January 2021 to the end of the tenancy, and the amount claimed for the water bill. Those are the only issues considered in the appeal and the decision we have arrived at is limited to whether the orders at first instance were correct or should be set aside and substituted by others.

Conclusion

1. In matter AA 35/2021, the appeal is upheld. The claim for compensation for damage to the floating floor is dismissed. Mr and Mrs Hamilton are ordered to pay $105.93 in rental arrears to Mr Zhang. The appeal in matter AA 3/2021 is also upheld. ACT Rental Bonds is ordered to discharge $846.15 to Mr Zhang and the balance of the bond to Mr and Mrs Hamilton. There is no order for either party to recover any filing fee.

………………………………..

Presidential Member H Robinson
For and on behalf of the Appeal Tribunal

Date of hearing:	2 June 2023
Solicitor for Mr and Ms Hamilton:	Bridie Harders, Legal Aid ACT
Mr Zhang:	In person