Lessor 123 v Tenant 123A & Tenant 123B (Residential Tenancies)
[2021] ACAT 33
•21 April 2021
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
LESSOR 123 v TENANT 123A & TENANT 123B (Residential Tenancies) [2021] ACAT 33
RT 123/2021
Catchwords: RESIDENTIAL TENANCIES – application for termination of fixed-term tenancy by lessor – significant hardship – lessor risk to personal safety – tenants’ likely homeless – financial circumstances – consideration of ‘significant hardship’ – consideration of competing hardship – balancing circumstances of the parties
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 39
Residential Tenancies Act 1997 s 50, standard term 94
Cases cited:Roberts and Anor & Ogilvie and Anor [2013] ACAT 21
Sanderson v Slavich [2004] ACTRTT 11
Whiddon v Bartlett & Manning [2002] ACTRTT 3
Tribunal: Senior Member K Katavic
Date of Orders: 21 April 2021
Date of Reasons for Decision: 21 April 2021
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 123/2021
BETWEEN:
LESSOR 123
Applicant/Lessor
AND:
TENANT 123A
First Respondent/Tenant
TENANT 123B
Second Respondent/Tenant
TRIBUNAL:Senior Member K Katavic
DATE:21 April 2021
ORDER
The Tribunal orders that:
1.The application is dismissed.
Until such further order of the Tribunal:
2.There is to be no public access to the file.
3.The publication or disclosure of the following, that may identify the parties, the premises, the occupants of the premises or any witnesses, is prohibited:
(a)evidence given at any hearing of this matter;
(b)matters contained in documents filed with the Tribunal;
(c)matters contained in documents received by the Tribunal.
4.The applicant/lessor is to be referred to as “lessor 123”.
5.The first respondent/tenant is to be referred to as “tenant 123A”.
6.The second respondent/tenant is to be referred to as “tenant 123B”.
7.The premises is to be referred to as the Rented Property.
The Tribunal notes that the above orders are made pursuant to section 39 of the ACT Civil and Administrative Tribunal Act 2008.
………………………………..
Senior Member K Katavic
REASONS FOR DECISION
Introduction
1.The respondents in this matter are the tenants of a property located in the ACT (the Rented Property). They have occupied that property since 17 September 2020 pursuant to a residential tenancy agreement dated 7 August 2020. The tenancy agreement was for a fixed term of 52 weeks ending 15 September 2021 with a periodic tenancy commencing thereafter. The applicant is the current lessor having purchased the property on 20 January 2021. She purchased the property with the tenancy agreement in place.
2.On 1 February 2021, the lessor issued the tenants with a notice to vacate pursuant to clause 94 of the standard residential tenancy terms, being a 26 week without cause notice. The notice requires the tenants to vacate the property by 13 September 2021.
3.The lessor commenced proceedings in the tribunal on 11 February 2021 seeking orders for immediate termination of the tenancy agreement and vacant possession pursuant to section 50 of the Residential Tenancies Act 1997 (the Act) on grounds of significant hardship. She claims risk to her personal safety against a background of domestic violence and significant financial stress. The tenants have resisted the lessor’s request to vacate the property and dispute the application before the Tribunal on the basis that they would be rendered homeless should they be required to vacate the property. They also claim they are under some financial stress which would be further impacted if they were required to relocate and their personal circumstances make it significantly difficult to do so.
4.Both parties provided written statements and other documents upon which they relied in support of their respective claims. I have considered this material in addition to the oral evidence given at the hearing by all parties.
The legal framework
5.Section 50 of the Act provides as follows:
Significant hardship
(1) On application by a lessor, the ACAT may make a termination and possession order in relation to premises occupied under a fixed term agreement if satisfied that—
(a)the lessor would suffer significant hardship if the ACAT did not make the order; and
(b)that hardship would be greater than the hardship the tenant would suffer if the ACAT made the order.
(2) If—
(a)the ACAT decides to terminate a residential tenancy agreement in accordance with this section; and
(b)the ACAT is satisfied that—
(i)the lessor would suffer significant hardship if the agreement were not terminated within 8 weeks after the making of the decision to terminate; and
(ii)that hardship would be greater than the hardship the tenant would suffer if the agreement were terminated within 8 weeks after that day;
the ACAT must—
(c)specify the day, less than 8 weeks after the making of the decision to terminate, when the termination is to happen; and
(d)give the tenant the notice of the proposed termination that is reasonable in the circumstances.
(3) If—
(a)the ACAT decides to terminate a residential tenancy agreement in accordance with this section; and
(b)the ACAT is not satisfied about the matters mentioned in subsection (2) (b);
the ACAT must—
(c)taking into consideration the need to comply with paragraph (d), specify the day, not less than 8 weeks after the making of the decision to terminate, when the termination is to happen; and
(d)give the tenant no less than 8 weeks notice of the proposed termination.
6.The lessor must establish that her circumstances amount to significant hardship. If satisfied, the Tribunal must then evaluate whether the lessor’s hardship would be greater than the hardship suffered by the tenants if such an order were made. The tenants are also required to establish hardship. What follows is a comparative exercise regarding the hardship of the lessor relative to that of the tenants.[1]
[1] Sanderson v Slavich [2004] ACTRTT 11 at [17]
7.‘Significant hardship’ is not defined in the Act nor is it qualified in any way in section 50. The kind of hardship the Tribunal may consider is not limited and may cover a broad range of circumstances personal to the party claiming hardship, be it financial, medical, welfare and safety. Such consideration may be approached as follows:
(a) actual hardship, not mere inconvenience, must be established;
(b) financial hardship, personal hardship and administrative difficulties may alone or in combination with each other or with other factors be considered;
(c) to be significant, hardship must be:
(i)real and important, or of a noticeably large amount;
(ii)it must cause distress or upset to the lessor;
(iii)it must be more than insignificant.[2]
[2] See Whiddon v Bartlett & Manning [2002] ACTRTT 3 at [10]
8.In Sanderson v Slavich[3] (Sanderson) the Tribunal noted:
The term “hardship” necessarily directs attention to the circumstances of the landlord’s particular case, having regard to the subjective circumstances of the landlord, as opposed to connoting some objective community wide standard of hardship. The same level of financial imposition impacts differentially on people depending on their financial resources. The act of moving house impacts emotionally in differential manner depending on the personally [sic] and history of the people concerned, including the presence of young children.
[3] [2004] ACTRTT 11 at [19]
9.Both parties in that matter raised financial hardship. The Tribunal concluded that neither party would suffer significant financial hardship. The basis of the lessor’s claim for hardship was an early return from an overseas posting with the expectation of moving back into the family home, which had been rented for a two year period, and avoid the cost of alternative accommodation for the duration of that lease.
10.In Sanderson the Tribunal held:
The Tribunal accepts that the landlord may experience some inconvenience in not being able to move back into the family home immediately on return from Singapore. But this inconvenience is nothing more than the consequences inherent in the commercial deal the landlord entered in granting a two year lease. Lots of people move house, many people move house regularly. The first move from Singapore would need to occur whether the landlord was moving into his family home or to other rented accommodation. The only additional inconvenience forced on the landlord is the inconvenience of the second move from the alternative rented accommodation to the family home at the end of the fixed term of the lease. Is this “significant hardship”. There is no scale which can be used to weigh these concepts. For better or worse, the Tribunal must use its own judgement as to whether the circumstances impose significant hardship. In the Tribunal’s view they do not.[4]
[4] Sanderson v Slavich [2004] ACTRTT 11 at [22]
11.In Roberts v Ogilvie[5] the Tribunal said:
6.It should be noted that the terms of section 50 (1) require a balancing of hardship between that suffered by the landlord if the lease is allowed to continue and that suffered by the tenant if the application to terminate the lease is granted. That hardship may be quite different in each case…
8.There is no guidance in the R T Act as to how the tribunal is to weigh those different and competing hardships, in order to achieve a just outcome. Accordingly, I have had to evaluate those competing hardships on the basis of the evidence provided by the parties, and my own assessment of the likelihood of those hardships arising and if they do, the likely effect on the parties. There are different considerations that arise for each party.[6]
[5] [2013] ACAT 21
[6] Roberts and Anor & Ogilvie and Anor [2013] ACAT 21 at [6], [8]
12.In that matter, the lessors claimed potential bankruptcy if the property was not sold with vacant possession. The parties had entered the lease for the property but occupancy had not commenced as at the time the lessors gave notice to vacate and applied to the tribunal for termination and possession orders. The respective contractual obligations under the tenancy agreement had however commenced, and at some point prior to the hearing of the application the tenants and their family moved in. The Tribunal was not satisfied the lessors would suffer significant hardship as the property could still be sold at a reasonable price in order to avoid bankruptcy despite being subject to a residential tenancy agreement, whereas the tenants faced the prospect of looking for alternative accommodation with their three children, one with special needs, and moving again.
The lessor’s claim for significant hardship
13.The lessor’s application is underpinned by her experience of domestic violence by her ex-husband. There is no doubt this has had a profound effect on her physically and emotionally. Additional to that was the financial commitment associated with the property which she claimed in her current circumstances she could not sustain.
14.The lessor resides in a rented property she occupied with her ex-husband. He left that property some time ago. In her written material, and also before the Tribunal, she said the situation with her ex-husband had been long-standing but in early 2020 she obtained an interim family violence order against him. That order, amongst other things, prohibited her ex-husband from attending that rented property in which she resides. The order was made final in October 2020 but the subject of subsequent appeal. It was confirmed in January 2021.
15.The lessor told the Tribunal her ex-husband had been convicted of offences in breach of the family violence order and sentenced to a term of imprisonment. The specific details of the offences and sentence are scant. The lessor claimed her ex-husband’s impending release from imprisonment posed a significant risk to her personal safety if she were to continue to reside in her current location. She said he had returned to the property multiple times in contravention of the family violence order but was not prosecuted for this. At one point in the proceedings she also said he was due for release in early April 2021 prompting the need for a more urgent hearing. However, at the hearing she said she believed he was due for release in mid May 2021.
16.On 20 January 2021, the lessor purchased the rented property. She did so with the knowledge that it was subject to a fixed term tenancy. Shortly thereafter, on 1 February 2021 she served a notice to vacate on the tenants, giving 26 weeks to vacate without cause. The notice requires the tenants to vacate by 13 September 2021. The fixed term tenancy does not end until 15 September 2021. In accordance with clause 94 of the standard residential tenancy terms such a notice cannot require the tenants to vacate within the fixed term. Such a defect renders the notice invalid. I raised this issue with the lessor’s agent at the hearing.
17.The lessor told the Tribunal she commenced proceedings shortly after serving the notice to vacate because the situation regarding her safety had escalated. I do not see how that is so on the evidence before me. Nonetheless, she also said the cost of renting and the expenses associated with also owing a property had placed her under significant financial stress. She claimed she needed to reside in the Rented Property in order to alleviate the financial stress she was under. There was no evidence before the Tribunal that the lessor had searched for any alternative accommodation other than the Rented Property in an effort to ameliorate her safety concerns. Her only solution was to reside in the Rented Property. At the hearing it was suggested that she should not have to move twice.
18.A report from a psychologist, relied upon by the lessor, states that the lessor has been advised by ACT Police to seek to relocate to an address unknown to her ex-husband or a safer location. It further states, she has sought to have the tenants of a property owned by her to vacate so she can move in.
19.In terms of her financial situation the applicant submitted a document outlining her expenses. Her monthly expenses amounted to approximately $3,045.67 (exclusive of food, gas and electricity). She was asked at the hearing about her income. She has two sources of income. Wages from full-time employment totalling about $2,400 per fortnight and rent from the Rented Property of $1,868.45 paid monthly. There is of course a deduction of agent’s fees leaving the lessor with about $1,683.48 per month. This amounts to approximately $6,483.48 in income per month. Taking into account some allowance for food and other expenses each month, it leaves the lessor with about $3,000 surplus.
The tenant’s claim for hardship
20.The tenants’ claim regarding hardship has evolved over the course of the proceedings. In their initial response to the application, the tenants claimed their circumstances meant they could not afford to alter their financial situation because they were obtaining finance to purchase land and build a house. This was also impacted by one of the tenants not being a permanent resident or Australian citizen. At the hearing, they advised the Tribunal that the loan process was now complete. Things have progressed slightly and the tenants now claim they would be rendered homeless should they be ordered to vacate the property.
21.The tenants told the Tribunal that in the second half of 2020 they began planning to purchase a house and land package. They said they signed a new fixed term tenancy with the previous owner ending in September 2021 as it coincided with the likelihood that their new house would be completed by then. At the hearing, they told the Tribunal that due to some recent delays with the land release, the house was unlikely to be completed by September 2021, but shortly thereafter. They informed the Tribunal that they had expected during the intervening period they would leave the Rented Property and reside with friends temporarily until the house was complete.
22.They expressed sympathy for the lessor’s situation, but said they had nowhere to go. They told the Tribunal that they have been actively looking for an alternative rental property. Due to their financial situation they have a strict budget. They have looked at 10 rental properties which are either beyond what they can afford or unsuitable for their needs. They have applied for 4-5 properties. Three of those applications have been rejected, one was taken off the market as it was leased and they had not heard about the outcome of the last. They also said one of the tenant’s residency status made applying for a rental more difficult.
23.They say they require a three bedroom property to allow sufficient space for their possessions and also family visits. One of the tenants’ parents live overseas and they travel from overseas for long periods of time, and reside with them at the property. While this plan was affected by the COVID-19 pandemic, they expect those family members to travel to Australia soon. The visa requirements associated with such a visit require a fixed address. A smaller property would not permit the parents to reside with them. The tenants are also due to marry in 2021. Further, they say they do not require a new 12-month fixed term tenancy because they expect to move into their new house sooner than that. This means they may be left with the financial burden of a lease they cannot get out of once the house is complete or simply cannot find a property that is being offered for a shorter period.
24.The tenants said they would be rendered homeless if the Tribunal were to order the termination of the tenancy.
25.The tenants were asked about their financial situation. They are both employed full-time. Their approximate combined monthly income is around $9,795. From this they pay rent of $1,868.45 monthly and other expenses including the loan for the land component. This cost will increase when construction commences. Based on what the tenants told the about their expenses, I estimate they have an approximate surplus of $5,000 each month. They say they cannot afford to pay higher rent due to upcoming expenses such as their wedding, the visa application fee, and building a house.
Should the tenancy be terminated?
26.This matter does not solely turn on the financial circumstances of the parties. I understand the lessor perceives her circumstances place her at a financial disadvantage, however on the evidence available I do not regard it to rise to a level that amounts to significant hardship. Likewise, the tenants have financial constraints that are particular to their circumstances, but I do not regard those as attracting significant hardship.
27.It rests on their respective personal circumstances. It is an unenviable situation to assess. On the one hand the lessor claims her personal safety is at risk if she does not move into the Rented Property and remains where she is. On the other hand, the tenants have no alternative accommodation and would be without a home.
28.I do not underestimate the distress experienced by the lessor nor do I seek to diminish the risk she believes exists. I recognise that the existence of the family violence order may not afford her sufficient protection at her current address. However, her personal safety may be at risk if she remains where she is, but it is not ameliorated by moving to the Rented Property. She could move elsewhere in the intervening period until the fixed-term expires. She could have done so at any time, prior to purchasing the property because the risk at her current location has existed for some time. I accept that this is made difficult by the invalidity of the notice to vacate, but that also could be remedied by issuing a new notice. She does not need to move to the Rented Property to be safe, she could move elsewhere. She may have to move twice. To do so amounts to inconvenience in the manner described by the tribunal in Sanderson. There is no evidence she has taken any steps to address her safety concerns, which I accept are real, other than to seek to move into the Rented Property. This is a consequence of a binding contractual agreement for a fixed-term. The tenants expected to have quiet enjoyment and exclusive possession of the property for the duration of the tenancy.
29.I am satisfied the lessor has established significant hardship based on the principles I have set out above, despite the convenience of moving into a property she owns, the distress and upset she is experiencing is real and important. It is more than insignificant. However, on the evidence before me I do not regard it as being greater than the hardship experienced by the tenants. They would be rendered homeless because they have no alternative place to reside. The lessor at least has a roof over her head and could make alternative accommodation arrangements to address her safety concerns. Instead, she has asked the tenants to make alternative accommodation arrangements which I am satisfied they have unsuccessfully attempted to do and are unlikely to be successful in doing so in the near future. In these circumstances I refuse to make the termination and possession order.
30.The application is dismissed.
31.In the interests of protecting the identity of the parties, I have also made orders pursuant to section 39 of the ACT Civil and Administrative Tribunal Act 2008 prohibiting the publication of the names of the parties and any material that might identify the parties. I also order there be no public access to the file.
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Senior Member K Katavic
Date of hearing: 12 April 2021 Applicant: Ms T Rennie, authorised representative First and Second Respondents: In person
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