LIU & ANOR v GILLIGAN & ANOR (Residential Tenancies)

[2020] ACAT 86

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

LIU & ANOR v GILLIGAN & ANOR (Residential Tenancies) [2020] ACAT 86

RT 81/2020

RT 191/2020

RT 210/2020

Catchwords:               RESIDENTIAL TENANCIES – meaning of bond – taking more than one bond – failure to lodge bond – lessor’s duty of urgent repair for leaking roof – tenant’s duty to advise lessor of vacating premises – keys to be returned to the lessor

Legislation cited:        Residential Tenancies Act1997 ss 8, 9, 10, 20, 21, 23, 36, 36, 62, 63 standard terms 15, 16, 17, 21, 22, 23, 23A, 63, 64, 65

Cases cited:Toora Women’s Inc v Various Tenants [2020] ACAT 2

Tribunal:  Senior Member A Anforth

Date of Orders:         23 October 2020

Date of Reasons for Decision:      23 October 2020

AUSTRALIAN CAPITAL TERRITORY  RT 81/2020

CIVIL & ADMINISTRATIVE TRIBUNAL  RT 191/2020

RT 210/2020

BETWEEN:

YI LIU

QIN ZHANG

Lessors

AND:

SCOTT GILLIGAN

CAMELIA UURA

Tenants

TRIBUNAL:     Senior Member A Anforth

DATE:23 October 2020

ORDER

The Tribunal orders that:

1.The tenants are jointly and severally to pay the lessors the sum of $7,322 in full and final settlement of all claims arising from the tenancy.

2.ACT Rental Bonds on behalf of the Territory is directed to release the sum of $2,800 to the lessor.

3.The tenants are to pay the balance of $4,522 after offset of the bond to the lessors on or before 30 December 2020.

………………………………..

Senior Member A Anforth

REASONS FOR DECISION

Introduction

1.This matter concerns:

(a)claims (RT 81/20) and (RT 191/20) by Yi Liu and Qin Zhang, lessors, against Scott Gilligan and Camelia Uura, tenants, for rent arrears, utility charges, cleaning and damage to the premises;

(b)a claim (RT 210/20) by the tenants against the lessors for an illegal bond, failure to repair hail damage to the roof and windows and breach of quiet enjoyment by unauthorised visits by the lessors.

2.The residential tenancy commenced on 30 May 2019 and ended on 3 April 2020 after the tenants vacated in response to a notice to vacate served by the lessors. The rent was $700 per week. The premises consisted of a main house and a granny flat. Three people lived in the house and one person lived in the granny flat.

3.There was no ingoing condition report prepared at the start of the tenancy and no outgoing condition report at the end of the tenancy. This constitutes a breach of standard terms 21, 22, 23 and 23A by the lessor.

4.The written agreement signed by the parties was not in the standard terms required by sections 8 and 9 of the Residential Tenancies Act 1997 (RTA). The agreement contained frequent grammatical errors consistent with the evidence from the parties that it was drafted by the lessors, for whom English is not their first language.

5.By force of sections 8 and 9 of the RTA, the parties are deemed to have a residential tenancy agreement in the standard terms. None of the non-standard clauses were endorsed under section 10 of the RTA, hence some of them would be void by reason of infringing sections 8 and 9 the RTA.[1] For present purposes only those terms of the non-standard agreement that are relevant to the dispute will be considered.

[1] Toora Women’s Inc v Various Tenants [2020] ACAT 2

6.The non-standard bond clause reads verbatim:

RENTAL BOND

A residential bond of four weeks rent must be paid by the tenant on starting the agreement.

GUARANTEE DEPOSIT

A residential Guarantee Deposit of AUD2800 in cash for full furnished and a grand piano must be paid by the tenant on starting the agreement. The deposit will be return the tenant who keep full furnished and a grand piano as good as starting rent at the end of the tenancy.

[errors in original]

7.The ‘guarantee deposit’ is a bond within the meaning of the definition in the Dictionary of the RTA:

“Bond” means an amount paid or payable by a tenant as security for the performance of the tenant's obligations under a residential tenancy agreement.

8.The tenants’ obligations under the residential tenancy agreement include to care for the contents of the house and return them in the condition in which they were received minus fair wear and tear (standard terms 63, 64 and 65). Hence the ‘guarantee deposit’ is functioning as a bond.

9.This bond clause provides for two separate bonds, each of $2,800. This requirement breaches sections 20 and 21 of the RTA which states there can only be one bond and that bond cannot exceed four weeks’ rent:

Section 20

Maximum amount payable

A lessor may only require or accept as a bond an amount of not more than the first 4 weeks of rent payable under the residential tenancy agreement.

Section 21

Only 1 bond per residential tenancy agreement

A lessor may only require or accept 1 bond in relation to a residential tenancy agreement.

10.Sections 20 and 21 are also replicated in standard terms 15 and 16 of the RTA.

11.The bond clause breaches section 23 of the RTA in so far it allows the lessor to receive and retain the ‘guarantee deposit’ in cash and hold it until the end of the lease. Section 23(3) is replicated in standard term 17 of the RTA. Section 23 of the RTA requires that any bond be deposited with the Office of Rental Bonds (ORB):

Section 23(3)

Deposit of bond by lessor

…

(3)If the tenant pays the bond to the lessor and not to the lessor's agent, the lessor must, before the prescribed period ends, deposit with the Territory—

(a) the amount of the bond; and

(b) a notice in accordance with section 25.

12.The evidence from the ORB was to the effect that only one bond was lodged.

13.On 6 February the lessors lodged an application with the Tribunal claiming:

(a)rent arrears of $6,300;

(b)electricity of $1,532.53;

(c)gas of $1,200.75;

(d)tribunal lodgement fee of $159.50.

14.The lessors annexed:

(a)a copy their Westpac bank statement showing rent deposit from the tenants on 31 December 2019 and 13 January, both of $700;

(b)a gas statement of 29 October 2019 showing a nil balance for the previous quarter and a balance of $1,102.61 for the quarter ending 30 September 2019;

(c)a gas statement of 30 January 2020 showing that the previous quarter’s bill had not been paid and new charges of $98.14 for the quarter ending 30 December 2019;

(d)an electricity statement of 31 January 2020 showing an unpaid balance of $814.90 for the quarter ending 31 September 2019 and new charges of $435.66 for the quarter ending 31 December 2019. The sum of $430.95 was credited for rebates and discounts leaving an unpaid balance of $819.61.

15.On 21 February 2020 the Tribunal found the rent was unpaid from 19 December 2019 at the rate of $700 per week and ordered the tenants to pay the arrears in a lump sum and future rent as it fell due.

16.On 24 February 2020 the lessors served a notice to vacate on the tenants for rent default requiring possession on 8 March 2020.

17.On 11 March 2020 the lessors filed an appliction for possession of the premises based on rent default. On 3 April 2020 the tenants vacated the premises. This date was within the fixed period of the lease that ended on 29 May 2020.

18.On 16 March 2020 the tenants filed an application (RT 210/20) in the sum of $7,100 for:

(a)a refund of the ‘guarantee deposit’ of $2,800

(b)breach of quiet enjoyment in the sum of $1,500 for the lessors making 15 unauthorised visits; and

(c)a rent reduction of $350 per week over an eight week period amounting to $2,800, for the lessors failure to repair the broken skylight and windows caused in a hail storm.

19.The tenants annexed:

(a)a statement from Michel Caraiannis, who was the person living in the granny flat stating that the window in the granny flat was broken by the hail storm;

(b)a series of medical records concerning Ms Uura’s health in support of their statement that their rent arrears had arisen from the unexpected sickness of Ms Uura;

(c)a receipt from the ORB showing that the bond was not lodged until 27 September 2019;

(d)photos of the broken skylight and window in the granny flat.

20.On 2 June 2020 the lessors filed submissions in which they redefined their claim to be:

(a)rent arrears of $10,500;

(b)the costs of replacing locks for keys not returned of $297;

(c)rubbish removal of $137;

(d)repair of a broken window in the granny flat of $659.94;

(e)outstanding water of $112.58;

(f)cleaning of $255;

(g)replacement of light bulbs of $40.60; and

(h)lost rent by reason of the early termination of the fixed term of $2,800.

Giving a total of $14,802.12 plus the Tribunal lodgement fee of $159.50.

21.The lessors annexed:

(a)photographs of the house, yard and broken windows;

(b)utility bills; and

(c)the invoice from the locksmith, rubbish removal, light bulbs.

22.On 24 June 2020 the matter came before the Tribunal for hearing. Both the lessors and both the tenants appeared in person by telephone. An interpreter assisted the lessors.

23.The tenants admitted the claims for:

(a)cleaning ($255);

(b)rubbish removal ($137);

(c)two light bulbs ($20); and

(d)an unspecified ‘small amount of water’ later reassessed by the lessor as $12.

24.There was a difference between the parties concerning the date the tenants vacated. It seems the tenants physically vacated on 21 March 2020 but did not tell the lessors. The lessors became aware of the fact and recovered possession on 3 April 2020.

25.The tenants denied the claim for the keys. They said that the keys were left in the house on a particular ledge. The house was left unlocked. The lessors deny that the keys were in the house. The tenants should have given the keys to the lessors. If the keys are missing, the lessors have little choice but to have the premises rekeyed.

26.The tenants explained the inconvenience caused by broken skylight and windows. Whenever it rained they had to put buckets under the leak in the living room and lounge room. The hail damage occurred on 20 January 2020 and was not repaired before the tenants physically vacated on 21 March 2020. There was no evidence of the number of days of rain in this period.

27.There was discussion about the rent default. The Tribunal and the parties went through the bank statements that had been filed. The lessors insisted that there was 15 weeks rent arrears amounting to $10,500. This appeared consistent with the statements. The tenants maintained that they were up to date as at 19 December 2019 and so their arrears were only 11 weeks and two days to 21 March 2019. The tenants did not factor in the additional period from 21 March 2020 to 3 April 2020 which is one day short of three weeks. If this period is allowed to the lessor then their claim of 15 weeks arrears is justified.

28.The Tribunal made orders for the parties to file and serve their respective bank statement showing rents received and paid respectively; a copy of the receipt for the ‘guarantee deposit’ and evidence of any cash payments for rent or other costs.

29.On 23 July 2020 the lessors filed their bank statements. These showed rent paid prior to 19 December 2019 and after. In the period after 19 December 2019 there were two payments each of $700.

30.On 24 August 2020 the lessors filed further documents and submissions in which they redefined their claim to be:

(a)rent arrears of $10,500;

(b)locks of $297;

(c)window gauze for the granny flat of $129.60;

(d)window repair of $691;

(e)water outstanding of $12.58;

(f)repair to garden of $75;

(g)light bulbs of $40.60; and

(h)tribunal lodgement fee of $159.50.

Total sum of claim: $11,905.28

31.The lessors denied the unauthorised visits and the claimed breach of quiet enjoyment. They annexed photographs of the rubbish, cleaning needed, damage to some walls, the granny flat gauze and window.

32.On 31 August 2020 the tenants filed submissions in which they challenged whether the lessors had in fact paid the utilities with the money paid by the tenants, prior to the tenants transferring the utilities into their own name. The tenants admitted that they had not paid rent since 1 January 2020 and only part rent for the prior week. The tenants admitted rent arrears of $9,200 before account was taken of the bonds.

33.They attached:

(a)their bank statements;

(b)a copy of the handwritten receipt for the ‘guarantee deposit’ with the lessor’s signature;

34.The matter came before the Tribunal on 1 September 2020. Both the lessors and tenants appeared by phone. It transpired that the tenants had not served on the lessor a copy of their submissions and documents filed on 31 August 2020 and the lessors had not served on the tenants a copy of the documents they filed on 23 July 2020. The hearing could not proceed to finality. The Tribunal ordered that the Registrar serve both sets of documents and the parties agreed that the matter would then be determined on the papers following final submissions by the parties due by 1 October 2020. The Registrar served the documents, but no final submissions were received from the parties by 1 October 2020.

The lessors’ claim

35.The tenants admitted the cleaning of $255 and the rubbish removal of $137.

36.The Tribunal is satisfied that the gauze and window in the granny flat was smashed at the same time as the other windows in the hailstorm. This is not the tenants’ responsibility under standard term 63 and accordingly this part of the lessor’s claim is dismissed.

37.The lessors only raised the issue of the repair of potholes in the garden in their submissions of 24 August 2020 which was after the hearing. They had ample opportunity to do so earlier and it is not procedurally fair to raise the matter in this belated manner. This part of the claim is dismissed.

38.The lessors claim for rent arrears of 15 week is allowed in the sum of $10,500. The lessor is entitled to rent until such time as the tenants provide the lessors with vacant possession. This requires that the tenants communicate their departure to the lessors. Absent this communication the lessors must respect the tenants ongoing exclusive right of possession. Merely leaving the premises with the keys inside and the house unlocked is not sufficient to satisfy the tenants’ duty.

39.The lessors claimed lost rent in the sum of $2,800 by reason of the termination of the tenancy within the fixed period. The lessors served a notice to vacate on the tenants who vacated in response to that notice. In these circumstances the tenancy comes to an end when the tenants vacate (sections 36(h) and 36(j) of the RTA). In these circumstances there is no abandonment by the tenants that justifies any order under sections 62 or 63 of the RTA.

40.The lessors’ claim is allowed in the sum of $10,892 plus the Tribunal lodgement fee.

Tenant’s claim

41.The Tribunal is satisfied that the lessor did take a second cash deposit of $2,800 for the ‘guarantee deposit’. This was illegal and the tenants are entitled to a refund thereof.

42.The broken skylight and windows which allowed rain to enter the loungeroom and living room is an urgent repair within the meaning of standard term 60. The lessors’ failure to repair the skylight and windows “as soon as necessary, having regard to the nature of the problem” to stop the rain entering the loungeroom and living room, is a breach of standard term 59.

43.The tenants described the steps they had to take when it rained but there was no evidence of the frequency and intensity of rain during this two month period (21 January 2020 – 21 March 2020). The Tribunal consulted the Bureau of Meteorology website and noted that there were two days in January after the hailstorm both of light rain; eight days in February of which one was heavy; and six days in March prior to 21 March 2020 of which two were heavy rain. This gives a total of 13 days of light rain and three days of heavy rain.

44.The tenants sought compensation assessed as a 50% weekly rent reduction i.e. $350 per week for the two month period. There is no basis for such an assessment. The daily rent was $100 per day. On the days of heavy rain it is reasonable to allow a 100% rent reduction which amounts of $300. On the days of light rain the inconvenience would have been less and so a reduction of 20% is allowed i.e. 13 days at $100 per day at 20% = $260. This gives a total allowed of $560.

45.The tenants assert that the lessors made either 12 or 15 unauthorised visits and some of those occasions resulted in acrimony. The lessors deny it. There was no email or other contemporaneous corroboration of the visits other than the statement of Mr Caraiannis who lived in the granny flat. This statement referred to regular visits by the lessors.

46.The truth probably lies somewhere between the tenants’ assertions and the lessors’ total denial. Given the extent of non-compliance by the lessors with the law as set out in the RTA referred to above and the equivocal corroboration by Mr Caraiannis, the Tribunal assumes six such visits by the lessors and allows $35 per visit (being 5% of the daily rent) giving a total of $210.

47.The tenants claim is allowed in the sum of $3,570 plus the Tribunal lodgement fee.

Conclusion

48.The Tribunal lodgement fee is the same for both parties and so is a neutral factor. When the tenants’ award of $3,570 is offset from the lessors’ award of $10,892, the balance is $7,322 in favour of the lessors.

49.ACT Rental Bonds on behalf of the Territory is directed to release the disputed sum of $2,800 to the lessor.

50.The Tribunal notes the breaches by the lessor in taking a second bond and in delaying lodgement of the first bond with the ORB. Both of these matters constitute offences under the RTA. The matter is referred to the Registrar for consideration of further action.

………………………………..

Senior Member A Anforth

HEARING DETAILS

FILE NUMBER:	RT 81/2020 RT 191/2020 RT 210/2020
PARTIES, APPLICANT:	Yi Liu & Qin Zhang
PARTIES, RESPONDENT:	Scott Gilligan & Camelia Uura
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	N/A
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Senior Member A Anforth
DATES OF HEARING:	1 September 2020