Macdonald v Al-Ani & Anor (Residential Tenancies) - [2024] ACAT 79

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

MACDONALD v AL-ANI & ANOR (Residential Tenancies) [2024] ACAT 79

RT 957/2024

Catchwords: RESIDENTIAL TENANCIES – application for declaration under section 83(1)(m) of the Residential Tenancies Act 1997 declaring a notice to vacate valid – termination under optional posting clause – whether notice to vacate was accompanied by evidence of posting – definition of ‘accompanied’ – whether co-owner can be considered a lessor when not listed on the lease – whether a break lease fee applies to a tenant served with a notice to vacate if they leave before the date on the notice – refusal to make order sought
Legislation cited: Legislation Act 2001
Residential Tenancies Act 1997 ss 5, 8, 36, 47, 59, 71ED, 83, 86, 96, standard terms 6, 83, 96, sch 2, cls 102, 103

List of

Texts/Papers cited: Macquarie Dictionary (online at 9 October 2024)

Tribunal:Presidential Member H Robinson
Senior Member B Barry

Date of Orders:  15 October 2024
Date of Reasons for Decision:      15 October 2024
Date of Publication:  22 October 2024
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          RT 957/2024

BETWEEN:

TIM MACDONALD
Applicant/Lessor

AND:

OMAR AL-ANI
First Respondent/Tenant

DANIELLE AL-ANI
Second Respondent/Tenant

TRIBUNAL:Presidential Member H Robinson
Senior Member B Barry

DATE:15 October 2024

ORDER

The Tribunal orders:

The Tribunal declines to make a declaration that the notice to vacate dated 20 August is valid.
The applicant lessor is granted leave to file an amended application by 21 October 2024.
The matter is listed for hearing on the amended application on Tuesday, 5 November 2024 at 10:00am.
If no amended application is received, the matter will be dismissed.
………………………………..

Presidential Member H Robinson
For and on behalf of the Tribunal

REASONS FOR DECISION

This is an application for a declaration under section 83(1)(m) of the Residential Tenancies Act 1997 (RT Act) declaring a notice to vacate (the NTV) valid.
At issue are two questions relating to the interpretation of the “posting termination clause”, an optional clause in the Standard Residential Tenancy Terms (Standard Terms).

Background

The applicant, Mr MacDonald, is the lessor of a property in Narrabundah (the property). He jointly owns the property with his wife, Ms MacDonald, but only his name is on the lease.
Ms MacDonald is currently posted overseas with the Australian Government. Mr MacDonald and their children accompanied her there. The family is planning to return to Australia on 29 October 2024 and wish to return to live in the property.
At the time of accepting the posting, Mr and Ms MacDonald were advised that the posting would be for the period 21 August 2021 to 20 August 2024. They decided to rent out the property during this period. Although they initially rented it to different tenants, from 23 October 2023 Mr Macdonald entered into a 12-month lease for the property with the respondents, Mr and Ms Al-Ani. The parties entered into a residential tenancy agreement for a fixed period for 30 October 2023 to 29 October 2024 (the RT Agreement).
The RT Agreement, by agreement, incorporated an optional clause known as the “posting termination clause”. This clause, extracted below, allows either the lessor or the tenants to issue a notice requiring the property to be vacated on 8 weeks’ notice should either be posted elsewhere as part of their work. The notice may be issued during the fixed-term period.
On 8 August 2024, the lessor’s agents sent an email to the tenants, advising that the lessors would be returning to Australia and would require possession of the property on 29 October 2024. This was the final date of the fixed term lease. It appears that this email was intended to be advanced notice, rather than a formal notice to vacate.
On 12 August 2024, Ms Al-Ani responded to the agents, noting the vacate date and stating their “understanding” that they “may vacate anytime before 29^th October.”
On 15 August 2024, the Agents responded by saying that the “fixed term is still applicable & if you do decide to leave early you may be liable to pay a lease break fee.”
On 19 August 2024, the tenants wrote to the Agents and requested evidence of the posting. Later that day, the agents responded and attached a letter from Australian Border Force dated 19 August 2024 (Border Force letter) that states:
I am writing to confirm that Ms Wendy MacDonald, currently on posting overseas for the Australian Borer Force, will be posted back to her home location of Canberra at the conclusion of her posting.
On 28 August 2024, the agents formally wrote to the tenants and advised that the lessors would be “returning to their property via invoking the posting clause.” This is the NTV relied upon in these proceedings. The notice gave 8 weeks’ notice,[1] meaning the tenants are required to vacate by 29 October 2024, the date advised in the advance email. Nothing else was attached to this letter.
[1] The notice included an incorrect vacate date, but that it not relevant to these proceedings
The tenants promptly questioned the validity of the NTV.
The lessor, through his agent, now seeks confirmation from the Tribunal that the NTV is valid.
The questions before the Tribunal are:
(a)Whether a notice to vacate under the posting clause must include evidence, what that evidence must look like, and the consequences if evidence is not attached?
(b)Whether the ‘posting termination clause’ extends to cover situations where the lessor’s spouse is the person posted?
(c)Whether a tenant who moves out pursuant to such a notice issued under the posting termination clause is liable for a break lease fee where they move out prior to the notice period expiring?

Statutory framework: the posting clause

Pursuant to section 8 of the RT Act, all residential tenancy agreements in the Territory are taken to include the standard residential tenancy terms.
The Standard Terms include the terms set out in schedule 1 to the RT Act, as well as several optional clauses that the parties may agree to include if they wish. One of these is the posting termination clause if the lessor and the tenant agree to it being included.[2]
[2] Section 8(1)(f) of the RT Act
The posting clause in the tenancy agreement signed by the parties provides:
Termination because of posting
102(1) The tenancy agreement may be terminated—
(a)if the lessor is posted to the ACT in the course of the lessor’s employment—by the lessor giving the tenant at least 8 weeks notice to vacate the premises; or
(b)if the tenant is posted away from the ACT in the course of the tenant’s employment—by the tenant giving the lessor at least 8 weeks notice of the tenant’s intention to vacate the premises.
(2)A notice under subclause (1) must be accompanied by evidence of the posting (for example, a letter from the employer of the lessor or tenant confirming the details of the posting).
(3)The residential tenancy agreement terminates—
(a)8 weeks after the day the notice under subclause (1) is received; or
(b)if a later date is stated in the notice—on the stated date.
If the posting clause is included in the agreement, the agreement may be terminated in accordance with the clause.[3] Broadly, this means that the lessors must serve a notice to vacate[4] that meets the requirements of the clause 83 of the Standard Terms, being:
Notice to vacate by lessor
83 A notice to vacate must be in writing, in the form required by the Residential Tenancies Act, and must include the following information:
(a)the address of the premises;
(b)the ground(s) on which the notice is issued, together with sufficient particulars to identify the circumstances giving rise to the ground(s);
(c)that the lessor requires the tenant to vacate the premises by the expiry of the required notice period and that the tenancy ends on the day that the tenant vacates the premises.
[3] Section 36(1)(n) of the RT Act
[4] Also called a “termination notice” in the Act: clause 6
If the tenant does not vacate the premises in accordance with the clause, then the lessor must apply to the Tribunal for a termination and possession order under section 47 of the RT Act.
The requirement for evidence to accompany the notice
Subclause 2 of the posting clause states that a notice under subclause (1) must be “accompanied by evidence of the posting (for example, a letter from the employer of the lessor or tenant confirming the details of the posting).”
Neither the NTV nor the preliminary email were accompanied by any evidence of ‘the posting’. The Border Force letter, which was given to the tenants prior to the NTV being served, confirms that Ms MacDonald was, at that date, on a posting and that she would return home afterwards. It has no dates or other details about when her posting would end, or when she would be returning to Canberra.
Neither the terms of subclause 2 nor the RT Act more broadly define what “evidence” the lessor is required to provide. Subclause 2 does not specifically require evidence of the date that the posting ceases – although the “example” refers to the “details” of the posting. This is expressly stated to be a requirement.
The Border Force letter is evidence that Ms MacDonald was, as at 19 August 2024, on a posting, and would eventually return to Canberra, but nothing more. Is this sufficient?
Viewed in context, it is arguable that the evidence contemplated by this clause, and particularly the “example”, is evidence relevant to the reason for issuing the NTV, which is a notice requiring the tenants to move from a property they are living in because the lessor requires the property when they return to Australia. At the least, we would expect that the evidence includes that the lessor is due to return to Australia within or shortly after the expiration of the 8-week notice period. It is doubtful that the Border Force letter meets the requirements of “evidence of the posting,” at least in any way meaningful to the NTV it should have accompanied. We doubt it can be considered “evidence” to support invoking the posting clause.
However, we do not need to determine this issue, as the letter provided as evidence did not, on our understanding, “accompany” the NTV. It was provided before the NTV and was issued at the tenant’s request.
The word “accompanied” is used in four places in the RT Act and the Standard Terms,[5] in each case referring to documents provided in support of a notice. There is no definition of the term in either the RT Act or in the Legislation Act2001. Turning to the natural and ordinary meaning of the word, the Macquarie Dictionary[6] defined “accompany” to mean:
1. to go in company with; join in action: to accompany a friend on a walk.
2. to be or exist in company with: thunder accompanies lightning.
[5] See s 71ED(2), standard term 96(2), sch 2, cls 102(2), 103(3) of the RT Act
[6] Macquarie Dictionary (online at 9 October 2024) ‘accompany’ (def 1–2)
Although a perhaps an unusual choice of a word to use in the context of documents, the intention, plainly, is that evidence of the posting accompany or ‘be with’ the NTV.
The letter provided to the tenants, upon their request, on 19 August 2024 did not include any details of the posting. In any case, however, the evidence did not “accompany” the NTV.
As such, we do not consider that the NTV meets the requirements of the RT Act and decline to make a declaration that it is valid.
Section 59(2) of RT Act allows the Tribunal to correct a defective notice (other than a notice not given in accordance with the Act) upon application by the lessor. There is currently no such application before the Tribunal.
The lease
The terms of the posting clause are quite clear: the lease may be terminated “if the lessor is posted to the ACT in the course of the lessor’s employment.”
The complexity in this case is that Ms Macdonald is not cited as the lessor on the lease.
The evidence of Mr Macdonald, given orally at the hearing, and Ms MacDonald by way of witness statement filed with the Tribunal, was that Mr MacDonald signed the lease on behalf of them both because Ms MacDonald was overseas. It is surprising that this was necessary in this age of modern telecommunications — surely either the RT Agreement could have been signed remotely, or Ms MacDonald could have executed a Power of Attorney giving her husband the power to enter into the agreement on behalf of her? Either would have been preferable.
The situation being what it is, what then are the legal consequences?
The ‘lessor’ box on the RT Agreement names only Mr MacDonald. However, the RT Agreement is subject to the terms of the RT Act.
Section 5 of the RT Act defines “lessor” as:
(1) A person is a lessor if the person grants a right of occupation under a residential tenancy agreement.
Ms MacDonald is the co-owner of the property. She owns the property as joint tenants with her husband, the applicant, whose name is on the lease. Joint tenancy is a method of owning property that allows all tenants to have their names on the title as co-owners, and they hold the interest jointly, not separately. The rights attached to such ownership are not readily divisible (unless, for example, there is a change to the type of tenancy to tenants in common).
A residential tenancy agreement may be written, oral, or partly in writing and partly oral.
There is no doubt that Ms MacDonald was aware of the lease, acquiesced to it, and, as the co-owner of the land, would be bound by it as joint owner with her husband. In our view, this makes her a lessor for the purposes of the RT Act, notwithstanding that her name is not on the RT Agreement. Put succinctly, she is a “lessor” within the meaning of that term in the RT Act, as her interest in the right to possession of the land, which is held jointly from her husband’s, has been leased to the tenants.
As such, Ms Macdonald’s return to the Canberra is a “posting” for the purposes of this clause. Any other interpretation would be disingenuous.
Nonetheless, for the avoidance of doubt, we note that in an era of digital technology, one partner being overseas is not a satisfactory excuse for the awkward practice of one party signing a lease on behalf of another, without adequate record of that, or only one party signing a lease at all. It is not unreasonable for a tenant to know who each of the lessors are when they enter into a lease.
The break lease fee
It is somewhat surprising to us that the posting clause does not allow a tenant, served with a notice to vacate, to break the lease prior to the expiration of the notice period without risk of penalty. It would be a fortunate situation where a tenant is able to find a new premises to move to without some degree of overlap.
This may be contrasted with other termination provisions. For example, where a lessor terminates a periodic tenancy under standard term 96, because they wish to move into the premises, the tenants may vacate the premises at any time during the two weeks before the date specified in the notice to vacate provided the tenant gives the lessor four days’ notice of intention to vacate.
We are not aware of any lessor, having issued a notice to vacate under a posting clause, then seeking compensation where the tenants vacate early, and it may be any compensation payable under section 83 of the RT Act would be minimal anyway, but this apparent possibility may nonetheless be something the Legislature may wish to consider clarifying.
Fortunately, in this case, Mr MacDonald confirmed at hearing that he would not be seeking a break lease fee from the tenants were they to move out early.

Conclusion

The NTV issued by the agents to the tenants is defective, as it is not accompanied evidence of the posting, as expressly required by the RT Act. The Tribunal therefore declines to make the order sought.
It is open to the Tribunal to correct a defect, if persuaded it is appropriate to do so, but no application of that nature is before the Tribunal.
In the interests of resolving this matter as promptly as possible, the applicant is granted leave to file an amended application, seeking correction of the defect of the notice, and setting out the grounds upon which he says the amendment should be made. The matter will then be listed for hearing so that the Tribunal can properly hear from the parties and consider the matter.
Accordingly, the Tribunal orders:
(a)The Tribunal declines to make a declaration that the notice to vacate dated 20 August is valid.
(b)The applicant lessor is granted leave to file an amended application by 21 October 2024.
(c)The matter is listed for hearing on the amended application on Tuesday, 5 November 2024 at 10:00am.
(d)If no amended application is received, the matter will be dismissed.
………………………………..

Presidential Member H Robinson
For and on behalf of the Tribunal

Date(s) of hearing:	2 October 2024
Applicant:	Ms Fuller, authorised representative
First Respondent:	Mr Al-Ani
Second Respondent:	Ms Al-Ani