Martins v Zhang - [2014] ACAT 48

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

MARTINS v ZHANG (Residential Tenancies) [2014] ACAT 48

RT 14/360
Catchwords: RESIDENTIAL TENANCIES – rental bond dispute – claim by lessor for additional week’s rent after termination of lease – time taken for repairs – no new tenants waiting to move in – new tenants not found for a month - lessor not entitled to additional rent
Legislation:Residential Tenancies Act 1997 Standard Terms clause 64
Cases:Hlubucek v Sinodinos [2007] ACTRTT 12

Tribunal: Mr W. G. Stefaniak AM – Presidential Member

Date of Orders and Decision 20 June 2014
Date of Corrected Order: 29 July 2014
Date of Published Reasons for Decision: 29 July 2014

ACT CIVIL AND ADMINISTRATIVE TRIBUNAL RT 14/360
BETWEEN:
DARIA MARTINS
Applicant

AND:
YOU ZHANG
Respondent

TRIBUNAL: Mr W.G. Stefaniak AM – Presidential Member

DATE:29 July 2014
CORRECTED ORDER

The Tribunal Orders that:
1.The application is dismissed
2.The Office of Rental Bonds is directed to release the $715 remaining bond monies held forthwith to the tenant.

………………………………..
Mr W.G. Stefaniak AM
Presidential Member

REASONS FOR DECISION

Mr Zhang and his colleagues were tenants in the subject property. Mr Zhang particularly, according to the applicant, was a good tenant. The applicant was the lessor (the landlord).
The tenancy commenced in November 2011. It finished on 14 March 2014. At that time it was a periodic tenancy. It was a group house. Mr Zhang was responsible for the behaviour of the other members of the group house.
I find nothing startling in the fact that the landlord claimed $1,506.35 out of the bond of $2,860. That is not unusual when the tenants have been in the house a number of years. That’s what bonds are for, and whilst Mr Pasi, who represented the tenant, mentioned there were some issues in relation to whether that was a justifiable claim, the bottom line is, his client agreed to pay it and that amount of the bond was released to the landlord. The balance of the bond of $1,305.65 would usually be due to the tenant. The applicant’s agent however agreed to the Office of Rental Bonds (ORB) releasing all but $715 of the $1,305.65 to the tenants.
The $715 retained by the ORB and in dispute, related to a request for the payment of a further week’s rent by the applicant’s agent. It was common ground that the tenancy finished on 14 March 2014. That was the date of the final inspection. Mr Zhang had some furniture in the premises but it is agreed that the furniture had been moved out by the end of 14 March 2014. The keys had been returned. It is clear the tenancy finished at one minute to midnight on 14 March 2014 and as of one minute past midnight, on 15 March 2014, there was no tenancy.
The landlord did some necessary repairs and advertised the property after the repairs were finished. This was one week after the tenancy finished. A month after the tenancy finished, new tenants were found. It wasn’t a group and unfortunately for the landlord, the rent was only $500 a week instead of the $715 per week rent paid by Mr Zhang and his colleagues. That is just a fact of life in Canberra at present where we have lots of properties and very few tenants. It is the current market situation and not something that’s likely to improve for a few years. It’s all supply and demand.
The applicant’s agents raise a very interesting question in this case. Is the applicant entitled to charge an extra week’s rent of $715 because that was the time it took to institute the repairs that were needed after the tenancy finished? The applicant’s contention is that the tenant has a duty under the Residential Tenancies Act 1997 (the RT Act) to return the property in a state that is basically the same as when they got it, fair wear and tear excepted. Clause 64 of the Standard Terms says:
“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 tenant, through his representative Mr Pasi from the Tenants’ Union, indicated that there is nothing in the RT Act or Regulations or indeed the case law which gives such a right to a lessor - to actually get an extra week’s rent after a tenancy has finished.
Mr Pasi quoted from Hlubucek v Sinodinos ACTRTT [2007] 12 in which the tribunal stated:
“An inspection report of a Final Inspection that was attended by both the lessor and the tenants, agreed to by both, is accepted by the Tribunal as evidence of the condition of the premises at the end of the tenancy...The Tribunal has accepted that there must be a finality about the condition of the premises at the end of the tenancy. See for instance Yandle v Katsoulis [1999] ACTRTT1 and Young v Forsyth [2003] ACTRTT. A lessor cannot add additional terms after the Final Inspection that the lessor discovers needs repairing, cleaning or restoring unless such further discovered items would not have been visible at the time of the final inspection.”
The quote goes on:
“Even in those circumstances, there has to be a finite limit to the time in which a lessor can discover such a need and add an item to the list. Once the tenants have vacated the premises they have no control over what happens in and to the premises and should not continue to be held responsible for matters that would have occurred after they vacated the premises.”
The above clearly indicates a tenancy finishes after the final inspection and anything that’s discovered after that has to be done within a short timeframe and needs to be an item that wouldn’t have been visible at the time of the final inspection. It doesn’t relate in any way and doesn’t assist in any way the applicant’s case in terms of whether a lessor can claim any extra rent after the tenancy terminates by way of compensation for putting the property into a condition in accordance with clause 64.
I must say I have taken the view, and indeed one or two other members of the Tribunal also have, that human nature being what it is and people sometimes suffering from domestic blindness, which is a common problem we all seem to suffer at times, it’s unreasonable to expect everything to be picked up on one final inspection. This Tribunal has, on a number of occasions, allowed a landlord to add an additional claim when it is obvious that the matter claimed had to have occurred during the tenancy and could not have occurred in the short timeframe between the final inspection and when the lessor or agent went back through and had another look.
Clearly, if it is several weeks after the final inspection, the potential for intervening events - such as climatic conditions, cobwebs growing because of the time of year or a new layer of dust on a window sill - can make it unsafe to attribute the problem to the recently expired tenancy. If however, something is discovered within one or two days after the final inspection (and it’s usually the lessor going in and picking up something the agents haven’t or indeed maybe the agents having another look and noting “-oops! I missed that one”), then that could be added to the list and this Tribunal takes a fairly liberal view of that.
This is not however the situation here. In this case, anything that needed fixing was attended to in a week. The lessor advertised after that and luckily for the lessor (in view of the current market), within a month of the old tenancy terminating, new tenants are signed up, albeit for a lessor rent of $500 per week. It is still a fairly quick turn over and I commend the lessor for being so prompt in that regard. A bird in the hand is certainly worth two in the bush in this market.
Is this tenant then liable for an extra week’s rent? I can find no case law and no case law has been put before me by either party that would indicate in a situation such as this that a tenant is liable to pay an extra week’s rent after his tenancy finishes.
It is normal in the ACT for there to be issues in relation to a bond. Often a tenant and a landlord will agree to an adjustment of the bond. In a place like Canberra where people are often posted away very quickly, it is not uncommon for tenants to tell the lessor or the lessor’s agent, “Look, you fix it. You do the cleaning. Take it out of the bond. I’m off, I’m being posted to Baghdad or Honiara and I don’t have time to clean it properly”. Such circumstances happen regularly in a place like Canberra.
Such issues as cleaning and minor damage are commonly a source of contention and the Tribunal gets hundreds of matters each year where people dispute what should happen with the bond. The fact that a bond is divided up between landlord and tenant is no reflection on either a tenant or indeed a lessor. In fact, in this instance, the applicant has praised the tenant saying he was a good tenant and all the landlord could come up with is $1,503; which the tenant was not overly happy to pay, but he has paid. That’s not too bad after two and a half years, especially in a group house so Mr Zhang has done a pretty good job as head tenant.
Maybe it could have been better, but that isn’t always the case and ACAT does not see the good cases where the house is in such a great condition it’s a seamless transfer of the whole bond back to the tenant. ACAT sees the ones where there are a few issues. The normal situation in these circumstances is that money comes out of the bond and action is sometimes taken by the parties in ACAT for that to occur when the parties can’t agree.
There have been no cases pointed out to me that would indicate in a situation like this, that the lessor is entitled to an extra week’s rent. The tenancy is finished. If there are any issues at the end, the bond may cover it, or the lessor may in some instances seek compensation for more than the bond. If the parties can’t work it out themselves, they come to ACAT and we will work it out for them.
There have been some occasions on which tenants have trashed property and ACAT has given compensation to a lessor for loss of potential rent because it was impossible to lease the premises due to smashed walls and doors, urine and faeces on carpets and other appalling behaviour by tenants, which caused the lessor many thousands of dollars of damage plus the inability to relet for a considerable period of time. These types of situations are fortunately rare and the lessor must be able to clearly show that rent has been lost before seeking compensation for it.
Some lessors after a lengthy tenancy, (and two and a half years could be classed as a lengthy tenancy) will take the opportunity to do such things as paint the premises and undertake other renovations before they relet the premises.
Some lessors have allowed tenants in, if they’ve got tenants to take over straight away after an old tenancy finishes, and have arranged as part of the deal to have the property professionally cleaned and some minor repairs done after the new tenants move in. An updated condition report is prepared and signed by the parties after the work has been completed. That is a not uncommon occurrence in this Tribunal.
It is also possible, especially when there are more tenants than properties available, for a lessor to have a tenant lined up to go in straight away but, because of the state of the property, a week or 2 is needed to get it into shape for the new tenants and the new tenants are not agreeable to going in before the remedial work is completed. In those circumstances, loss of that one or 2 weeks rent that the lessor would otherwise have got could be claimed from the old tenant. This occurs rarely and is not the case here.
I have seen several applications where a new tenant has been available from day one, but can’t take possession because the premises are not in a good enough state. Compensation of up to several weeks rent may given to the tenant in those circumstances. This would perhaps be claimable by the lessors from the old tenant should the lessors wish to pursue it. In other cases compensation ranging from a couple of weeks to close to 2 months lost rent has been given to lessors because premises were not habitable at the end of a lease due to the property being trashed by the exiting tenants.
None of that applies here. No case law has been put before me by either side which would indicate that the normal situation shouldn’t apply here. The tenancy finished on the 14th September. The tenant has paid his rent up until then. The tenancy terminates then. Everyone agrees the tenancy terminates then and there is simply, under the law, no reason why the tenant should have to pay anything extra. There are no new tenants who are waiting in the wings to move in straight away but can’t do so because the premises need to be repaired first.
The applicant’s point is interesting one and it’s not something that’s actually been raised to my knowledge in ACAT, since we’ve started and I don’t think it’s been raised in the old Residential Tenancies Tribunal. If it has, it hasn’t been reported. It is a valid and interesting question to raise, but there is nothing in the statute law and certainly nothing in the case law that’s been put before me which indicates the landlord is entitled to this extra week’s rent after the tenancy finishes in the circumstances of a case such as this.
Accordingly, the application is dismissed and the remaining bond monies in dispute of $715 (being the one week’s rent sought), held by the Office of Rental Bonds, are to be released to the tenant forthwith.

………………………………..
Mr W.G. Stefaniak AM
Presidential Member