Mies v Phillips
[2006] ACTRTT 1
•3 January, 2006.
Nicole Mies & Andrew Tarnawsky – v.- A.J Phillips ACTRTT 1 [2006]
CATCHWORDS
Abandonment
Implied reasonable time
ISSUES
Compensation for abandonment
Whether landlord has to elect to apply to the Tribunal pursuant to section 107(1) within a reasonable time following abandonment where notice was given by the tenants.
LEGISLATION
Residential Tenancies Act 1997
sections: 62, 107
prescribed terms: 84
Legislation Act 2001
sections: 139, 139
CASES CITED
Statutory Interpretation in Australia Pearce and Geddes 4th ed at [2.12];
Koon Wing Lau v Calwell 1949 80 CLR 533 at 573;
Re O’Reilly: ex parte Australlena Investments P/L 1984 58 ALJR 36;
BTR PLC v Westinghouse Brake and Signal Co (Australia) Ltd 1992 106 ALR 35 at 60.
Case Reference Number: RTT 05/1384
Re: 1/65 Melba Street, Downer ACT 2602
Decision
1. That the Office of Rental Bonds release half the bond to each party.
2. That the written reasons will issue.
Member: A. Anforth
Date: 3 January, 2006.
IN THE RESIDENTIAL TENANCIES
TRIBUNAL OF THE AUSTRALIAN
CAPITAL TERRITORY No. 1384 of 2005BETWEEN NICOLE MIES AND ANDREW
TARNAWSKY
(Tenant/Applicant)
AND A.J.PHILLIPS
(Landlord/Respondent)STATEMENT OF REASONS
1. This case raised for determination the interpretation of sections 62, 107 and prescribed term 84 in the relation to the compensation to which a landlord is entitled upon the abandonment of a fixed terms lease by a tenant.
2. The relevant sections provide as follows:
Section 62:
(1)Where a tenant abandons premises before the expiration of a fixed term agreement, the former lessor may apply to the tribunal for the following compensation:
(a)compensation for the loss of the rent which the former lessor would have received had the agreement continued to the end of its term;
(b)compensation for the reasonable costs of advertising the premises for lease and of giving a right to occupy the premises to another person.
(2) On application, the tribunal may award compensation of the kind referred to in subsection (1) (a) and (b).
(3) The amount of compensation the tribunal may award—
(a)under subsection (1) (a) shall not exceed an amount equal to 25 weeks rent; and
(b)under subsection (1) (b) shall not exceed an amount equal to 1 week’s rent.
(4) In determining the amount of compensation that may be awarded under subsection (2) in relation to costs, the tribunal shall have regard to when, but for the abandonment of the premises—
(a)the agreement would have expired; and
(b)the lessor would have incurred the costs referred to in subsection (1) (b).
Section 107
(1)Where a lessor received a notice of intention to vacate before the expiration of a fixed term agreement, and the date nominated in the notice as the date on which the tenant intends to vacate is a date before the expiration of the agreement, the lessor may—
(a)accept the notice; or
(b)apply to the tribunal for compensation for—
(i)the loss of the rent which the lessor would have received had the agreement continued to the end of its term; and
(ii)the reasonable costs of advertising the premises for lease and of giving a right to occupy the premises to another person.
(2) On application, the tribunal may award compensation of the kind referred to in subsection (1) (b).
(3) The amount of compensation the tribunal may award—
(a)under subsection (1) (b) (i) shall not exceed an amount equal to—
(i)25 weeks rent; or
(ii)rent in respect of the unexpired portion of the agreement;
whichever is the lesser; and
(b)under subsection (1) (b) (ii) shall not exceed an amount equal to 1 week’s rent.
(4) In determining the amount of compensation that may be awarded in relation to the reasonable costs of advertising, the tribunal shall have regard to when, but for the vacation of the premises—
(a)the agreement would have expired; and
(b)the lessor would have incurred those costs.
Prescribed term 84:
(1) If the tenant serves a notice of intention to vacate and vacates the premises in accordance with the notice, the tenancy terminates on the date of vacating the premises.
(2) On receiving a notice of intention to vacate, the lessor may—
(a)accept the notice and accept that the tenancy shall end on the date nominated in the notice; or
(b)apply to the tribunal for confirmation of the tenancy agreement, an order for compensation or both.
3. The issue raised concerns the landlords response to an abandonment in the fixed term of a lease which occurs following notice of intention to abandon given by the tenant. The tenant in the present proceedings maintains that the tenancy terminated on the date specified in their notice given to the landlord with the consequence that the landlord is not entitled to further rent, or compensation in lieu of rent pursuant to section 62, pending a new tenant being found, unless the landlord makes application to the Tribunal for an order to that effect pursuant to section 107(1)(b) within a reasonable time of the abandonment. In the present case the landlord did not make such an application until more than 3 years after the abandonment.
4. The landlord contends that compensation is payable under section 62 for abandonment independently of the process set out in section 107. In the alternative, the landlord contends there is no time limit on making the application under section 107 and no reasonable time limit ought to be implied into that section.
The facts:
5. The tenant lodged an application with the Tribunal on 3 June 2005 seeking a refund of the bond lodged by the tenant in respect of their tenancy at 1/65 Melba Street. Downer in the ACT.
6. The tenancy commenced on 14 March 2001 for a fixed term of 12 months. A bond of $540 was paid by the tenants and lodged with the Office of Rental Bond where it remained until the order of this Tribunal on 5 August 2005.
7. The tenancy ended when the tenants vacated the premise on 27 January 2002 prior to the end of the fixed term to move interstate. The tenants did not allege any breach on the landlord’s part.
8. At the time of lodging their claim with the Tribunal the tenants filed the following statement of particulars:
1. Please identify the issues in dispute, for example, payment of rental arrears or that the lessor fix a broken heater.
Mr Tarnawsky and I wish to claim a full refund of our rental bond of $540 (being four weeks' rent). Maureen Wales of Metropolis Real Estate disputes our claim but has provided no basis for her dispute. We have attempted to seek resolution between both parties, however Ms Wales has not responded to our written (and telephone) requests (example of written correspondence attached).2. Please state the nature of the relief you seek (What sort of order you want the Tribunal to make), for example, an order that the tenant pay rental arrears or the lessor fix the broken heater.
We seek a full refund of our rental bond. We believe we are entitled to the full amount because:
1. We left the property in excellent condition.
2. We had the carpets steam-cleaned before moving out.
3. We received no written complaints from Ms Wales regarding any aspect of our tenancy.4. We received an inadequate amount of rent reduction for water damage in the bathroom. The bathroom was in disrepair for six months and we only received a rent reduction for two of those months.
5. Ms Wales has provided no basis for her contesting our claim.
We understand Ms Wales is legally entitled to a maximum amount of $135 (being one week's rent) from the bond if the property was vacant after we moved out. If she can provide evidence of this, then we are happy for $135 of the $540 bond to be released to her as stated in our letter of 2 January 2002 (attached).
We also request that Ms Wales reimburse us for the Tribunal's administrative fee of $48. Had Ms Wales cooperated with us in resolving this matter, it would not have been necessary to bring an action in the Tribunal.3. Please give us a brief history of the dispute (why you are making the application). If you are claiming money please show calculations and total amount claimed.
Mr Tarnawsky and I broke lease six weeks early as we had received work and study offers interstate. As Ms Wales had not advised us on the procedure of claiming a bond refund, we took no action. Ms Wales contacted me on 20 April 2005, offering to divide the $540 bond fifty-fifty between herself and Mr Tarnawsky and I. We both questioned her basis for this claim of $270, but she did not provide a satisfactory response - for that matter, she provided no response at all. We lodged our claim for the full bond amount on 28 April 2005, as Ms Wales had not shown why she should receive such a large portion of the money. Ms Wales disputed our claim without providing any reason for doing so. We wrote to her on 17 May 2005, requesting that she contact us within two weeks to resolve this matter. She has neither contacted us, nor has she demonstrated a valid claim. We are frustrated at having had so much time wasted in waiting for Ms Wales to respond and feel that going through the Tribunal is the only way to settle this dispute.
9. Attached to the tenants application was a copy of their letter of 2 January 2002 to the landlord giving notice of their intention to vacate the premise on the weekend of 26-27 January 2002:
Enclosed in this letter are the details of our plans to vacate the above property, as we discussed in our meeting of 17 December 2001. The proposed date on which we intend to vacate the unit is the last weekend in January (26-27). We hope this will give you ample time to advertise the unit and obtain a new tenant.
As you are aware, we are both low-income earners and we would like to pay the January rent fortnightly (we are due for our next calendar-month rent on January 14, but since we will only be staying in the unit for another fortnight, we would like to make a fortnightly rent payment on January 14. Please advise if this is a viable option.
Regarding the additional week's rent we have to pay since we are breaking the lease early, should Andrew and I be unable to pay that amount, we request that it be deducted from our bond if possible.
Regarding the professional steam cleaning of the carpets in the lounge and bedrooms, are you able to give us the name and contact details of a good carpet cleaner?
Regarding the cost of advertising the property in the newspaper classifieds, please advise us of the cost and we will pay it, as stipulated in our lease.
If you need to 4iseuss any details with us, please don't hesitate to call us, at home (6242 5181) or mobile (0419 18 08 91). We look forward to hearing from you.
10. On the 23 June 2005 the landlords agent file a reply with the Tribunal alleging that the tenants vacated on 27 January 2002, being within the fixed term, at which time the rent was paid to 27 January 2002. New tenants were found and a new tenancy commenced on 2 March 2002 leaving a period of 4 weeks and 4 days for which the landlord makes a claim against the tenant for rent of $636.40. In addition the landlord claimed $88 for advertising for the new tenant and the Tribunal lodgement fee of $49.00.
11. The matter came before the Tribunal on 24 June 2005. The tenants appeared in person and Ms Wales of Metropolis Real Estate appeared for the landlord. At the hearing the landlord maintained that the tenant had abandoned the premises in the fixed term and was entitled to the various items of compensation set out above. The tenants were unrepresented and generally maintained that the landlord should have responded to their notice of intention to vacate of 2 January 2002 if it had been the landlord’s intention to seek the foregone rent for the 4 weeks and 4 days.
12. Present in the Tribunal at the time was Mr Christensen from the Commissioner for Housing who, acting in an amicus curiae capacity, helpfully brought the Tribunal’s attention to the terms of sections 62 and 107 of the Residential Tenancy Act 1997 (the Act) and prescribed term 84, each of which appear apposite to the present case.
13. There was some debate between the parties and the Tribunal concerning the proper construction of these provisions of the Act, and the application of the provisions to the present case. In particular Mr Christensen helpfully raised the issue of whether the present landlord was obliged to make application to the Tribunal pursuant to section 107(1)(b) upon receipt of the tenants notice of intention to vacate, and the consequences of not doing so. It was contended by Mr Christensen that a failure by the landlord to apply to the Tribunal for an order confirming the fixed term tenancy agreement necessarily leads to the conclusion that section 107(1)(a) applies with the effect that the landlord is taken to have accepted the termination of the lease at the date specified in the tenants notice. Such a conclusion is said to then deprive the landlord of the right to any further rent during the fixed term until a new tenant is found.
14. The Tribunal adjourned the matter for the parties to file written submissions on the point.
15. The landlord/respondent’s solicitors, Meyer Vandenberg, filed the following submissions:
The Respondent's Submissions as ordered on 30 June 2005 are as follows:-
1. The Residential Tenancies Act 1997 clearly applies to the tenancy in this matter.
2. Two provisions of the Act apply and are relevant to the dispute in question. They are Sections 62 and 107.
Section 62 applies to circumstances where a Tenant abandons premises and provides that the Lessor is entitled to compensation (which is set out in the section)3. Section 107 of the Act applies in circumstances where a Tenant provides to a Lessor a notice of intention to vacate before the expiration of a fixed term agreement. This is what happened in this case. In circumstances where the Tenant provides such a notice, the Lessor has two options:-
a. To accept the notice; or
b. Apply to the Tribunal for compensation.4. The Lessor did not accept the notice in this case. In all discussion between the Lessor and the Tenant, the Lessor's agent advised the Tenant that the Lessor required the Tenant to pay the Landlord compensation (i.e. to continue to pay rental until another tenant was found, and to pay for advertising costs).
5. Even if it is not accepted (as a matter of fact) that the Lessor's agent advised the Tenant that the Lessor wished to apply for compensation, then the worst position from the Lessor's perspective, is that the Lessor did not take up either option. There is no evidence suggesting that the Lessor accepted the notice. There are no time frames set out in section 107 for the Lessor to either accept the notice or to apply to the Tribunal for compensation. The Lessor has now applied to the Tribunal for compensation.
6. Prescribed term 84 of the Lease does not assist the Tribunal to make any determination. It effectively restates the provisions of 107 of the Residential Tenancies Act.
7. In the circumstances, there is no evidence for the Tribunal to find that the Lessor has accepted the Tenant's notice. Accordingly, the Tenant is not entitled to have the benefit of Section 107(i)(a) of the Act.
8. Accordingly, the Lessor is entitled to proceed with its application for compensation to recover for the loss of rent and reasonable costs of advertising the premises for lease (as prescribed in Sections 62 and 107)
9. It is therefore submitted that no order should be made for the bond to be released to the Tenant until such time as the Tribunal has determined the Lessor's application for compensation against the Tenant.
16. The tenants filed the following submission in reply:
The Respondent provides the following submissions in relation to the Applicant's claim for bond under section 62 and section 107 of the Residential Tenancies Act 1997 and the silence of the Act regarding a limitation period for these claims.
Return of Rental Bonds:
1. The ACT Residential Tenancies Act 1997, regarding the return of rental bond is silent regarding a limitation period.2. Under section 62 the lessor is entitled to apply to the tribunal for compensation for:
(a) compensation for the loss of the rent which the former lessor would have received had the agreement continued to the end of its term;
(b) compensation for the reasonable costs of advertising the premises for lease and of giving a right to occupy the premises to another person.3. The Act is silent regarding a limitation period for an application under section 62.
4. Under section 107 of the Act, when a lessor receives a notice of intention to vacate before the fixed term agreement expires the lessor may:
(a) accept the notice; or
(b) apply to the Tribunal for compensation5. Again, the Act is silent on a limitation period for an application under s!07.
6. The Explanatory Memorandum regarding the Residential Tenancies Bill 1997 states in clause 33 that a dispute regarding the whole or part of bond, is to be referred to the Registrar if the other party disputes the application within 14 days of notification of the application for the bond money to be paid out.
7. Section 35(1) of the Residential Tenancies Act 1997 further states that a tenant or lessor who has been given a notice of application for return of rental bond under section 33 notifies the Territory in writing within 2 weeks after being given the notice, the Territory shall refer the dispute to the registrar as a tenancy dispute.
8. The ACT Community Law Reform Committee of the Australian Capital
Territory, Report No 8, Private Residential Tenancy Law, states that either the tenant or lessor can submit a Claim for Refund of Bond form to the Bond Office, which is not signed by the other party. The Office must then give the other party written notice of the claim who then has 10 days to inform the Office that he or she wishes to dispute the claim. (p4$)9. These sections provide limitation periods, however there is no stated limitation period in relation to section 62 and section 107.
The role of the Tribunal under the Residential Tenancies Act 1997
10. The Tribunal is required to have regard to the rules of natural justice under section 121(1) of the Residential Tenancies Act 1997. It is a paramount consideration that the Tribunal acts in accordance with the above Act.
11. The rules of natural justice enforce the right to a fair trial. In the case of Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1 it was stated that an important consideration was whether "the delay has made the chances of a fair trial unlikely."
12. In Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1 McHugh J states "it is oppressive, even 'cruel' to a Defendant to allow an action to be brought long after the circumstance which give rise to it have passed."
13. Estate of Chu Van Hop (1999) NSWRT 66, was a decision of the NSW Residential Tenancies Tribunal, which discussed a reasonable period of time for seeking a return of rental bond. The Tribunal found that "2 years and 11 months is an inordinately long time to wait before seeking return of rental bond/' He further stated that a reasonable time would perhaps be "6 or even 12 months" and after this time that claims relating to the bond become stale. The Tribunal therefore, dismissed the Applicant's claim.
14. In this case 3 years have passed since the end of the Residential Tenancy agreement., which will affect the chances of a fair trial for the Respondent. For example, relevant evidence such as the official condition report is no longer available.
15. It is submitted that the Respondent cannot claim under section 62 and section 107 due to the 3 year delay. In the case of Donovan v Gwestoys Ltd [1990] 1 WLR 472 it was stated that the "primary purpose of the limitation period is to protect a defendant from the injustice of having to face to a stale claim."
16. It is also in the public interest that disputes be addressed as soon as possible, as discussed in Brisbane South Regional Health Authority v Taylor (1996) 139 ALR1.
17. The matter was next listed before the Tribunal on 5 August 2005. The tenants appeared in person and Ms Wales again appeared for the landlord.
18. The parties advised the Tribunal that they had come to an agreement on the disputed bond in which they were to receive half each. The Tribunal made an order to that effect by consent which has since issued to the parties and to the Office of Rental Bond.
19. At the time of making the consent order the Tribunal indicated that it would publish reasons in due course going to the issue of the construction of sections 62, 107 and prescribed term 84. The Tribunal adopted this course for three reasons:
(a)the same issue has now arisen in a number of cases and is as yet unresolved:
(b)the parties were desirous of some formal guidance on the matter, including the Commissioner for Housing who appeared amicus in this matter
(c)in deference to the effort made by the parties in filing their submissions in the matter.
20. The Explanatory Memorandum to the Act expressly states that the Act was intended to implement the recommendations of The Community Law Reform Committee Report No 8. Pursuant to section 139 Legislation Act 2001 recourse to the Explanatory Memorandum is permissible to resolve any ambiguities.
21. The Report upon which the Act contains the following relevant material:
892. Under the common law abandonment of premises is a repudiation by the tenant of his or her obligations under the lease. The abandonment presents the lessor with the following choice.
893. The lessor can choose to terminate the tenancy on the grounds of abandonment and claim compensation for loss of rent. The tenancy then ends the moment the lessor elects to terminate it. The lessor may terminate the tenancy by demonstrating an unequivocal acceptance of the abandonment through repossession of the premises or other means. If the lessor decides to terminate the tenancy, the lessor must take reasonable steps to minimize loss. In many cases, this means that the lessor must find a replacement tenant as soon as reasonably possible.
894. The lessor may not repossess the premises unless they have been abandoned. There must be clear and unequivocal evidence that the tenant has permanently left the premises and does not intend to meet his or her obligations of the agreement before the lessor can repossess the premises. Absence from the premises contrary to the agreement and failure to pay rent do not of themselves constitute abandonment. The tenant may be away on holiday, forced to stay in hospital suddenly or otherwise be required to travel. On the other hand, actions such as the removal by the tenant of furniture and other belongings, the return of the key to the lessor or a letter to the lessor stating a determination to leave may amount to such evidence.
895. In general, a lessor who discovers that the tenant has abandoned the premises can decide to keep the tenancy agreement alive and require the tenant to continue to pay rent as it falls due despite the fact that the tenant has abandoned the premises. In this situation the lessor is not under any duty to minimize loss and need not look for a new tenant.7
896. Physical abandonment of the premises is only one form of repudiation of the tenancy agreement by the tenant. The tenant could repudiate the tenancy by refusing to pay rent, or by a letter to the lessor which declares that the tenant will leave on a certain date irrespective of what the lessor says or does.
Abandonment of the premises shall terminate the tenancy from the date of abandonment897. The Committee considers that the proposed Act should not allow the lessor to keep the tenancy alive after the tenant abandons the premises. Abandonment of the premises should entitle the lessor to compensation, however, the lessor should be required to minimise loss. It is not appropriate for the lessor to continue to require a person to pay rent as the rent falls due for the full period of the tenancy agreement when that person is no longer in occupation of the premises.
898. Residential tenancies legislation in other jurisdictions provide that abandonment of the premises by the tenant has the effect of terminating the tenancy from the time of the abandonment.8 The Committee considers that this approach which removes the possibility of keeping the tenancy alive after abandonment, should also apply in the ACT.
899. In paragraph 917, the Committee recommends that the lessor be able to claim compensation for abandonment of the premises up to the equivalent of 16 weeks rent, subject to the requirement that the lessor take reasonable steps to minimise loss.
Recommendation 169: The proposed act provide that the tenancy agreement shall terminate upon abandonment of the premise by the tenant…
…
913. Under the common law the lessor can claim compensation for early termination of the tenancy due to abandonment of the premise for the rent tat he or she would have received had the tenancy agreement continued. The loss to the lessor in theory is therefore greatest where the termination occurs early in the tenancy. The law requires the lessor to take all reasonable steps to minimise the loss incurred because of the early termination.
914. It is arguable that under the common law the lessor may not charge the tenant for costs in addition to lost rent such as advertising or reletting fees to the extent that the lessor would have incurred these costs in any event. The Landlord and Tenant Act prohibits the lessor from charging fees with respect to a tenant vacating the premises. The Act then arguably prohibits a lessor from charging the tenant a reletting fee.
915. In other jurisdictions the lessor can seek compensation for losses including lost rent, reletting and advertising costs provided reasonable measures are taken to keep losses to a minimum.19 In South Australia and New South Wales the tribunal applies a mathematical formula or sliding scale to decide compensation for reletting and advertising costs such that little or no compensation is awarded if the early termination took place near the end of the tenancy.
….
917. The lessor should be able to claim compensation for loss of rent which the lessor would have received had the tenant not abandoned the premises. Under the current law there is considerable uncertainty as to the amount of compensation the lessor can claim for loss of rent. In order to reduce this uncertainty the Committee considers that the amount of compensation should be subject to a maximum of the equivalent of 16 weeks rent.Recommendation 172: The lessor may claim compensation for loss of rent which the lessor would have received had the tenancy continued up to the expiry date of the fixed term. The maximum amount of compensation that the lessor may claim is the equivalent of 16 weeks rent.
The above maximum amount shall apply before any consideration of reduction of compensation in accordance with the duty to mitigate. For example, if the tribunal decides that the compensation should be reduced because of failure to mitigate, and there were 45 weeks remaining in the fixed term after the abandonment, the tribunal shall apply the reduction as though there were 16 weeks rather than 45 weeks remaining. The maximum should not affect calculations of compensation or reduction for failure to mitigate, where the tenant abandons the premises with 16 or less weeks remaining in the tenancy.
Lessor can claim compensation for reletting and other costs
918. Several submissions from lessor’s stated that early termination can involve severe financial loss due to lost rent and the cost of reletting the premises. Particularly if the premises are abandoned, the lessor may also have to pay for cleaning, rubbish removal, removal and storage of abandoned goods, repairs and changing of locks. The lessor may also have to deal with unpaid telephone and electricity bills and other costs. The REI of the ACT and other submissions conclude that the lessor should be able to claim compensation for all losses due to early termination.
919. Cotswold Pty Ltd argues that the law does and should continue to allow the agent to charge the tenant for the costs of reletting. The REI of the ACT stated that the lessor should be able to charge a fee to cover the costs of reestablishing the tenancy. Cotswold Pty Ltd notes that, where appropriate, it charges the tenant for the cost of reletting measured at the equivalent of one weeks rent and argues that in many cases the actual cost of reletting will exceed this measure. The recommended reletting fee set by the Trade Practices Commission in 1986 is the equivalent of one weeks rent. The recommendation states that the agent may also charge for advertising and other additional costs.
920. The Consumer Affairs Bureau argues that the charging of reletting costs presents problems. The Bureau argues that they have received complaints of lessor’s or agents charging a reletting fee irrespective of whether the reletting cost was in fact a loss caused by the early termination. The Bureau also questions whether the charging of a reletting fee is legal.
921. The Tenants Union argues that the tenant should be able to terminate a lease early by giving 28 days notice and that the tenant should not be liable to pay any compensation for this.
922. The Committee considers that the lessor should be able to claim for losses incurred as a result of the early termination provided that the lessor has taken all reasonable steps to minimise those losses. These losses could include lost rent, advertising, reletting and other costs. The Committee considers that there should be a simple clear approach for the calculation of compensation for reletting and advertising fees to provide certainty and reduce the amount of time the parties and the tribunal need spend on assessing compensation.
923. The Committee considers that the lessor should not be able to claim compensation for these costs if they do not result from early termination. For example, reletting costs may not be a cost of early termination if the termination took place just one week before the tenancy was to expire and the premises were to be relet in any event. In this case the lessor should not be able to claim compensation for reletting. In contrast, if the early termination is in the first quarter of the tenancy the lessor should be entitled to full payment for these costs as they are an expense which the lessor would not have had to pay for some time, or at all, if the tenancy had continued. The Committee decided against establishing a strict formula for calculation of compensation for reletting and advertising fees. The Committee prefers the following approach which provides for the Tribunal to take account of the time of abandonment.
Recommendation 173: The Tribunal should be able to order compensation for advertising costs and reletting costs of an amount, up to the equivalent of one weeks rent, which the tribunal considers appropriate in the circumstances. In deciding what amount of compensation is appropriate the tribunal shall consider whether.
• the advertising costs and reletting costs are reasonable;
• the compensation should be reduced by reason of the timing of the abandonment given that the lessor is likely to incur these costs at the end of the fixed term in any event.
22. The immediate point to note from the above is that the Report did not specifically address the issue raised in the present dispute. In fact there does not appear to have been any recommendation by the Report consistent with the terms of section 107(1)(b).
23. This then leaves the Tribunal in a position of construing the Act, unaided by any extrinsic aids or authorities from the superior courts. Nor does there appear to have been any previous decision of the Tribunal on the point.
24. The legislative policy underpinning section 107 require a landlord to accept the termination of the lease upon abandonment following notice. The landlord must then decide whether to treat the abandonment as a repudiation at common law and reserve rights to future rent pending the finding of a new tenant; or treat the lease as termination on a non-repudiatory basis without a right to future rent. One purpose served in putting the landlord to this election is that the tenant will know clearly the extent of their future obligations following the abandonment. If the landlord can defer making the required election for an indefinite period then:
(a)the election becomes illusory as the landlord will plainly wait until a new tenant is found before making the election to seek rent to that the date of the commencement of the new tenancy:
(b)the tenant will not have the benefit of certainty as to their future obligations.
25. The wording of the provisions in question suggests the following:
(a)section 62 is not limited to abandonment following notice of intention of vacate by tenants, whereas section 107 and prescribed term 84 are so limited. Some abandonments occur with prior notice others occur without notice. If section 62 is construed as applying to the same class of abandonments as section 107, then section 62 appears to redundant ie to have no role to play in the legislative scheme. On the other hand if section 62 is limited to abandonments without notice and section 107 is limited to abandonment following notice, which is consistent with their literal reading, then neither is redundant. It is a common principle of statutory interpretation to prefer a construction which avoids rendering part of the legislation redundant (Statutory Interpretation in Australia Pearce and Geddes 4th ed at [2.12])
(b)Section 107 and prescribed term 84 have no specific time limits. The Tribunal is attracted to the tenants argument that in such circumstances a reasonable time must be implied in order that the section accord with the statutory scheme (section 138 Interpretation Act 2001). The approach is consistent with the authorities in Koon Wing Lau v Calwell 1949 80 CLR 533 at 573; Re O’Reilly; ex parte Australlena Investments P/L 1984 58 ALJR 36; BTR PLC v Westinghouse Brake and Signal Co (Australia) Ltd 1992 106 ALR 35 at 60. Without such an implied time limit the provision becomes meaningless in a practical sense.
26. Had the Tribunal been required to determine the matter, the Tribunal would have construed the provisions in the above manner. The Tribunal would further have found that 3 years was beyond a reasonable period for the landlord to made the required election and therefore would have treated the landlord as having elected not to pursue his rights to future rent following the tenants abandonment.
27. In this event the Tribunal would have disallowed the reletting and advertisement fees.
A. Anforth
Member
31 Dec 2005
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