Moller v Lau

Case •

[2021] NSWCATCD 153

•

07 December 2021

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Moller v Lau [2021] NSWCATCD 153
Hearing dates: 16 November 2021
Date of orders: 07 December 2021
Decision date: 07 December 2021
Jurisdiction:Consumer and Commercial Division
Before: P French, Senior Member
Decision:

(1) The residential tenancy agreement is terminated in accordance with section 85(3) of the Residential Tenancies Act 2010 on the ground that the landlord has served the tenant with an end of periodic agreement termination notice.

(2) The residential tenancy agreement is terminated immediately and possession of the residential premises is given to the landlord on the date of termination.

(3) The order for possession of the premises is suspended until 21 January 2022.

(4) The tenant is to pay the landlords an occupation fee calculated at the rate of $214.29 per day from 7 December 2021 until possession is the premises is returned to the landlords.

(5) The landlords may relist the application to determine any occupation fee that is owing within 60 days of the date for possession specified in these orders.

(6) The landlords are estopped from claiming from the tenant any amount of the $10,930.00 in rent deferral approved by them on 2 August 2021 subject to:

(a) the tenant doing anything necessary to enable the landlords to apply for the NSW’s Government’s COVID-19 Land Tax Relief; and

(b) the amount of any Land Tax Relief granted being equal to the deferred rent.

The tenant shall be liable for any amount of deferred rent not offset by Land Tax Relief, provided that the landlords have made a bona fide application for such Relief in accordance with that scheme’s guidelines.

(7) The tenant, Anthony Lau, must pay the landlords Malcolm Moller and Eraina Moller $4,649.94 for rent owed up to 16 November 2021 (other than the amount of deferred rent) by 30 March 2022.

(8) The application is otherwise dismissed.

Catchwords:

LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — Residential Tenancies Act 2010 — Whether COVID-19 impacted tenant — Section 85 termination notice issued to tenant during transitional period after first and second moratorium periods — Whether Schedule 2, Part 9, clause 28 is engaged — Whether landlords are estopped from claiming deferred rent from tenant in circumstances where they previously agreed to obtain Land Tax Relief in relation to the deferred rent

Legislation Cited:

Law Reform (Law and Equity) Act 1972 (NSW)

Residential Tenancies Act 2010 (NSW)

Residential Tenancies Regulation 2019 (NSW)

Cases Cited:

Waltons Stores (interstate) Ltd v Maher (1988) 164 CLR 387

Texts Cited:

Coronavirus (COVID 19) Temporary Changes to NCAT Operations procedure (18 March 2020 and as subsequently updated)

Category:Principal judgment
Parties: Malcolm Moller (First Applicant)
Eraina Moller (Second Applicant)
Anthony Lau (Respondent)
Representation: Belle Property Avalon (Agent) (First and Second Applicant)
Respondent (Self-represented)
File Number(s): RT 21/36366, RT 21/39964
Publication restriction: Nil

REASONS FOR DECISION

Introduction

  1. This is an application by Malcolm and Eraina Moller (the landlords) for an order under section 85(3) of the Residential Tenancies Act 2010 (RT Act) that would terminate a residential tenancy agreement that subsists between them and Anthony Lau (the tenant) on the ground that a ’90 day no grounds’ notice of termination of that agreement (termination notice) has been issued to the tenant and that he has failed to return possession of the premises to them in accordance with that termination notice, and for related orders. This application was made to the Tribunal on 25 August 2021 (the present application).

  2. For the reasons set out following the Tribunal has determined that it is bound by the mandatory terms of section 85(3) to make an order terminating the residential tenancy agreement. In this respect the protection afforded a COVID-19 impacted tenant and household by clause 28 of Part 9 of Schedule 2 of the RT Act is not engaged in this case because the tenant did not have COVID-19 related rent arrears on the date the termination notice was given. He was at that time paid in advance by 3 days.

  3. The landlords have sought immediate possession of the premises. However, the Tribunal has determined to suspend the order for possession until 21 January 2022 because of the impending Christmas and New Year holiday period and having regard to the fact that the tenant lives at the premises with his wife and three young children. While he was not in COVID-19 related rent arrears on the date the termination notice was issued, it is clear that the tenant’s business has been severely impacted by the pandemic before and after that date, and that it would constitute serious financial and other hardship for him to move his family prior to Christmas while his business is still in an early stage of recovery. While the landlords have stated a legitimate reason for wanting immediate possession (to realise the rental potential of their beachside property over the Christmas New Year period) they will suffer significantly less relative hardship from the order being suspended than the tenant would from no period of suspension or a shorter period of suspension.

  4. The landlords have also sought orders for payment of rent owed by the tenant. There are two sums involved (up to the date of the hearing), being an amount of $10,930.00 which is deferred rent owing for the period 2 August 2021 to 26 September 2021 and $4,649.94 which is owed in respect of the period 22 October 2021 to 16 November 2021 (being the date of the hearing). In relation to the deferred rent the Tribunal has concluded for the reasons set out following that the landlords are prevented by a promissory estoppel from claiming this rent from the tenant to any extent that they fail to make a bona fide application for a Land Tax Relief in relation to this amount. In relation to the remainder of rent owing the Tribunal has made a money order in favour of the landlords for the amount owing to be paid by 30 March 2022, which should provide sufficient time for the tenant’s business to recover sufficiently for him to meet this payment.

Procedural history   

  1. I note at the outset that present application is the landlords’ second application for a termination order under section 85(3) based on the same termination notice. In RT 21/334 the Tribunal dismissed the landlords’ first application because it was withdrawn after it was determined by the Tribunal that the application had been made prior to the date for vacant possession specified in the notice. In this respect, section 83(2) of the RT Act provides that a section 85 termination application cannot be made before the date for termination specified in the termination notice.

  2. The present application was first listed before the Tribunal for Conciliation and Hearing in a Virtual Hearing Room (VMR) on 16 September 2021 in accordance with the Coronavirus (COVID 19) Temporary Changes to NCAT Operations procedure (18 March 2020 and as subsequently updated). Ms Simone Robertson, the landlords’ Property Manager, attended that listing of the application on behalf of the landlords. Mr Lau also attended the hearing. In accordance with the Tribunal’s usual practice where both parties are present at the first listing of an application, the Tribunal, differently constituted, attempted to assist the parties to resolve the dispute cooperatively without the need for a formal hearing. Those efforts were not successful.

  3. As a consequence, the application was set down for a formal hearing and directions were issued to the parties for the filing and exchange of the documentary evidence that they would rely upon at the final hearing. I note that the hearing notes taken by the member at that time make it clear that it was understood by the parties that an issue to be determined at the final hearing was whether clause 28 of Part 9 of Schedule 2 of the RT Act was engaged by the application

Evidence

  1. Both parties have filed documentary evidence in relation to the application. The landlords’ bundle was filed prior to the first listing of the application in response to the directions issued by the Divisional Registrar for the first hearing. It was marked Exhibit A1. No additional evidence was filed by the landlords in response to the directions made by the Tribunal on 16 September 2021. The tenant filed a bundle of documents on 30 September 2021 which was marked Exhibit R1. The tenant also filed submissions in support of his case on that date.

  2. The Special Fixture Hearing was conducted by telephone in accordance with NCAT’s COVID-19 Revised Hearing Procedure. Ms Robertson attended on behalf of the landlords and gave oral evidence under a solemn promise to tell the truth. Mr Lau also attended and he also gave oral evidence under a solemn promise to tell the truth. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.

  3. After the hearing the Tribunal directed the landlords to file and serve a rent ledger setting out the rent paid and owing by the tenant up to and including 16 November 2021 (being the date of the hearing) and any associated document which set out the amount of deferred rent agreed to (or approved) by the landlords on 2 August 2021 and any additional rent arrears owed. The tenant was provided with the opportunity to comment on these documents. The landlords responded to this direction. This additional evidence is marked Exhibit A2.

Material facts

  1. The dispute arises from a residential tenancy agreement that was made between the parties on 6 September 2019 in respect of residential premises at Avalon Beach. It was initially a fixed term agreement of 52 weeks duration that was expressed to commence on 24 August 2019 and end on 21 August 2020. However, the tenancy continued on the basis of a periodic agreement after the end of the fixed term. The rent payable under the agreement was $3,000.00 per fortnight starting on 24 August 2019. The premises is a beach side 4 bedroom home with 2 bathrooms, two car garage, and various living areas. The tenant lives at the premises with his wife, Ms Iwona Lau, and their three young children.

  2. The tenant is the principal of a company, Alaud Pty Ltd, which conducts a film direction and production business. He is employed as the director of that business, and prior to the onset of the COVID-19 he also employed three staff. Iwona Lau is a freelance consultant working in the fashion industry. Both the tenant and Iwona Lau were and are “rent paying members” of the “household” within the meaning given those terms in section 228A and B of the now repealed Part 13 of the RT Act (as to which see following).

  3. I do not understand that any of the following facts are in dispute:

  1. During February and March 2020 the tenant’s business suffered severe interruption due to the impact of the COVID-19 pandemic, its’ associated international and interstate border closures, and movement restrictions imposed by related Public Health Orders. All work scheduled for those months was cancelled and so was work for the remainder of 2020;

  2. As a result of this disruption, by April 2020, the tenant’s business had to cease operation. The tenant was obliged to take himself off his company’s payroll and the company’s other staff were stood down. The tenant’s business applied for and was successful in obtaining a JobKeeper payment which was payable to him at the rate of $1,500.00 per fortnight from on or about 30 March 2020;

  3. Iwona Lau also lost most or all work from March 2020 due to the impact of the COVID-19 pandemic;

  4. On or about 30 March 2020 the tenant notified the landlords’ agent by email and telephone of his household’s COVID-19 related financial hardship. This resulted in him submitting, on 3 April 2020, an application for a rent reduction along with supporting financial information on a form provided to him for this purpose by the landlords’ agent;

  5. The landlords accepted on the basis of this information that the tenant and his household were COVID-19 impacted;

  6. After some negotiation, on 29 April 2020, the parties agreed that the rent payable for the premises would be reduced to $750.00 per week for a period of 9 weeks (that is, by an amount of $6,750.00 for that period) subject to an undertaking by the tenant that he would provide a revised statement of financial position to the landlords’ agent in 8 weeks. It is not clear on the evidence of either party when the rent reduction commenced, but there is no issue about this;

  7. It is clear from the email communications that passed between the landlords’ agent and the tenant at the time that the landlords ‘agreed’ to the reduction in rent to $750.00 on 29 April 2020 under sufferance, on the basis that it was all that the tenant said he was capable of paying.

  8. As a consequence, on 5 May 2020 under instructions from the landlords, the landlords’ agent issued the tenant with End of Fixed Term Notice of Termination of the residential tenancy agreement which required the tenant to return possession of the premises to the landlords on 21 August 2020.

  9. The tenant objected to this Termination Notice on the basis that such action was then prohibited by the NSW Government’s Response to the COVID-19 pandemic, and it was not pressed by the landlords;

  10. On or about 31 July 2020, after receiving an application from the tenant, Bridge Housing Ltd approved a Rent Choice Subsidy for the tenant commencing from 6 July 2020. The terms of the subsidy were that the tenant would pay the landlord rent at the rate of $375.00 per week, and Bridge Housing Ltd would pay the landlord $1,125.00 per week, 28 days in advance. In other words, the rent payable returned to $1,500.00 per week from 6 July 2020. A lump sum subsidy payment of $9000.00 was credited to the tenant’s account on 3 August 2021, and further subsidy payments were made during August and September 2020, which together with payments made by the tenant resulted in his rent arrears being reduced to $2,892.86 (or 13 days) on 21 September 2020;

  11. On or about 20 September 2020 the Rent Choice Subsidy paid by Bridge Housing Ltd to the landlords in respect of the tenant’s rent was revised from that date until 30 June 2021 to $2,100.00 per calendar month;

  12. Since that date the tenant’s household income was limited to this payment and a Job Keeper payment, which was reduced to $1,200.00 on 28 September 2020 and to $1,000.00 on 4 January 2021. Job Keeper ceased on 28 March 2021;

  13. On 11 May 2021, the landlords’ agent served a section 85(1), 90 day, no-grounds, notice of termination of the residential tenancy agreement on the tenant which required the tenant to return possession of the premises to the landlords on 10 August 2021. The tenant originally indicated that he would cooperate with that notice provided the landlords would agree that he could remain in the premises until 19 September 2021, which they did;

  14. On 11 May 2021 when the termination notice was given the tenant had paid rent up to and including 14 May 2021 after a part week payment held on account is applied. As this is a part week payment the ledger states the tenant is $664.22 (or 3 days in arrears);

  15. On 2 August 2021 the tenant made a further application to the landlords for a reduction in the rent payable for the premises to $750.00 per week due to the continuing impact of the COVID-19 pandemic on his household income (against the backdrop of the July 2021 outbreak). He also requested a waiver of the balance of the rent, being $750.00, a week on the basis that the landlords were eligible for COVID-19 Land Tax Relief and could obtain such relief in an amount equivalent to the foregone rent via that route. This led to the following email communications from the landlords’ Property Manager to the tenant:

9 August 2021

Thanks Anthony

…

I have passed the information and your request to the owner and put a start date of your original email on 2.8.21. I will let you know the outcome as soon as I have a response.

10 August 2021

Hi Anthony,

The landlord has agreed to a rent reduction at the property you are renting at … from the date of 2.8.21 to the requested amount of $750.00 per week.

Please see your current ledger. You are currently paid up to 16.7.21

The landlord has deferred this rent and I will apply for the land tax exemption, if this is paid it will be credited to the amount owing. The current moratorium period is through to Sept 11 but this may be extended if the lockdown continues.

  1. Although I am not able to trace the whole progression of negotiations in respect of the deferral period, in Exhibit A2, the landlords’ agent confirms it was in respect of the period 2 August 2021 to 26 September 2021;

  2. On or about 20 September 2021 the landlord’s agent notified the tenant by email that the landlords had determined not to apply for COVID-19 Land Tax Relief but instead to apply for a Residential Tenancy Support Payment under the NSW Government’s Residential Tenancy Support Package. The Residential Tenancy Support Payment is available to COVID-19 impacted tenants and landlords up to a maximum of $4,500.00;

  3. By return email the tenant objected to the landlords change of stance on the basis that the rent reduction application he had made, and which had been agreed to by the landlords, was premised on the whole deferred amount being extinguish by land tax relief available to the landlords under the Land Tax Relief programme;

  4. On or about 4 August 2021 a Leasing Consultant working with Belle Property Avalon undertook an appraisal of the premises for the purpose of providing an opinion as to its rental value. The opinion provided was as follows: “[a]fter taking into consideration recent leasing activity and current market trends in the area, it is out opinion that a reasonably rental price for the property would be in the vicinity of $1,800.00 to $1,900.00 per week;

  5. In the application form the landlords’ agent states in the section headed “Reasons for Order/s”: that the landlords want to recover possession of the premises to do “some minor renovations and bring the property back to market rent. Our estimate is $1800-$1900.00 per week.” In oral argument the landlords’ Property Manager stated that it was imperative that the landlords recover possession of the premises immediately because they would be capable of achieving a high rental over the summer holiday period due to the proximity of the premises to the beach;

  6. In his oral evidence the tenant contended that it would constitute serious financial and other hardship for him and his family to move from the premises because his business was still in an early stage of recovery.

Applicable law

  1. As set out above, this is an application for a termination order under section 85(3) of the RT Act. Section 85(1) provides that a landlord may at any time give a termination notice for a periodic agreement. The termination notice must specify a termination date that is not earlier than 90 days after the day on which the notice is given: s 85(2). Section 85(3) provides that the Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with section 85 and the tenant has not vacated the premises as required by the notice.

  2. Section 83(1) of the RT Act provides that if the Tribunal makes an order terminating a residential tenancy agreement, it must also make an order for possession of the residential premises, specifying the day on which the order takes or took effect. Section 114 of the RT Act provides that the Tribunal may suspend the operation of an order for possession of residential premises for a specified period if it is satisfied that it is desirable to do so, having regard to the relative hardship likely to be caused to the landlord and tenant by the suspension. The Tribunal may impose an obligation on a tenant to pay a specified occupation fee for the period for which the order for possession is suspended.

  1. Despite the terms of section 85(1) clause 28 of Part 9 of Schedule 2 of the RT Act imposes a limited moratorium on the issue of no-grounds termination notices from the date of assent of that section, which was 26 March 2021, until 26 September 2021. Clause 28 provides:

28   Moratorium on no grounds termination

(1)     A landlord must not give a termination notice under section 85 to an impacted tenant who accrued arrears during the moratorium period unless it is fair and reasonable in the circumstances.

(2)     The Tribunal must have regard to all relevant matters for the purposes of deciding under this clause whether a termination is fair and reasonable in the circumstances, including—

(a)    the general financial position of the landlord, and

(b)     whether the landlord or a member of the landlord’s family needs to reside at the premises.

(3)  This clause ceases to have effect on 26 September 2021

  1. The term “impacted tenant” takes its meaning from the now repealed 228A and B of Part 13 of the RT Act, which was enacted as part of the NSW Government’s COVID-19 pandemic response. Clause 28 is a transitional provision arising from the NSW Governments COVID-19 Recovery strategy.

  2. Clause 26(1) of Part 9 of Schedule 2 defines the term “arrears” for the purposes of that Part. In states as follows:

(1)  In this Part—

arrears accrued during the moratorium period by an impacted tenant means rent or charges that—

(a)  were payable by the impacted tenant during the moratorium period, and

(b)  were not paid, either with or without the agreement of the landlord, and

(c)  are still owing.

Consideration

  1. I make the following uncontroversial findings of jurisdictional fact:

  1. There is a residential tenancy agreement between the parties to which the RT Act applies. At all material times for this dispute it was and is a periodic agreement;

  2. The landlord’s agent served a Notice of Termination of a Periodic Agreement on the tenant on 11 May 2021 which specified as the termination date 10 August 2021. That notice was sent to the tenant’s email address on 11 May 2021 which is a method of service agreed to by the parties (see consent form attached to residential tenancy agreement) and was therefore permitted by section 223(1)(a)(v) of the RT Act. No issue arises as to the validity of the form of notice (other than the clause 28 issue) or its manner of service;

  3. That being so the tenant was given at least 90 days’ notice of termination, being 91 days, as required by section 85(2);

  4. The tenant has not returned possession of the premises to the landlords in accordance with the termination notice up to the date of the hearing (section 83(2(b));

  5. The landlord has applied to the Tribunal after the date for termination specified in the notice as required by section 83(2)(a) and within the time period permitted by Regulation 39(2) of the Residential Tenancies Regulation 2019, which is within 30 days of the date for termination specified in the termination notice.

  1. The threshold issue in this case is whether clause 28 of Part 9 of Schedule 2 of the RT Act applies in the circumstances of this case. I have concluded that it does not because on the date the notice was served, which was 11 May 2021, the tenant had paid up all rent that was owing to that date and was, in fact, paid in advance to 14 May 2021. In other words, he had no COVID-19 arrears “still owing” on that date. Clause 28(1) prevents a landlord from giving a tenant a section 85 termination notice who still had COVID arrears owing on the date the notice was issued. The tenant had COVID-19 related rent arrears both before and after that date, but did not on 11 May 2021, which is the temporal focus for clause 28.

  2. In this respect a distinction must be drawn between the meaning of the term “arrears”, which refers to money to which a landlord has a present accrued right and rent that a tenant has a contractual right to pay in advance which is held on account (or in trust) by a landlord until the days or period in relation to which it is payable have passed. Failure by a tenant to pay rent in advance by the period specified in the residential tenancy agreement is a breach of contract, but one in relation to which there is no substantive cause of action by a landlord unless and until the tenant fails to pay rent for a period of 14 days in relation to which the landlord has a present accrued right to rent: section 88(1) of the RT Act. In this case, the tenant had a contractual obligation to pay rent two weeks in advance. Despite that, the landlord’s agent’s rent ledger in evidence accounts for his rent in weekly intervals. It is generated by a software programme. Thus the tenant’s status on 11 May 2021 is reported to be 3 days in arrears, being 3 days short of the 7 days he was required to be in advance according to that programme, or 11 days if his obligation to pay 14 days in advance is calculated by reference to his obligation under the residential tenancy agreement.

  3. That conclusion having been reached, the Tribunal must approach the landlords’ termination application made under section 85(3) of the RT Act in the usual way. As there is no other issue as to the validity of the notice or its form of service which would potentially disentitle the landlords to the orders sought, the Tribunal must obey the mandatory terms of that section and make an order terminating the residential tenancy agreement.

  4. The only matter in the Tribunal’s discretion is whether the order for possession of the premises ought to be suspended, and if so, by what period of time, to enable the tenant time to move from the premises. In the exercise of this discretion I take into account the following considerations:

  1. the landlords are the registered proprietors of the premises and as a consequence have a superior estate in the land to which the tenant's leasehold interest must give way, provided the landlords recover possession in accordance with law. The Tribunal’s power to suspend an order for possession cannot reasonably be exercised so as to, in effect, defeat or frustrate the landlords’ right of possession;

  2. the landlords have sought to recover possession of the premises according to law by issuing the tenant with an End of Periodic Agreement termination notice;

  3. the tenant has had a total of 189 days up to the date of the hearing from the date the termination notice was served to find alternative accommodation. That is a very substantial period of time more than twice the required statutory notice period of 90 days;

  4. although the landlords do not require a reason to issue an End of Periodic Agreement Termination Notice, it is relevant to the exercise of the section 114 discretion that their reason is to realise the rental potential of their property over the summer holiday period;

  5. the tenant lives at the premises with his wife and three young children. The interests of the tenant’s children must be reasonably protected by providing a transition period to their new home. It is also the cusp of the Christmas and New Year period which is traditionally a time families spend together. I accept it would be seriously disruptive for the tenant to have to move during this period;

  6. the tenant and his wife have been severely impacted by the COVID-19 pandemic over a two year period and are financially depleted. Although it appears the worst of the pandemic has passed, their work is still in an early stage of recovery. I accept that it would constitute a severe financial hardship if they were obliged to move out of the premises before the end of the year;

  7. although the tenant is in rent arrears, his rent record shows continuous efforts throughout the pandemic period to meet his financial obligations to the landlords, albeit with some social assistance. His rent arrears at the date of the hearing, and his payment records, do not reasonably give rise to a concern that he will ultimately fail to pay the rent and any occupation fees owed to the landlords under the residential tenancy agreement. In any event, no argument of this nature was put to me by the landlords’ agent at the hearing;

  8. it is in the interests of both parties that the tenant has reasonable time to attend to his end of tenancy obligations to the landlords, so as to be able to move from the premises in an orderly way.

  1. Weighing each of these considerations in the balance I have determined to suspend the order for possession until 21 January 2022. This is a relatively long period of suspension, but one that is justified in this case by the imminent Xmas New Year period, the fact that the tenant has a young family, and by the fact that the tenant’s business is in an early stage COVID-19 economic recovery such that it would be a serious financial hardship to him if he were required to move before the end of 2021. As I have said above, the tenant’s record of rent payment does not give rise to a concern that he will ultimately fail to pay rent and occupation fees owed to the landlords once his business recovers.

  2. While there is nothing wrong with the landlords’ desire to realise the earning potential of their property, the hardship they will suffer in that being delayed until late January 2022 does not compare with the hardship that the tenant would suffer from no period of suspension or a shorter period of suspension of the order for possession. I accept that the period of suspension I have determined is longer than is typical, but it does not operate to frustrate the landlords’ right of possession. They will have their property back on the market for let before the end of January 2022.

  3. The landlords have also sought orders for the payment of the rent owed by the tenant up to the date of the hearing. Exhibit A2 clarifies the two amounts involved. The first is an amount of “deferred rent” which is in respect of the period 2 August 2021 to 26 September 2021 in the amount (now) of $10,390.00. The second amount is rent owed from 22 October 2021 up to the date of the hearing, being 16 November 2021, which is $4,649.94.

  4. There is no issue with respect to the second sum other than the tenant’s present capacity to pay it. I will thus make an order that this amount be paid in full by 30 March 2022 to allow time for the tenant’s business to recover sufficiently for him to be able to afford to do so. I take into account in this respect that the must pay current occupation fees and meet the costs of moving from the premises before that date.

  5. There is an issue with respect to the deferred rent. It is clear on the evidence that the rent reduction which the tenant applied for on 2 August 2021, and which the landlords approved (or agreed to) via their Managing Agent on 10 August 2021 was predicated upon the landlords making an application under the NSW Government’s Land Tax Relief programme for an amount equivalent to the deferred rent. Although it was not possible for the parties to know if that application would be approved by the NSW Government and, if so, what the amount of offset would be, it is clear that both parties reasonably expected that the amount of the deferred rent would be extinguished by Land Tax Relief, and would not be payable by the tenant to the landlords. That explains why the parties did not agree to a date by which the tenant had to pay the deferred rent – it was not expected by either party that he would be paying this rent.

  6. On 20 September 2021, just six days before the end of the deferred rent period, the landlords purported to change their minds as to the form of rent relief payment they would apply for. I am satisfied that they are prevented by a promissory estoppel from doing so: Waltons Stores (interstate) Ltd v Maher (1988) 164 CLR 387.

  7. On 10 August 2021 the landlords promised the tenant (agreed to the tenant’s proposal) that they would apply for Land Tax Relief equivalent to the amount of the deferred rent. The tenant relied upon that promise to remain in possession of the premises. Had he known he would have to pay the whole amount of deferred rent himself in the future he may have acted differently. He would clearly suffer a detriment if the landlords were not kept to their promise because he would be liable to pay the amount of deferred rent in excess of what is available to the landlords from Residential Tenancy Support Payment. It would be unconscionable for the landlords to be permitted to assert their legal right to the payment of this rent by the tenant in these circumstances.

  8. The tenant thus has an equitable defence to any application for an order that he be required to pay the deferred rent which the Tribunal can give effect to pursuant to section 6 of the Law Reform (Law and Equity Act) 1976.

  9. Of course, the promise made by the landlords was only to make a bona fide application for Land Tax Relief in relation to the deferred rent amount. Should they be unsuccessful in that application or should the amount of relief granted be less than the deferred rent, the tenant will be bound to pay the deferred rent or any shortfall in accordance with the original agreement made between the parties.

Conclusion

  1. For the foregoing reasons the residential tenancy agreement is terminated and possession of the premises is given to the landlords. However, the order for possession is suspended until 21 January 2022. The tenant must pay an occupation fee equivalent to his fortnightly rent until possession is returned. The landlords are estopped from claiming $10,930.00 in deferred rent from the tenant unless and until they make a bona fide application for Land Tax Relief in relation to that amount. Subject to such an application being made, the tenant shall remain responsible for any deferred rent not offset by such relief. The balance of the rent arrears owing by the tenant to the landlords up to the hearing date, being $4,649.94, must be paid by 30 March 2022

**********

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.


Registrar

Decision last updated: 15 March 2022

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Giumelli v Giumelli [1999] HCA 10