Ohnesorge v Benjamin - [2007] ACTRTT 23

AUSTRALIAN CAPITAL TERRITORY

RESIDENTIAL TENANCIES TRIBUNAL

CITATION:OHNESORGE V BENJAMIN [2007] ACTRTT 23 (25 July 2007)
RT 50of 2007
Catchwords: Repudiation of Residential Tenancy Agreement
Issues:Failure by tenant to occupy premises
Legislation:Residential Tenancies Act 1997 (ACT)
Sections: 7,24,25,102,104,107
Prescribed Terms: 20,54,63,84 and 86.

Tribunal:Ms J Lennard, Member

Date: 25 July 2007

AUSTRALIAN CAPITAL TERRITORY )

RESIDENTIAL TENANCIES TRIBUNAL ) NO: RT 50 of 2007

RE: PETRA OHNESORGE & STEFFEN OHNESORGE

(Applicant/tenant)

AND: NOEL BENJAMIN
(Respondent/lessor)

DECISION

Tribunal : Ms J Lennard, Member

Date : 25 July 2007

Decision : 14^th May 2007

Upon hearing Mr Enchelmaier for the Applicants, and there being no appearance of or on behalf of the Respondent, the Tribunal made the following ORDERS EX PARTE:

That the lessor is to pay the tenant/s the sum of $2,175.00 being compensation for;
a.   costs          $ 304.00
b.   rent in advance                     $1100.00
c.   wrongful claim on bond                  $ 200.00
d.   compensation for removal & storage of goods   $ 571.00

That the Office of Rental Bonds is directed to release $1,200.00 to the tenant forthwith.

That the abovementioned amount is to be paid on or before the 28^th day of May 2007.

That the lessor is to pay an amount, of $244.59 which is interest calculated on an amount of $3,071.00 from the 10^th of July 2006 to the 28^th of May 2007.

Decision: 15^th June 2007

That the application to set aside orders made on the 14^th day of May 2007 is dismissed.

…………………………….

Member

AUSTRALIAN CAPITAL TERRITORY )
RESIDENTIAL TENANCIES TRIBUNAL ) NO: RT 50 of 2007

RE:PETRA OHNESORGE & STEFFEN OHNESORGE
(Applicant/tenant)

AND: NOEL BENJAMIN
(Respondent/lessor)

REASONS FOR DECISION

25 July 2007 Ms J Lennard, Member

REASONS FOR DECISION

Noel Benjamin is the owner of premises at 85 Costello Circuit, Calwell, ACT.
Richard Luton Properties act as his agent in relation to the letting of the premises to tenants under a residential tenancy agreement.
This application was filed by Steffen and Petra Ohnesorge on 5 April 2007.
On 27 April 2007 the Respondent was served, by way of ordinary post to Richard Luton Properties, with a notice of application, a copy of the application and notice of hearing.
On 14 May 2007 the Residential Tenancies Tribunal heard the matter. Mr Enchelmaier (Hanstein Lawyers) represented the applicants. There was no appearance by either Richard Luton Properties or the lessor.
After viewing the file and hearing brief submissions from Mr Enchelmaier, and taking into account:

That the lessor’s agent had been served with the documents;
That the cause of action arose in July of 2006; and,
That the lessor’s agent had deemed the circumstances to give rise to a breach of lease by the tenants and had retained the sum of $1100 paid as rent in advance, and claimed an amount of $200 from the bond without correspondence with the applicants or recourse to the RTT,

the RTT determined to proceed to hear the matter ex parte in accordance with s91(d) of the Residential Tenancies Act 1997.

The RTT had before it the following documents:

Residential Tenancy Agreement in relation to the premises signed by both parties on 26 June 2006. This Agreement was for a fixed term of 12 months to commence 10 July 2006.
A letter to the applicants from Richard Luton Properties, dated 26 June 2006 and setting 22 August 2006 as the date of the first lessor’s inspection of the property. Attached to this letter is a one page document headed Tenancy Cleaning Guide for Routine Inspections.
A letter from the applicant to the respondent’s agent dated 12 October 2006. This letter asks for a response to previous requests for the return of the rent paid in advance and the bond.
A response to this letter from Richard Luton Properties dated 13 October and signed by Ms Nicole Scott. This letter states that your departure from the property was considered a break of lease and penalties in accordance with this applied.

The applicants gave oral evidence of the circumstances relating to their refusal to occupy the property. This is summarised as follows:

The applicants had originally viewed the premises approximately 14 days prior to signing the tenancy agreement. The premises were occupied at that time and there were items of furniture, clothing and many boxes in the premises. The applicants observed at that time that the premises were not in a reasonably clean condition. The agent showing the property agreed that the premises were not clean.
At this initial viewing the respondent’s agent had promised that the house would be professionally cleaned and that all boxes and other items would be removed from the premises prior to any new tenant taking occupation.
The applicants signed the residential tenancy agreement at the offices of Richard Luton Properties on 26 June 2006. At that time they were handed a copy of the agreement, and the letter setting out the agent’s requirements for an initial inspection to take place on 22 August 2006. The applicants paid $1100 rent in advance and $1400 as bond.
On 10 July 2006 the applicants collected the keys to the premises from the office of Richard Luton Properties. The applicants intended to occupy the premises that day.
Upon entering the premises the applicants observed that the premises were in a very dirty state. The applicants contacted Richard Luton Properties by phone and Ms Nicole Smith and Mr Rick Dickson, of that office attended the premises.
Ms Scott and Mr Dickson inspected the premises in the company of Mrs Ohnesorge. The agents agreed that the premises ‘needed to be professionally cleaned’. The agents said they would speak to the owner and he may agree to do some cleaning. There was no actual offer to organise cleaning or respond in any other way to the applicants’ complaints.
The applicants were also concerned that the premises could not be secured, because the bathroom window could not be closed. The window was at head height on ground level. It was a wind in/out style. The window closed only partially and left a gap through which a hand and arm could be slipped.
Concerned that the premises were not reasonably clean, that the premises would not be cleaned prior to occupation and that the premises could not be secured, the applicants declined to take up occupation and returned the keys to the agent. The applicants asked for a return of the money paid.
The agent accepted the keys, but became abusive and threatened to sue the applicants.
The applicants left the premises; the agents were still at the premises when the applicants departed.
Soon thereafter the applicants verbally requested that the agents return the rent paid on advance and the bond. No response was forthcoming form the agents.
On 12 October 2006 the applicants wrote to the agents as follows:

Dear Ms. Scott,
After a few months you have not responded to our earlier request to have our advanced rental payment and bond payment refunded.
As you failed to provide us with an adequate level of customer service, we have been advised, that the clause 87 of our lease allows for abatement of rent from the date the premise was uninhabitable.
We therefore claim a full refund of our rent (total amount $ 1100) and bond (total amount $ 1400).
We believe that we can resolve this matter without any court or tribunal.
Steffen & Petra Ohnesorge

In response the agents sent the following letter on 13 October 2006:

Dear Steffen & Petra,
In response to your letter dated 12^th October 2006 and as advised at the time you handed back the keys to the property at 85 Costello Circuit, Calwell, your departure from the property was considered a break of lease and penalties in accordance with this applied.
Clause 87 does not apply in this situation as the property was not uninhabitable. More so, these issues were attempted to be resolved on the day to which you refused.
As your lease commenced on the 10^th of July 2006 and a new tenant was not found until the 29^th of July 2006, there was 19 days of rent payable for the property which came to a total of $950.00. We also had to re-advertise the property to find new tenants, we advertised on at a cost to you of $39.00 and also a fee of $311.00 for the break of lease fees. This coming to a total of $1,300.00.
As you didn’t provide us with any forwarding address or details when refunding the bond we had to state your address for the refund of bond cheque as unknown, so the amount of $1,400.00 less the $200.00 owed towards the break of lease fee is currently sitting in dispute at the Office of Rental Bonds and you will need to contact them in order to retrieve this.
If you have any further queries, please feel free to contact me on 6292 2323.
Regards,
Nicole Scott.

The RTT viewed photos of the property taken by the applicants on 10 July 2006. These showed the premises to be in an unclean condition. In particular the RTT noted:

The toilet was not clean;
There was a build up of mould and soap scum in the bathroom;
The oven and the cook top were greasy and had some foods spills;
The vents and heater outlets were dusty and contained cobwebs;
There were cobwebs evident in several rooms; and
The window ledges and sliding door ledges were dirty.

The applicants asserted that the premises were uninhabitable. The RTT does not agree, the premises were not reasonably clean, but this by itself does not render them uninhabitable.

Clause 54 of the standard residential terms provides:

Lessor to provide premises in a reasonable state at the start of the tenancy
54 (1) At the start of the tenancy, the lessor must ensure that that the premises, including furniture fittings and appliances (unless excluded from the tenancy agreement), are –
(a) fit for habitation; and
(b) reasonably clean; and
(c) in a reasonable state of repair; and
(d) reasonably secure.

Section 7 of the Residential Tenancies Act 1997 provides that a residential tenancy agreement starts on the earliest of the following days:

(a) The day stated in the agreement;
(b) The 1^st day both the parties have signed the agreement and received a copy signed by the other
(c) The day the tenant takes possession of the premises;
(d) The 1^st day the lessor receives rent from the tenant.

On the evidence before the tribunal the residential tenancy agreement came into force on the 26 June 2006. [s7 (b)]. The commencement of the agreement may not be the same as the ‘start of the tenancy’. A tenancy is the period in which a tenant holds an interest in land. The residential tenancy agreement is a contract which sets out the rights and obligations of the parties to that agreement. Taking section 7 and clause 54 together the Tribunal is of the opinion that the obligation of the lessor to ensure that the premises are reasonably clean and reasonably secure arises on the day on which the tenant is permitted under the agreement to take possession of the premises. Thus the lessor was obliged to provide reasonably clean and reasonably secure remises on 10 July 2006, the day the agreement provided for the commencement of the term of the tenancy. Clause 54 is a fundamental term of the contract it imposes an absolute obligation upon the lessor – the lessor must ensure that the premises are reasonably clean and reasonably secure at the start of the tenancy.

The Tribunal turns to the question of whether the premises were reasonably clean. The photographic evidence and the oral evidence of Mrs Ohensorge established that the premises were dirty and that in particular the bathroom and kitchen areas were not substantially clean. The agent agreed that they had not been professionally cleaned as promised.

The issue for the tribunal is what is meant by the phrase reasonably clean? The Tribunal looks first to the ordinary meaning of the phrase “reasonably clean”: clean means free from dirt or unsoiled, premises would be in a reasonable state of cleanliness if they were not greatly less clean than might be expected in the circumstances.

The Community Law Reform Committee in its report on Private Residential Tenancy Law, when examining the question of what was meant by the phrase in relation to the tenant’s obligation to leave premises in a reasonably clean state said: decisions as to what is reasonably clean should take account of the normal incidence of living … this should be the extent of the requirement as to cleaning during the tenancy. [Para 500].

The Tribunal then should ask whether the premises were, in a reasonably clean state, taking into account the normal incidents of living and what might be expected in the circumstances. In concluding that the premises were not in a reasonably clean state the Tribunal was guided by the Tenancy Cleaning Guide for Routine Inspections provided by the lessor (through his agent) to the tenants on the day the tenancy agreement was signed. This indicated the level of cleanliness the lessor expected of the tenant during the term of the tenancy, and is an indication of what the lessor expected of the tenants. This guide stated:

The following is a guide to assist you in preparing the property for your routine inspection. As we only inspect six monthly, attentions to the following items will ensure a favourable report for your tenancy history reference and to the lessor.
· Stove hotplates, grill, drip trays, and oven racks are to be cleaned. Please ensure the inside edges and hinges are also cleaned. Rangehood filters and surrounds are cleaned.
· Dishwasher cavity and filter to be cleaned. Please ensure the inside edges and hinges are also cleaned.
· Exhaust fan covers/vents are to be taken from ceilings and cleaned.
· Heating filters (dusted gas ad electric) are to be cleaned…
· …
· Windows, flyscreens, door aluminium tracks and window sill tracks are cleaned.
· All curtains and blinds…are dust free and clean.
· Marks to be removed from walls, ceilings and cupboards, etc.
· All floors, skirting boards and architraves to be washed and free of dust. Also fingermarks from door handles/surrounds and light switch/wall surrounds etc are clean.
· Carpets to be vacuumed and professionally cleaned if necessary.
· Particular attention is to be paid to wet areas (eg bathrooms, toilets, laundry) including cupboards, basins, mirrors, baths, waste drains, hair removed etc. Shower recess screens, grouting and tiles are to be scrubbed free of soap residue and mildew. Shower curtains are to be washed.
· Cobwebs must be removed from the interna; and external areas of the home, garages, carports, garden sheds etc.
· ….

The RTT does not endorse or recommend this guide, however it does provide information as to what the lessor regarded as reasonably clean.

Taking the above factors into account the Tribunal finds that premises where the toilet was not clean; there was a build up of mould and soap scum in the bathroom; the oven and the cook top were greasy and had some foods spills; the vents and heater outlets were dusty and contained cobwebs; there were cobwebs evident in several rooms; and the window ledges and sliding door ledges were dirty, are not reasonably clean and thus the lessor was in breach of his obligation under clause 54 to deliver the premises in a reasonably clean condition.

The evidence before the Tribunal was that the premises could not be secured, because the bathroom window could not be closed. The window was at head height on ground level. It was a wind in/out style. The window closed only partially and left a gap through which a hand and arm could be slipped. This meant that the premises could not be rendered ordinarily secure and that there was a window at ground level that couldn’t be closed or locked. The RTT finds that the lessor was in breach of his obligation under clause 54 to deliver the premises in a reasonably secure condition.

The obligations imposed by clause 54 upon the lessor are significant. They set out the fundamental obligation of the lessor at the beginning of the tenancy. The applicants immediately upon identifying the breaches raised them with the lessor through the lessor’s agent and the response received was, on the evidence of the applicants not satisfactory. The agent did not indicate that any action was to be taken by the lessor to remedy the breach.

The applicants declined to take up occupation of the premises and returned the keys to the lessor’s agent. The agent accepted the keys. The agent was abusive and threatened to sue the applicants. In all the circumstances the RTT finds that the return of the keys was a rescission of the contract contained in the residential tenancy agreement. The acceptance of the keys by the agents constituted an acceptance of the rescission.

The lessor failed to return the bond or rent paid in advance. The lessor’s agent sought to justify this action by characterising the actions of the applicant as a break of lease and unilaterally imposed penalties upon the applicants.

If the Tribunal is not correct in characterising the actions of the applicant and the lessor’s agent as a rescission of the contract, then it is arguable that a break of lease has occurred. Clause 84(2) of the residential tenancy agreement provides that upon receiving a notice of intention to vacate the lessor may accept the notice and accept that the tenancy ends or apply to the tribunal for confirmation of the tenancy, an order for compensation or both. While the applicants have not complied with the clause 85 as to the form and content of the notice, the Tribunal is satisfied that both parties understood that the applicants were refusing to occupy the premises, that they had returned the keys and that the tenancy was ended. The lessor has never applied to the Tribunal for compensation.

Section 104(d) of the Residential Tenancies Act 1997 provides that the tribunal may make orders requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement. The test for what was caused by a breach is the ‘but for’ test as set down in Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310. This applies a common sense approach and the question is whether but for the breach by the lessor would the applicant have suffered the loss alleged? The Tribunal is of the opinion that as a result of the breach of the tenancy agreement by the lessor the applicant has suffered costs and inconvenience. These include the costs of moving their goods and chattels and storing them while looking for accommodation and legal fees involved in coming to the Tribunal. The Tribunal has declined the application for general damages for distress and inconvenience, but allowed the application for actual loss.

The Tribunal made the following orders on 14 May 2007:

1. That the lessor is to pay the tenants the sum of $2175.00 being compensation for:
(a) costs      $304.00
(b) rent in advance  $1100.00
(c) wrongful claim on bond      $200.00
(d) compensation for removal and storage of goods              $571.00

2. That the Office of Rental Bonds is directed to release $1200.00 to the tenant forthwith.
3. That the abovementioned amount is to be paid on or before 28 May 2007.
4. That the lessor is to pay to the tenant an amount of $244.59 which is interest calculated on an amount of $3071.00 from 10 July 2006 to 28 May 2007.

On 17 May 2007 the lessor made an application to set aside the Order and restore the matter to the list. The grounds for this application were that “Richard Luton Properties or Mr Noel Benjamin never received the hearing notice”.

Section 102(2) of the Residential Tenancies Act 1997 provides that the tribunal may amend or set aside an order it has made if the order was made after hearing a matter in the absence of one party. The Tribunal takes the view that the use of the word may gives a discretion to the tribunal and the tribunal usually addresses two issues in determining whether to exercise that discretion: did the absent part have a reasonable excuse for failure to attend, and, if the matter was reheard would the Tribunal be likely to come to a different decision.

The respondent lessor was served by way of ordinary post to Richard Luton Properties, with a notice of application, a copy of the application and notice of hearing. The documents were not returned to the Tribunal. The Tribunal notes that the orders of 14 May 2007 and the notice of the hearing of the lessor’s application to set aside those orders were successfully served by the same method. The Tribunal neither accepts nor rejects the lessor’s claim not to have received the original documents.

Therefore the Tribunal proceeded to hear from the lessor as to the merits of the matter. The lessor did not appear in person but was represented by Mr Rick Dickson of Richard Luton Properties. Mr and Mrs Ohnesorge appeared in person and were represented by Mr Kurt Enchelmaier of Hansteins Lawyers.

Mr Dickson gave the following evidence to the Tribunal:

That he agreed that the lessor, who had occupied them prior to the tenancy, had not cleaned the premises to a reasonable standard.
That he agreed that the bathroom window could not be closed from the inside. He stated that it could be closed if one person stood inside and another stood outside and pushed the window. He scoffed at the suggestion by the applicants that this may damage or break the window winding mechanism. The Tribunal concluded from this that the premises could not be secured unless there were two people available to close the window. Mr Dickson agreed that there was a gap between the widow and the sill, but denied that it was wide enough to put a hand through. He argued that the premises, even without the bathroom window closed were reasonable secure. Mr Dickson gave evidence that he had had some difficulty closing the window after the applicants had left the premises and that he engaged a tradesman to repair the window on the next day.
That while he had offered to contact the lessor about the dirty condition of the premises, he had not done so at that time and had not offered any suggestion as to how the breach might be remedied by the lessor except that the lessor ‘may agree to do a couple of hours cleaning’. He was not able to give the applicants and time by which they might expect a response. He confirmed that the premises had not been professionally cleaned.
That he had accepted the keys from the applicants and had not communicated with the tenants since 10 July 2007. He agreed that he had told the tenants that he would sue them for not taking up the tenancy.

The Tribunal revisited the issue of what the case would be if the Tribunal was not correct in characterising the conduct of the applicants and the lessor’s agent as repudiation of the agreement and acceptance of that repudiation. If the applicants’ refusal to take up occupancy of the premises was a ‘break lease’ as asserted by the lessor’s agent in the letter of 13 October 2006 then clause 84 (2) of the tenancy agreement and s107 of the Act would apply. Section 107provides that where the lessor receives notice of an intention by the tenant to vacate the premises prior to the expiration of a fixed term the lessor may –

(a) accept the notice; or
(b) apply to the tribunal for compensation for—
(i) the loss of rent that 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 premise to another person

In response to the alleged break lease, the agent engaged in the following conduct, but did not communicate with the applicant, although on the evidence before the Tribunal the agent knew the phone numbers of the applicants.

Advertised the property for rent and found tenant from 29 July 2007 – this would indicate that the agent and the lessor had not contemplated making an application to the tribunal for a confirmation of the tenancy;
Lodged the $1400 paid as bond by the applicants on 26 June 2006 with the Office of Rental Bonds on 27 July 2007. This was so even though no tenancy existed at that time. The Tribunal notes that the agent has failed to comply with the requirement that the Bond be lodged within 4 weeks as set out in clause 20 (c) of the tenancy agreement.
Retained the $1100 paid by way of rent in advance and made a claim on the bond in the amount of $200. No effort was made to contact the tenant and obtain an address or other contact details. These amounts were applied as compensation for loss of rent, in accordance with their understanding of s 107.
In the letter to the applicants Ms Scott claims an amount of $311 for break of lease fees. Mr Dickson gave oral evidence that the break of lease fee would be one week’s rent. No evidence was produced to the Tribunal to show that this fee had been charged to the lessor. It appears to the Tribunal that the break down of fees as set out by Ms Scott was at best a convenient method of collecting the maximum allowed from the tenant and at worst, a deliberate falsehood.

Interpreting and applying the Act to suit themselves is not an option provided to the lessor’s agents by either clause 84 or section 107. The lessor chose to sit on his hands and take none of the actions available to him. The agent has acted in bad faith in failing to bring an action to the RTT and in failing to contact the applicants, by allocating money paid as rent in advance as compensation to the lessor, failing to lodge the bond within time, lodging the bond where no tenancy existed and making a claim against the bond without any legal basis.

In all the circumstances the failure to bring this alleged break of lease to the Tribunal is construed as an acceptance of the repudiation of the agreement by the tenant. The conduct outline in paragraph 34 above is improper, especially in light of the fact that it was done without any attempt to communicate with the applicants.

Thus, having considered the evidence of the lessor’s agent as to the state of cleanliness and security of the premises and taking into account the subsequent conduct of the lessor, though his agent, the Tribunal confirmed the decision made on 14 May 2007 and made the following order:

That the application to set aside the orders made on 14 May 2007 is dismissed.

JANN LENNARD
MEMBER

25 JULY 2007