Ponnen v Constantinos Grivas Nominees Pty Ltd - [2006] SADC 23

District Court of South Australia
(District Court Administrative Appeals Tribunal: Appeal Under Residential Tenancies Act 1995)
PONNEN v CONSTANTINOS GRIVAS NOMINEES PTY LTD
Judgment of His Honour Judge Beazley (ex tempore)
1 March 2006
LANDLORD AND TENANT - TERMINATION OF THE TENANCY - NOTICE TO QUIT - WHAT NOTICE REQUIRED
RESIDENTIAL TENANCIES ACT - Appeal against findings and orders of Tribunal - Tenant gives early Notice of Termination of a fixed term lease - Tribunal ordered that the tenant pay the landlord the sum of $2,937.36 - No basis to set aside order - Appeal dismissed.
Residential Tenancies Act 1995 ss 41, 42, 86(3), referred to.
Vickers v Stichtenoth Investments Pty Ltd (1989) 52 SASR 90; Allmed Pty Ltd v Opak Investments Pty Ltd (in liquidation) (1995) ANZ Conv R 153, considered.

PONNEN v CONSTANTINOS GRIVAS NOMINEES PTY LTD
[2006] SADC 23

The appellant appeals against the order of the Residential Tenancies Tribunal (“the Tribunal”) made on 23 December 2005. Having concluded that Mr and Mrs Ponnen, as tenants were liable to the respondent landlord in the sum of $2,937.36, the Tribunal ordered pursuant to section 110 of the Act that the security bond in the sum of $2,340 be paid to the landlord, and that the tenants pay it the sum of $597.36 within 28 days of the date of the order.
Subsequently, the Commissioner paid out the sum of $2,340 leaving only the sum of $597.36 outstanding. Following the filing of a Notice of Appeal by Mr Ponnen, a Master of the Court made an order on 20 January 2006 staying the order of the Tribunal with respect to that sum of $597.36.
Background
The appellant and his wife had arrived in Australia from South Africa on or about 26 January 2005 and were seeking rental accommodation. No issue was raised about the fact that Mrs Ponnen was not named as a party to the appeal. They entered into discussions with the respondent’s director Mr Grivas in consequence of which a lease document entitled “A Tenant Lease For a Fixed Term” was executed by Mr and Mrs Ponnen on 14 March 2005. The lease was for a fixed term of 12 months due to expire 14 March 2006. The weekly rental eventually became $400 per week.
Clause 19 of the lease provided: -
“Except as stated in paragraph 16 and 17 on page 3 of this document (which are irrelevant for these purposes) neither the landlord nor the tenant may give notice of termination before the end of the term of this agreement. If the tenant vacates the premises before the end of the term of this agreement without the approval (preferably in writing) of the landlord, they may be liable to the landlord for the costs associated with finding a new tenant, re-letting the premises and for any loss of rent”
By letter dated 1 September 2005, the tenants gave written notice of their intention to vacate the premises on 17 October 2005. They had at that time entered into a contract for the purchase of a house. There were some discussions at that time between Mr Ponnen and the landlord, the effect of which was a matter in dispute before the Tribunal. Mr Ponnen and his wife vacated the premises on 17 October 2005. The landlord claimed losses in consequence in the sum of $2,937.36.
On the appeal only the sum of $2,228.46 being the sum fixed by the Tribunal for “rent arrears and rent loss” until a new tenant was found was in dispute. The balance of the total fixed by the Tribunal related to maintenance and advertising expenses, which were conceded by Mr Ponnen on the appeal.
Issues
At issue was whether the landlord had failed to mitigate his loss following the early termination of the lease by the tenants. The grounds were expressed as follows: -
“Decision of Tribunal was incorrect in that I acted within the Act to provide the landlord notice well ahead of the 21 days and also requested permission to sub-let premises which was refused”
To a large extent this appeal has arisen out of a misunderstanding between the parties arising out of alleged conversations that Mr Ponnen said that he had had with the landlord both prior to executing the lease and subsequent to giving notice of termination.
In his submissions, Mr Ponnen said that there had been a discussion about the availability of a lesser term when he first consulted Mr Grivas. He alleged that Mr Grivas told him that there could be no lease in South Australia for a term less than 12 months. This matter had not been raised before the Tribunal. Mr Grivas denied that such a conversation had occurred. Before considering whether I ought require the parties to give evidence on that topic Mr Ponnen conceded that he had learnt soon after speaking to Mr Grivas that it was possible to obtain leases for less than a 12 month period, yet he elected to affirm the terms of the lease. In those circumstances, there was no need to resolve that issue first raised by Mr Ponnen on the appeal. See Allmed Pty Ltd v Opak Investments Pty Ltd (in liquidation) (1995) ANZ Conv R 153.
Some time before September 2001, Mr Ponnen and his wife were able to purchase a property and in consequence sought some advice in respect to the early termination of the lease. It seems that Mr Ponnen understood from that advice that he could simply give 21 days notice to lawfully determine the lease. The difficulty with that advice is that section 86 of the Act, which specifies such notice, applies only to periodic tenancies and not to a lease for a fixed period.
Mr Ponnen wrote to the landlord on 1 September 2005 indicating that he would be terminating the lease as at 17 October 2005 and he attended to payment of his rent up to that date. In that letter, Mr Ponnen recognised that there was a need for a replacement tenant to be found so as to mitigate the damage, which might otherwise be suffered by the landlord. He gave evidence to the Tribunal that he wished to locate a tenant himself as that would assist in reducing the rent. His major grievance both at the Tribunal and on appeal was that he was denied the opportunity of either sub-letting or alternatively finding another tenant.
There appears again to have been a misunderstanding between Mr Grivas and Mr Ponnen in that Mr Ponnen believed that he could not embark upon finding another tenant while Mr Grivas said that he was more than happy for him to do so if he could in fact locate a tenant. This matter was considered by the Tribunal, which did not reach any conclusion about that misunderstanding save as follows:
“Mr Ponnen said if he had permission to sub-let, he could have activated other networks to find another tenant apart from the advertising avenue used by the landlord. The issue wasn’t directly resolved, in that the landlord said he could have directed any interested person to him to apply. The tenant said he hadn’t tried to find somebody to take over, as he understood he had been denied permission to do so. He said he waited for the landlord to reply to his request in writing. Later he asked the landlord again about subletting with no response. The landlord understood they were negotiating and that he had not denied tenant a right to sublet but had suggested another way that the matter might be resolved”.
The Tribunal then proceeded to determine whether the landlord had acted appropriately in mitigating his loss. There is no doubt that a landlord is under a duty to take reasonable steps to mitigate any loss by seeking another tenant. See Vickers v Stichtenoth Investments Pty Ltd (1989) 52 SASR 90. The Tribunal concluded that the landlord had acted properly in that he advertised regularly as soon as the property was placed in reasonable order and that he had in fact compromised the opportunity for a higher rental with the new tenant to achieve a re-letting a quickly as possible. Indeed a tenant was found in the month of November 2005.
The Tribunal considered the proposition that there had been a failure to mitigate by not allowing Mr Ponnen to proceed to find a sub-tenant but concluded that it was satisfied that the landlord had made every reasonable effort to re-let the premises promptly and that there was no evidence that the tenant could have had success at any earlier stage. The Tribunal pointed out that the landlord had had difficulty attracting new tenants even after the premises were cleaned and brought up to a reasonable level.
I have no doubt that Mr Ponnen is quite aggrieved that he was denied the opportunity of reducing the amount of rent which he was eventually forced to pay. Having heard the parties I do not find that Mr Ponnen was misled by the landlord. It is clear that it was a simple misunderstanding by both parties.
Having read the reasons of the Tribunal and having heard the parties I agree entirely with the decision reached by the Tribunal. In my opinion, the Tribunal was correct in concluding that the landlord did comply with his duty to take reasonable steps to mitigate his loss in the circumstances.
The only issue on the appeal was the question of the quantum of the rental arrears and rent loss occasioned by the seeking of a new tenant. I agree with the Tribunal that the quantum was entirely reasonable.
As the sum of $2,340 was paid out by the Commissioner in consequence of the order for the release of the bond the remaining sum is the sum of $597.36, which was the subject of the order of the Master on 20 January 2006. I make the following orders: -
1I affirm the order that was made by the Residential Tenancies Tribunal.
2I dismiss the appeal lodged by Mr Ponnen.
3I set aside the suspension order made by the Master on 20 January 2006.
4I vary the order of the Tribunal to the extent that the sum of $597.36 is to be paid by the Ponnens’ within 7 days to the respondents at 16 Bonview Street Beaumont.