Premier Capital Properties & Zhao and Anor (Residential Tenancies)
[2011] ACAT 28
•5 April 2011
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
PREMIER CAPITAL PROPERTIES & ZHAO AND ANOR (Residential Tenancies) [2011] ACAT 28
RT 41 of 2011
Catchwords: RESIDENTIAL TENANCIES – claim against rental bond – items of repair in dispute – need for legislative requirement for condition report to be signed by landlord or landlord’s agent and tenant – weight to be given to the periodic inspection report – factors relevant to ascertaining lessor’s loss, namely, tax deduction, depreciation and new painting which increases capital value – application of the balance of probabilities.
List of legislation: Residential Tenancies Act 1997 (ACT)
Residential Tenancies Act 2010 (NSW), s. 29(4) and (5).
Tribunal: Mr A. Anforth, Senior Member
Date of Orders: 5 April 2011
Date of Reasons for Decision: 5 April 2011
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA
BETWEEN:
PREMIER CAPITAL PROPERTIES
Applicant
AND:
TIMOTHY ZHAO
1st Respondent
LUCIA MEI
2nd Respondent
TRIBUNAL: Mr A. Anforth, Senior Member
DATE: 5 April 2011
ORDER
The tenants are to pay the lessor the sum of $337.50.
The Office of Rental Bond is to pay the sum of $337.50 to the lessor and the balance to the tenants.
………………………………..
Mr A Anforth
Senior Member
REASONS FOR DECISION
The Applicant is the lessor of premises at 88/21 Battye St Bruce and the Respondents were the tenants of that property.
The tenancy commenced in July 2008 and terminated on 3 December 2010.
The premises were new at the commencement of the tenancy.
The present disputes concerns a claim by the lessor of $1,200.00 against the bond of $1,560.00 held by the Office of Rental Bond.
The lessor lodged the claim with the Office of Rental Bond on
8 December 2010. The claim lodged did not particularise the basis of the claim.On 17 December 2010 the tenants lodged with the Office of Rental Bond an objection to the lessor’s claim which read as follows:
“This is Lucia Duo Mei. I used to live in 88/21 Battye Street, Bruce ACT (2617) and rent the unit since July 2008 to 3rd December, 2010. I gave the 4 weeks’ notice in advance to the agent before I move out (I emailed to Karen Defelice, the agent whom I always contacted on 5th November, 2010) and told her that I would vacate the unit on 5th December, 2010. While a couple of weeks later, I received the letter from Karen and was told she could not do the inspection on Sunday and she wanted to change the inspection day to 6th December, 2010. Because I would start my new work in Sydney on 6th December, I asked Karen whether she can change the inspection day to 3rd December, 2010. At the beginning she refused to change the date, she insisted I need give her four weeks’ notice in advance. I explained to her that I won’t be in Canberra after that day. Then she agreed to change to 3rd December, 2010. I arranged the end of lease cleaning on 2nd December, 2010 and paid the rent to 3rd December, 2010. On 3rd December, I came to the unit at 12pm. Karen came earlier and she arranged some people to inspect the unit. After I came there, she gave me a blank form and asked me to sign. She showed me where to sign it and told me I need to sign it otherwise I could not get the bond back. After I signed, Karen asked me to go to the car park. After she finished the inspection, I asked her to give me the form I signed. Because I didn’t have time to read it, I need to read it to make sure everything’s right. But she refused to give me the form and asked me to return the keys. I told her that if she refused to give me the form I would not return the keys. Then she shouted at me that she would not give me the form and told me if I didn’t give her keys I won’t get any money back. So I gave all the keys back to her and insisted that she should let me read the form. She turned very angry and yelled at me. At that time I thought there must be something wrong, so I tried to get that form. But she stopped me and wanted to leave. Then I tried to contact my friends for help and ask Karen to stay but she just ran out of the unit. I am not familiar with the process of inspection, and I don’t know the agent will keep the $1200 out of $1560 until I called the bond office this Tuesday. The agent was only not satisfied with the mark on the large wall in the living room and a small hooker I attached on the wall in the second bedroom. And I don’t think to remove the mark and the hooker will cost $1200. This agent didn’t take its responsibility to take care of the tenant during the last 2 years. I had to solve problems by myself. Karen even didn’t know which expense the landlord had paid and which expense I should pay. The gas bills had not been paid for nearly two years. (Because the gas account was under the landlords name, while the landlord didn’t know that and therefore he didn’t pay the bill.) Until I was told the gas would be cut because all the bills get paid, I changed the gas account to my name. The total bills are more than $2000, I had to pay out within one month and I had to pay the overdue fees. These are all because of the agent’s irresponsibility. An agent uses such way to cheat money is very bad. I believe the bond office will make right decision and I will be following up until I get my money back.”
The dispute was referred to the Tribunal on 11 January 2011.
On 3 March 2011 the matter was before the Tribunal for hearing. Ms De Felice, real estate agent appeared for the lessor and Ms Mei appeared by phone for the tenants. Procedural orders were made for the parties to file and serve their evidence. The parties agreed that once their respective evidence was filed and served then the Tribunal would make a decision on the papers.
On 8 March 2011 the lessor’s agent filed the following documents.
Firstly, a statement from John Fuentes of Real Painting Services setting out his observations of:
(a)a 15cm diameter repair in the wall of the living room/kitchen that required sanding and painting of the whole of the wall; and
(b)two 3cm diameter repairs in the wall of the second bedroom that required painting to two walls and a window.
The total repair bill from Real Painting Services was $1,200.00.
Secondly, an ingoing inspection report of 26 August 2008 which contain no annotations by the tenants and no notation of any defects by the lessor.
Thirdly, an inspection report of 12 March 2009 that contained no annotations by the tenants. The report said that the carpets were ‘very dirty’, the bathroom was ‘mouldy’, the kitchen was dirty and a wall in bedroom 1 needed repairing.
Fourthly, an inspection report of 24 April 2009 that contained no annotations by the tenants. The report said the premises were clean but noted the need for repair of the wall in the bedroom 1.
Fifthly, an inspection report of 23 October 2009 that contained no annotation by the tenants. The report noted an attempted repair to a wall in the living room which need ‘proper repairing’. It made no reference the wall in the bedroom.
Sixthly, an inspection report of 14 April 2010 that contained no annotation by the tenants. It noted that the repair to the living room wall had not been attended to. It made no reference to the wall in the bedroom.
Seventhly, an inspection report of 16 November 2010 that contained no annotation by the tenants. It noted that the repair to the living room wall had not been attended to but made no reference to the bedroom wall.
Eighthly, an inspection report of 3 December 2010 that contained no annotation by the tenants. It noted that neither the living room nor the bedroom walls had yet been repaired.
Ninthly, a fax from Wayne Saunders to the lessor’s agent of 14 January 2011 which said that he attended the premises on 14 May 2009 and ‘patched a hole in the bedroom wall behind the door as well as a few other small dents on the same wall. Then repainted the whole wall.’ An invoice was attached with is not legible but it appears to be for $300.00. The fax says that the account was paid by the tenants.
On 15 March 2011 the tenants filed their statement and evidence.
There were photographs attached to the statement. The photographs were black and white. It was not apparent which walls they depicted. The photographs show no defects in any wall.
The statement from the cleaner who performed the end of lease cleaning for the tenants, Mr David Zhao read:
“My name is David Zhao (10/01/1983 59 Nellie Hamilton Av. Gungahlin ACT 2912). I am the franchisee of VIP Home Services in Canberra. I have done the cleaning for Lucia at 88/21 Battye St, Bruce on 2nd December 2010. The job include all the general house cleaning (dusting, windows, sliding door inside/outside, kitchen, bathroom, etc) plus the oven and carpets steaming washing. Because the job has been done for a very long time, but in my memory, I did not notice any big damages which listed below:
1. Large wall in living area has been patched and needs to be fixed and
painted.
2. Wall in 2nd bedroom where window is has been patched and needs to be fixed and painted.
Please contact me if you have any queries about the cleaning.
My contact number is - (number removed)-”
Consideration of the issues:
There are two separate items of repair in dispute being, the bedroom wall and the living room wall.
In relation to the bedroom the tenants did not deny that two small marks had been made to the wall. They say that the marks were repaired in May 2009 and the account from Wayne Saunders produced from the records of the lessor’s agent appears to corroborate this assertion.
The inspection report of 24 April 2009 immediately before the repairs carried out in May 2009 refer to the marks on the bedroom wall. However the inspection reports of October 2009, April 2010 and November 2010 do not. These later reports do refer to the marks on the living room wall and so it be expected that if any marks remained on the bedroom wall they too would be noted in these later reports.
The final inspection report of 3 December 2010 does mention the marks on the bedroom wall. There are a number of things to note about this final report:
(a) It was carried out by the lessor’s agent alone, and not in the presence of the tenants;
(b) The lessor’s agent appears not to have made any serious effort to arrange a mutual inspection with the tenants;
(c) It was not notated by the tenant;
(d) According to the tenants’ story, the lessor declined to allow the tenants to notate it;
(e) The lessor’s agent took no photographs or video of the damage.
There is no requirement in the Residential Tenancies Act 1997 or in the standard residential tenancy agreement for the final end of tenancy inspection to be carried out by the lessor’s agent in the presence of the tenant. This omission stands in contrast to the tenancy law in other jurisdiction. For example see section 29(4) and (5) Residential Tenancies Act 2010 (NSW):
29(4) At, or as soon as reasonably practicable after, the termination of a residential tenancy agreement, the landlord or landlord's agent and the tenant must complete the copy of the condition report retained by the landlord or the tenant under this section, in the presence of the other party.
(5) It is not a breach of subsection (4) for the condition report to be completed in the absence of the other party if the party completing the report has given the other party a reasonable opportunity to be present when it is completed.(emphasis added).
There is a good reason for the kind of requirement contained in section 29(4) of the NSW Act. If the parties walk through the premises together at the end of the tenancy once all the furniture is out of the premises then the lessor’s agent can clearly identify any alleged damage or lack of cleaning and the parties can each photograph it. This creates certainty as to the issue between the parties and creates the best evidence of the matters claimed.
The absence in the ACT legislation of any the kind of requirements set out in section 29(4) and (5) of the NSW Act gives rise to the present kind of dispute where there the opportunity for clarity of issue and the collation of the best evidence are lost. The final inspection report carried out by the lessor’s agent alone degenerates into a self serving document that has no greater evidential value then the oral evidence of the agent who prepared it.
The facts of the present case further illustrate the problems that arise from the absence of any duty on the lessor’s agent to attempt to arrange a mutually convenient time with the tenant for the final inspection. In this case, it was clear that the tenant wanted to attend but the agent had her own agenda that did not facilitate the tenant’s attendance.
Under the NSW provisions, if a tenant is given a reasonable opportunity to attend the final inspection and chooses not to do so then the lessor’s agent can proceed in unilateral fashion and is not inconvenienced.
Even though the ACT legislation does not contain the equivalent of sections 29(4) and (5) of the NSW Act, nevertheless the Tribunal in the ACT has repeated asked lessor’s agent to adopt a practice consistent with the NSW Act and to take photographs of alleged damage or need for cleaning. Most agents in the ACT now comply with this practice.
The Tribunal recommends that the Minister give consideration to embodying in the ACT legislation the equivalent to NSW provisions referred to above.
Where does this leave the claim for the bedroom walls? The fact that the tenants had the walls painted in May 2009 and that no further reference to the walls appeared on the inspection reports thereafter until the final report at which the tenant was not present, causes the Tribunal to take the view (on the balance of probabilities) that the tenants’ evidence on the point is to be preferred i.e. that the walls were repainted in May 2009 and there were no significant marks on the bedroom wall at the end of the tenancy.
Even if there were a few marks of the order of 3cm, the issue of fair wear and tear after 2.5 years of tenancy has to be taken into account (prescribed term 64(b)). Fair wear and tear must be given some content.
This leaves the issue of the living room wall.
Most of the comments above are apposite to the marks on the living room wall. The main difference however is that all the periodic inspection reports from October 2009 consistently refer to this mark on the wall.
It would have been so much easier for all concerned if the parties had jointly inspected this mark and photographed it at the final inspection.
On balance, the Tribunal is prepared to accept that this mark was present at the end of the tenancy. The question is whether the existence of this marked required that ‘sanding and painting the entire wall’ (per Mr Fuentes). The absence of any visual evidence makes it difficult to form any view on this matter. At first blush, the temptation is to accept the judgement of the agent and the painter on the matter. But this temptation has to be ameliorated to some extent by the above finding that the bedroom walls did not need repair and repainting notwithstanding that the agent and the painter formed the view that they did.
The cost to the lessor in repairing and repainting the living room walls also has to be discounted by the fact that the cost is a tax deduction for the lessor, that the initial cost of painting is a tax depreciation in the hands of the lessor and the new painting is an increase in the capital value of the premises. These factors are relevant in ascertaining the precise extent of the loss suffered by the lessor.
The cost of painting the wall in the living room was $500 plus $100 paint (inclusive of GST) (per Mr Fuentes). The total cost of the living room wall is $600. Assuming an immediate tax deduction of 25% for the cost of the repair work leaves $450.00. A further allowance should be made for the depreciation of the internal paint work as a whole depreciation of 25% over 2.5 years based on the ATO scale (based on a 10% life expectancy of internal painting) which leaves $337.50 owing. This is approximately the real value of the lessor’s loss arising from the repair and repainting of the living room wall.
On the balance of probabilities, the Tribunal finds that the tenants caused the marking on the wall which was large enough (15cm diameter) to require repair and repainting.
The tenants are to pay the lessor the sum of $337.50.
The Office of Rental Bond is to pay the sum of $337.50 to the lessor and the balance to the tenants.
………………………………..
Mr A. Anforth
Senior Member
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