Spellman & Anor v Slattery & Anor (Residential Tenancies)
[2014] ACAT 61
•5 June 2014
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
SPELLMAN & ANOR v SLATTERY & ANOR (Residential Tenancies) [2014] ACAT 61
RT 14/408
Catchwords: RESIDENTIAL TENANCY – application for termination of residential tenancies agreement on basis of hardship - premises vacated before application made to Tribunal – agreement terminated by action of the tenants – Tribunal cannot retrospectively terminate agreement on the basis of hardship – in any event hardship of tenants not significant – hardship to lessors extensive - lessors entitled to seek compensation for “break lease” – orders about compensation agreed
Legislation:Residential Tenancies Act 1997, s 44
Tribunal: Ms J. Lennard – Senior Member
Date of Orders: 5 June 2014
Date of Reasons for Decision: 24 September 2014
ACT CIVIL AND ADMINISTRATIVE TRIBUNAL RT14/408
BETWEEN:
SHANE SPELLMAN
KELLY ARCHER
Applicants/Tenants
AND:
PETER SLATTERY
KIRSTEN HAWKE
Respondents/Lessors
TRIBUNAL: Ms J. Lennard – Senior Member
DATE:5 June 2014
ORDER
The Tribunal Orders that:
1. Tenancy is terminated as at 4:00pm Thursday 5th June 2014.
2. The tenants shall pay to the lessor the sum of $3,800.00 being 8 weeks rent compensation as follows:-
a) Rental Bond of $1,900.00 is released to landlord; and
b) In fortnightly payments at $950.00 commencing Thursday 19th June 2014.
Signed…………..
Ms J. Lennard – Senior Member
REASONS FOR DECISION
The applicants as tenants and the respondents as landlords, were parties to a residential tenancy rent agreement in relation to premises in Kaleen ACT. The agreement was for a term of 12 months and this term had not expired at the time of the hearing.
In March 2014 the tenants gave notice that they intended to terminate the lease, and relied upon the ‘posting clause’ in the agreement as the basis for this notice. Miss Kelly Archer had applied for and obtained a position with her current employer in Melbourne.
In earlier proceedings, the Tribunal found that the posting clause was not applicable. On 29 May 2014 orders were made refusing an application for termination of the agreement on the basis of posting. The hearing of an application for termination of the tenancy on the basis of hardship was adjourned to 5 June 2014.
These reasons deal only with the application for termination of the tenancy agreement on the basis of hardship.
JURISDICTION
Section 44 of the Residential Tenancies Act 1997 (the Act) provides that the ACT Civil and Administrative Tribunal may, upon application by a tenant, terminate a fixed term agreement if satisfied that the tenant would suffer significant hardship if the agreement were to continue and the level of hardship is such that it is appropriate and just to terminate the agreement during its fixed term.
The evidence before the Tribunal was as follows:
a)the tenants had given eight weeks written notice of their intention to vacate on 31 May 2014;
b)the landlords’ agents told the tenants that the posting clause could not be relied upon to terminate the residential tenancy agreement when Miss Archer had voluntarily surrendered her job in the ACT and applied for employment in Melbourne;
c)the tenants vacated the premises on 31 May 2014 and the landlords took possession of the premises on that date;
d)the tenants stopped paying rent when they vacated the premises;
e)the premises had not been re-tenanted;
f)the premises was the primary residence of the landlords;
g)the landlords were currently living in the Solomon Islands where one of them was employed and the other was not employed;
h)the rent received from the premises while the landlords were posted to the Solomon Islands was used to pay a housing loan;
i)the weekly rent for the premises was $475;
j)the tenants had moved to Melbourne and Ms Kelly Archer was employed and earning $55,000 per annum. Mr Shane Spellman had not yet obtained employment in Melbourne;
k)the tenants had incurred costs in the order of several thousand dollars in relation to vacating the premises, moving to Melbourne and paying the bond for the Melbourne premises; and
l)the tenants were paying rent of $1300 per month in Melbourne.
The tenants did not make an application to the Tribunal for termination on the grounds of hardship before they vacated the premises in accordance with their written notice. Termination of a residential tenancy agreement involves a question of fact and of law: as a matter of fact, the tenants had terminated the tenancy by the giving of the notice of vacation and then vacating the premises in accordance with that notice. This is a clear breach of their obligations pursuant to the fixed term tenancy agreement and a clear indication that they did not intend to perform the contract set out in the residential tenancy agreement according to its terms.
In these circumstances, the Tribunal was of the view that the tenancy, being already terminated by the conduct of the tenants, could not be retrospectively terminated by the Tribunal on the grounds of hardship. Section 44 of the Act provides that if the Tribunal decides to terminate a residential tenancy agreement on the grounds of hardship, the date of termination is to be determined after considering the relative levels of hardship suffered by the tenants and the landlords. The words of the section contemplate that the date of termination will be determined by the Tribunal and will be at some time between the date of hearing and eight weeks from the date of hearing.
The Tribunal nevertheless considered the submissions of the tenant as to the hardship they would suffer and the submissions of the landlords as to the hardship they would suffer. Hardship is not confined to financial hardship and may encompass financial, medical, and personal forms of hardship. While the Tribunal acknowledged that the tenants would suffer financial hardship as a result of the decision to vacate the premises and move to Melbourne, the Tribunal did not consider that this was significant hardship.
The landlords were likely to suffer considerable financial hardship as a result of the loss of the rental income from this fixed term tenancy. The information before the Tribunal was that the landlords would be returning to live in the premises in mid-2015, and taking into account the current state of the rental market in the ACT, it is likely that the financial loss of the landlords will be extensive.
If the Tribunal had found that the hardship of the tenants was such as to make it appropriate and just to terminate the tenancy during its fixed term in accordance with section 44(1), the Tribunal could not be satisfied as to the matters set out in section 44 (2) (b). Thus an order for termination on the grounds of hardship would be for termination at a date not less than eight weeks from the date of the hearing.
The Tribunal expressed the view that this matter should be regarded as a ‘break lease” and that the landlords were entitled to bring an action for compensation. The landlords’ agent indicated to the Tribunal that she would be prepared to agree to the tenants paying compensation equivalent to 8 weeks rent in order to bring the matter to an end and to avoid the need for the landlords to file a further application.
The Tribunal asked the tenants whether they would consent to orders that the tenancy be terminated, that the bond of $1900 be released to the landlords and that they pay a further $1900 (being four weeks rent) to the landlords within four weeks of the date of the hearing. Both tenants agreed to the proposed orders.
The Tribunal therefore made orders that the tenancy was terminated on the date of the hearing, that the bond should be released to the landlords and that the tenant should pay a further four weeks rent in fortnightly payments commencing 19 June 2014.
………………………………..
Ms J. Lennard
Senior Member
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