THE HURST-MEYERS CHARITY LTD ACN 611 166 119 v KHAN & ORS (Residential Tenancies)
[2020] ACAT 33
•6 May 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE HURST-MEYERS CHARITY LTD ACN 611 166 119 v KHAN & ORS (Residential Tenancies) [2020] ACAT 33
RT 630/2018
Catchwords: RESIDENTIAL TENANCIES – clause in agreement for contra work in lieu of part of the rent payable – effect of the contra clause being void – claim for compensation by lessor for repairs and cleaning – counter claim from tenants for compensation for failure to repair, wrongful eviction, property not as advertised, breach of quiet enjoyment and value of contra work
Legislation cited: Residential Tenancies Act 1997 ss 9, 10, 12, 15, 44, 56, 62 standard terms 24, 65
Cases cited:Abuaagla v Edwards [2014] ACAT 55
Tribunal: Senior Member D Mulligan
Date of Orders: 6 May 2020
Date of Reasons for Decision: 6 May 2020
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 630/2018BETWEEN:
THE HURST-MEYERS CHARITY LTD
ACN 611 166 119
Applicant
AND:
CHRISTOPHER KHAN
First Respondent
BRADLEY JOHNSON
Second Respondent
ANDREW WHYTE
Third Respondent
TRIBUNAL: Senior Member D Mulligan
DATE:6 May 2020
ORDER
The Tribunal orders that:
1.The respondents jointly and severally owe the applicant $10,784.91.
2.ACT Rental Bonds on behalf of the Territory is directed to release the entire bond of $2,100 to the lessor.
3.After taking into account the return of the rental bond, the respondents jointly and severally owe the applicant $8,684.91.
………………………………..
Senior Member D Mulligan
REASONS FOR DECISION
1.In September 2016, Mr Ralph Hurst-Meyers (Mr Hurst-Meyers) was a director and the secretary of the Hurst-Meyers Charity Ltd (ACN 611 166 119) (the Charity).
2.At that time, Auswide Services Pty Ltd (in liquidation) was the owner of Block 95, Booth, ACT, 2830. This land is also known as 705, Top Nass Road, Booth, ACT, 2830. Most commonly the property is known as Caloola Farm (the property).
3.The property is in a rural area and comprises approximately 426 acres of land.
4.There are a number of discrete houses within the property. One of those is known as the White House or the farmhouse (the White House).
5.The liquidator of Auswide Services Pty Ltd (in liquidation) and the Charity entered into a sale of land agreement for the property.
6.On 20 September 2016, the Charity entered into a licensing agreement with the liquidator of Auswide Services Pty Ltd,[1] Deloitte.
[1] Exhibit R1 pages 1-11
7.The effect of this licensing agreement was to grant a licence to the Charity over the property during the sale period.
8.The license agreement could be terminated at any time with the mutual agreement of the parties, or on the date the sale of land agreement was complete.[2]
[2] Exhibit R1 page 7, Clause 8
9.The licensor could also terminate the agreement on seven days’ written notice, if the Charity failed to remedy any default under the agreement.
10.Under the terms of the licence the Charity was entitled to enter into rental agreements in relation to those discrete houses, including, the White House. This point was expressly addressed by the liquidator, Deloitte, in a letter[3] dated 16 July 2018, in which the liquidator, Mr Mansfield, stated:
On 20 September 2016, the Company (as owner of Block 95, Booth also known as the Property) entered into a license agreement with the Hurst-Meyers Charity Ltd (ACN 611 166 119) (the licensee). The license agreement entitled the Licensee full use of the Licensed Area of the Property. The Licensed Area include the entire property and all buildings contained therein. As such confirmed that Hurst-Meyers Charities Ltd have the right, pursuant to the license agreement, to enter into rental agreements.
[3] Exhibit A1 Tab 15
11.Between 20 September 2016 and 30 December 2017, the White House was leased to a number of different parties.
12.In December 2017, the White House was vacant, and the Charity wanted it leased.
13.On 30 December 2017, an open home was held, and a number of parties inspected it. Amongst those who inspected the property were three friends; Andrew Whyte, Christopher Khan and Bradley Johnson (the tenants).
14.At this time the tenants’ did not have secure housing. Mr Khan described their circumstances in the following way:[4]
What were your living conditions before you moved in? They were, I’d say, here and there. We were living in another mate’s property before we lived there. So it was like pretty much jumping from house to house, I was couch surfing pretty much.
[4] Transcript of proceedings 26 July 2019 page 573
15.Between 30 December 2017 and 9 January 2018, the tenants communicated with Mr Hurst-Meyers about their interest in leasing the White House.
16.An example of the type of communication the parties had during this period can be found in an SMS sent by Mr Hurst-Meyers to Mr Khan on 1 January 2018, which related to the exchange of the tenants labour for a rent-free period at the start of the tenancy. The SMS stated:[5]
Because the rent is for this free grace period between the 1st and the 17th is worth ordinarily $1735 to us, we would like you to see if there’s anything temporary that you can do for the worst parts of the road where the concrete is broken up, where we have some road sub-base at Caloola in front of the double garage that if you had your bobcat could be spread over the broken concrete perhaps. I’ll keep negotiating with the government to fix the road once and for all though. On the lease …
[5] Transcript of proceedings 26 July 2019 page 571
17.On 9 January 2018, the three friends met with Mr Hurst-Meyers at the Southern Cross Club in Woden.
18.At that meeting a residential tenancy agreement[6] was signed by each of the three tenants and by Mr Hurst-Meyers for the lessor, who was expressed to be “Ralph George Noel Nancy Hurst-Meyers of RHM industries Pty Ltd and the Hurst-Meyers Charity”.
[6] Exhibit A1 Tab 2
19.The parties talked about the property and about the terms of the residential tenancy agreement the parties were about to sign.
20.One of the matters addressed by the parties was the quantum of rent payable per week. Unusually, the parties agreed that there would be two components which would collectively made up a weeks’ rent.
21.The tenants would pay rent of $525 per week and in addition they would undertake labour within the property to the value of $150 per week. This labour quotient was referred to as “contra” work.
22.Neither the oral discussions nor the written terms of the residential tenancy agreement provided a formula for calculating the value of the contra work. No hourly rate was specified nor was there included any other mechanism for determining the value of any contra work.
23.Likewise, there was no mechanism specified or created for recording any contra work undertaken by the tenants. To be clear, no ledger was in fact created by either the lessor or the tenants to record the hours the tenants undertook contra work.
24.It was also agreed by the parties that the tenants could move into the property immediately and begin paying rent on 18 January 2018.
25.In exchange for the free rent between 9 January 2018 and 17 January 2018, the tenants agreed to undertake contra work in and around the White House. These services were described in the residential tenancy agreement as being for “service such as painting, repairs to roof and completion of tiling and proposed road repairs (TBA)”.
26.The intended duration of the lease is difficult to determine from reading the residential tenancy agreement which, unusually, describes the tenancy as being both a fixed term tenancy commencing on 9 January 2018 (and terminating on 9 January 2019) and being a periodic tenancy commencing on 9 January 2018 and continuing on a periodic basis until terminated by the lessor or tenant in accordance with the Residential Tenancies Act 1997.
27.Whilst the agreement may be confusing, I’m satisfied from the evidence that the parties had a different understanding as to what was intended to be the duration of the tenancy agreement.
28.Mr Whyte most clearly stated what, after discussions on 9 January 2018, the parties understood to be the term of the lease, which was:[7]
A three-month trial lease with an automatic rollover to a year long term upon mutual acceptance/satisfaction with the arrangement, with silence or lack of issue with the tenancy within the first three months acting as acceptance of the automatic rollover.
[7] Statement of Andrew White paragraph 3
29.The residential tenancy agreement stated that “electricity and water usage and the home phone and Internet access is the financial responsibility of the tenant solely”.
30.The parties also agreed that a rental bond in the sum of $2,100 should be paid. The tenants paid that bond to Mr Hurst-Meyers on 9 January 2018[8] together with four weeks rent in advance of $2,100.
[8] Exhibit A1 Tab 3
31.Mr Hurst-Meyers did not deposit the bond he received from the tenants with the Territory within two weeks of receiving the bond. In fact, he did not pay the bond into the Territory until 7 November 2018, well after these proceedings had been commenced.
32.The tenants moved into the property, which was partly furnished, shortly after signing the tenancy agreement. They remained in the property for a period of 31 weeks and two days (between 9 January 2018 and 17 August 2918) and were liable to pay rent for a total of thirty weeks (from 17 January 2018 to 17 August 2018).
33.I am satisfied that when they moved into the property, the tenants found the house, yard and outbuildings associated with the White House, in a reasonable condition and state of cleanliness.[9]
[9] Exhibit A1 Tab 8 photographs on pages 22 - 25
34.Initially, the tenancy proceeded in the normal way with the tenants occupying the property and paying rent at the prescribed intervals.
35.The three-month trial period came and went on 8 April 2018, without either party seeking to terminate the lease.
36.The tenants made their last payment of rent ($2,100) on 4 April 2018. This payment covered the rental period ending 10 May 2018.
37.Up until 24 April 2018, the tenants made no complaint about the quality of the accommodation, their ability to enjoy the Caloola farm, the quality of the water or any other matter.
38.Up until that time the tenants’ attitude, as demonstrated by the emails and SMS messages exchanged between them and Mr Hurst-Meyers, had been positive in relation to their experience at the White House and the property in general. An example can be found in an SMS[10] sent to Mr Hurst-Meyers by Mr Khan on 20 March 2018, which in part said:
We also have many plans in the process that we would like you and the committee to approve e.g. the recycling plant, chicken coop, 3 car shed, the fences around the house done + much more. If we can arrange for a meeting or something that would be great, when you are available.
Thanks heaps once again Ralph and talk to you later:)
[10] Exhibit A1 Tab 26
39.It appears that by the late April 2018, the tenants had cash flow problems.
40.On 24 April 2018, Mr Khan on behalf of the tenants wrote[11] to Mr Hurst-Meyers to seek a rent reduction. Mr Khan suggested that the appropriate rent was $250 per week and that the tenants would be happy to contribute an additional $50 week for electricity. Mr Khan cited a number of factors that would warrant the rent reduction:
[11] Exhibit A1 Tab 29
(a)The bore water supplied was not drinkable;
(b)There was no sustainable rubbish removal solution;
(c)Smoke alarms had not been fitted in the White House;
(d)No asbestos report had been provided to the tenants;
(e)A structural shift in the northern end of the house;
(f)“Fences around the property”;
(g)“Locks on the house and windows”;
(h)Lack of landline/mobile phone and TV reception;
(i)Leaks in the roof;
(j)Pest/possum management;
(k)Lack of flyscreens;
(l)Backlash from events;
(m)Random visits from Leza (Hurst-Meyers) without warning;
(n)Members of the public driving at any hour of the day or night posing a security issue.
41.By 4 May 2019, the tenants’ financial situation was dire. On that day they wrote to Mr Hurst-Meyers and asked to use their bond to cover their rent. Their email[12] stated:
Hi Ralph regarding the rent on the white house we have gone out of rego on the car and were stuck at the moment, Im (sic) wondering if we can use the 4 weeks rent we paid in advance to get on top at the moment while things pick up. This will help us building a buffer zone up.
Thanks Ralph, Chris Andrew and Brad
[12] Exhibit A1 Tab 34
42.On 9 May 2018, the three tenants again emailed[13] Mr Hurst-Meyers. They highlighted their matters of concern and then said:
To resolve this we therefore request that:
The abovementioned issues are rectified as stated, upon which we will return to our standard rental payment;,
or tha;,
These issues and all others being disregarded by all parties by mutual agreement (aside from the immediate structural repairs to the house and smoke alarms) upon signing a new lease with the rent being reduced to $375 per week and no contra services.
[13] Exhibit A1 Tab 38
43.The tenants did not pay any more rent between 11 May 2018, and the day they eventually left the premises, 17 August 2018; a period of 14 weeks.
44.In evidence Mr Khan[14] explained the tenants’ financial circumstances and why he chose to stay in the White House whilst not paying rent:
You stayed in the property while you weren’t paying rent?...Right. Then it was in the middle of winter, I had nowhere else to go. I was actually looking for places prior to this - prior to that - and I just didn’t have the financial reasons (sic) to do it…
Did you have the money or were you broke?...I was broke, yes.
What about Andrew, was he broke?...Yes, yes, he was broke as well.
[14] Evidence of Mr Khan, transcript of proceedings of 26 July 2019 page 598
45.It seems clear the tenants had no money to pay rent and were intent in staying in the property notwithstanding the fact that they did not have the means, or the intention, to pay the rent.
46.The parties agree that the value of the unpaid rent is $7,350.
47.By SMS on 12 June 2013, Mr Whyte reassured Mr Hurst-Meyers that the unpaid rent was being held in an escrow account “in preparation for a determination by the courts.”[15] This statement was untrue. No money had been put aside by the tenants to meet their contractual rent obligations between 11 May 2018 on 17 August 2018.
[15] Exhibit A1 Tab 40
48.On 17 August 2018 the tenants departed the White House. They left it in a poor state. The interior of the house was dirty and contained items the tenants simply abandoned. The outbuildings were full of rubbish and the land associated with the house contained rubbish and other items the tenants abandoned.[16]
[16] Exhibit A1 Tab 8 photographs pages 1-16
49.The Charity was put to unnecessary effort and expense in cleaning the property to a state where it would again be re-let.
50.Mr Hurst-Meyers also found that some of the plumbing appeared to have been damaged and he found small holes in the tin roof of the White House. Mr Hurst-Meyers alleges that this damage was intentionally caused by the tenants.
51.On 27 July 2018 proceedings were initiated by the applicant at ACAT.
52.During the course of the hearing with Senior Member Robinson on 6 August 2018, the respondents agreed to leave the White House on 17 August 2018.
53.In addition to gaining vacant possession of the White House the applicant sought to recover $28,334.50[17] from the respondents. The applicant consented to reduce this amount to $25,000 to fit within the jurisdictional limit of ACAT.
[17] Paragraph 15 of the applicant’s undated initial submissions, which were filed pre-hearing.
54.The respondents’ response was filed at ACAT on 24 June 2019. It included a counterclaim in which the respondents sought compensation of $15,000 from the applicant.
55.Before dealing with each of the applicant and respondents’ claims I will address the substantial legal issues that arise in this case and which have an impact on how the case will be decided.
The law
No authority to enter into the tenancy agreement
56.The solicitor for the tenants, Mr Faulder, rightfully takes issue with the inclusion, in the residential tenancy agreement signed on 9 January 2018, of the name Ralph George Noel Nancy Hurst-Meyers of RHM industries Pty Ltd as being one of the lessors.
57.The license agreement was between Auswide Pty Ltd (in liquidation) and the Charity. Mr Hurst-Meyers was not a party to that agreement in his own right and no evidence has been provided that would explain or justify his name as being one of the lessors.
58.Mr Hurst-Meyers may have included his name into the lease agreement to provide the tenants a point of contact, as he is one of the directors and is also the secretary of the Charity.
59.Mr Hurst-Meyers did not strike me as a sophisticated businessman and likely did not understand that it was inappropriate to include his name as being one of the lessors.
60.The residential tenancy agreement did correctly include the name of the Charity as being one of the lessors in the circumstances, I think this is sufficient to give notice to tenants as to who they were dealing with as lessor.
61.Mr Faulder’s more substantial argument, briefly restated, is that whoever the lessor was, it did not have authority to enter into the residential tenancy agreement with the tenants and as a consequence the contract is unlawful and unenforceable, with the result the tenants should be able to recover the monies paid to the lessor.
62.In this regard, Mr Faulder relies upon to sub clause 11.1 of the license agreement[18] between Auswide Services Ltd (in liquidation) and the Charity, which states:
The licensee may not assign, transfer or otherwise dispose of the licence or any right under the deed.
[18] Exhibit R1 page 8
63.Mr Faulder argues that the act of the Charity entering into a residential tenancy agreement with the tenant’s breaches sub clause 11.1.
64.With respect, I do not agree with Mr Faulder’s analysis for the following reasons:
(a)Clause 3.1 of the licence agreement deals with the way in which the licensee can use the property. It provides “the Licensed Area and equipment may only be used for the operations of the licensee and related activities;”
(b)The property contained a number of dwellings, including the White House. In my opinion it would be one of the reasonable operations of the licensee to lease out those dwellings;
(c)My finding in this regard is supported by the view taken by the licensor who expressly addressed the issue as to whether it was a permissible use of the property for the licensee to lease the dwellings to tenants. He said:[19]
The license agreement entitled the Licensee full use of the Licensed Area of the Property. The Licensed Area include the entire property and all buildings contained therein. As such confirmed that Hurst- Meyers Charities Ltd have the right, pursuant to the license agreement, to enter into rental agreements.
(d)The Charity’s act of entering into a residential tenancy agreement, with the tenants, in relation to the White House was a permissible act under the licence agreement and did not “assign, transfer or otherwise dispose of the Licence or any right under the deed;”
(e)The licence for the property remained wholly in the hands of the Charity. They operated in accordance with the licence agreement and leased a portion of the licensed property, the White House, to the tenants.
The contra work
[19] Exhibit A1 Tab 15
65.A term in the residential tenancy agreement between the Charity and the tenants required a portion of the weekly rent to be paid by the tenants undertaking contra work. This was to be to the value of $150 per week.
66.This term contradicts clause 65 of the residential tenancy agreement which provides:
The lessor must not require the tenant to make alterations, improvements or renovations to the premises.
67.The standard residential tenancy terms are found in Schedule 1 of the Residential Tenancies Act 1997. Clause 24 relates to the issue of rent and bond payments. It provides:
Rent and other charges
Rent and bond only as payment for the tenancy
24 The lessor must not require any payment other than rent or bond for the following:
(a) the granting, extension, transfer or renewal of a tenancy or subtenancy;
68.The Charity required the supply of ongoing contra work in return for the grant of the tenancy. This is contrary to the terms of clause 24 and clause 65 with the result that the contra clause offends against section 9(1)(a) of the Residential Tenancies Act 1997.
69.Section 9 of the Residential Tenancies Act 1997 provides:
9 Inconsistent tenancy terms void
(1) A term of a residential tenancy agreement is void if—
(a)it is inconsistent with a standard residential tenancy term; and
(b)it has not been endorsed by the ACAT under section 10.
70.A person in the position of the applicant could apply to the ACT Civil and Administrative Tribunal (ACAT) under section 10 of the Residential Tenancies Act 1997, and seek to have a term, that was outside of the standard residential terms, endorsed. Section 10 provides:
10 Endorsement of inconsistent tenancy terms by ACAT
(3) The parties to a residential tenancy agreement may apply in writing to the ACAT for endorsement of a term of the agreement (the inconsistent term) that is inconsistent with a standard residential tenancy term.
71.The applicant did not seek to have the contra clause endorsed by ACAT, and consequently the clause is void pursuant to section 9(1)(a) & (b) as it is inconsistent with a standard residential tenancy term and it has not been endorsed by ACAT pursuant to section 10 of the Act.
72.In summary, this term in the agreement is void pursuant to sections 9(1)(a) of the Residential Tenancies Act 1997, as it is inconsistent with a standard residential tenancy term (which only allows rent or bond as payment for the tenancy) and that inconsistent term has not been endorsed by ACAT pursuant to section 10 of the Residential Tenancies Act 1997.
73.The same result would be achieved by applying section 9(2) of the Residential Tenancies Act 1997, to the contra clause. Section 9 (2) provides:
(2) A term of a residential tenancy agreement is void if it is inconsistent with this Act (other than a standard residential tenancy term).
74.In this case the term in the agreement providing for the provision of weekly contra work is inconsistent with sections 15(1)(2)(a) and (3) of the Residential Tenancies Act 1997, which provides:
15 Rent or a bond only
(1) In consideration for giving a tenant a right to occupy premises, a lessor may only require or accept rent or a bond.
(2) A lessor must not require or accept any consideration for—
(a)agreeing to enter into, extend or renew a residential tenancy agreement; or
…
(3) For subsection (1), a requirement that a tenant making alterations, improvements or repairs to the premises is taken to be consideration.
75.The requirement to undertake contra work is taken to be a consideration pursuant to section 15(3). Pursuant to section 15(1) the lessor can only accept rent or a bond. The lessor cannot accept consideration in the form of a contra arrangement. Consequently, the term relating to the contra arrangement in the residential tenancy agreement is void.
76.A term of residential tenancy agreement which is void pursuant to section 9(2) of the Residential Tenancies Act 1997, cannot be saved by being endorsed by ACAT.
What is the effect of the contra clause being void?
77.The word ’void’ is not defined in the Residential Tenancies Act 1997. It is a common term and is to be given its ordinary meaning. The Oxford Dictionary of English, Second Edition, defines it as “not valid or legally binding”.
78.The effect of the contra clause being ‘not valid or legally binding’ is that the contra clause is excised from the contract as a whole.
79.On 9 January 2018, when the parties signed the lease, they intended the tenants to pay a total weekly consideration of $675 per week ($525 in rent and $150 in contra work).
80.The consequence of the contra clause being void is that the term is excised from the contract meaning that under the agreement the tenants are only liable to pay the cash component of the rent, $525 per week.
81.This result may be unfair to the applicant (having lost the value of contra work of $150 per week), however the applicant has an obligation to enter into lease agreements, and propose clauses in the lease agreement, that are consistent with Territory law.
82.This outcome may have been unfair to the tenants had they in fact undertaken any contra work of substance. I will discuss this issue further when dealing with the issue of contra work in the tenants’ counter claim.
The applicant’s claims
83.The applicant’s claim is for $28,187.35, which he has reduced to $25,000 to fit within the ACAT jurisdiction. The claim is made-up as follows:
(a)Rent arrears (to 16/08/2018) - $7,350;
(b)The applicant claims contra from 17/01/18 to 16/08/18 - $3,000;
(c)Rent from 17/08/18 to 19/10/18 - $4,725;
(d)Contra from 17/08/18 to 19/10/18 - $1,350;
(e)Contra from 09/01/18 to 18/01/18 - $867.85;
(f)Electricity usage - $4,089.50;
(g)Asbestos clearance report dated 26/12/18 - $385;
(h)Plumbing and roof repairs by Tom Dickie - $1,500;
(i)Rubbish removal & clean up by Kosta - $3,000;
(j)Cleaning by Bhoj Bahadur - $720;
(k)Carpet cleaning by David Shepherd - $200;
(l)Repairs & painting water damage - $1,000.
84.I will go through each of the applicant’s claims in turn and determine what is owed by the tenants in relation to each of the claims.
(a)Unpaid rent - $7,350
85.The applicant is entitled to recover this amount for unpaid rent between 11 May 2018 and 17 August 2018.
(b)30 weeks unfulfilled contra services - $3,000
86.For the reasons given above, the contra clause is void and no sum is recoverable.
87.Consequently, this claim is denied.
(c)Nine weeks rent covering the period 17 August 2018 – 19 October 2018 during which the applicant alleges the property was un-tenantable because of the state in which all the respondents left the property - $4,725
88.Normally, if a fixed term agreement is ended by a tenant, the tenant is liable under the Residential Tenancies Act 1997 to compensate the lessor.
89.In the case where the fixed term tenancy is less than three years, the tenant is required, pursuant to section 9(1)(a) of the Residential Tenancies Act 1997, to pay six weeks rent, if less than half of the term has expired the tenant must pay compensation equal to four weeks rent.
90.It should be noted that compensation is only payable to the lessor in the event the agreement is terminated by the tenant. In this case the tenancy ended with the tenants agreeing to leave the White House on 17 August 2018. The applicant agreed to that course.
91.If a tenant abandons a property subject to a fixed term agreement then the lessor is entitled, pursuant to section 62(1)(a) and (b) of the Residential Tenancies Act 1997, to receive compensation for the loss of rent the former lessor would have received had the agreement continued to its end (9 January 2019) as well as compensation for the reasonable costs of advertising the premises for lease to another party.
92.In this case the property was not abandoned, it was surrendered by agreement on 17 August 2018.
93.A tenant may be liable to pay a lessor compensation to a lessor, pursuant to section 56 of the Act, in the event the tenant does not comply with a termination and possession order.
94.If a person to whom a termination and possession order is directed fails to vacate the specified premises in accordance with the order, the ACAT may, on application made within four weeks after the date when the person was to vacate the premises, order the person to pay to the applicant such of the following as it considers appropriate:
(a)An amount equal to the rent that would have been payable to the applicant if the premises had been tenanted during the period for which the person was in possession of the premises after termination of the residential tenancy agreement;
(b)An amount equal to the reasonable costs incurred by the applicant in applying for a warrant for eviction and having the warrant executed.
95.In this case the lessor did not obtain a termination and possession order. The tenancy ended by agreement and the tenancy ended on the agreed day.
96.It appears to me that by electing to terminate the agreement on 17 August 2018, the tenants have avoided paying compensation pursuant to sections 9(1)(a), 62(1)(a) and (b) and 56 of the Residential Tenancies Act 1997.
97.The question remains as to whether there is any other mechanism which would allow compensation for the period of time it takes a lessor to clean-up the mess left by a tenant. Section 83(d) of the Act seems relevant. It provides:
83 Orders by ACAT
Without limiting the orders the ACAT may make, the ACAT may make the following orders in relation to an application about a tenancy dispute or occupancy dispute:
(d)an order requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement or occupancy agreement;
98.The question arises whether this general power to require payment of compensation for loss of rent only derives from sections 9(1)(a), 62(1)(a) and (b) and 56 of the Residential Tenancies Act 1997, or whether it is a broader power that allows ACAT to do right in the circumstances of each individual case.
99.In my view it is the later, it would seem that if Parliament had meant to limit the payment of compensation for the loss of rent to a particular section or sections of the Act it would have expressly done so.
100.Moreover, limiting compensation to only 9(1)(a), 62(1)(a) and (b) and 56 of the Act, would have the effect of rewarding tenants who behave badly by failing to pay rent for a prolonged period. By agreeing to leave they could avoid ACAT imposing a termination and possession order and its consequences. They would also avoid being liable for any other form of compensation because they cannot be said to have abandoned the property or to have initiated the termination of the lease.
101.In my view section 83(d) allows ACAT to look at all the circumstances of an individual case and determine whether it is fair and appropriate to order compensation for a lessor’s lost rent.
102.One factor ACAT could look at was, whether as part of the tenant’s agreement to leave the property, there was also agreement as to whether the tenants were relieved of the obligation to pay compensation.
103.In this case it appears to me that the applicant was in the middle of a lengthy process aimed at having tenants removed from the premises. He was offered an agreement that the tenants would move out of the property on 17 August 2018. He accepted that offer. He did not agree to waive any rights he may have to compensation for lost rent.
104.I am of the view the applicant in this case is entitled to seek compensation for lost rent.
105.Mr Hurst-Meyers’ evidence was that it took nine weeks to clean-up the White House and return it to a rentable condition. The applicant provided no credible reason why it was that the White House was un-tenantable for such a prolonged period.
106.It seems to me that there was a lot to clean, tidy and repair, but that the work could have been done considerably faster than nine weeks. It seems to me that a period of three weeks would be adequate in the circumstances.
107.The respondents are to pay the applicant the sum equal to three weeks’ rent, being $1,575.
(d)Nine weeks contra payments for the period 17 August 2018-19 October 2018, $1,350.
108.This claim is denied for the same reason as in (b) above.
(e)Nine days of contra from 9 January 2018–18 January 2018 (It should be noted that the applicant initially sought $867.85 but revised this figure upwards during the course of the hearing to reflect the period 1 January 2018–18 January 2018) - $1,735
109.This claim is denied for the same reason as in (b) above. Moreover, no claim could be sustained for the period 1 January 2018–8 January 2018. There was no contract in existence during this period and there is no suggestion that in fact the tenants occupied the premises during this period.
(f)Electricity usage - $4,089.50.
110.Pursuant to clause 48(1) of the residential tenancy agreement the lessor is responsible for undertaking or arranging all readings or measurement of services, other than those that are connected in the name of the tenant.
111.At no stage during the course of the tenancy did the applicant present the tenants with an electricity account covering their usage during the time they were resident at the White House.
112.During the course of the hearing Mr Hurst-Meyers produced three ActewAGL invoices for the periods:
(a)Invoice one - 15 December 2017 – 10 March 2018;
(b)Invoice two - 11 March 2018 – 2 June 2018;
(c)Invoice three - 13 June 2018 – 20 June 2018.
113.The lease commenced on 9 January 2018. The applicant did not obtain a meter reading before the tenants moved into the property. As a consequence, I do not know what proportion of the electricity consumed between 15 December 2017 and 10 March 2018, is attributable to the tenant’s usage.
114.I am not prepared to fill in the gaps in the applicant’s case by trying to estimate the usage during this period. Consequently, I make no award in relation to the invoice relating to the period 15 December 2017–10 March 2018.
115.I am satisfied that the other two invoices relate only to the White House and correctly record the tenants’ electricity usage. Consequently, the tenants are liable to pay the applicant $1,189.91 ($929.72 for invoice two and $126.90 for invoice three).
(g)Asbestos report $385
116.At the commencement of a tenancy a lessor is obliged, pursuant to section 12(3) of the Residential Tenancies Act 1997, to provide a tenant with either an asbestos assessment or advice. The section provides:
(e) if there is an asbestos assessment report for the premises and the lessor can obtain a copy of the report after taking reasonable steps—a copy of the report;
(f) if there is no asbestos assessment report for the premises or the lessor cannot obtain the asbestos assessment report for the premises after taking reasonable steps—an asbestos advice for the premises.
117.The applicant did not provide the tenants with either an asbestos assessment or, advice at the commencement of the tenancy. In my view the tenants were perfectly entitled, on 9 May 2018, to request the applicant to provide information about the existence of asbestos at the White House.
118.The request for an asbestos report seems reasonable, particularly when one has regard to the obligation placed on the applicant under section 12(3). At the time the report was commissioned there was no agreement that the tenants would pay for the report. For those reasons the cost of the report is one the lessor should bear.
119.Consequently, this claim is denied
(h)Costs associated with repairing “deliberately broken plumbing and sabotaged roof” - $1,500
120.Mr Hurst Meyers alleges that some of the plumbing at the White House was deliberately broken and his roof was sabotaged.
121.Even if one accepted his allegations that the White House was deliberately damaged, he provided no admissible evidence as to who caused the damage. Moreover, he has not established that it was the tenants who intentionally or negligently caused the damage he complained of.
122.Consequently, this claim is denied.
(i)Costs of cleaning-up the White House, its grounds and outbuildings after the tenants left the property and costs associated with transferring the leftover rubbish to the dump - $3,000
123.Clause 64 of the residential tenancy agreement required the tenants to leave the premises in substantially the same state of cleanliness as when they moved into the premises. The agreement provides the tenant must leave the premises:
(a) in substantially the same state of cleanliness, removing all the tenant’s belongings and any other goods brought onto the premises during the duration of the tenancy agreement; and;
(b) in substantially the same condition as the premises were in at the commencement of the tenancy agreement, fair wear and tear excepted.
124.The tenants left the grounds and outbuildings of the White House should strewn with rubbish and abandoned property.[20] The applicant should be compensated for the costs of cleaning-up the area and taking the rubbish to the tip.
[20] See photographs in A1 Tab 9
125.I am not however satisfied that the amount sought by the applicant is appropriate and is founded on actual costs incurred by the applicant.
126.I am prepared to award the applicant the sum of $1,000 in relation to these costs.
(j)cleaning by Bhoj Bahadur - $720
127.The tenants left the White House in a very dirty state, strewn with rubbish and abandoned property.[21] The applicant should be compensated for the costs of cleaning the house.
[21] See photographs in A1 Tab 9
128.The cost of the cleaning seems modest. I am prepared to award the applicant the sum of $720 in relation to these costs.
(k)carpet cleaning costs - $200
129.I accept Mr Hurst-Meyers’ evidence that prior to the tenants moving in he had arranged for the carpets to be steam cleaned and that at the time the tenants moved in the carpets were reasonably clean.
130.In my view the carpets were left by the tenants in a filthy state, which justified them being steam cleaned, so that the carpets could be returned to the lessor in substantially the same condition as on 9 January 2019, when the lease was signed.
131.I am satisfied that the tenants should reimburse the applicant for the $200 costs associated with the carpet cleaning costs.
132.This claim seems to flow from Mr Hurst-Meyers’ claim that the plumbing and roof had been sabotaged. For the reasons given (h) above this claim is denied.
133.Consequently, I find that the tenants jointly and severally owe the Charity $12,034.91.
The respondents’ counterclaim
134.The tenants have filed a counterclaim in which the respondents seek compensation of $15,000 from the applicant. The respondents seek this amount based on:
(a)the lessor’s failure to repair throughout the tenancy;
(b)wrongful eviction by the lessor – defective notices;
(c)failure to provide the property (including Caloola Farm) as advertised or to the standard expected;
(d)breach of peace and quiet enjoyment (agents accessing the property, unfounded accusations, multiple notices issued once the tenants raised concerns about the property);
(e)“stress associated with the lessor failing to notify the tenants the property had asbestos and the tenants undertake (sic) work that exposed them to asbestos”;
(f)“extensive work undertake (sic) by the tenants that improved the property at no cost to the lessor. In this regard, the tenants are seeking reimbursement of the value of the contra for 31 weeks ($4,650)”.
135.As I have done with the applicant’s claims, I will now turn to examine each of the counter claims brought by the tenants.
(a)The lessor’s failure to repair throughout the tenancy
136.Mr Faulder submits that the tenants should be compensated for the water quality. He submitted that:
The respondents are not claiming for the cost of the water they purchased for consumption, although they arguably could. The respondents are, however, seeking compensation for the applicant’s failure to provide suitable drinking water.
Water
137.The White House is situated in an isolated part of the ACT. Reticulated water is not provided by a utility to the house. The house depends on bore water for all services including drinking and washing.
138.In their statements Mr Khan and Mr Whyte described the water in the same terms. They both stated:
you could not drink the water on the property. It tasted foul and it was irritating on your skin when washing.
139.It appears they did not have the water tested in any scientific manner. They complained of the water quality on 24 April 2018 and did not leave the property until 18 August 2018. It is unclear why they did not have the water tested during that period, particularly when it formed part of their counterclaim.
140.The tenants’ provided very little other evidence in relation to their complaint about the water quality. It is therefore very hard to determine what the water was like. A person may find some bore water to be unacceptable whereas others will find it to be perfectly adequate.
141.It is difficult to determine a complaint when one only has a person’s subjective complaint to go on.
142.Ultimately, I have regard to the onus and standard of proof and I am not satisfied that the respondents have proved, on the balance of the probabilities, that the water was not fit for human consumption and could not be used for bathing or washing.
Other repairs
143.Mr Faulder submitted that the tenants should be awarded compensation as:
there were other issues raised by the respondents that were not addressed by the applicant. These include issues with fences around the property, lack of locks on the house and windows, lack of TV reception, leaks in the roof, pest/possum management and a lack of flyscreens
144.It is surprising, considering that the lack of repairs is part of the counterclaim, how little has been said about this issue. Mr Faulder’s submissions in relation to repairs is set out in full above. Mr Faulder’s submissions provides no details, or references to the evidence, which would allow me to understand precisely what the issues were with each of the matters listed, how they impacted on the tenants and what, if any, costs they were put to.
145.The tenants’ statements are similarly devoid of detail. Mr Khan only says there:
were issues with the water, the state of the property, lack of repair work by Ralph and a lack of facilities as advertised[22]
[22] Mr Khan’s statement of 23 June 2019, paragraph 22
146.Mr Whyte’s witness statement speaks of him beginning to notice, over time, issues[23] “such as major cracks in the internal structure of the house, shifting of the foundations, the lack of smoke alarms and the lack of any motorbike tracks or pushbike tracks, Spartan course etc”.
[23] Mr Whyte’s statement of 23 June 2019, paragraph 17
147.The tenants’ email of 24 April 2018 (above), is the only other coherent list of the matters being complained of. However, it provides insufficient detail for me to be able to understand the scope of the issues complained of, the detriment suffered by the tenants or the quantum of any loss they suffered.
148.Again, I return to the onus and burden of proof. The tenants have not proved a case under this head of the counter claim to the civil standard.
(b)Wrongful eviction by the lessor defective notices
149.The tenants seek compensation for wrongful eviction. As a matter of fact, they were not evicted from the White House. They agreed to leave the premises.
150.In his submissions Mr Faulder cites Abuaagla v Edwards [2014] ACAT 55 (Abuaagla) in support of the proposition that notwithstanding the fact that a person had consented to the termination of a residential tenancy agreement, that person could nevertheless seek compensation pursuant to section 83(b) of the Residential Tenancies Act 1997, after the tenancy was over and after the tenant had left the leased property.
151.In Abuaagla the lessor served a notice under clause 96(1)(a) of the residential tenancy agreement, which allowed termination of the contract on four weeks’ notice in the event the lessor genuinely intends to live in the property. At the hearing of the application before ACAT the tenant agreed to the termination. The tenant’s acquiescence was based on the truthfulness of the lessor’s assertion that the lessor intended to move into the property.
152.Shortly after the tenant moved out, the lessor put the property up for rent again. The tenant sought compensation for being misled into leaving the property.
153.In Abuaagla, Senior Member Lennard held:
20. Section 83 of the Act provides that ACAT may make an order in relation to an application about a tenancy dispute requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement. The service of a notice to vacate on the grounds that the lessor intended to reside at the premises in the circumstances where the lessor had not formed a genuine intention to reside at the premises is a breach of contract.
21. A party who suffers damage as a result of a breach of contract by another party is entitled to an amount of damages which will, as far as possible, put the injured party in the same position they would have been in had the breach not occurred. That is, damages for breach of contract are compensatory. Robinson v Harman [1848] EngR 135; (1848) 1 Exch 850…
22. While damages for personal distress or pain and suffering are not usually awarded for a breach of contract, recent decisions indicate that such an award is appropriate and proper where the contract itself promised peace, comfort, and enjoyment or relaxation. Damages have been awarded for non-economic loss resulting from a breach of contracts relating to holidays and weddings. Jarvis v Swan Tours [1973] 1All ER 71; Baltic Shipping v Dillon [1993] HCA 4; (1993) 111 ALR 289.
23. Damages have been awarded in this tribunal for unlawful eviction in the circumstances of this matter in Osuchowski & Scouller v Radojevic [2008] ACTRTT 13 and Kiternas v Watts [2006] ACTRTT 4.
154.The present case can be distinguished from Abuaagla in the following ways:
(a)In Abuaagla, the tenancy was a periodic tenancy (clause 96 only applies to periodic tenancies), unlike the present case which is a 12-month fixed term tenancy;
(b)In Abuaagla the breach of contract could only be determined after the tenant left the property and it became apparent the lessor was not going to move into the property herself;
(c)In this case the reason for seeking to terminate the tenancy arose before the tenants agreed to leave the property;
(d)In this case the tenants, unlike the tenant in Abuaagla, were in breach of contract, having failed to pay rent for a period of up to 14 weeks;
(e)In this case, the lessor was justified in taking proceedings at ACAT to have the tenancy determined. The tenants’ breach of contract, namely failing to pay rent, lead to the termination process initiated by the lessor. That is not a feature common to the Abuaagla case;
(f)This is not a case where the tenants’ have been put to any additional expenses as a consequence of the termination of the contract.
155.The tenants were unable or unwilling to pay rent and consequently it was inevitable ACAT would ultimately terminate the tenancy and that they would have to pay the normal costs associated with moving to another property, as they would when otherwise their tenancy terminated.
156.The tenants therefore cannot show they have suffered any direct loss as a consequence of the lessor seeking to terminate the tenancy through an ACAT process.
157.This is not a case where an innocent party has been deceived into acting against their interest and are therefore due compensation for a breach of contract.
158.Additionally, Mr Faulder is critical of the fact that some of the amounts, claimed by the applicant, in the various notices filed at ACAT were wrong. The inference Mr Faulder’s seems to be asking me to draw is that these errors of themselves founds a right to compensation. If that is the inference I’m being asked to draw, I decline to make it.
159.ACAT is an informal tribunal that encourages litigants to act for themselves. Parties often get matters wrong, including amounts of monies claimed as owing. The fact that a party makes an such an error does not found a cause of action and is not something that is compensable.
(c)Failure to provide the property (including Caloola Farm) as advertised or to the standard expected.
160.Mr Faulder submits that:
The Tribunal should accept the respondents’ evidence that the property was advertised as having a motocross track, petting zoo, BMX track, etc. Whilst the respondents reproduced an advertisement that was for the conference centre, it is not unreasonable to assume the same external facilities were advertised. This is supported by the evidence of the respondents that they spoke with Mr Hurst-Meyers about the facilities when they inspected the property and raised the issue in SMS correspondence during the tenancy.
it is entirely reasonable for a tenant to rely on the assertions of a lessor and expect the same to be provided. This would apply irrespective of the fact that the facilities were not actually sighted on the day a tenant inspected a property (given the size of Caloola Farm if would seem unreasonable to expect prospective tenants to travel some distance to view the facilities.
161.As a matter of fact, the tenants were not able to produce the advertisement they say they were relying upon when they entered the lease, nor was their oral evidence compelling as to what had been promised in the advertisement.
162.The tenants were not sufficiently concerned about the absence of the ‘advertised’ features to exercise their right to terminate the lease at the end of the three-month trial period.
163.Moreover, the tenants made no complaints about the White House or the features of the property prior to 24 April 2018. Even then, when the tenants were trying to negotiate a rent reduction, they thought there were benefits to be derived from living at the White House. These benefits were stated in the tenants’ email[24] to Mr Hurst-Meyers of that date and included:
having use of 426 acres with all the existing infrastructure, a 4bedroom house, great views all round, just far enough away from town, great landlords and community, big events, awesome future potential, plenty of things to do around the property, and a dream brought into reality.
[24] Exhibit A1 Tab 29
164.On 24 April 2018, the tenants did not complain about the absence of “a motocross track, petting zoo, BMX track, etc”. Rather, they praised the existing infrastructure.
165.I reject the general proposition that the tenants didn’t get the amenities they bargained for. Mr Faulder further argues that the applicant was in breach of contract for not supplying a landline telephone.
166.It should be remembered that the residential tenancy agreement stated, “Electricity and water usage and the home phone and internet access is the financial responsibility of the tenant solely”.
167.There was no reliable evidence as to why the tenants did not have their own a landline at their property. Its absence is not mentioned in either the statement of Mr Whyte, nor the statement of Mr Khan or in their oral evidence. What is uncontroversial is the fact that Ms Liza Hurst-Meyers helped the tenants by allowing an extension from her phone to be run to the White House, so that the tenants had phone access, free of charge. In this regard it seems to me that the Charity, or its agents, acted in a very kind and generous manner to the tenants.
168.I should also note, for the sake of completeness, that the tenants were allowed to piggy-back off the internet connection supplied by the applicant or its agent.
(d)breach of peace and quiet enjoyment (agents accessing the property, unfounded accusations, multiple notices issued once the tenants raised concerns about the property)
169.In the present case, the respondents claim they had to deal with the following matters which they say breached their rights to quiet enjoyment of the property:
(a)Unfounded allegations of sexual assault (allegations continued throughout the hearing and notwithstanding a letter from the Youth Law Centre ACT);
(b)The issuing of unfounded allegations of arson (allegations continued throughout the hearing);
(c)Unfounded allegations of damage to the water infrastructure at the property (allegations continued throughout the hearing and notwithstanding a letter from the Youth Law Centre ACT);
(d)Defective notices designed to get the respondents to vacate the property ASAP. It is notable that the notices were issued after the respondents raised concerns about the property. On 15 March 2018, Mr Khan raised concerns with Mr Hurst-Meyers about their standing. On the same day, Mr Hurst- Meyers confirmed the respondents were “in excellent standing;”
(e)Threats that they would be liable for costs that they were either not liable for and raised no issues in relation rent arrears or generally could not be recovered by the applicant (e.g. legal fees);
(f)The applicant (or agents) accessing the property without the requisite notice or in accordance with the Residential Tenancies Act 1997. Aside from the service of legal documents during business hours (or, perhaps, an emergency), a lessor is required to give notice to access a property;
(g)Threats to engage a debt collector to garnish government contracts;
(h)Threats to have the respondents blacklisted (presumably on a tenant database);
(i)Threats to disconnect the electricity (in circumstances where the applicant had never provided the respondents with an electricity invoice confirming the separate metering of the electricity). In some circumstances, this could be conceived as constructive eviction;
(j)Attendance at the property by rangers, other officials, previous tenants, campers & sightseers, people doing burnouts, shooting, letting off fireworks, and campers consuming alcohol.
170.It should be noted that at the same time the tenants claim their quiet enjoyment was being interrupted by the actions of Mr Hurst-Meyers and others, they were breaching their fundamental obligation under the residential tenancy agreement to pay rent.
171.The tenants elected to stay in the premises from 11 May 2018 to 17 August 2018 (14 weeks) without paying any rent.
172.No power is granted to a tenant by the Residential Tenancies Act 1997, or any other Act, for a tenant to unilaterally decide to cease to pay rent.
173.If a tenant has concerns about repairs that need to be undertaken then, in the event the lessor fails to act on those repairs, the tenant can make an application to ACAT to obtain an order compelling the completion of those repairs. The tenant can also apply for compensation for the inconvenience and hardship cause by the absence of the amenity.
174.If a tenant, in a fixed term agreement, can’t afford to pay rent, then the tenant can apply to ACAT to have the tenancy terminated on the grounds of hardship.[25]
[25] Section 44 Residential Tenancies Act 1997
175.Irrespective of any repair issues or any hardship, people in the place of the tenants have an obligation to continue paying rent until and unless the lessor agrees to that course or unless ACAT relieves the tenant of that obligation to pay.
176.It is trite to say that lessors need to receive regular payment of rent on the day that it is due. A tenant’s failure to pay rent can create at a minimum inconvenience. At the other end of the spectrum it can cause significant financial and emotional stress.
177.A lessor may need to pay a mortgage, they may need to pay employees or other business expenses, they may be relying on the rental income to cover their living expenses or they may wish to invest that income.
178.A failure to pay rent for 14 weeks is in my view a very significant breach of the contract, which must have created difficulties for the Charity and its servants.
179.It seems to me that in this case any breach of peace and enjoyment suffered by the tenants is more than offset by their deliberate failure to pay rent for such a prolonged period.
180.I decline to award the tenants any costs in relation to these breaches.
(e)Stress associated with the lessor failing to notify the tenants the property had asbestos and the tenants undertook work that exposed them to asbestos
181.The tenants first complained of the need for an asbestos report on 24 April 2018. The lessor commissioned a report that was completed and dated 16 June 2018. It was supplied to the tenants shortly thereafter. After receiving the report, the tenants elected to stay in the White House until 17 August 2018.
182.For the reasons given in (d) above I decline to award the tenants any costs in relation to these breaches.
(f)Extensive work undertake (sic) by the tenants that improved the property at no cost to the lessor. In this regard, the tenants are seeking reimbursement of the value of the contra for 31 weeks - $4,650
183.In his submissions Mr Faulder contends that the tenants undertook extensive contra work. It is extremely difficult to accept that submission given that neither the lessor nor the tenants ever agreed on a mechanism for calculating or recording the contra work. No hourly rate for labour was agreed and no ledger for recording contra work was created.
184.The absence of any mechanism to calculate or record any completed contra work was likely because the tenants did not undertake sufficient contra work for there to be a need to record the number of hours involved or to determine an hourly rate for the labours.
185.It appears to me, that with one exception (road repairs done prior to the Psyfari event in February 2018) that no significant contra work was undertaken by the tenants.
186.It appears that on occasion they made half-hearted attempts to start jobs like painting some walls of the interior of the White House, but those jobs were never finished and were not done in a workman-like manner.
187.For example, in evidence Mr Khan[26] talked about the painting of some rooms in the White House that was undertaken before the tenants moved into the property in mid-January 2018.
[26] Evidence of Mr Khan Transcript of proceedings 26 July 2019 page 574
188.This work was part of the contra work mentioned in the residential tenancy agreement and it was intended that it be completed during the rent-free period at the beginning of the tenancy, that is the period between the signing of the residential tenancy agreement on 9 January 2018 and the time rent would be first payable on 18 January 2018.
189.The tenants wanted to complete this work before they moved, so as not to risk paint damage to their property.
190.Mr Khan described their efforts in the following terms:[27]
So we did some minor painting to the property yes, to the property, yes.
What do you mean by minor painting?...We painted the entrance room, we painted two bedrooms and painted the deck and a little bit in the kitchen.
So do you recall when this work was done?...No, I really don’t, to be honest, no.
Was it done - can you recall was it done within a certain time after you moved in?...Yes, yes. Well, we had to do it before we moved all our stuff in.
Why?...Because we didn’t want to get all our stuff painted on and that’s a pretty messy job, so - and to move everything as well. So there was no point bringing things into a house what we’re just about to paint.
Okay. So what work was involved in the painting?---All right. So there was a lot of sanding to be done, there was a lot of holes - well, not a lot of holes there was about three or four holes to be filled, pre-coat to be put on, cutting in to be done and then a finishing coat.
Did you complete all the painting?...No, we didn’t complete all the painting, no.
Why?...Just ran out of funds, ran out of time and, yes.
[27] Evidence of Mr Khan Transcript of proceedings 26 July 2019 page 574
191.From the evidence I heard and the photographs I was shown,[28] I am satisfied the tenants made minimal efforts to paint the rooms Mr Khan claims the tenants painted; the entrance, two bedrooms and the kitchen. Little paint had been applied and those rooms were very far from being finished.
[28] Exhibit 1 A1 Tab O photos 1-15
192.It should be remembered that those rooms were to be finished in January 2018. It was not finished by the time the tenants left the property in August 2018. Mr Khan claimed that they could not be completed because he and his flatmates have run out of funds and time.
193.This explanation is ludicrous. The lessor agreed to pay for the consumables (paint etc) and the three tenants had seven months to complete painting of a small area. The work wouldn’t have taken three motivated men more than a long weekend to complete.
194.The tenants’ attitude and indifference to completing the contra work related to the painting of the entrance, two bedrooms and the kitchen seems to have been indicative of the way they approached any form of contra work.
195.If one looks at the photographs provided by Mr Hurst-Meyers[29] the tenants started some work, like painting the hallway and then simply gave up after doing a small amount of work, like the cutting in.
[29] Exhibit 1 A1 Tab O photos 1-15
196.It appears to me that the tenants, generally speaking, did not complete any contra work of any value.
197.More importantly, the tenants have not produced any reliable evidence of precisely what work they undertook, when they undertook it and how long it took to do the work. Had they done that, then I would be in a position to arrive at a value for that work.
198.I return to the onus and burden of proof. With one exception the tenants have not proved they undertook any measurable amount of contra work that was completed to a competent standard.
199.The exception relates to road works on the property undertaken by Mr Khan shortly before an event known as Psyfari took place on the property in February 2018.
200.In this case Mr Khan, who undertook the work, undertook road works (in association with another person, Kosta Pizania), to ensure that the entrance road met the requirements of the ambulance service and the Rural Fire Service, for such an event.
201.Mr Khan provided Mr Hurst-Meyers with an invoice[30] for his endeavours. The invoice is dated 16 January 2019, which must be wrong as it details work done on 26 January 2019 and subsequently.
[30] Exhibit A1 Tab 16
202.The invoice seeks payment of $3,162.50 (including GST of $287.50). The invoice indicates that Mr Khan undertook 57.5 hours of work at the rate of $50 per hour.
203.In the course of Mr Khan’s evidence, he confirmed that the amount of hours he claimed to have undertaken in the invoice, was in fact the amount of time he actually worked on the project.
204.Mr Khan did not expect to be paid on the invoice. He intended that Mr Hurst-Meyers present the invoice to the organisers running the Psyfari event so that they could pay Mr Hurst-Meyers the invoice amount.
205.Mr Khan gave evidence that he was asked to do the road works shortly before the Psyfari event, and that he was asked to do a limited amount of work, well short of creating a new road[31] and that he and Mr Hurst-Meyers agreed that he would undertake the work in return for the discharge of the contra work the tenants owed for a year as well as the contra work owed by the tenants of the other houses on the premises for the period of a year:
[31] Transcript of proceedings 26 July 2019 page 584
So can you explain then to the tribunal, going through generally, what was the road work you did over the course of the days?...Okay. So it was general levelling, filling in all potholes, all channels of run-offs where you could not get the cars over, basing up, widening it from - some points were 1.5, to 3.5 metres widened. Levelling straight off, angling table drains and:[32]
So Ralph, you think sorry, Mr Hurst-Meyers was telling you what work needed to be done?...Yes. He was stressing about it. I believe it may have been a phone call. I believe he may have made a phone call to me saying that JJ’s people wouldn’t do it and if I could do it for him for the rest of the year’s contra.
He offered that?...Yes.
And what did you say?..., I said it’s well, well because the quotes I got were $100,000 a kilometre, but that was complete reseal, complete road. But it was way like I said, it’s not for one person. I asked him if the contra for everyone on the property was done for the rest of the year, that I will do it, and he agreed.
Okay.
SENIOR MEMBER MULLIGAN, so whose contra? When you say everybody, do you mean your house - - -?---So everyone’s - Josh’s premises, which contained Josh and Brendan, and the girls’ premises, which was Freya and Kimmy, and obviously our premises with Brad and Andrew.
MR HURST-MEYERS: Sorry, just .
SENIOR MEMBER MULLIGAN: You want to clarify something, do you?
MR HURST-MEYERS: I just want to clarify. When you say that I said everyone’s contra for the rest of the year, you’re saying that the work that you did on the road basically fixed up everyone else’s contra: that’s Josh, Brendan, Freya, Kimmy and your people; is that right?---Yes.
[32] Transcript of proceedings 26 July 2019 page 586
206.Mr Khan’s evidence as to the value of the contra work is unsatisfactory.
207.Mr Khan was cross-examined by Mr Hurst-Meyers, who highlighted that it was manifestly unlikely that he would have traded all the residents’ contra work for one year, for work that Mr Khan put an invoice value of $3,162.50[33], when the value of that contra work was $93,600:
[33] Transcript of proceedings 7 August 2019 page 691 line 45- page 692
So there was a side deal to do the roadworks that you did that you submitted an invoice for 3162?...Yes.
there was a side deal that that would count out everybody else’s contra for a year?..., As well as ours, yes.
All right, so if you just run through the figures per person or per group.
MR HURST‑MEYERS: Yes.
So your group, $150 a week to 7800, agree, and maths is right?..., Yes, if your maths is right, yes.
Klunker is a thousand dollars a week. Khan’s group is…
MEMBER MULLIGAN: No, no, just pause there. So what was theirs?
MR HURST‑MEYERS: 7800. Klunker was a thousand a week or 52 grand.
MEMBER MULLIGAN: He’s a thousand a week?
MR HURST‑MEYERS: Yes, 52,000. Chalker was 150 a week; that’s 7800.
MEMBER MULLIGAN: Chalker?
MR HURST‑MEYERS: Brendan Chalker.
MEMBER MULLIGAN: All right.
MR HURST‑MEYERS: And Davies was 400 a week or 20,800.
MEMBER MULLIGAN: So Chalker was 750 a week.
MR HURST‑MEYERS: That was 150 a week or 7800.
MEMBER MULLIGAN: Yes.
MR HURST‑MEYERS: Adam Davies was 400 a week or 20,800?---Who’s that?
Yes, he’s on contra?..., Adam.
Yes.
MEMBER MULLIGAN: 200 a week or what?
MR HURST‑MEYERS: It was 400 a week or 20,800.
MEMBER MULLIGAN: Yes.
MR HURST‑MEYERS: And Kim and Freya was a hundred a week or 5200. Now, when you had all those figures up that’s 93,600. Now, why would I in my right mind trade three grand for 93 grand?..., Well, it wasn’t three grand at the start. Like I said, the invoice was - you can scrap the invoice. That work I did for you just to cut it was a 50‑grand job easy, easy.
208.Mr Khan then shifted his position and sought to suggest that the contra work that was being exchanged for the road works was only $20,800 as the contra work of Josh Clunker ($52,000 per year) and Adam Davies ($20,800) was not included in the agreement he made with Mr Hurst-Meyers:
Why would he exchange that amount of money for … ?Okay. So; (1) Joshie was doing his own contra, so him - he never paid rent at all. He was meant to be the land manager of the place, so Joshie’s thing wasn’t included. Adam wasn’t included because he did all the Psyfari things, so it was for me, Brendan - me, Brendan, Brad, Whyte, Kim and Freya.
Hang on. I just want to write that down. So the contra was for who?... For me.
For your group, yes?..., Yes, for our group; Brendan in the other house, and Kimmy and Freya, and that was just a side thing. And the reason why he did this is because he could not get anyone else in to do this prior to the week in notice what he gave me to do the driveway.
209.Even with the change to Mr Khan’s evidence it seems inherently unlikely that Mr Hurst-Meyers would exchange 57.5 hours of Mr Khan’s labours for $20,800 worth of contra.
210.Mr Khan’s position is further undermined when one considers on the one hand his explanation for the value of the invoice being expressed to be $3,162.50 and his repeated assertions that the real value of his work was in the region of $50,000. In evidence he tried to explain his position:[34]
You never expected to get paid the 3160, did you?...No, not at all, no, no.
So why wouldn’t you put on the receipt or the invoice rather the full amount of the value of the work that you undertook?...It was just a rough - yes, just a rough for what I lost. It was for me personally as well.
But I go back to the issue. You were never going to get the money, so why was it relevant to put down what you’d lost as opposed to what the actual costs of doing the work had been?..., I don’t know I yes. I’d say it’s because we were standing at the time, I didn’t think too much of it. I just put it out there on what I lost on that time, and do note, this was a couple of months after the actual Psyfari effort happened and - yes, I was asked constantly to do more contra work and I - yes, that’s why I refused to do it.
[34] Transcript of proceedings of 7 August 2019 page 695 line 26
211.Mr Khan’s evidence as to the value of the contra work and the figures in the invoice are very unsatisfactory and do not give me confidence that what he says in relation to those matters is correct.
212.Mr Hurst-Meyers disputes the number of hours worked by Mr Khan on the road works and he disputes the times of day Mr Khan alleges he undertook the work.
213.I am however satisfied Mr Khan did some work and that work was of value. Given my reservations about Mr Khan’s evidence, I will allow that he worked 50 hours and that a fair rate for his labours is $25 per hour. He is consequently allowed the sum of $1,250, which is to be deducted from the quantum owed to the applicant.
Summary
214.The effect of this order is that the sum of $12,034.91 that I have awarded to the applicant is reduced by $1,250 to $10,784.91. I order the release of the rental bond of $2,100 to the applicant.
215.After taking into account the return of the rental bond, I find that the tenants jointly and severally owe the applicant $8,684.91.
………………………………..
Senior Member D Mulligan
HEARING DETAILS
FILE NUMBER:
RT 630/2019
PARTIES, APPLICANT:
The Hurst-Meyers Charity Ltd ACN 611 166 119
PARTIES, RESPONDENT:
Christopher Khan
Bradley Johnson
Andrew Whyte
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
Tenants Advice Service
TRIBUNAL MEMBERS:
Senior Member D Mulligan
DATES OF HEARING:
26-28 June 2019, 8-11 July 2019, 7 August 2019
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