Tran v Tennant & Anor (Residential Tenancies) - [2014] ACAT 66

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

TRAN v TENNANT & ANOR (Residential Tenancies) [2014] ACAT 66

RT 635 and 740 of 2014
Catchwords: RESIDENTIAL TENANCIES – Lessor’s claim for compensation for lost rent and reletting costs – whether compensation amount should be reduced because of lessor’s failure to take reasonable action to mitigate losses
Legislation:Residential Tenancies Act 1997
ss 29, 30, 36(b), 38, 84
(Standard residential tenancy terms) – clause 21

Tribunal: Ms W. Corby – Senior Member

Date of Orders: 3 September 2014
Date of Reasons for Decision: 16 October 2014

ACT CIVIL AND ADMINISTRATIVE TRIBUNAL RT14/635 and RT14/740
BETWEEN:
KIM L. TRAN
Applicant/Lessor

AND:
DAVID TENNANT
EMILIE TENNANT
Respondents/Tenants

TRIBUNAL: Ms W. Corby – Senior Member

DATE:3 September 2013
ORDER

The Tribunal Orders that:

In relation to the Applicant’s claim for compensation for lost rent and advertising and reletting amounts the Tribunal orders that the Respondents pay to the Applicant:
a. $1,655.70 for lost rent; and
b. $290.00 for advertising and reletting costs;
Being a total of $1,945.70

The Office of Rental Bonds (ORB) is to release to the Applicant’s (lessor’s) agent the Bond amount of $1,160.00 held by the ORB in part satisfaction of order 1.

The Respondents are to pay to the Applicant’s (lessor’s) agent the balance payable by the Respondents of $785.70 by two instalments of:
a. $392.85 to be paid on or before 3 October 2014; and
b. $392.85 to be paid on or before 3 November 2014.
If the Respondents fail to pay the outstanding amount as set out in order 3 then post-judgment interest is payable by the Respondents to the Applicant on so much of the outstanding debt as remains payable calculated at the relevant Magistrates Court interest rate from 4 September 2014.
Signed………………..

Ms W. Corby – Senior Member

REASONS FOR DECISION

The Respondents requested reasons for the orders made on 3 September 2014 at the conclusion of the hearing of this matter held on that date. In making the decision on 3 September 2014 the Tribunal had regard to the documents filed by the parties and the matters raised and evidence given by, or on behalf of, the parties at the hearing on 3 September 2014.
The Applicant lessor, Ms Tran (the ‘lessor’/’Applicant’) and the Respondent tenants, Mr and Ms Tennant (the ‘tenants’/’Respondents’) entered into a 12 month fixed term residential tenancy agreement on 21 February 2014 (the ‘tenancy agreement’).
The tenancy agreement was for a one-bedroom unit at Red Hill in the Australian Capital Territory (the ‘property’).
The fixed term tenancy agreement commenced on 21 February 2014 for 12 months and was due to end on 20 Feb 2015. The weekly rent was $290 and the bond was $1,160 which was paid to the Office of Rental Bonds (‘ORB’).
On 20 May 2014 the Respondents sent an email to the lessor’s agent advising of their intention to vacate the property prior to the end of the fixed term. On 21 May 2014 the Respondents advised that the ‘vacation date’ would be 18 June 2014. The lessor’s agent advised the tenants that the lessor would seek compensation pursuant to section 84 of the Residential Tenancies Act 1997 (the ‘RT Act’) as a result of the early termination of the tenancy.
Section 84 provides:
84Notice of intention to vacate—award of compensation
(1)If a lessor received a notice of intention to vacate before the end of a fixed term agreement, and the date nominated in the notice as the date when the tenant intends to vacate is a date before the end of the agreement, the lessor may—
(a)accept the notice; or
(b)apply to the ACAT for compensation for—
(i)the loss of the rent that the lessor would have received had the agreement continued to the end of its term; and
(ii)the reasonable costs of advertising the premises for lease and of giving a right to occupy the premises to another person.
(2)On application, the ACAT may award compensation of the kind mentioned in subsection (1) (b).
(3)The amount of compensation the ACAT may award—
(a)under subsection (1) (b) (i) must not be more than the lesser of the following:
(i)25 weeks rent;
(ii)rent in relation to the unexpired part of the agreement; and
(b)under subsection (1) (b) (ii) must not be more than 1 week’s rent.
(4)In deciding the amount of compensation that may be awarded in relation to the reasonable costs of advertising, the ACAT must have regard to when, apart from the vacation of the premises—
(a)the agreement would have ended; and
(b)the lessor would have incurred the costs.

On 18 June 2014 the tenants vacated the premises prior to the end of the fixed term tenancy. The tenancy ended on that date pursuant to the operation of sub-section 36(b) of the RT Act:
36Termination
Despite anything to the contrary in any territory law, a residential tenancy agreement must not terminate or be terminated other than in the following circumstances:
…
(b)if a tenant notifies the lessor in the form approved under section 133 (Approved forms—Minister) for a termination notice, and vacates the premises in accordance with the notice;

There was no dispute about or claim made in respect of the condition of the premises at the end of the tenancy. Both the lessor and the tenants applied to the Office of Rental Bonds for release of the total of bond monies of $1,160. The dispute was referred to the ACT Civil and Administrative Tribunal (ACAT). This matter was allocated ACAT case number RT 14/635.
An ACAT preliminary conference was held in matter RT14/635 on 29 July 2014. The matter was listed for hearing on 3 September 2014.
On 8 August 2014, and in response to orders made at the preliminary conference hed on 29 July 2014, the Applicant filed an application for compensation pursuant to section 84 of the RT Act for loss of rent, advertising and other costs she had incurred in relation to the re-tenanting the property as a result of the Respondents’ action in ending the tenancy prior to the end of the fixed term.
It appears that this application for compensation by the Lessor was, mistakenly, treated by ACAT as a new case and allocated the number RT14/740. Matter RT14/740 was listed for preliminary conference on 1 September 2014. The parties were later advised by the ACAT registry that this conference would not proceed as the matter number RT14/635, which dealt with the same application, was listed for hearing on 3 September 2014.
In an email sent by the Tenants on Saturday, 23 August 2014, they requested an adjournment of the 3 September 2014 hearing date to allow more time for them to obtain information from the Applicant about her claim, and to allow the Respondents more time to prepare for the hearing with that further information to be provided by the Applicant. In a follow up email, on Saturday, 30 August 2014, the Respondents repeated their request for an adjournment. In the 30 August 2014 email the Respondents advised that they were in the United Kingdom and thus, if they were to attend to the hearing on 3 September 2014, they would need to do so by telephone.
The ACAT registry advised the Respondents that the hearing would proceed on 3 September 2014. The Tenants were advised that their application for an adjournment of the hearing would be considered by the member who conducted the hearing. The Respondents were advised that they could call the hearing room at 4:05pm (AEST). Mr Tennant, on behalf of the tenants, called at that time.
Prior to the commencement of the matter at 4pm on 3 September 2014, the Tribunal member hearing the matter read and considered the information filed in the Applications RT14/635 and RT14/740. That information, and the matters ultimately raised at the hearing, indicated that the claim for compensation by the Applicant related to expenses or losses which the Applicant alleged she had incurred or sustained as a result of the Respondents’ early vacation of the premises prior to the end of the fixed term of the tenancy. The Applicant’s claim was made pursuant to section 84 of the RT Act.
The amounts claimed by the Lessor were identified in the application RT14/740. The Respondents were aware of the details of these claims. In their email to the ACAT registry of 25 July 2014 and in the Respondents’ detailed letter of 25 July 2014 to the lessor’s agent, the Respondents acknowledge that the lessor’s agent had advised them of the details of the lessor’s claim in an email of 16 July 2014.
At the hearing on 3 September 2014 the Tribunal considered that because -
a.both parties were present or were represented; and
b.the matters in dispute were confined to the assessment of compensation amounts and did not involve dispute as to matters where the physical presence of a party would be necessary – e.g. where there was physical evidence or photographic or documentary evidence;
the Tribunal concluded that the Respondents’ application for an adjournment should be denied and that the hearing should proceed.
At the hearing the Applicant was represented by Ms McGann of Ray White Real Estate, the Applicant’s agents. The Respondents were represented by Mr Tennant, one of the Respondents. Mr Tennant attended by telephone and advised that he and Ms Tennant were in the UK.
In summary the Tenants disputed that the lessor should be compensated for all or some of the amounts claimed. The Respondents assert that the amount of compensation awarded, if any, should reflect a failure by the lessor, pursuant to section 38 of the RT Act, to take reasonable steps to mitigate her loss.

That section provides:
38General duty to mitigate
A person who, apart from this section, would be entitled to compensation under this Act is not entitled to the compensation, or part of it, if the loss, or part of the loss, to be compensated could have been reasonably avoided.

The parties agreed that the tenancy should have ended on 20 February 2015, but instead ended on 18 June 2014 when the tenants vacated the property. The lessor did not accept the Respondents’ purported Notice to Vacate dated 20 May 2014 and their further advice on 21 May 2014 that the vacation date would be 18 June 2014. Nonethelss, in response to the Tenants’ notice and advice, the lessor took action to re-tenant the property. On and from 27 May 2014, the Lessor, by her agent, began advertising the premises for re-rental. The rental amount being advertised was $290 per week, the same amount as the Respondents paid. The lessor was seeking a 12 month tenancy, but from 27 May 2014 in the advertisement advised that the term of the tenancy was ‘negotiable’.
The lessor’s agents conducted a number of ‘open house’ displays of the property in the weeks after 27 May 2014 and also subsequent to the vacation of the premises by the Respondents on 18 June 2014. Several different people attended at all or some of these open house displays. Mr Tennant gave evidence that he was present when a prospective tenant (‘Ted’), whom he knew, attended at an open house on 12 June 2014. Ted subsequently lodged an application with the lessor’s agent to tenant the property.
Ted’s application was not accepted by the lessor. Mr Tennant alleged that if Ted had been approved for the tenancy then the losses, if any, sustained by the lessor would have been reduced.
Ms McGann gave evidence at the hearing that she had spoken to Ted after he had submitted his application. Ted had advised her that although he had applied for a 12 month lease, due to some uncertainty in relation to his work situation, he would prefer a shorter tenancy of 3 months.
The tenant also submitted that because the lessor was looking for a 12 month tenancy this reduced the number of applications by potential tenants as it excluded people interested in shorter-term tenancies. Ms McGann said that in fact the lessor was prepared to consider, if necessary, a 6 or 8 month tenancy. Ms McGann said that the advertisement had stated that although a 12 month tenancy was preferred, this was negotiable.
Mr Tennant said that the way the advertisement was set up would have limited the number of people who might see the advertisement, since people looking for a tenancy for less than 12 months might not see it, or think it was not worthwhile making further enquiries about this property.
The advertised rental amount of $290 was reduced to $270 on 10 July 2014, although the lessor’s agent, Ms McGann, at the hearing said she thought it was actually reduced nearer to 4 July 2014. On 4 July 2014 the lessor gave Ms McGann the instruction to reduce the rental amount from $290 to $270. Mr Tennant however says that the Respondents were actively monitoring the website where the property was advertised and he said that the advertised rent amount changed on 10 July 2014.
The Respondents say that it was unreasonable for the lessor to continue to seek a weekly rental amount of $290 until 10 July 2014. The property had by then been advertised since 27 May 2014, just over 6 weeks. A new tenant was found on 14 July 2014 and signed a tenancy agreement which commenced on 24 July 2014 for 12 months at a weekly rent of $270. The Respondents say that the fact that a tenant was found so soon after the reduction in rent demonstrates that the Applicant’s failure to reduce the rent sooner than 10 July 2014 impacted on the speed of re-tenanting and increased her loss.
The Respondents say that in their view, and by comparison with other properties available for rent in the area, it became apparent that the rental market had changed since they signed the tenancy agreement in February 2014. Consequently the rental amount being sought by the Applicant, as compared with the rental amount the Respondents had paid, would need to be reduced. The Tribunal notes that the ‘comparable’ properties relied on by the Respondents in support of this submission were in the same area but were not one-bedroom units.
The Respondents say that the lessor, in failing to:
a.accept the application by Ted;
b.clearly indicate in advertising the property that she was prepared to accept a tenancy that was less than 12 months; and
c.reduce the weekly rental amount from $290 to $270 earlier than 10 July 2014;
failed to mitigate her loss. As a consequence the Respondents submit that the amount of compensation sought by the lessor should be reduced pursuant to section 38 RT Act.
The Applicant seeks compensation for the costs of advertising the property and re-tenanting the property pursuant to section 84(1)(b)(ii). The Lessor’s agent provided evidence that the lessor had paid to her agent amounts for:
a.advertising the property - $152.90;
b.a ‘re-tenanting fee’ payable to the lessor’s agent by the Lessor - $297; and
c.preparing a condition report for the incoming tenant - $110;
being a total of $559.90.
In her application (RT14/740) the Applicant reduces this amount to 66.67% being the percentage of the unexpired portion of the lease. The lessor calculates her claim as $373.27, but accepts that this aspect of her claim is capped at $290 pursuant to section 84(1)(b)(ii) and 84(3)(b) of the RT Act.
The Respondents say that, given the vacation date of 18 June 2014, any amount of compensation should be reduced by reference to section 84(4) of the RT Act for 2 reasons. Firstly, any amount should be calculated at the pro rata amount of 66% to reflect the portion of the fixed term tenancy that remained outstanding at the time that the Respondents vacated the property, being the period 18 June 2014 to 20 February 2015. Secondly, that some of the amounts claimed by the lessor should not be reimbursed. The Respondents say that the cost of the preparation by the lessor’s agent of the Condition Report to give to the incoming tenant, when a detailed report had been prepared prior to the commencement of the Respondents’ tenancy only 3 months earlier, should not be reimbursed in full, or at all. In addition the Respondents query the amount claimed for the costs of advertising. Further the Respondents dispute that any amount should be awarded in relation to the ‘reletting’ fee charged by the lessor’s agent.
The Tribunal is satisfied, taking into account the matters set out in s84(4) that –
(a)but for the Respondents’ actions, it was reasonable for the lessor to have expected that she would not be required to commence advertising the property for re-tenanting until, at earliest, some weeks before the expiration of the fixed term tenancy agreement in February 2015;
(b)given the obligations placed on the lessor, under the Standard Terms of the Residential Tenancy agreement (Clause 21) and the RT Act (sections 29 and 30), it was reasonable for the lessor to have prepared a new condition report to be given to the incoming tenant.
Clause 21 from the Standard Terms:
21(1) Within 1 day of the tenant taking possession of the premises, the lessor must give 2 copies of a condition report completed by the lessor to the tenant.
(2) The condition report must be on, or to the effect of, the condition report form published by the Territory.
29Condition reports
(1)A lessor must, not later than the day after the tenant takes possession of the premises, give the tenant 2 copies of a report about the state of repair or general condition of the premises, and of any goods leased with the premises, on the day the tenant is given the report.
(2)A report under subsection (1) must be signed by the lessor.
(3)The tenant must, within 2 weeks after receiving the copies of the report mentioned in subsection (1), return 1 copy to the lessor, either—
(a)signed by the tenant; or
(b)endorsed with a statement, signed by the tenant, indicating whether the tenant agrees or disagrees with the whole of the report or with specified parts of it.
(4)If the tenant returns the copy signed but without further endorsement, the tenant is taken to have agreed with the whole of the report.
(5)To remove any doubt, a condition report for premises may, but need not, contain a list of items at the premises, other than goods leased with the premises.
30Evidence of condition of premises
(1)If section 29 (1) and (3) have been complied with, a statement in a report mentioned in section 29 about the state of repair or general condition of the premises, and of any goods leased with the premises, (other than a statement in relation to which the tenant, by endorsement, has indicated disagreement) is evidence of that state of repair or general condition on the day the tenant was given the report.
(2)If only section 29 (1) has been complied with, a statement in a report mentioned in section 29 about the state of repair or general condition of the premises, and of any goods leased with the premises, is evidence of that state of repair or general condition on the day the tenant was given the report.
(3)If section 29 (1) has not been complied with, evidence by the tenant about the state of repair or general condition of the premises, and of any goods leased with the premises, is evidence of that state of repair or general condition on the day the tenant took possession of the premises.
Ms McGann, the lessor’s agent, provided evidence that the lessor had made the payments referred to above in the sum of $559.90 in relation to the advertising and re-tenanting of the property. In her application the lessor acknowledges that any compensation amount is capped at one week’s rent – in this case $290.
The Respondents submit that no compensation should be ordered in relation to preparation of the condition report and that the ‘reletting fee’ is either not recoverable or should be reduced to $150. This amount, if any, and the advertising costs, if proved, should be further reduced to 66% to reflect the unexpired portion of the lease.

In summary the Respondents, for the reasons set out above, say that the Applicant’s claim pursuant to section 84(1)(b)(ii) of the RT Act should be restricted to an amount less than, or no more than, $199.92.
Mr Tenant gave evidence that the Respondents were living in Canberra, at the time that they signed the tenancy agreement in February 2014, so that Ms Tennant could undertake study which she was due to finish in June 2014. Also, Mr Tennant had applied for work with a government department and was on a list of potential candidates for a position with that department. Mr Tennant advised that because of their situation the Respondents, prior to signing the tenancy agreement, had taken a short-term (5 month) tenancy at another property. Mr Tennant gave evidence that at the end of the 5 month tenancy in early 2014, the Respondents had sought, and would have then taken, a further short term, about 4 month, tenancy agreement because the Respondents were not certain as to what they would do after Ms Tennant’s study was completed in June 2014 and in the event that Mr Tennant was not successful in applying for work.
Mr Tennant said the Respondents had not been able to find an alternative, short-term tenancy, and so had signed the 12 month tenancy agreement with the Applicant. Given the possibility that the Respondents were aware that they may decide to leave Canberra before the end of the fixed term, Mr Tennant said that at the time that they decided to sign the tenancy agreement with the Applicant, the Respondents had taken steps to inform themselves as to the consequences of ending the fixed term tenancy before the end of the fixed term on 20 Feb 2015.
Given the terms of section 84 of the RT Act, the Tribunal considers that if the Respondents had made this enquiry then they knew, or ought to have known, that by ending the fixed term tenancy early they may have been liable to pay compensation to the Applicant of up to 25 weeks’ rent in relation to the loss of rent and up to a further 1 weeks’ rent in relation to the advertising/re-tenanting costs.
Mr Tennant said that by 18 June 2014 he had not been able to find work in Canberra and Ms Tennant’s studies were finished. After 18 June 2014 the Respondents moved to South Australia. At some time before 3 September 2014, the date of the hearing, the Respondents travelled to the UK. At the hearing Mr Tennant advised that he had not been able to find work in Canberra or South Australia and, because he is a UK citizen, he and Ms Tennant decided to travel to the UK so that he could look for work. The Respondents were in the UK on the day of the hearing.
In the Tribunal’s view, the Applicant took prompt steps to advertise and exhibit the property after receiving the Respondents 20 and 21 May 2014 notice of their intention to vacate the premises on 18 June 2014.
On 20 May 2014, 3 months into the 12 month tenancy, the Respondents’ gave notice of their intention to vacate the premises in June 2014. On 21 May 2014 they advised the vacation date would be 18 June 2014. It is the Tribunal’s view that in the circumstances of this matter, not only was the lessor put to expense greater than the value of one week’s rent in order to re-tenant the property, but the lessor could reasonably have expected not to have incurred these costs for at least a further 7 or more months had the Respondents remained for the full 12 months of the fixed term.
The Respondents asserted that the rental market had changed and this impacted on what reasonable action the lessor should have taken to mitigate her loss. In support of this assertion the Respondents note that the period during which no new tenant for the property was found, from when it was first advertised from 27 May 2014, indicates that the state of the rental market had changed as compared with the rental market when the tenancy agreement was entered into by the parties in February 2014.
The Respondents submit that this change made it more difficult to find a tenant willing to sign a 12 month tenancy and pay the same rental amount of $290. This was the rental amount the Respondents had agreed to pay for the property in February 2014.
Initially the Applicant/lessor sought to tenant the property at a rent of $290 per week for a fixed term of 12 month. However the lessor’s agent gave evidence at the hearing that the lessor was prepared, at all times, to negotiate a shorter rental period.
From 27 May 2014 the property was advertised as being for a ‘negotiable’ term, although a 12 month tenancy was preferred. From at latest 10 July 2014 the property was advertised for $270 per week. On 15 July 2014 the lessor signed a fixed term 12 month tenancy agreement for $270 per week rent which commenced on 24 July 2014.
The Tribunal notes that the Respondents do not dispute the ultimate amount of weekly rent accepted by the Applicant as being a fair reflection of the market value at that time. The Respondents say however –
a.that the lessor should have reduced the weekly rental amount earlier and her failure to do so, by 18 June 2014 when the Tenants vacated the premises; and/or
b.the Applicant’s failure accept the application by Ted on or about 12 June 2014;
was a failure by the Lessor to mitigate her loss. The Respondents say that the Applicant’s claim for compensation should be reduced to reflect this failure.
The Tribunal notes that, notwithstanding that the property had been tenanted to the Respondents on or around February 2014 for $290 per week, and despite advertising and ‘open house displays’ of the property from 27 May 2014, the property was not re-tenanted until 24 July 2014 at a rental amount of $270 per week.
The Tribunal accepts that this delay and the reduced rental amount may reflect a change in the rental market between February, when the Respondents signed the tenancy agreement, and 27 May 2014 which impacted on the ease of, and/or the amount of rent that could be obtained for, the re-tenanting of the property.
Nonetheless, in the Tribunal’s view, it was reasonable, initially and only 3 months after the property had been rented to the Respondents, for the lessor to advertise the property for the same amount and for the same term as it had been rented to the Respondents. The Respondents agree that, initially, they had requested that the Applicant attempt to re-tenant the property for $290 per week. From the Respondents’ point of view, any amount of compensation payable would have be reduced if this approach had been successful.
As it transpired, no tenant suitable to the lessor was found until 15 July 2014 when the tenancy agreement to commence 24 July 2014 was signed. It is not clear whether, when a tenant was finally found, this was a result of the reduction in the weekly rental amount sought, or whether the time taken to find a suitable tenant reflected other factors and/or the state of the current rental market so that it takes longer to tenant properties.
In the Tribunal’s view the Applicant made genuine efforts to mitigate her loss. The Applicant responded quickly to the Respondents’ advice that they intended to vacate the property in breach of a 12 month fixed term tenancy agreement. The Respondents advised the Applicant of their intention only 3 months into a 12 months fixed term period, and they vacated the property less than 5 months into the fixed term.
The Tribunal notes that the Respondents’ gave evidence that they had sought but that they had been unable to find a ‘shorter’ term tenancy at the time that they had signed the 12 month tenancy agreement with the Applicant. In the Tribunal’s view this suggests that shorter term tenancies are not readily available. Thus it was not unusual or unreasonable for the Applicant to have sought a longer-term tenancy period when seeking to re-tenant the property.
The property was not re-tenanted until 24 July 2014 at a reduced rent. The Tribunal accepts that, had the rental amount been reduced at an earlier time, the property may have been re-tenanted prior to this date. However it is not possible to make any definitive finding as to how much sooner the property would have been re-tenanted had this occurred, or if it was necessary to reduce the rental amount at all or by $20 per week in order to tenant the property.
The Tribunal considers that it was reasonable, particularly in the circumstances presented by the Respondents’ actions, for the lessor to have declined to tenant the property to Ted who had indicated that he was not certain about his employment situation and that he was not keen to commit to a 12 month tenancy and indicated that he would prefer a 3 month tenancy.
The Respondents submit that an earlier reduction in rent may have impacted on the timing of the re-tenanting. The Tribunal accepts that a lower rental amount is likely to increase the potential to tenant a property. However the lessor is not required, in the circumstances presented by the Respondents’ actions, to ‘re-tenant at any price’.
As discussed above, the Tribunal accepts that the lessor did ultimately reduce the rent and the property was tenanted. If the reduction had occurred sooner, the property may have been tenanted earlier, however, the Tribunal is not satisfied that rental amount is the only factor to consider. There are other factors, such as the time of year, the number of rental properties available and the number of prospective tenants seeking properties that might equally affect the rate of re-tenanting.
The Tribunal accepts that had the lessor reduced the rental amount a week or two earlier she may have mitigated some of her loss, however this is not specifically quantifiable. The Tribunal considers that the amount of compensation payable in relation to the loss of rent pursuant to section 84(1)(b)(i) of the RT Act should be reduced, pursuant to section 38 of the RT Act, by a ‘global figure’ of $400 to reflect this possibility.
At the hearing Mr Tenant submitted that the hearing of the application should be adjourned in order to allow the Respondents time to obtain and consider applications by prospective tenants who had applied to rent the property during the period it had been advertised. The suggestion being that this may show either that other, suitable tenants had earlier applied but been rejected by the Applicant, or some other feature of the Applicant’s actions would indicate that she had failed to mitigate her loss.
The Tribunal considers that this exercise would in effect require the Respondents, and ultimately the Tribunal, to review the lessor’s decision in relation to the subsequent tenancy. The real question is, has the Applicant who is otherwise entitled to compensation, taken reasonable action to avoid all or part of the loss (section 38 RT Act). The Tribunal is satisfied that the Applicant has taken reasonable steps to mitigate her loss other than in relation to the reduction in compensation by $400 discussed to above.
The Tribunal is satisfied that the Applicant lessor has suffered loss and incurred expenses as a result of the Respondents’ action in vacating the property and terminating the fixed term tenancy agreement on 18 June 2014.
Mr Tennant submitted that the lessor’s agent had, before the application to ACAT, made an estimate of the likely losses that the lessor would sustain. The Respondents say that this amount was less than the actual amount claimed by the lessor in these proceedings. The Tribunal accepts that in the period before the lessor’s application to ACAT efforts may have been made to estimate the lessor’s loss and perhaps resolve by agreement the issues in dispute between the parties. However the Tribunal does not consider that the lessor should now be held to the assessment made in that time.
The Tribunal assesses the lessor’s loss as follows –
a.Pursuant to section 84(1)(b)(i) a total of $2,055.70 calculated as follows –
i. Loss of rent 19 June- 23 Jul 2014 (inclusive) during which time the property was vacant - $290 x 5 weeks = $1,450;
ii. $20 per week reduction in rental amount for the period 24 Jul to 20 Feb 2015 (30 weeks x $20 plus 2 days x $2.85) = $605.70
b.Pursuant to section 84(1)(b)(ii) - Expenses totalling $559.90 were incurred by the lessor for advertising, displaying and preparing the necessary condition report for the property for re-tenanting. The lessor has only sought a proportion of this amount to reflect the unexpired portion of the lease. Using the Respondent’s figure of 66% as the percentage to reflect this period, this amount would be $369.53.
Pursuant to s84(2)(i) the compensation that can be ordered for lost rent is capped at 25 x weekly rental amount paid by the Respondent – i.e. $290 x 25 = $7,250.
Pursuant to s84(3)b) the compensation pursuant to section 84(1)(b)(ii) for advertising and other costs incurred is capped at 1 week’s rent, being $290.
The Tribunal concludes that the amount of compensation payable by the Respondents to the Applicant pursuant to:
a.section 84(1)(b)(i) is $1,655.70 –which includes a reduction of $400 pursuant to section 38 of the RT Act to reflect the possibility that had the rental amount been reduced earlier by the lessor her losses may have been reduced; and
b.section 84(2)(ii) is $290.
………………………………..
Ms W. Corby
Senior Member