Zhang v Barden
[2018] ACAT 44
•18 April 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
ZHANG v BARDEN (Residential Tenancies) [2018] ACAT 44
RT 977/2017
Catchwords: RESIDENTIAL TENANCIES – compensation for damage at end of lease – claim for further rent after end of lease for cleaning– onus of proof in making claims for compensation – application dismissed
Legislation cited: Residential Tenancies Act 1997 standard terms 64, 89
Cases cited:Cooper & Ors v Westpac General Insurance Limited [2007] ACTCA 20
Dean v Singh [2017] ACAT 61
Maroney v Bullard [2016] ACAT 33
TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130
Westpac General Insurance Ltd v Cooper and Ors [2006] ACTSC 91
Tribunal: Presidential Member G McCarthy
Date of Orders: 18 April 2018
Date of Reasons for Decision: 18 April 2018
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 977/2017
BETWEEN:
XUEDONG ZHANG
Applicant/Lessor
AND:
AMANDA BARDEN
RODNEY BARDEN
TODD BARDEN
Respondents/Tenants
TRIBUNAL: Presidential Member G McCarthy
DATE:18 April 2018
ORDER
The Tribunal orders that:
The Office of Rental Bonds pay the amount of the bond held in dispute ($1,020) to the respondents/tenants.
The application dated 27 February 2018 is dismissed.
………………………………..
Presidential Member G McCarthy
REASONS FOR DECISION
On 6 August 2016, the respondents leased a residential property in Gungahlin, ACT, from the applicant, Mr Zhang, for a fixed term of 52 weeks. The rent was set at $630 per week.
The respondents gave the required notice to terminate the lease with effect from 4 October 2017. Although the applicant had engaged the services of a property manager to manage the property during the course of the lease, he chose to conduct the final inspection himself.
The parties arranged for a final inspection to occur on 4 October 2017, but Mr Zhang was not available that day and so the final inspection was postponed to the following day. On 5 October 2017, the tenants (or Mr Rodney Barden on behalf of the tenants) met with Mr Zhang at the property to conduct an exit or outgoing inspection. All of the tenants’ possessions had been removed from the house, and the property was presented for return to the lessor with vacant possession.
Mr Zhang was not satisfied that the property had been returned in a sufficient state of cleanliness. Whilst Mr Barden did not agree with Mr Zhang’s viewpoint he nevertheless agreed to conduct further cleaning. On 5 October 2017, Mr Barden returned all of the keys to the property to Mr Zhang except for one key which he retained with Mr Zhang’s agreement to gain access for the purpose of carrying out further cleaning. The tenants’ work commitments meant that their first opportunity to carry out further cleaning was over the weekend of 7- 8 October 2017.
Mr Barden met with Mr Zhang on 10 October 2017 to conduct a further inspection, at which time Mr Barden gave Mr Zhang the key that he had retained. Mr Zhang nevertheless remained dissatisfied with the condition of the property in the ways that became the subject of his application to the Tribunal filed and dated 27 February 2018. Mr Zhang made three claims for compensation which I deal with in turn.
Damaged floorboards
Mr Zhang submitted that the tenants damaged the timber laminate floorboards in the living and kitchen areas of the house. He relied on photographs of the flooring taken on 6 August 2016 at the commencement of the lease which, he said, showed the flooring without scratches and photographs of the flooring at the final inspection on 10 October 2017 which show severe scratching and wear. Mr Zhang also relied on the absence in the ingoing condition report of any mention alongside the photographs of the applicable flooring report that the floorboards were scratched. He provided a quote for replacement of the damaged timber laminate flooring of $1,672 inclusive of GST.
Mr Barden accepted that the flooring was scratched, but contended that it was already scratched, sun damaged and worn at the commencement of the lease. He provided clearer photographs of the flooring taken at the commencement of the lease which, he said, show that the floor was already damaged. He also relied on photographs taken in September, October and November 2016 that show a blue rug at the doorway to the outside deck covering the floor where the scratching was worst. He said that the rug been down at all times during the lease period, and so the damage could not have been caused during the lease.
Mr Barden also provided a letter from his fortnightly cleaner in which she said:
I have been cleaning for Rod, Amanda and Todd this year and noticed on my first clean the damage when I had to lift the rug to vacuum underneath. The faded and scratched floorboards at the rear door have always had a rug covering the area to hide and protect the floor.
In my experience, this kind of wear and tear takes years for it to become that damaged.
Under clause 64(b) of the Schedule to the Residential Tenancies Act 1997 (the RT Act), the tenants were required to leave the premises:
in substantially the same condition as the premises were in at the commencement of the tenancy agreement, fair wear and tear excepted.
In Westpac General Insurance Ltd v Cooper and Ors[1] the ACT Supreme Court per Tamberlin J said:
According to the language of cl 64(b), the onus is on the lessor to establish the condition of the premises at the time the tenancy commenced and prove that the premises were not in a similar condition when the tenant left. The clause provides an exception for “fair wear and tear.” The burden of demonstrating that the exception applies generally rests on the tenant: see Vines v Djordevitch (1955) 91 CLR 512 at 519-520. The phrase “fair wear and tear” has been interpreted as the reasonable use of the premises by the tenant and the ordinary operation of natural forces: see Regis Property Co Ltd v Dudley [1959] AC 370. The effect of the clause is that the tenant is bound to keep the house in good repair and condition, but is not liable for minor changes to the premises that constitute reasonable wear and tear.
[1] Westpac General Insurance Ltd v Cooper and Ors [2006] ACTSC 91 at [14], upheld on appeal in Cooper & Ors v Westpac General Insurance Limited [2007] ACTCA 20 at [24] – [26]
In short, it was for Mr Zhang to prove on the balance of probabilities that the flooring at the end of the lease was not in substantially the same condition that it was at the commencement of the lease.
It is clear from the photographs taken at the final inspection on 10 October 2017 that the flooring was scratched and worn in several places. The question however is whether the lessor has established on the balance of probabilities that it was not scratched and worn, at least to that extent, at the commencement of the lease.
The primary scratching is inside the doorway leading onto the deck. Mr Barden explained that the right-hand door (when looking out onto the deck) was the primary doorway leading to the deck although the left-hand door could also be opened if necessary. The pronounced scratching shown in the photographs immediately inside the right-hand door, significantly more than immediately inside the left-hand door, is consistent with that statement.
The lessor relied primarily on photographs 101 and 102 of the ingoing condition report to show that the flooring was in good order at the commencement of the lease. However those photographs show only the far left hand side of the glass windows and the left-hand side door leading to the deck, and none of the area on the right-hand side immediately inside the right-hand door. Also, photograph 102 shows significant reflection on the floorboards, which makes it impossible to tell whether the floorboards were faded, worn or scratched. Also, the enlarged copy of photograph 105 provided by the tenants shows, in my view, scratches and wear on the floor inside the doors, particularly the right-hand door.
I then have the photographic evidence taken within a month of the commencement of the lease showing a blue rug placed over the entrance to the deck that would have covered the floor to prevent any further scratching. After considering the evidence as a whole, I am not satisfied that the scratching and in the living areas occurred during the tenancy.
Also, even if some of the scratching and wear occurred during the tenancy, it is reasonably apparent that it occurred because of constant walking in and out of the house. In my view, the damage occurred in the course of the normal use of the property and so should be characterised as fair wear and tear, for which the tenants are not liable.[2]
[2] For the meaning of “fair wear and tear, see Maroney v Bullard [2016] ACAT 33 at [21] – [33]
The lessor’s claim for scratches in the kitchen area is even more problematic. Mr Zhang relied on photographs of flooring taken on 10 October 2017 which, he said, were of the flooring in the kitchen. He said that the photographs displayed scratches and marks. However, when examining the photographs, I could not distinguish scratches and marks from natural patterning in the timber laminates or joins between the timber panels or changes of shading arising from reflected light. I considered photograph 77 in the ingoing inspection report which shows the floorboards in the kitchen, and which likewise show variations arising from the natural patterning in the floor and changes of light and shade. I could not distinguish any difference in condition between the photographs of the kitchen flooring in the ingoing report from those in the exit condition report. It follows that I am not satisfied that the flooring in the kitchen is not in substantially the same condition as it was at the commencement of the tenancy.
Also, as with the doorway flooring, to the extent that there are scratches and marks on the kitchen flooring, it is difficult to see why they would not be characterised as caused by ordinary fair wear and tear that would naturally occur on a kitchen floor for which a tenant is not liable.
For these reasons, the claim in relation to the floorboards will be dismissed.
Carpet damage
By advice dated 11 September 2017, the lessor’s agent informed the tenants as part of the “vacating checklist” that they needed to “book professional carpet cleaning” to be done after their furniture was moved out. The tenants arranged for a company known as Electrodry to clean the carpets. They tendered a tax invoice dated 3 October 2017 to evidence the end of lease carpet cleaning.
Mr Zhang contended that the cleaning was not sufficient, and that steam cleaning was necessary to lift stains in the carpet. He referred to photographs of the carpet in the exit condition report which showed marks on the carpet. He seeks compensation of $200 as the cost to steam clean the carpet which, he said, would remove the stains. He relied on a quote dated 24 February 2018 from “Clean Carpets” which provides a description of the proposed work as “Carpet Cleaning + Moving Out Furniture”.
There are many difficulties with Mr Zhang’s claim. When comparing the photographs of the carpet in the exit condition report with the photographs of the carpet in the ingoing condition report (for example, photograph 173), it was very difficult to identify anything more than minor spots, in addition to the stains shown on the photographs in the ingoing condition report. Minor spots of this kind would ordinarily be regarded as fair wear and tear. Second, Mr Zhang might think that steam cleaning is preferable to dry-cleaning, and consumers are entitled to choose as they prefer, but I have no independent evidence that one kind of cleaning is preferable to another. I expect that Electrodry would disagree with Mr Zhang’s opinion. Third, the tenants did what they were required to do under the agent’s vacating checklist. Fourth, I have no evidence to support Mr Zhang’s claim that steam-cleaning would lift the stains. Fifth, I understood from the parties that Mr Zhang re-let the property in November 2017. There is no suggestion that anyone steam cleaned the carpet in the period from when the tenants vacated on 4 October to when the property was re-let. The quote from Clean Carpets is dated 24 February 2018. Last, there is nothing to indicate that the quote is for steam cleaning. It also includes an allowance for moving out furniture.
For these reasons, the claim for carpet cleaning will be dismissed.
Further rent
The lessor’s agent’s trust ledger records that the tenants paid the rent up to and including 4 October 2017. As mentioned, the tenants vacated the property on that date and arranged for a final inspection, but this was postponed at the request of Mr Zhang. On 5 October 2017, the tenants returned all the keys to Mr Zhang, but he agreed for them to retain one key in order to gain access for further cleaning. Mr Zhang met with the tenants again on 10 October 2017 for a further inspection.
Mr Zhang now claims an additional $540 by way of rent for the period 5- 10 October 2017. He calculates that amount from the weekly rent of $630, being $90 per day, for the additional six days after the scheduled inspection on 4 October 2017.
In my view, the claim is misconceived.
Clause 89 of Schedule 1 to the RT Act provides:
(1) The tenant may give notice to terminate a fixed term tenancy at or after the end of the tenancy by giving three weeks notice of the date when the tenant intends to vacate the premises.
(2) The tenancy ends on the date specified by the tenant.
The tenants exercised their right under clause 89, and notified the lessor of their intention to vacate on 4 October 2017. Under subclause 89(2), the lease therefore terminated on that date. Where the lease was at an end, the tenants were not liable to pay rent beyond 4 October 2017.
Questions of compensation to the lessor might have arisen for not returning the property on 4 October 2017 in substantially the same state of cleanliness as existed the commencement of the tenancy as required under clause 64(a) if Mr Zhang had had an incoming tenant to commence immediately following the termination of his lease with the tenants, but that was not the case.
Even if the property was not left in substantially the same state of cleanliness as it was at the commencement of the lease, it does not follow that compensation is payable. In Dean v Singh the Tribunal said:
9. However, if a tenant has in some respect not complied with clause 64, the lessor must take all reasonable steps to mitigate the loss caused by the breach. The lessor cannot recover damages for any loss which the lessor could have avoided but failed, through unreasonable action or inaction, to avoid. So, for example, if there are areas which are not in substantially the same state of cleanliness or not substantially in the same condition as at the time of the commencement of the lease, the lessor must mitigate their loss by giving the tenant a reasonable opportunity to correct the breach.
10. What is a “reasonable opportunity” will depend on the facts in each case such as whether a new tenant has been secured and, if so, when the new tenancy is to commence; whether the tenant allegedly in breach of clause 64 is willing and able to rectify the alleged breach; and the timeframe within which the tenant proposes (and is able) to correct the breach. There may be other factors.
11. When a tenant is in breach of clause 64, it is for the tenant to show that the lessor acted unreasonably in failing to mitigate their loss.[3] However, it would in my view be unreasonable for a lessor not to give the tenant a reasonable opportunity to correct the breach and instead to incur the expense of engaging contractors to correct the breach and then seek to recover those expenses from the tenant. A lessor might choose to engage contractors rather than deal with the tenant, but such costs in my view could not be recovered from a tenant if the tenant was not first given a reasonable opportunity to correct the breach in the tenant’s own manner or at the tenant’s own cost.
12. If a new tenant is secured, “reasonable opportunity” would depend on whether the outgoing tenant can demonstrate an ability to correct the breach before the new tenancy is to commence. It is no part of a lessor’s obligation to mitigate loss arising from an outgoing tenant’s breach of clause 64 that the lessor must forgo rent or, worse, be placed in breach of its lease with an incoming tenant by giving the outgoing tenant time to correct defects that should have been addressed on or before the final inspection.[4]
[3] TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130 at 138
[4] Dean v Singh [2017] ACAT 61 at [9] – [12]
In this case, all that can be said is that Mr Zhang appropriately gave the tenants an opportunity to correct the alleged breach, and they did so. More particularly, following termination of the lease on 4 October 2017, rent was no longer payable.
For these reasons, the claim for further rent will be dismissed.
Conclusion
Where each of the lessor’s claims have failed, I shall order that the bond moneys in dispute be returned to the tenants and that the application be dismissed.
………………………………..
Presidential Member G McCarthy
HEARING DETAILS
FILE NUMBER: | RT 729/2017 |
PARTIES, APPLICANT: | Xuedong Zhang |
PARTIES, APPLICANT: | Amanda Barden, Rodney Barden, Todd Barden |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, APPLICANT | N/A |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR APPLICANT | N/A |
TRIBUNAL MEMBERS: | Presidential Member G McCarthy |
DATE OF HEARING: | 11 April 2018 |
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