If the agreement is a residential tenancy agreement within the meaning of the Act, does it fall within an exemption?

1. Section 5(1)(b) of the Act states that the Act does not apply to an agreement under which a person boards or lodges with another.
2. The applicant argued that the arrangement between her and the respondent was more in the nature of a boarding or lodging arrangement due to the fact that she advertised the studio for rent on Air BnB, and flatmates.com.
3. It is generally accepted that the situation of boarding or lodging is more likely to occur where the person is provided with services or the owner continues to reside in the property. The following statements explain the law in this area:-

In the case of residential accommodation there is no difficulty in deciding whether the grant confers exclusive possession. An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own. ...

If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant.[11]

1. In other words, there are two situations in which accommodation may be a boarding/lodging arrangement as opposed to a residential tenancy agreement. First, if accommodation is offered which involves renting a room in a house, the owner continues to reside in the house (even if they are absent from time to time), and there are shared facilities, then it is likely that the arrangement will be a boarding or lodging arrangement. It is clear that was not the case here. If the respondent had been residing in the house, then the position may be different and that would depend on the nature of the precise relationship between the parties in that situation.
2. Second, if the owner provides some services, then the arrangement may be a boarding or lodging arrangement. The studio/granny flat was advertised on Air BnB as well as flatmates.com. Sometimes when a property is advertised on Air BnB, the owner will offer services as part of the "hosting" arrangement. For example, laundry services, transport arrangements, meals or other services of that kind. The applicant offered no such services to those renting the studio/granny flat.
3. The parties agreed that the applicant provided the respondent with bed linen, tea towels and cleaning products. However, the cleaning products were not replenished by the applicant during the respondent's stay and the linen and tea towels were not washed or replaced by the applicant during the respondent's stay. Accordingly, I do not regard the provision of those items as constituting a service.
4. In conclusion, I do not consider that the arrangement between the parties created a boarding/lodging situation because:-
   • the respondent had exclusive occupation of the studio for the time he lived there and this was not affected even when the applicant was resident in the house;
   • I am not satisfied that the applicant provided the respondent with any services which would mean that the respondent was a boarder or lodger rather than a tenant.

Is the agreement otherwise exempt under Section 5 of the RTA?

1. Section 5 of the Act states that the Act does not apply to various types of arrangements including:-
   • an agreement genuinely entered into for the purposes of conferring on a person a right to occupy premises for a holiday (para 5(1)(c);
   • a prescribed agreement (para 5(1)(h)).
2. Regulation 6(1)(a) of the regulations made under the Act states that an agreement for a serviced apartment is not a residential tenancy agreement.
3. The applicant agreed that the arrangement between her and the respondent was not a serviced apartment and on the basis of the evidence I consider that is correct.
4. The studio is advertised on Air BnB and Flatmates.com. The advertisement on Flatmates.com (pursuant to which the respondent entered into the agreement) states as follows:-

Pricing depends on the length of your stay.

Approx 6 months is $280 plus 30 a week for all utility bills. (4 weeks bond)

12 months + is $270 plus 30 a week for all utility bills (4 weeks bond)

Start with a shorter term and then extend.

Less than 4 months is $290 plus 50 for bills which includes internet and a ST premium ...3 weeks bond is still required and a copy of your ID. Please note, end date can be flexible but 4 weeks notice is still required ...

1. The applicant stated that she advertised through Air BnB primarily to attract short term holiday renters and she advertised through Flatmates.com primarily to attract longer term renters for the studio. She said that she would only "offer" a renter a residential tenancy agreement if the term of the agreement was for 6-12 months and this agreement was for a four month term. She said that her provision of bedlinen, tea towels and cleaning products was more consistent with the arrangement being holiday accommodation rather than a residential tenancy agreement.
2. Section 5(1b) of the Act states that an agreement which creates a right of occupancy for longer than 60 days is presumed not to be an agreement for the provision of accommodation for a holiday subject to evidence to the contrary.
3. The fact that the studio/granny flat is advertised on Air BnB suggests that from time to time it is rented out for holiday purposes.
4. However, the advertisement on flatmates.com suggests terms and conditions which are more aligned with a residential tenancy agreement -
   • the terms offered (ie length of stay) are significant and not "short stays";
     • the renter is required to pay for utility bills - this would not generally be required of someone renting for a holiday;
   • the requirement for a bond would not apply to a person renting out for very short periods, although could apply for a holiday rental for a more significant period.
5. There was no suggestion at the hearing that the respondent had rented the studio/granny flat for the purposes of a holiday and he made it clear that he was seeking a rental property for a longer term but something suitable so that a companion could join him. Even if sometimes the studio/granny flat is rented out to someone for the purposes of a holiday, it is this particular arrangement that must be considered.
6. For the reasons outlined above, I am not satisfied that the arrangement between the parties is exempt on the basis that it was a holiday rental.

Does the applicant have to refund the balance of the "security deposit" to the respondent?

1. The parties agreed and I find that the respondent paid a "security deposit" of $1,080 and the applicant has repaid $660.00 to him.
2. The parties agree that the respondent's rent was paid up until his vacate date if the applicable rent was $270.00 per week.
3. The applicant claims that she is entitled to retain the balance as the agreement between the parties was that the respondent was only entitled to rent the property at the rate of $270.00 per week if he stayed for at least four months. As he did not stay for at least four months, she has retained $420.00 as the balance of the rent to which she would have been entitled under the agreement. She referred to the advertisement which refers to different rates according to the renter's length of stay.
4. The respondent disputes the applicant's claim and states that he agreed to rent the property at $270.00 per week plus utilities of $30.00 per week and he paid a security deposit equal to four weeks' rent. He has provided various email exchanges between the parties.
5. Clearly, the arrangement between the parties was something other than what was envisaged by the advertisement. The advertisement refers to the rate of $270.00 per week plus utilities being only available to persons renting the studio/granny flat for 12 months. Neither party suggested that the initial arrangement between them was for a 12 month agreement.
6. The original Order referred to the advertisement as being an "invitation to treat" and subject to specific arrangements between the parties. I agree with this analysis.
7. As I mentioned above, a residential tenancy agreement is merely a special form of contract. The basis of any contract is mutual agreement on the terms of the agreement. The difficulty for the applicant in relation to this aspect of the matter, is in establishing that the respondent agreed that if he vacated prior to the expiry of four months from when he moved in, that he would pay rent at a higher rate. If he did not agree, then it was not part of the agreement between them and the applicant is not entitled to retain any amount he has paid towards rent at a higher rate.
8. On the basis of the evidence provided by the applicant, I am not satisfied that it was clear to the respondent that the rate of $270.00 per week plus utilities would only apply if he rented the studio/granny flat for at least four months, and if he vacated before then the rent would revert to a higher amount (and that he agreed to that arrangement).
9. Further, I observe that if the parties did not agree to rent at a higher rate should the respondent vacate before 4 months, the applicant is not entitled to determine the terms of the agreement in a unilateral fashion. They must be agreed between the parties. In this regard, I note the following email from the applicant to the respondent:-

The rent ended up on the short term rate not the 4 month plus rate.

But I'll help you out and charge in between the 3 month rate and what you paid - as a favour.

The rates are set to accommodate for the finding new tenants process I don't bend them. I am happy for short term but I don't provide long term rates. You gave me the right notice period ....But you were/we were going for the four month plus rate. I gave you the better rate based on 4 month minimum with a view to long term hopefully and aa quick move in......

Please don't blast me on email about your change to short term, because I'll charge the full short term rate as advertised if you do and won't engage....

1. In conclusion, my assessment of the evidence is that it does not support a view that the parties have agreed that if the respondent moved out before the expiry of four months from the commencement of the agreement, then a higher rate of rent applies. Accordingly, the applicant is not entitled to retain the amount of $420.00 paid by the respondent.
2. As I have found that the arrangement between the parties is a residential tenancy agreement, it follows that any amount paid by the respondent other than rent must be regarded as a security bond[12] and the bond should have been lodged with the Commissioner.[13]
3. In the original Order, Member Gooch directed that the applicant was to lodge the balance of the bond with the Commissioner and then for the Commissioner to pay that sum to the respondent. The basis of the original Order was Member Gooch's determination that the applicant should have brought her own claim for compensation and because she did not, she was not entitled to retain the amount from the bond.
4. My reasoning is slightly different being that I am not satisfied that the evidence supports the applicant's submission that the parties formed an agreement to the effect that the respondent would pay a higher rate of rent if he left before the expiry of four months.
5. Nevertheless, for the reasons outlined above, I consider the original Order was the correct and preferable order.
6. Accordingly, I will affirm the original Order.

1. The Tribunal grants leave to apply for internal review.
2. The Tribunal affirms the decision under review.

[1] [1985] UKHL 4; (1985) AC 809

[4] [1959] HCA 45; (1959) 101 CLR 209.

[6] Radaich v Smith supra at p 213 (Dixon CJ), 214 (McTiernan J), 217 (Taylor J), 221 (Menzies J), 222 (Windeyer J).

[8] Brendan Edgeworth, Butt's Land Law (Thomson Reuters Lawbook Co, 7th ed, 2017) 306-307.

[9] Tronnolone v Edwards and Bryan [2016] SACAT 27 at para 14.

[10] McColl v Hearse [2016] SACAT 38 (8 July 2016) paras 21 - 27.

[11] Street v Mountford, per Lord Templeman supra at p 293.

[12] Section 53(1) of the Act states that the only payments which can be required to be paid under a residential tenancy agreement are rent and a bond.

[13] It is an offence for a landlord to receive a bond and not transmit it to the Commissioner within 48 hours: s 62(1) of the Act.