Bayfield v Everall

NCAT Appeal Panel|2016-04-14

Introduction

On 6 July 2015, the appellant (landlord) and respondents (tenants) entered into a residential tenancy agreement in respect of a property at St Ives, New South Wales. The term of the agreement was for twelve months commencing on 1 August 2015. The agreement was generally in the form of the Residential Tenancy Agreement set out in Schedule 1 of the Residential Tenancies Regulation 2010 (the Regulation).
After receiving the keys and taking possession but prior to occupation of the rental property, the tenants alleged that the landlord was in breach of clause 18 of the agreement. This required the premises to be in a reasonably clean and fit condition to live in, the light fittings in the premises to be working and the premises to be in a reasonable state of repair considering the age of, the rent paid for and the prospective life of the premises. The tenants purported to terminate the agreement.
Clauses 41 and 42 were deleted from the agreement. Special condition 2 of the agreement was in the following terms: "2. Should the lessee wish to vacate the property prior to the expiration of the said lease he/she will create a penalty and agree to pay the following regulatory charges: a.) Owner's lease preparation fee, b.) Paying a fee equivalent to one/two weeks rent plus GST, c.) Paying all advertising expenses, d.) Continue to pay rent until the property has been re-let or the lease has expired, whichever occurs first."
On the purported termination of the agreement by the tenants, the landlord entered into a residential tenancy agreement with new tenants on 14 August 2015 with commencement of the fixed term on 1 September 2015. The landlord charged the tenants rent up until the commencement of the fixed term. The landlord retained the sum of $5,568 which had already been paid pursuant to Special Condition 2d.).
The tenants by their application to the Tribunal dated 7 October 2015 sought a refund of the sum of $5,568. They said that the landlord had misrepresented the state of the premises to them in breach of s 26 of the Residential Tenancies Act, 2010 (the Act). As understood by the Tribunal the tenants also made application pursuant to s 190 of the Act on the ground that the landlord had breached the residential tenancy agreement and in particular clause 18.

Appeal

In the notice of appeal the landlord sought leave to appeal on the grounds that the decision was incorrect. She said that the break-lease fee of $5,568.00 was the landlord's entitlement and that "the orders were based on incorrect details as per special conditions of the lease". The landlord also sought leave to appeal on the basis that the decision was inconsistent with previous decisions made by tribunals in similar circumstances. The landlord sought orders for the tenants to pay rent up until the date on which the new tenants took occupation of the premises, rather than the date on which the lease with a new tenant was entered into.
In their reply to the appeal, the tenants stated that they should not have to pay rent after the property had been re-let by the landlord upon entering into a residential tenancy agreement with a new tenant. The tenants said that special condition 2d.) of the lease provided that liability for rent ceased on the date that the property was re-let and that the property was deemed to be re-let on the date the new tenancy agreement was signed.
The appeal was heard on 14 April 2016. The landlord was represented by her real estate agent, Mr Wiseman. The tenants appeared in person.
Both parties made submissions in the appeal hearing. After reserving to consider the matter, the Appeal Panel called for written submissions to be provided by the parties as to: 1. whether special condition 2d.) was void by reason of the operation of section 21 of the Act or for any other reason; and 2. the consequence of special condition 2d.) being void for the disposal of the appeal. Both parties provided further submissions in writing.

Jurisdiction

This is an appeal from a decision of the Tribunal in the Consumer and Commercial Division. Section 80 of the Civil & Administrative Tribunal Act, 2013 (NSW) (CAT Act) governs internal appeals from decisions of a division of the Tribunal to the Appeal Panel. Section 80 relevantly provides: "80 Making of internal appeals (1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made. Note : Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27 (1). (2) Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance-with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance-as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. …"
The decision from which the landlord is seeking to appeal was not an interlocutory decision. Accordingly, the appeal might be made as of right on a question of law or otherwise with leave. The landlord has sought such leave. She does not expressly seek to appeal on a question of law.
It is apparent from the notice of appeal, the reply and the parties' submissions to which we shall refer that the contest between the parties effectively concerns whether a correct award of damages had been made having regard to Special Condition 2 and the operation of the Act.
The relevant finding in the Tribunal below is contained at paragraph 8 of the Reasons which reads: "8. The landlord provided a copy of the residential tenancy agreement, with the subsequent tenants. The new tenants entered into that agreement on 14 August 2015 with the commencement of the fixed term on 1 September 2015. The landlord charged the applicant rent up until the commencement of the fixed term of the new lease on 1 September 2015. However special condition 2d.) only requires the tenant to continue to pay rent until the property has been "re-let". The Tribunal finds from the lease provided that the property was re-let on 14 August 2015 when the parties entered into the agreement and that the landlord was only entitled to charge the tenant rent up until that date. In that regard the Tribunal finds that the tenant should be refunded the amount of $2,380 which is a refund of the overpaid amount for seventeen days."
The finding relies upon the Tribunal's construction of the word "re-let" to mean entry into a new lease rather than commencement of the fixed term of the new lease. What is the proper construction of the term is a question of law.
The Notice of Appeal does not articulate any question of law upon which an appeal to the Appeal Panel lies as a matter of right. As the Appeal Panel found in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [11] it is necessary that any question of law from which the right to appeal arises be stated with precision. In that decision at para 12 the Appeal Panel stated: "12. In circumstances where the Appellants are not legally represented, it is apposite for the Tribunal to approach the issue by looking at the grounds of appeal generally. It is necessary for the Appeal Panel to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations that might arise to the Respondent."
In our view, although not articulated precisely in that way, the grounds of appeal sufficiently identify the question of law to which we have referred. Further on appeal the parties have been afforded the opportunity to address the question of the proper construction of Special Condition 2d.) and its consequences and have done so.
To the extent that it will be necessary to consider an application for leave to appeal on other grounds Clause 12 of Schedule 4 to the CAT Act requires the Appeal Panel to be satisfied of certain matters when considering an application for leave to appeal from a decision of the Consumer & Commercial Division. That clause provides: "12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). Note : Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds. (2) Despite section 80 (2) (b) of this Act, an internal appeal against a Division decision may only be made on a question of law (as of right) and not on any other grounds (even with leave) if: (a) the appellant is a corporation and the appeal relates to a dispute in respect of which the Tribunal at first instance had jurisdiction because of the operation of Schedule 3 to the Credit (Commonwealth Powers) Act 2010 , or (b) the appeal is an appeal against an order of the Tribunal for the termination of a tenancy under the Residential Tenancies Act 2010 and a warrant of possession has been executed in relation to that order. …"
"Division decision" is defined in clause 1 of Schedule 4. It includes the decision of the Consumer & Commercial Division when it is exercising functions under the Residential Tenancies Act by reason of the definitions of "the Division" and "Division function" in clause 1 and the provisions of clause 3(1) of Schedule 4.
In the Notice of Appeal the landlord stated that the reason why the Appeal Panel should grant leave to appeal against the decision is "decision made on wrong basis & inconsistent with previous decisions made by NCAT in similar circumstances".
In its application for leave the landlord is required to set out the basis upon which it says the decision under appeal was not fair and equitable. In this instance the landlord stated: "Decision contrary to tenancy agreement & inaccuracy of break lease fee, assumed by NCAT."
She further stated in respect of whether the decision was against the weight of the evidence: "A full dossier of all paperwork relevant to tenancy." (sic)
In her application she said that the Tribunal should have given weight to the evidence because: "(1) Special conditions of tenancy; (2) Details of our claim page 141."
That page sets out a calculation of the landlord's asserted loss comprising rent from 1 August 2015 to 31 August 2015 ($4,340), re-letting fee ($1,078) and advertising ($150) a total of $5,568.
The landlord does not seek leave to appeal on the ground of new evidence being available.
The factors to be taken into account by the Appeal Panel when considering whether a "substantial miscarriage of justice" has occurred giving rise to exercise of a discretion to grant leave are set out in Collins v Urban [2014] NSWCATAP 17 at paras. [70] - [79]. The general considerations apposite to a grant of leave are set out at paras. [80] - [84]. The grounds to which we have been referred by the landlord go to the question of law which we have identified. In view of the decision we have come to it is unnecessary to consider the question of leave on other grounds.

Validity of Special Condition 2

In addition to the question of law which we have identified the question arose during the hearing of the appeal whether special condition 2d.) was void by operation of s 21 of the Act or any other reason. This is also a question of law. Although it was not raised before the Tribunal at first instance the determination of the appeal upon the basis of the construction of a special condition which was void as a matter of law would result in a miscarriage of justice. The question and its consequences for the appeal have been the subject of submissions by the parties.
There was no challenge in the appeal to the finding of abandonment or that the landlord did not breach the Act. As we have indicated, the only question was whether a correct award for damages had been made. In their further written submissions the tenants said that they did not challenge the orders made by the Tribunal dated 19 January 2016. They did repeat their initial submissions that a valid termination notice had been given (rather than the premises being abandoned). They said more specifically that a notice had been given in terms of s 98(1) of the Act regarding the landlord's asserted breach which the landlord failed to address in terms of s 105 of the Act as a result of which the landlord was not entitled to any fees, whether a break fee, penalty or otherwise.
The further written submissions invited by the Tribunal went to the discrete issue of the validity of Special Condition 2d.) which purported to fix the landlord's entitlement and the way in which it was calculated. In effect, this clause was in substitution for what the Act otherwise permitted under s 107. The parties were not invited to re-agitate their positions generally. The orders made by the Tribunal and based upon its finding of abandonment, were not challenged by the tenants in the notice of appeal or the reply or on the hearing of the appeal.
The parties are not legally qualified and are self-represented. The underlying facts including the terms of the agreement are beyond controversy. The parties were given an opportunity to and did make submissions about the validity of Special Condition 2d.). Indeed the tenants made submissions about the other sub-clauses in Special Condition 2 and generally as to the validity of the Special Condition. The Tribunal is in a position to dispose of the appeal taking into account that issue without further evidence or otherwise delaying the finalisation of the proceedings.
Accordingly, the issues to be determined on appeal are: 1. Whether Special Condition 2 is void by reason of the operation of s 21 of the Act or some other reason. 2. If so, to what relief if any is the landlord entitled. 3. If not, what is the proper construction of Special Condition 2. 4. To what relief if any is the landlord entitled.

Relevant legislation

Section 19 of the Act provides: "19 Prohibited Terms (1) A residential tenancy agreement must not contain a term of a kind set out in this section or prescribed by the regulations for the purposes of this section. (2) Terms having the following effects must not be included in a residential tenancy agreement: … (d) that, if the tenant breaches the agreement, the tenant is liable to pay all or any part of the remaining rent under the agreement, increased rent, a penalty or liquidated damages, …"
Section 21 of the Act provides: "21 Inconsistent and prohibited terms void (1) A term of a residential tenancy agreement is void to the extent to which it: (a) is inconsistent with any term included in the agreement by this Act or the regulations, or (b) is prohibited by this Act or the regulations. (2) The Tribunal may, on application by a landlord or a tenant, make an order declaring that a term of a residential tenancy agreement is void or partly void if satisfied that the term is inconsistent with any term included in the agreement by this Act or the regulations or is prohibited by this Act or the regulations."
Section 106 of the Act provides: "106 Abandoned premises (1) The Tribunal may, on application by a landlord, make an order declaring that the tenant abandoned the residential premises on a specified day. (2) The tenant is taken to have abandoned the residential premises on the specified day. (3) The landlord may take immediate possession of residential premises that have been abandoned by the tenant if there are no remaining occupants. Note : The residential tenancy agreement is terminated if a tenant abandons the residential premises (see section 81 (4) (d)). (4) In determining whether a tenant has abandoned the residential premises the Tribunal may consider (but is not limited to considering) the following: (a) the failure by the tenant to pay rent under the residential tenancy agreement, (b) any evidence that the tenant no longer resides at the premises, any failure by the tenant to carry out any obligations relating to the residential premises under the residential tenancy agreement."
Section 107 provides: "107 Landlord's remedies on abandonment (1) The Tribunal may, on application by a landlord, order a tenant to pay compensation to the landlord for any loss (including loss of rent) caused by the abandonment of the residential premises by the tenant. (2) The landlord must take all reasonable steps to mitigate the loss and is not entitled to compensation for any loss that could have been avoided by taking those steps. This subsection does not apply in the case of a fixed term agreement that provides for the payment of a break fee. (3) The compensation payable by a tenant under this section in respect of a fixed term agreement is the amount of the applicable break fee for the tenancy, if the agreement provides for the payment of a break fee. (4) The "break fee" for a fixed term agreement for a fixed term of not more than 3 years is: (a) an amount equal to 6 weeks rent if less than half of the fixed term had expired when the premises were abandoned, or (b) an amount equal to 4 weeks rent in any other case. (5) The "break fee" for a fixed term agreement for a fixed term of more than 3 years is the amount set out in subsection (4) or, if an amount is specified in the agreement, the amount specified. An agreement must not specify a break fee exceeding the amount (if any) specified by the regulations. (6) The amount of any money paid by a tenant to a landlord on terminating a fixed term agreement before the end of the fixed term or before otherwise abandoning the premises (other than money previously due to the landlord under the residential tenancy agreement) is to be deducted from any amount payable to the landlord under this section. (7) This section does not prevent a landlord from obtaining an occupation fee under Division 2 of Part 6 for goods left on the residential premises."
Section 219 provides: "219 Contracting out prohibited (1) A term of any residential tenancy agreement, contract or other agreement is void to the extent that it purports to exclude, limit or modify the operation of this Act or the regulations or has the effect of excluding, limiting or modifying the operation of this Act or the regulations. (2) A person must not enter into any contract or other agreement, with the intention, either directly or indirectly, of defeating, evading or preventing the operation of this Act or the regulations. (3) A landlord's agent must not enter into any contract or other agreement with the intention, either directly or indirectly, of obtaining exclusion from or indemnity for personal liability for any act on behalf of the landlord that renders the landlord's agent liable for an offence under this Act Maximum penalty: 20 penalty units."
Schedule 1 of the Regulation provides for the standard form of a residential tenancy agreement. There is contained in the standard form after clause 40A the following: "ADDITIONAL TERMS [Additional terms may be included in this agreement if: (a) both the landlord and tenant agree to the terms; and (b) they do not conflict with the Residential Tenancies Act 2010, the Residential Tenancies Regulation 2010 or any other Act, and (d) they do not conflict with the standard terms of this agreement. ANY ADDITIONAL TERMS ARE NOT REQUIRED BY LAW AND ARE NEGOTIABLE.] ADDITIONAL TERM - BREAK FEE [Cross out this clause if not applicable] 41. The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of the following amount: 41.1 if the fixed term is for 3 years or less, 6 weeks rent if less than half of the term has expired or 4 weeks rent in any other case, or 41.2 if the fixed term is for more than 3 years, [specify amount]. This clause does not apply if the tenant terminates the residential tenancy agreement early for a reason that is permitted under the Residential Tenancies Act 2010. Note. Permitted reasons for early termination include destruction of residential premises, breach of the agreement by the landlord and an offer of social housing or a place in an aged care facility. Section 107 of the Residential Tenancies Act 2010 regulates the rights of the landlord and tenant under this clause. 42. The landlord agrees that the compensation payable by the tenant for ending the residential tenancy agreement before the end of the fixed term is limited to the amount specified in clause 41 and any occupation fee payable under the Residential Tenancies Act 2010 for goods left on the residential premises.

Consideration and findings

In her written submissions the landlord made reference to section 21 which we have set out above. She submitted that the definition of "inconsistent" is: 1. Lacking in consistency, agreement or compatibility; at variance 2. Containing contradictory elements.
The landlord submitted that Special Condition 2d.) was clearly not void as it did not lack consistency with the tenancy legislation and was not at variance with the legislation and in no way did the clause contain contradictory elements.
The landlord submitted that the tenancy agreement represents a contractual agreement between two parties for the payment of a specific amount. She said that the subject tenancy agreement is in the standard form of residential tenancy agreement produced and maintained by the New South Wales Department of Fair Trading and that the additional terms clause located on page 9 of the tenancy agreement clearly states. "Additional Terms Additional terms may be included in this agreement if: (a) Both the landlord and tenant agree to the terms; and (b) They do not conflict with the Residential Tenancies Act 2010, the Residential Tenancies Regulation 2010 or any other Act; (c) They do not conflict with the standard terms of this agreement; (d) Any additional terms are not required by law and are negotiable."
The landlord submitted that in relation to the special condition that it has been acknowledged by both parties that they agree to the condition as the agreement has been signed; that the condition does not conflict with either the Act or regulations and that the condition does not conflict with the standard terms of the agreement.
Finally, the landlord submitted that the fact sheet produced by the New South Wales Department of Fair Trading on the topic of breaking a lease clearly states that "where there is a break fee in your agreement that is all you have to pay if you move out early. However if the landlord or agent find a new tenant quickly, it does not mean that you will get any of the break-fee back. It is a fixed fee."
The tenants submitted that section 107(1) of the Act allowed the Tribunal to order a tenant to pay a landlord compensation if the residential premises have been abandoned while section 107(3) provides for any such compensation to be limited to and specific to the amount of the applicable break-fee for the tenancy if the agreement provides for the payment of a break-fee. The tenants said that paragraph 41 of the agreement has been crossed out and the agreement makes provision for special conditions, more specifically the special condition 2 sub-clauses. The tenants submitted that special condition 2 does not create a break-fee as envisaged by the Act but it amounts to a penalty which is not permitted by the Act.
The tenants submitted that section 19 and section 21 create an environment in terms of which special condition 2 is void and that they are entitled to a full refund of the amounts paid by them.
In the alternative, the tenants submitted that special condition 2d.) was void by reason of the operation of section 21 of the Act. They also said that Special Condition 2b.) was void for uncertainty.
The tenants submitted that if part of the agreement is found not to be void they should only be liable for a maximum payment of $3,188.00 and that the landlord should refund the amount of $2,380.00 to them as ordered by the Tribunal.
As we have indicated clauses 41 and 42 were deleted from the agreement and Special Condition 2 added as a Special Condition.
The words of s 107 in their ordinary meaning provide as follows: 1. That compensation payable to a landlord for loss caused by the abandonment of the residential premises by the tenant can be ordered by the Tribunal (s 107(1)). 2. Where the agreement is for a fixed term providing for the payment of a break-fee the landlord is not required to take all reasonable steps to mitigate the loss (s 107(2)). 3. Where the agreement provides for the payment of a break-fee the compensation payable under s 107 is the amount of the applicable break-fee for the tenancy (107(3)). This amount is set out in s 107(4) for a tenancy of a fixed term of not more than 3 years to be an amount equal to 6 weeks' rent if less than half of the fixed term had expired when the premises were abandoned.
Section 107 provides for remedies upon abandonment. It does not otherwise permit the parties to agree a different remedy nor does it allow for compensation other than as provided for or calculated in accordance with that section.
In our view, the effect of s 107(4) is that to be operative as a break-fee term included in the tenancy agreement directed towards compensation for abandonment of a lease for a fixed term of not more than 3 years where less than half of the fixed term had expired the term must require payment of the amount specified in s 107(4). This view is supported by the terms of clause 41 in the form of the residential tenancy agreement set out in Schedule 1 of the Regulation to which we have referred. Clause 41.1 mirrors the operation of s 107(4).
This position is to be contrasted with a break-fee term in a lease with a fixed term for more than 3 years. Section 107(5) provides that in those circumstances the break-fee is the amount set out in sub-section 4 or if an amount is specified in the agreement the amount specified (our emphasis). There is no provision allowing the parties to specify an amount other than the break-fee in s 107(4) where the lease is for a fixed term of not more than 3 years. The break-fee provision for leases of a term greater than 3 years is mirrored in optional condition 41.2 which provides as we have indicated that the parties might specify an amount for the break-fee in those circumstances.
Special Condition 2 purports to operate so as fix the amount payable as damages for abandonment by reference to a formula specified in the wording which is inconsistent with the break-fee defined in s 107(4). Accordingly, it cannot operate as a break-fee term within the contemplation of s 107(4).
The next question is whether or not Special Condition 2 while not operating as a break-fee term is permissible as a liquidated damages clause fixing the amount of the landlord's compensation payable under s 107(1). The landlord submitted that as clause 41 of the lease agreement was deleted and replaced by Special Condition 2d.) she was entitled to the amounts already paid to her. She said that the Special Condition does not conflict with the Act or Regulations. For the reasons which follow we do not accept those submissions.
Although it might be termed a liquidated damages clause Special Condition 2 is not permissible. It is inconsistent with s107(1) and (2).
Where there is no break-fee term s 107(1) provides that the landlord might obtain an order for compensation for loss caused by the abandonment of the premises. As the agreement did not provide for a break-fee s 107(2) is operable meaning that the landlord is required to take all reasonable steps to mitigate the loss.
Conversely, calculation of payment under Special Condition 2 does not include a requirement that the landlord take all reasonable steps to mitigate its loss. To that extent it is inconsistent with the basis for calculation of loss where there is no break-fee term under s 107. In our view it should be held to be void under s 21 of the Act. Additionally, by reason that it purports to limit or modify the operation of s 107 by removing the landlord's obligation to mitigate, Special Condition 2 would also be void under s 219 of the Act.
Further, Special Condition 2(b) requires payment of a fee "equivalent to one/two weeks rent plus GST". Leaving to one side the question of ambiguity, which it is not necessary to consider for present purposes, the Special Condition purports to provide for the payment of an amount in addition to actual loss suffered by the landlord. This would introduce a liability for the payment of a charge not contemplated by or calculated differently from that specified in s 107(1) as a component of the landlord's loss. To that extent also it is inconsistent with the operation of s 107(1) and in our view is void pursuant to s 21 or in the alternative s 219 of the Act.
In her submissions the landlord referred the Appeal Panel to the decision of Nasme v Somova (Tribunal reference 14/51847). In that matter the landlord sought the payment of a break-fee. The landlord submitted that the decision determined that damages calculated under a break-fee run until the date of occupation by the new tenant. In light of our finding Special Condition 2 is void it is unnecessary to consider this submission. In any event, upon our reading of the reasons, the Tribunal made a consent order that the tenant pay arrears of rent and water usage but did not allow the landlord's claim for the break-fee. The reasons do not assist the landlord.
The operation of the regime under s 107 was considered in passing in Haines v Chen; Chen v Haines (2016) NSWCATCD 44 at [73] - [75] in which Special Condition 2d.) in identical terms was found by the Tribunal to be a prohibited term under the Act. In that decision the Tribunal determined the clause to be invalid under s 19(2)(d) of the Act to the extent that it required payment of more than the losses recoverable pursuant to s 107. It also expressed the view at [75] that: "The fee equivalent to one/two weeks rent plus GST" is clearly invalid. The decision did not give reasons in further detail.
In circumstances in which we have found Special Condition 2 to be void as a whole it is unnecessary to consider the tenants' submission that Special Condition 2d.) is void as a penalty.

Calculation of loss

As we have indicated, s 107 of the Act provides for landlord's remedies on abandonment. We cannot accept the tenants' submissions that invalidity of Special Condition 2 would give rise to an entitlement to a full refund. In the circumstances to which we have referred where the underlying agreement does not require the payment of the break-fee under s 107(4), the landlord is entitled under s 107(1) to an order for compensation for her loss. This is subject to s 107(2) requiring her to take all reasonable steps to mitigate her loss. She is not entitled to compensation for any loss that could have been avoided by taking those steps.
There is no contest that the tenants advised the landlord on 5 August 2015 that they wished to relinquish the tenancy and gave possession on 14 August 2015. The landlord was able to enter into a subsequent residential tenancy agreement with a new tenant on 14 August 2015 to commence on 1 September 2015. We are satisfied that the landlord in those circumstances took all reasonable steps to mitigate her loss. There was no evidence to the contrary nor were any submissions made to that effect by the tenants. The tenancy was for a fixed term of not more than 3 years. As the agreement does not provide for payment of the break fee specified in s 107(4), s 107(1) provides that the Tribunal may order the tenants to pay compensation to the landlord for any loss (including loss of rent) caused by the abandonment.
The incoming tenant entered into a new lease on 14 August 2015 with rent payable from 1 September 2015. The weekly rent was $980 being the same sum payable under the agreement by the tenants. Accordingly, the landlord's loss of rent is for the period 1 August 2015 to 1 September 2015 in the sum of $4,340 calculated as being 4 weeks and 2 days at $980 per week.
Additionally there was evidence that the landlord had incurred a re-letting fee in the sum of $1,078 and advertising costs in the sum of $150. The tenants did not contest the calculation of these sums conceding in their written submissions that upon Special Condition 2d.) being void that the landlord would be entitled to a lease preparation fee plus GST and all advertising expenses. We consider that the re-letting fee and the advertising expenses are a loss suffered by the landlord as a result of the abandonment of the premises. These fees would not have been incurred otherwise.
Upon this basis we find that the total loss suffered by the landlord is in the sum of $5,568. The tenants have paid that sum meaning that there is no money outstanding from the tenants to the landlord.
Section 81 of the CAT Act provides that in determination of an internal appeal the Appeal Panel may make such orders as it considers appropriate in light of its decision including that the decision under appeal be varied. Accordingly we make the following orders and declaration:

Orders 1. Order that the appeal be allowed. 2. Order that the decision under appeal be varied by substitution of the following declaration and order: 1. Declare that Special Condition 2 of the Residential Tenancy Agreement dated 6 July 2015 is void. 2. Order that the respondents pay to the appellant compensation for loss caused by abandonment assessed in the sum of $5,568. 1. The Tribunal notes that the sum referred to in Order 2(b) has been paid.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 October 2016

Residential Tenancies Regulation 2010(NSW)

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Judgment (9 paragraphs)

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