This is an application by Sreemoth Bhikkhu (the tenant) for an order from the Tribunal pursuant to section 175 of the Residential Tenancies Act 2010 (the Act) that will require Rental Bond Services to pay him his Rental Bond. This application was made to the Tribunal on 29 February 2016 (the Application).
The Application was listed before the Tribunal for conciliation and hearing 23 March 2016. Mr Bhikkhu attended the hearing in person. Ms Djuricic, Managing Agent, attended the hearing on behalf of the landlords. Efforts of the parties to resolve the dispute in conciliation with the assistance of a Tribunal conciliator were not successful.
The dispute involves a relatively simple rental bond claim. The parties told the Tribunal they had the evidence upon which they would rely at the hearing of the matter with them, and that this had been exchanged in conciliation. Mr Bhikkhu urged the Tribunal to hear the matter at its first listing because he was experiencing financial difficulty.
Having regard to these matters and to the guiding principle governing the Tribunal's practice and procedure set out in section 36 of the Civil and Administrative Tribunal Act 2013 which is to facilitate the just, quick and cheap resolution of the real issues in the dispute, the Tribunal determined to hear the application at its first listing.
The Respondent did not, at the time of the hearing, raise an objection to the Tribunal embarking upon hearing the matter. On 24 March 2016, after receiving notice that the Tribunal's decision had been reserved, the Managing Agent wrote to the Tribunal to request that the application be referred for "formal hearing." This course was not open to the Tribunal, as the matter had already been heard.
The dispute arises from a Residential Tenancy Agreement (RTA) that commenced on 26 December 2012. It was for a fixed term of six months. The tenancy continued as a periodic tenancy after the end of the fixed term. The RTA was in standard form. The tenancy came to an end and vacant possession was given to the landlord on 3 February 2016. The rent payable under the RTA was $400.00 per week.
Bhikkhu v Colvin Family Superannuation Fund [2016] NSWCATCD 29 | Case summary | Zoe
The RTA required the tenant to provide the landlord with a rental bond in the amount of $1,600.00 which is the equivalent of four weeks rent. This rental bond had been lodged with Rental Bond Services. As at the date of the hearing the rental bond remained with Rental Bond Services.
The landlord's claim upon the tenant's rental bond has three elements:
1. a claim for compensation for rent arrears of 22 days for the period 12 January 2016 to 3 February 2016 in the amount of $1257.15;
2. a claim for compensation for the costs of replacing the lock and keys of the garage door in the amount of $170.00; and
3. a claim for compensation for the cost of replacing a panel of a built-in bedroom mirror in the amount of $350.00.
Mr Bhikku gave oral evidence under affirmation. He submitted into evidence copies of his bank account records for the period 22 October 2015 to 29 January 2016, and copies of email correspondence between him and the Ms Djuricic. He also made a written submission to the Tribunal.
Ms Djuricic gave oral evidence under oath. She submitted into evidence a Managing Agency Agreement evidencing her authority to act on behalf of the landlord, a copy of the Incoming Condition Report agreed between the parties at the commencement of the tenancy, a copy of the final inspection report completed by the Managing Agent at the end of the tenancy, photographs of keys issued to the tenant at the commencement of the tenancy, and those that were returned by the tenant, a photograph of the alleged damage to the bedroom built-in mirror, a quotation for the replacement of the garage lock and key and replacement of the mirror, a copy of the tenant's rent trust ledger report for the period of the tenancy, which includes a substantial period when the tenancy was managed by another agency, and copies of email and other correspondence between the current Managing Agent and the tenant.
The Tribunal's power to make an order in relation to the payment of the rental bond is found in section 175 of the Act. Pursuant to sub-section 175(1) of the Act, the Tribunal may, (relevantly) on the application of a landlord make an order as to the payment of the amount of the rental bond. Pursuant to sub-section 175(3) of the Act an application for an order pursuant to section 175 of the Act must be made within the time period allowed by Regulation 22(8) of the Residential Tenancies Regulation 2010, which is within six months after the bond is paid. As noted above, in this case the tenant's rental bond has not been paid out. Accordingly, the Tribunal has jurisdiction to deal with this application.
Section 166 of the Act sets out the matters that may be the subject of a rental bond claim by a landlord:
166 Matters that may be subject of rental bond claim
(1) A landlord is entitled to claim from the rental bond for the residential tenancy agreement any of the following:
(a) the reasonable cost of repairs to, or the restoration of, the residential premises or goods leased with the premises, as a result of damage (other than fair wear and tear) caused by the tenant, an occupant or an invitee of the tenant,
(b) any rent or other charges owing and payable under the residential tenancy agreement or this Act,
(c) the reasonable cost of cleaning any part of the premises not left reasonably clean by the tenant, having regard to the condition of the premises at the commencement of the tenancy,
(d) the reasonable cost of replacing locks or other security devices altered, removed or added by the tenant without the consent of the landlord,
(e) any other amounts prescribed by the regulations.
(2) This section does not limit the matters for which the landlord may claim from the rental bond for a residential tenancy agreement
The rental bond is the property of the tenant and it must be returned to the tenant at the end of the tenancy unless and until the landlord can establish a right to some or all of the bond money by proving loss or damage as a result of conduct in the course of the tenancy for which the tenant is liable. The landlords bear the onus of proof in any claim upon the tenant's rental bond: Volfneuk v McCardle (2002) NSWCTTT 260.
Prior to the listing of this Application, apparently in an effort to settle the dispute, the tenant agreed to forfeit from his rental bond the costs claimed by the landlord for the replacement of the garage lock and key and the costs of replacing the bedroom built-in mirror. The Managing Agent submitted an email exchange between the Managing Agent and the tenant which evidences that offer. The tenant also refers to this agreement in his written submission. In conciliation conducted on the day of the hearing, the tenant appears to have repeated that offer of settlement. However, the Managing Agent refused to accept these offers of settlement.
The Managing Agent contends before the Tribunal that these offers of settlement should be regarded by the Tribunal as "admissions" by the tenant that he owes the landlord compensation in the amounts claimed for these items and that landlord is therefore automatically entitled to an order to this effect from the Tribunal. This understanding is misconceived.
The tenant made offers of settlement to the landlord which were rejected by the Managing Agent. The landlord cannot retain the benefit of the offers made by the tenant and pursue the tenant for the remainder of the claim. This is a contested application and the Tribunal must determine its outcome according to law on the evidence before it. Prior offers of settlement up to the commencement of the hearing are not evidence of the tenant's liability to pay compensation to the landlord. Any entitlement of the landlord to compensation must be established according to law with evidence.
In his written submission to the Tribunal, the tenant contends that the Tribunal should make an order that the landlord can retain $520.00 from his Rental Bond towards the costs claimed for the replacement of the garage lock and key and the built-in mirror, but it should order that the balance of the rental bond be refunded to him. While the Tribunal takes this submission into account, it is not bound by it. It must determine the application according to law. It must also have regard to the fact that the tenant is not legally represented, and that he appears to be under a misapprehension as to the extent of his legal obligations to the landlord. It would not be fair for the Tribunal base a decision on a submission made by the tenant that is based upon a misunderstanding of the applicable law.
The landlord claims that at the end of the tenancy the tenant owed rent for the period 12 January 2016 to 3 February 2016 (a period of 22 days) in the amount of $1,257.15. The tenant vehemently denies this and asserts that all rent due in the course of the tenancy has been paid.
It is necessary to provide some background to the dispute. From the commencement of the tenancy up to on or about 30 September 2015 the tenancy was managed by an entity trading as Haus Real Estate. The Managing Agent advised the Tribunal that Haus Real Estate was and remains the subject of a NSW Fair Trading audit intervention which resulted in the appointment of Devine Real Estate (the current Managing Agents) from 1 October 2015. It appears that this audit intervention has disclosed misappropriation of funds in respect of at least some tenancies under management.
It is now common ground between the parties that from 1 October 2015 up to the end of the tenancy the tenant paid rent regularly in accordance with the RTA. As outlined following, this has not been the case during the whole of the dispute. However, the tenant has submitted bank account records that evidences this, and the Managing Agent's most recent iteration of its Rent Trust Ledger Report also evidences this.
The dispute now turns on the landlord's contention that the tenant was in arrears of rent as at 1 October 2015 when Devine Real Estate assumed responsibility for the management of the tenancy. The tenant vehemently denies that he was in arrears of rent at the time the current Managing Agent assumed responsibility for the management of the tenancy.
The Managing Agent has submitted into evidence a copy of Haus Real Estate's Rent Trust Ledger for whole of the period of the tenancy up to 22 September 2015. It purports to report that as at that date the tenant had paid rent up to and including 8 September 2015. In other words, it reports that as of that date, the tenant was 14 days ($800.00) in arrears of rent. Haus Real Estate's ledger does not record rent payments made by the tenant after that date.
There is no record in Haus Real Estate's Rent Ledger of the tenant ever having been issued with an arrears warning letter or rent arrears termination notice. The tenant denies that he was in arrears of rent as at 22 September 2015 or at any time subsequently.
By letter dated 1 October 2015 Devine Real Estate wrote to the tenant to advise that it had been instructed by NSW Fair Trading to assume management of the tenancy. That letter set out some basic details about the tenancy and included a statement to the effect that as at that date rent was paid up to 8 September 2015. The letter also set out new account details for the payment of rent.
The tenant contends that he continued to pay rent on a regular basis after 22 September 2015 and that he was not in arrears as at 1 October 2015. He says that he first paid rent into Devine Real Estate's Rent Trust Account by funds transfer on 22 October 2015. From 22 September 2015 up to that date he says he continued to make payments to the Haus Real Estate Account. However, it would appear from a trust account reconciliation performed by Devine Real Estate on or about 14 January 2016 that the tenant continued to pay rent into the Haus Real Estate Trust Account up until 12 January 2016.
When the dispute about the tenant's alleged rent arrears first crystallised, it appears that the Managing Agent attributed the arrears to the tenant's failure to pay rent between 1 and 22 October 2015. In this respect, there is an undated email in evidence from Ms Djuricic to the tenant which states in part "It looks like rent was not paid during the period when Devine took over from Haus. As soon as I have reconciled, I will let you know as I have to go through each payment individually and cross reference everything."
However, based upon its trust account reconciliation of on or about 14 January 2016, the Managing Agent abandoned any contention that the tenant's alleged rent arrears arose from non-payment of rent during the period of their management. The Managing Agent asserted instead that the tenant's rent account was in arrears when it took over management.
In the course of the dispute about the tenant's alleged rent arrears the current Managing Agents have asserted various arrears figures to the tenant. As already noted, by letter to the tenant dated 1 October 2015, the Managing Agent asserted that the tenant was 22 days in arrears of rent ($1,257.15). By letter dated 14 December 2015 to the tenant, the Managing Agent claimed that the tenant was 48 days in arrears of rent ($2,742.85). On 11 January 2016, the Managing Agent notified the tenant that he owed rent of $2,000.00 as at that date. By email to the tenant dated 14 January 2016 the Managing Agent notified the tenant that he was 22 days in arrears of rent as at that date ($1,257.14) and that rent in the amount of $2,457.14 would be payable until the nominated date of vacant possession. By letter dated 14 January 2016 to the tenant the Managing Agent asserted that the tenant was 37 days in arrears of rent as at that date ($2,114.28) and owed rent in the amount of $3,257.15 until the nominated date of vacant possession on 3 February 2016. On 3 February 2016 the Managing Agent notified the tenant by email that he owed rent of $2,457.14 as at that date. It appears that it was not until on or about 18 March 2015 that the Managing Agent rested on the rent arrears figure of $1,257.15 which is now pursued before the Tribunal (Managing Agent's email to tenant dated 18 March 2016).
It will be noted that this last figure constitutes a reversion to the rent arrears claimed on by the Managing Agent 1 October 2015 when it assumed management of the tenancy.
These confusing and conflicting claims about rent arrears have bewildered and infuriated the tenant, perhaps unsurprisingly.
In order to discharge its onus of proving the tenant's breach of the RTA by failing to pay rent in accordance with the RTA, the landlord must persuade the Tribunal on the balance of probabilities that the tenant's rent trust ledger report is accurate. In most cases that come before the Tribunal that is a relatively straightforward matter. It is not in this case.
Ultimately the current Managing Agent has ceased to contend that the tenant has accrued rent arrears in the course of its management of the tenancy. In any event, no breach of the RTA by the tenant in failing to pay rent in accordance with the RTA during this period has been proved.
For the landlord to succeed in this aspect of the claim, the Managing Agent must now prove on the balance of probabilities that the Rent Trust Ledger kept by the previous Managing Agent is accurate. In this respect, the Managing Agent cannot do more than merely submit this Rent Trust Ledger into evidence. It is not in a position to bear witness as to its accuracy. The previous Managing Agent has been removed following an audit of its accounts which has disclosed misappropriation of funds from some of its accounts. While there is no explicit evidence of misappropriation of funds from the tenant's account this is a relevant circumstance which may be given some (though certainly not decisive) weight in the Tribunal's assessment of the accuracy of the previous Managing Agent's Rental ledger.
Other factors that must be attributed some weight in the balance of probabilities are the tenant's vehement denial that he had fallen into rent arrears, and the absence of any evidence that the former Managing Agent had ever notified or warned the tenant that he was in arrears of rent.
Even if the accuracy of the previous Managing Agent's Rent Trust Ledger were to be accepted by the Tribunal, it would only prove that the tenant was 14 days in arrears of rent ($800.00) as at 22 September 2016. That is not the claim now pursued before the Tribunal by the current Managing Agent.
The current Managing Agent has contended for various figures of rent arrears since assuming management of the tenancy. It has progressively had to abandon those claims as it has identified payments of rent made by the tenant to the previous Managing Agent's account. These wildly different claims give rise to substantial doubt about the accuracy of the current Managing Agent's Rent Ledger.
It was squarely put to Ms Djuricic that it was open to the Tribunal on the evidence before it to find that the Rent Trust Ledger Reports relied upon by the landlord were not accurate and that the tenant's evidence that he had paid all rent owed was to be preferred. In response, Ms Djuricic submitted that the hearing ought to be adjourned and the tenant directed to file and serve his bank statements for the period of the tenancy to prove his contention that he had paid rent in accordance with the RTA. That submission cannot be accepted. It would involve a reversal of the onus of proof that applies in a rental bond claim (and allegation of breach of the RTA), and it would amount to a fishing expedition by the landlord in the hope of finding evidence to repair the defects in its own evidence. This would not be fair to the tenant.
In all the circumstances I cannot be satisfied of the accuracy of either the previous or the current Managing Agent's Rent Trust Ledgers. The conduct of the previous Managing Agent, the inability of the current Managing Agent to bear witness to the accuracy of the previous agents rent record, the obvious errors in the posting of rent payments to the tenant's rent ledger during the period immediately following the assumption of responsibility by the current Managing Agent, and the wildly different claims made about the extent of the arrears owed by the tenant at various times in the course of them attempting to reconcile the tenant's account, create too strong a doubt. The landlord's claim for compensation for rent arrears has not been proved on the balance of probabilities. It must be dismissed.
The landlord claims the costs of removing and installing a new lock to the garage of the rented premises. The facts in relation to this claim are not in dispute between the parties. It is accepted that the tenant lost the key to the garage given him at the commencement of the tenancy. It is also accepted that that lock was undamaged but had to be replaced because the duplicate key to it had been lost or could not be retrieved from Haus Real Estate by the current Managing Agent.
It is a term of the standard form residential tenancy agreement, and section 70(3) of the Residential Tenancies Act 2010 that the tenant is liable for the costs of any replacement keys that may be required due to their loss or damage in the course of the tenancy. However, absent any special condition (which is not contended in this case) this obligation does not extend to the replacement of a lock when a key is lost.
In this case, the landlord's loss arises both because the tenant lost the key to the garage, and from the inability to retrieve the duplicate key from Haus Real Estate which meant that another key could not be cut. The tenant is not responsible for this second set of circumstances and is not liable to compensate the landlord for the loss incurred as a result of these circumstances.
Accordingly, the landlord has not established an entitlement to $170.00 in compensation for the costs of replacing the garage lock. Nevertheless, the landlord is entitled to a nominal amount equivalent to what it would have cost to replace the lost key if a master key had been available. In this respect I will allow the landlord $20.00.
The landlord claims the cost of replacing a panel of built-in mirror in bedroom 1 of the rented premises. In effect, the landlord claims that the tenant either intentionally, or negligently, caused damage to the mirror in breach of clause 133 of the standard form RTA (section 51(1)(d) of the Act). The Incoming Condition Report reports that the mirror panel was in undamaged condition at the commencement of the tenancy. The final inspection report notes a crack in the top left corner of the mirror panel. The tenant does not recall how the mirror acquired this damage but does not dispute its existence. It is open to me to find that the damage resulted from intentional or negligent conduct in the course of the tenancy for which the tenant is liable.
The landlord claims $350.00 in compensation for the cost of replacing the mirror panel. There is no evidence before the Tribunal in relation to the original cost of the built-in mirror or in relation to its age. It is accepted between the parties that the mirror predates the tenancy. It is therefore at least 4 years old, and judging from the photographs submitted by the Managing Agent it is likely to be older than that. For the purpose of this analysis, the Tribunal will assume that the mirror was at least 8 years old at the end of the tenancy. Given the age of the mirror and the absence of any evidence as to its purchase price the mirror only has a nominal depreciated value.
The landlord claims to be entitled to the full cost of replacing an asset with an advanced depreciated value with a new asset. The landlord is not entitled to claim compensation on this basis. The landlord is only entitled to claim the nominal depreciated value of the existing mirror. I will allow $25.00.
Conclusion
It follows from these findings that the landlord is entitled to an Order from the Tribunal pursuant to section 175 of the Act requiring Rental Bond Services to pay to him the sum of $45.00 from the tenant's Rental Bond. The balance of the Rental Bond is to be paid to the tenant.
P French
General Member
Civil and Administrative Tribunal of New South Wales
7 April 2016
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
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Decision last updated: 03 June 2016