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[2025] ACAT 62
General information, not legal advice.
ACT Civil and Administrative Tribunal
2025-09-19
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ACT CIVIL & ADMINISTRATIVE TRIBUNAL
BOWDERN V O’CONNOR (Residential Tenancies) [2025] ACAT 62 RT 13/2025 and RT 249/2025
Catchwords: RESIDENTIAL TENANCIES – Break lease fee clause -principles for calculating break fee – break fee charged in two components – failure to provide evidence of re-advertising costs – significant rental ledger error undetected for one month Lessor’s duty to mitigate loss – where tenant gave two months’ notice of termination – new tenancy commenced one month after termination date - delayed re-advertising and inspections – lost rent after two days was reasonably avoidable - set off against break fee Bond refund to tenant minus one day rent arrears – partial refund of break fee paid - tenant to make own arrangements for repayment of incorrect credit to managing agent – managing agent referred to regulatory authority
Legislation cited: Residential Tenancies Act 1997, ss 10, 27(1), 31, 38, Schedule 1, Schedule 2
Cases cited: Arsalan v Rixon [2021] HCA 40 Black & Anor v Jahan & Anor [2023] ACAT 73 British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rlys Co of London Ltd [1912] AC 673 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 Nichols v Amers Pty Ltd CAN 112 055 366 (No 2) [2020] ACAT 79 Powercor Australia Ltd v Thomas (2012) 43 VLR 220 Shao v Crown Global Capital Pty Limited [2023] NSWSC 820 TC Industrial Plant Pty Limited v Robert’s Queensland Pty Limited (1963) 180 CLR 130 Tuncel v Renown Plate Co Pty Ltd [1976] VR 501
List of Texts/Papers cited: Anforth et al, Residential Tenancies Law and Practice New th South Wales (The Federation Press, 8 ed, 2022) Wright, Principles of the Australian Law of Remedies (Lawbook Co 2020)
Tribunal: Senior Member E Morrison
Date of Orders: 12 September 2025 Date of Reasons for Decision: 12 September 2025 Date of Publication: 19 September 2025 AUSTRALIAN CAPITAL TERRITORY ) RT 13/2025 CIVIL & ADMINISTRATIVE TRIBUNAL )
BETWEEN: MARK BOWDERN Applicant/Lessor AND: KRISTINA O’CONNOR Respondent/Tenant AND: ACT RENTAL BONDS
TRIBUNAL: Senior Member E Morrison
DATE: 12 September 2025
ORDER After hearing from the parties, the Tribunal orders that:
And the Tribunal notes that: 1. In RT 249/2025, the Tribunal has made an order requiring the lessor to pay to the tenant the sum of $537.18, being a partial refund of the break fee.
……………………………….. Senior Member E Morrison AUSTRALIAN CAPITAL TERRITORY ) RT 249/2025 CIVIL & ADMINISTRATIVE TRIBUNAL ) BETWEEN: MARK BOWDERN Applicant AND: KRISTINA O’CONNOR Respondent
TRIBUNAL: Senior Member E Morrison
DATE: 12 September 2025
ORDER After hearing from the parties, the Tribunal orders that: 1. The lessor is to pay to the tenant the sum of $537.18 within 14 days of the date of this order, being a partial refund of the break fee.
And the Tribunal notes that: 1. In RT 13/2025, the Tribunal has made an order directing ACT Rental Bonds to release $86.43 of the bond to the lessor, and the remainder to the tenant.
……………………………….. Senior Member E Morrison REASONS FOR DECISION
Introduction 1. This decision relates to two residential tenancy matters that were heard together.
In both matters, the applicant was the lessor of a unit in Dickson (the lessor), and the respondent was a former tenant (the tenant). The property was managed by Independent Property Group (the managing agent) on behalf of the lessor.
The tenant gave 66 days’ notice to terminate the tenancy agreement during the fixed term. The lessor charged a break fee and sought a refund of the full bond. The tenant disputed both. The dispute was complicated by: (a) the managing agent’s early correspondence with the tenant, which relied on an incorrect interpretation of the break lease fee clause; (b) the break fee being charged in two components. The managing agent required the tenant to pay a ‘breach fee’ for re-advertising costs immediately upon receipt of the termination notice, and then ‘gap rent’ once a new tenant had been secured; and (c) two accounting errors and confusing record keeping by the managing agent, which made the rent ledger inaccurate and difficult to interpret.
There were three key issues to be determined: (a) how to calculate the break fee; (b) was the lessor entitled to charge the break fee in two components; and (c) did the lessor fail to take reasonable steps to mitigate its loss, and if so, should the amount to the paid by the tenant be reduced.
Background
On 27 June 2024, the parties entered into a residential tenancy agreement for a fixed term of 52 weeks from 24 July 2024 to 22 July 2025. Rent was $605 per week and payable fortnightly in advance. The tenant paid a bond of $2,160 which was lodged with ACT Rental Bonds.
The tenancy agreement incorporated an optional ‘break lease fee clause’ (the break fee clause) in the form set out in Schedule 2, section 2.1 of the Residential Tenancies Act 1997 (RT Act) as it then applied. The clause, extracted below, entitled the lessor to receive compensation for early termination of a fixed term tenancy agreement and prescribed a formula for calculating the amount payable.
On 9 September 2024, less than two months after the fixed term commenced, the tenant emailed the managing agent, giving notice that she had purchased a property and was terminating the tenancy. The notice gave a termination date of 14 November 2024 or 66 days. The tenant acknowledged she was terminating early and sought guidance on next steps.
Later that day, the managing agent replied by email, accepting the termination notice and scheduling the outgoing inspection for 14 November 2024. The email contained the following statement: As you have recently signed a fixed term, you will be liable to pay a breach fee of 1 week’s rent and up to 6 weeks of gap rent from the date you vacate the property or until the day before a new Tenant moves in, whichever is to come first. An invoice attached to the email required the tenant to pay a ‘breach fee’ of $605 by 23 September 2024.
On 10 September 2024, the tenant replied by email, stating: I understand the break fee is up to 6 weeks rent. Can I confirm what the upfront payment of one weeks rent is what it is due so soon? Can you point me to that additional fee in the rental agreement?
Later that day, the managing agent responded by saying: The invoice you received for a week’s rent due is to cover your breach fee. The gap rent of 6 weeks is separate to this amount. You can see more details on this in clause 17 of your Tenancy Agreement.
On 16 September 2024, the tenant replied by email, in which she: (a) disputed the lessor’s claim for 6 weeks’ ‘gap rent’ on the basis that the 66 days’ notice provided sufficient opportunity for the lessor to find a new tenant without any gap between tenants; (b) asserted there was no basis for charging one week rent in addition to the break fee of six weeks’ rent; and (c) acknowledged that even if a new tenancy agreement commenced on 15 November 2024, she was required under the break lease fee clause to reimburse the lessor’s reasonable expenses of advertising the property up to one week rent. The tenant advised she would pay that amount within seven days after receiving an invoice for those expenses.
Over the following week, the tenant and managing agent exchanged further emails in which the tenant again disputed the managing agent’s interpretation of the break fee clause, and requested evidence of the lessor’s reletting costs and a link to the online advertisement.
On 23 September 2024, the managing agent emailed the tenant, advising: The fees are to be charged only as the property is being re-advertised for rent. If this was not to be the case, there would be no break lease fee or gap rent charged. We have every intention to mitigate your loss as best we can. This has always been the case. It is general process to have a property advertised 3 weeks before a Tenant currently living in the property is to vacate as this assists to ensure it remains current on the market and we are able to gain as much interest as we can to fit in with the timeframes of potential Tenant’ searching for a new property. In this case, as you are breaking your lease, I had already pre-arranged to have the property re-advertised slightly early on 14/10/2024. After discussing further with our Accounts Team, I am unable to provide you with an invoice on re-advertising costs from All Homes as this includes other information on all aspects of our business as it is provided in bulk. I can confirm, the below fees are charged when having a property re-advertised. $550 + GST – Re-advertising Fee $1 week’s rent + GST – Re-letting Fee It is in everyone’s best interests to have the property rented as soon as we can, and it is my obligation to ensure both you and the Owner do not suffer from any unnecessary financial losses.
On 1 October 2024, the tenant paid $605 in response to the ‘breach fee’ invoice. However, the managing agent incorrectly receipted the payment as rent, which put the tenant’s rent balance into credit by an additional week.
On 14 October 2024, the managing agent advertised the premises on multiple online platforms including AllHomes, Domain and its own website. This was 42 days after accepting the termination notice. The advertised rent was $605 per week. The advertisement contained the same information and photos that had been used previously.
On 20 October 2024, the first ‘open home’ inspection was scheduled but did not proceed because the managing agent failed to attend.
On 27 October 2024, the first open home inspection took place. This was 49 days after accepting the termination notice.
On 30 October 2023, a second open home inspection took place.
On 8 November 2024, the tenant advised the managing agent she would not attend her outgoing inspection.
On 11 November 2024, the tenant paid $777.86 for rent. On the same day, the managing agent incorrectly credited $1,720 to the tenant’s rent account from an unrelated payee. The error was not detected until mid-December 2024.
On 14 November 2024, a third open home inspection took place.
On 14 November 2024, the outgoing inspection was conducted with no damage or repairs identified by the managing agent. The tenancy agreement terminated at 5pm.
On 22 November 2024, the lessor entered into a new tenancy agreement for the premises. The fixed term would commence on 13 December 2024 with rent payable at $600 per week. This meant there would be a gap of 28 days before rent would be payable under the new tenancy agreement.
On 26 November 2024, the managing agent informed the tenant that a new tenancy agreement had been signed and requested a final payment of $720 to cover ‘gap rent’ up to and including 12 December 2024.
On 27 November 2024, the tenant paid the $720 and asked for her bond to be returned. In reply, the managing agent advised the bond would be returned in full once the $720 cleared into its account. However, the bond refund was never processed. It also appears from the rental ledger that certain payments were split and receipted against different line items making it difficult to track what payments had been made and for what purpose.
On 16 December 2024, the managing agent advised the tenant there was a discrepancy in her rent ledger and asked her to pay a further $2,325. The tenant disputed the request and the parties exchanged several frustrated emails.
ACAT proceedings
The lessor submitted a bond refund application to ACT Rental Bonds. The tenant disputed the application and the matter was referred to ACAT as a rental bond dispute (RT 13/2025).
On 19 February 2025, the tribunal conducted a preliminary conference. The matter remained unresolved and was listed for hearing.
It is important to note that, in a rental bond dispute, the ACAT’s power to make orders for payment of money is limited to the disputed sum and the deductable costs listed in section 31 of the RT Act.
On 5 March 2025, the lessor filed a separate ACAT application (RT 249/2025). The lessor sought an order for the tenant to pay the sum of $3,247.14, comprising: (a) $1,720 incorrectly receipted funds; and (b) $1,527.14 for ‘outstanding rent and breach fee’.
On 13 March 2025, an in chambers order was made listing the matter for hearing (together with RT 13/2025) and directing the tenant to provide a response and any supporting material. No response or supporting material was filed before the hearing.
On 13 June 2025, the final hearing for both matters was conducted. The lessor was represented by the managing agent’s authorised representative (the lessor’s representative) and the tenant was self-represented.
The lessor relied on documents filed with its two applications. This included the rent ledger, trust account receipts and emails exchanged by the parties. The lessor’s representative also gave oral evidence at the hearing and was cross-examined.
The tenant relied on documents filed in response to the first application. This included a response submission and duplicate copies of many of the lessor’s documents. I suggested the tenant could read from a submission she had prepared for the hearing but which had not been filed before the hearing. The tenant also gave oral evidence at the hearing and was cross-examined.
Whilst the tenant had not filed a counter-claim form seeking repayment of the break fee, I was comfortably satisfied that her written submission put the applicant on notice that she would be seeking an order to that effect at the hearing.
I reserved my decision at the end of the hearing.
Who is the correct lessor?
At the beginning of the hearing, the tenant asked the tribunal to dismiss both applications because a land title search showed the registered proprietor for the premises to be an entity called Carmaddy Holdings whereas these proceedings have been brought by Mark Bowdern as lessor.
On review, the lessors named on the tenancy agreement are “Imogene and Mark Bowdern t/a Carmaddy Holdings”. The tenancy agreement was signed by the managing agent, ostensibly on behalf of the ‘lessor’. ACT Rental Bonds records the lessor as Mark Bowdern only. It is fair to assume this information was provided to ACT Rental Bonds by the managing agent.
Generally, the registered proprietor of land will be the lessor for a residential premises. However, there may be exceptions, such as where registered proprietor grants a head lease for the premises and then a sublease is entered into. It is also possible there has been an administrative error with how the lessor is named on the record.
Ultimately, I have decided it is unnecessary for me to determine this issue because I have decided in favour of the applicant, save for a deduction from the bond for one day rent arrears.
However, this is a good reminder to lessors and their managing agents that care needs to be taken to correctly identify all parties to a tenancy agreement from the outset to avoid future complications.
What payments were made by the tenant and how to reconcile the rent ledger
The rent ledger needs to be reconciled before the break fee can be considered.
The tenant’s obligation to pay rent accrued at $86.43 per day. As at 1 October 2024, the tenant’s rent was effectively paid to 7 October 2024.
I have determined that payments made into the rent account after 1 October 2024 should be treated as follows: Date Payer Transaction type Payment Rent – amount effective ‘paid to’
01.10.24 Tenant Break fee #1 $605 07.10.24
11.10.24 Tenant Rent (14 days) $1,210 21.10.24
25.10.24 Tenant Rent (14 days) $1,210 04.11.24
11.11.24 Tenant Rent (9 days) $777.86 13.11.24
11.11.24 Other Incorrect credit $1,720 13.11.24
27.11.24 Tenant Break fee #2 $720 13.11.24
The break lease fee clause
The break fee clause establishes a framework for calculating a lessor’s entitlement to compensation where a tenant ends a fixed term tenancy agreement before the end of the fixed term.
In July 2024, when the parties signed the tenancy agreement, the Standard Residential Tenancy Terms (the Standard Terms) did not include a break fee 1 clause by default. Rather, a lessor and tenant could agree to incorporate the optional clause set out in Schedule 2 to the RT Act. That was the clause adopted by the parties in this case and is set out below.
The RT Act was amended with effect from 10 December 2024 to include a break lease fee clause in all residential tenancy agreements. The clause is provided at section 89A of the Standard Terms.
In relation to calculating the break fee, the current clause mirrors the previous version. The current clause also contains additional provisions which prescribe the time at which the break fee is payable, require the lessor to take reasonable steps to find a new tenant, and provide exceptions.
The following paragraphs set out the principles for calculating a break fee under the clause. These principles can be applied to the current version of the clause as long as care is taken to identify whether and how the additional provisions might apply in any particular case.
Principles for applying the break lease fee clause
1 The Standard Terms are contained in Schedule 1 to the RT Act and are the default terms incorporated into all residential tenancy agreements in the ACT: RT Act, s 8(1)(a) Termination before end of fixed term—fee for breaking lease 101 (1) If the tenant ends a fixed term agreement before the end of the fixed term (other than for a reason provided for by the Residential Tenancies Act or the agreement), the tenant must pay a fee (a break fee) of the following amount: (a) if the fixed term is 3 years or less— (i) if less than half of the fixed term has expired—6 weeks rent; or (ii) in any other case—4 weeks rent; (b) if the fixed term is more than 3 years—the amount agreed between the lessor and tenant. (2) The lessor agrees that the compensation payable by the tenant for ending a fixed term agreement before the end of the fixed term is limited to the amount of the break fee specified in subclause (1). (3) However, the lessor and tenant agree that if, within the defined period after the tenant vacates the premises, the lessor enters into a residential tenancy agreement with a new tenant, the amount payable by the tenant is limited to— (a) the amount of the break fee under subclause (1) less the amount of rent payable by the new tenant for the defined period; and (b) if the tenant vacates the premises more than 4 weeks before the end of the fixed term—the lessor’s reasonable costs (not exceeding the defined cost limit) of advertising the premises for lease and of giving a right to occupy the premises to another person. (4) In this clause: defined cost limit means— (a) if half or more than half of the fixed term has expired—an 2 amount equal to /3 of 1 week’s rent; or (b) if less than half of the fixed term has expired—an amount equal to 1 week’s rent. defined period means— (a) if subclause (1) (a) (i) applies—6 weeks; or (b) if subclause (1) (a) (ii) applies—4 weeks; or (c) if subclause (1) (b) applies—N weeks. N is the number worked out as follows: break fee –––––––––––––––––––––––––––––––––––––––––––––––––– weekly rent payable at the time the tenant ends the agreement
The break fee clause must be read together with section 38 of the RT Act, which provides: 38 General 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 following principles apply when calculating the break fee for a tenancy agreement with a fixed term of three years or less: (a) The break fee clause will apply where a tenant terminates a tenancy agreement before the end of the fixed term. The break fee clause does not apply to termination of periodic tenancies. (b) The lessor may require the tenant to pay a break fee as compensation for the early termination, but can elect not to do so. (c) If required, the tenant must pay the break fee unless an exception applies. (d) The break fee must, and may only, be calculated in accordance with the 2 break fee clause. (e) The total amount payable in relation to the early termination is capped at the amount calculated in accordance with the clause, irrespective of the lessor’s true loss. The lessor may be entitled to pursue other claims against the tenant (such as for repairs or rental arrears after termination), but those claims must be separate and distinct to loss arising from the early termination. (f) The maximum break fee will be: (i) Six weeks’ rent – if the termination date falls in the first half of the fixed term; or 3 (ii) Four weeks’ rent – in any other case.
2 Unless an inconsistent term is endorsed by the ACAT pursuant to section 10 of the RT Act 3 For consideration of the break fee where a tenancy agreement was terminated after signing but before the fixed term commenced, see Black & Anor v Jahan & Anor [2023] ACAT 73. For tenancy agreements with a fixed term of more than three years, there is no calculation and the parties must agree on a break fee amount (g) The maximum break fee must be adjusted if the lessor enters into a new residential tenancy agreement within a ‘defined period’ after the tenant vacates the premises. (h) The ‘defined period’ starts on the day after the tenant vacates the premises, and is: (i) Six weeks – if less than half of the fixed term has expired; or (ii) Four weeks – in any other case. (i) The adjusted break fee is to be calculated as follows: (i) First, what is the maximum break fee payable (see paragraph (f) above). (ii) Second, subtract the sum of rent payable by the new tenant during the defined period. It does not matter how much rent was actually paid during that period, and does not include the bond or rent paid in advance. (iii) Third, add the lessor’s reasonable costs of re-advertising and re- 4 letting the premises, up to a maximum amount : A. The maximum is one week’s rent if less than half of the fixed term has expired. B. The maximum is 2/3 of one week’s rent if at least half of the fixed term has expired (but not in the last four weeks). C. The lessor cannot claim re-advertising and re-letting costs if the tenant vacates the premises in the last four weeks of the fixed term. D. The lessor can only claim its reasonable costs, up to the maximum amount. The costs must have been actually incurred (not anticipated) and may be reduced by any amount that is determined to be unreasonable.
4 Called the ‘defined cost limit’ (i) The lessor has a duty to mitigate its loss and is not entitled to claim a break lease fee for loss that could have been reasonably avoided.
(j) A break lease fee cannot be deducted from the bond. The bond can only be used to recoup the costs listed in section 31 of the RT Act. This includes 5 rent owing and payable at termination date, but not compensation for lost rent after termination. Any claim for a break lease fee must be pursued as a separate claim.
The lessor’s break fee claim
In its early correspondence with the tenant, the managing agent advised the tenant the lessor was entitled to one week’s rent plus up to six weeks’ ‘gap rent’ until a new tenant moved in.
That interpretation of the break fee clause was incorrect.
The tenancy agreement was for a fixed term of 12 months starting on 24 July 2024. It terminated on 14 November 2024, which was in the first half of the fixed term. This means the maximum break fee payable was six weeks’ rent or $3,630.
The tenant vacated the premises on 14 November 2024.
The ‘defined period’ for any adjustment to the break fee was six weeks from 15 November to 27 December 2024.
The lessor signed a new tenancy agreement with rent payable from 13 December 2024 at $600 per week.
Between 13 December and 27 December 2024 (inclusive), the rent payable by the new tenant was $1,200. The break fee is reduced to $2,430.
The lessor is entitled to add up to one week’s rent ($605) for reasonable re-advertising and re-letting costs.
5 RT Act, s 31(c)
There was limited evidence about the actual cost of re-advertising and re-letting. It appears the managing agent simply charged the tenant one week’s rent (as the ‘breach fee’) without considering the costs attributable to this particular premises. I suspect that approach is common practice among agents more broadly, making the tenant’s concern about the lack of documentation quite reasonable.
At the hearing, the lessor’s representative gave oral evidence that it was not possible to provide invoices or other documentation showing actual costs. This was because the advertising platforms issued bulk invoices to the managing agent for all sale and rental properties. The lessor’s representative estimated the total cost of advertising this property on external platforms to be $497, but could not quantify the cost of advertising on the managing agent’s own website because it was a sunk cost. The lessor’s representative advised that lessors are typically charged one week’s rent to cover those costs, but it was unclear whether this is the equivalent of one week’s rent under the terminating or new tenancy agreement. The lower of the two would be $600.
The lessor’s representative also gave evidence its office incurred administrative costs associated with conducting open home inspections, vetting applications, signing the new lease and lodging the bond – these costs were passed onto the lessor in the form of a letting fee calculated at one week’s rent (under the new lease) plus GST. This equates to $660 and was not recouped from the new tenant.
In other words, the actual cost charged to the lessor for readvertising and reletting was $1260. On the evidence provided, I am satisfied that at least $605 of that sum was reasonably incurred. Accordingly, I have determined the lessor is entitled to claim $605 under the adjusted break fee for its reasonable costs of re-advertising and re-letting the premises.
Accordingly, the break fee payable by the tenant under the break fee clause is: $3.630 - $1,200 + $605 = $3,035.
Charging the break fee in two components
The next question is whether the lessor is prevented or estopped from claiming the full break fee because it charged the re-advertising and re-letting component separately to ‘gap rent’.
In this case, the answer is no.
I am satisfied the tenant understood, at the time, that she was required to pay up to six weeks’ rent as a break fee. This was apparent in her emails and confirmed at the hearing.
However, different facts might lead to different outcomes. I also note the current version of the break fee clause expressly provides that the break fee: … is not payable until the defined period after the tenant vacates the 6 premises has ended.
It is unnecessary to consider this further in this matter, but may be a determinative consideration in other cases.
The lessor’s obligation to mitigate loss
Mitigation of loss means taking all reasonable steps to reduce the impact of 7 breach by the other party.
The common law principles concerning mitigation of loss have been widely considered by the courts and this tribunal. It is generally accepted that the duty to 8 mitigate can be broken down into three rules: (a) A plaintiff is not entitled to compensation for loss which is unreasonably 9 incurred, or which could have been reasonably avoided. (b) A plaintiff can recover for loss incurred in reasonable attempts to avoid or reduce loss, even if the actual costs incurred are greater than the loss that 10 was attempted to be mitigated.
6 RT Act, Schedule 1, section 89A(3)(b) 7 Nichols v Amers Pty Ltd CAN 112 055 366 (No 2) [2020] ACAT 79 at [12]; also see Residential th Tenancies Law and Practice New South Wales (8 edition) at [2.187.10] 8 th See Principles of the Australian Law of Remedies at [2.200] citing Gregor on Damages (18 edition) at [7- 004]-[7-006]; cited in with approval in Tuncel v Renown Plate Co Pty Ltd [1976] VR 501, Powercor Australia Ltd v Thomas (2012) 43 VLR 220 and Shao v Crown Global Capital Pty Limited [2023] NSWSC 820 at [85] 9 British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rlys Co of London Ltd [1912] AC 673 at [689] 10 Arsalan v Rixon [2021] HCA 40 at [32] (c) A plaintiff is not entitled to compensation for loss that has, in fact, been avoided.
Importantly, the plaintiff does not have an absolute duty to mitigate loss and is free to act in its own best interests. However, the reasonableness of its action (or inaction) in response to the breach will affect the amount it can recover from the 11 defaulting party. This is a question of fact to be determined objectively having regard to all relevant circumstances.
In this case, the managing agent took steps to mitigate the lessor’s loss by re-advertising the premises and conducting open home inspections for prospective tenants. This shifts the onus to the tenant to show that those actions were unreasonable or that the loss claimed by the lessor (in the form of the break fee) could have been reasonably avoided.
The tenant argued the lessor should not be allowed to recover the ‘gap rent’ component of the break fee because the managing agent’s delay in re-advertising the premises and conducting open home inspections was unreasonable. The tenant asserted that 66 days’ notice ought to have allowed sufficient time for the lessor to secure a new tenant from the day following termination.
It is not disputed that the managing agent waited until 14 October 2024 to advertise the premises for rent. This was 42 days after receiving the termination notice and 32 days before the termination date.
The first open home inspection was cancelled due to non-attendance by the managing agent. This meant the property was not available for inspection by prospective tenants until 27 October 2024 or 19 days before the termination date.
The lessor’s representative advised the Tribunal it does not generally advertise rental properties until three weeks before they are available for rent. This is to ensure properties ‘remain current’ because, in her experience, tenants are generally looking to move within two to three weeks rather than two months in advance. The lessor’s representative also advised it can be difficult to rent a
11 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 property that is currently tenanted. She asserted the lessor is entitled to check references and select a ‘good application’ which can delay finding a suitable tenant, and then there can be delays due to cleaning, repairs and rubbish removal at the end of the terminating tenancy.
I accept the general proposition that a lessor is entitled to take the time it needs to find a suitable tenant and that fluctuations in the rental market will result in longer and shorter lead times for doing so. The lessor’s duty to mitigate does not require it to accept the first application it receives.
In some cases, there may also be uncertainty about when the premises will be available for a new tenant to move in. An example is where tenant disputes the termination. Another example is where the lessor anticipates a need for significant repairs, cleaning and/or maintenance at the end of the terminating tenancy such as at the end of a long-term tenancy, for older homes with higher maintenance 12 requirements, or where routine inspections have identified previous concerns. In those situations, the lessor must balance its duty to mitigate loss under the terminating agreement with the risk of breaching a new tenancy agreement due to the premises being unavailable.
However, I am not satisfied those considerations applied in this case. The tenant was clear from the beginning that she intended to vacate on the notified date because she had purchased her own property, and acknowledged that she need to pay a break fee. The lessor accepted the termination notice immediately and scheduled the outgoing inspection for the last day of the tenancy.
There also was no evidence of concerns by the managing agent about property condition or maintenance. The tenant had occupied the premises for less than two months at the time she gave notice, and neither the incoming nor outgoing condition reports identified issues that needed to be resolved before a new tenant could move in.
12 th For further discussion, see Residential Tenancies Law and Practice New South Wales (8 edition) at [2.187.11]
There was also no evidence of external factors that may have contributed to the delay in re-advertising. The managing agent used the same online advertisement as used previously and there was no suggestion that the lessor would have incurred additional costs by re-advertising the premises earlier, such as in the form of a weekly fee to the online platforms.
Rather, it appears the only reason for the delay was the managing agent’s ‘blanket policy’ to not advertise until three to four weeks before the termination date. The cancelled first inspection was also due to factors within the managing agent’s direct control.
I do not accept the lessor’s argument that prospective tenants would have been disinterested if the premises were advertised earlier. The unit was less than 10 years old in a prime rental location with off street parking. I am also not persuaded that the lessor needed time to find a suitable new tenant because this would suggest that more, rather than less, advertising time should have been allocated.
On balance, I find the delay to readvertising and inspections to be unreasonable.
Having said that, I do not accept the tenant’s argument that a new tenancy agreement should have commenced the following day, on 15 November 2025. Even in situations like this, it is reasonable to expect a short gap between tenants to give the parties a small buffer to make final arrangements and manage any unexpected events. This may be as necessary for the outgoing tenant as it is for the lessor, such as to deal with any hiccups with a removalist or to attend to final matters following the outgoing inspection.
In this case, I am prepared to allow two days after the termination date as a reasonable period. I am satisfied it is more likely than not that lost rent after that period could have been reasonably avoided had the lessor readvertised the premises and conducted open home inspections earlier.
The lessor is not entitled to claim lost rent between 17 November 2024 and 12 December 2024. This equates to 26 days’ rent at $86.43 per day = $2,247.18. The break fee is to be reduced by this sum. Final calculations Compensation payable by tenant for early termination
The sum of compensation payable by the tenant for early termination of the tenancy is to be calculated as follows: $3,035 (adjusted break fee) minus $2,247.18 (failure to mitigate) = $787.82.
The tenant paid the lessor a total break fee of $1,325.
This means the lessor must reimburse the tenant the sum of $537.18.
Bond refund
ACT Rental Bonds still holds the full bond of $2,160. This is the tenant’s money 13 held on trust by the Territory. The lessor is only entitled to deduct amounts from 14 the bond as permitted by section 31 of the RT Act.
The tenant owes the lessor $86.43 for one day rent arrears as at the termination date. This is a permitted deduction and is to be released to the lessor. The remaining sum of the bond is to be released to the tenant.
Incorrect credit of $1,720
The $1,720 credit was an accounting error involving money held on trust by the managing agent for a different tenant.
The tenant needs to repay $1,720 to the managing agent’s trust account.
This sum cannot be deducted from the bond because it is not an amount owing to the lessor and is not a permitted deduction under section 31 of the RT Act.
The Tribunal has no jurisdiction to order the tenant to repay this sum to the managing agent. These matters are residential tenancy disputes between the lessor and tenant. The managing agent is not a party. The tenant is encouraged to arrange payment once the bond is distributed. In this regard, I note the tenant has not refused to pay this sum – it was very clear from the material filed in these
13 RT Act, s 27(1) 14 As noted previously, a break lease fee is not an allowed deduction under section 31 proceedings that errors to the rental ledger caused enormous confusion about what was owing and why.
Final matters
The managing agent’s errors and confusing receipting practices raise significant concerns. The incorrect credit was unfortunate but then it remained undetected for one month, likely due to receipting errors that were also undetected. The managing agent was responsible for holding funds on trust, both for Ms O’Connor and an unrelated tenant whose rent ledger may have shown as being arrears for the relevant period. The incorrect interpretation of the break fee clause added to the confusion.
I have asked the Registrar to refer the managing agent to the appropriate regulatory authority for consideration.
……………………………….. Senior Member E Morrison
Date(s) of hearing: 13 June 2025 Applicant: Ms Minko, Independent Property Group, on behalf of the lessor Respondent: In person
BOWDERN
O'CONNOR
(1963) 180 CLR 130