TENANCY: Whether premises abandoned or tenancy terminated by consent: whether landlord entitled to a break lease fee
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Catchwords
TENANCY: Whether premises abandoned or tenancy terminated by consent: whether landlord entitled to a break lease fee
Judgment (10 paragraphs)
[1]
Introduction
The applicant (the tenant) seeks an order that the respondent (the landlord) refund to her a total of $3,000.00, being four weeks rent paid as a bond and two weeks rent paid in advance. An application for orders for compensation in respect of other issues was abandoned on the first day of the hearing on 24 November 2015. In addition, on that day the landlord paid the tenant $100.00, being the refund of a security key deposit.
The landlord claims that he is entitled to retain the bond and the rent paid in advance as a break lease fee under clause 41 of the residential tenancy agreement.
For the reasons set out below, I find that the tenancy agreement ended by consent on the day on which it commenced, which I find to be 31 October 2015. In these circumstances, I find that a break lease fee is not payable and have ordered that the landlord pay the tenant the sum of $3,000.00.
[2]
Background
The landlord is himself the tenant of the premises that are the subject of this application. He states that he has the landlord's agent's consent to sub-let the premises.
On 28 October 2015, the parties entered into a written residential tenancy agreement in the standard form. The agreement is said to commence on 1 November 2015. The evidence provided by the parties indicates that this date was the result of a compromise, with the tenant initially wanting to move in on or around 8 November 2015 (at least in part because rent in her existing accommodation was paid until then) and the landlord wanting her to move in in late October.
The tenant claims that prior to 31 October, the landlord agreed that she could move in on 31 October instead of on 1 November. The landlord disputes that any such agreement was made.
What is not in dispute is that on 31 October 2015, the landlord sent a text message to the tenant stating that he was "thinking of extending another week" - the landlord was occupying the premises himself at this point - as it would "make [his] life easier". He also noted in his text message that this arrangement would mean that the tenant could get the most from her pre-paid rent in the other premises.
The tenant responded by text message, stating that she had nowhere to go, that her flatmates had found new places and that she was all packed and ready to leave. She asked the landlord not to give her a "last min[ute] jolt" and stated that she needed "to move in today".
The landlord responded, after a further exchange of text messages, "Guess I'll be sleeping on the couch tonight".
The tenant claims that when the tenant arrived at the premises, the bedroom that she was to occupy, and which had been occupied by the landlord, was in a mess. She claims that it was not in the condition it was in when she had inspected it.
The tenant contacted the landlord and complained about the situation. After the landlord arrived, a confrontation developed. The landlord offered the tenant alternative rental premises in an apartment on another floor, which the tenant rejected.
The tenant claims that she wanted to end the agreement because she could not trust the landlord. She further claims that she was "tricked" into signing a letter "cancelling" the tenancy agreement and that the landlord told her that if she did so he would refund to her the bond and rent paid in advance. She states that when it became clear that he would not refund the money paid to him, she advised that she would move in to the apartment on 1 November. However, the landlord refused to let her into the premises.
The landlord disputes that he told the tenant that he would refund the bond and the rent paid in advance. He claims that he is entitled to retain these monies under clause 41 of the residential tenancy agreement. He claims that the "cancellation" letter was a way of encouraging the tenant to go through with the tenancy agreement.
[3]
Jurisdiction
I find that there was a residential tenancy agreement between the parties and that the Tribunal has jurisdiction to deal with the application pursuant to s 175 and s 47 of the Residential Tenancies Act 2010 [the RT Act].
[4]
Proceedings in the Tribunal
The application first came before the Tribunal on 6 November 2015. Directions were made on that day for the exchange of evidence.
The matter was listed for formal hearing on 24 November 2015. On that day, oral evidence was taken from the landlord and the tenant. Time was also spent discussing settlement options.
The tenant's witnesses were not reached on the day of the hearing. As they had not provided witness statements, the Tribunal decided to adjourn the hearing with directions for witness statements in the form of statutory declarations or affidavits to be filed and served. This was particularly important as the oral evidence of the parties demonstrated that issues of credit would be central to the outcome of the application. This fact also prompted the Tribunal to spend time encouraging the parties to settle their dispute.
Pursuant to the directions of the Tribunal, the parties were to file and serve their witness statements by 3 and 10 December 2015 respectively.
The tenant filed a bundle of documents on 3 December 2015. These documents included statutory declarations made by Samuel Badampuri, Joris Ferrere and Jeffrey Zarif.
The landlord filed a bundle of documents on 11 December 2015. Included in the documents are three unexecuted statutory declarations in identical terms, from Manon Dibatista, Wade Mountford and Thomas Merlo, all of whom have been sub-tenants of the landlord in the same premises.
The tenant filed further documents on 18 December 2015, without the Tribunal's leave to do so. The documents included a statutory declaration from the same Thomas Merlo referred to above. The landlord objected to the documents being received, on the basis that the Tribunal had not given the tenant further time to file documents and he had not had the opportunity to respond to them. The Tribunal accepted the landlord's submission and refused leave for the tenant to rely on the documents filed on 18 December.
[5]
Evidence and submissions
In making a decision in relation to the application, I have relied on:
The application and the material filed with it;
The documents filed by the parties prior to the hearing on 24 November 2015;
The oral evidence and submissions of the parties at the hearing on 24 November 2015;
The documents filed by the parties on 3 and 10 December 2015 respectively;
The submissions made by the parties at the hearing on 22 January 2015 and
The evidence of the tenant's witnesses, Jeffrey Zarif, Samuel Badampudi and Joris Ferrere.
The documents filed by the tenant on 18 December 2015 have not been considered.
[6]
Issues
The issues to be considered in determining whether the landlord is entitled to a six week break lease fee are:
1. Was the tenancy agreement varied in that the agreed commencement date was 31 October 2015 rather than 1 November 2015?
2. Did the landlord agree to return the bond and the rent paid in advance to the tenant in consideration for her providing a "cancellation" letter?
3. What orders should be made?
The tenant has made much of the issue of the landlord's supposed breach of the tenancy agreement. In view of the findings I have made in respect of the second issue set out above, it is unnecessary to make a finding in respect of that issue.
However, the parties have given radically different evidence concerning what happened on and in the period leading up to their confrontation on 31 October 2015. This means that their credibility is central to a determination of the issues in dispute. I have therefore made findings in relation to both the parties' credibility generally and also in respect of the specific issues in dispute.
[7]
Credibility
Overall, I found the tenant's evidence to be more credible and persuasive than that of the landlord. In general, her evidence was plausible and internally inconsistent. It was supported by the evidence of her witnesses and by the documents provided. More specific findings about the tenant's credibility are made below.
I find the landlord's evidence to be generally lacking in credibility. Two main factors affect the overall credibility of the landlord's evidence.
The first factor is the landlord's inclusion of three unexecuted statutory declarations in documents filed with the Tribunal on 11 December 2015. Contrary to the directions made on 24 November 2015, the landlord made none of the deponents available for cross-examination. However, one of those who had allegedly made a statutory declaration in support of the landlord, Thomas Merlo, was present at the hearing to give evidence on behalf of the tenant. He had provided a statutory declaration for the tenant, which was included in the bundle filed on 18 December 2015 that was not received into evidence.
I put to the landlord that given that Mr Merlo was present, he could call him as a witness so that he could adopt what was set out in the unexecuted statutory declaration. The landlord declined to do so, even though I put him on notice that a failure to call Mr Merlo might lead me to make an adverse finding about his credibility. The landlord conceded that he had personally written the unexecuted statutory declarations, indicating that his proposed witnesses had declined to sign the declarations because they didn't want to be involved.
The fact that the landlord filed unexecuted statutory declarations from people who had declined to sign them raises serious concerns about his honesty and integrity. The landlord's action in this regard leads me to conclude that the landlord was prepared to mislead the Tribunal. I formed the view that the landlord's should not be accepted unless it was corroborated by independent evidence from a reliable source.
Another factor that adversely affects the landlord's overall credibility concerns an email the landlord included in the documents he filed with the Tribunal prior to the first hearing. This email is dated 13 November 2015 and purports to be from the agent who manages the premises on behalf of the owner. It states, amongst other things, that the property manager does not hold the landlord accountable for damage caused by the removal of a shelf in the premises.
Included in the documents filed by the tenant on 3 December 2015 is a statutory declaration dated 1 December 2015 by Jeffrey Zarif. In his declaration, Mr Zarif states that on 1 December 2015, he went with the tenant to Conrad Realty Pty Ltd and met with the agent who had purportedly sent the email referred to above, Mr Carlos Gonzalez. Mr Zarif states that Mr Gonzalves said that he was on leave on 13 November 2015 and that he did not send the email to the landlord. According to Mr Zarif, Mr Gonzalves confirmed that the email is a "fake".
Mr Zarif attended the hearing for the purpose of cross-examination. The landlord submitted that his evidence should be excluded because he was giving evidence about something someone else said. I refused to do so, as the rules of evidence do not apply in the Tribunal in proceedings such as these: s 38(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act).
The landlord had an opportunity to cross-examine Mr Zarif in respect of his declaration. Mr Zarif's evidence did not alter under cross-examination. Furthermore, the landlord was on notice that Mr Zarif had provided this evidence since it was served on 3 December 2015. The evidence was consistent with evidence given by the tenant on the first day of the hearing that the landlord's agent had denied sending the email. It was open to the landlord to obtain a statement from Mr Gonzalves, or to summons him to appear at the hearing if he wished to challenge the tenant's and Mr Zarif's evidence on this issue. He took neither of these steps.
In the circumstances of the case, and given other issues with the landlord's credibility referred to elsewhere in these reasons for decision, I am satisfied that weight can be placed on Mr Zarif's evidence. I am not satisfied that the email purportedly from the managing agent of the premises was sent by him. I make no finding as to whether the landlord caused any damage to the premises. Mr Zarif's evidence goes to the overall lack of credibility of the landlord's evidence.
[8]
Was the tenancy agreement varied in that the agreed commencement date was 31 October 2015 rather than 1 November 2015?
As noted above, the written tenancy agreement signed by the parties states that the tenancy agreement was to commence on 1 November 2015.
However, the tenant states that prior to 31 October 2015 she had a conversation with the landlord who verbally agreed that she could move into the premises on 31 October 2015.
The evidence of Mr Joris Ferrere, who provide a statutory declaration dated 30 November 2015, supports the tenant's evidence in this regard. Mr Ferrere was living in the premises at the time of the confrontation between the parties. He does not refer to the tenant's start date in his statutory declaration. However, in oral evidence at the hearing, Mr Ferrere stated that the landlord told him that the tenant would move into the premises on 31 October 2015.
The landlord submitted that I should place no weight on Mr Ferrere's evidence because he has had a dispute with Mr Ferrere in the Tribunal which resulted in orders being made against Mr Ferrere. It appears that those orders were made ex parte and are currently the subject of a set aside application.
Mr Ferrere's dispute with the landlord could be a reason to place less weight on his evidence than might otherwise be the case. However, his evidence did not change on cross-examination and I found it to be credible.
That said, I do not rely exclusively on Mr Ferrere's evidence in relation to whether the parties agreed to vary the commencement date of the tenancy agreement from 1 November 2015 to 31 October 2015. I am of the view that the tenant's own evidence on this point was plausible and internally consistent.
In relation to this, in her application the tenant refers to 31 October 2015 as the day on which she and the landlord had agreed she was moving her luggage into the premises because her former landlord was handing back the premises they had been living in on that day.
Furthermore, the record of text messages between the parties provided in the tenant's evidence strongly supports a conclusion that the parties had agreed that she would be moving in on 31 October. While earlier emails indicate that 1 November was the commencement date, at 8.17 on the morning of 31 October, the landlord sent the following text message to the tenant:
Good morning Natasha, I'm thinking of extending for another week …i reckon it would make my life easier and u get the most out of your pre-paid rent.
At 8.22, the tenant's responded to the landlord's message as follows:
Hi bi, i have nowhere to go. All my flatmates found new places and moved out so the owner is giving up the flat today. I am all packed and ready to leave. Please don't give me thus last min jolt: ( I need to move in today.
At 8.23, the landlord responded:
Really, I thought you paid until the 12th or something? Is he at least giving you the rent back?
In my view, it is inherently unlikely that the landlord would have responded in this manner if there was no prior agreement that the tenant would be moving in on that day. It is much more likely that he would have pointed out to her that she was not due to move in earlier than 1 November.
The combination of Mr Ferrere's evidence, the tenant's evidence (as set out in her application and repeated during the hearing) and the text message exchange sets out above leads me to conclude that it is more likely than not that at some point between the time the tenancy agreement was signed and 31 October 2015, the commencement date of the agreement was varied from 1 November 2015 to 31 October 2015.
Even if my finding in this regard is wrong, it would not alter my finding concerning the manner in which the tenancy agreement ended, which is dealt with below.
[9]
Did the landlord agree to return the bond and the rent paid in advance to the tenant in consideration for her providing a "cancellation" letter?
There is no dispute that on the afternoon of 31 October 2015 the parties had a confrontation after the tenant discovered that the bedroom she had rented was not ready for occupation.
The landlord's explanation for this is that he was in the process of packing his belongings and would have completed the task that day. Regardless of whether this is true (and, as noted above, I have concluded that the landlord's evidence should not be accepted without independent corroboration), there is no doubt that the condition of the bedroom, coupled with the fact that the landlord was going to continue occupying the premises for an unspecified period upset the tenant and led her to decide that she did not want to continue with the agreement.
There is a radical difference between the parties in relation to whether the landlord agreed that he would refund the bond and the rent paid in advance if she gave him a "cancellation" letter. The tenant claims that this was the reason she wrote the letter. She states that she wrote two versions of the letter, with the second version being written after the landlord rejected the first version. (Both versions of the letter are included in the documents filed by the tenant prior to the first hearing). The landlord claims that the cancellation letter was requested to encourage the tenant to proceed with the tenancy.
I prefer the tenant's evidence to that of the landlord. First, as noted above, I have found that the landlord's evidence should not be relied on unless independently corroborated.
Second, Mr Samuel Badampudi, who provided a statutory declaration dated 1 December 2015 and attended the hearing on 22 January 2016 for the purpose of cross-examination, supported the tenant's evidence. In his statutory declaration, Mr Badampudi stated that he was there during the confrontation. He states that the tenant only wrote the cancellation letter because the landlord agreed to return all her money. He strongly maintained this position on cross-examination. The landlord submitted that I should not accept Mr Badampudi's evidence because he is the tenant's friend. I do not consider that this is sufficient reason to reject evidence that was consistent and that did not alter when he was cross-examined. I find Mr Badampudi to be a credible witness.
Third, I consider it inherently implausible that the tenant would have written the cancellation letter and particularly that she would have written two versions of the letter if she had not been led to believe that she would get something in return, such as the refund of her bond and rent paid in advance. If the tenant had simply decided not to move into the premises, there would be no particular reason to write the letters at all.
Fourth, on 1 November, the tenant sent text messages to the landlord indicating that she wanted to move into the premises. The tenant stated that she did this because the landlord had not returned her money. I consider this a plausible explanation for the tenant's actions in this regard. If the tenant's "cancellation" letter had been a unilateral decision to terminate the tenancy agreement, taken with no expectation of obtaining anything in return, there would be no reason for the tenant to expect to be able to move into the premises on 1 November.
Overall, I conclude that during the course of the confrontation on the afternoon of 31 October 2015, the landlord agreed to return the tenant's bond and rent paid in advance in return for being given a "cancellation" letter.
The landlord submitted that he could not waive the break lease fee set out in clause 41 of the tenancy agreement because it is a "statutory right". I do not accept the landlord's argument in this regard.
The clause 41 break lease fee applies when a tenant abandons the premises. The break lease fee is also referred to in s 107 of the RT Act. However, s 81(4)(e) of the RT Act provides that a residential tenancy agreement ends when "the tenant gives up possession of the residential premises with the landlord's consent, whether or not that consent is subsequently withdrawn".
I conclude that this is in effect what happened in this case. The tenant and her belongings were in the premises. Following the confrontation, the tenant wanted not to proceed with the agreement. The landlord agreed to let her out of the agreement if she wrote a cancellation letter. He agreed to refund the rental bond and the rent paid in advance if she did so. The tenant wrote the letter, gave it to the landlord and removed herself and her belongings from the premises.
In these circumstances, I find that the tenant did not "abandon" the residential premises. Rather, she gave up possession with the landlord's consent and on the basis of an agreement that she would be refunded the bond and rent paid in advance. The fact that she unsuccessfully tried to enforce the residential agreement the following day, when the landlord had not honoured his part of the bargain, does not alter the circumstances in which the tenancy came to an end.
Given that there was no abandonment of the residential premises, the break lease fee does not apply. This is because clause 41 only applies where the tenant has abandoned the residential premises.
[10]
What orders should be made?
My finding that the tenant did not abandon the residential premises and that clause 41 of the agreement does not apply means that the landlord has no entitlement to retain the tenant's rental bond and rent paid in advance.
It is not in dispute that the tenant paid the landlord a total of $3,000.00 for the rental bond and rent paid in advance. The rental bond was not lodged with Renting Services. At the hearing, the landlord confirmed that he retains the monies paid to him by the tenant. He has accordingly been ordered to pay this sum to the tenant.
K Rosser
Senior Member
Civil and Administrative Tribunal of New South Wales
24 February 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: 08 April 2016