Residential tenancy - tenancy agreement - landlord leased property while he was overseas - outstanding rent - release of bond - Housing Trust provided bond guarantees

Residential tenancy - tenant did not attend hearing - telephone contact attempted - decision made in tenant's absence

Street v Mountford [1985] UKHL 4; (1985) 2 WLR 877

Noblett v Manley (1952) SASR 155

Frieze v Unger [1960] VicRp 38; (1960) VR 230

1. I am satisfied that the respondents were served with notice of the hearing but they did not attend the hearing. The Tribunal tried to phone them but the call was unanswered. The representative of the South Australian Housing Trust (the Trust) said that one of the respondents had contacted the Trust on the day before the hearing to say they would not be participating in the hearing as they considered the matter had been finalised.

1. This is an application for payment of the bond and compensation.

1. The history of this matter may be summarised as follows:

• There was a dispute about the bond which was referred to the Residential Tenancies Tribunal in 2009 and a hearing was conducted and order made on 19 January 2010;
• The effect of that order (the RTT order) was that the Tribunal did not have jurisdiction to deal with the dispute because it did not fall within the Residential Tenancies Act 1995 (the Act);
• The RTT order did not deal with the bond which was lodged with the Commissioner of Consumer and Business Services;
• Subsequently the Trust sought repayment of the bond guarantees they had provided in relation to this matter;
• The Commissioner wrote to the landlord and the respondents informing them of the claim and the landlord disputed the claim;
• The Tribunal conducted a conference on 4 August 2016 but the parties were unable to agree an outcome and so the matter was referred to a full hearing.

1. At this hearing Mr Farrugia gave evidence that:

• He had instructed Ray White to advertise for tenants for his house for a period of 4 months in 2009 during which time he was to be away overseas;
• There were a number of applicants who responded to the advertisement and ultimately he offered it to the respondents;
• They pleaded with him to move in before his departure as they had nowhere to live and he reluctantly agreed;
• During the time he was away, Mr Farrugia arranged with Smallacombe Real Estate to collect the rent;
• On his return the respondents refused to vacate until it suited them despite his requests for them to do so;
• There was no written agreement but the respondents had agreed to pay him rent of $220 per week, utilities and council rates;
• The respondents failed to meet many of their financial obligations under the arrangement but he was now only claiming for rent of $940 and he would be prepared to accept the bond of $880.00 in full and final satisfaction of all claims.

1. The basis of the RTT order was that the Tribunal considered that there was no tenancy agreement, no rooming house agreement and the arrangement was merely a house-sitting arrangement by which the respondents were actually lodgers. Therefore the Act did not apply to the arrangement and the Tribunal could not deal with the dispute.

1. I agree with the finding in the RTT order that the matter does not fall within the definition of "rooming house" under the Act (for any of the time that the respondents lived there). Mr Farrugia did not advertise the property as a rooming house and on an objective assessment, there was not accommodation at the property available for rent for at least three persons.[1] This was the case throughout the time the respondents lived there.

1. I agree with the finding in the RTT order that when Mr Farrugia and the respondents were all living at the property simultaneously, the respondents were lodgers. Section 5(1)(b) of the Act states that the Act does not apply to an agreement under which a person boards or lodges with another.

1. In general terms, in order for a person to be a tenant under a residential tenancy, that person will usually have exclusive occupation of that part of the property being rented by them.[2] Where the owner of the property retains possession and control over the property, and provides residential accommodation to another person in return for payment, the presumption is that the occupant is a lodger.[3] Where the owner of the property continues to live in it, the presumption is that the occupant is a lodger and not a tenant.[4] I consider that when Mr Farrugia was present at the property with the respondents, he retained control of the property and so the respondents were only lodgers.

1. However, I disagree with the RTT order in relation to the period when Mr Farrugia was not present at the property. Section 3(1) of the Act defines a residential tenancy agreement as an agreement under which "..a person grants another person, for valuable consideration, a right...to occupy premises for the purpose of residence".

1. During the time that Mr Farrugia was away, my view is that there was a residential tenancy agreement between Mr Farrugia and the respondents. I consider the fact that the property was advertised as a rental property for that period by an agent, and the fact that an agent collected the rent during this time are both indicators of a residential tenancy. It is clear that the respondents had exclusive occupation of the house during that time and they paid rent on a regular basis. A bond was also provided.

1. Mr Farrugia said that he was away from the property from 25 May 2009 to 23 September 2009. The rent record provided by Smallacombe Real Estate is for the period 27 May 2009 to 22 September 2009. If I rely on that record, the number of days in the period is 118. The rent at a daily rate is $31.42. Therefore the amount of rent which should have been paid during this period is $3,708.51. The amount that has actually been paid is $2,640.00. Therefore on my calculation the tenants owe $1,068.51 in rent for this period. The landlord has claimed $940.00.

1. During the course of the hearing Mr Farrugia agreed to compromise his claim for rent (for the period he was absent from the property) by accepting half the bond and the South Australian Housing Trust also agreed that in view of my finding that there was a tenancy for the period of Mr Farrugia's absence, they considered that repayment to them of half the bond was fair.

1. On the basis of the reasons I have outlined above, I will set aside the Tribunal order made on 19 January 2010. I am satisfied that there was a tenancy for the period 25 May 2009 to 23 September 2009. I am satisfied from the evidence that the amount of rent arrears for that period is approximately $1,068.51. I am also satisfied that in the circumstances of this matter a fair and equitable outcome is for half the bond to be paid to the landlord and for the remaining half to be refunded to the South Australian Housing Trust. I will make orders to reflect this outcome.

[2] Street v Mountford [1985] UKHL 4; (1985) 2 WLR 877.

[3] Noblett v Manley (1952) SASR 155.

[4] Frieze v Unger [1960] VicRp 38; (1960) VR 230 in which Sholl J decided that the exclusive use of a bedroom was consistent with the owner's right to control the room.