This is an appeal from a decision made in the Tribunal's Consumer and Commercial Division on 5 January 2021. The reasons for the decision were issued on 6 January 2021 but were modified and reissued on 8 January 2021. In these reasons, references to the Reasons are to the reasons at first instance as so modified and reissued.
The decision of the Tribunal at first instance was that Rental Bond Services be directed to pay the Respondent, as landlord of an apartment located on Liverpool Street, Sydney (the Apartment), the sum of $3,200 representing the entire rental bond paid by the Appellant in connection with his tenancy of the Apartment (the Tenancy).
The history of the Tenancy can relevantly be summarised as follows:
1. on 17 December 2019, the Appellant and the Respondent entered into a Residential Tenancy Agreement (the Tenancy Agreement) under which they agreed that the Appellant would rent the Apartment from the Respondent for a term of 6 months, from 21 December 2019 to 20 June 2020. This established the Tenancy;
2. the rent was $1600 per fortnight payable in advance. The Appellant was required to (and on 18 December 2019 did) pay a rental bond of $3200 (the Bond), which under the identifying number B017099-5 was placed with the Rental Bond Board on 31 December 2019;
3. until and including the payment made by him on 30 March 2020, the Appellant paid rent in the agreed amount of $1600 per fortnight;
4. on each of 16 April, 25 April, 16 May, 26 May and 6 June 2020 (being the remaining dates for making rental payments under the Tenancy Agreement), the Appellant made payments of $1000 only;
5. this, he says, is consistent with an agreement between himself and the Respondent (represented by her letting agent) for the rent to be reduced to $500 per week;
6. the Appellant vacated the Apartment on or about 20 June 2020;
7. the Appellant and the Respondent were in dispute as to whether the Appellant was entitled to repayment in full of the Bond, and on 26 August 2020 the Appellant lodged with the Tribunal an application under section 175 of the Residential Tenancies Act 2010 (NSW) seeking an order for payment to him of the Bond.
[2]
Findings and reasoning at first instance
At first instance, the Tribunal made two relevant sets of findings.
The first concerned cleaning expenses and is found at paragraphs [26] to [28] of the Reasons. This was that:
1. at the end of the Tenancy, the oven in the Apartment needed significant cleaning, and other areas, such as the shower, also required cleaning;
2. a reasonable allowance for that cleaning was $200; and
3. accordingly, the sum of $200 should reasonably be retained from the Bond and paid to the Respondent to cover cleaning costs.
The second concerned rent. At paragraphs [24] and [25] of the Reasons, the Tribunal summarises its principal findings:
"[24] The findings of the Tribunal may be summarised as follows:
1. On 02 May 2020, the [Respondent] offered to reduce the rent from $800 to $500 per week for the period to 30 May 2020 with the position to be reviewed a [sic] that date.
2. Later the same day, the [Appellant] did not accept that offer but made a counter-offer, seeking to have the reduction extend beyond 30 May 2020.
3. On 04 May 2020 the [Respondent]'s reply declined that offer.
4. As a result, there was no concluded agreement for the reduction of rent.
[25] It follows that the [Respondent] is entitled to claim arrears of rent for five fortnights of $600 each since the [Appellant] paid $1,000 instead of $1600".
Moreover, in the Reasons the Tribunal considered certain exchanges of emails between the Appellant and the Respondent's managing agent between 4 and 8 April 2020. This consideration was inserted into the reasons on 8 January 2021, as an amendment under section 63 of the Civil and Administrative Tribunal Act 2013 (NSW). In summary, these comprise:
1. a request by the Appellant, contained in two emails dated 4 April and 5 April 2020, for the rent to be reduced to $500 per week, because he lost his job as a consequence of business uncertainty in the early stages of the coronavirus outbreak, accompanied by an expression of willingness to vacate the Apartment on 2 weeks' notice if the Respondent finds an alternative tenant;
2. confirmation by the managing agent in an email to the Appellant dated 5 April 2020 as follows:
"The owner has approved to pay the rent $500 per week. Fortnightly rent $1000. It starts from 11 April 2020. Hope it eases your situation"; and
1. acceptance of that arrangement by the Appellant in an email dated 8 April 2020 to the managing agent.
The Tribunal found in paragraph [16] of the Reasons that:
"While there were earlier emails (the first of which was dated 04 April 2020) which suggest an approved rent reduction, on 30 April 2020 it was indicated that the 07 April 2020 email was the result of a misunderstanding. For that reason, the Tribunal considers the first of the relevant emails to be the one dated 02 May 2020".
These reasons will return below in more detail to the communications between the Appellant and the Respondent's managing agent on 30 April 2020.
[3]
The Appellant's contentions on appeal
These are in summary that the Tribunal erred in law by:
1. failing to give proper weight to exchanges of emails between the Appellant and the Respondent's managing agent between 4 and 8 April 2020;
2. failing to accept that the effect of these exchanges was to constitute a variation of the Tenancy Agreement, the effect of which was to reset the rent for the Apartment at $500 per week while allowing the Respondent the right to require the Appellant to vacate the Apartment on 2 weeks' notice; and
3. in consequence, ordering that the Bond be paid to the Respondent without deduction on account of unpaid rent.
[4]
The Respondent's contentions on appeal
These are in summary that:
1. the Tribunal's interpretation of the email exchanges was correct, so that no variation of the tenancy had been agreed; and
2. accordingly, the order that the Bond be paid in full to the Respondent should be upheld.
[5]
Consideration
The Appeal Panel notes that neither the Appellant nor the Respondent challenged the Tribunal's decision that an amount of $200 on account of cleaning costs.
Turning to the rent, the Appeal Panel does not consider that the effect of the exchange of emails between the Appellant and the Respondent's agent amounts to a variation of the Tenancy Agreement. In having reached that conclusion, the Appeal Panel is of the view that the Tribunal at first instance did not err in law.
While it is satisfied that the Respondent, through her managing agent's email of 7 April 2020, represented to the Appellant that she was willing thereafter to accept rent of $500 per week, the Appeal Panel cannot identify consideration moving from the Appellant sufficient to give rise to a binding contract varying the Tenancy Agreement. In response to the Respondent's concession, the Appellant merely continued to do that which he is already obliged to do, namely to pay rent, albeit at the lower rate which the Respondent had indicated would be acceptable to her. There was thus no variation of the Tenancy Agreement.
However, the Tribunal at first instance did make an error of law in failing to find that the Respondent, was estopped from asserting a claim for rent at the rate of $800 per week from 5 April 2020 to 20 May 2020. In the Appeal Panel's view, the Respondent's representation to the Appellant, coupled with the Appellant's response to it, was sufficient to give rise with effect from 5 April 2020 to a promissory estoppel as against the Respondent, such that she was estopped from asserting a claim for rent at the rate of $800 per week against the Appellant, at least until the events of 30 April 2020, when the Respondent indicated that she was not prepared to accept rent of $500 per week for the Apartment.
In Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11, the High Court of Australia accepted that an estoppel can arise under Australian law against one party to a contract enforcing his strict legal rights under the contract in circumstances where that party has represented to the other party that he will not enforce his strict contractual rights: per Deane and Mason JJ at 432.
The elements of the estoppel are set out in the Privy Council's opinion in Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326, as follows:
1. if one party to a contract agrees without fresh consideration not to enforce its rights an equity will be raised in favour of the other party;
2. the equity is subject to certain qualifications summarised below;
3. first, that the other party must have altered its position;
4. secondly, that the promisor can resile from its promise by giving reasonable notice, albeit informal in nature, giving the promisee a reasonable opportunity of resuming its position; and
5. thirdly, the promise only becomes final and irrevocable if the promisee cannot resume his position.
Applying these principles in the present case:
1. the Respondent's managing agent's email of 7 April 2020, informing the Appellant that the Respondent "... has approved to pay the rent $500 per week" was made without consideration but was sufficient to raise an equity in favour of the Appellant, subject to the qualifications referred to above;
2. the Appellant was entitled under clause 41.1 of the Tenancy Agreement at and after 7 April 2020 (by which time more than 50% but less than 75% of the term of the Tenancy had expired) to terminate the Tenancy by paying the break fee of 2 weeks rent specified in section 107(4)(c) of the Residential Tenancies Act 2010 (NSW); in apparent reliance on the Respondent's representation, he did not do so;
3. the communications between the Respondent's managing agent and the Appellant between 30 April 2020 and 4 May 2020 amount to notice from the Respondent resiling from the position established under the email of 7 April 2020;
4. since rent was payable under the Tenancy Agreement on a fortnightly basis, with the next payments due on or about 8 and 22 May 2020, the Respondent's reassertion of her strict contractual rights can reasonably be considered to take effect on and from 22 May 2020; and
5. accordingly, the Respondent can reasonably recover rent at the rate of $800 per week in respect of the 2 fortnightly rental payment periods from 22 May 2020 until the expiry of the Tenancy on 21 June 2020.
The net result, in the Appeal Panel's assessment, is that:
1. The Respondent is entitled to be paid from the Bond the sum of $1400, representing the difference of $300 per week between the contractual rent of $800 under the Tenancy Agreement and the $500 paid by the Appellant on account of weekly rent for the period of 4 weeks between 21 May 2020 and the end of the Tenancy on 21 June 2020, plus $200 in respect of cleaning costs; and
2. The Appellant is entitled to be paid the balance of the Bond, being $1800 and accrued interest.
Accordingly, the Appeal Panel makes the following orders:
1. the appeal is allowed;
2. order 1 made on 5 January 2021 in proceedings RT 20/36289 is varied by substituting "$1,400.00" for "$3,200.00".
[6]
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: 16 June 2021