Gho v Niew

Background

1. On 30 October 2019 the parties entered into a residential tenancy agreement (the "Lease") for a fixed term of 16 months ending on 28 February 2021 for premises at Zetland, NSW at a rent of $830 p/wk.
2. The Lease was in the standard form and contained cl 41 which said: "41. The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement the tenant must pay a break fee of the following amount: 41.1 if the fixed term is for 3 years or less, 6 weeks rent if less than half of the term has expired or 4 weeks rent in any other case, or 41.2 if the fixed term is for more than 3 years, [specify amount]: (no amount was specified) This clause does not apply if the tenant terminates the residential tenancy agreement early for a reason that is permitted under the Residential Tenancies Ad 2010. Note: Permitted reasons for early termination include destruction of residential premises, breach of the agreement by the landlord and an offer of social housing or a place in an aged care facility. Section 107 of the Residential Tenancies Ad 201O regulates the right of the landlord and tenant under this clause."
3. The Tribunal found as a fact that the tenant gave vacant possession of the premises to the landlord on 13 January 2021, being a date after more than half of the lease term had expired.
4. Before the Tribunal the landlord did not make any claim for the replacement cost of a key. She claimed four weeks rent for the break fee (totalling $3,320) and $80 for outstanding rent.
5. The Tribunal said the following about the landlord's claims for outstanding rent and the break fee: "4 The material facts (as defined by the authorities) are: (1)-(11) … (12) On 24/12/21 the landlord received the Bond of $3,320; (13) The landlord has claimed: a. Rent arrears $80 (shown in rent ledger); b. Water usage $35.25 (shown in rent ledger but no water bills delivered to the tenant are in the evidence); c. Break fee $3,320 (under RTA s107 the amount allowed is one week and $830); d. Painting $3,355 (no depreciation allowed, and incorrectly claims GST); e. Replace floors $3,527.70 (no depreciation allowed). … 21 In the case of claims for rent and water usage arrears: see RTA s166(1)(b); by proof of the contractual terms and the amounts claimed. The rent ledger is a business record which shows the amounts claimed as owing. This is good proof of the claim for rent arrears but not for the break fee which is determined by s 107, and not for the water as there is no evidence of the water bills having been delivered to the tenant. Rent of $80 plus a break fee of $830 is allowed."
6. At the time this Lease was entered into s 107 of the Residential Tenancies Act 2010 (NSW) (the "RTA") said: 107 Landlord's remedies on abandonment (1) The Tribunal may, on application by a landlord, order a tenant to pay compensation to the landlord for any loss (including loss of rent) caused by the abandonment of the residential premises by the tenant. (2) The landlord must take all reasonable steps to mitigate the loss and is not entitled to compensation for any loss that could have been avoided by taking those steps. This subsection does not apply in the case of a fixed term agreement that provides for the payment of a break fee. (3) The compensation payable by a tenant under this section in respect of a fixed term agreement is the amount of the applicable break fee for the tenancy, if the agreement provides for the payment of a break fee. (4) The break fee for a fixed term agreement for a fixed term of not more than 3 years is: (a) an amount equal to 6 weeks rent if less than half of the fixed term had expired when the premises were abandoned, or (b) an amount equal to 4 weeks rent in any other case. (5) The break fee for a fixed term agreement for a fixed term of more than 3 years is the amount set out in subsection (4) or, if an amount is specified in the agreement, the amount specified. An agreement must not specify a break fee exceeding the amount (if any) specified by the regulations. (6) The amount of any money paid by a tenant to a landlord on terminating a fixed term agreement before the end of the fixed term or before otherwise abandoning the premises (other than money previously due to the landlord under the residential tenancy agreement) is to be deducted from any amount payable to the landlord under this section. (7) This section does not prevent a landlord from obtaining an occupation fee under Division 2 of Part 6 for goods left on the residential premises
7. The section was subsequently amended by the Residential Tenancies Amendment (Review) Act 2018 (NSW) per Sch 1 cl 34. That amendment commenced on 23 March 2020.
8. When amended, s 107 said: 107 Landlord's remedies on abandonment (1) The Tribunal may, on application by a landlord, order a tenant to pay compensation to the landlord for any loss (including loss of rent) caused by the abandonment of the residential premises by the tenant. (2) The landlord must take all reasonable steps to mitigate the loss and is not entitled to compensation for any loss that could have been avoided by taking those steps. This subsection does not apply in the case of a fixed term agreement for a fixed term of not more than 3 years. (3) The compensation payable by a tenant under this section in respect of a fixed term agreement for a fixed term of not more than 3 years is the amount of the applicable break fee for the tenancy calculated under subsection (4). (4) The break fee for a fixed term agreement for a fixed term of not more than 3 years is - (a) if less than 25% of the fixed term had expired when the premises were abandoned - an amount equal to 4 weeks rent, or (b) if 25% or more but less than 50% of the fixed term had expired when the premises were abandoned - an amount equal to 3 weeks rent, or (c) if 50% or more but less than 75% of the fixed term had expired when the premises were abandoned - an amount equal to 2 weeks rent, or (d) if 75% or more of the fixed term had expired when the premises were abandoned - an amount equal to 1 week's rent. (5) The amount of any money paid to a landlord by a tenant on terminating a fixed term agreement before the end of the fixed term or before otherwise abandoning the premises (other than money previously due to the landlord under the residential tenancy agreement) is to be deducted from any amount payable to the landlord under this section. (6) This section does not prevent a landlord from obtaining an occupation fee under Division 2 of Part 6 for goods left on the residential premises.
9. Sub-section (6) has subsequently been repealed - Statute Law (Miscellaneous Provisions) Act 2020 (NSW), cl 2.34.

The Appeal

1. The landlord says that the Tribunal erred in: 1. failing to award her four weeks rent (rather than one week's rent) for the break fee; 2. failing to award her arrears of rent in the sum of $1,304.29; 3. failing to award her $47 for the replacement cost of a key.

Ground 1 - The Break Fee

1. As at the date of the hearing before the Tribunal (16 September 2021) s 107(4) provided that in the circumstances of this case (where more than 75% of the fixed term had expired when the premises were abandoned) a break fee of one weeks rent was payable.
2. However, s 107(4) as it existed at the time of the hearing did not apply to this Lease. What applied was s 107(4) as it existed at the time the Lease was entered into (and as set out at [8] above).
3. That is because cl 25 of Sch 2 of the RTA says: 25 Application of substitution of section 107 Section 107, as substituted by the Residential Tenancies Amendment (Review) Act 2018, does not apply to a residential tenancy agreement entered into before the substitution of that section.
4. Therefore, the Tribunal erred on a question of law because it applied the incorrect law to the question of the break fee. The Tribunal wrongly applied s 107(4) as it was on the date of the hearing rather than s 107(4) as it was at the time the Lease was entered into.
5. In response the tenant said that four weeks rent as a break fee was unfair, and that she was affected by the covid-19 pandemic.
6. As to fairness, the contract the tenant signed (the Lease) provided for a four-week break fee. That is what the tenant agreed to. Fairness requires her to be kept to the agreement she voluntarily made.
7. As to the pandemic, there were a number of pandemic provisions which temporarily appeared in the RTA. However, the tenant did not seek to prove before the Tribunal that she was an "impacted tenant" under those provisions, nor did the provisions apply to her even if she had. Those provisions applied to terminations by landlords for non-payment of rent, not abandonment by tenants.
8. In those circumstances the landlord was entitled to four weeks rent rather than the one weeks rent awarded by the Tribunal.

Ground 2 - Arrears of Rent

1. The landlord said that the Tribunal erred in only awarding her $80 for outstanding rent because, she submitted, the tenant in fact owed $1,304.29.
2. The landlord submitted that the Tribunal erred in finding that the tenant gave vacant possession of the premises to the landlord on 13 January 2021. The landlord submitted vacant possession was not given until 30 January 2021.
3. However, the Tribunal's reasons reveal that the landlord only claimed $80 as arrears of rent as was shown in the rent ledger tendered to the Tribunal and referred to in the Tribunal's decision at paragraph 4(13)(a) (quoted at [7] above).
4. The landlord said the keys were not returned until 30 January 2021, which appears to be an argument the landlord did not advance to the Tribunal (and we were not provided with a sound recording or transcript of the hearing which would prove whether that argument was put). In any event, returning of the keys is not the test for vacant possession, although it may be relevant to that question.
5. At the end of the day, we were not satisfied that the landlord had advanced this argument before the Tribunal, and she should not be allowed to raise it now for the first time because the tenant may have called evidence on the point in her defence or conducted her case differently. As was said in Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631; [1997] NSWCA 214 per Mason P, with whom Gleeson CJ and Priestley JA agreed, at 645: "Since this is an appeal by way of re-hearing, the matter should be approached in accordance with the principles stated in cases such as Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438 and Coulton v Holcombe (at 7-9). A party seeking to advance for the first time on appeal a new ground not taken at trial will be precluded from doing so if the new ground could possibly have been met by calling evidence at the hearing or if, had the ground been raised below, the respondent might have conducted the case differently at trial."
6. Even had the landlord overcome that difficulty, on an appeal she is required to demonstrate error in the Tribunal's decision. She has not persuaded us that any error attends that factual finding.
7. Therefore, we dismiss the appeal in relation to the claim for rent.

Ground 3 - The Key

1. This claim was not raised by the landlord at the hearing and should not be allowed to be raised for the first time on the appeal because the tenant may have called evidence on the point in her defence or conducted her case differently as explained earlier above.
2. Therefore, the appeal on this point is dismissed.

Conclusion

1. The result of the appeal is that the tenant owes the landlord a further three weeks rent in addition to the amounts awarded by the Tribunal.
2. Before the Tribunal the landlord had claimed and received the whole of the bond (four weeks rent totalling $3,320). As the Tribunal had found the tenant owed the landlord $1,510, it therefore ordered the landlord to repay the tenant $1,810.
3. The landlord has not paid that sum to the tenant, and it will therefore be taken into account in the calculations which follow.
4. The total amount owing by the tenant is $4,000 (four weeks rent totalling $3,320, plus $80 rent arrears plus $600 for re-painting) less $1,510 paid from the bond as ordered by the Tribunal, less the balance of the bond ($1,810) which the landlord did not repay the tenant as ordered by the Tribunal, leaving a balance of $680 owed by the tenant to the landlord.
5. Put another way, the landlord is entitled to $4,000 but has retained the full bond of $3,320, leaving a balance owing by the tenant to the landlord of $680.

Orders

1. We make the following orders: 1. Appeal upheld. 2. The orders of the Tribunal dated 16 September 2021 are set aside. 3. In lieu thereof, order the respondent to pay the appellant the sum of $680. **********​​​​​​​ 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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 March 2022