Lethorn v Wagenheim

What happened

This is an internal appeal to the NCAT Appeal Panel from a Consumer and Commercial Division decision that had ordered a tenant to pay a contractual six-week break fee under s 107 of the Residential Tenancies Act 2010 (NSW) (RT Act), on top of rental arrears. The tenancy was a 52-week fixed-term lease commencing 28 October 2019 at $900 per week. On 21 January 2020 the tenant emailed the landlords requesting to vacate on 5 February 2020. The landlords sent an email on 22 January 2020 attaching a notice of termination for non-payment of rent and the tenant vacated on 5 February 2020. The Tribunal, hearing related applications on 14 April 2020, awarded rental arrears and a six-week break fee of $5,400 under s 107. The tenant appealed on the ground the Tribunal erred in ordering the break fee because there was no abandonment and because the Tribunal failed to take into account the termination notice. The Appeal Panel allowed the appeal, holding that the Tribunal had committed a jurisdictional error in ordering a break fee without finding abandonment, concluded the tenancy ended by consent, and substituted orders awarding arrears only (less the bond). (See the Panel’s reasoning on the necessity of a finding of abandonment and its analysis of termination by consent versus abandonment.)

Why the court decided this way

The decision turns on three interlocking legal points:

1. Jurisdictional fact for s 107: The Panel held that a finding that the tenant abandoned the premises is a jurisdictional fact required before the Tribunal may exercise the power in s 107 to order compensation (including a contractual break fee) for loss caused by abandonment. The Panel expressly relied on prior Appeal Panel authority to say a s 107 order cannot be made absent a finding of abandonment. The consequence is that if the Tribunal did not (or could not) find abandonment, it had no power to order a break fee under s 107.

2. How the tenancy terminated: The Panel analysed s 81 which details how a tenancy terminates: by notice and vacant possession (s 81(2)); by abandonment (s 81(4)(d)); or by the tenant giving up possession with landlord's consent (s 81(4)(e)), among other methods. The Panel considered whether the tenancy had terminated by abandonment, or by notice and vacant possession, or by consent. Two factual/legal findings followed:

   • The tenant’s 21 January 2020 email asking to leave on 5 February 2020 did not, of itself, constitute abandonment. Abandonment requires evidence the tenant no longer resides at the premises; a mere request to vacate is not the same thing.
   • The termination notice attached to the 22 January 2020 email was not served 'in accordance with' the Act for the purposes of s 81(2), because the tenancy agreement did not specify an email address for service and s 223(1)(a)(v) only authorises sending to an email address specified by the person. That made the notice defective as a formal method of service, though the Panel noted the notice had in fact been received.

3. Termination by consent: Examining the conduct of the parties, the Panel found the tenancy ended with the landlords' consent (s 81(4)(e)). Once the tenancy ended by consent, it could not be said to have been abandoned. Because there was no abandonment, s 107 did not apply and the Tribunal lacked power to impose the contractual break fee. The Tribunal’s failure to make any finding of abandonment before awarding the break fee was therefore a jurisdictional error, which is a question of law and an available ground for an internal appeal.

Because the core prerequisite to a s 107 order was absent, the Panel set aside the break fee order and substituted orders for unpaid rent only, with the bond applied against those arrears.

Before and after state of the law

Before this decision:

• The statutory framework was settled: s 107 provides landlord's remedies on abandonment, s 106 relevantly directs what the Tribunal may consider when deciding abandonment, and s 81 sets out termination modes. Prior Appeal Panel authority, notably Rathod v Liu and Patterson, had already stressed that an order under s 107 depends on a finding of abandonment.
• There was some potential grey area over whether practical receipt of a termination notice could validate termination where formal service steps were defective, and how parties' communications might evidence consent.

After this decision:

• The Appeal Panel reiterates and clarifies that an antecedent finding of abandonment is a jurisdictional fact required for s 107 orders; Tribunal orders imposing contractual break fees under s 107 must be preceded by a proper finding of abandonment.
• The decision emphasises two practical consequences:
  1. Where a break fee is sought under s 107, the Tribunal must expressly address whether the tenant abandoned the premises, absence of that finding is jurisdictional error.
  2. Service by email is permissible under s 223 only where the tenancy agreement specifies an email address for that purpose; otherwise an email with an attached notice will not satisfy the statutory service method unless the defect is waived under s 113 or some other ground supports validity.

Thus landlords seeking break fees under s 107 must ensure facts clearly support abandonment or otherwise establish a contractual remedy by reference to another power; tribunals must make findings on the jurisdictional fact.

Key passages with plain-English translation

Selected passages from the Panel’s reasons and plain-English translation.

1. "We are satisfied that a finding that the tenant had abandoned the premises is a jurisdictional fact which is a condition for the exercise of the power of the Tribunal under s 107..."
   Plain English: The Tribunal cannot use s 107 to make a landlord whole for abandonment losses unless it first finds the tenant actually abandoned the home. That finding is a precondition to applying the rule.

2. "By failing to make any finding that the appellant had abandoned the premises the Tribunal committed a jurisdictional error."
   Plain English: Because the Tribunal did not decide whether the tenant abandoned the property, it used s 107 when it had no power to do so.

3. "In circumstances where the tenancy agreement did not specify an email address ... the notice of termination was not served by an authorised method of service within s 223(1)(a)(v) of the RT Act."
   Plain English: You cannot rely on the catch-all 'email the notice' unless the lease actually lists an email address for official notices; attaching a termination notice to an ordinary email did not satisfy the formal service rules.

4. "We are not satisfied that there had been a termination ... by reason of the appellant's request ... the appellant's request ... did not constitute an abandonment of the premises."
   Plain English: The tenant asking to leave on a date is not the same as abandoning the property; abandonment requires the tenant no longer lives there without consent.

5. "We are satisfied that there had been a termination of the tenancy agreement with the respondents' consent ... and ... since there has been a termination ... with the respondents' consent ... there cannot have been an abandonment ..."
   Plain English: Because both parties effectively agreed to end the lease, it cannot be treated as abandonment. You cannot have it both ways: consented surrender and abandonment.

(References above are to the Appeal Panel’s reasoning and the statutory provisions it applied.)

What fact patterns trigger this precedent

This decision is directly engaged where:

• A landlord seeks a break fee under s 107 alleging the tenant abandoned the premises, but the Tribunal’s reasoning does not include an express finding of abandonment.
• The tenant vacates during a fixed term after having communicated an intention to leave, and the landlord purports to serve a termination notice by email where the lease did not specify an email address for service.
• The parties' correspondence suggests the tenant requested to vacate and the landlord responded in a way that could be characterised as consenting to the tenant's leaving, but the landlord nonetheless treats the tenant's conduct as abandonment.
• Practitioners should be alert when relying on s 107 remedies: the facts must support a finding that the tenant abandoned (e.g. ceased living there without landlord consent and without Tribunal order), and any decision must record that finding.

In short, disputes arising from mid-term vacancies where the factual line between 'consented surrender', 'termination by notice', and 'abandonment' is blurred will be governed by the logic of this decision.

How later courts have treated it

As this deep dive is confined to the judgment itself, and the Appeal Panel explicitly relied on earlier NCAT Appeal Panel authorities (Rathod v Liu, Patterson, McDonald v Pochin) for legal propositions about abandonment and consent, the immediate effect is reaffirmation of those authorities. The Panel described Rathod as confirming that a s 107 order cannot be made absent a finding of abandonment and cited McDonald to support that a concluded termination by consent precludes abandonment.

Practitioners should expect subsequent tribunals to treat this decision as an authoritative restatement within NCAT’s appeal jurisprudence: s 107 requires an antecedent finding of abandonment; termination by consent is an alternative that excludes abandonment; email service when the agreement lacks an email for service is not a valid statutory method.

Still-open questions

Several practical matters remain for future determination:

• Waiver and actual receipt: The Panel noted s 113 permits the Tribunal to cure defects in termination notices if no disadvantage results. The Panel found the notice was not served in accordance with s 223, but also noted the notice had in fact been received. How broadly tribunals will apply s 113 to validate informal email service where the agreement lacks an email address remains fact-sensitive. The decision does not close the door on s 113 as a cure; it simply observed the defect and proceeded on consent grounds.
• Interaction with contractual break clauses outside s 107: This case dealt with a landlord’s s 107 remedy. Where a lease contains an express contractual break fee, but the statutory abandonment route is unavailable, the extent to which contractual provisions can be enforced by NCAT absent abandonment (for example by contractual damages claims separate from s 107) may require careful pleading and analysis in future cases.
• What factual matrix suffices to demonstrate consent: The Panel found the tenancy ended by consent on these facts. Delineating the minimal factual indicators that constitute landlord consent to termination (express words, conduct, practical acceptance of vacant possession) will continue to be litigated in close cases.
• Electronic service regimes: The decision underscores the importance of ensuring tenancy agreements specify email addresses for service if parties intend to rely on email. How tribunals will treat standard-form agreements that omit an email address but where parties regularly communicate by email remains an area where s 113 and ordinary notions of procedural fairness will be applied case by case.

Practical takeaways: landlords seeking break fees under s 107 must ensure the factual record supports abandonment or else seek alternative remedies; tenancy agreements should expressly provide an email for service if electronic service is to be relied upon; tribunals must expressly find the essential jurisdictional facts before applying s 107.