Mamone v Brochmann (Residential Tenancies) [2020] VCAT 1009

For the written reasons provided, the Tribunal orders and directs that:

1. The Residential Tenancies Bond Authority pay to the:

1. For the written reasons provided, orders have been made in proceeding R2020/16997 dealing with the bond.

1. The parties are in dispute over the bond, with a co-tenant vacating rented premises ahead of the end of the fixed term tenancy because of severe financial hardship.
2. Byron Brochmann, the tenant who vacated early, argues he was on a six-month tenancy and therefore is not liable for rent to the end of the fixed term, and otherwise had a COVID-19 reason for leaving and should not be liable to compensate the landlord. Daray Dreja, the tenant who remained in occupation to the end of the tenancy, says she paid her share of the rent and should not lose any of her bond.
3. The landlord is seeking rent to the end of the fixed term period.
4. Both the tenants' and the landlord's applications to the Tribunal raise issues concerning (a) the effect of a transfer or assignment during an existing tenancy, (b) the liability of multiple tenants to a tenancy agreement, and (c) the apportionment of liability in relation to rent, damages and the distribution of the bond.

Were There Two tenancy Agreements or a Transfer of Tenancy?

1. The tenancy for the Carlton North residence (the rented premises) commenced on 13 May 2019 for a 12-month fixed term period, with Ms Dreja named as the sole tenant. Rent was $3,259 per calendar month, and a bond of $3,750 was paid.
2. On 15 May 2019, Mr Brochmann filled in an application form to be joined to the tenancy agreement (the Application). The Application refers to a lease start date of 18 May 2019, a six-month tenancy with Ms Dreja and payment of $750 per week (being the equivalent of the $3,259 per month being paid). It also referred to Mr Brochmann having two jobs (an event manager and an additional source of income from acting and modelling).
3. On 30 May 2019, Mr Brochmann raised some concerns with not having sighted the lease agreement -

The Lease addendum lists off a lot of bullet (sic) that I need assistance with, like the lease agreement (haven't seen one yet so I can't sign saying I've sighted it if I haven't) ...

1. After being contacted by the agent and the documents explained, the tenants filled in a direct debit request form, with 64.7% of the rent to be taken from Ms Deja's account and 35.3% from Mr Brochmann's account. A bond tenant transfer was also signed on this date, (effective from 24 May 2019) placing Mr Brochmann on the bond lodged with the Residential Tenancies Bond Authority. Additionally, the lease addendum was signed and provided to the agent.
2. The agent thanked Mr Brochmann for the documents and stated, 'We can now update our system to add you on'.
3. Despite Mr Brochmann's claims that he was on a separate six-month tenancy, the documents he signed support the finding that he applied for, and was joined to, an existing tenancy. The bond documents were clearly transfer documents, with Mr Brochmann paying his share of the bond directly to Ms Dreja. The lease agreement was an addendum to the lease signed by Ms Dreja, and the direct debit form defined the contribution of the parties towards the payment for a single tenancy agreement.
4. I find that the tenants were on a single fixed term tenancy for the rented premises, with the end of the fixed term being 12 May 2020.

1. Multiple tenants may be jointly, severally or jointly and severally liable to a landlord under a tenancy agreement.
2. Generally, the liability of parties under an agreement may be specifically imposed by a term within the contract, contained within statute or arise under common law.
3. The Residential Tenancies Act 1997 (Vic) (the RT Act) does not provide any direct reference of a co-tenant's liability for rent and damages during a tenancy. A tenancy agreement must be in a standard form,[1] with that form prescribed in Schedule 1 of the Residential Tenancies Regulations 2019 (Vic) (the Standard Form Tenancy Agreement). The Standard Form Tenancy Agreement does not contain any precise term on tenant liability, nor was one inserted into this tenancy agreement.
4. Mr Brochmann has suggested that the direct debit form for payment of rent has different amounts, showing that the tenants had promised to separately pay a different amount towards the rent. The direct debit form is not part of the tenancy agreement, but a subsequent direction about contribution. It has no bearing on the liability of the tenants to the landlord.
5. The Property Law Act 1958 (Vic) (PL Act) provides for an implied joint and several covenant (promise)[2] in relation to a mortgage by guarantors[3] and bonds created for the transfer of land,[4] but Division 5, which relates to leases and tenancies, provides no such guidance. The Transfer of Land Act 1958 (Vic) does not expressly provide for the liability of joint parties to a lease agreement.
6. Without liability for tenancies in Victoria clearly expressed in the standard form contract, or by statute, the basis of the liability is a matter of construction, determined by reference to the nature of the obligation and the benefit[5] -

The statement of the law in Halsbury's Laws of England 3rd ed., vol. II, pp. 451-452, is in my opinion complete and succinct: 'The construction of a covenant with several covenantees depends, as regards its being joint or several, very largely on the interests of the covenantees in the subject matter of the covenant. Here, as in other cases, the intention of the parties as expressed by their words, prevails ...'

1. What then is the nature of the obligation and benefit of landlords and tenants to a residential tenancy? Do tenants only jointly promise to pay the rent and look after the property or do they make such a promise separately as well?
2. The RT Act and the Standard Form Tenancy Agreement use the terminology of 'tenant' and 'landlord' in the singular throughout and the agreement by its nature relates to a singular asset being the rented premises. The tenant, or tenants (plural and jointly), make a number of promises, including to pay rent and take reasonable care of the premises. The landlord, or landlords (plural and jointly), make a number of promises, including to maintain the rented premises in good repair and provide the tenants with quiet enjoyment.
3. There is no ability for one tenant to end a tenancy by giving a notice that only they are vacating, nor is there any ability for a landlord to end a tenancy against one tenant only. Specifically, the legislation only provides for a tenancy to be ended in situations where a tenant or occupant at the property has been subjected to violence at the hands of another tenant.[6]
4. For these reasons, I am of the view that where there are multiple parties to a residential tenancy agreement, the liability and benefit obtained is joint, and not several or joint and several.

1. As multiple parties in a tenancy agreement are jointly liable to the other party, the question remains whether liability can still be apportioned against the wrongdoer.
2. Various statutes provide for a Court or Tribunal to consider liability in the context of who is responsible.
3. Part IV of the Wrongs Act 1958 (Vic) (Wrongs Act) provides for determining liability according to contribution, blame or responsibility amongst those who are jointly liable to the person seeking compensation.[7]
4. Apportionment of liability is limited to damages, economic loss or damage to property, arising from a failure to take reasonable care.[8] It does not include apportionment of a debt, unless that debt is claimed and recovered by way of a judgment.[9]
5. Unpaid rent is not damage, but a debt arising from a term of the contract. Rent is distinguished from damages in many statutes, including the RT Act.[10] However, a claim for loss of rent arising from the early termination of a fixed term tenancy agreement may give rise to a claim for damages.

1. The question remains then whether the bond, which is provided as a surety for the joint promise made in relation to a tenancy, can be divided up and apportioned, according to responsibility for the damage and the contribution each tenant has made to its payment. For the reasons that follow I am of the view that the bond is an indivisible security, unless there is apportionment of liability in the limited circumstances of family or personal violence.
2. A bond is defined in the RT Act as 'an amount paid or payable by a tenant to secure his or her performance and observance of the tenancy agreement or any of the provisions of this Act relating to the tenancy agreement'.
3. Part 2, Division 2 of the RT Act provides guidelines on the payment of the bond when the tenancy commences, and Part 10 of the RT Act deals with management of the bond by the Residential Tenancies Bond Authority and its distribution at the end of the tenancy.
4. Sections 416 and 417, applications for the bond by a tenant and landlord respectively, do not refer to any express power to distribute the bond according to liability.
5. The bonds inability to be apportioned was acknowledged by the recommendations of the Royal Commission into Family Violence which sought amendment of the RT Act to

provide a clear mechanism for apportionment of liability arising out of the tenancy in situations of family violence, to ensure that victims of family violence are not held liable for rent (or other tenancy-related debts) that are properly attributable to perpetrators of family violence ..... including, where relevant, an order dealing with apportionment of liability for rent (or other tenancy-related debts) between co-tenants.[11]

1. As a result the wording of s 233C was amended by the Residential Tenancies Amendment Act 2018 (Vic) (the RTAA) to provide that the Tribunal may determine the liability of the applicant tenant, or any tenant under the existing tenancy agreement in relation to a bond paid for the rented premises and any existing liability under the existing agreement.[12] Additionally, under the RTAA, s 420A is set to be introduced to the RT Act, which provides for the Tribunal to apportion all of the landlord's loss (including rent) and to exclude the landlord from having access to the portion of the bond paid by the tenant who experienced family violence.
2. In the second reading speech, Consumer Affairs Minister Marlene Kairouz, described the Residential Tenancies Amendment Bill (Vic) as

implementing each component of recommendation 116 of the Royal Commission into Family Violence to better protect and support family violence victims living in residential rental housing. Consideration of family violence has also been interwoven with relevant provisions of the Act to avoid further victimisation of vulnerable renters while ensuring continuity of housing.

1. If the bond could have been apportioned amongst wrongdoers, there would have been no need for the amendments described. If tenants wish to raise apportionment in the context of a claim for the bond only, then unless there is a finding of violence between the tenants, the Tribunal has no jurisdiction to make any order or direction. This does not prevent the tenants raising this matter as a dispute between themselves in another jurisdiction.

1. Co-tenants that make a joint promise to a landlord are jointly liable for the duties and obligations imposed on them under a tenancy agreement. If a landlord makes a claim for compensation for economic loss and/or damage to property, then the Tribunal may consider apportioning liability amongst tenants, related to any amount above the value of the bond.

Liability for Unpaid Rent and Damages and the Distribution of the Bond

1. The landlord seeks payment of rent to the end of the fixed term tenancy, which was 12 May 2020, from the bond of $3,750.
2. The tenancy ended on 27 April 2020, ahead of the end of the fixed term tenancy which was 12 May 2020. Rent, which was $3,259 per calendar month, was paid to 22 April 2020, with $592.17 on account.
3. The tenants advised they would not be renewing their lease, and the rented premises would be vacant on 12 May 2020. Despite vacating two weeks earlier, the landlord was not able to secure a new tenant before the end of the fixed term, and as such is entitled to be compensated for the early termination of the tenancy.
4. Mr Brochmann submits that he vacated at the end of March 2020 because he was suffering from severe hardship and therefore the landlord should not be entitled to the claim for loss arising from ending the tenancy early. He seeks to rely on sections 537 and 542 of Part 16 of the RT Act, which essentially provides that a tenant is not in breach of a term of the tenancy agreement or a duty provision, if they were unable to comply because of a COVID-19 reason, including severe hardship.
5. The tenants are jointly liable to the landlord. To obtain the benefit of any of the protections provided by Part 16 of the RT Act, the tenants must establish that they, jointly, are suffering severe hardship. At the time that Mr Brochmann vacated the rented premises, Ms Dreja says she was not experiencing any financial hardship and was able to pay the rent. The combined effect is that the Tribunal is not satisfied that at the time that the landlord's loss arose, the tenants jointly were suffering from severe hardship.
6. Ms Dreja submits that as she paid her share of the rent to the end of the fixed term, she should have her share of the bond refunded to her in full. In other words, the landlord's claim should only be taken from the share of the bond paid by Mr Brochmann.
7. For the reasons provided above, the bond is indivisible, unless there has been an application for relief under the family violence provisions. Any dispute about contribution towards the bond, or responsibility for the loss to the landlord, is a matter for another jurisdiction and a separate cause of action.
8. The rent was in credit $57.92 when the tenancy ended on 27 April 2020. The rent payable to the end of the fixed term, being 12 May 2020, is $1,544.83 (already reduced by the credit).
9. There will be an order and direction that the landlord is entitled to the payment of $1,544.83 from the bond. The balance of the bond of $3,750, an amount of $2,205.17, will be returned to the tenants (jointly).

[2] Paragraph 18 of David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48.

[5] Lombard Australia Ltd v NRMA Insurance Ltd (1968) 72 SR (NSW) 45.

[6] See sections 233A and 234(2A) of the RT Act.

[7] Part IV of the Wrongs Act (ss 23A-24D) is headed "CONTRIBUTION" and ss 23B and 24 operate to create both a new right and a remedy for the recovery of what s 23B identified as contribution from any person "liable in respect of the same damage" as the claimant for contribution - Alexander v Perpetual Trustees WA Ltd [2004] HCA 7 [3].

[8] See section 24AF of the Wrongs Act which states: (1) This Part applies to - (a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and (b) a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria). (2) If a proceeding involves 2 or more apportionable claims arising out of different causes of action, liability for the apportionable claims is to be determined in accordance with this Part as if the claims were a single claim. (3) A provision of this Part that gives protection from civil liability does not limit or otherwise affect any protection from liability given by any other provision of this Act or by another Act or law.

[9] Section 24AA of the Wrongs Act 1958 (Vic).

[10] See sections 417, 418 and 419 of the RT Act. See also section 19 of the Limitations of Actions Act 1958 (Vic), s 67 of the Transfer of Land Act 1958 (Vic) and the Property Law Act 1958 (Vic).

[11] Recommendation 116 of the Royal Commission into Family Violence.

[12] This amendment took effect from 25 April 2020, through the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic).