• (b) negotiations between the parties by email whilst the Respondents were in Singapore;

• (c) the Respondents took possession on 20 July 2007;

• (d) the Respondents abandoned the premises on 26 July 2009;

• (e) the Applicant did his best to mitigate his losses by finding a new tenant but incurred a loss of rent until a new tenant was found.

2. Annexed to the application was a copy of the residential tenancy agreement for a fixed term from 20 July 2009 - 1 November 2009 at a rent of $650 per week. The residential tenancy agreement was in standard terms with relevant special Clauses 108 and 109 that read:

The tenant acknowledges that the house known as 36 Hicks Street (the premises for which this tenancy agreement is subject) and the adjoining bed sitter known as 1/36 Hicks Street, form a dual occupancy property. The tenant agrees to respect the rights of the tenant in the bed sitter to quiet and privacy, and agrees to share the clothesline. The tenant agrees to provide driveway access for the tenant in the bed sitter at all times. The tenant is permitted to park cars to the side or in front of the house but not on the nature strip.

The tenant is responsible for the maintenance of the lawn and garden except in the area between the driveway gate and the rear of the bed sitter which is the garden area for the bed sitter.

1. Also annexed to the application were a series of emails between the parties. The more relevant ones were as follows:

• (a) email of 24 June 2009 at 8.45am from the Respondents to the Applicant expressing interest in the premises;

• (b) an email from the Applicant to the Respondents of 26 June 2009 at 11.50am setting out the requirements of any tenancy of the premises but making no reference to the existence of any bed sitter or need to share any part of the land or premises;

• (c) email of 26 June 2009 at 12.10pm from the Respondents to the Applicant in which the Respondents indicated their willingness to enter the residential tenancy agreement and noting that they had not themselves seen the premises;

• (d) an email from the Applicant to the Respondents of 26 June 2009 at 4.19pm in which the Applicant said he would email the tenancy agreement to the Respondents but needed to know the details of the Respondents' children;

• (e) an email from the Applicant to the Respondents of 29 June 2009 at 10.34am which acknowledged receipt of the bond by internet transfer and noted that the residential tenancy agreement would be forwarded shortly;

• (f) an email form the Respondents to the Applicant of 29 June 2009 at 12.12pm in which the Respondents supplied details of their children and address in Singapore;

• (g) a text message from the Respondents to the Applicant of 30 June 2009 at 11.30am in which the Respondents said that they had received the emailed tenancy agreement and noted the existence of the bed sitter which the Respondents said was the first mention of the existence of the bed sitter. The Respondents asked for the details about the occupant of the bed sitter;

• (h) an email from the Applicant to the Respondents of 30 June 2009 at 12.29pm in which the Applicant:

• apologised for forgetting to mention the existence of the bed sitter and its occupant; * vouched for the integrity and safety of the occupant of the bed sitter; * said that the only common ground was the driveway and clothesline; and * noted that the occupant of the bed sitter had his own private garden.

• (i) an email from the Respondents to the Applicant of 30 June 2009 at 2.41pm in which the Respondents expressed their concern with the arrangement as parents but said that they would still take the lease;

• (j) an email from the Applicant to the Respondents of 30 June 2009 at 12.54pm in which the Applicant said:

"I worked out why I didn't think to advise you earlier of the bed sitter - I didn't know until Susan's fourth email that you had kids, by which time I was focussed on getting the lease prepared. Again I can only apologise".

(k) an email from the Respondents to the Applicant of 30 June 2009 at 6.48pm in which the Respondents returned the executed residential tenancy agreement;

(l) an email from the Respondents to the Applicant of 23 July 2009 at 3.07pm in which the Respondents advised that they had vacated the premises for the following reasons:

• the existence of the occupant in the bed sitter and their concern for the safety of their children;

• the need to share the garden and clothesline with the occupant of the bed sitter; and

• the late advice about the existence of the bed sitter left them with little choice but to enter the residential tenancy agreement while in Singapore.

(m) an email from the Applicant to the Respondents of 23 July 2009 at 6.09pm in which the Applicant said that he had communicated the existence of the bed sitter prior to the Respondents executing the tenancy agreement.

There were other emails attached to the application which dealt with the Applicant's efforts to find another tenant for the premises.

The matter was listed before the Tribunal on 9 December 2009 and procedural orders were made for the service of documents.

On 11 January 2010 the Respondents filed their cross-claim seeking an order in the form of a declaration that the residential tenancy agreement was void from its inception by reason of the false and misleading statements in the Applicant's advertisement and emails, for the repayment of rent paid and for compensation for distress and other factors.

The application maintained that the premises did not accord with the description on 'All Homes'. It was not a house, rather it was a dual occupancy and it did not have a large private garden because the clothesline was in the garden and there was shared used of the clothesline. Further, the occupant of the bed sitter had access to the private garden. The Respondents maintained that they had little practical choice but to sign the tenancy agreement because of their imminent departure from Singapore.

Annexed to the cross-claim was a copy of the advertisement in 'All Homes' placed by the Applicant and to which the Respondents responded. The advertisement relevantly:

• (b) described the extent of the land, the subject of the tenancy, as being the whole block; and

The cross-claim annexed a statement from the Respondents explaining the urgency of their return to Canberra from Singapore and the need to secure short-term accommodation.

On 11 January 2010 the Tribunal made orders for the matter to be heard on 24 March 2010 with a view of the premises to occur on that morning. The orders provided for the filing of any further evidence and amended the Respondents cross-claim to include a claim under Section 46 of the Act.

On 25 January 2010 the Applicant filed his further evidence and submissions. The Applicant maintained that he had disclosed the existence of the bed sitter before the Respondents executed the lease and that the garden was 'private'. A series of character references were provided.

On 12 February 2010 the Respondents filed their final evidence and submissions which set out the same facts asserted previously with detailed submissions on the law.

On 24 March 2010 the Tribunal attended for a view of the premises and the hearing then resumed at the Tribunal. At the view, the Tribunal noted that the bed sitter was at the rear of the premises to be let; it had its own garden between the driveway and the bed sitter; the remainder of the garden was not 'large' and not 'private' in the sense that the occupant of the bed sitter had access to it via a door, and indeed needed to access the garden in order to use the clothesline.

At the conclusion of the evidence the Tribunal held that the residential tenancy agreement had been induced by a false and misleading statement by the Applicant and ordered that the residential tenancy agreement be terminated as at the date that the Respondents returned the keys to the Applicant (27 July 2009). In addition, an order was made for a refund of rent paid beyond that date and for the refund of the bond to the Respondents.

The Applicant has subsequently sought a statement of reasons for the Tribunal's decision.

• (a) the advertisement in 'All Homes' did not disclose the existence of the bed sitter;

• (b) the advertisement in 'All Homes' described the premises as house and actually described the extent of the land to be leased as the whole block; and

• (c) the advertisement described a large private garden;

• (a) the failure to mention the existence of the bed sitter was a very significant omission on the part of the Applicant which was at least reckless and probably deliberate; and

• (b) the description of the house and the gardens was positively and factually false and misleading.

15. The Tribunal found as a fact that the absence of reference to the bed sitter and the false descriptions of the house and yard each separately and substantially contributed to the Respondents' decision to enter the residential tenancy agreement. Had the Respondents known of the true facts they would not have entered negotiations to lease the premises. It was only the urgency of the Respondents situation that left them with little practical choice but to go ahead with the agreement prior to leaving Singapore once they had become aware of the bed sitter.

16. The Tribunal noted the Applicant's protestations that he had in fact notified the Respondents of the existence of the bed sitter. The email history speaks for itself. It was not even contested that the Applicant did not mention the existence of the bed sitter at any time prior to the Respondents receiving a copy of the residential tenancy agreement and discovering the existence of the bed sitter for themselves. It was only after the Respondents raised the issue with the Applicant that the Applicant addressed it. The Applicant then said:

"I worked out why I didn't think to advise you earlier of the bed sitter- I didn't know until Susan's fourth email that you had kids, by which time I was focussed on getting the lease prepared. Again I can only apologise."

1. The Tribunal formed the view that this was clearly a specious rationalisation. When the Applicant placed the advertisement in 'All Homes' he was addressing the advertisement to the world, including potential tenants with and without children. In any event, a potential tenant without children may be influenced by the prospect of having to share the property with a stranger, particular given that the rent charged was a very substantial one.

2. The Tribunal determined the matter on the basis of Section 46 of the Act notwithstanding that the Respondents put their case in the alternative on Sections 12 and 14 of the Fair Trading Act 1992 and parts of the common law.

On application by a tenant, the ACAT may terminate a residential tenancy agreement if satisfied that the agreement was induced by a false or misleading statement.

The Tribunal had the benefit of helpful submissions on the law from the Respondents that drew upon cases decided in relation to the analogous provisions of Sections 52 and 53 of the Trade Practices Act 1975 and Sections 12 and 14 of the Fair Trading Act 1992 (ACT).

In short, the term 'false' refers to the factual content of the representation and not to whether there was an intent on the part of the Applicant to made a false statement (Parkdale Custom Built Furniture P/L v Puxu P/L [1982] HCA 44; (1982) 149 CLR 191; Equity Access P/L v Westpac Banking Corporation [1989] FCA 506; (1990) ATPR 40-994). A statement is misleading if it is likely to induce a false understanding in the mind of a reasonable man whether or not any such intent existed (Given v CV (Holdings) P/L [1909] ArgusLawRp 86; (1977) 15 ALR 439).

A statement can be false or misleading by virtue of omission to include a relevant fact (Henjo Investments P/L v Collins Marrickville P/L (No1) [1988] FCA 40; (1988) 79 ALR 83).

If a statement is false or misleading then there is no test of whether the person acting on the statement was careless or that they should have made their own inquiries. It is sufficient that the person in fact relied upon the false or misleading statement (Henjo). But in any event, the Tribunal found no lack of care or diligence on the Respondents' part who were entitled to rely upon the advertisement in 'All Homes' and who were known to the Applicant to be in Singapore and hence without any immediate or practical way of checking the truth of the Applicant's advertisement.

The only issue of concern the Tribunal had was the effect of the Respondents becoming aware of the existence of the bed sitter when they received the tenancy agreement and whether the Respondents' decision to proceed with the tenancy agreement nullified the false and misleading content of the advertisement. Initially, the Tribunal thought that this may be the case but upon further reflection and recourse to authorities, the Tribunal became aware of the error of this approach. As long as the false and misleading statements were still an operative factor to any significant degree in the Respondents' decision to execute the tenancy agreement then the effect of the false and misleading statement is not spent (St Lukes Health Insurance v MBF Ltd (1995) ATPR-41-428; ACCC v Dell Computers P/L (2002) FCA 847).

In the present case, the Respondents discovered the non-disclosure of the bed sitter for themselves by which time they had committed to the tenancy agreement and had little time left to look for another premises. It may have been theoretically possible for the Respondents to pull out of the agreement at that stage but the practicality was another matter. Given that the false and misleading statements do need to be the sole or even dominant cause of the Respondents' decision to enter the tenancy agreement, the Tribunal was satisfied that the Respondents' decision to enter the tenancy agreement was induced by:

• (a) the belief that they were to rent the whole of the premises with a private garden; and

In any event, even if the existence of the bed sitter per se is put to one side on the basis of the belated disclosure in the tenancy agreement, there was still no disclosure of the absence of the exclusive use of the back garden until the tenants took possession. This alone is sufficient to enliven Section 46 of the Act.

The Respondents contended that the Applicant's false and misleading advertisement was intentional and that the matter should be referred for prosecution. The Tribunal took the view that because the Applicant had not been the subject of cross-examination on this point that it would be unfair to come to any findings on his motivations. Nevertheless, the Tribunal did have sympathy for the Respondents submission on the bases that the omission in the advertisement was so significant and so obvious and that the Applicant's explanation was so inadequate and unbelievable. This view was put to the Applicant.

DATE/S OF HEARING: 25 March 2010 PLACE: CANBERRA

DATE/S OF DECISION: 19 April 2010 PLACE: CANBERRA

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )