Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Krnjic v Jiang [2021] NSWCATCD 39 Hearing dates: 13 July 2021 Date of orders: 16 July 2021 Decision date: 16 July 2021 Jurisdiction: Consumer and Commercial Division Before: G Blake AM SC, Senior Member Decision: (1) The respondent is to pay the applicants the sum of $500.00 immediately. If you do not receive the money payable to you as directed by this order, you can get a certified copy of this money order from NCAT. You can then register it with the Local or District Court to enforce the order. For more information about enforcing money orders, visit the NCAT website www.ncat.nsw.gov.au. Catchwords: LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — Residential tenancy agreements – Holding fee – Entitlement to holding fee where residential tenancy agreement does not proceed Legislation Cited: Residential Tenancies Act 2010 (NSW), ss 13, 15, 24, 25, 26 Residential Tenancies Regulation 2019 (NSW), cl 4, Sch 1 Cases Cited: Nil Texts Cited: Nil Category: Principal judgment Parties: Bonnie Rose Krnjic (First Applicant) Melissa Holt (Second Applicant) Xiaoen Sam Jiang (Respondent) File Number(s): RT 21/05016 Publication restriction: Nil REASONS FOR DECISION Overview 1. In these proceedings the first applicant, Bonnie Rose Krnjic (Ms Krnjic), and the second applicant, Melissa Holt (Ms Holt) (who are collectively called the applicants), seek against the respondent, Xiaoen Sam Jiang, the return of a holding deposit. 2. I have decided that the respondent owes the applicants $500.00. The background 1. The respondent is the owner of residential premises at Wolli Creek (the premises). 2. During the period from 2 January 2021 to 22 January 2021, negotiations were conducted between the applicants and Lynn Lin (Ms Lin), the managing agent of the respondent, for a residential tenancy in respect of the premises. 3. On 8 January 2021, the applicants paid a holding deposit of $500.00 to Ms Lin. 4. On 22 January 2021, the applicants advised Ms Lin that they were not proceeding with a residential tenancy in respect of the premises, and requested the return of the holding deposit. 5. On 26 January 2021, Ms Lin advised the applicants that the respondent refused to return the holding deposit. The procedural history 1. On 3 February 2021, the applicants commenced proceedings RT 21/05016 against Linking Investment Group as the first respondent and Ms Lin as the second respondent by filing an application in which they seek an order under s 25 of the Residential Tenancies Act 2010 (NSW) (RT Act) for the return of the holding deposit. 2. On 29 March 2021, the Tribunal relevantly made the procedural directions amending the name of first respondent to Xiaoen Sam Jiang, and removing Ms Lin as a respondent. The hearing 1. On 13 July 2021 at 1.15pm, the hearing took place by telephone. The applicants represented themselves. Ms Lin represented the respondent. 2. The applicants relied on the bundle of documents provided to the Registry on 17 February 2021 (the applicants' documents) which was admitted into evidence without objection (Ex A1) and comprised the emails and text messages passing between one of the applicants and Ms Lin between 2 and 26 January 2021. 3. The respondent relied on the bundle of documents provided to the Registry on 26 March 2021 which was admitted into evidence without objection (Ex R1) and comprised the following documents: 1. the statement of Ms Lin dated 23 February 2021 (the Lin statement); 2. emails passing between one of the applicants and Ms Lin between 2 and 26 January 2021 including a tenancy application form and a draft residential tenancy agreement; 3. a condition report for the premises; 4. invoice no Van210121 dated 20 January 2021 of Vanny Cleaning for the end of lease cleaning of the premises. 1. Ms Krnjic gave oral evidence which consisted of stating the time at which the text messages were sent as well as indicating which text messages comprised a screenshot. Ms Krnjic was not cross-examined by Ms Lin. 2. Ms Lin did not give oral evidence. 3. The applicants and Ms Lin made oral submissions. The issue 1. The issue which arises for decision is whether the applicants or the respondent are entitled to the return or the retention of the holding deposit. 2. Before considering this issue it is appropriate to set out the applicable statutory provisions, and set out the evidence of the parties. In setting out the evidence of the respondent I have not included the relevant email correspondence as it has been set out as part of the applicants' evidence. Whether the applicants or the respondent are entitled to the return or the retention of the holding deposit The applicable statutory provisions The RT Act 1. Part 2 contains provisions dealing with residential tenancy agreements. Division 1 (ss 13-18) contains general provisions. Section 13 deals with agreements that are residential tenancy agreements, and relevantly provides: 13 Agreements that are residential tenancy agreements (1) A residential tenancy agreement is an agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence. (2) A residential tenancy agreement may be express or implied and may be oral or in writing, or partly oral and partly in writing. … 1. Section 15 deals with standard residential tenancy agreements, and relevantly provides: 15 Standard residential tenancy agreements (1) Standard form may be prescribed The regulations may prescribe a standard form of residential tenancy agreement. … (5) Residential tenancy agreement taken to include standard terms A residential tenancy agreement of a kind for which a standard form is prescribed is taken to include the terms of the standard form. … 1. Part 3 provides for the rights and obligations of landlords and tenants. Division 1 (ss 23-31A) contains provisions dealing with pre-agreement matters. Section 24 deals with holding fees, and relevantly provides: 24 Holding fees (1) A person must not require or receive from a tenant a holding fee unless— (a) the tenant's application for tenancy of the residential premises has been approved by the landlord, and (b) the fee does not exceed 1 week's rent of the residential premises (based on the rent under the proposed residential tenancy agreement). Note. A tenant is defined in this Act as including a prospective tenant. (2) A person who receives a holding fee must give the tenant a written receipt setting out the following— (a) the amount paid and the date on which it was paid, (b) the address of the residential premises, (c) the names of the landlord and the tenant. … (4) A holding fee may be retained by the landlord only if the tenant enters into the residential tenancy agreement or refuses to enter into the residential tenancy agreement. (5) Despite subsection (4), a holding fee must not be retained by the landlord if the tenant refuses to enter into the residential tenancy agreement because of a misrepresentation … by the … landlord's agent. … 1. Section 25 deals with disputes about holding fees, and provides: 25 Disputes about holding fees (1) The Tribunal may, on application by a person who has paid, or required or received payment of, a holding fee, make an order in relation to the payment or repayment of the fee. (2) A person may make an application under this section whether or not the prospective residential tenancy agreement was executed. 1. Section 26 deals with the disclosure of information to tenants, and relevantly provides: 26 Disclosure of information to tenants generally (1) False representations A … landlord's agent must not induce a tenant to enter into a residential tenancy agreement by any statement, representation or promise that the … agent knows to be false, misleading or deceptive … The RT Regulation 1. Clause 4 of the Residential Tenancies Regulation 2019 (NSW) (RT Regulation) deals with the standard form of a residential tenancy agreement, and relevantly provides: 4 Standard form of residential tenancy agreements—s 15 of Act (1) The standard form of residential tenancy agreement is the form set out in Schedule 1. The evidence of the parties The applicants 1. I have set out below out of the applicants' documents the emails and text messages that are directly relevant to the issue to be decided. 2. On 4 January 2021 at 2.58pm, Ms Holt sent an email to Ms Lin which: 1. relevantly stated: "At this point in time, we are interested in a 12 month lease with a move in date of 22 January 2021. We would like to put in an offer of $480 per week." 1. attached the tenancy application form of Linking Property signed by each of the applicants which specified a tenancy for the period of 12 months deposit. 1. On 4 January 2021 at 8.47pm, Ms Lin sent an email to Ms Holt which relevantly stated: "Thank Melissa for application, our advertising rent is $500, we need talk to owner to see what he think. Will update you soon." 1. On 5 January 2021 at 9.11am, Ms Lin sent a text to Ms Holt which relevantly stated: "I talked to owner, he still want $500 per week. Can you pay $480 for first three months and $500 for the rest months for one year lease?" 1. On 5 January 2021 at 10.37am, Ms Holt sent a text to Ms Lin which relevantly stated: "Hi Lyn, we would be happy to accept the offer of 3 months at $480 per week and the following 9 months at $500 per week with the condition of the first week being rent free." 1. On 5 January 2021 at 12.07pm, Ms Lin sent two texts to Ms Holt which relevantly stated: "If you are happy to go ahead not free week for first week, first three months $480, rest 9 months $500, you can pay deposit" "Please let me know asap" 1. On 5 January 2021 at 1.36pm, Ms Lin sent a text to Ms Holt which relevantly stated "Owner not accept". 2. On 5 January 2021 at 1.56pm, Ms Holt sent a text to Ms Lin (the 5 January 2021 at 1.56pm text) which relevantly stated: "Which part did they not accept?" 1. On 5 January 2021 at 2.42pm, Ms Lin sent two texts to Ms Holt (the 5 January 2021 at 2.42pm texts) which relevantly stated: "He wants $500" "Per week" 1. On 5 January 2021 at 5.23pm, Ms Holt sent a text to Ms Lin (the 5 January 2021 at 5.23pm text) which relevantly stated: "Hi, we will accept $500 per week on the condition that it is professionally cleaned (including carpet steam cleaning) and that any damage done by previous tenants is corrected prior to us accepting the keys. Could you please send me a copy of the lease first so we can review it before we pay the holding fee?" 1. On 5 January 2021 at 5.38pm, Ms Lin sent three texts to Ms Holt which relevantly stated: "Thx for support" "We will make sure all professional cleaning done before you move it" "We will prepare leave (sic) and send to you for review" 1. On 6 January 2021 at 4.41pm, Ms Lin sent an email to Ms Holt (the 6 January 2021 at 4.41pm email) which: 1. relevantly stated: "This is the standard form of residential tenancy agreement for you and Bonnie. Please fill in the form." 1. attached a residential tenancy agreement form which was partially completed including specifying that the term of the agreement was "6 months" commencing on "22/1/2021" and ending on "22/7/2022" (the draft residential tenancy agreement). 1. On 6 January 2021 at 9.01pm, Ms Lin sent two texts to Ms Holt which relevantly stated: "Draft tendency (sic) agreement sent" "Are you ready to pay holding deposit?" 1. On 7 January 2021 at 8.21am, Ms Holt sent an email to Ms Lin (the 7 January 2021 at 8.21am email) which relevantly stated: "We are able to pay the deposit now but think we should be waiting until we have received the condition report completed by you or the landlord prior to us signing the lease. The lease also needs to be updated. The length of the lease and date duration of the lease has been entered incorrectly. We would also like the lease properly filled out before we sign as we note there are some parts that need to be filled out by you. We would also appreciate any clauses that aren't relevant being crossed out and we understand we should have also been sent to NSW New Tenants Checklist. Moving forward we would like all correspondence to be via email to both myself and Bonnie during at reasonable hours (not at night unless emergency). Please let us know the details to pay the deposit and we will wait to here from you about the updated lease and condition report." 1. On 7 January 2021 at 6.17pm, Ms Lin sent a text to Ms Holt which relevantly stated: "Hi: Melisa Have you paid deposit yet? I cannot hold property without deposit" 1. On 7 January 2021 at 6.21pm, Ms Holt sent a text to Ms Lin which relevantly stated: "Hi Lynn, I responded to your email this morning and had been waiting for your response before we sent the deposit. Did you receive it? Could you please respond to that so that both Bonnie and I can be included in the correspondence and then we will be happy to pay the deposit." 1. On 7 January 2021 at 6.41pm, Ms Lin sent a text to Ms Holt which relevantly stated: "Let me check" 1. On 7 January 2021 at 7.40pm, Ms Lin sent an email to Ms Holt (the 7 January 2021 at 7.40pm email) which relevantly stated: "Hi: Melissa Thank for email, the lease we sent you for draft only, we will sign lease when we have conditioning report. Please pay deposit to our trust account below: Linking Investment Group Trust account [Account details omitted] Please pay asap, we can't hold property without holding deposit." 1. On 7 January 2021 at 10.16pm, Ms Holt sent an email to Ms Lin which relevantly stated: "Thank you for answering my email. We will pay the deposit first thing in the morning. I just wanted to confirm that this holding deposit will then be used as our first week's rent?" 1. On 7 January 2021 at 10.43pm, Ms Lin sent an email to Ms Holt (the 7 January 2021 at 10.43pm email) which relevantly stated "Yes!" 2. On 8 January 2021 at 10.22am, Ms Holt sent an email to Ms Lin which relevantly stated: "We have sent through the holding deposit. Thank you for holding the place for us. …" 1. On 21 January 2021 at 7.32pm, Ms Krnjic sent a text to Ms Lin and Saer who is a colleague of Ms Lin which relevantly stated: "Thank you for your time today. We were looking forward to signing the lease today however there were a few concerns that need addressing as below: LEASE • The length of the lease is incorrect " it says 6 months when it should be 12 months as agreed upon when our application was accepted • The duration of the lease is incorrect - it should be 22/01/2021 until 21/01/2022 … It would be much appreciated if you could address each individual concern as soon as possible. … We look forward to seeing you at your office tomorrow at 12pm. …" 1. On 22 January 2021 at 8.01am, Ms Lin sent a text to Ms Krnjic which relevantly included the following screenshot marked "Not Delivered": "Hi: Melisa Owner not agree to sign 12 months, he only agree to sign 6 months for $500. If you really want to sign 12 months. He said rent be $520per week" 1. On 22 January 2021 at 8.26am, Ms Krnjic sent a text to Ms Lin and Saer (the 22 January 2021 at 8.26am text) which relevantly stated: "I refer to the screenshot you just sent through to our other group message. Our application was submitted and accepted on the basis that it would be a 12 month lease, at no point throughout any of our dealings with you did you indicate or say anything in writing that it would be a 6 month lease, nor was it mentioned on the advertisement. If we had known this was a 6 month lease we would have never applied. Due to the lack of clarity throughout this process and disrespect, we will no longer be proceeding moving into [address omitted]. As the terms in which we have paid the deposit have not been met, please refund our deposit as soon as possible." 1. On 22 January 2021 at 8.28am, Ms Lin sent a text to Ms Holt which relevantly stated: "Before you paid deposit, we sent you lease agreement" 1. On 22 January 2021 at 8.29am, Ms Holt sent a text to Ms Lin which relevantly stated: "Which was completely wrong, and we told you that. And your response was it was a draft and would be corrected." 1. On 22 January 2021 at 8.30am, Ms Lin sent a text to Ms Holt which relevantly stated: "Application form only $480, but lease agreements $500" 1. On 22 January 2021 at 8.32am, Ms Holt sent a text to Ms Lin which relevantly stated: "The lease had incorrect dates and lease length. We advised you that it needed to be changed, you did not say anything about a 6 month lease" 1. On 22 January 2021 at 8.33am, Ms Lin sent a text to Ms Holt which relevantly stated: "If you stop to enter agreement, owner may not refund you deposit. As we refuse many people, at lease (sic) 100 Inquiries" 1. On 22 January 2021 at 10.44am, Ms Krnjic sent an email to Ms Lin which relevantly stated: "Due to the lack of clarity throughout this process and the disrespect we have faced, we will no longer be proceeding with moving into 305/1 Guess Wolli Creek. As the terms in which we have paid the deposit have not been met, please refund our deposit as soon as possible. I confirm that we are within our rights to receive our full deposit back. If you are not willing to refund the full deposit, we will put a formal case to Fair Trading and the NSW Civil and Administrative Tribunal. Our application was submitted and accepted on the basis that it would be a 12 month lease, we have only now (22 January 2021) been told that the owner will only accept a 6 month lease. At no point throughout any of our dealings was it indicated to us that this would be a 6 month lease. If we had known this was a 6 months lease we would have never applied or gone through with this process. I also note that the agent offered us the first 3 months at $480 per week and the following 9 months at $500 per week, so she was aware that the lease was for 12 months. This offer was then withdrawn by the agent as the owner would only accept $500 per week. In addition, it was agreed that the apartment would be professionally cleaned prior to our move in on 22 January 2021, however upon inspection in the afternoon on 21 January 2021 it was evident that it had not been professionally cleaned or was poorly done and the agent refused to provide the date the clean was done or proof it was done. Please find attached screenshots of texts and emails of our dealings with the agent Lynn. Please refund the deposit ($500.00) to the bank account details below, no later than close of business Monday 25 January 2021. If you are not willing to refund the full deposit, we will put a formal case to Fair Trading and the NSW Civil and Administrative Tribunal. …" 1. On 26 January 2021 at 1.49pm, Ms Lin sent an email to Ms Holt (the 26 January 2021 at 1.49pm email) which relevantly stated: "Sorry for the late reply. First at all, the reason landlord do not want to return the deposit is because your notice just one day before the agreement date. It will cause we have to reject other tenant's application so the landlord have no rent to collect during these days. Therefore, they make a lost. Second, the agreement we sent to you is showing the lease period is 6 mouths (sic) starting from 22/01/2021 before you pay your deposit but a typing mistake on the ending date. Finally, the apartment was professionally cleaned in all aspects before you inspect. We have the cleaning receipt if you want to check." 1. On 26 January 2021 at 4.49pm, Ms Krnjic sent an email to Ms Lin and Saer (the 26 January 2021 at 4.49pm email) which relevantly stated: "… We met with a colleague of the agent we were dealing with at the property in the afternoon on 21 January 2021 to complete the condition report, sign the lease and collect the keys. When we reviewed the lease, we saw it was the exact same that had previously been sent through to us and hadn't had the length of the lease or the dates of the lease updated, or been completed properly. He advised this would be fixed and we could meet at Linking Properties office at 12pm on 22 January to sign the lease and collect the keys. We sent a follow up message at 7:32pm on 21 January 2021 advising for a second time what changes to the lease needed to be made. At 8:07am on 22 January 2021, the agent Lynn advised us that that owner did not agree to a 12 month lease and If it was to be a 12 month lease it would be $520 per week. This was the first time we had been advised of this. We then advised the agent at 10:44am on 22 January 2021 that we would not be proceeding with the tenancy as this is not what was agreed when we paid our deposit on 8 January 2021. …" The respondent 1. In the Lin statement Ms Lin relevantly states: "… 3. On 4th Jan 2021, she made an application for one year and $480 per week, owner refused. In order to move forward the case, we tried to offer $480 for first three months, the rest for $500 per week. Base on my memory Melisa accepted. But owner still refused, as this offer is my opinion, not owner offer. As we tried to find the way to move forward the lease. 4. After multi conversations, she decided to go ahead for $500 per week, but didn't mention the length of lease. She paid deposit after we sent her draft of lease. She did mention something need to changed for lease, but never mention 12 months in her email. … 9. We have transferred $500 to owner account; We didn't have money in our trust account." Consideration 1. As is clear from the emails and text messages set out at [26] to [34] above, the negotiations between the applicants and Ms Lin were based on the term of the residential tenancy being 12 months. Ms Lin in the 5 January 2021 at 2.42pm texts in responding to the 5 January 2021 at 1.56pm text indicated that the only part of the applicants' proposal that the respondent did not accept was the weekly rent. No disagreement was expressed to the proposed term of 12 months. 2. Against this background the agreement between the applicants and Ms Lin recorded in the texts on 5 January 2021 at [33] and [34] above is to be properly understood as an agreement for a residential tenancy for a term of 12 months at a weekly rental of $500.00 per week (the 5 January 2021 agreement). This agreement constituted a residential tenancy agreement within s 13(1) of the RT Act. Having regard to s 15(5) of the RT Act when read with cl 4 of the RT Regulation, the 5 January 2021 agreement was for a residential tenancy for a term of 12 months at a weekly rental of $500.00 per week on the terms of the standard form of residential tenancy agreement in Sch 1 of the RT Regulation. 3. The draft residential tenancy agreement should not be understood as a proposed variation of the 5 January 2021 agreement. There was no indication in the 6 January 2021 at 4.41pm email that the respondent was proposing to vary the 5 January 2021 agreement. 4. In the 7 January 2021 at 8.21am email Ms Holt requested the correction of the term of the draft residential tenancy agreement to 12 months. The response of Ms Lin in the 7 January 2021 at 7.40pm email and her failure to indicate that the respondent wished to vary the 5 January 2021 agreement should be understood as an agreement to prepare a form of residential tenancy agreement which conformed to the 5 January 2021 agreement. 5. On 8 January 2021 the respondent was entitled pursuant to s 24(1) of the RT Act to receive the holding deposit of $500.00 paid by the applicants because Ms Lin on his behalf had approved their application for a tenancy of the premises for a term of 12 months at a weekly rental of $500.00 per week contained in the 5 January 2021 at 5.23pm text. 6. I am satisfied that the conditions for the retention of the holding deposit of $500.00 by the respondent specified in s 24(4) of the RT Act have not been met. The applicants have neither been able to, nor refused, to enter into "the residential tenancy agreement", being the tenancy of the premises for a term of 12 months at a weekly rental of $500.00 per week. On the contrary, it is the respondent who has refused to proceed with "the residential tenancy agreement". 7. If I had found that there was a tenancy of the premises for a term of 6 months at a weekly rental of $500.00 per week as contended for by the respondent, it would have been necessary to consider whether the applicants were induced to enter into the tenancy by any statement, representation or promise of Ms Lin that she knew to be false, misleading or deceptive within s 24(5) when read with s 26(1) of the RT Act. 8. I am satisfied that I should exercise the discretion under s 26(1) of the RT Act to order the respondent to repay the holding deposit of $500.00 to the applicants because the reasons advanced for its retention set out in the 26 January 2021 at 1.49pm email do not have any merit for the following reasons: 1. the refusal of the applicants to proceed with a tenancy of the premises on 22 January 2021 occurred because as set out in the 26 January 2021 at 4.49pm email it was on 21 January 2021 that the applicants were requested to sign a residential tenancy agreement that was inconsistent with the 5 January 2021 agreement. The loss of rent complained of by the respondent arose from his failure to honour the 5 January 2021 agreement; 2. the draft residential tenancy agreement that was inconsistent with the 5 January 2021 agreement; 3. no evidence of professional cleaning of the premises was provided prior to the 22 January 2021 at 8.26am text. Order 1. I make the following order: 1. the respondent is to pay the applicants the sum of $500.00 immediately. ********** 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: 16 August 2021