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Benchmark - Real Estate Cases & Commentary
Tenancy matters
    •  Residential Tenancy Agreement
        -  Verbal agreement
            >  Breach of verbal agreement
            >  Agreement "for life or as long as the tenant wishes to stay"

Breach of verbal agreement 

The landlord and the tenant entered into a verbal residential tenancy agreement. The agreement gave the tenant the right to occupy a bedroom in the landlord’s residential premises. The tenant paid the landlord a rental bond of $720.00. However, the landlord did not deposit the rental bond with Renting Services, as required by the Residential Tenancies Act 1987 (NSW).

Shortly after the tenant had paid four weeks rent in advance, the landlord asked the tenant to vacate the premises. The tenant did so.

The landlord returned the amount of the bond to the tenant.

The tenant claimed that the payment of the amount of the bond was, in fact, the repayment of a separate loan that the tenant had made to the landlord. However, the CTTT found, on the balance of probabilities, that this payment had been of the bond.

The tenant sought compensation for missed university classes, phone bills, transport fees, and psychological damage. She claimed that the dispute with the landlord had caused her to become very stressed, and to consult a psychologist.

The CTTT pointed out that it can only award compensation to a tenant if it finds that the landlord has breached the terms of the residential tenancy agreement. In this case, the CTTT did not find, on the balance of probabilities, that the landlord had breached any term of the standard residential tenancy agreement that applied in this case. The landlord had asked the tenant to vacate the premises, and she had done so.

The CTTT noted that it did not have jurisdiction to impose any penalty on the landlord for failure to lodge the rental bond.

Li v Jin [2010] NSWCTTT 314

Agreement “for life or as long as the tenant wishes to stay” 

Managing agents and landlords should take care to ensure that detailed records are kept of any negotiations with tenants concerning the terms of a Residential Tenancy Agreement, in particular, where the tenants are holding over under the terms of an earlier lease.

The estate of a deceased landlord served a Notice to Quit on a tenant occupying residential premises under a holding over clause. When the tenant refused to vacate the premises, the estate applied to the CTTT for an order that the tenancy be terminated and possession be granted.

In 1993 the tenant and the Deceased had entered into a written Residential Tenancy Agreement for a term of six months. The tenant resided in the premises for a period of 12 years after the expiration of that term, under the holding over provision in the lease. The tenant claimed that the Deceased and he reached a verbal agreement in a supermarket December 1998 whereby the tenant would be permitted to stay in the premises for the remainder of the tenant’s life, or for as long as the tenant wished.

The tenant argued that the Notice to Quit could not be effective because it was served during a fixed term residential tenancy, the fixed term being the duration of his life.

The CTTT found that the tenant had not proved the existence of a new or varied tenancy agreement for a fixed term, i.e., a tenancy for the life of the tenant. An agreement for the tenant to stay as long as he wished to stay would be inconsistent with the grant of a fixed term. The tenant did not attempt to formalise the agreement. The CTTT made an order for possession in favour of the landlord.

The tenant then appealed to the District Court. The District Court overturned the decision of the CTTT. The estate then appealed to the Court of Appeal. The estate was ultimately successful when the Court of Appeal held in its favour. The Court of Appeal did not accept that the CTTT had erred.

Dayeian v Davidson [2010] NSWCA 42