Applicants Seek Refund of Holding Fee Paid for Lease

Krnjic v Jiang [2021] NSWCATCD 39 (16 July 2021)

The applicants paid a holding fee to the respondent in view of the residential premises they sought to lease.  However, the applicants sent them a draft residential tenancy agreement inconsistent with their previous agreement.  The applicants then sought a refund of their holding fee but the respondent refused.

Facts:

The first applicant, Bonnie Rose Krnjic (Ms Krnjic), and the second applicant, Melissa Holt (Ms Holt) (who are collectively called the applicants), conducted  negotiations with Lynn Lin (Ms Lin), the managing agent of the respondent for the lease of residential premises.  The respondent is the owner of residential premises at Wolli Creek (the premises).  On 8 January 2021, the applicants paid a holding deposit of $500.00 to Ms Lin in view of the latter's statement that they will not be able to hold the property without a deposit. 

However, 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.  On 26 January 2021, Ms Lin advised the applicants that the respondent refused to return the holding deposit.  The applicants assert that the respondents, despite the agreement to professionally clean the apartment prior to their move, did not prove that it was done.  Furthermore, despite their notices of concerns regarding the indication in the draft residential tenancy agreement that it would be a six month lease despite the agreement that it would be a 12 month lease. 

It was further asserted that the agent offered them the first 3 months at $480 per week and the following 9 months at $500 per week (5 January 2021), so Ms Lin 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  This offer was then withdrawn by the agent as the owner would only accept $500 per week.  The respondent claims that they do not want to return the deposit because their notice just one day before the agreement date.  Such caused them loss because they had to reject another tenant's application. 

Issue:

Whether the applicants or the respondent are entitled to the return or the retention of the holding deposit. 

Applicable law:

Residential Tenancies Act 2010 (NSW) s 13 - defines "residential tenancy agreement" as 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.

Residential Tenancies Act 2010 (NSW) s15 - provides that the regulations may provide for the following--

(a) the terms of the agreement,

(b) more than one standard form of residential tenancy agreement for use for different classes of residential premises, agreements or parties,

(c) the addition of clauses to, or the omission or variation of terms contained in, a standard form of residential tenancy agreement in specified circumstances,

(d) the application of terms of standard forms of residential tenancy agreement to agreements entered into before the regulations prescribing those standard forms took effect.

Residential Tenancies Act 2010 (NSW) s24 - provides that if a tenant has paid a holding fee, the landlord must not enter into a residential tenancy agreement for the residential premises with any other person within 7 days of payment of the fee (or within such further period as may be agreed with the tenant) unless the tenant notifies the landlord that the tenant no longer wishes to enter into the residential tenancy agreement.

Residential Tenancies Act 2010 (NSW) s25 - provides that 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.

Residential Tenancies Act 2010 (NSW) s26 - provides that a landlord or landlord's agent must not induce a tenant to enter into a residential tenancy agreement by any statement, representation or promise that the landlord or agent knows to be false, misleading or deceptive or by knowingly concealing a material fact of a kind prescribed by the regulations.

Residential Tenancies Regulation 2019 (NSW), cl 4, Sch 1 - provides the standard form of tenancy agreement. 

Analysis:

The negotiations between the applicants and Ms Lin were based on the term of the residential tenancy being 12 months.  No disagreement was expressed about the proposed term of 12 months.  It 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 draft residential tenancy agreement should not be understood as a proposed variation of the 5 January 2021 agreement.

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.  The draft residential tenancy agreement that was inconsistent with the 5 January 2021 agreement.  Furthermore, there was no evidence of professional cleaning of the premises.

Conclusion:

The Court ordered the respondent to repay the holding deposit of $500.00 to the applicants because the reasons advanced for its retention do not have any merit.