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Legislative Assembly for the ACT: 1997 Week 11 Hansard (6 November) . . Page.. 3776 ..

MR HUMPHRIES (Attorney-General) (6.03): I move amendment No. 30 on the list of amendments circulated in Ms Tucker's name, which reads:

Page 30, line 9, clause 61, subclause (3), omit the subclause.

I also present the supplementary explanatory memorandum, basically for all of those amendments, but particularly for amendment No. 30. Mr Speaker, I do not press this amendment hard. I realise that it is not going to succeed. It removes the limits imposed on the amount of compensation that the tribunal can award against a tenant who abandons their premises before the expiration of a fixed term tenancy agreement.

The reason why we propose to remove the cap is that in the legislation there is an obligation imposed on a landlord to mitigate their losses. If a landlord has premises that are abandoned and simply sits on them for two years, he or she would not be able to recover two years worth of rent from the tenant should he or she find them again, because they have not attempted in any way to mitigate their losses. But, if the landlord does try over a period of two years, say, to rent the premises and cannot, and this was the term of the lease that remained, in theory it ought to be possible for the landlord to recover those costs. Bearing in mind that obligation, that duty, to mitigate their losses, I think a cap could be viewed as being unreasonable.

MS TUCKER (6.04): We will not be supporting this amendment. The Government is attempting to remove the cap on the amount of compensation the tribunal may award where the tenant has abandoned the premises during a fixed term lease. Currently, this matter is dealt with through the common law and, as the Community Law Reform Committee report states, there is considerable uncertainty. I think it is important to remember that the lessor can claim compensation for damages also, so all we are talking about is compensation for lost rent. We believe that any financial loss to the lessor must be balanced against the lack of any incentive to find a new tenant.

At a practical level, the Government's desire to remove this cap contradicts clause 36, which sets the general onus on anyone who is receiving compensation to seek to avoid being paid that compensation. It is unfair, we believe, if a tenant abandons the premises, either with or without notice, early on in a fixed term lease, say a 12 months lease, for example, for them to face the threat of having to pay for up to 11 months' rent.

MS REILLY (6.05): Mr Speaker, I rise to speak against this amendment. The Labor Party considered this matter. The Community Law Reform Committee suggested a cap because it could leave a tenant liable for an unknown amount of money. In fact, they suggested a 16-week cap, but we are happy to go along with a 25-week cap.

Amendment negatived.

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