On 26 March 2025, the Supreme Court of New South Wales (Brereton J) delivered a landmark judgment against the plaintiff in ZeroBonds Residential Pty Ltd v Commissioner for Fair Trading [2025] NSWSC 265, a case concerning the proper construction of sections 23 and 32 of the Residential Tenancies Act 2010 (NSW). It is the first case concerning the proper constructions of those sections and the intended protective benefits of the Act for tenants. Rachel Francois of 11 St James Hall appeared for the successful defendant, the Commissioner for Fair Trading.

The plaintiff, ZeroBonds, sought to offer a new product to residential tenants in NSW called a “Bond Replacement Product” and a “Bond Reversal Product”. For both products, instead of paying the rental bond of 4 weeks rent, tenants would pay ZeroBonds a lesser amount which was non-refundable, with ZeroBonds then also liable to the Landlord in the event of a breach of the tenant’s residential tenancy agreement up to a set amount. ZeroBonds sought declarations that the provision of these products did not contravene sections 23 and 32 of the Act.

Brereton J found that section 23 is engaged ‘when a payment is required or received because the tenant desires or proposes to enter into a residential tenancy agreement,’ and that the section should not be given an absurd temporal construction which would concern ‘any payment made by a person who happens to be a tenant,’ nor one which prohibits a person from receiving non-permitted payments only when they are the express conditions of entering into a residential tenancy agreement.

His Honour remarked that because section 23 of the Act is intended to protect tenants by providing that they can only be required to make the particular payments specified by the section, constructions of section 23 which allow tenants to make any payment which confers them with benefits they wish to obtain could enable exploitation.

The Court thus rejected the construction of section 23 of the Act advanced by ZeroBonds, found that the issue of ZeroBonds’ products would offend sections 23 and 32 of the Act, and held that the variety of circumstances in which ZeroBonds’ products could be issued is so wide that the matter did not lend itself to declaratory relief.

Link to judgment: https://www.caselaw.nsw.gov.au/decision/195cf221399cd78c4a0f7c4d