The appellant, a tenant, and the respondent, a landlord, entered into a written residential tenancy agreement on 17 June 2016 for premises in the central district of Sydney, New South Wales. The tenancy was terminated by an order of the Tribunal on 23 November 2016 in proceedings RT16/42884. An appeal from that decision was dismissed on 26 April 2017: Abdel-Messih v Azzi [2017] NSWCATAP 86; AP16/51813. We have continued to call the parties tenant and landlord in these reasons for ease of identification.
In the termination proceedings the Tribunal found that the tenant had breached the tenancy agreement by sub-letting the whole of the premises without the consent of the landlord and that such was a serious breach of the tenancy agreement.
The Tribunal suspended the possession order until 7 December 2016. Following the lodgement of the tenant's appeal, the Appeal Panel in the termination proceedings on 13 December 2016 stayed the order for possession until further order of the Appeal Panel conditional on the tenant paying the outstanding rent or occupation fee of $1,650 and paying an occupation fee of $150 per day, such amount payable weekly in advance. The Appeal Panel stay was lifted on the landlord's application on 21 February 2017. The landlord did not obtain possession of the premises until the remaining sub-tenant vacated on 24 February 2017.
In the present proceedings from which this appeal is brought, the landlord claimed from the tenant $5,850 by way of money order under s 187 of the Residential Tenancies Act 2010 (NSW) (RTA) being an amount equivalent to the amount of unpaid occupation fee for the period from 17 January 2017, when the tenant stopped paying the occupation fee, until 24 February 2017.
RTA s 187 empowers the Tribunal, on application by a landlord or a tenant or other person under the RTA, or in any proceedings under the RTA, to make one or more of the specified orders. The relevant orders are found in s 187(1)(c) (an order for the payment of an amount of money) and (d) (an order as to compensation). Order (i) (for a termination order and order for possession of premises) had already been made in the previous proceedings. Section 187(2), without limiting the Tribunal's power to make an order as to compensation, empowers the Tribunal to order compensation to be paid for the following: (a) loss of rent; (b) any other breach of a residential tenancy agreement. The amount sought in the present application did not exceed the $15,000 limit in s187(4)(a) and Residential Tenancies Regulation 2010 (NSW) (RTR) reg 23(b).
RTA s 190 empowers a landlord or tenant to apply to the Tribunal for an order in relation to a breach of a residential tenancy agreement within the period prescribed by the regulations after the landlord or tenant becomes aware of the breach. The application was lodged within time under RTA s 190(1) and RTR reg 22(9).
RTA s 123 provides that a tenant who fails to comply with an order for possession of the Tribunal is liable to pay an occupation fee to the landlord for the period the tenant remains in possession of the residential premises after the date the tenant is required to vacate the premises, with the occupation fee payable being an amount equal to the rent that would have been payable for that period if the residential tenancy agreement had not been terminated. Under RTA s 123(4) the Tribunal may, on application by the landlord, order the tenant to pay to the landlord an amount of occupation fee.
The tenant opposed the claim on various grounds, primarily the following substantive matters:
1. The Tribunal had no jurisdiction to determine the claim as it arose for a breach after termination of the tenancy or, alternatively, by way of damages for a pre-existing breach but after termination of the tenancy.
2. The tenant returned the keys to the landlord on 16 January 2017 and was paid up to that date and had no access to the premises after that date, and that was the date on which he returned legal possession so as to cease to be liable for rent under the lease to the landlord despite the continued presence of the sub-tenant.
In his decision on 19 July 2017, the primary member referred to the finding between the same parties in the termination proceedings that the tenant sublet the premises without the consent of the landlord and went on to say
"The history of the matter shows that the tenant did nothing at any time to rectify the breach of the agreement in respect of him seeking to remove his sub-tenant from the premises, either before or after the date of the order for termination made by the Tribunal".
The primary member then found that the loss suffered by the landlord as claimed
"has clearly flowed from the breach of the tenancy agreement by the tenant by sub-letting the premises during the tenancy agreement and the landlord not being able to get vacant possession of the premises back until 24 February 2017 due to the sub-tenant being in possession. The Tribunal finds that it is directly due to that breach of the tenancy agreement and the sub-tenant remaining in possession of the premises until 24 February 2017 that the landlord has suffered the loss claimed. Additionally, the stay order on possession that the tenant sought as part of the appeal process was made by the Appeal Panel conditional on the tenant paying the occupation fee of $150 per day. … The Tribunal is satisfied that this is a direct loss flowing from the tenant's breach during the tenancy agreement and the tenant's failure to comply with the Appeal Panel's conditional order for the payment of an occupation fee. … The tenant did not vacate the premises as previously ordered by the Tribunal and remained in possession."
The primary member, reciting the foregoing matters, found that the Tribunal had jurisdiction under RTA ss 123, 190 and 187(1)(c) and (d).
The primary member repeated his finding that the presence of the sub-tenant after return of the keys by the tenant on 16 January 2017 meant that the tenant had not provided the landlord with vacant possession of the premises. He referred to the fact that the landlord wrote to the Tribunal on 20 January 2017 seeking to have the matter re-listed to have the stay lifted so that possession could be enforced, the Appeal Panel re-listed the matter on 21 February 2017 and lifted the stay and that this was the point at which the landlord was then able to seek enforcement orders to gain vacant possession. The sub-tenant left on 24 February 2017 and the primary member found that "the landlord could not have taken any action that would have resulted in him obtaining vacant possession from the sub-tenant in any time shorter than 3 days. … the landlord acted with due diligence, according to law and in a timely manner to gain vacant possession of the premises as soon as possible. This included having to deal with the Appeal Panel's stay order on possession that was made due to the tenant appealing the original decision and obtaining vacant possession of the premises after the stay order had been lifted. … The tenant had not removed his sub-tenant and there was no vacant possession given to the landlord by handing the keys back. The tenant did not seek to withdraw his appeal thereby lifting the stay order on possession and allowing the landlord to obtain possession of the premises sooner than 21 February 2017. … The Tribunal is not satisfied that the fact that the tenant did not have access to the premises is relevant as he was the person that sub-let the whole of the premises without permission and by doing so never had access to the premises anyway."
The primary member therefore found that the tenant was liable to pay money or compensation for the landlord's loss directly due to the tenant's breach during the tenancy agreement calculated in accordance with the equivalent occupation fee for the period from 17 January 2017 to 24 February 2017, equalling $5,850.
The order on 19 July 2017 was for the tenant to pay to the landlord $5,850 on or before 16 August 2017. That order has not been complied with at date of hearing. The tenant's application to the Appeal Panel for a stay of that order was refused on August 2017. The tenant applied orally during the appeal hearing for a stay but offered no material beyond that put forward in support of the previous application. We accordingly refused the renewed stay application.
No application was made by any sub-tenant under section 130 of the Conveyancing Act 1919 (NSW) or otherwise for substitution as tenant.
It appears that the only contest at the primary hearing on the issue of sub-tenancy was whether or not consent was given in respect of the particular sub-tenant who remained in possession until 24 February 2017. There was no contest on the terms of the standard sub-letting provision in clause 32 of the standard residential tenancy agreement which was apparently not in evidence in any event but which mirrored RTA ss 74 and 75. There was no application under s 75(5) to the Tribunal to order a sub-lease on the basis that the Tribunal was of the opinion that failure to consent by the landlord was unreasonable.
[2]
Appeal Grounds
The tenant's notice of appeal filed 25 July 2017 set out various grounds of appeal against the primary decision. The tenant, at the request of the Tribunal at the outset of the appeal hearing, stated the grounds on which he relied as follows:
(1) Alleged absence of procedural fairness: the tenant complained that the landlord said that he did not consent to the particular sub-tenant's occupation only during the hearing and this was the relevant alleged breach complained of by the landlord and found by the primary decision.
(2) No evidence to support the finding of breach by absence of landlord consent to the sub-tenancy.
(3) The Tribunal did not have jurisdiction to give damages for an alleged breach occurring after termination because the lease had ended. The Tribunal had jurisdiction to determine damages for a pre-determination breach but not for an award of damages for that breach that was for a period after termination. The tenant accepted that a variant of this argument - that the landlord did not have standing to claim in the Tribunal for such damages - was not maintainable if there was jurisdiction.
(4) The Tribunal did not have jurisdiction to determine the claim because the landlord had claimed only under RTA s 187 and that provision required for its operation a primary basis for liability, in another provision of the RTA such as those the primary member identified in his reasons.
(5) The landlord did not mitigate his loss after 17 January 2017 because he was able to take action earlier than that date to lift the stay and he misconceived the continuance of the stay after 17 January 2017 as an impediment to obtaining a warrant for possession.
The tenant accepted that the first ground of absence of procedural fairness was not in the notice of appeal. He said there was no space to include it in the form but agreed he was familiar with the ability to put an annexure on the notice of appeal. There is some doubt in the Tribunal's mind whether or not all the other grounds so summarised were contained in the notice of appeal. Given our decision, we have dealt with them in any event and note there was no opposition by the landlord to our dealing with the matters in the summary.
The written grounds of appeal contained also the following matter not in the summary:
(1) The primary decision erred in finding that the tenant failed to try to evict the sub-tenant because the tenant's termination application against the sub-tenant was dismissed for lack of jurisdiction since the tenancy had by then been terminated and the landlord was entitled to possession under RTA s 81(4)(a).
To the extent this was the subject of written submissions by the tenant or was touched upon in oral submissions by the tenant, we have dealt with it.
We note, as was pointed out to the tenant during the appeal hearing, that the application for leave to appeal against findings of fact did not include leave to appeal the primary member's findings of absence of consent by the landlord to any sub-tenant.
We now deal with each ground.
[3]
Alleged absence of procedural fairness
The tenant complained that the landlord said that he did not consent to the particular sub-tenant's occupation only during the hearing and this was the relevant alleged breach complained of by the landlord and found by the primary decision. The tenant accepted that he did not ask for an adjournment to deal with this matter at the primary hearing. He called in aid that he was not sufficiently skilled to know to ask for an opportunity to meet the alleged new material. He did not present any evidence to support that submission. The material he had provided on the appeal hearing showed other decisions in the Tribunal to which he was a party and a detailed knowledge of the provisions of the RTA and of the Civil and Administrative Tribunal Act 2013 (NSW) (CATA).
It was pointed out to the tenant during his oral argument that there was an issue estoppel between him and the landlord on the Tribunal's finding in the earlier termination proceedings that the tenant had sub-let the whole of the premises without the landlord's consent, which was the basis of the finding of breach and grant of a termination order.
This rendered irrelevant, for the purposes of the current proceedings, whether or not there was a further breach in relation to a person whom the tenant said was a different sub-tenant not in the premises at the time of the events giving rise to the termination order and to whom the tenant said the landlord had consented. Whether or not what the tenant asserted about the identity of the sub-tenant in occupation after 17 January 2017 and about consent to that sub-tenant was correct is irrelevant. The landlord's claim is for not being given possession, or not being paid for being out of possession while an order for possession was stayed, as a consequence of the tenancy having been terminated for a found breach in the earlier proceedings. The tenant is responsible for that situation irrespective of the identity of any person in actual occupation of the premises during the period and irrespective of whether that person was there with consent prior to the termination of the lease. Termination of the lease terminates consent as it does any sub-lease.
Even if the tenant established consent being given by the landlord after the termination of the lease, there was no claim of estoppel and no claim of a new written residential tenancy brought by the tenant. At best, in those circumstances, any alleged consent by the landlord after termination and during the stay of possession would be to the continued occupation by someone other than the tenant of the premises so long as the conditions of the stay were met by the tenant's payment of the occupation fee.
Accordingly, this ground of appeal must fail as, even if made out, it would not relevantly affect the outcome of the proceedings.
In any event, we are not satisfied that the tenant put forward material to justify an absence of procedural fairness. In this respect, we have already pointed to the absence of any evidence that the tenant was not capable of asking for an adjournment if he was taken by surprise. Further, the tenant accepted that the limited material placed before the primary member did not contain any document that indicated the landlord's consent or any statement alleging such consent.
The tenant said that the sound recording of the primary hearing would assist by showing that the landlord gave oral evidence at the primary hearing that the tenant had breached the lease by sub-letting to the person in occupation during January and February 2017. He at first did not want an adjournment to obtain a transcript of the recording. Then he asked for an adjournment if the landlord would not admit the issue of consent to the particular sub-tenant in occupation during January and February 2017.
We refused that adjournment. In addition to the irrelevancy described above, the tenant had no satisfactory explanation why he had not applied for the sound recording in the time frame required to comply with directions made on 10 August 2017 to prepare the appeal for hearing. Those directions required the tenant to lodge with the Tribunal and provide to the landlord by 7 September 2017 the sound recording of the primary hearing if what happened at the primary hearing was being relied upon, together with a typed copy of the relevant parts. The tenant apparently did not apply for a copy of the sound recording until 8 September 2017. He said he could not recall why that occurred and added that "usually" such a recording was available within 2 weeks of payment which would have been before the appeal. Even if that was the case, it was not a basis to be relied upon for non-compliance with directions and would not have enabled compliance with the directions made to lodge and serve his material (using that transcript) for the appeal by 7 September 2017. He had not followed up with the Tribunal Registry when the alleged usual 2 week period expired by applying for an adjournment on the basis he needed the recording. He had not sought an extension of time to comply with directions. The directions of 10 August 2017 issued to both landlord and tenant on 11 August 2017 contained a note which relevantly said that leave was required to rely at the appeal hearing on any sound recording not lodged and served as directed.
Further, there was no indication in the tenant's submissions that the landlord's alleged response orally was not consistent with the existing material before the primary member and was not in response to an allegation put to him which he was entitled to answer.
[4]
Alleged absence of evidence of no consent
This ground also must fail for the reasons given in relation to the first ground. The primary member, without expressly mentioning issue estoppel, referred to the existing breach of the lease and termination of the lease for that breach.
Further, we are satisfied that the primary member's decision was consistent with the written material before him about absence of landlord consent to any sub-tenancy. That written material was identified for us during the hearing as distinct from further material in the tenant's folder of material that the tenant then said he wanted to use if the Tribunal decided to allow the appeal and then re-hear the matter. There was no indication in that further material that it could not have been before the Tribunal in the primary hearing and no submission to that effect was made.
Accordingly, even if the tenant had identified that he sought leave to challenge, in relation to the occupant in January and February 2017, a finding of fact in the primary decision that there was no landlord consent to that occupation, we would have refused leave on the basis, in addition to the irrelevancy we have already identified above, that the primary member's finding was fair and equitable and in accord with the weight of evidence before him and there was no significant new evidence now available that was not reasonably available at the time of hearing.
[5]
No Tribunal jurisdiction for post-termination breach or damage
The landlord did not allege or rely upon a post-termination breach, as is apparent from what has already been said. Neither did the primary member in his decision.
Damages that are causally connected to a pre-termination breach do not have that causal chain arrested by the termination of the lease because the cause of action in respect of them has accrued before termination and survives termination: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, [1933] HCA 25 at 476-477; Macquarie International Health Clinic PL v Sydney South West Area Health Service (No 2) [2009] NSWSC 629 at [16]-[20]. There is nothing in the statutory basis for the Tribunal's jurisdiction which alters this principle.
There was no evidence that the fixed term of the lease had ended, so if the breach had not occurred the landlord would have continued to receive rent during the period for which damages were claimed, without any discount for a leasing-up period.
This ground also fails.
[6]
No primary grounds for RTA s 187 relief
Irrespective of whether it spelled out the primary bases for liability in the application, the landlord's application was an "application by a landlord … under [the RTA]" and these proceedings were "proceedings under [the RTA]" which are the preconditions in RTA s 187 for orders to be made under it. If the tenant was unclear about the basis for primary liability, it was open to him at a directions hearing to seek those particulars. To the extent he did so in his written submissions before the primary member, he did not press for them but, rather, sought to rely upon their not being spelled out when he had not asked for them to be spelled out.
In any event, the submission ignores that the initiating application by the landlord filed 22 February 2017 expressly mentions RTA s 123 in the orders sought and this was not affected by the amendment which added reference to s 187. Indeed, the tenant did not take the Tribunal to the application which was directly contrary to his entire contention on this ground.
This ground also fails.
[7]
No mitigation by landlord
As the primary member correctly stated, this ground fails on the facts. The landlord applied for a lifting of the stay immediately after the tenant ceased to pay the occupation fee which was a condition of the continuance of the stay. The timing and scope of the landlord's actions on the evidence were entirely reasonable. Even with the non-performance of the condition on which the stay was granted, the landlord could not obtain a writ to enforce possession without a decision of the Tribunal lifting the stay.
[8]
Stifling of tenant's attempted mitigation
Even if the tenant had been able to make an application after termination of the tenancy to evict the tenant, and even if RTA s 81(4)(a) had the effect on exposure to damages which the tenant appears to say it does (which it does not, it simply confirms that any sub-lease was terminated by termination of the head lease), this was irrelevant to the present situation and the landlord's claim against the tenant.
What would have been appropriate mitigation, once the tenant ceased to pay the occupation fee, was for the tenant to consent to the immediate lifting of the stay so the landlord could obtain as rapidly as possible a warrant for possession if the occupier did not then leave. This would have reduced the period of occupation fees payable to the landlord if the landlord had not then acted speedily.
There was an argument by the tenant, not raised as a distinct appeal ground, that "possession" in the RTA did not have the word "vacant" added in the statutory wording and that the tenant had given legal possession when he handed back the keys he had to the premises. This argument fails to appreciate what is trite law - that possession in the lease context means exclusive possession, that is, exclusive of the tenant and of anyone whom the tenant has permitted to occupy the premises.
This final ground also fails.
[9]
Conclusion
The appeal must be dismissed and that order will be effective immediately on publication of these reasons, reserving the question of costs for further consideration.
[10]
Costs
The landlord in his reply to the appeal sought costs. The landlord was represented by an agent at the hearing but there is some indication from their content that the reply to appeal and concise reply submissions were prepared with legal assistance, which may be recoverable on an assessment if a costs order was made.
Section 60 of CATA requires the Tribunal to be satisfied that there are special circumstances warranting an award of costs. This rule does not alter for proceedings in the Commercial and Consumer Division and on appeal from decisions of that Division for a claim below $30,000: Civil and Administrative Tribunal Rules 2014 (NSW) rules 38, 38A.
CATA s 60(3) sets outs out considerations to which the Tribunal may have regard when determining whether or not there are special circumstances warranting an award of costs. The Tribunal considers that the tenant prima facie ought to pay the costs of the appeal on the indemnity basis, taking into account the considerations in the following paragraphs of s 60(3):
(b) the tenant has been responsible for prolonging unreasonably the time taken to complete the proceedings;
(c) the relative strengths of the claims made by each of the parties, including claims that have no tenable basis in law;
…
(e) the appeal proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance;
(f) the tenant has failed to comply with the duty imposed by CATA s 36(3), which requires the parties to co-operate with the Tribunal to give effect to the guiding principle to facilitate the just, quick and cheap resolution of the real issues in the proceedings and for that purpose to participate in the processes of the Tribunal and comply with directions and orders of the Tribunal.
In summary, the prima facie position is reached based on the matters set out in the foregoing reasons:
(1) All the appeal grounds were simply dealt with as they were misconceived in the way the appeal was initiated and conducted.
(2) At least one of the appeal grounds was not directly raised in the notice of appeal.
(3) Appeal Panel directions were not adhered to in seeking the transcript of the primary hearing if the tenant wanted it and the absence of timely transcript was then, without a satisfactory explanation for that non-adherence, sought to be used to justify an adjournment sought belatedly and without notice during the appeal hearing.
(4) The tenant did not disclose in his argument to the Tribunal the presence in the landlord's initiating application of a matter (reliance upon RTA s 123 as an order sought) which directly undercut an appeal ground persisted in by the tenant and made this aspect of the primary proceedings as well as the appeal proceedings hopeless.
(5) The tenant sought to raise an appeal on a question of fact and credit - the landlord's alleged consent to a particular sub-tenant - without properly seeking leave to do so. The tenant's written submissions and oral argument on this alleged issue severely attacked the credit of the landlord's agent without articulating a proper basis for that attack.
(6) The tenant's written submissions and oral argument, in their detailed reference to case law indicated a basis of legal knowledge, and aspects of the tenant's material submitted on appeal showed previous appearances in the Tribunal and a detailed knowledge of the provisions of the RTA and CATA, yet the tenant in argument at the appeal hearing sought to minimise his knowledge that he could have asked at the primary hearing for an adjournment if, as he alleged in argument, he was caught by surprise on a matter of fact (alleged absence of consent to the particular sub-tenant).
(7) The tenant's written submissions were unnecessarily prolix and did not concisely address the real issues in dispute on the appeal.
(8) The tenant's initiating of an appeal which should never have been initiated in light of the misconceived grounds on which it was initiated and conducted unnecessarily prolonged the final determination of the proceedings.
(9) The foregoing support the basis for award of costs on the indemnity basis since they disclose relevant unreasonable conduct in connection with the conduct of the proceedings: Oshlack v Richmond River Council (1998) 193 CLR 72, [1998] HCA 11.
The Tribunal will make directions to give the tenant an opportunity to put before it written submissions which deals with why the Tribunal ought not to make an order that the tenant pay the costs of the appeal as agreed or assessed on the indemnity basis or, in the alternative, on the ordinary basis.
The written submissions ought also to deal with whether the Appeal Panel may dispense with a hearing and determine the matter of costs on the papers.
[11]
Orders
1. Appeal dismissed
2. The respondent is to provide, to the Tribunal and to the appellant, either in person or by post, any further documents and submissions he intends to rely on in relation to costs, on or before 20 November 2017.
3. The appellant is to provide to the respondent and the Tribunal, either in person or by post, any further documents and submissions in relation to costs on or before 4 December 2017.
4. The issue of costs will presently be decided on the papers. In the event that a party seeks a further hearing that party make submissions on that topic as part of the foregoing written submissions. The Tribunal will decide costs on the existing material together with any written submissions received in response to the above directions and any material at any further hearing it grants having considered any written submissions for a further hearing.
5. The parties submissions on costs are to address the special circumstances which would warrant the making of a costs order and whether the Tribunal should make an order that the tenant pay the costs of the appeal as agreed or assessed on an indemnity basis or in the alternative on the ordinary basis.
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Principal Registrar
[12]
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 November 2017