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This appeal arises out of a dispute between the Appellant (the landlord) and the Respondent (the tenant) concerning a residential tenancy regulated by the Residential Tenancies Act 2010 (NSW) (the RT Act), and in particular by the provisions of the RT Act dealing with social housing tenancy agreements.
The Appellant filed an application on 4 August 2020 in the Consumer & Commercial Division of the Tribunal seeking a number of orders concerning the residential tenancy agreement between it and the Respondent.
On 20 October 2020, the Tribunal made orders to the following effect:
1. The Tenant must comply with the terms of the residential tenancy agreement by keeping the residential premises in a reasonable state of cleanliness both inside and out.
2. The Tenant must comply with the terms of the residential tenancy agreement by not intentionally or negligently causing or permitting any damages to the residential premises.
3. The Tenant must comply with the terms of the residential tenancy agreement by informing the Landlord of any damage to the residential premises.
4. By consent, the Tribunal is satisfied that the notice of the hearing has been duly served on the Respondent and the Tribunal considers that justice requires the matter be dealt with in the absence of the party.
The Tribunal's decision also stated:
"The Applicant seeks leave to add a claim for money (187(1)(d)). No rent or water arrears are presently owing. On the facts described by the Applicant's representative, this is actually a claim for compensation. Leave is granted to add a claim for compensation (187(1)(d)). The application for compensation for damage to the premises is then however dismissed as no cause of action existed at the date of this application for compensation as the tenancy remained on foot at that time: see Micalleff v Constantine and Marcer (Tenancy) [2013] NSWCTTT 102 and Susan Trevallion v Vivian Puccini-Scuderi and Peter Scuderi [2014] NSWCATCD 81."
Notice of Appeal
The Appellant lodged a Notice of Appeal on 3 November 2020. The appeal is only in respect of the dismissal order set out in in paragraph 4 above.
The grounds of appeal are brief and may be summarised as follows:
1. The Tribunal erred in its interpretation and application of s51(1)(d) of the RT Act (clause 13.4 of the residential tenancy agreement) in that it applied the wrong test or asked the wrong question.
2. The Tribunal thereby found that no cause of action for compensation existed at the date of the application as the tenancy remained on foot.
3. The Tribunal therefore dismissed the claim for compensation under s187(1)(d) thereby lapsing into legal error.
The Tribunal made directions with respect to the appeal at a directions hearing on 18 November 2020. The directions required the Respondent to lodge a Reply to Appeal by 2 December 2020. Other directions were made for the Appellant and the Respondent to file submissions and supporting material. The notice of directions sent to the parties stated that the issue of whether the Appeal Panel should determine the appeal on the papers and dispense with the hearing will be decided on 16 December 2020. Further directions were made on 16 December 2020. This included an order (Order 1) for the Appellant to serve its submissions, which had been filed on 15 December 2020, upon the Respondent as well as to provide evidence of compliance with Order 1 insofar as service on the Respondent is concerned. The Respondent was given a further time (until 15 January 2021) to file submissions in reply, including as to whether a hearing may be dispensed with and the appeal decided on the papers. The Tribunal noted that the Appellant consented to the appeal being decided on the papers.
The Respondent has not participated in the appeal either by appearing at the two directions hearings or by filing any reply or submissions.
Although the directions required the Appellant to provide copies of the two cases referred to in the decision under appeal (ie. the Micalleff case and the Trevallion case) neither have been provided. We have obtained a copy of both. The Appellant's submissions refer to a provision of the residential tenancy agreement. A copy of that agreement has not been provided.
As the appeal concerns the provisions of s51 of the RT Act, it is helpful to set out the terms of that section in full, which is as follows:
51 Use of premises by tenant
(1) A tenant must not do any of the following--
(a) use the residential premises, or cause or permit the premises to be used, for any illegal purpose,
(b) cause or permit a nuisance,
(c) interfere, or cause or permit any interference, with the reasonable peace, comfort or privacy of any neighbour of the tenant,
(d) intentionally or negligently cause or permit any damage to the residential premises,
(e) cause or permit a number of persons to reside in the residential premises that exceeds any number specified in the residential tenancy agreement.
(2) A tenant must do the following--
(a) keep the residential premises in a reasonable state of cleanliness, having regard to the condition of the premises at the commencement of the tenancy,
(b) notify the landlord of any damage to the residential premises as soon as practicable after becoming aware of the damage.
(3) On giving vacant possession of the residential premises, the tenant must do the following--
(a) remove all the tenant's goods from the residential premises,
(b) leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, and, if there is a condition report, as set out in the condition report applicable to the premises when the agreement was entered into,
(c) leave the residential premises in a reasonable state of cleanliness, having regard to the condition of the premises at the commencement of the tenancy,
(d) remove or arrange for the removal from the residential premises of all rubbish, having regard to the condition of the premises at the commencement of the tenancy,
(e) return to the landlord all keys, and other opening devices or similar devices, provided by the landlord to the tenant.
(4) In this section--
[2]
"residential premises" includes everything provided with the residential premises (whether under the residential tenancy agreement or not) for use by the tenant.
(5) This section is a term of every residential tenancy agreement.
Appellant's Submissions
The Appellant's submissions are as follows:
1. The principle that the Tribunal apparently gleans from the two decisions cited in order 5 ( quoted in paragraph 4 above) is that the RT Act places on a tenant the obligation to return the property to the landlord, when vacating the property, in the same condition as it was when it was leased, save for fair wear and tear and therefore until the tenant vacates, the tenant has an opportunity to repair damage and return the premises to their original condition and therefore compensation for damage cannot be awarded whilst the tenancy is alive. The landlord can only claim compensation for damage when the property has been vacated as this enlivens a cause of action for breach under s 51(3) of the RT act.
2. The Tribunal's approach misconstrues both the RT Act and the decision in Micalleff.
3. In Micalleff the focus was on damages for breach of the covenant that the property be left in the same condition as when it was leased (s 51(1)(iii)(b). The Appellant submits that the decision should be understood to mean that a cause of action for a breach under s 51(3) does not arise until the tenant has given vacant possession of the property. The Appellant submits that the Tribunal in the decision under appeal has conflated a cause of action for a s 51(3)(b) breach with a cause of action for a breach under s 51(1)(d). The Tribunal fell into the same error in Trevallion.
4. The Appellant submits that an action under s 51(1)(d) asserting intentional or negligent damage to the premises by a tenant can bring can be brought by the landlord and damages awarded during the tenancy or after. It is separate to a cause of action than a cause of action under s 51(3)(b) that only arises with vacant possession.
5. The Appellant points to remedies available under Division 5A of Part 3 of the RT Act and to s 92A. Division 5A deals with rectification orders which may be made following investigation by the Secretary. These rectification orders concern investigations as to whether a tenant has intentionally or negligently caused or permitted damage to residential premises as well as other types of investigations not presently relevant to this appeal. Section 92A provides that the Tribunal may, on application by a landlord, make a termination order if it is satisfied that a tenant rectification order was given and that the tenant has failed to comply. The Appellant submits that those provisions would tend to suggest that the landlord has remedies on breach which are not deferred until the termination of the tenancy.
6. Consideration
In our view, the Tribunal has misconstrued the provisions of s 51 of the RT Act and a question of law arises. This means that the Appellant has an appeal as of right: see s 80(2) of the NCAT Act.
In these proceedings the allegation against the tenant was that there had been a breach of s 51(1)(d) namely that the tenant had intentionally or negligently caused or permitted damage to the residential premises. This is apparent from the application filed on 4 August 2020 in which the allegation is made that the tenant has breached the tenancy agreement by failing to adhere to clauses requiring the tenant not to intentionally or negligently cause or permit damage, to keep the residential premises reasonably clean and to notify the landlord as soon as practicable of any damage to the residential premises.
In our view the obligations set out in s 51(1)(d) are continuing obligations applying during the currency of the tenancy and a cause of action arises when a breach occurs. The Tribunal erred in holding that no cause of action existed at the date of the application for compensation as the tenancy remained on foot. In these proceedings the landlord was not making an allegation of a breach by the tenant of an obligation arising on giving vacant possession. Such obligations are set out in s 51(3). Such obligations arise on giving vacant possession and are to be distinguished from the obligation set out in s 51(1)(d). The other obligations set out in s 51(1) and s 51(2) do not arise in these proceedings and we confine our decision to s 51(1)(d).
We have read the recent Appeal Panel decision in Homes North Community Housing v Sehwaiger [2020] NSWCATAP 286 and agree with the decision and reasoning recorded in that decision. In particular we agree with the Appeal Panel that:
1. The decisions in Micalleff and Trevallion do not support the proposition of law relied upon by the Tribunal below to the effect that an order for compensation could not be sought from Tribunal until the residential tenancy has come to an end.
2. We agree with the Appeal Panel's reasoning that s 190(1) of the RT Act expressly contemplates in subsection 2 that an application relating to a breach of a residential tenancy agreement can be made during the tenancy agreement.
Accordingly, the appeal should be upheld and the Appellant's application for compensation should be remitted to the Tribunal for hearing. The appellant has sought an order that the hearing be before a differently constituted tribunal. We see no justification for such an order. The tribunal made its decision on the basis of statutory construction and did not consider evidence or make any findings concerning the conduct of the parties.
The following orders are made:
1. Appeal upheld and order 5 made 20 October 2020 in application SH 20/33145 is set aside .
2. The Appellants application for compensation is remitted to the Consumer and Commercial Division of the Tribunal for hearing and determination.
[3]
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
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Decision last updated: 10 March 2021