Ahearn v Doig

NCAT Appeal Panel|2018-12-13|Before: Ors J

Introduction

This is an appeal from a decision (which we will refer to as the Decision) of the Tribunal made in the Consumer and Commercial Division and published on 5 September 2018. The Notice of Appeal was lodged with the Tribunal on or about 16 September 2018 and therefore appears to have been filed within the time required by the Civil and Administrative Tribunal Rules 2014 (the Rules).
The dispute between the parties arose out of a residential tenancy agreement in which the appellants were the landlords and the respondents to the appeal were the tenants. It is convenient to refer to the appellants as the landlords and to the respondents to the appeal as the tenants.
The application lodged in the Consumer and Commercial Division was brought by the tenants seeking compensation. The Tribunal made an order that the landlords were to pay the tenants the sum of $4,890.16. It is that order which is the subject of this appeal.

The First Instance Decision

It is necessary, in order to understand this decision, to set out a summary of the facts and reasoning contained in the Decision. That summary is as follows: 1. The parties entered into a residential tenancy agreement on 7 December 2017 for a term of 26 weeks. The agent representing the landlords was Elders Real Estate (Elders); 2. On 1 January 2018 the premises suffered damage in a storm. On 2 January 2018 Elders sent an email to the landlords to the effect that the fans had stopped working when water in the lounge room was coming out of the fan light. The premises were inspected by Oriel Property Services who were insurance assessors engaged by the landlords' insurer. They provided a report on 3 January 2018. The report stated that water ingress was noted affecting most of the lower level ceiling. Water had also entered via windows on the second floor and had affected carpets. Oriel also sent a message to the agent recommending temporary accommodation for the tenants due to the significant amount of works that needed to be conducted at the property and that an Oriel technician had deemed the property "uninhabitable" due to the tenants not being able to access areas such as the kitchen, and due to safety issues; 3. On 3 January 2018 the agent gave the tenants a termination notice under s 109 of the Residential Tenancies Act, 2010 (RT Act); 4. The tenants left the premises on 4 January 2018 and later brought an application seeking repayment of rent and compensation. They alleged that the landlords had prior knowledge of the premises "capacity to leak and failed to rectify the issue". At the hearing, the landlords admitted the claim for repayment of rent but disputed the claim for compensation; 5. After the hearing, the Tribunal issued a summons at the request of the tenants for production of the agent's file. Documents were produced on 19 July 2018 and further submissions were filed by both parties on 30 August 2018; 6. The Decision recited the evidence provided by the tenants and the evidence provided by the landlords. In addition, the Decision separately set out the evidence contained in the documents produced by Elders in response to the summons. This evidence included a condition report dated 9 May 2017 which was said to contain reference to former tenants' comments that there was "bubbled plaster". There was also a communication from a previous tenant Elizabeth Tanttari dated 29 June 2017 to the previous managing agents to the effect that there was water pooling in the roof and that it had created a bubble in the ceiling. There was a report by the agent dated 2 August 2017 following an inspection of the premises which referred to a leaking downpipe adjacent to the living room and bubbles in the top left corner of the living room. There was also a letter from the agent to the landlords dated 3 August 2018 stating that the tenants had reported that the outside downpipe adjacent to the living room leaks and in stormy weather paint bubbles in the living room. Finally, there was a reference in the incoming condition report of 7 December 2017 stating "bubbled plaster, glue above entrance between fan and window"; 7. The Decision referred to the landlords' duty to carry out repairs and stated that the Tribunal was satisfied that the landlords were in breach of their obligation (imposed by s 63 of the RT Act) to provide and maintain the premises in a reasonable state of repair. The Tribunal found that there was "abundant evidence of signs (especially the message of 29 June 2017) pointing to a history of rain water coming into the lounge room through the ceiling". The Tribunal found that there was "no evidence that the issue was addressed by the landlords as it should have been by investigating the defect and repairing it"; 8. The Tribunal was satisfied that the landlords' failure to comply with s 63 of the RT Act resulted in the premises being so seriously affected by the entry of rain water that the residential tenancy agreement was terminated. Further, the Tribunal stated that the reports of Oriel and of an electrician (Mr Rhodes) provided strong evidence that the lower level ceiling was extensively effected by rainwater from the storm; 9. The landlords' decision to seek to terminate the residential tenancy agreement pursuant to s 109 of the RT Act constituted a repudiation of the landlords' obligation to keep the premises in a reasonable state of repair; 10. The Tribunal awarded damages to the tenants, being the cost of a removalist and the extra amount paid to secure emergency accommodation (after making an allowance for the rent that would have otherwise been paid by them to the landlords). There was also an amount added constituting a refund of overpaid rent; and 11. The Decision recorded that the landlords suggested that the tenants had failed to mitigate their losses but found that there was no evidence enabling such a finding to be made.

Notice of Appeal

The Notice of Appeal contained the following grounds of appeal: 1. The Decision was based upon a previous tenancy with Elizabeth Tanttari and the agencies, Harcourts. This constituted "old evidence" and the Member did not have the entire file from Harcourts; 2. The email allegedly sent by one of the tenants (Mr Doig) on 8 December 2017 referring to a serious water leak was not received and was falsely generated; and 3. The termination notice was effective to end the residential tenancy agreement and the landlords had no obligation to provide alternative accommodation as claimed by the tenants.
The Notice of Appeal stated that the landlords did not ask for leave on the basis of having suffered a substantial miscarriage of justice. On the form, there is the question "are you asking for leave?" An appellant is required to tick the "yes" box or the "no" box. The landlords ticked the no box.

Reply to Appeal

The tenants have filed a Reply to Appeal which disputes the landlords' contentions and have attached a copy of the email allegedly sent by Mr Doig on 8 December 2018 to Elders. That email refers to a number of faulty or damaged matters and states that there "is what looks like to be a serious water entry through the floor from the upstairs minor bedroom - visible through the lounge room ceiling paint".

Landlords' Submissions

The landlords have lodged submissions received on 3 October 2018 and further submissions received on 7 November 2018. These submissions largely dispute various factual findings and it will be necessary to refer to them in some detail. In addition, the submission received on 7 October 2018 (which contains the heading "chronology of case") refers to cl 12 of Sch 4 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) and it is clear that the landlords seek to rely upon the provisions of that clause as well as submitting that there has been an error of law.
The points made by the landlords may be summarised as follows: 1. The landlords say they did not receive the email of 8 December 2017 outlining a serious water issue; 2. The condition report prepared by Elders was in error in that it failed to update the position. They say that they inspected the premises and found no evidence of plaster bubbling; 3. The Decision failed to record that one of the landlords (Mr Ahearn) inspected the property with one of the tenants (Mr Doig) on 15 December 2017 and at that inspection, Mr Doig did not mention the lounge room ceiling plaster mark; 4. The landlords were not aware of the report of Ms Tanttari; 5. The landlords inspected the property in early August 2017 and repaired an exterior join in the gutter; 6. The landlords sought to introduce fresh evidence in the form of weather reports from 8 December 2017 to 1 January 2018 indicating that there were numerous storms with strong winds in that period and argued that the tenants did not report any leakage during those storms; 7. The tenants may have left the windows open on 1 January 2018 and this would explain why the earlier storms did not result in water coming in; 8. The storm on 1 January 2018 was a "natural disaster", outside the control of the landlords; 9. The landlords are not liable if the tenants did not inform them of the state of the premises; and 10. The tenants claim is excessive as they claim for 5 star accommodation and also left their property at the premises until 9 January 2018.
At the appeal hearing the landlords added to the matters raised in the submissions described above. They stated: 1. With respect to the inspection of the property they conducted in August 2017, they acknowledged that there was no evidence that that had occurred. In addition, they were not able to provide evidence that they gave evidence to the Tribunal at the first instance hearing that such an inspection had taken place; 2. The landlords referred to the fact that the tenants' belongings remained in the property until 8 or 9 January 2018. In response to our questions, they stated that the repair work to the property was conducted in January and the property was not able to be let again until February; 3. They acknowledged that they did not provide any evidence that the tenants could have obtained cheaper accommodation than that which they paid for.

The Tenants' Submissions

It is not necessary to record the various points made by the tenants in their submissions. However, one point should be referred to, namely that the tenants dispute that they did not complain about the presence of water entering the premises after they took possession. The tenants maintain that they sent the email at 8 December 2017 to Elders in which they referred to a "serious water entry".
We also note that the tenants' submissions were not supplied to either the Tribunal or to the landlords until approximately 11 December 2018. At the appeal hearing we asked the landlords whether they were able to proceed, notwithstanding the very recent service of the tenants' submissions, and Mrs Ahearn said they were able to do so.

Decision

Appeals from decisions made in the Consumer and Commercial Division of the Tribunal are regulated by s 80 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) and by cl 12 of Sch 4 of the NCAT Act. In summary, this means that a party may appeal as of right on a question of law and with leave of the Appeal Panel pursuant to the provisions of cl 12 of Sch 4.
In this case, the landlords have not expressly identified any questions of law but, rather, have submitted that the evidence did not support the finding that they had failed to keep the premises in a reasonable state of repair.
The essence of the decision under appeal was that there is "abundant evidence of signs pointing to a history of rain water coming into the lounge room through the ceiling". The Decision expressly left out of consideration the tenants' email of 8 December 2017 on the basis that there was no evidence that it had been received by Elders or by the landlords. However, the Decision expressly referred to the email of 29 June 2017 from Elizabeth Tanttari to the landlords' previous agent, Harcourts. From the reasons contained in the Decision, the other evidence to the same effect was the condition report of 9 May 2017, the contents of the agent's inspection report of 2 August 2017, the email from the agent to the landlords dated 3 August 2017 and the incoming condition report of 7 December 2017. All of these contained references to symptoms of water entry. In the absence of countervailing evidence, the Member's conclusion that the landlords failed to comply with their obligations under s 63 of the RT Act resulting in the premises being seriously affected by rain water on 1 January 2018 is a conclusion which seems justifiable and does not display an error.
In our view, there was no countervailing evidence put forward by the landlords that would have justified the Tribunal coming to a different conclusion. Although the landlords stated that they inspected the premises in early August, that evidence does not appear to have been put to the Member at the hearing or in written submissions. Indeed, at the hearing of the appeal, the landlords acknowledged that they had not done so.
The landlords also submitted that they were not aware of Ms Tanttari's email. However, they did not deny being aware of the agent's report of 3 August 2017. In any event, it is a clear and uncontroversial legal principle that the knowledge of an agent is the knowledge of the principal. This means that proof that a landlord knew of the state of premises is satisfied if the agent knew, even if the agent did not inform the landlords.
We refer to the landlords' submission of fresh evidence in the form of weather reports for the period in December 2017 prior to the severe storm on 1 January 2018. As is clear from the provisions of cl 12 of Sch 4 of the NCAT Act, new evidence cannot be tendered in an appeal unless it is significant new evidence that was not reasonably available at the time of the hearing. This is made clear in the form of the Notice of Appeal completed by the landlords (see paragraph 6B(iii) of the form of the Notice of Appeal). What constitutes new evidence not reasonably available at the time of proceedings under appeal was considered by an Appeal Panel in Owen v Kim [2017] NSWCATAP 26. In essence, it was decided that that term means evidence that was unavailable because no person could reasonably have obtained the evidence. Here, there was no suggestion put forward by the landlords that the weather reports could not have been provided at the first instance hearing. In any event, in our view, they do not prove that the premises were in fact in a reasonable state of repair up until the severe event on 1 January 2018. Such a conclusion is purely speculative and unlikely given the other evidence identified in the Decision and relied upon by the Member.
In our view, the fact that the tenants may have left property at the premises for approximately one week after their departure does not mean that the Decision was in error or the order made unjust or inequitable. The landlords conceded that the property was not able to be rented again until February 2018 as repair work was required to be undertaken following the storm. In short, the presence of property belonging to the tenants has not caused the landlords to suffer any loss and there was no suggestion that it caused a delay in the commencement of the repair work.
We refer to the landlords' contention that the tenants stayed in 5 star accommodation. There was no evidence tendered by the landlords that the tenants' conduct was unreasonable and that they could have stayed in adequate but cheaper accommodation. The onus is on the landlords to provide evidence that the loss claimed by the tenants was unreasonable because the tenants could have mitigated the extent of their loss by locating cheaper accommodation: see the decision of the New South Wales Court of Appeal Karacominakis v Big Country Developments Pty Ltd & Ors Big Country Developments Pty Ltd v Chadlace Pty Ltd & Ors J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors Hollingsworth & Anor v Big Country Developments Pty Ltd & Ors [2000] NSWCA 313 per Giles JA and Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57 per Garde J. Here, once it was established that the tenants' loss was caused by the landlords' breach, the onus then shifted to the landlords to establish that the tenants' loss was greater than would have been the case had the tenants acted reasonably. There was no such evidence in support of the landlords' contentions.
For the above reasons, it is our view that the landlords have not demonstrated either that there has been an error of law, or that one of the grounds set out in cl 12 of Sch 4 of the NCAT Act has been established. It follows that the appeal must be dismissed. Further, the order recorded in the decision should be affirmed.
At a directions hearing in these appeal proceedings an order was made staying the operation of the order made at first instance. It is necessary for us to order that that stay be lifted.

Orders

The Appeal Panel makes the following orders: 1. The appeal is dismissed; 2. The order staying the operation of Order 1 made on 5 September 2018 in RT 18/12899 is lifted; and 3. Order 1 made on 5 September 2018 in RT 18/12899 is affirmed.

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: 02 January 2019

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