Bickerton v McSelan Holdings Pty Ltd

Background

1. The tenants (appellants) entered into a residential tenancy agreement with the landlord (respondent) commencing on 11 October 2017 at a weekly rent of $300.
2. The premises rented were a few kilometres outside the rural town of Finley, NSW. The premises were not on town water, potable water being supplied by two rainwater tanks. One tank was connected to "channel water". That is, it was connected by a pipe and pump to an irrigation channel allowing the pumping of water from that irrigation channel into the tank if required.
3. A number of disputes arose between the parties including one relating to the quality of the potable water available in the premises. It is only the latter which is the subject of this appeal, all other disputes having been settled between the parties or determined by the Tribunal (and from which no party has appealed).
4. The tenants claimed that the water available from the rainwater tanks was not fit for human consumption. They first complained to the landlord on 11 January 2018 and began purchasing bottled water for drinking and cooking in May 2018.
5. The documentary evidence established that the cost of the purchased bottled water averaged $22 per week from 8 May 2018 to the date of the hearing below (being 31 October 2018). This period is approximately 24 weeks.
6. The Tribunal accepted the evidence from an officer of NSW Health who had tested the water. That officer said that he had no confidence in the safety of the water, and advised against the water being used for drinking, brushing teeth and food preparation. The Tribunal found that the water was not of an acceptable standard for human consumption.
7. The Tribunal found that the poor quality water was a breach of the landlord's obligations under s 63 of the Residential Tenancies Act 2010 (NSW) ("RTA").
8. The Tribunal found that the rent payable under the existing residential tenancy agreement was excessive having regard to the reduction in the quality of the potable water provided with the premises and that, for twelve months commencing on 18 January 2018, the rent for the premises (insofar as the water is concerned) must not exceed the agreed rent less $22 (the "rent reduction").
9. In relation to that breach the Tribunal rejected the tenants' claim for a rent reduction of $150 per week.
10. In addition, the Tribunal awarded the tenants $400 as compensation for damage and loss caused by the poor water quality. The damage and loss was not identified.
11. It appears the Tribunal was satisfied that the problems with the quality of the water could be solved by having the water tanks professionally cleaned in order to remove contaminants and ordered the landlord to do so within 21 days of the Tribunal's orders.
12. The tenants have appealed from the Tribunal's assessment of the quantum of the rent reduction and compensation.
13. The tenants contend that the Tribunal erred and should have awarded them a rent reduction of $70 per week commencing on 18 January 2018 and ongoing (until repairs to the potable water supply were made) together with $2,500 compensation.

Time to Appeal

1. The Notice of Appeal was filed one day late. The fault for doing so was not the tenants' fault.
2. No prejudice having been suffered by the landlord it is appropriate that time be extended for the filing of the Notice of Appeal.

Grounds of Appeal

1. The tenants advanced four grounds of appeal: 1. inadequate reasons; 2. a failure to address a substantial argument advanced by the tenants; 3. the award of $22 per week and $400 compensation was unreasonable in that it lacked an evident and intelligible justification; and 4. the award of $22 per week and $400 compensation was against the weight of evidence.
2. The first three grounds give rise to questions of law and thus may be raised as of right. The fourth requires leave to appeal [Section 80(2)(b) and clause 12(1) of Schedule 4 of the Civil and Administrative Tribunal Act 2013 No.2 (NSW).]
3. It is convenient to address Ground 3 first, followed by the remaining grounds in their numerical order.

Ground 3

1. The appellant cites Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332 at [76] and [105] and Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 357 ALR 408 at [82].
2. In Li, the Minister appealed by special leave contending that, contrary to the conclusions of the Federal Magistrates Court and the Full Court of the Federal Court, the Migration Review Tribunal did not act unreasonably in making its decision refusing to defer its decision on the respondent's application to review a decision refusing her a visa, and did not fail to apply such requirements of procedural fairness as were imposed on it by the Migration Act 1958 (Cth).
3. At [76], Hayne, Kiefel and Bell JJ, constituting a majority, said (footnotes omitted): "As to the inferences that may be drawn by an appellate court, it was said in House v R that an appellate court may infer that in some way there has been a failure properly to exercise the discretion "if upon the facts [the result] is unreasonable or plainly unjust". The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification."
4. At [105] Gageler J, agreeing in the result but delivering separate reasons, said (footnotes omitted): ""It is, of course, true that, as a measure in fact of time, space, quantity and conduct, reasonableness is a concept deeply rooted in the common law: and so, in such cases, is the power of a court to say whether a particular decision of that fact is or is not within the bounds of reason". Review by a court of the reasonableness of a decision made by another repository of power "is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process" but also with "whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law".
5. SZVFW was an appeal from a decision of the Full Court of the Federal Court holding that a judge of the Federal Circuit Court was correct to find that a decision of the Refugee Review Tribunal was legally unreasonable.
6. The passage in SZVFW cited by the appellant, namely [82], requires the context of the preceding few paragraphs. Nettle and Gordon JJ said (footnotes omitted): "[78] The task of the court, where it has been alleged that a decision is legally unreasonable, is to ask whether the exercise of power by the decision-maker was beyond power because it was legally unreasonable. [79] That task requires the court to assess the quality of the administrative decision by reference to the statutory source of the power exercised in making the decision and, thus, assess whether the decision was lawful, having regard to the scope, purpose and objects of the statutory source of the power. [80] Parliament is taken to intend that a statutory power will be exercised reasonably by a decision-maker. The question with which the legal standard of reasonableness is concerned is whether, in relation to the particular decision in issue, the statutory power, properly construed, has been abused by the decision-maker or, put in different terms, the decision is beyond power. That question is critical to an understanding of the task for a court on review. [81] How that abuse of statutory power manifests itself is not closed or limited by particular categories of conduct, process or outcome. The abuse of statutory power is not limited to a decision affected by specific errors which bring about an improper exercise of power because, for example, the decision-maker took into account an irrelevant consideration or failed to take into account a relevant consideration; or exercised the power in bad faith, or for a purpose other than a purpose for which it was conferred; or exercised the power in such a way that the result of the exercise of power is uncertain. [82] Nor is the abuse of statutory power limited to a decision which may be described as "manifestly unreasonable", or to what might be described as an irrational, if not bizarre, decision that is so unreasonable that no reasonable person could have arrived at it. A conclusion of legal unreasonableness may be outcome focused - where, for instance, there is no "evident and intelligible justification" for the decision. As Gageler J explained in Li, "[r]eview by a court of the reasonableness of a decision made by another repository of power 'is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process' but also with 'whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law'".
7. Kiefel CJ said, at [10] - [11] (footnotes omitted): [10] In the joint judgment in Li it was explained that a decision made in the exercise of a statutory power is unreasonable in a legal sense when it lacks an evident and intelligible justification. That may be so where a decision is one which no reasonable person could have arrived at, although an inference of unreasonableness is not to be drawn only where a decision appears to be irrational. ... [11] Statements such as that made in the Wednesbury case, that a decision may be regarded as unreasonable if no reasonable person could have made it, may not provide the means by which a conclusion of unreasonableness may be arrived at in every case. But it serves to highlight the fact that the test for unreasonableness is necessarily stringent. And that is because the courts will not lightly interfere with the exercise of a statutory power involving an area of discretion. The question is where that area lies."
8. Adopting an appropriate level of restraint, because an appeal of this nature does not succeed just because we might have decided differently had we been in the Tribunal's shoes, the question for us raised by this ground of appeal is whether the outcome, the Tribunal's decision, lacked an evident and intelligible justification. If it lacked an evident and intelligible justification then it was legally unreasonable and should be set aside.
9. An associated question raised in the appellant's submissions, but in reality, being a different ground of appeal, is whether the Tribunal's decision was so unreasonable that no decision maker would have made such a decision.
10. In our opinion the Tribunal's decision did have an evident and intelligible justification and was not unreasonable.
11. A failure to refer to comparable decisions, as submitted by the appellant, does not deprive the Tribunal's decision of having an evident and intelligible justification, or turn a reasonable decision into an unreasonable one. One must examine the Tribunal's reasoning and determine whether it contains evident and intelligible reasoning supporting the decision made.
12. One must keep in mind in a case such as the present that the decision challenged is as to the quantum of the rent reduction and compensation. Hence it is an evaluative decision as to the extent to which rent may be excessive taking into account the reduction in services and the matters set out in s 44(5) of the RTA, namely: 1. the general market level of rents for comparable premises in the locality or a similar locality, 2. the landlord's outgoings under the residential tenancy agreement or proposed agreement, 3. any fittings, appliances or other goods, services or facilities provided with the residential premises, 4. the state of repair of the residential premises, 5. the accommodation and amenities provided in the residential premises, 6. any work done to the residential premises by or on behalf of the tenant, 7. when the last increase occurred, 8. any other matter it considers relevant (other than the income of the tenant or the tenant's ability to afford the rent increase or rent).
13. It is evident that the Tribunal took into account the rent being paid, the cost of bottled water and the degree of inconvenience to the tenants in arriving at its evaluation of the degree to which the rent was excessive and as to the amount of compensation that should be awarded, keeping in mind the Tribunal also ordered that the landlord clean the tank and thus bring the problem to an end.
14. It is not to be overlooked that, at the time of the hearing, the tenants had been purchasing water (on the evidence) for approximately 24 weeks (at an average of $22 per week), whereas the rent reduction was of $22 per week for 52 weeks. In effect, the rent reduction was for an amount equal to double the proved cost to the tenants for the bottled water purchased by them.
15. The tenants seek an order for a reduction in rent for longer than twelve months, but that is not allowable. Such an order cannot be for a period longer than twelve months - s 44(6)(a) of the RTA.
16. An evaluative decision of this type is not apt for strict mathematical calculation but is inherently impressionistic.
17. The evident and intelligible justification for the evaluation of excessive rent, given the degree of inconvenience suffered by the tenants and other evidence of the subjective effect of the poor quality water, was approximately double the cost of the bottled water purchased by them up to the date of the hearing.
18. The reasoning for the compensation of $400, rather than some other amount, is unclear, but it is clear that the Tribunal was attempting to evaluate, in monetary terms, an appropriate amount of compensation over and above the rent reduction for the loss and damage caused to the tenants.
19. The tenants claim $2,500 should have been awarded, but no justification is given for that amount (as opposed to any other amount) other than emphasising, and legitimately so, the subjective effect the poor water quality had on the tenants. But that makes the point, amounts for compensation are one person's subjective assessment, expressed in monetary terms, of the subjective impact of the poor water quality. Such amounts are not calculable, at least in cases like the present, according to any mathematical or quantitative standard.
20. Others may have evaluated differently, but that does not mean there was error.
21. In all of the circumstances, on the evidence given and taking into account the Tribunal's reasons, we do not believe the Tribunal's decision was unreasonable.
22. In our opinion the Tribunal's decision contained an evident and intelligible justification and was not so unreasonable that no decision maker would have made the same decision.
23. We reject Ground 3.

Ground 1

1. In Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 McColl JA, with whom Ipp JA and Bryson AJA agreed, said at [57] - [59] that the giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons works a miscarriage of justice. Whilst the extent and content of reasons will vary from case, it is essential that the reasons explain how the legal and factual points in dispute between the parties was resolved. Not just the result, but how the Tribunal reasoned to that result.
2. Reasons must enable the parties to identify the basis of the decision and the extent to which their arguments had been understood and accepted.
3. As was noted by Priest JA in Carbone v Toyota Motor Corporation Australia Ltd [2017] VSCA 249 at [121], those hearing appeals should not: "... search for, or too readily identify, error; should avoid reading the reasons under review as if they were a will or a statute; and should eschew the temptation to turn a molehill of semantic imprecision into a mountain of appealable shortcoming."
4. We have identified at [34] above the factors identified by the Tribunal and which are expressly taken into account in the Tribunal's reasons.
5. In our opinion the Tribunal's reasons are adequate, albeit economical.
6. It is not possible, as the tenants' submissions suggest, to calculate the amounts to be awarded according to some form of formula. The assessment of rent reduction and compensation is, to an extent, impressionistic. It is certainly evaluative, and thus reasonable minds may differ as to amounts to be awarded.
7. In a case such as the present, we do not consider more extensive reasons were required. The reasons did explain the factors the Tribunal took into account. The Tribunal was not required to set out every detail of its process of reasoning (Pollard at [58]) nor every fact or piece of evidence (Pollard at [61]), but did refer to the matters it regarded as important in arriving at its evaluation of the amount of rent reduction and compensation. In that way the Tribunal sufficiently explained how it resolved the issue of quantum on those two matters.
8. We reject Ground 1.

Ground 2

1. The tenants contend that the Tribunal failed to address a substantial argument of the tenants. Where a decision-maker has failed to respond to a substantial argument it has been said that there has been a failure to accord natural justice, that is, procedural fairness - Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088.
2. The tenants point to five facts: not being able to brush their teeth or prepare food with the water; having to wash their clothes numerous times as a result of the water; the need to rewash their dishes; their children complaining of itching after contact with the water, and; the water being unsuitable for bathing.
3. In our opinion the Tribunal has not erred.
4. First, because the matters referred to were, to a large degree, taken into consideration by the Tribunal.
5. Second, they amount to facts rather than a separate and distinguishable argument, and there is no requirement to refer to all facts and evidence in reasons (see Pollard at [61]).
6. The first of the matters identified at [54] above were caught up with the evidence of the need for and use of bottled water and so were taken into account.
7. The second and third of those matters was expressly referred to by the Tribunal at [30] of its reasons. We consider it is reasonable to infer that they were taken into account because they were matters about which the first appellant gave evidence, and which led her to purchasing the bottled water. The Tribunal referred to this evidence of the need to purchase bottled water at [86] of its reasons.
8. The fourth matter was unsupported by any medical or expert evidence and so it could not be said that the itchiness referred to was proved to have been connected to the poor quality water.
9. The fifth matter is, in our opinion, sufficiently taken up with the second, third and fourth matters.
10. All of the matters were really facts going to the quantum of rent reduction and compensation, rather than being an independent substantial argument. As we have noted earlier, reasons are not required to refer to every piece of evidence.
11. In our opinion the Tribunal did not fail to address a substantial argument advanced by the tenants.

Ground 4

1. The tenants contend that the evaluative decisions as to the quantum of rent reduction and compensation were against the weight of evidence.
2. We do not agree.
3. The test for "against the weight of evidence" is set out in Calin v The Greater Union Organisation Pty Ltd [1992] HCA 23; (1991) 173 CLR 33 wherein Mason CJ, Deane, Toohey and McHugh JJ, at 41, said of this ground: "The correct principle is that a court on appeal may order a new trial if the jury has reached a conclusion which is against the evidence in the sense that the evidence in its totality preponderates so strongly against the conclusion favoured by the jury that it can be said that the verdict is such as reasonable jurors could not reach."
4. However, the types of conclusions their Honours were speaking of were findings of fact or ultimate findings, rather than the evaluative and impressionistic assessment of by how much the rent was excessive and an appropriate amount of compensation.
5. One hundred percent of the evidence may be in favour of the contention that the poor water quality had an adverse impact, but it was the degree of that impact together with the other matters to which the Tribunal had regard that determined the amount of rent reduction and compensation.
6. As we have noted earlier, the Tribunal took into account the tenant's complaints of how the poor quality water adversely impacted upon them (where supported by evidence). Having done so the Tribunal made its evaluation of the amount by which the rent was excessive and the amount of compensation. The "against the weight of evidence" ground is not applicable to such evaluation.
7. In those circumstances we are not satisfied that the tenants may have suffered a substantial injustice because the decision of the Tribunal was against the weight of evidence.
8. Accordingly, we are not persuaded that the tenants have established the grounds for the granting of leave to appeal on this point per clause 12(1)(b) of Schedule 4 of the Civil and Administrative Tribunal Act 2013 No.2 (NSW).
9. We decline to grant leave in relation to Ground 4.

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. Registrar 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: 25 June 2019