Cernaianu-Soare v NSW Land & Housing Corporation

Supreme Court of NSW|2007-09-10|Before: Ms J, Harrison J

CITATION : Cernaianu-Soare v NSW Land & Housing Corporation [2007] NSWSC 1026

JURISDICTION : Common Law Division - Administrative Law Division

DECISION : (1) The appeal is upheld; (2) The decision of Tribunal Member Farley dated 12 April 2007 is set aside; (3) The matter is remitted to the Tribunal to be determined according to law; (4) The first defendant is to pay the plaintiff's costs as agreed or assessed.

CATCHWORDS : Appeal decision of CTTT - termination of tenancy - procedural fairness

LEGISLATION CITED : Consumer, Trader and Tenancy Act 2001 (NSW) ss 28, 35, 49, 65, 67 & 68 Residential Tenancies Act 1987 (NSW) s 64

Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456 Department of Housing v El Kazzi [2004] NSWCTTT 633 CASES CITED : Italiano v Carbone [2005] NSWCA 177 Kalokerinos & Anor v HIA Insurance Services Pty Ltd & Anor [2004] NSWCA 312 Maconachie v Kullenberg & Ors [2005] NSWCA 294 Matthews v NSW Land & Housing Corporation [2004] NSWSC, unreported - 30003/2004

Liliana Cernaianu-Soare - Plaintiff PARTIES : New South Wales Land & Housing Corporation - First Defendant Consumer, Trader and Tenancy Tribunal - Second Defendant

COUNSEL : Mr D Robertson with Ms J Soars - Plaintiff Mr A Jungwirth - First Defendant

Henry Davis York - Plaintiff SOLICITORS : NSW Land & Housing Corporation - First Defendant Submitting Appearance, Crown Solicitor - Second Defendant

LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW

LOWER COURT JUDICIAL OFFICER : Tribunal Member Farley

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30042/2007 - LILIANA CERNAIANU-SOARE v NEW SOUTH WALES LAND & HOUSING CORPORATION & ANOR

JUDGMENT (Appeal decision of CTTT - termination of tenancy - procedural fairness) 1 HER HONOUR: By amended summons filed 27 June 2007, the plaintiff seeks orders, firstly, that the orders of Tribunal Member Farley made on 12 April 2007 be set aside; secondly, that the Court make such order in the proceedings as in its opinion, should have been made by the Tribunal; thirdly, in the alternative, that the matter be remitted to the Tribunal to be determined according to law; and fourthly, an order dismissing the first defendant's application in the Tribunal. 2 The plaintiff is Liliana Cernaianu-Soare (Ms Cernaianu-Soare). The first defendant is the New South Wales Land & Housing Corporation (Housing Corporation). The second defendant is the Consumer, Trader and Tenancy Tribunal (CTTT) who has filed a submitting appearance. 3 Ms Cernaianu-Soare relied on her affidavits sworn 27 April 2007, 17 May 2007 and 31 August 2007 and the affidavit of James Donald Falconer sworn 27 April 2007. The Housing Corporation relied on the affidavit of Robert Weeks sworn 13 June 2007.

The relevant statutory provisions 4 Ms Cernaianu-Soare appeals from the whole of the decision of Tribunal Member Farley dated 12 April 2007 pursuant to s 65 and 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW). 5 Section 65 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (the Act) provides: "(1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of: (a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or

(c) an injunction, in respect of any matter that has been heard and determined (or is to be heard or determined) by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter." 6 Section 65(3) however provides: "(3) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the Tribunal has made an order if the ground on which the relief or remedy is sought is that:

(a) the Tribunal had no jurisdiction to make the order, or

(b) in relation to the hearing or determination of the matter, a party had been denied procedural fairness." 7 Prerogative relief under s 65(1)(a)(a) of the CTTT Act is discretionary and may be refused where there has been delay on the part of the applicant or it can be said that the applicant has waived or acquiesced in the validity of the decision (Italiano v Carbone [2005] NSWCA 177 per Basten JA at [117]; Maconachie v Kullenburg & Ors [2005] NSWCA 294 per McColl JA (Giles JA agreeing) at [59]). 8 Section 67 of the Act allows for an appeal to be made to this court on a question with respect to a matter of law. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal (s 67(8)). The onus lies on the plaintiff to demonstrate that there has been an error with respect to a matter of law. 9 Section 67(3) of the Act provides that, after deciding the question of the subject of an appeal, the court may affirm the decision of the Tribunal, or it may make an order in relation to the proceedings in which the question arose as it, in its opinion, should have been made by the Tribunal, or it may remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal. 10 The width of s 67 was discussed in Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456. Hodgson JA (with whom Beazley and Tobias JJA agreed) stated succinctly [at para 33]: "… in my opinion, to establish an error of law by the Senior Member, it was necessary to show that he applied a wrong principle of law. That could be shown either from what he said, or because the ultimate result, associated with the facts that he expressly or impliedly found, indicates that he must have applied the wrong principle of law". 11 See also Kalokerinos & Anor v HIA Insurance Services P/L & Anor [2004] NSWCA 312 at paragraphs [39], [40], [41], [47] and [59].

The Tribunal generally 12 At the outset, it is helpful to set out some of the provisions of the Act. The functions of the Tribunal are to adjudicate disputes between consumers and commercial disputes between landlords and tenants. The Tribunal is not constrained by the rigour of the courtroom. Its objects are to ensure that the Tribunal is accessible, its proceedings are efficient and effective, its decisions are fair and to enable proceedings before the Tribunal to be determined in an informal, expeditious and inexpensive manner. The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 28). 13 Evidence must be given on oath or statutory declaration (s 39(1)) but the Tribunal is not bound by the rules or practice of evidence and the Tribunal may inform itself on any matter in such manner as it considers appropriate (s 28(2)). The Tribunal must conform to the rules of natural justice, but broadly speaking, has control of and responsibility for its own procedures (s 28(1) and (2)). Its business is conducted in public (s 33). Section 35 provides that the Tribunal must ensure that each party in any proceedings is given a reasonable opportunity to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise); and to make submissions in relation to the issues in the proceedings. Normally, a party to the proceedings has carriage of his or her own case and is not entitled to be legally represented (s 36(1)). The Tribunal has the power to award costs (s 53), but usually each party bears its own costs. Pursuant to s 54 of the Act, the Tribunal is obliged to use its best endeavours to bring the parties to a settlement before making an order. The Tribunal has a power to correct its decision (s 50) and the Registrar can issue a certificate, which operates as a judgment to recover amounts ordered to be paid (s 51).

Grounds of appeal 14 The grounds of appeal are firstly, that the Tribunal Member failed to comply with a statutory pre-condition to the exercise of the power under s 64(2)(b) of the Residential Tenancies Act 1987 (NSW) (the RT Act); secondly, the Tribunal Member misconstrued s 64(2)(b)(ii) of the RT Act in that she failed to take into account whether the alleged breach by the plaintiff, in the circumstances of the case, was such as to justify the termination of the agreement; thirdly, the Tribunal member misconstrued s 64(2)(b)(ii) of the RT Act in that she failed to take into account the circumstances in which the plaintiff had not paid the full amount of the rent claimed by the first defendant in making her decision; fourthly, the Tribunal Member erred in the exercise of her discretion pursuant to s 64(2)(b)(ii) of the RT Act in that she failed to take into account the reasons why the plaintiff had not paid the full amount of the rent claimed by the first defendant in coming to her decision; fifthly, the Tribunal Member failed to accord to the plaintiff procedural fairness in that she failed to allow, or to fully allow, the plaintiff to be heard, to make submissions or to tender documents in support of her case, including in respect of: (a) a statutory pre-condition to the exercise of the power under section 64(2)(b)(i) of the RT Act to make the orders, namely, to be satisfied that the ground specified in the notice referred to in s 57 of that Act had been made out; and/or (b) a statutory pre-condition to the exercise of the power under section 64(2)(b)(ii) of the RT Act to make the orders, namely, to be satisfied that the breach, in the circumstances of the case, justified the making of the orders; sixthly, the Tribunal Member failed to accord to the plaintiff procedural fairness in that there is a reasonable apprehension of bias by the Tribunal Member by reason of pre-judgment on the issues, including as to whether: (a) a statutory pre-condition to the exercise of the power under section 64(2)(b)(i) of the RT Act to make the orders, namely, to be satisfied that the ground specified in the notice referred to in s 57 of that Act had been made out; and/or (b) a statutory pre-condition to the exercise of the power under section 64(2)(b)(ii) of the RT Act to make the orders, namely, to be satisfied that the breach, in the circumstances of the case, justified the making of the orders. 15 These ground of appeal fall into four main categories. The are firstly, whether the Tribunal Member failed to make decisions in accordance with s 64(2)(b) of the RT Act; secondly, whether the plaintiff was denied procedural fairness; thirdly, whether there was an apprehension of bias; and lastly, whether the reasons provided were insufficient. I have found it only necessary to determine the first two categories. 16 Section 64(2) of the RT Act states:

(2) The Tribunal, on application by a landlord under this section, is to make an order terminating the agreement if it is satisfied: (b) in the case of a notice given by a landlord on the ground referred to in section 57, relating to a breach of the agreement: (i) that the landlord has established the ground, and (ii) that the breach, in the circumstances of the case, is such as to justify termination of the agreement, …"

(1) Whether there was a failure to make decisions in accordance with s 64(2)(b) of the Act 17 Before terminating a tenancy agreement pursuant to s 64(2)(b) the Tribunal must look into and be satisfied as to both limbs of s 64(2)(b). 18 In relation to s 64(2)(b)(i) (the first limb) the issue is whether the Department of Housing had established the plaintiff was in payment of rent. 19 The Tribunal Member in her written reasons stated: "The rent had remained unpaid for not less that (sic) 14 days on the day the notice was served or deemed served. The tenant has persistently breached the terms of the residential tenancy agreement in relation to the payment of rent. The tenant has failed to remedy the breach." 20 Other evidence of the calculation of arrears, namely the rent ledger of the Department of Housing was before the Tribunal Member. 21 On 11 January 2007, the NSW Department of Housing issued a Notice of Termination to the plaintiff. Relevantly, it stated: "You have breached the Residential Tenancy Agreement by not paying rent on time Particulars - Rent Arrears

An amount of $195.10 is owing as at 7th January 2007 which based on a weekly rental of $61.60 is in excess of 14 days in arrears.

You are required by the landlord to give vacant possession on 11th February 2007 being a date not earlier than 14 days after the service of this Notice." 22 The plaintiff submitted that rent had not remained unpaid for 14 days on the day the notice of termination was served. 23 Under the lease, the market rent is $175 per week, 14 days of arrears calculated at market rent amounts to the sum of $350. The amount specified as owing in the letter is less than that amount. However, "arrears" is defined in the Macquarie Dictionary (2005) 4th ed, The Macquarie Library Pty Ltd, as "the state of being behind in payment; a debt which remains unpaid, though due" and in the Australian Concise Oxford Dictionary (1992) 2ND ed, Oxford University Press, as "an amount still outstanding or uncompleted: "in arrears" is defined as behind esp. in payment." 24 According to Counsel for the plaintiff, the findings in the reasons do not provide calculation of the rent alleged to have been outstanding nor do they specify a monetary amount of rent found to be unpaid and therefore do not comply with ss 49(3)(b) and 49(3)(c) of the CTTT Act. Counsel for the plaintiff submitted that without such details, the finding of the Tribunal Member is mere assertion, not supported by adequate reasons. 25 Counsel for the defendant submitted that the statement "the rent remained unpaid for not less than 14 days" was a finding of fact not an error of law. He referred to Matthews v NSW Land & Housing Corporation [2004] NSWSC, unreported - 30003/2004. In my view, "arrears" does not necessarily mean 14 days of market rental remaining unpaid. In Matthews, O'Keefe J stated (at page 7) that whether or not rent is due and unpaid is a question of fact. In my view, the Tribunal Member's finding as to the existence of arrears was one of fact. 26 In relation to s 64(2)(b)(ii) of the RT Act, (the discretionary second limb) the Tribunal Member stated:

"The Respondent was invited to address the Tribunal in relation to the Notice of Termination and on any matter which the Tribunal should consider when making its decision. The Respondent did not address the Tribunal in regard to the matter before it but chose to make submissions in relation to the rental subsidy. The Tribunal explained to the Respondent that its limited jurisdiction did not include the making of any findings, orders or declarations in relation to the matter of rental subsidies.

The Respondent avoided answering any direct question put to her by the Tribunal.

I have considered the evidence given orally by and on behalf of each of the parties as well as the documentary evidence. I have been well placed to observe the demeanour of each of the witnesses. I have borne in mind the importance of my decision to the parties. Having done so, I have reached a firm conclusion in the matter, which is set out below.

The Respondent, despite being given ample opportunity to address the matter before the Tribunal, did not do so. The Respondent told the Tribunal that the household consisted of herself and her partner, an adult child aged 26 years and two children aged 16 and 10 years.

I note in passing that the residential tenancy agreement states that no more than 4 persons should reside on the premises.

The Respondent asserted that the total family income was 206.40 per week. She said that she and her partner were not permitted to be employed, and did not elaborate. She said that her weekly rental should be based on 25% of the family's assessable income. It defies logic that a family of four can, without more, live on the income stated by the Respondent.

I asked the Respondent, in vain, to address the matter upon which the Tribunal was asked to decide, particularly in the circumstances where the grounds to terminate the tenancy agreement were made out, and of any special circumstances which the Tribunal should consider.

Whilst I found that the Respondent was intelligent, articulate and extremely well turned out, I could only make an adverse finding as to her credibility and her lack of candour." 27 Counsel for the plaintiff submitted that the Tribunal Member also failed to make any finding that she was satisfied of the matters set out in s 64(2)(b)(ii) of the RT Act. According to the plaintiff, the Tribunal Member's comments during the course of the hearing, focused on s 64(2)(b)(i) without making any finding as to the amount of rent outstanding and determined to make the order for termination of the lease notwithstanding that she had not made the finding required by s 64(2)(b)(ii) of the RT Act. 28 Counsel further submitted that the Tribunal Member failed to correctly interpret s 64(2)(b), failed to take into account relevant considerations under this section and she failed to exercise her discretion under s 64(3)(b)(ii) correctly or at all. The Tribunal's exercise or purported exercise of power was thereby affected. It exceeded its authority or powers and its decision is reviewable under s 65(3) and/or s 67 of the CTTT Act. 29 It is my view because the Tribunal Member did not give the plaintiff the opportunity to address the special circumstances that the Tribunal should have considered. The exercise of her discretion miscarried. I shall deal with this topic more fully under the next heading.

(2) Procedural Fairness 30 Section 28 of the CTTT Act reads: "28 Procedure of Tribunal generally

(1) The Tribunal may, subject to this Act, determine its own procedure.

(2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of procedural fairness.

(3) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.

(4) The Tribunal is to take such measures as are reasonably practicable to ensure that the parties in any proceedings understand: (a) the nature of the assertions made in the proceedings and the legal implications of those assertions, and

(b) the procedure of the Tribunal and any decision or ruling made by the Tribunal that relates to the proceedings." 31 Section 35 of the CTTT Act reads: "Opportunity for parties to present case

The Tribunal must ensure that each party in any proceedings is given a reasonable opportunity:

(a) to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise), and

(b) to make submissions in relation to the issues in the proceedings." 32 Section 35 provides that the CTTT "must ensure" that each party is given "a reasonable opportunity" to present its case. There are provisions which allow the CTTT a significant degree of flexibility in adapting its procedures to the exigencies of the case in determining the manner in which the proceedings will be conducted. Nevertheless, those provisions should not be construed so as to derogate from other provisions cast in obligatory language which constitute core elements of procedural fairness - see Italiano at [105] and [106]. 33 After reading the transcript and carefully listening to the CD of the proceedings before the Tribunal I have formed the view that the plaintiff was not given a reasonable opportunity to make submission in relation to s 64(2)(b)(ii) (the discretionary limb). It is true that the plaintiff held a strong view that the policy of rent subsidy was a relevant factor in the determination of the amount of arrears. It has limited relevance - see Department of Housing v El Kazzi [2004] NSWCTTT 633. The plaintiff and the Tribunal Member devoted much time to debating this issue. The Tribunal Member adopted a robust approach and often cut the plaintiff off, so that she could not address the issues she wanted to. 34 When the plaintiff sought to hand up submissions, the Tribunal Member refused to take them (t 9.35). The plaintiff's submissions covered the hardship that would be suffered by the plaintiff and her family if an order terminating the tenancy was made. In these submissions the plaintiff says that she and her spouse had no income since late 2001, as a result of being deprived of the right to work for at least five years as a condition of their visas. They had only recently been granted the right to work and were looking forward to rebuilding their lives, to find work and regain the ability to financially support their children. The plaintiff and her partner have two children who attend local school and whose schooling and wellbeing would be severely disrupted should they have to vacate the premises. Their eldest son suffers from a serious permanent psychological disorder and would be hugely affected by an eviction. The whole family would have to suffer, with unmeasurable consequences, as they do not have the ability to rent elsewhere and could not afford private rent and therefore would be left without a roof. 35 The plaintiff, also in these submissions, stated that she had continuously respected the terms of my rent agreement and paid rent on a regular basis and in a timely fashion. She has cared for the premises and always endeavoured to be a good tenant. She says, in these submissions, that she has repeatedly indicated to the Department that she intended to continue to pay rent as per the conditions of her lease, and would not have deliberately made any underpayments. The plaintiff was denied the opportunity to have these relevant matters taken into account. Hence, these matters were not considered by the Tribunal Member when she exercised her discretion under s 64(2)(b)(ii) of the RT Act. 36 It is my view that the plaintiff was not given a reasonable opportunity to make submissions in relation to s 64(2)(b)(ii). She was not afforded procedural fairness. There is an error of law. The decision of Tribunal Member Farley dated 12 April 2007 is set aside. 37 Counsel for the first defendant submitted that the plaintiff should have sought a review pursuant to s 68(2) of the CTTT Act and referred to Kullenberg at [61] to [64]. He submitted that this Court should refuse to grant relief. While the hearing in the CTTT took place on 12 April 2007 and written reasons were requested on that date, they were not supplied until 22 June 2007 some two months later. The Tribunal Member's reasons were received by the parties after this matter had already been allocated a hearing date in this Court. In these circumstances it is not appropriate that this Court would refuse to grant relief on the basis that the plaintiff failed to avail herself of the provision of s 68(2). 38 There is an error of law. Hence, it is not necessary for this Court to determine whether there was a reasonable apprehension of bias, nor if the reasons for the decision are adequate. It is my view that this matter should be remitted to the CTTT to be determined according to law. 39 Costs are discretionary. Costs normally follow the event. The first defendant is to pay the plaintiff's costs as agreed or assessed.

(2) The decision of Tribunal Member Farley dated 12 April 2007 is set aside.

(3) The matter is remitted to the Tribunal to be determined according to law.

(4) The first defendant is to pay the plaintiff's costs as agreed or assessed. **********

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.

Consumer, Trader and Tenancy Act 2001(NSW)ss 28, 35, 49, 65, 67

Residential Tenancies Act 1987(NSW)s 64

Consumer, Trader and Tenancy Tribunal Act 2001(NSW)

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