Cheng v Bugno

Background

1. The parties entered into a residential tenancy agreement in May 2011 in respect of an apartment in the Sydney Central Business District.
2. In August 2016 the ducted air-conditioning / heating system of the apartment ceased working. Over the ensuing years various unsuccessful attempts were made to fix that system.
3. In September 2018 the washing machine provided by the landlord as part of the tenancy ceased working. It was replaced with a smaller machine.
4. On 17 October 2018 the landlord served notice on the tenant of a proposed rental increase from $730 pw to $750 pw with effect from 21 December 2018.
5. In response, the tenant commenced proceedings in the Tribunal seeking an order that the air conditioning system be repaired and that the proposed rental increase was excessive.
6. The parties attended a conciliation hearing at the Tribunal on 11 December 2018 but were not able to resolve their differences. On that occasion the landlord was represented by an agent, Mr Mao.
7. Directions were made by the Tribunal on the same day for the filing and exchange of the parties' documents. "Documents" was defined by the Tribunal to include witness statements, statutory declarations or affidavits, together with "any other document to be relied upon".
8. The parties subsequently exchanged their documents.
9. The landlord's documents consisted of: 1. the tenant's rental ledger; 2. advertisements of (what the landlord said were) comparable apartments for lease which include the amounts of rent the owners of those apartments were seeking; and 3. an email from building management of the subject premises regarding the air conditioning system (which indicated that, as at 15 January 2019, and after extensive investigations, inspections and repairs, the fault had been identified and expert recommendations were being sought as to the necessary repairs).
10. The hearing in the Tribunal took place on 13 February 2019.
11. On that occasion the tenant appeared, but there was no appearance by or on behalf of the landlord.
12. The Tribunal was satisfied that notice of the hearing had been duly served on the landlord. Consistent with Rule 35(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the "NCAT Rules"), the Tribunal further considered that justice required the matter to be dealt with in the absence of the landlord.
13. At the hearing the Tribunal considered the tenant's documents and oral evidence given at the hearing. The Tribunal also considered the landlord's documents which had been filed with the Tribunal and served on the tenant. The landlord's documents were read by the Tribunal as a submission of the landlord in lieu of personal attendance at the hearing on 13 February 2019.
14. After considering all of the material, the Tribunal found that the market rate for comparable apartments was $700 pw ($30 pw below that being paid by the tenant prior to the proposed rental increase). The Tribunal said that the landlord's documents concerning comparable apartments only contained rental amounts being sought by the owners of the apartments, and not actual rentals of apartments when rented.
15. The Tribunal found that the subject apartment was in a poor state of general repair.
16. The Tribunal noted that the landlord had not filed or served any evidence as to any increase in past outgoings or anticipated increase in future outgoings, nor as to capital works or repairs intended to be carried out and which would be expected to improve the state of repair and overall condition of the subject apartment.
17. The Tribunal considered the tenant's evidence of loss of amenity resulting from the non-functioning air conditioning system and the smaller washing machine. No evidence to the contrary had been filed or served by the landlord.
18. Having taken all of those matters into account the Tribunal found the rent to be excessive in various amounts and for various periods, ordered the excessive rent (already paid) to be repaid, and made an order that the air conditioning system be repaired.
19. The landlord appeals from all of the orders made by the Tribunal.

Grounds of Appeal

1. In short, the landlord complains that: 1. the landlord was not given notice of the hearing; 2. the Tribunal ought to have found that the market rent for comparable apartments was higher and thus the rent for the subject apartment was not excessive; and 3. the air conditioning system had (at least by the time of the appeal) been repaired.
2. On the appeal the landlord read a statutory declaration by Mr Mao on 8 April 2019 which stated that: "We did not receive the notice of hearing for the matter we should have attended ..."
3. The "we" referred to in that statutory declaration refers to the real estate agency which employs Mr Mao.

Decision

1. We see no error in the Tribunal's decision.
2. In his Reasons (at [5]), the Tribunal Member had noted that notices of the hearing date in February 2019 were posted by the Tribunal's Registry on 20 December 2018 both to Mr Mao's office and to the landlord's residential address (being that address nominated on the residential tenancy agreement). Neither had been returned to the Tribunal unopened. There was no record in the Tribunal file of any request for an adjournment of the hearing having been made by the landlord. There was otherwise no explanation for the landlord's failure to appear at the hearing. As indicated, the Tribunal found that justice required the matter be dealt with in the absence of the landlord.
3. In those circumstances it cannot be said that the Tribunal erred. The addresses on both notices were correct. The NCAT Rules allowed for service by post [Rule 13(2)(b)], deemed service effected in that way to have occurred after seven business days [Rule 13(4)(a)], and allowed for a hearing in those circumstances to proceed in the absence of the landlord [Rule 35(2)]; see also Souleles v Todd [2016] NSWCA 91 which related to legislation (in similar terms) affecting the Consumer Trader and Tenancy Tribunal, a predecessor of the Civil and Administrative Tribunal.
4. On this appeal and putting aside the evident weaknesses in the bald conclusion stated in Mr Mao's statutory declaration, no evidence was tendered to us to the effect that the notice of hearing sent directly to the landlord had not been received.
5. In those circumstances it does not seem just to us to grant leave to appeal on discretionary grounds on the basis of fresh evidence.
6. There is a further difficulty for the landlord. On the assumption the landlord had not received the notice of hearing, would the result have been any different had he appeared? That is, in legal terms, did any procedural unfairness arising from a lack of notice cause an injustice? We do not think so.
7. Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 is the oft-quoted authority on procedural unfairness and whether such unfairness will entitle a party to a new trial.
8. In Giretti v Deputy Commissioner of Taxation (1996) 70 FCR 151 Lindgren J, with whom Jenkinson J agreed, said that in Stead could be found both a forward-looking test and a backward-looking test. The question in Stead was whether a new trial should be ordered when there had been a denial of the opportunity to make submissions. The forward-looking test was whether a new trial would inevitably result in the making of the same order, so that ordering a new trial would be a futility. The backward-looking test was whether it could be concluded that giving the opportunity to make submissions "could have made no possible difference to the result".
9. In our opinion the landlord does not satisfy either test to the extent there may be a difference between them.
10. No evidence had been filed or served by the landlord to the effect that the air-conditioning system had not worked as detailed by the tenant, nor that the replacement washing machine was not smaller than that originally supplied and which therefore caused the tenant the loss of amenity referred to in his evidence. No evidence had been filed or served to the effect that the air conditioning system had been repaired.
11. In relation to the excessive rent, the Tribunal considered matters it was able to consider. No evidence had been filed or served by the landlord on that issue other than advertised rentals for comparable apartments. The Tribunal expressed a preference for the tenant's evidence of actual rentals rather than the landlord's evidence of advertised rentals. In our opinion the Tribunal's preference was logical and sensible.
12. It is true that the landlord may have cross-examined the tenant at the Tribunal hearing had the landlord appeared (or could do so if there was a new hearing), but to what effect? In our opinion, cross-examination would have made no real, sensible possibility of a difference given the complete absence of any contradictory documentary or testimonial evidence filed and served by the landlord in the proceedings before the Tribunal on the matters in issue.
13. In those circumstances we are of the opinion any cross-examination of the tenant would not have altered the result.
14. Accordingly, the landlord's appeal fails.

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: 18 June 2019