Gu v McMahon

NCAT Appeal Panel|2021-09-06

Overview

For a period of nearly 6 months in 2020 the respondent (the Tenant) occupied residential premises in Sydney owned by the appellant (the Landlord) under a residential tenancy agreement.
After the Tenant vacated the premises in late December 2020 she commenced proceedings in the Tribunal. These proceedings included a claim for the return of the rental bond she had paid at the commencement of the tenancy. In those proceedings the Landlord disputed that the Tenant was entitled to be paid the amount of the bond and contended that the Tenant owed her monies which exceeded the amount of the bond consisting of rent and other items, including costs to make good the premises after the Tenant vacated. The Tenant disputed these claims.
The Tribunal rejected the Landlord's claims except for two of her claims (a claim with respect to the maintenance of the garden and a claim concerning some cupboards in the kitchen). As a consequence, the Tribunal ordered that an amount of $2,090.55 be paid from the rental bond to the Landlord and the balance be paid to the Tenant. It was implicit in this order that the Tribunal dismissed the balance of the Landlord's claims.
The Landlord has appealed from that decision. As outlined below, we have decided that the Tribunal's rejection of most of the Landlord's other claims was affected by appellable error. At the hearing of the appeal, we explored the possibility of determining the outstanding issues between the parties for ourselves. However, for reasons that will appear below, this was neither fair to the parties nor practicable.

The Tribunal proceedings and hearing

On 30 December 2020 the Tenant commenced proceedings in the Tribunal seeking payment to her of the full amount of the rental bond pursuant to s 175 of the RTA. (The application also sought an order under s 21 of the RTA that a term of a residential tenancy agreement was void or partly void because the term was inconsistent with the Act or Regulations. The application did not identify which term was said to be void or partly void or explain the basis of this claim. However, it emerged at the hearing that this was connected with a contention that the Tenant had been misled into making the agreement by the term of the agreement that no sales inspections would be carried out during the tenancy).
In her application the Tenant stated that she did "not agree with any claims that the Landlord is making regarding repairs or outstanding rental payments". The parties must have appreciated that this was a reference to the claims set out in, at least, Mr Wang's email of 26 December 2020.
Under s 175 of the RTA, upon application by a landlord or tenant, the Tribunal may make an order as to payment of the rental bond.
On 30 December 2020 the parties were given notice of a conciliation and hearing (by telephone) to be held on 1 February 2021. This notice was accompanied by various directions, including that the Tenant was to give to the Landlord any "documents" on which she intended to rely within 14 days. The directions contained a notation that "Documents" included, amongst other things, witness statements.
On 14 January 2021, the Tenant gave the Landlord and the Tribunal a folder of documents. This did not include any witness statements.
At the hearing on 1 February 2021 a direction was made which required the Landlord, by 15 February 2021, to give the Tenant all documents on which the Landlord intended to rely at the hearing. No provision was made for the Tenant to provide any responsive evidentiary material. It was also noted that the Tenant had sent her documents to the Landlord and the Tribunal and that the Tenant accepted liability "only for the costs associated with the repair of cupboards in the sum of $800."
No direction was made for the Landlord to provide any specific document outlining her claims.
In accordance with the direction made on 1 February 2021, on 15 February 2021, the Landlord provided a folder of documents. This included a list of claims (the Landlord's List of Claims), a statement from Mr Wang in support of the claims, copies of quotes and estimates of costs and the Landlord's Outgoing Condition Report.
The Landlord's List of Claims outlined a claim for a total amount of $16,268.51. The items listed were the same as those set out in the 26 and 27 December 2020 emails from Mr Wang (there were still 22 numbered items but item 18 in the Landlord's List of Claims incorporated both items 18 and 19 set out in the 26 December 2020 email). These documents made it clear that the Landlord's claim for rent was based upon a failure by the Tenant to bring the tenancy agreement to an end by giving the required 21 days' notice in a properly served termination notice.
No formal application pursuant to s 175 of the RTA (or pursuant to s 163 of the RTA) was ever made by the Landlord for payment to be made to her of the rental bond and no separate application was lodged by the Landlord in the Tribunal making a claim for rent and compensation for breach by the Tenant.
Nevertheless, the material provided by the Landlord pursuant to the direction made on 1 February 2021 confirmed what was apparent from the email correspondence outlined above, namely that the Landlord opposed payment of the rental bond to the Tenant and instead sought payment of that money and more on the basis of her claims for rent and compensation in respect of the condition of the premises when the Tenant vacated.
The procedure that was followed before the final hearing did not expose and adapt to the real issues that arose in the dispute between the parties. No provision was made for the Tenant to respond to the Landlord's evidentiary material in support of her claims. As a consequence, there was nothing from the Tenant which, explicitly, notified the Landlord or the Tribunal of the nature of the Tenant's case as to how and when the tenancy agreement terminated and there were no written statements from the Tenant responding to the factual aspects of the Landlord's claim. There was also no formal process taken which recognised that the Landlord pursued a money claim for more than the amount of the rental bond.
At the hearing on 28 April 2021 the Tribunal raised with Mr Wang, who appeared for the Landlord, the fact that no application by the Landlord had been lodged in the Tribunal. The response from Mr Wang was that he had been told by the Registry that this was unnecessary (transcript, page 10).
The Tribunal also raised with Ms Elkordi, who appeared for the Tenant, the absence of any witness statements from the Tenant. Ms Elkordi indicated that she was a bit confused about this because the Tenant had put on her evidence before the first hearing on 1 February 2021 (transcript, page 11). Subsequently, she said that they were not aware that they needed to provide such material and apologised for not doing so (transcript, page 13).
The course followed at the hearing was that Ms Elkordi presented what she said was "my evidence as to whether we agree or we disagree with these items" (transcript, page 19.1) - a reference to the Landlord's List of Claims. In doing so, in respect of some items she made assertions about matters of which she had no personal knowledge-for example, that curtain rods were not changed (transcript, page 25.2), that a light fell off because the back door lock mechanism was not working properly (transcript, page 28.4), that a bathroom was never used by the Tenant (transcript, page 32.4) and that no hooks were placed in a wall by the Tenant (transcript, page 34.2). In respect of a number of the claims, one of the objections to it, or the sole ground of objection, was that no invoice for the costs claimed had been provided.
After hearing from Ms Elkordi, the Tribunal heard from Mr Wang who gave an account about each of the items claimed. With respect to the claim for rent, Mr Wang submitted that the Tenant never gave a proper termination notice giving 21 days' notice (transcript, page 39.6). As to the other items claimed, Mr Wang referred to various parts of the evidence, including entries in the Landlord's Outgoing Condition report and to quotes in respect of the rectification work he said was required.

The Tribunal's decision

The Tribunal identified the issues as being, first, whether a term of the tenancy agreement was void or partly void and, secondly, whether there were outstanding rental payments or repair or cleaning costs which entitled the Landlord to part or all of the bond: [6].
The Tribunal then proceeded to address each of the claims in the Landlord's List of Claims in the order listed, beginning with the claim for rent.
As to the claim for rent, the Tribunal referred to the existence of emails and text messages in the documentary material presented to the Tribunal and remarked that neither party at the hearing had relied upon any particular communication with respect to the issue. The Tribunal then said: 12 Neither party has tendered in evidence termination notices in a form compliant with the Regulations. That, combined with the absence of any witness statement of the [Tenant], nor reference at the hearing by either party to any particular text message or email either in support of, or opposition to, the contention of rental arrears leaves the Tribunal in the unsatisfactory position of being asked to speculate. 13 There is no Application by the [Landlord] before the Tribunal; the sole Application for determination being that of the [Tenant]. 14 On the limited evidence on this issue the findings I make, the only findings, are that vacant possession of the Premises was given by the [Tenant] to the respondent on 21 December 2020 and that rent was paid up to that point. I make no finding of rental being in arrears.
The Tribunal proceeded to accept the Landlord's claims in respect of the kitchen cupboards (the Tenant had accepted liability for $800 but the Tribunal awarded $880) and the work required on the garden.
All of the other claims were rejected.
Most of the claims were rejected on the basis that the Tribunal was not satisfied that there was a defect in the particular condition of the premises as alleged by the Landlord or, in some instances, on the basis that it was not satisfied that the Tenant was responsible for the defect.
In some instances, the Tribunal said that it accepted the position of the Tenant concerning a disputed fact in circumstances where such a position necessarily depended upon the personal knowledge of the Tenant which had not been the subject of any evidence from her (paragraphs 21,37,43,44, and 47).
In respect of one of the claims (item 16), the Tribunal gave as an additional reason for rejecting the claim that the quote supplied in support of the claim was for a number of different items of work and there was no calculation as to that part concerning item 16. Furthermore, the Tribunal said that the quote was given without a visual inspection and was therefore unreliable.
As we have already mentioned, the Tribunal made no findings bearing upon the weight to be given to the Landlord's Outgoing Condition Report and it did not address the probative force of that Report. It also made no findings about the Tenant's Ingoing Condition Report.
Nevertheless, in addition to the claim for rent, the following three claims in the Landlord's List of Claims were unaffected by the issue concerning the probative force of the Landlord's Outgoing Condition Report: 1. Item 17 was a claim for damage to a retaining wall near the water meter based upon the contention that this was "caused by tenant's removal car crashing". One of the reasons the Tribunal gave for rejecting this claim was that there was no evidence that any damage was caused by the applicant: at [52]. 2. Item 21 was a claim for "Damaged/destroyed side fence gate. Cost of replacement $842 as attached quotes". The Tribunal referred to the evidence in support of this claim consisting of photographs and a quotation from Amazing Fencing. It said that the photographs appeared to show a timber gate having been removed and possibly lying on its side. It concluded, amongst other things, that there was no evidence as to precisely what the author of the quotation was quoting for, nor was there any evidence sufficient to persuade the Tribunal as to the manner or respects in which it is alleged the side gate was either damaged or destroyed. It also considered that, given what it said was the paucity of evidence, it was not persuaded that the damage was caused by the Tenant: at [57]. 3. Item 22 was a claim for unpaid water usage. The claim was in two parts. First, a claim for a small amount in respect of water usage, including an amount for the period 5 June 2020 to 30 June 2020, according to the water bill in evidence. The second part was for the period from 4 September 2020 to 21 December 2020. Mr Wang informed the Tribunal of a water meter reading taken on 21 December 2020 but no water bill concerning this second period was presented to the Tribunal. In rejecting item 22 the Tribunal concluded, amongst other things, that the Landlord did not rely upon any evidence to support this item of her claims: at [61].

The limited appeal right

Under s 80 of the NCAT Act, a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law. In respect of any other grounds, in the case of an appeal from the Consumer and Commercial Division of the Tribunal, which this is, the appellant must satisfy the Appeal Panel that leave to appeal should be granted under cl 12 sch 4 of the NCAT Act on the basis that: …..the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with)

Grounds of Appeal

In the Notice of Appeal lodged by the Landlord she requested that the order made by the Tribunal be changed and that the Tenant be ordered to pay her the sum of $14,177.96. This amount is the difference between the amount ordered to be paid to the Landlord from the bond and the total amount of the Landlord's claims ($16,268.51).
Amongst the grounds of appeal set out in the Notice of Appeal, it was said that the Tribunal erred in law regarding the unpaid rent claim, that the decision was not fair and equitable and that the decision concerning the claims for compensation was against the weight of the evidence. Leave to appeal was sought.
In explaining why it was said that the decision was not fair and equitable, it was said in the Notice of Appeal, amongst other things, that: 1. The Tenant never served a proper termination notice as required by s 97 of the RTA and so the lease was not terminated. 2. Eventually, the Tenant moved out of the premises on 21 December 2020 but rent was only paid to 20 December 2020. 3. The Tenant was liable for payment of rent for a period of 21 days from 21 December 2020.
In explaining why it was said that the decision concerning compensation was against the weight of the evidence, it was said in the Notice of Appeal, amongst other things, that the Tribunal did not assess the condition reports (ingoing and outgoing).
The Landlord had no legal representation, nor did the Tenant. In Cominos v Di Rico [2016] NSWCATAP 5 at [13], the Appeal Panel stated that it may be difficult for self-represented appellants to clearly express their grounds of appeal and that in such circumstances it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. We have approached the appeal in this manner.
In addition to the bundles of documents the parties had presented to the Tribunal, the following written material was presented on appeal: 1. The Landlord provided a written statement from Mr Wang. In part, this contained submissions about error by the Tribunal but it also contained a more expansive account as to the defects said to have been found at the premises when the Tenant vacated and as to the costs of cleaning or rectifying such defects. 2. The Tenant presented a statutory declaration by Ms Elkordi on 26 August 2021 with attached documents. She also presented an unsigned statutory declaration from herself containing a date of 26 August 2021. This addressed the Landlord's claims. Part of what was said was in the nature of submissions.
To the extent that this written material from each of the parties consisted of evidence in support of, or in opposition to the Landlord's claims, we would only have, potentially, taken it into account in the event that we decided to deal with the appeal by way of a new hearing. That is not the course that we have followed.

Consideration - error concerning the Landlord's claim for rent

In our opinion, the Tribunal made an error of law in failing to identify and address the issues that arose in respect of the Landlord's claim for rent. This was an error of the nature referred to in Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088 at [24]-[25]. Another way to characterise the error is that the Tribunal's failure to identify and address these issues flowed from an error of law in failing to ask itself the right questions: John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at 13(2).
The Landlord's claim for rent was based on its contention that the tenancy agreement continued in circumstances where the Tenant had failed to give a proper termination notice by its email of 2 December 2020. It was said that this notice was not proper in two respects. First, because under s 97 notice of 21 days was required and, secondly, because the notice could not be given by email.
If the basis for a conclusion that the tenancy agreement terminated in late December 2020 was solely dependent upon a termination by the tenant pursuant to s 97 of the RTA then the Landlord's position about termination was the correct one and, clearly, she was entitled to a substantial amount of additional rent, subject to any order curing the defective notice under s 113 of the RTA.
In this connection, the Tribunal needed to determine how and when the tenancy agreement terminated. At the latest, this must have occurred by the time the Landlord entered into a tenancy agreement with a new tenant, said by the Landlord to have occurred in early March 2021.
In her email sent on 9 November 2020, the Tenant had contended that she was entitled to terminate by giving 14 days' notice because of the alleged breach by the Landlord of s 26 of the RTA.
In these circumstances, on the material before the Tribunal, and having regard to the absence of legal representation for the parties, the Tribunal ought to have considered with the parties a number of issues as to how and when the tenancy agreement terminated, including, but not necessarily limited to, the following: 1. Did the tenancy agreement terminate on 21 December 2020, in accordance with s 81 (2) of the RTA, by reason of the termination notice given by the Tenant on 2 December 2020 and the vacation of the premises by the Tenant on 21 December 2020? With regard to this issue, did the Landlord contravene s 26 (1) of the RTA in connection with the term of the agreement that there would be no sale inspections during the term of the tenancy? Did the 2 December 2020 email from the Tenant meet with the requirements for service of such a notice? 2. Even if the notice of termination given in the email of 2 December 2020 was not valid: 1. did the tenancy agreement terminate on or about 21 December 2020 by reason of the operation of s 81 (d), (e), or (g) of the RTA and, if so, when did that occur? 2. or should the Tribunal cure any defect with such notice pursuant to s 113 of the RTA? 1. Isn't the Landlord entitled to 1 day's outstanding rent even if the answer to any of the above questions is yes? 2. If the answer to these questions is no, when did the tenancy agreement terminate?
Furthermore, from what the Tenant said in her statutory declaration presented on appeal, it appears that she wishes to contend that, even if the answer to the above questions is no, then the Landlord failed to mitigate her loss by not re-letting the premises until a date in March 2021. It seems to us that the Tenant should be permitted to pursue this contention upon the redetermination of the proceedings that we have decided must occur.

Consideration - errors concerning the Landlord's other claims

The fact that the Landlord's Outgoing Condition Report was not signed by both parties did not deprive the report of any weight: Hall v Jenkins [2015] NSWCATAP 197 at [63].
Potentially, depending upon findings concerning the manner of preparation of the report, including about its preparation in the presence of the Tenant's agent, the provision of it to the Tenant, the Tenant's contemporaneous response to it (or lack of such a response), and, potentially, the credit of Mr Wang and Ms Elkordi, the Landlord's Outgoing Condition Report was deserving of significant weight in the determination of all of the Landlord's claims, save for those concerning rent (item 1), the damaged retaining wall (item 17), the damaged side fence gate (item 21) and unpaid water usage (item 22).
Hence, the weight to be given to the Landlord's Outgoing Condition Report was an important issue in the proceedings. As we have said, the Tribunal did not address this issue. In our opinion, it erred in law in failing to do so. The error was in failing to ask itself this question.
As to the remaining claims that were unaffected by this issue (apart from the claim for rent which we have already dealt with), firstly, we can see no error of law or fact by the Tribunal in respect of its rejection of the claim concerning the retaining wall (item 17). On the contrary, with regard to that claim we consider the Tribunal was correct in concluding that there was no basis for a conclusion that the Tenant was responsible for this damage.
We also consider that the Tribunal was correct to reject the claim in respect of unpaid water usage (item 22). Although the Tribunal was incorrect in saying that the Landlord did not rely upon any evidence in support of this claim (she did present one water bill, there was a water reading at the commencement of the tenancy in the ingoing condition report, Mr Wang informed the Tribunal of a water reading on 21 December 2020 and gave his calculation of water usage and cost), the Landlord's contention was unsubstantiated. As to the part of the claim concerning water usage to 3 September 2020, the water bill in support of this claim included usage for a period from 5 to 30 June 2020 (20kl), but nearly all of this period was before the Tenant took possession of the premises. There were no water readings to show that this usage began at the commencement of the tenancy and it seems highly unlikely that such a large amount would have been used by the Tenant from 29 June 2020. As to the claim for water usage from 4 September 2020 to 21 December 2020, there was no water bill presented to substantiate the claim.
We do, however, consider that the Tribunal erred in rejecting the claim concerning the side fence gate (item 21). The Tenant's objection to this claim was that no invoice for the claimed cost had been provided (transcript, page 36.6). There was no contention that no damage had occurred or that the Tenant was not responsible for the damage. With reference to photographs, Mr Wang informed the Tribunal that the Tenant had cut parts of the gate to patch gaps in the fence (transcript, page 60.6) - the Landlord had agreed to the patching work at the Tenant's expense before the commencement of the tenancy but not to the gate being cut for this purpose: see email sent on 24June 2020. The claim was stated to be for "cost of replacement" and the quote from Amazing Fencing did appear to be for materials and work to supply a side gate. In these circumstances, in our opinion, leaving aside a question of procedural unfairness to the Tenant in connection with the absence of any witness evidence from her, the totality of the evidentiary material on the subject ought to have led the Tribunal to uphold this claim.
Finally, the Tribunal's additional reasons for rejecting the claim the subject of item 16 do not overcome the Tribunal's error concerning the Landlord's Outgoing Condition Report, nor does any contention with respect to any of the items that only quotes, rather than invoices were supplied. The quote relied upon in respect of item 16 also covered the cost of the works described in items 12, 13 and 15, which claims will now be redetermined. The lack of a visual inspection in making this quote did not deprive the quote of any probative force.
It was open to the Tribunal to assess quantum on the basis of quotes, rather than invoices, depending upon the circumstances. There is no general rule that quotations cannot be relied upon to establish quantum of loss or damage. It will depend upon, among other things, the nature of the work to be done, the nature and content of the quotation, the circumstances in which it was prepared, the genuineness of the quotation and the expertise or experience of the person who prepared it.: Hall v Jenkins [2015] NSWCATAP 197 at [79].

Outcome of the appeal

It follows from the above reasons that the Tribunal's rejection of claims by the Landlord's, except for its rejection of the claims the subject of items 17 (damage to retaining wall) and 22 (unpaid water usage), should be set aside.
These rejected claims will need to be redetermined by a differently constituted Tribunal. With respect to the claim for rent, the largest rejected claim, the Tribunal will need to address the issues outlined in paragraphs 88 and 89 above. Furthermore, further directions will need to be made which, at least, make provision for the parties to provide evidence and submissions regarding their competing contentions about termination of the tenancy agreement and for the Tenant to provide her evidence in response to the Landlord's evidence in support of his claims for costs that are to be re-determined.

ORDERS

Accordingly, we make the following orders: 1. To the extent required, leave to appeal is granted. 2. The appeal is allowed in part. 3. Set aside the order made by the Tribunal on 16 June 2021 but only to the extent that it implicitly dismissed the claims by the appellant the subject of items 1, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19 and 20 in the Landlord's List of Claims. 4. The appellant's claims the subject of items 1, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19 and 20 in the Landlord's List of Claims remitted to a differently constituted Tribunal for redetermination. 5. For the purpose of such redetermination, directions should be made by the Tribunal which address the matters referred to in paragraph 99 of these reasons and which make provision for the parties to adduce such further evidence and submissions as the Tribunal may decide to allow. 6. Otherwise, the appeal is dismissed.

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: 27 October 2021

At a glance

Court

Decision date

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Judgment (11 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (4)