This is an appeal from a decision of the Tribunal's Consumer and Commercial Division. Orders were made on 17 May 2019 terminating the residential tenancy between the parties. The appellant is a tenant and the respondent landlord is a social housing provider.
The history of the appellant's tenancy and matters relevant to it, as to which there was no dispute, is as follows:
1. On 26 September 2016 the appellant and the respondent entered into a social housing tenancy agreement for certain premises (the Premises).
2. On 12 June 2017 NSW Police searched the Premises and found cash totalling $9,050 and equipment used in the manufacture, sale, cultivation and supply of prohibited drugs.
3. On 30 October 2017 the respondent filed an application (the Application) in the Tribunal seeking a termination order in respect of the appellant's tenancy of the Premises based on a breach by the appellant of s91 of the Residential Tenancies Act 2010 (the RTA).
4. On 7 February 2018 the appellant was convicted of a number of offences under the Drug Misuse and Trafficking Act 1985 and the Crimes Act 1900 including the supply, possession and cultivation of a prohibited drug and receiving stolen property, unlawfully obtaining goods and dealing with the proceeds of crime.
5. On 8 March 2018 the Tribunal made an order pursuant to the application giving notice to terminate the appellant's tenancy agreement under section 91(1)(a) of the RTA.
6. The appellant lodged an appeal against the Tribunal's orders dated 8 March 2018.
7. On 30 October 2018 the Appeal Panel heard the appellant's appeal, set aside the termination and possession orders dated 8 March 2018 and ordered the proceedings to be remitted to the Tribunal for the re-hearing of the Application.
8. On 29 March 2019 the application was reheard.
9. On 17 May 2019, the Tribunal:
1. made orders terminating the appellant's tenancy agreement and ordering that possession of the Premises be given to the Respondent within 28 days, and
2. issued its reasons for doing so.
1. On 31 May 2019 the appellant lodged a Notice of Appeal against the orders of 17 May 2019, along with an application for stay of the original decision pending appeal.
2. On 3 June 2019 the Tribunal made directions for the filing of evidence concerning the stay application, and on 13 June 2019 the Tribunal:
1. Stayed the order until further order; and
2. Made certain directions concerning the lodging of the respondent's Reply to Appeal, and the lodging by the parties of their respective submissions, the evidence on which they propose to rely and the sound recording and transcript of the original hearing.
Hall v NSW Land and Housing Corporation [2020] NSWCATAP 2 | Case summary | Zoe
In its Reply to Appeal the respondent accepts that the appeal was lodged in time.
After the Appeal Panel heard this matter, the Appeal Panel's decision in Orr v NSW Land and Housing Corporation [2018] NSWCATAP 23 was upheld by the Court of Appeal in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231.
The parties were given the opportunity to provide further submissions about the Court of Appeal decision. Both parties provided further submissions on 20 December 2019. We have considered those submissions.
[2]
Relevant legislation
This appeal concerns sections 91, 154D and 154E of the RTA.
Section 91 gives the Tribunal the power to make a termination order in circumstances where the premises have been used for illegal purposes. Section 154D(1) sets out circumstances in which it is mandatory to make the termination order and in which the Tribunal is bound to terminate the tenancy agreement. Section 154D(1) is subject to exceptions. Relevantly, if the Tribunal concludes that a termination order would likely result in undue hardship pursuant s154D(3)(b) of the Act, the Tribunal can exercise a discretion under s 91 not to terminate the tenancy agreement. Section 154E of the Act sets out a non-exhaustive list of matters which are to be taken into consideration when exercising the discretion to terminate a social housing tenancy agreement.
In the application before the Tribunal it was conceded by the respondent that the tenant was a person suffering from a disability for the purposes of s154(3)(b)of the Act. The issue that arises in this appeal is whether the Tribunal properly considered undue hardship and the discretion about whether to terminate.
In her Notice of Appeal, the appellant appeals against what she says are certain errors of law made by the Tribunal. She also seeks leave to appeal against certain other aspects of that decision.
Internal appeals in the Tribunal may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) of the Civil and Administrative Tribunal Act 2013 No 2 (the NCAT Act).
[3]
Ground 1 - Wrong test
The appellant submits that the Tribunal applied an incorrect test in deciding for the purposes of section 154D(3)(b) of the RTA that a termination order would not result in undue hardship for the appellant. The appellant submits that the Tribunal took into account the nature of the appellant's offence in determining undue hardship, rather than considering exclusively the impact of termination on the appellant. It is submitted that in doing so, the Tribunal departed from the correct test as set out by a differently constituted Appeal Panel in Orr v NSW Land and Housing Corporation [2018] NSWCATAP 237, at [53] to [54] and which was recently confirmed in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231.
The appellant submits that in making its assessment of undue hardship for the purposes of applying the threshold test in section 154D(3)(b), the Tribunal had regard, not only to the personal circumstances of the appellant, but also to the nature of the offences which formed the basis of the application.
The Appeal Panel's decision in Orr v NSW Land and Housing Corporation [2018] NSWCATAP 23 at [33] explains the interrelationship of sections 154D(1) and (3), as does the Court of Appeal's decision in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231, at [80] to [81] (per Bell P, with Ward JA agreeing) and at [118] to [119] (per McCallum JA).
It is clear from the Tribunal's reasons for decision that the Tribunal was aware of the correct test in relation to the relevant sections. At [4] of the decision the Tribunal identified:
….If the tenant establishes that she suffers from a relevant disability, and would likely suffer undue hardship, the effect of subsection 154D(3)(b) of the RT Act is to render inapplicable the mandatory termination order provision under section 154D(1). In those circumstances the Tribunal retains the discretion to make a termination order under section 91(1)(a) taking into account the matters set out in section 154E.
The Tribunal went on to make the following relevant findings in its reasons for decision:
25 By virtue of the admissions made by the tenant, the Tribunal is satisfied that the grounds specified in subsection 91(1) have been made out. The tenant has intentionally caused:
(a) the use of the premises for the supply of a prohibited drug (as set out in subsection 91(1)(a)); and
(b) the use of the premises for an unlawful purpose namely the other offences for which she was convicted.
26 By virtue of the admission made by the corporation, the Tribunal is satisfied that the tenant is a person suffering from a disability within the meaning of the Anti-Discrimination Act 1977.
It is the following paragraphs of the reasons for decision which have become the matter of contention in this appeal.
27 The hardship which the tenant may suffer from a termination order is described in the evidence referred to above and includes some risk of homelessness, relapsing into drug dependence and undoing the progress made in the rehabilitation programme. In the circumstances, and particularly given that the supply of a prohibited drug is a key feature of this case, the Tribunal is not satisfied that these risks should be regarded as undue hardship.
28 As the tenant's representative submitted, fairly, tenants on a marginal income are likely to encounter hardship if they are evicted from social housing. The Tribunal accepts the evidence of Ms Sacco and Dr Reid about the particular hardship that homelessness would impose upon the tenant. However, while it is unlikely that the tenant would be able to afford private rental accommodation, the possibility that she could find accommodation with family or friends has not been adequately addressed. It should be noted that the tenant gave written evidence about neighbourhood impact but no evidence concerning the question of hardship. There is a risk of homelessness but on the evidence the Tribunal is unable to quantify that risk.
29 It follows that the Tribunal must exercise the discretion under section 91 of the RT Act taking into account the matters set out in section 154E.
30 The Tribunal is required to take into account the matters in subsection 91(2) in relation to the ground specified in subsection 91(1)(b):
(a) The nature of the unlawful use: The tenant was convicted of having stolen property and unlawfully obtained goods on the premises and dealing with a large amount of money suspected of being the proceeds of crime. Police alleged that the tenant supplied cannabis in exchange for stolen property. It is unnecessary to make a finding with respect to that allegation; suffice to say that the tenant's explanation of the source of the property was unconvincing. In discussions with the police, the tenant changed her story several times about the source of the cash. She declined to participate in an interview concerning the circumstances in which the offences were committed. In the end, as previously noted, she pleaded guilty to a number of offences. As noted previously, she has offered an explanation about saving money from a superannuation payout. The Tribunal is not inclined to accept this explanation and prefers the conclusion reached by the police that the money in the safe was in all likelihood unlawfully obtained.
(b) There is no evidence of any previous unlawful uses.
(c) The previous history of the tenancy is unremarkable.
31 While it is not undue hardship, the Tribunal also takes into account the hardship which would be likely to be suffered by the tenant if a termination order is made.
32. The Tribunal also has regard to the matters in subsection 154E(1).
The appellant identifies an issue with [27] of the reasons where the Tribunal found:
In the circumstances, and particularly given that the supply of a prohibited drug is a key feature of this case, the Tribunal is not satisfied that these risks should be regarded as undue hardship [underlining added]
The appellant submits that the Tribunal has taken into consideration an element which is irrelevant in its assessment of undue hardship in section 154D(3), namely the nature of the appellant's offence. This same matter was initially raised before the Appeal Panel in Orr v NSW Land and Housing Corporation [2018] NSWCATAP 237. The Appeal Panel found:
46…. The landlord submits that there is nothing in s 154D(1)(3) of in the RT Act that would preclude the Tribunal from defining undue hardship in s 154D(1)(3) as "hardship that is excessive in the circumstances". The landlord further submits that the Tribunal's finding that it must be satisfied that the consequences of making a termination order would not be out of proportion to the tenant's fault is consistent with "undue hardship" being "hardship that is excessive in the circumstances". The landlord submits that where the person seeking to rely on the s 154D(3)(b) exclusion to s 154D(1) breached s 91 of the RT Act, the person's level of culpability must be a relevant consideration in determining whether that person may suffer undue hardship if the tenancy is terminated.
….
54. Given that termination of a social housing tenancy agreement under s 91(1)(a) would otherwise be mandatory regardless of the tenant's degree of fault, an interpretation of "undue hardship" that involves "consequences out of proportion to the tenant's fault" is, in our view, inconsistent with the purpose of s 154D(3)(b). The Liberian Shipping line of authority concerning the meaning of undue hardship can be distinguished from the use of the phrase in s 154D(3), as the conduct of the party seeking the extension of time is clearly relevant to the reasons for a delay in commencing proceedings and accordingly to the issue of whether an extension of time should be granted.
55. We conclude that the Tribunal did not correctly apply s 154D(3). However, in view of our findings in relation to the other grounds of appeal, this does not affect the disposition of the appeal.
Those findings were not disturbed on the further appeals of the Orr decision.
If the Tribunal has taken into consideration the gravity of the offence in determining undue hardship then that would amount to an irrelevant consideration and amount to an error of law (see Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, where the Appeal Panel set out at [13] a non-exclusive list of questions of law)
The respondent submits that having found that a termination order would not result in undue hardship for the appellant for the purposes of section 154D(3), so that mandatory termination applied, any error by the Tribunal in considering the discretionary factors under section 91 of the RTA was irrelevant since it had no jurisdiction to consider those matters. Counsel for the Respondent in his submissions described these words as a "… mere reference to the fact that drug supply was a key feature of the case …" which did "... not mean the Tribunal had regard to the degree of the appellant's fault in breaching s91..". The Appeal Panel disagrees with this reading of the reasons.
The inclusion of the underlined parenthetical phrase in [17] of the reasons, modified by the word "particularly", can in the Appeal Panel's view only be read as introducing into the Tribunal's reasoning an element which is irrelevant to the assessment of undue hardship in section 154D(3), namely the nature of the appellant's offence. While this is a consideration which may be relevant in exercising the discretion under section 91 of the RTA, it is not one which has any place in making the required assessment under section 154D(3).
In our view the Tribunal has incorrectly applied the test in determining undue hardship, because it has taken the nature of the offence into consideration.
We disagree with the respondent that in these circumstances, where the Tribunal found no undue hardship on an incorrect ground, that it could simply be presumed that mandatory termination applied. In fact that approach is inconsistent with how the Tribunal proceeds in paragraph [29], where it stated in the reasons:
"… [i]t follows that the Tribunal must exercise the discretion under section 91 of the RT Act taking into account the matters set out in section 154E" [underlining added].
It is difficult to reconcile why, if the Tribunal was of the view that there was no undue hardship, it not only went on to exercise the discretion under s 91 but considered itself obliged to do so, as the word "must' indicates.
This is not to deny that consideration in the reasons of the elements of the section 91 discretion might nonetheless be appropriate in some circumstances. That could be the case - as recognised in the Appeal Panel's decision in Orr v NSW Land and Housing Corporation [2018] NSWCATAP 23 at [59] - if it were undertaken as an alternative analysis whose objective was to address the possible consequences of the primary finding - that is, the absence of undue hardship - being successfully challenged. However, there is no indication in the present case that the Tribunal was undertaking the analysis on such an alternative basis. The Tribunal clearly (but incorrectly) articulated in the reasons that it proceeded to exercise the section 91 discretion as the logical and necessary consequence of the Tribunal's finding under section 154D(3) that a termination order would not cause undue hardship to the appellant.
In [30] to [33] of the reasons the Tribunal proceeded with an analysis under section sections 91 and 154F of the RTA as to whether to make a termination order. In doing so:
1. It addressed in [30] the mandatory considerations prescribed in ss 91(2)(a), (b) and (c) of the RTA, in 30, (b) and (c) respectively;
2. It considered in 32 to (e) the mandatory considerations respectively set out in ss 154E(1)(a) to (e) of the RTA in the case of applications for the termination of social housing agreements; and
3. In [31] and [32] it considered the potential hardship to the appellant of making a termination order; the approach which it adopted in doing so was consistent with that approved by the Appeal Panel in Orr v NSW Land and Housing Corporation [2018] NSWCATAP 23 at [35] and by the Court of Appeal in in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231, at [80] to [82] (per Bell P, with Ward JA agreeing) and at [118] to [119] (per McCallum JA).
Despite the errors of law which underlie the Tribunal's reasoning concerning the interrelationship between sections 154D and 91 of the RTA, the Tribunal reached in its orders essentially the same eventual conclusion that it could have reached if either:
1. It had not ventured into its section 91 analysis, and made the non-discretionary termination order provided for under section 154D(1) which was the logical consequence of its finding in paragraph [27] of its reasons, or
2. It had found that the making of a non-discretionary termination order imposed undue hardship and then proceeded with the analysis under sections 91 and 154E which it in fact undertook.
This presents the Appeal Panel with a dilemma. The Tribunal's decision is based on an error of law as described above, but the immediate consequence of that error is not necessarily materially different from what would have been the outcome had the Tribunal either (1) properly found undue hardship under section 154D or (2) made its finding about the exercise of the discretion in the alternative. The Appeal Panel has gone on to consider the balance of the reasons and has reached the view that it is necessary to set aside the final orders made by the Tribunal because the error of law in relation to the finding of undue hardship has infected the entire decision. That this is so is illustrated by the Tribunal's findings in respect of the risk of homelessness.
In relation to the risk of homelessness, at [23] the Tribunal set out the evidence that the tenant relied on in relation to this issue including:
1. A Housing Pathways policy document that stated that the tenant would be ineligible for social housing if a termination order is made.
2. Information about the tenant's relationships and supports (at pages 6 and 7 of Ms Sacco's report 04.08.2018) and that there is no person in a position to provide her with accommodation.
3. A MERIT (Magistrates Early Referral into Treatment) Report that states the tenant was homeless for four years before securing public housing.
4. A letter from a St Vincent de Paul Society case worker dated 14.12.2018 stating that if a termination order is made, the tenant will be facing homelessness.
At [24] of the Tribunal's reasons for decision, the Tribunal also listed the evidence which challenged the tenant's allegation in relation to homelessness, including that there was insufficient evidence that the tenant would become homeless if the tenancy agreement was terminated and the possibility that the tenant could live with 'Tash' (page 7 Ms Sacco's report 04.08.18) had not been addressed.
At [28] of its reasons the Tribunal came to the following conclusion in relation to homelessness:
As the tenant's representative submitted, fairly, tenants on a marginal income are likely to encounter hardship if they are evicted from social housing. The Tribunal accepts the evidence of Ms Sacco and Dr Reid about the particular hardship that homelessness would impose upon the tenant. However, while it is unlikely that the tenant would be able to afford private rental accommodation, the possibility that she could find accommodation with family or friends has not been adequately addressed. It should be noted that the tenant gave written evidence about neighbourhood impact but no evidence concerning the question of hardship. There is a risk of homelessness but on the evidence the Tribunal is unable to quantify that risk.
The appellant submits that the Tribunal failed to address a substantive argument about the effect that homelessness would have on the tenant, namely that homelessness would likely to result from her eviction and would encourage a relapse into drug dependency and impair the progress of her efforts at rehabilitation.
It is clear from the listing of the evidence and the statement of the Tribunal at [28] of its reasons (at para 37 above) that the Tribunal was aware and accepted the evidence of Ms Sacco and Dr Reid about the particular hardship that homelessness would impose on the tenant. The Tribunal gave consideration to those concerns and that a termination order could result in homelessness, relapse into drug dependence and impairment of rehabilitation.
However, confusion arises in the reasons as to whether the assessment of homelessness was in relation to the test for undue hardship or the discretion in relation to s91. The reasons at [28] come after the Tribunal makes the finding that there is no undue hardship. It is unclear in that context whether that analysis was in relation to the finding of undue hardship or the exercise of the discretion under s91. The Tribunal purports to exercise its discretion under s91 of the RTA from paragraph 29 and at [31] states:
While it is not undue hardship, the Tribunal also takes into account the hardship which would be likely to be suffered by the tenant if a termination order is made.
While it may be inferred that this statement relates to the homelessness, it is not clear from that statement what weight, if any, was given to homelessness in the context of the exercise of the s91 discretion. On that basis we find that the error of law has infected the decision as a whole and allow the appeal. The proceedings will be remitted to the Consumer and Commercial Division for re-hearing.
Given our consideration of Ground 1 and our conclusion that the proceedings should be remitted, it is unnecessary for us to consider the remaining grounds of appeal. It is also unnecessary for us to consider the application for leave to appeal.
[4]
Orders
Accordingly, we make the following orders:
1. The appeal is allowed.
2. The orders made by the Tribunal on 17 May 2019 are set aside.
3. The proceedings are remitted to be reconsidered by a differently constituted Tribunal.
[5]
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: 13 January 2020