Hancock & Claringbold v Callala Bayside Realty Pty Ltd t/as Callala First National Real Estate

The Grounds of Appeal

1. In the Appellants' Notice of Appeal under "Grounds of Appeal" the Appellants stated "Refer to attached sheets it was not fully addressed".
2. There was attached to the Notice of Appeal a handwritten document headed "Ground for Appeal. Notice of Order" in the following terms (obvious errors have been corrected): Brian Muller has been involved in the complaint since June 013. He is principal of both agencies and a licensed Auctioneer. He was not prepared to conciliate and was not involved in the proceedings we wish to know why not. He is being investigated by Fair Trading and this investigation is still ongoing some 7 months later. His involvement by compiling a Special Condition Sheet unauthorised by us is considered a serious breach of the Stock and Agents Act 2002 sect 52. As a result of this it completely invalidated both the Management Agreement and the R.T.A. The above has not been addressed as clearly itemised in our application dated 16/6/015. Fair Trading suggested that we make the application dated 16/6/015 to NCAT and that they were obliged to address the issue raised Property Stock and Agents Act 2002 sect 52. This was not addressed at the Hearing. We did not seek rent increases. But would expect the C.P.I. be considered when the premises were re-let. All electric usage were provided in a timely manner ie once received from Origin Energy. The Member failed to acknowledge that it took months for the Accounts to be rectified by Origin Energy, the tenant put the electricity into his name. The electricity usage is separately metered as is the Solar Contribution that is fed back into the grid and this is not against normal procedure. Clause 10 of all R.T.A. had not been deleted. At no time did we advise anyone that the electricity was included in the rent. Otherwise Clause 10 would have been deleted. At no time during the rental period did any of the tenants state that the rent was too high. Refer to appraisal by 1st National and the tenants agreed to the figure by signing the R.T.A. before moving into the premises. Who gave 1st National the authority to state the Tenant and the Landlord agree that the electricity is included in the weekly rent. This Special Condition Sheet was inserted 1 month after the tenant signed by R.T.A. agreeing to pay all metered electricity used by them. This was not fully addressed. Clause 10 in each R.T.A. is quite explicit. Not considered and not understood by the Member. Separately metered the electricity used by tenant is spelt out clearly on the account. The question is how can a tenant sign an R.T.A. agreement stating rent payable per week and that they are responsible for electricity used by them and then told by the agent Brian Muller of 1st National one month later that the electricity is now included in the weekly rent. By way of a Special Condition Sheet placed into the R.T.A. as he stated the rent was too high, this all happened after the tenants moved into the house. We were paying commission to the agent to look after us not the Tenant. As a result of this we were out of pocket by thousands of dollars. As late as March 015 Brian Muller was negotiating back with the tenant to recover our money for unpaid Origin Energy invoices. This was not addressed.
3. Under the heading in the Notice of Appeal, "Reasons why the NCAT Appeal Panel should grant leave to appeal against the decision", the Appellants again state "refer to attached sheets for consideration the dispute was not fully addressed as per our application dated 16 June 2015". The attached sheets were also referred to in the Notice of Appeal as "Reasons why the decision was not fair and equitable". Under the heading "What evidence should the Tribunal have given more weight to? Why?" the Appellants state Brian Muller was involved since June 2013 why was he not involved in the proceedings and consider the Property, Stock and Business Agents Act 2002.
4. In respect of the claim that significant new evidence is now available that was not reasonably available at the time of the hearing the Appellants state "had the [Property Stock and Business Agents Act 2002] been considered it would have made a difference to the decision". The reason identified by the Appellants why this evidence was not available at the time of the hearing is "Hearing not prepared to consider the above requested and itemised on initial application form".
5. From the foregoing we identify that the only questions of law upon which the Appellants seek to rely are the asserted failure of the Tribunal Member to take account of s 52 of the Property, Stock and Business Agents Act 2002 (NSW), and, possibly, that the Tribunal Member erred in failing to find that the special condition executed after the entry into the second tenancy agreement was unenforceable and made without the authority of the Appellants.
6. The Appellants' proposition that the Property, Stock and Business Agents Act was "new evidence not reasonably available at the hearing" cannot succeed. This is not new evidence as contemplated by cl 12(1)(c) but rather, as we understand it, an assertion by the Appellants that the Tribunal improperly failed to take into account the Property, Stock and Business Agents Act. We deal with this issue below in determining the question of whether the Tribunal at first instance made any error of law.
7. If the Appellants are not able to establish that there was an error of law, the remaining issue is whether they should be given leave to appeal on grounds other than a question of law. As we understand the Notice of Appeal, the basis upon which the Appellants submit that leave should be granted is that the Tribunal Member's finding, that the Appellants had agreed that the electricity would be included in the rent, was a finding against the weight of the evidence.

Was there an error of law by the Tribunal at first instance?

1. Section 52 of the Property, Stock and Business Agents Act provides: 52 Misrepresentation by licensee or registered person (1) A person who, while exercising or performing any function as a licensee or registered person, by any statement, representation or promise that is false, misleading or deceptive (whether to the knowledge of the person or not) or by any concealment of a material fact (whether intended or not), induces any other person to enter into any contract or arrangement is guilty of an offence against this Act. Maximum penalty: 200 penalty units. (2) Without limiting the generality of subsection (1), a statement, representation or promise is taken to be false, misleading or deceptive if it is of such a nature that it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the statement, representation or promise indicates that the state of affairs does exist. (3) It is a sufficient defence to a prosecution for an offence under this section if the defendant proves that the defendant did not know, and had no reasonable cause to suspect, that the statement, representation or promise was false, misleading or deceptive.
2. That provision imposes criminal sanctions upon false, misleading, and deceptive conduct by a licensee, while performing a function as a licensee, which induces any other person to enter into any contract or arrangement.
3. The Appellants have not put forward any reasonable basis upon which Mr Muller might, on the evidence before the Tribunal Member (or the Appeal Panel) be guilty of an offence against s 52. Assuming Mr Muller was responsible for the special condition executed in respect of the second tenancy (and there was no evidence before the Tribunal Member to establish that he was), there was no basis upon which the Tribunal might have found that that agreement was induced by false, misleading, or deceptive statements.
4. Moreover it is clear that s 52 does not provide any private right of action. An infringement of s 52 does not gives rise to any right in any other person, whether or not the "other person" was induced to enter into a contract by false, misleading or deceptive statements, to seek relief, whether by way of damages or otherwise from the infringing party.
5. The Appellants' reliance upon s 52 of the Property, Stock and Business Agents Act is misconceived and this ground of appeal therefore fails.
6. Insofar as it can be discerned that the Appellants contend there was an error of law in the Tribunal failing to find the special condition was unenforceable and executed without authority, this ground also fails.
7. The Tribunal, after hearing evidence from the Appellants and from the witnesses called for the Respondent, including Ms Trethewey and Ms Zoeller, found as follows: Further the Tribunal is satisfied that the respondent acted on instructions during the first lease with the tenant Mr & Mrs Hynds and during the second lease with Mr Hockey that the rent paid by the tenants included electricity usage. The Tribunal accepts the evidence of Ms Trethewey that she told the applicants that the electricity charges would need to be included in the rent and this was accepted by the applicants. In other words, the respondent advised the applicants that the tenant's liability to pay for electricity charges (see printed condition 10 of the tenancy agreements) was to be met by it being included in a rent amount which was above the prevailing market rate for two bedroom properties in the relevant locality (about $320.00 per week). To the extent that there are differences in the recollection of the parties as to these material conversations the Tribunal prefers the evidence of the respondent's representatives. Moreover the Tribunal is not satisfied that the respondent included a special condition in the tenancy agreement with Mr Hockey which was at odds with the applicant's instructions. In particular the Tribunal does not agree that the special condition has the effect of allowing the tenant 'free' electricity. The special condition in the tenancy agreement with Mr Hockey means what it says. It states: "The tenant agrees that the electricity is to stay in the landlord's name. The tenant and the landlord agree that the electricity is included in the weekly rent". It was not until the respondent received these instructions in an email of 08-Aug-2014 "would you please have the latest agreement amended to include a clause that the tenants are required to pay electricity charges" that the applicants clarified the position. The respondent then acted in accordance with those instructions.
8. In light of these factual findings, which must be accepted unless the Appellants are granted leave to appeal on questions other than questions of law, it is impossible to say the special condition was entered into without the authority of the Appellants.
9. Moreover, there is no basis upon which the special condition could be said to be unenforceable. Subject to compliance with the overriding requirements of the Residential Tenancies Act 2010 (NSW) (the RTA), the parties to a residential tenancy agreement may agree to amend the agreement at any time, just as is the case with any ordinary contract.
10. When the Respondent (with, as found by the Tribunal, the authority of the Appellants) executed the special condition and obtained the signature of the tenant on the special condition, the residential tenancy agreement between the Appellants and the tenant was amended so as to include the special condition. It is not suggested the special condition was inconsistent with the overriding requirements of the RTA.
11. The special condition was thereafter enforceable in accordance with its terms and bound the Appellants.
12. In conclusion, we find there was no error of law in the Tribunal's decision.

Should the Appellants be given leave to appeal on grounds other than a question of law?

1. While the Appellants completed that part of the Notice of Appeal challenging the decision on the basis that it was not fair and equitable, it was clear from their submissions that the Appellants claim there may have been a substantial miscarriage of justice because the decision was against the weight of evidence.
2. The Tribunal accepted the evidence of Ms Trethewey and Ms Zoeller. It cannot be said that their evidence was inherently unlikely or unbelievable. That evidence supported the findings of the Tribunal which we have set out above. There is no basis upon which it could be said (in terms of the decision in Collins v Urban) that there has been a substantial miscarriage of justice by which the Appellants have been deprived of a significant possibility of achieving a different result.
3. The Appellants relied on their own evidence about instructions given to the Respondent but the evidence of the Respondent's witnesses was preferred. These findings were open to the Tribunal. The factual findings were reasonably arrived at and not clearly mistaken. To the contrary, we find they are consistent with the objective documentary evidence in a way which the Appellants' version of events is not. In particular, we refer to Annexures B to E to Ms Trethewey's affidavit which disclose that Ms Trethewey forwarded a copy of the residential tenancy agreement relating to the second tenancy, including the special condition, to the Appellants on 14 February 2014 and did not receive any objection at that time from the Appellants.
4. We therefore refuse the Appellants leave to appeal.

Costs

1. In its written submissions, the Respondent sought an order for costs on the bases: 1. that the Appellants' claims had no tenable basis in fact or law; 2. that the Appellants' claims were misconceived and without substance 3. that the Appellants failed to comply with the duty imposed by s 36(3) of the Civil and Administrative Tribunal Act to co-operate with the Tribunal to give effect to the guiding principle for the Act to facilitate the just, quick and cheap resolution of the real issues in the proceeding; and 4. that the Appellants did not achieve a better result on the hearing than an offer made by the Respondent.
2. As the Appellants had, for reasons not of their own making, only had access to the Respondent's submissions at the hearing, we gave the Appellants leave to file written submissions in reply to the Respondent's application for costs. The Appellants filed written submissions on 18 February 2016. They opposed the application for costs.
3. Costs in this jurisdiction are governed by s 60 of the Act. This section provides that: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant.
4. Section 60 has been considered by the Appeal Panel in a number of cases: see, for instance, CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120; Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48; and Rose Nettis Pty Ltd v Three Tall Trees Pty Ltd [2015] NSWCATAP 51. As the Appeal Panel noted in eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]: The authorities considering the meaning of the expression "special circumstances" were recently reviewed in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]. From those authorities, it can be seen that "special circumstances" are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional. Further, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must, of course, be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs.
5. Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) provides that in proceedings for the exercise of functions in the Consumer and Commercial Division, the Tribunal may award costs in the absence of special circumstances if the amount claimed or in dispute is more than $30,000 (r 38(2)(b)) or if the amount is more than $10,000 but less than $30,000, where the Tribunal has made an order under cl 10(2) of sch 4 of the Act about conduct causing disadvantage (r 38(2)(a)). Neither of these provisions apply in this case.
6. Apart from the fourth basis set out above, it is clear from the submissions of the Respondent that the bases upon which the Respondent seeks costs are all founded on the proposition that the Appellants persisted in an appeal which had no prospects of success, in particular, by persisting with their reliance upon s 52 of the Property, Stock and Business Agents Act.
7. Although we have dismissed the appeal and found that the Appellants' reliance upon s 52 of the Property, Stock and Business Agents Act was misconceived, we do not consider that the Appellants' maintenance or conduct of the appeal was such as to constitute special circumstances so as to warrant an order that the Appellants pay the Respondent's costs. In this regard we take account of the fact, pressed upon us by the Appellants in their written submissions, that the Appellants were not legally represented while the Respondent was represented by solicitors. Although the Respondent's solicitors were granted leave to represent the Respondent, this is not a case where legal representation was essential for the protection of the Respondent's interests.
8. We do not consider that the Appellants failed to comply with their duty to give effect to the guiding principle. Even though they maintained arguments which we have found to be misconceived and have failed to obtain leave to appeal on issues other than questions of law, they complied with directions and co-operated with the Tribunal, in particular in agreeing to proceed with the appeal notwithstanding that they only received a copy of the Respondent's appeal papers at the commencement of the hearing. Furthermore, it could not be said that the Appellants' request for leave to appeal had "no tenable basis".
9. The offer of settlement raises a different issue. The Respondent's settlement offer was sent by the Respondent's solicitors to the Appellants on 30 April 2015. The Respondent offered to pay $1,867.46, being the Respondent's calculation of the amount paid by the Appellants for electricity during the first two leases (disregarding any solar rebate). The Appellants did not accept the offer.
10. The Respondent refers to the Appeal Panel decision in Integrity Homes Pty Ltd v Staniland [2015] NSWCATAP 284 in which a costs order was made against an unsuccessful appellant in circumstances where the appeal was found to be without merit, and to have "no tenable basis in fact or law" and the appellant had failed to accept a settlement proposal and obtained a worse result at the hearing.
11. Each case must turn on its own facts. There are a number of grounds of distinction between these proceedings and Integrity Homes.
12. The appellant in Integrity Homes was legally represented and should have been aware of the deficiencies in its case.
13. The appellant in Integrity Homes was found to have unreasonably prolonged the time taken to complete the proceedings. We do not make such a finding against the Appellants in these proceedings.
14. Most significantly, the offer made by the Respondent in Integrity Homes related to the disposition of the appeal. The offer relied upon by the Respondent in these proceedings was made before the commencement of proceedings in the Tribunal and before the decision of the Tribunal from which the appeal is brought.
15. We do not understand the Respondent to be relying upon the offer in respect of the costs of the proceedings below. Any application for those costs should have been made to the Tribunal at first instance.
16. There is authority from the Court of Appeal that an offer made before trial or judgment at first instance does not have the same significance in respect of the costs of an appeal as it might have in respect of the costs at first instance.
17. In Grace v Thomas Street Café (No.2) [2008] NSWCA 72 at [33] the Court of Appeal (Spigelman CJ, Beazley JA, and McClellan CJ at CL) held: pre-trial settlement offers do not necessarily continue to operate for the purpose of an appeal. Generally, if an offer is not renewed (either in the same or different terms) prior to the appeal, the Court will not make a special costs order in respect of the appeal.
18. The Court of Appeal referred to a number of authorities and went on to record that: a pre-trial offer may be relevantly persuasive in the exercise of the discretion [relating to costs] depending upon all of the circumstances.
19. Our discretion in respect of the costs of appeal is governed by different rules to those applicable in the Court of Appeal. Nevertheless we consider that the general propositions outlined above are relevant to the exercise of our discretion.
20. As was observed in Bathurst Regional Council v Thompson (No.2) [2012] NSWCA 420 at [16]: The usual position is that appeal costs should primarily be determined by the issues in and the outcome of the appeal proceedings themselves.
21. We do not consider that the offer of settlement made prior to the hearing at first instance constitutes special circumstances relevant to the costs of the appeal in the circumstances of this case. We decline to make an order in respect of the costs of the appeal.

Conclusion

1. Having regard to the foregoing reasons, we making the following orders : 1. Leave to appeal refused; 2. Appeal otherwise dismissed; and 3. Application for costs made by the Respondent refused, each party to pay their own costs.

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: 08 March 2016