Hassani v Afzal

Consideration

The issue for determination in this appeal is whether the tenants were denied procedural fairness. This is a question of law for which there is a right of appeal; s 80(2)(b) Civil and Administrative Act 2013 (NSW) (NCAT Act)
The parties filed submissions in relation to their respective positions. The appeal was heard on 8 October 2020 and the parties made oral submissions to support their contentions. In respect of the tenants, Mr Amir Hassani and Mr Arash Hassani appeared on behalf of the tenants. Ms Williamson was the agent of the landlords and appeared on their behalf.
There is no dispute about the following matters in this appeal: 1. Rental arrears as at 18 August 2020 were $11,942.86. 2. The notice of termination was issued by the landlords after 15 April 2020 (being the date when Part 6A of the RT Reg came into force) but less than 60 days after commenced of that Part. 3. There had been no participation by the landlords in good faith in a "formal rent negotiation process" as that term is defined under s 228A of the RT Act.
It was also common ground that the Tribunal, in the proceedings at first instance, had made directions contained in the notice of hearing dated 23 June 2020 requiring the parties to file and serve all their evidence prior to the hearing on 18 August 2020. These directions, which included filing evidence concerning "a COVID-19 impacted tenancy" were as follows: 1. The applicant is to give to the respondent any documents they intend to rely on within 14 days of the date of this notice. 2. The respondent is to give to the applicant any documents they intend to rely on within 28 days of the date of this notice. 3. The applicant is to give to the respondent any documents in reply within 35 days of the date of this notice. 4. Parties are to lodge with the Tribunal any documents they have given to the other party within 35 days of the date of this notice. Note: Documents include: tenancy agreement, termination notice, rent ledger, utility bills, quotes, witness statements. If this is about a COVID-19 impacted tenancy both parties must include in their documents the financial statement (COVID-19). It can be found on the NCAT website, search for financial statement. 5. Each page in the bundle of documents must be consecutively numbered. 6. The Tribunal will contact the parties on the telephone number provided. The number you have provided must be a direct line not a switchboard. If you have not provided the Tribunal with a current telephone or direct line, you must do so at least 3 days before the hearing. 7. Parties must be available on the telephone number provided for at least 2 hours from the time specified on this notice. If the Tribunal is unable to contact a party by telephone they may proceed to make orders including final orders in the absence of that party.
In relation to these directions, the tenants said they had provided a statement from their accountant setting out their financial circumstances. This document was provided by JBM Accountants from a Mr Javad Monfared. This statement said: To Whom It May Concern; I Javad Monfared From JBM Accountants act as the tax agent for Amir and Arash Hassani and confirm that both clients had more than 60% reduction to their income for the months of March, April, May and June 2020. Kind regards Javad Monfared Manager
However, no further evidence in documentary form was provided by the tenants prior to the hearing at first instance. In this regard, neither the tenants nor the landlord provided a completed "Financial Statement (COVID-19)" required by the directions made 23 June 2020.
While acknowledging their failure to comply with directions, the tenants submitted on appeal it was their first time appearing in the Tribunal, that neither party had provided their required evidence and the proceedings should be have adjourned to permit them to provide the further information required.
Further, the tenants submitted the Tribunal had indicated at the commencement of the hearing that it was unable to proceed due to the absence of the required evidence. While no adjournment was sought, the tenants said that the proceedings should have been adjourned by the Tribunal due to their circumstances.
In addition, the tenants relied on oral evidence given by them to the Tribunal at the original hearing. The tenants provided to the Appeal Panel a copy of the transcript of proceedings at first instance. In connection with who was paying the rent the following exchange occurred at transcript [75]-[80]: Member: Okay well before we go off to this, I want to have a look at something. How many people are in the household? There is 4 people in the household. Who makes payment towards the rent? Mr Hassani: Amir and Arash we both work in the same business and we are paying the rent. Member: Under section 228(b), it says right, well the other 2 people on the agreement, Esmaeil Hassani and Khadijeh Etemadifar, do they work Mr Hassani: No, they are pensioners. Member: So to there other 2 are pensioners. What type of pensioners are they? Mr Hassani: Mum is a disability pension and dad is carer pension of mum.
Thereafter conciliation appears to have taken place, where by the Tribunal tried to settle the dispute between the parties. After this process had concluded, the following further exchange occurred at transcript [130]-[131]: Member: Ms Williamson my final question to you is, with relation 31(c)2a says, long pause...hmm. Okay no sorry I withdraw that. I'm going to have to think about this and I will give you my notice in writing. Just one other thing Mr Hassani you ah told me that only yourself and Ash pay the rent but the residential tenancy agreement is in 4 names. Why is that? Mr Hassani: Because when you apply to rent a property the agency requires every single adult to be part of the application. I can forward you a statement that money for rent is coming out of our account and me and Ash are the direct paying tenants of the property.
Finally, at transcript [132]-[133] the following exchange occurred: Member: who would be paying this 500/week. Would it be just yourself and Ash Mr Hassani: yes, that is correct Member: I think I have enough information to make a decision but need to think through. I will send you the notice of order. Is there an email address Mr. Hassani
It should be noted, that during the hearing, the Tribunal made the following statements concerning the hearing process. First, at transcript [81] the Tribunal said: Member: What you haven't done sir, you have to show me through evidence that there has been a 60% reduction of the income, you say there is a 60% reduction in your income. For the purpose of this past, a household is impacted by COVID-19 pandemic if anyone or more of the rent paying members of the household have lost employment or income as a result of the pandemic, had a reduction in work hours or income as a result of the impact of the COVID-19 pandemic, had to stop working or materially reduce the member work hours because of household or carers responsibility and as a result of any of the matters stated above, the weekly household income has been reduced by at least 25% compared to the week house hold income for the household before the occurrence of the matters. Your accountant letter sets out that you have received a 60% reduction in income but you haven't given any particulars on the income of the whole household so I can make a determination that the household weekly income has reduced by 25%, In the direction that was sent to you on 23 June 2020, it says the documents that you have to produce to the Tribunal are the tenancy agreement, a termination notice, a rent ledger, bills quotes, witnesses and if this is about COVID-19 impacted tenancy BOTH parties must include in their documents a financial statement COVID-19 and it can be found on the NCAT website, search for financial statement. Now neither party has provided that to me so I can make an assessment what the relevant strengths and weaknesses of the parties' financial position is. Secondly the tenant is now raising matter which should be the subject of a cross application so if you're saying there are problems with the premises, because where is it here, there is need for repairs they weren't done, and the work is therefore for excess, that the premises have been misdescribed so the rent is excessive, you Mr Hassani need to raise that as a cross application. So that means I can't go forward and make a termination on this matter until both parties have provided me with that evidence. Mr Hassani notwithstanding the household may be impacted by COVID-19, what's the prospect going forward?
Then at transcript [97], the Tribunal said: The landlord is claiming $11,492.00. I can't hear the matter today. I have heard that you can pay $500 so I can make an interim order that going forward you can pay $500/week and what about the arrears. How much of those arrears can you pay immediately?
At transcript [118], the Tribunal then said: Member: I don't think a result can be reached so it goes for me to make a decision.
Finally at transcript [134] the Tribunal said: Member: I think I have enough information to make a decision but need to think through. I will send you the Notice of Order. Is there an email address Mr Hassani.
The Tribunal then concluded the hearing and shortly thereafter made the Orders and provided reasons.
Of the hearing process, the Tribunal said in its reasons at [3]: At the hearing both parties were given an opportunity to present their evidence, test the other party's evidence and make submissions.
Of the tenants' evidence the Tribunal said in its reasons [6]: The Respondents also claimed that the household is impacted by the COVID-19 pandemic: section 228B of the Residential Tenancies Act. In support of that claim, the Respondents tendered an undated statement by Javad Monfared, Tax Agent, certifying that the first two respondents had a 60% reduction to their income for the months of March, April, May and June 2020: the document titled 'Account Letter' and attached to their e-mail to the Tribunal dated 27 July 2020. The document does not set out their 'pre-COVID' income or their income since the COVID-19 pandemic. Moreover, no evidence was put forward of the Third and Fourth Respondents' income.
The Tribunal referred to decision Serious v Barlow; Barlow v Serious [2020] NSWCATCD 3 at [38]. The Tribunal then said in its reasons at [7]-[9]: 7. On the evidence before it, the absence of the actual income figures of the four respondents before and after 15 April 2020 is fatal to the Respondent's claim that they are part of an impacted household and thereby impacted tenants. Since the tenants do not satisfy the definition of an impacted tenant, the protections introduced to deal with the impact of the COVOD-19 pandemic do not apply to them and the landlords are not precluded from obtaining the orders sought by the Application. 8. The directions made on 23 June 2020 as to the filing of evidence were clear to put the Respondents on notice that they had to give documents upon which they intended to rely and that if it related to a COVID-19 impacted tenancy, then they had to include in those documents the Financial Statement (COVID-19) available from the NCAT website. Having had since 23 June 2020 to put that information before the Tribunal, there is no justification to extend the time to do so today when the matter was set down for a hearing. 9. In the view of the Tribunal nothing put to it as to the Respondents circumstances provides a reasonable explanation for not paying the rent. While the Respondent's evidence clarifies why the rent fell into arrears, it does waive (sic) the obligation to pay rent.
The paragraphs to which we refer demonstrate the following errors: 1. The parties were not given an opportunity to present oral evidence, test the other parties' evidence or make submissions concerning the evidence. Rather, the hearing proceeded in a manner which moved from the formal hearing process to the conciliation process and back again. In relation to what they had told the Tribunal at the hearing and what their accountant had said, the tenants were not afforded an opportunity to make submissions about why the evidence provided was sufficient to demonstrate the tenants were COVID-19 impacted. 2. The Tribunal erroneously reached a conclusion that there was no evidence of the actual income figures of the four tenants before and after 15 April 2020 and that this was fatal to the tenants' claim. As is evident from the statement provided by the accountant and the statements made by Mr Hassani during the hearing at first instance, there was some evidence, albeit scant, concerning these matters. This evidence included that the personal income of Amir and Arash Hassani had reduced by 60% and that they were the rent paying members of the household.
As to the other two tenants, Esmaeil Hassani and Khadijeh Etemadifar (parents), they were on pensions and not paying the rent. This fact is relevant to the question of whether the tenants were impacted tenants and whether Reg 41C applied.
Section 228A Definitions defines an impacted tenant in the following terms: Impacted tenant means a tenant who is a member of a household impacted by the COVID-19 pandemic.
Section 228B(1) of the RT Act provides that a household is impacted by COVID-19 in the following circumstances: 228B When a household is impacted by COVID-19 pandemic (1) For the purposes of this Part, a household is impacted by the COVID-19 pandemic if - (a) any 1 or more rent-paying members of the household have - (i) lost employment or income as a result of the impact of the COVID-19 pandemic, or (ii) had a reduction in work hours or income as a result of the impact of the COVID-19 pandemic, or (iii) had to stop working, or materially reduce the member's work hours, because of - (A) the member's illness with COVID-19, or (B) another member of the household's illness with COVID-19, or (C) the member's carer responsibilities for a family member ill with COVID-19, and (b) as a result of any of the matters stated in paragraph (a), the weekly household income for the household has been reduced by at least 25% compared to the weekly household income for the household before the occurrence of any of the matters.
Section 228B(2) states that: Weekly household income means the total of the weekly income including any Government payments received by each rent paying member of the household (emphasis added)."
Section 228A Definitions defines a rent paying member as follows: Rent - paying member of a household means any member of a household who regularly contributes to the rent payable under a residential tenancy agreement for the residential premises in which the household resides.
Significantly, the definition of impacted tenant does not require every tenant must be a "rent paying member of the household". Rather, the tenant must be a "member of a household impacted by the COVID-19 pandemic".
If a tenant is a member of a household impacted by the COVID-19 pandemic, they are an impacted tenant. In this case: 1. reg 41C(1)(a) of the RT Reg prohibits giving to an impacted tenant a termination notice under section 87 of the RT Act on the grounds specific in section 88 of the RT Act, namely non-payment of rent, during the moratorium period; and 2. reg 41C(1)(b) and (c) prevent applications to the Tribunal for a termination order in respect of the non-payment of rent during the moratorium period.
Regulation 41C(2) provides an exclusion permitting notice to be given or an application to be made to the Tribunal. However, this does not apply if "the termination notice is given, or the application is made, less than 60 days after the commencement of Part 6A of the RT Regulation. That is, 60 days after 16 April 2020.
Having regard to the above, it seems to us that the evidence provided to the Tribunal may support a finding that the tenants were COVID-19 impacted. This is despite the fact the tenants had failed to comply with the directions previously by the Tribunal for the filing and service of relevant documents, including witness statements, prior to the hearing on 18 August 2020. This is because: 1. there was evidence the only rent paying members of the household were Amir and Arash Hassani; 2. there was evidence, albeit scant, that because of the COVID-19 pandemic, the income of Amir and Arash Hassani had reduced by 60%, that is more than a 25% reduction; 3. only the income of rent paying members of the household is relevant to determining a household is impacted by the COVID-19 pandemic; and 4. the other two tenants, Esmaeil Hassani and Khadijeh Etemadifar, do not appear to be rent paying members of the household. Consequently, while they may be impacted tenants as defined under the RT Act, their income is irrelevant for the purpose of determining whether the household is impacted within the meaning of section 228B of the RT Act. In this regard the income of non-rent paying members of the household is not relevant because of the definition of weekly household income which is only the income of a "rent paying member of the household".
That is not to suggest that the income of all members of the household (rent paying or not) is irrelevant to the exercise of any discretion to terminate a tenancy under Reg 41C(4). However, a determination under that section is only arises in circumstances where a termination notice and/or application to the Tribunal has been validly made.
It follows that the Tribunal was, prima facie, in error in rejecting the claim by the tenants that they were impacted tenants in a household that was impacted by the COVID-19 pandemic. If it had reached this conclusion, the application should have been dismissed.
However, that is not the end of the matter. As we recorded above, the Tribunal indicated in its reasons that both parties were given an opportunity to present their evidence and test the other parties' evidence and make submissions. The transcript does not support this conclusion. Rather, what occurred was that the Tribunal was critical of the inadequacy of the evidence of both parties, indicated it would not proceed with a hearing and proceeded by way of conciliation. When unable to obtain a settlement through conciliation the Tribunal returned to the hearing process which concluded shortly thereafter with no opportunity to either party to present their cases.
We make no criticism of the Tribunal's attempts to finalise this dispute by conciliation, the matter being listed in a group list at a first hearing with limited time. However, having regard to the statements made by the Tribunal and the absence of a clearly delineated hearing process to give an opportunity for the parties to cross examine the opponents in relation to their evidence and to make submissions concerning that evidence, in our view the hearing process miscarried and both parties were denied a reasonable opportunity to be heard.
It follows from the above that we should set aside the orders made by the Tribunal and remit the proceedings for rehearing on the question of whether a termination order should be made. This will include the issue of whether or not the tenants and/or the household were impacted within the meaning of the RT Act and RT Regulation.
In doing so, there has been no dispute concerning the amount of rent which remained unpaid as at 18 August 2020. Consequently, we will set aside the orders for termination and possession and the order in respect of the payment of occupation fee but not the order for payment of rent outstanding as at 18 August 2020. Whether or not the tenants are impacted tenants does not remove their liability for unpaid rent. It only prevents a landlord terminating a tenancy. This will mean that the tenancy remains on foot, the rent payable being $760 per week.
Whether a termination order should ultimately be made will, in part, depend on whether the tenants are COVID-19 impacted. If the tenants are impacted tenants, as stated above, the application should be dismissed because the termination notice was served in contravention of reg 41C. This is because the notice was served during the moratorium period and not at least 60 days from 15 April 2020. If not COVID-19 impacted, the Tribunal on remittal will need to re-exercise any discretion in relation to the breach arising from the failure to pay rent.
For the purpose of the remitted proceedings, we will make directions to permit the parties to file or serve further evidence on the question of whether the tenants were COVID-19 impacted and any evidence relevant to the exercise of any discretion to terminate the tenancy and/or make a finding under s 89(5) of the RT Act. The parties' witness will be required to be available for cross examination at the final hearing. Finally, in light of the previous defaults, orders should be made preventing evidence to be relied upon which is not served on time.

At a glance

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Judgment (5 paragraphs)

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