This appeal is from a decision notified on 3 September 2015 after a hearing which occurred in the Consumer and Commercial Division of the New South Wales Civil and Administrative Tribunal. As a result of that decision the appellant landlord was ordered to pay the sum of $1,465.71 to the tenants who are the respondents to this appeal. The Appeal Panel was informed that the landlord has paid that sum, together with an amount of $88.00 for a filing fee for the enforcement of that order. The enforcement was undertaken by the tenants because there had been no subsequent stay of the order made in the Tribunal.
Hayes v Williamson [2015] NSWCATAP 268 | Case summary | Zoe
The appellant contends by this appeal that the amount which should have been paid to the tenants is the sum of $320.00.
The tenants occupied a Terrace house located in Australia Street, Newtown which was adversely affected by a storm so that the third bedroom which was occupied by the first named tenant was no longer habitable. In the Tribunal below the tenants argued that the rent payable should not have exceeded $650.00, and the landlord argued that it should not have been less than $710.00. The relevant passage of the decision which is said by the appellant to be incorrect and is the essence of the appeal, is as follows:
Having regard to the floor plan tendered by the [landlord], the area of bedroom 3 represents approximately one quarter of the floor space of the premises requiring the rest of the serviceable area of the premises to fulfil the function that bedroom 3 performed, that is to serve as the [tenant's] bedroom and personal storage. This means that the loss to the [tenants] is approximately one half of the amenity of the premises from 21 April 2015. Accordingly the rent should have been rebated by one half to $425 per week for the period from 21 April 2015 to 26 May 2015. As during that period $710 was paid, there is an overpayment of rent amounting to $1,465.71 (that is and(sic) overpayment per week of $285 ($710 - $425) for the period 21 April 2015 to 26 May 2015) occurred and an order should be made for its repayment: paragraph 45 (2) (b) of the Act.
The Act referred to in this extract is the Residential Tenancies Act 2010 (NSW). The section quoted provides:
45 Remedies for reduction of rent on frustration of residential tenancy agreement
(1) The Tribunal may, on application by the landlord or tenant, make an order determining the amount of rent payable if the rent is abated under section 43 (2).
(2) The Tribunal may order that:
(a) from a specified day, the rent for the residential premises must not exceed a specified amount, and
(b) the landlord must repay to the tenant any rent paid by the tenant since the specified day that is in excess of the specified amount.
Note : The residential tenancy agreement may also be terminated in these circumstances (see section 109).
There was no dispute that section 43 of the Residential Tenancies Act applied because of storm damage to bedroom 3 of the Terrace house.
[2]
Relevant legal principles
This is an internal appeal: see sections 4 and 32 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the Act"). Section 81 of the Act provides:
81 Determination of internal appeals
(1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following:
(a) the appeal to be allowed or dismissed,
(b) the decision under appeal to be confirmed, affirmed or varied,
(c) the decision under appeal to be quashed or set aside,
(d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it,
(e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel.
(2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when varying, or making a decision in substitution for, the decision under appeal.
An internal appeal from a final decision in the Consumer and Commercial Division is heard by the Appeal Panel. The basis upon which appeals from decisions of the Consumer and Commercial Division may arise is referred to in s 80(2)(b) of the Act. That section states that an appeal may be made as of right on any question of law, or with leave of the Appeal Panel on any other grounds.
The Appeal Panel therefore has the capacity to make a different decision to that of the Tribunal below if the appeal is allowed, or leave to appeal is appropriate.
The appellant seeks leave under the first two limbs of clause 12 of Schedule 4 of the Act, if leave is required. The first two limbs of this provision which are the only ones relevant in this matter are as follows:
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied 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,...
The decision of the Appeal Panel in Collins v Urban [2014] NSWCATAP 17, at [65]-[84], constituted by the President Justice Wright, Deputy President Westgarth and Principal Member Harrowell, comprehensively discussed the processes of an internal appeal such as this one.
[3]
The Appeal
The appellant seeks leave to appeal. In essence, the appellant contends that the decision in the Tribunal was not fair and equitable, and additionally says that the decision was against the weight of the evidence. If either or both of those contentions are made out then it is likely that leave to appeal would be granted. There is no appeal as of right on a question of law since none was argued by the appellant, and there is none available on the material before the Appeal Panel.
The Reply to Appeal incorrectly suggests that the appellant does not require leave to appeal, but otherwise seeks to uphold the decision of the Tribunal on the basis that it was fair and equitable.
The appellant supplied written material in support of the appeal, and the respondents provided written material in support of upholding the decision. The Appeal Panel heard oral submissions during the course of the hearing on 1 December 2015. The parties were unable to mediate their dispute despite being given the opportunity to do so even at the time of the hearing of the appeal.
The appellant argued that comparable rents for a 2 bedroom house in this area ranged from $760.00-$810.00, based upon evidence they obtained from a real estate agent. This provided a benchmark for the amount which the landlord said was appropriate. The respondents disputed the reasonableness of that approach.
As previously identified, the method by which the Tribunal determined the amount by which the rent should be abated compared the floor space occupied by the bedroom and effectively doubled that percentage to arrive at the loss of amenity. This method was not criticised by the appellant. This method was also adopted by the respondents as appropriate because it arrived at the result more favourable to the tenants than the amount of rent which they proffered as fair and reasonable. However, it appears to the Appeal Panel that the method was flawed because it accepted the wrong percentage. Submissions made to the Tribunal by the landlord, a copy of which were provided in the appeal papers, stated that the bedroom was less than 1/8 of the total enclosed living areas of the terrace. A mathematical calculation was undertaken by the landlord in the Tribunal and provided again in the papers filed in the appeal. That calculation was slightly in error, but essentially adopting the same methodology the Appeal Panel arrived at a percentage of 12.36% reflecting the floor area of the bedroom compared to the total floor area of the enclosed living areas. This figure was not disputed by the appellant during the course of the hearing in the Appeal Panel.
Utilising the percentage of 12.36% and doubling it a percentage of 24.72% is obtained. The reference to one quarter by the Tribunal is unable to be found anywhere in the submissions or by reference to the evidence before the Tribunal. Doubling of the wrong percentage compounds the factual error. The Appeal Panel therefore finds that the Tribunal decision was unreasonably arrived at and plainly mistaken as to the fact (the proportion of the floor area), sufficient to say that central aspect of the reasoning was in error: see Collins v Urban (supra) at [84]. For those reasons the Appeal Panel grants the appellant leave to appeal from the decision of the Consumer and Commercial Division on the basis that the decision was against the weight of the evidence, and was based upon a clearly wrong factual premise.
[4]
Substitution of the correct decision
The Appeal Panel considers that there is another method of arriving at the loss of amenity in this matter so that a calculation may be appropriately made as to the abatement or reduction of the rent.
A comparison of the floor areas of the bedrooms and the common areas in the Terrace house arrives at the conclusion that the common areas occupied approximately 60% and the bedrooms occupied approximately 40% of the floor area of the enclosed living areas of the Terrace house. These figures were accepted by the appellant during the course of argument in the Appeal Panel. There was no dispute from the respondents about that calculation.
The Appeal Panel favours an approach which has regard to the fact that bedroom three was not available and represents a reduction of approximately $100.00 per week (i.e. approximately 12% of $850.00) and, in addition, makes a further reduction because of the loss of amenity of the common area worth 60% of $850.00, or $510.00. A simple approach to these calculations is to reduce the value of the common area by one half in recognition of both the loss of bedroom three and the reduction in the amenity of the common area.
Utilising the method adopted by the Tribunal the appropriate reduction in the rent leads to a figure of approximately $640.00 per week ($850.00 - 24.72%) rather than the figure propounded by the landlord in the appeal of $646. The difference between the amount paid of $710.00 and $640.00 is $70.00 per week. There is no dispute that the amount was paid for 5 weeks before the tenants severed the tenancy. Therefore $350.00 was the amount which should have been repaid to the tenants on the calculations utilising the correct percentage and doubling it if the Tribunal had not fallen into error.
If however, the method which the Appeal Panel considers is more appropriate is utilised then one half of the amenity of the common area was lost to the tenants because the tenant who was in bedroom number 3 had to occupy common areas. This approach was raised by the Appeal Panel with the parties during the hearing. The common areas occupied approximately 60% of the enclosed living areas. If the amenity of the common areas was reduced by approximately half because of the occupation by the tenant of those areas in substitution for bedroom 3 then that would appear to be a fair assessment. Therefore one half of that common area represents 30% of the total enclosed living areas. The rent could reasonably be reduced from $850.00 per week by 30% or $255.00 utilising that rationale. The figure arrived at utilising this method is $595.00 per week. The difference between the $710.00 paid per week (for 5 weeks) and $595.00 per week for the same period is $115.00 per week, totalling $575.00. Utilising this calculation the amount to be paid by the landlord to the tenants was $575.00. In actual fact, $1,465.71 (not counting enforcement costs of $88.00) was paid to the tenants. Therefore the appropriate adjustment is that the tenants should repay to the appellant landlord the sum of $890.71. This appears to the Appeal Panel to be a fair and appropriate adjustment.
The orders of the Appeal Panel therefore are:
1. Leave to appeal is granted.
2. The appeal is allowed.
3. In substitution for the decision of the Tribunal it is declared that the amount that should have been paid by Robert Hayes and Bernadette Hayes to Gemma Williamson and Hannah Buckle and Jenna Phillips is $575.00 in substitution for the amount of $1,465.71 originally ordered by the Tribunal.
4. That consequent upon the declaration in order 3, Gemma Williamson and Hannah Buckle and Jenna Phillips are to forthwith repay to Robert Hayes and Bernadette Hayes, the sum of $890.71.
[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
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Decision last updated: 10 December 2015