Hobson v New South Wales Land and Housing Corporation

NCAT Appeal Panel|2015-08-07

REasONS FOR DECISION

Joanne Hobson has lived in "social housing premises" provided and managed by the New South Wales Land and Housing Corporation (Housing NSW) for over 17 years. In early 2015, Housing NSW applied to the New South Wales Civil and Administrative Tribunal (NCAT) for orders under s 85 of the Residential Tenancies Act 2010 (NSW) (the Act) to terminate its tenancy agreement with Ms Hobson. At a hearing on 15 May 2015 the Tribunal entered consent orders under s 59 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) to terminate the tenancy agreement between the parties and to grant possession of the subject premises to Housing NSW in six weeks (the Consent decision).
Ms Hobson appeals against the Consent decision. She contends that when she entering into the agreement on which that decision was based she was under a "special disadvantage" and further that Housing NSW made unconscientious use of its superior position in obtaining her agreement to terminate the tenancy.

Grounds of appeal

The decision under appeal is an "internally reviewable decision" (ss 4, 32(4) of the NCAT Act). A party may appeal an internally reviewable decision on any question of law or with the leave of the Appeal Panel on any other ground (s 80(2)(b) of the NCAT Act).
Where, as in this case, the decision the subject of the appeal is a decision of the Consumer and Commercial Division of NCAT, cl 12 of Schedule 4 to the NCAT Act limits the circumstances in which an Appeal Panel may grant leave to appeal: 12 Limitations on internal appeals against Division decisions (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 …
At the hearing of the appeal Ms Hobson advised that she had decided to abandon all but one ground of appeal, namely that the conduct of Housing NSW, in obtaining her agreement to terminate the tenancy, was unconscionable. The original notice of appeal stated that this ground raises a question of law. We gave Ms Hobson leave to amend the notice of appeal to characterise this ground as also falling within one of the limited grounds on which leave to appeal can be given, namely that the decision was "not fair and equitable" (cl 12(1)(a) of Schedule 4 to the NCAT Act).

Power to set aside consent orders

Section 59 of the NCAT Act provides: (1) The Tribunal may, in any proceedings, make such orders (including an order dismissing the application or appeal that is the subject of the proceedings) as it thinks fit to give effect to any agreed settlement reached by the parties in the proceedings if: (a) the terms of the agreed settlement are in writing, signed by or on behalf of the parties and lodged with the Tribunal, and (b) the Tribunal is satisfied that it would have the power to make a decision in the terms of the agreed settlement or in terms that are consistent with the terms of the agreed settlement.
The grounds for setting aside a consent order broadly correspond with those available to set aside the underlying agreement on which the consent order is based (Loch v New South Wales Land and Housing Corporation [2014] NSWCATAP 110 at [27], [28]; Shelton v Phoo [2015] NSWCATAP 120 at [45]; Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235). They include unconscionable conduct.
In Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 Mason J commented on the power of the courts to set aside contracts and other dealings on equitable grounds (at 461): In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience. But relief on the ground of "unconscionable conduct" is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage... . [emphasis added]
In Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362 Fullagher J considered (at 405) the type of circumstances adversely affecting a party which may induce a court of equity to aside a contract: Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other. [emphasis added]
In a dissenting judgement, Kitto J echoed those comments and stated that relief for unconscionable conduct may be available where (at 415) : [O]ne party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.

Did Housing NSW make unconscientious use of its position?

Ms Hobson contends that Housing NSW made unconscientious use of its superior position. She submits that Housing NSW was on notice of her "special disadvantage", namely her inability to make an informed judgement about her best interests. Referring to the comments made by Fullagher J in Blomley v Ryan set out above, she contends that she was placed at a "serious disadvantage" in relation to Housing NSW because of her "lack of assistance or explanation where assistance or explanation is necessary". Ms Hobson asserts that on becoming aware that she did not have the benefit of independent advice, Housing NSW was in effect obliged to suggest that she seek an adjournment to obtain such advice. She contends that this was especially necessary given that during the conciliation session she told Ms Hook that she had not received notice of the termination of the tenancy.
Ms Hobson contends that had she had the benefit of independent advice she may have decided not to relinquish her tenancy. She argues that had she received independent legal advice she may have been advised of two possible avenues of redress:

First, to seek judicial review of Housing NSW's decision to issue a notice of termination under s 85 of the Act
Second, to make an application to the Tribunal for orders under s 115 of the Act to refuse to make a termination order on the ground that the termination notice was "retaliatory".

What happened before and during the conciliation session?

To determine whether as Ms Hobson contends Housing NSW made unconscientious use of its position it is necessary to examine the conduct of the parties prior to and during the conciliation session.

Notification of termination of tenancy

Housing NSW tendered affidavit evidence in these proceedings in support of its claims that:

the First Letter and notice of termination were sent by post to Ms Hobson's premises
a Housing NSW officer delivered by hand a copy of the notice of termination to Ms Hobson's premises
neither the First Letter nor the notices of termination were returned to Housing NSW.

Ms Hobson testified that she first learnt of the decision to terminate the tenancy on receiving the notice of hearing on 11 May 2015. In re-examination she claimed that she and an adjacent neighbour sometimes receive each other's mail. She stated that their respective premises are on different streets but share the same street number.

The conciliation session

At the commencement of the hearing, the presiding Member directed the parties to attempt to reach agreement. Ms Hobson met with Ms Hook. Each gave evidence in these proceedings about what was said during the conciliation conference. They agree that during the conference:

Ms Hook advised Ms Hobson that a decision had been made to terminate her tenancy
Ms Hook stated that s 85 of the Act meant that the Tribunal had no discretion about whether or not to terminate the tenancy but did have a discretion about when she would be required to vacate the tenancy. She handed Ms Hobson a copy of that provision
Ms Hobson made no mention of s 115 of the Act
Ms Hook stated that Housing NSW was prepared to offer Ms Hobson some assistance to find private rental accommodation and to extend the time to vacate the premises to six weeks if she was willing to consent to orders being made to terminate the tenancy
Throughout much of the conference Ms Hobson was crying and upset
Throughout the conference Ms Hook was polite and quietly spoken.

The only material difference between their respective accounts is whether, as claimed by Ms Hobson (i) she told Ms Hook she had not received either the First Letter or the subsequent notices of termination, and (ii) she repeatedly said she did not understand why she was at the Tribunal or why her tenancy was being terminated. Ms Hook testified that she could not recall Ms Hobson making those statements.
Ms Hobson claims that Ms Hook told her that she had only two options: either "sign the piece of paper" and be provided with assistance in finding private rental accommodation or not sign and be given no assistance to find alternative accommodation. She agreed that Ms Hook did not say she must sign the proposed agreement.

Did Housing NSW make unconscientious use of its superior position?

It is a matter of common knowledge that social housing in NSW is a scare resource and demand far outstrips supply. We accept as contended for Ms Hobson that, given the lack of affordable housing and her modest means, the termination of her tenancy represented the loss of a significant benefit.
While no evidence that Ms Hobson suffers an intellectual disability or some other disabling condition we accept, given her lack of knowledge of the law and limited education, Ms Hobson was at a disadvantage in negotiations with Housing NSW. As a large government agency Housing NSW has access to significant legal resources. In addition, as a "repeat player" in NCAT's Consumer and Commercial Division, Housing NSW has the advantage of specialist knowledge of the residential tenancy jurisdiction.
While the position between the parties was unequal, it does not necessarily follow that Housing NSW made unconscientious use of its superior position. Whether it did requires consideration of the circumstances surrounding the making of the agreement on which the consent decision was based.
Relevant to that consideration is whether, as claimed, Ms Hobson told Ms Hook that she first learnt of the decision to terminate the tenancy when she received the notice of hearing. This is relevant because a pre-condition to the exercise of the Tribunal's power to make a termination order under s 85 of the Act is that the tenant was issued with a valid termination notice, relevantly a notice issued at least 90 days before the purported termination (see also s 83 of the Act). We accept the proposition advanced by Ms Hobson, that had Ms Hook been on notice that she had not received the notice of termination, to proceed to obtain her agreement in those circumstances may constitute unconscionable conduct.
The divergent accounts given by the protagonists together with the lack of independent evidence makes determining what occurred during the conciliation conference a difficult task. It is a case of word-against-word. The three letters sent by Housing NSW to Ms Hobson relating to the termination of the tenancy were sent at different times and by different methods of delivery. We think it improbable that none reached Ms Hobson, even if her unsupported claim that her mail sometimes is sent to her neighbour is accepted. Further, while not determinative, Ms Hobson made no mention of not having received notice of the termination of the tenancy in the proceedings before the presiding Member when the consent orders were made (see Transcript of Proceedings, NSW Land and Housing Corporation v Hobson (NCAT, Member J Ringrose, 15/5/2015)). We could not be satisfied on the balance of probabilities that Ms Hobson told Ms Hook she did not receive notice of the termination.
We must now consider whether, as Ms Hobson contends, Housing NSW through Ms Hook took unconscientious advantage of its superior bargaining position by failing to suggest or recommend that she seek independent advice and/or apply to the Tribunal for an adjournment to enable her to obtain such advice.
It is not in issue that Ms Hook was aware that Ms Hobson had not obtained legal advice. Nor is it in issue that Ms Hook neither suggested nor encouraged Ms Hobson to seek advice before agreeing to terminate the tenancy. Nor is it suggested that Ms Hook told Ms Hobson she was not entitled to receive, or discouraged her from obtaining, independent advice.
Ms Hobson argues that by failing to inform her about s 115 Ms Hook in effect misled her about her options. Section 115 deals with "retaliatory evictions" and states: Retaliatory evictions 115 Retaliatory evictions (1) The Tribunal may, on application by a tenant or when considering an application for a termination order or in relation to a termination notice: (a) declare that a termination notice has no effect, or (b) refuse to make a termination order, if it is satisfied that a termination notice given or application made by the landlord was a retaliatory notice or a retaliatory application. (2) The Tribunal may find that a termination notice is a retaliatory notice or that an application is a retaliatory application if it is satisfied that the landlord was wholly or partly motivated to give the notice or make the application for any of the following reasons: (a) the tenant had applied or proposed to apply to the Tribunal for an order, (b) the tenant had taken or proposed to take any other action to enforce a right of the tenant under the residential tenancy agreement, this Act or any other law, (c) an order of the Tribunal was in force in relation to the landlord and tenant. …
Section 115 of the Act provides an avenue of redress to a tenant confronted by an application made by a landlord for orders to terminate a tenancy under s 85 of the Act, in circumstances where that application is "retaliatory".
In May 2013 the Tribunal (differently constituted) refused to grant an application made by Housing NSW to terminate Ms Hobson's tenancy. Ms Hobson contends that in issuing the 2015 termination notice Housing NSW was wholly or partly motivated by its lack of success in the 2013 NCAT proceedings. She argues that as a consequence, Ms Hook's failure to inform her of s 115 of the Act constituted a misrepresentation.
That submission cannot be accepted. There is no direct evidence, nor in our view evidence to support such inference being drawn, that in moving to terminate the tenancy in 2015, Housing NSW was motivated by its lack of success in proceedings before the Tribunal two years earlier. Absent such evidence it cannot reasonably be suggested that by failing to inform Ms Hobson of the terms s 115 of the Act, Ms Hook took advantage of Ms Hobson.
Had Ms Hobson sought legal advice she may have been advised to challenge the Application. She may have been advised to pursue one or both of the grounds referred to at [16] above; or some other ground. Alternatively she may have been advised not to challenge the Application. It is not possible to speculate on what advice Ms Hobson might have received or whether any challenge to the decision to terminate the tenancy, would have been successful.
Ms Hook had an obligation to Ms Hobson (and the Tribunal) not to misrepresent the law and to act fairly in her dealings with Ms Hobson. That obligation did not extend to giving Ms Hobson advice on how best to exercise her rights. That it may have been open to Ms Hobson to challenge the application made by Housing NSW of itself does not establish that Ms Hobson made uncontentious use of her superior bargaining position.
As pointed out by Housing NSW, it was required to comply with the Model Litigant Policy for Civil Litigation, adopted by the NSW Government 8 July 2008. The policy required Housing NSW to: Nature of the obligation 3.1 The obligation to act as a model litigant requires more than merely acting honestly and in accordance with the law and court rules. It also goes beyond the requirement for lawyers to act in accordance with their ethical obligations. Essentially it requires that the State and its agencies act with complete propriety, fairly and in accordance with the highest professional standards. 3.2 The obligation requires that the State and its agencies, act honestly and fairly in handling claims and litigation by: …
The policy does not, as we understand Ms Hobson to suggest, prevent an agency from entering into an agreement where the other party to the agreement does not have the benefit of independent advice even where, as in this case, the agreement resulted in the loss of a significant benefit.
We are not persuaded that by failing to suggest or urge Ms Hobson to seek independent advice before entering into the agreement, Ms Hook took advantage of Ms Hobson or induced her by unconscionable conduct to enter into that agreement. No error of law is demonstrated. The contention that the decision under appeal is not "fair and equitable" made out.

Decision

We have decided to refuse leave to appeal and dismiss the appeal.
Unless the orders made by the Tribunal are varied, Ms Hobson would be required to vacate the premises immediately. We consider it appropriate that she be given a reasonable period to make alternative accommodation arrangements and for that reason we have decided to set aside Order (3) made by the Tribunal on 15 May 2015 and in substitution order, that the order for possession is suspended until 28 days from the date of this decision. The balance of the decision under Appeal is confirmed.

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: 14 October 2015

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