Hong Kong Pty Ltd atf The Hong Kong Trust v Hamilton

The Decision

1. At [1] to [4] the Tribunal sets out the background to the respondent's application.
2. At [5] the Tribunal notes that the appellant lodged but did not serve a statement as to the circumstances of the respondent leaving the premises but declined to allow the statement as evidence. However, the Tribunal allowed each party to test each other's case, noting that "justification is not really to the point".
3. The appellant's statement, being that of Mr Anderson, was included in the appellant's appeal documents. We accept that that statement was not before the Tribunal. But given that we have decided to re-exercise the powers of the Tribunal pursuant to s 81(2) of the NCAT Act, and in the absence of any objection from the respondent, we consider it appropriate to receive that document on appeal. In any event, at least in relation to the rent claimed by the appellant, the document assists the respondent.
4. At [6] to [14] the Tribunal set out its relevant findings which were as follows: FACTS & CIRCUMSTANCES: 6. The respondent operates a backpacker hostel including the room comprising the premises. In the ordinary course of things, that operation is not within the Act. 7 In 2021, the respondent faced with a decline in backpackers because of the pandemic made some or all of its rooms available for longer term accommodation. 8. In October 2021 the parties made a written agreement headed "Share Accommodation Agreement" for a room with access to common areas; the term was six months; the rent was $200 per week; and the bond of $800 was to be paid and held by the respondent. 9. The agreement has some language consistent with a tenancy under the [RT] Act; there is a reference to rent, to quiet enjoyment and to the availability of the Tribunal in the event of a dispute. The agreement has some language inconsistent with a tenancy under the [RT] Act; relevant here is the reservation of a right in the respondent to evict and to receive a forfeited bond. 10. The respondent's case is that the longer term and the language of the agreement do not dislodge the starting point that this is a backpackers' hostel excluded from the [RT] Act. The applicant's case is that the agreement has the relevant indicia of a tenancy agreement and that a bond and an agreement for an extended term point away from the usual arrangement in a backpackers' hostel. 11. The Tribunal finds that the parties agreed that the applicant would give and the respondent would receive use of the room; that the usual indicia of a tenancy agreement are present; and that the arrangement between the parties in relation to the room was a residential tenancy. 12. On 9 February 2022 the applicant paid $400 as two weeks' rent in advance. 13. On 10 February 2022 the respondent sought to evict the applicant. The mode of eviction was in accordance with the written agreement but inconsistent with the [RT] Act. As to the circumstances, the Tribunal is satisfied that the applicant believed it was acting in good faith on the complaint of a third party; that the respondent denies the substance of the complaint; that the respondent asserted rights consistent with the [RT] Act; and that the actual leaving was in accordance with directions of the police called to the scene by the respondent. 14. Whatever the underlying circumstances the parties acted as though the arrangement was terminated.
5. The Tribunal then concluded: 15. As the arrangement was a residential tenancy, the applicant is entitled to refund of money paid as rent for the period from the termination, ie the 19 days from and including 10 February 2022, being 13/14x $400, or $371.42. 16 As to the bond, the respondent has kept the bond pursuant to the written agreement but that is not a basis permitted by the [RT] Act. The respondent makes no other claim. The respondent must return the bond of $800. 17. As to compensation for breach of quiet enjoyment, the applicant makes two assertions to a sum of $1,250. First, expenses. This is an assertion without a receipt or other documentary evidence. The Tribunal will not make an order on this basis. Second, the impact of the interference. Wrongful termination is an interference and interruption which does not affect use and amenity of premises; it removes the possibility of use and amenity. The fact that the respondent was acting in good faith on a complaint and with a misunderstanding of its own obligation is an explanation but not an excuse. The Tribunal is satisfied on the material before it that the tenant is entitled to $400 compensation for the respondent's act in depriving him of his right of quiet enjoyment.

Grounds of Appeal

1. By way of background, the appellant's Grounds of Appeal state: 1. HONG KONG PTY LTD atf THE HONG KONG TRUST is an operator of Backpackers, Hostels and Boarding houses. 2. Mr Gavin Lyndoch Hamilton was a resident at Sydney City Hostel in Haymarket. 3. Due to the COVID pandemic, guests were allowed to stay long-term. Long-term residents of the Hostel were contracted to stay using a Boarding House Occupancy Agreement under the Boarding Houses Act 2012. 4. On Sunday, 9/01/22, Gavin Lyndoch Hamilton was evicted from the Hostel by management and three police officers for sexual harassment of other guests. a. Written notice of eviction was given. b. Police investigated the allegations and evicted Mr Hamilton.
2. The balance of the Notice of Appeal simply refers to the Boarding Houses Act 2012 (NSW) (BH Act) and NSW Fair Trading's Guidelines in relation to boarding houses, and notes that s 7 of the Residential Tenancies Act 2010 (NSW) (RT Act) does not apply to premises used as "a hotel or motel" or used as "a backpacker's hostel".
3. We discussed this with the appellant's representative during the appeal hearing.
4. Mr Anderson agreed that the appellant's principal ground of appeal was that the Tribunal erred in finding that the arrangement between the parties was a residential tenancy agreement and not regulated by the BH Act.

Appellant's oral submissions

1. As noted, Mr Anderson confirmed that the appellant was appealing as it disagreed that the accommodation arrangement between the appellant and the respondent constituted a residential tenancy agreement. He explained that this was the appellant's view for a number of reasons, all of which in his submission pointed to the accommodation arrangement being one between boarding house proprietor and resident.
2. The matters included:

• there being no "individual" address on the Agreement, only a "common" address for all residents;
• the respondent not having exclusive access to the premises save for his bedroom;
• there being communal showers and kitchens;
• the website advertised the premises as a hostel;
• a sign outside the front door indicated that the premises were a hostel;
• various fire safety signs throughout the premises indicated that the premises constituted a hostel.

1. In the absence of a transcript of the hearing, we are not satisfied that these matters were raised before the Tribunal. Nevertheless, clearly the Agreement was.

Consideration

1. As noted above, we consider that the appellant has raised a question of law, that being the nature of the relationship between the parties, and therefore the agreement between them constituted a residential tenancy agreement.
2. The Tribunal's reasons for this finding that there was a residential agreement were as follows are set out above.
3. Regrettably, we consider that these reasons are inadequate. This is principally because at [11] the Tribunal states "that the usual indicia of a tenancy agreement are present; and that the arrangement between the parties in relation to the room was a residential tenancy".
4. The issue is that the Tribunal did not indicate what those "usual indicia" are, and does not persuasively set out its evaluation of the competing factors which indicated that the Agreement constituted a residential tenancy agreement and those that did not.
5. In NSW Land and Housing Corporation v Orr [2019] NSWCA 231, Bell P (as the Chief Justice was then, with whom Ward JA (as the President was then) identified the applicable principles as follows (at [66]-[77]: 66. In the context of appellate review of the adequacy of reasons, the function of an appellate court is to determine not the optimal level of detail required in reasons for a decision but rather the minimum acceptable standard: Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48] (Resource Pacific). The standard is not one of perfection: Bisley Investment Corporation v Australian Broadcasting Tribunal (1982) 40 ALR 233 at 255 (Bisley). … 71. … even in the less formal setting of a tribunal which has significant powers the exercise of which is capable of affecting the lives of citizens in profound ways, there are certain minimum characteristics that a Tribunal's reasons must possess. These are really supplied, in relation to the Tribunal, by s 62(3) of the CAT Act which, as noted at [52] above, requires there to be set out in reasons (when requested by a party): (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, and (c) the reasoning processes that lead the Tribunal to the conclusions it made.
6. Regrettably, we do not consider that the Tribunal conformed with the expectation to provide reasons that surpassed the minimum acceptable standard on this occasion.
7. We discussed this matter with the Mr Anderson. He was content that, if the Tribunal found that this was a proper basis on which to allow the appeal, then the Tribunal should substitute another decision for the Decision (NCAT Act, s 81(1)(d)), and to exercise all the functions that are conferred or imposed on the Tribunal by the NCAT Act or any other legislation (NCAT Act, s 81(2)).
8. We consider that the Tribunal erred in finding that the Agreement constituted a residential tenancy agreement. We consider that, in addition to deciding whether the arrangements constituted a residential tenancy agreement, or reflected the arrangements for a backpacker hostel, we think that the Tribunal ought also to have considered whether or not the arrangements reflected a relationship of boarding house operator and boarder.

Reconsideration of respondent's application

1. The starting point is the Agreement itself, which provided that it was a "Share Accommodation Agreement". As we have noted above, the Agreement:

• provided that the appellant could inspect the house common areas at any reasonable time;
• provided that Mr Hamilton agreed to comply with "House Rules".
• referred to resolving disputes in accordance with the Occupancy Principles. This we find is a reference to Occupancy Principles set referred to in s 30 and Sch 1 of the Boarding House Act 2012 (NSW).

1. The principal reason that the Tribunal found that there was a residential tenancy agreement was that the term of the Agreement (namely six months) "point[ed] away from the usual arrangement in a backpackers' hostel".
2. In our view, the better view is that the Agreement, which was clearly modelled on the "Standard Occupancy Agreement for general boarding houses under the Boarding Houses Act 2012" published by the Commissioner for Fair Trading [1] (BH Act, note to s 28) is in fact an agreement between the appellant as proprietor and the respondent as resident in relation to a boarding house.
3. Boarding premises are a general boarding house if the premises provide beds, for a fee or reward, for use by five or more residents (not counting any residents who are proprietors or managers of the premises or relatives of the proprietors or managers): BH Act, s 52. During the appeal hearing Mr Anderson told us that the premises could accommodate 68 residents.
4. We consider that Room 12 forms part of a registrable boarding house by reason of it being part of a general boarding house.
5. We are confirmed in this view by the content of the House Rules. These Rules overwhelmingly point to the arrangement being one of a boarding house. To give but two examples, tenants occupying premises subject to a residential tenancy agreement are not prohibited from eating in their bedrooms; nor are they confined to eating and drinking in the kitchen, which can only be used for 45 minutes each day.

Implications of the BH Act applying to the Agreement

1. As noted above, the Tribunal found that:

• the respondent was entitled to a refund of rent (now the occupancy fees) paid after the termination, being $371.42;
• the respondent was entitled to keep the bond (now the security deposit);
• the respondent was entitled to $400 compensation for the appellant's act in depriving him of his right of quiet enjoyment.

1. If the arrangement is one of boarding house proprietor and resident, in our view:

• the respondent remains entitled to a refund of rent of $371.42;
• the respondent remains entitled to keep the security deposit;
• the respondent is not entitled to $400 compensation.

1. We discussed each of these matters with Mr Anderson.
2. He accepted that, in relation to a refund of the occupancy fees, the Agreement states that "on termination the tenant is required to pay up to the end date on the notice". This is clearly a reference to the occupancy fees. As the written notice of eviction called for immediate departure from the premises by the respondent, we suggested to Mr Anderson that on the face of the Agreement the appellant was not entitled to retain the occupancy fees which effectively had been paid in advance.
3. Mr Anderson accepted this position and did not seek to disturb the Tribunal's finding on this issue.
4. Turning to the issue of whether the appellant was entitled to retain the security deposit, the Agreement provided that where the appellant immediately terminates the Agreement, as was the case here, the security deposit was forfeited. That would suggest that the respondent was not entitled to a return of the bond.
5. However, we put to Mr Anderson that pursuant to s 8(1)(b) of the BH Act the security deposit must not be more than two weeks' occupancy fees. We suggested that the appellant was never entitled to retain four weeks' of occupancy fees in the event of immediate termination of the Agreement.
6. Mr Anderson accepted the correctness of this position.
7. We accept and find however that the appellant was entitled to retain two weeks of the security deposit.
8. That leaves the award of compensation the Tribunal ordered to be paid by the appellant to the respondent. The Tribunal based its award of compensation on the appellant breaching the respondent's right to quiet enjoyment of the premises. Such a right appears in the clause numbered 4 [2] of the Agreement, namely that the appellant "agrees to take all reasonable steps to enable the [respondent's] quiet enjoyment of the premises".
9. Mr Anderson said that he did not accept that the appellant had breached the Agreement, including the respondent's right to quiet enjoyment in any way. He submitted that the respondent that had breached the House Rules, as a result of which he (Mr Anderson) contacted the police. Following an investigation, the police escorted Mr Hamilton from the premises, and gave him assistance with his belongings.
10. In short, Mr Anderson denied that the appellant had breached the Agreement in any way giving rise to a claim for damages or compensation by the respondent.
11. We agree.

Conclusion

1. The result is that the order (1) of the Decision should be set aside, and in lieu thereof there be substituted an order that Hong Kong Pty Ltd atf The Hong Kong Trust pay Mr Hamilton the sum of $771.42. As $1,571.42 has already been paid by the appellant, the respondent must reimburse it $800.00.
2. That amount should be paid within 14 days.

Other

1. There is one final matter. Mr Anderson told us that some $1,672.42 had been garnisheed from the appellant's bank account. We assume that the difference of $101.00 relates to a filing fee in the Local Court of NSW. We are not able to make any orders about those monies

Orders

1. The Appeal Panel orders: 1. The application to extend the time for filing the Notice of Appeal in relation to the decision of the Tribunal in RT 22/16536 of 7 July 2022 to 29 July 2022 is granted and the time accordingly extended; 2. The appeal is allowed; 3. In lieu of order (1) in RT 22/16536 of 7 July 2022 order that the appellant is to pay the respondent of $771.42 immediately; 4. Stay order (3) above given that monies have already been paid to the respondent; 5. The respondent to pay the appellant $800 [within 14 days of the publication of the reasons]. 6. (6) The appeal from the decision in RT 21/32410 is dismissed as having been withdrawn

Endnotes

1. see https://www.fairtrading.nsw.gov.au/__data/assets/pdf_file/0018/370008/Standard_form_occupancy_agreement.pdf
2. We note that there is no cl 3 in the Agreement. 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: 12 October 2022