Hundt v Kong

NCAT Appeal Panel|2018-05-03

Introduction

The appellant, a tenant of residential premises, seeks to appeal a decision of the Tribunal, in the Consumer and Commercial Division, made on 14 February 2018. The Tribunal also published reasons for decision on 16 February 2018.
The tenant had commenced proceedings against the respondent, a landlord, on 3 November 2017, seeking orders that the respondent landlord pay him compensation for a breach of the residential tenancy agreement they had entered on 26 August 2016, an order regarding excessive rent (s 44(1)(b) of the Residential Tenancy Act 2010 (NSW) (RTA)) and an order for the release of the bond held by NSW Rental Bonds (s 175 of the RTA Act). The Tribunal dismissed the tenant's claim for compensation, made an order that the bond be released to the landlord and noted that the tenant's claim regarding excessive rent was not applicable as he had vacated the premises two days after he had lodged his claim with the Tribunal.
In his Notice of Appeal the tenant identified the following orders of the Tribunal that he was seeking to change as follows: 1. that the bond be given to the owner; and 2. the dismissal of his claim for compensation.
At the hearing of the appeal, the tenant did not press his appeal in so far as it related to the order concerning the bond as the bond money was paid to the landlord shortly after the Tribunal had determined the tenant's claim. Hence we have not considered this aspect of the tenant's appeal any further.
For the reasons that follow we have decided to allow the appeal as in our opinion the Tribunal failed to properly characterise the tenant's claim as an alleged ongoing/continuing breach, by the landlord, of their tenancy agreement up until the tenant vacated the premises. This failure led the Tribunal into error in determining whether the tenant's claim was brought within time, or alternatively in the exercise of its discretion to extend time under s 41 of the NCAT Act. Hence we have made orders setting aside the decision of the Tribunal to dismiss the tenant's compensation claim and we have made an order remitting that claim for reconsideration by the Tribunal differently constituted.

Jurisdiction of the Appeal Panel

The decision of the Tribunal is an internally appealable decision and an appeal can be made from that decision as of right on a question of law, or with the leave of the Appeal Panel on any other grounds: see Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(1) and (2)(b) and see Jackson v NSW Land and Housing Corporation [2015] NSWCATAP 281 at [14]-[15].
Where leave to appeal is sought and the decision the subject of appeal is a decision of the Tribunal in the Consumer and Commercial Division, the Appeal Panel may only grant leave to appeal where it 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, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). (see NCAT Act, Sch 4, cl 12)
At the hearing we raised the issue as to whether the appellant had lodged his appeal within the prescribed time: see Civil and Administrative Tribunal Rules 2014, rule 25(4)(b). Having regard to the date and day on which the Tribunal published its reasons for decision, the date on which the appellant's appeal was lodged and how time is to be reckoned (see Interpretation Act 1987 (NSW) s 36), we are satisfied the appellant's appeal was lodged within time. We note the landlord did not otherwise object to time being extended if necessary.

Background

The residential tenancy agreement between the tenant and the landlord related to premises located on the top floor of an apartment block in Lavender Bay, New South Wales. The tenancy was initially for a fixed term of one year from 7 September 2015 to 6 September 2016 at a fortnightly rent of $1,520 with a rental bond of four weeks' initial rent of $3,040. The tenancy remained on a periodic basis from 7 September 2016 until 5 November 2017 when it was terminated by the tenant and vacant possession given to the landlord.
Initially, the tenant's return of the bond and claim for compensation was for loss of use of a second bedroom in the tenancy from 4 April 2016 to vacation on 5 November 2017. On 4 April 2016 a storm caused the second bedroom ceiling to leak, damaging a mattress. The tenant immediately advised the landlord's agent of the leak and the landlord's agent advised its maintenance contractor on 5 April 2016 by email. During the course of the tenancy the tenant made a number of follow-up enquires with the landlord, her agent and the strata manager about the ceiling leak and the effect it was having on his use of the premises.
The facts in the case beyond that point are controversial. They centre upon the landlord's responsibility for repairing the ceiling when it was common property and the strata manager allegedly failed to respond effectively, because the leak continued in various forms (some more extreme than others) until the tenancy was terminated. The tenant said that the water leak not only damaged possessions and caused mould but also denied the opportunity to have another person occupy the room and share the payment for the rental. As part of the attempted remediation insulation was removed from below the roof which made the premises unbearably hot in summer and cold in winter.

Notice of Appeal and Reply to Appeal

In his Notice of Appeal, the tenant's grounds of appeal included the following: 1. an apparent misinterpretation of the facts; 2. there was a valid reason to extend time as evidenced in the tenant's follow-up correspondence ; 3. by their own admission s 63(1) of the RTA was not adhered to by the landlord. The landlord was aware the leaks were continuing after the first attempt by the Strata who were not prepared to paint or repair the ceiling until the root cause of the roof leak was rectified. In her evidence the landlord said she did not want to put insulation in the roof partly because it was just going to get wet and the ceiling remained damaged until the tenant vacated the premises.
The tenant also sought leave to appeal. He said the decision was not fair and equitable as the Tribunal had "failed to take all the evidence into account and showed an inaccurate understanding of the facts".
The tenant submitted that the Tribunal's decision was against the weight of the evidence in that it failed to give proper weight to his photographic evidence, his diary of calls made to the landlord's managing agent, the text messages he sent to the landlord's managing agent highlighting the issue and the termination notice he gave to the landlord's managing agent the contents of which were not disputed. On the other hand, the landlord's evidence only showed two communications with the Strata for repairs where he had made more than 20 follow-ups with the landlord and her managing agent.
In her Reply to Appeal, the landlord supported the orders that had been made by the Tribunal below. The landlord also said that, apart from the tenant having lodged his claim for compensation well out of time, he also failed to provide her "with a specific deadline to have the problem fixed before lodging" his claim.
In regard to the tenant's grounds of appeal, the landlord submitted that, contrary to his contention that he was unaware of the procedure of lodging a breach notice, he was fully aware of the relevant procedures given his 9 years of experience in the real estate industry.
The landlord also submitted that, to the tenant's knowledge, the Owners Corporation was responsible for fixing the ceiling in her apartment and her managing agent had been liaising with the Owners Corporation "to hasten repairs". The landlord also reiterated that the tenant had failed to follow proper procedures in that he did not stipulate a deadline within which the repairs were to be undertaken - had he done so and she failed to do the repairs within that time she would have been "required to reimburse him".

Relevant legislation

Section 52(1) of the RTA requires the landlord to provide the premises in a reasonable state of cleanliness and fit for habitation by the tenant.
Section 63(1) of the RTA requires the landlord to keep the premises in a reasonable state of repair, having regard to the age of the premises, the rent payable and the prospective life of the premises.
Section 51(2)(b) of the RTA requires a tenant to notify the landlord of any damage to the premises as soon as practicable after becoming aware of the damage.
Section 187 of the RTA empowers the Tribunal, on application by a landlord or a tenant or other person under the RTA, or in any proceedings under the RTA, to make one or more of the specified orders. The relevant orders are found in s 187(1)(c) (an order for the payment of an amount of money) and (d) (an order as to compensation). Section 187(2), without limiting the Tribunal's power to make an order as to compensation, empowers the Tribunal to order compensation to be paid for the following: (a) loss of rent; (b) any other breach of a residential tenancy agreement. The amount sought by the tenant was $15,000 being the limit of the Tribunal's jurisdiction: see RTA, s 187(4)(a) and Residential Tenancies Regulation 2010 (NSW) (RTR), reg 23(b).
Section 190 of the RTA empowers a landlord or tenant to apply to the Tribunal for an order in relation to a breach of a residential tenancy agreement within the period prescribed by the regulations after the landlord or tenant becomes aware of the breach. Regulation 22(9) of the RTR requires an application for an order for a breach of a residential tenancy agreement under s 190 to be brought within 3 months of the applicant becoming aware of the breach.
However, under s 41 of the NCAT Act the Tribunal is given a discretion to extend time to bring proceedings under the RTA.

Decision of the Tribunal

The Tribunal found that the tenant's compensation claim had been made out of time because the tenant had been aware of the alleged breach as to water ingress since April 2016 and mould since June 2016 and he did not bring proceedings until November 2017.
In regard to the issue of extending time within which the tenant could bring his compensation claim, the Tribunal said the following: "20 The granting of an extension of time to bring proceedings is discretionary, and in making its determination, the Tribunal must take into account a number of relevant factors. Such factors include the length of the delay, whether a satisfactory explanation has been given for the delay, prejudice that might affect the other party in meeting the substantive application, and the merits of the substantive application. [citations omitted] 21 However, the prima facie rule is that proceedings should be commenced within the time limits set out in the relevant legislation. In considering an application for extension of time to bring such an application, the major criterion is to consider what best serves the interests justice and the Tribunal should not grant an extension of time unless satisfied that it is proper to do so. 22 In these circumstances, the application for compensation has been brought well out of time. The tenant was aware of these issues regarding the leak in the ceiling of the second bedroom in April 2016, and the alleged mould resulting from the leak, since June 2016. No request was made to have the rent reduced as a result of the second bedroom allegedly becoming partly or entirely uninhabitable for a period of 17 months. 23 The tenant gave evidence that he did not know he could make a claim until a real estate agent friend told him he could. This is despite fact that he gave evidence he was a salesperson for a real estate agent about 7 years ago. The tenant also gave evidence that he did not want to leave the property when the Residential Tenancy Agreement ended in September 2016 because he liked the property and its location and was hopeful that the landlord would fix the problem. 24 I am not satisfied that the explanations for delay in bringing proceedings for compensation, based on a breach of the landlord's obligations, are sufficient to grant an extension of time. I cannot find that it is in the interests of justice to grant an extension of time. 25 Accordingly, I refuse an application to extend time to bring these proceedings, and the tenant's application is dismissed."
The Tribunal went on to say that even if it had been minded to extend time, it could not find on the evidence before it that the tenant had established that the landlord had breached her duty, and that as a result of that breach, the second bedroom became uninhabitable. However, the Tribunal did not disclose its reasoning in reaching this finding. That is, the Tribunal did not deal with the merits of the tenant's claim for compensation.

Consideration

In this case, the Tribunal determined the tenant's compensation claim by refusing his application to extend the time within which that claim could be made. That is, the Tribunal's refusal to extend time became part of the final decision that determined the rights of the parties. Accordingly, leave to appeal is not required where the grounds of appeal raise a question of law: see Jackson v Land and Housing Corp NSW [2015] NSWCATAP 281 at [14]-[15]. As noted by the Appeal Panel in Jackson, at [15], once questions of law have been identified, at least so far as those questions are concerned, leave to extend to the merits is not necessary.
As noted in Jackson, at [9] and [10], whether the Tribunal misdirects itself with respect to a statutory test is a question of law. Additionally, the manner in which the Tribunal exercised its discretion can also raise a question of law where it can be shown that the Tribunal failed to take into account some irrelevant matter, or gave insufficient weight to a relevant matter: see House v R (1936) 55 CLR 499, 505-506.
In our opinion, on the material before it, the Tribunal failed to correctly characterise the tenant's compensation claim. This failure, in our opinion, gives rise to a question of law in the Tribunal's application of reg 22(9) of the RTR and, in the alternative, in the exercise of its discretion under s 41 of the NCAT Act. In regard to the latter, while the Tribunal enunciated the relevant factors governing exercise of discretion to extend time under s 41 of the NCAT Act, it failed to correctly characterise their application to the circumstances before it.
We note the tenant's claim before the Tribunal below was based on an ongoing/continuing breach by the landlord which had not been remediated and was the subject of continuous complaint by the tenant. The tenant articulated this to be the basis of his claim in his brief overview submitted to the Tribunal below. In support of his claim the tenant also provided the Tribunal with specific details of the claim, a chronology of events and supporting documentation of communications he had made with the landlord and her managing agent.
However, the Tribunal did not characterise the tenant's claim as an ongoing/continuing breach. Instead the Tribunal focused on the length of the delay between the time of the April 2016 storm when the damage originally occurred and the time the tenant made his compensation claim and failed to take into account the nature of the ongoing problem, attempts to obtain remediation and ineffective response.
The issue of ongoing/continual breach of a party to a residential tenancy agreement was recently considered by the Tribunal in New South Wales Housing Corp v Tanious [2016] NSWCATCD 57, BC201608161. In that case the breaching party was the tenant who had installed metal shutters on the windows of the premises without the written consent of the landlord. The landlord became aware of the installation of the shutters in August 2013 and issued a notice requiring the tenant to remove them. It was not until 2016 that the landlord commenced the proceedings that were the subject of the application before the Tribunal in Tanious (supra). At [25], the Tribunal noted that there was no dispute that the tenant had installed the shutters without the written consent of the landlord, which the Tribunal found to be a breach of s 66 of the RTA and cl 25.1 of the written tenancy agreement.
At [27], the Tribunal found that: " … [By] continuing to fail to remove the shutters and restore the property to its original condition, the tenant's breach is ongoing. As the tenant's breach is ongoing, the Tribunal is satisfied the proceedings were commenced within the limitation period in reg 22(9) of the Residential Tenancies Regulation 2010.."
At [28] to [31] the Tribunal went on to say the following: "28 If the above analysis of the limitation period is incorrect and the limitation period commenced to run in August 2015, the Tribunal is satisfied that the limitation period should be extended under s 41 of the Civil and Administrative Tribunal Act 2010 to 27 May 2016 in any event. 29 Proceedings in this matter were commenced on 27 May 2016, approximately 6 months after the landlord became aware the tenant had erected the shutters. However, the landlord had not delayed in taking proceedings against the tenant. The landlord had given the tenant written notice that the tenant must remove the shutters, or the landlord would seek termination of the tenancy. The landlord previously filed proceedings in the Tribunal seeking termination. Ultimately, those proceedings were dismissed by reason of the landlord failing to attend the hearing. The landlord sought to re-instate the termination proceedings. 30 Although the landlord was unsuccessful in having the termination proceedings re-instated, it is clear that the landlord was continuing to take action in the Tribunal regarding the issue of the shutters having been installed by the tenant without written consent. The current proceedings were filed approximately 9 weeks after the re-instatement application of the earlier proceedings failed. 31 In my view, the length of the delay in commencing these proceedings is not unreasonable. The reason for the delay is that the landlord had taken earlier termination proceedings. The landlord has continued to agitate the issue of the tenant having installed the shutters without written consent before the Tribunal, and it is not unreasonable that the landlord awaited the decision whether or not to re-instate the termination proceedings before filing this application in the Tribunal. There is no prejudice to the tenant by reason of the extension of the limitation period, in circumstances where the landlord has given written notice to the tenant to remove the shutters; the tenant continues to refuse to remove the shutters; and the landlord is not seeking a termination order in these proceedings."
In our opinion, the approach adopted by the Tribunal in Tanious in regard to ongoing/continuing breaches of a residential tenancy agreement is correct.
In Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9, at [91], the Appeal Panel also said it was accepted that an obligation to maintain under s 63(1) of the RTA can give rise to an ongoing obligation rather than a single obligation that is breached once and for all.
From the material before us, we are satisfied that, in this case, the tenant's complaints and requests for action were continuous. He complied with his duty under s 51(2)(b) of the RTA and immediately informed the landlord of the damage to the ceiling following the 4 April 2016 storm, yet the problem he complained about continued until the time he vacated the premises. Whatever the rights and wrongs about who was responsible as between the landlord and the Owners Corporation for dealing with the issues, and whether or not the tenant bore any responsibility, the continuous nature of the problem, complaint and attempted remediation was present, to the knowledge of the landlord and her managing agent. It is not necessary for us to determine this issue at this time, including the issue raise by the landlord in her Reply to Appeal. However, we do note that the landlord is a member of the Owners Corporation.
In that situation of continuity of problem alone, but reinforced by continuity of complaint and attempted remediation, one's awareness of the relevant issue must in our view be governed by the ongoing nature of the issue, reinforced by the ongoing nature of the response. It would not be within the scope of remedial legislation, which still requires prompt action, if the tenant did take prompt action by complaining about the breach, there was ongoing attempted resolution, but nevertheless awareness ran from the time of the first knowledge of the issue. It would force a tenant to go to the cost in time and money of a legal proceeding when the obvious defence would be that the proceeding was premature because the problem was under apparent remediation.
A restrictive interpretation of the time limit could, but need not, be a reasonable approach in the situation where the tenant had done nothing when first aware of the issue, or had complained but not followed up the complaint when the resolution was not effective, prompting further ongoing attempts, complaints and further attempts, even if the problem was ongoing. In some circumstances the ongoing nature of the problem of itself may be sufficient. In this case, despite the controversy over responsibility, clearly all three aspects are present. That is, the relevant "awareness" by the tenant of the landlord's alleged breach of the tenancy agreement is the ongoing nature of the problem and the ineffective attempts to remediate it.
Accordingly, in our opinion, the ongoing and continuous nature of the damage the subject of the tenant's claim was relevant to the question as to whether his claim had been brought within time, or whether there was a satisfactory explanation for the delay in bringing the application. It was also relevant to the question of prejudice to the landlord (if any) and the question whether there was a meritorious basis for the tenant's claim (a reasonably arguable case).
The Tribunal's failure to properly characterise the tenant's claim as an alleged ongoing/continuous breach and to fail to take this factor into account when determining whether the tenant's claim was brought within time prescribed in cl 22(9) of the RTR, or whether to extend time under s 41 of the NCAT Act, in our opinion, is an error of law.
On this basis alone, and having regard to the material before us we find that the tenant's compensation claim was brought within time.
In the event we are wrong in our analysis of cl 22(9) of the RTR, for the same reasons given above, we would extend time within which the tenant could bring his claim to 5 November 2017, being the date on which he lodged his claim with the Tribunal.
For completeness we also consider that the Tribunal erred in law in: 1. refusing the extension of time on the basis that the tenant was a real estate salesperson about 7 years before without explaining how that knowledge at that distance, on the evidence (or absence of it) justified the conclusion that the tenant should not be accepted on his evidence that he did not know he could make a claim until a real estate friend told him he could; and 2. relying upon that the tenant liked the property and its location, did not want to leave it and was hopeful that the landlord would fix the problem. That the tenant liked the property and its location and did not want to leave the property was not the subject of exposed reasons as to why this was a relevant consideration in respect of whether or not to extend time to bring a claim for breach of tenancy terms. Properly taken into account, hope that the landlord would fix the problem reinforced the continuing nature of the problem, requests for remediation and ineffective response as matters justifying an extension of time.
In light of our findings, it is unnecessary for us to deal with the tenant's application for leave to appeal. However, for the reasons given above, we would have also found that the appellant may have suffered a substantial miscarriage of justice in that the Tribunal failed to have regard to the ongoing/continuous nature of the tenant's compensation claim. That is, we would have granted leave to appeal.

Conclusions

For the reasons set out above we are satisfied that the tenant has established an error of law in the Tribunal's findings and reasons for decision in regard to his compensation claim. On this basis, the appropriate order is to allow the appeal.
We have also found that the tenant's compensation claim was brought within time. In the alternative, we have found that time should be extended within which the tenant brought his claim to the date on which he lodged his application with the Tribunal. Accordingly, it would be appropriate to make an order extending time, in the event it is necessary.
Finally, in regard to the tenant's substantive claim, we do not consider it appropriate to go on to consider the merits of that claim although both parties had submitted extensive material on the merits. Time did not allow us to hear the parties fully on this issue and in our opinion it is nevertheless best dealt with again, at first instance, by the Tribunal below, differently constituted. In this regard we again note the Tribunal did not deal with the merits of the tenant's claim.
On the basis of our findings we make the following orders: 1. Appeal allowed. 2. Set aside the Tribunal's decision to dismiss the tenant's compensation claim. 3. To the extent necessary, extend time for lodgement of the tenant's compensation claim to 3 November 2017. 4. Remit the tenant's compensation claim for reconsideration by the Tribunal differently constituted

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: 27 June 2018

Residential Tenancies Regulation 2010(NSW)

Residential Tenancy Act 2010(NSW)

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