Kesselring v Van Bodegraven

The Appeal

1. The Grounds of Appeal are: 1. The Tribunal erred in law by taking into account an irrelevant consideration, namely the agreement between the parties, as that agreement was void under s 21 of the RT Act; and 2. The Tribunal erred in law by applying the wrong test under s 100 of the RT Act.
2. The Tenants did not seek leave to appeal under s 80(2) of the NCAT Act.
3. In Reply the Landlord agrees with the decision that the Tenants should pay the Landlord a sum of money, however the amount ordered was incorrect as the Tenants were $208.55 in credit and owed the Landlord $1,460.00. That amount was deducted from the rental bond. The Landlord contends that s 100 of the RT Act is irrelevant and there was mutual agreement between the parties on ending the tenancy.

The Evidence

1. At the appeal call over on 4 September 2018 the parties were directed to lodge their written submissions in support of, and in opposition to, the appeal. An order was made that the appeal was to be decided on the papers without an oral hearing.
2. The Tenants' representative provided written submissions on 18 September 2018. The Landlord's representative provided written submissions in reply on 2 October 2018. On 19 October 2018 the Tribunal sent the following to the parties: The directions made on 4 September 2018 included a direction that this appeal is to be decided on the papers without an oral hearing. The Appeal Panel met on 12 October 2018 to discuss the appeal. The Appeal Panel formed the view that while the respondent's representative had provided some documents that were before the Member at first instance with his submissions on the appeal, it would be assisted by an understanding of the totality of evidence before the Member. Accordingly, pursuant to the power conferred by s 38(2) of the Civil and Administrative Tribunal Act 2013, which includes that the Tribunal "...may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice", the Appeal Panel requested access to the Consumer and Commercial Division file RT 18/20625. File RT 18/20625 includes the documents provided on behalf of the landlord on 8 June 2018, which include: (1) copy of the Vacate Notice provided by the tenants dated 9 April 2018; (2) front page of the residential tenancy agreement dated 5 June 2017 showing as tenants "Annette Mary Kesselring and Leonardo Voli Kesselring". Having regard to these documents, the Appeal Panel: (1) Proposes to add Annette Mary Kesselring as a party to the appeal, on the basis that she was a cotenant and respondent to the original proceedings in RT 18/20625 (see rule 29(b) Civil and Administrative Tribunal Rules 2014); and (2) Requests clarification as to whether the appellants provided documents which were before the Member on 20 July 2018, and if so, what those documents were; and (3) Invites the parties to provide submissions as to: a. Whether the Vacate Notice was a termination notice compliant with the requirements of s82 of the Residential Tenancies Act 2010, and b. Whether that notice was served in accordance with the requirements of s223 of the Residential Tenancies Act 2010, that is, how it was sent to the landlord's agent, and if by email, that s223(1)(v) was satisfied.
3. The Landlord's representative provided a submission on 30 October 2018 in which he stated that the termination notice was not compliant as only one signature was received and it was emailed to the agent. The Landlord did not accept the vacate notice as they relied on the mutual agreement between the Landlord and the Tenants confirmed by text message. The Tenants signed the bond form for refund of $1,460.00 owing to the Landlord, and they agreed with the amended amount of $1,460.00.
4. The Tenants provided on 5 November 2018 a copy of the documents in which they had relied at the first instance hearing. The Tenants submitted that the vacate notice was sent by email as the parties regularly corresponded that way during the tenancy; the parties' agreement to service by email was demonstrated by the Landlord's conduct in serving their notice of intention to sell the premises by email on 21 March 2018; and the Landlord had no doubt as to the intentions of the Tenants merely that they considered they were not entitled to give notice in accordance with s 100(1)(c) of the RT Act. The Tenants submit that the notice of termination was sent by Annette Kesselring on behalf of both tenants. If there is any reason to find the lack of both signatures rendered the notice invalid the Tenants submit that such defect should be overlooked in accordance with s 113 of the RT Act.

Appellants' submissions

1. The Tenants submit that the Tribunal erred in taking into account an irrelevant consideration, namely the agreement that the Tenants could give one months notice. The Landlord's reliance on that agreement meant it constituted a term of the RTA, and it was void pursuant to s 21 of the RT Act because it was inconsistent with s 100 of the RT Act which provides that a tenant can give 14 days' notice where the landlord notifies them of the intention to sell. The Tribunal erred by taking the agreement into account in requiring the Tenants to pay more than 2 weeks notice to end the agreement.
2. The second ground is that the Member erred in applying the wrong test under s 100 of the RT Act, in finding that s 100 of the RT Act did not apply because the Landlord was not required to comply with s 26. The Landlord is not entitled to any compensation in addition to the 2 weeks written notice provided in accordance with s 100(1)(c) of the RT Act.

Respondent's submissions

1. The Landlord submits that the Tribunal did not allow for the in hand credit of $208.55 to be applied to the rent, and so the figure in dispute was $1,460.00. There was no evidence that the Landlord had any prior intention to sell the property.

Whether there was an error on a question of law

1. It was common ground that: 1. The Residential Tenancy Agreement between the parties was for the period 17 June 2017 to 17 June 2018; 2. In March 2018 the Landlord notified the Tenants that he intended to sell the property; 3. There was some discussion between the parties as to whether the Tenants would purchase the property; 4. On 21 March 2018 the Landlord's agent confirmed that the property was up for sale, and compensation of $100 per week for inconvenience was agreed; 5. By exchange of text messages the Landlord agreed with the Tenants that they could move out on one months notice; 6. On 9 April 2018 a vacate notice was emailed to the Landlord's agent; and 7. The Tenants vacated the premises on 23 April 2018.
2. It was not in dispute on the appeal that the order made by the Member that the Tenants pay the Landlord $1,688.55 did not take into account the amount of $208.55 in credit, and that the amount which the Landlord was claiming was $1,460.00; or that that amount was paid to the Landlord from the rental bond, the balance being paid to the Tenants.
3. The Tenants rely on s 100 of the RT Act, which provides: 100 Early termination without compensation to landlord (1) A tenant may give a termination notice for a fixed term agreement on any of the following grounds: (a) that the tenant has been offered, and accepted, accommodation in social housing premises, (b) that the tenant has accepted a place in an aged care facility or requires care in such a facility, (c) that the landlord has notified the tenant of the landlord's intention to sell the residential premises, unless the landlord disclosed the proposed sale of the premises before entering into the residential tenancy agreement as required by section 26, (d) that a co-tenant or occupant or former co-tenant or occupant is prohibited by a final apprehended violence order from having access to the residential premises. (2) The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given. (3) The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement. (4) The tenant is not liable to pay any compensation or other additional amount for the early termination of the agreement.
4. Section 26 of the RT Act, as referred to in s 100(1)(c), relevantly provides: 26 Disclosure of information to tenants generally … (2) Disclosure of sale, mortgagee actions A landlord or landlord's agent must disclose the following to the tenant before the tenant enters into the residential tenancy agreement: (a) any proposal to sell the residential premises, if the landlord has prepared a contract for sale of the residential premises, (b) that a mortgagee is taking action for possession of the residential premises, if the mortgagee has commenced proceedings in a court to enforce a mortgage over the premises. (3) Subsection (2) does not apply to a landlord's agent unless the agent is aware of the matters required to be disclosed. … Maximum penalty: 20 penalty units.
5. It was common ground on the appeal that at the time of entering into the residential tenancy agreement the Landlord had no intention to sell the property, and that he advised the Tenants of that intention in March 2018. There is accordingly no issue as to the correctness of the Member's conclusion that s 26(2)(a) of the RT Act did not apply.
6. Having concluded that s 26(2)(a) did not apply, the Member relied on the agreement reflected in text messages that the Tenants could vacate before the end of the fixed term with one months notice. In relying on that agreement between the parties, the Member appears to have found that the tenancy ended by operation of s 81(4)(e) of the RT Act, which provides that a residential tenancy agreement terminates if (e) "the tenant gives up possession of the residential premises with the landlord's consent, whether or not that consent is subsequently withdrawn".
7. However, the Member did not consider the alternative basis on which the Tenants contended the tenancy ended, that is by their giving a termination notice pursuant to s 100(1)(c) of the RT Act and vacating the premises. We find that in failing to consider whether s 100(1)(c) applied, the Member did not address the issue she was required to determine, that is, how and when the tenancy ended and whether the Tenants could rely on the vacate notice sent by the Tenants on 9 April 2018 informing the Landlord's agent of their intention to vacate the premises on 23 April 2018. That was the case that the Tenants sought to make, and required consideration of whether the vacate notice was a valid termination notice relying on s 100(1)(c) of the RT Act.
8. In C G Constructions Pty Limited v Hanson Constructions Materials Pty Limited [2017] NSWCATAP 130 the Appeal Panel said: 33. In Prendergast v Western Murray Irrigation Limited [2014] NSWCATAP 69 at [13] the Appeal Panel identified, by reference to authority, a number of examples of questions of law that would qualify as such under s 80(2)(b) of the Tribunal Act. One such example arises where the Tribunal decision is made on a wrong issue or has posed the wrong question for determination. That may also be expressed as involving a circumstance where the decision-maker fails to engage with and determine the case that a party seeks to make. 34. The authority cited for identifying an error of law of that kind is found in a number of decisions of the High Court including Craig v South Australia (1995) 184 CLR 163 at 179; [1995] HCA 58; Re Minister for Immigration and Multicultural Affairs; Ex Parte Miah (2001) 206 CLR 57; [2001] HCA 22 at [80]-[81]; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30 at [82]. In Miah the error of law of the kind that we have identified is described as a "constructive failure to exercise jurisdiction." 35. In Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088, Gummow and Callinan JJ (Hayne J agreeing) said at [24] that a failure to respond "to a substantial, clearly articulated argument relying upon established facts was at least" a failure to accord an applicant natural justice. A failure of that kind has also been described as a constructive failure to exercise jurisdiction (see, for example, MZAES v Minister for Immigration and Boarder Protection [2015] FCA 113 at [66]). Such a failure will constitute an error of law.
9. The failure to address the issue of whether the Tenants could rely on the vacate notice was an error on a question of law: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at 13. The failure to consider properly the application of s 100(1)(c) means that the decision in favour of the Landlord cannot stand and should be set aside.

Disposition of the Appeal

1. Section 81 of the NCAT 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 confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
2. In the present circumstances, the Appeal Panel is of the view that little purpose would be served in remitting the matter to the Consumer and Commercial Division for reconsideration, and that given that all the relevant evidence is available the Appeal Panel should consider whether another decision should be substituted for that at first instance. The Appeal Panel informed the parties that it was of the view that the appeal should be upheld, and that it proposed to make a new decision in substitution for that of 20 July 2018, and proposed to dispense with an oral hearing and determine the appeal on the basis of all the material now before the Tribunal. The parties were invited to make any submissions in opposition to that course. A submission was received from the Landlord's agent, maintaining that sufficient evidence has been supplied and requesting that the original decision be upheld. No submission has been received from the Tenants.
3. The central facts are not in dispute, and the issue is the application of the provisions of the RT Act to those facts. To exercise the power conferred by s 80(3) of the NCAT Act and make a new decision in substitution for that made on 20 July 2018 would avoid the necessity for any further process or hearing, and would be consistent with the guiding principle in s 36 of the NCAT Act in facilitating the just, quick and cheap resolution of the real issues in dispute. The Appeal Panel is satisfied that it is appropriate to determine this internal appeal by way of a new hearing.
4. The Appeal Panel is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering all the documents and submissions provided to the Tribunal. Neither party opposed that course. The Appeal Panel dispenses with a hearing.
5. The relevant facts are not in dispute, and are stated at paragraph [21] above.
6. The end of the fixed term agreement was 17 June 2018. Section 100(1) of the RT Act provides four grounds on which a tenant can give a termination notice for a fixed term agreement, specifying a termination date not earlier than 14 days after the day on which the notice is given, which can be before the end of the fixed term: s 100(2),(3). Paragraph (c), that the landlord has notified the tenant of the landlord's intention to sell the premises, is one of those grounds.
7. As discussed in Anforth et al Residential Tenancies Law and Practice New South Wales 7th ed, 2017, s 100(1)(c) was amended in 2014 to clarify whether the protection of tenants at risk of interference with their rights to quiet enjoyment during the tenancy and of a short notice eviction after a sale of the premises applies only if the landlord intends to sell the property at the time of entering the tenancy, or if that decision is made after entering into the tenancy agreement. We agree with those authors that s 100(1)(c) as presently drafted makes it clear that the entitlement of the tenant to give 14 days notice to terminate a fixed term agreement applies if the landlord forms the intention to sell after entering into the residential tenancy agreement.
8. It was not in dispute, and the Appeal Panel so finds, that s 26(2)(a) of the RT Act does not apply to this matter, as there was no proposal to sell the residential premises at the time the parties entered into the RTA. The Appeal Panel is satisfied that in that circumstance, s 100(1)(c) would apply, enabling the Tenants to terminate the RTA before the end of the fixed term.
9. The parties could not by agreement preclude the operation of s 100(1)(c). Section 219 of the RT Act provides that a term of any tenancy agreement, contract or other agreement "is void to the extent that it purports to exclude, limit or modify the operation of this Act or the regulations or has the effect of excluding, limiting or modifying the operation of this Act or the regulations". The consequence is that if the vacate notice of 9 April 2018 was a valid termination notice, the residential tenancy agreement, and thus the Tenants' obligation to pay rent, ended on 23 April 2018 when they gave vacant possession of the residential premises: s 81(2) RT Act.
10. The Landlord's position is that the vacate notice was not a valid termination notice, as it was signed by one tenant only and it was emailed to the Landlord's agent.
11. The requirements for a valid termination notice are specified in s 82 of the RT Act: 82 Termination notices (1) A termination notice must set out the following matters: (a) the residential premises concerned, (b) the day on which the residential tenancy agreement is terminated and by which vacant possession of the premises is to be given, (c) if the notice is not given under section 84, 85, 96 or 97, the ground for the notice, (d) any other matters prescribed by the regulations. (2) A termination notice must be in writing and be signed by the party giving the notice or the party's agent. (3) A termination notice for a periodic agreement may specify a day other than the last day of a period for the payment of rent as the termination date.
12. The document is on "Reconstruct Real Estate" letterhead, and instructs the provider to fax it to the agency. Since the amendment to s 223 of the RT Act in 2017, that is no longer a standard method for service of notices. Section 223(1)(a) now provides: 223 Service of notices and other documents (1) A notice or other document that is authorised or required by this Act or the regulations or a residential tenancy agreement to be given to or served on any person may be given or served by: (a) in the case of a natural person: (i) delivering it to the person personally, or (ii) delivering it personally to a person apparently of or above the age of 16 years at the person's residential or business address, or (iii) delivering it in an envelope addressed to the person and leaving it in a mailbox at the person's residential or business address, or (iv) sending it by post to the address specified by the person for the giving or service of documents or, if no such address is specified, the residential or business address of the person last known to the person giving or serving the document, or (v) sending it to an email address specified by the person for the service of documents of that kind, or (vi) any other method authorised by the regulations for the service of documents of that kind, or …
13. The vacate notice is dated 9 April 2018, identifies the residential premises, states as the vacating date "23/04/2018", and specifies as the reason for the notice "Selling of the property". The notice complies with s 82(1)(a), (b) and (c) of the RT Act, and there are no other matters prescribed by the regulations.
14. The notice is signed by one tenant, Annette Kesselring. The notice names both tenants, and if Annette Kesselring was entitled to sign the notice both in her own right as co-tenant, and also as agent for Leonardo Kesselring, it would comply with s 82 of the RT Act. The notice was sent by email, a valid form of service if sent to an email address specified by the Landlord for the service of documents of that kind. The Landlord's agent disputes that that was a valid form of service. The Tenants contend that that was how the parties regularly corresponded during the tenancy, citing as evidence of their agreement to serve notices in that fashion by the Landlord's conduct in his agent serving the notice of intention to sell the premises by email on 21 March 2018.
15. Section 113 of the RT Act enables the Tribunal to make a termination order "or any other order" even though there is a defect in the form or manner of service of a termination notice: 113 Defects in termination notices The Tribunal may make a termination order for a residential tenancy agreement or any other order even though there is a defect in the relevant termination notice or the manner of service of the notice if: (a) it thinks it appropriate to do so in the circumstances of the case, and (b) it is satisfied that the person to whom the notice was given has not suffered any disadvantage because of the defect in the notice or service or that any disadvantage has been overcome by the order and any associated order.
16. Even if the vacate notice was defective either because it was signed only by one tenant or because it was sent by email, we are not satisfied that the Landlord suffered any disadvantage because of any defect in form or the manner of service. The notice identified both tenants. The Landlord's agent received it, and used it to calculate the vacate date on which the Landlord relied, namely 7 May 2018, as evident from an email dated 26 April 2018. In doing so the Landlord accepted that it was sufficient in form and manner of service. There was no delay in the Tenants' confirming their position that they were relying on s 100(1)(c) and not the agreed one months notice, as they responded to an email on 11 April 2018 from the agent (stating his understanding that the agreement was for one months notice) on the same day to confirm their position that they were relying on a 14 day notice as the property was for sale.
17. The Appeal Panel, exercising the power conferred by s 81(2) of the NCAT Act, is satisfied that it is appropriate in the circumstances of the case to waive any defect in form or manner of service of the Tenants' termination notice of 9 April 2018. The information required by s 82(1) of the RT Act was provided, and the Landlord accepted that notice as notice for the purposes of his calculation of the notice period, and accordingly there was no disadvantage to the Landlord because of any defect in the notice or service.
18. On that basis, the vacate notice was sufficient to give the 14 days notice required by s 100(1)(c). As a consequence, pursuant to s 81(2) of the RT Act the residential tenancy agreement ended on 23 April 2018 when in accordance with the notice the Tenants gave vacant possession. The rent ledger in evidence before the Member shows that the rent was paid to 21 April 2018, with a further $208.55 paid on 15 May 2018, taking the date paid to 23 April 2018. The Tenants were not required to pay rent after that date, and they are entitled to be refunded any amount for rent paid to the Landlord by them or from the rental bond. That amount was $1,460.00 paid to the Landlord from the rental bond.

Orders

1. The Appeal Panel orders: 1. Annette Mary Kesselring is joined as a party to the appeal. 2. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 a hearing is dispensed with. 3. The appeal is upheld. 4. The orders made in proceedings RT 18/20625 on 20 July 2018, as amended under s 63 of the Civil and Administrative Tribunal Act 2013 on 30 July 2018, are set aside, and the following order is substituted: "James van Bodegraven is to pay Annette Mary Kesselring and Leonardo Volpi Kesselring the sum of $1,460.00 within 14 days of the date of these orders".

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: 23 January 2019