Kwok v Tahiri

Kwok v Tahiri - [2015] NSWCATAP 244 - NSWCATAP 2015 case summary — Zoe

History to decision under appeal

On 17 March 2015 the Tahiris lodged an application with NCAT (RT 15/13490) seeking orders to:

reduce the rent payable (s 45 of the Act)
repay rent paid (s 47 of the Act)
return the rental bond (s 175)
terminate the Agreement (s 103).

Under the heading, "Reasons for the Orders", the Tahiris wrote:

at the commencement of the tenancy, 15 January 2015 we were given one non-functioning garage door key and were unable to use the garage and park our car on the premises until 15 February 2015
on 19 January we reported to the agent/landlord and sent photos in relation to the condition of the wooden floor - "wooden floor planks not attached, loose, to the floor". No repair action was taken
on 19 January we reported to the agent/landlord that the air conditioning had not been working properly since the commencement of the tenancy - "freezing first floor, not cooling second floor". Repairs not undertaken until 3 March 2015
on 1 February 2015: blockage of sewer, resulting in an inch of flooding. The landlord did not reimburse the costs we incurred to repair the sewer, $1094, within 14 days as required under the Agreement
on 7 February 2015, the sewer flooded a second time making all toilets unusable. The plumbers sent by the landlord to repair the sewer left the front garden and pool area "filthy and messy". The latter was unusable for weeks
on 12 February 2015 we reported to the landlord "serious concerns" about dents in the second floor. No action taken to repair floor
on 24 February we gave the landlord a 14 day "Notice of Breach of Agreement"
on 2 March 2015 a gardener attended the premises to repair the front yard (after plumber). The gardener completes the job on 6 March 2015 "leaving premises unclean, mud all over pool deck area and front yard footpath".

On 26 March 2015 Mr Kwok lodged an application with NCAT seeking orders under s 187(1)(c) of the Act for payment in the sum of $9600, the equivalent of six weeks rent. Under the heading "Reasons for the Order", Mr Kwok wrote:

the tenants breached the Agreement by vacating the premises on 10 March and therefore in accordance with the terms of the Agreement a six weeks "break fee" is payable
on payment of the break fee the balance of the rent paid in advance will be refunded
there will be no claim from the bond.

[6]

Termination of residential tenancy agreement

Part 5 Division 1 of the Act is headed "Termination of residential tenancies". Contained in that division s 81 reads: 81 Circumstances of termination of residential tenancies (1) Termination only as set out in Act A residential tenancy agreement terminates only in the circumstances set out in this Act. (2) Termination by notice and vacant possession A residential tenancy agreement terminates if a landlord or tenant gives a termination notice in accordance with this Act and the tenant gives vacant possession of the residential premises. (3) Termination by order of Tribunal A residential tenancy agreement terminates if the Tribunal makes an order terminating the agreement under this Act. …
Section 98 of the Act provides: 98 Breach of agreement-termination notice by tenant (1) A tenant may give a termination notice on the ground that the landlord has breached the residential tenancy agreement. (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 if it is a fixed term agreement. (4) The Tribunal may, on application by a landlord made before the termination date and within the period prescribed by the regulations, revoke a termination notice by a tenant if satisfied that the landlord has remedied the breach and that it is appropriate, in the circumstances of the case, to continue the tenancy. Note : The tenant may apply directly to the Tribunal on the ground of breach by the landlord for a termination order without first giving notice (see section 103).
Regulation 22(4) of the Residential Tenancies Regulation 2010 (NSW) (the 2010 Regulation) states that the prescribed period for the making of an application by a landlord for the revocation of a termination notice under s 98(4) is seven days after being served with the termination notice.
Section 103 provides: 103 Breach of agreement-termination by Tribunal (1) The Tribunal may, on application by a tenant, make a termination order if it is satisfied that: (a) the landlord has breached the residential tenancy agreement, and (b) the breach is, in the circumstances of the case, sufficient to justify termination of the agreement. (2) In considering the circumstances of the case, the Tribunal may consider (but is not limited to considering) the following: (a) the nature of the breach, (b) any previous breaches, (c) any steps taken by the landlord to remedy the breach, (d) any steps taken by the tenant about the breach, (e) the previous history of the tenancy. (3) The Tribunal may refuse to make a termination order if it is satisfied that the landlord has remedied the breach. (4) A tenant may make an application under this section without giving the landlord a termination notice. (5) The Tribunal may make a termination order under this section that takes effect before the end of the fixed term if the residential tenancy agreement is a fixed term agreement.
Section 111 states: 111 Disputes about termination (1) A landlord or tenant may apply to the Tribunal for an order in relation to a dispute about a termination notice. (2) The Tribunal may, on application by a landlord or tenant, declare that a termination notice was or was not given in accordance with this Part. (3) Subsection (2) does not limit any other order the Tribunal may make on an application under this section.

[9]

Ground 2: The Tribunal misapplied s 63 of the Act

Mr Kwok contends that the Tribunal misconstrued s 63 of the Act by not applying the "reasonableness test", citing in support Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313 and Hamilton-Clarke v Lazanas (Tenancy) [2013] NSWCTTT 516 at [40].
Mr Kwok asserts that throughout the tenancy he reimbursed the Tahiris for any repair costs incurred, responded in a timely manner to their requests for repairs to be undertaken "even though there were numerous requests in frequent succession and some might not have been reasonable". He contends that the premises were in a reasonable state of repair both at the commencement of the tenancy and when the notice of termination was served. He suggests that being "expats with no rental history in Australia" the tenants might have had "different expectation of reasonable state of repair". In his submissions he detailed the steps he asserts were taken to accommodate the Tahiris' concerns about the state of the premises.
The High Court in Northern Sandblasting Pty Ltd v Harris did not, as Mr Kwok contends, consider the proper construction of s 63 of the Act. Indeed the Act did not come into operation until three years after that decision. Nonetheless we agree with the proposition advanced by Mr Kwok that s 63 does not mandate that a landlord must rectify any and all things or services reported by a tenant as requiring repair. Section 63 simply requires the landlord to maintain the premises in a "reasonable state of repair having regard to the age of, rent payable for and prospective life of the premises". Whether the landlord has failed to comply with their obligation to maintain the premises in a "reasonable state of repair" is a question of fact to be objectively assessed. It requires consideration of, among other things, the nature of the thing or service said to require repair and the age of, rent payable for and the prospective life of the subject premises.
The Reasons given by the Tribunal were brief. Nonetheless it is implicit that the Tribunal found that the grounds listed in the Tahiris' notice of termination - "air conditioning, oven and bubble bath not working, loose and bowing floor boards, garage remote not supplied; pool unusable for several weeks" - constituted a breach of Mr Kwok's obligation under s 63 of the Act and in turn a breach of the Agreement itself.
Mr Kwok submits in effect that the only rational explanation for that finding is that the Tribunal misconstrued the phrase "reasonable state of repair". While there may be legitimate disagreement about the issue of whether Mr Kwok complied with his obligations under s 63 of the Act, it does not follow in making that finding the Tribunal misconstrued the expression "reasonable state of repair". The ultimate finding, that Mr Kwok was in breach of s 63, was open to the Tribunal on the available material. No error of law is demonstrated.

[11]

Consideration

A residential tenancy agreement terminates only in the circumstances set out in the Act (s 81(1)). These include (i) where the tenant gives a notice of termination in accordance with the Act (s 81(2)); and (ii) where the Tribunal makes a termination order (s 103 of the Act).
It will be recalled that the order made by the Tribunal in relation to the termination of the Agreement was in the following terms: The Tribunal declares that the residential tenancy agreement was terminated on 11 March 2015 pursuant to RTA s 98.
The basis upon which the Tribunal "declared" that the Agreement terminated on 11 March 2015, is unclear. It would appear that the above "order" was either in the form of a declaration made under s 111(2), or, simply a finding that the tenancy had terminated by the operation of s 98 of the Act.
A declaration made under s 111(2) is a declaration that a termination notice was or was not given in accordance with Part 5 of the Act. A notice will be given in accordance with Part 5 if it complies with the requirements of s 82 of the Act. Where the notice is given by a tenant under s 98 of the Act, among other things it must set out the ground for the termination (s 82(1)(b) of the Act). A tenant may give a termination notice on the ground that the landlord has breached the residential tenancy agreement (s 98(1) of the Act).
By the combined effect of ss 82, 98 and 111, before exercising the discretionary power to make a declaration under s 111(2) of the Act, the Tribunal must be satisfied as asserted by the tenant in the notice of termination that the landlord has breached the residential tenancy agreement. Similarly, to make a finding that a residential tenancy agreement terminated under s 98 of the Act, the Tribunal must be satisfied, that there had been a breach of the tenancy agreement. Even if, as Mr Kwok contends, a notice of termination can only be given under s 98 of the Act if the breach is "sufficient to justify termination of the agreement", we are unable to accept the proposition that the Tribunal found the nature of the breach to be "trivial".
No error of law is demonstrated.

[12]

Ground 4: Applying the "wrong onus"

Mr Kwok contends that the Tribunal erred in awarding the sum of $1600 as compensation because: There is no evidence being adduced to have proven the civil onus on the balance of probabilities of suffering and damage therefore no award of damage shall be supported.
In support Mr Kwok cites the following passage from Deane J in Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 at [4]: [T]he plaintiff bears the onus of establishing the extent of her loss or injury on the balance of probabilities. To satisfy the requirements of that rule, a plaintiff must, if she is to recover more than a nominal amount in such an action, affirmatively establish assessable damage, that is to say, loss or injury which is capable of being measured in monetary terms (citations omitted).
The Tahiris contend that the Tribunal did not err in awarding compensation and point out s 187(1)(d) of the Act gives the Tribunal power to do so.
While no argument that the Tribunal has power to award compensation, the Reasons do not allow us to discern the basis upon which the Tribunal concluded that the Tahiris were entitled to compensation as a result of Mr Kwok's breach of s 63 of the Act, or how it arrived at the figure of $1600.
At hearing we raised with the parties our preliminary view that the Tribunal may not have discharged its obligation to provide adequate reasons, in relation to its decision to award compensation.
In Collins v Urban [2014] NSWCATAP 17 at [56], the Appeal Panel discussed (at [43] to [64]) the nature and extent of the obligation to provide adequate reasons, referring to Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 in which Basten JA observed (at [48]) that the requirement to give reasons was "not universal in nature" and "is variable in content".
The Appeal Panel in Collins v Urban acknowledged the practical difficulties of discharging the obligation to give adequate reasons in a high volume jurisdiction such as the Consumer and Commercial Division of NCAT. The Appeal Panel set out (at [62]) what it considered to be the minimum requirements necessary to discharge that obligation in uncontested tenancy matters. They include "any other relevant matter which would be necessary to allow the Appeal Panel to hear and determine any appeal on a question of law or, if leave were granted, on other grounds".
Here the matter was contested and the Tribunal gave written reasons shortly after making its decision. The Reasons do not allow us to decide whether, as whether Mr Kwok contends, the Tribunal proceeded to award compensation in circumstances where there was no evidence of loss or damage and/or whether it "applied the wrong onus". Nor do they disclose, the bases on which the Tribunal arrived at the figure of $1600 as the award for compensation. In our opinion the Reasons in this respect are demonstrably inadequate and the Tribunal's failure to give adequate reasons constitutes an error of law.

[13]

Should the time to lodge the Notice of Appeal be extended?

Mr Kwok was required to lodge his Notice of Appeal within 14 days from the day on which he was notified of the decision or given reasons for the decision, whichever is the latter (Rule 25(4)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules)). He was given a copy of the Reasons for decision on 7 April 2015. Lodged on 29 April 2015, the Notice of Appeal was therefore out-of-time by about eight days.
Section 41 of the NCAT Act confers on the Appeal Panel a discretionary power to extend the time for lodging the Notice of Appeal. While unfettered, that power must be exercised judicially having regard to s 36 of the NCAT Act and the need "to facilitate the just, quick and cheap resolution of the real issue in the proceedings": Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [18].
In Jackson the Appeal Panel identified (at [22]) the considerations generally relevant to the question of whether an application to extend time to lodge a Notice of Appeal should be granted: (1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal), (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable [citations omitted].

[16]

Consideration

Time limits are imposed to bring finality to the decision-making process. They are an important but not an absolute value. Once the threshold questions of whether an acceptable explanation for making a late application and whether the respondent will suffer substantial prejudice are resolved, the question must be whether or not justice can be done to both parties if the matter proceeds to an appeal having regard to the need "to facilitate the just, quick and cheap resolution of the real issue in the proceedings". It is to that question that the considerations outlined in Jackson are ultimately directed.
Mr Kwok has provided an explanation for not filing the Notice of Appeal before 17 April 2015. However he has not provided an explanation, let alone an adequate explanation, for the further delay of some 12 days after being notified of the decision that the set aside application had been refused. Nor has he explained the very significant delay in notifying the Tahiris of the appeal. Mr Kwok was required to serve a copy of the notice of appeal as soon as practicable after lodgement and preferably within three working days: NCAT Procedural Direction 1, 7 February 2014 at [17]. As a consequence of that delay, the Tahiris "threw away" costs incurred in applying to the Local Court for a monetary order.
For the reasons set out above, the appeal must be dismissed except in relation to one discrete point, namely the decision to award compensation under s 63 of the Act. It is not possible to say whether if this issue were to be reheard, Mr Kwok would achieve a better (or worse) result.
Weighing in favour of extending the time to appeal is the relatively short delay in filing the Notice of Appeal and the fact that the appeal could not be said to have no prospects of success, in respect of the compensation issue. Balanced against those considerations are Mr Kwok's failure to provide an adequate explanation for the delay in filing and giving the Tahiris notice of the appeal, together with the prejudice the Tahiris suffered as a consequence. While finely balanced we conclude that the balance of considerations do not favour exercising the power to grant an extension of time to lodge the Notice of Appeal.

[17]

Should an order for costs be made?

The Tahiris seek an order for costs. They point out they have no legal training or background and Mr Kwok's Notice of Appeal contained quasi-legal arguments, including references to legal principles and High Court authorities. They assert they had no option but to obtain legal representation to understand and respond to the appeal.
Section 60(1) of the NCAT Act establishes the general principle that each party is to pay its own costs. The Appeal Panel may only award costs if satisfied that there are "special circumstances" warranting an award of costs (s 60(2) of the NCAT Act). Section 60(3) sets out a non-exhaustive list of factors the Tribunal may have regard to in determining whether are special circumstances warranting an order for costs: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36(3), (g) any other matter that the Tribunal considers relevant.
We accept that the Tahiris felt at a loss when confronted with Mr Kwok's Notice of Appeal. We also accept that parts of the Notice and the submissions in support were couched in quasi-legal language. Nonetheless the Tahiris were not otherwise disadvantaged by Mr Kwok's conduct in the Appeal. He complied with all directions, including the direction to provide additional written submissions when asked for further clarification about the grounds of appeal. The appeal could not be described as either frivolous or vexatious. Nor could it be described as hopeless.
Without more, the Tahiris' belief that they needed legal representation to be able to understand and respond to the appeal does not constitute special circumstances. It follows that the power to award costs cannot be exercised.

At a glance

Court

Decision date

Source

Judgment (19 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (6)

Cited By (2)