(2000) 201 CLR 520
Director of Public Prosecutions for Victoria v Le [2007] HCA 52
(2007) 232 CLR 562
Feyzbahsipour v Lee [2021] NSWCATAP 173
Hill v Forteng Pty Ltd [2019] FCAFC 105
Rudge v The Crown in the right of the State of NSW
Ex parte Lam [2003] HCA 6
Source
Original judgment source is linked above.
Catchwords
(2000) 201 CLR 520
Director of Public Prosecutions for Victoria v Le [2007] HCA 52(2007) 232 CLR 562
Feyzbahsipour v Lee [2021] NSWCATAP 173
Hill v Forteng Pty Ltd [2019] FCAFC 105Rudge v The Crown in the right of the State of NSWEx parte Lam [2003] HCA 6(2003) 214 CLR 1
Reisner v Bratt and Anor [2004] NSWCA 22
Serious v BarlowBarlow v Serious [2020] NSWCATCD 3
Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10
The appeal arises from a dispute under the Residential Tenancies Act 2010 (NSW) ('the RT Act').
The appellant Mr Lewis was a co-tenant to a residential tenancy agreement. Mr Smyth was the other co-tenant. Although Mr Smyth, as a party to the proceedings at first instance is a party to the appeal, the Appeal Panel noted in directions made on 7 April 2021 that Mr Smyth did not wish to lodge further material or be heard in the appeal.
The appeal was lodged within the relevant limitation period in Rule 25 of the Civil and Administrative Tribunal Rules 2014 (NSW).
The key issue in the appeal is whether the Tribunal made an error of law, or an error other than an error of law for which leave to appeal should be granted, in respect of a finding made by the Tribunal that that the whole of the rent arrears calculated at the rate of $1,720 per week was owed by the tenant; rather than an amount of $1,200 per week for a period from April to June 2020.
The appellant submits that the amount of $4,050 is owed for rent arrears rather than the amount ordered by the Tribunal. On 22 January 2021, the appeal was reinstated (after previously being dismissed for non-appearance under s 55 (1) of the Civil and Administrative Tribunal Act 2013 (NSW)) on the condition that $4,050 be paid to the respondent by 25 January 2021. It is unclear to us whether or not this amount was paid.
Determination of the issue of the amount of rent arrears owed involves consideration of the applicable legal principles of whether the terms of a written residential tenancy agreement were varied in the context of the COVID-19 pandemic and legislative changes that commenced with the Residential Tenancies Amendment (COVID-19) Regulation 2020 (NSW) ('the COVID-19 Regulation').
In essence, the Tribunal had to consider and determine whether or not the parties had agreed to defer $520 pw of the rent on the condition that the tenants pay rent on time; or whether the parties had agreed to an unconditional rent reduction.
[2]
BACKGROUND
In November 2019, a fixed term residential tenancy agreement between the respondent ('the landlord'); the appellant Mr Lewis, and Mr Smyth, was entered into for residential premises in Bondi.
A second fixed term was entered into on 12 March 2020. The residential tenancy agreement was in writing. The appellant and Mr Smyth were listed as co-tenants. The fixed term of the agreement was 3 months, ending on 17 June 2020. Up to 8 persons could ordinarily live the in premises at one time. The rent payable was $1,720 per week.
On 30 March 2020, Mr Smyth sent an email to the landlord's agent stating that the co-tenants were in a difficult financial situation and could not afford to pay rent, due to a number of persons sharing the premises having moved out and the remaining occupants either not working or working reduced hours. The email stated the co-tenants would "like to discuss our options and come to some agreement".
On 3 April 2020, the landlord's agent sent a letter addressed to the co-tenants. That letter referred to previous email correspondence, and relevantly stated:
"You signed a new lease commencing 12 March at $1,720 per week.
On a weekly basis, we agree to defer $520 of the $1,720 on the condition that rent would be paid on time.
We note that your rent is currently paid up till 26 March, and in order to comply with the deferment condition, the rental arrears at $1,200 x 2 ($2,400) must be paid on time.
If your rent will be paid on time (sic), the rent that was deferred will not be claimed as owning (sic) by you.
Should the rent not be paid on time the $520 per week deferred is a debt that needs to be paid as soon as possible.
We are keen for you to complete your lease that you signed and hope this gives you enough incentive to pay on time".
In the Appeal Panel hearing, Mr Lewis asserted that he did not receive the letter of the landlord dated 3 April 2020.
On 4 April 2020, Mr Lewis emailed the landlord's agent stating that: "myself and Alan are the only two people with any income at the moment and we both have hours reduced". The email went on to state that the co-tenants could not afford to pay rent at the stipulated amount under the residential tenancy agreement, and concluded:
"It is impossible to pay the rent price when there is only a few of us left and hardly any money coming in so I don't know what to suggest".
The email was signed "Kind Regards, Brad and Alan".
On 5 April 2020, the agent of the landlord sent an email to Mr Lewis stating:
"I have spoken to the owner and they have agreed to reduce your rent again for you but this would be the last time so please ensure you pay your rent on time and at the correct amount.
Please ensure to make a payment of $1,200 ASAP as you are currently 11 days in arrears. I advise you start advertising the empty beds you have at the reduced rate you should be able to find some people.
Please ensure to keep under 14 days in arrears if possible. Let me know if there is anything else I can help you with."
[3]
DECISION OF THE TRIBUNAL
Contrary to directions of the Appeal Panel, Mr Lewis did not provide a sound recording of the hearing in the Tribunal or a transcript of relevant passages of the hearing. The only transcript provided by Mr Lewis was of the set-aside hearing on 8 July 2020 when discussions took place as to the rent arrears and manner of payment in the context of the Member presiding at the set-aside hearing attempting to agree on that issue. That transcript has no bearing on the hearing of 15 October 2020.
The Tribunal provided written reasons dated 16 October 2020. The Tribunal made orders in favour of the landlord and ordered the co-tenants pay the landlord the net amount (after credit for the rental bond being paid to the landlord) of $10,189.66.
However, the salient issue in the appeal is the findings of the Tribunal regarding the rent arrears owed. The Tribunal found the co-tenants owed rent for the period from 8 May 2020 to 22 June 2020 in the sum of $11,272.86.
The Tribunal found that the rent had not been unconditionally reduced by the landlord but had been reduced on the condition that the co-tenants pay the reduced rent on time.
The reasons of the Tribunal state as follows:
The Tenants dispute that the rent was deferred and argue the Landlord agreed to a reduction. The Tenants rely on emails dated 5, 6 and 17 April 2020 as confirmation that the Landlord had agreed to reduce the rent. In those emails the agent uses the words "reduce the rent "on several occasions. The Tenants say this constitutes evidence that the Landlord had agreed to a rent reduction. I reject that submission.
I am satisfied that when the evidence is considered objectively the agreement was that the rent would be reduced to $1200 per week subject to certain conditions. Those conditions are clearly set out in correspondence between the parties. Although Mr Lewis denies receiving the letter dated 5 April 2020 which spelt out the basis upon which the Landlord was prepared to reduce the rent to $1200 per week, the arrangement was again detailed in the letter dated 20 April. The payment of $520 would be deferred and provided the rent was paid on time, the deferred amount would be waived. If the Tenants did not pay the rent on time, then the condition for the deferment and waiver were not satisfied and the full amount of rent namely $1720.00 was due and payable.
I prefer the Landlord's evidence to that of the Tenants on this issue. I find there was an agreement to defer $520 of the rent and the Landlord would accept $1200 in lieu of $1720.00.
This had the effect of reducing the rent to $1200 per week for a short period. The Tribunal accepts that the agent often used the words "reduce the rent" or similar words in her dealings with the Tenants but the use of those words must be viewed against the background of the agreement to defer part of the rent. The agreement provided that if the rent paid the rent on time then any deferred amount would be waived. The Tenants did not pay their rent on time as evidenced by the entries on the ledger and accordingly did not satisfy the condition for the waiver. I find the full rent of $1720 was therefore due and owing for the period of the tenancy.
[4]
NOTICE OF APPEAL
In the Grounds of Appeal section of the Notice of Appeal Mr Lewis says that he was denied procedural fairness by the Tribunal in that:
The Tribunal Member's view that the tenant's email to the agent on 20 April 2020(stating "Okay, that's no problem") was in response to the email sent by the agent on the same day outlining the terms of the agreement was not put to the tenant. If the tenant had known that this was the Member's interpretation of the landlord's evidence then he could have explained that his email was in fact in response to an email sent by the agent days earlier, and pointed out that the email from the agent which he was supposedly replying to was not sent to him in any case.
A denial of procedural fairness is an error of law which leave to appeal is not required. However, in addition the tenants raise three other appeal grounds.
The first is that that the Decision was not fair and equitable. Here Mr Lewis says:
The decision was not fair and equitable as the Tribunal misinterpreted the tenant's email sent on 20 April 2020 as acknowledgement that the tenant was aware of, and accepted, that the agreement between the parties included a term that the rent would be deferred (instead of reduced) if the tenant did not pay rent on time. The tenant's email on 20 April 2020 was in response to an email sent by the agent requesting that the tenant fill out a financial hardship form. In addition, the email that the Tribunal believed the tenant was replying to was never actually sent to the tenant, but rather a co-tenant, further showing that the tenant's statement "Okay, that's no problem" was not in response to the agent's statement about the terms of their rent reduction agreement. As a result, the decision was not fair and equitable as the Tribunal erroneously came to the conclusion that the tenant was informed that the rent would be deferred only if the rent was not paid on time.
The second was that the Decision was against the weight of the evidence. Here Mr Lewis says:
The Tribunal should have given more weight to the fact that the tenant's email on 20 April 2020 was not in response to the email sent to the agent on the same day as the agent's email was never sent to the tenant (and therefore could not have been what he was replying to).
The Tribunal also should have given more weight to the tenant's statement that he never received the letter the agent stated was hand-delivered on 3 April 2020 and the fact that the agent communicating via letter was inconsistent with all previous methods of communication.
[5]
LANDLORD'S REPLY
In its reply the Landlord states:
On 20 April 2020 9:38am Tara Amigdalos emailed Alan Smyth (the principal tenant) confirming that rent is a deferral on the condition that the rent would be paid on time. Brad's response of "That's no problem" isn't relevant as it is not up to the tenants to determine will offer as it is at the Landlords discretion what rent they will agree to as a lease was signed at $1720.
And
Regarding the of (sic) Tribunal decision against the weight of evidence, the emails supplied clearly showed the Tribunal member which tenant they were addressed to. The email response on 20 April is not relevant as it is the Landlords decision on what they will offer and not up to the tenant to decide.
In any event, if the tenant did not agree to the email sent on 20/04/20, then no adjustment had been agreed to and no amendment to their lease would have been entered into.
The tenant has been unreliable in their statements throughout this process. The tenant also claimed hardship but failed to supply any evidence of such. They also failed to pay the rent on time even at the deferred rate. They had also advised that they had left the property clean and tidy after vacating however it was found to be filthy with rubbish left behind which was shown in the photos that were supplied as evidence.
[6]
SCOPE AND NATURE OF APPEAL-APPLICABLE PRINCIPLES
Section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act') sets out the basis upon which appeals from decisions of the Tribunal may be brought. That section states that an appeal may be made as of right on any question of law or with leave of the Appeal Panel on any other grounds (s 80(2) (b)).
[7]
Question of Law
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, without listing exhaustively possible questions of law, the Appeal Panel considered the requirements for establishing an error of law giving rise to an appeal as of right.
In Prendergast the Appeal Panel also stated at [12] that, in circumstances where an appellant is not legally represented, it is appropriate for the Tribunal to approach the issue by looking at the grounds of appeal generally, and to determine whether a question of law has in fact been raised (subject to any considerations of procedural fairness to the respondent that might arise).
A denial of procedural fairness is an error of law: Prendergast at [13] (4); Italiano v Carbone [2005] NSWCA 177; Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143 at [8]: NCAT Act, ss s 38(2), (5) and (6).
Applying an incorrect legal principle is also an error of law: Prendergast at [13] (3).
[8]
Leave to appeal
Clause 12 of Sch 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal, an Appeal Panel may grant leave to appeal only if satisfied that the appellant may have suffered a substantial miscarriage of justice because:
1. the decision of the Tribunal under appeal was not fair and equitable; or
2. the decision of the Tribunal under appeal was against the weight of evidence; or
3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel conducted a review of the relevant cases at [65]-[79] and concluded at 84 that:
Ordinarily it is appropriate to grant leave to appeal only in matters that involve:
(a) Issues of principle;
(b) questions of public importance or matters of administration or policy which might have general application; or
(c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;
(d) a factual error that was unreasonably arrived at and clearly mistaken; or
(e) the Tribunal having gone about the fact-finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
Even if an appellant establishes that it may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the Act. The appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32].
[9]
CONSIDERATION
Although the only error of law clearly referred to in submissions is a purported failure to provide procedural fairness, the grounds of appeal also raise for consideration the applicable legal principles when there is a dispute between a landlord and tenant as to whether there was an agreement to reduce rent unconditionally; or to reduce rent on the basis the full amount payable was merely deferred; or to reduce rent on the condition that the reduced amount must be paid on time and any failure to comply with the condition meant the full amount was due and payable.
During the 2020 COVID-19 pandemic, legislative changes to the RT Act and the Residential Tenancies Regulation 2019 (NSW) ('the RT Regulation') were introduced to deal with the impact of the pandemic on residential tenancies. Those legislative changes are summarised in Serious v Barlow; Barlow v Serious [2020] NSWCATCD 3 at [30]-[33].
There have been further legislative changes to repeal Part 13 of the RT Act from 26 March 2021 and introduce a 6 month "moratorium period" in respect of COVID-19 impacted tenants who accrued rent arrears during the period between 15 April 2020 and 26 March 2021; but is unnecessary for the purpose of this decision to set out that legislative regime.
Relevant to this appeal, the 2020 legislative changes to the RT Act and RT Regulations imposed restrictions on private landlords taking action to terminate a residential tenancy agreement with a COVID-19 impacted tenant; allowed a tenant who asserted that COVID-19 had financially impacted them to request the landlord participate in a formal rent negotiation process; provided a statutory definition of a COVID-19 impacted tenant; and allowed a COVID-19 impacted tenant to apply to NCAT for a termination of the tenancy.
However, the legislative changes did not empower the Tribunal to order a rent reduction due to the financial impact of the COVID-19 pandemic. Rather, the purpose of the legislative changes was for landlords and tenants to have negotiations in good faith (if the tenant was a COVID-19 impacted tenant) to attempt to agree to a rent reduction or a rent deferral. NSW Fair Trading provided a mediation service to landlords and tenants that could be engaged by the parties.
However, when it comes to the task of the Tribunal in determining whether or not there was an agreement between the landlord and tenant to reduce rent, the legislative changes do not alter the law of contract.
[10]
Application of Principles to This Appeal
Mr Lewis has not established any error of law in the finding of the Tribunal that rent had been reduced on the condition that the co-tenants pay the reduced amount on time, and the waiver of the full amount was also conditional upon the co-tenants paying the reduced amount on time. They were the terms of the variation of the residential tenancy agreement.
The correspondence between the parties provides sufficient evidence to make such a finding. It is clear from the reasons the Member was assessing the issue of the terms of any variation objectively, not upon the subjective beliefs of the parties.
In disputing the findings made, Mr Lewis raises two issues. The first is that he did not receive the letter of the landlord's agent dated 3 April 2020 that clearly set out the terms upon which the landlord agreed to reduce the rent. Under s 223 (1) (a) (iv) of the RT Act, the landlord was entitled to serve the correspondence by mail.
In any event, the Member clearly took into account the email correspondence between the parties over a period of time where the issue of a reduction of rent was discussed, and there is nothing to indicate the Member failed to consider all of the evidence or applied an incorrect legal test.
The second issue raised by Mr Lewis is that the Member fundamentally misunderstood the evidence because the email that the landlord's agent had sent dated 20 April 2020 regarding the conditional nature of the rent reduction was only sent to Mr Smyth, and Mr Lewis's email of 20 April 2020 that started "Okay, that's no problem" was not acknowledgement of receipt of the email, but was in reference to the agent's earlier email requesting provision of a COVID-19 "hardship form" and documentation.
We are not satisfied the Member fundamentally misconstrued the evidence sufficient to constitute an error of law. It was open on the evidence of the exchange of emails for the Member to conclude that Mr Lewis's email was an acknowledgement of that the landlord was agreeing to a rent reduction on a conditional basis.
In any event, when all of the correspondence between the parties was considered, irrespective of Mr Lewis's email of 20 April 2020, it was open to the Member to conclude that the variation was conditional and that the co-tenants had not complied with the condition that they must pay rent on time and at the full reduced amount or the full rent payable would not be waived.
[11]
Denial of Procedural Fairness
Mr Lewis raises as an error of law that the Member denied him procedural fairness because the Member did not raise with him during the hearing that the Member regarded Mr Lewis's email as an acknowledgement that the rent reduction was conditional and provide an opportunity to make submissions on that issue.
We are not satisfied there was any denial of procedural fairness.
Firstly, there was no sound recording or transcript of evidence provided, so we cannot ascertain whether or not the Member raised his interpretation of Mr Lewis's email of 20 April 2020 at the hearing.
Secondly, procedural fairness is not an abstract concept and involves practical injustice. As Basten JA stated in Italiano v Carbone [2005] NSWCA 177 at [88]:
An opportunity foregone, but reasonably available, does not demonstrate breach of procedural fairness. To demonstrate procedural fairness it is usually necessary to show that a claimant "lost an opportunity to put any information or argument to the decision-maker, or otherwise suffered any detriment", as explained by Gleeson CJ in Re Minister for Immigration, Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at [36]. As the Chief Justice continued at [37]:
"A common form of detriment suffered where a decision-maker has failed to take a procedural step is loss of an opportunity to make representations." at [37].
The "practical injustice" principle arising from the decision of Gleeson CJ in Re Minister for Immigration, Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at [37] was applied by the NSW Court of Appeal in Clarke v Hicksons Lawyers [2021] NSWCA 100 at [30].
A failure by a Tribunal during a hearing to refer to a piece of evidence and how they may, or may not, view the evidence and raise it with the parties is not a denial of procedural fairness in the circumstances of this matter. The Tribunal has a duty under s 38 (5) of the NCAT Act to (a) ensure parties understand the nature of the proceedings; (b) if requested to do so, explain any aspect of the procedure of the Tribunal or any decision or ruling made by the Tribunal that relates to the proceedings; and (c) ensure parties have a reasonable opportunity to be heard and have their submissions considered in the proceedings.
The Tribunal has the duty to give both parties a fair hearing, which may require the Tribunal to give some assistance to persons who are unrepresented and not legally trained in the circumstances of the particular case. However, such assistance must not be done in a manner that conflicts with the duty of the Tribunal to be an impartial adjudicator (Reisner v Bratt and Anor [2004] NSWCA 22 at [4]-[7]).
[12]
Leave to Appeal
We are not satisfied a substantial miscarriage of justice may have occurred the decision of the Tribunal under appeal was not fair and equitable; or the decision of the Tribunal under appeal was against the weight of evidence; or significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with) and that leave to appeal should be granted in accordance with the principles expressed in Collins v Urban.
Rather, the decision clearly sets out the evidence of the parties and explains in a cogent and efficient manner the findings of the Tribunal.
In respect of the fresh evidence sought to be relied upon, the email of Mr Lewis dated 17 April 2020 was evidence that was reasonably available to him prior to the hearing on 15 October 2020. In any event, we have considered his submission that Member overlooked or did not give sufficient weight to evidence of Mr Lewis that the rent reduction offered by the landlord and accepted by the co-tenants was unconditional.
The other documents sought to be relied upon as fresh evidence have no relevance to the issues for determination in the appeal.
As there was no stay order made that the appellant not pay the amount (or part of the amount) ordered by the Tribunal in is orders of 16 October 2020 (the orders and reasons being published the day after the hearing) it is unnecessary to make any orders lifting a stay. Accordingly, the amount of $10,189.66 is payable to the respondent landlord pursuant to the order of the Tribunal dated 16 October 2020.
[13]
ORDERS
1. Leave to appeal is refused.
2. The appeal is dismissed.
[14]
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: 24 June 2021
Parties
Applicant/Plaintiff:
Lewis and Smyth
Respondent/Defendant:
Rejko Pty Ltd
Legislation Cited (7)
Civil and Administrative Tribunal Regulations 2013(NSW)
On 6 April 2020 Mr Lewis sent an email to the landlord's agent. The email stated that the co-tenants were advertising rooms for $150 per person per room with no bond, and "hopefully we can fill the beds before the end of the week". The email went on to note the co-tenants were now "12 days in arrears" and stated:
"…
The only reasonable option…is to pay $150 per tenant living in the property (currently 5). When the house is full we will be able to pay the full $1,200 rent price".
On 6 April 2020, the agent of the landlord responded to Mr Lewis's email. The email relevantly stated:
"I recommend paying what you can afford and once the new people move in use their bond to pay off the owing funds. I have reduced the rent to $1,200 from 26/03 therefore you are owing $2,400 which will pay you up to 09/04.
You need to pay for the previous 2 weeks, we have not received anything. I understand you say you're not going to get a complete bond form (sic) the new people moving in which is fine but you need to pay off the owing funds for the empty beds therefore I recommend asking for a 1 or 2 week bond so you can use these funds to pay off the empty beds and the bond board are holding the original bond.
Please ensure a min of $1,200 is paid today.
If you cannot keep under the 14 days of arrears we would need to issue you with a termination notice for non-payment of rent.
…"
On 8 April 2020 Mr Lewis emailed the agent (carbon copied to Mr Smyth) stating that the co-tenants had been unsuccessful in advertising for new occupants.
On 9 April 2020, the agent of the landlord emailed the co-tenants a Notice of Termination due to non-payment of rent. The covering email stated the co-tenants must pay outstanding rent immediately or the landlord would file proceedings in NCAT.
On 17 April 2020 Mr Lewis emailed the landlord's agent (carbon copied to Mr Smyth) stating the landlord could not take action to evict the co-tenants during the 60-day moratorium period under the Residential Tenancies Amendment (COVID-19) Regulation 2020. The email stated the co-tenants would pay "as much as we can possibly afford" and "we will continue to pay for new tenants (sic) to help pay the full asking price".
The landlord's agent responded to the email of the co-tenants dated 17 April 2020 by sending an email stating that the co-tenants needed to provide documentation that the household was financially impacted by COVID-19 and that the landlord required the documents "before your termination notice takes place". The email stated that if the co-tenants could not demonstrate the household income was affected by more than 25% "the termination notice is effective".
On 20 April 2020, the landlord's agent sent an email addressed to Mr Smyth. The email was not carbon copied to Mr Lewis. The email, however, commenced "Dear Brad and Alan". The email relevantly stated as follows:
"To clarify, you signed a new lease commencing on 12 March 2020 at $1,720 per week.
The rent was subsequently adjusted on a deferred basis on the condition that the rent would be paid on time.
If your rent would be paid on time the rent deferred would not be owed by you.
As you have not paid your rent on time we are now requesting that he full amount be paid by you as a matter of urgency.
As you are aware, the termination notice given to you requires that you move out on 24 April.
…
Please let me know as a matter of urgency if you are planning to pay the full rent or if you will act on the termination notice".
On 20 April 2020 Mr Lewis sent an email to the landlord's agent (carbon copied to Mr Smyth) as follows:
"Hi Tara,
Okay, that's no problem. We will complete the financial hardship form as soon as we can, it looks like this needs to be printed out and signed before sending it back?
Is the office still open? I was wondering if we can come into the office so we can print the pages and have a quick chat?"
At the Appeal Panel hearing, Mr Lewis asserted that he did not receive the landlord's agent's email of 20 April 2020 and that his email of 20 April 2020 was replying to the landlord's agent's email of 17 April 2020 (i.e. the request that the co-tenant's provide a "financial hardship form" and documents to verify the household had a loss of income of 25% in the COVID-19 period.
There was a further email exchange on 20 and 21 April 2020 between the co-tenants about the co-tenant's providing documentation to establish loss of income.
Importantly, on 21 April 2020 Mr Lewis sent an email to the landlord's agent (carbon copied to Mr Smyth) as follows:
"…
We will attach evidence proving we have significantly reduced income. The bottom part 'Financial Request' is asking for proposed reduced rent. As previously discussed, we would like it to be reduced to $750 pw per person but we know you won't accept that figure.
…"
On 23 April 2020, Mr Lewis sent an email to the landlord's agent (carbon copied to Mr Smyth) stating as follows:
"As discussed, I would like to confirm we will leave the property on the day the lease ends on June 17. In the meantime we will continue to pay as much as we can possibly afford.
Thanks
Brad and Alan"
On 24 April 2020, the landlord commenced proceedings in the Tribunal seeking order for termination of the tenancy due to non-payment of rent; and payment of rent arrears. That application was listed for a Group List and Conciliation hearing. Neither co-tenant appeared at the hearing, and the Tribunal made ex-parte orders terminating the tenancy and ordering payment of rent arrears.
Mr Lewis then filed a set aside application under Clause 9 (1) of the Civil and Administrative Tribunal Regulation 2013 (NSW). The Tribunal set aside the money order regarding rent arrears as there was a dispute as to how much was owed by the co-tenants. The Tribunal refused to set aside the termination order because the co-tenants had moved out of the property and the tenancy had ended in any event.
The Tribunal granted the landlord leave to amend its application to additionally claim compensation for cleaning and repairs to the premises (relevantly invoking provisions under ss 51 (3); 187 and 190 of the RT Act).
Mr Lewis then filed proceedings in the Tribunal seeking payment of the rental bond under s 175 of the RT Act. By this stage, Mr Smyth was not actively involved in the proceedings.
Both the landlord's application and the application of Mr Lewis (with both Mr Lewis and Mr Smyth being parties to the landlord's application) were listed at a final hearing before the Tribunal on 15 October 2020.
The third submission and that there is significant new evidence now available that was not recently available at the time of the hearing. Here the Mr Lewis states:
The tenant has attached evidence showing an Email sent from the agent to the tenant on 17/4/2020 requesting to fill out the financial hardship form. Evidence includes the Email from the tenant replying to the agents Email "okay that's no problem".
Pages 2-5: Images (from 21st October 2020) showing furniture in the garden. During the hearing the agent claimed these items had been removed from the property after the tenants vacated in June 2020. The images show the wooden table, BBQ and small fridge still in the property.
The agent claimed the dismantling and removing of these items resulted in the invoice from TIRO Projects.
The tenant received an invoice for $1,500 from TIRO Projects 'Dismantle all furniture & remove rubbish for unit and leave neatly on curb for rubbish collection'.
Page 6: An image showing the large Samsung fridge in the tenants' new home. During the hearing, the agent claimed this was also removed which resulted in the $1,500 invoice from Tiro Projects
When asked why this evidence was not available at the time of the hearing, Mr Lewis states:
The images are now available after the tenant visited the property on 21/10/2020 to conduct a house viewing/inspection. The evidence also includes the Facebook advert for property inspection.
A residential tenancy agreement is a contract. In the circumstances of this matter, it was a written contract for a fixed term of 3 months with rent of $1,720 per week commencing on 12 March 2020.
In the context of a dispute about what rent is payable in the context of discussions between the parties as to whether the terms of the written agreement have been changed, the Tribunal must ascertain whether there has been a variation of the contract.
The landlord, as the party claiming rent is owed, bears the onus of proving on the balance of probabilities the amount claimed. This is usually done by providing evidence of the terms of the residential tenancy agreement and a rent ledger that shows the payments made and the arrears to the date that the tenancy ended. However, if the tenant provides evidence that disputes the amount identified in the rent ledger (such as evidence of the tenant in oral and or written form that the landlord had agreed to a rent reduction for a period of time), the Tribunal must engage with the relevant legal principles to determine whether or not the contract had been varied by the parties.
It is well established that in determining the rights and liabilities of parties to a contract the test is objective, in the sense of what the words or conduct of each party would have led a reasonable person in the position of the other party to believe and what a reasonable person would have understood: Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [40]. A party may subjectively believe the contract has been varied, but that is not the applicable legal test.
Parties to an existing contract may vary some of its terms by agreement (Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93). Variation of an existing contract creates a new contract, which either the parties intend to replace the original contract or leave the first contract in force subject to the second contract's alteration (Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Car (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520). The varied contract is subject to the ordinary rules of contract formation (BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 286; Tekmat Pty Ltd v Dosto Pty Ltd (1990) 102 FLR 240 at 248).
Thus, to determine whether or not the residential tenancy agreement has been varied, the Tribunal must consider objectively:
1. Whether the parties have mutually agreed to vary the terms of the contract in respect of the amount and manner rent is payable.
2. Whether any agreement is sufficiently certain to bind the parties.
3. Whether there is an intention to create legal relations; and
4. Whether there is consideration for the variation.
Negotiations between private landlords and tenants during the COVID-19 pandemic period will often fall within 3 potential categories.
The first category is where there is an agreement to vary the residential tenancy agreement to unconditionally reduce the rent payable for period of time. For example, the parties may agree that the tenant is only liable to pay half of the rent for a 3-month period, and the landlord waives the other half of the rent.
The second category is where there is an agreement to vary the residential tenancy agreement by the deferral of rent for a period of time. For example, the parties may agree that the tenant is only obliged to pay half the rent for a 3-month period, but after that period expires the tenant must pay the full amount of rent in addition to the half of the rent that was deferred for the 3-month period.
The third category is where there is an agreement to vary the residential tenancy agreement by the conditional reduction of rent. For example, the parties may agree that the tenant is to pay half the rent for a 3-month period, but on the condition that rent is paid on time and at the amount agreed. If such a condition is not met, the whole of the rent (and all rent arrears calculated at the full amount of rent) is immediately due and payable.
The above categories are only raised by way of example. It will depend on the particular facts and circumstances of the case as to whether or not there has been an agreement to vary the residential tenancy agreement, and if so, the terms of the variation.
In respect of contractual principles pertaining to variation, intention to create legal relations and consideration for the variation are unlikely to be controversial. A landlord and tenant reaching an agreement to vary the obligation of the tenant to pay rent at a certain amount in the context of the COVID-19 pandemic and the legislative changes to the RT Act and RT Regulations will likely have an intention to create legal relations by way of the variation.
The issue of consideration also may not be controversial. During the COVID-19 pandemic, both landlords and tenants were under financial pressure due to lockdowns and contraction of the economy. The changes to the RT Act and RT Regulations imposed by the COVID-19 Regulation restricted the rights of landlords to seek termination for COVID-19 impacted tenants, but also imposed upon tenants the obligation of demonstrating to the landlord that they were COVID-19 impacted. COVID-19 impacted tenants also were given the right to make an application to NCAT to terminate the tenancy. Landlords and tenants were encouraged to negotiate. There was, however, no prescribed rent reduction.
In such a context, it was clearly in the interests of both landlords and tenants to attempt to negotiate a mutually agreed rent reduction or deferral. There is a clear tangible benefit or advantage to both parties, because of the risk to both parties that the tenancy may be terminated by the tenant if an agreement to vary the rent payable under the residential tenancy agreement was not reached; leading the tenant to have to find new residential premises and the landlord being put to the time and expense of attempting to find a new tenant (Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723; Director of Public Prosecutions for Victoria v Le [2007] HCA 52; (2007) 232 CLR 562 at [43]; Hill v Forteng Pty Ltd [2019] FCAFC 105 at [11]-[44]; Rudge v The Crown in the right of the State of NSW; Wynn v The Crown in the right of the State of NSW [2020] NSWSC 1422 at [89]-[93] ('Rudge')).
However, if the Tribunal is not satisfied there was consideration for the purported variation of the contract, the issue of whether rent was unconditionally reduced or merely deferred can be approached on the basis of principles of promissory estoppel (i.e. the tenant arguing that the landlord is estopped from enforcing its strict legal right to payment or rent arrears at the amount set out in the original residential tenancy agreement).
In the context of a dispute about whether rent has been unconditionally reduced or merely deferred promissory estoppel principles are identified and discussed in Feyzbahsipour v Lee [2021] NSWCATAP 173 at [14]-[18]. Such principles are also discussed in detail (in the context of a contract of employment) in Rudge at [109]-[122].
Consequently, in the context of variation of the contract, the key issues for determination are likely to involve whether, assessed objectively, there was a mutual agreement to vary the residential tenancy agreement (and, if so, the terms of the variation) and whether the terms of the variation are sufficiently certain.
In setting out the above principles as to whether or not the terms of a residential tenancy agreement have been varied in respect of the amount and manner that rent is paid during the COVID-19 period, we do not seek to suggest that Members of the Tribunal must engage in a complex enquiry involving extensive reasons to determine the issue of whether the terms of the residential tenancy agreement have been varied (or, adopting the alternative approach, whether the landlord is estopped from claiming payment of the entire rent arrears under the terms of the residential tenancy agreement).
Rather, the critical issue will be the evidence (both oral and in writing) as to whether there was an agreement to unconditionally reduce the rent; or reduce it on certain conditions; or merely defer part of the amount payable; or there was no agreement at all.
We are cognisant that (as was the case in this matter) Members at first instance are often given limited time to hear and determine disputes due to the volume of litigation in the Consumer and Commercial Division of the Tribunal (particularly in residential tenancy disputes). The Tribunal has to focus on the real issues in dispute (s 36 (3) of the NCAT Act); and allocate time and resources in a manner proportionate to the importance and complexity of the proceedings (s 36 (4) of the NCAT Act). Further, in this matter the Member at first instance had to determine other issues in dispute in addition to the issue of the rent arrears payable.
In NSW Land and Housing Corporation v Orr [2019] NSWCA 231 at [66]-[77] the NSW Court of Appeal referred to important principles (including the "sheer volume of litigation") that determine whether reasons given by the Tribunal are sufficient to reach an acceptable minimum standard. It is unnecessary for us to repeat such principles in circumstances where the grounds of appeal in this matter do not raise the issue of adequacy of reasons.
We note that in Wallbank v Angelos [2021] NSWCATAP 128 ('Wallbank') the Appeal Panel of the Tribunal dealt with an appeal involving whether or not there had been a variation to a residential tenancy agreement in respect of rent being "waived" or "deferred". However, that decision did not deal with the principles applicable to variation of a contract in any detail; and was a decision that turned on a finding by the Appeal Panel that there had been a mischaracterisation of the evidence upon which a critical factual finding had been made.
In our view, the decision in Wallbank involves the particular facts of that case and there is no inconsistency in the principles expressed in this decision with the decision in Wallbank.
Further, because Mr Lewis and Mr Smyth were co-tenants, it was open to the landlord's agent to address the email of 20 April 2020 to Mr Smyth only. There was no legal obligation on the landlord's agent to send every email to both co-tenants.
In circumstances where it was clearly in dispute whether rent had been unconditionally reduced or conditionally reduced, and both parties had the opportunity to give evidence and make submissions on that issue, we do not regard it as a denial of procedural fairness for the Member not to have raised during the hearing (on the assumption he did not do so, but without a sound recording or transcript to verify what occurred) that the Member may have considered the email of Mr Lewis in a particular light. To impose such an obligation would go beyond the duty of the Tribunal to give a fair hearing to both parties.