Liu v Victory Lease Pty Ltd

The money order sought

1. Ms Liu seeks the sum of $ 8,239.55 being the difference between the amount of the claim and monies received from the insurer and the tenants' bond, and includes a claim for travel costs, legal research and consulting expenses of around $ 2,700.

Appearances

1. The applicant, Ms Liu, appeared in person.
2. Mr Li appeared for the respondent, Victory Lease Pty Ltd.
3. Each representative gave evidence after taking an oath or affirmation.

The cause of action

1. In Sacks v Hammoud [2016] NSW CATAP 225 (11 October 2016) the Appeal Panel considered some necessary elements that give rise to a right of action, given that the consumer legislation does not expressly specify or create causes of action that may underpin a consumer claim. Consumer claims may be brought in reliance upon common law causes of action such as negligence or breach of contract or on statutory causes of action on the basis of misleading and deceptive conduct or a failure to comply with a statutory guarantee in part 3 - 2 of the ACL NSW.
2. Ms Liu relies upon the respondent's failure to comply with a term of the agency agreement alleging a breach of contract. In the alternative, Ms Liu alleges that the respondent has breached a statutory guarantee pursuant to section 60, Australian Consumer Law ("ACL") to found an action against Victory Lease Pty Ltd and seeks damages for the breach.

Jurisdiction

1. On the establishment date, 1 January 2014, the Civil and Administrative Legislation (Repeal and Amendment) Act 2013 amended certain statutes which previously conferred jurisdiction on now "abolished" tribunals.
2. From 1 January 2014, FTA, was amended. The definition of "Tribunal" was changed in that Act from the CTTT to NCAT - see cl 4.34 item [2] in Schedule 4 to the Civil and Administrative Legislation (Repeal and Amendment) Act.
3. Section 79 D Fair Trading Act 1987 (FTA) provides that a consumer means any person to which a supplier has supplied goods or services whether under a contract or not.
4. Section 79E FTA provides that a consumer claim includes a claim by a consumer for the payment of a specified amount of money that arises from the supply of goods or services by a supplier to the consumer.
5. The limitation period for the making of the claim is 3 years from the date the cause of action arises.
6. The Tribunal is satisfied that the applicant is a consumer to which a supplier has supplied goods or services whether under a contract or not pursuant to Section 79D Fair Trading Act 1987 ["FTA"].
7. Further, the Tribunal is satisfied this is a claim for the payment of a specified amount of money that arises from the supply of goods or services by a supplier to the consumer Section 79E ["FTA"].
8. The Tribunal is satisfied that NCAT has jurisdiction to hear the application

The relevant sections of the ACL that the applicant relies upon to found an alternative basis for the action against the respondent

1. Pursuant to section 28 Fair Trading Act, ["the Act"] the Australian Consumer Law applies as a law of New South Wales ["ACL"]. It may be applied in determining a consumer claim made pursuant to Part 6A of the Act.
2. The ACL provides a number of guarantees where there is a supply of goods and services whether by contract or otherwise. If there is a breach of a statutory guarantee, certain remedies are available to the consumer.
3. In the alternative, Ms Liu relies upon a statutory cause of action set out at section 60, ACL, alleging that Victory failed to comply with a guarantee in relation to the supply of its services with due care and skill under its management agency agreement. For ease of reference, the Tribunal sets out the section below: If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill.
4. If the applicant is successful in that claim, Section 267 of the ACL NSW applies: For ease of reference, the Tribunal sets out the section below: (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and (b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3-2 is not complied with; and (c) unless the guarantee is the guarantee under section 60--the failure to comply with the guarantee did not occur only because of: (i) an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or (ii) a cause independent of human control that occurred after the services were supplied. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time--the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) terminate the contract for the supply of the services. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) terminate the contract for the supply of the services; or

(b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

(5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).

Property and Stock Agents Regulations 2022 - alleged breaches of regulations ("the regulations")

1. The Tribunal understood that Ms Liu relied upon a number of references to alleged breaches under the regulations, more particularly those set out at Division 2 and its attendant schedules as they may apply to a leasing agency, to "collectively" found her action under section 60, ACL: that Victory was in breach of the statutory guarantee for the respondent's management services to be supplied with due care and skill.
2. The Tribunal notes that the commencement date of the regulations, 1 September 2022, occurred after the date of the alleged breaches.

The savings provisions

1. Property and Stock Agents Regulations 2022 - regulation 64 provides, inter alia, that An act, matter or thing that, immediately before the repeal of the Property and Stock Agents Regulation 2014 , had effect under that Regulation continues to have effect under this Regulation.

The nature of the breaches

1. The headings under which Ms Liu relies to found the alleged breaches under the regulations are set out as general rules of conduct as they relate to the terms applying to all agency agreements, including reimbursement of monies to the licensee unless specifically itemised in the agreement; schedule 9; the extent of the agent's authority; and service or delivery of the agency agreement.
2. The Tribunal sets out the relevant regulation as follows: Property and Stock Agents Regulations 2014 - Regulation 7 Rules of conduct (1) The rules set out in Schedules 1-3 and 6 are prescribed for the section 37 of the Act as rules of conduct to be observed in the course of the carrying on of business or the exercise of functions under a licence or certificate of registration, with those Schedules applying as follows-- (a) Schedule 1 applies to all agents and assistant agents (in addition to any other Schedule or Schedules that may be applicable to the particular agent or assistant agent), (b) Part 1 of Schedule 2 applies to real estate agents and assistant real estate agents who perform real estate sales or leasing functions in relation to the sale or purchase of land or business agent functions, (c) Part 2 of Schedule 2 applies to real estate agents and assistant real estate agents who perform real estate sale or leasing functions in relation to the lease of land or on-site residential property manager functions, (d) Schedule 3 applies to stock and station agents and assistant stock and station agents, (e) Schedule 6 applies to strata managing agents and assistant strata managing agents. (2) A reference to an "agent" in Schedules 1-3 or 6 includes a reference to a assistant agent to whom the Schedule applies. (3) A reference to a "business" in Schedule 1 includes a reference to a professional practice.

Comment

1. Section 36, Property and Stock Agents Act, 2002, ("PSAA") provides for a review of commission and fees before the Tribunal. Otherwise, the legislation does not expressly specify or create causes of action that may underpin a consumer claim, other than to say a claim under that section (not relevant for determining this application) does not limit a claim under Part 6A FTA. Section 36 (7) provides that: This section does not limit Part 6A of the Fair Trading Act 1987

By way of background

1. Ms Liu gave evidence that she had originally purchased land at Wildflower Street Schofields in around 2014, and settled the purchase in around 2015. Ms Liu then built a residential property on that land in around 2016-2017. The property was leased through the agency, Victory, from around 19 January 2017.

The terms of the agency agreement

1. The management agency agreement was in a standardised format available through the Real Estate Institute New South Wales ("REINSW"). One of the terms of the agency agreement provided that the agency was to pay insurance premiums on the property as and when they fell due.
2. The respondent, Victory, relied upon the terms of the agency agreement, more particularly, the following provision at clause 18, setting out the agent's obligations under the heading Disbursements from the Principal's monies. For ease of reference, the tribunal recites the relevant provision at clause 18, as follows: The agent is authorised and instructed to pay the following monies received on behalf of the Principal.
3. Conveniently, the disbursements listed provided a box crossing exercise; the response being either Yes or No. At clause 18, sub-clause iv, the reference to Insurance Premiums (see attached schedule) was marked Yes and referred the parties to the attendant schedule that contained no further particulars on the date that the parties executed the agreement in January 2017.
4. Ms Liu's evidence was that before the due date for payment of the insurance premium, in around 31 March 2022, she had a conversation with Virginia at the agency (as the Tribunal understood) to the effect that the premium would be paid. As the Tribunal understands, the conversation between Ms Liu and Virginia occurred around 22 February 2022. The "usual" practice was that the agency paid the insurance premium in prior years as the policy fell due for renewal. The Tribunal comments that perhaps Virginia may not have been fully aware of the parlous state of the tenants' ledger in mid-February 2022.
5. An e-mail addressed to Ms Liu from Amanda Xiao, Admin & Accounts Assistant, Victory, dated 22 February 2022 attached the IP Landlord's Insurance Invoice and stated that: Due to you may need to claim the lost [sic] after tribunal order. We will arrange IP renewal payment for you soon.
6. In or around this time, later in February 2022, the agency advised Ms Liu that the current tenants had fallen into arrears. Ms Liu gave evidence that the agent was "chasing up" the tenants for payment of those arrears.

The monthly ownership statements

1. The December 2021 - January 2022 monthly statement that Ms Liu received from the agency showed no rent was received for the period from 14 January 2022 to end of month, 28 January 2022.
2. The subsequent ownership statement for the period 28/01/2022 - 28/02/2022 showed no rental receipts for the period after 14 January 2022. The statement also referenced "outstanding information" and included a reference to an insurance premium for an amount of $ 427.05 that was payable to Property Plus Insurance for the period 31/03/2022 - 31/03/2023.
3. Ms Liu's evidence was that she did not pay any outstanding amounts set out in the statement but was relying on the agent "chasing up" the arrears. The Tribunal interposes the evidence from Mr Li, the respondent's agent, that he made no attempt to follow up the landlord for payment of the "outstanding" amounts referenced in the statement.
4. A subsequent Ownership Statement that Victory issued for the period 28/02/2022 - 30/03/2022 referred to further "outstanding" amounts that included the third instalment of $ 400.00 for council rates for the 2021/2022 period, as well as the "insurance premium" of $ 427.05.

The arrears - the Tribunal hearing

1. By 28 January 2022, the tenants' arrears had escalated to $ 1,190.00 and Victory issued a notice of termination alleging that the tenants were no less than 14 days in arrears as at the date of service of the notice on 28 January 2022. The notice further required the tenants to yield up the premises on 25 February 2022.
2. The arrears remained unpaid and the matter was listed before NCAT on 9 March 2022 in RT22/06450. The Tribunal made orders for termination of the residential tenancy and for yielding up possession of the premises on 19 March 2022, if the tenants failed to pay the rental arrears for the period 15 January 2022 to 9 March 2022 in the amount of $ 4,242.86.

Order for occupation fee

1. The Tribunal made a further order for the payment of the occupation fee of $78.57 per day after 20 March 2022.

The respondent's position

1. In reliance upon the terms of the management agency agreement, Mr Li, on behalf of Victory, relied upon the terms of the agreement, the position was that the payment of the premium was to be funded out of the rental receipts rather than the beneficence of the agency [in the absence of any monies held in the tenants' ledger account] pursuant to clause 18 iv of the Management Agency Agreement dated 19 January 2017.

No loss suffered in the absence of renewal of insurance premium

1. Mr Li further submitted that, in any event, although the current premium was not paid until June 2022, the applicant suffered no loss. The previous insurance policy available for the relevant period up until 31 March 2022, satisfied a greater part of the alleged loss after the respondent agent took steps to lodge a claim with the insurer reliant upon the terms of the previous policy for the 2021-2022 period.

The loss of rent claim limited under the terms of the policy

1. The respondent's position was that the loss of rent claim under the terms of the existing [and any renewed policy] was limited to 10 weeks arrears for loss arising out of any single claim. This was contrary to Ms Liu's position that if the policy was renewed, it would enliven her entitlement to a "further" period of loss of "default of rent" of 10 weeks.
2. The Tribunal does not accept Ms Liu's interpretation of her entitlement to claim a further 10 week's loss for arrears if the premium was renewed. By reference to the terms of the Landlord's Insurance Policy Certificate issued on 6 April 2021 for the period commencing on 31 March 2021 and expiring on 31 March 2022, the rent default was limited to 10 weeks.
3. The insurer paid a total of $ 5,799.50 for loss of rent up to 31 March 2022.

Other claims satisfied under the terms of the Landlord's policy

1. The insurer paid an amount of $ 497.10 for the "no vacant possession" claim. The basis of that claim was in contradistinction to the loss of rental claim. The insurer also paid the Sheriff's fee of $ 367.00.
2. Mr Li's evidence was that the insurer denied a claim for the wall repair and painting on the grounds that it was not covered by the terms of the landlord's policy. The scope of the landlord's policy was limited to damage to carpets, blinds and floating floor boards. The insurer submitted that the nature of the claim was only available under the terms of a building insurance policy rather than the terms of the landlord's policy. The insurer suggested that Ms Liu make a claim on her building policy instead.
3. Ms Liu readily conceded that she held no policy of building insurance for the residential premises other than as defined under the terms of the landlord's policy of insurance.
4. In any event, Mr Li submitted that the new tenant was not mindful of any difference in the colour of the wall the subject of the claim that the insurer declined to satisfy.

Expenses paid from the bond

1. Mr Li relied on a schedule of expenses paid from the bond that included the following amounts: 1. Water usage charges - $ 240.25 2. Cleaning - $ 770 3. Garbage removal - $ 990 4. Carpet Cleaning - $ 330 5. Mowing - $ 330

The occupation fee

1. The Tribunal raised an issue with Mr Li acting for the agency. The terms of the original Tribunal orders made on 9 March 2022 enlivened a relist of those proceedings to crystalise any additional amounts owing to which the landlord was entitled.
2. Mr Li's evidence was that the former tenants had filed for bankruptcy and there was no utility in venturing down that pathway.
3. Accordingly, Mr Li's submission was that Victory had not breached a provision under the management agency agreement. Mr Li submitted that in reliance upon clause 18 iv, no funds were held to satisfy payment of the premium when it fell due on 31 March 2022. The respondent further submitted that Ms Li was aware that no funds were held to oblige Victory to pay the premium.
4. Ms Liu's evidence was that she relied upon Victory's advice that it was chasing up the tenants for the arrears. Given the amount of the arrears owed from 14 January 2022, it may have been prudent for the applicant to pay the outstanding premium in the amount of which she was aware as the date for payment drew near. The premium payable was $427.05.
5. Victory's case is that even if the premium was paid, the terms and conditions of the Landlord's policy limited the amounts for which the applicant was entitled to claim. Victory's case is that even if the landlord's policy of insurance was renewed, the nett effect of the amounts received under the policy and the bond claim would not express itself as a loss.
6. Ms Liu submitted in evidence the terms of a document that recorded a discussion about Victory satisfying any "additional" amount of $ 3,481.70. However, it appeared that a term of that arrangement was that Victory would continue managing the property, as the Tribunal understood, for the next two years.
7. Ms Liu was disinclined to accept that proposal given the allegation that Victory had poorly managed the property for the last two years prior to the current tenant falling into arrears.

The tenancy

1. Victory, on behalf of its principal, Ms Ziyan Liu, had entered into a residential tenancy agreement with tenants named as Brendon Pak and Alexander Mi-Ru Park for a period of 60 weeks commencing on 8/12/2019 and ending on 06/02/2021. The weekly rent was $ 550 per week increasing to $ 580 per week at the date the tenants fell into arrears.
2. The property was described as an unfurnished property with 4 bedrooms and 2 bathrooms and 1 car space.
3. From a review of the historical ledger accounts, the rent was paid in a timely manner for the duration of the tenancy up until 14 January 2022 when the tenants fell into arrears. Neither party proffered any reason why the tenants had become delinquent in the payment of the rent to entitle the landlord to serve a notice of termination founded upon a breach for non-payment of rent.

The claim in the alternative

1. The Tribunal understood that Ms Liu relied upon a number of references to alleged breaches under the regulations, more particularly those set out at Division 2 and its attendant schedules as they may apply to a leasing agency, to "collectively" found her action under section 60, ACL. Ms Liu submitted that Victory was in breach of the statutory guarantee for the respondent's management services to be supplied with due care and skill.

Causation

1. In Szeto v The Owners - Strata Plan No 1418 [2023] NSWCATAP 105 (12 April 2023) the Appeal Panel referenced the member's comments regarding whether the alleged loss had resulted from a contravention by the Body Corporate of the relevant section of the Act that the appellants relied upon to found its claim for damages.
2. Similarly, for Ms Liu to succeed in her claim founded upon an alleged breach of section 60, ACL, Ms Liu must establish a causal connection between the "collective" breaches of the regulations that underpin her claim for breach of statutory guarantee and any loss that entitles her to recover damages
3. The learned member at first instance, cited the following authorities in relation to the matter of causation: Causation is a question of fact on which the applicants bear the legal burden of proof and it is not an insubstantial burden: Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 at [93] para 4; and see also Castle Constructions Pty Ltd v Fekala Pty Ltd (2006) 65 NSWLR 648; [2006] NSWCA 133 at [24]. 75 Causation is a question of fact to be answered by common sense and experience: March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 per Mason CJ at [17]. 76 The authorities dealing with causation recognise that there may be a class of case where notwithstanding the legal burden of proving causation, the evidential burden can shift to the respondent or defendant.
4. The Tribunal has reviewed the historical rental receipts during the course of the tenancy up to 14 January 2022. In the absence of any other persuasive evidence, the Tribunal is not satisfied that the alleged "collective" breaches of the regulations that Ms Liu relies upon to underpin her claim pursuant to section 60, ACL, are causally related to the alleged damage or loss suffered, purportedly as a result of Victory's supply of services under the agency agreement.

The parol evidence rule and its application to the terms of the management agency agreement

1. In Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 (11 May 1982) Mason J stated; The broad purpose of the parol evidence rule is to exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, vary or contradict the language of a written instrument (Goss v. Lord Nugent (1833) 5 B & Ad 58, at pp 64-65 (110 ER 713, at p 716) Although the traditional expositions of the rule did not in terms deny resort to extrinsic evidence for the purpose of interpreting the written instrument, it has often been regarded as prohibiting the use of extrinsic evidence for this purpose. No doubt this was due to the theory which came to prevail in English legal thinking in the first half of this century that the words of a contract are ordinarily to be given their plain and ordinary meaning. Recourse to extrinsic evidence is then superfluous. At best it confirms what has been definitely established by other means; at worst it tends ineffectively to modify what has been so established. (at p348)
2. The Court further opined and cited Lord Wilberforce in L. Schuler A.G. v. Wickman Machine Tool Sales Ltd [1973] UKHL 2 (1974) AC 235, at p 261 was able to state the broad thrust of the rule in this way: "The general rule is that extrinsic evidence is not admissible for the construction of a written contract; the parties' intentions must be ascertained, on legal principles of construction, from the words they have used. It is one and the same principle which excludes evidence of statements, or actions, during negotiations, at the time of the contract, or subsequent to the contract, any of which to the lay mind might at first sight seem to be proper to receive." His Lordship noted that evidence of surrounding circumstances is an exception to the rule, but he had no occasion to discuss its scope for there it was not, as it is here, a critical question. (at p348)

Findings

1. For the purpose of interpreting the written instrument, the managing agency agreement, the words of the written contract are to be given their plain and ordinary meaning, more particularly, clause 18 iv obliges Victory to pay certain nominated expenses, including any insurance premium, from the Principal's monies: The agent is authorised and instructed to pay the following monies received on behalf of the Principal.
2. The Tribunal finds that Victory was not in breach of its obligations under the terms of the written agency agreement. The payment of the insurance premium was to be funded from monies received on behalf of the Principal, the rental receipts, rather than from the beneficence of the agency.
3. The Tribunal further finds that the previous insurance policy available for the relevant period up until 31 March 2022, satisfied a greater part of the alleged loss after the respondent agent took steps to lodge a claim with the insurer reliant upon the terms of the previous policy for the 2021-2022 period.
4. The Tribunal finds that Ms Liu's entitlement to recovery under the terms and conditions of the Landlord's policy would not be at variance with the claim, as made, if the policy was renewed when it fell due on 31 March 2022.
5. As to the alternative claim, the Tribunal was not persuaded to entertain Ms Liu's claim for relief under section 267, ACL, for any alleged breach of section 60, ACL. The "collective" breaches of conduct founded under the regulations and its attendant schedules were not causally related to any alleged loss that Ms Liu suffered in Victory's performance of the agency agreement.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 January 2024