Luo v Campbell

Background

1. The following facts are uncontroversial. The parties entered into a written residential tenancy agreement in 2013 for premises in Hurstville Road, Oatley. After the expiration of the 12 months' fixed term the residential tenancy agreement continued as a periodic agreement. On 1 July 2021, the tenant vacated the premises, thereby terminating the residential tenancy agreement.

The tenant's application - RT 21/26840

1. The tenant filed application RT 21/26840 on 21 June 2021 seeking an order regarding the payment of the rental bond under s 175 of the Residential Tenancies Act 2010 (NSW) (the Act).

The landlords' application - RT 21/27849

1. The landlords filed application RT 21/27849 on 28 June 2021 seeking an order for compensation for $4,500 under s 187 of the Act, and an order under s 175 regarding the payment of a rental bond. The landlords alleged that the tenant was liable to pay the compensation for "malicious damage" and cleaning costs. The landlords also sought payment of outstanding water bills.

The decision below

1. Both applications were listed for hearing on 1 November 2021. The Tribunal delivered oral reasons for decision on the day of the hearing and a transcript has been provided by the tenant to the Appeal Panel.
2. In the landlords' application RT 21/26840, the Tribunal ordered that the bond be released to the tenant and stated that: …monies found to be payable by the tenant to the landlord [sic - landlords] have already been taken into account in the related matter RT 21/26840 between the same parties. Detailed oral reasons have been provided to the parties at the hearing for this matter and the related matter RT 21/26840.
3. In the tenant's application, the Tribunal extended the time in which the tenant could bring her application and ordered the landlords to pay her compensation for loss of facilities for a period of 52 weeks at $80 per week from 1 June 2020 to 1 June 2021; $4,160 less $1,000 being the compensation payable by the tenant to the landlord in the related bond claim RT 21/27849.
4. The Appeal Panel had the benefit of a transcript provided by the tenants' former Legal Aid solicitor. The headings have been added by the Appeal Panel: The landlords' claim …the other claim filed by the landlord is a claim that was filed on 28 June 2021 and that claim was a claim against the rental Bond. When the evidence was filed on the landlords claim it came down to 3 separate things. A claim for repairs to the sum of $4400 and a claim for water usage in the sum of $117.30. So, cleaning had gone out…. Water charges I indicated to Mr Anastasiadis that the water charges claim had not been made out because compliance with section 39 had not been established. That is a strict approach, but it is an approach which arises because the tenant said that she hadn't received it until late. That statement would not have in its self been evidence except that the only evidence provided by the landlord suggests that that was when the tenant was sent this claim… A document from 30 August 2021. It related to an account that was issued in April and in the absence of further evidence section 39 had not been complied with when the objection had been taken.… There was no sufficient evidence I disallow that part of the claim. Repairs I then come to the next part of the claim which is a total claim for repairs costing of $4400. … There was a door knob had gone back and struck the wall causing a dent in the plaster … There was no door stopper to prevent the door from going back and preventing [it]. In similar terms the repair seems otherwise to relate to the repair of two windows.… The tenant says that because the timber work around the window glass had deteriorated one of the glass items came out in a storm. … The present agent for the landlord has some difficulty because he can only speculate as to what in fact was the cause. He speculates as to that and he speculates as to the other assertion that the glass broke when someone tapped it. The bulk of the claim is for painting on the walls. Walls that had been damaged in some sense by moisture or by mould, but more particularly walls that were approximately eight years old since last painted. The general principle of depreciation in the Tribunal is that if a landlord seeks to recover from a tenant, the cost of that sort of work being done then it is generally depreciated for the sake of simplicity for paintings and items of that nature, that is 10% per year. So, if we have an all rounded figure of $4400 which is painting then the responsibility for the tenant, applying the principle that I've just referred to is 20% of that sum. 20% of $4000 is $800 … It is probably a bit generous to say that $400 would be the cost of the other repairs but if I take that approach as I intend to the responsibility for one window and a partial responsibility to ensure there was a stopper would result in and apportioned sum of $200 being paid by the tenant and $200 being paid by the landlord. It follows therefore that the compensation to be paid out of bond on the findings that I have made for the landlord is a total sum of $1000. The tenant's claim - extension of time I now turn to the tenant's claim. As I have said section 190 of the Act limits the time of the claim though it is regularly extended under the Civil and Administrative Tribunal Act and in tenant matters in particular a general standard extension is in the order of 12 months. That is because you would not expect that one party if something's happened to rush out and bring a claim and to preserve the sanctity of the situation, one assumes that when things happen tenants live in hope that they'll be fixed and landlords live in hope that they'll pick it up at the end of the title out of the bond.… Rent Reduction The tenant describes a regular leak which resulted in water damage, paint peeling, water damage window and rotting of the window frames …. Photos go back to March 2018. The only evidence I have on top of that was nothing was done to the property during the tenancy to repair those problems. … She said she asked [the former agents] for the repairs to be done in January 2021 but again that was not done. … Between 2018 and 1 June 2021 that there was progression of the mould infestation. … She refers to the leak in the girl's room that's bedroom two from the roof above the window which ended up in the ceiling covered in mould and the ceiling eventually caved in. … She noted that there was a decent sized fern growing out of a corner in their room. There is a photograph of that in the landlords' material and I'm really not sure how that deterioration was allowed to continue. Applying the principle that I have to consider and restricting my position to a period between June 2020 in June 2021, I am satisfied that for that period of 52 weeks I should allow a rent reduction for the things of which I have referred of $80 per week. $80 per week is less than 15% of the rent but in the circumstances, I regard that as being something of what I call a minimum. $80 per week for 52 weeks is a sum of $4160. I make it clear that the major part of that in terms of time would be the responsibility of the previous landlord, but as I have said where a property is sold with a tenant then the purchaser takes on the benefit of the rent and the responsibility of paying for anything the previous landlord has incurred in terms of the relationship between the landlord and the tenant, it follows therefore that in the matter relating to the tenant's claim against the landlord I'm going to allow the sum of $4160 … [These transcript excerpts are verbatim].

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, the "leave") of the Appeal Panel: NCAT Act, s 80(2).
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exhaustive list of questions of law being: 1. whether there has been a failure to provide proper reasons; 2. whether the Tribunal identified the wrong issue or asked the wrong question; 3. whether a wrong principle of law had been applied; 4. whether there was a failure to afford procedural fairness; 5. whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. whether the Tribunal took into account an irrelevant consideration; 7. whether there was no evidence to support a finding of fact; and 8. whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; 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).
4. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
5. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
6. In Collins v Urban, the Appeal Panel stated 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.

Submissions and evidence

1. In deciding the appeal, we have had regard to the following: 1. the Notice of Appeal lodged on 5 November 2021 and attachments constituting the evidence filed before the Member below; 2. the landlords' submissions prepared by their agent Mr Anastasiadis dated 13 December 2021 ; 3. the tenant's submissions and evidence lodged 1 December and 22 December 2021 including the transcript prepared by Legal Aid.

Notice of Appeal

1. The Notice of Appeal was lodged on 5 November 2021, which is within the 14 day time period specified in cl 25(3) of the Civil and Administrative Tribunal Rules 2014 in respect of the landlord's application.

Grounds of Appeal

1. At the hearing, the landlords' representative Mr Anastasiadis, confirmed the grounds of appeal specified in the Notice of Appeal.
2. In respect of the appeal against the tenant's application RT 21/26840, Mr Anastasiadis confirmed that the grounds of appeal were: 1. the Tribunal erred in extending time pursuant to s 41 of the NCAT Act and in circumstances where the tenant's claim for damages was brought more than 90 days after she became aware of the breach (Ground 1); 2. the Tribunal erred in awarding compensation to the tenant for breaches of the residential tenancy agreement between June 2020 and June 2021 and ordering compensation payable by the current landlord who only purchased the property on 18 January 2021 (Ground 2); 3. the Tribunal's findings in respect of compensation were against the weight of evidence and the Tribunal should have given no weight to the tenant's black and white photographs (Ground 3); 4. the Tribunal denied the landlords procedural fairness in admitting the tenant's black-and-white photographs into evidence even though the directions clearly called for colour photographs (Ground 4); 5. respect of the appeal against decision RT 21/27864, the Tribunal erred in dismissing the landlords' claim for outstanding water usage of $117.30 in circumstances where the evidence indicates that an invoice was sent to the tenant attaching the water bill within the timeframe required under the legislation (Ground 5).

Consideration

1. At the hearing of the appeal the parties supplemented their written submissions with further oral submissions.

Ground 1

1. A failure by a Tribunal to properly consider its discretion under s 41 would constitute an error of law. The landlords argue that the Tribunal's discretion miscarried and that the tenant's claim was brought more than 90 days after she became aware of any breach. The landlords submit that some of the tenant's claims dated back to the beginning of the tenancy in 2013 and it was an error of the Tribunal to award compensation against a landlord who only purchased the property on 18 January 2021. The landlords' submissions state: Backdated for a 12 month period compensation awarded to the tenant even though there was no evidence to prove the supposed outstanding repairs and no evidence to prove that the tenant had reported these issues to the previous property manager.
2. We shall address the exercise of the discretion first.
3. Regulation 39(9) of the Residential Tenancies Regulations 2019 (NSW) (the Regulations) provides: For the purposes of section 190 (1) of the Act, the prescribed period is within three months after the applicant becomes aware of the breach.
4. The tenant reported the need for repairs throughout the tenancy but the landlords continued to breach their obligations to provide and maintain the residential premises. The failure to maintain the premises interfered with the tenant's right to quiet enjoyment of the premises
5. We have had regard to the oral reasons provided by the Tribunal and in particular the finding that a breach by the landlords continued and that the premises were in need of significant repair between June 2020 and June 2021. In particular, the reasons stated that between 2018 and 1 June 2021 there was progression of the mould infestation and the Tribunal was unsure how such deterioration was allowed to continue.
6. Accordingly, the Tribunal concluded that the issue of water ingress and urgent outstanding repairs was one which was continuing. We consider that it was open to the Tribunal to arrive at a finding that the issue was at least present until June 2020 based on the evidence tendered by the tenant. The tenant claimed that in fact the problem continued and had not been rectified at the date she vacated the premises. In her statement dated 9 July 2021, the tenant refers to the continuing need for repair.
7. In her statement, the tenant deposes that: 1. she discussed the need for repair at a meeting with Mr Anastasiadis on 15 February 2021 who told her that nothing would be done because the house will be demolished; 2. on 25 May 2021 the hot water system broke down and the tenancy remained without hot water until the tenant vacated the tenancy with the assistance of Wesley Mission on 1 June 2021; 3. the property was structurally poorly renovated and window frames were unstable and during a storm event in 2018 the window pane broke. The former real estate agent was notified but no repairs were undertaken; 4. a leak in the kitchen caused a mould infestation that was brought to the attention of the former agent; 5. there was a leak in the girls' bedroom and eventually the ceiling caved in; 6. the issues were reported to the agent, the agent would organise workmen to give quotes but no repairs were undertaken during the tenancy; 7. the statement annexed photographs and emails generally supportive of the proposition that the tenant asked for repairs as early as 2016. 8. in 2018 the tenant wrote to the agent that the leak in the bedroom had turned into a "gush".
8. We are satisfied that the evidence is capable of supporting the findings reached by the Tribunal. In the oral reasons for decision, the Tribunal stated why it decided to extend time and why the order for compensation was made. The Tribunal considered, in its discretion, that the calculation of compensation in the form of a rent abatement from June 2020 was based on a continuing breach of the tenancy agreement. On the tenant's case, the breach in respect of the water ingress continued and became progressively worse in 2018 when again the landlord was notified. A plumber was sent in 2018 but the leak was not fixed and according to the uncontested evidence of the tenant the water ingress continued, eventually resulting in a "fern" growing from the ceiling.
9. We consider that the reasons provided by the Tribunal are supported by the evidence and in particular the statement of Crystal Campbell of 9 July 2021.
10. The Tribunal's decision to extend time is discretionary. The landlords' notice of appeal and written submissions fail to demonstrate how the exercise of the Tribunal's discretion miscarried (House v King (1936) 55 CLR 499). Based on the evidence before the Tribunal, the decision to extend time was not unreasonable or plainly unjust. Section 190(1) of the Act permits a landlord or a tenant to apply to the Tribunal for an order in relation to the breach of a residential tenancy agreement "within the time prescribed by the Regulations after the landlord or tenant becomes aware of the breach or within such other period as may be prescribed by the Regulations".
11. In light of the evidence, we see no support for the proposition that the discretion to extend time miscarried, particularly in light of the Tribunal's finding that the breach was continuous. We find no error is established and this ground of appeal is dismissed.

Ground 2

1. The landlords submit that the Tribunal erred and should not have awarded damages against them as they were not "responsible" for the breach because having only purchased the property on 18 January 2021.
2. The landlords submit that the decision was not fair and equitable and seek the leave of the Appeal Panel to set the decision aside.
3. The Tribunal addressed the issue raised in Ground 2 and invited the landlords' submissions. In particular the Tribunal said (see p 22 of the transcript): …the tenant is entitled to bring a claim against the landlord or the landlord's successor in title because any claims from the tenancy flows through to the new landlord and that matter is dealt with in the conveyancing transactions.
4. The landlords' submissions do not address the issue other than to state that it is not fair and equitable to find a landlord liable for a previous landlord's breach.
5. We consider that the Tribunal was correct in finding that the current landlords are liable for any breach that occurred during the term of the tenancy.
6. Section 118 of the Conveyancing Act 1919 (NSW) provides: 118 Obligation of lessors' covenants to run with reversion (1) The obligation of a covenant entered into by a lessor with reference to the subject-matter of the lease shall, if and as far as the lessor has power to bind the reversionary estate immediately expectant on the term granted by the lease, be annexed and incident to, and shall go with that reversionary estate, or the several parts thereof, notwithstanding severance of that reversionary estate, and may be taken advantage of and enforced by the person in whom the term is from time to time vested by conveyance, devolution in law, or otherwise, and if and as far as the lessor has power to bind the person from time to time entitled to that reversionary estate, the obligation aforesaid may be taken advantage of and enforced against any person so entitled. (2) This section applies to - (a) leases made after the commencement of this Act, and (b) leases made before the commencement of this Act so far only as relates to breaches of covenant committed after the commencement of this Act.
7. In Hassiotis v Jiang [2017] NSWCATCD 84, the Tribunal stated: [25] Section 118 of the Conveyancing Act 1919 deals with the subsisting obligations of a lessor on the sale of the property, such as the terms of a lease, including the duration of that lease. In simple terms, the property is sold subject to those obligations. This includes any contingent obligations the lessor may have to the lessee. The new owner's reversionary interest in exclusive possession crystallises when those obligations come to an end. … What effect did the sale of the property to the current landlord have on the option? [32] When the current landlord purchased the premises she did so subject to the terms of the lease between the previous landlord and the tenant. Her right to exclusive possession of the premises is a reversionary interest within the meaning of section 118 of the Conveyancing Act 1919 that does not crystallise until the estate in the land granted to the tenant by the previous landlord comes to an end. She must fulfil the previous landlord's covenants (or promises) to the tenant under the terms of the lease.
8. When the landlords purchased the property in January 2021 subject to an existing tenancy agreement, they accepted the obligations that the previous lessor owed to the tenant under the residential tenancy agreement.
9. In light of the decision of the Tribunal in Hassiotis v Jiang and in the absence of any submission or authority to the contrary, we are not of the view that the Tribunal erred. The current landlords must fulfil the previous landlord's covenants or promises to the tenant under the terms of the agreement. Whether or not the landlords purchased the property on 18 January 2021 is irrelevant.

Grounds 3 and 4

1. We have already determined that the Tribunal's findings and reasons were supported by evidence and were not against the weight of evidence. The landlords' third ground of appeal concerns specifically the admission of black and white photographs into evidence and the weight they were afforded.

Denial of procedural fairness

1. Mr Anastasiadis submitted that the tenant's black and white photographs were not 'clearly visible', undated and not probative of her case and their admission into evidence constituted a denial of procedural fairness as the Tribunal had directed the parties to serve colour photographs.
2. Section 38(2) of the NCAT Act requires a Tribunal's procedures to accord with natural justice. Natural justice, or procedural fairness, concerns the fairness of the proceedings: see M Aronson, Judicial Review of Administrative Action, 4th edition (2009) Lawbook Co at [7.20].
3. For the following reasons, we are not satisfied that the Tribunal denied the landlords procedural fairness as claimed.
4. First, it is clear from the documents tendered by the tenant on appeal that a full set of colour photographs was provided to the landlords and the Tribunal by email. We accept the tenant's submission and evidence that photographs provided to the landlords by email and in hardcopy, were in colour, clear and demonstrate that the property was significantly affected by mould. Both parties agree that the Tribunal considered black and white print outs of colour photographs.
5. Secondly, the transcript shows that the landlords' agent did not object to the tender of black and white photographs nor did the agent submit at any stage of the hearing that he was procedurally disadvantaged.
6. Thirdly, the third ground of appeal states that the black and white photographs were of poor quality and incapable of establishing any breach by the landlords and that the Tribunal's findings in respect of an ongoing breach were against the weight of evidence.
7. In respect of the third ground, the agent did submit to the Tribunal that the photographs were incapable of demonstrating that there was mould on the ceilings. This proposition was rejected by the Tribunal Member who stated the photographs "very clearly show paint hanging down", to which the agent responded "that is the leak that came above the window and we had that rectified after she vacated".
8. Fourthly, the fourth ground of appeal, namely that the admission of the photographs into evidence constituted a denial of procedural fairness was not raised at the hearing. A party is bound by the case he or she ran in the Tribunal below, and the landlords now seek to argue that, contrary to the position they took before the Tribunal, that black and white photographs should not been accepted by the Tribunal at all.
9. In McInnes v Rheem Australia Pty Limited [2021] NSWCA 89 Gleeson JA, with whom Bell P and Payne JA agreed, observed: "[44] It is trite that a party is bound by the case he or she ran below. As the High Court said in University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483, in the context of an application to reopen a case following judgment: 'It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had and (sic) opportunity to do so.' It would be inimical to the interests of justice to allow Ms McInnes to make an entirely new and different costs application on appeal, after having failed on a different basis before the primary judge: Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645-646; Water Board v Moustakas (1988) 180 CLR 491 at 487; [1988] HCA 12."
10. There is no error by the Tribunal in considering black and white photographs and the landlords have not demonstrated a denial of procedural fairness. Both the third and the fourth grounds of appeal must be dismissed.

Ground 5

1. The landlords submit that the Tribunal erred in finding that they had failed to serve a water bill within the three months required under the legislation.
2. The transcript discloses a considerable exchange between the Tribunal and the landlords' representative commencing at p 13. The agent submitted he was in possession of evidence that would support the contention that the water bill was served in accordance with s 39 of the Act. The Act prescribes that a tenant is not required to pay the water usage charges if the landlord fails to request payment from the tenant within three months of the issue of the bill. The bill in question was issued on 13 April 2021. The letter tendered by the landlord attaching the water bill was dated 30 August 2021, more than four months after the date of issue and more than two months after the tenant vacated the property. It was the agent's submission that the letter was merely a print out of an earlier copy, and that the earlier copy proving service could be produced.
3. No such copy was produced before the Tribunal or on appeal. It was open to the Tribunal to find that the water bill had been served outside the statutory period and we find no error established.

Conclusion

1. For the above reasons, the landlords fail in their appeal in respect of proceedings RT 21/27864 and RT 21/26840.
2. To the extent that the landlords have raised an error of law, the appeal is dismissed.
3. To the extent that the appeal raises errors other than errors of law, we do not consider that a grant of leave is warranted as we are not satisfied that any ground involves an issue of principle, a question of public importance, an injustice which is reasonably clear or that the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result.

Orders

1. The Appeal Panel orders that: 1. In relation to any error of law, the appeal is dismissed. 2. In relation to errors other than errors of law, leave to appeal is refused and the appeal otherwise dismissed.

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: 10 February 2022