McPhee v Gladwin and Gladwin

NCAT Appeal Panel|2020-09-23|Before: Blake AM

inistrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 30 June 2020 Before: M Eftimiou, General Member File Number(s): RT 20/20201

Background to appeal

The respondents were the landlords and the appellant was the tenant of residential premises in Dulwich Hill, an inner western suburb in Sydney, NSW, under a written residential tenancy agreement dated 24 January 2017. The original fixed twelve-month term was from 29 January 2017 to 28 January 2018. Rent was $890pw with a bond of $3,560. The premises were a three-bedroomed house with a granny flat at the rear and a car space. The appellant was the remaining tenant out of the five original tenants.

Reasons for primary decision

The primary member, in addition to recording the large number of bases of claim for relief, referred to the large volume of documents filed and served in hard copy by each party and an additional 20 folders of documents, with each folder containing a substantial volume of documents, filed and served electronically by the tenant.
The primary member advised the tenant that the Tribunal's jurisdictional limit for money orders under RTA s 187(4) with cl 40 of the RTR was $15,000. Having been given the opportunity to consider whether he went on or pursued his much larger claim elsewhere, the tenant restricted his claim to the jurisdictional limit and reduced the 32 orders he sought to the following: a s 115 order against retaliatory eviction for 18 months; a s 44 order against any rent increase in that period; an order, based on a finding that the granny flat was uninhabitable owing to persistent flooding, mould and failure to repair in breach of RTA ss 63 and 64, for a rent abatement of $400pw (45%) backdated to the first flood (said to have been ignored by the landlord) on 22 September 2019; a work order to make the granny flat "presentable".
The primary member found that the ground for RTA s 115 had been made out but in the exercise of discretion under the provision, in the word "may", declined to set aside the termination notice because there was clear expert evidence (from a trade quoting on the necessary repairs) that the premises could not be inhabited during repairs. The appeal against refusal of this order was, as said earlier, not pressed.
The primary member found that the flooding during rain of the granny flat - reported in March and September 2019 and in January and February 2020 - was due to insufficient drainage. This was based on the landlord's expert evidence. The finding and work order based on it were not pressed on appeal, as said earlier.
The primary member also found that the landlord had acted on repairs to the main house, to the tune of $13,484, when brought to the landlord's attention and having regard to the age and prospective life of the 1900s house and the rent paid for it. Any further repairs required the tenant to vacate. The member pointed to the landlord's evidence that the rent paid for the repairs and the tenant had not paid rent since 20 April 2020.
The primary member restricted the tenant's claim for a $400pw rent reduction for the granny flat allegedly being uninhabitable from September 2019 either as a result of breach of the landlord's obligation to repair or abatement for some other cause.
The primary member pointed to the fact that the tenant had been sub-letting the granny flat during the term of the tenancy agreement for $400pw which also allowed those sub-tenants use of the main house facilities. The flat had been occupied until May 2020 (except for one month at the end of 2019) but was now uninhabitable at date of hearing at the end of June 2020. (There appeared to us to be no evidence of consent of the landlord to sub-tenancies but this was not mentioned in the primary decision.)
The primary member did allow $400 rent reduction for loss of amenity of the premises when no one was in occupation of the granny flat being one month. The access to other facilities inferred that the granny flat was worth less than $400pw stand-alone but there was "little evidence" as to the proper amount of compensation. Beyond $400 the tenant had failed to establish loss or a basis for rent reduction since rent of $400 otherwise continued to be paid to him for occupation of the granny flat.
The primary member, doing the best she could with the competing evidence of the parties on comparable properties, determined a 25% rent reduction to $667.50pw for the rest of the term of the tenancy. The tenant's comparables were in the range $480 to $570pw; the landlord's $680 to $950pw. There was little basis to assess comparability. This placed the net rent well above the tenant's range but below the base of the landlord's range.
The primary member pointed out that other orders sought by the tenant were beyond power, such as reducing the principal rent if a sub-tenant of a room in the house did not pay the tenant and ordering the landlord to carry out a mould and lead report. The Tribunal had no power to reduce rent for Covid impact.

Procedural decisions at appeal hearing

The tenant required a three-day extension of time for filing his notice of appeal. This was resisted by the landlords who pointed to no prejudice. For reasons given orally at hearing we granted the extension of time to and including 17 July 2020.
On 14 September 2020 the tenant's application for adjournment had been refused. A further application had been referred to the appeal hearing. Adjournment was sought on the grounds of inadequate time to prepare due to covid-19 quarantining till a relatively short time before hearing with little internet access and little opportunity to seek legal advice (leave for legal representation having been granted 3 August 2020). The application was refused for reasons given orally at hearing being, in summary, inadequate explanation of what had been done during the period of over a month prior to quarantine.
The tenant had also sought leave to issue a summons which was refused for reasons given orally at hearing. In summary, the seven categories of documents sought were brought into existence before the primary hearing and there was no reason given for their not being sought in a timely fashion for the primary hearing.
The tenant also raised resistance to a claim on the bond by the landlords for cleaning of $1,287. There was no claim by the landlords before us in respect of the bond.
The large amount of material before the primary member had been reduced before us but was still significant in volume.
Both parties also sought to put before us new evidence that had not been before the primary member. There was no basis for taking into account that new evidence within the criteria in the legislative provisions described below. All of it related to events that pre-dated the primary hearing or, like the tenant's mould report, could have been obtained before the primary hearing.

Grounds of appeal

The notice of appeal had been prepared by the appellant tenant without legal assistance. In accordance with the approach outlined in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, at [12] we discern them to be, in summary, as follows: 1. The compensation awarded was "grossly insufficient" on the weight of evidence. 2. The amount of rent reduction and its starting date was also too small and too late on the weight of evidence. 3. The time frame for repairs was too long on the weight of evidence. 4. Orders ought to have been made to rectify the main house and to overturn the termination notice as retaliatory.
The Notice of Appeal also stated that the primary decision was not fair and equitable.
As already said, the grounds concerning repairs and the retaliatory notice were not pressed.

Applicable legal principles

Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (CATA) states: "Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds."
Clause 12 of Schedule 4 to CATA states: An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
A Division decision is a primary decision of the Consumer and Commercial Division. The primary decision here is such a decision.
A question of law may include, not only an error in ascertaining the legal principle or in applying it to the facts of the case, but also taking into account an irrelevant consideration or not taking into account a relevant consideration, which includes not making a finding on an ingredient or central issue required to make out a claimed entitlement to relief: see CEO of Customs v AMI Toyota Ltd (2000) 102 FCR 578 (Full Fed Ct), [2000] FCA 1343 at [45], applying the statement of principle in Craig v South Australia (1995) 184 CLR 163 at 179.
These categories are not exhaustive of errors of law that give rise to an appeal as of right. In Prendergast at [13], the Appeal Panel enunciated the following as specifically included: 1. whether the Tribunal provided adequate reasons; 2. whether the Tribunal identified the wrong issue or asked the wrong question; 3. whether it applied a wrong principle of law; 4. whether there was a failure to afford procedural fairness; 5. whether the Tribunal failed to take into account a relevant (that is, a mandatory) consideration; 6. whether it took into account an irrelevant consideration; 7. whether there was no evidence to support a finding of fact; and 8. whether the decision was legally unreasonable.
The "no evidence" ground must identify that there is no, or substantially inadequate, evidence to support a "critical" or an "ultimate" fact in order to constitute a jurisdictional error (a form of error of law): AAI Ltd t/as GIO v McGiffen (2016) 77 MVR 34;, [2016] NSWCA 229 at [81]; Jegatheeswaran v Minister for Immigration & Multicultural Affairs (2001) 194 ALR 263; [2001] FCA 865 at [52]-[56].
A failure to deal with evidence may also in the appropriate circumstances be characterised as a failure to have regard to a relevant consideration or a failure to have regard to critical evidence. It is generally not mandatory to consider particular evidence: Rodger v De Gelder (2015) 71 MVR 514; [2015] NSWCA 211 at [86]; Allianz Australia Insurance Ltd v Cervantes (2012) 61 MVR 443; [2012] NSWCA 244 at [15] per Basten JA (McColl and Macfarlan JJA agreeing). However, by s 38(6)(a) of the CATA, the Tribunal "is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings." This obligation includes an obligation to have regard to material which has been disclosed to the Tribunal and which is relevant to the facts in issue, at least where that material is of some significance. Further, at common law, where a decision-maker ignores evidence which is critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the decision-maker, this is an error of law: Mifsud v Campbell (1991) 21 NSWLR 725 at 728; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [62]-[63]; Eadie v Harvey [2017] NSWCATAP 201 at [61]-[62].
Legal unreasonableness can be concluded if the Panel comes to the view that no reasonable tribunal could have reached the primary decision on the material before it: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 ; [2013] HCA 18at 364 [68]). A failure properly to exercise a statutory discretion may be legally unreasonable if, upon the facts, the result is unreasonable or plainly unjust: Li at 367 [76]). There is an analogy with the principle in House v The King (1936) 55 CLR 499; [1936] HCA 40 at 505 that an appellate court may infer that there has been a failure properly to exercise a discretion "if upon the facts [the result] is unreasonable or plainly unjust" and legal unreasonableness as a ground of judicial review: Li at 367 [76]. Further, there is some authority to the effect that unreasonableness as a ground of review may apply to factual findings, although this has not been finally resolved: see Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346 at [153]; Wehi v Minister for Immigration and Border Protection [2018] FCA 1176 at [29]; Legal Profession Complaints Committee v Rayney [2017] WASCA 78 at [193].
The Appeal Panel has stated that, in circumstances where an appellant is not legally represented, it is appropriate for the Tribunal to look at the grounds of appeal generally, and to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations in favour of the respondent: Prendergast at [12].
Turning to errors of fact, in Collins v Urban [2014] NSWCATAP 17, after an extensive review from [65] onwards, an Appeal Panel stated at [76]-[79] and [84(2)] as follows: "74 Accordingly, it should be accepted that a substantial miscarriage of justice may have been suffered because of any of the circumstances referred to in cl 12(1)(a), (b) or (c) 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. 75 As to the particular grounds in cl 12(1)(a) and (b), without seeking to be exhaustive in any way, the authorities establish that: 1 If there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" - Hutchings v CTTT [2008] NSWSC 717 at [35], Atkinson v Crowley [2011] NSWCA 194 at [12]. 2 The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153]. … 78 If in either of those circumstances the appellant may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved then the Appeal Panel may be satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or because the decision was against the weight of the evidence. 79 In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b) or (c), it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this then, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred - see the general discussion in Kyriakou v Long [2013] NSWSC 1890 at [32] and following concerning the corresponding provisions of the [statutory predecessor to CATA (s 68 of the Consumer Trader and Tenancy Tribunal Act)] and especially at [46] and [55]. 84 The general principles derived from these cases can be summarised as follows: … (2) 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."
The question of what constitutes significant new evidence not reasonably available at the time the proceedings under appeal were being dealt with was considered by an Appeal Panel in Owen v Kim [2017] NSWCATAP 26. In that appeal the Appeal Panel stated at [37]-[39]: "37 In Owners - SP 76269 v Draybi Bros Pty Ltd [2014] NSWCATAP 29 the Appeal Panel stated at [109] in connection with cl 12(1)(c) of Schedule 4 to the Civil and Administrative Tribunal Act: 'In order to fall within this paragraph the appellant must be able to point to evidence which: (1) is significant; and (2) has arisen and is new in the sense that it was not reasonably available at the time the proceedings below were being heard.' 38 In Leisure Brothers Pty Ltd v Smith [2017] NSWCATAP 11 the Appeal Panel stated at [40 ]: 'The meaning of this clause was considered by the Appeal Panel in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111. At [23] - [24] the Appeal Panel said: '23 Unlike the WIM Act, the expression "reasonably available" is not qualified by the words "to the party". This difference suggests that the test of whether evidence is reasonably available is not to be considered by reference to any subjective explanation from the party seeking leave but, rather, by applying an objective test and considering whether the evidence in question was unavailable because no person could have reasonably obtained the evidence. For example, in Owners SP 76269 v Draybi Bros [2014] NSWCATAP 20 at [114] the Appeal Panel refused leave because, although the appellant may not have been aware of the evidence (being an email), it could have obtained the evidence by summons. In Prestige Auto Centre Pty Ltd v Apurva Mishra [2014] NSWCATAP 81 at [17] the Appeal Panel granted leave because the respondent to the appeal had fraudulently altered evidence. The party seeking leave under cl 12(1)(c) could not reasonably have had available to them the evidence that the report in question had been fraudulently altered at the time the proceedings were being dealt with by the Tribunal. That fact was not known to the appellant at the time of the hearing and could not reasonably be known due to fraud. 24 Each of these cases illustrates that something more than a party's incapacity to procure evidence is necessary to satisfy the requirements of cl 12(1)(c).' 39 As stated at [27] in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown: 'the issue is whether, objectively, the evidence has arisen since the hearing and was "not reasonably available" at the time of the hearing.'"
In Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 an Appeal Panel stated at [10]: "An appeal does not provide a losing party with the opportunity to run their case again except in the narrow circumstances which we have described. Mr Ryan has not satisfied us that those circumstances apply to his case and we refuse permission for him to appeal."
Even if the appellant establishes that he or she may have suffered a substantial miscarriage of justice within cl 12 of Sch 4 to the CATA, the Appeal Panel has a discretion whether or not to grant leave under s 80(2) of that Act (see Pholi v Wearne [2014] NSWCATAP 78 at [32]). The matters summarised in Collins v Urban, above, at [84(2)] will come into play in the Panel's consideration of whether or not to exercise that discretion.
In dealing with errors of law and errors of fact, the Panel must be cognisant that the two can intermingle. The Panel must also be alert that, under Australian law, there is a different approach to matters between two situations.
The first of these is where the particular decision has involved evaluation from findings of primary facts and the drawing of inferences therefrom on which reasonable minds may differ but which must be accepted as legally correct unless overturned or varied on appeal.
The second situation arises where there has been an exercise by the primary decision-maker of a discretion or choice embodied in the statute or law being applied, including as to whether relief is to be granted or refused and the form of relief: Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [18], [20], [26], [30]-[32], [43]-[45], [48]-[49], [55]-[56], [85]-[87], [127]-[128], [153]-[155].

Error of law

We see no error of law. The primary member appropriately considered the evidence and gave adequate reasons for her conclusions. Those reasons addressed relevant considerations and the appropriate issues. The conclusions were not legally unreasonable in the sense described above.
In particular, the basis for assessing a rent reduction was in our view the correct approach. The focus was not on what the tenant could obtain from sub-letting the granny flat, which informed the tenant's concentration on comparable rentals for one-bedroom premises in the locality. Nor could it be on what was the comparable rental for a three-bedroom house in better condition but similar age to the main dwelling.
Rather, the focus was on the contribution that the portion of the premises made to the rental being obtained by the landlord from the premises as a whole being a main dwelling with granny flat and relatively large curtillage. The test is in relation to the whole or part of the premises being rented to the tenant (not any sub-tenant) becoming uninhabitable or suffering a loss of amenity.
The focus on what the tenant lost would inform the basis for a compensation claim. The primary member effectively recognised this when pointing out that the $400pw awarded by way of rent reduction on the main tenancy was too high for the granny flat alone, and took into account that the sub-tenants' rent to the sub-landlord included use of facilities in the main house. In effect, the rent reduction was a mechanism for compensation.
The tenant's submissions inherently recognised the foregoing distinction even if the tenant did not accept it. The tenant's measures for assessing rent reduction that focused on the granny flat produced outcomes less than $400pw from comparable granny flats.
To grant both compensation for loss of the granny flat sub-tenancy rent and a rent reduction would clearly be double-dipping.

Grant of leave to appeal on questions of fact

On the evidence placed before us that was part of what was placed before the primary member, the following emerge: 1. There was a chronic history of complaint about the condition of the premises that started in 2016/17 and escalated dramatically from the latter part of 2019. 2. The landlord appears to have responded to the managing agent's communications in 2016 and 2017 about the specific issue raised with respect to equipment in the premises. The landlord also seems to have undertaken some garden maintenance that would have been the tenant's responsibility. 3. Overall, the landlord seems to have expended about four months' equivalent of rent on repairs and maintenance since 2016 according to the invoices in evidence. That amount of approximately $13,000 must be set against the $46,280pa of rent. 4. The attempts to fulfil the landlord's strict obligations concerning repairs and the structural condition of the premises under RTA ss 52 and 63 seem, from the photographic evidence, to have been spectacularly unsuccessful in respect of water entry into the granny flat from about September 2019 and not to have been what should have been done to fulfil the obligation. 5. There was also evidence that structural and other repairs were required to the main house from at least early 2020 and possibly earlier. 6. There was evidence of the managing agent having difficulty and delay in obtaining instructions from the landlord to carry out works. 7. The tenant, despite difficulties in maintaining occupants of the granny flat due to the water entry and the damp smell in particular, did not successfully challenge the finding that he continued to receive the rent for the granny flat up to the date that the primary member found, being May 2020, except for one month in December 2019 for which he was compensated. 8. The main house continued to be occupied by the tenant and used by the granny flat occupants despite the mould, roof and other issues that had emerged. 9. There was sales evidence that placed the primary member's chosen rate of reduction within the range of reason on the relevant criteria of assessment that we have dealt with above under errors of law.
On the facts just set out and those dealt with in the following paragraphs, which were also before the primary member, we see no basis for a grant of leave in respect of the granny flat. The tenant suffered no financial loss which was the only available form of compensable loss, however distressing the circumstances. The $400pw ordered by way of rent reduction when the granny flat became uninhabitable replaced the $400pw that would have been obtained from the granny flat sub-tenants. On the test set out in the preceding section on errors of law, the rent reduction would be less than the $400pw ordered.
On the weight of the evidence concerning loss of amenity in the main house through presence of mould and deteriorating condition of roof, walls and ceilings, there was a basis for finding that a period of rent reduction at 10% on the main house was appropriate for 127 days from the beginning of 2020 until 7 May 2020 when the rent reduction that the primary member awarded began. This totals $1,614.71 at a daily rate of reduction of $12.71 off the daily rate under the tenancy agreement of $127.14.
Such a rent reduction would take into account that the tenant was still living in the premises on a periodic tenancy, was not paying rent elsewhere and was receiving $400pw for the sub-tenancy in the granny flat with no reduction of rent to the sub-tenants for the loss of amenity in their shared use of the main house facilities. It acknowledges the increased severity of problems about which the tenant had complained increasingly since 2017 but the absence of rent increase throughout the tenancy.
There was also a basis in the evidence for finding that such reduction would be absorbed within the 25% reduction awarded by the primary member from May 2020. As the primary member recognised, the $400pw was too high in itself to compensate the tenant for loss of the rent from the sub-tenancy, because the sub-tenancy rent gave rights to the main house which no longer had to be shared with the sub-tenants.
However, the evidence was that the tenant had not paid rent since some point in April 2020 and had not paid water usage since the start of the tenancy. This amount is substantially greater than the variation in rent reduction that we have considered appropriate on the weight of evidence. The landlord, on the evidence before us, had not claimed rent arrears or water usage in these or other proceedings.
In those circumstances, there was no substantial miscarriage of justice in the primary member's findings and no basis for a grant of leave to appeal other than to take into account the rent reduction we have considered appropriate if, contrary to our understanding, rent arrears and water usage charges are claimed.
To take account of that prospect, we shall grant leave to appeal. Under s 81(1)(b) and (2) of the Civil and Administrative Tribunal Act 2010 (CATA), we shall vary the primary orders to add an order that an additional rent reduction of $1,614.71 be applied for the period 1 January 2020 to 6 May 2020 inclusive with such application to be as a credit against any arrears of rent or unpaid water charges.

Costs of appeal

Rule 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) applies the same costs rules as applied in the Division when there is a departure under the Division rules (such as under Rule 38) from CATA s 60. Rule 38 does not apply because the claim is under $30,000, so rule 38A has no work to do and CATA s 60 applies to costs of the appeal.
There are no special circumstances as required under CATA s 60 to justify an award of any costs of the appeal, if there are any when the parties are self-represented.

Orders

The orders we accordingly make are as follows: 1. Leave to appeal is granted and the appeal is allowed to the following extent: Add a new order 2A to the Tribunal's orders made 30 June 2020 as follows: "2A. Order that a rent reduction of $1,614.71 be applied for the period 1 January 2020 to 6 May 2020 inclusive with such application to be as a credit against any arrears of rent or unpaid water charges." 2. The appeal is 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: 17 February 2021

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