Metrix Developments Pty Ltd v Chen

Summary of the Decision under Appeal

1. The following is a summary of the Decision: 1. The Respondents' application was listed for hearing on Monday 29 March 2021 to consider an application for termination under s 87 of the RT Act, to also consider an application for termination due to the sale of the residential premises under s 86 of the RT Act, and for an access order pursuant to s 60. 2. The Appellants opposed a contested hearing taking place on 29 March 2021 due to insufficient time to prepare for the hearing. On the basis that the Respondents did not press the s 86 application and that the Appellants did not raise COVID 19 issues and further that there were no other claims on foot 3. In the Tribunal between the parties and that no rent had been paid since November 2020, the Tribunal determined that it was appropriate to proceed with the s 87 termination application. However, given that the solicitor for the Appellants had health issues and needed time to prepare, the Tribunal determined that it was appropriate to give to the Appellants a short period of time to provide submissions, namely by 9 am on 30 March and to list the hearing for 12:15 pm on 30 March. The Tribunal received submissions and telephoned the parties on 30 March at which time the Appellants' solicitor sought have the Tribunal's determination made on the papers. The Respondents' solicitor agreed to that course. He also withdrew that part of the Respondents' application concerning a termination order based on s 86 of the RT Act. 4. The Decision records that the Tribunal considered the submissions filed by both parties. Those submissions included submissions by which the Appellants sought orders for rent abatement and compensation. The Tribunal stated that as no application has been filed by the Appellants in respect of their claims for relief and remedies the submissions seeking certain orders were not to be considered as part of the determination before the Tribunal. 5. The Tribunal found that the tenancy agreement named the three Appellants as tenants and that they have been correctly named as Respondents to the proceedings. This finding was made in response to the Appellants' assertion that only Metrix Development Pty Ltd (Metrix) was the tenant. 6. The Tribunal found that a "section 87 notice of termination" had been served by leaving a copy at the residential premises on 15 January 2021. That notice was addressed to all three of the Appellants and was served in accordance with s 223(1)(a)(iii) of the RT Act. The effect of that section is to provide that service of notice on one tenant is sufficient in cases where there is more than one tenant. The Tribunal was also satisfied that service of the notice of termination had occurred validly by an email sent from the Respondents' agent to two of the tenants (A&L Metledge). 7. In response to the Appellants' submission that rent abatement and compensation claim should be determined by the Tribunal prior to the Respondents' application for termination based on rent arrears, the Tribunal found that as at the date of its Decision no application has been made by the Appellants for abatement. The Tribunal found that, as no order has been made by the Tribunal for abatement, full rent is payable and that it is not reasonable to delay the Respondents' application for termination based upon rent arrears. The Tribunal found that the Appellants owed rent arrears of $13,678.59 as at the date the s 87 notice of termination was served. That amount was in excess of 14 days rent. The Tribunal found that the notice gave the Appellants the required 14 days to deliver up vacant possession and that the notice was valid. The Tribunal found that the notice met the requirements of ss 82, 87 and 88 of the RT Act. The Tribunal also found that rent arrears in excess of $30,000 were owing as at the date of the hearing and that that "large amount" justifies a termination order. 8. The Tribunal referred to the fact that the Appellants had young children and had undertaken attempts to find a new home. The Tribunal also referred to the fact that the Respondents had entered into a contract for sale of the residential premises requiring vacant possession. 9. The Tribunal found that only a short period of time of two weeks ought to be allowed for vacant possession and in coming to that view referred to a number of matters. These included that the rent arrears were substantial and that rent had not been paid since November 2020. The notice of termination was issued on 15 January which the Tribunal considered gave the Appellants more than reasonable time to find alternative accommodation. The Tribunal also found that it was relevant that the residential premises had been sold requiring settlement to take place on 6 April 2021. The Tribunal found that under the RT Act the tenants have the right to continue the tenancy if all rental arrears are paid by the date required for possession. This was undoubtedly a reference to the fact that no finding was sought by the Respondents under s 89(5) to the effect that the Appellants had frequently failed to pay rent. 10. The Tribunal found that it was satisfied that rent in excess of $30,000 is due and that therefore it was appropriate to make an order for the full bond to the released to the Respondents to be applied to the rent arrears.
2. The Tribunal then considered the Respondents' application for an access order and the Appellants opposition. The Tribunal found that the requirements of s 55(2)(d) of the RT Act have been met. That provision permits a landlord to enter premises without consent of the tenant after giving notice for the purpose of valuing the property but not more than once in any period of 12 months.

The Notice of Appeal

1. The Notice of Appeal listed 12 grounds of appeal including grounds which require leave. None of these was particularised. Particularisation of those grounds was contained in submissions subsequently filed. We will explain those submissions in further detail in the following paragraphs.

The Appellants' submissions

1. The Appellants' submissions are contained in a number of emails sent to the Tribunal. These emails can be distilled into a number of submissions the contents of which are set out below.
2. The first submission is that the Tribunal erred in proceeding upon a breach of a s 87 notice of termination when in fact there was no such notice. The Tribunal relied upon a notice attached to an email dated 15 January 2021 but that email attached a different notice of termination. What was attached to that email was a notice under s 88.
3. Had a notice under s 87 been issued, there would have been a requirement by the Tribunal to consider the previous history of the tenancy (see s 87(5)) and the Tribunal did not give consideration to the history of the tenancy.
4. The Appellants had claims for rent abatement and/or rent reduction and there had been prior communications between the parties as to what level of reduction in the rent should be paid. These matters should have been taken into account by the Tribunal. The Appellants had reasons for requiring abatement of rent arising out of the premises becoming uninhabitable as a result of storms and flooding. The Appellants seek compensation from the Respondents and commenced proceedings in the Local Court just prior to the hearing of their appeal.
5. In addition, the Appellants submitted that the Respondents had indicated to them that when the current lease expired a new tenancy agreement would be entered into with them. Contrary to that representation the Respondents have entered into a contract for sale of the subject premises with vacant possession.
6. The Tribunal should not have made the access order. The order had the effect of breaching the Appellants' right to quiet enjoyment. The purpose of the section permitting the Tribunal to order access is to assist the landlord. Here, the purpose of the access order was to assist a third party, namely the purchaser of the property. The access order should be set aside notwithstanding that it has already been complied with.

Respondents' Submissions

1. The Respondents filed a reply and written submissions. Essentially the Respondents' position is that the Tribunal has not erred in any respect and that the appeal should be dismissed. It is not necessary to record in any detail the Respondents' submissions.

The Hearing

1. The appeal came before us on 7 May 2021 at which Ms M Metledge, solicitor, sought leave to appear for the Appellant. The Respondents (who had previously been given leave to have legal representation) did not oppose the grant of leave to Ms Metledge. We made an order at the hearing granting her that leave. At the end of the hearing, having heard from the representatives of both parties, we adjourned for a short period. We then returned and spoke to the parties. We indicated to the parties that our decision was that the appeal should be dismissed and that we would formally make that order together with directions for cost submissions. We indicated that our reasons would follow. These are those reasons.

Consideration

1. Part 5 of the RT Act deals with termination of residential tenancy agreements. Relevant to this decision are ss 87 and 88. They provide: 87 Breach of agreement (1) A landlord may give a termination notice on the ground that the tenant has breached the residential tenancy agreement. (2) The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given. (3) The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement if it is a fixed term agreement. (4) The Tribunal may, on application by a landlord, make a termination order if it is satisfied that-- (a) the tenant has breached the residential tenancy agreement, and (b) the breach is, in the circumstances of the case, sufficient to justify termination of the agreement, and (c) the termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice. (5) In considering the circumstances of the case, the Tribunal may consider (but is not limited to considering) the following-- (a) the nature of the breach, (b) any previous breaches, (c) any steps taken by the tenant to remedy the breach, (d) any steps taken by the landlord about the breach, (e) the previous history of the tenancy. (6) The Tribunal may refuse to make a termination order if it is satisfied that the tenant has remedied the breach. Termination notices for non-payment of rent or charges 88 Termination notices for non-payment of rent or charges (1) A termination notice given by a landlord on the ground of a breach of the residential tenancy agreement arising solely from a failure to pay-- (a) rent, or (b) water usage charges, or (c) charges for the supply of electricity, gas or oil ("utility charges"),payable by the tenant (a "non-payment termination notice") has no effect unless the rent has, or the water usage charges or utility charges have, remained unpaid in breach of the agreement for not less than 14 days before the non-payment termination notice is given. (2) A non-payment termination notice is not ineffective merely because of any failure of the landlord or the landlord's agent to make a prior formal demand for payment of the rent, water usage charges or utility charges. (3) A non-payment termination notice must inform the tenant that the tenant is not required to vacate the residential premises if the tenant pays all the rent, water usage charges or utility charges owing or enters into, and fully complies with, a repayment plan agreed with the landlord, unless the Tribunal makes a termination order on the basis that the tenant has frequently failed to pay rent, water usage charges or utility charges on time. (4) Despite any other provision of this Part, a landlord may apply to the Tribunal for a termination order before the termination date specified in a non-payment termination notice. The Tribunal must not consider any such application until after the termination date.
2. The notice of termination dated 15 January 2020 is headed "Termination Notice of Residential Tenancy Agreement - non-payment of rent or charges". It is addressed to the three Appellants and states that the tenants have breached the residential tenancy agreement by not paying rent on time. The application filed by the Respondent sought a termination order under s 87 alleging that the Appellants have breached the residential tenancy agreement by non-payment of rent.
3. In our view the Respondents have complied with the RT Act by the issue of a notice pursuant to s 87 alleging breach by the Appellants of the residential tenancy agreement. Section 88 is only relevant to the extent that it further regulates the terms of a termination notice on the ground of breach where that ground arises solely from a failure to pay rent, or other charges not presently relevant.
4. In our view, the Appellants have misconstrued the relationship between ss 87 and 88 by alleging that the notice was a "section 88 notice" and that there was no "section 87 notice". The fact is that there was a notice of termination alleging breach by reason of failure to pay rent. The Tribunal found that the notice complied with the relevant provisions of s 87. This approach is consistent with the approach of the Court of Appeal in Navazi v New South Wales Land & Housing Corporation [2015] NSWCA 308 at paragraphs 54 and 55.
5. Accordingly we reject the submission that there was in this case no s 87 notice of termination served by the Respondent.
6. We also reject the submission that the Tribunal failed to take into account the "history" of the tenancy as required by s 87. The Tribunal referred to the Appellants' claims for rent abatement and to the claims that they had an expectation that they would be offered a renewed lease. In our view there was no error made by the Tribunal in not taking into account the claims for rent abatement. No applications had been lodged with the Tribunal and we discern no error in the Tribunal's decision that it would not be reasonable to delay the landlord's application for termination. Sections 43, 44 and 45 of the RT Act deal with rent reductions, claims for return of excessive rent and rent abatement. Each of those sections requires an application to have been filed with the Tribunal before the Tribunal may make an order. In this case, the Tribunal had before it allegations relevant to a rent reduction or abatement claim but no application under any of the three sections referred to. In our view the Tribunal was not in error in proceeding to deal with the Respondents' termination application.
7. With respect to the Appellants' submissions that the order for access should not have been made because it breached the quiet enjoyment of the Appellants and was made for the benefit of the third party, we are of the opinion that those submissions should be rejected. The reason is that s55(2)(d) the RT Act expressly contemplates that once a year an access order may be made to value the property. There was no assertion made by the Appellants that an access order had previously been made within the preceding 12 months. To the extent that the Respondents exercised the right to obtain such an access order within the limits of the RT Act, there cannot be a breach of the tenants' right to quiet enjoyment unless something occurs in the undertaking of the inspection. A complaint of that kind cannot not arise in the context of this appeal which is concerned whether the access order should have been made. We do not agree with the submission that the order should not have been made because it was apparently required for the purposes of the purchaser's mortgagee. The Respondents had entered into a contract for sale and it was in their interests to facilitate completion of that sale by permitting the purchaser to satisfy its mortgagee that the property would support the purchaser's loan. In our view there was no error made by the Tribunal in making the access order in such circumstances.
8. The Appellants submitted that only Metrix was the tenant and that the other two appellants (respondents at first instance) were not tenants. The Tribunal considered the agreement, found that all three appellants were named as tenants and held that the application had been appropriately brought against them. In our view there was no error by the Tribunal in relation to this issue.
9. For the above reasons the submissions of the Appellants are rejected and it follows that the appeal must be dismissed. Accordingly, the orders of the Tribunal are as follows: 1. Appeal dismissed. 2. If the Respondent seeks costs of the appeal written submissions in support of a costs order must be filed and served within 21 days. 3. Within 21 days thereafter the Appellants may file and serve written submissions in opposition to the application for costs. 4. The submissions should include submissions as to whether the Appeal Panel may decide the question of costs "on the papers" by dispensing with a hearing on the question of costs.

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: 18 May 2021