Mohd v Basha [2022] NSWCATAP 351 | Case summary

Background

The parties entered into a residential tenancy agreement (the "lease") for premises at Guildford, NSW commencing on 25 February 2020.
The term of the lease was 26 weeks, with a due end date of 18 August 2020.
The lease provided that once the fixed term of the lease ended the lease would continue in force on the same terms as contained in the lease and would continue as a periodic agreement.
The managing agent alleged that: 1. the tenants had been in arrears of rent from about three weeks after the commencement of the lease; 2. the tenants received a specific performance order on 28 October 2020 but this was not adhered to; 3. the arrears (at that time) of about $9,300 were paid by two organisations on 29 March 2022; 4. on the night the arrears were paid the landlord and agent allegedly received abusive messages and emails late from the first appellant; 5. the landlord's agent has allegedly done everything possible to help the tenants through the Covid-19 pandemic including applying for several Covid assistance packages for them; 6. despite that assistance the tenants nevertheless kept falling behind and this caused the landlord stress because she was close to losing her home through bank defaults as she relied on the rent from the premises to pay her mortgage; 7. a Tribunal hearing was listed for 28 August 2020; 8. an application for a stay was refused on 11 July 2020; 9. a Tribunal hearing was allocated for 8 August 2020; 10. on that day an order to vacate was made; 11. that order was appealed; 12. the tenants fell behind again on their rent on 17 August 2022 (by eight days), 22 August 2022 (by six days) and 24 August 2022 (by one day); 13. that even though the bulk of the arrears were then paid, "this (was) their pattern"; and 14. the landlord could not afford to go through this stress again if the arrears became unmanageable, so she decided she would like the property back.
The tenancy rental ledger for the period post-July 2021 showed a continual state of arrears, with an arrears balance varying between about $2,000 and $4,300, but most often being in the vicinity of $3,000, up to about 10 May 2022. The ledger shows that from that date up until the date of hearing before the Tribunal the tenants were mostly up-to date with their rent, except for some brief falling behind to the extent of five hundred dollars or less (for no more than eight days at any one time).
The landlord's agent issued a Termination Notice dated 24 March 2022 to the appellants giving notice that the landlord was terminating the lease for non-payment of rent and water usage charges and requesting vacant possession by 11 April 2022.
The landlord commenced proceedings against the tenants in the Tribunal on 5 April 2022.
The tenants alleged that: 1. they live in the premises with their son; 2. their son has cancer and is undergoing treatment, the second appellant is unable to work because she has health conditions and the first appellant has recently had heart problems; 3. they are refugees who arrived in Australia on a protection visa in 2012; 4. they moved into the premises three months before the first Covid-19 lockdown; 5. the ongoing rent arrears are a result of the first appellant losing his job as a chef in the first lockdown and then having difficulty finding and maintaining secure and stable work thereafter; 6. they obtained rent arrears assistance from a number of community organisations and paid off the rent arrears; 7. the first appellant secured a full time, permanent role as a chef in a hotel before the Tribunal hearing, had recommenced paying his weekly rent on time and had demonstrated that he could now afford to maintain his rent payments; 8. at the date of the Tribunal hearing the tenants were up-to-date and a short period in advance of rental due. 9. the tenants had been applying for private rental properties but kept getting rejected; 10. despite the first appellant's new secure employment, if the tenants were evicted they would become homeless which would have a detrimental impact on the family's health.
The Tribunal heard the proceedings on 8 August 2022.

Section 89 of the Residential Tenancies Act 2010 (NSW)

Section 89 of the RTA relevantly says: (1) This section applies if a landlord gives a tenant a non-payment termination notice. (2) The Tribunal must not make a termination order on the ground set out in the notice if the tenant pays all the rent … owing or enters into, and fully complies with, a repayment plan agreed with the landlord. (3) … (4) … (5) The Tribunal may, on application by a landlord, make a termination order despite subsection (2) or (3) if it is satisfied that the tenant has frequently failed to pay either or both of the following amounts owing to the landlord for the residential premises - (a) rent, on or before the day set out in the residential tenancy agreement, …
The critical word in s 89(5) is "may". Parliament chose that word rather than, for example, "must".
In Cain v New South Wales Land and Housing Corporation [2014] NSWCA 28 the Court of Appeal was concerned with whether the use of the word "may" in s 91(1) of the RTA conferred a discretion or whether, once the condition mentioned therein was satisfied, the section mandated that a termination order be made.
Section 91 said: 91 Use of premises for illegal purposes (1) The Tribunal may, on application by a landlord, make a termination order if it is satisfied that the tenant, or any person who although not a tenant is occupying or jointly occupying the residential premises, has intentionally or recklessly caused or permitted: (a) the use of the residential premises or any property adjoining or adjacent to the premises (including any property that is available for use by the tenant in common with others) for the purposes of the manufacture, sale, cultivation or supply of any prohibited drug within the meaning of the Drug Misuse and Trafficking Act 1985, or (b) the use of the residential premises for any other unlawful purpose and that the use is sufficient to justify the termination. (2) In considering whether to make a termination order on the ground specified in subsection (1) (b), the Tribunal may consider (but is not limited to considering) the following: (a) the nature of the unlawful use, (b) any previous unlawful uses, (c) the previous history of the tenancy. (3) The termination order may specify that the order for possession takes effect immediately. (4) A landlord may make an application under this section without giving the tenant a termination notice. (5) The Tribunal may make a termination order under this section that takes effect before the end of the fixed term if the residential tenancy agreement is a fixed term agreement.
Basten JA, with whom Gleeson and Leeming JJA agreed, said this (at [14]): "The word 'may', 'if used to confer a power, indicates that the power may be exercised or not, at discretion': Interpretation Act 1987 (NSW), s 9(1). Nevertheless, such a power can, in particular circumstances, be coupled with a duty to exercise the power: Ward v Williams [1955] HCA 4; 92 CLR 496."
His Honour then set out the submissions in favour of the mandatory construction, which relied on support internally (within s 91) and contextually. Those submissions need not be repeated here. Suffice to say that his Honour held that "may" in section 91 and in its ordinary usage had a discretionary rather than mandatory meaning.
At [24] his Honour said: On the contrary, where the statute uses the same terminology in various provisions, it will usually (though not necessarily) be appropriate to give it the same meaning in each case. Both ss 87 and 91 confer a power on the Tribunal by use of the word "may": a clear reason must be established to conclude that in one situation the Tribunal has a discretion, but in another it does not.
Therefore, it would be usual, though not necessary, to give the word "may" in s 89(5) the same meaning as it has in s 91. No clear reason for a different interpretation is apparent.
We have not had the assistance of counsel or solicitors that the Court of Appeal had in Cain, but in our view the word "may" in s 89(5) refers to a discretionary not mandatory decision.
As has sometimes been said, the process of statutory interpretation begins and ends with the words used. In its ordinary usage "may" refers to a discretion.
In Cain Basten JA said at [25]: The difference in effect between "may" and "must" (or "shall", being the term identified as imposing a duty in s 9(2) of the Interpretation Act) does not depend upon the existence of s 9 of the Interpretation Act; it is an element of ordinary English usage. Nor did the distinction escape the drafter of the Residential Tenancies Act, which uses the language of power and the language of obligation with, to all appearances, deliberate precision: cf the use of "must" in ss 84(3) and 85(3). There is nothing in the surrounding provisions which require a strained construction of s 91.
Leeming JA elaborated on the principal point of construction. Gleeson JA agreed with his Honour's elaboration. His Honour observed that the power in s 91 should be read with the other powers in Part 5 Division 2 of the RTA. Section 89(5) is also contained in that section and so his Honour's observations are apposite. His Honour said: [48] Section 91 is to be construed 'so that it is consistent with the language and purpose of all the provisions of the statute': Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56; (2012) 87 ALJR 131 at [24] (original emphasis, citing Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]). The power in s 91 is therefore to be read with the other powers conferred in Division 2. Division 2 is headed 'Termination by Landlord' and comprises 12 sections identifying the circumstances when a termination order issues from the Tribunal. The first two sections (ss 84(3) and 85(3)) commence 'The Tribunal must, on the application by a landlord, make a termination order if ...' and are followed by nine provisions in the form 'The Tribunal may, on the application by a landlord, make a termination order if ...' (ss 86(4), 87(4), 89(5), 90(1), 91(1), 92(1), 93(1), 94(1), 95(3)) (emphasis added). [49] The change in language from 'must' to 'may' is a remarkable feature of the structure of the Division. It is a large task to disregard the prima facie purposeful shift in language between the first two and the last nine conferrals of power.
In Peachey v Dubbo Koorie Housing Aboriginal Corporation [2022] NSWCATAP 119 the Appeal Panel said at [12]: The word "may" in s 89(5) of the RTA suggests that the decision to be made is a discretionary one. That is, assuming the Tribunal was satisfied that a tenant had frequently failed to pay rent the Tribunal might, but was not required to, make a termination order. Other factors may be relevant within the exercise of that discretion, but, of course, those factors would have to be relevant in some way to the parties and the tenancy.
In our view (per the principles in Project Blue Sky Inc & Ors v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]) there is no support, either from the text, the context, the language of the RTA viewed as a whole, the general purpose and policy of s 89(5) and its consistency and fairness for any suggestion that the "may" in s 89(5) denotes other than a discretionary exercise of power.
Therefore, there are, so far as this case is concerned, two parts to the application of s 89(5): first, whether the Tribunal was satisfied that the tenants had frequently failed to pay rent, and; second, assuming that the Tribunal was so satisfied, whether the Tribunal, in the exercise of its discretion, considered that a termination order should be made.
It is common ground that the first part was satisfied.
As for the second part, no mention of it is found in the Tribunal's written decision. We also note that the Tribunal's written reasons contain no statement to the effect that "oral reasons were given" which indicates that there were no reasons given (orally) additional to those in writing.
It follows from the written reasons which were given that, logically, the Tribunal either: did not know that the power to make a termination order under s 89(5) of the RTA was discretionary (and therefore did not consider that issue); did know the discretion existed but overlooked it; or did consider the discretion but failed to give any reasons why it was exercised against the tenants and in favour of the landlord.
The first two possibilities are errors of law because the Tribunal would have failed to have constructively exercised its jurisdiction had it fallen into either of those two errors.
If the third logical possibility was the one which in fact happened, then that was an error of law - Stoker v Adecco Gemuale Constructions Pty Ltd [2004] NSWCA 449 per Santow JA, with whom Mason P and Sheller JA agreed, at [41].
The extent of reasons required to be given in the Tribunal was the subject of attention in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 per Bell P (now Bell CJ), with whom Ward JA (now Ward P) at [65]-[77].
In relation to s 89(5) and the exercise of the discretion, and without wishing to appear to be laying out a tariff or guideline for the length of reasons, we would not have thought that the reasons needed to be lengthy in the usual s 89(5) case. But something must be said so that, most particularly, the losing party knows why it lost the case.
We would not have thought the reasons need be lengthy because the Tribunal receives (according to the last-published Annual Report for 2020-2021) a little under 54,000 applications yearly in the Consumer and Commercial Division (in which tenancy matters are heard) of which approximately 32,000 are tenancy matters and 10,000 are social housing matters.
To get through this heavy caseload with the finite resources it is allocated, the Tribunal often allocates Tribunal Members four of these matters to be heard in one day and are given 90 minutes in which to hear them and write reasons. Rarely are members given the assistance of quality submissions in these cases.
It is therefore of no surprise that in Orr Bell P said at [70]: … it is generally accepted that the sheer volume of work undertaken by tribunals is such that a perhaps more relaxed standard of review of reasons with corresponding compensation for linguistic infelicities is appropriate than may be the case when an appellate court is hearing an appeal from another court.
Despite those considerations the parties, and most particularly the tenants in this case, were entitled to know why the discretion was exercised against them (assuming the Tribunal turned its mind to the discretion but simply did not give reasons for its exercise of the discretion).
Whilst this particular case may seem of small consequence compared to cases of great financial value between commercial entitles for example, it was of great significance to them. Its outcome was perhaps as significant to the tenants (and the landlord for that matter) as the outcome of large corporate cases are to the directors and shareholders of the companies involved. Therefore, they are entitled to know the reasons for the decision of such significance to them and, at least in this respect, treated no differently to the directors and shareholders of large companies for example.
The tenants are refugees with their own health problems caring for a son with cancer. They commenced a tenancy shortly before the first covid lockdown. The first appellant, the breadwinner of the family, lost his first job (which caused the arrears of rent) but had recently gained employment and had brought his arrears up to date. The tenants have continued to pay their rent in advance pursuant to orders of the Appeal Panel which granted them a stay on the orders of the Tribunal.
It is common knowledge that the rental market in Sydney is very tight, and the effect on a family such as this should a termination order be made would be dire.
On the other hand, the landlord claimed to need the rent from the premises to pay her mortgage, a very significant consideration for obvious reasons.
Those countervailing considerations required attention by the Tribunal and appropriate reasons so that, whoever lost the case, they understood why the decision was made against them.
The reasons need not have been elaborate. As Mahoney JA said in Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378, quoted with apparent approval in Orr at [74]: But, subject to matters such as these, the basis of the decision of a trial judge or of an intermediate court of appeal should be made apparent. This does not mean that the reasons given need to elaborate: an elaborate argument may not require an elaborate answer. Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it.

Mohd v Basha

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Judgment (8 paragraphs)

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Legislation Cited (2)

Cases Cited (9)