Nelson v Auberson [2019] NSWCATAP 241 | Case summary

Background and Ground 1

On 6 January 2016 the Tenants and Landlord entered into a residential tenancy agreement for a period of 12 months commencing on 8 January 2016 for premises located at Lucknow, NSW.
At the conclusion of that 12-month fixed term the tenancy became a periodic tenancy as defined in the Residential Tenancies Act 2010 (NSW) ("RTA").
On 14 March 2019 the Landlord's real estate agent issued a termination notice seeking to end the periodic tenancy. There is no dispute between the parties that this notice (referred to on the appeal as the 90-day Notice) was governed by s 85 of the RTA.
A termination notice under s 85 of the RTA is not predicated on any breach of the residential tenancy agreement by the tenant and is colloquially known as a "no grounds" notice. If the tenant does not vacate the property in accordance with the termination notice, and the landlord takes proceedings in the Tribunal to obtain a termination order, then pursuant to s 85(3) of the RTA the Tribunal "must" terminate the residential tenancy if the termination notice is a valid notice (i.e. it is in a form that complies with s 82 of the RTA); has been validly served (see s 223 of the RTA); it gives a minimum of 90 clear days to vacate the property; proceedings have been taken in the Tribunal after the date of vacant possession in the notice has expired [s 83(2)(a) of the RTA]; and proceedings have been commenced within the relevant limitation period under Regulation 22 of the Residential Tenancies Regulation 2010 (NSW). The Tribunal has the power to suspend the date of vacant possession for a period after the date of termination - s 114 of the RTA.
The 90-day Notice was so named because under s 85 of the RTA a notice to terminate a periodic tenancy must specify a termination date which is not earlier than 90 days after the day on which the notice is given to the tenant. The 90-day Notice issued in this case specified a date 95 days after the date the Notice was given to the Tenant, being 17 June 2019.
On 11 April 2019 the real estate agent issued, on behalf of the Landlord, a further termination notice. This termination notice (referred to on the appeal as the 14-day Notice) was issued in relation to unpaid rent.
There is no dispute between the parties that the 14-day Notice was governed by, amongst other provisions, s 89 of the RTA.
Section 89 of the RTA says: 89 Repayment of rent owing following issue of non-payment termination notice (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) A termination of the residential tenancy agreement solely on the ground of non-payment of rent, and any warrant for possession issued as a result of any order for possession, cease to have effect if the tenant pays all the rent owing or enters into, and fully complies with, a repayment plan agreed with the landlord and the tenant has not vacated the residential premises. (4) If a tenant repays all the rent owing or enters into, and fully complies with, a repayment plan agreed with the landlord, the landlord must notify: (a) the Tribunal, if the landlord has applied to the Tribunal for a termination order on the ground of non-payment of rent and the application has not been finally dealt with, or (b) the Sheriff, if a termination order has been made and a warrant for possession of the residential premises has been issued but has not been enforced by the Sheriff. Maximum penalty: 20 penalty units. (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 rent owing for the residential premises on or before the day set out in the residential tenancy agreement. (6) If the Tribunal makes a termination order as referred to in subsection (5), a warrant for possession may be issued as a result of that order, even if the tenant has paid all rent owing or complied with a repayment plan.
On 2 May 2019, the owed rent not having been paid, the Landlord commenced proceedings in the Tribunal seeking, amongst other orders, a termination order. The basis of the termination order set out in the Landlord's application commencing the proceedings was the outstanding rent and the 14-day Notice. The Tribunal has the power to terminate a tenancy for non-payment of rent by reason of the operation of s 87(4) and s 187(1)(i) of the RTA.
That application was allocated a hearing date of 25 June 2019.
On that day, as is the Tribunal's usual practice in tenancy disputes, the parties were encouraged to attempt to conciliate their dispute and reach agreement. The parties did so.
At the conciliation the landlord was represented by a real estate agent. The first appellant, Ms Nelson, was present but the second appellant, Mr Johns, was not. There is no dispute that at the conciliation Ms Nelson was authorised to act on Mr John's behalf. The Tenants also had the assistance of a representative from a tenancy advisory service.
There is a dispute as to what was said at the conciliation. It is the Tenants' case that certain things were said at the conciliation which misled Ms Nelson and placed her under duress. Ms Nelson submits that she only agreed to the consent orders (on her own behalf and on behalf of Mr Johns) because she was misled and because she was acting under duress (being the first two grounds of appeal).
We divert briefly from this narrative of events to note that what is said at conciliations is prima facie confidential. Schedule 1 to the Civil and Administrative Tribunal Regulations 2013 (NSW) (the "Regulations") contains cl 2 which provides: (1) ... (2) Any statement or admission made before the Tribunal or any person at a meeting or other proceeding held for the purposes of a resolution process to which parties have been referred by the Tribunal under section 37 of the Act is not admissible in the proceedings in which the referral was made, or in any other legal proceedings before a court or other body, unless the person who made the statement or admission consents to its disclosure in the proceedings. (3) Subclause (2) does not apply with respect to proceedings in which the parties have been referred for mediation under section 37 of the Act.
The conciliation held between these parties on 25 June 2019, which is a form of "dispute resolution process" utilised by the Tribunal, was not a mediation, and so the exception provided by subcl (3) does not apply.
The Landlord does not consent to disclosure of any statement or admission made by his representative at the conciliation.
In Astley v J.H Properties Pty Ltd [2017] NSWCATAP 181 ('Astley'), the Appeal Panel held that a conciliation conducted by a Senior Member of the Tribunal was not a conciliation process the subject of a referral under s 37 of the NCAT Act, accordingly the provisions of Sch 1 subcl (2) of the Regulations did not apply, and the Appeal Panel granted leave to adduce further evidence on appeal regarding what occurred at the conciliation (see [28]-[32]).
The Appeal Panel in Astley also pointed out that in Yuen v Thom [2016] NSWCATAP 243 at [22] evidence of what occurred during a conciliation process of the Tribunal was admitted. There are also decisions of the Appeal Panel where a party has sought that consent orders arising from an agreement made in a conciliation process in the Tribunal be set aside and evidence of what occurred during the conciliation has been considered, but the issue of whether or not such a conciliation process fell within the ambit of Sch 1 subc (2) of the Regulations was not considered: Loch v NSW Land and Housing Corporation [2014] NSWCATAP 110; Hobson v NSW Land and Housing Corporation [2015] NSWCATAP 222.
It is not clear to us whether, in this case, a referral was made under s 37 and thus whether or not Sch 1 cl 2 of the Regulations applies.
However, we need not pursue that matter further because this appeal can be decided on the basis of the allegations made by the Tenants, rather than on the basis of evidence by them of what was said and done at the conciliation. In other words, for the purposes of this appeal, we do not admit Ms Nelson's recollection of what occurred at the mediation as evidence, but rather treat her recollection as setting forth the allegations the Tenants make as a basis for relief on this appeal.
Returning to the narrative, there is no dispute that by the time of the 25 June 2019 the Tenants had paid all of the outstanding rent. Accordingly, the Tenant submitted, the Landlord was required to notify the Tribunal pursuant to s 89(4) of the RTA that all of the rent had been paid as the Landlord's application had not finally been dealt with.
The point to be noted is that if the Landlord had notified the Tribunal that all of the rent had been paid, s 89(2) of the RTA provided that the Tribunal could not have made a termination order unless satisfied under s 89(5) that the Tenants had frequently failed to pay rent when due. There is no dispute that there were multiple past occasions when the Tenants had failed to pay rent when due. Indeed, the application filed by the Landlord expressly mentions that the Landlord was seeking a termination order on the basis that the Tenants had frequently failed to pay rent.
Thus, at the time of the hearing and conciliation, the real issue in dispute between the parties in relation to the proceedings on foot was whether the Landlord could obtain a termination order based upon alleged frequent non-payment of rent.
Ms Nelson's recollection is that it was her belief at the time of the conciliation that the proceedings based upon non-payment of rent were "baseless", and that the Landlord's representations to her to the contrary, made at the conciliation, were misleading.
However, the proceedings were not "baseless" as, even though the Tribunal could not make a termination order by reason of s 89(2) of the RTA it could have made a termination order by reason of s 89(5) of the RTA if satisfied the Tenants had frequently failed to pay rent when due. Thus, the proceedings were not "baseless" and if statements were made as Ms Nelson alleges (that the proceedings were not baseless), they were not misleading.
Ms Nelson says she was misled in an additional way.
In the background at the conciliation, although not relied upon in a formal way in the proceedings, was that the termination date specified in the 90-day Notice had passed eight days earlier.
In her statutory declaration declared on 9 July 2019 Ms Nelson made a number of references to the 90-day Notice being "out of time" as at the time of the conciliation. When asked by us what she meant by the expression "out of time" Ms Nelson did not respond to the question directly. Rather, Ms Nelson said that she was told the proceedings were based upon the 90-day Notice and that this was misleading (we shall come to this matter shortly).
However, at the hearing of this appeal the Tenants did not dispute that the 90-day Notice was valid and complied with the provisions of the RTA. This was objectively true because the Tenants accepted (in their written submissions) that the 90-day Notice had been received by them on 14 March 2019, and the date given for termination, being 17 June 2019, was 95 days later.
Therefore, to the extent the Tenants' have earlier submitted that they were misled about the 90-day Notice being valid, that allegation was not pursued. In any event, there is no substance to the allegation.
What the Tenants do press is an allegation that Ms Nelson says she was told by the real estate agent representing the Landlord that, unless the parties resolved their dispute in their conciliation, the Landlord would continue with the proceedings based on the 90-day Notice.
Ms Nelson further alleges she was told by the tenants' representative that, in her experience, the Tribunal member who would hear the case if the parties did not resolve their differences did not generally give tenants more than two weeks to vacate rented premises (on the assumption a termination order was made). There is no complaint that this latter statement was misleading.
Ms Nelson alleges that there was then some further negotiation between her and the Landlord's representative about time to vacate, with the Landlord wanting four weeks and the Tenants wanting 90 days.
Ms Nelson alleges that her tenancy solicitor (whom she says she subsequently consulted) advised her that the 90-day Notice was "out of time" and the termination for rent arrears "had no grounds". If that advice was given, it was wrong.
Ms Nelson alleges that she was deliberately lied to and misled in that she was allegedly told that "the 90 day vacate was still active when it wasn't" and she was allegedly told that the "Real Estate had no grounds what so ever" for a termination order.
The latter is objectively incorrect as the Landlord could have proceeded on the then existing proceedings to seek a termination order for frequent non-payment of rent as we have explained earlier.
As to the former, the landlord could have commenced fresh proceedings based upon the 90-day Notice (a fact the Tenants acknowledge they were told by the Landlord's agent - see paragraph 15 of the appellants' written submissions dated 12 August 2019); those proceedings would be expected to receive a hearing date within three weeks of the commencement of those proceedings (as is the Tribunal's usual practice in termination proceedings) and a termination order made to take effect a couple of weeks thereafter.
In that way the 90-day Notice was "still active" to use Ms Nelson's words, and the Landlord had available two grounds for termination: frequent non-payment of rent in the then existing proceedings; and the 90-day Notice in fresh proceedings.
Therefore, on the allegations made by Ms Nelson (on her own behalf and on behalf of Mr Johns) she was not misled. The 90-day Notice was "active", and the Landlord had existing proceedings in which it could have pressed for a termination order based upon frequent non-payment of rent.
At the end of their negotiations the parties reached agreement. They went before the Tribunal and the Tribunal made the consent orders the parties asked for. Those orders were: 1. By consent, the Residential Tenancy Agreement is terminated immediately and possession is to be given to the landlord on the date of termination. 2. By consent, the order for possession is suspended until 13-Aug-2019. 3. By consent, the tenant shall pay the landlord a daily occupation fee at the rate of $57.14 per day from the day after the date of termination, namely 26-Jun-2019 until the date vacant possession is given to the landlord. 4. By consent, within 60 days of the date of possession of the premises specified in these orders the landlord may request the relisting of the application to determine the amount of the occupation fee owing.
It will be noted that the date for possession negotiated by the parties was seven weeks after the date of the conciliation, a period slightly longer than probably would have been the case had the Landlord immediately commenced proceedings based on the 90-day Notice.
As will be apparent from what we have said above, in our opinion the allegations made by the Tenants about Ms Nelson having been misled are doomed to fail as the objective considerations demonstrate that she could not have been misled as alleged. Accordingly, Ground 1 is dismissed.

Ground 2

Ground 2 is to the effect that Ms Nelson entered into the agreement with the Landlord at the conciliation under duress.
Ms Nelson sets out her evidence of duress in her statutory declarations declared on 9 and 30 July 2019. That evidence is admissible because it does not (at least in relation to duress) contain evidence of statements or admissions by others and so does not contravene cl 2 of Schedule 1 of the Regulations.
Ms Nelson alleges that all parties (the Landlord's agent and the tenant's representative) misled her (as set out earlier in these reasons), which left her feeling that in fact: "... constraints were placed upon me, illegally and deceptively forcing me into agreeing to consent under duress. I felt incredibly overwhelmed, by being deliberately misled, and influenced by all these parties, them stating under the guise that it was a 90 day termination, when in fact it was not."
The Tenants' case on duress is founded on Ms Nelson being misled. As we have earlier found that Ms Nelson could not have been misled as alleged, the point about duress must fail.
If we were wrong on that point, the case on duress would fail for the additional reason that there is no evidence of conduct necessary to establish duress.
In Turk at [56] - [59] the Appeal Panel said: "[56] The most recent authoritative consideration of duress was by the NSW Court of Appeal in Australia & New Zealand Banking Group v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149. At [66] the Court confined the concept of duress and explained how it fit with other equitable and statutory doctrines and rights. The Court said: "The vagueness inherent in the terms "economic duress" and "illegitimate pressure" can be avoided by treating the concept of "duress" as limited to threatened or actual unlawful conduct. The threat or conduct in question need not be directed to the person or property of the victim, narrowly identified, but can be to the legitimate commercial and financial interests of the party Secondly, if the conduct or threat is not unlawful, the resulting agreement may nevertheless be set aside where the weaker party establishes undue influence (actual or presumptive) or unconscionable conduct based on an unconscientious taking advantage of his or her special disability or special disadvantage, in the sense identified in Commercial Bank of Australia Ltd v Amadio. Thirdly, where the power to grant relief is engaged because of a contravention of a statutory provision such as s 51AA, s 51AB or s 51AC of the Trade Practices Act (Cth), the Court may be entitled to take into account a broader range of circumstances than those considered relevant under the general law. Pursuant to both provisions of the Trade Practices Act (Cth) and the Contracts Review Act, the relative strengths of the bargaining positions of the parties, and their ability to negotiate terms, will be relevant. [57] Thus, the Court, in a decision binding on the Tribunal, has said that duress is limited to circumstances where there is threatened or unlawful conduct involving the person, or the person's commercial and financial interests. [58] After reviewing a number of duress authorities Ward J, in A v N and Anor [2012] NSWSC 354 observed at [509] that: "... the cases show that there is a high threshold to be met with respect to the conduct of the party alleged to be exerting pressure, as these cases all exhibit a high degree of threatened violence." [59] In this case, there was no threat of the relevant kind, nor unlawful conduct, in relation to the appellant and his decision to agree to the consent orders. There was some pressure, but no threat or unlawful conduct.
So here. There is no evidence of threatened or actual unlawful conduct of the relevant kind to establish a case of duress. There may have been some pressure, as many negotiating parties may legitimately seek to exert, but there is no evidence of any unlawful conduct. Ground 2 is dismissed.

Nelson v Auberson

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