NSW Land and Housing Corporation v Boyd

The background

1. On 22 February 2013, the applicant and the respondent entered into a residential tenancy agreement in respect of the premises commencing on 24 December 2012 (the residential tenancy agreement).

The history of the proceedings

1. On 30 November 2021, the applicant commenced proceedings SH 21/48900 against the respondent by filing an application in which it sought pursuant to ss 109(5) and 187(1)(i) of the Residential Tenancies Act 2010 (NSW) (RT Act) a termination order on the ground that the agreement has been frustrated, and a possession order pursuant to s 187(1)(i) of the RT Act, and provided the following reasons for this order: "NSW Land and Housing Corporation (LAHC) is seeking an order for immediate termination of tenancy under Sec 109, property has been rendered wholly uninhabitable due to major structural failures to the footings, external & internal walls. Immediate relocation of the Tenant is required as the property has been deemed uninhabitable due to these structural issues and may be causing both a major health and mental risk to the Tenant. Tenant has rejected an offer of an alternative social housing property that suited her housing and medical requirements."
2. On 8 and 15 December 2021 and 1 February 2022, the Tribunal made the procedural directions for the filing and service of evidence by the parties.

The hearing

1. The hearing took place on 9 February 2022. Ms L Sioeli, Senior Client Service Officer of the Department of Communities and Justice, represented the applicant. Mr R Yen, solicitor of the Marrickville Legal Centre, represented the respondent.
2. The applicant relied on the following documents which were admitted into evidence without objection: 1. a bundle of documents which had been provided to the Tribunal on 7 December 2021 (Ex A1); 2. the undated draft report of Sumeer Gohil (Mr Gohil) (Ex A2) (the Gohil report).
3. The respondent relied on the following documents which were admitted into evidence without objection: 1. a bundle of documents which had been provided to the Tribunal on 19 January 2022 (Ex R1); 2. a bundle of documents, other than a letter dated 7 February 2022 to the Tribunal, which had been provided to the Tribunal on 7 February 2022 (Ex R2).
4. There was no oral evidence.
5. The applicant made no oral submissions and the respondent made brief oral submissions.
6. At the conclusion of the hearing, I reserved my decision.

The issues

1. The following issues arise for determination in the proceedings: 1. whether the Tribunal has jurisdiction to determine the proceedings; 2. whether the applicant is entitled to a termination order by reason of the frustration of the residential tenancy agreement due to the premises being wholly uninhabitable.
2. Before considering these issues it is appropriate to set out the applicable statutory provisions and legal principles, and to summarise the evidence of the parties and the submissions of the respondent.

NCAT Act

1. Part 3 (ss 28-34) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) contains provisions dealing with the jurisdiction of the Tribunal. Section 28 deals with the jurisdiction of the Tribunal generally, and relevantly provides: 28 Jurisdiction of Tribunal generally (1) The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation. (2) In particular, the jurisdiction of the Tribunal consists of the following kinds of jurisdiction - (a) the general jurisdiction of the Tribunal, …
2. Section 29 deals with the general jurisdiction of the Tribunal, and relevantly provides: 29 General jurisdiction (1) The Tribunal has general jurisdiction over a matter if - (a) legislation (other than this Act or the procedural rules) enables the Tribunal to make decisions or exercise other functions, whether on application or of its own motion, of a kind specified by the legislation in respect of that matter, and (b) the matter does not otherwise fall within the administrative review jurisdiction, appeal jurisdiction or enforcement jurisdiction of the Tribunal. …
3. Schedule 4 contains provisions dealing with the Consumer and Commercial Division of the Tribunal (the CC Division). Clause 3 deals with the functions allocated to the CC Division, and relevantly provides: 3 Functions allocated to Division (1) The functions of the Tribunal in relation to the following legislation are allocated to the Division - … Residential Tenancies Act 2010 …

RT Act

1. Part 3 Division 3 (ss 49-54A) contains provisions dealing with the occupation and use of residential premises. Section 52 as in force at the commencement of the residential tenancy agreement dealt with the landlord's general obligations for residential premises, and relevantly provided: 52 Landlord's general obligations for residential premises (1) A landlord must provide the residential premises in a reasonable state of cleanliness and fit for habitation by the tenant. … (4) This section is a term of every residential tenancy agreement.
2. Part 5 Division 5 (ss 108-109) contains provisions dealing with the termination of residential tenancy agreements by events. Section 109 deals with the frustration of residential tenancy agreements in certain circumstances, and relevantly provides: 109 Agreement frustrated - destruction of, or uninhabitable, premises (1) This section applies if residential premises under a residential tenancy agreement are, otherwise than as a result of a breach of an agreement, destroyed or become wholly or partly uninhabitable or cease to be lawfully usable as a residence or are appropriated or acquired by any authority by compulsory process. (2) The landlord or the tenant may give the other party a termination notice. … (5) The Tribunal may, on application by a landlord or tenant, make a termination order if it is satisfied that a termination notice was given in accordance with this section and that this section applies to the residential premises.
3. Part 9 Division 1 (ss 187-189) contains provisions dealing with the general powers of the Tribunal. Section 187 deals with the orders that may be made by the Tribunal, and relevantly provides: 187 Orders that may be made by Tribunal (1) The Tribunal may, on application by a landlord or tenant or other person under this Act, or in any proceedings under this Act, make one or more of the following orders - … (i) a termination order or an order for the possession of premises, …

The applicable legal principles

1. In Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9 (Roberts) at [116]-[117] an Appeal Panel considered the expression "fit for habitation" which is imported in the RT Act: "[116] In Finn v Finato (Tenancy) [2004] NSWCTTT 179 the Consumer Trader and Tenancy Tribunal (CTTT) considered the obligations of a landlord to provide and maintain the premises in a reasonable state of repair and the meaning of the expression "fit for habitation", an expression also used in the Residential Tenancies Act, 1987. At [18]-[19], the CTTT said: 16 Section 25(1)(a) of the Residential Tenancies Act 1987 requires the landlord to provide a property in a reasonable state fit for human habitation. Section 25(1)(b) imposes a duty of the landlord to provide and maintain the property in a reasonable state of repair having regard to the age of the premises and the amount of the rent payable during the prospective life of the premises (Roberts and Bell - 00/40837). In a previous case the Tribunal held that the requirement for habitability was a minimum condition beyond which the state of disrepair could not fall. The premises were also badly affected by rising damp and mould causing the tenant to complain about the problem (Edwards and Savires RT01/38788). 17 I refer to "Residential Tenancies Law and Practice New South Wales' (2001 edition 4th) at page 73 where the learned authors state that the objective test is one of contemporary standards in assessing habitability as determined by the tribunal in previous decisions (Lam and Lu RTT90/008960). 18 The leading decision which guides the Tribunal in relation to this standard of habitability is Summers v Salford Corporation [1943] AC 283 in which Lord Atkin said: "If the state of the repair of the house is such that by ordinary user damage may naturally be caused to the occupier either in respect of personal injury to life or limb or injury to health, then the house is not in all respect fit for habitation..... it is clear that premises may be unfit for human habitation even though it is physically possible for a tenant to reside in the premises." 19 In McLeish v FT Eastment & Sons Pty. Ltd (1970) 91 WN (NSW) 268 CA the Court in reliance upon Proudfoot v Hart (1890) 25 QBD 42 considered the words " fit for habitation" and "tenantable repair " and whether there was a difference . This is relevant to a consideration of section 25(1) of the Act, which imports both concepts. The Court stated: "must both import such a state as to repair that the premises might be used and dwelt in, not only for safety , but for reasonable comfort, by the class of persons by whom and for the sort of purpose for which, they were to be occupied.....The conclusion I draw... is that the landlord is obliged to hand the premise over to the tenant, at the commencement of the lease, in a reasonable state of repair having regard to its age, rent payable and the prospective life of the premises, and the state of the repair must at least meet the minimum standard inherent in the contemporary understanding of the term "fit for habitation". [117] That is, the CTTT concluded that the obligation to maintain includes ensuring the premises do not fall below a particular state of repair. That minimum level is that the premises are fit for habitation, namely that the residential premises can be used and dwelt in not only safely but also with reasonable comfort, being the state of the premises which a landlord is required to provide at the commencement of a residential tenancy agreement."
2. As set out in De Soleil v Palmhide Pty Ltd [2010] NSWCTTT 464 (De Soleil), the test of uninhabitability is a difficult one to satisfy and it should not be lightly found by the Tribunal that premises are not fit for habitation: Stokes v Zarimis [2021] NSWCATCD 23 at [51]; Taylor v Reilly [2021] NSWCATCD 74 at [84].

The evidence of the applicant

1. Adrian Krekacs (Mr Krekacs), a structural engineer, in his draft report dated 4 October 2019 (the Krekacs report) stated that he inspected the premises on 25 September 2019, and expressed the following opinions: "The following defects were generally observed: • Diagonally propagating cracks throughout the dwelling both internally and externally up to approx. 15mm wide (refer photographs) • Diagonally propagating cracks throughout the dwelling both internally and externally up to approx. 15mm wide (refer photographs) • Delaminating cornices throughout the dwelling (refer photographs) • Gaps opening up front bedroom widow up to approximately 20mm wide (refer photographs) The defects, particularly cracks to masonry walls, in our opinion appear to be consistent with the type of damage generally induced by foundation movement and in particular differential foundation settlement."
2. On 25 November 2021, the Department of Communities and Justice under delegated authority of the applicant gave a notice to the respondent of termination of the residential tenancy agreement on 25 November 2021 under s 109 of the RT Act (the 25 November 2021 notice) which relevantly provided: "The premises have been rendered wholly uninhabitable due to major structural damage, cracking to external and internal walls."
3. Mr Gohil, a structural engineer, in the Gohil report stated that he inspected the premises on 25 January 2022, and expressed the following opinions: "3.1. A full inspection of all areas of the property was not able to be conducted due to the high volume of material being stored within the property. 3.2. There is structurally significant cracking present in the property. Without being able to inspect all of the property, with unobstructed view of all the areas, it is not possible to quantify the risks presented by the defects observed. 3.2.1. It is recognised, that these structural defects have been present in the property for a longer period of time, as was noted in previously conducted structural inspections. As such it could be argued that these defects have stabilised in size and will not increase in severity, but this is just an assumption. It would not be an acceptable way to calculate the risk that these defects present. 3.2.2. As a complete inspection of the property was not possible, there is a real risk that there may be damage to the building which has not been observed and noted. This damage could of course present a safety risk to the tenant."

The evidence of the respondent

1. The residential tenancy agreement relevantly provides: LANDLORD'S GENERAL OBLIGATIONS FOR RESIDENTIAL PREMISES 16. The landlord agrees: 16.1 to make sure that the residential premises are reasonably state clean and fit to live in, and"
2. The respondent in the ingoing condition report dated 22 February 2022 signed between Family and Community Housing NSW and herself recorded "cracks in bedroom walls" for bedroom 2.

The submissions of the parties

1. In his oral submissions the respondent made the following submissions: 1. section 109 does not apply because the applicant breached s 52(1) of the RT Act and cl 16.1 of residential tenancy agreement; 2. the 25 November 2021 notice was invalid.

Whether the Tribunal has jurisdiction to determine the proceedings

1. I am satisfied that the applicant has made an application within s 109(5) of the RT Act.
2. I am satisfied that the Tribunal has jurisdiction to determine the proceedings pursuant to ss 28(1) and (2)(a) and 29(1)(a) of the NCAT Act as ss 109(5) and 187(1)(i) of the RT Act enable the Tribunal to make decisions in relation to the application of the applicant. It follows that the functions of the Tribunal in relation to the RT Act have been allocated to the CC Division pursuant to Sch 4 cl 3(1) of the NCAT Act.

Whether the applicant is entitled to a termination order by reason of the frustration of the residential tenancy agreement due to the premises being wholly uninhabitable

1. I am not satisfied that the applicant breached s 52(1) of the RT Act, and cl 16.1 of the of residential tenancy agreement by reason of the presence of cracks in the walls of bedroom 2. The presence of cracks in the walls of bedroom does not establish that the premises were not fit for habitation by the respondent at the commencement of the residential tenancy agreement.
2. Having regard to the principles in Roberts at [116]-[117] and De Soleil, I am not satisfied that the applicant has established that the premises are wholly uninhabitable due to due to major structural damage, cracking to external and internal walls as alleged in the 25 November 2021 notice. Neither Mr Krekacs in the Krekacs report nor Mr Gohil in the Gohil report supports the characterisation of major structural damage to the premises. There is no evidence that there is any risk of personal injury to life or limb or injury to the health of the respondent.
3. It follows that the 25 November 2021 notice was invalid and the applicant has not established that it is entitled to a termination order by reason of the frustration of the residential tenancy agreement due to the premises being wholly uninhabitable.

Order

1. I make the following order: 1. the proceedings are 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: 14 March 2022