NSW Land and Housing Corporation v Khalkhali

REASONS FOR DECISION

1. This is an appeal from two decisions of the Consumer and Commercial Division of the Tribunal.
2. The dispute involves a social housing residential tenancy. The premises are a strata unit located in an eastern suburb of Sydney, NSW. The appellant is the landlord. The respondent is the tenant.
3. In the proceedings before the Tribunal ('the substantive proceedings') the tenant filed her application in the Tribunal on 20 April 2022. The complaint of the tenant was that there was a longstanding issue with water ingress into the unit causing mould and wet carpet. The tenant also asserted that the balcony of the unit was structurally unsound with concrete cancer. The tenancy had commenced in 2001.
4. There was no evidence to clearly establish the date the building was constructed. From the limited evidence before the Tribunal on that issue, it can be inferred the building was constructed no later than the 1960's.
5. The balcony of the unit did not have an awning, nor did any other residential balconies.
6. The orders sought by the tenant when the application was filed were as follows: 1. An order for compensation under s 187 (1) (d) of the Residential Tenancies Act 2010 (NSW) ('the RT Act') of $500. 2. An order for a rent reduction under s 44 (1) (b) of the RT Act due to the reduction or withdrawal of goods, services or facilities by the landlord. 3. An order under s 65 (1) (a) of the RT Act that the landlord perform repairs.
7. The matter was listed for a Conciliation and Group List (Hearing) at the Tribunal on 11 May 2022. Ms Pope, a tenant's advocate from Eastern Area Tenant's Service, appeared for the tenant. A representative of the landlord appeared. The matter was set down for a final hearing, with directions regarding the filing and serving of documentary evidence by the parties.
8. Importantly, the Tribunal Member on 11 May 2022 noted the following in the procedural directions: 8. The tenant is claiming for repairs to balcony to resolve leaking and mould issues and a mould clean of the property. The tenant is also claiming $500 for loss of enjoyment (sic) of the property and a rent reduction of 15% per week from 13 February 2022 to date for withdrawal of services for loss of use of party of the property due to leak and mould pursuant to Section 44 (1) (b).
9. That notation in the procedural directions of the Tribunal clearly set out what was being claimed by the tenant in the proceedings.
10. The reference to a 15% rent reduction equated to a rent reduction of $11.80 per week from 13 February 2022.
11. The tenant filed and served documentary evidence. Included in the tenant's documentary evidence was an expert report by a building consultant, Mr Ovidi (Sydney Building Consultants) dated 25 May 2022. That report had been engaged by Eastern Area Tenants Service and paid for by that organisation in support of the tenant's application.
12. The landlord has also filed and served documentary evidence and submissions on 4 July 2022.
13. The landlord's documentary evidence filed and served in the substantive proceedings indicated the landlord had taken some measures in 2022 to inspect and repair the premises. Such measures included repairs to the roof in late May 2022; engaging an engineer to inspect the building and provide a report on necessary repairs; and a "mould washdown" in the bedroom and kitchen. The landlord asserted that the tenant had not been co-operative regarding access in respect of some attempts to inspect and repair.
14. The hearing was listed at 1.15 pm on 6 July 2022. The hearing was listed by telephone. The Tribunal had sent the parties a hearing notice dated 17 May 2022. That hearing notice contained the following information: 1. The Tribunal will contact the parties on the telephone number listed on the application for hearing. The parties must notify the Tribunal of any changes of the telephone number within 7 days from 17 May 2022. The number must be a direct line or mobile not a switchboard and each party must be available on the notified telephone number. The Tribunal will call from a private number. 2. You must remain available after the time listed above in the event the Tribunal is delayed in calling you. If the Tribunal is unable to contact a party by telephone the Tribunal may proceed to make orders including final orders in the absence of that party.
15. The landlord provided in its bundle of appeal documents a transcript of the hearing on 6 July 2022. Ms Pope appeared for the tenant. There was no appearance by the landlord. The Member briefly stated at the commencement of the hearing that he "tried to ring NSW Land and Housing. They're not answering so we're just going to proceed in their absence."
16. The Tribunal heard evidence from the tenant and submissions of Ms Pope.
17. Towards the conclusion of the hearing, the Member said the following: Member:…So the remedies are work order for 65 (sic), compensation for 63/50, and 44 is the reduction in the rent...So here's my thinking. Award a lump sum compensation form breach of the section 63 obligation seeking $500, rent reduction of 15%-that's $11.80 per week-from 13 February to today, compensation continuing at a daily rate of $10 a day from tomorrow until repair. Ms Pope: Yep. Thank you Member. I understand. Member: Yeah, all right. And then the work orders flowing from section 65 are mould removal, carpet removal and replacement with new, installation of a sufficient awning over the balcony. I'll say this, "To reduce the" or "to prevent water ingress from the southerly prevailing weather and particularly rainstorms …
18. The Member then issued written orders and reasons. According to the landlord, the orders and reasons were emailed at approximately 2.35 pm on 6 July 2022.
19. The orders made by the Tribunal were as follows: 1. Landlord to pay tenant $500 for "lump sum compensation" for breach of s 63 of the RT Act under s 187 (1) (d) of the RT Act as "sufficient repairs were not done within a reasonable time" 2. Landlord is to allow the tenant a rent reduction of 15% under s 44 (sic) as she has been unable to fully use the whole of the Premises (e.g. bedroom, kitchen, and balcony), i.e. $11.80 per week from 13/2/22 to date. 3. The landlord is to pay the tenant $10 per day from tomorrow until repairs are completed as "compensation" under s 187 (1) (d) of the RT Act. 4. The landlord is to reimburse EATS for the cost of the expert report within 7 days of delivery of a copy of the SBC tax invoice to the landlord, not exceeding $1,300. 5. By 27/7/22 the landlord is to complete the following works in the Premises: 1. Mould removal. 2. Carpet removal and replacement with new. 3. Installation of a sufficient awning over the balcony to prevent water ingress from the southerly prevailing weather and particularly rain storms from the south. 4. Repair source of water ingress into the main bedroom through the balcony door. 5. Appointment of a structural engineer to inspect and report on balcony safety , and the extent of concrete cancer. The tenant is to be provided with a copy of the structural engineer's report within 7 days of its receipt by the landlord, ,and the tenant is to be advised on a works program for the treatment of concrete cancer.
20. On about 8 July 2022 the landlord filed a set-aside application under Cl. 9 (1) (b) of the Civil and Administrative Tribunal Regulation 2013 (NSW) on the basis that orders had been made in its absence. That Regulation (which was repealed and replaced by the Civil and Administrative Tribunal Regulation 2022 (NSW) on 1 September 2022; but which contains no relevant difference in the substance of Cl. 9 (1) (b)) relevantly states as follows: 9 Additional power to set aside or vary decision determining proceedings - the Act, s 90(2)(a) (1) In addition to a power that is expressly conferred on the Tribunal by the Act or enabling legislation to set aside or vary its decisions, the Tribunal may order that a decision it has made that determines proceedings be set aside or varied if - (a) all of the parties to the proceedings have consented to the making of the order to set aside or vary the decision, or (b) the decision was made in the absence of a party and the Tribunal is satisfied that the party's absence has resulted in the party's case not being adequately put to the Tribunal. Example - The Act, sections 45(3), 53(4), 63, 64(3) and 73(3) expressly confer powers to set aside or vary decisions of the Tribunal. (2) The Tribunal may make an order under this section of its own motion or on the application of a party. (3) Unless the Tribunal grants an extension under the Act, section 41, an application for an order under this section must be made within 7 days after the decision concerned was made. (4) Except where the parties have consented to the making of the order, the Tribunal may not make an order under this section unless the Tribunal has - (a) given the parties an opportunity to make submissions about the proposed order, and (b) taken any submissions into account. …
21. There was confusion as to when the set aside application was filed. According to a statutory declaration of Ms Pickering, client service officer of the respondent, she filed the set-aside application electronically with the Tribunal on 8 July 2022. When she did not hear from the Tribunal she made contact on 14 July 2022. She was informed that the set-aside application was not on file. She provided the Tribunal with information verifying that it had been filed on 8 July 2022. Ms Pickering was told that the respondent's email of 8 July 2022 had been located and would be placed with the file and the set-aside request would be expedited.
22. The set-aside application did not contain a large amount of information. In response to the question "If you are asking to have the decision set aside or varied because the decision was made in your absence which resulted in your case not being adequately put to Tribunal, provide the following information" the respondent provided a detailed explanation as to why Ms Pickering has not appeared at the hearing.
23. In response to the question "Describe in summary the case (evidence and arguments) you would have put to the Tribunal if you and not been absent. Use a separate sheet if needed" the respondent stated in response to each of the orders made: The landlord is to immediately pay the tenant $500 as lump sum compensation for breach of the RTA s 63:- The landlord does not dispute this as this was the offer made at initial hearing that the tenant declined. The landlord is to allow the tenant a rent reduction of 15% under s 44 as she has been unable to fully use the whole of the Premises (e.g. bedroom, kitchen and balcony)i.e. $11.80 per week from 13/2/22 to date The landlord does not dispute this as this was the offer they made at the initial hearing which the tenant declined. The landlord is to pay the tenant $10 per day from tomorrow until repairs are completed as compensation under s 187 (1) (d) (sic) (Nothing was identified in response to this order). The landlord is to reimburse EATS for the cost of the expert report within 7 days of delivery of a copy of the SBC tax invoice to the landlord, not exceeding $1,300. (Nothing was identified in response to this order). By 27/5/22 the landlord is to complete the following works in the Premises: Mould removal. Landlord's response-Mould removal is in progress, delay due to specialist materials required, expected to be completed by 8/7/22. Carpet removal and replacement with new Landlord's response-scope and quote raised 7/7/2022-target date 12/7/2022. Work to be determined if full replacement is required when scope has been received. Target date of 27/7/22 may not be achievable. Installation of a sufficient awning over the balcony to prevent water ingress from the southerly prevailing weather and particularly rain storms from south. Landlord's response-The landlord has engaged an engineer to scope and submit findings/recommendations, the target completed date for receipt of Structural Engineer's Report is 21/7/22. Dependent on findings (sic) works will not be met by 27/7/22. Repair source of water ingress into the main bedroom through the balcony door. Landlord's response-This has been completed (sic) 15/6/22. Appointment of structural engineer to inspect and report on balcony safety, and the extent of concrete cancer. The tenant is to be provided with a copy of the structural engineer's report within 7 days of its receipt by the landlord, and the tenant is to be advised on a works program for the treatment of the concrete cancer. Landlord's response-The landlord has engaged an Engineer to scope and submit findings/recommendations to determine or identify concrete cancer, the target completed date for receipt of Structural Engineer's report is 21/7/22, works derived from findings will exceed 27/7/22.
24. On 20 July 2022, a Senior Member of the Tribunal determined the set aside application on the basis of the application filed on 8 July 2022. The Senior Member did not call on any further submissions or documents from either party on the set-aside application. The orders and reasons state as follows; The Tribunal dismisses the application to set aside the decision/orders made on 06-Jul-2022 Reasons: Although the decision was made in the absence of the Applicant (to the set aside application) the Tribunal is not satisfied that the Applicant's absence has resulted in the Applicant's case not being adequately put to the Tribunal. Although the orders were made in the absence of the applicant (sic), and the Tribunal is satisfied that the party's absence resulted in their case not being adequately put to the Tribunal, in the exercise of discretion the Tribunal is not satisfied that there is a real likelihood that it would be unjust to let the decision stand. The application was not made in time and leave is not granted to extend time. The set aside application indicates comment/compliance to be met of the orders made by the Tribunal. As regards orders 3 and 4 not addressed in the set aside application. The Tribunal is not satisfied that there is a real likelihood that it would be unjust to let these orders stand.
25. The landlord filed a Notice of Appeal on 29 July 2022. We will return to the grounds of appeal later in this decision.
26. The appeal from the substantive decision on 6 July 2022 has not been filed within the applicable 14 day period from the date the landlord was notified of the decision of 6 July 2022 under Reg. 25 (4) (b) of the Civil and Administrative Tribunal Rules 2014 (NSW) ('the NCAT Rules'). That time period can be extended under s 41 of the NCAT Act.
27. On 4 August 2022 the tenant filed a renewal application under Sch. 4 Cl. 8 of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act') in Matter SH 22/35332. The renewal application stated the landlord had complied with orders 1 and 2 of the Tribunal dated 6 July 2022 and had not complied with order 3 in respect of "compensation awarded to the tenant". The renewal application also stated that the landlord had not completed or fully complied with the work orders contained in Order 5.
28. The renewal proceedings in Matter SC 22/35332 are yet to be listed for a final hearing in the Tribunal.
29. However, the parties appear to have overlooked the fact that on 1 August 2022 the Appeal Panel granted a stay of Orders 3, 4, and 5 of the Tribunal dated 6 July 2022 and on 17 August 2022 the Appeal Panel extended by consent the stay order "until further order or finalisation of the appeal, whichever is earlier in time".
30. Further, under Sch. 4 Cl. 8 (1) and (2) of the NCAT Act a party in whose favour an order is made may renew proceedings within 12 months of the date that the order was to be complied with. However, by reason of Sch.4 Cl. 8 (5) (b) of the NCAT Act, the renewal clause does not apply if the order "is or has been the subject of an internal appeal". By reason of ss 32 and 80 of the NCAT Act, this appeal is an internal appeal.
31. Accordingly, the Tribunal has no jurisdiction in the renewal proceedings until this appeal has been determined. We will return to this issue later in this decision when we discuss the disposition of the appeal and what is to occur in Matter SH 22/35332.

GROUNDS OF APPEAL

1. In respect of the decision of the Tribunal dated 6 July 2022 the landlord's grounds of appeal are summarised as follows: 1. Denial of procedural fairness in respect of the hearing on 6 July 2022 being conducted in the absence of the landlord including: 1. The orders regarding compensation (Order 3) and costs (Order 4) of the decision of 6 July 2022 were not raised in the tenant's application or referred to in evidence and submissions. The landlord was denied procedural fairness because it never had any opportunity to be heard on such issues. 2. The landlord was not given a reasonable opportunity to be heard on the feasibility of the landlord performing the repairs (Order 5) within the short timeframe ordered by the Tribunal. 3. The order regarding construction of an awning should not have been made. 4. The set aside application was in part refused because it had been filed out of time; and procedural fairness required the landlord to be given an opportunity to be heard on the set-aside application. 1. Error on a question of law in respect of the repair order that the landlord construct an awning over the balcony (Order 5 (3) dated 6 July 2022). The landlord submitted that the duty under ss 63 and 65 of the RT Act for a landlord to take reasonable measures to keep premises in a reasonable state of repair having regard to the age of the premise; life expectancy of the premises; and rent payable for the premises did not extend to making a capital improvement by way of installation of an awning. The landlord relied upon authorities including Southwark London Borough Council v Tanner [2001] 1 AC 1 at [8]; Tabert v NSW Land and Housing Corporation [2001] NSWCA 182; Beerby v NSW Department of Housing [1996] NSWRT 216; and Vankataiah v Sekiguchi [2021] NSWCATCD 52 at [55] that the landlord's duty to repair related to renewal, replacement, or repair of existing structures, and the installation of an awning was a capital improvement that was beyond the scope of the landlord's duty, in respect of both s 52 of the RT Act (habitability of the premises) and ss 63 and 65 of the RT Act (repair of the premises). 2. Error on a question of law in respect of the Tribunal awarding the tenant legal costs in respect of its expert report. The landlord submitted that the Tribunal had not considered the requisite "special circumstances" test under ss 60 (2) and (3) of the NCAT Act and was in error in awarding the tenant the cost of the expert report, which was a disbursement that fell within legal costs and should have been subject to the provisions of ss 60 (1) (2) and (3) of the NCAT Act. 3. Error on a question of law in respect of Order 3 of the decision dated 6 July 2022 to award the tenant ongoing "compensation" of $10 per day under s 187 (1) (d) of the RT Act until repairs are completed. The landlord submits that "compensation" must only arise from the landlord's breach and there must be evidence to establish loss. There was no evidence to support any such future loss, which was entirely speculative. In written submissions, the landlord expanded this ground of appeal to include a submission that the Tribunal had, in effect, imposed a "penalty" on the landlord.

SCOPE AND NATURE OF APPEALS

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80 (2) of the NCAT Act
2. Internal appeals involve consideration of whether there has been any error of law; or any error other than an error of law sufficient to grant leave to appeal under Cl. 12 of Sch. 4 of the NCAT Act.
3. An appeal is not simply an opportunity for a dissatisfied or aggrieved party to re-argue the case they put at first instance: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
4. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 ('Prendergast') the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons. 2. Whether the Tribunal identified the wrong issue or asked the wrong question. 3. Whether a wrong principle of law had been applied. 4. Whether there was a failure to afford procedural fairness. 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations. 6. Whether the Tribunal took into account an irrelevant consideration. 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
5. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in Cl. 12 (1) of Sch. 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
6. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of Cl. 12 (1) of Sch. 4 may have been suffered 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.
7. Even if an appellant from a decision of the Consumer and Commercial Division requiring leave to appeal has satisfied the requirements of Cl. 12(1) of Sch. 4 of the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80 (2) (b) of the NCAT Act.
8. In Collins v Urban, the Appeal Panel stated at [84] that 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; (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.
9. Even if the appellant establishes that it may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains discretion whether to grant leave under s 80(2) of the NCAT Act. The appellant must demonstrate something more than the Tribunal was arguably wrong (Pholi v Wearne [2014] NSWCATAP 78 at [32]).
10. In this matter, the only grounds of appeal raised by the landlord involve an error on a question of law. Consequently, it is unnecessary to consider the principles applicable to leave to appeal under Sch. 4 Cl. 12 of the NCAT Act and Collins v Urban.

Extension of Time To Appeal

1. The principles applicable to whether time should be extended to appeal are set out in Jackson v NSW Land and Housing Corporation [2022] NSWCATAP 22 at [22] as follows: The considerations that will generally be relevant to the Appeal Panel's consideration of whether to grant an extension of time in which to lodge a Notice of Appeal include: (1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant - Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSWCA 85 at [38]; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision - Jackamarra v Krakouer (1998) 195 CLR 516 at [4], Nanschild v Pratt [2011] NSWCA 85 at [39] and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success - Jackamarra at [7]; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal), - Tomko v Palasty (No 2) (2007) 71 NSWLR 61at [55] (per Basten JA) but note also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable - Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [14] (per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58] - [59].
2. In our view, it is appropriate to extend time to appeal the decision of 6 July 2022. The extension sought is for a brief period. The explanation for the delay is a reasonable one, being that the legal department of the landlord needed to consider the decision and the relevant Solicitor was on leave for a period of time. There is no prejudice to the tenant in extending the period to appeal, such as evidence or submissions that are unavailable and would have been available had the appeal been filed within time. Further, the landlord's prospects of succeeding in the appeal are strong.

Denial of Procedural Fairness

1. The fact that the landlord failed to have the decision of 6 July 2022 set aside under Cl. 9 (1) (b) of the NCAT Regulation does not eliminate the right of the landlord to appeal from the substantive decision or mean that the Appeal Panel must only focus upon the set aside decision.
2. It is appropriate to focus upon the substantive decision of 6 July 2022, because if that decision involves a denial of procedural fairness to the landlord the appeal will succeed irrespective of whether there was an error in the decision of 20 July 2022 to refuse the set aside application, unless we are satisfied that it is inevitable the outcome would have been the same had procedural fairness been accorded and the landlord was not denied the possibility of a successful outcome (Stevanovski v CLK Plumbing Pty Ltd [2017] NSWCATAP 180 at [30]-[31], applying the principles that arise from Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 at 145 and 147).
3. However, the Appeal Panel retains a discretion, if the appeal succeeds, to vary the decision; or to quash the decision in whole or part and substitute another decision; or to remit the decision in whole or part for reconsideration to the Tribunal under s 81 of the NCAT Act.
4. We are satisfied that the decision contains errors of law that involve a denial of procedural fairness, and that the appeal succeeds.
5. There are numerous decisions of the Appeal Panel which state that the Tribunal must conduct hearings in a procedurally fair way (e.g. Kotsakis v Hidajat [2021] NSWCATAP 358 at [53]-[56]). That duty is also part of the statutory requirement in s 38 (5) (c) of the NCAT Act that the Tribunal must take measures that are reasonably practicable to ensure the parties have a reasonable opportunity to be heard and have their submissions considered in proceedings.
6. The duty under s 38 (5) (c) of the NCAT Act is not breached simply because a hearing is conducted ex parte (Merrick v Hines [2021] NSWCATAP 108 at [24]-[25]). Rule 35 of the NCAT Rules gives the Consumer and Commercial Division of the Tribunal the power to conduct ex parte hearings in certain circumstances. No ground of appeal was raised that the Tribunal did not properly consider and apply Rule 35 of the NCAT Rules.
7. The denial of procedural fairness in this matter is not that the Tribunal conducted the hearing of 6 July 2022 ex parte.
8. Rather, it is that the Tribunal made orders that included matters that were not part of the tenant's application prior to the hearing on 6 July 2022 and were not matters the landlord was on notice about until the decision of the Tribunal was sent to the parties.
9. Having the benefit of a transcript of the hearing on 6 July 2022, as well as Ms Pope in her oral submissions referring to what occurred at the hearing, we are satisfied that the tenant never sought an order that there be "compensation" under s 187 (1) (d) of the RT Act of $10 per day for the period from the date of the hearing until repairs were completed.
10. The landlord was never on notice that such an order may be made and had no opportunity to provide evidence or submissions in opposition to it. The Tribunal raised towards the end of the hearing that it was going to make such an order. There was no explanation in the reasons for the legal basis of such an order, nor how it could be made under s 187 (1) (d) of the RT Act (rather than, for example, an order under s 44 (1) (b) to fix rent for a particular period of time for both the past and the future by reason of a withdrawn of goods, services or facilities by the landlord provided that the total period of the rent reduction did not exceed 12 months).
11. The Tribunal also failed to formally grant leave to amend the tenant's application or consider the relevant legal issues pertaining to a party seeking leave to amend.
12. Although it would have been of assistance under s 36 (3) of the NCAT Act for Ms Pope to attempt to dissuade the Tribunal from making such an order in circumstances where it was not an order that had been sought by the tenant and the tenant had not sought leave to amend the application at the hearing for such an order to be made, we are not critical of Ms Pope for failing to do so. We accept that it was raised by the Member who thought it was appropriate and Ms Pope (who is not a Solicitor) passively accepted the Tribunal's decision.
13. A party to litigation is entitled to know in substance the case it has to meet (Bellingen Shire Council v Colavon Pty Ltd [2012] NSWCA 34 at [33]). The landlord was not given that opportunity in the circumstances of this matter.
14. We accept that by reason of s 38 (4) of the NCAT Act the Tribunal must act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. There are also circumstances in which it is not a denial of procedural fairness to consider a matter that a party should have been aware of, even if it was not raised at, or prior, to the hearing (e.g. BKB Constructions Pty Ltd v Sawan [2022] NSWCATAP 103 at [59]-[74]). In this matter, the landlord was clearly denied the reasonable opportunity to be heard on an order made in its absence that it had no reasonable knowledge could be made.
15. Further, there was a denial of procedural fairness to the landlord in the decision to order the landlord to construct an awning. The application sought "repairs" to the balcony, but in our view it was not clearly stated that the tenant was seeking that the landlord construct an awning to prevent water ingress in the context of seeking an order for repairs under s 63 of the RT Act. That was not referred to by the Tribunal in the notation made in the procedural directions of 11 May 2022 setting out the Tribunal's understanding of the real issues in dispute, nor was it referred to specifically in the original application for orders.
16. The report of Mr Ovidi dated 25 May 2022 referred to an awning over the balcony being a structure that would "deflect wind driven rain and reduce the exposure to window and door" and the report contained a diagram of an awning. He also referred to "the likely cause of water ingress" being the absence of an awning. The content of the report is not, however, sufficient to put the landlord on reasonable notice the tenant was seeking a repair order that an awning be installed, in circumstances where Mr Ovidi did not clearly state in his report that the absence of an awning is a design fault or deficiency in a building that is over 50 years old. We were not taken to any correspondence by the tenant to clearly indicate the tenant was seeking the installation of an awning as part of an order to repair.
17. Additionally, the report does not contain a scope of works to install an awning, or state precisely where the awning should be located.
18. In our view, the landlord was not reasonably on notice prior to the hearing of 6 July 2022 that the Tribunal may make an order that an awning be constructed above the balcony. Making such an order at an ex parte hearing was, in our view, a denial of procedural fairness to the landlord.

The Costs Order

1. The decision to award the tenant the cost of the expert report of Mr Ovidi was also a denial of procedural fairness. There was nothing in the application or the documents and submissions of the tenant to indicate that the tenant intended to make a costs application at the hearing.
2. In our view, the tenant obtaining an expert report (arranged by the tenancy advocacy service representing the tenant) in the course of the proceedings to adduce evidence on whether the balcony required repair was a legal disbursement, not damages arising from a breach by the landlord and accordingly the provisions of s 60 of the NCAT apply.
3. If the Tribunal was considering making a costs order (or the tenant had made an application for a costs order) in ex parte proceedings of this type, the appropriate course of action was to allow both parties an opportunity to make submissions on the issue of costs. The Tribunal failed to do this and there was a denial of procedural fairness to the landlord.
4. Further, irrespective of the issue of procedural fairness, the reasons of the Tribunal do not indicate the Tribunal considered the legal principles pertaining to whether there were sufficient "special circumstances" to award the tenant costs The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6]-[15]).
5. The tenant states in her Reply to Appeal that she is no longer seeking a costs order regarding the cost of obtaining the expert report and consents to this order being set aside.

The Order to Construct an Awning

1. As discussed previously, the making of that order at an ex parte hearing in circumstances where the landlord was not reasonably on notice such an order could be made was a denial of procedural fairness.
2. For the sake of completeness, we will consider whether there was any legal basis for making the order irrespective of the issue of procedural fairness.
3. The balcony of the tenant's residence did not have an awning at the commencement of the tenancy; and it does not appear any other residential balcony in the building has an awning.
4. The landlord's duty to keep premises in a reasonable state of repair arises from ss 63 and 65 of the RT Act, which state as follows: 63 Landlord's general obligation (1) A landlord must provide and maintain the residential premises in a reasonable state of repair, having regard to the age of, rent payable for and prospective life of the premises. (2) A landlord's obligation to provide and maintain the residential premises in a reasonable state of repair applies even though the tenant had notice of the state of disrepair before entering into occupation of the residential premises. (3) A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant's breach of this Part. (4) This section is a term of every residential tenancy agreement. 65 Tenants' remedies for repairs - Tribunal orders (1) Orders for which tenant may apply The Tribunal may, on application by a tenant, make any of the following orders - (a) an order that the landlord carry out specified repairs, (b) an order that the landlord reimburse the tenant an amount for urgent repairs carried out by the tenant, (c) an order that the landlord reimburse the tenant an amount for repairs to a smoke alarm carried out by the tenant under section 64A(3). (2) Orders for repairs The Tribunal may make an order that the landlord carry out specified repairs only if it determines that the landlord has breached the obligation under this Act to maintain the residential premises in a reasonable state of repair, having regard to the age of, rent payable for and prospective life of the premises. (3) In deciding whether to make an order under this section, the Tribunal - (a) must take into consideration the regulations, if any, made under subsection (6), and (b) may take into consideration whether the landlord failed to act with reasonable diligence to have the repair carried out. (3A) The Tribunal must not determine that a landlord has breached the obligation unless it is satisfied that the landlord had notice of the need for the repair or ought reasonably to have known of the need for the repair. …
5. The scope of the landlord's duty keep premises in a reasonable state of repair under s 63 of the RT Act does not extend to installing a new structure which is a capital improvement, as distinct from repairing the structure in existence at the commencement of the tenancy. As Higgins CJ stated in Re Newell [2003] ACTSC 31 at [17]-[18]: The ordinary meaning of the term "repairs" is that of restoration of the relevant thing "to good condition by renewal or replacement of decayed or damaged parts, or by refixing what has given way; to mend" (Shorter Oxford Dictionary). It will come as no surprise that such is the meaning courts have afforded the term when considering an obligation to repair premises. Thus, in Ex parte Foote [1933] SASR 142, repairs were held to include replacement of broken or worn-out parts where necessary. Conversely, making good structural deficiencies for the purpose of facilitating use by a tenant, not being other than a design shortcoming, is not within the meaning of the term "repairs" - see Lazar v Williamson (1886) 7 LR (NSW) 98.
6. In Taber v NSW Land and Housing Corporation [2001] NSWCA 182 it was held that a landlords common law duty of care in the tort of negligence to a tenant did not extend to installing a handrail on a flight of four steps when non previously existed.
7. In Southwark London Borough Council v Tanner [2001] 1 AC 1 at [8] Lord Hoffman stated: Keeping in repair means remedying disrepair. The landlord is obliged to restore the house to its previous good condition. He (sic) does not have to make it a better house than it originally was.
8. The Tribunal, and its predecessors, have held on a number of occasions that the scope of the duty to keep premises in a reasonable state of repair does not extend to altering the premises to provide different and improved structures that were not present at the commencement of the tenancy, as distinct from repairing the existing structure (including the renewal or replacement of fittings and fixtures that existed at the commencement of the tenancy): Beerby v NSW Department of Housing [1996] NSWRT 216; Stokes v Zarimis [2021] NSWCATCD 23; Venkataiah v Sekiguchi [2021] NSWCATCD 52;
9. If the state of disrepair is due to a design fault in the building, then work necessary to comply with the duty keep the premises in a reasonable state of repair may involve measures to address the design fault. Mustill LJ stated in McDougall v Easington District Council [1989] 1 EGLR 93 at 95-96: Assuming, therefore, that the steps which the council took were capable of amounting to repairs, the question is whether the work done to no 37 in fact fell into this category. There are many reported cases on this topic. In addition to those already mentioned we were referred to Lister v Lane & Nesham [1893] 2 QB 212, Lurcott v Wakely & Wheeler [1911] 1 KB 905, Quick v Taff-Ely Borough Council [1986] QB 809, Brew Brothers Ltd v Snax (Ross) Ltd [1970] 1 QB 612, Stent v Monmouth District Council (1987) 19 HLR 269. Some of the problems discussed in these cases do not arise here. In particular, we need not consider the position which exists where the defects in design do not lead to structural disrepair but merely to lack of amenity; for there is no doubt that there had been in the past, and would continue to be in the future, deterioration in the structure which needed to be put right by one means or another. Nor do I think it necessary to attempt a complete reconciliation of the whole body of authority by means of a single statement of principle: for I believe that whatever particular formula one selects from the various judgments, the result in the present instance must be the same. It is sufficient to say that, in my opinion, three different tests may be discerned, which may be applied separately or concurrently as the circumstances of the individual case may demand, but all to be approached in the light of the nature and age of the premises, their condition when the tenant went into occupation, and the other express terms of the tenancy: (i) Whether the alterations went to the whole or substantially the whole of the structure or to only a subsidiary part; (ii) Whether the effect of the alterations was to produce a building of a wholly different character from that which had been let; (iii) What was the cost of the works in relation to the previous value of the building, and what was their effect on the value and lifespan of the building. Whichever of these tests one chooses to apply, and whether they are taken separately or together, the answer in the present case seems to me the same. When the work was complete, the house not only looked different; it was different. The changes were not simply cosmetic. The roof, elevations and fenestration were of different configurations and materials. With the exception of the basic concrete boxes, no feature of the house was left untouched in the course of the work. The outcome was a house with a substantially longer life and worth nearly twice as much as before. Acknowledging that repairs, properly so called, inevitably involve an element of renewal and improvement, I still think it clear that the learned recorder was right to hold that these could not be described as repairs. They gave the building a new life in a different form.
10. In the circumstances of this dispute, it is unclear how the installation of an awning is a necessary and appropriate measure to address a design fault in the building to prevent water ingress so as to achieve compliance with the landlord's duty to repair under s 63 of the RT Act, as distinct from a capital improvement of residential premises.
11. However, for the purpose of this appeal, it is unnecessary to express a concluded view about this issue.
12. As discussed previously, we are not satisfied the landlord was reasonably on notice the tenant was seeking the installation of an awning in the context of seeking an order for repairs, as distinct from taking other repair measures to prevent water ingress into the existing structure and repairing concrete cancer. Further, the reasons of the Tribunal do not indicate the Tribunal considered the correct legal principles when finding that an appropriate remedial measure for the landlord's breach of s 63 of the RT Act was the installation of an awning.

The Order for Compensation

1. Under s 187 (1) (d) of the RT Act, the Tribunal can make an order for "compensation". However, there can be no remedy without a cause of action. "Compensation" is awarded for past or future loss or damage caused by the breach of duty applying relevant principles of contract law in the context of the RT Act. The Tribunal cannot engage in "palm tree justice" to achieve an outcome that it regards as fair and equitable on a moral, rather than legal, basis (Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 at 321; Jet 60 Minute Cleaners Pty Ltd v Brownette [1981] 2 NSWLR 232 at 236).
2. The Tribunal's reasons do not identify the legal basis upon which it made an award of "compensation" of $10 per day from 6 July 2022.
3. There is no doubt that the Tribunal has the power under s 44 (4) and (6) of the RT Act to determine the maximum amount of rent payable for the premises if it finds the rent is excessive having regard to the matters in s 44 (5) of the RT Act, provided that the period of the rent reduction (retrospectively and prospectively) does not exceed a total of 12 months.
4. Accordingly, the Tribunal can determine the amount of past rent payable for the premises under s 44, and award compensation to the tenant in a lump sum for the difference between that amount and the amount of rent the tenant paid the landlord.
5. Under s 44 of the RT Act, the Tribunal has the power to fix the rent for a period of time into the future (subject to the total period of the order not exceeding 12 months-s 44 (6) of the RT Act). However, we can discern no legal basis for the Tribunal awarding the tenant "compensation" of $10 per day under s 187 (1) (d) of the RT Act in the circumstances of this matter.
6. The Tribunal also cannot invoke s 187 (1) (d) of the RT Act to impose a monetary penalty on the landlord as distinct from awarding compensation to the tenant on the basis of compensating the tenant for breach of an obligation by the landlord under the RT Act. There is reference in the transcript to the order being an "incentive" for compliance. That is not a matter relevant to compensating the tenant for the landlord's
7. The principles applicable as to whether an order should be made determining whether the Tribunal should find that rent is excessive under s 44 (1) (b) of the RT Act have been considered by the Appeal Panel in a number of decisions (e.g. Roberts v NSW Aboriginal Housing Office [2017] NSWCATAP 9; Pan v Malveholm [2021] NSWCATAP 101; Hyndes v Maddak Pty Ltd [2021] NSWCATAP 302). It is unnecessary to consider such principles in the context where neither party is disputing orders 1 and 2 made by the Tribunal on 6 July 2022.

The Set Aside Application

1. As we are satisfied that there was a denial of procedural fairness in the decision of 6 July 2022, it is unnecessary for us to consider whether there was any legal error in the set-aside decision of 20 July 2022.
2. Principles applicable to set-aside applications are set out in in Hammond v Ozzy's Cheapest Cars Pty Ltd t/as Ozzy Car Sales [2015] NSWCATAP 65 and Bryan v Gorgievski [2015] NSWCATAP 186 ('Gorgievski'). The criteria are as follows: 1. Was the decision made in the absence of the party? 2. If so, did the absence of the party result in their case not being adequately put to the Tribunal? 3. If so, should the Tribunal exercise its discretion to set aside the decision? In this regard, the key issue is whether there is "a real likelihood it would be unjust to let the decision sought to be set aside stand" (Gorgievski at [35])
3. It is unnecessary for us to explore whether those principles were correctly applied in the circumstances of this matter. However, we note that the Tribunal appears to have been under the misapprehension on 20 July 2022 that the landlord had filed the set aside application out of time and took that into account as a material consideration in refusing the set aside application.
4. Finally, in respect of the decision of the Tribunal to make the set-aside application on the basis of the information contained in the set aside application rather than calling on the parties to make further submissions, we do not interpret Cl. 9 (4) of the Regulation as a stipulation that the Tribunal can never made a decision on a set aside application without calling on further written submissions from the parties.
5. If the information contained in the set aside application is manifestly inadequate to grant a stay of the orders and call for further submissions of both parties on the set aside application, the Tribunal has, in our view, a discretion to dismiss the set-aside application at that point. The application itself clearly gives the party seeking the orders be set-aside the opportunity to make submissions on the relevant issues pertaining to the criteria to set aside the decision under Cl. 9 (1) (b) of the Regulation.
6. As discussed previously, the landlord did not assist its prospects of having the orders of 6 July 2022 stayed and being given the opportunity to make further submissions on the set aside application by failing to address what it would have said to oppose the orders had it appeared at the hearing on 6 July 2022, rather than simply giving an explanation as to why it did not appear.

Conclusion and Scope of Remittal of Proceedings

1. The appeal is upheld because the landlord was denied procedural fairness.
2. We are not satisfied that it is appropriate for us to reconsider the matter under s 81 of the NCAT Act on the basis of the documents and submissions before us at the appeal hearing. Neither party sought that we do so.
3. However, the scope of the remitted proceedings is narrow because: 1. There was no challenge by either party to orders 1 and 2 of the Tribunal dated 6 July 2022. 2. The tenant consents to order 4 of the Tribunal dated 6 July 2022 being set aside. 3. The parties agree that order 5 (2) (replacement of carpet) should occur when the water ingress issues have been repaired.
4. What is in dispute between the parties is: 1. Whether the s 44 (1) (b) of the RT Act order should extend beyond 6 July 2022; for how long; and for what amount? 2. Whether mould has been removed (the landlord says this has been attended to, and the tenant disputes that the repairs have been performed adequately)? 3. Whether installation of an awning is within the appropriate scope of the landlord's duty under s 63 of the RT Act? 4. What, if any, further repairs need to be performed to address water ingress and when are those repairs to be completed? 5. What are appropriate orders to be made in respect of replacement of carpet?
5. We note the renewal proceedings are still on foot. As these proceedings are to be remitted back to the Tribunal for determination according to law before a different Tribunal Member, there is no basis to renew the proceedings for non-compliance with work orders. The applicant should strongly consider withdrawing the renewal application in Matter SH 22/35332 pursuant to s 55 (1) (a) of the NCAT Act.
6. Finally, we note that the issues currently in dispute between the parties appear to be of narrow compass. Both parties are strongly encouraged to have further settlement negotiations in the future. If the proceedings are resolved, the tenant may inform the Tribunal in writing that the proceedings are withdrawn. In the alternative, both parties may provide signed proposed consent orders for consideration of the Tribunal upon the remittal of the proceedings.

ORDERS 1. Time for filing the appeal extended to 29 July 2022. 2. Appeal allowed. 3. Orders 3, 4, and 5 of the Tribunal dated 6 July 2022 in Matter SH 22/17155 set aside. 4. Matter remitted to be determined according to law in respect of the issues identified in paragraph [96] of this decision. 5. Any amendment of the remitted proceedings or further evidence of the parties to be at the discretion of the Tribunal.

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: 26 October 2022