NSW Land and Housing Corporation v Traynor

Background

1. On 23 February 2015, the landlord and the tenant entered into a 2-year social housing tenancy agreement for premises at Gosford. The premises are one unit in a unit block owned by the landlord. Other units in the block are let out to other social housing tenants.
2. Clause 13.1 of the tenancy agreement provided that the tenant was not to use, cause or permit the premises to be used for any illegal purposes.
3. On 27 March 2020, the police executed a warrant at the premises leading to the tenant's arrest. Numerous items were confiscated by the police including: 1.2 kilograms of cannabis; $7860 in cash; and two extendible batons, a sling-shot, two handheld electronic control devices, a key-ring knuckle duster and an ornamental knife (known as a "zombie knife") being "prohibited weapons" (without a permit) under the Weapons Prohibition Act 1998.
4. The tenant pleaded guilty to four offences being the possession and supply of cannabis, dealing with proceeds of crime and possessing prohibited weapons.
5. It was not in dispute that the tenant had used the premises for the: 1. sale or supply of cannabis; and 2. storage of prohibited weapons and storage of cannabis.
6. On 24 September 2020, the tenant was sentenced to an intensive corrections order. The tenant has since undertaken 20 sessions of drug counselling, has been hospitalised for his pain management and is an outpatient for psychiatric and pain management sessions at Gosford Hospital.
7. The tenant also has a prior conviction (in 2011) for drug possession.
8. The tenant suffers a disability within the meaning of the Anti-Discrimination Act 1977 being various mental health conditions, physical functional disabilities and chronic pain. The tenant has previously been homeless for extended periods of time.
9. The tenant continues to reside in the premises.

Procedural background

1. On 6 August 2020, the landlord filed the Original Application in the Tribunal (proceedings SH 21/05600) for termination and possession of the premises.
2. On 1 February 2021, the matter was heard by the Tribunal and the tenancy was terminated on the basis of the tenant's use of the premises for the manufacture, sale, cultivation and supply of cannabis (being prohibited drugs).
3. On 12 April 2021, the Tribunal set aside the orders made on 1 February 2021 and the Tribunal re-registered the Original Application (proceedings SH 21/15808) which was heard by the Tribunal on 21 July 2021.

Relevant legislation

1. Before we turn to the Reasons for the Decision of the Tribunal it is convenient to set out the relevant legislation in the Residential Tenancies Act.
2. Section 81 of the Residential Tenancies Act sets out the circumstances under which a residential tenancy terminates under the Act including by order of the Tribunal (s 81(3)).
3. Section 91 of the Residential Tenancies Act provides: 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.
4. Division 5 of the Residential Tenancies Act contains additional provisions relating to the termination of social housing tenancy agreements.
5. Of relevance, in sub-div 4 entitled "Breach of Agreement", s154D provides: "154D Tribunal required to make termination order in certain circumstances (1) Subject to subsection (3), the Tribunal must make a termination order on the application of a landlord under a social housing tenancy agreement if - … (b) an application for the order is made under section 91 and the Tribunal is satisfied of the matters set out in section 91(1)(a), … (3) However: … (b) subsections (1) and (2) do not apply if the Tribunal is satisfied that the termination order would be likely to result in undue hardship being suffered by a child, a person in whose favour an apprehended violence order could be made or a person suffering from a disability within the meaning of the Anti-Discrimination Act 1977 who is occupying or jointly occupying the social housing premises, and…
6. Section 154E of the Residential Tenancies Act provides: 154E Exercise of discretion to make termination order (1) In considering whether to make a termination order for a social housing tenancy agreement, the Tribunal must have regard to the following - (a) the effect the tenancy has had on neighbouring residents or other persons, (b) the likelihood that neighbouring residents or other persons will suffer serious adverse effects in the future if the tenancy is not terminated, (c) the landlord's responsibility to its other tenants, (d) the history of the current tenancy and any prior tenancy arising under a social housing tenancy agreement with the same or a different landlord, (e) whether the tenant, wilfully or otherwise, is or has been in breach of an order of the Tribunal. (2) This section does not limit any other matter that may be considered by the Tribunal under this Act.

Tribunal proceedings and reasons for decision

1. In the Reasons for Decision, the Tribunal began by setting out the uncontroversial factual background of the case which we have summarised above.
2. The Tribunal then noted (at [14]) that the landlord's claim arose under: 1. s 91(1)(a) in respect of the use of the premises for the supply of cannabis; and 2. s 91(1)(b) in respect of the use of the premises for storing and possessing prohibited weapons and for storing cannabis.
3. The Tribunal first determined that s 91(1)(a) was satisfied as the tenant pled guilty to the charge of supplying cannabis and had accepted in submissions that the premises had been used for the supply of a prohibited drug (at [15]).
4. The Tribunal then determined (at [16]) that while the premises were used for other unlawful purposes (being storing and possessing prohibited weapons and cannabis), s 91(1)(b) was not satisfied as those uses were not sufficient to justify termination. In reaching this view the Tribunal considered the nature of the unlawful use finding that the weapons could be collectables (as the tenant had contended) and that there was no evidence that the weapons had in fact been used.
5. In assessing the nature of the unlawful uses of the premises, the Tribunal also recorded the landlord's submission to the effect that storing drugs on the premises was part of preparation of the drugs for sale and that because of the seriousness of the s 91(1)(a) matters, this storage was enough to justify termination. The Tribunal stated (at [16]) I do not accept this submission because the storage itself is what I must consider in terms of s 91(1)(b) and to combine s 91(1)(b) with s 91(1)(a) would misinterpret the distinction provided in the Act and expose the tenant to a sort of "double jeopardy".
6. Given the Tribunal's positive finding in relation to s 91(1)(a), the Tribunal then noted (at [18]) that it was required under s 154D(1)(b) to make a termination order subject to the matters in s 154D(3).
7. As the tenant was a person a suffering a disability within the meaning of the Anti-Discrimination Act 1977 (a matter not in dispute in the proceeding) the Tribunal considered it was not bound to mandatorily terminate the tenancy (at [21]): s 154D(3)). The landlord accepted as much.
8. In terms of each of the factors in s 154E and s 154F that the Tribunal was required to consider, the Tribunal: 1. accepted the landlord's submission that there was a potential for the tenant's continued use of the premises to have some disturbance to the neighbours including the reputation arising from having had a drug-supplying neighbour but noted there was no evidence of adverse effects on neighbours and that the landlord had not taken the opportunity to put on a s 154F statement (at [23] and [24]) - s 154E(1)(a)-(c), s 154F; 2. accepted the landlord's submission that it can be inferred that there is a general adverse effect on society from the use and supply of prohibited drugs but noted that this one particular instance of drug sale and supply (which engaged s 91(1)(a)) does not warrant termination (at [25(a)]) - s 154E(1)(a)-(c); 3. found, despite the landlord's submissions to the contrary, the tenant's prior illegal activity (including in 2011) does not necessarily mean that unlawful activity would be expected to continue in the future in the particular circumstances of the tenant (at [26(a)]) - s 154E(1)(b)-(c); 4. considered the history of the tenancy including that there had been no other incidents since the tenancy commenced in 2015 (at [25(b)]) - s 154E(1)(d); 5. there was no evidence of any other breaches since 27 March 2020 (at [25(b)]) - 154E(1)(e);
9. In the exercise of the discretion, the Tribunal weighed these factors against the seriousness of the consequences for the tenant and the protection that would be afforded to his neighbours by terminating the tenancy, ultimately deciding to decline to terminate the tenancy (at [20], [21], [26(b)]) - s154E(1)(b)-(c) and (2).

Scope and nature of internal appeals

1. The internal appeal is brought as of right on any question of law, and with permission (or "leave") on any other grounds: CAT Act, s 80(2)(b).
2. On a question of law appeal, the exercise of a statutory discretion, including under s 91 of the Residential Tenancies Act, can only be overturned in limited circumstances: House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505-506. Those circumstances were summarised by the Court of Appeal in Hannaford v Commonwealth Bank of Australia [2014] NSWCA 297 at [14] per Tobias AJA (Beazley P (at [1]) and Emmett JA agreeing (at [6])). The Court held that any attack on a discretionary decision must fail: "…unless it can be demonstrated that the decision maker: (a) made an error of legal principle, (b) made a material error of fact, (c) took into account some irrelevant matter, (d) failed to take into account, or gave insufficient weight to, some relevant matter, or (e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning."
3. The principles governing an application for leave to appeal under the CAT Act are well-established and repeated in many decisions of the Appeal Panel, often quoting Collins v Urban [2014] NSWCATAP 17.
4. The circumstances in which the Appeal Panel may grant leave to appeal from a decision made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the CAT Act.

The Grounds of Appeal

1. The grounds of appeal in the landlord's Notice of Appeal are as follows: 1.In determining that the illegal use was not sufficient to justify termination of the tenancy under s. 91(1)(b) of the Residential Tenancies Act 2010, the Member erred in law by failing to take into account s. 91(2) of the Residential Tenancies Act, by failing to take into account the storage of cannabis at the premises on the basis that it would expose the tenant to "a sort of double jeopardy" (at [16]), and by taking into account irrelevant considerations; and 2.The member erred in law by taking into account irrelevant considerations, and failing to take into account relevant considerations, when applying s.154E of the Residential Tenancies Act 2021.
2. The landlord did not seek leave to appeal in its Grounds of Appeal nor did it make an application for leave at the hearing.

Reply to Appeal

1. The tenant filed a Reply to Appeal in which he replied to the grounds as follows: There was no error of law or manifest misapprehension of the fact which caused the Tribunal's exercise of discretion to miscarry. The Tribunal considered the nature of the offence, the use of the premises for storage of drugs and declined to accept that it was sufficient to justify termination. The Tribunal also correctly considered matters under s 154E when exercising its discretion to make a termination order. The grounds of appeal do not disclose what irrelevant matters were erroneously taken into account by the Tribunal.

Ground 1: Failure to take into account s 91(2) and taking into account irrelevant considerations

1. At the hearing of the appeal Ms Faramarzi, who appeared for the landlord, properly withdrew the contention that a failure to take into account s 91(2) amounted to an error of law. We make no further comment on this aspect of Ground 1.
2. Ms Faramarzi pressed the contention that the Tribunal took into account irrelevant considerations when determining whether the unlawful use of the premises for the storage of cannabis and weapons was sufficient to justify termination under s 91(1)(b).
3. It was submitted that the irrelevant considerations were: 1. that the weapons may be collectables; 2. there was no evidence that the weapons had been put to use against any person; 3. that storage of drugs had not caused damage to others, a matter which was unsupported by any evidence; and 4. that the tenant would be subjected to a sort of double jeopardy if the storage of drugs is considered under s 91(1)(b) after it was already considered in s 91(1)(a)), which was a mistake.
4. It was argued that whether or not the weapons were put to use or there was damage to others caused by the storage of the cannabis, the criminal charges for possession and supply, of themselves, were enough to justify termination under s 91(1)(b). In addition, the absence of evidence about the use of the weapons and damage caused to others from the storage of drugs should not be the basis upon which to make a positive finding. It was said that the tenant's history of illegal activity is evidence supporting the likelihood of the behaviour continuing in the future.
5. It was submitted that the legislature takes offending from government property very seriously and seeks to protect the community from it. Where drug offending is involved, there are mandatory provisions terminating a tenancy without requiring the exercise of the Tribunal's discretion. In support of this submission, we were referred parts of the Second Reading Speech to the Residential Tenancies and Housing Legislation Amendment (Public Housing - Antisocial Behaviour) Bill 2015 which introduced mandatory termination as follows: There has been a number of cases where the tribunal has accepted that significant drug cultivation or dealing is occurring from a public housing property and has not issued a termination order. For example, a public housing tenant was found with more than 12 kilograms of cannabis in her home and more than 20 kilograms in her car. Police seized nearly two kilograms of cannabis leaf bud with a street value of $15,000, which had been dried in a kitchen cupboard. Charges were laid, and a two-year suspended sentence with a good behaviour bond was handed down by the courts. Even though there was clear evidence that this serious crime was committed on Government property, the tribunal declined to terminate the tenancy. These provisions in this bill will ensure that, in these very serious cases, the tenancy is not continued. Our priority here must be to protect the people who live near these criminals - it must be to protect the majority of tenants in social housing who do the right thing; and in particular to acknowledge that many of these tenants are vulnerable and afraid.
6. Mr Seymour, who appeared for the tenant, contended there was no error in the approach taken by the Tribunal in separating each of the landlord's claim under s 91(1)(a) and (b). To do otherwise, would have elided the separate consideration of the s 91(1)(a) part of the landlord's claim.
7. It was argued that the application in respect of s 91(1)(b) related to the use of the premises for "any other" unlawful activity which was the possession of cannabis and possession of a prohibited weapon. It therefore precluded the matters relevant to the s 91(1)(a) enquiry, namely the supply and sale of cannabis. It was correct for the Tribunal to decline the invitation of the landlord to take the storage of cannabis as a step preliminary to the sale or supply sale of cannabis in the s 91(1)(b) evaluation.
8. It was submitted that the reference to "double jeopardy" at [16] was inapt but should not be confused with legal error.
9. Further, Mr Seymour submitted that the focus of s 91 is on the use of the premises and that the Tribunal that should not accept that any unlawful use of the premises must automatically mean termination is required. A plain reading of s 91(1)(b) shows a judgment is called for as to whether the unlawful use is sufficient to justify termination.

Consideration of Ground 1

1. The landlord has failed to demonstrate, by reference to the Residential Tenancies Act, how the matters considered by the Tribunal are "irrelevant" to the s 91(1)(b) enquiry. Further s 91(2) expressly states that the matters the Tribunal may take into consideration are not limited.
2. Contrary to the submissions of the landlord, the Tribunal did not make a positive finding that the weapons had not (as a matter of fact) been put to adverse use against a person or that the storage of the cannabis did not have an adverse effect on a particular person. Rather, it stated there was no evidence of those specific matters and otherwise accepted the landlord's submissions. In any event, in circumstances where the matters which can be taken into account are not limited, this was not irrelevant to the Tribunal's evaluation under s 91(1)(b).
3. It was also not irrelevant to consider that some of the weapons were collectables. The tenant had given evidence of this and it was also part of the evidence that the charge for possession of a weapon did not extend to all of the weapons.
4. We consider the Tribunal's use of the phrase "sort of double jeopardy" in [16] is merely "looseness of language or unhappy phrasing": NSW Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 ("Orr") at [77] per Bell P citing Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287; [1993] FCA 456). The Tribunal was correct not to conflate the test in s 91(1)(a) with that in s 91(1)(b). They are distinct considerations: one dealing with the use of premises for specific types of unlawful activity (manufacture, sale, cultivation or supply of prohibited drugs); and the other with any other unlawful purpose. The use of word "other" in s 91(1)(b) demonstrates the type of unlawful activity to be considered excludes that already covered by s 91(1)(a). That the Tribunal did not consider the supply of the cannabis as part of the storage was not an error of law.
5. While we agree that the legislature clearly had in mind mandatory termination in the circumstances provided for in the Act, the landlord's submissions are premised on an incorrect assumption that any unlawful use of premises must automatically mean termination is required. That is not what the Residential Tenancies Act provides. Rather, a plain reading of s 91(1)(b) demonstrates the legislative intention is that the unlawful use must also be "sufficient" to "justify" termination. This calls for the exercise of the Tribunal's discretion.
6. It is not an error on a question of law for the Tribunal, having correctly identified the relevant legislation to be applied and made relevant findings, to exercise its statutory discretion in a way contrary to that sought by one party to proceedings. The Tribunal did not take into account factors which were "extraneous to the proper exercise of its power" (Ballantyne v Workcover Authority (NSW) [2007] NSWCA 239): it simply exercised its discretion differently from that argued for by the landlord, for the reasons it gave.
7. The landlord's submissions do not amount to more than dissatisfaction with the way the findings were made and suggest that the outcome should have been different. This does not establish any error of law.
8. This ground of appeal fails.

Ground 2: Failure to take into account relevant considerations applying s 154E

1. The landlord submitted that the Tribunal failed to take into account relevant considerations when applying s 154E(1). Specifically, the Tribunal did not consider s 154E(1)(b) and (c).
2. In respect of the factors in s 154E, Mr Seymour submitted that there was no error demonstrated: the Tribunal considered the mandatory factors, accepted most of the landlord's claims (at [25] and [25(a)]) but ultimately found these to be outweighed by the serious consequences for the tenant.
3. As set out above at [31], the Tribunal considered each of the mandatory considerations in s 154E and then weighed them against the effect termination would have on the tenant. There was no error in this approach.
4. In truth, the landlord's complaint constitutes a challenge to the findings which required the landlord to bring an appeal with leave under s 80(2)(b) of the CAT Act. This was not done in the Notice of Grounds of Appeal nor at the hearing. Consequently, we reject this ground of appeal.

Other matters

1. We note the landlord's raised two further grounds in submissions: 1. The Tribunal ought to have approached the inquiry under s 154E with all four offences in mind rather than just one breach because it might have made a difference to the outcome. 2. The Tribunal did not sufficiently engage with the evidence and submissions. The landlord contends that the Reasons for Decision do not refer to the decision of Carr v NSW Land and Housing Corporation [2019] NSWCATAP 144 at [51]. It is said that the Tribunal did not take into account the "common sense matter" referred to in Carr, such as that the sale of drugs from premises will attract persons, who may engage in antisocial behaviour, into the neighbourhood which is likely to have a serious adverse effect on neighbouring residents. As we understand it, this is a complaint about a failure on the Tribunal's part to record the submission in its Reasons.
2. These were not included as grounds in the Notice of Appeal and the landlord did not seek leave to amend the Notice of Appeal to include them.
3. In any event, we do not consider either demonstrate errors of law for the following reasons. 1. We do not agree that the Tribunal only considered the one offence in evaluating the mandatory considerations. At [25(b)] the Tribunal refers to the "convictions" arising out the police raid on 27 March 2020. These convictions were for all four offences. 2. There is no obligation on the Tribunal to repeat all submissions made by the parties (Orr at [66]) and this complaint does not, in any event, raise an error of law (Alexandra Landfill Pty Ltd v Transport for NSW [2020] NSWCA 165 at [29]-[30] per Basten JA, [314] per Sackville JA, [412] per Leeming JA).
4. We also note in written submissions the landlord sought alternative relief if the tenancy was not to be terminated, namely, a 12 month specific performance order should be made pursuant to s 187(1)(b) of the Residential Tenancies Act 2010 given the serious breaches of cl 13.1.
5. This relief was not sought below and no leave was sought to make this application. We reject the landlord's invitation to make alternative orders.

Costs of the appeal

1. The Tribunal made orders on 20 August 2021 that leave be given to both the landlord and the tenant to be legally represented at the appeal on the condition that no legal costs be recovered by each party to the appeal ("conditional representation order").
2. Consequently, at the hearing of this appeal both parties were legally represented.
3. Despite the conditional representation order, the tenant sought costs in his favour in the event that he was successful in the appeal. This in effect amounted to a departure from the conditional representation order and was in conflict with his ability to be legally represented at the hearing.
4. The tenant's costs application was made on the basis that additional costs had been incurred addressing several grounds in the landlord's written submissions that were considered to be "not properly pleaded." No evidence was filed quantifying the additional costs that were said to have been incurred in respect of insufficient arguments.
5. Section 60 of the CAT Act provides that each party should pay their own costs unless we are satisfied that there are special circumstances warranting an award of costs: s 60(2) CAT Act.
6. In considering what amounts to special circumstances it has been consistently held by the Appeal Panel and the Tribunal at first instance that special circumstances are circumstances that are out of the ordinary, but they do not have to be extraordinary or exceptional. Subsection 60(3) provides that, in determining whether there are special circumstances which warrant a costs award, we may have regard to the matters set out in paragraphs (a) to (f) of s 60(3) as well as "any other matter that the Tribunal considers relevant": s 60(3)(g).
7. The tenant did not address us on the s 60(3) factors. As best as we understand the grounds for the tenant's application, it appears the contention is that the landlord made a claim that had no tenable basis (s 60(3)(c)) or was misconceived or lacking in substance (s 60(e)).
8. We do not consider the appeal was untenable or misconceived. Nor do we consider that responding to an argument which may be lacking in substance, of itself, is a "special circumstance." The tenant did not take us to any authority for the proposition that it was.
9. Even if satisfied that there are special circumstances an Appeal panel must further be satisfied that there are circumstances "warranting an award of costs": see, for example, The Owners - Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [10] - [12]. The exercise of the discretion requires the Appeal Panel "to weigh whether these circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Cost) [2016] NSWCATAP 87 at [9]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35]. In our view, even if costs incurred by the tenant in this appeal in addressing submissions of the landlord which were "not properly pleaded" could be regarded as a special circumstance, in the context of this appeal, where the tenant was granted leave for legal representation and where there has been a conditional representation order, we would not have regarded it as justifying an award of costs.
10. We find that there is no reason to depart from the usual position that each party is to pay their own costs of the appeal. The tenant's application for costs is therefore refused.

Orders

1. Our Orders are as follows: 1. The appeal is dismissed. 2. The respondent's application for costs is refused.

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: 29 November 2021