Prior v Al-Ali

Background

1. On or about 16 January 2019, the respondent as the landlord and the appellant as the tenant entered into a residential tenancy agreement for premises comprising a three bedroom house and garage at Bradbury NSW 2560 (the premises) at a rent of $450.00 per week.
2. In February 2019, an asbestos report was obtained by the agent on behalf the respondent that recommended the removal of the roof of the garage which was a part of the premises. The respondent's agent notified the appellant on 27 February 2019 that the respondent was making inquiries and obtaining quotes for the removal and replacement of the garage roof. From about that time, the appellant ceased using the garage and left certain goods inside the garage, apparently to avoid the risk associated with their removal. He also utilised a part of the house to store goods that he said he would have otherwise stored in the garage.
3. In early 2020, the appellant received notice of an intended rent increase to $480.00 per week. On 11 March 2020, the appellant raised with the respondent's agent the fact that the roof had still not been removed and replaced. On 12 March 2020, the respondent's agent informed the appellant that the respondent was still in the course of obtaining quotes for the removal of the garage roof and would "proceed when possible to do so".
4. On 8 April 2020, the appellant filed an Application in the Tribunal seeking various orders, including orders for compensation for the value of some goods allegedly damaged, compensation for non-economic loss, repayment of rent, for the respondent to carry out some repairs, and that the rent payable was excessive "due to the reduction or withdrawal of any goods, services or facilities provided with the residential premises" under s 44(1)(b) of the RT Act.
5. The Tribunal relevantly rejected the appellant's claim for compensation and non-economic loss but ordered reduction in the rent by $80.00 per week from 11 March 2020 "until the earlier of the issue being addressed or the tenant vacating, and in any event not more than the mandated 12 months": [20].
6. After the publication of the Tribunal's decision, the respondent served a notice of termination dated 3 June 2020 on the appellant who vacated the premises on about 7 August 2020.

The Tribunal's decision

1. At the hearing before the Tribunal, as in this appeal, the respondent was represented, with leave, by his agent. The Tribunal dealt with and determined three of the claims made by the appellant in his application.
2. The first claim for compensation for damaged goods was rejected on the basis that there was no evidence of damage: [11].
3. The second claim for compensation for non-economic loss was rejected on the basis that the "Tribunal does not award compensation on this basis": [12].
4. In relation to the third claim the subject of this appeal, the Tribunal found: "... the real issue is that the tenant bargained for premises including a garage and has, as a result of the withdrawal, been deprived of the use of the garage and been inconvenienced in his and his family's use of the rest of the premises": [16].
5. As we have set out above, under s 44 of the RT Act the Tribunal therefore determined that the rent was excessive and ordered that there be a rent reduction of $80.00 per week from 11 March 2020. In making the order from that date, the Tribunal had regard to what it described as the failure by the appellant to "apply to the Tribunal in a prompt manner." The Tribunal described the events occurring in the context of the appellant's request for a decrease in the rent shortly after the respondent had sought to increase the rent earlier in the year (at [20]). Therefore, the date from which the rent reduction was to take effect was determined from the date on which the appellant was found to have first raised the "asbestos issue" with the respondent or his agent.

The Appeal

1. On 20 July 2020, the appellant filed his Notice of Appeal challenging the Tribunal's order that the rent reduction operate from 11 March 2020. The Notice of Appeal did not identify that the appellant was seeking leave to appeal.
2. In an attachment to the Notice of Appeal, the appellant identified three grounds in support of the appeal: 1. since the withdrawal of the facility was found to have occurred on 27 April 2019, the finding that the rent reduction should only operate from 11 March 2020 "was unreasonable because it lacked an evident and intelligible justification"; 2. the Tribunal "applied the wrong test" under s 44(1)(b) of the RT Act by limiting the respondent's liability. The Tribunal should have applied the rent reduction from the date the facility was withdrawn and not a date more proximate in time to the filing of the appellant's Application in the Tribunal because he did "not promptly" make the Application. The RT Act "provides a mechanism to limit the Landlord's liability where the Tenant does not promptly make an application." Section 44(6)(a) of the RT Act sets a maximum period of 12 months for an excessive rent order to operate. Accordingly, the Tribunal should have applied the rent reduction for a period of 12 months from the date the facility was withdrawn; 3. the Tribunal erred in the exercise of its discretion. As explained to us at the hearing of the appeal, this ground relied upon the same factual matters raised in the appellant's second ground of appeal set out above.
3. On 6 August 2020, the respondent filed a Reply to the Notice of Appeal (the Reply). The Reply did not contend that the appellant required leave to appeal. In the Reply, the respondent supported all of the findings and orders in the Tribunal's decision.

The hearing of the appeal

1. On 7 August 2020, the Tribunal granted leave for the respondent to be represented by his agent on the appeal, on the condition "that no legal costs may be recovered" by the respondent in the appeal.
2. The appellant filed two sets of submissions: in chief on 31 August 2020, and in reply on 1 October 2020. The respondent filed his submissions on 21 September 2020.
3. The appellant and the respondent relied on their written submissions and made oral submissions at the hearing.
4. In his written submissions, the appellant raised two additional matters as amended grounds of appeal. In his written submissions, the respondent notified his objection to the appellant seeking to amend his Notice of Appeal. At the outset of the hearing, we raised the proposed amendments with the appellant.
5. The appellant did not press the first amendment and said that he included it "more for input as to why it was rejected". The appellant confirmed that he was not contending the Tribunal was wrong in refusing him compensation for the allegedly damaged goods and he accepted that he had not provided the Tribunal with any evidence of damage.
6. The second amendment raised the issue of so-called "non-economic loss" that the Tribunal had rejected. This proposed amendment was described as a claim for the appellant's suffering "emotionally and financially from this situation" and for that of his family. The appellant's written submissions explained that the claim concerned financial hardship "in the form of moving costs, disposal of damaged items, days away from work to plan for hearings and costs of evidence". In his submissions in reply, the appellant quantified some of the costs he had incurred in "evidence gathering" including costs to obtain the transcript of the Tribunal hearing and the filing fee for lodging the appeal. He provided "evidence" in support of this claim as an attachment to his submissions in reply.
7. We raised with the appellant the fact that this claim concerned matters which were allegedly incurred after the Tribunal hearing and which could not properly be the subject of this appeal. This proposed amendment was withdrawn by the appellant on the basis that the appellant accepted that he was entitled to apply for some of his costs of the appeal in the event the appeal was successful.
8. The appellant also submitted a calculation in support of his claim for the 12 months rent reduction from 27 April 2019 totalling $4,280.00, being 46 weeks at the reduced rent of $80.00 per week and 6 weeks at $100.00 per week due to the increase in the rent having occurred during this period. At the hearing of the appeal, we raised with the appellant the accuracy of those figures. The appellant agreed that the correct figure should be a reduction of $110.00 and not $100.00 for the 6 weeks at the higher rent, so that his claim for the overpayment of rent was actually $4,340.00.
9. In the event that the appeal was successful, the respondent's agent agreed with those corrected figures. There was no challenge by either party against the Tribunal's finding that a rent reduction of $80.00 per week was "a reasonable reduction": [21].
10. However, and without objection, the respondent provided in his written submissions a document entitled "Rent Summary" recording the rental payments due and paid for the entire period of the rental term, being from 16 January 2019 to 11 August 2020. The Rent Summary recorded the rental reduction of $80.00 from 11 March 2020 in accordance with the Tribunal's orders and showed the last payment of any rent being on 14 July 2020, some 4 weeks prior to the end of the tenancy. Therefore, the rent unpaid by the appellant at the (then) increased rate of $480.00 per week for 4 weeks is $1,920.00.
11. The respondent claimed that sum in set-off of any amount to which the appellant may be entitled if the appeal was successful. On that basis, if the appeal was successful both parties agreed that the appellant would be entitled to $4,340 for overpaid rent less the unpaid rent of $1,920, the difference being $2,420. As we have set out above, it is that sum we have ordered the respondent to pay the appellant for the reasons that follow.

The issues

1. Having regard to the grounds of appeal and the submissions of the parties, as we now discuss, we are of the view that the appeal raises the following two issues: 1. whether the appellant has a right to appeal the Tribunal's decision; and 2. if so, whether the Tribunal made an error of law.

A right to appeal on a question of law

1. An appellant may appeal from a Tribunal's decision as of right on any question of law or otherwise with the leave of the Appeal Panel: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) the Appeal Panel at [13] set out a non-exclusive list of questions of law which relevantly includes whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. A question of law also arises where it involves consideration of whether a court or tribunal has identified or applied the relevant and correct legal test and whether the facts of a case "fall within a statute properly construed: Federal Commission of Taxation v Trail Brothers Steel & Plastics Pty Ltd [2010] FCAFC 94; (2010) 186 FCR 410 at [13].
4. We are satisfied that the appeal raises a question of law as to whether the Tribunal applied the correct test under s 44(1)(b) of the RT Act in its determination of the date from which the excessive rent order should take effect or the decision as to this date is so unreasonable that no reasonable decision-maker would make it.
5. Further, having made a finding of fact that the garage as a facility associated with the premises had been withdrawn since 27 April 2019, the appellant contended that the Tribunal erred in the exercise of its discretion so as to make the rent reduction order only take effect from 11 March 2020. This date was selected by the Tribunal because that was when the appellant had apparently first complained about the "asbestos issue" and because the Tribunal found that the appellant had not lodged his Application for rent reduction "promptly." In the circumstances, the appellant contended that Tribunal failed to have regard to s 44(6)(a) of the RT Act.
6. A question of law arises where a discretion may have miscarried in the sense described by the High Court in House v King [1936] HCA 40; (1936) 55 CLR 499 at 505; namely, if the Tribunal member acted upon a wrong principle, mistook the facts or failed to take into account or gave insufficient weight to some relevant matter or took into account an irrelevant matter or reached a conclusion which was, on the facts, "unreasonable or plainly unjust". The last-mentioned type of error, the unreasonable or plainly unjust ground, was further explained in Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61; (2019) 99 NSWLR 419 at [8]-[11] where it was said that this ground only applied where the reasons did not disclose why the impugned orders were made.
7. We are also satisfied that a question of law arises as to whether the Tribunal exercised its discretion in a way that miscarried, as being wrong in principle, or giving insufficient weight to something relevant, being the date the facility was withdrawn.
8. Accordingly, we find that the appellant has a right of appeal from the Tribunal's decision.

Section 44: RT Act

1. Section 44 of the RT Act relevantly provides: 44. Tenant's remedies for excessive rent (1) Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders - … (b) an order that rent payable under an existing or proposed residential tenancy agreement is excessive, having regard to the reduction or withdrawal by the landlord of any goods, services or facilities provided with the residential premises and that, from a specified day, the rent for residential premises must not exceed a specified amount. …. (3) Applications on withdrawal of goods or services A tenant may, before the end of a tenancy, make an application that the rent is excessive, having regard to the reduction or withdrawal of any goods, services or facilities provided with the residential premises, even if those goods, services or facilities were provided under a separate or a previous contract, agreement or arrangement. (5) The Tribunal may have regard to the following in determining whether a rent increase or rent is excessive - (a) the general market level of rents for comparable premises in the locality or a similar locality, (b) the landlord's outgoings under the residential tenancy agreement or proposed agreement, (c) any fittings, appliances or other goods, services or facilities provided with the residential premises, (d) the state of repair of the residential premises, (e) the accommodation and amenities provided in the residential premises, (f) any work done to the residential premises by or on behalf of the tenant, (g) when the last increase occurred, (h) any other matter it considers relevant (other than the income of the tenant or the tenant's ability to afford the rent increase or rent). (6) Effect of excessive rent order An order by the Tribunal specifying a maximum amount of rent - (a) has effect for the period (of not more than 12 months) specified by the Tribunal, and

Consideration: Did the Tribunal make an error of law?

1. For the reasons which follow, we are satisfied that the Tribunal erred as a matter of law in its consideration of s 44 of the RT Act and in the exercise of its discretion.
2. First, having found that the facility was withdrawn from 27 April 2019, there was no reason given by the Tribunal for not making that the date from which the excessive rent order should operate, having regard to s 44(1)(b) of the RT Act which provides that an order may be made that rent is excessive "having regard to the reduction or withdrawal by the landlord of ... facilities provided with the residential premises and that, from a specified day, the rent for residential premises must not exceed a specified amount."
3. There is nothing in s 44(1)(b) which suggests against that "specified day" being determined without reference to the preceding words, namely having regard to the reduction or withdrawal of facilities. Having found that the withdrawal occurred on a specified day, being 27 April 2019, and that the appellant and his family had been deprived and inconvenienced in the use of the premises since that time, the Tribunal gave no reasons for not selecting 27 April 2019 as the specified day. The Tribunal did not have regard to any of the substantive matters listed in s 44(5)(a) to (g) in deciding to make the order take effect from 11 March 2020. In these circumstances, the selection of 10 March 2020 as the specified date was so unreasonable that no reasonable decision-maker would make it.
4. In what it described as the exercise of its discretion, the Tribunal raised "another factor" which presumably, although it did not expressly say it, was a reference to "any other matter it considers relevant" in s 44(5)(h) of the RT Act. The Tribunal appears to have regarded it as "relevant" that the appellant did not apply to the Tribunal "in a prompt manner" and "in fact, it was a year down the track" (at [18]). In the exercise of its discretion, the Tribunal appears but did not expressly state, to have taken into account that "delay" under s 44(5)(h) of the RT Act. The Tribunal acknowledged the appellant's evidence was that he did not know of his rights to apply for a rent reduction order until just before he filed the Application but held that "ignorance of a right is not something to be visited on the landlord": [19].
5. The Tribunal made no mention of any prejudice occasioned to the respondent by that apparent delay and no prejudice appears to have been suggested by the respondent. In our view, the discretion miscarried by the Tribunal disregarding its own finding as to when the withdrawal of the facility occurred and then effectively penalising the applicant in not applying for the rent reduction at a much earlier time. In doing so, it is apparent that the Tribunal failed to have any regard to s 44(3) of the RT Act which permits a tenant to make an excessive rent application at any time "before the end of a tenancy." The Application was filed within that time requirement. Further, we accept the appellant's submission that any prejudice caused by any delay in bringing an application is avoided by s 44(6) of the RT Act, which provides for a maximum period of 12 months in respect of which an excessive rent order can apply.
6. In the circumstances we uphold the appeal. We order that the excessive rent order is to operate from the date that the Tribunal found as being the date the garage facility was withdrawn for use, namely 27 April 2019. We are also of the opinion that the order should operate for the maximum period of 12 months from that date, as provided by 44(6)(a) of the RT Act because the evidence satisfies us that the garage roof replacement had still not been undertaken by the respondent by the time the appellant vacated the premises on about 7 August 2020.
7. In our orders, we have applied the agreed figures to which we have referred to above in these reasons.

Orders

1. We make the following orders: 1. The appeal is allowed; 2. The orders made by the Tribunal in proceedings RT 20/16225 are set aside; 3. The following orders are substituted in place of the orders made by the Tribunal in proceedings RT 20/16225: 1. the rent payable under the residential tenancy agreement between the appellant and the respondent is excessive, and that from 27 April 2019 to 26 April 2020 the rent for the residential premises must not exceed $370.00 per week; 2. the respondent is to pay the appellant the sum of $2,420.00 immediately; 1. There is no order as to the costs of the appeal; 2. If the appellant seeks a different costs order to order (4) above, then the following orders will apply: 1. within 14 days of the publication of these reasons, the appellant is to file and serve any submissions and evidence addressing any "special circumstances" in support of an application for his costs under s 60 of the NCAT Act; 2. the respondent is to file and serve any submissions and evidence in response within 14 days of receipt of the appellant's submissions and evidence; 3. any question of costs will be determined on the papers (as the parties have agreed).

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: 30 October 2020