Saqa v Kashro

Material before the Appeal Panel

1. Other than the appellant's Notice of Appeal and the respondent's Reply to Appeal, the following material was before us: 1. a copy of the decision of the Tribunal below; 2. a copy of the appellant's application lodged with the Consumer and Commercial Division; 3. a letter dated 28 May 2018, from the managing agent of the respondent, Olga Tizzone of Century 21.
2. Neither party filed or relied on any evidence that was tendered into evidence before the Tribunal below.
3. At the hearing, oral submissions were made by the solicitor for the appellant and the agent for the respondent. The appellant was legally represented at the hearing of his appeal, but he was not legally represented at the hearing before the Tribunal below.

Residential Tenancies Act

1. Part 3 of the RT Act contains provisions concerning the rights and obligations of landlords and tenants. Division 2 of that Part contains provisions in regard to rent and other payments, including the payment of utility charges such as charges for the supply of electricity and water to the residential premises the subject of a residential tenancy agreement. Sections 38 and 40 in this Division of this Part relevantly provide the following in regard to the supply of electricity to the residential premises the subject of a residential tenancy agreement: "38 Utility charges payable by tenant (1) A tenant must pay the following charges for the residential premises: (a) all charges for the supply of electricity, gas (except bottled gas) or oil to the tenant at the residential premises if the premises are separately metered, … (2) This section is a term of every residential tenancy agreement. 40 Payment of rates, taxes and certain utility charges by landlord (1) A landlord must pay the following charges for the residential premises: (a) …, (b) the installation costs and charges for initial connection to the residential premises of an electricity, water, gas, bottled gas or oil supply service, (c) all charges for the supply of electricity, gas (except bottled gas) or oil to the tenant at the residential premises that are not separately metered, … (2) This section is a term of every residential tenancy agreement."
2. The respective obligations prescribed in ss 38 and 40 are terms of every residential tenancy agreement. They are also terms that the parties to a residential tenancy agreement cannot contract out of: see RT Act, s 21 which provides: "21 Inconsistent and prohibited terms void (1) A term of a residential tenancy agreement is void to the extent to which it: (a) is inconsistent with any term included in the agreement by this Act or the regulations, or (b) is prohibited by this Act or the regulations. (2) The Tribunal may, on application by a landlord or a tenant, make an order declaring that a term of a residential tenancy agreement is void or partly void if satisfied that the term is inconsistent with any term included in the agreement by this Act or the regulations or is prohibited by this Act or the regulations."
3. The terms of s 38 and 40 are contained in clause 9 and 10 of the prescribed Standard Form of Residential Tenancy Agreement: see Residential Tenancies Regulation 2010 (NSW) (RT Reg), Sch 1.
4. The term "separately metered" is not defined in the Act. We note that the recently enacted Residential Tenancies Amendment (Review) Act 2018 (NSW) includes the insertion of a definition of this term to s 3(1) of the RT Act. The Amending Act has not come into operation yet and is not relevant for the purpose of this appeal. However, we do note that the definition includes the type of meter to which the term relates, what the meter is to measure and that a separate bill can be issued by the supplier of the utility in respect of the supply to the residential premises and the use by the tenant of those premises.
5. Sections 52 and 53 of the Victorian, Residential Tenancies Act 1997 (Vic) (Victorian Act), is of a similar effect to ss 38 and 40. The Victorian Act does include a definition the term "separately metered" in s 3(1). That definition is in the following terms: "… [that] there is, in respect of the rented premises, a room or a site, a meter - (a) that has been installed or approved by the relevant supplier of the utility; and (b) that measures, in relation to those premises or that room or site only, the quantity of a substance or service that is supplied to, or used at, those premises or that room or site.".
6. The recent decision of the Appeal Panel in Knezevic v Kirby [2017] NSWCATAP 190 at [48] is consistent with the abovementioned meaning of the term "separately metered" as it is contained in the Victorian Act and in our view provides guidance as to the meaning of the term in the RT Act.
7. Section 47 in Division 2 of Part 3 sets out a tenant's remedies for repayment of rent and excessive charges. That section is in the following terms: "47 Tenant's remedies for repayment of rent and excess charges (1) Requests to landlord A tenant may make a written request to the landlord that the landlord repay to the tenant any rent, or other amounts, paid by the tenant that are not required to be paid under this Act or the residential tenancy agreement. (2) A request may be made during or after the termination of a residential tenancy agreement. (3) A landlord must, within 14 days of a written request by a tenant, repay to the tenant the amount of any rent or other amount paid in excess of the amount payable by the tenant under this Act or the residential tenancy agreement. (4) Tribunal orders A tenant may apply to the Tribunal for an order for the repayment of rent or any other amount paid by the tenant if a written request by the tenant for payment is not complied with by the landlord within 14 days. (5) The Tribunal may order that rent or any other amount be repaid to the tenant if it finds that the rent or amount was not required to be paid by the tenant under this Act or the residential tenancy agreement."
8. We have dealt with this section and the powers of the Tribunal in regard to breaches of a residential tenancy agreement more generally, below.

The decision of the Tribunal below

1. At [1] the Tribunal noted the following: 1. the appellant's claim was for payment of a sum equivalent to the "electricity accounts that he had paid directly to the energy provider since the commencement of his tenancy agreement in February 2016." The amount claimed, as contained in the Electricity Energy summary, was $7,545.39; 2. the respondent had acknowledged that the premises rented by the appellant and his family were "not separately metered as there is a small granny flat at the back of the premises"; 3. the respondent said that there had been an agreement between the parties that because the premises were not separately metered, the appellant would pay the electricity bills and not pay any water; and 4. the appellant did not deny the agreement despite being asked repeatedly if it was true.
2. At [2] the Tribunal said: "2. Section 38(1)(a) of the Residential Tenancies Act 2010 states that a tenant must pay all charges of electricity to the tenant if the premises are separately metered. Section 47(1) of the Residential Tenancies Act 2010 states that a tenant may make a written request to the landlord that the landlord repay to the tenant any rent, or other amounts, paid by the tenant that are not required to be paid under this Act or the residential tenancy agreement. The Tribunal is satisfied that the tenant by the nature of this application has made such a request."
3. At [3], the Tribunal said: "3. Section 47(5) of the Residential Tenancies Act 2010 states that the Tribunal may order that rent or any other amount be repaid to the tenant if it finds that the rent or amount was not required to be paid by the tenant under this Act or the residential tenancy agreement. This is a discretionary power that requires consideration of the law and facts in the matter."
4. At [4], the Tribunal found: "In this matter, the Tribunal accepted the landlord's evidence that there was an agreement at the start of the tenancy agreement between the parties that in lieu of the premises not being separately (sic), the tenant would pay just the electricity and he wouldn't have to pay any water. The Tribunal was informed that the tenant had a total of 7 people living in the premises using the electricity and water. The Tribunal was satisfied based on that agreement that the tenant knew that he would be paying a bit more for the electricity due to the granny flat, but he would be saving paying any water usage for the 7 people in the premises. The Tribunal accepted that situation and since the commencement of the tenancy agreement in February 2016 has complied with the arrangement by directly signing up for and paying Electricity Energy for the electricity usage and that he knew the whole time that he was paying for the whole premises. Additionally, the landlord has received no money from the tenant for electricity usage as he has paid Electricity Energy direct."
5. The Tribunal concluded as follows: "5. The Tribunal considered it would be fundamentally unfair and unequitable if the tenant was now allowed to ignore that agreement and to be repaid by the landlord for money the landlord never received which would result in 7 people having lived at the premises for over 2 years without having paid anything for the electricity and water that they had actually used and the tenant agreed to pay for in their arrangement of compromise. In exercising discretion and consideration of the above factors/reasons, the Tribunal was not persuaded that the tenant should be repaid for the electricity usage as claimed. The application is dismissed."
6. Other than challenging the Tribunal's exercise of its discretion under s 47(5) of the RT Act, the appellant did not challenge the findings of the Tribunal as set out in its reasons for decision.

Consideration

1. During oral argument we raised with the parties the Tribunal's finding that the appellant's application at first instance satisfied the requirements of s 47(1) of the RT Act. The solicitor for the appellant argued that a tenant's right to make an application to the Tribunal under s 47(4) was not dependent on the tenant having first made a written request to the landlord under s 47(1) and then wait 14 days before the tenant had standing to make an application to the Tribunal under s 47(4).
2. As we have noted, s 47(4) expressly provides that a tenant may apply to the Tribunal "if a written request by the tenant for payment has not been complied with by the landlord within 14 days". In our opinion, the express words of this subsection do not support the appellant's contention.
3. What is required before the tenant makes an application to the Tribunal under s 47(4) is a written request to the landlord: see Udy v Tilby [2018] NSWCATAP 89, at [34]. As can be seen from the structure of s 47, it expressly sets out what steps a tenant must take in order to avail himself or herself of the remedy in that section.
4. The first step is for the tenant to make a "written request" to the landlord in terms of s 47(1). Once the tenant has made a written request, the tenant's right to apply to the Tribunal does not arise until the expiry of 14 days from the date of the request and the landlord having failed to repay the amount requested by that time. That is, the tenant's standing to make an application under s 47(4) does not arise until the requirements of s 47(1) and (3) have been met.
5. It is not clear from the Tribunal's reasons for decision as to whether the appellant had made a written request to the respondent in terms of s 47(1), prior to the lodgement of his original application in November 2017. However, as this was not an issue raised by either party in this appeal we have not considered it any further in this appeal.
6. As we have noted, the only issue for determination in this appeal is whether the Tribunal erred, in law, by taking into account an irrelevant consideration; namely the agreement between the parties that was void under s 21 of the RT Act. We have dealt with this issue below. However, it is convenient to briefly consider the discretion in s 47(5).

Section 47(5) discretion

1. As we have noted, s 47(5) expressly states that that the Tribunal "may" make the order sought under that section.
2. Section 9(1) of the Interpretation Act 1987 (NSW) provides that the word "may", in an Act or instrument, if used to confer a power, indicates that the power may be exercised or not, at discretion. In Cain v New South Wales Land and Housing Corporation [2014] NSWCA 28, at [14], the Court of Appeal said that notwithstanding the use of the word "may" the power can in particular circumstances be coupled with a duty to exercise that power if the prescribed preconditions to that power are satisfied (i.e. proven). In this case, neither party argued that the word "may" in s 47(5) of the RT Act imposed a duty on the Tribunal to exercise the power if the preconditions in that subsection were satisfied. In our opinion, they were correct in not so arguing.
3. In Cain (supra) the issue was whether, the word "may", in s 91(1)(a) of the RT Act, gave the Tribunal a discretion, which included a discretion to decline to make a termination order. That section is in the following terms: "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 .."
4. After considering the intersection of ss 87 and 91 of the RT Act, the Court of Appeal concluded that there was nothing in those section and the surrounding sections which required a strained construction of s 91. That is, the Court of Appeal found that the word "may", in s 91, did vest the Tribunal with a discretion to refuse to make the order sought even though the Tribunal was satisfied of the matters prescribed in s 91(1)(a).
5. In Abdel-Messih v Marshall [2017] NSWCATAP 136, at [25], the Appeal Panel made a similar finding in regard to the word "may" in s 107(1) of the RT Act. On appeal, the Supreme Court upheld the decision of the Appeal Panel: see Abdel-Messih v Marshall [2018] NSWSC 648.
6. While sections 91 and 107 are in Part 5 of the RT Act which deals with orders the Tribunal can make terminating a tenancy agreement, in our opinion, there is no reason to construe the meaning of the word "may" in s 47(5), in Part 3 of the Act any differently to that contained in ss 91 and 107 of the RT Act: see Ward v Williams [1955] HCA 4 at [11]; (1955) 92CLR 496. That is, the discretion in s 47(5) includes a discretion not to make the order sought.

Error of law in exercise of discretion

1. It is well accepted that the exercise of a discretionary power will not be subject of review on appeal on a question of law unless "there has been a failure properly to exercise the discretion which the law reposes in the court at first instance": see House v King (1936) 55CLR 499 at 504-505; [1936] HCA 40. In House v King the High Court identified the following as an appealable error in the exercise of a discretion: "… [It] must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust."
2. The Appeal Panel has accepted that where the Tribunal at first instance failed, in its exercise of a discretion, to take into account a mandatory consideration, this was an appealable error of law: see John Prendergast and Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13(5)] (Prendergast) and Director General, Department of Finance & Services v Porter [2014] NSWCATAP 6 at [26] to [29]. The same applies to the Tribunal at first instance having taken into account a prohibited or forbidden consideration in the exercise of a discretion: see Ballantyne v Work Cover Authority (NSW) [2007] NSWCA 239 at [113] and M Aronson, M Groves and G Weeks Judicial Review of Administrative Action and Government Liability (Thomson Reuters, 6th ed, 2017) (Aranson) at [5.30].
3. In Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40 at [15]; (1986) 162 CLR 24 at 40, Mason J set out the propositions relevant to a relevant and irrelevant consideration in regard to the exercise of a discretion, which included the following: "(b) What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive. If the relevant factors - and in this context I use this expression to refer to the factors which the decision-maker is bound to consider - are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the Act. In the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard: …." (emphasis added)"
4. In Ward v Williams (supra), at [12], the High Court said that a discretion must be exercised "judicially and upon grounds which do not go beyond the scope and object" of the legislation.
5. In Cain (supra), at [29], Basten JA, noted that "broadly speaking", the factors a court or tribunal takes into account in the exercise of a discretion "may be characterised as mandatory, permissible or prohibited".
6. In Cain, the landlord had made an application to the Tribunal seeking an order for termination on the grounds of the tenant, Cain, having been convicted of cultivation and supply of cannabis under the Drug Misuse and Trafficking Act 1985 (NSW). In refusing to make the orders sought, the Tribunal referred to the personal circumstances of Cain, including undertakings she had given to the District Court in her criminal proceedings and that a termination of her tenancy may hinder her in adhering to the undertaking she had given. At [39], Basten JA said: "39. … [Assuming] that the Tribunal had power to decline to make a termination order, there is no basis for reading the statute as excluding either the personal history of the respondent, the nature of the offending, the sentencing in the District Court for the offence, the possibility of repetition in the future or the likely effect of the termination order on the tenant's health and medical treatment."
7. In this case, there are no mandatory considerations prescribed in the RT Act or the RT Reg that the Tribunal must take into account in the exercise of its discretion under s 47(5). Nor are there any extraneous or prohibited considerations prescribed.
8. The objectives, scope and purpose of the RT Act are to regulate residential tenancy agreements of residential dwellings within New South Wales. This includes prescribing: 1. a standard form of residential tenancy agreement in which the standard rights and obligations of the landlord and the tenant are set out, including those terms which cannot be contracted out of; and 2. the remedies available to a party where the other party has failed to meet an obligation imposed on them under the terms of the standard form of residential tenancy agreement.
9. As we have noted, Part 3 of the RT Act contains provisions in regard to the rights and obligations of landlords and tenants under a residential tenancy agreement. Division 2 of that Part contains provisions concerning the obligations of landlords and tenants in regard to rent and other payments, including payment of charges for the supply and use of a utility to residential premises. Sections 38, 40 and 47 are within this Division. Section 47 contains a remedy that is available to a tenant where he or she pays an amount that he or she is not required to pay under the RT Act or under the residential tenancy agreement (e.g. where the residential premises are not separately metered, payment of charges for the supply of electricity to those premises).
10. The s 47 remedy is one that lies against the landlord and is in the form of a liquidated amount, representing the actual amount the tenant paid and was not required to pay under the RT Act or the residential tenancy agreement. That is, it is not a remedy in the form of compensation for loss as a result of a breach of the tenancy agreement. However, it is nevertheless a remedy arising from a breach of the tenancy agreement.
11. Where the Tribunal is satisfied that the tenant has established (proven on the balance of probabilities) that the amount of rent or other amount the subject of the tenant's claim was an amount that the tenant was not required to pay, for the reasons set out above, the Tribunal nevertheless has a general discretion as to whether or not to make the order sought. That discretion, as discussed in Cain (supra) and Abdel-Messih v Marshall (supra) is to be exercised in the context of the scope and purpose of s 47 and its surrounding provisions in the RT Act and also in the context of the factual circumstances of the case that is before the Tribunal.
12. Finally, as noted in House v King (supra) any statutory discretionary power, is nevertheless subject to "the presumption of the law that the legislature intends the power to be exercised reasonably" and not unreasonably: see Minister for Immigration and Border Protection v SZVFW [2018] HCA 30, at [4] per Kiefel CJ and Minister for Immigration and Citizenship v Li (supra). Unreasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker, it is a question as to whether the legal standard of reasonableness has been abused in the exercise of the general discretion: see Minister for Immigration and Citizenship v Li (supra), at [66] per Hayne, Kiefel and Bell JJ. To determine whether there has been an abuse of the discretion, "it is necessary to construe the statute because the question to which the standard of reasonableness is addressed is whether the statutory power has been abused": see Minister for Immigration and Citizenship v Li (supra), at [66] and [67] per Hayne, Kiefel and Bell JJ.

Did the Tribunal take into account an irrelevant consideration?

1. In our opinion, the fact that the oral agreement between the appellant and the respondent was void under the terms of the RT Act did not mean that the conduct of the appellant and the respondent in reliance of that agreement was of no relevance to the exercise of the Tribunal's discretion under s 47(5). That discretion, as we have already noted is not enlivened until such time the Tribunal is satisfied of the preconditions prescribed in that subsection (i.e. that the amount of rent or other amount the subject of the tenant's claim was an amount that the tenant was not required to pay under the RT Act or the residential tenancy agreement).
2. As the RT Act, nor the RT Reg prescribe any prohibited factors, it cannot be said that the conduct of the appellant and the respondent in reliance of an oral agreement, which is contrary to the statutory obligations on the landlord under s 40(1)(c), is an irrelevant consideration in the exercise of the discretion under s 47(5).
3. While the appellant did not articulate its grounds of appeal in terms of an "unreasonable" exercise of the s 47(5) discretion, we accept that had the Tribunal exercised its discretion solely on the basis of the terms of an agreement (oral or otherwise) between a landlord and a tenant it might arguably be an unreasonable exercise of that discretion in the terms set out in House v King (supra) and Li (supra). However, this was not the sole basis on which the Tribunal exercised its discretion. As we have noted above, in the exercise of its discretion, the Tribunal took into account the conduct of the appellant and the respondent in so far as it related to their oral agreement. This conduct, which was not challenged by the appellant in this appeal, the Tribunal found to have been engaged in by the appellant willingly and with the knowledge, from the commencement of the tenancy, that the premises were not separately metered. In this regard the Tribunal found: 1. the oral agreement was an arrangement of compromise, made at the commencement of the tenancy and made in lieu of the appellant's residential premises not being separately metered; 2. at all times the appellant knew he would be paying a little more in electricity due to the granny flat, but would be saving paying any water usage for the 7 people in his premises; 3. the appellant accepted the situation and complied with the arrangement by signing up with the retail electricity supplier Electricity Energy and has paid all electricity charges for the last 2 years. That is all bills were issued to the appellant and he paid Electricity Energy directly; and 4. the respondent has not received any money from the appellant for electricity usage.
4. In our opinion, as the discretion vested in the Tribunal under s 47(5) includes a discretion not to make the order sought, we can see no error in the Tribunal having taken the conduct of the appellant and the respondent into account. In this regard we reiterate the following: (a) the appellant's knowledge from the time he commenced his tenancy that his premises were not separately metered, (b) the fact that, with this knowledge, the appellant took it upon himself to arrange for the supply of electricity to the premises to be put into his own name knowing that there were 7 people living in his premises and that he would be paying "a bit more" for the electricity due to the granny flat not being separately metered; and (c) the appellant having paid all charges for two years. In our opinion, these were all factors relevant to the Tribunal's exercise of its discretion. Opinions might differ as to what weight should be given to such factors in the exercise of the discretion. However, we can see no error in the exercise of its discretion in that the decision of the Tribunal is unreasonable in terms of the principles set out in House v King (supra) and Li (supra).
5. In relation to usage, if the water charges were not separately metered this was not a charge the appellant was required to pay: RT Act, s 40(1)(f).
6. The appellant was also critical of the Tribunal's "finding" that it would be fundamentally unfair and unequitable to allow the appellant to ignore the oral agreement. While we agree that notions of fairness might appear to be inconsistent with the statutory obligations on a landlord under s 40 of the RT Act, however this does not mean, depending on the circumstances of a particular case, that this is not a factor that can be taken into account in the exercise of the discretion under s 47(5). In this case, we do not accept the Tribunal made a "finding" as contended by the appellant. When read as a whole, the findings of the Tribunal were as summarised above, which the Tribunal took into account in exercising its discretion to make the decision to refuse to make the order sought. As we have already indicated, in our opinion, the appellant has failed to demonstrate that the Tribunal erred in the exercise of its discretion.

Conclusion

1. For the reasons set out above, we find that the appellant has failed to establish that the Tribunal erred in law in taking into account an irrelevant consideration. On the basis of our finding, the appeal should be dismissed.
2. Accordingly, we order: 1. Appeal is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 November 2018