Stuart v Leonardo

NCAT Appeal Panel|2021-04-20

Introduction

The appellant (Mr Stuart) and the second respondent (Ms Wissel) were tenants pursuant to a residential tenancy agreement (agreement) dated 30 May 2018. The first respondent (Ms Leonardo) was the landlord.
On 29 September 2020 the landlord filed application RT 20/41301 seeking various orders, including an order terminating the agreement for failure to pay rent and an order in connection with the payment of the rental bond. The landlord had issued a notice of termination dated 23 September 2020, which required vacant possession by 8 October 2020.
Ms Wissel had, apparently, vacated the premises sometime in July 2019, Mr Stuart remaining as the sole occupant. There was no evidence before us that Ms Wissel was removed as a tenant or that the landlord agreed to release her from her obligations under the agreement.
The application was heard by the Tribunal on 28 January 2021. By that time, both tenants had vacated the property. There is a dispute concerning the date vacant possession was delivered up to the landlord, a matter which we will deal with below.
The only issues the Tribunal was required to determine were the amount of rent which remained unpaid, whether the tenants were liable to pay compensation for a replacement security card and for cleaning of the premises and who was entitled to the rental bond provided pursuant to the agreement.
By consent the Tribunal made an order that the tenants pay the landlord $370.00 being an amount for replacement of the security card and as compensation for cleaning. The Tribunal also ordered the tenants to pay to the landlord the sum of $10,171.70 for rent arrears, such amount to be paid on or before 25 February 2021. Finally, the Tribunal ordered that the rental bond be released to the landlord.
The Tribunal provided reasons for its decision (reasons).
Ms Wissel did not appear at the hearing. However, the Tribunal proceeded to determine the case in her absence, having been satisfied that notice of the hearing on 28 January 2021 had been given to her, Ms Wissel having been aware of the proceedings following her attendance at an earlier directions hearing on 16 November 2020.

Notice of Appeal, history of appeal proceedings and submissions

Mr Stuart filed a Notice of Appeal on 11 February 2021. The appeal was lodged in time.
Mr Stuart challenged the three orders made by the Tribunal, namely the consent order, the order concerning the payment of rent and the order in relation to the payment of the rental bond. His grounds of appeal were recorded in an attachment to his Notice of Appeal. The orders sought in the appeal (see Section 5C of the Notice of Appeal) were as follows: I would like to be give (sic) the rent reduction of 40% from the day I request until the day I was evicted from the premises or apartment.
In a separate document entitled "B Grounds of Appeal" Mr Stuart raised various grounds including the following: 1. Mr Stuart had attempted to negotiate to reduce the rent, asserting he was impacted by the COVID-19 pandemic (pandemic) and that the agent for the landlord (Mr Liang) had breached his obligation and did not respond to Mr Stuart's email requesting a rent reduction; 2. Mr Stuart had received email requests for information from the landlord's agent which "was invasive and inappropriate", the agent requesting evidence concerning any application made by Mr Stuart for Jobkeeper payments from the government; 3. the Tribunal had a "wrong perception of what happened to employees at the period when the pandemic [began]" and the consequences for those affected and the Tribunal failed to ask questions about the impact of the pandemic upon Mr Stuart; 4. the landlord's agent lied "about the ledger" and that the landlord applied "a 20% rent reduction" which Mr Stuart says he never negotiated and did not receive until 22 September 2020, after the notice of termination was issued.
Mr Stuart attached to his Notice of Appeal documents from the original hearing (Appellants Bundle- AB). However no sound recording or transcript of the proceedings at first instance was provided to the Appeal Panel.
The landlord filed a Reply to Appeal. Again, the documents relied on by the landlord from the original hearing were attached to the Reply (Respondent's Bundle- RB).
The proceedings were listed for call over before the Appeal Panel on 19 February 2021. At that time, directions were made for the filing and service of evidence and submissions by each of the parties. No further documents were provided by either Mr Stuart or the landlord.
In addition, Ms Wissel, who had not been named in the Notice of Appeal participated by telephone at the call over. The Appeal Panel noted Ms Wessel had advised she did not have notice of the original hearing, she was a party to the residential tenancy agreement but did not reside in the premises as she was overseas and that she denied the liability. Because she was a party to the proceedings at first instance and had not lodged a Notice of Appeal, she was joined as a respondent. The directions made by the Appeal Panel on 19 February 2021 permitted her to file and serve evidence and submissions in the appeal.
Despite the directions made in respect of Ms Wissel, no evidence or submissions were filed by her.
At the hearing of the appeal, all parties appeared by telephone. Mr Stuart and Ms Wissel appeared for themselves and Mr Liang represented the landlord as her agent.
At the outset of the appeal we enquired of Ms Wissel her position in connection with the orders made by the Tribunal at first instance. She explained to us that she had applied to the Tribunal at first instance to set aside the orders, the subject of this appeal. She said that application had been dismissed, a fact confirmed by our review of orders made in proceedings RT 21/06280. The set aside application was made pursuant to reg 9(1)(b) of the Civil and Administrative Tribunal Regulation, 2014 (NSW) (NCAT Reg). It was dismissed on 26 March 2021 on the basis there was an appeal which had been lodged.
In light of what we were told, we explained to Ms Wissel that a determination of the present appeal may affect her rights should she subsequently wish to appeal the orders originally made by the Tribunal on 28 January 2021. We indicated to her that there appeared three options available. These were: 1. apply for the present appeal to be adjourned; 2. seek leave to be joined as an appellant in this appeal and pursue any claims for relief; 3. do nothing and allow this appeal to proceed on the grounds raised by Mr Stuart.
After consideration, Ms Wissel informed the Appeal Panel that she wished to have the present appeal determined without her being joined as an appellant and without an adjournment.
We subsequently provided Ms Wissel, as well as the other parties, an opportunity to make oral submissions.
Through the process of submissions and a review of the tenant rent ledger maintained by the landlord's agent (RB pp75-81) the issues for determination were narrowed.
Mr Stuart did not challenge the consent order for $370.00, he accepting liability for the damaged security card and cleaning.
Mr Stuart also accepted that: 1. the rent ledger recorded the rent payable each week under the residential tenancy agreement (before any rent reduction) being $750 per week; 2. the rent ledger recorded all payments of rent which the tenants had made; 3. the rent ledger recorded that the tenants had been provided with a credit for rent at a rate of $150 per week for a period of 21 weeks; and 4. the rent credit had been applied on about 29 September 2020 (as recorded at p 80 of the rent ledger) on the basis of a rent free period from 6 June 2020 until 11 July 2020, this equating to the amount allowed in (3) above.
Consequently, subject to the two issues below, the rent ledger demonstrated an amount of $10,171.70 was outstanding for rent. This constituted rent outstanding at 14 October 2020, being the date the landlord said that the tenants vacated the property. In this regard, the landlord relied on a document found at RB 82 being the receipt issued by the agent on return of the keys to the premises, as proof of when the tenancy ended.
However Mr Stuart said the Tribunal was in error in awarding this sum for two reasons.
First, Mr Stuart said that he was affected by the pandemic and had attempted to negotiate a rent reduction of 40% with the landlord. The landlord's agent had failed to respond to his emails and he had remained in the premises. While imprecise, Mr Stuart said that the failure of the agent to respond, the conduct of the landlord's agent and the fact he did not vacate the premises (having waited many months for a response to his email) constituted circumstances entitling him to a rent reduction of 40%.
While he accepted that a rent reduction of 20% (equivalent to $150 per week) had been applied for the period set out above, Mr Stuart asserted that the Tribunal at first instance should not have made an award for $10,171.70. Rather, it should have taken into account that the tenant was never offered a reduction of 40% and that there had been a failure to negotiate.
Despite being asked on several occasions by the Appeal Panel what power the Tribunal had to reduce rent under the Residential Tenancies Act, 2010 (NSW) (RT Act) the Residential Tenancies Regulation, 2019 (NSW) (RT Reg), Mr Stuart did not identify any power permitting the Tribunal to do so.
Secondly, Mr Stuart said that he left the premises on 22 September 2020. While he accepted that the keys were returned in mid October 2020, he said he should not be liable for rent for the period from when he left until mid-October.
Mr Stuart said that he carried out cleaning to the premises and had requested the landlord's agent to inspect the premises. This had occurred, the inspection being delayed, however further cleaning was required. On completing a second clean, again Mr Stuart says he requested the landlord's agent to inspect the premises and that the agent again delayed in doing so. Mr Stuart says that the conduct of the agent gave rise to the delay in him returning the keys and he should not be liable for any rent during this period.
Mr Liang submitted that the tenants had not vacated the property as required by the notice of termination (RB 21). It should be noted that this notice is dated 23 September 2020 and required vacant possession by 8 October 2020. Mr Liang said in submissions it had been served on 23 September 2021
He also sought to rely on various emails, although this material had not been provided to the Tribunal at first instance. He said the issue of the date the tenants vacated had not arisen in the proceedings at first instance and therefore various email evidence had not been provided. Other evidence to which he referred included an email indicating that the tenants were moving boxes out of the premises on 7 October 2020.
Mr Stuart sought to challenge the submission concerning the date the notice of termination was issued. He said the date of the notice was 9 September 2020, referring to the documents in AB attachment 1. The problem with this submission is that the notice to which Mr Stuart refers is dated 9 September 2019, not September 2020. It required vacant possession by 23 September 2019, not Spetember 2020. That is, it appeared the notice to which he referred has been issued the year before the present dispute arose.
Be that as it may, for the reasons below, it is unnecessary to resolve this dispute.
The only issue raised by Ms Wissel concerned the order in connection with the bond. We made clear to Ms Wissel that this order entitled the landlord to receive the bond, which was to be applied to any amounts due to the landlord in consequence of the orders made by the Tribunal. We also indicated that, to the extent the appeal was successful, we would make appropriate orders concerning the bond as necessary.

Consideration

There is a right of appeal on a question of law. Otherwise leave to appeal is required: s 80(2)(b) of the NCAT Act. To the extent leave is required it may only be granted if the appellant can demonstrate he may have suffered a substantial miscarriage of justice: Sch 4 cl 12(1) NCAT Act.
Where parties are self-represented, in may be necessary for an Appeal Panel to identify whether the grounds of appeal raise questions of law or not.
It seems to us that the issue of whether the Tribunal had power to reduce the rent in the circumstances which occurred is a question of law as is the issue raised concerning when the tenancy ended and vacant possession was given to the landlord, thereby ending the obligation to pay rent agreement.
Before dealing with these issues, it is appropriate to briefly deal with the termination notice and the circumstances in which the tenancy in this case terminated. This is because the termination date will affect the rent payable.
In the absence of a termination order made by the Tribunal, a residential tenancy agreement only terminates in circumstances provided by the RT Act.
In the present case, the notice of termination had been issued in the moratorium period as defined in the RT Act. Consequently, Part 13 Response to COVID-19 pandemic of the RT Act and Part 6A of the RT Reg (COVID provisions) applied to this agreement. Mr Stuart asserted he was an impacted tenant within the meaning of Part 13 of the RT Act. If he was, then the notice of termination was invalid and an application for termination could not have been made to the Tribunal: Reg 41C of the RT Reg.
The Tribunal found the tenants were not impacted tenants: reasons at [17]. If this finding is correct, the agreement terminated pursuant to s 81(2) of the RT Act. This section provides: A residential tenancy agreement terminates if a landlord or tenant gives a termination notice in accordance with this Act and the tenant gives vacant possession of the residential premises.
If the termination notice was invalid, the agreement nonetheless terminated because the tenant gave up possession with the landlord's consent. In this regard s 81(4)(e) of the RT Act provides: (e) the tenant gives up possession of the residential premises with the landlord's consent, whether or not that consent is subsequently withdrawn.
Because no termination order was made, it is unnecessary to resolve which of these provisions applied. This is because in either case termination occurs when this the tenants gave up possession, there being no order of the Tribunal.
Consequently, as identified above, the issue that remains relevant for consideration in this appeal is when vacant possession was given up.
We will deal with the substantive issues under the following headings: 1. Was the Tribunal in error in failing to reduce the amount of rent payable? 2. When did the tenancy end?

Was the Tribunal in error in failing to reduce the amount of rent payable?

Mr Stuart asserted that the landlord was under an obligation to negotiate in connection with the rent because he was an impacted tenant.
Leaving aside the question of whether, contrary to the Tribunal's finding at [17] of the reasons, Mr Stuart was an impacted tenant, this matter can be disposed of shortly.
The COVID provisions (now repealed) applied in connection with impacted tenants in relation to the termination of residential tenancy agreements, other than those where the landlord is a social housing provider: Reg 41A. They permitted an impacted tenant to seek termination under s 228C of the RT Act. They prohibited a landlord from issuing a termination notice for non-payment of rent or applying to the Tribunal for a termination order in respect of such notice: Reg 41C(1).
There was an exception that permitted a landlord to give a notice of termination or apply for an order if the following conditions in Reg 41C(2) were satisfied: 1. the termination notice was given, or the application was made, at least 60 days after commencement of Part 6A; 2. the landlord has participated, in good faith, in a formal rent negotiation process (as defined in s 228A of the RT Act) with the impacted tenant; and 3. it was fair and reasonable in the circumstances of the case for the landlord to give the termination notice or apply for the order.
However, the COVID provisions did not otherwise require a landlord to negotiate with a tenant in respect of a rent reduction or to engage in a formal rent negotiation process as defined by the RT Act. Rather, the requirement for formal rent negotiation only arose for consideration in connection with the making of a termination order by the Tribunal, whether on application by a landlord or a tenant.
Significantly, the COVID provisions did not grant to the Tribunal a power to alter the rent payable under a residential tenancy agreement on application of an impacted tenant or a landlord in any circumstances. While the Tribunal may have been prevented from considering termination applications concerning impacted tenants absent complying with requirements concerning formal rent negotiation processes provided by the RT Act, it could not alter the rent on application by an affected party. Absent agreement to vary a residential tenancy agreement, tenants remain bound to pay rent in accordance with the original agreement whether or not the tenant was an impacted tenant.
Otherwise, there was no provision such as that found in s 44 of the RT Act that permitted a rent reduction order to be made in favour of a tenant simply because they were an impacted tenant.
In the present case, a request had been made for a rent reduction. Mr Stuart says he asked for a reduction of 40%. It is clear from the evidence provided to us that such a request was not agreed to by the landlord. Rather the landlord has in fact reduced the rent by 20% for the period we set out above.
Whether this reduction is characterised as a waiver of rent, as opposed to an agreement to vary the residential tenancy agreement to reduce the rent, neither party suggests that the amount of the reduction should not be taken into account when determining what rent is presently outstanding. Indeed, the landlord herself advocated through her agent in the proceedings at first instance and on appeal that she was only entitled to the amount of rent after allowance for the reduction of 20%.
In these circumstances, absent an agreement between the parties to reduce the rent by 40% and in the absence of any power under the RT Act for the Tribunal to impose a rent reduction, in our view no error is established in the Tribunal making an award in the sum of $10,171.70.

When did the tenancy end?

In relation to the issue of when a tenancy ends and vacant possession is given up by the tenants, cl 17 of the agreement is relevant. This clause, which is in the same terms as cl 18 of the Standard Form Agreement found in Schedule one of the RT Act provides as follows: 17. The tenant agrees, when this agreement ends and before giving vacant possession of the premises to the landlord - 17.1 to remove all the tenant's goods from the residential premises, and 17.2 to leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, as at the commencement of the tenancy, and 17.3 to leave the residential premises reasonably clean, having regard to their condition at the commencement of the tenancy, and 17.4 to remove or arrange for the removal of all rubbish from the residential premises in a way that is lawful and in accordance with council requirements, and 17.5 to make sure that all light fittings on the premises have working globes, and 17.6 to return to the landlord all keys, and other opening devices or similar devices, provided by the landlord.
Section 51(3) of the RT Act also requires all residential tenancy agreements to have terms to the effect of cl 17.1-17.4 and 17.6.
As stated above, the tenancy ends when possession is given up to a landlord. This is a question of fact. Matters relevant to determining whether possession has been given up include whether a tenant has left the premises and met their obligations under clause 17, including delivery up of the keys. This is because the performance of these obligations before the tenancy ends is consistent with a tenant relinquishing use and control of the premises and returning possession of the premises to the landlord in the state as required by the agreement.
In Phoenix v Guangyue Chen [2020] NSWCATAP 255 the Appeal Panel considered when vacant possession was delivered up and the relevance of a tenant returning the keys to the landlord. The Appeal Panel said at [72]-[77]: 72 The significance of the delivery of keys in the context of the giving of possession was considered by the English Court of Appeal in Thomas v Metropolitan Housing Corporation Ltd [1936] 1 All ER 210. That case concerned the question whether a tenant was protected by the English Rent Restriction Acts. Under legislation enacted in 1923, where a landlord came into possession of a dwelling, to which the Rent Restriction Acts had previously applied, at any time after the passing of the 1923 legislation, then the Rent Restriction Acts ceased to apply to the dwelling. "Possession" was defined as meaning "actual possession", with the result that a landlord did not come into possession by reason only by reason of a change of tenancy made with the landlord's consent. 73 The facts giving rise to those proceedings were that a tenant who was entitled to the protection of the Rent Restriction Acts had moved her furniture out of the premises on the middle of the day on a Saturday and left the key to the premises at the landlord's agent's offices on the Saturday afternoon. The incoming tenant had occupied the premises over the weekend but only signed a lease on the following Monday. The trial Judge held that the protected tenancy came to an end on the Saturday and that the landlord had entered into actual occupation upon delivery of the key. That conclusion was upheld by the Court of Appeal. 74 Slesser LJ held, at 214: "There are many cases … to the effect that the giving of a key giving access to the premises may amount to actual possession; and, when this is done with the intention to give possession, that possession will be an actual possession". 75 Scott LJ held, at 216: "Actual possession of empty premises, or of chattels which are locked up within a building or in a package of some sort, is retained by retaining the key. Possession of the key gives actual possession. The reason why there is so little law on the point is, I think, that it is difficult to imagine that anything to the contrary could ever have been contended … the evidence is … quite clear that the key of the premises was left with the landlord by the tenant going out on Saturday, October 17. That was a symbolical giving up of possession, leaving the actual possession in the landlords until the landlords parted with possession to somebody else." 76 Thomas v Metropolitan Housing Corporation was applied, in relation to a residential tenancy governed by the RTA, by P Taylor SC DCJ in NSW Land & Housing Corporation v Quinn (No 2) [2018] NSWDC 161. His Honour held that, in circumstances where a tenant had not returned the keys and there was no evidence of the date when he had vacated the premises, the tenant was liable for an occupation fee until the date of execution of a warrant for possession. At [258]-[259] his Honour held: 258 Although Mr Quinn may have vacated the premises earlier, there is no evidence that he returned the key, and, at least until late July 2014, the evidence is to the contrary. Having retained the key, he retained actual possession. Any presumption that he acted in accordance with the order of the Tribunal cannot displace the evidence that he had not returned the key by late July 2014, the presumption of continuity and an available Jones v Dunkel inference arising from his unexplained failure to give evidence on the subject. 259 As there is no evidence that vacant possession was earlier "given to the landlord", Mr Quinn is liable for the occupation fee until possession was proved to be taken by the Corporation. … 77 It is clear that the question whether a tenant has given vacant possession of premises is a question of fact in each case. However, in our view, as Taylor DCJ held in NSW Land & Housing Corporation v Quinn, ordinarily a tenant does not give up vacant possession of premises until they return the keys to the landlord or the landlord's agent.
There is no dispute that the keys were returned on 14 October 2020: RB 82. However, Mr Stuart submitted that the delay in returning the keys arose from cleaning.
It was Mr Stuart's obligation to leave the premises in a clean state. This did not require an inspection by the landlord and such an inspection was not a precondition to ending the tenancy or return of the keys. Rather, the only inspection required was for the purpose of outgoing inspection report, such report to be completed "[a]t or as soon as reasonably practicable after, the termination of the residential tenancy agreement": s 29(4) RT Act.
Similarly, following a return to the premises to clean them on a second occasion, a second inspection was not required for the purpose of returning the keys.
Rather, in our view, even if the landlord's agent was delayed in inspecting the premises, this did not prevent the tenants completing their cleaning obligation and returning the keys.
In the present case, it was not until the keys were returned that possession was effectively given to the landlord. At this point, the tenant ceased to have access to the premises and ceased to be able to exercise rights associated with possession.
There is no dispute about the date the keys were returned. It follows that the tenancy came to an end on 14 October 2020. The obligation to pay rent therefore ceased on this date and it was this date to which unpaid rent was calculated by the Tribunal. After allowance for the rent reduction, the amount of unpaid rent was $10,170.70.
Having regard to the above, the appellant has not established any error in the Tribunal in connection with order 3 made 28 January 2021. Consequently, the appeal should be dismissed.

Orders

The Appeal Panel makes the following order: 1. The 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: 03 May 2021

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