appellant. 1. Appeal Dismissed. 2. Order made 2 December 2014 staying the operation of the orders made 23 May 2014 is discharged.
Key principles
A co-tenant cannot unilaterally terminate a fixed term residential tenancy agreement by verbal notification to the landlord's agent that they are moving out of the premises,...
Section 101 of the Residential Tenancies Act 2010 (NSW) does not permit a co-tenant to terminate a fixed term tenancy agreement unless the term has expired (at [45]).
Service of a termination notice under the Residential Tenancies Act 2010 (NSW) on one co-tenant at the residential premises is taken to be service on all co-tenants pursuant to s...
Personal service of an application commencing proceedings in the Tribunal is required under clause 13 of the Civil and Administrative Tribunal Rules 2013 (NSW), and such service...
Issues before the court
Whether leave to appeal is required and, if so, whether it should be granted
Whether the appellant remained a tenant under the Residential Tenancy Agreement at the date of the hearing
Plain English Summary
A woman who separated from her husband and moved out of their rented home tried to avoid paying rent arrears by arguing she had told the real estate agent she was leaving. The Tribunal Appeal Panel found that simply telling the agent was not enough to end her legal obligations as a co-tenant. Because she was still legally a tenant under the fixed-term lease, she remained responsible for the rent even though she was not living there. Although the landlord failed to properly serve her with court papers (which was unfair), the Panel decided this would not have changed the outcome because she had no legal defence to the claim. The appeal was dismissed.
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Whether the appellant would have successfully resisted the orders had she been notified of the proceedings
Whether service of the termination notice and Tribunal application on the co-tenant was effective
APPEALS: Whether leave requiredNo notification of hearingPROCEDURE: Personal service of application commencing proceedings
RESIDENTIAL TENANCIES: Termination of tenancy by co-tenant
Judgment (7 paragraphs)
[1]
Overview
The appellant and her husband Corey Adam Axford entered into a residential tenancy agreement with the respondents for a fixed period from 14 October 2013 to 12 October 2014 (the Residential Tenancy Agreement). Shortly after entering into the Residential Tenancy Agreement, the appellant separated from her husband and moved out of the rented premises. She says that she attended the offices of the landlord's agent and told a Mr Chombo that she had separated from her husband and that she was moving out of the premises.
Rent for the premises fell substantially into arrears. Eventually, the landlord served a termination notice on the tenants, effected by service on the appellant's husband. The appellant was not personally served with this notice. The landlord applied to the Tribunal for orders terminating the tenancy and seeking payment of the arrears. The appellant was not served with the Tribunal proceedings and had no notice of the hearing.
At the hearing below, the Tribunal made orders with the consent of the appellant's former husband (as tenant) and the landlord, including for the payment of an amount of $6,600.00 by way of rental arrears. Not having been served with the application, the appellant was not at the hearing and did not consent to the orders.
It appears that steps to recover the amount ordered to be paid to the landlord from the husband have been unsuccessful. Solicitors for a mercantile agent made contact with the appellant by letter dated 17 October 2014 demanding she pay the amount the subject of the Tribunal orders. This was the first she knew of the Tribunal orders. On 2 December 2014 she obtained a stay of the operation of the orders of the Tribunal.
By her Notice of Appeal she seeks leave to appeal from the orders of the Tribunal and to have her name removed from the orders for payment of the arrears. For the reasons given below, in so far as leave is necessary, we would grant her leave to appeal but dismiss the appeal on the basis that the co-tenancy had not been terminated and she remained liable for the rent. She has been unable to demonstrate to the Appeal Panel that, had she been notified of the Tribunal proceedings and appeared at them, she would have successfully resisted the making of the orders.
[2]
The Notice of Appeal
By Notice of Appeal filed 18 November 2014, the appellant seeks to have order 6 made by the Tribunal amended by removing her name. Order 6 is in the following terms:
"6. By consent, the tenant, Sen Yueng Tse & Corey Adam Axford… to pay the landlord, Bin Hang and Chang Su…. the sum of $6,600.00 on or before 30 May 2014".
In effect, the appellant seeks to set aside order 6 in so far as it applies to her.
The Notice of Appeal indicates that leave to appeal is required, and sought. The appellant states that leave ought to be granted as the decision below was not fair and equitable as she had told the real estate agent managing the rented property that she had left her husband and that he may not pay rent. She says the agent was on notice of this and was negligent in managing the landlord's property by not taking steps to terminate the tenancy when the husband fell into arrears of rent. She also asserts leave ought to be granted as she has suffered a substantial miscarriage of justice on the basis of the above matters and that the Tribunal was not aware of these matters when it made its decision.
[3]
The Reply to the Appeal
In the Reply to the Appeal, the respondents accept that the appellant reported to the agent's office and told the agent that she was separating from her husband. There is a discrepancy as to the date this occurred which we deal with below (the appellant says this was on or about 23 October 2013 and the respondents in their Reply to Appeal stated this was on 9 December 2013 but in oral evidence the respondents' agent stated it was two weeks after 15 October 2013). The respondents allege that the husband and his mother attended the agent's office to pay rent a week later and reported that the appellant and he were together and the agent could not get into contact with the appellant as she was not answering her phone.
The respondents resisted the orders sought on appeal as it was said that "no evidence were (sic) given by [the appellant] for not living at the premises and no formal request was made to take her name off the lease".
[4]
The Hearing of the Appeal
The appellant was represented at the hearing before the Appeal Panel by Mr Kennedy, solicitor. The respondents were represented by Mr Chombo, the managing agent of the property.
It was not disputed by the respondents that the appellant had not been personally served with the termination notice, served pursuant to the provisions of the Residential Tenancies Act, 2010 (NSW). It was also not disputed that the appellant was not personally served with the application commencing the proceedings in the Tribunal. The effect of the failure to serve the appellant with each of the documents is considered below.
Because the appellant had not been present at the hearing below, the Appeal Panel allowed each of the appellant and Mr Chombo to give evidence and be cross-examined. Such an approach is allowed in the hearing of an appeal: see s 80(3) CATA.
The appellant gave sworn evidence that around 23 October 2013, she attended the office of the respondent landlords' managing agent and spoke to Mr Chombo. The appellant's evidence was that she showed Mr Chombo a Statutory Declaration bearing the date 23 October 2013 and which she referred to as her "separation document" (the Statutory Declaration) and informed him of her separation from her husband , that she was vacating the premises and wished to be removed from the residential tenancy agreement.
Mr Chombo gave sworn evidence of a meeting with the appellant, which he put at around 15 October 2013. He said he had checked notes on his agencies computer system that showed that this was the date of her visit. He did not have those notes with him at the hearing. He explained the inconsistency of that date with the date of 9 December 2013 in the Reply to Appeal by stating that he prepared that document from memory and checked the computer notes the day before the hearing of the appeal. We do not accept that explanation and generally prefer the evidence of the appellant. We formed the view that Mr Chombo was not telling the truth in some aspects of his evidence. Where his evidence is inconsistent with that of the appellant, unless otherwise independently corroborated, we prefer the evidence of the appellant.
In any event, Mr Chombo agreed that when she visited his agency, the appellant informed him that she was separating from her husband but denied ever seeing the Statutory Declaration. Mr Chombo gave evidence that he had a subsequent conversation with the appellant's husband and mother-in law in which they informed him that the appellant and her husband had reconciled. He said that meeting, and all other matters relating to the tenancy, was recorded in notes on his agency's computer system. As we have observed, he did not have those notes with him at the hearing of the appeal and there was no explanation why he did not bring them if he sought to rely on them, particularly as he must have known they would be relevant, having apparently checked them the day before the appeal hearing. Absent some corroborative evidence, we do not accept Mr Chombo's evidence that the husband of the appellant attended the agency with his mother and told him that the appellant and he had reconciled.
[5]
Does the Appellant require Leave to Appeal?
It is not in issue that the rental payments fell behind, causing the respondent to take action under the Residential Tenancies Act 2010 (the RTA) against both the appellant and her husband as co-tenant, seeking to terminate residential tenancy agreement and recoup the outstanding rent in arrears. The appellant was not personally served with the termination notice. However, under s223(3) of the RTA, service by the respondents on the appellant's husband as a co-tenant of the Termination Notice, at the residential premises, is taken to be service on the appellant.
It is also not in issue that the appellant was not served with the application commencing the proceedings in the Tribunal. She should have been. Pursuant to clause 13 of the Civil and Administrative Tribunal Rules 2013, personal service is required. In our opinion, such service cannot be effected by serving the co-tenant. Service of the documents issued by the Tribunal to commence the proceedings is not service of documents under the RTA such as to enliven the operation of s 223 of the RTA.
Mr Chombo testified that he served the application commencing the proceedings on the appellant by leaving it at the premises the subject of the Residential Tenancy Agreement. However, he knew the appellant was not living there. We reject his evidence that he thought otherwise. The respondents cannot avail themselves of the provisions in the rules which allow for service on the last known residential address of the appellant as they knew, though their agent, that she was not living there. There was no evidence of any attempt to find her. They could have sought orders from the Tribunal with respect to service of the application on the appellant but they did not.
On 23 May 2014, the matter came before the Tribunal. Mr Chombo appeared for the respondents. The appellant was not present, her husband attended and agreed to consent orders being made by the Tribunal. These included consent orders terminating the tenancy and awarding the landlord a money order in the sum of $6,600 for rent arrears. These Consent Orders reflected the agreement between Mr Chombo for the respondent and by the appellant's husband and were made against the appellant and her husband as co-tenants.
The Notice of Appeal indicates that the appellant seeks leave to appeal. As she was denied the opportunity of appearing at the Tribunal as she was not served with the application and otherwise had no notice of the hearing, she was denied procedural fairness. Denial of procedural fairness raises a question of law: see the discussion in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13]. She certainly has been denied the right to participate in the hearing.
[6]
Consideration of the Appeal
In essence the appellant relies on the fact that she was not residing at the residential premises and had not resided there since October 2013. As such the appellant's case is that she received no notification of the substantive hearing. Had she been served with the applications, she said she would have attended the hearing to alert the Tribunal to the fact that she had separated from her husband and had told the agent of this fact. She would have submitted that as far as she was concerned she had severed her obligations under the residential tenancy agreement, she was no longer a tenant under that agreement and hence no orders could be made against her
The respondents argue that the appellant was a tenant and as such they were entitled to serve her with the Termination Notice at the residential premises, initiate the substantive hearing proceedings against her and her husband and seek to enforce the consent orders against her. We have rejected that argument as outlined above. They submit that she remained bound by the terms of the Residential Tenancy Agreement as at the date of the hearing and the orders made should not be disturbed.
The fundamental issue in the appeal is whether the appellant was a tenant under the Residential Tenancy Agreement at the date of the hearing.
As we have observed above, we accept the appellant's evidence that she attended the office of Mr Chombo on 23 October 2013, showed him the Statutory Declaration and informed him she would be vacating the residential premises. We do not accept that the agent was told otherwise by the husband. We are not satisfied, however, that the appellant's conduct amounted to her legally terminating the residential tenancy agreement in so far as she was a co-tenant under that agreement.
Section 101 RTA makes provision for co-tenants to terminate a tenancy. This provision does not however, apply to fixed term tenancy agreements unless the term has expired (S101(1)). The Residential Tenancy Agreement here is a fixed term tenancy agreement.
On 23 October 2013, when the appellant attended the agent's premises, the fixed term of the residential tenancy agreement was still on foot. Thus even if the appellant had sought to unilaterally terminate the fixed term tenancy agreement by notice in writing to the agent, it was not open to her to do so absent consent of the other tenant and of the landlords and any such notice (without that consent) would have been ineffective.
[7]
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: 31 March 2015
1. Appeal Dismissed. 2. Order made 2 December 2014 staying the operation of the orders made 23 May 2014 is discharged.
The appellant also gave evidence that she had further telephone contact with the agent on 18 December 2013. She tendered a copy of her mobile phone bill that showed her making a call to the agent for just over 7 minutes. She said that in that call she was asked by the agent about the arrears of rent. She said that she again told the person at the agency that she had separated from her husband and was not living at the premises and that they should kick the husband out if he was not paying rent. Mr Chombo denied anyone at the agency spoke to the appellant on that day. He said that it was more likely that the appellant was on hold for the 7 minutes. We reject that assertion. We think it is fanciful. We note that rent had fallen into arrears from about 10 December 2013. We accept the appellant's evidence that she had the conversation with someone at the agency on 18 December and again told them that she had separated and was no longer living at the property.
If leave is required, whilst for the reasons we identify below, we do not believe the appellant should succeed and her prospects of success before the Tribunal had she been notified of the hearing were poor, we accept that she ought to have been given the right to be heard and that the respondent ought to have taken steps to serve her or, if her whereabouts were unknown, make an application in respect to service. Certainly, we think the respondent ought to have brought to the attention of the Tribunal the notification by the appellant to the agent that she was moving out of the property and did not regard herself as bound by the residential tenancy agreement.
If the appellant had been given notice of the hearing, she may have been able to take advice and put other matters before the Tribunal or reach some sort of accommodation with the landlords. It is possible that an agreement could have been reached with her husband as to payment of arrears. She was denied the opportunity to participate in any such discussions.
In the circumstances, we are satisfied that she may have suffered a substantial miscarriage of justice and should therefore be granted leave to appeal (see clause 12 of schedule 4 CATA and the discussion of the principles relating to leave to appeal in Collins v Urban [2014] NSWCATAP 17 at [65]-[84]).
The RTA makes provision for tenants to seek to terminate an agreement, including a fixed term residential agreement grounds such as hardship (s 104). The appellant made no attempt to avail herself of these provisions or to otherwise apply to the Tribunal for orders that the residential tenancy be terminated.
Ultimately, the appellant made a unilateral decision to break the agreement she signed in October 2013, to be bound as a tenant under that agreement until October 2014. There is no evidence that she did so with the consent of either her husband and co-tenant or the respondent landlords. It is not enough simply to verbally notify the landlord's agent. She did not attempt to obtain any legal redress which may have been open to her under the RTA.
Her actions were not a valid means of terminating the tenancy. As such, she remained bound as a tenant under the Residential Tenancy Agreement with all the obligations imposed upon her under that agreement until that agreement expired or was terminated by the Tribunal.
Whilst one can have some sympathy for the appellant, we therefore find that when the proceedings came before the Tribunal on 23 May 2013, the appellant was a tenant under and bound by the terms of the Residential Tenancy Agreement. A co-tenant cannot terminate a residential tenancy agreement, particularly without the express consent of the other co-tenant(s) and landlord, simply by verbal notification that they are moving out of the premises.
The appellant does not take issue with the termination order, nor the money order binding her husband arising from the non-payment of rent. She simply says that as she had moved out, she should not be subject to the money order.
What the appellant argues is that if she had had the opportunity to attend the hearing she would have been able to advise the Tribunal that she was no longer a tenant under and therefore not bound by, the residential tenancy agreement. For the reasons given above, we do not accept this was the case. The appellant remained a tenant under and was bound by the terms the residential tenancy agreement at the date of the hearing at which the orders were made.
Mr Kennedy, for the appellant, also argued that the appellant would also have argued that the landlord's agent was negligent in the management of the property in that, having been told that the appellant was moving out, the agent ought to have taken steps to terminate the tenancy and not let the rent go so far into arrears. We cannot accept that argument. Even if such matters could be established, it does not alleviate the problem for the appellant that she remained bound by the terms of the Residential Tenancy Agreement.
We are not satisfied that the arguments identified before us that the appellant would have wished to raise, or could have raised, at the substantive hearing had any realistic prospects of success. As there were no other arguments identified, to uphold the appeal and remit the matter for further hearing would not, on the material before the Appeal Panel, result in a different outcome.
The orders we make are as follows:
1. Appeal Dismissed.
2. The order dated 4 December 2014 staying the operation of the orders made 23 May 2014 is discharged.