Tsung v Johnson

NCAT Appeal Panel|2022-02-16|Before: Blake AM

Background

This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act) from a decision made in the Consumer and Commercial Division of the Tribunal on 1 November 2021.
The appellant is a landlord of premises of which the respondent was a tenant (premises) pursuant to a written residential tenancy agreement (agreement) that commenced on 16 April 2021 for a term of 6 months. The respondent vacated the premises on 6 August 2021 before the expiry of the full term of the agreement, due to the presence of excessive mould in the lounge room and a second bedroom.
The appellant claimed from the respondent $933.83 from the rental bond comprising a break lease fee of $740, unpaid rent of $72.85, and carpet cleaning costs of $121. The $72.85 for rent was later returned to the respondent.
The respondent commenced proceedings RT 21/35526 against the appellant in the Tribunal claiming a rent reduction and compensation for damage caused by the mould to certain household items of furniture and some personal property.
The Tribunal disallowed the appellant's claims.
The Tribunal did not allow the respondent's claim for a full rent reduction for the period from 15 July 2021 to 6 August 2021, and instead applied a 30% reduction in the rent for that period of the claim and awarding the respondent $364.71. The Tribunal also allowed the respondent an amount of $2,127.50 for damage that the mould caused to certain items of "relatively new" household furniture, based on a 50% discount applied to the original purchase cost of that furniture. The Tribunal disallowed the respondent's claim for compensation for damage caused to her personal belongings. The Tribunal awarded the respondent $3,352.21.

Notice of appeal

The appellant lodged a Notice of Appeal on 15 November 2021 (Appeal). The appellant marked the box on the Appeal to indicate that leave to appeal was being sought. The grounds relied upon for leave to appeal were described as "a denial of procedural fairness" for the Tribunal's failure to have regard to evidence relating to the cause of the mould and that the decision was "against the weight of the evidence".
The appellant contended that the Tribunal: 1. failed to consider or show that it has considered material information relating to the cause of mould; 2. failed to take into consideration that the tenant has the responsibility to maintain proper hygiene and ventilation of the unit.
The appellant accepted the amount of $364.71 awarded by the Tribunal to the respondent based on the 30% reduction for the rent for the period from 16 July 2021 to 6 August 2021. The appellant also accepted the Tribunal's decision to disallow her claim for $121 for costs of carpet cleaning.
Therefore, the appellant sought orders in the appeal: 1. for payment of the $740 break lease fee that had been disallowed by the Tribunal; and 2. for dismissal of the respondent's claim for damage to the household furniture.

Reply to appeal

The respondent lodged a Reply to Appeal (Reply) on 15 December 2021. The respondent opposed the appellant's application for leave to appeal. The Respondent supported the original orders made by the Tribunal and provided a detailed form of a submission with her Reply.

Evidence and Submissions

Both parties provided extensive evidence and detailed submissions. The appellant lodged her evidence and written submissions on 10 January 2022. The respondent lodged her evidence and written submissions on 24 January 2022.

Statutory basis of the appeal

Section 80 (2) of the NCAT Act provides that an internal appeal (which this is) may be made as of right to the Appeal Panel on a question of law and otherwise with the leave (that is, with the permission) of the Appeal Panel.
The Appeal Panel relevantly may make such orders as it considers appropriate in light of its decision on the appeal, including but not limited to any one or more of orders that the appeal is to be allowed, the decision under appeal is to be varied, and the whole or any part of the case is to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel: s 81(1)(a), (b) and (e) of the NCAT Act.
An internal appeal is not a re-hearing of the original proceedings or a mere opportunity for a party dissatisfied with the outcome in the original proceedings to re-argue its case: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. To succeed in an appeal, the appellant must establish an error of law has occurred; or otherwise an error of the type that it is appropriate to grant leave to appeal.
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out a non-exclusive list of questions of law at [13], including whether there has been a failure to provide proper reasons, whether the Tribunal identified the wrong issue or asked the wrong question, and whether the Tribunal took into account an irrelevant consideration.
An error of law will also occur where there is a material failure by the Tribunal to respond to a "substantial, clearly articulated argument relying upon established facts" that may be characterised either as a failure to afford natural justice or as a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24]-[25] (Gummow and Callinan JJ; Hayne J agreeing at [95]); DVE18 v Minister for Home Affairs (2020) 276 FCR 401; [2020] FCAFC 83 at [34]; followed by the Appeal Panel in Goncalves v Bora Developments Pty Ltd [2021] NSWCATAP 231 (Goncalves) at [9(2)].
A failure to deal with evidence may also in the appropriate circumstances be characterised as a failure to have regard to a relevant consideration or a failure to have regard to critical evidence. By s 38(6)(a) of the NCAT Act, the Tribunal "is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings." This obligation includes an obligation to have regard to material which has been disclosed to the Tribunal and which is relevant to the facts in issue, at least where that material is of some significance: Goncalves at [28]; Croghan v Rees [2021] NSWCATAP 328 at [40].
Where, as in the present case, the parties are not legally represented it is appropriate for the Appeal Panel to review the stated grounds of appeal, the material provided by the parties, and the Tribunal's decision which is being challenged to ascertain whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal: Cominos v Di Rico [2016] NSWCATAP 5 (Cominos) at [13].

The issues

We are satisfied that the appeal was commenced within the time of 14 days prescribed under r 25(4)(b), when read with par (d) of the definition of "residential proceedings" in r 3(1), of the Civil and Administrative Tribunal Rules 2014 (NSW).
Having regard to the principles in Cominos at [13], we have discerned from the order challenged on appeal and the grounds of appeal in the notice of appeal, the material provided by the appellant, and the Tribunal decision the following five grounds of appeal: 1. ground 1: the Tribunal erred in identifying the wrong issue or asking the wrong question in not considering the cause of mould in the premises; 2. ground 2: the Tribunal erred by constructively failing to exercise jurisdiction; 3. ground 3: the Tribunal erred by not affording procedural fairness; 4. ground 4: the Tribunal erred by failing to take into account relevant considerations; 5. ground 5: the Tribunal erred by failing to provide proper reasons.
Grounds 1 to 4 arise out of the failure of the Tribunal to consider the cause of mould in the premises. Ground 5 arises out of the failure of the Tribunal in its decision to disclose adequate reasons for rejecting the break fee and for finding that the appellant was liable to pay damages of $2,127.50 for damage to the household furniture.
We are satisfied that each of grounds 1 to 5 raise an error of law. It follows that the question of whether there is an error for which leave to appeal is required does not arise for decision.
It is convenient to deal with grounds 1 to 4 together.

Ground 1: the Tribunal erred in identifying the wrong issue or asking the wrong question

Ground 2: the Tribunal erred by constructively failing to exercise jurisdiction

Ground 3: the Tribunal erred by not affording procedural fairness

Ground 4: the Tribunal erred by failing to take into account relevant considerations

We are of the view that the Tribunal addressed the wrong issue in finding - without more - that there was mould in the property so that "the tenant had valid reason to vacate" and that "on the balance of probabilities, … the mould would have damaged the furniture".
There was no issue that there was mould in the premises. In our opinion, the Tribunal should have first determined as a question of fact, what caused the mould to occur. Such a finding was a necessary step in the process of reasoning to be undertaken by the Tribunal to determine who was responsible for the mould occurring and for it not being removed.
For example, if there was a structural or building related issue that caused the mould, such as dampness in the walls or the floor slab or there was a water leak, then it would be the responsibility of the appellant as the landlord to prevent that cause of the mould occurring, by rectifying that defective part of the building. A failure to rectify the defect in those circumstances would be a cause of the mould occurring and if the cause of the mould was left unrectified, it would entitle the respondent as the tenant to vacate and claim a rent reduction and, subject to the usual requirements of proof, compensation for any damage to property and belongings resulting from the presence of the mould.
If however for example, the presence of the mould was due to the respondent failing to properly ventilate the premises when there was excessive internal heating that might have caused excessive condensation internally, and then she failed to treat and control the mould, then liability for the presence of the would most likely be on the respondent.
We are of the view that the Tribunal misdirected itself in its fact-finding as it only considered if mould was present. That was the wrong issue and it was not in dispute that there was mould in the premises at the time of the respondent's occupation.
As the appellant contended in her Appeal, the Tribunal did not determine the issue of causation. Without determining the cause of the mould in the premises as a matter of causation, the Tribunal could not properly determine liability between the parties.
We are satisfied that there was sufficient material for the Tribunal to have been able to make findings with respect to causation and liability.
The appellant provided in her evidence a series of statutory declarations by a previous tenant, agents strata/property managers who attended inspections of the premises, an incoming inspection report and a routine inspection report that were both signed by the respondent, and an inspection report prepared by a licensed plumber/builder to inspect the premises for moisture or leaks and dampness. The effect of that evidence was that there was no building related issue that was causing the mould, that some of the items identified as mould by the respondent was not mould, and that excessive condensation was apparent in the premises due to a lack of ventilation.
The respondent provided a large number of emails recording her complaints about the mould that were made to the appellant's agents along with photographic evidence of a large area of what appeared to be mould under the lounge and on her child's toy kitchen in the second bedroom. There was also a photo of mould on a shoe. The Tribunal noted that there was no evidence of mould on the lounge, the mattress or the bed but accepted on the balance of probabilities that the presence of mould "would have damaged [that] furniture". The Tribunal discounted the award of damages by 50% although the furniture was "new" or "relatively new" and there was no objective evidence that it had been disposed of by the respondent.
By addressing the wrong issue or asking the wrong question the Tribunal made an error of law.
While we have analysed this error of the Tribunal in terms of identifying the wrong issue or asking the wrong question, it could equally be characterised as a constructive failure to exercise jurisdiction, or a failure to afford procedural fairness, or a failure to take into account relevant considerations. There was both a substantial, clearly articulated argument as to the cause of the mould, and evidence as to the cause of the mould, which the Tribunal did not consider. Each of these failures of the Tribunal constituted an error of law.

Ground 5: the Tribunal erred by failing to provide proper reasons

The approach to the provision of adequate reasons is set out in the decision of Bell P in NSW Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 (Orr), as later summarised in the decision of the Appeal Panel in Origin Concepts Pty Ltd v Wynne [2022] NSWCATAP 31 at [20]-[23].
The reasons to be given by the Tribunal need not be elaborate but the basis for the decision should be made apparent. The features that are required for reasons to be adequate are set out in s 62(3) of the NCAT Act and provides some guidance as to the detail to be supplied in a decision by the Tribunal such as in the decision the subject of this appeal: see Bell P in Orr at [71] and [74] (Ward JA at [109] agreeing).
In disallowing the appellant's claim for the break lease fee, the Tribunal failed to give any reasons or disclose its process of reasoning to explain how it reached that finding. Similarly, in awarding the respondent a reduction in rent and damages, there was no process of reasoning disclosed as to how the Tribunal reached those findings, beyond the undisputed fact that mould was present in the premises. There was nothing in the Tribunal's reasons to identify the factual or legal basis for finding liability on the part of the appellant so as to allow the respondent's claim for rent reduction and damages. The Tribunal appears to have assumed that if mould was present in the premises at the time the respondent was in occupation, then it was simply the appellant's fault.
Further, no clear or logical reasons were given to explain how the Tribunal determined and then applied a 50% deduction in the damages awarded to the damaged furniture given the newness of the furniture and in the absence of proof of mould or damage to the lounge, mattress or bed and when it was said to have been disposed of by the respondent. The Tribunal appears to have simply inferred that it was "probable" that mould would have damaged such items of furniture.
We have found that the Tribunal failed to address the issue of causation in its reasons. The cause of the presence of mould in the premises was unexplained by the Tribunal and was also left undetermined. By failing to consider that issue, the Tribunal failed to disclose its process of reasoning by which it found the appellant liable to the respondent for her claim for a rent reduction and damages. It follows that the Tribunal made an error of law in failing to provide adequate reasons for its decision.

Disposition of the appeal

We consider that the appeal should be allowed, and the decision of the Tribunal that the appellant pay $3,352.21 should be varied to substitute $364.71, which is the amount that the appellant accepted as a rent reduction for the period from 16 July 2021 to 6 August 2021.
However, in our opinion, given the various matters that require reconsideration due to the errors of law raised in this appeal, the Tribunal is better placed than the Appeal Panel to undertake the necessary fact finding and consideration of the evidence which may be assisted by a hearing and possible cross-examination of the parties and any witnesses. It follows that the proceedings should be remitted to the Consumer and Commercial Division of the Tribunal for rehearing of the issues other than the claim of the respondent for a rent reduction and the claim of the appellant for the cleaning of the carpet by a differently constituted Tribunal upon the evidence already adduced to the Tribunal at first instance, and such further evidence as the Tribunal may allow.

Orders

We make the following orders: 1. the appeal is allowed; 2. the decision made on 1 November 2021 in proceedings RT 21/35526 is varied by substituting $364.71 for $3,352.21; 3. the proceedings are remitted to the Consumer and Commercial Division of the Tribunal for rehearing of the issues other than the claim of the respondent for a rent reduction and the claim of the appellant for the cleaning of the carpet by a differently constituted Tribunal upon the evidence already adduced to the Tribunal at first instance, and such further evidence as the Tribunal may allow.

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: 11 May 2022

(2019) 100 NSWLR 578

At a glance

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Judgment (14 paragraphs)

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Legislation Cited (2)

Cases Cited (12)

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