Westwell v Kitson

NCAT Appeal Panel|2018-04-30

REASONS FOR DECISION

This is an internal appeal under s80 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) against orders made on 1 March 2018 in the Consumer and Commercial Division of the Tribunal, in proceedings RT 17/49933.
Proceedings RT 17/49933 were an application made on 23 November 2017 by Leeza Kitson for orders under the Residential Tenancies Act 2010 (the RT Act) including an order under s87 terminating the residential tenancy agreement between Ms Kitson and Rachel Westwell for residential premises at Forest Hill NSW (the Premises). While Ms Westwell disputes the validity of the residential tenancy agreement, for convenience in these reasons the parties are referred to as "the landlord" and "the tenant" respectively.
As background to the Tribunal proceedings, it was common ground that the tenant and Aaron Kitson, brother of the landlord, were partners residing in the Premises with their children until 2016. After the relationship ended and Mr Kitson moved out, the tenant signed a residential tenancy agreement for a period of two years from 10 October 2016, with rent of $280 per week payable. The managing agent at that time was Kitson Property, which it appears is the business run by the father of Aaron Kitson and the landlord. In September 2017, the landlord replaced Kitson Property as managing agent with Maholo Pty Ltd t/as Wagga Wagga Real Estate. The landlord's application to the Tribunal relied on a termination notice dated 20 November 2017, with the date for vacant possession 4 December 2017.
There are proceedings under the Family Law Act 1975 (Cth) between the tenant and Aaron Kitson in the Federal Circuit Court ('the family law proceedings'). The tenant has been seeking to have the landlord joined to the family law proceedings, based on what is claimed to be an equitable interest in the property of which the landlord is the legal owner. There is a caveat registered on the title, lodged by the tenant on 22 December 2017. The tenant has legal representation in the family law proceedings, and from correspondence filed by the tenant in the Appeal Panel proceedings has had such representation since December 2017.

Availability of appeal

In Loch v New South Wales Land and Housing Corporation [2014] NSWCATAP 110 an Appeal Panel held that a consent order is an order of the Tribunal, and binding on the parties in the same way as a decision given after a contested hearing; and it is, accordingly, an internally appealable decision within s 32(4) of the NCAT Act.
The appeal may be brought as of right on a question of law or, with the leave of the Appeal Panel, on other grounds: s 80(2)(b) NCAT Act. As the appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of cl 12(1) of Sch 4 to the NCAT Act leave to appeal may only be granted under s 80(2)(b) if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarised at [71] and [79] as follows: [71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).

The Appeal

There were 8 grounds of appeal identified in the Notice of Appeal: 1. The Tribunal erred in finding that it had jurisdiction to hear the matter when the same issues were being pursued in the Federal Circuit Court in proceedings under the Family Law Act; 2. The Tribunal erred in finding that the lease was valid; 3. The Tribunal erred by failing to properly swear in the witness Aaron Kitson; 4. The Tribunal erred in finding that rent was owing and/or outstanding by disregarding the evidence that Aaron Kitson had in fact paid it; 5. The Tribunal erred in making orders by consent; 6. The Tribunal erred in not checking any summonsed material showing that the property was never claimed as an investment property in Leeza Kitson's tax returns 15/16; 7. The Tribunal erred in disregarding the signed "statement of Leeza Kitson" stating that she and Aaron Kitson paid $290 p/week rent when there was evidence that contradicted that; 8. The Member disregarded the evidence showing $20,000 of her and Aaron's money paid for the deposit and stamp duty.
The tenant also sought leave to appeal on the basis that the decision was not fair and equitable, and was against the weight of evidence.
The landlord's Reply to Appeal, lodged on 22 March 2018, disputed each of the tenant's Grounds of Appeal, and opposed leave being granted.
Directions were made on 22 March 2018 for the tenant to provide to the Tribunal and the landlord all the evidence below on which she wished to rely, any fresh evidence, her written submissions in support of the appeal, and the sound recording of the hearing if what happened was being relied upon. The landlord was directed to provide her documents in reply by 23 April 2018.
On 23 April 2018 the tenant requested an extension of time to 29 April 2018 for provision of her documents, stating that she had not received the Reply to Appeal until 9 April 2018. The landlord objected, stating that she had provided that on 21 March 2018. On 26 April 2018 the Tribunal informed the parties that in the interests of ensuring that the appeal hearing could proceed as listed on 30 April 2018, the tenant was granted an extension of time to provide her documents to 4pm Friday 27 April 2018, noting that the landlord had sent documents by email on 25 April 2018.

The Appeal hearing

The tenant appeared in person, and the landlord by telephone. The Appeal Panel had the tenant's written submissions received by email at 7.45am on 30 April 2018; and the landlord's submissions received by email 7.04pm on 29 April 2018.
The tenant had requested a copy of the sound recording. That was provided on 15 March 2018. At the appeal hearing the tenant stated that the recording was divided into segments and relevant parts were not audible. As a consequence, the Appeal Panel did not have either the sound recording or a transcript of the first instance hearing.
Having regard to the grounds of appeal, in particular ground 5, and in the context where the Appeal Panel had not been provided with a transcript or sound recording of the first instance hearing, or any of the documents available to the Member on that occasion, the Appeal Panel exercised the power conferred by s 38(2) of the NCAT Act to inform itself on any matter in such manner as it thinks fit to obtain the first instance file. That file had copies of the residential tenancy agreement dated 10 October 2016, a rent ledger as at 1 March 2018, the completed Hearing Notes form, and a copy of the Tribunal form for recording agreements between parties (the Conciliation Agreement Form) which had been signed by the landlord and the tenant on 1 March 2018. The Appeal Panel informed the parties that those documents had been obtained.
The Appeal Panel heard submissions from both parties. At the conclusion of the hearing we reserved our decision, and granted a stay of the operation of Order 3 made on 1 March 2018, requiring vacant possession by 14 May 2018, until further order, conditional on the tenant continuing to comply with Orders 4 (payment of an occupation fee) and 6 (payment of rent arrears by instalments). It was common ground at the hearing that those payments are currently being made.

Whether there was an error of law

The grounds of appeal fall into two categories: 1. Whether the Member erred in making orders by consent, including: 1. Whether the Member erred in finding that the Tribunal had jurisdiction by reason of the Federal Circuit Court proceedings; and 2. Whether the Member erred in finding that the lease was valid; 1. The challenge to the Member's findings as to: 1. Rent outstanding; 2. Rent paid; 3. Whether the premises were claimed as an investment property by the landlord; and 4. Payment of the deposit and stamp duty.

The Consent Orders

The Tribunal's power to make consent orders is conferred by s 59 of the NCAT Act: 59 Powers when proceedings settled (1) The Tribunal may, in any proceedings, make such orders (including an order dismissing the application or appeal that is the subject of the proceedings) as it thinks fit to give effect to any agreed settlement reached by the parties in the proceedings if: (a) the terms of the agreed settlement are in writing, signed by or on behalf of the parties and lodged with the Tribunal, and (b) the Tribunal is satisfied that it would have the power to make a decision in the terms of the agreed settlement or in terms that are consistent with the terms of the agreed settlement. (2) The Tribunal may dismiss the application or appeal that is the subject of the proceedings if it is not satisfied that it would have the power to make a decision in the terms of the agreed settlement or in terms consistent with the terms of the agreed settlement.
Rule 37 of the Rules also requires the Tribunal, in deciding whether to give effect to a settlement, to take into account the interests of a "vulnerable person" as that term is defined, namely a person who is totally or partially incapable of representing themself in proceedings before the Tribunal because of a disability. The tenant is not such a person.
The principles applicable to setting aside a consent order were outlined by an Appeal Panel in McDonald v McDonald [2016] NSWCATAP 252: 59. A review of the authorities dealing with when a consent order can be set aside can be found in the recent Appeal Panel cases of Prenc v Stojcevski [2016] NSWCATAP 244 at [43]-[45], [53]-[57] and Yuen v Thom [2016] NSWCATAP 243 at [36]-[54]. From those cases, the following principles can be discerned (omitting authorities): (1) At common law, a consent order may be set aside on the same basis as the underlying agreement may be set aside; (2) Whether the agreement constituting the compromise can be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence and the like; (3) In order to set aside a consent order on one of the above bases, it must be possible to point to some contumelious conduct on behalf of the respondent for instance: (a) with respect to duress, it must be shown that illegitimate pressure was placed on the appellant such that there was no reasonable alternative but for her to submit; (b) with respect to undue influence, not only must there be a source of power to deprive the other person of free and voluntary consent, but it must be shown that the agreement was the result of the actual influence; (4) With respect to mistake: (i) the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party's motives for entering into the contract; (ii) a common mistake arises when the mistaken belief is held by both parties; (iii) a unilateral mistake is where one party is mistaken but where there are no other vitiating circumstances, such as misleading or deceptive conduct, fraud or misrepresentation, a unilateral mistake will not generally constitute a basis for setting aside an agreement unless the mistake is a serious mistake in relation to a fundamental term of the agreement and the other party knew of, or contributed to, the mistake. (5) With respect to other doctrines which may be applicable, such as unconscionable dealing, it must be shown that one party to the transaction was at a special disadvantage in dealing with the other party because of illness, ignorance, inexperience, impaired faculties, financial need or other circumstances that affect their ability to conserve their own interests, and the other party takes unconscientious advantage of the opportunity. It must be emphasised that the disadvantage must be "special" to disavow any suggestion that the principle applies whenever there is some inequality of bargaining power between the parties. What must be present is some disabling condition or circumstance which seriously affects the ability of the innocent party to make a judgment in their own interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. (6) There may be other factors which arise such as non est factum which defence would arise in very limited circumstances to persons who, through circumstances such as blindness or illiteracy, are unable to have any understanding of the meaning of the document evidencing the agreement and who signed it in the belief it was radically different to what was in fact signed.
Section 59(1) requires both that there be an agreed settlement, and that the Tribunal be satisfied that it would have the power to make a decision in the terms of that agreed settlement.
The first issue to consider is whether the Tribunal had power to make the consent orders. The tenant contends that it did not, because of the concurrent Federal Circuit Court proceedings; the invalidity of the lease; and a Burns v Corbett issue. We note that the latter contention was made in submissions and does not form a separate ground of appeal.
The tenant has provided documentation concerning the Federal Circuit Court proceedings, including orders made on 20 February 2018 in Wagga Wagga and correspondence from her solicitor to Aaron Kitson's solicitor dated 20 December 2017. The court proceedings are brought under the Family Law Act, and are between the tenant and her former partner; the tenant is directed to file a statement of claim by 13 March 2018 if she seeks to join the landlord; and the matter is next listed on 21 May 2018. The tenant confirmed at the appeal hearing that the landlord is not a party to those proceedings. The correspondence confirms that the disputed ownership of the residential premises forms part of the larger dispute between the former partners as to financial matters. The Federal Circuit Court proceedings are between different parties. The issue of termination of the residential tenancy agreement relating to the Premises for failure to pay rent in accordance with that agreement is not the subject of the dispute between the former partners as to the family law financial settlement. Clause 5(7) of Sch 4 to the NCAT Act does not apply, and the concurrent proceedings in the Federal Circuit Court did not deprive the Tribunal of jurisdiction to determine the dispute under the RT Act.
In terminating the residential tenancy agreement and make the other orders for possession and payment of rent arrears, the Tribunal was exercising powers conferred by the RT Act. That required that there be a residential tenancy agreement between the parties. The tenant describes the document dated 10 October 2016 as a "bogus" lease, stating that she owns the property pursuant to a resulting trust or constructive trust as she and Aaron Kitson had paid all the purchase monies, the lease was put in place to enable the landlord to claim a tax deduction through negative gearing, and the lease came into place many months later after Aaron Kitson moved out and he "made" the tenant sign a lease.
The difficulty with that contention is that whatever the merits or otherwise of the tenant's claims to have an interest in the Premises, the landlord was at the date of execution of the residential tenancy agreement the legal owner, based on the Contract for the sale of land dated 14 April 2016 and the Transfer dated 16 May 2016. The agreement is the Standard Form Residential Tenancy Agreement, and the tenant's signature is witnessed by Ms Heffernan, an employee of the landlord's then managing agent. Prima facie, the Tribunal had jurisdiction in the matter under the RT Act, and had sufficient evidence to be satisfied that it had jurisdiction to make consent orders, including termination of the tenancy, on the basis of the signed agreement of the parties: S & G Homes t/as Pavillion Homes v Owen [2015] NSWCATAP 190 at [67].
In respect of the tenant's assertion that there was no residential tenancy agreement between the parties due to the circumstances in which she signed the written residential tenancy agreement dated 10 October 2016, that was an issue in dispute in the proceedings. At a point during the course of the hearing, the tenant agreed to settle the matter and signed an agreement which became consent orders. By reason of that agreement, the tenant was consenting to vacate the premises by 14 May 2018. Having signed the agreement and consented to the orders, there was no basis for the Tribunal Member to determine the issues of rent arrears and date of vacant possession, as the parties had agreed to such matters.
There is no evidence to support any assertion that coercion or duress was involved in the signing of the residential tenancy agreement, but in any event the Tribunal Member was not called upon to determine that issue because the parties had reached agreement. The signed document was a sufficient basis for the Member to be satisfied that there was a residential tenancy agreement and thus power to make consent orders under the RT Act. The fact that the tenant has registered a caveat, preventing sale of the Premises, does not alter that situation. Neither does the tenant's assertion as to the use the landlord makes of the money she pays as rent to the managing agent.
The third matter on which the tenant relies is her assertion that the landlord resides in Western Australia and that as a consequence of the decision in Burns v Corbett [2017] NSWCA 3 the Tribunal has no jurisdiction. As explained during the appeal hearing, based on the decision in Johnson v Dibbin; Gatsby v Gatsby [2018] NSWCATAP 45 there is currently no basis for rejecting an application or declining to accept an application in respect of which the Tribunal otherwise has jurisdiction simply because of the fact that the dispute involves individuals who are residents of two different States of Australia. That is not contradicted by the more recent decision of the High Court in Burns v Corbett & Ors; Burns v Gaynor [2018] HCA 15. It is not necessary to consider or determine the dispute as to whether or not the landlord resides in Western Australia, as even if that were established it would not on the present state of binding authority preclude the Tribunal from making orders under the RT Act.
The Tribunal had power to make the orders. The next issue to consider is whether the tenant has established that there was no true agreement underlying the consent orders such that they should be set aside.
At the Appeal Panel hearing, we questioned the tenant about the hearing and the circumstances in which she signed the agreement that formed the basis of the consent orders. The tenant asserted that the agreement had occurred after the hearing had been proceeding for a number of hours. The tenant stated that a former employee of Kitson Property, Ms Heffernan, attended the hearing as her "witness". The tenant agreed that, as of 1 March 2018, she had Solicitors acting for her in the family law proceedings.
The tenant asserted that, at a point after the hearing had been proceeding for a considerable period of time, the Tribunal raised with the parties the issue of settlement. The tenant stated she believed she had "no choice" but to settle. The tenant did not clearly explain why she believed she had "no choice" but to settle. The tenant was asked why, if she did not understand the written agreement or its legal effect when made into orders of the Tribunal, she did not ask for time to telephone her Solicitor or ask Ms Heffernan for advice. The tenant replied that her Solicitor had no experience in residential tenancy matters and Ms Heffernan was only present as a witness. The tenant repeated that she "felt she had no choice".
The tenant stated that the Tribunal Member had asked her when she could leave the property, and she had said it would take her "6 months" to move out. The landlord had sought vacant possession within 7 days. There were further negotiations between the parties, and the tenant agreed to vacate the property by 14 May 2018 (approximately 10 weeks from the date of the hearing) and to pay rent arrears by instalments.
The landlord stated that the tenant was clearly aware when the agreement was reached that she would be required to vacate the property by 14 May 2018, and there was no basis to set aside the agreement or the consent orders.
Having regard to the principles as explained in McDonald v McDonald, in light of the documentary evidence on the Tribunal file and provided in support of the appeal, and the oral submissions, for the following reasons we are not satisfied that any of the grounds identified at paragraph 59 (2) in McDonald apply so as to enable the tenant to have the agreement set aside.
The central difficulty for the tenant is that she signed the agreement recorded on the Conciliation Agreement Form. That document recorded the agreed amount of rent arrears, agreed repayment by instalments, and the termination of the tenancy agreement with possession on 14 May 2018.
It was not in dispute that agreement had been reached after some four hours of the hearing at which oral evidence had been given; that the tenant was accompanied at the hearing by Ms Heffernan; and that there had been negotiation as to the date for vacant possession. While the tenant stated to us that she felt she had no option but to sign, it was not apparent from the way in which she presented her supporting documents and oral submissions on the appeal that she might have been under any particular disadvantage during the course of the hearing or negotiations at first instance. While the tenant was not legally represented at the hearing, she had ongoing legal representation in her family law proceedings.
There was no evidence of pressure which might make her agreement as reflected in the Conciliation Agreement Form involuntary such that it could be concluded that it was made under duress or was the subject of undue influence. The fact that the tenant recalls in detail the negotiation as to the final date for her to move out negates any suggestion that she may have misunderstood what the substance of the orders was intended to be, or that there was any relevant mistake in signing the agreement.
The tenant has not established any error of law in the making of the consent orders.

The challenge to the Member's findings

Grounds 3, 4, 6, 7 and 8 can be shortly disposed of. The Member's orders were made by consent, to implement the agreement reached between the parties. The Member made no findings as to rent paid or due or to any of the other substantive issues in dispute. These grounds of appeal are not made out.
The tenant has not established any error of law.

Whether leave to appeal should be granted

Whether the application for leave to appeal is based on cl 12(1)(a) or (b) of Sch 4 to the NCAT Act, for the tenant to establish that she may have suffered a substantial miscarriage of justice she would need to establish that she was deprived of a significant possibility or a chance that was fairly open that a different and more favourable result would have been achieved. For the reasons above, the tenant is bound by the orders made giving effect to the agreement that she reached with the landlord. Whether or not the Member might have reached the same conclusion had he determined the matter based on all the evidence on which the tenant contended he should have relied does not alter that conclusion. There is no basis on which leave to appeal should be granted.

Conclusion

Leave to appeal is not granted, and the appeal should be dismissed.
Order 3 of the consent orders made on 1 March 2018 suspended the order for possession until 14 May 2018. As noted above, at the conclusion of the appeal hearing we granted a conditional stay of that order. Having now finalised our reasons for dismissing the appeal, it is appropriate to consider varying Order 3 to provide an appropriate period in which the tenant is to vacate, pursuant to s 81(1)(b) of the NCAT Act. That possibility was discussed with the parties at the appeal hearing, the tenant urging us to suspend the order for possession to the date the tenancy would otherwise have ended, in October 2018; the landlord considered that a period of 2 weeks would be sufficient.
Acknowledging that the tenant has care responsibilities for her children, and bearing in mind the extent of the rent arrears, we are of the view that the order for possession should be suspended for a period of three weeks after the date of these orders.
The Appeal Panel orders: 1. Leave to appeal refused 2. Appeal dismissed 3. The stay of the operation of Order 3 made on 1 March 2018 is lifted 4. The orders made on 1 March 2018 are varied by varying Order 3 to specify that the order for possession is suspended until the date three weeks after the date of these orders.

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: 22 May 2018

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