Williams v Jeffreys

Summary

1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act") against a decision made in the Consumer and Commercial Division of the Tribunal on 17 May 2021.
2. The appeal was brought by Ms Williams, a landlord of residential premises in Birchgrove. She has sought an extension of time and leave to appeal against orders made by the Tribunal in application RT 21/06554 on 17 May 2021 ("Original Orders"). The Original Orders included an order requiring Ms Williams to refund her former tenant, Mr Jeffreys, a break lease fee in the sum of $4,500. For convenience we shall refer to the parties as landlord and tenant.
3. For the reasons given below, we have concluded that the application for an extension of time and leave to appeal should be allowed. We have also upheld the appeal and remitted the application to be determined before a differently constituted Tribunal according to law.

Background

1. On 19 September 2020, the parties executed a residential tenancy agreement for the premises at Birchgrove for a fixed term of 12 months commencing 6 October 2020 for a weekly rent of $1,500. The tenant paid a bond of $6,500.
2. Clause 51 of the residential tenancy agreement relevantly provided as follows: "51. The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of the following amount if the fixed term is not more than 3 years: 51.1 4 weeks rent if less than 25% of the fixed term has expired, 51.2 3 weeks rent if 25% or more but less than 50% of the fixed term has expired … Note: Permitted reasons for early termination include destruction of residential premises, breach of the agreement by the landlord and an offer of social housing or a place in an aged care facility, and being in circumstances of domestic violence. Section 107 of the Residential Tenancies Act 2010 regulates the rights of the landlord and tenant under this clause."
3. On 18 January 2021, the tenant gave a termination notice to the landlord and paid rent up to the end of the 21 day notice period, being 9 February 2021.
4. Although the tenant and his family moved out of the premises shortly after giving notice, vacant possession was not given to the landlord until 9 February 2021.
5. On 12 February 2021, the tenant made an application to the Tribunal seeking various orders including for compensation of $21,000 under s 187(1)(d) of the Residential Tenancies Act 2010 (NSW) (the RT Act); reimbursement of rent of $4,500 under the RT Act, s 47; refund of the full amount of the rental bond under the RT Act, s 175; reimbursement of an amount of $165 for urgent repairs carried out at the premises; and a termination order under the RT Act, s 103.

Tribunal proceedings and reasons for decision

1. On 17 May 2021, the matter was listed for Conciliation and Group List hearing. The landlord was unrepresented. The tenant was represented by his solicitor, Ms Andreana Angelous. The Tribunal had previously made orders on 5 March 2021 granting leave for the parties to be represented at the hearing.
2. The tenant argued that: 1. The landlord made representations at the time of entering into the residential tenancy agreement that the oven would be repaired, some of the landlord's personal items would be removed and defective blinds would be repaired. However, these things were not done; 2. His right to quiet enjoyment under the terms of the lease and s 50 of the RT Act had been breached by the landlord. In particular, tradespersons conducted work at the premises without notice in the period 11 to 15 January 2021; 3. The tenant and his family were unable to reside at the premises during the three week notice period as a result of the landlord's threatening behaviour. As a result, the $4,500 rent he had paid for those three weeks should be reimbursed; and 4. He should not have to pay a break lease fee under the terms of the lease because the landlord breached the lease.
3. The landlord argued that there were no breaches by her, that the tenant had damaged the premises and that he should be required to pay her compensation. She also argued that the tenant should pay the break lease fee as required under the lease.
4. The parties tendered a transcript of the proceedings. At the conclusion of the hearing, the Tribunal stated: "All in all, I'm satisfied that the applicant has proved his case on the balance of probabilities, that he wanted - was entitled to terminate the lease because he was disturbed by actions of the landlord. The fact that the landlord is equally disturbed by actions of the tenant does not change that situation. And for those reasons I find that the applicant was entitled to break the lease. However, I am not satisfied that beyond that the applicant is entitled to further compensation. So on that basis I'm going to note the finding that the - the tenant was - was entitled to break the lease for, generally speaking, disturbance of quiet enjoyment and, therefore, should not have to pay the break lease fee, which is to be returned. I'm also making an order that the bond is to be returned to the - to the applicant, and I am dismissing the application otherwise for additional compensation."
5. The Tribunal published a Notice of Order in the following terms: "1. The landlord … is to pay the tenant … the sum of $4,500… Reasons: *refund of break lease fee $4,500.00 2. The Rental Bond Services is directed to pay the tenant …. the whole bond plus interest … 3. The Application is otherwise dismissed."

The scope and nature of internal appeals

1. To succeed in an appeal, the appellant must demonstrate either an error on a question of law, which, except in an appeal from an interlocutory decision, may be argued as of right; or that permission (that is, "leave") to appeal should be granted to bring the appeal: NCAT Act, s 80(2).
2. The principles governing an application for leave to appeal under the NCAT Act are well-established and repeated in many decisions of the Appeal Panel, often quoting Collins v Urban [2014] NSWCATAP 17 (Collins v Urban).
3. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law has been applied; 4. Whether there was a failure to provide procedural fairness; 5. Whether the Tribunal failed to take into account relevant (ie mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there is no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
4. The circumstances in which the Appeal Panel may grant leave to appeal from a decision made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
5. In Collins v Urban, the Appeal Panel stated, at [76], that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act may have been suffered where: "... there was a 'significant possibility' or a 'chance which was fairly open' that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance."

An appeal commenced out of time

1. Under r 25(4)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW), an appeal from a decision concerning residential proceedings must be brought within 14 days from the decision. However, we may extend time for filing the Notice of Appeal under s 41 of the NCAT Act.
2. The discretionary power to grant an extension of time under s 41 of the Act is unfettered but it must be exercised judicially and having regard, among other things, to s 36 of the Act and the need "to facilitate the just, quick and cheap resolution of the real issue in the proceedings".
3. In Kelly v Szatow [2020] NSWSC 407 at [28]-[32], the Court summarised the principles that apply to an extension of time to appeal. Relevant considerations include the length of the delay and any associated reasons for such, the strength of the plaintiff's case and consideration of whether the defendants would be prejudiced by a granting of the application: see Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 at [3]-[5]; Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 at [55].
4. As set out in Jackson v Land and Housing Corporation (NSW) [2014] NSWCATAP 22 at [22], the relevant considerations in deciding whether to grant an extension of time in which to lodge a Notice of Appeal include: "(1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant - Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSWCA 85 at [38]; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a 'vested right' to retain the benefit of that decision - Jackamarra v Krakouer (1998) 195 CLR 516 at [4], Nanschild v Pratt [2011] NSWCA 85 at [39] and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success - Jackamarra at [7]; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal), - Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [55] (per Basten JA) but note also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable - Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [14] (per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58]-[59].

The grounds of appeal

1. The grounds of appeal in both the Notice of Appeal and Amended Notice of Appeal are as follows: "1. The reference to the break lease fee in the Orders being 'refunded' makes no sense. As the tenant never paid me a break lease fee in the first place and therefore the order is erroneous. 2. Leave is sort [sic] to appeal the decision out of time in circumstances where a garnishee order has been made to deduction $4,500 from my bank account (without my knowledge) as informed to me by my Bank on 1 July 2021. 3. The Order is confusing in that the tenant should have paid me a break lease fee in circumstances where the tenant entered a 12 month lease but sort [sic] to terminate after 3 months. The decision because of its confusion is wrong at law."

Reply to appeal

1. The tenant filed a Reply to Appeal on 20 July 2021 in which he replied to the grounds as follows: "(1)The Respondent paid 3 weeks rent in the sum of $4,500 representing the break fee. Whilst the Respondent provided 3 weeks notice, it was the Respondent's evidence that he was unable to remain in occupation for that entire 3 week period due to the conduct of the Respondent [sic]. This is what was referred to as the break lease fee. (2)The Appellant is not required to be notified of a Garnishee Order. This is not a valid ground of appeal. (3) The Respondent's [sic] grounds are devoid of any proper or substantial reasons at law and a factual claim of confusion is not a proper and valid ground of appeal. The Appellant has failed to set out grounds as to an error of law. The Respondent says there was no error."
2. In his Reply, the tenant stated that "All original orders made by the Tribunal on 17 May 2021 are supported by the Respondent".

The hearing

1. At the hearing of the appeal, Mr Francis, counsel for the tenant, accepted the following: 1. The amount of $4,500 which the tenant had paid was the rent payable to 9 February 2021 and not a break lease fee. 2. The tenant did not give vacant possession of the property until 9 February 2021. 3. Order 1 made by the Tribunal was unsound as the tenant had not paid a "break lease fee" and the Tribunal must have misunderstood and/or misdirected itself.
2. However, it was argued that it would be fair for the tenant to keep that amount as compensation in circumstances where the tenant and his family were unable to reside in the premises because of the alleged threatening and abusive conduct of the landlord.
3. We note that the tenant did not file a Notice of Appeal challenging the Tribunal's conclusion that an order for compensation would not be made. The tenant submitted that he considered $4,500 an appropriate amount of compensation considering he was unable to occupy the premises during the last three weeks of the tenancy because of the landlord's threatening behaviour.

Leave to appeal

1. Given the concession made by the tenant at the hearing (referred to in [28] above) it was not in dispute in the appeal that there was no evidence before the Tribunal to support the finding of fact that a break lease fee had been paid to the landlord.
2. Further, there is no provision under the RT Act for a break lease fee to be awarded in favour of a tenant and we cannot discern from the Tribunal's reasons why Order 1 was made.
3. Making a finding of fact where there is no evidence to support that finding is an error of law: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [91]; House v The King (1936) 55 CLR 499; [1936] HCA 40.
4. Given there was an error of law, the landlord does not require leave to appeal and the appeal should be allowed, subject to the resolution of whether an extension of time should be granted to file the Notice of Appeal.

Extension of time to file Notice of Appeal

1. As noted above, the decision of the Tribunal was given orally at the hearing on 17 May 2021. A Notice of Order (which included the Tribunal's reasons for decision) was received by the landlord a week after the hearing.
2. However, the landlord did not file her Notice of Appeal until 2 July 2021, or 23 days out of time.
3. It was submitted that the reason the landlord had not taken steps to file a Notice of Appeal earlier was because she had not understood the orders. She clearly indicated in her submissions that she made a decision to "get on with her life".
4. However, the landlord also did not appreciate that the order (while incorrect) could be enforced. It was not until the tenant took steps to enforce the refund of $4,500 by obtaining and issuing a garnishee order to the landlord's bank, that the landlord took steps to appeal the Tribunal's decision.
5. While the tenant submitted that the delay in filing a Notice of Appeal has caused prejudice to him in circumstances where he took steps to obtain a garnishee order, he should have known he was not entitled to the refund of a break lease fee which he had never paid.
6. On balance, strict compliance with the 14 day time limit in the circumstances described above, would cause an injustice for the landlord who has demonstrated an appealable error in the order of the Tribunal.
7. Further, we note that an Amended Notice of Appeal was filed by the landlord on 13 August 2021 without leave. However, the grounds are the same as the original Notice of Appeal and insofar as necessary, we grant leave for the Amended Notice of Appeal to be filed out of time.
8. As no party challenged the balance of the Tribunal's orders, the appeal is otherwise dismissed.

Costs of the appeal

1. In the event that the landlord was successful in the appeal, she requested an order for costs in her favour.
2. Section 60 of the NCAT Act provides that each party should pay their own costs unless we are satisfied that special circumstances exist: s 60(2) NCAT Act.
3. Special circumstances are not defined in s 60. However, s 60(3) provides that, in determining whether there are special circumstances which warrant a costs award, we may have regard to the matters set out in paragraphs (a) to (f) of s 60(3) as well as "any other matter that the Tribunal considers relevant": s 60(3)(g).
4. In Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81, Santow JA (Brownie AJA agreeing) stated: "54 The Tribunal, following the successful appeal to the Appeal Panel on 3 February 2005, concluded against Dawson that the criterion of 'special circumstances' was not satisfied in the circumstances. I set out below the Tribunal's reasoning on this issue: '17 If the traditional common law approach of "costs follow the event" applied in the Tribunal, the Applicant, being successful, would have a prima facie entitlement to its costs. But as has been said in numerous cases …, the criterion of "special circumstances" dictates a very different approach. 18 The principles governing the awards of costs were specifically considered by the Appeal Panel in Sotiropoulos v Mattana Coiffure Pty Limited (No 2) (RLD) [2004] NSWADTAP 43 and in Wood & Anor v Bergman (No 2) [2003] NSWADT 175. Clearly, section 88 of the ADT Act lays down a principle that the Tribunal must be satisfied that there are special circumstances warranting an award of costs. Illustrations of what may qualify as "special circumstances" appear in paragraph 2 of the Tribunal's Practice Note 12, dated 4 March 2003 however, the list given is not exhaustive. In Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164, at [29], the Tribunal defined "special circumstances" as "circumstances that are out of the ordinary, but without having to be extraordinary or exceptional". A finding of "serious unfairness" is not a prerequisite to determining that there are "special circumstances". … 20 I have no doubt that the Applicant, through no fault of its own, has been placed in the situation where it has been forced to pursue this litigation. In my view this is extremely regrettable. Nevertheless, the legislature has established a scheme for the resolution of retail tenancy disputes that anticipates that an order for costs will be the exception rather than the rule [and] in order for the Applicant to succeed in this application, I must find that the circumstances surrounding the conduct of the case amount to "special circumstances". I also agree that costs orders are not a sanction to reprove unreasonable conduct that has led to an application for relief. 21 In the circumstances of this matter it is my view that requirements for an order pursuant to section 88 have not been met. The circumstances were not out of the ordinary such as to amount 'special circumstances' that could be relevant to the question of costs. Accordingly, the appropriate order is that each party should bear its own costs.'"
5. The applicant for costs bears the onus of establishing an entitlement to costs: Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48 at [18].
6. The landlord's costs application was made effectively on the basis that had the error not been made, the appeal would not have been required. It was also submitted that no letter of demand had been made for the $4,500; no notice had been given to the landlord of the garnishee order; and the tenant had not asserted that a break lease fee had been paid but instead sought to have the amount applied as compensation.
7. The tenant opposed the landlord's application for costs noting s 60 of the NCAT Act and the considerable amount of costs incurred by him "answering arguments that are without substantiation".
8. At the hearing, we informed the landlord and her legal representative, Mr Noss, of the requirements in s 60 of the NCAT Act. Mr Noss relied on the circumstances referred to in [48] above which it was contended constitute special circumstances.
9. We conclude that none of the matters raised by the landlord constitute "special circumstances" and we were not addressed on the specific requirements of s 60 of the NCAT Act. In reaching our decision, we have taken into account the written submissions on costs of both parties as well as oral submissions made at the hearing.

Orders

1. We make the following orders: 1. Time to lodge the Notice of Appeal is extended to 2 July 2021. 2. The appeal is allowed. 3. The Orders of the Tribunal made on 17 May 2021 in RT 21/06554 are set aside. 4. The matter is remitted to the Tribunal, differently constituted, to be determined according to law, with such new evidence as the Tribunal may permit. 5. Each party to pay their own costs of the appeal. 6. The appeal is otherwise 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

Amendments 06 October 2021 - Order numbers on coversheet 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: 06 October 2021