Willis v Charles

Background

1. In the matter, Karenessa Willis and Peter Willis (the Appellants) appealed against orders made on 29 March 2016 in favour of the Respondent Robert Charles, to the effect that they had to pay the Respondent the sum of $1,198.87 on or before 12 April 2016. A stay was ordered on 19 April 2016 in relation to the orders.
2. The case related to a residential tenancy pursuant to which the Appellants as tenants occupied premises at 1020 Armidale Road South Grafton (also known as Elland) in New South Wales (premises) which were owned by the Respondent.
3. The parties entered into a written Residential Tenancy Agreement (RTA) in relation to the premises for the period of six months commencing on 10 July 2015 and ending on 7 January 2016. The RTA stated that the premises included: "…Solar power which is in owners name and then tenants. Tenants to pay the account…"
4. It appears from the evidence that the tenancy got off to a poor start. Mrs Willis complained about the cleanliness of the bathroom on initial occupation particularly the porcelain toilet seat. After cleaning it thoroughly, leaving on the photographic evidence only a small remaining mark, the Appellants decided to replace the seat with a plastic replacement. The evidence showed that Mr Charles acknowledged this but did not expressly approve its replacement or that the porcelain seat be thrown out.
5. The Appellants were presented with electricity bills for payment including solar electricity bills. In due course the Appellants refused to pay the solar electricity bills claiming solar electricity was "free" as it came from the sun although the Respondent had spent a considerable sum having the solar system installed.
6. In due course, the relations between the parties worsened and the Respondent served a "Notice to Terminate Tenancy Agreement" under the Residential Tenancies Act 2010 (NSW) (the Act).
7. The notice of termination provided inter alia as follows: "To: Peter Willis and Karenessa Willis … I give you notice to deliver up vacant possession of the premises at: Address of premises 1020 Armidale Road, Elland Postcode 2460 On: 07/01/2016 (insert date on which tenant is required to vacate premises) NB: Unless this notice is being given for the end of fixed term tenancy you can vacate and hand back possession any time prior to this date and your responsibility to pay rent ceases from that date (section 110). This notice is being given on the following grounds: (tick appropriate box to indicate the grounds/reason and complete details as required) P End of fixed term tenancy: 30 days minimum notice required (Section 84) … P Other breach of agreement, besides unpaid rent: 14 days notice (Section 87) The tenant has breached clause/s 10.1 of the residential tenancy agreement dealing with payment of electricity with separate metering."
8. The notice of termination was dated 19 October 2015 and signed by the Respondent and personally placed in the Appellants' letterbox in an envelope addressed to the Appellants. There was no issue as to the validity of the notice of termination.
9. The Appellants gave vacant possession to the Respondent on 21 December 2015. Rent had been paid by the Appellants up to 24 December 2015 apart for one day on 1 October 2015. There was some disagreement between the parties as to whether a skip containing rubbish from the Appellants was left on the property but the evidence showed that it was collected on 22 December 2015.
10. The Appellants gave vacant possession earlier than 7 January 2016 as they had decided that the notice of termination from the Respondent, having ticked two bases for providing the notice of termination, enabled them to choose the earlier one to provide vacant possession.
11. When the Appellants vacated the premises they did not replace the plastic toilet seat with the original porcelain toilet seat. They also did not pay an outstanding account for solar electricity.
12. The Respondent lodged an application with the Tribunal on 5 January 2016 seeking payment of a portion of the rental bond which had been paid by the Appellants. The application provided the following reasons for requesting payment of a portion of the rental bond: "Replace toilet seat. Payment of water bill. Payment of solar electricity. Payment of rent to 7-01-2016. Payment of 1 day's Rent. 31 September 2015."
13. The matter came on for final hearing on 29 March 2016. The Appellants submitted at first instance in summary as follows: 1. they were not liable to pay the cost of the replacement toilet seat as it had been dirty and stained when they arrived and they were entitled to replace it. They also asserted that the Respondent was aware that they intended to replace it and acknowledged this; 2. they were not obliged to pay the water usage claimed; 3. they were not liable for the claimed rent arrears as they had given vacant possession under the notice of termination on 21 December 2015 and they were entitled to choose the earlier date where two grounds had been relied upon in the notice of termination by the Respondent; 4. they were not liable for the solar electricity bill as solar electricity was free coming from the sun.
14. The Respondent submitted in summary as follows: 1. the Appellants were not entitled to replace the toilet seat and he had not agreed to its replacement. They were required to compensate for the cost of a porcelain replacement seat; 2. the Appellants were obliged to pay the water usage charge; 3. the Appellants were obliged to pay the rental arrears up to the end of the fixed term under the RTA; and 4. the Appellants were obliged to pay the solar electricity bill pursuant to the RTA and the solar electricity was not free as claimed.
15. The Respondent's application at first instance was successful and the Tribunal Member hearing it gave brief oral reasons for his decision. In relation to the toilet seat, the Member concluded that the Appellants had done a good job in cleaning it and there was only a small mark left. The Member accepted that the Respondent had purchased a replacement porcelain seat at the cost of $51.59 which was equivalent to that which was there when the tenants took possession. The Member concluded that the Applicants were not entitled to replace the seat which was there when they took possession with an inferior one and that Mr Charles was entitled to recover the cost of replacing an equivalent porcelain toilet seat. The Member appeared to accept that the Respondent had not agreed to the seat's replacement with the plastic version as the Appellants had claimed.
16. In relation to the water usage the Member was satisfied that the amount claimed was correct.
17. In relation to the solar electricity charge, the Member concluded that the Appellants had received an electricity rebate due to the presence of the solar electricity and that the Appellants had been separately billed for the solar electricity supplied to the Appellants' premises. The Member relied on section 38(1)(a) of the Act which provides as follows: "38 Utility charges payable by tenant (1) A tenant must pay the following charges for the residential premises: (a) all charges for the supply of electricity, gas (except bottled gas) or oil to the tenant at the residential premises if the premises are separately metered,…".
18. The Member was satisfied that the electricity, which included the solar electricity, was supplied electricity which was separately metered and it was payable by the tenant Appellants.
19. In relation to the rent arrears claim, the Member concluded that as it was a fixed term tenancy and a notice of termination was issued, the Appellants were liable to pay rent until the expiry of the tenancy. The Member also found that rent was payable for 1 October 2015 but that the Appellants had paid rent up until 24 December 2015. The Member did not consider the alternative argument that the ticking of the two boxes allowed the Appellants to choose the period most favourable to them for vacation of the premises.

Applicable statutory provisions

1. Sections 51(3) to 51(5) of the Act provide as follows: "51 Use of premises by tenant … (3) On giving vacant possession of the residential premises, the tenant must do the following: (a) remove all the tenant's goods from the residential premises, (b) leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, and, if there is a condition report, as set out in the condition report applicable to the premises when the agreement was entered into, (c) leave the residential premises in a reasonable state of cleanliness, having regard to the condition of the premises at the commencement of the tenancy, (d) remove or arrange for the removal from the residential premises of all rubbish, having regard to the condition of the premises at the commencement of the tenancy, (e) return to the landlord all keys, and other opening devices or similar devices, provided by the landlord to the tenant. (4) In this section: "residential premises" includes everything provided with the residential premises (whether under the residential tenancy agreement or not) for use by the tenant. (5) This section is a term of every residential tenancy agreement."
2. Section 84 of the Act provides as follows: "84 End of residential tenancy agreement at end of fixed term tenancy (1) A landlord may, at any time before the end of the fixed term of a fixed term agreement, give a termination notice for the agreement that is to take effect on or after the end of the fixed term. (2) The termination notice must specify a termination date that is on or after the end of the fixed term and not earlier than 30 days after the day on which the notice is given. (3) The Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice. (4) This section does not apply to a residential tenancy agreement if the tenant has been in continual possession of the same residential premises for a period of 20 years or more and the fixed term of the original fixed term agreement has ended."
3. Section 87 of the Act provides as follows: "87 Breach of agreement (1) A landlord may give a termination notice on the ground that the tenant has breached the residential tenancy agreement. (2) The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given. (3) The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement if it is a fixed term agreement. (4) The Tribunal may, on application by a landlord, make a termination order if it is satisfied that: (a) the tenant has breached the residential tenancy agreement, and (b) the breach is, in the circumstances of the case, sufficient to justify termination of the agreement, and (c) the termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice. (5) In considering the circumstances of the case, the Tribunal may consider (but is not limited to considering) the following: (a) the nature of the breach, (b) any previous breaches, (c) any steps taken by the tenant to remedy the breach, (d) any steps taken by the landlord about the breach, (e) the previous history of the tenancy. (6) The Tribunal may refuse to make a termination order if it is satisfied that the tenant has remedied the breach."
4. Section 110 of the Act provides as follows: "110 Tenant may vacate at any time before termination date specified by landlord (1) A tenant who is given a termination notice by the landlord, or who gives a termination notice, may give vacant possession of the residential premises at any time before the termination date. (2) If a termination notice is given by a landlord, the tenant is not liable to pay any rent for any period after the tenant gives vacant possession of the residential premises and before the termination date. (3) Subsection (2) does not affect the liability of a tenant under a fixed term agreement to pay rent in respect of a period after the tenant gives vacant possession of the residential premises and before the end of the fixed term, if the termination notice is given by the landlord in accordance with section 84."

The Appeal

1. On 6 April 2016, the Appellants lodged their Notice of Appeal against the orders made on 29 March 2016. This was within the 28 day appeal period established by Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014.
2. There was no issue that the Tribunal at first instance had jurisdiction as the issue was one under the Residential Tenancies Act 2010 (NSW).

Scope and nature of the Appeal

1. A party may appeal against an "internally appealable decision" of the Tribunal as of right on any question of law, or with the leave of the Appeal Panel on any other ground: s80(2)(b) of the Civil and Administrative Tribunal Act 2013 ("NCAT Act"). It is not in dispute between the parties that the Tribunal's decision is an internally appealable decision.
2. Where, as in this case, the decision under appeal is a decision of the Consumer and Commercial Division of the Tribunal, the Appeal Panel may only grant leave to appeal where the appellant may have suffered a "substantial miscarriage of justice" because the decision under appeal was not fair and equitable, was against the weight of evidence, or significant new evidence has arisen: clause 12(1) of Schedule 4 to the NCAT Act.

The grounds of appeal

1. The grounds of appeal are set out by the Appellants in the Notice of Appeal as follows: "Toilet Seat: We never damaged the toilet seat, the Landlord refused to get cleaner back to clean the seat, therefore, the previous tenant or Landlord should be paying for the cost of a new Toilet Seat. Also, the Landlord was not able to provide a receipt of the purchase of the new Toilet Seat he claims to have bought. Rent Arrears: We were given a termination notice from the Landlord. Under Section 87, if the Landlord issues Termination under breach of agreement, we are not liable for remainder of rent to end of fixed term. Electricity: There was never an agreement made to pay extra money on top of electricity bill to owner for the solar power generated by the grid. It was never a condition in our signed lease agreement. The electricity we are being made to pay for is free energy consumed by the sun via the solar panels."
2. There was no appeal in relation to the order concerning the water usage charge.
3. The Appeal Panel took the ground of appeal in relation to the rent arrears as essentially being that the Respondent in the notice of termination had relied upon two grounds to issue the notice and the Appellants were entitled to rely on that which was most favourable to them and provide vacant possession earlier than the end of the fixed term tenancy.

The Appellants' submissions

1. The Appellants filed detailed written submissions and supplemented them at the hearing with oral submissions.
2. The Appellants' submissions in summary were as follows: 1. the Appellants were entitled to replace the toilet seat because it was dirty when they arrived and even after cleaning it still had a mark which was a health hazard. While the Respondent did not expressly agree to the replacement of the toilet seat he did not oppose it when replacement was mentioned in his presence. As a matter of hygiene it was appropriate to replace the toilet seat. It was accepted by the Appellants at the appeal that the Tribunal Member had preferred the evidence of the Respondent in relation to what had occurred when replacing the toilet seat was mentioned and concerning the cost of the replacement toilet seat; 2. there should be no charge in relation to the use of the solar energy because it was free, coming from solar panels, even though there had been considerable expense by the Respondent in installing the solar panels; 3. in relation to the rear arrears claim, two grounds were relied upon by the Respondent in his notice of termination and the Appellants were entitled to choose the shorter period. They gave vacant possession on 21 December 2015 but had paid rent up to 24 December 2015 and no rent was owing by them including in relation to 1 October 2015. The Member, so it was submitted by the Appellants, had erred in his interpretation of section 110 of the Act.

The Respondent's submissions

1. The Respondent also filed detailed written submissions and supplemented them orally (by way of telephone) at the hearing of the appeal.
2. The Respondent's submissions on the appeal were as follows, in summary: 1. when the Appellants took possession of the premises the bathroom had a porcelain toilet seat. The Appellants were not entitled to replace it with an inferior plastic toilet seat. The Appellants had to return the premises to the same condition as they receive them on initial occupation. The Member at first instance had preferred the Respondent's evidence that there was no agreement to replace the toilet seat and in relation to the cost of the new toilet seat; 2. the solar energy was separately metered and calculated and was not free. Also, the RTA made clear that the Appellants were responsible for the solar power account by stating the following: "Solar power which is in owners name and then tenants. Tenants to pay the account." The Member at first instance was correct in preferring the evidence of the Respondent that the Appellants had agreed to pay the solar electricity accounts when presented to them; 3. in relation to the rent arrears, the Respondent acknowledged that he had ticked two boxes indicating two grounds for issuing the notice of termination and stated that this was "an error on my behalf". However, the Respondent submitted that the notice to terminate made clear that the termination date was 7 January 2016 on the expiry of the fixed term tenancy and not an earlier date. The Respondent conceded that he did not appreciate the potential significance of relying on two grounds for terminating the RTA when he signed and served the notice of termination.

Consideration of grounds of appeal

1. Section 80(2) of the NCAT Act provides as follows: "(2) Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance-with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance-as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds."
2. Clause 12(1) of Schedule 4 of the NCAT Act provides as follows: "12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only 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)."
3. In relation to the ground of appeal concerning the toilet seat, section 51(3)(b) of the Act obliges a tenant to leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, when the residential tenancy agreement was entered into. When the RTA was entered into in the present case, the toilet in the bathroom had a porcelain toilet seat. The Appellants replaced it with an inferior plastic one without the express agreement of the Respondent. The Tribunal Member at first instance accepted the evidence of the Respondent in this regard.
4. In John Prendergast and Vanessa Prendergast v Western Murray Irrigation Limited [2014] NSWCATAP 69 at [13], the Appeal Panel of the Tribunal indicated that errors of law included a decision where there was no evidence to support a finding of fact.
5. As set out above, under clause 12 of Schedule 4 of the NCAT Act, an Appeal Panel may grant leave under section 80(2)(b) of the NCAT Act for an internal appeal only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because inter alia the decision of the Tribunal under appeal was not fair and equitable or was against the weight of evidence.
6. In the present case the Tribunal Member at first instance preferred the evidence of the Respondent in relation to the discussion concerning the toilet seat and the cost of buying the replacement toilet seat. This was conceded by the Appellants at the hearing of the appeal.
7. In the Tribunal's view, that decision at first instance was not against the weight of evidence and therefore the Appellants have not suffered a substantial miscarriage of justice. There is also nothing to suggest that the decision of the Tribunal Member at first instance was not fair and equitable in relation to this ground of appeal.
8. Accordingly, the Tribunal does not grant leave to appeal in relation to this ground of appeal and the appeal is dismissed on this ground.
9. In relation to the solar energy bill ground of appeal, section 38(1)(a) of the Act obliges a tenant to pay charges for the residential premises for the supply of electricity if the premises are separately metered. The Tribunal Member preferred the evidence of the Respondent in relation to this issue and expressly found that the premises were separately metered. This was also conceded by the Appellants on the hearing of the appeal. Further, the obligation to pay the solar electricity charges was expressly referred to in the RTA. At the hearing of the appeal, the Appellants had no satisfactory response to the obligation referred to in this provision in the RTA, submitting that this referred to the standard electricity bill not the bill for solar electricity.
10. Again, the Tribunal is of the view that the decision of the Member at first instance was available on the evidence and was not against the weight of the evidence. Accordingly, the Tribunal is of the view that the Appellants have not suffered a substantial miscarriage of justice because the decision of the Tribunal at first instance was not fair and equitable or was against the weight of evidence.
11. Accordingly, the Tribunal does not grant leave to appeal on this ground and the appeal is dismissed on this ground.
12. The Tribunal is satisfied that the ground of appeal relating to rental arrears and the rights and obligations of the Appellants and the Respondent concerning the notice to terminate dated 19 October 2015 does involve a question of law as to the proper interpretation of the Act for which leave to appeal is not required from the Tribunal.
13. Section 110 of the Act allows a tenant who is given a termination notice by the landlord to give vacant possession of the residential premises at any time before the termination date. If a termination notice is given by a landlord, the tenant is not liable to pay any rent for any period after the tenant gives vacant possession of the residential premises and before the termination date: section 110(2) of the Act. However, section 110(3) of the Act provides that the liability of a tenant under a fixed term agreement to pay rent in respect of a period after the tenant gives vacant possession of the residential premises and before the end of the fixed term is not affected "if the termination notice is given by the landlord in accordance with section 84". The question for the Tribunal therefore, is whether the termination notice dated 19 October 2015 served by the Respondent was a termination notice given in accordance with section 84 of the Act.
14. Section 84 of the Act relates to a landlord giving a termination notice for a residential tenancy agreement that is to take effect on or after the end of the fixed term of the agreement but is given before the end of the fixed term.
15. In the present case the end of the fixed term of the RTA was 7 January 2016 and the notice was given on 19 October 2015 by the Respondent. However, the Respondent relied on two grounds for the notice, being the end of the fixed term tenancy and another ground being an alleged breach of the agreement through the failure by the Appellants to pay electricity with separate metering.
16. The issue for the Tribunal is whether relying on two grounds to issue the termination notice being a breach under section 87 of the Act and the end of the residential tenancy agreement at the end of a fixed term tenancy under section 84 of the Act mean that the termination notice is given by the landlord in accordance with section 84 as provided in section 110(3) of the Act.
17. The Tribunal has been unable to locate any binding authority on the matter and the issue comes down to the construction of the Act.
18. It is clear when looking at the notice to terminate that notice was given by the Respondent not only under section 84 but also under section 87 of the Act. In the Tribunal's view, on receipt of the notice, the Appellants were entitled to choose the ground relied upon by the Respondent which they preferred and to give vacant possession at any time. The Appellants in the present case chose to rely on this entitlement to give vacant possession on 21 or at the latest 22 December 2015.
19. In the Tribunal's view the reliance on two grounds, one of which was section 84 of the Act, did not mean that the termination notice was given by the landlord "in accordance with section 84" within section 110(3) of the Act.
20. A tenant faced with multiple grounds of termination in a notice served by a landlord is, in the Tribunal's view, faced with a choice. The tenant can exercise that choice by giving vacant possession at a time consistent with any of the grounds relied upon by the landlord. A tenant is entitled to assume that a landlord has carefully considered the alleged breaches the landlord wishes to rely on in issuing the notice to terminate.
21. There is nothing in the Act which in our view indicates that this approach by a tenant is unavailable.
22. The termination notice given in the present case was not given by the Respondent only "in accordance with section 84" but was given by the Respondent in accordance with both section 84 and section 87. To take the opposite approach would in our view be casting a difficult burden on a tenant and be liable to cause uncertainty in residential tenancies where multiple grounds are relied on.
23. For these reasons the Tribunal allowed the appeal of the Appellants concerning the rent arrears ground of appeal. The evidence showed that the Appellants had paid the rent up to 24 December 2015.
24. The Respondent asserted that one day's rent was owing to him for 1 October 2015. However, as the Appellants had paid the rent up to 24 December 2015 but had provided vacant possession on either 21 or at the latest 22 December 2015, in fact no rent was outstanding to the Respondent.

Orders

1. For these reasons the Appeal Panel made the following orders on 7 June 2016: 1. The appeal is allowed in part. 2. The orders made at first instance on 29 March 2016 are set aside. 3. The tenants Karenessa Willis and Peter Willis of 684 Parker Road Lanitza 2460 are to pay the landlord Robert S Charles of 1038 Armidale Road Elland 2460 the sum of $311.19. 4. Rental Bond Services is directed to pay the landlord Robert S Charles of 1038 Armidale Road Elland NSW 2460 the sum of $311.19 from the rental bond number P167107-9. Any amount received is to be credited against the money order in 3 above. The balance of the rental bond is to be paid to the tenants Karenessa Willis and Peter Willis of 684 Parker Road Lanitza 2460. 5. The stay made on 19 April 2016 is vacated. 6. Leave to appeal in relation to the toilet seat and solar energy bill grounds of appeal is refused.
2. The Tribunal directs that a copy of these reasons is to be provided to the Appellants and the Respondent.

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: 25 July 2016