Wolfson v Bradley

Background

1. The Appellants became the tenants of the premises in June 2016. The fixed term of 2 years of the most recent residential tenancy agreement between the Appellants and the Respondents ended on 31 August 2020.
2. In late March 2020, the Appellants claim to have lost their main source of income and in early April 2020 there were extensive email communications between the Appellants and the Respondents in which the Appellants sought a rent reduction or rent deferral from the Respondents. During this period the Appellants requested and the Respondents refused to sign a non-disclosure agreement. Subsequently the Appellants also sought an extension of the fixed term of the residential tenancy agreement to 31 December 2020.
3. On 19 May 2020, the Respondents issued a notice of breach of the residential tenancy agreement to the Appellants in respect of their failure to pay the full amount of rent for the period from 16 to 22 May 2020, and noted they would be entitled to issue a termination notice on the ground of non-payment of rent in the absence of the breach being rectified (the 19 May 2020 notice).
4. On or shortly before 21 May 2020, the Appellants approached NSW Fair Trading to assist with rent reduction negotiations with the Respondents.
5. On 26 May 2020, the Respondents issued a notice of breach of the residential tenancy agreement to the Appellants in respect of their failure to pay the full amount of rent for the period from 23 to 29 May 2020, and noted they would be entitled to issue a termination notice on the ground of non-payment of rent in the absence of the breach being rectified (the 26 May 2020 notice).
6. On 30 May 2020, the Respondents served a Notice of Termination on the Appellants. The Notice of Termination was pursuant to s 84 of the Residential Tenancies Act 2010 (NSW) (RT Act), namely, notice for the end of a fixed term tenancy. Usually only 30 days' notice is required for a termination notice under s 84 of the RT Act, but pursuant to s 229(1)(c) of the RT Act when read with cl 41D(1) and (2)(a) of the Residential Tenancies Regulation 2019 (NSW) (RT Regulation) which commenced on 15 April 2020 during the moratorium period then ending on 15 October 2020 landlords were required to give at least 90 days' notice. The Respondents' Notice complied with this requirement and nominated 1 September 2020 as the date on which the tenants were required to vacate the premises.
7. On 1 June 2020, NSW Fair Trading sent a letter to the Appellants and the Respondents setting out the agreement they had reached on the terms of a rental reduction being $1,857 per week including arrears from 30 May 2020 to 31 August 2020 (the 1 June 2020 letter).
8. On 6 June 2020, the Appellants commenced their application to have the Notice declared of no effect because it was retaliatory.
9. On 24 July 2020, there was a directions hearing for the Appellants' application. It did not resolve by consent on this occasion so was listed for hearing on 10 August 2020. After the directions hearing the Member issued written reasons. The Tribunal noted on 24 July 2020 that each party "should particularly focus on identifying with clarity … the evidence that the landlords' motivation in issuing the notice was or was not within the scope of section 115(2) of the Residential Tenancies Act".

The Tribunal's reasoning

1. At the hearing on 10 August 2020 the Appellants made an application to amend their application to allege the giving of a termination notice by the the Respondents during the moratorium period as well as three false representations made by the Respondents, and the inability of the Respondents to increase the rent which is referred to at [3] of the Decision. This application was rejected for the reasons given at [4] of the Decision.
2. The Member set out the relevant legislation, namely ss 84 and 115 of the RT Act, then outlined cll 41C and 41D(2)(a) of the RT Regulation and explained that the former applied to a termination notice for the non-payment of rent under ss 88 and 89 of the RT Act while the latter applied to a termination notice under s 84 of the RT Act. He held that the 19 May 2020 notice was not a termination notice and the Respondents had not breached cl 41C of the RT Regulation by seeking termination for rent arrears during the moratorium period.
3. The Member found that the Notice was not retaliatory within s 115 of the RT Act on the following six grounds set out at [9] and [10] of the Decision: 1. the moratorium only related to terminations based on rent arrears; 2. the parties did come to an agreement on rent arrears at the end of May and beginning of June, and the parties conceded that negotiations relating to a rent reduction only applied to the end of the fixed term period; 3. the landlord's gave a proper notice with the extended 90 days for vacant possession as was intended under cl 41D(1) and (2)(a) of the RT Regulation; 4. the rent reduction negotiations were not done in bad faith on behalf of the landlords, but to the contrary, there was evidence that the tenants did not apply good faith; 5. any concerns the landlords had in relation to the capacity to pay of the tenants were well founded as the reduced rent was still high, at $1,857 per week, and the tenants' income had apparently reduced by 95%, and would be a valid reason for issuing an end of fixed term notice; 6. the Notice of Termination did not follow from a request of the tenants to reduce rent until the end of the fixed term. Any rights to negotiate or enforce a rent reduction did not arise in relation to a termination notice under s 84 of the RT Act. Throughout this dispute no orders of the Tribunal were in place which the tenants had tried to enforce thus resulting in the alleged retaliatory notice. On the contrary, from on or about 1 June 2020, there was an agreement in place for reduced rent to which the parties had come of their own volition.

The scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
2. 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 which relevantly includes whether the Tribunal identified the wrong issue or asked the wrong question.
3. A question of law arises where a discretion may have miscarried in the sense described by the High Court in House v R [1936] HCA 40; (1936) 55 CLR 499 at 505; namely, if the Tribunal member acted upon a wrong principle, mistook the facts or failed to take into account or gave insufficient weight to some relevant matter or took into account an irrelevant matter or reached a conclusion which was, on the facts, "unreasonable or plainly unjust". The last-mentioned type of error, the unreasonable or plainly unjust ground, was further explained in Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61; (2019) 99 NSWLR 419 at [8]-[11] where it was said that this ground only applied where the reasons did not disclose why the impugned orders were made.
4. A question of law also arises where it involves consideration of whether a court or tribunal has identified or applied the relevant and correct legal test and whether the facts of a case "fall within a statute properly construed": Federal Commission of Taxation v Trail Brothers Steel & Plastics Pty Ltd [2010] FCAFC 94; (2010) 186 FCR 410 at [13].
5. The circumstances in which the Appeal Panel may grant leave to appeal from decisions 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 on the basis that: 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).
6. In Collins v Urban [2014] NSWCATAP 17 (Collins), 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."
7. 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) of the NCAT Act.
8. In Collins, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: "(a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed."

The Notice of Appeal

1. On 21 August 2020, the Appellants commenced this appeal by filing a Notice of Appeal and also filed a stay application. The appeal is within time. On 25 August 2020, the stay was refused.
2. The 15 grounds of appeal were listed in the Notice of Appeal as: "The Tribunal was in error to order: 1) to dismiss the application for a declaration that the termination notice was retaliatory under s 15 when it was made under s 115; 2) that application was made based upon ss.88 and 89 when it was made under s 115; 3) dismissal of the application in wilful ignorance of s 41C(4); 4) that a breach notice was not evidence of Respondents' intention to terminate under s 87/s 88; 5) that s 228C was relevant; 6) that s 41C of the Regulation did not apply to s 84 of the Act; 7) that s 229 did not apply to s 84 of the Act but only s 87 and s 88 of the Act; 8) that the agreement was not a specific date but "… end of May and beginning of June"; 9) that s 84 notice was proper during mediation; 10) that there was evidence Applicant did not apply in good faith; 11) that respondent was reasonable to refuse to reduce rent and refuse to sign a bilateral NDA; 12) that Applicant had not provided COVID-19 impact evidence to the Tribunal; 13) that there was evidence to no ability to pay; 14) that the s 84 notice occurred after mediation; 15) that s 115 requires Applicant enforce Tribunal orders."
3. In Cominos v Di Rico [2016] NSWCATAP 5 (Cominos), the Appeal Panel at [13] stated that it may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal.
4. Having regard to the principles in Cominos, we have discerned from the orders challenged on appeal and the grounds of appeal in the Notice of Appeal, the material provided the Appellants, and the Decision the following four grounds of appeal: 1. ground 1: the Tribunal erred in refusing the application of the tenants to amend their application; 2. ground 2: the Tribunal erred in failing to find that the landlords issued a termination notice for non-payment of rent under s 88 of the RT Act; 3. ground 3: the Tribunal erred in failing to find that cl 41C of the RT Regulation applied to the Notice of Termination; 4. ground 4: the Tribunal erred in finding that the Notice of Termination was not retaliatory.

Ground 1: the Tribunal erred in refusing the application of the tenants to amend their application

1. We are satisfied that a ground 1 raises a question of law as to whether the Tribunal exercised its discretion in determining the application of the tenants to amend their application in a way that miscarried in the sense described in House v R.
2. The Appellants have not addressed any submission as to why the refusal by the Member of their application to amend their application was erroneous.
3. We are not satisfied that the Member made any such error in his refusal of the Appellants' application. The Member took into account the fact that the application "was made very late" and that "the landlords would suffer serious prejudice if the matter was delayed further" which were clearly relevant matters. Accordingly, we reject ground 1.

Ground 2: the Tribunal erred in failing to find that the landlords issued a termination notice for non-payment of rent under s 88 of the RT Act

1. We are satisfied that a ground 2 raises a question of law as to whether the Tribunal erred in failing to characterise the 19 May 2020 notice as a termination notice for non-payment of rent under s 88 of the RT Act.
2. Section 87(1) of the RT Act provides that a landlord may give a termination notice on the ground that the tenant has breached the residential tenancy agreement.
3. Section 88(1) of the RT Act relevantly provides that a termination notice given by a landlord on the ground of a breach of the residential tenancy agreement arising solely from a failure to pay rent, which is called a non-payment termination notice, has no effect unless the rent has remained unpaid in breach of the agreement for not less than 14 days before the non-payment termination notice is given.
4. The Appellants submit that the Respondents initiated termination of the residential tenancy agreement under ss 87 and 88 of the RT Act with five breach notices and pursuing arrears of rent.
5. We are satisfied that neither the 19 May 2020 notice nor the 19 May 2020 notice was a non-payment termination notice within s 88 of the RT Act either in form or substance. They each did not require the tenants to vacate the premises, but alleged that the tenants were in breach of the residential tenancy agreement and required them to remedy the breach within five days. They each also gave notice that the landlords would be entitled if the breach was not remedied to issue a non-payment termination notice under s 88 of the RT Act.
6. The Member did not make any error in failing to find that the 19 May 2020 notice was a non-payment termination notice under s 88 of the RT Act. Accordingly, we reject ground 2.

Ground 3: the Tribunal erred in failing to find that cl 41C of the RT Regulation applied to the Notice of Termination

1. We are satisfied that a ground 3 raises a question of law as to whether cl 41C of the RT Regulation applied to the Notice of Termination.
2. Section 228A of the RT Act as it was in force from 14 May 2020 to 27 September 2020 relevantly defined: 1. "impacted tenant" to mean a tenant who is a member of a household impacted by the COVID-19 pandemic; 2. "moratorium period" to mean the period ending at the end of 15 October 2020.
3. Clause 41C of the RT Regulation as it was in force from 14 May 2020 to 17 September 2020 relevantly provided that: 1. during the moratorium period a landlord was prohibited from giving an impacted tenant a termination notice under s 87 of the RT Act on the ground specified in s 88 of the RT Act: cl 41C(1)(a); 2. a landlord may give a termination notice where, among other conditions, the landlord has participated, in good faith, in a formal rent negotiation process with the impacted tenant: cl 41C(2)(b).
4. The Appellants submit that the Notice of Termination violated cl 41C of the RT Regulation because it was issued while the parties were engaged in a mediation with NSW Fair Trading.
5. We are satisfied that: 1. the Notice of Termination was issued during the moratorium period; 2. clause 41C of the RT Regulation on its proper construction did not apply to the Notice of Termination because it was issued under s 84(1) of the RT Act and not under s 87(1) of the RT Act on the ground specified in s 88(1) of the RT Act. There was no obligation under cl 41C(2) of the RT Regulation for the Respondents to participate in good faith in a formal rent negotiation process. The the Respondents did so voluntarily. It follows that even if the Appellants were impacted tenants the Respondents were not prohibited from issuing the Notice of Termination notwithstanding the parties were still engaged in a mediation with NSW Fair Trading.
6. The Member did not make any error in failing to find that cl 41C of the RT Regulation applied to the Notice of Termination. Accordingly, we reject ground 3.

Ground 4: the Tribunal erred in finding that the Notice of Termination was not retaliatory

1. We are satisfied that a ground 4 raises a question as to whether the Appellants may have suffered a substantial miscarriage of justice because the finding of the Member was against the weight of the evidence and accordingly raises ground of appeal for which leave is required.
2. Section 115 of the RT Act relevantly provides: 115 Retaliatory evictions (1) The Tribunal may, on application by a tenant or when considering an application for a termination order or in relation to a termination notice - (a) declare that a termination notice has no effect, or (b) …, if it is satisfied that a termination notice given … was a retaliatory notice …. (2) The Tribunal may find that a termination notice is a retaliatory notice … if it is satisfied that the landlord was wholly or partly motivated to give the notice … for any of the following reasons - (a) the tenant had applied or proposed to apply to the Tribunal for an order, (b) the tenant had taken or proposed to take any other action to enforce a right of the tenant under the residential tenancy agreement, this Act or any other law, (c) an order of the Tribunal was in force in relation to the landlord and tenant.
3. Clause 41D(1) and (2)(a) of the RT Regulation as it has been since force from 14 May 2020 has relevantly provided that during the moratorium period a landlord must not in a termination notice given under s 84 of the RT Act specify a termination date that is earlier than 90 days after the day on which the notice is given.
4. The Appellants submit that the finding of the Member that the Notice of Termination was not retaliatory was against the weight of the evidence for variously expressed reasons which in substance focussed on it being issued during the negotiations and before the conclusion of the agreement referred to in the 1 June 2020 letter.
5. We are satisfied that the finding that the Notice of Termination was not retaliatory was not against the weight of the evidence for the following reasons: 1. none of the reasons in s 115(2) of the RT Act for finding that a termination notice is a retaliatory notice existed. In particular, the tenants had no right that they could have enforced under the residential tenancy agreement as the period of 90 days for delivering up vacant possession specified in cl 41D(2)(a) of the RT Regulation was provided in the Notice of Termination; 2. there was no prohibition on the landlords issuing the Notice of Termination until they participated in good faith in a formal rent negotiation process pursuant to cl 41C(1)(a) and (2)(b) of the RT Regulation because these provisions did not apply to a termination notice given under s 84 of the RT Act.
6. The Member did not make any error in finding that the Notice of Termination was not retaliatory. Accordingly, we reject ground 4.

Costs

1. The Respondents did not seek an order for costs in their favour. As a result, there will be no order as to costs of the appeal.

Orders

1. We make the following orders: 1. Leave to appeal is refused; 2. The appeal is dismissed; 3. No order as to costs.

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 December 2020