Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Aboriginal Housing Office v Fernando [2021] NSWCATAP 95 Hearing dates: On the papers Date of orders: 19 April 2021 Decision date: 19 April 2021 Jurisdiction: Appeal Panel Before: S Westgarth, Deputy President M Harrowell, Deputy President Decision: (1) Appeal allowed. (2) Order 4 made in SH20/32861 is set aside. (3) By consent, the Respondent is to pay to the Appellant the sum of $826.78. (4) The amount in order 3 is to be paid by instalments of $50.00 per month, such payments to be made as deduction from the Respondent's Centrelink payments, first payment to be made with 21 days from the date of these orders. Catchwords: RESIDENTIAL TENANCY- cause of action under s 51- whether a claim for compensation can be made before end of tenancy. Legislation Cited: Residential Tenancies Act 2010 (NSW) Cases Cited: Aboriginal Housing Ltd v William Dennis[2021]NSWCATAP52 Homes North Community Housing v Schwaiger [2020] NSWCATAP 286 Micalleff v Constantin and Marcer (Tenancy) [2013] NSWCTTT 102 (6 March 2013) Susan Trevallion v Vivian Puccini-Scuderi and Peter Puccini [2014] NSWCATCD . Texts Cited: Nil Category: Principal judgment Parties: Aboriginal Housing Office (Appellant) Wendy Fernando (Respondent) Representation: Solicitors: R Fester, Department of Communities and Justice ( Appellant) Respondent (Self-Represented) File Number(s): 2020/00371212 (AP 20/50624) Publication restriction: Nil Decision under appeal Court or tribunal: New South Wales Civil & Administrative Tribunal Jurisdiction: Consumer & Commercial Division Citation: Not applicable Date of Decision: 18 November 2020 Before: P Harris (General Member) File Number(s): SH20/32861 REASONS FOR DECISION Background 1. This appeal arises out of a dispute between the Appellant (the landlord) and the Respondent (the tenant) concerning a residential tenancy agreement regulated by the Residential Tenancies Act 2010 (NSW) (the RT Act). 2. The Appellant filed an application on 3 August 2020 in the Consumer & Commercial Division of the Tribunal seeking a number of orders which are described below. The decision under appeal (the Decision) which was published on 18 November 2020 records that there was no appearance by the Respondent and that the Respondent and Appellant had signed "a form of agreement" 3. The orders sought by the Appellant in the Consumer & Commercial Division were: 1. An order under s 187(1)(a) of the RT Act for an order that restrains any action in breach of a residential tenancy agreement. 2. An order under s 187(1)(c) of the RT Act for an order for the payment of an amount of $1,456.06. 3. An order under s 90 of the RT Act for a termination order where the Respondent or occupant "is causing serious damage or injury". 1. The Decision records that the Tribunal made a number of orders by consent. These were orders to the effect that the Respondent must comply with terms of the residential tenancy agreement. However, the Decision also records order 4 to the effect that the Appellant's application for compensation for damage was dismissed "as the tenancy remains on foot and the Applicant has no cause of action upon which to base a claim for compensation while the tenancy continues". 2. On 2 December 2020 the Appellant lodged a Notice of Appeal. We will describe the grounds of appeal later in these reasons. The Decision Under Appeal 1. The following is a summary of the reasons contained in the Decision: 1. The parties had entered into a residential tenancy agreement in December 2014 for a term of two years and the agreement has continued as a periodic agreement. 2. Clauses 13.4 and 14 in the tenancy agreement contained provisions for the tenant not to intentionally or negligently cause or permit any damage to the residential premises, to keep the residential premises reasonably clean and to require the tenant to notify the landlord as soon as practicable of any damage to the premises. Clause 15 provided that the tenant agrees that when the agreement ends to leave the premises as nearly as possible in the same condition, fair wear and tear excepted as at the commencement of the tenancy. 3. The parties had reached a settlement agreement a provision of which recorded that the Respondent had agreed to compensate the Appellant for damage to the premises and for the amount of the compensation to be paid by instalments taken out of the Respondent's Centrelink payments. 4. The wording of the clauses in the tenancy agreement and in s 51(3)(b) of the RT Act "potentially give rise to both contractual and legislative causes of action that the agreement has been breached, but do not of themselves give an entitlement to compensation". 5. Clause 15.2 "follows the wording in s 51(3)(b) of the RT Act which requires the tenant to leave the residential premises as nearly as possible in the same condition (fair wear and tear excepted) as at the commencement of the tenancy when the tenancy comes to an end. Therefore "while damage may entitle the landlord to bring an action for breach, the tenant has until the end of the tenancy to restore the premises to the same condition as at the commencement, less fair wear and tear". 6. The Tribunal referred to decisions said to support the above propositions. They are Micalleff v Constantin and Marcer (Tenancy) [2013] NSWCTTT 102 (6 March 2013) and Susan Trevallion v Vivian Puccini-Scuderi and Peter Puccini [2014] NSWCATCD. 7. The Tribunal concluded that the Appellant had no cause of action upon which to claim compensation as the tenancy "continued at the date of the application". 8. The Tribunal then considered the question of whether the consent of the parties empowers the Tribunal to make consent orders where a cause of action does not exist. The Tribunal concluded that a consent order is an order of the Tribunal and the Tribunal must be satisfied that a remedy is available under the RT Act or the residential tenancy agreement before the consent order is granted. The Tribunal concluded that such a remedy is not available if not supported by a cause of action. The Tribunal decided that it cannot hear and determine a dispute without a valid cause of action and that there was no valid cause of action for compensation in this case as the tenancy continued. The Tribunal held that "consent cannot replace that missing cause of action". 9. The Tribunal then considered the position if it were the case that the Tribunal was wrong "as to the interrelationship between a cause of action and jurisdiction". The Tribunal noted that the tenant "would not have had any understanding of the complexities of the matter to be determined or be aware that such consent as she provided ran contrary to the wording of both the Act and the residential tenancy agreement". The Tribunal stated that it was satisfied that the tenant had not given "true consent" The Tribunal determined that the application for a compensation consent order could not be made. 10. Finally, the Tribunal noted that the parties had agreed that the amount of compensation to be paid by the Respondent was $826.78 payable by instalments as recorded in a document that they had signed. In doing so, the Tribunal noted at [14] of its reasons that it was an agreed fact "that damage to a repair cost of $826.78 had been sustained by the premises during the tenancy". This statement was not challenge on appeal. Grounds of Appeal 1. As stated above, a Notice of Appeal has been lodged with the Tribunal and the grounds of appeal may be summarised as follows: 1. Ground 1: The Tribunal erred in law by applying the wrong test or asking the wrong question under s 51(1)(d) of the RT Act. 2. Ground 2: There was no evidence to support the finding of fact namely that the tenant did not give true consent. There was no basis upon which the Tribunal could make such a finding. The Appeal Proceedings 1. The appeal was listed for call over on 16 December 2020. A representative for the Appellant appeared and the Respondent appeared personally (both by telephone). Directions were made for the filing and serving of submissions. By consent the tribunal made an order dispensing with a hearing. We are satisfied that the issues for determination can be adequately determined on the papers. The Appellant has filed submissions but nothing has been received from the Respondent. Appellant's Submissions 1. The Appellant's submissions may be summarised as follows: 1. The Tribunal has misconstrued the RT Act and the decision in the Micalleff. In Micalleff the focus was on damages for a breach of the covenant that the property be left in the same condition as when it was leased (s 51(3)(b)). That decision should be understood to mean that a cause of action for a breach of s 51(3) does not arise until the tenant has given vacant possession. 2. However, this is to be distinguished from a case where it is asserted that there is a cause of action under s 51(1)(d). 3. An action under s 51(d) asserting intentional or negligent damage can be brought and damages awarded during the tenancy or after. It is separate to a cause of action under s 51(3)(b). 4. With respect to ground 2, the Appellant submits that there was no evidence to enable the Tribunal to find that the Respondent would not have had any understanding of the complexities of the matter and that her consent ran contrary to the wording of both the Act and the tenancy agreement. Consideration 1. Two recent cases are relevant to this appeal. They are Holmes North Community Housing v Schwaiger [2020] NSWCATAP 286 and Aboriginal Housing Ltd v William Dennis [2021]NSWCATAP52. Both decisions explain how s51 of the RT Act is to be construed in so as far as when the cause of action arises when the landlord alleges breach by the tenant and claims compensation. 2. It is clear in our view that s 51(1)(d) imposes upon a tenant an obligation not to intentionally or negligently cause or permit any damage to the residential premises. Section 51(2) imposes a positive obligation on a tenant to keep residential premises in a reasonable state of cleanliness (having regard to the condition of the premises at the commencement of the tenancy) and to notify the landlord of any damage as soon as practicable after becoming aware of the damage. Section 51(3) imposes further obligations on the tenant on giving vacant possession. 3. The obligations contained in s 51(2) and (3) do not modify or suspend the obligations in s 51(1). A breach under s 51(1) during the currency of the tenancy agreement gives rise to a cause of action available to the landlord. Under general law principles concerning breaches of agreements, it is well understood that if one party to an agreement breaches an obligation causing loss or damage to the other party, the affected party may sue for damages. The Tribunal is given jurisdiction to make an order for compensation under s 187(1)(d). 4. For the reasons given in the two Appeal Panel cases referred to above, we are of the opinion that the Tribunal erred in its interpretation of s 51(1)(d). 5. In our view the Tribunal's refusal to make the consent order was predicated upon the basis that the Respondent may have been misled or confused into signing the agreement by reason of the Appellant's understanding of the provisions of the RT Act. In our view the Appellant's understanding was correct and the premise for the Tribunal to refuse to make the consent order was misplaced. Accordingly, the appropriate order, in the absence of any other considerations suggesting that true consent had not been given, is to make the orders sought by the Appellant based on the agreed fact that the damage caused by the Respondent was $826.78. 6. At paragraph [31] of the reasons, the Tribunal recorded the terms of the agreed instalment arrangement. This was for the payment of $50.00 per fortnight to be deducted from Centrelink payments due to the Respondent. The terms of this agreement as recorded by the Tribunal were also not in dispute in this appeal. We will make an instalment order to this effect. 7. It follows that the following orders should be made: 1. Appeal allowed. 2. Order 4 made in SH20/32861 is set aside. 3. By consent, the Respondent is to pay to the Appellant the sum of $826.78. 4. The amount in order 3 is to be paid by instalments of $50.00 per month, such payments to be made as deduction from the Respondent's Centrelink payments, first payment to be made with 21 days from the date of these orders. ********** I hereby certify that this is a true and accurate record of the reasons for Decision of the New South Wales Civil and Administrative Tribunal. Registrar 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: 19 April 2021