Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Barkat v Sun [2021] NSWCATAP 327 Hearing dates: 10 May 2021 Date of orders: 25 October 2021 Decision date: 25 October 2021 Jurisdiction: Appeal Panel Before: T Simon, Principal Member D Robertson, Senior Member Decision: (1) Appeal upheld. (2) The orders of the Tribunal made on 18 February 2021 are set aside. (3) Matter remitted to the Consumer and Commercial Division to be heard and determined by a differently constituted Tribunal. Catchwords: APPEAL – Residential tenancy - procedural fairness – failure to allow cross examination – oral agreement – fixed term agreement - retaliatory notice – termination - declaration of residential tenancy agreement – Residential Tenancies Act 2010 s115 – s11 – s16 – COVID-19 provisions Legislation Cited: Civil and Administrative Tribunal Act 2013 NSW Civil and Administrative Tribunal Rules 2014 NSW Residential Tenancies Act 2010 NSW Residential Tenancies Regulation 2019 NSW Cases Cited: Cheung v Yang [2013] NSWSC 1694 Wakim v Mathiew Pty Ltd [2002] NSWSC 405 Category: Principal judgment Parties: Mark Barkat – appellant Rubina Barkat - appellant Zechao Sun – respondent Aiqing Xu - respondent Representation: Robi Barkat – for the appellants D Wang – agent for the respondent File Number(s): 2021/00061970 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 19 February 2021 Before: K Rickards, General Member File Number(s): RT 20/40080 Reasons For Decision Background 1. This is an appeal from a decision of the Consumer and Commercial Division of the Tribunal, made on 18 February 2021 (amended 19 February 2021). The Tribunal terminated the residential tenancy agreement between the parties and dismissed the appellants' application. 2. In this decision, any reference to "the tenants" is a reference to the appellants and any reference to the "the landlords" is a reference to the respondents. 3. The tenants made an application to the Tribunal dated 17 September 2020. The tenants sought, amongst other things, a declaration pursuant to the Residential Tenancies Act 2010 NSW (RTA) that a notice of termination which had been issued by the landlord was retaliatory and an order declaring that there was a residential tenancy agreement between the parties. 4. The landlords had served the tenants with an end of fixed term termination notice dated 13 July 2020. The date for vacant possession specified in the notice was 21 October 2020. There had been no application made by the landlord to the Tribunal for termination at the time the application to the Tribunal was made by the tenants. 5. In the brief reasons for decision, amended on 19 February 2021, the Tribunal relevantly found the following: * That there was no new verbal tenancy agreement between the parties. The tenants had asserted that a new tenancy agreement had been created by the parties because an offer was conveyed by the landlords' daughter and had been accepted by the tenants. The Tribunal found that the law and evidence did not support that submission. * That the evidence did not support any suggestion or inference that the landlord's daughter had, in place of the managing agent, actual or ostensible authority to bind the landlords to any agreement. The Tribunal also found no direct evidence of any communication from the landlord which supported a concluded agreement as the tenants asserted. * That a valid notice of termination was issued on 13 July 2020 and it was not subsequently withdrawn, rescinded or varied and on that basis the Tribunal proceeded to terminate the tenancy. * That the COVID-19 regulations affecting termination at the time did not apply to this residential tenancy agreement. * That the notice of termination was not retaliatory because the fact that the notice followed unsuccessful discussions in relation to a new agreement did not of itself establish that the notice was retaliatory "as prescribed by the legislation". 1. The decision of the Tribunal was an internally appealable decision from which an appeal can be brought as of right where there is an error of law and with the leave of the Appeal Panel on specified grounds: see, s 80(1) and (2)(b) and clause 12 of Schedule 4 of the Civil and Administrative Tribunal Act 2013 NSW (the NCAT Act). 2. The Notice of Appeal was lodged on 2 March 2021 which was within the 14-day time period specified in cl 25(4)(b) of the Civil and Administrative Tribunal Rules 2014 NSW. 3. On 24 March 2021 the Appeal Panel suspended the operation of the order for possession until further order, conditional on the payment of rent. 4. At the Tribunal hearing the landlords were represented by their managing agent. The tenants were represented by their son, Robi Barkat, who disclosed in a statutory declaration filed in the proceedings that he has been admitted as a solicitor since 2014. Grounds of Appeal 1. In an attachment to their Notice of Appeal the tenants listed eight grounds of appeal which were identified discursively in 22 paragraphs over 11 pages. The first and substantial ground (effectively encompassing the grounds identified by the tenants as grounds 1 to 3) was that the tenants had been denied procedural fairness. It is convenient to address that ground first, before turning, if necessary, to other grounds. Procedural Fairness - denied right to be heard 1. The tenants raise issues about the way that the hearing was conducted. The tenants submit that the Tribunal managed the hearing by only allowing each party an opening and a reply, and that the tenants were not permitted to make further submissions, and in particular that they were denied the opportunity to challenge through cross-examination the evidence led for the landlord. 2. Specifically, the tenants complain that they were denied the opportunity to cross-examine the landlords' daughter, Ms Yanhong Sun (also known as Francis). The landlords' documents filed in the Tribunal had included a statutory declaration from Ms Sun. 3. The tenants referred us to the earlier directions of the Tribunal made on 19 November 2020, in which the following orders and notations were made: 7 All evidence from a party's witness(es) in support of that party (ies) must be in the form of a statement, statutory declaration, affidavit or expert report as appropriate. … Notation: The following witnesses are to be available for cross-examination at the contested hearing; Shoshi Barkat, Robi Barkat, Robina Barkat, and Yanhong Sun. Issue: The claim involves a retaliatory eviction pursuant to section 115 of the Residential Tenancies Act, 2010 or an order pursuant to s111 of the Residential Tenancies Act, 2010 that a termination notice. The tenants claim they entered into rent negotiations as the tenants were COVID 19 impacted and that after the offer of settlement was not accepted by the tenants a Termination Notice was issued. Consideration 1. Section 36 of the NCAT Act sets out the guiding principle to be applied to practice and procedure of the Tribunal as follows: (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it— (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal— (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. 1. Section 38(2) of the NCAT Act provides that: [t]he Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. 1. Section 38(5) of the NCAT Act provides: The Tribunal is to take such measures as are reasonably practicable: (a) to ensure that the parties to the proceedings before it understand the nature of the proceedings, and (b) if requested to do so-to explain to the parties any aspect of the procedure of the Tribunal, or any decision or ruling made by the Tribunal, that relates to the proceedings, and (c) to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings. 1. A failure to allow a party an opportunity to cross-examine may in some, but not all, situations constitute a denial of procedural fairness. In Wakim v Mathiew Pty Ltd [2002] NSWSC 405 at [30], O'Keefe J said: There may, however, be cases in which the denial of an oral hearing or of the right to cross-examine may constitute a denial of natural justice. In determining whether or not that is so in a given case, it is necessary to consider the whole of the circumstances including the legislation, the general practice as understood by the parties and any acceptance by them as to the way in which the proceedings are to be conducted... 1. We have listened to parts of the recording of the hearing. The Tribunal began by outlining the structure in which the matter would proceed. The Tribunal indicated that it would outline to each party the case as the Tribunal had understood it and then the Tribunal would confirm that outline with the tenants and the evidence that the tenants were seeking to rely on. Following that the landlords would have the opportunity to confirm its case to the Tribunal and the evidence they were relying on and then each party would have an opportunity to respond. 2. The tenants had provided three separate statutory declarations to the Tribunal from witnesses. The landlords had filed the statutory declaration from Ms Sun which has already been referred to. The statutory declarations differ between the parties as to what occurred in a conversation between the tenants and Ms Sun in relation to the renewal of the lease and any extension of the fixed term. In summary, the tenants' position was that, following negotiations, Ms Sun spoke to the tenant Ms Rubina Barkat on 26 July 2020 and confirmed that her parents had agreed to renew the lease at a rental amount of $950.00 per week for a period of 12 months, commencing on 1 August 2020, on the basis that outstanding arrears would be paid. 3. In her statutory declaration dated 7 September 2020, Ms Sun stated that she advised Ms Barkat that her parents had instead decided to move back into the property at the expiry of the fixed term lease on 21 October 2020. Ms Sun provided no details of when that conversation was said to have occurred. 4. An email dated 27 July 2020 from one of the tenants, Mr Mark Barkat, to the real estate agent was included in the documents before the Tribunal. The email confirms the conversation between Ms Barkat and Ms Sun and seeks the preparation of the new lease consistent with that agreement. Mr Barkat also advised the agent that the arrears of $6,842.67 had been paid into the agent's trust account. 5. On 27 July 2020, the agent, Mr Yee, replied to Mr Barkat's email stating: Once your funds come through, I will inform the owner and wait their instructions. 1. A subsequent email dated 29 July 2020, from Mr Yee to Mr Mark Barkat was also provided to the Tribunal. That email informed the tenants that the landlords had advised that they were going to be moving back or selling in 6 months' time and therefore the lease renewal is only for 6 months and asking the tenants to confirm if they wish to take up a lease extension of 6 months. The email also stated: Please note that the owners have advised they do not want to be contacted directly anymore and will only renew the lease if you agree to this condition. 1. There was clearly a contested factual issue concerning the content of the conversation between the tenants and Ms Sun, which it might be thought warranted testing by cross-examination. We note the requirement of section 36(4) of the NCAT Act that the practice and procedure of the Tribunal should be implemented "in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings." That may require that the opportunities afforded to the parties for oral submissions and for cross-examination be limited or even denied. 2. However, the matter was the first one listed for the day at 9.15am. The tenants state that they had been advised that the matter had been allocated 3 hours for final hearing. During the COVID-19 pandemic the practice of the Consumer and Commercial Division of the Tribunal has been that matters such as the tenants' application are ordinarily allocated 90 minutes for hearing. More complicated matters could be allocated more time. While we have nothing before us to confirm whether the matter was allocated 90 minutes or 3 hours, it was clear from the recording of the hearing which was provided to us that the hearing was completed in 46 minutes. 3. The notice of termination that the tenants were challenging was given under section 84 of the Residential Tenancies Act 2010 NSW (RTA) on the basis that the fixed term had come to an end. The tenants were seeking a declaration pursuant to section 11 of the RTA that an oral agreement reached between the tenants and the landlords was a residential tenancy agreement to which the Act applied. Fundamental to the resolution of those issues were the conversations between the parties and whether they amounted to an oral agreement pursuant to section 13(2) of the RTA, to extend the fixed term period. If the Tribunal found there had been a separate oral agreement for a new fixed term period, it would have rendered the termination notice invalid. 4. The tenants attached to their submissions a transcript of the parts of the hearing on which they relied. The landlords did not dispute the accuracy of that transcript. 5. The transcript reveals the following exchange between the Tribunal and Mr Robi Barkat: R: Tribunal Member, sorry, I was under the impression, as per the orders of Tribunal Member Sutherland, that I'd be given the chance to cross examine Francis. T: No R: On her statutory declaration T: No, no. I explained at the outset, that's not how I run a hearing. R: In that case your honour, ah , Tribunal Member, can I just have the chance to highlight some of the things that wasn't included in my original opening because I thought. T: Sir. R: I'd be given the opportunity. T: No, no, no. If you want to briefly point something out. I do not want to go around. That's exactly why I described how hearing was going to run at the outset. Sir. R: When, when that was. When the Tribunal Member made that? T: Sir. R: Statement, I thought it was included in that the opportunity to cross examine the parties. As per the orders of Tribunal Member Sutherland. That's why ... T: Again, again. With respect, you can go and tell me till the cows come home of what you believe Tribunal Member Sutherland told you or didn't tell you. I've told you at the outset this matter is listed for hearing in front of me, I explained how I'm going to run it. And you've listened. I've given you an opportunity to outline your position. I've indicated I'm going to read the material that you have lodged. I've given each side an opportunity to respond. And now you're telling me that you want to go in some other direction and I'm tell you no. Now if you are unhappy with that. R: But. T: You can go and talk to someone else. R: With respect Tribunal Member, me pointing out the deficiencies in the statutory declaration provided, is not my submission, is not me outlining my arguments. It's me replying to them, to the material they have provided. T: No. I'm going to reserve. I'm going to reach a decision. I'll publish it to the parties and then if you are, if either party, both parties have.... 1. We accept that there is no obligation to allow cross-examination in every hearing before the Tribunal. For example in Cheung v Yang [2013] NSWSC 1694 the Court found that the former CTTT did not make an error in directing that there was to be no cross-examination. At [59] – [61] Harrison J stated: Mr Cheung's complaint can only be that he was not given an opportunity to cross-examine the Yangs or their witnesses, not that he was not tested in cross-examination. The only witnesses that Mr Cheung identified as a potential candidate for cross-examination was Mr Bae, and then only on the question of some relatively small amounts paid to him for plumbing and electrical work. Denying Mr Cheung the opportunity to cross-examine him would not attract a legitimate complaint in the circumstances, as well for the reason that the contest about the quantum of the cost of the works effectively disappeared in the wake of the Tribunal's acceptance of the value of the works performed by Mr Cheung. It was wholly within the legitimate power of the Tribunal to dispense with cross-examination if it thought fit in accordance with the terms of s 28 of the Act. The only limitation upon its power to do so consists in its obligation to conform to the rules of procedural fairness. Refusing to permit Mr Cheung to cross-examine Mr Bae did not offend those rules. Denying Mr Cheung the opportunity to call his wife to give further (oral) evidence also did not offend any rule of procedure or fairness. Mrs Cheung had sworn an affidavit in support of his case in chief. Everything that she might have been expected to contribute to the proceedings was no doubt contained in that document. Mr Cheung did not identify a late emerging issue to which her proposed further evidence was to be directed. An application to expand her evidence fell to be determined by the Tribunal having regard to the equal opportunities that both sides had had prior to that time to formulate their respective cases. Once again it seems highly likely that no criticism of the Tribunal could ever have been made of its decision not to allow Mr Cheung to call his wife if lawyers had continued to represent Mr Cheung. No different result should follow only because Mr Cheung appeared for himself or required an interpreter. 1. Cross-examination is the opportunity to allow parties to test the evidence so as to determine the issues in dispute. We do not accept that the Tribunal was obliged to allow cross examination simply because of the earlier directions. If the evidence of the witness sought to be cross-examined is not relevant to the central issues in dispute then it may be that cross examination would not be necessary or appropriate and it would be acceptable for the Tribunal to dispense with cross examination. 2. However, considering the circumstances of this case and the issues that needed to be determined by the Tribunal, we find that it was a denial of procedural fairness not to allow the tenants an opportunity to cross-examine Ms Sun on the statement that had been provided to the Tribunal. The tenants had sought to cross-examine the witness and Ms Sun's evidence was directly disputed by the tenants. There were no time constraints requiring the hearing to be brought to a close without the tenants being given the opportunity to cross-examine Ms Sun and the Tribunal had directed that Ms Sun be available for cross-examination. At issue in this case was whether the parties had entered into an oral agreement for a further fixed term period of the residential tenancy agreement. Without the opportunity to cross-examine, the tenants were denied the opportunity to test the veracity of Ms Sun's statutory declaration, and test the primary issue in contention, which was whether the telephone conversation on 26 July 2020 resulted in a verbal agreement for a further fixed term. 3. A denial of procedural fairness is an error of law and the appeal must be allowed. We will set aside the orders made the by the Tribunal on 18 February 2021 and remit the matter to the Consumer and Commercial Division to be determined by a differently constituted Tribunal. 4. It is, in those circumstances, unnecessary for us to consider all the remaining grounds of appeal in this matter. However, for completeness we make the following comments in relation to certain of the grounds of appeal raised by the tenants. Summons 1. The tenants submitted that the Tribunal refused to deal with the issue of possible material missing from documents produced by the real estate agent in response to a summons. The tenants state that they raised the issue by email with the Registry on 1 February 2021 and the Registry replied that the matter could be raised at the hearing and resolved then. The matter was not subsequently dealt with. The transcript provided by the tenants discloses that Mr Robi Barkat raised the issue at an early stage in the hearing and the Tribunal declined to deal with it. 2. The foundation for the tenants' allegation that there was material missing from the documents produced by the real estate agent was that there were long periods of time for which no material was produced. The tenants submitted that "logic dictates some material ought to have been received or sent." The tenants assert that the alleged missing material may have been relevant as it may have gone to matters related to any alleged agreement, as well as possibly informing the cross examination of the landlords' witness. 3. Beyond those assertions by the tenants, there is nothing before us to indicate that the summons to produce documents on the real estate agent had not been complied with. However, the tenants were entitled to put their concerns to the Tribunal and the real estate agent who was at the hearing and was available to answer any issues in relation to the summons. The issue raised by the tenants should have been dealt with by the Tribunal. Findings in relation to a Residential Tenancy Agreement 1. In the reasons for decision the Tribunal stated at [2] and [3]: 2. A fundamental submission made by the respondent is that a new verbal tenancy agreement was created between the parties because an offer was conveyed by the respondents' daughter which was accepted by the applicants and followed by part performance in the form of payment of arrears of rent which were then owing, withdrawal of the claim for carpet replacement and agreement not to pursue any further legal action. This submission is not supported upon consideration of the available evidence and the applicable law. Rent arrears were properly payable and there is insufficient evidence to support the contention that payment formed part of any concluded bargain. The claim for carpet replacement was put forward and then withdrawn independently and there was no binding or enforceable agreement entered into to prevent future pursuit of further legal action. 3. The evidence also does not support any suggestion or inference that the respondents' daughter had, in place of the managing agent, actual or ostensible authority to bind the respondents to any agreement. Further to this, there is no direct evidence of any communication from the respondents which supports the contention that a concluded agreement was reached as asserted. 1. We infer that the first reference to respondent at [2] was intended to be applicants. 2. The tenants raised as grounds of appeal that the Tribunal had erred both in finding that no binding agreement for a further term had been reached and in finding that the landlords' daughter did not have actual or ostensible authority to bind the landlords to a binding agreement. We consider that the Tribunal's consideration of both issues discloses error. 3. Section 13 of the RTA defines a "residential tenancy agreement" in the following terms: (1) A residential tenancy agreement is an agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence. (2) A residential tenancy agreement may be express or implied and may be oral or in writing, or partly oral and partly in writing. (3) An agreement may be a residential tenancy agreement for the purposes of this Act even though— (a) it does not grant a right of exclusive occupation, or (b) it grants the right to occupy residential premises together with the letting of goods or the provision of services or facilities. 1. The witness statements from the tenants which were before the Tribunal explain that there had been some negotiation between the parties in relation to the upstairs carpet. However, the issue between the parties was not whether the tenants could pursue a claim for carpet replacement. Rather the issue in dispute was whether the parties had come to an oral agreement for a further fixed term residential tenancy agreement for a further year and whether that agreement was conditional on the payment of the outstanding rental arrears amounting to $6,842.67. There was no need for additional consideration for the parties to enter into a further fixed term tenancy, the consideration from the tenants for such an agreement would be the agreement to pay the rent for the further fixed term. 2. The statutory declaration filed on behalf of the landlords from their daughter Ms Sun read as follows: I, Yanhong spoke with Rubina over the phone. Rubina offered to pay all rent arrears as she and her husband did not want to be terminated for non-payment of rent as she just had surgery. She asked for a new lease. I said my parents would consider extending the lease due to Rubina's situation once rent arrears were paid. I said to Rubina that my agent would be in touch with her to confirm my parent's final decision. Following this, my parents decided to move back into the property upon lease expiry on 21 October 2020. 1. It does not follow from that statement that the landlords had not authorised their daughter to negotiate on their behalf. In fact the statutory declaration would indicate the contrary, they had allowed their daughter to at least communicate with the tenants on their behalf. Further, the later email from the agent dated 29 July 2020, identified at [23] above, indicated that it was only at that point that the landlords advised that they did not want to be contacted directly anymore. 2. Accordingly, the finding of the Tribunal, that the evidence does not support that the daughter had actual or ostensible authority to act on her parents' behalf simply because there was a managing agent with such authority, is incorrect. The evidence would at least suggest that some communication was happening with Ms Sun with the landlords' knowledge. The Tribunal will need to determine whether those communications amounted to an agreement between the parties. Termination and the COVID-19 pandemic 1. In response to the COVID-19 pandemic various amendments have been made to the RTA and to the Residential Tenancies Regulation 2019 NSW (the Regulations). Relevantly at the time the landlords served notice of termination the applicable amendments included the insertion of Part 6A to the Regulations and Part 13 to the RTA. In particular, regulation 41B prohibited a landlord from giving an "impacted tenant" a termination notice in certain circumstances. The moratorium period, during which that prohibition applied, commenced on 15 April 2020. Section 228B of the RT Act defines when a household is impacted by the COVID-19 pandemic. 2. In the reasons for decision the Tribunal made findings at [5] as follows: that the evidence supplied to the landlord and to the Tribunal does not meet the requirements set for establishment to entitlement of the tenants to any dispensation pursuant to the present COVID regulations 1. The tenants state that they had not had the opportunity to engage in the NSW Fair Trading Dispute Resolution process as was required by the COVID-19 Regulations at the time and that, had the proper process been followed, they would have been required to provide further evidence to establish whether the provision applies. The tenants submit that the proceedings were not commenced in order to establish the application and quantum of relief applicable to the tenants in light of COVID-19. 2. However, the moratorium was irrelevant in respect of a notice of termination served pursuant to section 84 of the RTA. Landlords were not prohibited by Part 6A of the Regulation from serving a termination notice pursuant to section 84 of the RTA at the end of a fixed term during the moratorium. 3. Given that the notice of termination was based on section 84 of the RTA, the COVID-19 provisions would never have applied to the section 84 termination application. 4. However, while this was not directly raised as a ground of appeal, as we have previously stated there had never been an application from the landlords to terminate the tenancy. The only application before the Tribunal was the tenants' application. At the time that the tenants filed the application on 17 September 2020, the landlords would not have yet been able to file an application for termination, as the date for possession on the notice of termination was 21 October 2020 (section 93(2)(a) of the RTA). 5. There was no indication in the course of the hearing that leave had been granted for the landlords to seek an order for the termination of the tenancy. The parties were not on notice from either the application brought by the tenants, any proposed cross application by the landlords, or by the granting of any leave to seek an order for termination that the Tribunal would be making an order for termination of the tenancy agreement. 6. Although we have not heard from the landlords in relation to this issue, we consider that, had this been raised as a ground of appeal by the tenants, it is likely that we would have found that it also amounted to a denial of procedural fairness to the tenants, as there was no initiating proceeding or orders sought for termination of the tenancy and the tenants had not been provided with an adequate opportunity to meet the case for termination. Given that we have remitted the matter on the other grounds that have been raised by the tenants, we merely raise this matter so it may be considered in the remitted proceedings. 7. Accordingly we make the following orders: 1. Appeal upheld. 2. The orders of the Tribunal made on 18 February 2021 are set aside. 3. Matter remitted to the Consumer and Commercial Division of the Tribunal to be heard and determined by a differently constituted Tribunal. ********** 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 October 2021