Civil and Administrative Tribunal New South Wales Medium Neutral Citation: O'Connor v McManus [2022] NSWCATAP 93 Hearing dates: 15 February 2022; 14 March 2022 Date of orders: 15 March 2022 Decision date: 30 March 2022 Jurisdiction: Appeal Panel Before: Principal Member, The Hon D A Cowdroy AO QC ADCJ Senior Member, Mr P H Molony Decision: (1) An extension of time is granted to the appellant to bring the appeal; (2) The appeal be upheld; (3) The proceedings be remitted for determination by a Tribunal differently constituted of the following issues: (a) did the appellant become aware of the breach of the residential tenancy agreement for non-payment of water charges: (i) after three months of each water charge being notified to the tenant? Or (ii) only after the respondent refused to make payment of the water charges at the conclusion of the lease? (b) whether in the circumstances an extension of time is required to institute proceedings to recover water charges, other than the charges of 11 August 2021 and 14 September 2021 ; (c) whether an extension of time should be granted to the appellant in which to bring the claim for unpaid water charges; (d) if so, to determine whether the respondent is liable for such charges; and (e) if so, the period for which the respondent is liable taking into consideration the fact that some of the water charges were raised more than six years since the claim was made. (4) The proceedings be referred to the Registrar for allocation of a hearing date. Catchwords: APPEAL – residential tenancies – claim by landlord for arrears of water charges – whether appellant landlord was denied natural justice – failure of Tribunal to explain to the appellant that he was entitled to apply for an extension of time in which to bring her claim 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: Bobolas v Waverley Council (2016) 92 NSWLR 406 Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143 Italiano v Carbone [2005] NSWCA 177 Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Texts Cited: Judicial Review of Administrative Action, 4th edition (2009) Law Book Co Category: Principal judgment Parties: Humphrey O'Connor (Appellant) Tyra McManus (First Respondent) Nicholls Phillip (Second Respondent) Representation: Solicitors: John Joseph Solicitors (Appellant) J Saxelby (Agent)(Respondent) File Number(s): 2021/00341083 Publication restriction: None Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 02 November 2021 Before: A Blair, General Member File Number(s): RT 21/42065 & RT 21/40159 JUDGEMENT Facts 1. By Notice of Appeal filed on 30 November 2021, the appellant appeals a decision made by the Tribunal in proceedings under RT 21/42065 and RT 21/40159. The decision is dated 2 November 2021 and was received by the appellant on 4 November 2021. 2. The claim arises from a residential tenancy agreement made pursuant to the provisions of the Residential Tenancies Act 2010 (NSW) ("RT Act") of residential premises in a country town of New South Wales made between the appellant as landlord and the respondent as tenant . The tenancy agreement commenced on 23 March 2013 and continued until vacant possession was provided on 10 September 2021. 3. On 22 September 2021 the respondent lodged an application with the tribunal seeking a refund of her rental bond. 4. On 8 October 2021 the appellant lodged a cross application seeking compensation under section 187(1)(c) and (d) for the respondent's alleged non-payment of water usage charges amounting to $3,878.33. Some charges were raised more than six years before the date of the claim. 5. Both matters were heard before the Tribunal on 13 October 2021. Tribunal orders 1. The Tribunal found that the obligations of the tenant required the payment of rental together with payment of water usage charges. The Tribunal also found that, contrary to the respondent's claim, the dwelling the subject of the tenancy had been fitted with water efficiency measures as required by section 39(1)(b) of the RT Act. Accordingly the tenant was liable to make payment of the water usage charges provided the other requirements of s 39 were met. 2. However, the Tribunal found that whilst the appellant was entitled to make a claim under section 190 of the RT Act for an order in relation to a breach of a residential tenancy agreement, r 39(9) of the Residential Tenancies Regulation 2019 (NSW) ("the Regulation") provides: "(9) For the purposes of section 190(1) of the Act, the prescribed period is within 3 months after the applicant becomes aware of the breach." 1. The Tribunal stated, inter alia: "17. The tenant gave evidence that she had received invoices issued by the landlord for water usage charges which included the bill evidencing water usage charges that the landlord had received from Lithgow City Council. The tenant said that she had not paid water usage charges because she did not believe water efficiency measures were installed at the premises.… 18. There is no evidence before the Tribunal of any application to the Tribunal within the three month time period set out in Regulation 22 [sic -39]." 1. Accordingly, the Tribunal found that since the appellant did not commence proceedings in relation to the water usage charges until 8 October 2021, the claim for water usage charges was not "within the time limits set in the regulations. It is open to the Tribunal to exercise discretion and extend time for an application to be made to the Tribunal". 2. The Appeal Panel notes that in fact two of the water charges were within the three month period: namely charges made on 11 August 2021 and 14 September 2021. In this respect there is an obvious error as discussed later in this decision. 3. The Tribunal continued: "The prima facie rule is that application should be brought within the time set out in the legislation. The landlord did not provide an adequate explanation for the lack of action, or the delay, in relation to the recovery of the water use charges. The tribunal notes that the landlord had generated appropriate invoices and letters in relation to water usage charges and had indicated to the tenant that if the amounts are not paid by the due date further action will be taken. There was no follow-up-up action in relation to the unpaid debt except for the application to the Tribunal on 8 October 2021, which is not within the time limit.…" Notice of Appeal 1. The Notice of Appeal states: "The Tribunal Member made orders that the Applicant had not commence proceedings within the time limit. The Tribunal member did not give an opportunity to make submissions or evidence in respect of limitation periods to either party. The Tribunal member mentioned the issue of time limits/limitation period at the outset of the hearing, saying she would look into the issue, but no further mention of time limits has made during the hearing. Despite this, the Tribunal member based their decision solely on the issue of time limits/limitation periods." Leave to appeal 1. The appellant recognises that leave to appeal is required because he asserts that the decision was not fair and equitable. The appellant asserts that no opportunity was given to him to address the criteria upon which the member made the decision relating to the limitation period and time periods. The appellant says that had this been a factor, he would have been able to provide evidence that the tenant had agreed to pay the outstanding water charges from 2013 and for this reason he did not commence proceedings. The appellant submitted that there are compelling reasons why the time limit before commencing proceedings should be extended. 2. Although not addressed in the Notice of Appeal, the Tribunal notes that, since the proceedings arise out of a residential tenancy agreement under the provisions of the RT Act, a period of 14 days is allowed in which to bring the appeal: r 25(4)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW), which provides: "(4) Unless the Tribunal grants an extension under section 41 of the Act, an external or internal appeal must be lodged— … (b) in the case of an internal appeal against a decision made in residential proceedings--within 14 days from the day on which the appellant was notified of the decision or given reasons for the decision (whichever is the later), or…" 1. The decision was received on 4 November 2021 by the appellant but the appeal was not filed until 30 November 2021, namely a period of 26 days. It follows that leave of the Appeal Panel is required to bring the appeal out of time. Reply to appeal 1. The respondent states that the appellant was provided a reasonable opportunity to formulate their evidence and submissions on the questions of law; that it is reasonable to assume that all elements the application should have been considered by the appellant. The respondent refers to the principles referred to in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 to the effect that time limit should generally be strictly enforced. No request an extension of time has been submitted and the time limit should be enforced. Observations 1. In effect, the appeal raises only a question of law. This is an appeal brought under section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act") Section 80 (2) relevantly provides: "Any internal appeal may be made: (a) [Not relevant] (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance – as of right and any question of law, all with the leave of the Appeal Panel on any other grounds." 1. The Appeal Panel considers that the Notice of Appeal raises, in substance, a claim of denial of natural justice or procedural unfairness because the appellant was denied the opportunity of make submissions on the limitation issue, or address whether an extension of time should be granted . As such, a grant of leave under section 80 of the NCAT Act is not required to bring the appeal. However, leave is required for an extension of time to bring the appeal pursuant to section 41 of the NCAT Act. Such section provides: "(1) The Tribunal may, of its own motion or on application by any person, extend the period of time for the doing of anything under any legislation in respect of which the Tribunal has jurisdiction despite anything to the contrary under that legislation. (2) Such an application may be made even though the relevant period of time has expired." 1. At the hearing on 14 March 2022, the respondent was invited to state whether she claimed any prejudice would be occasion to her if an extension of time in which to bring the appeal, although 12 days out of time, were granted. The respondent's agent informed the Tribunal that the respondent would suffer prejudice because she would have been deprived of the right to file a cross-appeal asserting that the Tribunal's decision which found that water-saving measures had been installed, was erroneous. 2. The Appeal Panel notes that the respondent did not file any cross appeal upon the filing of the Notice of Appeal, and has not sought to do so since November 2021. Further the submissions of the respondent raised no objection to the appeal on the ground that it has been brought more than 14 days after the Tribunal's decision was notified. Accordingly, the Appeal Panel considers that the respondent's claim that it would have filed a Notice of Cross Appeal should be rejected. No other prejudice to the respondent has been indicated. Accordingly, the Tribunal will grant such extension. Denial of Procedural Fairness 1. The claim of denial of procedural fairness arises because the Tribunal did not invite the appellant to provide submissions concerning the limitation issue and whether an extension of time should be granted in which to bring the claim for the arrears of water charges. 2. The appellant was unrepresented, and a court or tribunal owes no special duty to an unrepresented litigant: see Bobolas v Waverley Council (2016) 92 NSWLR 406 at [247]. However, section 38 (2) of the NCAT act requires a Tribunal's procedures to accord with natural justice. Procedural fairness concerns the fairness of the proceedings: see Judicial Review of Administrative Action, 4th edition (2009) Law Book Co at [7.20]. 3. When this hearing commenced on 15 February 2022, the Appeal Panel had not been provided with a transcript of the audio recording of the hearing. Accordingly it was necessary to adjourn the proceedings to understand the issues that have been considered at the Tribunal hearing on 2 November 2021. Such transcript has now been provided and was considered by the Appeal Panel at the adjourned hearing on 14 March 2022. 4. The transcript records the careful questioning by the Tribunal member relating to the following issues: 1. installation of water-saving measures: the appellant provided clear evidence that the water-saving measures were installed on 25 August 2011 at the premises; 2. that reminders were sent to the tenants to pay water charges Issued by Lithgow City Council that were overdue as far back as November 2015, and the most recent of which was 14 September 2021; 3. that the appellant put a repayment offer to the tenant that she pay $50 a week from 8 October 2021 until 24 March 2023 to repay the amount of $3,878.33 in unpaid water charges and that the appellant keep the bond. 4. that on 11 August 2021 the tenant gave notice of vacating the premises and on the same day the tenant, in response to a repayment plan for the overdue water rates forwarded an email to the appellant stating: "Thank you for the offer of a payment plan, I might have to take that offer up as I definitely don't have anywhere near that amount unfortunately"; 1. that the accounting program maintained by the appellant automatically issued reminders to the tenant for unpaid charges, and that that occurred throughout the tenancy from 2013. 2. that the tenant vacated the premises on the 10 September 2021; 3. that tenant denied having received any such invoices and claimed that water saving measures had not been installed at the premises. 1. The Tribunal did not provide an extemporaneous judgement but reserved its decision. Appeal Hearing on 14 March 2022 1. At the hearing on 14 March 2022, the legal representative for the appellant referred to material which he states was filed with the original application to the Tribunal and again before the Appeal Panel, including invoices which were sent to the respondent. No such documents have been received by the Appeal Panel. Further, it appears that no documents of the kind referred to by the appellant's solicitor were before the Tribunal. At page 6 of the transcript of the Tribunal hearings, the Tribunal Member recorded: "I note that Ms McManus has provided the tribunal with documents. Ms O'Connor, [appellant's agent] the only document that I have from you is the document I explained that had been provided to the tribunal by email earlier today which is essentially a copy of the previous residential tenancy agreement with the tenant prior to Ms McManus which indicates in that agreement that water-saving features were installed." 1. Irrespective, the legal representative for the appellant stated that there were two payments made by the respondent for "water", namely on 20 April 2015 and another on 29 May (year not recorded). 2. The legal representative for the appellant contended that his client did institute the proceedings within 3 months after becoming aware of the breach of the tenancy agreement; that breach being the fact that the respondent only disputed liability to meet the water charges at the conclusion of the lease. 3. In response, Ms Saxelby for the respondent submitted that the mere fact that the landlord postponed taking recovery proceedings in respect of the water charges until the conclusion of the lease period did not override the statutory obligation to bring proceedings promptly to recover the water charges. 4. Ms Saxelby also submitted that the question of time limits was referred to on several occasions in the transcript by the Tribunal Member. Accordingly, the issue of the three month time limit in which to institute proceedings was not overlooked by the Tribunal. Consideration 1. The Tribunal reached the conclusion that the landlord (appellant's) claim for an order for compensation was out of time, and that an extension of time was required under section 41 of the NCAT Act in which to bring the claim. 2. The Tribunal member correctly referred to the fact that a landlord was required pursuant to clause 39(6)(9) of the Residential Tenancies Regulation 2019 (the RT Regulation) to bring proceedings for a breach of the residential tenancy agreement under s 190 of the RT Act within 3 months "after the applicant becomes aware of the breach". The appellant claims that he did not become aware of the breach until the respondent refused to make payment for the water charges, and that the proceedings were instituted thereafter within the three month period. 3. Recovery of water charges is specifically provided for in section 39 of the RT act. Section 39 (5) provides that recovery must be made within three months of the date of issue of the bill or invoice for water charges. Section 39 of the RTA provides: "39 Water usage charges payable by tenant (1) A tenant must pay the water usage charges for the residential premises, but only if— (a) the premises are separately metered or the premises are not connected to a water supply service and water is delivered to the premises by vehicle, and (b) the premises contain water efficiency measures prescribed by the regulations for the purposes of this section, and (c) the charges do not exceed the amount payable by the landlord for water used by the tenant. (2) A tenant is not required to pay the water usage charges unless the landlord gives the tenant a copy of the part of the water supply authority's bill setting out the charges, or other evidence of the cost of water used by the tenant. (3) A landlord must give the tenant not less than 21 days to pay the water usage charges. (4) A tenant is not required to pay the water usage charges if the landlord fails to request payment from the tenant within 3 months of the issue of the bill for those charges by the water supply authority. (5) Subsection (4) does not prevent a landlord from taking action to recover an amount of water usage charges later than 3 months after the issue of a bill for those charges, if the landlord first sought payment of the amount within 3 months after the issue of the bill. (6) A landlord must ensure that the tenant receives the benefit of, or an amount equivalent to, any rebate received by the landlord in respect of any water usage charges payable or paid by the tenant. Note: Tenants under social housing tenancy agreements may be subject to different provisions in relation to the payment of charges for water usage (see Division 3 of Part 7). (7) This section is a term of every residential tenancy agreement." 1. The Tribunal found that the respondent did not dispute she had received the invoices. At paragraph 17 of the Tribunal's decision, the Tribunal found, inter alia, the following: "The tenant gave evidence that she had received invoices issued by the landlord for water usage charges which included the bill evidencing water usage charges that the landlord had received from Lithgow City Council. The tenant said that she had not paid water usage charges because she did not believe water efficiency measures were installed at the premises." 1. Such conclusion did not consider the issue of when the appellant first became aware of the respondent's breach of the lease. That is, whether the appellant became aware of the respondent's breach of the lease because of non-payment of water charges only after the tenant signified refusal to pay such charges. If this be the case, the appellant's claim was brought within three months. 2. The Tribunal's decision is predicated upon the conclusion that the appellant's action should have been brought within three months of each water charge not being paid by the respondent. In fact to charges for water, as indicated above, were within the three month period of action being commenced by the appellant. 3. Irrespective the appellant was not invited to provide submissions on why an order providing for an extension of time should be made. The Tribunal Member stated in her decision: "So in reading the legislation – so if I'm satisfied that the application's been brought in time and that's essentially what I want to check. There was an application made under section 187 of the Residential Tenancies Act has a time limit of three months. Now, I appreciate that that may not apply to circumstances where it's alleged that the tenant has breached the Residential Tenancy agreement by not paying water usage charges and the time may be extended beyond the initial three months. That's something I need to check." 1. Whilst the Tribunal Member was conscious of time limits, and referred to time limits repeatedly, there is no specific discussion concerning the application of section 41 of the NCAT act , nor was this consideration raised. 2. The Appeal Panel notes that the appellant was not legally represented at the Tribunal hearing. Whilst not owing a special duty to an unrepresented litigant, the Tribunal must nevertheless ensure that its procedures comply with the requirements of section 38(2) of the NCAT Act. 3. The legal representative for the appellant submitted to the Appeal Panel that: 1. the appellant's agent manages numerous leased properties; that on frequent occasions tenants who are required to pay water charges do not do so; and that it was impractical to take proceedings every time a tenant fail to pay water charges within the three month period prescribed. In this instance, the unpaid charges have accumulated for years, resulting in a total claim of $3878.33; 2. the appellant's claim, made pursuant to section 190 of the RT act, was brought within three months of the appellant "becoming aware" of the breach has provided by Reg 39. Findings 1. The appellant's submissions establish that that the appellant failed to claim the arrears of water rates to meet his agent's convenience: that is, it was not convenient to pursue the tenant for non-payment of water charges on every occasion that the tenant did not make payment. However, the provisions of section 39(4) were specifically intended to avoid the consequence that a tenant who did not, or who is unable to pay the water charges, would be required to meet them at a later date. The time limit of three months was clearly incorporated to avoid any subsequent hardship. Accordingly, irrespective of any inconvenience to the landlord in promptly following up payment for water charges, the statutory provisions must be observed. But this still leaves open the question whether the appellant became aware of the breach within three months of the water charges being rendered; or only following the tenant's refusal to make payment. 2. The Tribunal notes however that in respect of the last two water charges sent on 11 August 2021 and 14 September 2021, the appellant's claim for these two charges are within the statutory period, whichever applies, since proceedings were commenced on 22 September 2021. These charges were not referred to in the decision, and prima facie no extension of time was required in respect of such charges because the claims brought within three months. 3. Despite these observations, the fact remains that the Tribunal did not offer an extension of time to the appellant to bring the proceedings. Such an application may well prove to be unsuccessful in view of the observations referred to above. However, the Appeal Panel is not aware of the material upon which the appellant would rely in support of such an application. 4. The failure to give consideration as to whether an extension of time was required and indeed to raise with the appellant the fact that an extension of time could be granted constitutes procedural unfairness: see Italiano v Carbone [2005] NSWCA 177; Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143 at [8]. Had the opportunity been given to provide submissions on the question of extension of time, the appellant states that he would have had material which could have had a distinct bearing on the question of whether an extension should be granted. In the circumstances, a denial of procedural fairness has occurred. In Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [37], Gleeson CJ said: "Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness and natural justice, the concern of the law is to avoid practical injustice". 1. The Appeal Panel considers that it is necessary for the proceedings be reconsidered with respect to the issue: when did the appellant become "aware of the breach"? Was the appellant aware following each occasion when the tenant did not pay the water charges in which case the appellant's claim could not succeed without an extension of time been granted. 2. Alternatively, did the appellant become aware of the respondent's breach of the residential tenancy agreement only following the tenant's refusal to pay the water charges which became apparent at the end of the lease. In this event, the action was brought within three months and no extension of time is necessary. 3. As already stated, irrespective of the determination of this question, the water charges dated 11 August 2021 and 14 September 2021 are within the three month period of the appellant's claim and there is no apparent reason why the respondent should not be ordered to pay such charges. The Appeal Panel also observes that the appellant claims to have material which led him not to enforce the charges as they fell due. Whether any equitable doctrine arises out of such conduct, if in fact it did occur, is a matter for consideration on remittal. Orders 1. The Appeal Panel orders that: 1. An extension of time is granted to the appellant to bring the appeal; 2. The appeal be upheld; 3. The proceedings be remitted for determination by a Tribunal differently constituted of the following issues: 1. did the appellant become aware of the breach of the residential tenancy agreement for non-payment of water charges: 1. after three months of each water charge being notified to the tenant? Or 2. only after the respondent refused to make payment of the water charges at the conclusion of the lease? 1. whether in the circumstances an extension of time is required to institute proceedings to recover water charges, other than the charges of 11 August 2021 and 14 September 2021 ; 2. whether an extension of time should be granted to the appellant in which to bring the claim for unpaid water charges; 3. if so, to determine whether the respondent is liable for such charges; and 4. if so, the period for which the respondent is liable taking into consideration the fact that some of the water charges were raised more than six years since the claim was made. 1. The proceedings be referred to the Registrar for allocation of a hearing date. ********** 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: 30 March 2022