Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Sun v Zhang [2023] NSWCATAP 333 Hearing dates: 4 October 2023 Date of orders: 19 December 2023 Decision date: 19 December 2023 Jurisdiction: Appeal Panel Before: D Robertson, Senior Member D Goldstein, Senior Member Decision: 1. The appeal is allowed. 2. The order of the Tribunal made in proceedings RT 23/18730 on 1 August 2023 is set aside and the following order substituted: The rent increase notified by the landlord Shiu Kwan Sun on 27 February 2023 is not payable by the tenants Yijiao Zhang and Jun Ma because s 41 of the Residential Tenancies Act 2010 (NSW) has not been complied with. Catchwords: LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — Rent — Rent increases – In the absence of a notice served in compliance with the requirements of the Act, the entry into a renewed fixed term tenancy agreement does not increase the rent payable notwithstanding that the renewed agreement states a higher rent Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Residential Tenancies Act 1987 (NSW) Residential Tenancies Act 2010 (NSW) ss 41, 42 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Cominos v Di Rico [2016] NSWCATAP 5 Hashman v Mason [1997] NSWRT 1152 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Texts Cited: None Cited Category: Principal judgment Parties: Shiu Kwan Sun (Appellant) Yijao Zhang and Jun Ma (Respondents) Representation: Shiu Kwan Sun (Self represented) Yijao Zhang and Jun Ma (Self represented) File Number(s): 2023/00258017 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 04 August 2023 Before: A Lynch, Tribunal Member File Number(s): RT 23/18730; RT 23/23715; RT 23/34677 REASONS FOR DECISION 1. The appellant is the owner of a property in the Sydney CBD. The respondents have occupied those premises pursuant to consecutive residential tenancy agreements since 12 April 2021. 2. The respondents filed an application in the Tribunal (RT 23/18730) on 21 April 2023. The relief sought by the respondents in that application included, relevantly, an order pursuant to s 44(1)(a) of the Residential Tenancies Act 2010 (NSW) (the RTA) that a rent increase is excessive and an order for repayment of excessive rent. 3. The appellant filed an application (RT 23/23715) on 22 May 2023 seeking termination of the respondents' tenancy for non-payment of rent. The appellant filed a further application (RT 23/34677) on 28 July 2023, again seeking termination of the tenancy for non-payment of rent. 4. The issues between the appellant and the respondents arose after the appellant served a notice on the respondents on 27 February 2023 purporting to increase the rent from $1,150 per week to $2,000 per week with effect from 1 April 2023. 5. The parties subsequently signed a further residential tenancy agreement specifying rent of $2000 per week. The further tenancy agreement is dated 10 March 2023 but appears to have been signed by the respondents on 15 March 2023. The discrepancy is not significant to these proceedings. 6. At the hearing of the application the respondents confirmed to the Tribunal that their application was for orders that the rent increase notice was invalid by reason of the provisions of sections 41 and 42 of the RTA. 7. Those sections provide: 41 Rent increases (1) The rent payable under a residential tenancy agreement may be increased only if— (a) the tenant is given a written notice by the landlord or the landlord's agent specifying the increased rent and the day from which it is payable, and (b) the notice is given at least 60 days before the increased rent is payable. (1A) Subsection (1) does not apply to a fixed term agreement for a fixed term of less than 2 years that specifies the date on which, and the amount by which, the rent payable under that agreement will be increased. This subsection does not affect the operation of subsection (2) in relation to the renewal of a fixed term agreement. (1B) The rent payable under a periodic agreement may not be increased more than once in any period of 12 months. (2) This section extends to an increase in the rent payable under a residential tenancy agreement on renewal of the agreement as if the increase were an increase during the term of the agreement. Note— Notice of a rent increase on renewal is required under subsection (1) before the lease is renewed. (3) A rent increase is not payable by a tenant unless the rent is increased in accordance with this section or the rent is increased by the Tribunal. (4) The residential tenancy agreement is varied to specify the increased rent from the date the rent is increased in accordance with this section. (5) Notice of a rent increase must be given by a landlord or landlord's agent in accordance with this section even if details of the rent increase are set out in the residential tenancy agreement. (6) Notice of a rent increase may be cancelled or varied (so as to reduce the increase) by a subsequent written notice given to the tenant by or on behalf of the landlord. Any such later notice takes effect from the date on which the earlier notice was to take effect. (7) Notice of a rent increase is not required to be given by a landlord or landlord's agent if the increase arises because of the end of, or a reduction in, a rent reduction. (8) Subsections (1)–(7) are terms of every residential tenancy agreement. (9) A landlord or landlord's agent must not contravene this section. Maximum penalty—20 penalty units. (10) The Tribunal must not make an order that a rent increase is not payable because this section has not been complied with unless the application for the order is made not later than 12 months after the rent is increased. If an application has not been made within that 12-month period, the rent increase is taken to comply with this section. 42 Rent increases under fixed term agreements (1) The rent payable under a fixed term agreement for a fixed term of less than 2 years must not be increased during the fixed term unless the agreement specifies the increased rent or the method of calculating the increase. (2) The rent payable under a fixed term agreement for a fixed term of 2 years or more— (a) must not be increased more than once in any period of 12 months, and (b) may be increased whether or not the agreement specifies the increased rent or the method of calculating the increase. (3) A landlord or landlord's agent must not increase the rent payable under a fixed term agreement in contravention of this section. Maximum penalty—20 penalty units. 1. The Tribunal held: "15. In regard to the rental increase notice, the notice was served on 27 February 2023 with a date to commence of 11 April 2023. Section 41(1) of the Act specifies a tenant must be given written notice of an increase in rent and the notice is to be given at least 60 days before the increased rent is payable. Only 43 days notice has been given. The rent increase notice is invalid. 16. This provision extends to a rent increase payable where there is a renewal of the fixed term lease. Otherwise any rental increase must be specified in the residential tenancy agreement after the relevant 60 days' notice is given. There is no provision in the new tenancy agreement for an increase in the rent after 60 days notice is given. 17. The rent increase is therefore invalid. There is no acceptance by the tenants that the rent increase is valid as they have continued to pay rent of $1150 per week. 18. The landlord cannot contract out of their obligations under the RT Act. The obligation is to serve a rent increase notice giving 60 days notice. That has not been done. The rent is therefore $1,150 per week." 1. The Tribunal rejected a submission from the appellant that the respondents' application was required to be brought within 30 days of the notice of rent increase being issued, noting that that time applied to applications pursuant to s 44 of the RTA for an order that the rent increase is excessive, and that the relevant time limitation in respect of an application for orders that a notice of rent increase is invalid is 12 months, as set out in s 41(10) of the RTA. 2. The Tribunal rejected the respondents' application in so far as it related to a rent increase in April 2022, as the application in respect of the notice of that increase was brought outside the 12-month period laid down in s 41(10). 3. The Tribunal dismissed the appellant's first application for termination (RT 23/23715) as the respondents had continued paying the rent at $1,150 per month and were therefore not in arrears. The Tribunal noted that the appellant's second termination application was withdrawn by the appellant. 4. The order made by the Tribunal was: "It is ordered that the rent shall not exceed the sum of $1,150 per week as from 11-Apr-2023 to 10-Apr-2024." 1. The appellant filed a Notice of Appeal on 14 August 2023, within the time laid down in the Civil and Administrative Tribunal Rules 2014 (NSW) for the lodgement of appeals in residential proceedings. Scope and Nature of Internal Appeals 1. Internal appeals against decisions of the Tribunal, other than interlocutory decisions, may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) s 80(2). 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: 1. Whether there has been a failure to provide proper reasons where they are required; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited by cl 12(1) of Sch 4 to the NCAT Act. In such cases, the Appeal Panel must first 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). 1. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) in Sch 4 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." 1. 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). 2. In Collins v Urban, the Appeal Panel stated at [84] that: "(1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact, … [and] (2) 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." Grounds of Appeal 1. The Notice of Appeal identified the grounds of appeal as follows: "The order believe that the renewal contract would continue to be executed and the lease term would be one year, but the rent could only be the same as the original contract, which was contrary to the implementation of the contract. The renewal lease agreement is signed by both parties and is valid now, which means both parties need to follow the terms in the agreement. Although the notice days is not enough for 60 days, we believe the legal effect of the notice is not as strong as a signed contract." 1. The Notice of Appeal also sought leave to appeal on the ground that the decision was not fair and equitable because: "The NCAT order were unfair to the landlord with following reason: 1 . The lease agreement had been signed and exchanged with legal validation. 2. The lease agreement were legally bind and in the NCAT order there were no clarification about the lease agreement legality and validity. 3. The NCAT Order completely one-sided to tenant and leave no chance for landlord." 1. As the appellant was not legally represented, we adopt the approach to the appellant's grounds of appeal suggested in Cominos v Di Rico [2016] NSWCATAP 5 at [12] – [13]: "12 The Appeal Panel must give effect to the guiding principle when exercising functions under the CAT Act, which is to 'facilitate the just, quick and cheap resolution of the real issues in the proceedings' (s 36(1)). This is reinforced by s 38(4) which provides that the Tribunal is required to act with 'as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.' 13 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. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]-[316]). Relevantly, s 38(2) provides that that Tribunal 'may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.'" 1. We understand the basis of the appellant's appeal to be that the Tribunal erred with respect to a question of law by failing to give effect to the new tenancy agreement executed by the parties in March 2023 and that for the same reason the decision was not fair and equitable. 2. At the hearing of the appeal, the appellant's agent, Mr Cheung, who represented the appellant by leave, did not dispute that the appellant had not given 60 days notice of the purported rent increase on 11 April 2023. However, he submitted that that should not have the consequence that the appellant is bound by the agreement entered into in March 2023 at the rent payable under the previous fixed term agreement, without any opportunity to increase the rent until the end of the fixed term. The respondents maintained that they were entitled to enforce the new fixed term rental agreement at the previous rent. 3. We are satisfied that, to the extent that the orders made on 4 August 2023 purport to mandate that the rent shall not exceed $1,150 per week until the end of the fixed term tenancy, those orders were not an appropriate outcome of the application that the respondents pursued at the hearing. 4. That application, as the Tribunal noted the respondents had confirmed at the hearing, was for orders that the notice of increase in the rent was invalid as contrary to ss 41 and 42. 5. The Tribunal having determined that the notice was invalid, the appropriate order was an order that the rental increase the subject of the notice of 27 February 2023 was not payable because s 41 of the RTA had not been complied with, as contemplated by s 41(10). 6. The order made by the Tribunal reflects the terms of s 44 of the RTA, which empowers the Tribunal to make an order that the rent shall not exceed a specified amount where the Tribunal has determined either that a rent increase is excessive, or that the rent payable under a tenancy agreement is excessive "having regard to the reduction or withdrawal by the landlord of any goods, services or facilities provided with the residential premises". 7. The respondents did not pursue their application for an order that the rent was excessive and the Tribunal did not purport to determine any such application. By making an order that was not appropriate to the application the Tribunal was ostensibly determining and by failing to make the order appropriate to the application, the Tribunal failed to ask itself the right question, 8. To that extent, we are satisfied that the appeal raises a question of law, albeit not the question which the appellant sought to raise. 9. We consider it appropriate to allow the appeal by setting aside the order made on 4 August 2023 and substituting the appropriate order, that is an order that the rent increase notified by the landlord on 27 February 2023 is not payable by the tenants because s 41 of the RTA had not been complied with in relation to the notice. In setting aside the order made at first instance, the Appeal Panel has the power, pursuant to s 81(2) of the NCAT Act, to exercise all the functions that are conferred or imposed by the NCAT Act or other legislation on the Tribunal at first instance. 10. We note that the RTA does not directly and explicitly confer jurisdiction upon the Tribunal to make such an order as we propose to make. However, the provisions of s 41(10) clearly contemplate that the Tribunal does have such jurisdiction. In our view, the source of jurisdiction to make such an order is section 187(1)(a), (b) and/or (h), which confer upon the Tribunal jurisdiction to make: "(a) an order that restrains any action in breach of a residential tenancy agreement, (b) an order that requires an action in performance of a residential tenancy agreement, … (h) an order directing a landlord, landlord's agent or tenant to comply with a requirement of this Act or the regulations." 1. Section 41(8) of the RTA provides that subs 41(1) – (7) "are terms of every residential tenancy agreement". Subsection 41(1) provides that the rent payable under a residential tenancy agreement may be increased only if the tenant is given a written notice specifying the increased rent and the date from which it is payable and the notice is given at least 60 days before the increased rent is payable. An attempt to increase rent without complying with those requirements will be a breach of the tenancy agreement. 2. We note that the order made by the Tribunal did not directly determine the question whether the parties are bound to the fixed term tenancy agreement entered into in March 2023, but with the rent fixed at $1,150 rather than $2,000 per week and the landlord having no right to seek to increase the rent during the term. Nor does the order we propose to substitute for the order made by the Tribunal determine that question. That question was not raised by the cases the parties were pursuing before the Tribunal, nor could it be raised on the appeal. 3. We note that s 41(2) of the RTA provides that the provisions of s 41 "extend to an increase in the rent payable under a residential tenancy agreement on renewal of the agreement as if the increase were an increase during the term of the agreement". Accordingly, the rent was not validly increased by the entry into the new lease notwithstanding that it specified the increased rent. That is sufficient basis for the dismissal of the appellant's application for termination on the basis of failure to pay rent. The respondents had continued to pay rent at the rate previously applicable, and, since no valid notice of increase had been given, that continued to be the rate payable. 4. Section 42 of the RTA governs the circumstances in which rent may be increased under a fixed term tenancy agreement. 5. The equivalent provision to ss 41 and 42 in the predecessor to the RTA, s 45 of the Residential Tenancies Act 1987 (NSW), was held by the Residential Tribunal in Hashman v Mason [1997] NSWRT 1152 to have the effect that, if rent was not increased by notice complying with the requirements of the Act, given at least 60 days before the increased rent became payable, before or concurrently with the execution of a renewed fixed term tenancy agreement, the rent remained at the previous level and could not be increased during the term of the renewed agreement. 6. It is not necessary for us to determine whether that is correct, although we see no obvious error in the reasoning. For that reason, had we not upheld the appeal on a question of law, we would not have granted leave to appeal. It is not apparent that the appellant would suffer a substantial miscarriage of justice if the decision were not set aside. 7. Should the questions whether the parties are bound by the tenancy agreement entered into in March 2023 and/or whether the appellant is entitled to serve a notice of increase in rent during the term of that agreement become a live issue in the future, those questions may be determined in further proceedings between the parties at that time. orders 1. Our orders are: 1. The appeal is allowed. 2. The order of the Tribunal made in proceedings RT 23/18730 on 1 August 2023 is set aside and the following order substituted: The rent increase notified by the landlord Shiu Kwan Sun on 27 February 2023 is not payable by the tenants Yijiao Zhang and Jun Ma because s 41 of the Residential Tenancies Act 2010 (NSW) has not been complied with. ********** 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 December 2023