New South Wales Supreme Court CITATION : Scicluna v NSW Land and Housing Corp [2008] NSWSC 607 HEARING DATE(S) : 12 June 2008 JUDGMENT DATE : 20 June 2008 JURISDICTION : Common Law JUDGMENT OF : Harrison AsJ (1) The appeal is dismissed. (2) The decision of Tribunal Member Farey dated 21 December 2007 is affirmed. DECISION : (3) The summons filed 26 February 2008 is dismissed. (4) I vary the date of termination to 18 July 2008. (5) The plaintiff is to pay the first defendant's costs as agreed or assessed. CATCHWORDS : TENANCY - termination LEGISLATION CITED : Consumer, Trader and Tenancy Tribunal Act 2001 Residential Tenancuies Act 1987 CATEGORY : Principal judgment House v R (1936) 55 CLR 499 Italiano v Carbone & Ors [2005] NSWCA 177 CASES CITED : Middlebrook v NSW Land & Housing Corporation & Anor [2005] NSWSC 673 McAuliffe v CTTT & Anor [2004] NSWSC 824 RTA v Swain (1997) 41 NSWLR 452 Scicluna v New South Wales and Housing Corporation & Anor [2007] NSWSC 385 John Scicluna (Plaintiff) PARTIES : New South Wales Land and Housing Corporation (First Defendant) Consumer, Trader and Tenancy Tribunal (Second Defendant) FILE NUMBER(S) : SC 30014/2008 COUNSEL : N Eastman (Plaintiff) A Jungwirth (First Defendant) Legal Aid Commission of NSW (Plaintiff) SOLICITORS : New South Wales Land and Housing Corporation (First Defendant) Crown Solicitor (Second Defendant) LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW LOWER COURT FILE NUMBER(S) : RT06/26839 LOWER COURT JUDICIAL OFFICER : Tribunal Member Farey LOWER COURT DATE OF DECISION : 21 December 2007 LOWER COURT MEDIUM NEUTRAL CITATION : [2007] NSWCTTT 759 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST ASSOCIATE JUSTICE HARRISON FRIDAY, 20 JUNE 2008 30014/2008 - JOHN SCICLUNA v NEW SOUTH WALES LAND AND HOUSING CORPORATION and ANOR JUDGMENT (Termination of tenancy) 1 HER HONOUR: By summons filed 26 February 2008 the plaintiff seeks firstly an order granting leave to extend the time to bring this appeal, secondly, an order pursuant to s 67(3)(a) of the Consumer, Trader and Tenancy Tribunal Act 2001 setting aside the orders made by the Consumer Trader and Tenancy Tribunal ("the Tribunal") on 21 December 2007 in matter number RT06/26839, thirdly, an order pursuant to s 67(3)(b) of the Act to have matter number RT06/26839 remitted back to the Tribunal to be heard according to law, and fourthly, an order pursuant to s 65(3) of the Act quashing the orders made by the Tribunal on 21 December 2007 in matter number RT06/26839. 2 The plaintiff in these proceedings in John Scicluna. The first defendant is the New South Wales Land and Housing Corporation ("the Housing Corporation"). The second defendant is the Consumer, Trader and Tenancy Tribunal. The second defendant has filed a submitting appearance. For convenience I shall refer to the parties by name. Mr Scicluna relies on the affidavits of Matthew Hazard; one dated 2 May 2008 and one dated 4 June 2008. The Housing Corporation did not rely upon any affidavit evidence. 3 Mr Scicluna and the Housing Corporation entered into a residential tenancy agreement for a premises in Guilford in 2001. Mr Scicluna is a 50 year-old pensioner who is legally blind. Extension of time to appeal 4 The plaintiff seeks that an extension of time be granted in relation to the lodging of this appeal. On 21 December 2007, the Tribunal made its orders. On 26 February 2008, the summons was filed. The proceedings were filed just over one month out of time. On 8 January 2008, Mr Scicluna made an application to the Tribunal for a rehearing. On 5 February 2008, the Tribunal Member declined to grant a rehearing. The Housing Corporation does not oppose an extension of time. The explanation for delay is satisfactory. An extension of time to file this appeal is granted. The first hearing in the Tribunal 5 On 29 May 2006 the Housing Corporation applied to the Tribunal seeking an order to terminate the resident lease on the grounds that Mr Scicluna had allowed the premises to be used for an illegal purpose [thereby breaching s 23 of the Residential Tenancies Act 1987] ("the Act"). On 17 October 2007, Tribunal Member Farey made a finding that Mr Scicluna "was at all times aware of the illegal activities taking place on the premises and that he failed to take any steps to put an end to the said activities" and "that this breach involves the manufacturer and sale of a substantial quantity of dangerous illegal drugs." (the earlier finding). The Tribunal Member ordered that the tenancy be terminated and that vacant possession be given to the Housing Corporation. The first appeal 6 Mr Scicluna appealed the decision of the Tribunal Member dated 17 October 2007 to this Court. Malpass AsJ found that the Tribunal had failed to make requisite findings as required by s 64(2)(b)(ii) of the Act and that the Tribunal had failed to consider the matters in s 64(2)(c) (see Scicluna v New South Wales Land and Housing Corporation & Anor [2007] NSWSC 385). The appeal was successful and was remitted back to the Tribunal to be reheard according to law. The second hearing in the Tribunal 7 On 4 September 2007, these proceedings were heard by Tribunal Member Farey. The Tribunal Member reserved the decision and then published written reasons on 21 December 2007. The orders made were for termination of the tenancy and that vacant possession be given to the Housing Corporation. It is this decision that Mr Scicluna appeals to this Court. I shall refer to the decision of the Tribunal Member in more detail later in this judgment. Grounds of Appeal 8 Mr Scicluna advances four grounds of appeal before this Court. The main ground of appeal is that the Tribunal Member erred in the exercise of her discretion pursuant to s 64(2)(b)(ii) of the Act. The second to fourth grounds of appeal are variations of the above. They are formulated as the Tribunal erred in the making of the decision by (a) failing to properly consider evidence that was before the Tribunal, and/or (b) failing to ensure that all relevant material was disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings. The third ground of appeal is that the Tribunal erred in the exercise of its discretion under ss 64 and 65 of the Act as the decision on the facts was unreasonable, harsh and/or unjust. The final ground of appeal is that the Tribunal denied Mr Scicluna procedural fairness by failing to ensure, as far as practicable, that all relevant material was disclosed to the Tribunal to determine all of the relevant facts in issue in the proceedings as is required by s 28(5)(b) of the Consumer, Trader and Tenancy Tribunal Act 2001. The Tribunal Member's decision 9 The Tribunal Member made a finding that Mr Scicluna was at all times aware of the illegal activities, being the manufacture and sale of a substantial quantity of dangerous and illegal drugs, taking place on his premises and failed to take any steps to bring an end. This finding is not the subject of challenge. It was not disputed that s 64(2)(b)(i) had been made out. What is the subject of dispute is whether the Tribunal Member exercised her discretion in accordance with s 64(b)(ii) of the Act. 10 Section 64(2)(b) reads: "(2) The Tribunal, on application by a landlord under this section, is to make an order terminating the agreement if it is satisfied: (a) … (b) in the case of a notice given by a landlord on the ground referred to in section 57, relating to a breach of the agreement: (i) that the landlord has established the ground, and (ii) that the breach, in the circumstances of the case, is such as to justify termination of the agreement". 11 The Tribunal Member in her written reasons summarised Mr Scicluna's evidence and the Housing Corporation's evidence. The Tribunal Member referred to Mr Scicluna as being legally blind and stated: "The Respondent gave evidence of the importance in his life of his present carer, Ms Kennerly, her children and his daughter. He says that presently living on the premises are the Respondent and his daughter. The Respondent submits that he requires a three bedroom house to be able to accommodate those persons upon whom he relies upon from time to time to provide him with the physical care which he requires and with social companionship. The Respondent gave evidence as to the affordability of satisfactory accommodation in the private residential market. He stated that a three bedroom house was essential because his daughter was living with him and that his carer and/or her children stayed over-night on some occasions. However, he said that a three bedroom house at commercial rates of rent was beyond his means. Ms Jones told the Tribunal that three bedroom accommodation for the Respondent would be appropriate for him. She stated that persons with the Respondent's disability rely on extra space so as to move around the home without bumping into anything. Having the extra bedrooms meant that his goods and chattels could be spread around throughout the whole premises and could be more easily distinguished and located. Ms Jones also noted that the Respondent was able to move independently around the inside of his home." 12 Ms Jones is an occupational therapist. She provided a report and gave evidence. The Tribunal Member evaluated all the evidence and made findings of fact in relation to those matters. This included the earlier finding. The Tribunal Member did not accept Mr Scicluna's evidence that he voluntarily restricted his use of his accommodation to the bedroom, kitchen and bathroom at the time the illegal activity was being carried on. 13 The Tribunal Member concluded that she was satisfied that the landlord has established the ground of the breach and that the ground is a breach of the residential tenancy agreement pursuant to s 64(2)(b)(ii) of the Act and that in the circumstances justifies the termination of the agreement. Had the Tribunal Member stopped there it would have been difficult to allege that the Tribunal Member had wrongly exercised her discretion. However, the Tribunal Member continued: "No substantiation for the assertions that the Respondent should be accommodated in a three bedroom house was put before the Tribunal, nor was it stated why the Respondent could not be accommodated in smaller surroundings. I regard this evidence as incomplete and unsatisfactory. Despite Ms Jones' evidence, I am satisfied on the evidence that the Respondent can be satisfactorily accommodated in other than three bedroom accommodation. In RTA v Swain it was found that the landlord, having terminated the tenancy, failed to take into account the tenants' various special circumstances. I am also required in this case to take into account any special circumstances relating to the Tenant. The Respondent made submissions regarding his special circumstances and I have considered these submissions carefully. The Respondent's blindness could form part of a submission of special circumstances. However, weighing up all of the circumstances as they relate to Respondent, I am not able to find special circumstances such as to entitle me to exercise my discretion to set aside the termination within the meaning of this section." 14 It is these latter comments that has led to the challenge that the Tribunal Member wrongly exercised her discretion. 15 RTA v Swain (1997) 41 NSWLR 452, does not refer to special circumstances. Swain dealt with a precursor to the current s 64(2), but for present purposes, this does not matter. In Swain Meagher JA stated at 456: "The question then becomes what the words "circumstances of the case" mean. They are clear enough; they require regard to be had to the particular case before the Tribunal. If they were intended to be limited to matters of form and time, then s.64(3) merely repeats what is said by s 64(2)(c). It is difficult to see why the words do not mean what they say. I think it can be fairly stated that the Act is intended to balance the rights of landlords and tenants. The argument urged against accepting Rolfe J's interpretation of s 64(2) is that it could be unduly harsh on the landlord. That argument fails as hardship to the landlord is something which the Tribunal must consider as part of the "circumstances of the case". But further, the matter is specifically addressed in s 69, which does not seem to have been raised at any stage of the history of the case. That section enables the Tribunal to terminate a tenancy, even in the absence of a breach, simply to avoid hardship to the landlord. Section 69 can, in this way, be seen as the landlord's counterpart to s 64(2)(c). If Rolfe J's interpretation were not upheld, then a landlord could plead hardship to obtain an early termination, but the tenant, in circumstances where no breach had occurred could not plead hardship to avoid eviction; the tenant could only rely on s 65(1) to postpone eviction or rely on the limited grounds of refusal to make an order which are provided for in s 65(2) and which do not include hardship to the tenant." 16 Mr Scicluna submitted that the Tribunal failed to take into account the circumstances of the case, it has only looked for special circumstances, which it could not find and that by seeking to find special circumstances it is in error. 17 Mr Scicluna also submitted that the error is similar to that identified in the approach adopted by the Tribunal Member at first instance in Middlebrook v NSW Land & Housing Corporation & Anor [2005] NSWSC 673 and Scicluna v New South Wales Land and Housing Corporation & Anor [2007] NSWSC 385 (Scicluna (No 1)). Before the Tribunal Member proceeds to make an order, it is incumbent upon the Tribunal to make the requisite findings of fact in respect of these matters. 18 In Middlebrook, Malpass AsJ stated: 32 In the present case, the Tribunal is prohibited from making an order terminating the agreement under s64 of the RT Act unless it is satisfied that the notice of termination was given and that it was given in accordance with Pt 5. In my view, s 64 imposes threshold requirements that must be satisfied before the Tribunal can make an order terminating a residential tenancy agreement under the section. It must be satisfied of the matters specified in subs (2)(a)(i) and (ii) and subs (2)(c). When it is satisfied of those matters it can then address the requirements of s 64(2). 33 Subsection (2) of s 64 of the RT Act not only requires the Tribunal to be satisfied that the landlord has established the ground relied on pursuant to s 57, but also that the breach, in the circumstances of the case, is such as to justify termination of the agreement. In the present case, it must also be satisfied that, after having considered the circumstances of the case, it is appropriate to terminate the agreement. 34 Before proceeding to make an order, it is incumbent upon the Tribunal to make the requisite finding in respect of each of these matters. 35 The Tribunal should make an order if it is satisfied as to each of the relevant matters specified in subs (2). The language of subs (4) regards these matters as "obligations". 36 In my view, a reading of the reasons discloses that the Tribunal has failed to make all of the findings that had to be made pursuant to subs (2) and (3). It seems to me, for these reasons alone, that the order made by the Tribunal has to be set aside." 19 Middlebrook also dealt with the earlier version of s 62(2). 20 In Scicluna (No 1), Associate Justice Malpass had this to say (at [17]): "I have carefully read both the ex-tempore reasons and the subsequent written reasons. This reading has led me to the view that the Tribunal has failed to make requisite findings in respect of other matters. It has failed to make a finding as required by s 64(2)(b)(ii). It has failed to do what was required by s 64(2)(c). Accordingly, grounds falling within the Middlebrook category have been made out." 21 So far as this current appeal is concerned, it was not disputed that the notice referred to s 57 and that the landlord had established the ground (s 64(2)(b)(i)). The appeal relates to whether the Tribunal Member properly exercised her discretion in accordance with s 64(2)(b)(ii). In addition to s 64(2)(b)(ii) the Tribunal Member may considered the circumstances of the case concerning social housing premises. 22 Section 64(4) of the Act reads: (4) Without limiting the obligations of the Tribunal under subsection (2) (b) or (c), in considering the circumstances of a case concerning social housing premises under that provision, the Tribunal, in addition to having regard to the circumstances of the tenant and other circumstances of the case, is to have regard to such of the following matters as may be relevant: (a) any serious adverse effects the tenancy has had on neighbouring residents or other persons, (b) whether any breach of the residential tenancy agreement was a serious one (and, in particular, whether it was one to which subsection (6) applies), and whether, given the behaviour or likely behaviour of the tenant, a failure to terminate the agreement would subject, or continue to subject, neighbouring residents or any persons or property to unreasonable risk, (c) the landlord's responsibility to its other tenants, (d) whether the tenant, wilfully or otherwise, is or has been in breach of an order of the Tribunal, (e) the history of the tenancy concerned, including, if the tenant is a tenant under a public housing tenancy agreement, any prior tenancy of the tenant arising under any such agreement." 23 It is accepted that unlike the wording in s 64(2)(b)(ii), which is mandatory, the wording in s 64(4) only required those matters to be considered, in so far as they are relevant. 24 Counsel for Mr Scicluna submitted that by referring to special circumstances the Tribunal Member had sought to firstly, to demonstrate that the s 64(2)(b)(ii) factors are not 'special' circumstances, they are only 'circumstances' – meaning the member has demonstrably failed to apply the correct test and has failed to do what she is required to do by the Middlebrook approach to that section; and secondly, failed to consider the s 64(4) matters which were relevant, adopting the same approach that Middlebrook applies to s 64(2)(b)(ii), but in this instance to the s 64(4) matters. 25 Counsel for the Housing Corporation submitted that the plaintiff's submissions misconceive the relative strength of "special circumstances" as used by the learned Tribunal Member. According to the Housing Corporation, this reference to the otiose adjective "special" was neither necessary nor material to either the Tribunal's decision or the Member's detailed reasoning behind the decision. According to Counsel for the Housing Corporation "special circumstances" is not a more onerous condition than the statutory questions the Member directly addressed but merely an additional (but strictly unnecessary) enquiry. I disagree. In my view special circumstances denotes circumstances that are different from the circumstances which ordinarily apply. 26 However, upon a careful reading of the Tribunal Member's reasons, it is my view that she did take all the circumstances into account and made findings in respect of those matters. In the exercise of her discretion the Tribunal member decided that the breach in all the circumstances of the case is such as to justify termination of the agreement. The Tribunal Member did do what she was obliged to do under s 64(2)(b)(ii) before she then set about considering whether there were special circumstances. 27 I agree that the finding of special circumstances was not required. The Tribunal Member seems to have considered that Mr Scicluna being legally blind and his need of three bedroom accommodation, were submissions that special circumstances existed. Had the Tribunal Member not considered these matters in reaching her earlier decision to terminate the tenancy there would have been an error of law. In my view this extra reasoning and further conclusion, although odd, do not infect the earlier part of her decision where she exercised her discretion in accordance with s 64(2(b)(ii). The first and second grounds of appeal fail. 28 The third ground of appeal is that the Tribunal Member erred in the exercise of her discretion under ss 64 and 65 of the Act as the decision of the facts was unreasonable, harsh and/or unjust. 29 The principles according to which this Court is to decide whether the Magistrate's discretionary decision to terminate Mr Scicluna's resident lease constitutes an error of law, are stated definitively in a short passage in the joint judgment of Dixon, Evatt and McTiernan JJ in House v R (1936) 55 CLR 499 at 504-505. It is, I think, useful to restate them as follows: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 30 The parties referred to McAuliffe v CTTT & Anor [2004] NSWSC 824 (at [23]), where I determined that in the exercise of its discretion, the Tribunal's decision to terminate a tenancy was an error of law. Paragraphs [23] reads "While this Court does not lightly interfere with the exercise of a Tribunal Member's discretion, the result upon the facts is harsh and plainly unjust. It is my view that a substantial injustice has in fact occurred such that there exists an error of law. The appeal is upheld. The decision of Tribunal Member H E Moore dated 19 November 2003 is set aside. The second defendant's application in the CTTT is dismissed." 31 The facts in McAuliffe were very different to this case. One important difference is that referred to by the Tribunal Member. In her reasons, the Tribunal Member says: "The breach is not one of the cultivation or possession of a small amount of marijuana for personal use, which may not be sufficient to bring the (residential tenancy) agreement to an end. This breach involves the manufacture and sale of a quantity of dangerous illegal drugs. In my view, this is precisely the sort of activity contemplated by Section 23 . " 32 The result here cannot be said to be harsh and unjust. Nor in my view, has a substantial injustice occurred. This ground of appeal fails. Procedural fairness in Tribunal 33 The last ground of appeal is that Mr Scicluna was denied procedural fairness in that "a failure to properly consider evidence before the Tribunal" as an error of law can be characterised either as error of law or denial of procedural fairness. This ground characterised as a failure to accord procedural fairness, by failing to accept submissions and consider evidence, and not allowing submissions to be made on the relevant grounds in s 64(2)(b)(ii)). As a repetition of the issues elucidated above, by applying the more onerous "special circumstances" test, the Tribunal Member has failed to properly consider evidence before the Tribunal. 34 Mr Scicluna submitted that the application of the "special circumstances" test has arguably resulted in a substantial injustice in respect of the error in the exercise of discretion. 35 Section 28 of the Consumer Trader and Tenancy Tribunal Act reads: "28 Procedure of Tribunal generally (1) The Tribunal may, subject to this Act, determine its own procedure. (2) The 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 procedural fairness. (3) The Tribunal is 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. (4) The Tribunal is to take such measures as are reasonably practicable to ensure that the parties in any proceedings understand: (a) the nature of the assertions made in the proceedings and the legal implications of those assertions, and (b) the procedure of the Tribunal and any decision or ruling made by the Tribunal that relates to the proceedings. (5) The Tribunal … (g) may dismiss any proceedings if the applicant fails to attend a hearing, …" 36 Section 35 reads: "35 Opportunity for parties to present case The Tribunal must ensure that each party in any proceedings is given a reasonable opportunity: (a) to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise), and (b) to make submissions in relation to the issues in the proceedings." 37 Section 35 provides that the CTTT "must ensure" that each party is given "a reasonable opportunity" to present its case. There are provisions which allow the CTTT a significant degree of flexibility in adapting its procedures to the exigencies of the case in determining the manner in which the proceedings will be conducted. Nevertheless, those provisions should not be construed so as to derogate from other provisions cast in obligatory language which constitute core elements of procedural fairness - see Italiano v Carbone & Ors [2005] NSWCA 177 at [105] and [106]. 38 Both parties were allowed legal representation at the hearing pursuant to s 36 of the Consumer, Trader and Tenancy Tribunal Act. They were given reasonable opportunity to call and give evidence and make submissions. As previously stated, the Tribunal Member came to a conclusion by the proper exercise of her discretion. In these circumstances it is my view Mr Scicluna has been afforded procedural fairness. 39 There has been no error of law. The appeal is dismissed. The decision of Tribunal Member Farey dated 21 December 2007 is affirmed. The summons filed 26 February 2008 is dismissed. The date of termination is to be varied. 40 Costs are discretionary. Costs normally follow the events. The plaintiff is to pay the first defendant's costs as agreed or assessed. The Court orders (1) The appeal is dismissed. (2) The decision of Tribunal Member Farey dated 21 December 2007 is affirmed. (3) The summons filed 26 February 2008 is dismissed. (4) I vary the date of termination to 18 July 2008. (5) The plaintiff is to pay the first defendant's costs as agreed or assessed. ********** 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.