Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Stiff v New South Wales Land and Housing Corporation [2014] NSWCATAP 58 Hearing dates: 2 September 2014 Decision date: 09 October 2014 Jurisdiction: Appeal Panel Before: M Chesterman, Principal Member K Rosser, Senior Member Decision: 1. The appeal is dismissed. 2. The parties are to bear their own costs. Catchwords: Termination of residential tenancy agreement on ground of supply of prohibited drug from the premises - whether Tribunal genuinely exercised discretion subsequently held to be available to it - whether it failed to take relevant considerations into account Legislation Cited: Civil and Administrative Tribunal Act 2013 Residential Tenancies Act 2010 Cases Cited: Australian Conservation Foundation v Forestry Commission (1988) 78 ALR 685 Cain v New South Wales Land and Housing Corporation [2014] NSWCA 28 House v R [1936] HCA 40; 55 CLR 499 Minister for Immigration and Ethnic Affairs v Maitan (1988) 78 ALR 419 New South Wales Land and Housing Corporation v Cain [2013] NSWDC 68 Weal v Bathurst City Council & Anor [2000] NSWCA 88 Texts Cited: Aronson, Dyer and Groves, Judicial Review of Administrative Action (3rd edn) Category: Principal judgment Parties: Barbara Patricia Stiff (Appellant) New South Wales Land and Housing Corporation (Respondent) Representation: L Robison (Appellant) S Gardiner (Respondent) Carters Law Firm (Appellant) Legal Services Branch, Housing NSW (Respondent) File Number(s): AP 14/46381 (AP14/0104) Decision under appeal Jurisdiction: 150003 Date of Decision: 2014-01-22 00:00:00 Before: Consumer and Commercial Division File Number(s): SH13/37460 reasons for decision Introduction 1This is an appeal against a decision of the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal ('NCAT'). This decision ('the Tribunal's decision') was given on 22 January 2014. The principal order made in it was that a residential tenancy agreement between the Appellant tenant, Barbara Stiff, and the Respondent landlord, the New South Wales Land and Housing Corporation, was terminated immediately, with possession of the premises in Malabar to which the agreement applied ('the premises') to be given to the landlord on the date of termination. This order was, however, suspended until 22 April 2014. 2It was not disputed that the tenancy agreement, which was dated 18 September 1980, was governed by the Residential Tenancies Act 2010 ('the Act') and that the Tribunal had jurisdiction to hear and determine the matter. 3The tenant first sought to challenge the Tribunal's decision by appealing to the District Court. But on 19 May 2014 she was granted leave to discontinue this appeal, and on 22 May 2014 she instituted an internal appeal to the Appeal Panel of NCAT. 4The principal orders sought in her Notice of Appeal were that the appeal be allowed and the Tribunal's decision quashed or, in the alternative, that the matter be remitted to the Consumer and Commercial Division for rehearing. 5She also sought an interim order staying the Tribunal's decision until the determination of the appeal. But at a hearing on 2 June 2014, the Appeal Panel, constituted by Principal Member Harrowell, refused to make such an order, on the basis that the landlord had agreed not to enforce the order for possession or apply for a warrant for possession until the appeal was finally determined or dismissed. 6The appeal was heard before us on 2 September 2014. Mr Robison of counsel appeared for the tenant and Mr Gardiner of counsel for the landlord. At the commencement of the hearing, we granted leave to the tenant, which the landlord did not oppose, for the Notice of Appeal to be filed out of time. 7Our decision on the appeal is that it should be dismissed, for the reasons that follow. Relevant legislation 8Sections 91 and 152 of the Act are significant in these proceedings. They state:- 91 Use of premises for illegal purposes (1) The Tribunal may, on application by a landlord, make a termination order if it is satisfied that the tenant, or any person who although not a tenant is occupying or jointly occupying the residential premises, has intentionally or recklessly caused or permitted: (a) the use of the residential premises or any property adjoining or adjacent to the premises (including any property that is available for use by the tenant in common with others) for the purposes of the manufacture, sale, cultivation or supply of any prohibited drug within the meaning of the Drug Misuse and Trafficking Act 1985, or (b) the use of the residential premises for any other unlawful purpose and that the use is sufficient to justify the termination. (2) In considering whether to make a termination order on the ground specified in subsection (1) (b), the Tribunal may consider (but is not limited to considering) the following: (a) the nature of the unlawful use, (b) any previous unlawful uses, (c) the previous history of the tenancy. (3) The termination order may specify that the order for possession takes effect immediately. (4) A landlord may make an application under this section without giving the tenant a termination notice. (5) The Tribunal may make a termination order under this section that takes effect before the end of the fixed term if the residential tenancy agreement is a fixed term agreement. 152 Termination by Tribunal of social housing tenancy agreements for breach (1) In determining whether to terminate a social housing tenancy agreement on the ground of a breach by the tenant, the Tribunal 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 agreement was a serious one, 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 any prior tenancy of the tenant arising under a social housing tenancy agreement. (2) This section does not limit any other matters that may be considered by the Tribunal under any other provision of this Act. 9Prior to 1 January 2014, the Tribunal referred to in these provisions was the Consumer, Trader and Tenancy Tribunal ('the CTTT'). From that date onwards, it has been NCAT. 10Under section 136 of the Act, the term 'social housing tenancy agreement' is defined to mean 'a residential tenancy agreement where the landlord is a social housing provider'. The definition of 'social housing provider' expressly includes the landlord in this case, the New South Wales Land and Housing Corporation. The Tribunal's decision 11The landlord's application for an order terminating the tenancy agreement was based on section 91(1)(a) of the Act. The evidence on which the application was based was to the following effect. 12On 27 June 2013, the police, in the course of executing a search warrant at the premises let by the landlord to the tenant, found 67.86 grams of cannabis, small resealable bags, scales and $40,021.00 in cash. The tenant was charged and convicted, on her plea of guilty, of the following offences: supply of prohibited drug, allegedly cannabis, and deal with property suspected to be proceeds of crime, being $395.00 cash. She received a suspended sentence of four months imprisonment for the former offence and was given a three-month bond with respect to the latter. A further charge of possessing a prohibited drug was laid against her, but subsequently withdrawn. 13The tenant admitted that she had been charged, convicted and sentenced as alleged by the landlord. She also did not dispute that she had supplied drugs from the premises. 14The Tribunal accordingly found (at paragraph [14] of its reasons) that the tenant had 'supplied a prohibited drug from the residential premises within the meaning of the Drug Misuse and Trafficking Act 1985'. 15The landlord submitted that the Tribunal was bound by the decision of the District Court in New South Wales Land and Housing Corporation v Cain [2013] NSWDC 68, even though it was currently the subject of an appeal. In this decision, which was delivered on 23 May 2013, the Court ruled that the word 'may', where it appeared near the commencement of subsection (1) of this section, was to be construed as imposing an obligation on the CTTT to make a termination order if it was satisfied of the matters set out in paragraph (a) of this subsection. There was no room, the Court held, for the exercise of any discretion by this tribunal. The Court effectively treated the word 'may', in its application to cases brought under paragraph (a), as meaning 'must'. 16It followed, the landlord argued, that if the Tribunal was satisfied that the tenant had acted in the manner outlined in paragraph (a) it was obliged to terminate the tenancy agreement. It had no option to do otherwise. 17As outlined in paragraph [10] of the Tribunal's reasons, the tenant argued that the Tribunal should interpret the word 'may' in section 91(1) as conferring a discretion, not imposing a duty. Accordingly, in any case in which it was satisfied as to the matters set out in paragraph (a), it should not regard itself as bound to make a termination order, but should proceed to determine, in the exercise of this discretion, whether or not such an order should be made. 18The tenant also tendered evidence in support of a submission by her that, if such a discretion did exist, it should be exercised in her favour. This evidence, which the Tribunal summarised in paragraphs [9], [11] and [12], was to the following effect:- 1. She was 79 years of age and was the carer of her 59-year-old daughter, who lived with her and suffered from cerebral palsy. She had lived at the premises for more than 30 years. On account of her age it would be difficult to find premises for her and her daughter. They might indeed be homeless for a period of time. 2. According to an advocacy group for people with disabilities and to her daughter's employer, termination of the tenancy agreement would be very disruptive and distressing for the daughter. It would upset her (the daughter's) need for stability and certainty and could cause her to lose her job. 3. The amount of cannabis found on the premises and the sum of money on which her (the tenant's) conviction for dealing with property suspected to be proceeds of crime was based were both relatively small. 4. The cannabis had belonged to her other daughter, who had recently died. She had simply sold it at no profit following the death of this daughter. This death was a factor increasing the distress that she would suffer if she were evicted. 5. She had not tried to cover up the fact that she had supplied drugs, but had co-operated with the police and had pleaded guilty. 6. Two witnesses had seen her deceased daughter give her a substantial sum of money. She had also received regular gifts of money from two of her neighbours. 7. Two other neighbours stated that she helped them in many ways (for instance, by babysitting) and that she had given financial assistance to a number of members of the community. 8. She had already suffered considerably through having been sentenced and on account of media publicity that her case had attracted. 19 Paragraphs [17] to [19] of the Tribunal's reasons are of particular significance in this appeal and should be quoted in full:- 17. Section 91 of the Act relates to the use of the premises for illegal purposes. Use of a premises (sic) for the "purposes of the manufacture, sale, cultivation or supply of any prohibited drug within the meaning of the Drug Misuse and Trafficking Act 1985" is in its own category under 91(1)(a). Section 91(1)(b) relates to any other unlawful use and section 91(2) relates to the factors which may be taken into consideration in relation to section 91(1)(b) only. The Tribunal accepts that despite the use of the word "may" at the beginning of section 91(1), the subsequent treating of the manufacture, sale, cultivation or supply of any prohibited drug on its own and the failure of the considerations in section 91(2) to apply to the clause at the very least highlight the intention of the section to treat the supply of drugs as serious. 18. While no complaints were provided from neighbouring tenants, the Tribunal is satisfied based on the considerations in section 152 that the supply of drugs from a premises has adverse effects on neighbouring residents, whom this landlord has responsibilities to. Having considered all the evidence, the Tribunal is satisfied that even if section 91(1)(a) allows the Tribunal discretion in deciding whether it should terminate the tenancy, the Tribunal is satisfied in the circumstances that the tenancy should be terminated. 19. The Tribunal has considered the matters put forward by the tenant as to why it should not terminate the tenancy and while the Tribunal does not accept that those matters should prevent termination, it does accept that they should be taken into consideration in the Tribunal exercising its discretion as to the length of time for possession of the premises. 20The Tribunal then held in paragraph [20] that three months should be allowed for possession and that the orders terminating the tenancy agreement and providing for an occupation fee should be suspended. The Court of Appeal's decision in Cain v New South Wales Land and Housing Corporation 21On 26 February 2014, about one month after the Tribunal's decision, the Court of Appeal delivered its decision (Cain v New South Wales Land and Housing Corporation [2014] NSWCA 28) in the appeal brought by the tenant in that case against the decision of the District Court. It allowed the appeal and restored the CTTT's decision in her favour. 22For present purposes, it is sufficient at this stage to quote the following passages from paragraphs [25], [26] and [29] in the judgment of Basten JA (with which Gleeson and Leeming JJA agreed):- 25 The difference in effect between "may" and "must" (or "shall", being the term identified as imposing a duty in s 9(2) of the Interpretation Act) does not depend upon the existence of s 9 of the Interpretation Act; it is an element of ordinary English usage. Nor did the distinction escape the drafter of the Residential Tenancies Act, which uses the language of power and the language of obligation with, to all appearances, deliberate precision: cf the use of "must" in ss 84(3) and 85(3). There is nothing in the surrounding provisions which require a strained construction of s 91. Conclusion as to power 26 Whether the Tribunal had power to decline to make an order once the preconditions to the exercise of a statutory power were established was a question of law and, in all probability, a jurisdictional question: the answer was not said to depend on the facts. The answer given by the District Court was erroneous. The order made by the Tribunal should not have been set aside on this ground. Taking irrelevant matters into account... 29 Broadly speaking, factors which a court or tribunal takes into account may be characterised as mandatory, permissible or prohibited. The Tribunal having been held not to have any discretion to refuse to make a termination order, no question arose as to a failure to take into account mandatory considerations, although such an error would have been an error of law... The tenant's submissions in the appeal 23In the Notice of Appeal, the tenant stated she was appealing only on questions of law. At the commencement of the hearing, her counsel, Mr Robison, made a request for leave to amend the Notice by adding an application for leave to extend the appeal to the merits. Counsel for the landlord, Mr Gardiner, opposed this grant of leave, pointing out that one of a series of directions given to the parties on 29 May 2014 was that the tenant should filed and serve any amended Notice of Appeal by 20 June 2014. We indicated that we would be reluctant to grant the leave sought. Mr Robison then stated that since the principal relief sought by his client was an order quashing the Tribunal's decision, there was 'probably no need' to press his request. 24The Notice of Appeal listed six errors of law that the tenant claimed to have been made by the Tribunal. In an Amended Reply, the landlord conceded Grounds 1 and 5 because of the Court of Appeal's decision in Cain. These were to the effect that the Tribunal erred in applying the District Court's decision in this case and in construing section 91(1)(a) of the Act as not conferring a discretionary power on it. The tenant did not press Ground 2, which was that the Tribunal erred in holding that judgments of the District Court were binding upon it. 25Grounds 3, 4 and 6 were as follows:- 3. The Tribunal erred by failing to take into account relevant considerations, namely those matters referred to in paragraphs 9 to 12 of the judgment below. 4. The Tribunal failed to give appropriate weight to these matters referred to in paragraphs 9 to 12 of the judgment below. 6. The Tribunal failed to exercise its discretion pursuant to s 91. 26At the hearing, the grounds mainly relied on were Grounds 3 and 6. 27With respect to the latter Ground, Mr Robison maintained that, as appeared from paragraph [17] of its reasons, the Tribunal believed itself to be bound by the District Court decision in Cain and therefore to have no discretion under section 91(1)(b) of the Act to decide that the tenancy agreement should not be terminated. It followed, he argued, that the indications given by the Tribunal (in paragraphs [18] and [19]) as to how any such hypothetical discretion should be exercised did not amount to a 'real' exercise of the discretion that actually existed, and that this failure to exercise the discretion was an error of law. 28In support of this argument, Mr Robison cited a short passage from the judgment of Mason P in Weal v Bathurst City Council & Anor [2000] NSWCA 88. This case was concerned with the exercise of discretionary powers conferred by planning legislation on local councils, and with the particular question of whether the respondent council had taken sufficient account of a particular factor (that of noise) when determining a development application. In his judgment at [13], Mason P stated the following proposition (which also appears in a similar form in Giles JA's judgment at [80]):- 13... I agree with Giles JA that there had to be an understanding of relevant matters and their significance to the decision required to be made, as well as a process of evaluation sufficient to warrant the description of the matters being taken into consideration... 29According to Mr Robison, the Tribunal did not understand the 'significance' for its decision of the matters which in its opinion would have been relevant if a discretion existed under section 91(1)(b). This was because it proceeded on the basis that there was no such discretion. The result was that it failed to 'consider' these matters in the legally relevant sense. 30It followed, he claimed, that since consideration of some of these matters was required under section 152 of the Act (which counsel on both sides treated as applicable to the circumstances of the case following the Court of Appeal's decision in Cain), the ultimate consequence was that the Tribunal had failed to have regard to mandatory considerations. 31As authority for the proposition that such a failure amounted to an error of law, as asserted in Ground 3, Mr Robison cited the second sentence (quoted above) of paragraph [29] of Basten JA's judgment in Cain. He also cited the following statement in Aronson, Dyer and Groves, Judicial Review of Administrative Action (3rd edn) at p 260: 'Discarding a mandatory consideration as irrelevant would, of course, amount to an error of law.' 32Mr Robison referred in his oral submissions to dicta in two other cases: Minister for Immigration and Ethnic Affairs v Maitan (1988) 78 ALR 419 at 429 and Australian Conservation Foundation v Forestry Commission (1988) 78 ALR 685 at 693. He agreed, however, that these dicta were not of immediate relevance to the circumstances of this case. 33Ground 4 in the Notice of Appeal was described by Mr Robison as a 'subsidiary' ground. He submitted that when proper consideration was given to all the factors operating in the tenant's favour (these being the matters summarised in paragraphs [9], [11] and [12] of the Tribunal's decision), it became clear that the discretion conferred by section 91(1)(b) of the Act should have been exercised in her favour. The landlord's submissions 34 The main proposition advanced in Mr Gardiner's outline of submissions was that contrary to the assertion in Ground 6 of the Notice of Appeal the Tribunal 'ultimately exercised the discretion to terminate under section 91 despite the [District Court's] decision in Cain'. Although the relevant passage in its decision (paragraphs [18] and [19]) was relatively short, it was sufficient, because it had already outlined the factors relevant to exercise of the discretion. It had done this chiefly in paragraphs [9] to [12], but also in paragraphs [6] (which described the conviction and sentencing of the tenant) and [7] (where it was noted that the landlord had been invited to address the Tribunal on the matters listed in section 152 of the Act). Accordingly, the Tribunal's conclusions with regard to the exercise of a discretion under section 91(1)(b) were not hypothetical, but followed from a genuine assessment of all the relevant evidence 35Mr Gardiner submitted also that it was 'typical' for a court or tribunal to decide a case on a single ground, but to add an alternative ground. When this occurred, he maintained, any appellate court or tribunal would treat both grounds as operative. 36With reference to Ground 3 of the appeal, Mr Gardiner argued that the tenant had not identified any legal error in the Tribunal's exercise of the discretion that it took to be possibly available to it. She had not established any of the recognised grounds for appellate intervention in a discretionary decision, such as are listed in a well-known passage in House v R [1936] HCA 40; 55 CLR 499 at 504-505. This passage is as follows:- 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." 37Mr Gardiner also emphasised the well-established principle that an appellate court or tribunal should use caution and restraint when deciding whether a decision reached in the exercise of a discretion should be set aside. It was not enough, he said, that the court or tribunal would have been minded to exercise the discretion in a different way. 38With regard to Ground 4, his submission was that an error of law was not established simply by showing that a decision was against the weight of the evidence. Discussion and conclusions 39We have found this case to be a difficult one to resolve, but we are satisfied after careful consideration of the arguments put before us that the appeal must be dismissed. 40A significant factor leading us to this conclusion is that, contrary to a submission by Mr Robison, the Tribunal's decision did not include an explicit ruling that it was bound by the District Court's decision in Cain precluding any exercise of discretion once the matters set out in section 91(1)(a) of the Act. 41Mr Robison relied expressly on paragraph [17] of the Tribunal's reasons when making this submission. But a close reading of this paragraph indicates otherwise. Having referred at the commencement of this paragraph to relevant features of section 91, the Tribunal went no further in the final sentence than to record the following conclusion:- ...despite the use of the word "may" at the beginning of section 91(1), the subsequent treating of the manufacture, sale, cultivation or supply of any prohibited drug on its own and the failure of the considerations in section 91(2) to apply to the clause at the very least highlight the intention of the section to treat the supply of drugs as serious. 42In the two preceding paragraphs, the Tribunal noted the parties' conflicting submissions as to whether the District Court's decision in Cain was binding on it. But once again, it left this question unresolved. A significant observation in the former paragraph was that this decision was the subject of an appeal. The clear implication of this was that the reversal of the Court's ruling that no discretion existed was a possibility that should not be ignored. 43A further feature of the Tribunal's reasons that supports our view on the matter now being discussed is their two references (in paragraphs [7] and [18]) to section 152 of the Act. The matters listed in subsection (1) of that section, and indeed the whole of the section, would not have been thought relevant if the Tribunal was not taking account of the possibility that a discretion might be available to it under section 91(1)(a). 44In our opinion, these various considerations lend significant support to Mr Gardiner's argument that the two statements made by the Tribunal regarding the exercise of any discretion available to it were not merely 'hypothetical' rulings, but constituted a genuine exercise of this discretion. The Tribunal was careful, in our opinion, to base its decision both on the premise that the District Court's ruling in Cain was correct in law and on the alternative premise that it would be reversed in the appeal proceedings that were currently in train. 45For these reasons, we conclude that Ground 6 in the Notice of Appeal has not been made out. 46Our view regarding Ground 3 is that, contrary to Mr Robison's argument, the Tribunal adequately summarised (chiefly in paragraphs [9], [11] and [12]) the factors supporting the exercise of any available discretion in favour of the tenant and made it clear, in paragraphs [18] and [19], that in reaching the contrary conclusion it had taken due account of these factors. Mr Robison did not point to any specific factor in the tenant's favour that the Tribunal should have referred to (whether by virtue of section 152 or for any other reason), but omitted to mention. We agree with Mr Gardiner that none of the errors listed in House v R was discernible in the Tribunal's reasons. It is not to the point that an exercise of the discretion in the tenant's favour, if supported by an adequate explanation of the reasons for it, would arguably at least be also immune from appellate intervention. 47We also agree with Mr Gardiner that Ground 4 does not allege an error of law and must therefore be rejected. 48For the foregoing reasons, the appeal must be dismissed. 49Mr Gardiner indicated that if the appeal was unsuccessful, the landlord would not seek costs. We therefore order, pursuant to section 60(1) of the Civil and Administrative Tribunal Act 2013, that the parties are to bear their own costs. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar ******** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2014