Civil and Administrative Tribunal New South Wales Medium Neutral Citation: KOLE MURGOSKI AND DANICA MURGOSKI -v- WILLS PARTNERS PTY LTD TRADING AS H T WILLS & CO [2014] NSWCATAP 82 Decision date: 13 November 2014 Jurisdiction: Appeal Panel Before: Hon Graham Mullane, Senior Member Ms Christine Paul, Senior Member Decision: 1. The Appeal of Cole Murgoski and Danica Murgoski against the decision of the Consumer & Commercial Division of the Tribunal of 3 June 2014 is dismissed. Legislation Cited: Residential Tenancies Act, 2010 Consumer Claims Act, 1998 Category: Principal judgment Parties: KOLE MURGOSKI AND DANICA MURGOSKI (Appellants) WILLS PARTNERS PTY LTD TRADING AS H T WILLS & CO (Respondent) File Number(s): AP 14/46459 (AP 14/0281) Publication restriction: Nil Decision under appeal Jurisdiction: 150003 Date of Decision: 2014-06-03 00:00:00 Before: F E Gray General Member File Number(s): Gen 14/05556 reasons for decision INTRODUCTION 1The Appellants owned a residential property in Punchbowl. The parties entered into an exclusive agency agreement on 11 May 2013 appointing the Respondent as the exclusive agent for the sale of the property ("the sale agreement"). 2The parties entered into an exclusive management agency agreement on 23 July 2013 ("the management agreement") for the Respondent to manage the property for the Appellants. The Respondent located tenants, David and Feda Bowens, and they entered into a Residential Tenancy Agreement with the Appellants to lease the property for 6 months from 26 July 2013 for $500 per week. They paid a bond of $2,000 which was deposited with the Rental Bond Board. 3It is common ground that neither party informed Mr & Mrs Bowens before they entered the lease that the property was for sale. Section 26 of the Residential Tenancies Act, 2010 ("the Act") required the landlord to disclose to the tenant the proposed sale of the property before the tenant entered into the lease if a contract for the sale had been prepared. 4Subsequently, Mr Bowens became unemployed and his wife faced serious financial difficulty. Mrs Bowens wrote to the Respondent on 19 September 2013 advising that she and her husband wished to terminate the lease on 18 October 2013 because Mr Bowens had lost his job. She proposed that a friend of theirs take over the leasing of the property at the same rental from 19 October and gave details of the proposed replacement tenant, who was married, without children and in full time employment as a telecommunications engineer. 5The Tribunal found that the Appellants had "entered into an agreement to sell the premises before the Residential Tenancy Agreement was entered into", and that the Respondents notified the landlords after the letter of 19 September 2013 that they were terminating the lease pursuant to s.100 of the Act. 6Section 100 of the Act provides: 100 Early termination without compensation to landlord (1) A tenant may give a termination notice for a fixed term agreement on any of the following grounds: (a) that the tenant has been offered, and accepted, accommodation in social housing premises, (b) that the tenant has accepted a place in an aged care facility or requires care in such a facility, (c) that the landlord has notified the tenant of the landlord's intention to sell the residential premises, unless the landlord disclosed the proposed sale of the premises before entering into the residential tenancy agreement as required by section 26, (d) that a co-tenant or occupant or former co-tenant or occupant is prohibited by a final apprehended violence order from having access to the residential premises. (2) The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given. (3) The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement. (4) The tenant is not liable to pay any compensation or other additional amount for the early termination of the agreement. 7The Respondent gave the appellants notice on 17 October 2013 terminating the management agreement . 8The tenants vacated the property on 22 October 2013 and paid rent until then. The tenants subsequently took proceedings against the Appellants in the Tribunal regarding the bond. Correspondence for the Appellants from the Tribunal in relation to the Application of the tenants was sent to the Respondent by post addressed to the Appellants at care of the Respondent at its address. It appears there was no appearance by or on behalf of the Appellants at any stage of the bond proceedings. The tenants were successful in obtaining orders for the whole of the bond to be paid to them and it appears that it was. THE EVIDENCE 9The evidence comprised: 9.1 Sales Inspection Report and Exclusive Agency Agreement dated 11 May 2013; 9.2 Management Inspection Report and Exclusive Management Agency Agreement dated 23 July 2013; 9.3 Standard Form Residential Tenancy Agreement dated 27 July 2013; 9.4 Letter of 19 September 2013 from Tenants Feda and David Bowens to Valentia at office of Respondent agent; 9.5 Notice of Conciliation and Hearing (Group List) dated 23 October 2013 addressed to the Appellants at care of the Respondent; 9.6 Notice of Orders made on 30 October 2013 sent by Tribunal to Appellants at care of the Respondent on 30 October 2013; 9.7 Notice by Tribunal headed "Notice of Conciliation and Hearing (Group List)" dated 1 November 2013 advising of listing of matter on 20 November 2013 at 2.15pm addressed to the Appellants at care of the Respondent; 9.8 Notice of Tribunal of orders made on 20 November 2013; 9.9 Notice from Tribunal headed "Notice of Conciliation and Hearing (Group List)" dated 25 November 2013 advising of listing on 11 December 2013 at 9.15pm addressed to the Appellants at care of the Respondent: 9.10 Notice of the Tribunal dated 11 December 2013 notifying of Orders made on 11 December 2013 addressed to the Appellants at care of the Respondent; 9.11 Letter dated 24 January 2014 from F C Bryant Thomas & Co, solicitors to Mr Murgoski; 9.12 Notice of Appeal filed on 11 July 2014; 9.13 Reply to Appeal filed on 30 July 2014; 9.14 E-mail of 22 August 2014 from Val Atkinson of Respondent to the Tribunal; and 9.15 Letter of 15 August 2014 to the Appellants from F C Bryant Thomas & Co with Appellant's submissions attached. 10The parties did not rely of any other documents or evidence. THE PROCEEDINGS, FINDINGS AND ORDERS APPEALED FROM 11The Appellants by an Application filed on 24 January 2014 in the Consumer & Commercial Division of the Tribunal commenced the proceedings. The Appellants alleged in the proceedings that the Respondent had failed to manage the property in accordance with its obligations to them. 12The parties have not put the Application in evidence, but the Tribunal Member in his reasons found (and neither in the Appeal nor in the written submissions did the Appellant dispute): "The crux of the Applicant's case is as follows: i) the Managing Agent did not manage the [property] in accordance with their obligations to the landlords; ii) the Respondents did not either undertake end of tenancy [inspection] or, if they did, they did not obtain compensation from the [tenant of the property] in relation to moneys owing for water usage, rent, or damage to the [properties] caused during the tenancy; iii) the bond was refunded, either in total or part, without the consent of the landlords; and iv) the Respondents [sic] did not represent the Applicants and sided with the tenants in relation to disputes, rather than the landlords [sic]." 13At the hearing on 3 June 2014 the Appellants appeared in person and the Respondent had legal representation. 14The Tribunal Member found that the Appellants had not established a case to justify any of the orders sought and dismissed the Application. Extensive reasons (16 pages) were prepared and dated 11 June 2014. Presumably they were despatched to each of the parties by post on 11 June 2014 or the next working day (12 June 2014). THE NOTICE OF APPEAL 15The Notice of Appeal was filed on 11 July 2014. The Appellants did not complete the prescribed form. They did not complete boxes 6 to 18A. Instead they attached 2 pages providing the following information: ANNEXURE TO NOTICE OF APPEAL RE: MURGOSKI v. HT WILLS & CO NCAT FILE NUMBER: 14/05556 Paragraph 11A Orders Challenged on Appeal: Dismissal of Application in relation to Respondents management of 23 Owen Street, Punchbowl Paragraph 11B Grounds of Appeal: 1. Member did not consider documents establishing that the Respondent failed to notify the Applicants of the tenants application against the Applicants as landlords resulting in the Applicants not being able to challenge the tenants claim for the refund of the bond. 2. Member did not consider document confirming that the tenants real reason for seeking early termination of the lease was the unemployment of the tenants husband. 3. The member did not consider that the Respondent was both the letting and selling agents and should have advised the tenants that the property was already on the market for sale at the time of arranging the lease of the property to the tenant. Paragraph 11C Orders that the Appeal Panel should make: 1. That the Respondent pays to the Applicants loss of rent calculated from 22 October 2013 to 26 January 2014 for 23 Owen Street, Punchbowl. 2. Alternatively that the Respondent pays to the Applicants the sum of $2,000.00 being the amount of bond released to the tenant for 23 Owen Street, Punchbowl. Paragraph 12B Application for Relief to Appeal: (i) Decision not fair and equitable (a) The member did not consider or refer to evidence that the Respondent failed to notify the Applicant of the tenants(sic) application against the Applicants; (b) The member did not consider or refer to evidence that the tenant was seeking early termination of the Residential Tenancy Agreement for reasons other than Section 100 of the Residential Tenancies Act. (ii) Decision of the Tribunal against late of (sic) evidence: Evidence of Applicant and documents at the Hearing Applicant Documents Index: Documents 2, 3 and 4 - confirms Respondent both letting and selling agent for the Applicants Document 5 - establishes tenants real reason for seeking termination of lease Document 17 - Notices from Tribunal sent to the Respondent and not sent to the Applicants Document 16 - Confirmation of Respondents verbal advice via Applicants solicitor that the bond had been released to the tenant. Evidence of the Other Party in Documents given to the Tribunal No evidence given that contradicts the documents referred to above What Decision Should the Tribunal have made 1. The Respondent failed to notify the Applicants that the tenant has brought an Application against the Applicants and thereby deprive the Applicants of the opportunity to claim against the bond. 2. The Respondents should and could have advised the tenant at the commencement of the Residential Tenancy Agreement that the property was for sale as they were both selling and letting agents for the Applicants. 3. The tenant wanted early termination of the agreement because of husband's unemployment not because the property was for sale. GROUND 1: Member did not consider documents establishing that the Respondent failed to notify the Applicant of the tenant's Application against the Applicant's as landlords resulting in the Applicants not being able to challenge the tenants (sic) claim for the refund of the bond. 16While the management agreement was in force, the Respondent was required under that agreement to provide services to the Appellants. Under the definition of "consumer" in s.3 of the Consumer Claims Act, 1998, the Appellants were consumers and the Respondent was a supplier in relation to services. But ss.3A(1) of the Consumer Claims Act, 1998 defines a consumer claim as being a claim "that arises from a supply of goods or services by a supplier to the consumer, whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of goods or services". 17The Respondent purported to terminate the management agreement on 17 October 2013. 18The agreement is in evidence but it does not provide any obligation for the Respondent to provide any services after termination of the agreement. Accordingly, it appears that once the agreement was terminated, on the evidence there was no contractual obligation by the Respondent to provide any services to the Appellants. The claim of the Appellants for compensation for services not provided by the Respondent after the termination of the Management agreement is not a consumer claim and the Tribunal has no jurisdiction to entertain such a claim. 19It appears therefore that once the agreement was terminated there was no contractual obligation to provide any services (such as forwarding mail) to the Appellants. 20It may be arguable that if the agent failed to forward to the Appellants correspondence received by the agent from the Tribunal about the bond proceedings received by the agent after the termination of the contract is actionable in negligence. However, the Tribunal does not have a jurisdiction to entertain negligence proceedings. That jurisdiction is with the courts. 21But the matter is complicated by the fact that Clause D of the management agreement provides: "The agreement is effective from 23/7/13 and can be terminated thereafter in writing by either party on the giving of not less than 60 days notices. Such termination will be without prejudice to either parties [sic] existing rights, duties or obligations." 22The notice of the termination was given on 17 October, 2013. According to Clause D of the agreement notice given on 17 October 2013 would not take effect until 60 days later (i.e. 17 December 2013). 23However, it appears that neither of the parties had regard to that condition of the contract. The Respondent purported to terminate the contract by notice of 17 October 2013 effective immediately. The Appellants attended on the office of the Respondent on 25 October 2013 and on that day collected their files, thereby accepting termination of the contract. Accordingly, after 25 October 2013 the management agreement was no longer in force. There was no contract requiring the Respondent to act as director's managing agent for the Appellants in respect of the property and no requirement for the Respondent to provide any agency service to the Appellants in respect of the property. 24All of the correspondence from the Tribunal regarding the Rental Bond proceedings sent to the Appellants at c/- of the Respondent was posted after 25 October 2013 except the letter of 23 October 2013. That was a letter forwarding a copy of the Application and advising that the matter was listed at 11.15am on Wednesday, 30 October 2013. That letter was in evidence before the Tribunal and it clearly was received by the Respondent but not given to the Appellants. It appears that that the earliest that letter could have been received by the Respondent would be 24 October 2013 if it was posted on Wednesday, 23 October. It may have been posted on 23rd and not received till Friday, 25 October or Monday, 28 October or later. The Respondent has not provided any evidence in this Appeal as to the actual date on which the letter and the Application was received by the Respondent. . 25However, the onus is on the Appellants if they seek to assert that the letter was received by the Respondent at a time when the management agreement was still in force. The Appellants have not established on the balance of probabilities that it was. 26The evidence did not establish that any of the correspondence from the Tribunal to the appellants at care of the Respondent was received prior to the termination of the management agreement. Accordingly, the evidence does not establish any contractual obligation on the part of the Respondents to notify the Appellants of the correspondence. 27Of course, it needs to be said that the Appellants had obtained the files on 25 October 2013 and should have taken action in relation to the bond themselves. That might be an answer to a claim in negligence by the Appellants against the Respondent in a Court. But it is irrelevant here. 28There was no obligation after the termination of the management agreement for the Respondent to provide any services to the Appellants. The claim of the Respondents in the Tribunal was therefore not a consumer claim as defined in the Consumer Claims Act, 1998 and the Tribunal did not have jurisdiction to entertain such a claim. 29Ground 1 has no merit. GROUND 2: "Member did not consider document confirming that the tenants [sic] real reason for seeking early termination of the lease was the unemployment of the tenant's husband" 30The notice of termination which the tenant gave on 19 September 2013 was not effective to terminate the lease. The ground (unemployment of Mr Bowens) was not a valid ground for termination under the terms of the lease or s.100 of the Residential Tenancies Act, 2010. 31However, s.100 of that Act does permit the tenant to give a termination notice (of 14 days or move) for a fixed term lease where the landlord has notified the tenants of the landlord's intention to sell the residential premises but the landlord did not disclose the proposed sale before entering into the lease, as required by s.26. 32Mr & Mrs Bowens were entitled to terminate the lease for the non-disclosure by the landlord, even though they might not have done so if Mr Bowens had not become unemployed. 33Ground 2 has no merit. GROUND 3: The Member did not consider that the Respondent was both the letting and selling agent and should have advised the tenants was the property was already on the market for sale at the time of arranging the lease of the property to the tenant. 34It is arguable that a licensed and competent real estate agent who had been retained under the sale agreement and then located tenants for the property would have advised the Appellants of their obligations under s.26 of the Residential Tenancies Act, 2010 to disclose to the prospective tenants that the property was for sale. 35The argument for the Appellants, although not raised as a claim in the Tribunal hearing seems to be that if the disclosure had been made, the tenants would not have been able to terminate the lease when they did and the tenants would have stayed the term of the lease to January and paid rent. But this argument is mere conjecture. The Appeal Panel is not aware of any evidence offered as to what the reaction of Mr & Mrs Bowens would have been if the listing of the property for sale had been disclosed before any lease was signed. One possibility is that they may have decided not to proceed with the lease and the property would have been vacant and rent forgone until another tenant was located.. 36Another possibility is that they would have proceeded with the lease, but then vacated in October 2013 because Mr Bowens had lost his job. Ms Bowens suggested a friend who would have taken a lease of the premises upon the Bowens vacating. We are not aware of any evidence as to why the appellants did not enter a lease to that person or someone else. The evidence is not capable of establishing that any loss of rental for the period after 22 October 2013 was attributable to a failure of the Respondent to inform the tenants that the property was listed for sale or to advise the Appellants to do so. 37Ground 3 does not have merit. CONCLUSION 38The Appeal Panel finds that none of the three Grounds raised by the Notice of Appeal has merit and the Appeal should be dismissed. ORDERS 39Accordingly, the Order of the Tribunal is: 1) The Appeal of Kole Murgoski and Danica Murgoski against the decision of the Consumer & Commercial Division of the Tribunal of 3 June 2014 is dismissed. 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: 13 November 2014