Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Salisbury v Sonter [2016] NSWCATAP 57 Hearing dates: 2 December 2015 Date of orders: 08 March 2016 Decision date: 08 March 2016 Jurisdiction: Appeal Panel Before: D Patten, Principal Member R Titterton, Senior Member Decision: Leave to appeal granted Appeal dismissed. Catchwords: Leave to appeal – no question of principle. Operation of s 66 of the Residential Tenancies Act 2010 Legislation Cited: Residential Tenancies Act 2010 Cases Cited: Coulton v Holcombe [1986] HCA 33 Palm Homes Pty Ltd v Kav's Constructions Pty Ltd [2015] NSWCATAP 113 Category: Principal judgment Parties: John Salisbury and Joanne Salisbury (Appellants) Glen Sonter and Pamela Hibbert (Respondents) Representation: Mr Carpenter, Solicitor (Appellants) Ms Shirvington, Tenancy Advocate (Respondents) File Number(s): AP 15/50960 Decision under appeal Court or tribunal: Civil and Administrative Appeal Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 11 August 2015 Before: S Fenwick, General Member File Number(s): RT 15/12406 REASONS FOR DECISION 1. The appellants seek to appeal from a decision of the Consumer and Commercial Division of the Tribunal (the Tribunal) of 11 August 2015. 2. For the following reasons, we dismiss the appeal. Background 1. In proceedings RT 15/12406 the landlords, the present appellants (to whom we will refer as the landlords), sought compensation for damage to their premises by their tenants, the present respondents. The landlords sought compensation for various items including, relevantly for this appeal, $7,150 for repainting the premises. 2. The Tribunal found that the tenants were not liable for the costs of repainting the premises, as the landlords had agreed to allow the tenants to paint the premises. The Tribunal's reasons for decision state (at [17]): There is no dispute that the tenant was given permission to repaint the premises, and the landlord was aware that the tenant would be doing this himself and that he was not a professional painter. There is a dispute as to whether the tenant had to get approval for the colour, or just paint it in a neutral colour. The [landlords have] provided no evidence of the conditions they attached to the tenant undertaking the painting, accepting that it was a verbal agreement. The property manager who is dealt with the tenant is no longer working for the landlord's agent and is unavailable to give evidence. While it is clear that the re-painting was not carried out to a professional standard, nothing was put in place by the [landlords] to ensure the painting was carried out to their satisfaction, approve the colour or ensure a reasonable standard. No evidence was provided of what would be required to make the paintwork more acceptable, short of completely repainting, eg cleaning paint from skirting boards or light switches. There is no evidence of loss provided by the [landlords], for example that they could not let the premises or put it on the market for sale until this work was done. Indeed the work was yet to be done at the date of the hearing. I find that the tenants had permission to paint, and while the work was not up to a professional standard, the landlords have not shown the loss that this has caused them. Consequently the tenants are not liable for the costs of repainting the premises. Notice of Appeal 1. The Notice of Appeal relevantly states: 1. The Tribunal erred on a question of law in Paragraph 17 in a finding that the tenants had permission to paint. a. Section 66 of the Residential Tenancies Act 2010 requires written approval for the painting. b. Indeed there was evidence that although the tenant had verbally requested permission to paint some two years prior to the actual painting, no permission was given by the agent or the landlord for this painting to proceed unless and until a colour scheme was provided and approved. c. At paragraph 17 the Member appears to apply the provisions of Section 69(2)(a) and (b) to her findings that there was no evidence by the landlord that affected their ability to let the residential premises to other tenants and that the work was not done to a professional standard. However, this section is irrelevant if written permission to make the (alteration) painting was never obtained. 2. The Tribunal erred in finding that the landlord had not produced evidence of loss relating to repainting. 1. These grounds were clarified, and simplified somewhat, in the landlords' written submissions. In summary, the landlords submit that the Tribunal fell into fundamental error in finding that: 1. The tenants had permission to paint when clearly there was no written evidence of written evidence as required by s 66 of the RT Act. 2. The landlords had demonstrated no loss by their failure to undertake the work prior to the hearing. 1. In relation to approval for the painting, the landlords submit that the finding of the Tribunal that: There is no dispute that the tenant was given permission to repaint the premises, and the landlord was aware that the tenant would be doing this himself and that he was not a professional painter. is an inaccurate summary of the evidence, and irrelevant having regard to the requirements of s 66 of the Residential Tenancies Act 2010 (the RT Act). 1. The landlords submit that the sound recording of the hearing establishes that the tenant did have permission to paint, but that permission was conditional upon the tenants producing to the appellants' agent and for approval of the landlord an appropriate colour, being a neutral colour. Therefore, they submit that the Tribunal's conclusion that the tenants were given permission to repaint was an incorrect summary of the evidence. 2. References to the sound recording were provided in both the landlords' primary submissions and in their submissions in reply. Reply to appeal 1. In their Reply to Appeal, the tenants state that: The original application to the Tribunal did not dispute that the tenants were given permission to paint the house, and at the hearing there was still no dispute that the tenants were given permission. Therefore whether or not it was written is not relevant. The application mentions that the house was painted in a "blue gray colour" indicating that the landlord was unhappy with this colour. The landlord did not provide any evidence that they had suffered any loss due to the painting. The Tribunal is unable to order compensation without evidence of loss to a party. Therefore the matter under appeal has no has basis as the type of approval, written or verbal was never an issue. Even if the Tribunal agrees with the [appellants] that the tenant[s] needed to have written permission, the landlord [has] not suffered any loss as the landlord at the time of the hearing had not had any rectification work being done and had not done so when the property was sold at auction on 3 September 2015. Oral submissions 1. At the hearing, Mr Carpenter, Solicitor, appeared for the landlords. He amplified his written submissions, and submitted that the Tribunal made a fundamental error of law, in finding that the tenants had consent to the painting without reference to the requirements of s 66(1) of the RT Act requiring that the tenants obtain the landlords' written consent. 2. The Tribunal discussed with Mr Carpenter whether he conceded that s 66(5), which provided that the requirement that the tenant not make alterations without the written consent of the landlord became a term of the residential tenancy agreement, could be varied by agreement of the parties. Initially, Mr Carpenter did not make that concession. He said that that would be contrary to the RT Act, and in addition was contrary to the evidence. He also said that this would be contrary to literature published by the Department of Fair Trading (and here he referred to pp 72 and 76 of the appeal bundle). 3. However, when pressed, Mr Carpenter agreed that, as the requirement of s 66 (namely that permission be in writing) formed part of the residential tenancy agreement, the requirement could be varied by mutual consent of the parties. When asked whether this caused a difficulty in challenging the Tribunal's findings, he submitted that any variation would have to be express, not implied, and that the evidence was that any consent of the landlord for the painting was conditional. 4. He then referred to page 8 of the Appeal Bundle which included a handwritten note of the tenants stating: Painted whole house inside (every room), ceilings, walls, doors, skirtings approved by verbal conversation with our previous property manager who state we could paint but not lairy colours. 1. This Mr Carpenter submitted was evidence that any approval to paint was conditional on the painting not being in "lairy colours". At this point the Appeal Panel asked Mr Carpenter what was the evidence of the "lairy colours", commenting that the walls appeared to "bluish gray". Mr Carpenter said the colours were "bluish gray" with "dark blue" (trim), as indicated on a number of pages of photographs appearing in the Appeal Bundle. He also submitted that the evidence from the agent was that not only was the colour scheme to first be approved by the landlord, when the first room was painted, it was had to be inspected and approved by the landlord. He said that this was evident from the transcript, references to which were summarised in his submissions in reply. 2. The second error of law was that the Tribunal found that the landlord had not mitigated their loss' this he submitted was irrelevant to claims for compensation, as it was not relevant to the operation of s 66, where the landlords were unable to rent the property, and where there was ongoing loss. Here the landlords were not claiming an ongoing loss of rent, but that these were unapproved alterations, and were seeking to be reimbursed for the costs of putting the property that back into the condition before it was painted. 3. Mr Carpenter accepted that that if the Appeal Panel was against him on the first point, then that was the end of the appeal, and the question of mitigation did not arise. 4. It is appropriate therefore to first consider the primary matter challenged by the landlords, that is the Tribunal's finding that the tenants had the landlords' permission to paint the premises. Consideration 1. Mr Carpenter conceded that there was no "direct" evidence of the Tribunal at [17] that "The landlord did not provide any evidence that they had suffered any loss due to the painting". He invited the Appeal Panel to listen to the sound recording at the places identified in his submissions in reply. He conceded that the particular officer of the agency at the time, who had the conversation/s with the tenant about painting the premises, did not give evidence at the hearing. He submitted that there was evidence from the principal of the real estate agency, who was entitled to speak for former employees, did could give evidence from their own knowledge of the matter. 2. We have listened to the short passage of the sound recording Mr Carpenter directed us to. The principal of the agency managing the landlords' property told the Tribunal: The painting, although it now be fresh, is in the worse colour – I'm terribly sorry – that I've nearly seen ever, and the quality of it was very, very poor. We did request that we approve the sample, and we also did, and unfortunately this is a verbal thing as well, that when the first room was done that we reinspect that to see if the quality was up to standard for him to continue to paint the premises. 1. That is the highest the evidence reached. We note that an earlier passage of the sound recording notes that the agency principal stated that she did not have the diary notes with her at the hearing which recorded that exchange between the relevant agent and the tenants. In other words, what was stated was a bare submission, unsupported by evidence. 2. We acknowledge that the Tribunal was not bound by the rules of evidence, and subject to the rules of natural justice, could inquire into and inform itself on any matter in such manner as it thinks fit: s 38(2) of the Civil and Administrative Tribunal Act 2013. However, as is observed by Aronson and Groves in Judicial Review of Administrative Action (5th Ed) at 581: Provisions which free a tribunal or other body from the rules of evidence are best regarded as facultative. They are intended to provide procedural flexibility but not to displace logic or reasons. A decision-maker freed from the rules of evidence must therefore still consider the whether the material it can consider should in fact be considered. The litmus test is usually whether the material is rationally probative. It follows that provisions which free tribunals from the rules of evidence do not allow decision-makers to "draw inferences or jump to conclusions, which the available material did not adequately support". 1. Given these considerations, and given the evidence actually before the Tribunal, we consider that the Tribunal's reasoning process was entirely orthodox, that the findings made by the Tribunal were available to it, and that the Tribunal did not err in its reasoning or its decision. We consider therefore that this ground of appeal must fail. 2. In the circumstances, as conceded by Mr Carpenter, the need to consider the second ground of appeal does not arise. We note however, that, as claimed by the landlords, there were quotations before the Tribunal at the time of the hearing. Fresh evidence 1. The landlords sought to tender fresh evidence on the appeal, namely a letter of Mr Pat Cutcliffe dated 26 October 2015. In that letter, Mr Cutcliffe is a director of L J Hooker, Orange. He states that the property had been depreciated by $5,000 to $10,000 by the painting by the tenants. 2. We see no reason why this evidence should be allowed. The evidence relates to a question not agitated below, namely that the landlords' loss was the difference in sale price attributed to the painting by the tenant causing a loss of value to the property. That issue was not argued below, and could not have been, as the property was sold a number of months after the hearing. In those circumstances, it is not appropriate to consider this issue or to allow this evidence on appeal: Palm Homes Pty Ltd v Kav's Constructions Pty Ltd [2015] NSWCATAP 113; Coulton v Holcombe [1986] HCA 33. Orders 1. Finally, we note that the landlords argued the appeal on the basis that the Tribunal had made an error of law. Given the concessions made during the appeal hearing about the effect of s 66 of the RT Act, namely that the parties could vary the requirement for written consent, what was actually argued was, in our view, a question of fact, not a question of law. This conclusion means that the landlords cannot appeal as of right, but require the leave of the Appeal Panel to do so. In the circumstances, we would grant that leave to the landlords, but dismiss the appeal. 2. The Appeal Panel makes the following orders: 1. Leave to appeal granted. 2. Appeal dismissed. ********** 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: 08 March 2016