Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Lewer v Smith [2016] NSWCATAP 76 Hearing dates: 18 January 2016 Date of orders: 08 April 2016 Decision date: 08 April 2016 Jurisdiction: Appeal Panel Before: N Hennessy LCM, Deputy President K Rosser, Senior Member Decision: 1. The Tribunal's decision that the landlord is to pay the tenant the sum of $2,115.00 on or before 17 July 2015 is set aside. 2. The whole case is to be reconsidered by the Tribunal in accordance with these reasons. Catchwords: APPEAL – residential tenancy agreement – false representations inducing a tenant to enter into a residential tenancy agreement– material findings of fact – adequacy of reasons Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) ss 41, 62(3)( a) and 80(2)(b). Civil and Administrative Tribunal Rules 2014 (NCAT Rules), r 25(4)(b) cl 13 Residential Tenancies Act 2010 (NSW), ss 26(1), 70, 81(4)(e), 187(1), 191 and 103 Residential Tenancies Regulation 2010, Sch 1 Cases Cited: Beale v GIO (1997) 48 NSWLR 430 Dennis Willcox Pty Ltd v Federal Commissioner of Taxation [1988] FCA 123, (1988) 79 ALR 267 Hadid v Redpath [2001] NSWCA 416 Hamod v State of New South Wales [2011] NSWCA 375 Linfox Australia Pty Ltd v Fair Work Commission [2013] FCAFC 157; (2013) 240 IR 178 Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100 Mullens v Millermade (1882) 22 Ch D 194 XYZ v State Trustees Limited [2006] VSC 444 Category: Principal judgment Parties: Bradley Lewer (Appellant) Harley Smith (Respondent) Representation: Appellant (in person) Respondent (in person) File Number(s): AP 15/51068 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 9 July 2015 Before: G Wilson, General Member File Number(s): RT 15/31440 reasons for decision Introduction 1. A landlord, Mr Brewer, has appealed from a decision of the Consumer and Commercial Division of the Tribunal ordering that he pay his tenant, Ms Smith, $2,115.000 as compensation for breaching the agreement. The Tribunal found that the landlord had breached the agreement because his agent had induced the tenant to sign the agreement by a statement that she knew to be false, misleading or deceptive: Residential Tenancies Act 2010 (NSW), 26(1). That statement was that there had not been any illegal activities associated with the premises. 2. Section 26(1) of the Residential Tenancies Act, the provision in issue in this appeal, provides that: False representations A landlord or landlord's agent must not induce a tenant to enter into a residential tenancy agreement by any statement, representation or promise that the landlord or agent knows to be false, misleading or deceptive or by knowingly concealing a material fact of a kind prescribed by the regulations. 1. Prior to the hearing the parties terminated the agreement by consent from 27 May 2015. The only order, against which the landlord may appeal, is the order as to compensation. 2. The landlord submitted that he was not liable for any false statement made by the agent and even if he was, the Tribunal gave no reasons for preferring the tenant's evidence about the misrepresentation to that of the agent. 3. We have decided the landlord is liable for false statements inducing a tenant to sign an agreement but that the Tribunal has failed to make some material findings of fact and has given inadequate reasons for its decision. We have set aside the Tribunal's decision that the landlord is to pay the tenant the sum of $2,115.000 on or before 17 July 2015 and remitted the whole matter to the Consumer and Commercial Division for re-consideration in accordance with these reasons. Was the appeal lodged within time? 1. Because these proceedings are "residential proceedings", an appeal must be lodged within 14 days from the day on which the appellant was notified of the decision or given reasons for the decision, whichever is the later: Civil and Administrative Tribunal Rules 2014 (NCAT Rules), r 25(4)(b). The Tribunal may extend the time for the lodgement of an appeal: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 41. 2. The Tribunal made the decision on 9 July 2015 and produced reasons dated 17 August 2015. The Tribunal's records show, and we find, that the letter containing the reasons for decision was posted to the landlord on 17 August 2015. Clause 13 of the NCAT Rules deals, among other things, with service by post. We are satisfied that the decision was posted and that the landlord is taken to have been given the reasons on 21 August 2015, the fourth working day after the letter was posted. The appeal was lodged on 4 September 2015 after some delays relating to the payment of the correct fee and the transmission of the appeal to the Sydney Registry. The landlord says he did not receive the reasons until after he appealed. Regardless of when he actually received the reasons, the landlord has appealed within 14 days of 21 August 2015, the date he is deemed to have been given the reasons: NCAT Rules cl 13. The appeal was lodged within time. Tenant's application and agreement reached on 25 May 2015 1. The tenant's application was under s 190 of the Residential Tenancies Act for breach of the residential tenancy agreement by either: 1. making a false misrepresentation which induced the tenant to enter into the agreement: Residential Tenancies Act, s 26(1); or 2. failing to provide and maintain locks or other security devices necessary to ensure that the residential premises are reasonably secure: Residential Tenancies Act, s 70 and s 191. 1. The Tribunal has power under s 187(1) to award compensation for a breach of the agreement. 2. The application was listed for conciliation and hearing on 25 May 2015. At that hearing, the tenant and the agent agreed that the tenant would give vacant possession of the property on 27 May 2015. At the appeal hearing, the landlord agreed that his agent had consented to the termination of the tenancy agreement at the hearing before the Consumer and Commercial Division on 25 May 2015. As a principal is bound by the actions of his or her agent made within the agent's authority, the agreement between the tenant and the agent resulted in the tenancy ending on 25 May 2015: Residential Tenancies Act, s 81(4)(e). Tribunal's decision and reasons 1. At [6]–[9] the Tribunal outlined the evidence of each party in relation to the tenant's claim that the landlord had breached s 26(1) of the Residential Tenancies Act. In summary, the Tribunal recorded the tenant's version as being: 1. before signing the Residential Tenancy Agreement, the tenant disclosed to the agent that she worked in the criminal justice system and that she wanted to be assured that the property was safe and secure; 2. the questions she asked included whether the location was safe and whether there had been any illegal activities associated with the premises; 3. the agent replied that while the property was "not in the best area, it was far from the worst" and, critically, that there had not been any trouble previously with the premises which had been occupied by a single mother and her children; 4. upon becoming aware that a previous occupant had been arrested for breaking into surrounding houses and was incarcerated in the correctional centre where the applicant was employed, the tenant questioned the agent again; 5. the agent replied that she knew about those incidents but as the offender was an occupant, not a tenant, she did not consider it relevant to her inquiries. 1. On the night of 14 March 2015 there was an attempted break in of the premises while the tenant and her son were asleep. Two days later the tenant left the property because she was too frightened to stay. On 4 April 2015 the house was broken into again and some of the tenant's possessions stolen. 2. In summary, the Tribunal recorded the agent's version as being: 1. the tenant did not inform him of any matters that were a high priority for her safety and security; 2. the agent admitted that the tenant had asked whether there had been any previous break-ins and she replied, "that there had allegedly been a break in some time ago but our office now believed that it was a 'staged' break in that everyone else in town knew about"; 3. in answer to the tenant's questions after the attempted break-in, the agent told the tenant that the partner of a previous tenant had been living at the property, had been arrested there and was now in prison. 1. The Tribunal concluded at [13], that: The evidence of each party conflicted with the other in respect of the questions asked by the applicant and the responses given by the landlord's agent prior to and after entering into the agreement. The Tribunal considered on the balance of probabilities, that the evidence given by the applicant was the more likely account of the discussions between the applicant and the managing agent prior to and after the signing of the residential tenancy agreement. The Tribunal was further satisfied with the applicant's evidence of the events relating to the previous tenancy. Based on these findings the Tribunal was satisfied the applicant was induced by the managing agent's false or misleading responses to specific questions to enter into the residential tenancy agreement. Tribunal's orders 1. The Tribunal made the following orders: 1. By consent, the Residential Tenancy Agreement is terminated under s 103 Residential Tenancies Act 2010 as the landlord has breached the agreement and the breach is in the circumstances of the case, sufficient to justify termination. 2. By consent, the Residential Tenancy Agreement was terminated on 27 May 2015. 3. The landlord Bradley Lewer (address deleted) is to pay the tenant Harley Smith (address deleted) the sum of $2,115.000 on or before 17 July 2015. 4. Application for amendment of application is disallowed as no leave was sought to amend the application prior to the hearing as a special fixture. 1. The Tribunal did not need to make order 1 because by the date of the hearing the tenancy agreement had already come to an end in accordance with the agreement reached on 25 May 2015. Grounds of appeal 1. Neither party was represented by a lawyer. Being fair to both parties means that neither should be disadvantaged because he or she is self-represented: Hamod v State of New South Wales [2011] NSWCA 375 at [309] – [316]. Where appropriate, the Appeal Panel may suggest a question of law which the self-represented person has not articulated: XYZ v State Trustees Limited [2006] VSC 444 at [43]. 2. Following some discussion during the appeal hearing, we understand the landlord's grounds of appeal to be that: 1. he is not liable for any false or misleading statements made by his agent because he did not authorise the agent to make those statements or know that they had been made; 2. even if he is liable for any statements made by the agent, the Tribunal failed to explain why the tenant's evidence about the representations was accepted and the agent's evidence was not accepted; and 3. the Tribunal failed to provide adequate reasons for determining that the level of compensation payable to the tenant was the full amount of the rent paid from 4 April 2015 to 27 May 2015. 1. During the course of the hearing we also raised with the parties whether or not the Tribunal had failed to address another part of the tenant's claim. As well as alleging a breach of s 26(1), the tenant alleged that the landlord breached the agreement by failing to provide and maintain locks or other security devices necessary to ensure that the residential premises are reasonably secure. The Tribunal did not address that claim in the reasons for decision. We will treat this matter as a ground for a cross-appeal by the tenant. 2. Each ground of appeal raises a question of law: NCAT Act, s 80(2)(b). 3. Before addressing these grounds it is relevant to identify the findings of fact that the Tribunal needed to make and what those findings were in this case. Findings on material questions of fact 1. When giving written reasons, the Tribunal must set out "the findings on material questions of fact, referring to the evidence or other material on which those findings were based": NCAT Act, s 62(3)( a). Those findings relate both to what happened and to the elements of the alleged statutory breach. 2. The factual matters which the Tribunal was required to address when determining whether the landlord had breached s 26(1) of the Residential Tenancies Act, were that: 1. the landlord or landlord's agent induced a tenant to enter into a residential tenancy agreement; (the first material question of fact) 2. the inducement was by way of a statement, representation or promise; (the second material question of fact) 3. the landlord or agent knew that statement, representation or promise to be false, misleading or deceptive (the third material question of fact). 1. The Tribunal expressly found at [13] that the tenant "was induced by the managing agent's false or misleading responses to specific questions to enter into the residential tenancy agreement". 2. The Tribunal made no express finding identifying the statement, representation or promise that the agent made. However, it is apparent from the evidence that the representation was that there had not been any illegal activities previously with the premises. While the Tribunal should have made that finding expressly, its failure to do so does not constitute an error of law because the finding is apparent when the reasons are read in their entirety. 3. The Tribunal made no express finding as to the third material question of fact, that is, whether the agent knew that the statement, representation or promise was false, misleading or deceptive. The Tribunal recorded that the agent had disclosed to the tenant after the attempted break-in on 14 March 2015 that she was aware that a man who resided with a former tenant had been arrested at the premises. However, that evidence is not a sufficient basis for us to be satisfied that the Tribunal made a finding that the agent knew that the statement or promise was false, misleading or deceptive. A finding of that seriousness and significance should be supported by reference to the evidence and made expressly. 4. This was not a ground of appeal raised by the landlord or the Appeal Panel and it would be procedurally unfair to set aside the decision on that basis. Nevertheless, we note it here so that it may be taken into account when the matter is re-heard. Liability of landlord for representations made by agent 1. We are satisfied that the representations of the agent that the Tribunal impliedly found had been made in this case were made with the implied authority of the landlord. In Mullens v Millermade (1882) 22 Ch D 194 at 199 Bacon VC made the following observation: A man employs an agent to let a house for him; that authority, in my opinion, contains also an authority to describe the property truly, to represent its actual situation, and, if he thinks fit, to represent its value. That is within the scope of the agent's authority … 1. In Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100, a real estate agent had been engaged by a developer to market luxury apartments 'off the plan'. The agents made representations about the views which proved to be misleading. The Queensland Court of Appeal decided that the representations were within the implied authority given by the developer because those representations related to the core function of marketing the units. Similarly, in this case, the representations related to the core function of the managing agent to obtain a tenant for the property. 2. Consequently, it is our view that the Tribunal did not misunderstand or misapply the law when it concluded that in this case the landlord is liable for any breach by the agent of s 26(1) of the Residential Tenancies Act. Inadequate explanation for accepting evidence of tenant 1. The critical difference between the tenant's evidence and the agent's evidence appears to be that prior to signing the agreement, the tenant said the agent told her that there had not been any illegal activities previously with the premises whereas the agent's evidence was that he told the tenant that there had allegedly been a break in some time ago but it was believed to be staged. It appears to be common ground that the agent did not disclose the fact that a previous occupant had been convicted of offences relating to break-ins in the surrounding area. 2. The reason the Tribunal gave for preferring the tenant's evidence was that it was "the more likely account" of the discussions. In Beale v GIO (1997) 48 NSWLR 430 at 442-444, Meagher JA described the elements of adequate reasons as including "reasons for making the relevant findings of fact". In Hadid v Redpath [2001] NSWCA 416 at [53], the Court of Appeal held that it was an error of law to fail to give reasons for preferring the testimony of one witness over the evidence of another. The inherent probability or improbability of the evidence is a legitimate reason for preferring one witnesses' evidence over another's, but the Tribunal should have, at least, explained why the tenant's version was more likely or why the tenant was a more credible witness. The Tribunal has failed to provide adequate reasons for its decision and it should be set aside on that basis. Inadequate reasons for findings about level of compensation 1. The tenancy was terminated on 27 May 2015, the date that the tenant vacated the premises. The tenant claimed compensation for the rent paid from 4 April 2015 when she moved out, even though she had left some of her possessions at the property. The Tribunal noted that the rent for the period of 4 April 2015, when the tenant left the property, to 27 May 2015, when she gave vacant possession, was $2,115.00. 2. The Tribunal awarded compensation for the entire period on the basis that the tenant had asked the agent if she could terminate the tenancy and the agent had told her that she was not able to terminate the tenancy during the fixed period of 12 months. The Tribunal said at [15] that: While the tenancy was not terminated until 27 May 2015 the Tribunal was satisfied from the evidence of the applicant regarding her request to terminate the tenancy and her fear of living in the premises based on the false or misleading statements by the respondent's agent that the breach by the landlord entitled her to compensation for the rent paid during this period. 1. The standard form of Residential Tenancy Agreement set out in Schedule 1 of the Residential Tenancies Regulation 2010 states that parties to a residential tenancy agreement must comply with the Residential Tenancies Act and the Residential Tenancies Regulation. The Tribunal may therefore make an order for compensation where a party breaches the Residential Tenancies Act. In this case the Tribunal ordered that the tenant was entitled to compensation for the rent paid from 4 April 2015, when she first left the property. The basis for that decision was that the agent had induced her to enter into the Residential Tenancy Agreement by making a representation which he knew to be false. In addition he told her, wrongly, that she could not terminate the tenancy during the fixed period. 2. While the Tribunal gave reasons for finding that the tenant was entitled to compensation, no reasons were given for the amount of compensation ordered. In particular, the Tribunal gave no reasons for finding that the tenant had established a basis for compensation equalling 100% of the rent payable for the period from 4 April 2015 to 27 May 2015. We note that the tenant conceded during the appeal hearing that during this period she was storing some of her possessions on the premises. The Tribunal has erred in failing to provide adequate reasons for its decision in relation to this issue. Failure to address a claim 1. As well as alleging a breach of s 26(1) of the Residential Tenancies Act, the tenant alleged that the landlord breached the agreement by failing to provide and maintain locks or other security devices necessary to ensure that the residential premises are reasonably secure. The Tribunal did not address that claim in the reasons for decision. 2. It is an error of law for the Tribunal to fail to address an application or submission of substance which, if accepted, is capable of affecting the outcome of the case: Linfox Australia Pty Ltd v Fair Work Commission [2013] FCAFC 157; (2013) 240 IR 178 at [47]–[48]; Dennis Willcox Pty Ltd v Federal Commissioner of Taxation [1988] FCA 123 at [21], (1988) 79 ALR 267at 276–7. 3. The Tribunal's failure to address this part of the tenant's claim could not have made any difference to the outcome because the Tribunal awarded compensation for the entire period the tenant was not living in the premises. However, if the Tribunal comes to a different view on remittal, this claim should be addressed. Orders 1. The Tribunal's decision that the landlord is to pay the tenant the sum of $2,115.00 on or before 17 July 2015 is set aside. 2. The whole case is to be reconsidered by the Tribunal in accordance with these reasons. 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 April 2016