Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Perkins v Barraket [2016] NSWCATCD 54 Hearing dates: 3 June 2016 Decision date: 23 June 2016 Jurisdiction: Consumer and Commercial Division Before: W Priestley, General Member Decision: 1. The respondent is to pay the applicants the amount of $3,766.37 immediately. Catchwords: Assessment of damages, mitigation, apprehended bias Legislation Cited: Residential Tenancies Act 2010 Civil and Administrative Tribunal Act 2013 Cases Cited: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 288 Bogoevski v Stricklands [2015] NSWCATAP R v Commonwealth Conciliation and Arbitration Commission and Ors; ex parte the Angliss Group (1966) 122 CLR 546 Hadley v Baxendale (1854) 156 ER 145 Karacominakis v Big Country Developments Pty Ltd [2000] NSW CCA 313 at paras 187-188 British Westinghouse Electric Co Ltd v Underground Railways Co Ltd [1912] AC 673 at 689 Texts Cited: Residential Tenancies – Law and Practice, New South Wales, sixth edition - Anforth, Christensen and Bentwood Category: Principal judgment Parties: Christian Perkins & Terrence Perkins (applicants) Elias Barraket (respondent) Representation: Applicants: C Perkins Respondent: C Butler File Number(s): RT 16/14346 Publication restriction: Unrestricted reasons for decision Background 1. The applicants and the respondent entered into a six month fixed term residential tenancy agreement on 31 March 2015 ("the agreement"), in relation to residential premises in Tweed Heads West, NSW ("the premises"). The applicants were the tenants and the respondent was the landlord. 2. Shortly after the commencement of the agreement, the applicants notified the landlord of concerns they had about the adequacy of the security locks on the premises, and asked for them to be improved. The landlord declined, and the applicants served a notice of termination on the landlord under section 98 of the Residential Tenancies Act ("the Act"). The landlord did not apply to the Tribunal under section 98(4) of the Act for the notice to be revoked. 3. The applicants handed back possession of the premises to the respondent on the termination date given in the notice. 4. On 8 May 2015, the landlord lodged application numbered RT 15/31899 seeking a six weeks lease break fee of $3,120, and release of the bond of $2,080 to him as part-payment of the compensation sought. 5. On 27 May 2015, the applicants lodged application RT 15/34873 seeking orders that the bond be released to them, and for payment of compensation in respect of the alleged breach of the respondent's obligation under the agreement and the Act, to provide locks or security devices to enable the premises to be reasonably secure. 6. The compensation sought by the applicants on their application is $11,741.88 for economic loss and $3,000 for non-economic loss. This was amended in a schedule of damages lodged by the applicants on 31 July 2015 to $14,201.23 for economic loss, and the claim for non-economic loss of $3,000 was maintained. The claim appears to relate solely to losses incurred by one of the applicants, Mr Christian Perkins, and not to any losses suffered by Mr Terence Perkins. I shall refer to Mr Christian Perkins as Mr Perkins in these reasons. Particulars of the losses claimed were lodged with the Tribunal on 30 July 2015 and are; * temporary accommodation from 4 April 2015 to 26 June 2015 while alternative permanent accommodation was found ($12,953.23), no claim is made in respect of accommodation costs for the nights of 17-19 April, 22 May, 30 May, 1 June, or 5 June; * storage in Nambucca Heads of goods that were not moved to the premises while alternative permanent accommodation was found ($300); * storage in the Gold Coast of goods removed from the premises while alternative permanent accommodation was found ($318); * costs for removal of goods from the premises to storage at the Gold Coast ($330); * removal costs of goods from storage to alternative permanent accommodation ($300). 1. The landlord's application, and the tenants' application, were heard together on 21 August 2015. The Tribunal found the landlord had breached the Act and the agreement, as the locks were not adequate to reasonably secure the premises, and that the tenants had validly terminated the agreement. The Tribunal dismissed the landlord's application for compensation, and ordered the bond to be returned to the tenants. 2. The Tribunal then dismissed the tenants' application for compensation, on the basis they had failed to mitigate their loss that flowed from the landlord's breach of the agreement. The tenants appealed that decision. 3. On 16 March 2016 the Appeal Panel upheld the appeal, insofar as the decision determined the tenants' entitlement to compensation, and the matter was remitted for a rehearing before the Tribunal as previously constituted, for the limited purpose of assessing that entitlement. The rehearing was subsequently listed for 3 June 2016 at Murwillumbah. 4. The applicants advised the Registry they did not wish the Tribunal, as previously constituted, to determine the rehearing, on the basis they believed there was a reasonable apprehension I might be biased. 5. On 24 May I made orders giving the parties leave to lodge and serve any further documents they wished to rely on, by 30 May 2016. No further documents were lodged by either party. 6. On 24 May the parties were also directed to make any application that I be disqualified from hearing the matter, in writing, by 30 May 2016. On 27 May 2016, the applicants lodged an application, supported by written submissions, that I disqualify myself on the grounds of apprehended bias. The rehearing and the evidence 1. At the commencement of the rehearing the respondent's representative, Mr Butler, was given an opportunity to support or oppose the applicants' application that I disqualify myself. Mr Butler stated the respondent did not have a position in that regard. I determined I should not disqualify myself, and advised the parties I would provide written reasons for that decision. 2. All the evidence relating to the assessment of the applicants' entitlement to damages from the initial hearing on 21 August 2015 was then admitted into evidence. That evidence consists of; * Statutory declarations of Mr Perkins declared 5 June 2015 and 23 July 2015; Statutory declaration of Joanne Turnbull declared 22 July 2015, and statutory declaration of Terence Perkins; * Receipts from Nambucca Valley Self Storage, Allsafe Self Storage Complex (Qld) Pty Ltd, and Burleigh Heads Removals and Storage; * Copies of internet booking confirmations, hotel accounts, and receipts for hotel accommodation, for the period 4 April 2015 to 26 June 2015; There was no evidence that the accommodation to which those documents relate was the only accommodation reasonably available to the applicants. * The applicants' chronology of events; * Copies of emails to Mr Perkins from real estate agents regarding inspection of rental properties dated 20, 27, 29 and 30 April, and 5 May 2015; 1. At the rehearing, the applicants sought to put into evidence further documents about the cost of short term accommodation. Those documents consisted of the results of two internet searches for the prices of available hotels on the "Wotif" website. The results of the first search constituted 11 pages relating to the prices of hotels in Tweed Heads between 21 April 2016 and 28 April 2016. The search was conducted on 21 April 2016. The results of the second search consisted of 14 pages relating to the prices of available hotels on the Gold Coast. That search also appears to have been conducted on 21 April 2016, for the period 21 April 2016 to 28 April 2016. Mr Perkins stated the reason he had not lodged the documents in accordance with the Tribunal's directions, was an oversight. Mr Butler objected to those documents being admitted into evidence, on the basis they were of little relevance given they related to accommodation costs over one year ago, and that they should have been lodged in accordance with the Tribunal's direction. Mr Butler was unable to point to any prejudice suffered by the Respondent if the documents were admitted, and the Tribunal allowed them into evidence. 2. Both parties were given an opportunity to make submissions in respect of the evidence as it related to each component of the applicants' claim. 3. The Tribunal has considered all of the evidence listed above, and has reviewed the recording of the proceedings on 21 August 2015, in reaching its decision. No evidence was submitted by the respondent about how long applicants for rental accommodation in the vicinity of the premises must usually wait until they can secure such accommodation, or generally on the issue of the assessment of the applicants' entitlement to compensation. 4. The evidence of Mr Perkins about the reasonableness of his attempts to mitigate has loss by finding other permanent premises to rent consists of the following; * Paragraph one of page two of the applicants' chronology, in which it is stated "Applicant began searching for alternative rental properties" on 6 April 2015. * Paragraph 5 of the applicants' chronology in which it is stated "Applicant continued search for alternative rental properties" on 25 April 2015. * Paragraph 3 of Joanne Turnbull's statutory declaration dated 22 July 2015 in which she states that prior to 10 April " …and as soon as it became apparent that the security situation was unsatisfactory….we started to search for rental properties once again. Christian was then attending several property inspections each week and he continued to apply for properties, without success." Ms Turnbull's address on the statutory declaration is given as St Leonards, a suburb of Sydney. It is not clear what is meant by "we started to search for rental properties once again." As the first paragraph of Ms Turnbull's statutory declaration states she assisted Mr Perkins search for rental properties prior to the agreement being entered into, by searching online, I infer she conducted some online searches and advised him of the results. Those results are not specified, nor is there any direct evidence about how Mr Perkins acted, if at all on that advice. * The emails from real estate agents set out in paragraph 14 of this decision. The first of these is dated 20 April 2015 and confirms registration to inspect a property at Vantage Point Drive, Burleigh Heads, Queensland. The second email is dated 27 April 2015, and advises Mr Perkins that his application for the Vantage Point Drive property was unsuccessful. The third email advises Mr Perkins his application for a rental property at Sanctuary Cove Queensland was unsuccessful. The fourth is dated 29 April 2015 and advise Mr Perkins if he wishes to inspect a property at Banora Point he can register to do so and inspect the property on 7 May 2015. The fifth email is dated 30 April and confirms Mr Perkins' registration to inspect the Banora point property and the inspection times. The sixth email is dated 8 May 2015 and lists four properties ranging from $250 to $550 per week that can be inspected once Mr Perkins registers to do so. The respondent's representative did not cross-examine Mr Perkins about his attempts to find alternative permanent accommodation, but did submit there was no evidence as to how many properties had actually been applied for other than the one at Vantage Point Drive and the one at Sanctuary Cove. In my view, the fact that only two properties may have been applied for, must be taken into account with the fact that Mr Perkins also made attempts to locate properties, which if suitable, he would presumably have applied for. Findings 1. Having considered all of the evidence I make the following findings. 2. The parties entered into a residential tenancy agreement on 31 March 2015 in respect of residential premises at Tweed Heads West, NSW. Under the agreement the tenancy was to commence on 31 March 2015 and continue for six months. The applicants were the tenants, and the respondent the landlord. 3. The applicants moved some of their belongings into the premises on 2 April 2015. 4. On or about 4 April 2015, one of the applicants, Mr Perkins was unable to reside in the premises due to the landlord's failure to provide locks that made the premises reasonably secure. 5. On 4 April 2015, Mr Perkins commenced residing in temporary hotel and resort style accommodation, and continued to do so until 16 June 2015. This accommodation was of a high standard and included the Ramada Hotel Gold Coast, the Intercontinental Sanctuary Cove Resort, and the Mercure Gold Coast Resort. The standard of the temporary hotel accommodation was vastly superior to that of the premises. The temporary accommodation included use of swimming pools, internet access, access to resort gardens and golf facilities, proximity to the beach, and availability of room service. 6. On 10 April 2015 the applicants served a Notice of Termination on the respondent. In accordance with the Act, the notice specified a termination date of 24 April 2015 and included the absence of adequate locks as a ground for the termination. On 24 April 2015 the applicants handed back possession of the premise to the respondent. 7. Mr Perkins ceased attempting to find alternative permanent accommodation on 25 May 2016 when he entered into a residential tenancy agreement with Ms Turnbull. Under that agreement, Mr Perkins was entitled to possession of Ms Turnbull's premises from 17 June 2015, and on that date he commenced residing there. The application for disqualification on the grounds of apprehended bias 1. In a written application dated 26 May 2016, the applicants requested I disqualify myself on the ground of apprehended bias. As is referred to by the applicants, the test for apprehended bias is as set out in Ebner v Official Trustee in Bankruptcy [2000] HCA 63. The test recognises that fundamental to our legal system is that trials be conducted by an independent and impartial tribunal, and that justice should both be done, and be seen to be done. 2. The test in Ebner is that "a judge is disqualified if a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide" (paragraph 6). 3. At paragraph 8, the High Court said of the test; "Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits." 1. At paragraph 19 the High Court said; "Judges have a duty to exercise the judicial functions when the jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong. They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause. Judges do not choose their cases; and litigants do not choose the judges. If one party to a case objects to a particular judge sitting, or continuing to sit, then the objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case." 1. A helpful summary of the authorities on the issue, and how the second step in the application of the test should be carried out, is set out in Bogoevski v Stricklands. [1] Having mentioned the passage from Ebner set out above, the Appeal Panel in Bogoevski then quoted two passages from R v Commonwealth Conciliation and Arbitration Commission and Ors; ex parte the Angliss Group. [2] They are; "(The) requirements of natural justice are not infringed by a mere lack of nicety but only when it is firmly established that a suspicion may reasonably be engendered in the minds of those who come before the Tribunal or in the minds of the public that the Tribunal or a member or members of it may not bring to the resolution of the questions arising before the Tribunal fair and unprejudiced minds. Such a mind is not necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it.' (at 553 -554). And further at 553; "It is plain that when it is necessary to consider a question of fairness in relation to a tribunal the whole of the circumstances in the field of enquiry are of importance. The nature of the jurisdiction exercised and the statutory provisions governing it exercised are amongst those circumstances." 1. The matters the applicants rely on to make out their application are first, two remarks I made in the course of the hearing on 21 August 2015. The first remark was that the relevant section of the Residential Tenancies Act (section 98) which allowed the applicants to terminate the tenancy agreement in the manner they did, was an unsatisfactory state of affairs for landlords. I then said "I am bound to apply the law as it is". The second remark was an expansion of that first remark, in that it explored in more detail the application of the section, and in which I said that operation seemed to me to be unfair. I then said "…but that's the law and there is nothing I can do to take fairness into account". 2. In considering the whole of the circumstances of the field of enquiry, it is important to note I made no adverse findings of credit, or of fact, in relation to the applicants, and applied the section in a way that resulted in them defeating the respondent's claim for the bond and additional moneys, in respect of the respondent's claim for a lease break fee. 3. In considering the nature of the jurisdiction, it should be borne in mind that the Tribunal is bound by section 38 (5) of the Civil and Administrative Tribunal Act, to ensure parties understand the nature of proceedings. It is also important to note that parties are usually not legally represented, and they do not have lawyers available to them to explain why they did or did not succeed, in their claims before the Tribunal. 4. The remarks I made about the operation of section 98 are not new. Similar remarks have been made by the authors of the leading text on the Act, Anforth, Christensen and Bentwood in "Residential Tenancies – Law and Practice, New South Wales" sixth edition at pages 236 and 237. Several decisions of the Tribunal are cited in which similar comments have been made by Tribunal members about the section. Both remarks ended with a clear indication that any view I held about the unfairness of the operation of the section, would not affect my application of the section to the case. 5. Secondly, the applicants rely on the way I conducted my assessment of their claim for compensation, after I had upheld their claim that the landlord had breached the Act, determined they had validly terminated the tenancy, and ordered the rental bond should be returned to them. 6. The applicants successfully appealed my decision in respect of their claim for compensation, and the Appeal Panel sent the matter back to me for the limited purpose of assessing the applicants' entitlement to compensation. 7. As the Appeal Panel determined, the way in which I assessed the applicants' entitlement to compensation was wrong at law, and the Appeal Panel corrected that error. The remittal of a matter in such circumstances, to the Tribunal as previously constituted, is routine. It is also efficient, as it avoids the need for another member to familiarise him or herself with the matter. 8. In my view, the applicants' grounds of objection, in light of all the relevant circumstances, cannot be said to be substantial. Nor do I think it can be said that there is a logical connection between those grounds and the applicants' apprehension that I would deviate from the course of deciding the case on its merits. It follows that the test in Ebner has not been made out, and I should not disqualify myself from determining the matter. Application of the law to the facts – assessment of compensation 1. The Tribunal has jurisdiction to hear and determine the matter under section 187 of the Act, and sections 28 and 29 of the Civil and Administrative Tribunal Act 2013. 2. The applicants are entitled to be compensated for the losses they have suffered that have been caused by the respondent's breach of the agreement. Such compensation must be limited by the rule of remoteness, which is set out in Hadley v Baxendale [3] , as follows; "Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. in the usual course of things, from such breach of contract itself, or such as may be reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it" 1. The applicants' claim for compensation is also qualified by the principle of mitigation. That principle is stated as; "The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this is qualified by a second, which imposes on a claimant the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps." [4] 1. The operation of the principle of mitigation is explained more fully in Karacominakis v Big Country Developments Pty Ltd [5] "A plaintiff who acts unreasonably in failing to minimise his loss from the defendant's breach of contract will have his damages reduced to the extent to which, had he acted reasonably, his loss would have been less. This is often misleadingly referred to as a duty to mitigate, although the plaintiff is not under a positive duty. The plaintiff does not have to show that he has fulfilled his so-called duty, and the onus is on the defendant to show that he has not and the extent to which he has not (TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130). Since the defendant is a wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did (Banco de Portugal v Waterlow and Sons Ltd [1932] UKHL 1; (1932) AC 452; Pilkington v Wood (1953) Ch 770; Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd (1976) 1 NSWLR 5). Whether the plaintiff acted unreasonably is a question of fact." 1. The Tribunal finds that Mr Perkins acted reasonably in taking the steps that he did to secure alternative permanent accommodation, including his decision to cease searching for such accommodation, when he was offered a lease on Ms Turnbull's premises. 2. However the cost incurred by Mr Perkins of staying in hotel or resort style accommodation until he obtained permanent accommodation, cannot be said to arise naturally from the respondent's breach, or to have been in the contemplation of the respondent at the time the agreement was made. As the Appeal Panel said (at paragraph 43) "In our view, that expense was incurred by the decision of the tenants to move into accommodation far superior to the premises which had been vacated. The expense thus incurred was not incurred as a result of the landlord's breach, and there was no evidence that the tenants had no other choice of accommodation" I respectfully agree with that view. 3. Notwithstanding that, the cost of some type of temporary accommodation while permanent accommodation was found, for some period of time, does arise naturally from the respondent's breach. That raises the questions for what cost of temporary accommodation, and for what period, should the applicants be compensated? Those questions are difficult to answer on the evidence before the Tribunal, however as was said in Fink v Fink (1946) 74 CLR at 143, mere difficulty in determining quantum does not relieve a court from estimating damages as best it can. 4. In relation to the cost of temporary accommodation, the internet search results of the price of hotels and resorts for the period 21 – 28 April 2016 put into evidence by the applicants, provide a basis for an estimate of reasonable costs to be made. As the respondent's representative submitted, they relate to a period one year after the event, however given the low rate of inflation, they are at least some reasonable guide to the likely range and cost of accommodation available in April, May and June in 2015. The Aruba Beach Resort at Broadbeach, a three and a half star resort, is shown to cost $765 for one week. The Sunshine Beach Resort at Miami, three stars, was $613 for the week, the Santana Resort, three and a half stars, was $636 for the week and the Bay of Palms at Elenora, three and a half stars was $630. The Silvershaw Apartments on the Broadwater at Biggera Waters, four and a half stars was $895, and at the top of the range was the Palazzo Versace, 5 stars, at $3,206 for that week. 5. Doing the best that I can, three and a half star accommodation, at a cost of $630 per week is a reasonable amount to use as a basis for calculating the compensation that should be awarded to the applicants. 6. Mr Perkins was unable to reside in the premises, because of the respondent's breach from 4 April 2015. He expeditiously followed the procedure for terminating the lease set out in section 98 of the Residential Tenancies Act, and handed back possession on 24 April 2015. That is a period of 20 days in which the applicants not only had to pay rent of $520 on the premises, but had to incur the cost of alternative accommodation, the reasonable cost of which the Tribunal has found to be $630 per week, or $90 per day. From those 20 days should be deducted the three days 17-19 April for which the applicants do not claim. That is a total of 17 days at $90 per day and the applicants should be compensated $1,530 for that. 7. Between 24 April 2015, when the applicants handed back possession and were relieved of their obligation to pay rent of $520 per week, and 17 June 2015 when Mr Perkins commenced occupation of Ms Turnbull's premises at a rent of $500 per week, there are 52 days. No claim is made for accommodation on 22, 23 and 30 May, nor 1 and 6 June 2015. The applicants should be compensated for the cost of temporary accommodation for 47 days, at a rate of $110 per week or $15.71 per day, being the difference between $630 per week it was reasonable for them to incur, and the $520 per week they did not have to pay for permanent accommodation after validly terminating the agreement and handing back possession. That is a total of $738.37. 8. The total of the applicants' entitlement to compensation for temporary accommodation is therefore $2,268.37. There was no evidence as to the duration of the lease between Mr Perkins and Ms Turnbull. I have made no deduction for the benefit the applicants gained by renting Ms Turnbull's premises for $20 per week less than the rent they were required to pay for the respondent's premises, as it would be too speculative to do so. 9. The applicants' claim for the cost of transporting and storing their belongings flows naturally from the respondent's breach and the amounts claimed seem reasonable, and those amounts, which total $1,248.00, should be awarded. 10. In relation to the claim for non-economic loss, Mr Perkins informed the Appeal Panel that claim was discontinued so far as it related to physical or psychological injury, but was maintained insofar as it concerned a claim for loss of quiet enjoyment. He confirmed that position at the rehearing and submitted an award of $750.00 would be appropriate. Given that he did not reside in the premises after 4 April 2015, and stayed in high quality accommodation from that date until he moved into Ms Turnbull's premises, a nominal amount of $250.00 seems appropriate. 11. Accordingly there should be an award of compensation to the applicants under section 187 of the Act of $3,766.37. W Priestley General Member Civil and Administrative Tribunal of New South Wales 23 June 2016 ********** Endnotes 1. [2015] NSWCATAP at pp 111 and 112 2. (1969) 122 CLR 546 3. (1854) 156 ER 145 4. British Westinghouse Electric Co Ltd v Underground Railways Co Ltd [1912] AC 673 at 689 5. [2000] NSW CCA 313 at paras 187 -188 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: 11 August 2016