Commissioner for Housing v Key

[2004] ACTCA 17

COMMISSIONER FOR HOUSING v KEY
[2004] ACTCA 17 (25 August 2004)

APPEAL – point of law not raised before the Tribunal below – whether Commissioner entitled to raise that point of law on appeal
LEASES AND TENANCIES – determining appropriate rental increase – relevance of s 68(2)(b) – considerations for determining whether rental increase excessive – whether rental component of Consumer Price Index a relevant consideration
WORDS AND PHRASES – 'any other matter the Tribunal considers relevant'

Residential Tenancies Act 1997 (ACT) ss 67, 68, 69

O'Sullivan v Watson (1986) 7 NSWLR 693 considered

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

No. ACTCA 55 - 2003
No. SCA 55 of 2003

Judges:  Higgins CJ, Connolly and Moore JJ
Court of Appeal of the Australian Capital Territory
Date:  25 August 2004

IN THE SUPREME COURT OF THE  )   No. ACTCA 55-2003
  )  No. SCA 55 of 2003
AUSTRALIAN CAPITAL TERRITORY  )  
  )  

COURT OF APPEAL  )          

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:COMMISSIONER FOR HOUSING

Appellant

AND:PAMELA KEY

Respondent

ORDER

Judges:  Higgins CJ, Connolly and Moore JJ
Date:  25 August 2004
Place:  Canberra

THE COURT ORDERS THAT:

1. The appeal be dismissed with costs.

IN THE SUPREME COURT OF THE  )  No. ACTCA 55-2003
  )  No. SCA 55 of 2003
AUSTRALIAN CAPITAL TERRITORY  )  
  )  
COURT OF APPEAL  )  

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: COMMISSIONER FOR HOUSING

Appellant

AND: PAMELA KEY

Respondent

Judges:  Higgins CJ, Connolly and Moore JJ
Date:  25 August 2004
Place:   Canberra

REASONS FOR JUDGMENT

1. This is an appeal from the judgment of Ryan J of 5 December 2003 by the Commissioner for Housing ("the Commissioner").  His Honour was dealing with an appeal by the Commissioner against the decision of the Residential Tenancies Tribunal ("the Tribunal") made on 28 July 2003.  The Tribunal is constituted under the Residential Tenancies Act 1997 (ACT) ("the Act"). The Tribunal ordered that the rent payable by the respondent to the Commissioner under a Residential Tenancy Agreement in respect of a house at 15 Bannister Gardens, Griffith in the ACT ("the premises") be increased by $40 a week rather than $55 a week which had been proposed by the Commissioner. The increase ordered by the Tribunal brought the total rent of the premises to $225 a week. Two of the orders made by the Tribunal were:

3.  That the new rental of $225.00 per week is to take effect from 1 February 2003.

4.  That in the event that the new rental rate creates a position where the tenant is eligible for a rental rebate, the rebate is to be applied retrospectively to the date of the rental increase.

1. In this appeal, the Commissioner raised five grounds of appeal though some concern the same issue.  It is convenient to deal with the issues in the order in which counsel for the appellant addressed them at the hearing of the appeal. 

1. The first concerned Ryan J’s rejection of a contention of the appellant that the Tribunal had erred in law in determining that the rental increase was to take effect from 1 February 2003. The relevant provisions of the Act are ss 67 and 69. Section 67 provides that:

The tribunal may make the following orders in relation to an application for review of a rental rate increase:

(a)  an order allowing the increase applied for or such other increase as the tribunal considers just;

(b)  an order disallowing the increase;

(c)  an order disallowing part of the increase.

Section 69 provides that:

(1)  Where the tribunal makes an order under section 67 (a) or (c), the rental rate increase takes effect from the date on which the proposed increase would, but for section 66, have taken place.

(2)  The tribunal may, on application, grant a tenant time to pay rent owed by virtue of the operation of subsection (1).

(3)  Where —

(a)  the tribunal makes an order referred to in section 67 (b) or (c); and

(b)  notwithstanding section 66, the tenant has paid the lessor the full amount of the rental rate increase proposed by the lessor;

the tribunal may order the lessor to pay to the tenant the difference between the amount the tenant paid to the lessor and the amount that was payable.

(emphasis added)

1. It was common ground in the appeal that the "date on which the proposed increase would … have taken place" was, for the purposes of s 69(1), 22 September 2002. Counsel for the Commissioner submitted the Tribunal did not have the power to determine that the increase would take effect from 1 February 2003. Ryan J rejected a similar submission and concluded that it did have power. In this appeal, counsel for the respondent has pointed to what we accept is a concession made by a solicitor representing the Commissioner before the Tribunal. It was conceded, in the face of a request by the respondent that any rent increase operate from the date of the Tribunal's decision, that the Tribunal could decide that the increase should operate from a date after 22 September 2002 (the end of October 2002 was proposed by the Commissioner as the latest date from which the increase could commence). This appears to us to involve a concession that the Tribunal was not bound to determine that any increase could operate only from 22 September 2002.

1. Counsel for the respondent submitted that because the Commissioner made that concession and for reasons explained by McHugh J in O’Sullivan v Watson (1986) 7 NSWLR 693 at 702-3, the Commissioner should not be allowed to raise in this appeal an issue about the power of the Tribunal to determine that the rent increase could operate from a date other than 22 September 2002. The principle discussed by McHugh J concerns circumstances where a point of law is not raised or argued before a court or tribunal and any defect arising from an erroneous application of the law by the court or tribunal could have been cured.

1. Had the concession not been made, and perhaps additionally, had the Commissioner submitted to the Tribunal that it was bound to determine that the increase could only operate from 22 September 2002, the Tribunal could have cured what is now said to be a determination tainted by error (concerning the date from which the increase should operate).  In these circumstances, in our opinion, the Commissioner should not be permitted to pursue this point in the appeal.  We should not be taken, however, to be endorsing the conclusion of Ryan J.  There are arguments of some substance raised by the Commissioner as to why his Honour was wrong though, equally, there are arguments of substance supporting his Honour's conclusion. 

1. The next issue raised by the Commissioner in this appeal concerned the approach taken by Ryan J to the question of whether the Tribunal's reasons were adequate and satisfied the requirements of s 106 of the Act. His Honour concluded they did not satisfy those requirements but refused to make an order remitting the matter to the Tribunal so that it could provide further reasons. The Commissioner submitted that such an order should have been made. Ultimately, however, counsel for the Commissioner accepted that this submission was only pressed if we were otherwise satisfied that the Tribunal had erred in law in its consideration of the respondent's application for review. In adopting this approach, the Commissioner was proposing, in effect, that if the Tribunal has to address again the application according to law because of orders made by this Court, it should also be required to give reasons which satisfied s 106 of the Act (at least when a request for reasons was made). As discussed elsewhere in these reasons, we are not satisfied that the Tribunal has erred in law and, accordingly, it is unnecessary to consider further this issue concerning what Ryan J should have done in light of his conclusion about the inadequacy of the reasons.

1. The principal point raised by the Commissioner in this appeal concerned the Tribunal's reference in its reasoning to "the formula" in s 68(2)(b). It is convenient to set out s 68 which relevantly provides:

(1)  The tribunal shall allow a rental rate increase that is in accordance with the prescribed terms unless the increase is excessive.

(2)  For subsection (1)—

(a) unless the tenant satisfies the tribunal otherwise, a rental rate increase is not excessive if it is less than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later); and

(b) unless the lessor satisfies the tribunal otherwise, a rental rate increase is excessive if it is more than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later).

(3)  Where a tenant or lessor proposes that a rental rate increase is or is not excessive, the tribunal, in considering whether it is satisfied as to the proposal, shall consider the following matters:

(a)  the rental rate before the proposed increase;

(b)  if the lessor previously increased the rental rate while the relevant tenant was tenant—

(i)  the amount of the last increase before the proposed increase; and

(ii)  the period since that increase;

(c)  outgoings or costs of the lessor in relation to the premises;

(d)  services provided by the lessor to the tenant;

(e)  the value of fixtures and goods supplied by the lessor as part of the tenancy;

(f)  the state of repair of the premises;

(g)  rental rates for comparable premises;

(h)  the value of any work performed or improvements carried out by the tenant with the lessor’s consent;

(j)  any other matter the tribunal considers relevant.

(4)  Where the tribunal considers a proposed rental rate increase is excessive but a lesser increase would not be, it may disallow so much of the increase as is excessive.

(5)  In subsection (2):

index number means the Consumer Price Index (Privately-owned dwelling rents expenditure class) for Canberra published from time to time by the Australian Statistician.

The gravamen of the Commissioner's argument was that reference by the Tribunal to "the formula" as a relevant consideration when determining what was an appropriate rental increase, demonstrated it took into account the Consumer Price Index (Privately-owned dwelling rents expenditure class) for Canberra published from time to time by the Australian Statistician. This is the "index number" as defined in s 68(5). The Commissioner submitted that this index number was not a matter that could be taken into account by the Tribunal when assessing whether a rental rate increase was excessive or not. The only relevance of the index number, it was submitted, was in determining who bore the onus of proof as provided in s 68(2).

1. In dealing with this submission, we should commence by saying that the use of the expression "the formula" may have the effect of distracting attention from the language used in the Act and the scheme of review established by Part 5. It is plain that the index number does have an important role to play in the operation of s 68(2). However it does not follow that the express reference to the "index number" in s 68(2) and the fact it is defined in s 68(5), implies that it is a factor the Tribunal cannot take into account when undertaking the task required by s 68(3).

1. In our opinion, whether the index number can be taken into account depends on the meaning of the expression "any other matter the Tribunal considers relevant" in s 68(3)(j). That expression is in general and wide language and, presumptively, the only limit on matters the Tribunal can take into account, is that they must be matters which are relevant having regard to the function the Tribunal is performing and the scope, purpose and objects of the Act.

1. We have little doubt that circumstances might arise where the index number could be a relevant consideration.  For example, the Tribunal may be required to consider whether a rental increase was excessive for a property for which there were no comparable premises.  The property may, for relevant purposes, be unique.  Its uniqueness may flow, for example, from its location, size or configuration of rooms.  In those circumstances, we do not see why the index number might not be relevant in determining whether a rental increase was excessive.  The index number might be a relevant consideration in other situations.  Ultimately its relevance would depend on the Tribunal's opinion that, in the circumstances of a particular case, it was relevant.

1. Counsel for the Commissioner submitted that the matters listed in s 68(3) have a common characteristic, namely that they each related to the property in question. Thus, it was submitted, s 68(3)(j) must be construed ejusdem generis, and concerns only matters which shared this characteristic. As the index number did not share this characteristic it was not a matter which could be considered under s 68(3)(j). We make two observations about this submission. First, what is sometimes described as the ejusdem generis rule, should be deployed with considerable caution: see the discussion in Pearce and Geddes, Statutory Interpretation in Australia, fifth edition at 4.24.

1. Secondly, we do not accept that the matters listed in s 68(3)(a) to (h) have a common characteristic as narrowly as was characterised by counsel for the Commissioner. Rental rates for comparable premises (the matter identified in s 68(3)(g)) do not concern the property in question, at least directly. While they do indirectly (in the sense that they create a point of comparison with the property in question), that indirect relationship is no different in principle (only different in degree) from the relationship between the property in question and the index number. In our view the construction advanced by the Commissioner of s 68(3)(j) is too narrow. The Tribunal is entitled, if it considers it relevant, to consider the index number when assessing whether the rental rate increase is excessive or not.

1. One further matter should be noted. Section 68(2) requires two calculations and a comparison to be made. Somewhat simplified, the following must be done. The existing rent must be notionally increased by the index number producing an increase as a money amount. That increase is then increased by 20% producing a second money amount. That second money amount is then compared to the rental rate increase (viz. the increase sought by the lessor) to determine which is the greater. It would be wrong of the Tribunal to treat either the increase resulting from the first calculation (using the index number) or the increase resulting from the second calculation (using the 20%) as some sort of indicative benchmark (sanctioned by the legislation) of what might be a rent increase which was not excessive. On another view, s 68(2) calls for a comparison of percentages and not money amounts, but it is unnecessary for us to determine this question in this appeal. The point we are making is that those calculations and that comparison are made only for the purpose identified in s 68(2), namely to determine who must show that the rental rate increase is or is not excessive. That is not to say, however, that the index number is necessarily irrelevant in considering whether the rental rate increase is excessive. As we have just discussed, it may be relevant.

1. In our opinion, the appeal should be dismissed with costs.

   I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

   Associate:

   Date: 25 August 2004

Counsel for the Appellant:  Mr D Kettle

Solicitor for the Appellant:  ACT Government Solicitor

Counsel for the Respondent:  Mr P J Ward

Solicitor for the Respondent:  Blake Dawson Waldron

Date of hearing:  10 August 2004

Date of judgment:  25 August 2004