Commissioner for Housing v Pamela Key
[2003] ACTSC 101
•5 December 2003
COMMISSIONER FOR HOUSING v PAMELA KEY
[2003] ACTSC 101 (5 December 2003)
APPEAL FROM THE RESIDENTIAL TENANCIES TRIBUNAL
No. SCA 55 of 2003
Judge: Ryan J
Supreme Court of the ACT
Date: 5 December 2003
| IN THE SUPREME COURT OF THE | ) | |
| ) | ||
| AUSTRALIAN CAPITAL TERRITORY | ) | No. SCA 55 of 2003 |
| ON APPEAL FROM THE RESIDENTIAL TENANCIES TRIBUNAL constituted by Member Hyndes | ||
BETWEEN: COMMISSIONER FOR HOUSING Appellant AND: PAMELA KEY Respondent
ORDER
| Judge: | RYAN J |
| Date: | 5 DECEMBER 2003 |
| Place: | CANBERRA |
THE COURT ORDERS THAT:
Paragraph 4 of the order of the Residential Tenancies Tribunal made 28 July 2003 be set aside;
The appeal be otherwise dismissed and the remaining paragraphs of the Tribunal’s order be affirmed;
There be no order as to costs.
| IN THE SUPREME COURT OF THE | ) | |
| ) | ||
| AUSTRALIAN CAPITAL TERRITORY | ) | No. SCA 55 of 2003 |
| ON APPEAL FROM THE RESIDENTIAL TENANCIES TRIBUNAL constituted by Member Hyndes | ||
BETWEEN: COMMISSIONER FOR HOUSING Appellant AND: PAMELA KEY Respondent
| Judge: | RYAN J |
| Date: | 5 DECEMBER 2003 |
| Place: | CANBERRA |
REASONS FOR JUDGMENT
This is an appeal by the appellant, Commissioner for Housing (“the Commissioner”), against a decision of the Residential Tenancies Tribunal (“the Tribunal”) made on 28 July 2003. The Tribunal ordered that the rent payable by the respondent to the Commissioner pursuant to 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. The order of the Tribunal ended with these paragraphs;
‘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.’
On 19 September 2003, I ordered that the time in which the Commissioner might appeal from the orders of the Tribunal of 28 July 2003 be extended to 26 September 2003. Pursuant to that order, a notice of appeal dated 19 September 2003 has been filed stating the following grounds;
‘(i)That the Tribunal erred as a matter of law in holding that once section 68(2) of the Residential Tenancies Tribunal Act 1997 (“RTA”) has been used by the Tribunal to determine which party bears the onus of proof then, “…[o]nce that point is reached the formula as laid down in Section 68(2)(b) remains of relevance in consideration of all the evidence before the Tribunal including market rentals, but is not totally persuasive as to the outcome …”: Tribunals reasons for decision; cf the Court per Crispin J in Commissioner for Housing v Pamela Key [2003] ACTSC 44 (3 June 2003) at paragraphs 4 to 10;
(ii)That the Tribunal erred as a matter of law in ordering that the new rental rate was to take effect from 1 February 2003, which involved a variation of the timing of the rent increase, an order not available to the Tribunal in relation to a rent review: see s 67 of the RTA; cf s 104(m) of the RTA;
(iii)That the Tribunal erred as a matter of law because the written reasons for the Tribunal did not sufficiently comply with the requirements of section 106(2) of the RTA; that is to say, they do not adequately provide a statement of reasons; and
(iv)That the Tribunal erred as a matter of law in making its fourth order because it has no jurisdiction in relation to rebates.’
In his reasons for judgment in proceedings numbered SCA 3 of 2003 which were delivered on 3 June 2003, Crispin J referred to s 68 of the Residential Tenancies Act 1997 (ACT) (“the Act”) which provides as follows;
‘68Guideline for orders
(1)The tribunal shall allow a rental rate increase that is in accordance with the prescribed terms unless the increase is excessive.
(2) For the purpose of 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.’
His Honour accepted a submission by Mr Kettle for the Commissioner that s 68(2);
‘… provides a rebuttable presumption which, in effect, determines which party bears the onus of proof and that the formula thereby provided should play no further part in the Tribunal's determination of the extent to which the proposed increase may be excessive.’
His Honour continued in [8] of the same reasons;
‘However, the fact that the proposed increase in the rental for the property in question was more than 20% greater than a general increase in prevailing rentals could have no significance other than to cast on to the proponent the onus of proving that the increase was not excessive. The Tribunal was not entitled to treat the formula as exerting a moderating influence against which other factors such as increased rentals for comparable properties would need to be balanced. Its task was to determine which party bore the onus of proof, having regard to the rebuttable presumptions provided by subs (2), then to determine whether that onus had been discharged, having regard to the matters enumerated in subs (3) and then, if appropriate, to determine how much of the proposed increase should be disallowed.’
After the earlier proposed increase had been remitted to it by his Honour, the Tribunal observed in its reasons of 11 August 2003;
‘Pursuant to Section 68 (2) (b) of the RT Act, the proposed increase of $55 created a situation where ACT Housing bore the responsibility of satisfying the Tribunal that the proposed increase of $55 was not excessive. The proposed increase was well in excess of 20% above the CPI figure of 5.7% which prevailed at the time of notification of the proposed increase. Given the existing rent of $185, the benchmark increase for the application of Section 68 (2) (b) was $10.54 (CPI) plus $2.10 (20% of CPI) ie $12.64.
Whilst the Tribunal found the proposed increase of $55 to be excessive, it was open to the Tribunal to disallow part of the increase (in this case $15 per week) and award a lesser increase pursuant to Section 68 (4) regardless of the fact that the lesser increase of $40 as ordered was also in excess of increase as subject to the formula which operated pursuant to Section 68 (2) (b). The Tribunal views Section 68 (2) (b) as creating a threshold situation as to which party carries the initial burden of persuading the Tribunal as to whether the proposed increase is excessive or not excessive as the case may be. Once that point is reached the formula as laid down in Section 68 (2) (b) remains of relevance in consideration of all the evidence before the Tribunal including market rentals, but is not totally persuasive as to the outcome.’
In my view, Crispin J is not to be taken as having held that s 68(2) is irrelevant to the Tribunal’s task of assessing the amount by which a proposed increase is excessive if it reaches that stage after allocating the competing burdens of proof and determining whether the relevant burden has been discharged. I consider that what his Honour meant was not available to the Tribunal was an automatic application of the formula instead of having regard to market trends which the formula was designed to reflect. That is made clear by [9] of his Honour’s reasons where it is pointed out;
‘In the present case, it appears that the Tribunal took into account "the application of the formula in subs 68(2)" rather than merely an increase in prevailing market rentals as a factor to be weighed in the balance with other matters in determining how much of the proposed increase should be disallowed. Consequently, I am obliged to accept Mr Kettle's submission that an error of law has been demonstrated.’ (emphasis added)
In its subsequent decision, the Tribunal clearly took into account matters other than the amount by which the rent would be increased on a strict application of the formula. As it noted in the passage from its reasons quoted at [6] of these reasons, the proposed increase of $55 and the actual increase which it allowed were both well above the increase of $12.64 which would have been yielded on a strict application of the formula. The Tribunal clearly took into account matters other than the formula as it went on to observe;
‘The Tribunal took careful account of the oral and documentary evidence submitted by the parties. The premises were attractive, and included large garden areas in a sought after area. ACT Housing relied, in the main, on the valuation as submitted plus additional evidence as to prevailing rental rates for comparable premises. The valuation concluded that an appropriate rental reflecting market positioning and allowing for tenant-funded improvements was $250 per week. On behalf of the tenant it was pointed out that there was very little evidence available on comparable premises in Griffith. There was a property in Kingston which was available for rent at $200 per week. A "drive by" inspection by the Tribunal revealed a property which is scheduled to be demolished to form part of a major re-development and was not an appropriate comparison.
The Tribunal allowed the tenant to give evidence as to personal and financial circumstances. The Tribunal took the view that while income considerations do not form part of the factors to be considered during rental increase considerations, as this is purportedly covered by the rebate system, it was of background interest to the Tribunal that such matters are understood. The Tribunal was dealing with a tenant of some 17 years standing and although this is also another factor which has limited bearing on assessment of rent payable, concepts of personal endeavour and dependability in the face of considerable hardships should be respected.’
For these reasons, I have not been persuaded that ground (i) of the Commissioner’s grounds of appeal has been made out.
On the question of the date from which the increase allowed by the Tribunal should take effect, it has been submitted by Mr Christensen for the Commissioner that s 67 of the Act makes available to the Tribunal three mutually exclusive choices and does not permit the Tribunal to make “any other order it thinks fit.”
Section 67 provides;
‘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.’
In my view, the orders which that section allows the Tribunal to make are not mutually exclusive. Thus, an order like the present allowing an increase of $40 a week instead of the $55 a week applied for, is an order under s 67(a) but also an order under s 67(c) disallowing part, ie $15 of the increase applied for. Words of wide import in a facultative section like s 67 ought not to be read down unless the language chosen by Parliament intractably requires that construction. In my view, s 67 permits the Tribunal to disallow part of the claimed increase by deferring the date from which it is to be payable as well as, or instead of, reducing the claimed amount from the date proposed by the Commissioner as the date from which the increase should be paid. For these reasons, on the view I take of s 67, it is unnecessary to consider whether par 3 of the Tribunal’s order could be supported by resort to s 104 of the Act which, so far as is relevant, provides;
‘The tribunal may, in addition to any other order it is empowered to make, make the following orders in relation to an application about a tenancy dispute:
… … …… …
(m) such other order as the tribunal considers appropriate.’
Since I regard the present order as one under s 67 disallowing part of the increase, it is unnecessary to consider whether it could have been supported as an additional or “other” order under s 104. Accordingly, ground (ii) of the grounds of appeal has not been made out.
The third ground of appeal complains of the adequacy of the Tribunal’s reasons. Section 106(2) of the Act provides;
‘A statement of reasons shall-
(a) set out the tribunal's findings on material questions of fact;
(b)refer to the evidence or other material on which the finding was made; and
(c) give the tribunal's reasons for making the order.’
The Tribunal purported to comply with the requirements of s 106(2) by dividing the operative part of its statement of reasons into three headings:
‘(a) Tribunal’s Findings on Material Questions of Fact.
(b) Evidence or other Material on which the Findings Were Made.
(c) Reasons for Making Order.’
However, the statements gathered under the first of those headings are not findings of fact at all. The first was a statement of the legal effect of s 68(2) of the Act discussed at [7] above. The remaining statements under the first heading were ultimate conclusions that the claimed increase of $55 a week was excessive, that an increase of $40 a week would not be excessive and that 1 February 2003 was “found to be appropriate” as the commencement date for the increased rent of $40 a week. Not surprisingly, given the error to which I have just pointed, the statement under the second heading could not comply with s 106(2)(b). That statement was in these terms:
‘The Findings of the Tribunal were based on consideration of the following evidence or other material:
Documents filed by and on behalf of the Applicant/Tenant.
Documents filed by and on behalf of the Respondent/Lessor.
Evidence given by and on behalf of the Applicant/Tenant.
Evidence given by and on behalf of the Respondent/Lessor.
Previous decisions of the Residential Tenancies Tribunal of the ACT.
Relevant sections of the RT Act.
Residential Tenancies Law and Practice in NSW, Allan Anforth, Tom Thawley and Peter Christensen.’
Section 106(2)(b) does not require a recital of all the evidence or other material which the Tribunal has considered. Rather, it requires a reference to each piece of evidence or material on which the Tribunal has relied in making one of the findings on a material question of fact which it is obliged by s 106(2)(a) to set out in its statement of reasons. The requirement is not satisfied by a generalised reference to all of the evidence before the Tribunal like that given in the passage from its statement of reasons quoted at [15] above.
The findings of fact made by the Tribunal are actually to be gleaned from those parts of its “Reasons for Making Orders” which are gathered under the sub-heading “Rental Increase Granted”. Those paragraphs have been quoted in full at [6] and [8] of the present reasons. Reading those passages with the benevolence enjoined by authorities such as Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272 and Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 I consider that the Tribunal made the following findings of fact:
(a)the rental market in the ACT had moved upwards since the last review of the rent of the premises. (The only evidence referred to as supporting this finding was the increase of 5.7% in the consumer price index, presumably that referable to the rent paid for privately owned dwellings in Canberra).
(b)the premises were attractive and included large garden areas in a sought-after location. (No evidence was referred to as supporting this finding but it seems from the transcript of the hearing before the Tribunal to have been common ground).
(c)the valuation relied on by the Commissioner did not indicate the current market rental value of the premises. (The basis for this finding seems to have been the tenant’s assertion that there was very little evidence of rents commanded by comparable properties in Griffith).
(d)the property in Kingston available for rent at $200 a week did not indicate the current market rental value of the premises. (The evidence for this finding was that derived from the Tribunal’s own “drive by” inspection which revealed that the Kingston property was not comparable with the premises).
(e)the tenant had been in occupation of the premises for some 17 years and had been dependable and stable. (The evidence for this finding is not set out but, like that discussed in (b) above, it seems to have been common ground).
The Tribunal’s reasons for its order awarding an increase of $40 a week in the rent of the premises are not expressly given in its statement of reasons. I infer that its reasons included the findings of fact which I have imputed to it at [17] above. I am also prepared to assume that the Tribunal drew on the “experience and expertise” which is a qualification for appointment under s 113(5) of the Act and the specialised knowledge which it can be taken to have acquired in the course of its day to day exercise of jurisdiction in relation to residential tenancies in this Territory. Nevertheless, that assumption cannot excuse the Tribunal from the explicit obligation imposed by s 106(2) to make clear the reasons for each of its orders. As Woodward J pointed out in Ansett Transport Industries (Operations) Pty Ltd v Wraith (1983) 48 ALR 500 at 507 a “decision-maker should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute) and the reasoning processes which led him to those conclusions.”
As I have demonstrated earlier in this discussion of the Tribunal’s reasons, it is not clear that all of the findings of fact on which the decision to increase the rent of the premises by $40 a week have been set out or even left to be gathered by unmistakeable inference. Nor has the Tribunal made clear the reasoning process which led it from whatever findings of fact it did make to the conclusion that an increase of $40 a week would not be excessive. Accordingly, had I been persuaded to refer the matter to the Tribunal for correction of either of the substantive errors of law alleged in grounds 1 or 2 of the Commissioner’s notice of appeal, I would have directed that the statement of reasons for the correcting order conform in all respects with s 106(2) of the Act. However, since I have concluded that the only error of law which would warrant remitting the case to the Tribunal is a procedural one going to the provision of a statement of reasons, I consider that to make such a remitting order would be an inappropriate exercise of the Court’s discretion under s 126(3) of the Act. I am reinforced in that conclusion by the fact that only a relatively short time remains before the Commissioner, in accordance with his usual practice, can again review the rent of the premises.
The fourth ground of appeal goes to the jurisdiction of the Tribunal to direct the Commissioner in the exercise of the powers reposed in him in the administration of the Public Rental Housing Assistance Program (“the Program”) made under s 12(1) of the Housing Assistance Act 1987 (ACT). Clause 17 of the Program contains, amongst others, these provisions;
‘(1) A tenant may apply to the Commissioner for rent rebate.
… … … … …
(3)Subject to the provisions of this clause the Commissioner must grant a rebate of rent of the amount by which the weekly rent payable by the tenant under clause 16 is more than the Basic Rent.
… … … … …
(5)For the purpose of this clause 17, “Basic Rent” means the sum of:
(a)25% of the weekly income of the household, other than:
i.the weekly income of all members of the household that are less than 18 years of age other than the tenant; and
ii.dependent child payments;
(b)10% of the weekly income of all members of the household that are independent person less than 18 years of age other than the tenant, other than dependent child payments; and
(c)10% of dependent child payment payable to any person in the household; and
(d)any component of the rent for the Property which is in respect of hot water, space heating, garages and other facilities and is specified by the Commissioner to form part of the basic rent.
(6)Rent rebate is granted for a period of 6 months.
(7)The Commissioner may from time to time extend by up to 6 months the period of rent rebate granted to a tenant.
… … … … …
(10)The Commissioner may from time to time review the rent rebate granted to a tenant and may suspend, vary or terminate the grant of rent rebate if it appears to the Commissioner for any reason that the tenant is or was not eligible for rent rebate or is or was eligible for a different amount of rent rebate.
… … … … …
(12)A tenant who:
(a)is subletting his or her accommodation;
(b)ceases to reside at or is absent from his or her accommodation without the consent of the Commissioner; or
(c)is absent from his or her accommodation with the consent of the Commissioner for a period greater than 3 months commencing on or after 1 January 2001;
is not eligible for rent rebate unless the Commissioner determines that special circumstances exist.’
I agree with the submission of Mr Christensen for the Commissioner that neither s 67 nor s 104 of the Act empowers the Tribunal to direct the Commissioner in the exercise of his powers or discretions under the Program. The Act, as I perceive it, is concerned to provide a mechanism for regulation of the relations between lessors and tenants generally in respect of the use and occupation of premises as residences. The orders contemplated by s 67 of the Act are capable of taking effect notwithstanding an assignment or sublease whereas the right to apply for a rebate under the Program, as the extracts quoted above make clear, is personal to the tenant who applies for the rebate and is not usually available after an assignment or sub-lease of the relevant premises.
Accordingly, paragraph 4 of the Tribunal’s order of 28 July 2003 must be set aside.
Conclusion
For the reasons which I have endeavoured to explain, I have been persuaded only to set aside paragraph 4 of the Tribunal’s order of 28 July 2003. The remaining paragraphs of that order will be affirmed and, consistently with the undertaking given to the Court on behalf of the Commissioner when an extension of time within which to appeal was granted, there will be no order as to costs.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.
Associate:
Date: 5 December 2003
Counsel for the Appellant: Mr P Christensen
Solicitor for the Appellant: Australian Government Solicitor
The respondent did not appear.
Date of hearing: 3 December 2003.
Date of judgment: 5 December 2003
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