Harada v Barnes & Anor
[2021] ACAT 66
•19 July 2021
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
HARADA v BARNES & ANOR (Appeal) [2021] ACAT 66
AA 8/2021 (RT 135/2020)
Catchwords: APPEAL – residential tenancies – appeal by lessor – whether lessor in breach of clause 54 of the standard residential tenancy terms – whether at the commencement of the tenancy the premises were not reasonably clean, not in a reasonable state of repair and not secure – whether breaches entitled the tenant to terminate the tenancy under clauses 90 and 91 where alternatives to termination were available – appeal dismissed
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 79, 82
Residential Tenancies Act 1997 s 8, standard terms 54, 60, 61, 90, 91
Cases cited:Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4
Faulder v Tran [2018] ACAT 80
Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275
Tam v Du [2019] ACAT 94
V v Elringtons Pty Ltd [2018] ACAT 23
Tribunal: Presidential Member G McCarthy
Senior Member M OrlovDate of Orders: 19 July 2021
Date of Reasons for Decision: 19 July 2021
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 8/2021
BETWEEN:
LILY HARADA
Appellant/Lessor
AND:
ALLISON BARNES
First Respondent/Tenant
AND:
NATHAN DEAN
Second Respondent/Tenant
APPEAL TRIBUNAL: Presidential Member G McCarthy
Senior Member M Orlov
DATE:19 July 2021
ORDER
The Tribunal orders that:
1.The application for appeal is dismissed.
………………………………..
Presidential Member G McCarthy
For and on behalf of the Tribunal
REASONS FOR DECISION
Introduction
1.This is an application for appeal by the lessor against a decision by a differently constituted tribunal (original tribunal) upholding the tenants’ claim to end the tenancy; upholding their claim for compensation for breaches of the tenancy agreement; and dismissing the lessor’s counterclaim for loss of rent and costs of reletting the premises (original decision).
2.The Tribunal is satisfied that the application for appeal should be dismissed for the following reasons.
The original decision
3.The dispute arose out of a tenancy of premises in Forde, ACT. The parties entered into a residential tenancy agreement on 24 December 2019 for a fixed term of 12 months commencing on 16 January 2020. The tenancy agreement included the standard residential tenancy terms prescribed by section 8 of the Residential Tenancies Act 1997 (RT Act) and set out in Schedule 1 of the RT Act (standard terms). Upon taking possession, the tenants complained about the state of cleanliness and repair of the premises. When the complaints were not resolved to their satisfaction, on 15 April 2020 the tenants issued a notice under clause 91(a) of the standard terms, giving the lessor 14 days to remedy the breaches. On 30 April 2020, consequent upon the lessor’s alleged failure to remedy the breaches, the tenants served a notice of intention to vacate under clause 91(c). They nominated 14 May 2020 as the date on which the tenancy would end. On 1 May 2020, the tenants filed an application for resolution of a tenancy dispute in the tribunal claiming, among other things, compensation for the lessor’s alleged breaches of the residential tenancy agreement. On 16 October 2020, the lessor filed a response and counterclaim seeking compensation for the tenants’ alleged abandonment of the tenancy. The original tribunal heard the application on 4 November 2020. It gave oral reasons and made final orders on 18 December 2020.
4.The original tribunal found that:
(a)the tenancy was validly terminated on 14 May 2020 pursuant to clause 90(b) of the standard terms, and as a result, dismissed the lessor’s counterclaim for lost rent and re-letting costs, which was premised on the tenants being found to have abandoned the tenancy;
(b)the premises were not reasonably clean at the commencement of the tenancy in breach of clause 54(1)(b) of the standard terms, for which the original tribunal awarded compensation of $175;
(c)the premises – specifically, the oven, dishwasher and toilet – were not in a reasonable state of repair at the commencement of the tenancy in breach of clause 54(1)(c) of the standard terms, for which the original tribunal awarded compensation totalling $550; and
(d)the premises were not reasonably secure at the commencement of the tenancy due to defective window locks in breach of clause 54(1)(d) of the standard terms, for which the original tribunal awarded compensation of $60.
Function of the Tribunal on appeal
5.Pursuant to section 79(3) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act), a party to an original application may appeal to the tribunal on a question of fact or law. Pursuant to section 82(1), an appeal may be dealt with as a new application, or as a review of the original decision, as the tribunal considers appropriate. The former is what lawyers refer to as a ‘hearing de novo’ and the latter as a ‘rehearing’. This application was dealt with as a rehearing.
6.In V v Elringtons Pty Ltd, [1] President Neate summarised the appeal tribunal’s role in a rehearing as follows (omitting citations):
In Excel Intelligent Pty Ltd v Thompson, the Tribunal considered the judicial authorities discussing the role of an appeal court or tribunal. It is not necessary to repeat the full discussion in that decision. However, it is relevant to note the following propositions drawn from judgments about the nature of a rehearing:
(a) An appeal court (or an appeal tribunal) must determine whether the decision appealed against is wrong because the court at first instance (or an original tribunal) fell into an error of law, made a finding of fact that is clearly wrong or exercised a discretion on a wrong principle or in a way that is clearly wrong.
(b) Ordinarily, if there has been no further evidence admitted or no relevant change in law, a court in entertaining an appeal by way of rehearing (or an appeal tribunal) can exercise its appellate powers only if satisfied that there was an error on the part of the court below (or an original tribunal).
(c) The appellate court (or an appeal tribunal) will give proper allowance to the advantage of the court of first instance (or an original tribunal) who saw and heard the witnesses, so that, ordinarily, facts found based on the assessment of witnesses will not lightly be overturned.
(d) The appellate court (or an appeal tribunal) is obliged to conduct a real review of the trial and the reasons of the court of first instance (or an original tribunal).
(e) In an appeal by way of rehearing, once error below has been found (after making proper allowance for the advantages of the trial judge or original tribunal), the appellate court (or appeal tribunal) can substitute its own decision based on the facts and the law as they now stand.[2]
[1] [2018] ACAT 23
[2] V v Elringtons Pty Ltd [2018] ACAT 23 at [23]
7.In short, the appellant must show that the original tribunal committed an error of fact or law that was material to the result.[3]
[3] Tam v Du [2019] ACAT 94 at [22] (per Presidential Member McCarthy) citing Giusida Pty Ltd v Commissioner for ACT Revenue [2016] ACTSC 275 at [29]-[39] (per Refshauge J); Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4 at [46]-[55] (per President Neate)
8.An appellant must do more than contend that the decision of the original tribunal was wrong and that a different result should obtain. A rehearing does not give an appellant the opportunity to have a second run at the target, as if the original decision had never been made, simply because the appellant is dissatisfied with the result. The onus is on an appellant to show, specifically, where the original tribunal went wrong. Normally, that requires an appellant to point to an error of fact or an error of law in the written or oral reasons for decision of the original tribunal and to explain to the appeal tribunal how that error affected the result.
9.If the appellant says that the original tribunal committed an error of fact, the appellant must take the appeal tribunal to the evidence before the original tribunal to demonstrate the error or, if the appeal tribunal gives leave for the appellant to rely on new evidence, the new evidence that the appellant says demonstrates the error and explain what the correct finding of fact should be based on the new evidence.
10.It is not enough for an appellant to say that a different inference of fact should have been made when all the evidence is weighed in the balance. The appellant must show that a material finding of fact was clearly wrong.[4]
[4] Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4 at [53(a)]
11.Although the lessor served some additional video evidence of the oven and window locks filmed on 5 and 6 April 2021[5] – i.e. approximately a year after the tenancy terminated – the lessor did not seek leave to rely on the fresh evidence. Accordingly, the application for appeal proceeded on the evidence before the original tribunal.
Grounds of appeal
[5] Email from Peter Tolhurst (on behalf of the appellants) to the Tribunal sent on 6 April 2021 at 4:39 PM
12.The lessor appealed on the grounds that the original tribunal erred:
(a)by not making decisions “in the spirit and as per”[6] the RT Act;
(b)by not allowing questions that might expose an ulterior motive;
(c)by making decisions without clear evidence from the claimant and not considering evidence or statements from the respondents;
(d)by showing judicial bias in the decision.[7]
[6] Application for appeal under ‘reasons for appeal’
[7] Application for appeal under ‘reasons for appeal’
13.There was no cross-appeal by the tenants about the amount of compensation awarded to them or in respect of any of their claims that were disallowed.
14.The lessor’s grounds of appeal were not clearly expressed. There was some discussion about this at the hearing with a view to clarifying the errors of fact or law raised by the appeal. With that discussion in mind we consider that the appeal raised the following issues.
(a)whether the original tribunal made an error of fact in finding that the premises were not reasonably clean at the commencement of the tenancy;
(b)whether the original tribunal made an error of fact in finding that the oven, dishwasher, and toilet, were not in a reasonable state of repair at the commencement of the tenancy;
(c)whether the original tribunal made an error of fact in finding that the premises were not reasonably secure at the commencement of the tenancy due to defective window locks;
(d)whether the original tribunal made an error of fact or law in finding that termination of the tenancy under clause 90(b) of the standard terms was justified in the circumstances; and
(e)whether the original decision should be set aside on the grounds that it was tainted by bias on the part of the original tribunal.
Lessor’s submissions
15.Whilst acknowledging the tenants’ application as “very detailed”, the lessor’s written submissions claim that the original tribunal was persuaded by “over exaggerated, inconsistent, false, dramatized claims and unsworn evidence”[8] and that it decided the application without access to all the video evidence, and otherwise “made a poor interpretation of the evidence”.[9]
[8] Appellant’s submissions, 10 April 2021 (not-paginated), page 1
[9] Appellant’s submissions, 10 April 2021 (not-paginated), page 1
16.The lessor submits the tenants failed to provide sufficient evidence of their claims and that the original tribunal discounted or gave insufficient weight to the evidence of the lessor’s witnesses. Critically, according to the lessor, the original tribunal focused only on whether the tenants’ claims justified the termination of the lease and failed to have regard to other clauses of the standard terms that provided an alternative remedy to termination and that this was done to “justify what we perceive as a biased decision”.[10]
[10] Appellant’s submissions, 10 April 2021 (not-paginated), page 4
17.The lessor’s letting agent, Mr Tolhurst, who gave evidence and represented the lessor at the original hearing and at the appeal, expanded on these themes in his oral submissions. We address those submissions in our consideration of the issues raised by the appeal.
Tenants’ submissions
18.The tenants, Allison Barnes and Nathan Dean, submitted that the findings, reasoning and conclusions of the original tribunal were properly made. Their written and oral submissions did not raise any new issue that had not been considered by the original tribunal.
Issue 1 – were the premises not reasonably clean at the commencement of the tenancy?
19.Clause 54(1)(b) of the standard terms requires the lessor to ensure that the premises, including furniture, fittings and appliances (unless excluded from the tenancy agreement) are reasonably clean at the commencement of the tenancy.
20.The original tribunal found:
I am satisfied on the evidence that Mr Tolhurst did not inspect the property on the commencement of the tenancy and that the report that he produced was based on an inspection that he had conducted at the end of the previous tenancy, some weeks earlier.
…
I relied on the best evidence available to the tribunal to determine the state of cleanliness at the start of the tenancy and that was the two videos and the still photos that the tenants took at the beginning of the tenancy…From that evidence, it’s clear to me that the house had been cleaned throughout, but the standard of cleaning was not particularly thorough and perhaps not particularly recent.
In particular there was some dirt [that] could be seen in some of the cupboards, the rangehood filter was not clean, there was particles of dirt on some of the floors, dust in the tracks of the sliding wardrobe doors and shower cubicles and some dirt and insects had accumulated in places.[11]
[11] Transcript of oral reasons for decision given on 18 December 2020, page 5, lines 7-36
21.The original tribunal concluded that although the condition of the property was neither “great” nor “terrible”, the issue was whether it was reasonable.[12] The original tribunal referred to the statement of the appeal tribunal in Faulder v Tran[13] that:
The standard of cleanliness required in Standard Term 54 is not one that the tenant ‘prefers’, and a failure on the part of the lessor to attain that standard is not necessarily a breach by the lessor. The breach either occurred on day one or did not. The question is whether the premises were ‘reasonably clean’. That is to be determined objectively according to prevailing community standards. [14]
[12] Transcript of oral reasons for decision given on 18 December 2020, page 5, lines 38-39
[13] [2018] ACAT 80
[14] Faulder v Tran [2018] ACAT 80 at [89] (per President Neate and Senior Member Anforth)
22.The original tribunal concluded that the cleanliness of the premises at the start of the tenancy was “borderline, but it did fall just short of …community standards or [what] could reasonably be expected” and that it would have taken only a few hours to bring the premises up to the “minimum threshold of reasonableness”.[15] Accordingly, the original tribunal allowed compensation of $175 for five hours of cleaning.
[15] Transcript of oral reasons for decision given on 18 December 2020, page 6, lines 4-10
23.Mr Tolhurst submitted that the original tribunal failed to consider that the property had been professionally cleaned at the end of the previous tenancy and disputed that the video of the premises, on which the original tribunal relied, showed that the premises were not reasonably clean. Mr Tolhurst also submitted that the original tribunal’s finding that he did not inspect the premises at the commencement of the premises, where he claims he did, showed bias.
24.We consider these issues in reverse order.
25.The evidence established that the premises were vacated on 21 December 2019 and remained vacant until the tenants took possession on 16 January 2020. Mr Tolhurst conducted the final inspection with the previous tenants and was satisfied with the condition of the premises.[16] The original tribunal enquired whether anyone inspected the premises for the purpose of preparing the entry condition report or whether the person who prepared the report simply relied on the previous final inspection report.
[16] Transcript of proceedings on 4 November 2020, page 12, line 43 to page 13, line 22; page 29, lines 4-6
26.Having carefully read the transcript of Mr Tolhurst’s evidence, we are satisfied that the original tribunal was correct in finding that Mr Tolhurst did not inspect the premises at the commencement of the tenancy for the purpose of preparing the incoming condition report. The evidence shows that Mr Tolhurst simply relied on the final inspection report he prepared at the end of the previous tenancy several weeks earlier. Mr Tolhurst’s submission that the original tribunal’s finding demonstrates bias is without substance and we reject it.
27.The tenants’ videos filmed on the day they took possession include commentary by Ms Barnes and provide a contemporaneous visual and oral record of what Ms Barnes observed at the commencement of the tenancy. Having viewed the video evidence and photographs taken the same day for ourselves, we were not persuaded that the original tribunal was wrong to find that premises were not reasonably clean at the commencement of the tenancy.
28.There was evidence that the outgoing tenants had arranged for the premises to be cleaned on 21 December 2019 by KS Cleaning ACT Pty Ltd. The fact that the premises were accessed by tradespeople installing the air conditioning system in the period between 21 December 2019, when Mr Tolhurst inspected the premises after they were cleaned and 16 January 2020, when Ms Barnes and Mr Dean took possession, may go some way towards explaining the unsatisfactory condition of the premises. For example, dirty water stains visible in the bottom of the bath[17] and faeces visible in the toilet,[18] are consistent with the facilities having been used after the premises were cleaned. Further, the references to dusty surfaces throughout the premises in the video evidence are consistent with the fact that several weeks passed between the date when the premises were cleaned and the date the tenants took possession. The surfaces may have been clean and dust free on 21 December 2019 but clearly, several weeks later, they were not. That is unsurprising. Canberra summers are notorious for the dusty conditions they produce.
[17] Video 16-1-20 Brief video of property 2.mov at 01:42
[18] Video 16-1-20 Brief video of property 2.mov at 05:42
29.We note that the cleaner’s invoice for work done at the end of the previous tenancy is for an amount of $530 and simply states that it is for “end of lease cleaning and carpet steam cleaning”. [19] It provides no details of the time spent on cleaning and the cleaners did not give evidence. The previous tenancy agreement was not in evidence, but we note that the tenancy agreement that Ms Barnes and Mr Dean entered into states that the tenants must have the carpets professionally cleaned immediately before vacating the premises, but does not state that the whole premises must be cleaned professionally. The extent to which the whole of the premises can be said to have been “professionally cleaned” at the end of the previous tenancy, as the lessor claims, is not established by the evidence.
[19] Attachment 3 to the agent/lessor’s timeline response filed on 21 September 2020
30.We observe that merely because premises have been ‘professionally’ cleaned is not determinative of the issue whether the lessor has complied with clause 54(1)(a) of the standard terms. As the appeal tribunal stated in Faulder v Tran:
Cleanliness is an objective test judged by average standards in the community. It is not the standard preferred by either party. It is not the standard required by a fastidious house proud person, nor is it what will be accepted by the proverbial ‘slob’. It is somewhere in between depending on the circumstances of the premises.[20]
[20] [2018] ACAT 80 at [23(g)]
31.It is the result that counts, whether the result is achieved by the efforts of a paid cleaner, the tenant, or both. Mr Tolhurst acknowledged at the hearing of the appeal that there have been occasions in his experience when professional cleaners have been asked to return to finish a job that was not done properly the first time. The lessor’s reliance on the fact that the premises had been ‘professionally cleaned’ is overstated.
32.Mr Tolhurst also submitted that the original tribunal should have considered that the lessor offered to have the cleaners return to “touch up” the cleaning at a meeting with the tenants on 22 January 2020, which they rejected. However, the offer had no value because the evidence established that, by then, the tenants had finished cleaning the property themselves. In any event, the issue is the state of cleanliness of the premises at the commencement of the tenancy, not what happens afterwards if the lessor has breached the obligations in clause 54(1)(b).
33.We find against the lessor on this issue.
Issue 2 – were the premises not in a reasonable state of repair at the commencement of the tenancy?
34.Clause 54(1)(c) of the standard terms requires the lessor to ensure that the premises, including furniture, fittings, and appliances (unless excluded from the tenancy agreement) are in a reasonable state of repair at the commencement of the tenancy.
35.The parties’ dispute concerned the condition of the oven, dishwasher, and toilet at the commencement of the tenancy.
The oven
36.The original tribunal found that the condition of the oven posed a health and safety risk to the tenants and that they were deprived of the use of the oven for the duration of the tenancy, for which the original tribunal awarded compensation based on the loss of use of the oven for three months.[21]
[21] Transcript of oral reasons for decision given on 18 December 2020, page 7, lines 4-7
37.The original tribunal accepted the tenants’ evidence that the oven was unusable because the control knobs became unbearably hot after the oven had been in use for some time and that Ms Barnes had burned her fingers on the knob. There was photographic evidence taken at the commencement of the tenancy showing that the surface of the control knobs had melted from previous use. The original tribunal also accepted the evidence of Mr Dean, who works as a hotel manager with responsibilities for occupational health and safety at his workplace, that he had measured the temperature of the control panel using a handheld thermometer gun at 100o Centigrade.[22] The evidence included a short video of him doing so, which we have viewed.[23] The original tribunal considered both Ms Barnes and Mr Dean to be credible witnesses.[24]
[22] Transcript of oral reasons for decision given on 18 December 2020, page 6, lines 15-47
[23] Oven 23-4-20, 6 13 31 pm.mov
[24] Transcript of oral reasons for decision given on 18 December 2020, page 6, lines 28-29, 38-39
38.Mr Tolhurst submitted that the oven was in working order and the tenants’ claims to the contrary were “false, unproven and highly exaggerated”.[25] He pointed to the absence of any expert evidence, questioned the veracity of Ms Barnes’ evidence that she had burnt her fingers and asserted that the oven remains in working order “to this day”.[26] Mr Tolhurst also referred to his evidence of having inspected the oven and finding nothing wrong with it and the absence of any previous complaints about the oven.
[25] Appellant’s submissions, 10 April 2021 (not-paginated), page 9
[26] Appellant’s submissions, 10 April 2021 (not-paginated), page 9
39.We are not satisfied that the original tribunal was wrong to find that the oven posed a health and safety risk to the tenants. In substance, the lessor’s complaint is that when all the evidence is weighed in the balance, the original tribunal should have reached a different conclusion. That is not enough to demonstrate that the original tribunal’s finding of fact is clearly wrong.
40.We find against the lessor on this issue.
The dishwasher
41.The original tribunal found that the dishwasher was not in a reasonable state of repair at the commencement of the tenancy and was never properly repaired by the lessor, although it remained useable. The original tribunal awarded compensation of $100 for the inconvenience. The original tribunal said:
It’s not in dispute that the top of the dishwasher door was cracked and this could be seen when the door was opened. The handle of the door was located at the top front of the dishwasher. It was on the same panel or component of the door as the crack. The crack was on the top; the handle was on the front. I accept the tenants’ evidence that the lessor’s attempts to fix the problem with putty were wholly ineffective and that as a result of the crack, the door could not be opened in the usual way by using the handle, because the top of the door flexed too much due to the crack.
Instead, they had to open the door from the side, which meant that their hand came into close proximity with the sharp metal parts of the machine, which otherwise their hand wouldn’t have done if they were able to operate the door normally with the handle. Mr Dean gave evidence that he had cut his finger as a result. It seemed that they continued to use the dishwasher, but I accept that it was not in a reasonable state of repair…[27]
[27] Transcript of oral reasons for decision given on 18 December 2020, page 7, lines 15-31
42.Mr Tolhurst submitted that the original tribunal was wrong to find that the dishwasher was not in a reasonable state of repair because the door of the dishwasher could be opened, the dishwasher worked, the crack was superficial, and the dishwasher did not leak.
43.However, it is apparent from the original tribunal’s reasons reproduced above that the original tribunal considered these matters but was persuaded by other evidence that the dishwasher was not in a reasonable state of repair and had inconvenienced the tenants as a result. We were not persuaded that the original tribunal was wrong to do so.
44.We find against the lessor on this issue.
The toilet
45.The original tribunal found that the water in the main toilet would not stop running after the toilet was flushed and had to be turned off at the valve or tap next to the toilet. It took six weeks to effect repairs during which time the toilet was unusable, and the tenants and their guests had to use the toilet in the ensuite. The original tribunal awarded $50 compensation to the tenants for the inconvenience.[28]
[28] Transcript of oral reasons for decision given on 18 December 2020, page 8, lines 31-44
46.Mr Tolhurst submitted that the tenants had provided no evidence that the toilet leaked, and that the original tribunal had disregarded the evidence of Mr Tolhurst and Ms Harada that they had not observed the toilet to leak.
47.We were not persuaded that the original tribunal’s finding was wrong. It is apparent from the original tribunal’s reasons that the critical piece of evidence on which the original tribunal relied in rejecting Mr Tolhurst’s evidence was that a plumber had attended the premises and fixed the problem and the fact that the plumber’s report referred to the replacement of a perished part.[29]
[29] Transcript of oral reasons for decision given on 18 December 2020, page 8, lines 39-44
48.We find against the lessor on this issue.
Issue 3 – were the premises not reasonably secure at the commencement of the tenancy
49.Clause 54(1)(d) of the standard terms requires the lessor to ensure that the premises are reasonably secure at the commencement of the tenancy.
50.The original tribunal found that three of the window locks were defective at the commencement of the tenancy and, although one was later repaired, the others were not, for which the original tribunal awarded $60 compensation for a period of three months. The original tribunal said:
With regard to the window locks, on the balance of evidence I am satisfied that at the commencement of the tenancy three of the window locks in the premises were defective, one in the kitchen and two in the lounge. During the tenancy, the lessor repaired the kitchen window, but not the other two. The two lounge windows could not be locked with the key. They had locks on them, but they couldn’t be locked. One of them had a broken clip and so it could not even be securely closed to prevent entry from the outside and the lack of the functioning locks meant that neither window could be deadlocked.[30]
[30] Transcript of oral reasons for decision given on 18 December 2020, page 8, lines 11-29
51.Mr Tolhurst submitted that there were inconsistencies in the tenants’ evidence, a lack of video evidence and that a colleague had inspected the windows and found that the windows were lockable, in the sense that they clicked shut, but could not be deadlocked.
52.Having reviewed the transcript of the hearing before the original tribunal in relation to this issue it is apparent that the issues and competing viewpoints of the parties were thoroughly explored.[31] It is apparent from the original tribunal’s reasons (reproduced above) that the finding that the locks were defective was made on the balance of the evidence. In substance, Mr Tolhurst submitted that on the balance of the evidence the original tribunal should have reached the opposite conclusion. However, that is not enough to show that the original tribunal’s finding on this issue was clearly wrong. Apart from that, the concession that the windows could not be deadlocked in our view supports the original tribunal’s finding.
[31] Transcript of proceedings on 4 November 2020, page 81, line 11 to page 93, line 46
53.We find against the lessor on this issue.
Issue 4 – was the termination of the tenancy justified in the circumstances?
54.The original tribunal found that the tenancy ended on 14 May 2020 pursuant to clauses 90(b) and 91 of the standard terms on the grounds that the lessor had breached clause 54 of the standard terms and subsequently failed to remedy the breaches, and the tenants had given the necessary notices under clause 91.[32]
[32] Transcript of oral reasons for decision given on 18 December 2020, page 2, lines 29-31, page 4 lines 1-37, page 9, line 32 to page 10, line 29
55.Clause 90 of the standard terms provides:
If the lessor breaches the tenancy agreement, and the tenant wishes to terminate the tenancy agreement, the tenant may either –
(a) apply to the tribunal for an order terminating the tenancy; or
(b) give the lessor written notice of intention to terminate the tenancy, in accordance with clause 91.
56.Clause 91 provides:
If the tenant decides to proceed by way of notice to the lessor, the following procedures apply:
(a) the tenant must give the lessor a written notice that the lessor has 2 weeks to remedy the breach if the breach is capable of remedy;
(b) if the lessor remedies the breach within that 14-day period—the tenancy continues;
(c) if the lessor does not remedy the breach within the time specified in the notice, or if the breach is not capable of remedy—the tenant must give 2 weeks notice of intention to vacate;
(d) the tenancy agreement terminates on the date specified by the tenant;
(e) rent is payable to the date specified in the notice or to the date that the tenant vacates the premises, whichever is the later;
(f) if the lessor remedies the breach during the period of the notice of intention to vacate—the tenant, at the tenant’s option, may withdraw the notice or may terminate the tenancy agreement on the date specified in the notice by vacating the premises on that date.
57.The original tribunal found that the tenants gave the lessor a valid notice to remedy the breaches of clause 54 in accordance with clause 91(a) and that the lessor failed to remedy the breaches within the specified 14-day period. The tenants then gave the lessor a valid notice of intention to vacate the premises in accordance with clause 91(e). The tenants moved out before the 2-week notice period expired but paid rent to the date specified in the notice, which was 14 May 2020.[33]
[33] Transcript of oral reasons for decision given on 18 December 2020, page 10, lines 17-29
58.The lessor submitted that terminating the tenancy under clause 90 was a “sledge hammer option”[34] and that:
Moving straight to 90 and 91 we believe shows a lack of understanding of the tenancy agreement and undermines the integrity of the lease agreement when considering clauses 61 and 62 were a more suitable option and included and legislated for this very purpose.
Perhaps even better staying until the lease was completed or at least fulfilling an option that was put forward to terminate the lease.
… The lessor tried to make arrangements to satisfy Ms Barnes[’] and Mr Dean[’]s concerns and they had the options under clause 60 and 61 but they have done nothing to address their own concerns as this option provides.
Our concern is in this appeal why [the original tribunal] did not raise this, due to bias or a lack of understanding and knowledge of the agreement. We feel [the original tribunal] was led to this decision by the applicants.[35]
[34] Appellant’s submissions, 10 April 2021 (not-paginated), page 4
[35] Appellant’s submissions, 10 April 2021 (not-paginated), page 4
59.Clause 60 of the standard terms contains a list of items deemed to be urgent repairs in relation to the premises, or services or fixtures supplied by the lessor. Clause 61 authorises the tenant to arrange for urgent repairs to be effected to a maximum value of up to 5% of the rent of the property over a year, if the lessor or the lessor’s nominee cannot be contacted, or fails to effect the urgent repairs within a reasonable time.
60.In essence, the lessor submitted that the tenants should have proceeded under clauses 60 and 61 and, in effect, that the original tribunal was wrong to uphold the tenants’ right to terminate the tenancy agreement under clauses 90 and 91.
61.The lessor’s submission is misconceived and must be rejected for the following reasons.
62.First, the choice to proceed under clauses 60 and 61, or under clauses 90 and 91, was the tenants’ choice to make. Provided the conditions were met for the tenants to proceed under clauses 90 and 91 they were not under any legal compulsion to take a different course. A party with a choice between alternative rights in any given circumstances is free to choose the alternative that best suits its own interests.
63.Second, the tenants proceeded under clause 90(b) rather than clause 90(a). If a tenant seeks an order terminating the tenancy under clause 90(a), considerations such as whether there are suitable alternatives to termination are relevant to the exercise of the tribunal’s discretion to make the order. However, the tribunal’s discretion is not enlivened if a tenant elects to proceed under clause 90(b). The only issue the tribunal must decide in that case is whether the conditions set out in clause 91 are met. No discretion is involved. If the tenant follows the steps in clause 91 correctly, the tenancy terminates on the date specified by the tenant in the notice of intention to vacate issued under clause 91(d). The tribunal does not have power to change that result.
64.Third, Mr Tolhurst accepted at the appeal hearing before us that a breach of clause 54, as occurred in this case, can found a right to terminate under clause 90. That is clearly correct.
65.Fourth, although the lessor has appealed against the original tribunal’s findings that the lessor breached clause 54 and subsequently failed to remedy the breaches to the extent that they were capable of being remedied, we have found against the lessor on those issues. Therefore, the original tribunal was correct to find that grounds existed for the tenants to issue a notice to remedy under clause 91(a) and, upon failure to remedy, a notice of intention to vacate under clause 91(d).
66.Finally, the lessor does not challenge the original tribunal’s findings that the tenants complied with all the conditions in clause 91. It follows that the original tribunal’s finding that the tenancy terminated on 14 May 2020 (the date specified in the tenants’ notice of intention to vacate) was correct.
67.Accordingly, the appeal on this issue fails. Where we are satisfied that the tenancy was terminated lawfully, it is not necessary to say anything about the original tribunal’s dismissal of the lessor’s counterclaim for lost rent and re-letting costs: those issues no longer arise.
Issue 5 – is the original decision tainted by bias?
68.The lessor’s allegations of bias involved the following elements.
69.First, Mr Tolhurst submitted that the original tribunal failed to consider whether proceeding under clause 60 and 61 was a more suitable option to termination of the tenancy, and that it failed to do so “due to bias or a lack of understanding of the tenancy agreement”.[36] This ground fails because, as we already explained, the lessor’s reliance on clauses 60 and 61 was misconceived.
[36] Appellant’s submissions, 10 April 2021 (not-paginated), page 4
70.Second, Mr Tolhurst submitted that the original tribunal’s finding that he did not inspect the premises at the commencement of the premises, when he claims he did, shows bias. This ground fails because, as we earlier explained, we consider the original tribunal’s finding was correct.[37]
[37] See paragraph [25]
71.Third, Mr Tolhurst submitted that a comment by the original tribunal about a written statement purportedly made by the lessor’s son, Mr Harada,“[w]ell, you know what I think of the statement, Mr Tolhurst…”[38] shows bias. The background is that Mr Harada gave evidence by telephone. When asked about a written statement he purportedly made on 19 September 2020, Mr Harada disclaimed knowledge of the document. After hearing from both Mr Harada and Mr Tolhurst, the original tribunal said:[39]
Yes, I don’t think that’s a reliable or useful document. It’s not created by Mr Harada. He hasn’t signed off on it. It seems to have been created by Mr Tolhurst based on information which may or may not have been provided by Mr Harada which is not in evidence. So perhaps we’ll just go straight to asking Mr Harada some unleading [sic] questions.
[38] Transcript of proceedings on 4 November 2020, page 67, line 7
[39] Transcript of proceedings on 4 November 2020, page 61, lines 7- 12
72.Having considered the transcript of the discussion about Mr Harada’s statement, we consider that the original tribunal was correct to disregard the document: it was not, in truth, his statement. There is no basis to suggest that the decision to disregard it was the result of bias. We also note that Mr Harada gave oral evidence covering the issues apparently traversed by the document, so the lessor suffered no disadvantage.
73.Fourth, Mr Tolhurst pointed to the original tribunal’s failure to refer to his evidence that he was a licensed builder[40] as evidence of bias. Mr Tolhurst’s evidence related to the state of cleanliness of the premises at the commencement of the tenancy and was to the effect that “I’m a licensed builder and when we do a final inspection everyone misses the same thing. It’s just natural”.[41] We do not consider the evidence that Mr Tolhurst is a licensed builder has much, if any, probative value in relation to the issues the original tribunal was required to decide and the ‘failure’ to refer to his qualifications certainly does not demonstrate bias.
[40] Transcript of proceedings on 4 November 2020, page 29, line 29
[41] Transcript of proceedings on 4 November 2020, page 29, lines 29-30
74.Fifth, Mr Tolhurst made a general submission at the appeal hearing that the original tribunal demonstrated bias by “shutting him down” on various occasions. Having reviewed the whole of the transcript of the original proceeding, it is apparent to us that the original tribunal conducted the hearing informally, as is usual in matters of this kind, turning to consider each issue in turn and giving both the tenants and Mr Tolhurst an adequate opportunity to ask questions of each other and to fully canvas the issues in submissions. We reject the submission that the original tribunal ‘shut down’ Mr Tolhurst from saying what he wished to say.
75.Lastly, Mr Tolhurst submitted that the failure of the original tribunal to give sufficient weight to his arguments was evidence of bias. We disagree. The fact that a court or tribunal does not accept one party’s evidence or submissions on a matter in issue, or prefers the evidence or submissions of the opposite party, is not evidence of bias. It is an inescapable feature of the decision-making process. The losing party will always be disappointed. The fact that it lost does not mean that the court or tribunal was biased against it.
76.Accordingly, the appeal on this issue fails.
Conclusion
77.As the lessor has not succeeded on any of the issues raised on the appeal, the appropriate order is to dismiss the application for appeal.
………………………………..
Presidential Member G McCarthy
For and on behalf of the Tribunal
Date of hearing 21 May 2021 Appellant: Mr P Tolhurst, authorised representative Respondents: In person
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