Kiternas v Watts
[2006] ACTRTT 4
•18 January, 2006
Ranko & Nada Kiternas – v.- R & C Watts ACTRTT4 [2006]
CATCHWORDS
Rent reductions
Compensation for distress and inconvenience
Failure to carry out repairs by landlord
Mitigation of losses by tenant
ISSUES
Whether the Tribunal may order successive rent reductions pursuant to s71
Whether the Tribunal has the power to award compensation for distress and inconvenience pursuant to s104(1)(d) for a landlords failure to repair
Whether the Tribunal can order rent reductions and compensation pursuant to s104(1)(d)
Whether the tenant has mitigated his losses by unreasonable delay in commencing proceedings in the Tribunal
LEGISLATION
Residential Tenancies Act 1997 (ACT) sections: 38, 71 and 104(1)(d) prescribed terms: 54-57
Legislation Act 2001 : sections 138, 139.
CASES CITED
The Progressive Mailing House P/L v Tabali P/L (1985) 157 CLR 17;
The Estate of Tanya Humphries v The Commissioner for Housing in the ACT [2003] ACTSC 40; Minister for Immigration, Multicultural and Indigenous Affairs v Al Khataji (2004) HCA 38; Robinson v Harman 1848 1 EX 850 at 855,
Commonwealth v Amann Aviation P/L Ltd 1991 174 CLR 64 at 128;
O'Brien v Dunsdon 1965 39 ALJR 78;
Sellars v Adelaide Petroleum N/L 1994 179 CLR 332 at 349;
Hadley v Baxendale 1854 9 Ex 341;
C Czamikow Ltd v Loufos 1969 1 AC 350;
Baltic Shipping Co v Dillon 1993 176 CLR 344;
Simonius Vischer & Co v. Holt [1979] 2 NSWLR 322 at 355–6;
Lloyds and Scottish Finance v. Modern Cars and Caravans [1966] 1 QB 764;
TC Industrial Plant Pty Ltd v. Robert’s Queensland Pty Ltd (1963) 180 CLR 130 at 138; Wenkart v. Pittman (1999) 46 NSWLR 502 at 520–523;
Murray-Oates v. Jadd Pty Ltd (1999) 76 SASR 38 at 48;
Roper v. Johnson (1873) LR 8 CP 167.;
Karacominakis v. Big Country Development Pty Ltd [2000] NSWCA 313;
The World Beauty [1970] P 144;
Payzu Ltd v. Saunders [1919] 2 KB 581;
Banco de Portugal v. Waterlow & Sons Ltd [1932] AC 452;
Karacominakis v. Big Country Developments Pty Ltd [2000] NSWCA 313;
Residential Tenancies Tribunal v Offe (unreported SC of NSW 1/7/97 Abadee J);
Strahan v Residential Tenancies Tribunal (unreported SC NSW Dowd J 1998);
Reiss v Helson [2001] NSWSC 486;
Sonia Jones v Commissioner for Housing for the ACT [2003] ACTSC 52;
Musumeci v Winadell P/L (1994) 34 NSWLR 723;
Spathis v Hanave Investment Co P/L (2002) NSWSC 304;
Worrall v Commissioner for Housing [2002] FCAFC 127;
Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1980) 29 ALR 333;
Smith v The Queen (1994) 181 CLR 338;
Barres v Sun and Xia (2001) NSWRT 168;
Jacques v Santa Rita (1999) NSWRT 40;
Case Reference Number: RT 986 of 2004
Re: 10 Sulman Place, Swinger Hill ACT
Decision
The Respondent, Richard Watts is to pay the tenants the sum of $4160.00 within 28 days.
This order is in addition to the order made on 17 June 2005.
Member: A. Anforth
Date: 18 January, 2006
STATEMENT OF REASONS
This matter is a continuation of the dispute between the parties in respect of which a decision was given on 17 June 2005 with reasons. The full text of that decision is annexed to these reasons.
In the decision of 17 June 2005 the Tribunal made the following findings of fact:
77. That the rent arrears payable by the tenants to the landlords at the termination of their lease was $5042.35
78. The landlords failed to comply with section 29 of the Act at the commencement of the tenants lease in February 2002 in that the landlords did not carry out an inspection of the premise, prepare a report and provide a copy to the tenants. Neither of the agents appearing for the landlords at the hearing had any personal involvement with the premises at the commencement of the tenants lease in February 2002. Consequently the landlords were not in a position to know the state of the premises at that time.
79. There exists sufficient corroboration to satisfy the Tribunal that the tenants complaints concerning the poor state of the premises from the beginning of their lease is probably true. The defects were not minor, they went to basic issues of personal hygiene, heating, lighting, cooking and safety within the house and therefore constituted a "significant diminution" of the tenants enjoyment of the premises within the meaning of section 71. The evidence reviewed above satisfied the Tribunal that most, if not all these defects, were present from the commencement of the lease.
80. To the extent that the landlords suggested that some of the defects had been deliberately or negligently caused by the tenants, there is no evidence of any kind before the Tribunal which supports those claims. There is evidence recorded above of early and consistent complaints by the tenants of the need for repairs.
81. The tenants are entitled to their retrospective rent reduction. Section 71(3)(b) limits the rent reduction to a 12 month period, in this case running from the commencement of the lease in February 2002. The tenants sought a reduction of $80 per week which represents about a 27% reduction on the average rent agreed between the parties. In the circumstances the Tribunal does not consider this to be unreasonable and makes orders accordingly in the sum of $4160.00. After allowing for the set off of rent arrears the final sum owing by the tenants to the landlords is $882.00 (in rounded off terms).
After making these findings of fact and the consequential orders, the Tribunal observed:
82. But to limit the tenants claim in this manner is unfair in that the landlords' failure to repair extended beyond the first 12 months of the lease. The question then arises as to whether the Tribunal can
(a) construe the tenants application to be for a series of 12 monthly rent reductions to span the whole of the relevant period: or
(b) make an order under section 104 for compensation to the tenants for the landlords' breaches of prescribed terms 54 and 55, being an order in addition to the rent reduction. The Tribunal is cognisant of authorities to the contrary in the context of similarly worded NSW legislation (Residential Tenancies Law and Practice In NSW 2003 ed Anforth, Thawley and Christensen at [2.49.0])
83. These issues were not argued before the Tribunal and so it is not appropriate for the Tribunal to make orders at this stage. The parties have leave to relist the matter on these limited points prior to 30 July 2005 after which the orders below are final. The parties are encouraged not to seek relisting unless and until they have taken appropriate legal advice on the issues.
The parties were given leave to relist the matter for determination of the above issues and any consequential orders.
The Tenant applied to relist the matter on 26 July 2005 and the matter came before the Tribunal on 29 Jul 2005. Mr Kiternas appeared in person and Ms Pellatt, solicitor, appeared for the landlord.
On 29 July 2005 the Tribunal made the following orders:
1.That the matter is adjourned to 22nd September 2005 at 10.00am.
2.That the respondents are to file and serve submissions going to the issues of law raised in paragraph 82 of the decision and on apprehension of bias by 26th August 2005.
3.That the applicant is to file and serve submissions in reply by 16th September 2005.
4.The decision of 17 June 2005 is amended by deleting the number 81 and substituting 82 in order 2
.
On 26 August 2005 the solicitors for the landlord filed the following submissions:
SUBMISSIONS ON ISSUES RAISED IN PARAGRAPH 82 OF THE JUDGMENT DATED 17 JUNE 2005
Introduction
1.The respondents make the assumption that the application we are asked to make submissions on is that brought on or about 28 October 2004 seeking a retrospective rent reduction. A decision in this matter was delivered on 17 June 2005 and the matter was sought to be brought back before the court via a document entitled 'application to restore to the list' dated 26 July 2005. On 29 July 2005 orders were made in the tribunal for the filing and serving of submissions, hi that regard the orders were a little unusual in they required the respondent to file and serve submissions first in the absence of knowledge upon what grounds the application is based. In that situation the respondent reserves its right to provide further submissions after submissions on behalf of the applicant have been considered. On the assumptions made above the respondent submits as follows:
The tenant's application as a series of 12 monthly rent reductions to span the whole relevant period.
2.Section 71 of the Residential Tenancies Act 1997 ("RT Act (ACT)") provides that:
71 Reduction of existing rent
(1) on application by a tenant, the tribunal shall order a reduction in the rental rate payable under a residential tenancy agreement if it considers that the tenants use or enjoyment of the premises has diminished significantly
...
(3) a reduction in the rental rate ordered under subsection (1) shall –
(a) take effect from the day on which the tenant's use or enjoyment of the premises diminished, or such later date as the tribunal specifies; and
(b) remain in force for such period, not exceeding 12 months, as is specified by the tribunal.
3.In the respondent's submission the words of the section are clear and unambiguous. The Tribunal has the power to make an order for rent reduction for a period not exceeding 12 months. There is no power or authority given to the tribunal to make an order for a series of 12 monthly rent reductions and on the face of it would be ultra vires to do so.
4.No assistance on the issue is found in the explanatory memoranda to the RT Act (ACT) as the part that relates to the section is silent on the issue and in the absence of any express or intended power it is our submission that a series of orders is simply not able to be made without being beyond power.
5.This interpretation of section 71 is supported by looking at the related provisions in the New South Wales Residential Tenancies Act 1987 (NSW) ("RT Act (NSW)"). Section 49 of that Act deals with orders as to excessive rent increases or rents and provides that:
…
If the Tribunal determines that a rent is excessive having regard to the reduction or withdrawal by the landlord of any goods, services or facilities provided with the premises, the Tribunal may order that from a day specified by the Tribunal, not being earlier than the date of that reduction or withdrawal, the rent shall not exceed and amount specified by the Tribunal and may make such other orders as it thinks fit.
An order made by the Tribunal specifying a maximum amount of rent:
has effect for such period, not exceeding 12 months, as is specified by the Tribunal in the order, and
...
6. Like section 71 of the RT Act (ACT) the RT Act (NSW) restricts tenants to a period not exceeding 12 months in relation to reducing rent as a consequence of the reduction or withdrawal by the landlord of any goods services and facilities. Section 49(4)(a) was considered by the NSW Court of Appeal in Roads and Traffic Authority v 41 NSWLR 452 where Meagher JA said (at 457):
Section 49(4)(a) operates to prevent the Tribunal from making an order by way of rent reduction for a period greater than twelve months. Thus, if the tenant fails to make the application within 12 months of the withdrawal of the goods, services or facilities, the landlord is still only potentially liable for a 12 month period. That is another example of the balancing of rights and obligations between landlords and tenants: tenants who may not be aware of their legal rights may fail to bring an application within a reasonable time, yet there is a limit to how much a landlord should be prejudiced by a tenants failure exercise their legal rights.
7. This approach is in accordance with the intended purpose of the RT Act (ACT) in seeking to balance the interests of the parties to a residential tenancy agreement2 and the respondents would submit is binding upon the Tribunal when considering whether or not to make a further order under section 71 of the RT Act (ACT).
8. In the respondents submission not only is there no power contained in the Act and seemingly no intention on the part of the parliament to provide for such a power such that any exercise of power purporting to extend the ambit of s 71 will be ultra vires. If, in the alternative, the Tribunal considers there is power to make the order proposed the Respondent submits that the authority of the NSW Court of Appeal in Roads and Traffic Authority v Swain is binding and restricts the period to one award on a single application for a period of not more than 12 months.
Order under section 104 for compensation to tenants for the landlord's breaches of prescribed terms 54 and 55, being an order in addition to the rent reduction.
9. With regards to the possibility of ordering compensation under section 104 of the RT Act (ACT) for the landlords breaches of prescribed terms 54 and 55 in addition to the rent reduction the respondent submits that to make an order in those terms would be tantamount to "punishing" the respondent twice for the same breach. There is already a provision in the Act compensating a tenant by way of rental reduction as a result of the landlord's failure to maintain the premises and any appliance, furniture or facility supplied with the premises contained in section 71(1). As submitted above the clear intention of that section is that a tenant is to be compensated for a period of not more than 12 months and to do otherwise would be ultra vires.
10. If it is proposed to make for compensation pursuant to section 104 in addition to rent reduction it would be using that provision to read into the legislation an ability to make up for the lack of power in section 71. This would bring about a situation in which there was a direct conflict between the operation of section 71 and section 104 of the Act. To resolve that conflict the respondent submits that the tribunal would need to apply the relevant principle of Generalia Specialibus Non Derogant. This would result in the specific provision in section 71 (allowing for rental reduction in the case of a landlords failure to maintain a premises) overriding the more general provision in section 104 (allowing for compensatory orders to be made).
11. In that respect the respondent repeats its submissions above and says that an compensatory order made pursuant to section 104 would be ultra vires and contrary to the intention of the Act.
On 15 September 2005 the Tenant filed the following submissions:
SUBMISSIONS REGARDING ISSUES RAISED IN PARAGRAPH 82 OF THE
TRIBUNAL'S STATEMENT OF REASONS DATED 17 JUNE 20051.Under section 71 of the Residential Tenancies Act 1998 (ACT) (the Act), the Tribunal has the power to order a reduction in the rental rate payable under a residential tenancy agreement where the tenant's use or enjoyment of the premises has diminished significantly as a result of one or more of a number of factors.
2.The Applicant submits that the Tribunal has to power to make consecutive orders under section 71 of the Act. The Applicant further submits that, while each consecutive order made under section 71 must not continue in excess of 12 months, the Tribunal must be able to make consecutive orders to allow the intent of section 71 to be properly realised.
3.In report number 8 of the Community Law Reform Committee of the ACT entitled 'Private Residential Tenancy Law', the Committee decided at paragraph 486 that the Tribunal should have the power to 'order a reduction in rent for the loss in value of facilities to the tenant due to ... failure to repair.’ The Committee went on to specify the intended scope of this power in paragraph 487, stating that:
‘
The Tribunal should be able to order a retrospective reduction in rent to commence from the date on which the proposed Act requires the lessor to make repairs and the lessor fails to do so…”
and then continuing by specifying that:
‘The reduction in rent should continue until the lessor repairs or restores the facilities or earlier as the Tribunal considers appropriate.’
(emphasis added)
4.In other words, it was the intention of the committee that the power to order a rent reduction should be both retrospective and prospective – that is, it should extend from the date on which the lessor fails to meet his/her obligation to repair to the date on which the repairs are finally completed. The Committee goes on to make recommendation 104 in these terms.
5.In the Explanatory Memorandum to the Residential Tenancies Bill 1997, the then section 70 (now section 71) was described as intended to implement recommendation 104. The Explanatory Memorandum goes on to endorse the Committee's view of the scope of the section and to specifically state that 'the Tribunal should be able to order a retrospective reduction in rent to continue until the cessation of interference' (emphasis added).
6.It is clear that both the Committee and the Legislature intended that the Tribunal should have the ability to impose a rent reduction which spans the entire period of the breach, from the lessor's initial failure to make repairs (or withdrawal of facilities) until the lessor has fully discharged (or met) his/her obligations. The Explanatory Memorandum goes on to emphasise this point by specifying that the rent reduction should encompass the entire period of breach even where there have technically been a number of separate breaches, rather than a single, continuing breach:
'The Tribunal should be able to deem separate acts of interference as continuing interference by the lessor as it considers appropriate and order a reduction in rent accordingly.'
7.The emphasis in the Explanatory Memorandum is on allowing the Tribunal to determine the extent of its orders by reference to the resolution of the breach(es) in question, rather than any artificial timetable.
8.Section 139 of the Legislation Act 2001 (ACT) states that the Tribunal must prefer an interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation, whether or not the Act's purpose is expressly stated in the Act. The purpose of the Residential Tenancies Act is not expressly stated within the text of the Act itself. It is to be found in the report of the Committee and the Explanatory Memorandum. Both documents are clear that a rent reduction is envisaged as continuing from the time of the breach until the time it is remedied by the lessor.
9.The Applicant submits that the arguments of the Respondent are not consistent with the clear intention expressed by the Committee and the Legislature that the extent of this power be determined by the length of time taken by the lessor to meet his/her obligation to make repairs.
10.The Respondent submits that there is no power in the Act for the Tribunal to make more than one order of 12 months' duration in relation to a particular failure by a lessor. If this construction of section 71 were accepted there would be ramifications which are at odds with both the Committee and the Legislature's stated intention.
11.For example, in the situation where the lessor failed to make repairs 11 months prior to the Tribunal hearing, the Tribunal's orders could only continue for 1 month beyond the date of the hearing, regardless of whether the repairs are completed within that month. If the repairs were not completed, there would be no remedy available to the tenant, as the only remaining action would be finding that the lessor had breached the orders of the Tribunal; an action which delivers no remedy to the tenant.
12.Indeed, there may be situations where the Tribunal cannot order a rent reduction to cover the period in which the repairs must take place. For example, in the above situation it may be that the repairs required are so extensive that one month from the date of the hearing is not sufficient to complete the repairs. On the Respondent's interpretation, the Tribunal would not have the power to extend the rent reduction beyond one month even where its own orders might envisage the repairs taking longer than this period.
13.In such a situation, if the Tribunal was not able to make a second 12 month order to cover the period until the repairs are completed, the intention of the Committee and the Legislature would be subverted.
14.The Respondent says that his interpretation is consistent with the general purpose of the Bill as set out in the outline which opens the Explanatory Memorandum. The outline states that the Bill was intended to 'balance the interests of the parties to a residential tenancies agreement...'. The Applicants make two observations regarding this submission. Firstly, the more general statement in the outline of the Explanatory Memorandum must be read in the context of the more specific comments later in the Explanatory Memorandum regarding the operation of the-then section 70. While balancing the interests of the parties may be one of the overarching principles behind the Act, the specific intention of the legislature with regard to rent reductions is clearly to extend the Tribunal's power from the first moment of breach to the point at which the breach is finally remedied. It is this specific delineation of scope that should guide the Tribunal.
15.Secondly, an interpretation which permits multiple 12 month orders does not negate the possibility of balancing the interests of the parties. It is clear that the tenant has a duty to mitigate his or her losses (section 38 of the Act), particularly by not delaying seeking orders from the Tribunal to the point where the lessor is disadvantaged by the delay. However, the appropriate point to consider the competing interests of the parties is not at the point of statutory interpretation, as the interests of the parties will vary from case to case. Instead, the Tribunal should consider the issue of mitigation at the point at which it considers whether to make a rent reduction order at all.
16.By way of illustration - in the above example, the tenant has delayed taking action in the Tribunal for eleven months. If there is no particular reason for this delay, it may be that the Tribunal would decide that the tenant had failed to mitigate his or her losses and make a reduced order on that basis. On the other hand, if the tenant delayed taking action because s/he made repeated attempts to bring the repairs to the lessor's attention and reasonably relied on
the lessor's assurances that the repairs would be undertaken in the near future, it may be that the Tribunal would find that there has been no failure to mitigate. In other words, imposing an absolute l2 month limit to allow a measure of 'balance' between the parties may in fact do the opposite and unfairly disadvantage a party.
17.In the current proceedings, the applicants submit that they cannot be said to have failed to mitigate their losses, as they actively campaigned to have the repairs carried out by the lessor. The lessor has not been injured by the delay in bringing the current application - on the contrary, they have been granted ample time to effect the repairs requested. On this basis, the applicants submit that they are entitled to a rent reduction for the entire period from the point at
which the lessor first failed to meet his obligation to complete repairs to the date on which the tenancy ended.
The matter was then before the Tribunal on 22 September 2005, with the following orders:
1.That the matter is adjourned to Thursday, 13 October 2005 at 11:00am
2.That the Tribunal strongly recommends that Welfare Rights & Legal Centre act for the tenant in this matter.
3.That in the alternative, the Tribunal strongly recommends that Legal Aid be granted to the tenant to assist in the conduct of the case.
10. On 7 October 2005 Welfare Rights and Legal Centre responded to the Tribunal in the following terms:
I refer to the orders made in the above matter on 22 September 2005. The orders state that the matter has been adjourned, to Thursday 13 October 2005 at 11:00 am and also orders that the Tribunal strongly recommends that the Welfare Rights and Legal Centre act for the tenant in this matter. In the alternative, the Tribunal ordered that it strongly recommended that Legal Aid be granted to the tenant to assist in the conduct of the case.
Mr Kiternas has today contacted this Centre for assistance regarding the hearing on 13 October. For professional and ethical reasons, the Welfare Rights and Legal Centre can only agree to act for clients in accordance with the Centre's policies and intake procedure. As the Centre is closed between 10 October and 14 October 2005 for the National Association of Community Legal Centres' Conference, the next date for intake will be 19 October 2005.
At that time, Mr Kiternas' application will be considered along with the applications of each of the individuals seeking representation. The Centre will consider its current capacity and apply its policies to determine which (if any) of the applicants we are able to assist. At this point, we are unable to say whether Mr Kiternas' application will be successful at that time.
In light of this, we support Mr Kiternas' request for an adjournment of several weeks, which will allow him time to apply to this Centre for assistance, and to investigate whether assistance is available from Legal Aid in the event that this Centre is unable to assist.
If you have any questions about this letter, please contact the Centre on 6257 2931.
11. The matter was then before the Tribunal on 8 November 2005. On that occasion Ms Dalley from Welfare Rights and Legal Centre appeared for the tenant and Ms Reece, solicitor appeared for the landlord. Mr Christensen from the Commissioner of Housing’s office was present in the Tribunal for another matter, Peters v The Commissioner for Housing RTT 1600/05, in respect of which Welfare Rights and Legal Centre were also acting for the tenant. Mr Christensen and Ms Dalley advised the Tribunal that the Peters matter raised the same issues of law as that under consideration in the present matter. After some discussion it was agreed between the parties and the Tribunal that the issues of law would be argued on the one occasion only, in the context of the Kiternas matter, and the ruling in Kiternas would then be applied in the Peters matter as well. This course of action was adopted for the economy of time and resources for all concerned.
12. In the light of this agreed course of action, Mr Christensen was invited to make submissions in the present matter on an amicus curiae basis.
13. On the 8 November 2005 the following orders were made:
1.That the applicant is to file and serve on the Tribunal, the respondent and The Commissioner for Housing in the ACT as amicus, any further submissions by 22nd November 2005.
2.That the respondent and The Commissioner for Housing in the ACT as amicus are to file and serve on the Tribunal and the applicant any further submissions by 6 December 2005.
3.That the Tribunal will then determine the matter without further hearing.
14. On 23 November 2005 Ms Dalley filed the following submissions:
In accordance with orders of the Residential Tenancies Tribunal dated 14 November 2005, the Applicant makes the following further submissions:
1. The Applicant submits that the Residential Tenancies Tribunal has the power to make multiple orders for a reduction in the rental rate payable under a residential tenancy agreement under section 71 of the Residential Tenancies Act 1997 ('RTA'). To this effect, it commends to the Tribunal the previous submissions made in this matter by the Applicant.
2. In the alternative, if the Tribunal does not have the power to make multiple orders for a reduction in rent and the total rent reduction available in relation to a given breach of a residential tenancy agreement is limited to a maximum of 12 months, the Applicant submits that the Tribunal has the power under section 104 of the RTA to make orders for compensation for any loss, either to the extent that such loss does not attract redress under section 71 or as an alternative compensatory measure to be used instead of section 71.
3. Specifically, the Applicant submits that section 104 gives the Tribunal the power to make orders in relation to loss of any kind arising from a breach of a residential tenancy agreement, including compensation for non-economic loss (see paragraphs 28-34 below).
4. The Applicant submits that the wording of section 104 of the RTA specifically negates the operation of the generalia specialibus rule of statutory interpretation. In the chapeau to section 104, the powers given to the Tribunal under that section are specifically expressed to be '...in addition to any other order it is empowered to make... [emphasis added]', The wording used in this section is significant, as it points to a clear intention to provide a power to the Tribunal independent of ('in addition to any other power provided in the RTA). This construction is reinforced by section 104(d), which gives the Tribunal the power to make an order '...requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement... [emphasis added]'. The Applicant submits that the inclusion of 'loss of rent' in this power indicates that the section 104(d) powers are intended to operate in addition to (and concurrently with) other powers in the RTA, such as sections 62 and 107 which empower the Tribunal to order compensation for loss of rent in various circumstances.
5. It follows that the Tribunal has the power to make orders under section 104 without reference to limitations on its powers to make orders in other parts of the RTA. In other words, section 104 is expressly construed as a catch-all power to allow the Tribunal to make orders where it appears appropriate to the Tribunal to do so, without reference to the content of other sections of the RTA. In the same way that the Tribunal can make orders for 'loss of rent' despite the existence of sections 62 and 107, the Tribunal can also make orders regarding 'any other loss' despite the fact that such loss may also be covered by other sections of the RTA (eg: section 71).
6. The Applicant submits that the broad drafting of section 104 reflects the need to empower the Tribunal to avoid situations where a tenant has experienced loss as a result of a breach by the lessor, but is not entitled to compensation for that loss due to a technicality or limitation elsewhere in the RTA,
7. Section 104(d) gives the Tribunal power to make orders with regard to 'compensation for loss'. It is an established principle of contract law that compensation for loss operates, as far as possible, to place the applicant in the same position as though the contract had been performed.1
8. The present Member sitting in the Residential Tenancies Tribunal of NSW considered the definition of compensation' in Eldridge v Brunger and Callender2. He found that 'compensation is based on the indemnity principle, -which requires the injured party be paid compensation to the extent of the has suffered, but not more3. The Applicant submits that the obverse construction is also true - that the injured party is entitled to compensation to the full extent of the loss suffered, and no less.4
9. If section 71 is considered to both1
a.limit available compensation to a maximum of 12 months' rent
reduction; andb.operate in such a way that the Tribunal is unable to make further orders
in relation to an application under section 104,
then the Tribunal will be faced with situations where the Applicant has an entitlement to compensation for loss arising from a breach which cannot be compensated in full by the Tribunal.
10. One such circumstance is the case of a tenant who has lost the use of a facility for a period in excess of 12 months, such as the scenario set out at paragraphs 11 and 12 of the Applicant's original submissions.
11. Another scenario occurs where a tenant has sustained a loss which exceeds the total rent payable under the residential tenancy agreement. This may be particularly the case where the period of the tenancy has been brief and the tenancy comes to an end as a result of the breach.
12. In both of these scenarios, it is clear that a narrow reading of the Tribunal's powers under sections 71 and 104 will result in situations where a tenant, through no fault of his or her own, will not be entitled to compensation for part of his or her loss. Although it is true that tenancy law generally attempts to balance the needs of both the tenant and the lessor,5 in each of the scenarios above, the limitations in section 71 could operate to limit a tenant's damages even where there is no prejudice to the lessor requiring balance, for example:
a.where an application for a rent reduction is delayed beyond 12 months
due to delays in the Tribunal process;b.where a rent reduction is sought for a breach which requires repairs
over a future period in excess of 12 months; orc. where the tenant's loss exceeds the value of the rent paid to date and
the tenancy has come to an end.
13. For the principles of compensation to be properly met, it is necessary for the Tribunal to have an additional and concurrent power to address the entirety of the tenant's loss in the circumstances of each breach. For this to occur, the Applicant submits that:
a.the Tribunal has the power to make multiple orders each being of no more than 12 months duration under section 71; or, in the alternative,
b. the Tribunal, after making an order for a rent reduction of up to 12 months' duration, may make a further order under section 104 compensating the tenant for any loss which exceeds the value of the compensation available under section 71; or, in the further alternative,
c. the Tribunal can determine that it is not appropriate in the circumstances to award a rent reduction under section 71 and instead award compensation under section 104.
14. The Applicant submits that the Tribunal's ability to use section 104 as an alternative to section 71 may be seen by implication in Worrall v Housing Commissioner for the ACT.6 In this case, the applicant sought a reduction of rent under section 71 for an alleged breach of clause 52 of the prescribed terms of his residential tenancy agreement. In the alternative, he sought compensation for loss under section 104(d). The decision of the Tribunal in the first instance7, Crispin J of the ACT Supreme Court at second instance8 and Miles, Ryan and Higgins JJ of the Federal Court of Appeal9 each appeared to assume the availability of compensation under section 104(d) in the alternative in a case where section 71 was invoked as the primary remedy. By inference, it appears that the various Courts and Tribunal accepted that compensation could be awarded under section 104(d) as an alternative to a rent reduction under section 71.
15. While it is true that there is a decision in NSW which questions the Tribunal's ability to award compensation where a rent reduction is available, the Applicant submits that the position is not clear in that jurisdiction.
16. In Bollingmore v Stojanovski,10 the present Member, sitting in the NSW Residential Tenancies Tribunal, found that there were difficulties in that jurisdiction in applying the general compensation power in section 16 of the Residential Tenancies Act 1987 (NSW) ('NSW Act') where the rent reduction provisions also applied. The Member identified two problems with a concurrent application of the two powers:
a.the generalia specialibus rule, which provides broadly that a specific provision will prevail over a general provision; and
b. the decision of the NSW Court of Appeal in Roads and Traffic Authority v Swain and Anor11 that the Tribunal could not order a rent reduction in excess of 12 months' duration as a result of the need to balance the rights of tenants and lessors.
17. The Applicant submits that the generalia specialibus rule does not apply to section 104 of the RTA as the drafting of that section specifically envisages the power operating in a manner unfettered by the limitations of other, more specific provisions of the RTA (see paragraphs 4 and 5 above). We note that section 16 of the NSW Act does not contain an equivalent statement of independent operation to that found in the chapeau to section 104 of the RTA. Given this, the issue of generalia specialibus may well be a relevant consideration in the NSW jurisdiction, but does not apply in the context of the explicit wording of section 104 of the RTA.
18. The decision of the NSW Court of Appeal in Swain dealt with an appeal from a decision of Rolfe J in the NSW Supreme Court on a question of whether the NSW Residential Tenancies Tribunal had discretion to decide not to terminate a tenancy under sections 64 and 65 of the NSW Act. In particular, the decision focused on the application of section 64(2)(c), which provides that the Tribunal must consider the circumstances of the case when deciding whether to terminate a tenancy.
19. The Court of Appeal endorsed Rolfe J's conclusion that the Tribunal was not bound to terminate a tenancy where the Tribunal found that the circumstances of the case did not warrant termination. One of the factors in His Honour's decision was the prospect of a tenant losing an entitlement to the full value of a rent reduction under sections 47 and 49 by means of an application to terminate by the lessor.12
20. Beyond this conclusion, there is very little consideration in the decision of Rolfe J of the interplay between rent reduction and compensation, save the following obiter dicta:
a.that the time limitation in section 16 did not affect the Tribunal's ability to hear an application for rent reduction under sections 47 and 49, as an application for rent reduction may be heard 'at any time' while the tenancy is on foot;13 and
b.that the entitlement to compensation cannot be carried from premises to premises and that monetary compensation cannot be awarded in lieu of a rent reduction.14
21. The Court of Appeal likewise did not comment directly on the interplay between section 16 and sections 47 and 49, but did accept the argument that the Tribunal could not order a rent reduction in excess of 12 months' duration as a result of the need to balance the rights of tenants and lessors.15 With regard to this argument, the Applicant refers to his submissions in paragraph 12 above.
22. The Applicant submits that there is nothing in the judgement of either the Supreme Court or the Court of Appeal which states that monetary compensation is not available for any loss for which a rent reduction is not granted or not available. Indeed, the concern of Rolfe J appears to be that the tenant's full entitlements should be available, regardless of intervening matters such as an application to terminate.16
23. This view is consistent with the Applicant's submission that compensation for loss arising from breach should be complete except where there is a failure to mitigate. The Applicant further submits that mitigation is not a factor to be considered when determining whether compensation can be awarded - mitigation is to be considered when determining the quantum of loss.
24. In any event, the Applicant notes that there are significant differences in the rent reduction provisions of the NSW and ACT legislation.
25. Sections 47 and 49 of the NSW Act provide that the Tribunal may 'determine that a rent is excessive, having regard to the reduction or withdrawal by the landlord of any goods or services.,..' This construction is significantly different to section 71 of the RTA, which does not require a determination that the rent demanded is excessive. The ACT provision is couched in terms of a more compensatory nature - the Tribunal may order a rent reduction 'if it considers that the tenant's use or enjoyment of the premises has diminished significantly as a result o/[the matters set out in subparagraphs (a) to (c)]'. In NSW, section 49 must be read in conjunction with section 48, which sets out a number of factors to be considered when determining whether a rent is excessive. None of these factors consider the extent of loss to the tenant arising from breach.
26. In NSW the question is one of the suitability of the level of rent given the value of the property and facilities actually provided. It is, in effect, a rewriting of the contract itself to properly reflect the value of the bargain. In the ACT, the question is one of the degree of loss actually suffered by the tenant - the Tribunal may order a reduction only where the tenant has suffered a significant diminution of his/her use and enjoyment of the premises which constitutes 'a substantial interference with, or a significant lessening of freedom in exercising, the tenant's rights.'17 The decision in Worrall makes it clear that the simple loss of a facility is not sufficient to attract a rent reduction - the loss suffered must be 'significant'.18 There is no such requirement on the face of the NSW Act - it may be possible for a rent reduction to be ordered under section 49 of the NSW Act even where the tenant has suffered no significant diminution of his or her use of the property as a result of the withdrawal of a service or facility.
27. In light of this, the Applicant submits that the NSW authority regarding rent reductions should not be followed in the ACT. The purpose of a rent reduction under section 71 is to provide a form of compensation to the tenant. The Applicant submits that the differences between the two Acts are sufficient to make the NSW authorities unhelpful on this point.
Scope of the power to award compensation under section 104
28. The Applicant further submits that the Tribunal has the power to compensate an applicant for both economic and non-economic loss arising from a breach of a term of a residential tenancy agreement, in particular, for a breach of clauses 52, 54 and 55 of the prescribed terms.
29. In Baltic Shipping Co v Dillon (The Ship Mikhail Lermontov),19 the High Court considered the scope of compensation for loss in the context of a breach of contract. Mason CJ, Toohey and Gaudron JJ (with whom Deane, Dawson and McHugh JJ agreed on this point) held:
'Damages? for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom of molestation.20
30. This category of 'contract for enjoyment' identified by the majority of the High Court is called to mind by clause 52 of the prescribed terms of the schedule to the RTA, which expressly includes a prohibition on the lessor interfering in the 'reasonable peace, comfort or privacy of the tenant in the use by the tenant of the premises'. Given that residential tenancy agreements are essentially contracts for a home, with all the emotional and psychological benefits which attach to a home, it seems clear that the express term set out in clause 52 indicates that a residential tenancy agreement is a contract '... the object of-which is to provide enjoyment, relaxation or freedom of molestation.
31.It has been accepted in NSW that a contract for a residential tenancy is just such a contract for enjoyment. In Strahan v Residential Tenancies Tribunal of NSW.,21 Dowd J found that the Residential Tenancies Tribunal of NSW had the power to award compensation for non-economic loss in accordance with the principal in Baltic Shipping Co:
'As I have indicated above, it is my view that loss of amenity, inconvenience, disappointment, distress, embarrassment and mud and dust throughout a house, inability to have visitors, having to clean repeatedly and a general inability to enjoy a house are matters which are clearly compensable in terms of the principles in Baltic Shipping.''22
32. The view of Dowd J was later upheld by Master Harrison of the NSW Supreme Court in Reiss & Anor v Helson & 2 Os.23
33. This construction of the residential tenancy agreement is consistent with the position for common law leases that a breach of the covenant of quiet enjoyment may give rise to non-economic loss.24
34. The Applicant submits that the case law position is consistent with the drafting of sections 104(d), which provide for compensation for 'any other loss caused by the breach', and 71, which provides for a rent reduction to compensate for 'interference -with the tenant's quiet enjoyment of the premises, or the tenant's ability to use the premises in reasonable peace, comfort and privacy'. The language used in sections 71 and 104 shows a clear intention to encompass non-economic loss in the range of compensation available under these sections.
Foootnotes:
1 Wenham v Ella (1972) 127 CLR 454
2 [1997] NSWRT 116
3 ibid at 4-5
4Of course, once an entitlement to compensation for breach is established, the duty to mitigate loss may reduce the quantum of compensation available in a particular matter. However, mitigation is not a relevant consideration at the point of determinig an entitlement to compensation per se.
5 This is an argument which appears in the decision of the NSW CA in Roads and Traffic Authority v Swain [1997] 41 NSWLR 452 at 457 and was approved in the decision of the current member sitting in the NSW Residential Tenancies Tribunal in Bollingmore v Stojanovski (RTT 97/000732) at 13.
6 [2002] FCAFC 127
7 Worrall v Housing Commissioner for the ACT (ACT Residential Tenancies Tribunal, unreported 31 July 2000) at 8
8 Worrall v Housing Commissioner for the ACT [2001] 163 FLR 414 at para 19
9 Op Cit at para 47
10 (RTT unreported 97/000732)
11(1997) 41 NSWLR 452 at 457
12 Swain v Roads and Traffic Authority (NSWSC unreported 22 March 1995 BC9504317 at 27
13 Ibid
14 Ibid
15 Op Cit at 457
16 Op Cit at 27
17 section 71(2) RTA
18 Op Cit para 43
19 (1993) 176 CLR 344
20 Ibid at 365 and 366
21 (NSWSC unreported 12 September 1998)
22 Ibid at para 16. Justice Dowd also relied on the decision of Abadee J in Residential Tenancies Tribunal of NSW v Offe (unreported NSW Supreme Court 1 July 1997), which was subsequently overturned by the Full Court of the Supreme Court of NSW in Offe v Residential Tenancies tribunal of NSW (unreported NSW CA 29 October 1997) on the issue of whether the Supreme Court had standing to make a decision ex parte. Abadee J’s decision was criticized by the Appeal Court on the grounds of standing only – the conclusion drawn by His Honour from Baltic Shipping was not directly challenged.
23 [2001] NSW SC 486 at para 53
24 see Campbell J in Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 at [153]-[160] and also Southwark LBC v Tanner [2001] 1 AC 1 at 7 and 10 in the UK jurisdiction.
15. On 21 December 2005 the Tribunal received telephone advise from the solicitor for the landlord to the effect that they did not wish to make further submissions.
16. On 3 January 2006 Mr Christensen filed the following submissions:
SUBMISSIONS BY THE AMICUS CURIAE
Power to Award Damages
1. It is important to note that the Residential Tenancies Tribunal is wholly a creature of statute, and is strictly bound by the four corners of the powers granted under the Residential Tenancies Act. To this extent, the fact that a Court could award general damages under the principle in Dillon v. Baltic Shipping, does not necessarily mean the Tribunal has such power.
2.It is noted that 180 In Musumeci v Winadeil Pty Ltd(1994) 34 NSWLR 723, at 752 Santow J considered a claim for damages for mental distress arising from a breach of covenant in a lease of commercial premises. His Honour rejected that claim saying:
"/ consider the matter is settled by Baltic Shipping Co v Dillon (1993) 176 CLR 344. The covenant for quiet enjoyment in the lease is very different from the notion of providing "pleasure or enjoyment or personal protection". As was put by McHugh J (at 405), though with some reservation, damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one, the object of which is to provide enjoyment, relaxation or freedom from molestation. That is not the case here."
3.The applicants refer the Tribunal to Spathis v. Hanave Investment Co Pty Ltd 120021NSWSC 304, particularly paragraphs 153 -160. With respect, the Court in these paragraph is only outlining the factual basis for it finding that there had been breaches of the covenant for quiet enjoyment. The Court expressly relied on and agreed to the proposition from Musameci referred to above.
4.The powers under the RTA to award damages are set out in s. 104(d), which states:
Orders
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 or occupancy dispute:
(a)an order restraining any action in breach of a residential tenancy agreement or occupancy agreement;
(b)an order requiring performance of a residential tenancy agreement or occupancy agreement;
(c) an order requiring the payment of money to the Territory or a person;
(d)an order requiring the payment of compensation for loss of rent or any other loss caused by the breach of a residential tenancy agreement or occupancy agreement;
(e)an order specifying that an amount of money (being an amount not greater than the amount of bond paid into the trust account in relation to the relevant residential tenancy agreement) be paid to the lessor from the trust account;
(f)an order restoring a residential tenancy agreement and granting the former tenant possession of premises which the person—
(i) was evicted from in contravention of this Act; or
(ii) vacated in accordance with a termination notice that was not in the form approved under section 133 (Approved forms— Minister) for a termination notice;
(g)an order requiring payment of all or part of the rent payable under the standard residential tenancy terms or standard occupancy terms into the tribunal until the tribunal orders otherwise;
(h)an order directing payment out of any monies payed into the tribunal as appropriate;
(i)an order terminating a residential tenancy agreement or occupancy agreement and granting vacant possession of the relevant premises to the applicant for the order;
(j) an order declaring the premises were abandoned on a particular day;
(k) an order correcting a defect in a notice or in the service of a notice;
(l) such other order as the tribunal considers appropriate.
4. In Jones v. Commissioner for Housing[2003] ACTSC 52, at paragraph 20, Connolly J stated:
"moreover, although not dealt with by the Tribunal in it's oral reasons ... the respondent's submissions to the Tribunal made the point that the Tribunal does not have a general jurisdiction to award compensation in the nature of damages for non-economic loss. To the extent that the applicant had sought such compensation (as for her claim that she fell down stairs), such a matter would have to be dealt with in the ordinary way as a claim for damages for personal injury, and not as an application for compensation in the Residential Tenancies Tribunal"
5.In commenting on this section, at paragraph 54 of the judgement, the Full Federal Court in Worrall v. Commissioner for Housing [2002] FCAFC 127 the Court cited, with approval, paragraph 486 of the Community Law Reform committee report and stated that s. 71 carried
into effect the intention expressed in that paragraph.
Paragraph 486 states:
The Committee considers that the Tribunal should have the power to award compensation for property or financial loss only. In particular, the Tribunal should not have the power to award compensation for personal suffering due to the failure of the lessor to make repairs (refer to paragraphs 994-995). However, the Committee considers that the Tribunal should have the power to order a reduction in rent for the loss in value of facilities to the tenant due to their withdrawal or failure to repair. In some cases the reduction could be the equivalent of the weekly cost of hiring replacement facilities. In an extreme case the tenant should be able to receive a 100% reduction in rent if the tenant is forced to find temporary alternative accommodation as a result of the premises becoming unliveable.
6.It is also noted that paragraph 488 of the Report cites a list of example for which a reduction in rent may be allowed as follows:
Loss of appliances supplied with the tenancy, due to the landlord's failure to repair within the required timeframe
Loss of toilet and washing facilities
Loss of furniture, curtains and carpets
Loss of electricity or water supplyLoss of use of garden, courtyard, storage or parking facilities
Withdrawal by the lessor of any of the above
7.It is submitted that the genus of these items clearly involves the loss of use of an item that requires either use of the items elsewhere, or specific remedial measures while the item is not there or function (for example, a lack of carpet may require the wearing of shoes, and may also require extra heating). It is submitted that the genus does not include mere cosmetic issues, nor a more general claim for "stress, annoyance etc". This, it is submitted, is consistent with the use of the words "Compensation for loss..." in Section 104(d).
8.While it is accepted that this is not the position in NSW, and there are some arguments as to the futility of making damages orders so limited, the Lessor respectfully notes that the Tribunal is bound to follow the decision of Worrall and Jones, being decisions of a superior Courts in
the ACT.
9.In addition, the NSW Act clear uses the word "compensation" in s. 16(2)(d), in contradistinction to "compensation for loss" as it appears in the ACT Act. It is respectfully submitted that the NSW expression is clearly intended to have a broader meaning.
10.It is submitted that this is especially significant as s. 71 (c) of the ACT Act clearly envisages rent reductions for loss of quiet enjoyment.
11.To the extent that subsequent decisions of this Tribunal have found to the contrary, especially Greenhill v. Commissioner for Housing [2004] ACT RTT 7, the Lessor respectfully submits they are wrongly decided.
Can the Applicant Claim Damages as well as a rent Reduction
12.The lessor submits it is trite law that the Applicant can only recover one set of damages, whether they are from rent reduction or damages under s. 104. to the extent that Greenhill appears to award both, it is submitted it is incorrectly decided - it is submitted that it cannot be
appropriate to award a complete refund of rent, on the basis of the property being uninhabitable, and then to award contractual damages in addition (there may be an argument for tort damages, but those are beyond the jurisdiction of the Tribunal).
13.However, the Lessor further submits that general damages under s. 104 cannot be awarded for an action commenced under s. 71. The lessor submits that the inclusion of s. 71 is intended exclude the more general power to award damages where there is no impediment to an application under s. 71, for example, where the tenancy has ended and there is no value in continuing rent reductions. This is emphasised, it is submitted, by the wide, and specific wording used in s. 71, as opposed to the more general wording in s.104(d).
14.The Applicant argues that Worrall'scase is authority for the proposition that a claim for damages is an alternative claim that can be brought in addition to a claim for rent reduction.
15.With respect, Crispin J in the Supreme Court merely refers to the claim for damages at the tail-end of his judgement, after he has already determined a rent reduction is not made out, and then only to dismiss it. In those circumstances, it was unnecessary for him to determine the inter-relationship between the two types of claims, and, it is submitted, the comment is obiter. The Full Court did not discuss s. 104(d).
16.The amicus respectfully agrees with the NSW decision of Bollingmore v. Stojanovski and the other cases referred to at [2.49.0] of Anforth, Thawley & Christensen.
17.The criticisms the applicant makes, especially the Bollingmore decision, of its reliance on the generalia specialibus it is submitted, are not made. Despite the width of the of the introduction to s. 104 ("In addition to any other order") it is submitted that the legislature, in setting up a specific response to a claim for loss of quiet enjoyment, thus limiting a possible claim for damages. To take the width of s. 104 literally would permit double recovery - a result the amicus submits could not have been intended.
Rent Reduction
18.The operative part of Section 71 of the Act states:
71 Reduction of existing rent
(1) On application by a tenant, the tribunal shall order a reduction in the rental rate payable under a residential tenancy agreement if it considers that the tenant's use or enjoyment of the premises has diminished significantly as a result of any of the following:
(a) the loss or diminished utility of an appliance, furniture, a facility or a service supplied by the lessor with the premises as a result of—
(i)the withdrawal of the appliance, furniture, facility or service by the lessor; or
(ii)the failure by the lessor to maintain the premises and any appliance, furniture or facility supplied with the premises in a reasonable state of repair, having regard to their condition at the commencement of the residential tenancy agreement; or
(iii) the failure by the lessor to provide and maintain such locks or other security devices as are necessary to ensure that the premises are reasonably secure;
(b)the loss of the use of all or part of the premises;
(c)interference with the tenant's quiet enjoyment of the premises
or the tenant's ability to use the premises in reasonable peace, comfort and privacy by the lessor or any person claiming through the lessor or having an interest in, or title to, the premises.
(3) A reduction in the rental rate ordered under subsection (1) shall—
(a)take effect from the day on which the tenant's use or enjoyment of the premises diminished, or such later date as the tribunal specifies; and
(b)remain in force for such period, not exceeding 12 months, as is specified by the tribunal.
19.The relevant limitation is s.3(b), which, on it's face, limits a rent reduction to 12 months.
20.It is submitted that, as this section is clear on its face, and there is no ambiguity, extrinsic evidence to determine it's meaning is not admissible. The Respondent contends the "golden rule" i.e. that a provision of an Act has it's natural meaning, and only that meaning, if that meaning is the only available meaning, is continued in the law of the Territory by Section 137(3) of the Legislation Act. Section 138 confirms this, and it is submitted s. 139 only has application if there is an ambiguity or if the apparent meaning leads to an absurdity.
21.To the extent that the intention of the section is relevant, it is submitted that one of the purposes of the RTA was to provide an appropriate forum where tenancy matters could be decided, so as to provide more certainty to the parties and avoid "self help"
22.In addition, it is noted that the twelve-month provision does not appear in either of the Recommendations referred to in the Explanatory Memorandum of the Act. It is submitted that this indicates the legislature, by specifically including the clause, when it was not included in the recommendations, deliberately did so, and meant it to have it's usual meaning.
23.On the equivalent provision in NSW, the Supreme Court held that a similar limitation was part of the Act's balancing the rights of lessors and tenants (RTA v. Swain(1997) 41 NSWLR 452) This position has never been seriously disputed by the NSW Tribunal (see Anforth, Thawley & Christensen at [2.49.1]
24.It is important to note that s. 71 is, in effect, a contractual term, and governs the relationship in which lessors and tenants contract. Both parties are taken to be aware of the contract between them. To put an interpretation on this clause that unduly favours one party would be to upset the contractual balance intended by the Legislature.
25.In this regard, it is noted that, at common law, a right to terminate a contract could be lost if the innocent party continues with performance, and takes no act to bring the contract to an end. For example, if a tenant makes a single complaint in relation to premises, but takes no further action to require repairs within a reasonable period, a court may well find the tenant has waived his rights to require those repairs. This means that the limit to a 12 month period in fact may advantage the tenant.
26.It is submitted that this is even more the case in the context of the Act, as one of the clear intentions of the Act was to encourage parties to bring their disputes promptly before the Tribunal, rather than resorting to self-help or sleeping on rights.
27.Such a provision, putting a time limit on an order, would have the effect of encouraging parties to bring their actions in the tribunal promptly and not sleep on their rights, so that the issue can be dealt with by the Tribunal and appropriate orders made so that both parties are aware of where they stand. Accordingly, it is submitted that even using a purposive interpretation would still mean the section be given a meaning to restrict the duration of an order to 12 months.
28.It is also noted that s. 3(a) takes effect from the date the tenant's use or enjoyment of the property is diminished, not the date of any notification of the tenant (although a tenant's failure to notify may bring the tenant in breach of Prescribed term 63(b)). Given a situation where a lessor can be liable for a breach before being notified, it is submitted that the limitation of one year is an appropriate response to balance the interest of the lessor and tenant.
29.It is further submitted that the intention of the 12 months limitation was to provide a time to enable repairs to be carried out, and to provide a "stick" in the nature of rent reductions, to encourage the lessor to have the work carried out promptly.
30.The lessor notes the issues raised in paragraph (xiii) and following of the Applicant's submissions, but submits:
(a)there are other remedies available to the Tribunal in the circumstances that the repairs could not be carried out prior to the end of the 12 month period, for example, the Tribunal could require the rent to be paid into the Tribunal, to be used to carry out the necessary repairs
(b)that a tenant who permits defects to continue for eleven months, even with constant reminders, is likely to have failed to mitigate their own loss (see Fenton, Neist and Baker v. de Andrade [1999] ACTRTT 21 and Watson v. Douglas & Xavier [1999] ACTRTT 23)
31.In relation to mitigation, it is respectfully submitted that the issue of mitigation only arises once an entitlement to damages has arisen. The learned authors of Cheshire & Fifoot Law of Contract (7th Australian edition) 1997, Butterworths, at paragraph [23.31] note that mitigation can be explained by concepts of remoteness and causation, although it has an independent operation based on unconscionability. In truth it is submitted that a party has not in fact
suffered a loss if they could, acting reasonably, have mitigated it. In this regard, it is submitted as being relevant in determining whether damages are suffered in the first place.
32.It follows, if the party has failed to mitigate, the party is not entitled to damages, rather than mitigation acting as a mere reduction in damages.
17. In addition to the above submissions, there were relevant submissions lodged by the parties in the associated matter of Peters v Commissioner for Housing. In addition to the issues raised above concerning rent reductions and the power to order compensation pursuant to section 104, the Peters matter also raised the issue of whether the rent reduction should take as its datum the actual rebated rent being paid by the tenant or the commercial rent provided for in the residential tenancy agreement. This issue is not directly relevant to the present case, but it is indirectly relevant for the reasons which appear below. Accordingly, the parties submissions have been set out in full.
18. The Respondent/Commissioner filed submissions which were substantially reproduced in the amicus submissions set out above.
19. On 22 December 2005 Ms Dalley filed the following submissions on behalf of the tenant:
The Applicant makes the following further submissions:
Rebated Rent
By Application dated 19 September 2005, the Applicant seeks a rent reduction under section 71 of the Residential Tenancies Act 1997 (‘RTA’).
The Applicant is (and has been at all material times) in receipt of a rent rebate under the terms of the Housing Assistance Act 1998 (HAA) and the Public Rental Housing Assistance Program 2005. Under this program, the Applicant’s rent is effectively subsidised by the Commonwealth. The Applicant qualifies for this program by virtue of her low income.
At the commencement of the tenancy, Housing Act charged a market rent of $130 per week. The market rent is currently calculated at $180. The Applicant paid a rebated rent as follows:
· From 12 February 2002 – 17 August 2002 paid $49.45 per week
· From 18 August 2002 until 22 February 2003 paid $50.80 per week.
· From 23 February 2003 until 23 August 2003 paid $51.65 per week.
· From 24 August 2003 until 28 February 2004 paid $52.95 per week
· From 29 February 2004 until 26 February 2005 paid $54.50 per week.
· From 27 February 2005 until present paid $56.70 per week.
The Applicant seeks a rent reduction of 50% calculated on the rebated rent from the commencement of her tenancy to date and continuing until the repairs specified in this application are completed.
Section 71 of the RTA provides the Tribunal with the power to ‘order a reduction in the rental rate payable under a residential tenancy agreement’ [emphasis added]. The RTA does not define the phrase ‘rental rate payable’.
The Respondent submits that the phrase ‘rental rate payable’ should be interpreted to mean the market rent payable for the property, not the rebated rent.
The Applicant accepts this position but submits that such an interpretation should not mean that a tenant on a rebated rent is unable to seek a rent reduction at all, nor that the outcome of any such application should be affected by the tenant’s status as a person receiving a rent rebate.
The Applicant notes that the decision in Commissioner for Housing v Key[1] states that the Tribunal does not have the power under section 67 of the RTA to direct the Commissioner for Housing with respect to the operation of the HAA. His Honour found that the right to a rent rebate was a right personal to the tenant in which the lessor and the Tribunal play no part.
[1] [2003] ACTSC 101
While the Applicant agrees with His Honour’s finding regarding the Tribunal’s powers, she submits that this finding is significant to section 71 only to the extent that it identifies the focus of the RTA as being the ‘regulation of the relations between lessors and tenants generally’ (paragraph 21). In other words, a section of the RTA such as section 71 has as its focus the rights and obligations of the lessor and the tenant. Thus, in the case of section 71, where a breach of a lessor’s obligation occurs, the tenant is granted the right to a remedy for that breach, without reference to the tenant’s status as a person in receipt of a rent reduction.
The Applicant submits that there is nothing in the decision of Key which could be construed as authority for the proposition that tenants in receipt of rent rebates are not eligible for rent reductions under section 71. The only relevant finding in the decision is that the Tribunal has no power to direct the exercise of the Commissioner’s powers under the HAA and must therefore make its decision with reference only to the lessor’s breach and the tenant’s loss.
A rebated rent is effectively one where the market rent of the property in question is effectively subsidised by the Commonwealth. The tenant pays a part of the market rent (equal to 25% of the tenant’s income). The fact that the tenant is only personally paying part of the rent should not be a barrier to the tenant receiving a rent reduction, although it may affect the amount of the reduction.
We note that it is necessary to separate the Commissioner for Housing acting in its capacity as lessor and the Commissioner acting in its capacity as a body authorised to grant rent rebates. For the purposes of the RTA, the Commissioner is a lessor. The decision that the Commissioner was not covered by the RTA in Key is limited to those aspects of the Commissioner’s operations which relate to its powers under the HAA. Key is not authority for the proposition that the Commissioner is permitted to escape from the consequences of a breach merely because it has also exercised its powers in granting a rent rebate to the lessor. This view was accepted by this Tribunal in Greenhill v Commissioner for Housing of the ACT:
‘The decision [in Key] does not limit the ability of this Tribunal to order a rental rebate under section 71 RTA 1997 as long as in doing so the Tribunal does not direct the Commissioner in the exercise of his powers and discretions under the HAA 1987.’[2] (paragraph 24)
[2] [2004] ACT RTT 7 at paragraph 24
The Applicant submits there is nothing in the HAA or the Program which would affect the award of a rent reduction. We note that the Respondent has not pointed to any power or discretion under the HAA which it says is affected by the award of a rent reduction by the Tribunal. The Applicant submits that, while it is clear that the Tribunal cannot interfere in the decision to grant a rent rebate, or the level of that rebate, it does have the power to make orders reducing rent where a lessor has breached the lease. The existence of a rebated rent is not sufficient to remove the Commissioner for Housing in its capacity as a lessor from the jurisdiction of the Tribunal under section 71.
In Greenhill, this Tribunal decided that the existence of a rebated rent was immaterial to the outcome of the application for a rent reduction. The Member found that:
‘…in such an extreme case as this, the Tribunal orders under section 71(1) RTA 1997 that the Applicant's rental rate payable under the residential tenancy agreement be reduced by the amount of 100% of the market rent payable under the residential tenancy agreement for the period end of 4 August 2003 to 3 October 2003 and the Respondent credit that reduced rent to the Applicant's rental account with the Respondent.’ [3]
[3] ibid at paragraph 25
The Tribunal then ordered that 100% of the rebated rent paid by the Applicant should be repaid to the Applicant by the Commissioner.
In accordance with this approach, the Applicant submits that the practical outcome of an application for a rent reduction should not be affected by the tenant’s status as a person on a low income (and thus in receipt of a rent rebate). In other words, where a tenant on a rebated rent makes an application for a rent reduction and a rent reduction of 50% of the market rent is awarded, that reduction should be applied evenly to all components of the ‘rental rate payable’, including the component actually paid by the tenant. Thus, where the market rent for a property is $100 per week and the tenant pays a rebated rent of $50 per week and an order is made of a rent reduction of 50%, that reduction should be calculated as 50% per $1, meaning a weekly reduction of $50.00 for the entire market rent and a rent reduction of $25.00 in real terms for the tenant (ie: 50% of each dollar actually paid by the tenant).
The Applicant makes this submission on the basis that there is no intention in the RTA to create a distinction in compensation outcomes between two classes of tenants on a basis which is irrelevant to the criteria for awarding a rent reduction, namely, the tenant’s receipt of a rent rebate. The Applicant submits that such a distinction would be contrary to the rules of statutory interpretation set out in the Human Rights Act 2004 (ACT) (‘HRA’). Section 30 (1) of the HRA states that when ‘working out the meaning of a Territory law, an interpretation that is consistent with human rights is as far as possible to be preferred.’
Section 8 (3) of the HRA specifies that:
‘Everyone is equal before the law and is entitled to the equal protection of the law without discrimination. In particular, everyone has the right to equal and effective protection against discrimination on any ground.’
The Applicant submits that when considering the interpretation of the scope section 71 where a rent rebate has been granted, the Tribunal must, as far as possible, prefer an interpretation which does not create a discriminatory distinction between two classes of persons. Interpreting section 71 as in some way imposing a bar to a rent reduction to tenants with a rebated rent would create such a distinction by denying a remedy to a class of tenants on the basis of an irrelevant consideration (eligibility for a rebated rent).
By way of example – the position of a tenant with a rebated rent is similar to the position of a tenant in a private tenancy whose rent is partially subsidised by a third party (for example, an employer). The rent actually payable by the tenant in the private tenancy is less than the market rent, due to a private arrangement between the tenant and the third party. If the private tenant then fails to meet the terms of that arrangement (for example, resigns from her employment), then the tenant is liable for the entire market rent. Indeed, such a tenant was always liable for the entire market rent – but was saved from having to meet the entire liability by virtue of the private arrangement.
Similarly, a tenant on a rebated rent has an agreement with the Commissioner in its capacity as the holder of powers under the HAA that she will only pay part of the rent owing on the property in question. In the event that the tenant ceases to qualify for the agreement, or fails to meet its terms by not supplying regular income information etc, she, like the private tenant, will become liable for the market rent of the property. Like the private tenant, the only thing standing between the tenant and liability for the entire market rent is the separate ‘subsidy’ arrangement.
However, interpreting section 71 to exclude tenants in receipt of a rebated rent would create a distinction between these two classes of tenant. The former would be entitled to a rent reduction. The latter would not, despite the fact that the tenant’s loss may be otherwise identical.
The Applicant submits that such an interpretation is not consistent with the right to equality before the law set out in section 8 of the HRA, and as such should not be the Tribunal’s preferred interpretation.
Section 28 of the HRA states that:
‘Human rights may be subject only to reasonable limits set by Territory laws that can be demonstrably justified in a free and democratic society.’
The Applicant submits that there can be no justification for such a distinction in the context of section 71 where the nature of the lessor’s omission and the loss experienced by the tenant are the criteria for determining whether and to what extent a rent reduction should be ordered. The tenant’s economic status is not a factor relevant to that analysis, and therefore should not be artificially imported into section 71 via the phrase ‘rental rate payable’. Where there is no justifiable reason for discrimination against a group of tenants, the Tribunal must prefer an interpretation which avoids such discrimination and allows for equality of protection and restitution under the law for tenants on rebated rents.
The hypothetical public tenant described in paragraph 22 above who experiences a loss of amenity arising from the withdrawal of a facility (for example, a non-functioning toilet) will experience the same level of discomfort and inconvenience as the hypothetical tenant described in paragraph 21 above in the same circumstances. In these circumstances, the rent actually paid to the lessor by the tenant is irrelevant to the question of the loss suffered by the tenant as a result of the withdrawal of services.
Indeed, it could be argued that there is a strong public policy argument that the tenant on a rebated rent should be able to obtain the full rent reduction as the tenancy is being sustained partially through public funds. In a sense, the loss of amenity to the tenant is also a loss to the subsidising third party (whether private or the Commonwealth) which has invested funds in ensuring that the tenant is adequately housed. While the funds for the rebate program are administered by the Commissioner for Housing, those funds have come from the Commonwealth and should not be spent where the bargain for which they are providing is diminished by the Commissioner’s failure to meet the terms of its own agreement.
The Applicant further submits that, where the operation of section 71 provides a tenant with a lessor overall rate of compensation by virtue of the fact that the tenant qualifies for a rebated rent (eg: receives only $25.00 reduction instead of the $50.00 she would receive if she were paying the market rent) the Tribunal has the power to order compensation for any loss not covered by the rent reduction under section 104 of the RTA (see below).
Alternative powers to award compensation
…………….
20. The tenants submissions beyond this point are substantially reproduced in the submissions set out above.
21. On 23 December 2005 Ms Dalley filed the following supplementary submissions:
The Applicant makes the following submissions:
Rebated Rent
1. Section 71 of the RTA provides the Tribunal with the power to ‘order a reduction in the rental rate payable under a residential tenancy agreement’ [emphasis added]. The RTA does not define the phrase ‘rental rate payable’.
2. The Applicant submits that the phrase ‘rental rate payable’ should be interpreted to mean the rent actually owed and payable by the tenant, regardless of whether that rent is a rebated rent. In other words, where a tenant in receipt of a rebated rent makes an application for a rent reduction, the reduction should be taken off the rebated rent, as opposed to the full market rent of the property.
3. A tenant who is entitled to a rebated rent is not required to pay the market rent for a property. For practical purposes, the rental rate payable by a tenant on a rent rebate is 25% of that tenant’s income. While the rebate continues, the tenant is not liable for the difference between the rebated rent and the market rent. In other words, at no point is the difference between the rebated rent and the market rent actually ‘payable’.
4. In addition, section 71 of the RTA is couched in terms which make the purpose of a rent reduction clearly compensatory in nature[4]. Calculation of compensation requires an analysis of the position of the applicant – her losses, her liabilities and her acts of mitigation. It does not involve notional values. Even where the financial calculation involves the quantification of loss which is not overtly financial (such as loss of the use of facilities), the calculation is made with reference to the actual facts of the case. It therefore follows that the calculation of the rent upon which the reduction is to be based should be the actual rent payable by the tenant (being the rebated rent), not a notional rent which is never actually paid by the tenant (the market rent).
Since instigating the above the tenants did not respond to messages left on an answering machine that a new Tenancy Agreement was ready for them to sign and also did not respond when this was put in writing to them. They successfully avoided formalising this Tenancy. It has always been the owners wish to have a Tenancy Agreement in place.
No Final Vacate was done at this property because Denis Kiternas did not officially advise this office in writing that he had or would be vacating the property on a particular date. The first we knew of his intention to vacate was a request for a rental reference. We do not know what date he actually left the property.
Rental payments for the most part were made by Mrs Kiternas in person at this office. During these visits Mrs Kiternas did not raise maintenance issues. Our dealings have been with Mrs Kiternas since we found out that they were the tenants in residence. By his own admission Mr Kiternas advised that this was the case as he was ill.
By agreement with the tenants Mr & Mrs Watts visited the property with the Property Manager on 25 March 2004 and both Mr & Mrs Kiternas were in attendance. The need for re-tiling of the ensuite was raised but only to reinforce the need for quotes to be obtained so the work could be undertaken. The Kiternas' were specifically asked during this inspection if there were any other problems? The Kiternas' answered in the negative and certainly did not mention any of the issues they now raise. Mr Watts raised the whereabouts of the smoke detector and the hose (both are listed in the Condition Report of 17 September 2001). The Kiternas' were unaware of the location of either item of the Watts property.
With regard to the maintenance at this property: HANDRAIL
This was re-attached by a tradesman after the tenants vacated the property. The owner has had to meet this cost. We are advised by the Tradesman that the wall does not show damage consistent with being pulled from the wall by someone falling. The handrails look to have been unscrewed as if to give enough space to move furniture up & down stairs. The staircase is narrow and vertical in an L shape.
GATE:
A quote was requested on 18 January 2002 to repair the rear gate. We note that Mr Denis Kiternas advised this office that he would repair this which was later noted on a letter supplied dated 14 October 2002, also refer email sent on 26 November 2002 stating "Denis will repair". Mr & Mrs Kiternas had an unauthorised dog in the property which was kept both inside the property and in the rear courtyard of the property. We received a complaint from an angry neighbour with regard to the loud barking and smell from this animal. A Notice to Remedy was issued to them with regard to this animal.
OVEN:
All hotplates were noted as working on the Condition Report dated 17 September 2001. The oven as well was noted to be in a sound and dean condition.
The operation of the Chef electric oven was checked on 15 March 2002 and all was found to be OK, the tradesman made some minor adjustments, The owner met the cost of this visit. The cost of the tradesman attending was $93.50
A further request was made to service the oven to the Property Manager as referenced by an email on 26 November 2002 which advised that "The tenant cannot state what is wrong with the oven & all looked OK"
The simmerstat was replaced by our tradesman on 4 October 2003 at a cost of $132, This work was paid for on 4 October 2003. The tenant called our tradesman direct and did not advise Raine & Home Tuggeranong that this was done. The cost was met by the owner.
The tenants did not advise this office at any time that they were forced to use a frying pan to cook on instead of the oven in the property. If this was the case then an appliance serviceman would have been sent to the property.
Upon investigation at the Final Vacate inspection the oven and hotplates were all found to be in working order, however, we note that the oven was found to have been cleaned with Caustic Soda - it is well known that using this product reacts when heated with the surface of an oven. Caustic soda has ruined the interior surface of this oven as evidenced by the digital photograph taken of the interior and also a photo of caustic soda left under the sink at the property. This oven is now worthless and an added expense to the owner.
MAIN BATHROOM:
There was an initial complaint regarding tiles lifting 3 July 2002
We note that there was no flaking paint prior to the partial work carried out. Iii fact the walls were described as "freshly painted", sound & clean in the "Condition Report" dated 17 September 2001.
2 quotes were received for work to remedy this problem, one from Just Fix It and one from Kenro Services initially for $6138,00,
The quote from Kenro Services was accepted on 16 September 2002, but the owner wished to suggest tile colour and wanted a specific vanity fitted as per correspondence dated 23 October 2002. A re-quote was requested taking into account these changes on 23 October 2002. This quote was received on 28 October 2002. A deposit ($900) for this work was paid on 20 November 2002. An anticipated commencement for this work to be done as per email was 10 February 2002 A call was received from Paul at Kenro Services advising that they were having trouble organising the vanity. The main bathroom work was done and the bathroom was usable.
The tenants advised several problems with the main bathroom partial renovation. These problems were cosmetic & did not affect their use of the bathroom. Final payment was made on the bathroom on 15 August 2004 because of the fact that we had considerable difficulties getting Kenro Services to re^-attend and remedy:
a The walls had a lump of plaster above the top row of tiles.
a The faucet over the bath was not flush with the tiles.
a The toilet cistern button was sticking.
o The window frame required clear sealer
p Sealant (small splash) was to be removed from the bath surface.
a The shower rose would not stay tight.
The work done in partial renovation is a major work and cost the owner a considerable sum of money and it was required that Kenro re-attend to complete the work before Final payment could be made.
We wish to advise at this time:
The owner could not do both bathroom and ensuite at the same time as the tenants would need to be vacated from the property as no bathroom would have been available for the tenants use.
ENSUITE:
An urgent quote was requested on 29 March 2004. This quote was supplied on 5 May 2004. A further quote was requested on 18 June 2004 and on 27 August 2004 requesting a particular colour for the tiles. Monies were placed in trust for this cosmetic upgrade for over 1 year.
Scott from Mult-Trade advised this office that he could not contact the tenants to make a time to view and had tried several times to contact someone, so he could go to the property and view the ensuite and supply a quote. After trying to contact the tenants Mrs Kiternas was again in the office regarding rental payments when she was handed Scotts mobile number for the tenants to call him and set up a suitable time for him to attend. To our knowledge this contact with Scott was not made by any of the tenants.
LIGHTS:
The 17 September 2001 Condition Report shows all lights were working and were in sound and clean condition.
The problem with the lounge light was reported on 7 September 2004. This was acted on immediately. The invoice is dated 13 September 2004 and was paid by the owner on 30 September 2004 for the cost of $110.00. The light switch & the lamp holder were replaced for the lounge lights. Upon discussions with our electrician he advised that he also supplied 6 screw type light bulbs at his own expense. The original lights had not been screwed into the socket properly and so they were flickering. This is a common problem with screw type light globes if they are not screwed in properly. At the Final Vacate Inspection all lights are working in the correct manner.
The owner notes: After all the attendances by qualified electricians to the property, not one has ever raised issues about the compliance of the property to Australian electrical wiring standards. The only comment has been from Mr Kiternas, whose qualifications are unknown.
INTERNAL DOORS:
The 17 September 2001 Condition Report shows all doors and door locks to be in a sound condition, apart from a missing handle on the inside of the walk-in robe door.
Two internal doors ( door knobs) were repaired on 17 May 2002 at a cost of $121.00
At the Final Vacate inspection 2 doors were found to have been taped & had wire in the latches to keep them from latching. 1 doorknob was missing altogether and could not be found at the property.
CARPETS:
The 17 September 2001 Condition Report shows the "good quality carpet to be in a good condition and sound and freshly cleaned."
There was no smell of dampness evident at the property, on the contrary the smell was of dog urine. We have had Morgans carpet cleaning at the property and they advise that a "dog has urinated on the carpets & the smell has permanently permeated the carpet and that type of smell cannot be removed". The carpet is now worthless.
GARAGE DOOR:
Request to AO Auto doors on 1 December 2003 to undertake preventative maintenance service on the automatic doors at the property.
We note at this time that Denis Kiternas was supplied with 2 x remote controllers for this door as well as signing for 10 keys to the property. Mr R Kiternas did not return any remotes and only 1 key was returned to this office after vacating the property. When questioned regarding this he stated that keys were on the bench. On visiting the property no keys were found to be on the kitchen bench. We again called him and he stated as far as he was concerned only 1 key from Mrs Kiternas is all he was returning. To date only 1 key has ever been returned from these tenants. The owner has now had to supply himself with 2 remote controllers to replace the ones not returned and to make arrangements to replace the keys.
Be advised that the owner of this property has now had to spend the sum of $240 to have two new remote controls purchased to replace the ones not returned to this office at the Final Vacate inspection.
We further note that the handle lock on the side door to the garage was hanging loose.
The use of a garage is to park a car and the tenants had this facility and a serviced automatic door. We were not advised that the door handle had been removed and left hanging.
KITCHEN CEILING:
In December 2004 a professional Building Inspection was carried out on the property by a building engineer. There were no concerns raised with the ceiling as it is only cosmetic,
RENT:
We wish to advise that the rent for this property had already been kept at a conservative amount of $290 per week. In actual fact we could have achieved a rental of $320 per week for this property. Allowances have been made for the tenants with regard to keeping the rent at the lower figure.
Rent is outstanding for the period July 2004 to 17 December 2004 (apart from two fortnightly payments made at the direction of the Residential Tenancies Tribunal member on 11 November 2004. The Tribunal directed the Kiternas' to pay rent of $580.00 per fortnight on time until further notice. The rent has not been paid despite the Tribunals direction.
Mr Kiternas by his own admission has stated that he is holding funds in a separate account in trust. These funds have not been paid to Raine & Home Tuggeranong nor to the owner.
Despite the lack of rent the owner has had to meet on-going costs associated with the property including: water and sewerage (All water and sewerage accounts have been paid by the owner for the entire term of the occupancy by the Kiternas') Rates, Land Tax, Insurance and other outgoings. The refusal by the Kiternas' to pay rent since July 2004 (apart from two fortnightly rental periods in November/December) has cost the owner considerably. Additionally the carpets have been ruined by dog urine and the oven ruined by the use of caustic soda. This has led to further costs through the complete depreciation of these assets. Both the carpets and oven were in good condition according to the 17 September 2001 Condition Report. The owner has also had to fund directly the cleaning ($330.00), replacement of the remote garage door openers ($240,00) and other costs hi the absence of any Bond monies. The owner has suffered considerable financial loss and hardships from the occupancy of his property by the Kiternas'/
We further advise that the owner of this property, Mr Watts has received unsolicitored and he believes threatening emails from Mr Kiternas, which he finds totally unacceptable.
54. On 24 January 2005 the applicants lodged a complaint with the Tribunal concerning the alleged bias of the presiding member (Exh 79). That complaint read:
I wish to submit a complaint regarding the way in which tribunal member Mr. Allan Anforth Chaired the case RT 986 of 2004. In these proceedings (3 to date) he demonstrated the following:
Complete disregard for truth.
Disregard for the law.
Wasted time.
Was extremely biased.
In one occasion he calculated a figure for outstanding rent to be in excess of $4,000 while the correctly calculated figure should have been $209.50.
For the very next payment the rent shows to be in credit for $190.50, and remain so for a about dozen rows reaching the credit of $920.50 at one stage.
I believe that this example alone should be a sufficient reason to demonstrate why Mr. Anforth should not be allowed to represent this Tribunal.
I wish to point out that my experience in the legal matters is very limited, and I strongly believe that if the material is examined by a properly qualified person the further breaches would be reviled.
I would welcome an opportunity to discuss these charges further, or to submit additional information in writing.
I can be contacted at the above address or by phone 86882924. With Respect:
55. The Deputy Registrar responding advising the tenant of his right to appeal to the Supreme Court.
56. On 7 February 2005 the applicant lodged a further complaint about the presiding member and asked that the orders of 21 January 2005 be set aside (Exh 80). The letter read:
I hereby request that the order made by the tribunal on the hearing of 21.01.2005 be set aside as the amount is clearly incorrect.
Rent from 17.09.01 to 03.12.04 (168 weeks @ $260 per week) 43680.00
Rent Paid (Landlord figure) 40910.50
Therefore the Balance is $2769.50
There where two rent increases in that period that even Member himself declared illegal and would obviously have to be reviewed, but even if they are taken into account in full that would increase the balance by $1685.00 to $4454.50.
57. On 11 February 2005 the applicant lodged a third complaint about the presiding member (Exh 81). It read:
As you must be aware, I have made two written complaints to the Tribunal in regard to the conduct of Mr Allan Anforth in the course of the above case. My attempt to arrange an appointment with the member of the Tribunal and discuss my accusations further proved unfruitful as well, as I was advised some days later by telephone that the Tribunal does not discuss such matters with the public.
It is obvious that 1 submitted my complaint to the incorrect authority or in the incorrect format, and as a result I have only managed to waste the time of the Tribunal Staff.
I profoundly apologise for my mistake, and would greatly appreciate the Tribunal assistance with the following.
1. I strongly believe that Mr Anforth should not be allowed to continue as a member of this Tribunal based on the evidence of this case alone, and would greatly appreciate advice as to which authority I should address my complaint.
2 There have been a number of serious offences committed by the other party during these hearings (including attempted theft, fraud etc). So far I was unable to identify the way to instigate the appropriate proceedings against the offenders. The assistance of the Tribunal in this matter would also be greatly appreciated.
3. For some reason, we have yet to receive the audio tapes from the hearing of 21/01/2005 (after almost 3 weeks now), which will help me in completing the list of breaches committed by Mr Anforth and the other party in this matter.
4. I respectfully request that another Member be appointed to conclude this case, for reasons stated in my previous correspondence.
I trust the above meets with your approval, however if you should require additional information, please do not hesitate to contact myself.
58. The applicant appended documents purporting to be a “verbal record” of the parts of the proceedings. These read:
Record of verbal submission made by Ranko Kiternas to Tribunal Hearing of 21 Jan 2005-Exh 82
Re: Returned payments / cheques
There are a number of receipts that Raine & Home Tuggeranong refuses to accept, as the payments that they were issued for were returned by the bank.
We wish to reaffirm the following issues.
My wife recollects that on a number of occasions she was summoned to Raine & Home's office, and made a cash payment in place of the returned bank payment. In each case she has done so, we believe that receipts in our possession are for cash payments and not for returned payments.
We cannot see any other way for these receipts to come into our possession as no receipt was ever mailed to us and there is no reason to create a receipt for payments made by the bank as they are not required by the Residential Tenancies ACT 1997.
We believe that all of these receipts should be taken as proof of payment, and records adjusted accordingly.
Record of verbal submission made by Ranko Kiternas to Tribunal Hearing of 21 Jan 2005 Exh 83
Re: Suggested steps to resolve rental payments dispute
We suggest the following steps be undertaken to resolve the rental dispute.
A:
1.Rent from 14 Sept 2001 to 3 Dec 2004 (168 weeks) be calculated at base rate ($260 per week)
2.The amounts and duration for any rental increases in that period to be determined and added to the figure above
3.Rent for the period after 3 December 2004 to be determined and added to the figure above
4. Any other monies due and payable to be included in the total above.
B:
1.The payments agreed to by both parties to be included in payment subtotal ($40,910.00)
2.Any amounts awarded for disputed payments based on receipts to our name, be determined and added to the above.
3.Any money awarded for payments for which we do not have receipts, or substituted receipts to another person, be determined and added to the above.
The total value of B should then be subtracted from the total value of A, to determine the actual value of the alleged rental arrears.
Record of verbal submission made by Ranko Kiternas to Tribunal Hearing of 21 Jan 2005 Exh 84
Re: Members Calculations.We wish to set the record straight in regard to Mr Anforth's attempts to prove the amount of rental arrears.
Following his lengthy mental calculations, he arrived to a figure in excess of $4000 for the period between 20 December 2002 and 17 January 2004.
From the attached spreadsheet the properly calculated amount based on the same figures is in fact $209.50, one would have to assume that if Mr Anforth was leaning in our favour to the same degree, a similar number could be quoted with a different sign in front.
We further wish to confirm that Mr Anforth's statement that I did a "fair amount of interrupting myself was indeed incorrect as confirmed from the audio tapes of the hearing, we trust this clarifies the situation a little.
Furthermore we wish to place on record that we have been greatly affected both emotionally and financially by the members ruling to evict us from the premises despite the fact that the Member was well aware that we could not find alternative accommodation due to the rental references supplied by Raine & Home Tuggeranong.
We have some of our friends (who rang Raine & Home Tuggeranong for a rental reference) as well as some private landlords who are willing to testify to the content of these references.
In addition we cannot understand what hardship a potential seller would have with a periodic tenant occupying the premises, on the contrary, one would think the property would be more attractive to the investors between the potential buyers.
Consequently, we were forced to move into premises that we would not otherwise chosen and with only a 6 month lease, so we may have to move again shortly and thus experience further costs.
We take this opportunity to respectfully request that the Tribunal instruct Raine & Home Tuggeranong to release the bond money for the above property, submitted by our son Denis, as he is obviously the previous tenant, and the bond should have been released 2 years ago.
59. Again the Registrar advised the applicant of his right of appeal to the Supreme Court but otherwise declined to intervene.
60. The matter was then listed for further hearing on 4 March 2005. The parties attended.
61. The Tribunal went through the tenant’s list of defects one by one. The tenants evidence was as follows:
62. In relation to the main bathroom, repairs were carried out in May 03 but were not effective. The exhaust fan never worked; the room smelt of rotting timber; there was water damage under the bath; the bathroom door could not be closed lest it would not open; the tiles were poor and never adequately fixed. The tenants had the partial use of the bathroom but the smell and door compromised its use for 67 weeks. The landlords concede there were defects and contracted with Kenro to carry out the work. Kenro was delayed and eventually did the work. Thereafter there was some correction required to the repairs but essentially the tenants had the use of the premises. It is clear from Exh 49 that the landlords were aware of the state of the bathroom as at 28 June 2002. The whole sorry saga of the bathroom is chronicled at paragraph 23 above and shows that the problem was continuous throughout the lease.
63. The hotplates on the stove never worked properly from the beginning of the lease. Only the small plate actually worked and the tenants cooked on frying pans and other plug in devices. The landlords had the stove attended to on 15 March 2002 and again on 4 October 2003 and claim that the tenants did not thereafter report any defects in the stove. Repairs were ineffective and the tenants reported this fact to the landlords after the purported repairs. The tenants deny that the simmer stats was ever repaired and insinuated corruption on the agents part (Exh 35).
64. All three toilets were defective in some way throughout the whole lease. Each leaked constantly causing a large water bill. The plumbing was noisy. The toilets could be used but after use the tenants would need to wait about 1 m to check if the flushing had stopped. The attempted repairs in 2002 were ineffective and the tenants advised the landlords of this fact (Exh 1 and 2). The Inspection Report (Exh 70) shows the landlords knew of the toilet problems on 14 November 2002.
65. There were 10 doors inside of which 8 did not work and the ninth was missing a handle. There was an attempted repair by lubrication and painting of two doors but they still did not function properly. Had to leave door open or they would jam shut. This intruded on the tenants privacy and caused heating issues in winter and odour problems. The landlords asserted that two doors were repaired on 17 May 2002 and that the problem with the other doors was due to the deliberate interference by the tenants. The evidence for this assertion was the existence of tape and wires to hold the doors in place at the final inspection. The existence of the tapes is equally consistent with the tenants complaint that they had to secure the doors per Exh 2.
66. The ensuite was missing tiles, the shower door was insecure, the shower glass cracked and the door would not shut. The tenants ceased using it in May 2003 when the main bathroom had some repairs. The ensuite was never repaired. The landlords agent claimed that the failure of repair was due to the lack of co-operation by the tenants with the tradesmen. There was no evidence of this.
67. The ceiling about the stove had come away from the wall causing dust and vermin to fall onto the stove. It caused heating and cleaning issues. The landlords assert the problem was cosmetic only.
68. The handrails to the upstairs came away from the wall and were shaky. Twice falls occurred by reason of this fact. The handrails were loose from the beginning of the lease. The landlords asserted that the handrail was deliberate interfered with by the tenants. There was no evidence of this deliberate interference before the Tribunal.
69. The lights were a problem throughout the lease. They flickered and bulbs blew. Flames came out of the living room switch. Repairs were undertaken in September 2004 but not effectively. The same problems continued thereafter. The landlords denied any notice of the problem until September 2004 and assert the problem was then fixed.
70. The lock on the roller door and side were both non-functional throughout the lease. Consequently the tenants were deprived of the use of the garage for housing their vehicles. The landlords assert that the tenants were supplied with remote controllers for the door which were lost. The manual lock on the door was broken, by implication the landlords were suggesting by the tenants. Again there was no evidence of this. Exh 54 shows the landlords know of the lock problem on 26 November 2002. Exh 61 records that tradesmen serviced the door and locks on 22 January 2004, which is hard to reconcile with the fact that the agents reported the door and locks were still broken at the date the tenants vacated the premises.
71. The back gate was rotten and had to be opened by manual lifting. The landlords claimed that Denis Kiternas had voluntarily undertaken to do this repair. Obviously the matter remained unrepaired long after Denis had vacated and the landlords offered no explanation for this fact. Exh 39 and 44 indicate that the landlords had obtained a quote from Just Fix It on 18 January 2002 and 12 March 2002. Exh 54 shows that the landlords knew the gate had not been fixed as at 26 November 2002 well after Denis had vacated.
72. The tenants did not ultimately press the issue of the non-receipt of the rent increase notices and no evidence was led to suggest that the rent increases were excessive per se for the purposes of section 68 of the Act. The tenants application was one made under section 71(1) for a rent reduction by reason of the failure of the landlords to maintain and repair the premises.
73. For the purpose of calculating a rent reduction the parties were asked to agree an average rent over the period of the tenancy to obviate the necessity of the Tribunal having to consider each period of rent increase separately. The parties agreed on $580.00 pf which was to form the base line for any retrospective rent reduction.
Tribunals finding on credit
74. The Tribunal found the tenants to be unreliable witnesses prone to making extravagant and unsubstantiated allegations against other people.
75. The Tribunal found the tenants prepared to adopt knowingly false positions in respect of the dishonoured cheques and clerical errors in their rent ledger for their own gain.
76. The tenants vitriolic allegations against the presiding member during the course of the hearing process is also to be depreciated and verges on contempt.
The Tribunals findings of fact:
77. That the rent arrears payable by the tenants to the landlords at the termination of their lease was $5042.35
78. The landlords failed to comply with section 29 of the Act at the commencement of the tenants lease in February 2002 in that the landlords did not carry out an inspection of the premise, prepare a report and provide a copy to the tenants. Neither of the agents appearing for the landlords at the hearing had any personal involvement with the premises at the commencement of the tenants lease in February 2002. Consequently the landlords were not in a position to know the state of the premises at that time.
79. There exists sufficient corroboration to satisfy the Tribunal that the tenants complaints concerning the poor state of the premises from the beginning of their lease is probably true. The defects were not minor, they went to basic issues of personal hygiene, heating, lighting, cooking and safety within the house and therefore constituted a “significant diminution” of the tenants enjoyment of the premises within the meaning of section 71. The evidence reviewed above satisfied the Tribunal that most, if not all these defects, were present from the commencement of the lease.
80. To the extent that the landlords suggested that some of the defects had been deliberate or negligently caused by the tenants, there is no evidence of any kind before the Tribunal which supports those claims. There is evidence recorded above of early and consistent complaints by the tenants of the need for repairs.
81. The tenants are entitled to their retrospective rent reduction. Section 71(3)(b) limits the rent reduction to a 12 month period, in this case running from the commencement of the lease in February 2002. The tenants sought a reduction of $80 per week which represents about a 27% reduction on the average rent agreed between the parties. In the circumstances the Tribunal does not consider this to be unreasonable and makes orders accordingly in the sum of $4160.00. After allowing for the set off of rent arrears the final sum owing by the tenants to the landlords is $882.00 (in rounded off terms).
82. But to limit the tenants claim in this manner is unfair in that the landlords’ failure to repair extended beyond the first 12 months of the lease. The question then arises as to whether the Tribunal can
(a) construe the tenants application to be for a serious of 12 monthly rent reductions to span the whole of the relevant period: or
(b) make an order under section 104 for compensation to the tenants for the landlords’ breaches of prescribed terms 54 and 55, being an order in addition to the rent reduction. The Tribunal is cognisant of authorities to the contrary in the context of similarly worded NSW legislation (Residential Tenancies Law and Practice In NSW 2003 ed Anforth, Thawley and Christensen at [2.49.0])
83. These issues were not argued before the Tribunal and so it is not appropriate for the Tribunal to make orders at this stage. The parties have leave to relist the matter on these limited points prior to 30 July 2005 after which the orders below are final. The parties are encouraged not to seek relisting unless and until they have taken appropriate legal advice on the issues.
Orders:
The tenants are to pay the landlords the sum of $882.00 forthwith.
The parties have leave to relist the matter for argument and further orders limited to the issues at paragraph 81 above prior to 30 July 2005 after which the order 1 is final.
A. Anforth
Member
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