Muscat v Moffatt

[2023] NSWCATCD 8

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Muscat v Moffatt [2023] NSWCATCD 8

Hearing dates:

12 January 2023

Date of orders:

17 January 2023

Decision date:

17 January 2023

Jurisdiction:

Consumer and Commercial Division

Before:

P French, Senior Member

Decision:

(1) The Residential Tenancy Agreement is terminated in accordance with s 87 of the Residential Tenancies Act 2010 as the tenant has breached the agreement by failing to pay rent in accordance with that agreement.

(2) The Tribunal is satisfied in accordance with s 89(5) the tenant has frequently failed to pay rent owing for the residential premises.

(3) The Residential Tenancy Agreement is terminated immediately, and possession is given to the landlords on the date of termination.

(4) The order for possession is suspended to 7 February 2023.

(5) The tenant shall pay the landlords a daily occupation fee at the rate of $54.28 per day from the day after the date of termination, namely 18 January 2023, until the date vacant possession is given to the landlords.

(6) Within 60 days of the date for possession of the premises specified in these orders the landlord may request a relisting of the application to determine the amount of the occupation fee owing.

(7) The tenant, Hailee Moffatt, 28 Ridges Lane, Richmond Lowlands, NSW, 2753, Australia is to pay the landlords, Frank Muscat and Robert Muscat, PO Box 277, Richmond, NSW, 2753 the sum of $1,591.00 immediately.

Catchwords:

LEASES AND TENANCIES - Residential Tenancies Act 2010 (NSW) – obligations of tenant and landlord – obligation to pay rent – rent arrears termination application – frequent failure to pay rent

Legislation Cited:

Residential Tenancies Act 2010 (NSW) – ss 83, 87, 88, 89, 114

Category:

Principal judgment

Parties:

Frank Muscat (First Applicant)
Robert Muscat (Second Applicant)

Hailee Moffatt (Respondent)

Representation:

Victoria Muscat (First and Second Applicants)
Joanne Muscat (First and Second Applicants)

Hailee Moffatt (Self-represented)

File Number(s):

RT 22/45596

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This is an application by Frank and Robert Muscat (the landlords) for orders pursuant to sections 83(1), 87, 88, and 89(5) of the Residential Tenancies Act 2010 (the Act) that would terminate a residential tenancy agreement that subsists between them and Hailee Moffatt (the tenant) and return possession of the premises to them on the ground that the tenant has frequently failed to pay rent in accordance with that agreement, and for related orders. This application was made to the Tribunal on 6 June 2022.

Procedural history

2. The application was originally determined by the Tribunal, as presently constituted, on 27 September 2022 after two Special Fixture Hearings conducted on 28 August 2022 and on 27 September 2022. The tenant attended the first of those Special Fixture Hearings but not the second due to some inadvertence on her part as to the venue for the second hearing (the original proceedings).

3. On 13 October 2022 the Tribunal, differently constituted, set-aside the orders I made on 27 September 2022 on the application of the tenant, which resulted in the application being re-registered and listed before me for rehearing today. I have heard the application afresh.

Evidence

4. The landlords were represented at the hearing by Ms Victoria Muscat and Ms Joanne Muscat who both gave oral evidence under oath. They relied upon bundles of documents filed in the original proceedings on 20 June 2022, 20 July 2022, 2 August 2022 and 27 September 2022 and a further bundle of documents handed up at the final hearing. These bundles were marked Exhibits A1 to A5 respectively.

5. The tenant attended the hearing in person and gave oral evidence under oath. She relied on a bundle of documents filed on 1 July 2022 in the original proceedings and on a further bundle of documents handed up at the final hearing. These bundles were marked Exhibits R1 and R2 respectively. I note that both the landlords’ and the tenant’s bundles also contained material concerning a related application made by the tenant which is the subject of a separate decision.

Jurisdiction

6. I make the following findings of jurisdictional fact:

1. There is a residential tenancy agreement subsisting between the parties to which the Act applies. The date of that agreement is 8 July 2016. It was originally a fixed term agreement of 6 months duration, but it has continued periodically since the end of the fixed term.

2. The landlords have served the tenant with a termination notice on the ground of non-payment of rent that complies with the requirements of Part 5 of the Act. The date of that notice is 18 May 2022. It required the tenant to give vacant possession on 1 June, 14 days later.

3. I have reached the conclusion that on the date the termination notice was served the tenant was “not less than 14 days in arrears” as required by s 88(1)(a) of the Act. This finding requires some further discussion in the circumstances of this case, to which I return below.

4. The termination notice was served on the tenant in accordance with s 223 of the Act. In this respect it was served by Ms Victoria Muscat via an envelope addressed to the tenant which was placed in the tenant’s letterbox on 18 May 2022. It was also served on the tenant by email on that date. The issue of whether the latter was an agreed method of service is not material because the other mode of service is permitted.

5. The date for termination specified in the notice has passed.

6. The tenant did not return possession of the premises to the landlord in accordance with the termination notice and remains in possession of the premises.

7. The application was made within the time permitted by ss 83 and 88 of the Act, that is, within 30 days of the termination date specified in the notice.

Material facts

7. With respect to the issue of whether the tenant was at least 14 days in arrears before the termination notice was issued, there is a degree of complexity in this case. The tenant is a person who has the benefit of a rental subsidy that is paid directly to the landlords by the Department of Communities and Justice (DCJ). That subsidy partially pays the tenant’s rent. The tenant is responsible for the payment of the remainder of it. That subsidy is paid monthly in advance in respect of a specified period.

8. On the date the termination notice was issued, the tenant was $1,502.00 or 28 days in arrears of rent calculated in accordance with the landlords’ rent record. However, also on that date, the landlords held on account a credit of $742.00 paid by DCJ in respect of a period after the date of the notice. If that amount were to be applied to rent owed by the tenant on the date the termination notice was issued, she would have been $760.00 or exactly 14 days in arrears on that date. She would therefore not have been at least 14 days in arrears “before” the date of the termination notice, as required by s 88(1) of the Act. The termination notice would therefore be of no effect in accordance with that section.

9. In usual circumstances any payment received by a landlord towards rent is paid from the day after rent has previously been paid up to. Where a tenant is in arrears of rent, any rent payment is applied to the arrears first, rather than to the current or any future period.

10. The landlords’ contention is, in effect, that it holds the DCJ subsidy in trust and is only authorised to bring it to account in respect of the period specified in the payment advice it receives from DCJ. That is, that it can only be applied in respect of the period specified in the payment advice rather than any earlier period. This is at odds with the usual way in which rent payments are credited to a tenant’s rent account.

11. The DCJ Payment Advice notices are in evidence. The landlords’ submissions are consistent with the payment specifications set out in those notices. Those Payment Advices specify the period (usually, the future period) in respect of which the payment is made. I therefore accept that the $742.00 held on account by the landlords on the date the termination notice was issued was held in trust for DCJ to be brought to account in future in accordance with DJC’s payment instructions. It did not stand to the tenant’s rent credit on the date the termination notice was issued.

12. I acknowledge this issue is not straightforward, but any other construction would impugn the public purpose of the rental subsidy which is to satisfy part (not all) of the rent owed by a tenant on the basis that the tenant remains responsible for the remainder of the rent payable. It is on this basis that I have made the finding of jurisdictional fact set out at paragraph 6(c) above.

13. The tenant disputes the accuracy of the landlords’ rent record. She contended that it is riddled with errors, that she has been given wildly inconsistent figures as to her rent arrears at various times, and that the rent record fails to record payments she and DCJ have made towards rent. In her opinion, and according to her calculation, she ought to be showing as paid in advance as at the date of the hearing.

14. The landlords bear the formal onus of proving the rent paid and owing by the tenant during the tenancy. In this respect they rely upon a rent record generated by a software program. The rent record records payments made, the source of the payment (whether from the tenant or DCJ) and the period in respect of which the payment has been allocated. It has the appearance of a reliable business record. I am satisfied that provided data entries are correct, the status of the account will be correct.

15. While the tenant does not bear the formal onus of proof, she does bear a practical onus of proving that she (or DCJ) has made payments towards rent that are not accounted for (or not appropriately brought to account), or which are incorrectly recorded, on the landlords’ rent record. During evidence this involved a painstaking examination of the payments made by the tenant and DCJ to determine if they were reflected on the landlords’ rent record. At the final hearing, the tenant was successful in establishing that one payment of $389.00 she had made had not been entered against her account. Otherwise, every payment she put in issue was identifiable in the rent record. It should be noted that part of the difficulty arose because the amounts paid by the tenant and DCJ were not recorded in that amount on the rent record in a single transaction. They were frequently broken into more than one amount and distributed over different rent period periods. Nevertheless, they remained identifiable.

16. I was thus satisfied on the final state of the landlords’ evidence (their rent record) that as at the date of the hearing the tenant owes rent of $1,591.00 and is 29 days in arrears. This amount takes account of a payment of $389.00 the tenant has established on her evidence had not been credited to her rent account prior to the hearing. It does not take account of an amount of $742.00 which the landlords hold in trust for DJC in respect of future rent payment periods for the reasons I have stated above.

17. I am satisfied on the bases set out above that the tenant was in breach of her obligation to pay rent at the time the termination notice was served on her and that this breach has persisted up to the date of the hearing. It is to be acknowledged that the severity of the tenant’s default on rent has lessened since the original proceedings were determined. At that time, I determined that she owed rent in the amount of $2,877.12 and was 46 days in arrears. Nevertheless, her default on rent remains substantial as at the date of this hearing.

18. The tenant has failed to pay all rent due on multiple occasions during the tenancy. On her own evidence (page 17 of R2), there were several weeks when she did not pay rent at all during February and most of June 2022. I am also satisfied having regard to the landlords’ rent record that all rent was not paid when it fell due on many occasions during the tenancy.

19. The rent arrears exceed the rental bond, which is $1,460.00.

20. In the exercise of discretion, I am satisfied on these factual findings that the tenant’s breach of the residential tenancy agreement in failing to pay rent in accordance with that agreement is, in the circumstances of the case, sufficiently serious to justify termination of that agreement under s 87 and 89(5) of the Act.

21. Two issues raised by the tenant in response to the application require comment.

22. The tenant is critical of the fact that the landlords have failed to issue her with rent receipts for the payment of rent by her and DCJ in accordance with s 36 of the Act. That is disputed by the landlords, and there are copies of documents that amount to rent receipts in the tenant’s documents (Exhibit R1 at pages 31 to 34 for example). In any event s 36 is a civil penalty offence. The Tribunal has no role in its enforcement. The ultimate issue in these proceedings is whether the landlords’ evidence is sufficient to establish that the residential tenancy agreement required the tenant to pay rent which she has failed to pay, and whether that default is sufficiently serious to justify termination of the residential tenancy agreement. Rent receipts would be relevant evidence in relation to these issues, but their absence does not prevent the Tribunal from making findings of fact on other evidence.

23. The tenant also attempted to put her case on the basis that she simply wanted the Tribunal to determine the amount of rent, if any, owed, and she would pay it immediately. As noted above her contention was that the landlords have provided her at different times with various rent arrears figures and that she could have no confidence in their accuracy.

24. It may be accepted that there is some degree of complexity in the landlords’ rent record which is the result of the way they are required to bring to account the rent subsidy provided by DCJ (as explained above). However, that issue aside, it is not a difficult exercise for either party to calculate what rent has been owed under the agreement and what has been paid. The $389.00 discrepancy the tenant established in her documents filed at the final hearing was immediately accepted by the landlords’ representatives. I am satisfied that this discrepancy could have been corrected by the provision of that document to the landlords without resort to a Tribunal hearing.

25. That discrepancy, which was ultimately the only defect in the landlord’s rent record pressed (or at least for which proof was offered) by the tenant does not, in my view, justify the withholding of other rent arrears for which there was no proof of payment. This submission was also inconsistent with other submissions made by the tenant to the Tribunal during the hearing which were to the effect that she did not believe that she owed any rent arrears at all and in fact was paid in advance. In this respect, despite the tenant submitting she simply wanted the Tribunal to determine if rent arrears were owed, she remained steadfast in her belief that she did not owe rent despite compelling evidence to the contrary. I therefore accord this submission limited credence.

26. Having determined to terminate the residential tenancy agreement, I must consider if the order for possession should be suspended to allow the tenant further time to move from the property, and if so, by what period. In the exercise of this discretion the Tribunal is to consider the relative hardship to the landlords and the tenant from the order being suspended (s 114 of the Act).

27. The landlords contend that the tenant ought to be permitted a further 7 days to move from the premises. They point to the protracted history of these termination proceedings, the continuing seriousness of the tenant’s rent default, the amount of which exceeds the rental bond (in other words, the landlords’ financial exposure), and the breakdown in the relationship between the tenant and the landlords as factors justifying this short period of further possession.

28. The tenant contends that if the residential tenancy agreement is to be terminated, she should be permitted “at least 2 months or more” to move from the premises. In this respect she contends that she lives at the premises with her 9-year-old daughter, an elderly grandfather who is undergoing treatment for a serious medical condition, her older mother who occupies a caravan on the site, and that she has also recently been diagnosed with a serious medical condition. No supporting (corroborating) evidence of the tenant’s or her grandfather’s medical conditions has been submitted.

29. I have determined that this is an appropriate case in which to suspend the order for possession by 21 days because of the following considerations:

1. Justice requires that the tenant have some further time to find alternative accommodation for herself and her family.

2. The tenant has a child whose interests must reasonably be accounted for by allowing time to find at least safe temporary accommodation until alternative permanent accommodation is secured.

3. Some weight should be given to the tenant’s contentions as to her own and her grandfather’s medical conditions despite the absence of corroborating evidence.

4. It is in the interests of both parties that the tenant has time to attend to her end-of-tenancy obligations to the landlords.

5. No greater period of suspension is justified given the seriousness of the rent arrears, the landlord’s financial exposure due to the exhaustion of the rental bond by rent arrears, and the protracted nature of these proceedings. In this later respect, subject to what I have said above, I consider it is appropriate that the landlord/tenant relationship between the parties now be brought to finality promptly.

30. The landlords are also entitled to orders that will require the tenant to pay the rent arrears I have determined to be owing up to the date of the hearing, and an occupation fee calculated at the daily rate of 1/7 of the weekly rent up to the date possession of the premises is returned.

Orders

31. For the foregoing reasons I make the following orders:

1. The Residential Tenancy Agreement is terminated in accordance with s 87 of the Residential Tenancies Act 2010 as the tenant has breached the agreement by failing to pay rent in accordance with that agreement.

2. The Tribunal is satisfied in accordance with s 89(5) the tenant has frequently failed to pay rent owing for the residential premises.

3. The Residential Tenancy Agreement is terminated immediately, and possession is given to the landlords on the date of termination.

4. The order for possession is suspended to 7 February 2023.

5. The tenant shall pay the landlords a daily occupation fee at the rate of $54.28 per day from the day after the date of termination, namely 18 January 2023, until the date vacant possession is given to the landlords.

6. Within 60 days of the date for possession of the premises specified in these orders the landlord may request a relisting of the application to determine the amount of the occupation fee owing.

7. The tenant, Hailee Moffatt, 28 Ridges Lane, Richmond Lowlands, NSW, 2753, Australia is to pay the landlords, Frank Muscat and Robert Muscat, PO Box 277, Richmond, NSW, 2753 the sum of $1,591.00 immediately.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Amendments

23 August 2023 - Formatting amendments.

Decision last updated: 23 August 2023