Young & Anor v Chief Executive Officer (Housing)
[2023] HCATrans 30
[2023] HCATrans 030
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Darwin No D5 of 2022
B e t w e e n -
ENID YOUNG
First Appellant
PETRIA CAVANAGH IN HER CAPACITY AS ADMINISTRATOR OF THE ESTATE OF ROBERT CONWAY (DECEASED)
Second Appellant
and
CHIEF EXECUTIVE OFFICER (HOUSING)
Respondent
KIEFEL CJ
GAGELER J
GORDON J
EDELMAN J
GLEESON J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 16 MARCH 2023, AT 9.46 AM
Copyright in the High Court of Australia
MR M.L.L. ALBERT: If the Court pleases, I appear for the appellants. (instructed by the Australian Lawyers for Remote Aboriginal Rights)
MR N. CHRISTRUP, SC, Solicitor‑General for the Northern Territory: If the Court pleases, I appear with MR H.H. BADDELEY for the respondent. (instructed by MinterEllison)
KIEFEL CJ: Yes, Mr Albert. Do you want to deal with the question of the consent order first?
MR ALBERT: If the Court pleases. Your Honours, I hope, will have received a copy of the proposed consent order.
KIEFEL CJ: We have just been given it, actually. Perhaps you could take us through what the step is, to explain what the consent is about and what effect it has.
MR ALBERT: Yes, if the Court pleases. Ground 3, as it was, was raised as part of the special leave application and it was at that stage that there was an agreement reached in principle as to the resolution of that ground. The resolution concerns order 5 made by Justice Blokland and coincidentally also order 5 of the Northern Territory Court of Appeal.
The effect of the Northern Territory Court of Appeal’s order 5 was to undo the whole of order 5 of Justice Blokland. The difficulty with that is that the appeal by the Chief Executive Officer of Housing only concerned one sentence of order 5 from Justice Blokland. So, the order made by the Court of Appeal had the effect of undoing a concession made by the landlord, and also had the effect of not leading to Ms Young’s claim being remitted to the Tribunal for reconsideration.
KIEFEL CJ: I think you say in your notice of appeal that the first two sentences, there was no dispute about them, and so they should really just stand – that is of order 5 of Justice Blokland’s judgment – and an appeal is pending in relation to the third sentence of order 5.
MR ALBERT: Yes.
KIEFEL CJ: And that appeal just concerns the quantification?
MR ALBERT: Yes, that is correct, your Honour.
KIEFEL CJ: And that was filed at the same time as the appeal on the substantive conceptual question that we are dealing with?
MR ALBERT: It was on the same day. I am not sure if it was before or after, but it was on the same day.
KIEFEL CJ: But it is an appeal from the same judgment in the Court of Appeal.
MR ALBERT: Yes, your Honour. Not only the same judgment, but the same order of Justice Blokland.
KIEFEL CJ: But it has not been dealt with by the Court of Appeal as yet?
MR ALBERT: That is correct.
KIEFEL CJ: I see. So, they were run in parallel.
MR ALBERT: They were designed to be run in parallel.
KIEFEL CJ: To separate out the issues?
MR ALBERT: Yes, and what happened, I think, was more practical than anything, which was we ran out of time, having dealt with the landlord’s appeal.
KIEFEL CJ: To do with the quantification. So, it is something that is still to be dealt with by the Court of Appeal.
MR ALBERT: That is correct, your Honour.
KIEFEL CJ: And the effect of the Court of Appeal’s order 5 is unwittingly to have prevented that from going ahead.
MR ALBERT: Yes, your Honour.
KIEFEL CJ: I see. And this is consented to, Mr Solicitor?
MR CHRISTRUP: That is so, your Honour.
KIEFEL CJ: And you would seek orders in terms of the consent order which was provided to the Court this morning.
MR ALBERT: We do, your Honour.
KIEFEL CJ: There will be orders in those terms.
MR ALBERT: If I might address the Court on the two live grounds. Enid Young is a long‑term tenant of premises of which the Chief Executive Officer of Housing is landlord. For 68 months, the landlord did not provide Ms Young with a door for one of the external doorways to her house. There is now no dispute that doing so was a breach of section 49 of the Residential Tenancies Act. The question that arises on the appeal is what relief can Ms Young get from the Northern Territory Civil and Administrative Tribunal for that failure to comply with the contractual term applied by statute?
Ms Young submits that she can recover for the feeling of insecurity, the lack of peace of mind and the gap in protection of her and her possessions from weather, animals and people. The Northern Territory Court of Appeal concluded that she was only able to recover for any physical inconvenience arising from the accepted breach. Ms Young ultimately submits that that conclusion was in error, either by proper appreciation of the scope and operation of section 122 of the Residential Tenancies Act or by application of general law principles concerning the nature of a landlord’s obligations and, in particular, those that were breached.
EDELMAN J: Mr Albert, there was a separate obligation in relation to the air conditioner, I think, that was found to have been breached. The court accepted that there was physical inconvenience arising from not having an air conditioner in the desert and that there could be recovery for that head of damages as a physical inconvenience, as well as distress arising from that physical inconvenience.
MR ALBERT: That was dealt with in the Tribunal rather than the court, and my recollection is that there was certain compensation awarded for it – is perhaps not quite the precision that your Honours put on it as to the reason.
EDELMAN J: Why would not the same approach apply here without even the need, arguably, to get into questions of whether mental distress damages standing alone are recoverable? If there is physical inconvenience arising from not having a door, or having an insecure door, and that can lead to distress, why cannot distress be recoverable in that way?
MR ALBERT: I think the answer to your Honour’s question in the mind of the Court of Appeal and in the landlord’s mind is that the word “physical” in the phrase “physical inconvenience” has a lot of work to do. The approach that they seem to take – if I can be practical about the door – the approach they seem to take is that recovery could be had in respect of, for example, the need to sweep up the mess that came through the empty doorway. That might be a task you do every few days. But you cannot recover, on their analysis, for the feeling of insecurity that fills the time between the sweeping‑up exercise.
So, the question, in practical terms, that comes before the Court and ultimately will be dealt with below is: does she recover only for the, quote, physical inconvenience of sweeping up? The evidence was a snake had come into her house, so that is physically inconvenient, removing a snake. Does she recover just for that? Or does she recover for the feeling of insecurity, lack of peace of mind, and so on, from concern that a snake might come in at any time, or a person might come in at any time, or the weather might blow in at any time? So that, as I understand it, is the distinction they seek to draw.
I should, in passing, note that that very literal approach to the notion of physical inconvenience is in tension with the approach, as we read it, taken by the House of Lords in Farley v Skinner – and I may come to that later on if necessary. But the answer to your Honour’s question, I think, is that there is nothing preventing the same approach being taken for air conditioner as compared with door, but there are significant limits on the real‑world consequences of that.
GLEESON J: Mr Albert, we are only dealing with a breach of section 49, not a breach of section 48.
MR ALBERT: We have always presented it as a breach of both in respect of the door.
GLEESON J: So why does the notice of appeal refer only to section 49?
MR ALBERT: The breach that was accepted to have occurred was of section 49, and Justice Blokland proceeded on that basis. The significance of the ‑ ‑ ‑
GLEESON J: So, you do not have a finding of breach of section 48 in relation to the missing door?
MR ALBERT: That is correct.
GORDON J: Was that issue remitted?
MR ALBERT: The whole – yes, is the answer.
GORDON J: So, the whole of 48 was remitted?
MR ALBERT: Yes.
GORDON J: So, can we take it into account here?
MR ALBERT: We say you may need to, and the reason in ground 2 is when one is assessing – if one deals with it at this level, and I propose to address your Honours on that in due course – if one is dealing with it at the high, holistic, overall object level, then one might sensibly look at the statutory regime in total, including sections 48, 49, 57 and 65.
Can I perhaps offer a slightly fuller response to your Honour Justice Gleeson. That is to say, as I think your Honours appreciate, that the Tribunal – the breach that was found was of section 57, which is the repairs provision, and the period of breach was only from the date of notice. So, the recovery of $100 related to that six‑week period of almost six years, so that was the approach of the Tribunal.
Then it went to Justice Blokland. Before Justice Blokland was a concession by the landlord that, no, this was a breach of section 49. The difference between the two – one of the differences – being that there is no notice requirement in section 49. So, the period of time went from six weeks to almost six years. It is in that context that section 48 has not yet been dealt with, acknowledging your Honour Justice Gordon’s observation to me that everything to do with section 48 has been remitted – everything – because the test that was applied by the Tribunal member has been found to be incorrect.
If I might address your Honours on ground 1 particularly, ground 1 concerns a question of statutory construction of section 122 of the Residential Tenancies Act. In our submission, ground 1 can be resolved by reliance on five core principles or, rather, propositions, and the propositions are these. First, section 122(1)(a) specifically empowers the Tribunal to order compensation for loss or damage. The second proposition, there are limits on that power which are expressed in section 122.
The first notable limit is in the text of section 122(1)(a) itself, and that is a causation test, made apparent by the Parliament’s election to use the word “because”. That analysis was broadly accepted by the Court of Appeal. Your Honours will find that at paragraph 55 in core appeal book at page 191 – I do not need to go to it. The point we make about section 122(1)(a) is that Parliament could have, but did not, add remoteness or foreseeability as a further limit.
The second part of this proposition is to look at the further limitation imposed by Parliament on the power to avoid compensation in section 122(5)(a). That limit deals with forms of non‑pecuniary loss and damage. It relates only to, and I quote, “physical injury, pain or suffering”. Our point there is a basic one, which is that that does not cover, as this Court found in Moore, disappointment or distress. So, we make, in a sense, the same point: Parliament could have made disappointment or distress unavailable by adding it to 122(5)(a), but it did not do so.
The third proposition is that section 122(3) prescribes matters that must be taken into account by the Tribunal and, importantly, those matters include matters familiar from the general law of the contract, including something that looks like – but, perhaps, not the same as – I will come to it in a moment – mitigation and self. We make the same point again: Parliament could have included, as a mandatory relevant consideration, remoteness or foreseeability here as well, but it did not.
The fourth proposition is that disappointment and distress is a form of loss or damage which could be caused by a failure to comply with either the Residential Tenancies Act or a tenancy agreement. The fifth conclusory proposition is that, with no limit or exclusion in the Act, the Tribunal, in our submission, has power to award compensation for disappointment or distress where that is caused by failure to comply with either the Tenancy Act or a tenancy agreement.
The effect of our submission and of those five propositions is to invite the Court to do little more than to take the words of Parliament, to note the absence of any reference to principles of remoteness or foreseeability, to note the absence of any exclusion of a power to compensate for disappointment or distress, and from that absence and from the express reference by contrast to a causation test, the Court can conclude that the Northern Territory Court of Appeal was in error when it superimposed the remoteness or foreseeability element to the power of the Tribunal in section 122 that is not apparent in the text.
We rely on two authorities briefly concerning statutory compensation specifically which, in our submission, support both the analysis and the conclusion. The first is this Court’s decision in Marks v GIO. If it assists, we can go to it, but it will be brief. Your Honours will find that in volume 3 at tab 11 and, of course, it is reported in the Commonwealth Law Reports. Most helpfully, Justice Gaudron, who was presiding, at paragraph 17, which is at the CLR page 503, neatly summarised the position of all members of the Court, noting that Justice Kirby was in dissent.
At paragraph 17, Justice Gaudron records that all members of the Court agree that the statutory entitlement to damages in that case about section 82 of the Trade Practices Act has an express causation test. Then her Honour goes on:
there is no basis for thinking that relief under s 82 is to be confined by analogy either with actions in contract or in tort.
And the reason I highlight that passage is because, in our submission, it is a direct retort to the precise opposite conclusion reached by the Court of Appeal in this case, in particular at paragraph 54, which is at core appeal book 190, where their Honours say that contract principles, and I quote:
will properly be applied by analogy to the award of compensation.
In our submission, there is a perfect conflict opposite analysis of this Court, as compared with the Court of Appeal. True it is, it is a different statutory regime, but in our submission, the analysis ought be the same.
EDELMAN J: It is not just a different statutory regime, but section 82 is a provision concerning loss arising from a statutory norm; whereas a section 49 breach – that you are concerned with here – is a breach that involves a term of the tenancy agreement. It is a breach of the contract and a breach of the lease agreement.
MR ALBERT: Your Honour, we would agree with you up to the point where one observes that section 122(1)(a) also, and equally, concerns a breach of the Act and therefore, in our submission, is also concerned with what your Honours just described as norms imposed by statute.
If it were the case – and I want to draw a contrast in a moment between sections 120 and 122 on precisely this point – if it were the case that section 122(1)(a) was concerned only with a tenancy agreement – with failure to comply with only with the tenancy agreement, then, your Honour’s point to me would a powerful. But, in our submission, it loses its power by reason that, under section 122, they take an approach very similar to that in section 82 of the Trade Practices Act, as it then was, which is to also deal with statutory norms. They are bundled up in section 122.
EDELMAN J: Your assumption, then, being that compensation for loss or damage, it has to be exactly the same, and determined by exactly the same rules, no matter whether or not it is responding to a breach of a term that Parliament has chosen to impose into a contract, or breach of a term that is a completely different statutory norm. It has to be the same rules that apply.
MR ALBERT: In the context of section 122, the answer to your Honour’s question is yes. If I might then turn to paragraph 34 of the joint judgment of Justices McHugh, Hayne, and Callinan, which is at the report at page 509. I do not propose to read any of it, but would note this is the source of Justice Gaudron’s conclusion; that there was a unanimous view, in this respect. At paragraph 34, their Honours note, as Justice Gaudron had, that the causation test is built into the text of the provision, in that case, by use of the words “by conduct of”; in our case, by use of the word “because”.
They note the lack of any stated limitation on the kinds of loss or damage, and we would observe the same applies here, save that, in our submission, the position here is clearer and stronger in our favour because Parliament has turned its mind to forms of loss or damage in subsection (5) and has specifically excluded some forms of non‑pecuniary loss or damage, but not the ones at issue here.
At paragraph 38, the report at page 510, the plurality confirmed the summary of Justice Gaudron and note – again, in our submission, as a direct retort to the Court of Appeal – I quote:
it is wrong to limit the apparently clear words of the Act by reference to –
contract or tort law analogies. They go on at 41 and 42 to note that the common law may give some help generally, but in essence say that if the statute prescribes a causation test to be applied, well, that is that. Then, at paragraph 42, the plurality seemed to endorse the “but for” test as being the test to be applied. Can I emphasise, the question of what is the correct test for causation is not at issue and need not be resolved in this appeal.
Can I then refer to the second authority just briefly – for which I apologise for the late provision. It was sent to the Court last night. I have hard copies here if it has not reached your Honours. It is the Federal Court’s decision in the matter of Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance. I do have copies if ‑ ‑ ‑
KIEFEL CJ: I do not think they have been made available. If you could hand them up, thank you.
MR ALBERT: The fault for that lies with me.
GAGELER J: There are, of course, other cases in this Court that have dealt with the question of the interpretation of a compensation provision in the statute, which refers to a causation requirement. The general thrust of them is that the causation being referred to is to be discerned as an exercise of statutory interpretation. But they are not isolated. There is a number of them much more recent than the cases you are taking us to.
MR ALBERT: I accept that, your Honour, and accept the thrust of them. In our submission – and it is the next step in my analysis – when one looks at the statutory context here, for the question of how one discerns the appropriate causation test, one reaches comfortably the conclusion that remoteness is not any part of it.
GORDON J: Can I ask about that. So, you took us to the construction elements upfront – the five propositions.
MR ALBERT: Yes.
GORDON J: Is there more than that?
MR ALBERT: The one bit more is to focus on section 120. The reason that I did not put that in the five propositions is because, we say, it supports the conclusion that one reaches in the five propositions, rather than being necessary as part of the five propositions. That is the distinction I was seeking to draw – perhaps, a fine one.
Can I identify why we provide this authority to the Court, acknowledging what your Honour Justice Gageler has just said to me about there being more recent authorities of this Court. The reason that I provide this to the Court is that it is an example of a different statutory regime for statutory compensation which, equally, relies on a causation test and, in particular, the word “because”. Your Honours will find the relevant provision at page 589, at paragraph 408 where, as your Honours will see, what is at issue is the Fair Work Act and, thus, an employment contract context.
What Justice Barker does – working, as his Honour says, from first principles – the relevant analysis starts at paragraph 441. What we would note is that from first principles and without reference to Marks v GIO or, indeed, any of the other more recent authorities, to which your Honour has just referred, his Honour reaches precisely the same conclusion in respect of the Fair Work Act and, in particular, at 442, by express reference to Baltic Shipping.
The conclusion that his Honour reaches is reached by reason of the analysis at paragraphs 443 to 450. The short point that his Honour reaches is that, in the context of a statutory compensation regime where the express word is “because” and causation is the central test, the Court is still empowered to award compensation for disappointment or distress; there being no policy consideration militating against the making of such an order, as his Honour says at 443.
EDELMAN J: Even if it is unforeseeable?
MR ALBERT: I am sorry, your Honour?
EDELMAN J: Even if it is unforeseeable?
MR ALBERT: No. What his Honour refers to is it being a direct consequence.
EDELMAN J: That is a test of remoteness.
MR ALBERT: In our submission – and, indeed, in the analysis of Justice Barker – it is an application of the causation test limited in that way.
EDELMAN J: It was exactly the test of remoteness that existed in Re Polemis in torts before the courts moved to a test of reasonable foreseeability.
MR ALBERT: What his Honour is clearly not doing – and it is the reason why we say there is force in the analysis and poignancy – is looking to the general law of contract to discern whether disappointment and distress can be awarded. As your Honours would well appreciate, the so‑called general rule is most commonly attributed to Addis v Gramophone, an employment contract context. Yet here, in the very same contractual context with the same relationship, the Court comes to the conclusion that where Parliament is silent on excluding disappointment and distress, even against that common law, general law backdrop, even against that stark backdrop, one still reaches the conclusion that that part of remoteness and foreseeability analysis does not have application.
Can I note to the extent it adds anything that that judgment of Justice Barker has apparently been both approved and applied by the Federal Court a number of times since, including by Justice Banks‑Smith in Fair Work Ombudsman v Austrend International [2020] FCA 1193 and by Justice O’Callaghan in CFMEU v Melbourne Precast Concrete Nominees [2020] FCA 1309. As far as I can discern, there is no judgment to the contrary and no analysis either.
GLEESON J: Do you have findings against you that the damages that you are claiming are either too remote or not foreseeable?
MR ALBERT: Do we have findings? No, the answer ‑ ‑ ‑
GLEESON J: Adverse findings.
MR ALBERT: No, your Honour. In our submission, in a sense we can go a bit further in answer to your Honour’s question and say that it is very hard to see how the basis for the relief that Ms Young seeks could be excluded by any causation test or indeed by any remoteness principle being applied. I am going to come to Kemp v Sober in a moment. We seek to align ourselves with that in saying in this case it is almost impossible to see how it could be sensibly said that the breach of an obligation to provide “reasonable security”, that it is not foreseeable or it is remote that that breach will cause a feeling of insecurity. In our submission, one is the natural reflex of the other.
EDELMAN J: That is really your argument, is it not? It is not really an argument that there can be no remoteness limitation at all. You would not seriously suggest, for example, that if a tenant suffered mental distress as a result of a breach of a landlord’s obligation to provide documentation for the lease, that that would be recoverable mental distress, even though it was causally related to the breach?
MR ALBERT: I think the answer to your Honour’s question is no, we do not suggest that, but it is a question of how one reaches that conclusion, and this, in a sense, is to point to perhaps the unfortunate breaking‑up of the two appeals, which is to say in the context your Honour has given it is very hard to see how the quantum of any such claim could be above zero, whether one applies remoteness or not, and, in our submission, that is the proper locus of that form of analysis, one has to discern whether there has in fact objectively been a form of true loss or damage connected or caused by the breach. In the context your Honour has given it would be very hard to see how you could get from one to the other.
Can I turn, then, to the question of statutory context and identify reasons that we say, even when one looks outside of section 122(1), one is reinforced in the conclusion reached from the five propositions that I gave earlier. The parties are agreed and, indeed, it could be said to be obvious, that the Act makes use of many concepts and language from general contract law. From that fact we invite the Court to conclude that the lack of reference, the lack of reference to any form of remoteness or foreseeability, indicates Parliament’s intention not to embrace those rules or related concepts of contract law.
In our submission, section 122 specifically, and only, since that is all that is truly before the Court, is an exhaustive expression of the Tribunal’s power to order compensation under the Act. That analysis, as I foreshadowed in our submission, is confirmed when one looks to section 120, which I had asked the Court to pull up, it is in volume 1 or elsewhere, because there are fine details of it that we would seek to emphasise by way of comparison with section 122(1)(a).
There are four features of section 120 that we would seek to highlight. The first is that section 120 is one of only three provisions that fall within Division 2, Part 13 of the Act, which is titled “Compensation”. The second is that it shows expressly that Parliament was aware of general contract law principles and that it was actively and directly selecting which ones applied to the determination of statutory compensation and, indeed, other compensation by reason of breaches to which it is directed.
The third point we would make – and it goes back to a discussion that we had earlier with your Honour Justice Edelman – is your Honours will note – by comparison with section 122(1)(a) – what is by comparison an abrupt ending. Section 120 in terms applies only to a breach of the agreement. It does not apply to a failure to comply with an obligation under the Act. The significance of that is that Parliament has shown not only an awareness but a utilisation of the distinction between the two bases of non‑compliance.
In section 120 as compared with 122(1)(a), they use that distinction to say the general law rules of mitigation apply only to one of the two. In our submission, that tends strongly to the conclusion that Parliament intended in section 122(1)(a) that the two bases of breach, breach of the agreement or breach of the Act, be treated the same, and that leads to the point we have made in writing and in our outline that it is, as we have said, unlikely that Parliament intended for what we have termed “bifocal legal lenses” to be used in the interpretation and application of section 122(1)(a). That is made much less likely when one compares the precise drafting of section 120 and its scope.
The fourth and final observation to be made about section 120, and again it is to contrast it with section 122, is that unlike the other two provisions in this Division of the Act, section 120 is not limited in operation only to the Tribunal. It seems on its terms to apply whenever there is a breach of a tenancy agreement and whenever that is litigated. Section 120 therefore has the primary function of allowing for a reduction of compensation for one party’s failure to mitigate. Now, that may seem obvious and basic but that is the way, in our submission, that one then makes sense of section 122(3)(e).
Section 122(3)(e) in terms seems to call in aid concepts of mitigation also. The difference between section 120 and 122(3)(e) is that 122(3)(e) permits in terms the Tribunal to specifically award no compensation for breach because of an action to mitigate. One gets to that conclusion by looking at the opening words of that subsection (3), which is:
In determining whether to order the payment of compensation –
here are the things that must be taken into account. So, that is the first point of distinction between 122(3)(e) and 120. The second point of distinction goes back to the point I made a moment ago, that section 122(3)(e) covers both a breach of a tenancy agreement and a breach of the Act. In that way, its function is distinct from section 120 as well.
KIEFEL CJ: Mr Albert, where are you in relation to your outline of argument?
MR ALBERT: Sorry, if your Honour would just give me ‑ ‑ ‑
KIEFEL CJ: I assume that you are following your outline in your address to us.
MR ALBERT: I am, your Honour.
KIEFEL CJ: Have we got to paragraph 6 yet?
MR ALBERT: I think the next sentence was in paragraph 6 – the next sentence of my oral submissions.
KIEFEL CJ: I was just a little concerned because, having regard to your time estimate, I see we are almost at the halfway point.
MR ALBERT: Then I share your Honour’s concern.
KIEFEL CJ: I would not want you to limit yourself in relation to ground 2, in relation to the time you take.
MR ALBERT: Yes. If the Court pleases, I am grateful for the indication. In light of that helpful direction, can I, perhaps, move then to the history that we rely upon, which is addressed in paragraph 6 of outline – and I will attempt to be brief.
Again, we do not rely on these as the five core propositions, but we say this analysis supports the conclusion that arises from the five core propositions. The point to be made in this respect is to look at the legal context – the general law context – in which section 122 was enacted. At the time, in 1999, there were, in our submission, at least three notable judgments that had been handed down, being Reardon, which is at tab 42, handed down by the Victorian Supreme Court in 1992; Baltic Shipping, handed down by this Court in 1993; and Strahan following Offe, which was handed down by the New South Wales Supreme Court in 1998.
I intend to address your Honours about Baltic Shipping under ground 2, so I will not say a great deal about it, but can I make some brief observations about Reardon and Strahan. Reardon – which your Honours can go to if it would assist, at tab 42 – considered a Victorian provision which, relevantly, adopted a similar structure and language to section 122 of this Act. Your Honours will find that recited at page 14 of the judgment which is at page 1020 of the authorities.
The judgment – I think it is important to observe – was handed down in the period between the hearing and judgment by this Court in Baltic Shipping. So, there was, at that time, a degree of uncertainty. The obligation being considered in Reardon was a breach of a “quiet enjoyment” obligation – as your Honours will see at page 3 to 4 of the judgment. In particular, the real estate agent in that case gave keys to seven to eight police officers to execute a warrant. That allegation failed, but breach of the Act was considered in some detail by the Court.
The compensation question that was referred to the Supreme Court concerned only non-pecuniary loss in the form, particularly, of inconvenience. The Supreme Court’s analysis, which we say forms an important part of the backdrop to the Northern Territory Parliament’s enacting of section 122, highlighted that Parliament had specifically carved out of the Tribunal’s power some non-pecuniary loss and damage; i.e., same as here, physical injury, pain, or suffering. And the Court said, and I quote:
supports the view that “loss and damage” in s.105 otherwise includes non-pecuniary loss and damage.
We say, the same conclusion ought be reached here about substantively the same provision. The Court then concluded that non-pecuniary loss or damage will be a consequence that often flows from disruption to quiet enjoyment. And for reasons become important later, in my submissions, we would ask the Court to note that the Supreme Court relied there on the judgment in McCall v Abelesz. The key conclusion for our purposes is the conclusion close to the end, Justice Smith says:
The expression “loss and damage” is a wide one and I would expect an express limitation to be included (as in –
the section 122(5) equivalent:
if it was intended by the Parliament to exclude compensation for a typical consequence of disruption to quiet enjoyment and one that is compensable at common law.
Whether that last bit is ultimately found to be right or not under ground 2 is beside the point. In our submission, that analysis is persuasive and correct in identifying what one does with the silence of Parliament on the particular forms of loss and damage, contrasted with the Parliament speaking on related forms of non-pecuniary loss and damage. Seven years later, after this judgment of Justice Smith, the Northern Territory Parliament chose to adopt a provision in materially the same terms.
The second case is Baltic Shipping. As I said, I do not want to say much about that now, because I do want to deal with it under ground 2, save to make the observation that in Baltic Shipping, this Court recognised the exception to the general rule, that disappointment and distress cannot be compensated – that being the general rule – but that has the exception of a circumstance where the contract is for personal protection, peace of mind, freedom from molestation, or comfort.
We would note for present purposes, importantly, that, in our submission, the High Court in Baltic Shipping twice referred to “quiet enjoyment” cases – and I will take your Honours to those in due course – but perhaps most importantly for the present case, the Court repeatedly relied on the case of Kemp v Sober – a housing case, but not a residential tenancy case.
KIEFEL CJ: Are you moving to Baltic Shipping, then?
MR ALBERT: With your Honours’ indulgence, I might do that in a moment just because it has a happier home in ground 2.
KIEFEL CJ: Yes.
MR ALBERT: In our submission, Baltic Shipping clearly uses language which correlates the protections later adopted by the Northern Territory Parliament. The language correlates and those same concepts were enacted in the Residential Tenancies Act. That is to say, Baltic Shipping reinforced the availability of compensation for disappointment and distress – and, in the face of that, years later, the Northern Territory Parliament said nothing.
The last of the cases, which I do not specifically need to take – in fact, no, I might – is the case of Strahan – which your Honours will find at tab 50 of the bundle of authorities. Strahan, importantly for the chronology on which we rely, was handed down in the year before section 122 was enacted. It was the second in a series of cases handed down by the New South Wales Supreme Court dealing specifically with the question of whether Baltic Shipping applied in the Residential Tenancies context. Your Honours will find reference to that at page 8 of the judgment – page 1205 of the joint bundle of authorities.
There, your Honours will find reference to Offe – the first of the decisions – at earlier pages, your Honours will see, pages 2 and 3, the statutory power being referred to and relied upon being recited broadly. The issue in the case was a failure to fulfil a promise to install a sealed road to premises – a delay of some two and a half years is noted at page 6 of the judgment. The effect of the failure to install a sealed road was to cause the occupants to come into the house regularly with muddy shoes, which affected the carpet and – quoting from page 4:
generally adversely affected the living of the tenant.
Those adverse effects are given form at pages 7 and 8, where the Court describes them as a form of:
inconvenience and discomfort –
and the example they give is, there was:
reduced enjoyment of the verandah –
At page 15 equally the Court identifies the form of loss and damage as – and I quote:
discomfort, deprivation of enjoyment . . . and inability to entertain –
I emphasise those because, in our submission, those points provide again direct retort to what we would submit is a mischaracterisation by the Northern Territory Court of Appeal of this judgment at paragraph [66] of the Court of Appeal’s judgment where they say Strahan was only concerned with “physical inconvenience”.
Your Honours will find in the latter part of that judgment a block quote from Justice Abadee from Offe which, in our submission, echoes and expands on the conclusions reached by Justice Smith in Reardon where Reardon predates Baltic Shipping and Offe, and Strahan postdated. Then, importantly, at page 13 of the judgment, being page 1210 of the joint book of authorities, the court concludes, we say correctly, compensation under residential tenancies can be awarded “for disappointment and distress”, including:
compensation flowing from a breach of the contract the object of which is to provide quiet enjoyment and freedom from molestation.
In our submission, that is correct and consistent with the bulk of authority. It is, I have to note, inconsistent with what was said by the Court of Appeal in Branchett v Beaney, a British case to which I will come in due course.
Further on page 13 of the judgment, your Honours will note that there are findings about “loss of enjoyment” and a notation that that is “compensable”. Then over the page, at 14, the analysis that mirrors that of Justice Smith in Reardon, compensation under the New South Wales Act should be interpreted, says Justice Dowd, “in its widest sense” to include compensation for disappointment or distress. Then over at page 17 one sees again a focus on relaxation, enjoyment, peace of mind and so on, where the court says:
the quality of life of the tenant and the enjoyment of the premises over a protracted period –
goes:
to the very essence of the contract of leasing itself –
and thus, it falls within the Baltic Shipping exception. Against that careful analysis, reinforcing what was said by Justice Abadee in Offe, against that backdrop the Parliament enacted section 122 with silence on the question of disappointment and distress or the principles of remoteness. In our submission, that reinforces the conclusion that we urge on the Court, that where there is no limit or exclusion in the Act, the Tribunal retains the power to compensate for disappointment and distress where that is caused by the failure to comply with either a tenancy agreement or the Act. Unless there was anything further, I might move to ground 2.
KIEFEL CJ: Yes, thank you.
MR ALBERT: The core proposition on ground 2 is this, residential tenancy agreements generally and section 49 of the Residential Tenancy Act specifically, if breached, naturally cause a deprivation of peace of mind, freedom from molestation, or personal protection among other things. That is, such agreements are within the recognised exception to the general rule that disappointment and distress cannot result in compensation for breach of contract. At this point, can I take the Court to Baltic Shipping, recognising that, of course, your Honours are very familiar with it, but seeking to really pinpoint a few critical passages from it.
Can I identify the three purposes for which I want to take your Honours to Baltic Shipping, and they are these. These are the particular points that I want to pick up on, the general thrust, of course, your Honours will be familiar with. The first is to launch to the submission that the language adopted by this Court already accommodates residential tenancies. The second is that the authorities applied in and by this Court already capture residential tenancy contexts, and the third – and I will explain the significance of this – is to identify what we perceive to be two different methods, perhaps questions of emphasis, as to how one reaches the conclusion that one falls within the exception.
By way of introduction, can I identify those two methods that we perceive, and it seems the landlord does as well, within the judgments of this Court. I do not, when I say there are two methods, mean to suggest that they are in conflict. We say that they are not, but they are important methodologically in how one then ‑ ‑ ‑
GORDON J: Well, let us cut through it, can we, a bit? Is it that the one is a breach of a term promising something which falls within the four heads in the exception?
MR ALBERT: Yes.
GORDON J: And is the second then to look at the object of the contract as a whole itself? So, one is a term specific and the other is contract specific?
MR ALBERT: Yes, your Honour. And the distinction, as I think your Honour appreciates, as to the global assessment, we say that comes through from Chief Justice Mason with whom Justice Gaudron and Toohey agreed. The specific term analysis seems to emerge from the remaining judgments of Justices Brennan, Deane, Dawson and McHugh.
EDELMAN J: But one can look to the whole of the contract if it is the whole of the contract that is repudiated, and in Baltic Shipping v Dillon there was not really a difference between the two because it was breach of both implied promises of a good holiday and repudiation of the contract as a whole.
MR ALBERT: With respect, we agree. We would go further and say that that is the reason why we do not say their intention with one another. They are differences of emphasis, but there are important differences of method, in our submission, that one has to go through to determine whether one fits within the exception. So, to put meat on those bones, in this case the question – whichever method the Court adopts, we say, you reach the same conclusion – but, if you are dealing only with the question of the specific provision, the analysis begins and ends with section 49.
EDELMAN J: Why would you not start with the most recent authority of this Court, which is Moore v Scenic Tours where the Court focuses upon the particular provision?
MR ALBERT: We are perfectly comfortable doing that.
EDELMAN J: It is up to you.
MR ALBERT: No, we are perfectly comfortable in doing that. Can I note at this juncture what we perceive, rightly or wrongly, to be a change in the position of the landlord from the written submissions to the outline filed this morning? In the written submissions, at paragraph 51, the emphasis is most definitely on the particular provision. They say that is where the weight of authority is. In the outline filed this morning, as I read it at paragraph 4, they take the other approach. I do not mean, expressly, or in any way to be critical of my learned friends, but it is to note that there seems to be a different approach between the two.
EDELMAN J: But you do not say this is a repudiation case. This case, as you are presenting it, only concerns section 49 at that particular obligation.
MR ALBERT: I do not think we need to fix ourselves to one or the other. We are in the comfortable position of saying, whichever method you apply, you reach the same conclusion and I propose to address your Honours on either scenario.
EDELMAN J: I appreciate that, but you do not say that there has been a breach of the contract here that amounts to a repudiation of the entire contract such that one would have to look, on one analysis, at the objects of the contract as a whole because the contract, as a whole, had been repudiated.
MR ALBERT: We certainly do not seek to repudiate the contract and never have. Imposing those limitations of focus on myself, can I then go to the judgments in Baltic Shipping, just to try to give body to the submissions that I have made? Can I start in the judgment of the Chief Justice at CLR 360, at about point 1, which is in the joint folder of authorities, volume 3, at page 182. Can I note, at this point, the heavy emphasis placed by Chief Justice Mason, among others – and I am going to identify later where there is further reliance on the judgment in Kemp v Sober.
That was provided to the Court by email, I think, yesterday or the day before. I am not sure whether the judgments have reached your Honours. It seems it may have. If not, I have copies of it. It is a very short judgment to which I would like to take your Honours briefly. The facts of Kemp v Sober, as we read them, were these. What we would now call a “developer” – a Mr Kemp – sold a plot in a development he modestly called “Kemp Town” with a negative covenant prohibiting the use of any house sold – so this is not a residential tenancy context – quote:
to the annoyance, nuisance or injury of any of the houses –
in Kemp Town. Your Honours will find that at page 200 of the English reports version that has been provided. The owner of the relevant house, Ms Sober, let her house to people who established a girls’ school there with about 20 students. Mr Kemp, the developer’s widow, at this point ends up being the neighbour of the home of which Ms Sober is the owner. The Vice‑Chancellor notes at page 201 the particular issue at stake which was described in the Vice‑Chancellor’s words as:
annoyance not only from their practising music and dancing, but from their relations and friends continually calling upon them.
So that is the thing for which compensation is sought. The source of the quote at page 360 in Chief Justice Mason’s judgment then follows:
But a person who stipulates that her neighbour shall not keep a school stipulates that she shall be relieved from all anxiety arising from a school being kept; and –
these are the critical words that many justices of this Court adopt in Baltic Shipping:
the feeling of anxiety is damage.
In our submission, there is a close analogue between Kemp v Sober and our case in at least two senses. Firstly, both cases concern the enjoyment of a home. Secondly, both cases concern an express term which – and we emphasise this – identifies the ends to be achieved by the contractual term. In Kemp v Sober, the ends were avoiding “annoyance or nuisance”. In our case, most relevantly, the ends to be achieved are the provision of “reasonable security”.
If we then return to this Court’s decision in Baltic Shipping and jump over to CLR page 365 at about point 6 this, in our submission, is the basis upon which one can identify the difference in emphasis and perhaps method that the Chief Justice favoured, as compared with four other justices. His Honour said:
it is preferable to adopt the rule that 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. In cases falling within the last‑mentioned category, the damages flow directly from the breach of contract, the promise being to provide enjoyment, relaxation or freedom from molestation.
This passage is the passage I note that was recited and applied in the Residential Tenancies context in Offe and Strahan. At 366 –
EDELMAN J: That is talking about – that passage is talking about situations where the defendant does not perform the contract, is it not?
MR ALBERT: What your Honour says certainly matches with the facts of Baltic Shipping.
EDELMAN J: The opening words were:
On the other hand, as a matter of ordinary experience, it is evident that, while the innocent party to a contract will generally be disappointed if the defendant does not perform the contract –
and then it goes on, concluding the passage that you quoted.
MR ALBERT: Yes, I certainly do not seek to divorce it from its context. At about point 1 on the next page, 366, again, we see, what, in our submission, is the most clear identification of the method that the Chief Justice prefers, being what we would term loosely as the global assessment. His Honour says:
In the present case, the contract, which was for what in essence –
and that, we say, is the clue –
was a “pleasure cruise”, must be characterized as a contract the object of which was to provide for enjoyment and relaxation.
That approach, as I foreshadowed, is to be contrasted in the next judgment, being the judgment of Justice Brennan. Can I start the references at 369 of the reported version, at about point 9 down the page – the last paragraph. His Honour, in our submission, in this passage, identifies and uses language that perfectly accommodates residential tenancies. And indeed, he relies on a residential tenancy case for the critical conclusion. So that is the reason I take your Honours to this passage.
If I have correctly apprehended the policy underlying the contractual rule, it is clear that the Hamlin v Great Northern Rly Co. principle has no application when (to adopt the words of Pollock C.B.) the “disappointment of mind” is itself the “direct consequence of the breach of contract”. In such a case the disappointment is not merely a reaction to the breach and resultant damage but is itself the resultant damage.
We say that applies neatly here and to Kemp v Sober.
If a contract contains a promise, expressed or implied –
so, here you see his Honour identifying the method, you focus on the term –
that the promisor will not cause the promisee, or will protect the promisee from, disappointment of mind, it cannot be said that disappointment of mind resulting from breach of the promise is too remote. Such a promise is expressed or implied in many contracts the object of which is to provide –
and here is the language that we say directly accommodates residential tenancies:
a service or facility conducive to peace of mind, tranquillity of environment or ease of living –
At that point I would ask your Honours to go to footnote (27) and to note that Justice Brennan relies on a residential tenancy case, being Branchett v Beaney, for that core proposition. So, three important points emerge from this passage. First, the focus on the method determining whether there is a promise, express or implied and identifying the object of that term. Second, the use of the language of “service or facility” being language that clearly accommodates the form of contract before your Honours here. Thirdly, and reinforcing that second point, the citation of Branchett v Beaney being a residential tenancy case.
Now, we will address your Honours on Branchett v Beaney later. It is at tab 20, but can I just highlight at this point that what we take to be the passage being endorsed by Justice Brennan is a passage from obiter of the Court in Branchett v Beaney which critically relies on the case of Chiodi. Branchett v Beaney is at tab 20 – Chiodi is at tab 39. Chiodi is a case about mental suffering directly from discomfort in a residential tenancies context. I might take your Honours to Chiodi, which you will find in volume 4 at page 928.
I ask your Honours to go there only briefly, because what you see on that page are recitation of a series of cases where compensation has been awarded by British courts for, and I quote, “disappointment”, “inconvenience”, “distress”, “discomfort”, “loss of enjoyment” – each of them in a residential tenancies context for a breach of a covenant of repair.
So, in our submission, Justice Brennan specifically had in mind the very context that is before your Honours here. His Honour’s reference to “service or facility” is contemplating a residential tenancy. If I go, then, back to Baltic Shipping later on page 370 of the reports at about point 7, you see a reference and quotation from Kemp v Sober – all I would note in addition is that Justice Brennan characterises the agreement in Kemp v Sober as being one of a “peace of mind” promise, which your Honours will see in the introductory lines.
Over the page we see one of many recitations to the judgment of Lord Bingham in Watts v Morrow, which uses the phrase “the very object”. I need to highlight this passage because it is an immediate response from this Court to a submission, which, it seems to us from the outline, the landlord heavily relies upon. And that is the language of Lord Bingham of “the very object”. Justice Brennan engages directly with that language and recasts it as being not the only object or even the dominant object but, quote:
more accurately, an object of a contract –
How does one work out “an object”? His Honour goes on to say exactly how, and that is to look at the terms, express or implied – so again you see identification of the method that Justice Brennan adopts. It is in this passage that we get the quote which this Court reiterated unanimously in Moore – which we say, with very little intervention, applies to this case:
if peaceful and comfortable accommodation is promised –
and we say that is exactly what it is here – his Honour is dealing with holidaymakers:
to holidaymakers and the accommodation tendered does not answer the description, there is a breach which directly causes the loss of the promised peacefulness and comfort and damages are recoverable accordingly. In cases of this kind, a statement by the promisor commending –
and again, note the language:
a service or facility to be provided under the contract is frequently a term of the contract, not a mere representation.
So, again, you see adherence to that term focus. We say that passage is, in truth, a direct complete response to ground 2. The nature of the term is identified by Justice Brennan at about point 8 – and at this point, can I just note that where is – there are four judges of the Court that adopt the approach of looking to the specific term, all four of them agree the relevant term was an implied term – and it seems to us that that was also the case in Moore – they do frame the language of the implied term slightly differently. So, at about point 8, Justice Brennan identifies an:
implied promise to carry her safely (or to use all reasonable care to carry her safely) to her destination –
That passage, indeed, this analysis, was summarised and applied by this Court unanimously – your Honour Justice Edelman writing separately – in Moore, in particular at CLR 342 – I do not necessarily need to go to it, but I just note it for the benefit of your Honours’ associates – at paragraph 45 of this Court’s judgment.
If one then goes to the joint judgment of Justices Deane and Dawson, again on those three core points – at 381 of the Commonwealth Law Reports, your Honours will see Justices Deane and Dawson taking the same approach as Justice Brennan in the search for an express or implied term and relying on that effort as the means by which to reach the conclusion. At the bottom of that page, about point 9, their Honours say:
That category of case encompasses cases where the disappointment and distress have been caused by breach of a contract under which the party allegedly in breach is shown expressly or impliedly to have agreed –
so, there is the term again –
to provide pleasure, entertainment or relaxation or to prevent molestation or vexation.
Now, the reason I highlight that is because of the footnote. There is a very large footnote (63) but can I place particular emphasis on the second‑last of the cases which Justices Deane and Dawson rely upon, being Sampson v Floyd. That is also a residential tenancy case. Sampson v Floyd is a case where there was an allegation of a breach of the common law obligation to provide quiet enjoyment and where the Court of Appeal concluded that a breach of that term gave rise to an entitlement to compensation for disappointment or distress and, indeed, awarded such compensation.
So, you have express contemplation of the residential tenancy context where, in that judgment, the court reached the relevant conclusion. Can I make one observation as to the tension in the analysis between Branchett v Beaney and Sampson v Floyd. Sampson v Floyd, the relevant analysis is ratio. The judgment is a judgment of two appellate court judges. Branchett v Beaney, the analysis is obiter and it too is the judgment of two justices on appeal.
So, applying ordinary principles, the better authority, in our submission, is Sampson v Floyd and we urge the Court to adopt that reasoning. Sampson v Floyd was also provided to the Court ‑ I do not need to go to it, but it was provided to the Court, I think, yesterday. If your Honours would be aided by a copy, I have brought copies with me.
The last point to make about the joint judgment of Justices Deane and Dawson is at about point 2 on page 382 where your Honours will see again a recitation of Watts v Morrow, and then an identification – and I point to this because it makes good the point I made a moment ago about the slightly difference approaches – then an identification of what the implied term was in the minds of Justices Deane and Dawson. The implied term, according to their Honours, was to:
take all reasonable steps to provide –
a cruise with:
relaxing enjoyment and entertainment –
for 14 days. I note that (a) because it is a slightly different term, but (b) because it uses, coincidentally, exactly the language of section 49, “all reasonable steps”.
If one then goes, finally and briefly, to the judgment of Justice McHugh, Justices Gaudron and Toohey agreeing with the Chief Justice relevantly, at 394 of the report at about point 4 your Honours will see Justice McHugh in essence agreeing with Justice Brennan, Justices Deane and Gaudron – I am sorry, Deane and Dawson – adopting the specific term approach. The implied term that his Honour prefers is an implied term slightly different, being an implied term that it would be “an enjoyable experience”. At 398 at about point 5 ‑ ‑ ‑
KIEFEL CJ: I am sorry, did you say 398?
MR ALBERT: Yes, your Honour. Your Honours will again see Justice McHugh relying on Kemp v Sober. Then in the final passage if one goes to 405 at about point 8, Justice McHugh says:
At the same time, it should recognize –
That is, contract law:
that damages for distress or disappointment are recoverable in an action for breach of contract if it arises from breach of an express or implied term –
So again, that methodology:
that the promisor will provide the promisee with pleasure or enjoyment or personal protection –
And we say that has direct application here:
or if it is consequent upon the suffering of physical injury or physical inconvenience.
Obviously enough, a door’s important function is to provide personal protection. The very final point is at the top of 406 at about point 1 where you Justice McHugh identifying what his Honour considered to be the implied term, being a term:
to provide a pleasurable and enjoyable cruise for fourteen days.
Although I recognise your Honours are very familiar with the judgment, I hope that the identification of those passages going to those three points assists in the ultimate analysis. I then propose to deal as briefly as I can with the specific terms, but noting the time and the early start, I am in your Honours’ hands.
KIEFEL CJ: Would it be convenient for the Court to take its break now, then?
MR ALBERT: If the Court please.
KIEFEL CJ: Yes, thank you, Mr Albert. The Court will adjourn for 15 minutes.
AT 11.10 AM SHORT ADJOURNMENT
UPON RESUMING AT 11.28 AM:
KIEFEL CJ: Yes, Mr Albert.
MR ALBERT: If the Court is to adopt the approach of focusing on the, in this case, express term as the means to determine whether this breach falls within the exception, then centre stage is section 49 of the Residential Tenancies Act. There is not a great deal that one can say about section 49 that is not obvious from the text, so I would seek to make only a few brief observations. The first is that it, unusually in the context of this Act, identifies the ends to which the obligation is directed – namely, reasonable security – as well as the means. Other provisions like sections 48 and 65 identify the ends, but not the means.
Critically, the end, expressly identified, being reasonable security, in our submission, is one that overlaps with many of the objects identified in Baltic Shipping: security being a source of peace of mind, freedom from molestation, and personal protection. Our reliance on section 49, not only an express term, but one mandated by a statute, in our submission, aligns this case, most closely with Kemp v Sober, where again, there was an express term; where again, the express term was aimed at peace of mind being enjoyed specifically in a home. And in both contexts, the result of a breach is, or at least can be, loss and damage in an experiential form, not only a physical form; something that is felt.
In Kemp, what was felt, so the Court said, was “anxiety”; that was said to either damage. Here, the damage is insecurity, the opposite of reasonable security. If what I would loosely call the majority approach of this Court in Baltic Shipping, giving prominence to the particular term is the proper approach, then, in our submission, the analysis ends there. I would, however, note – going back to the exchange I had with Justice Gleeson earlier – that it has always been our position that the failure to provide the door for five and a half years was, equally, a breach of section 48. I do not need to go to it, but your Honours will see that recited in the Tribunal’s decision at core appeal book, 41, paragraphs 157 to 159, page 43 at 165, and page 50 at 213.
KIEFEL CJ: It says that in terms of – if one is talking about what might be suffered, distress seems to be more readily connected to feeling of insecurity, which is section 49.
MR ALBERT: With respect, we would agree with that.
KIEFEL CJ: Rather than something being habitable – I mean, there might be a breach of obligation for your ground 1, but distress because something is not habitable is not so comfortable.
MR ALBERT: I would accept that as a broad proposition. I do not, necessarily ‑ ‑ ‑
KIEFEL CJ: Are you are relying on section 65 as well?
MR ALBERT: Only to the extent that one has to get to the general holistic assessment of the contract.
KIEFEL CJ: Of the contract as a whole?
MR ALBERT: Yes. I am sorry, your Honour. In our submission, the simple route is to just focus on section 49.
KIEFEL CJ: We are talking about ground 2 here, but in relation to ground 1, it is section 49 which is your focus. Is that right?
MR ALBERT: Section 49 is the accepted breach.
KIEFEL CJ: Yes.
MR ALBERT: Yes, your Honour.
GLEESON J: Can I just bring you back to that question about the impact of living in premises that are not habitable and suggest that that is quite different from living in premises that are uncomfortable and suggest to you that the psychological impact of living in premises that are not habitable would be an experience of being degraded, which would be quite a distressing experience.
MR ALBERT: With respect, we would agree with that. So, perhaps, I need to withdraw, to an extent, the earlier answer I gave. If one looks at the case of Chiodi, one sees a house in serious degradation and that is what your Honour said to me is the conclusion that the Court reaches. But, in our submission, the issues with Ms Young’s house specifically, easily reach the level of being not habitable on a number of fronts.
Your Honours will appreciate that the wrong test was applied by the Tribunal – a much higher test than is consistent with authority. But, even when that higher test was applied, Ms Young’s house was found to be in breach. Of course, the relevant breach was the one Justice Edelman raised with me earlier, which was that she, quite literally, vacated the house for three months of the year because it was not liveable – it was dangerous to her health. So, obviously, dangerous to her that she ‑ ‑ ‑
KIEFEL CJ: That was to do with air‑conditioning, though, was it not?
MR ALBERT: It is air‑conditioning. It was ‑ ‑ ‑
KIEFEL CJ: But we are talking about the door ‑ ‑ ‑
MR ALBERT: Yes.
KIEFEL CJ: ‑ ‑ ‑ on this appeal.
MR ALBERT: Yes. Yes, your Honour is quite right. Can I just address the Court briefly on the substance of the obligation in section 48(1)(a) in the context of either the narrow analysis, if one is looking for the actual term “breached”, or on the broader analysis of where one is doing a wholistic assessment. The leading authority, in our submission, is the House of Lord’s decision in Summers v Salford, and it is the only case that I wanted to take the Court to on this point. Your Honours will find it in volume 5 at tab 52. With respect, the analysis in Summers v Salford very neatly matches your Honour Justice Gleeson’s question to me a moment ago.
The facts, very briefly, in Summers v Salford was that there was a person living in a four‑bedroom home. In one of the bedrooms, the window had a sash cord break. Notice was given of that breakage, nothing was done, then a second sash cord of the same window broke and, relevantly, crushed the user’s hand. The question, essentially, before the Court was: did a broken sash cord for a window make the house not habitable?
The point that we seek to draw from Summers v Salford – and I will attempt to brief and just to take your Honours to it – is that the language in used by the House of Lords, far removed from the Baltic Shipping world, is language that overlaps with the language used by this Court in Baltic Shipping. Two speeches are particularly revealing, including, as a recitation of the core elements of the long history of this obligation in the common law. Can I, in the first instance, take your Honours to the speech of Lord Atkin, starting at appeal cases 289 at about point 2 on the page. It is in volume 5 at page 1225.
As I launch into this again briefly, can I mention that Lords Thankerton and Wright agreed entirely with Lord Atkin, and I submit that the other lords broadly do as well, or at least say things consistent. At about point 2 on the page, Lord Atkin notes his own earlier formulation that a place is not habitable if by “ordinary” use, what might “naturally” occur is:
injury to life or limb or injury to health –
In our submission, that matches with the Baltic Shipping notions of personal protection and peace of mind at least. At 289, at about point 8, the same page, you will see Lord Atkin endorse other authorities that we rely on – older ones – being Proudfoot v Hart and Belcher v McIntosh – the latter of which you will find at tab 18. I do not need to go to it, but it is the source of the critical notion of 180 years standing: habitable means the state of repair allows for the house to be:
used and dwelt in –
and this is the key phrase:
not only with safety –
So, it has the safety element, but with:
reasonable comfort –
Of course, that language marries perfectly with what this Court said in Baltic Shipping, in particular about contracts for “comfort” and “relaxation”. In our submission – and I will take your Honours to a passage which confirms this in a moment – it is clearly a breach of such an obligation if there is a doorway that is not covered in that heat, dust, animals and people are left free to enter.
If one then goes to the speech of Lord Wright – only in the interests of time. We invite the Court to consider the whole of the judgment – at appeal cases 292, volume 5, page 1228, at about point 7 on that page, your Honours will see Lord Wright adopting the language of “comfort and sanitation”, that comfort and sanitation:
needs must . . . be capable of being satisfied –
for the house to be habitable. Comfort and sanitation, of course, overlapping with this Court’s language again of comfort, of personal protection and, in our submission, also freedom from vexation. If one then goes over to 294, at about point 3 on the page, your Honours will see the Court quoting Smith v Marrable, which you will find in the joint bundle of authorities at tab 47 and on which we rely, where the Court in Smith v Marrable, reinforced in Summer v Salford, had said habitable means:
“fit for decent and comfortable habitation.”
Again, using the Baltic Shipping language of comfort and relaxation. Then at 295, at about point 4, your Honours will see Lord Wright attempting to distil the question of what it is that makes a house habitable. His Lordship says:
the real question is how it affects the tenant’s reasonable enjoyment of the premises.
Again, Baltic Shipping language. If one then goes, just finally and briefly, to Lord Romer at 298 at about point 7, his Lordship deals with the situation, which was one step removed from what in fact happened, of what would happen if a window was unclosable from the broken sash‑cord – that is at about point 7. We read his Lordship to say that that would make the premises not habitable too, and the reason is because it would give, and I quote, “uninterrupted access” to the weather which, of course, is exactly what happened with Ms Young as well, but in our submission, on a more dramatic scale because it was an entire doorway left open.
So, in our submission, if the majority approach in Baltic Shipping, giving prominence to the particular term, is to be the method used, the analysis can at its shortest end at section 49 and its longest end at the end of discussion of section 48. However, there is a different method proposed and I would note that from the outline of submissions from our learned friends, it is clear that the approach that the landlord is going to urge on this Court is a global holistic assessment approach. So, can I address your Honours on that because, as I said earlier, in our submission, it makes no difference to the outcome of this appeal. You reach the same conclusion by a different route, but I want to address that directly, as it were, as a prophylactic reply.
I think it is important, not least because our learned friends rely on it, to go to the House of Lords’ decision in Farley v Skinner, which is the most direct addressing of this issue, and of the approach of the Chief Justice in Baltic Shipping, to look at the essence of the contract and, in particular, to try to make sense of, or give meaning to, the phrase used by Lord Bingham in Watts v Morrow of “the very object”.
Your Honours will find Farley v Skinner at volume 5, tab 26. The facts, very briefly and fairly, in Skinner were that a surveyor was engaged for the prospective purchase of a property – so, again, it is dealing with a home. There was the general contract with the general terms, but specifically, the would‑be owner said to the surveyor, I am particularly concerned about plane noise – the house is close to Gatwick Airport – and I want to know that it will be okay. The surveyor comes back and says, it will be okay, the purchaser moves in, and the plane noise is not okay. So, the question in the case is about pleasure that comes from a home. If one goes to appeal cases 745, which is at page 648 of the joint bundle, in the speech of Lord Steyn, one sees an identification of Watts v Morrow ‑ ‑ ‑
GORDON J: Sorry, which page are we on?
MR ALBERT: I am sorry, it is appeal cases 745.
GORDON J: Thank you.
MR ALBERT: In paragraph 15, at about point G, Lord Steyn addresses the submission that was made to the House of Lords in Farley v Skinner that appears to match the submissions that your Honours are about to hear from my learned friend; that is, “the very object” is the key. Lord Steyn rejects it and says, that was only ever intended to be a statement of broad principle. Then, over the page at 746, Lord Steyn emphasises that that was the particular context in Watts v Morrow, that there was no “specific undertaking”, which, of course, distinguishes Watts v Morrow from both Farley v Skinner and from this case.
If one then jumps over to 748, at about point B, Lord Steyn, relevantly for us, identifies that there is a body of British case law, and then identifies the kind of contracts that are commonly dealt with under the exception:
I am satisfied that in the real life of our lower courts non‑pecuniary damages are regularly awarded on the basis that the defendant’s breach of contract deprived the plaintiff of the very object of the contract, viz pleasure, relaxation, and peace of mind. The cases arise in diverse contractual contexts –
and then his examples are revealing:
e g the supply of a wedding dress or double glazing, hire purchase transactions, landlord and tenant –
If one then goes over to 749 at about point B, one sees a direct grappling with this question as to the proper method. You will see at 23 a recitation of the submission that was made which appears to match the submission that your Honours are about to hear from the landlord, that a “major or important” object is “not enough”, it must be the object of the entire contract. At 23, that is rejected. It is described broadly as an overly:
narrow reading of . . . Watts v Morrow.
Then, if one jumps over to 750, at about point C, after a careful detailed and, in our submission, correct analysis, the conclusion is reached that:
There is no reason –
for the question to:
depend on the object . . . ascertained from all its constituent parts. It is sufficient if –
and these are the key words:
a major or important object . . . is . . . pleasure, relaxation or peace of mind.
Lord Browne‑Wilkinson agrees entirely with Lord Steyn at appeal case 752. Can I finally take your Honours in this judgment to Lord Clyde at appeal cases 755, at about point F, where the submission that is made on this point is again rejected. Lord Clyde agrees with Lord Steyn and says, focusing on the words the “very object” is – and I quote:
playing with words.
A breach of contract can mean, says Lord Clyde:
a breach of a particular provision in a contract.
Then, in an analysis that conforms the four judges in Baltic Shipping at 756, at about point D, Lord Clyde fastens on the idea that the focus should be on the particular provision breached. So, that approach seems to have carried favour in the House of Lords, much as it could be said it did in Baltic Shipping.
I do not need to take your Honours to it, but that analysis and that conclusion is the same one that is reached by the Canadian apex court in Fidler v Sun Life Assurance, which in due course your Honours will find in volume 4 at tab 27, in particular at pages 693 and 694, where there is an express endorsement of the analysis of Farley. So, you have two apex courts agreeing. What the court says in Fidler v Sun Life is that what one looks for is:
an object–
which is exactly the language of Justice Brennan in Baltic Shipping:
of which is to secure a particular psychological benefit.
Although probably not much turns on it, that also seems to be the approach in the United States, and we have given an example case of Taylor v Burton – I do not need to go to it, but it is at volume 5, tab 54, at page 1270 – which, I note, is a building case and where much the same conclusion is reached without reference, it should be said, to either Farley or Fidler.
I am conscious of the time. Can I perhaps take your Honours, as briefly as possible to two final substantive points. The first, as foreshadowed in our outline, is to focus our analysis on section 3 of the Residential Tenancies Act, in particular subsections (d) and (e). The reason that we adopt this focus is that if one is adopting, as it were, contrary to four justices in Baltic Shipping and Fidler and Farley, if one is adopting a global assessment – a wholistic assessment, approach of method – as the landlord seeks, then, in our submission, section 3 is, perhaps, unusually revealing.
What is revealing about subsections (d) and (e) is that in a very short list of objectives of a relatively long Act of 171 provisions or thereabouts, you see Parliament focusing on what, in our submission, is a very short group of provisions when it uses the language of the provision of “safe and habitable premises”. If one is attempting to discern an important object or a significant object of contract under this very regime, one is at least aided by the prominence given by Parliament to those very concepts, “safe and habitable” again aligning with the language of Baltic Shipping.
When one then asks where is the meat on the bones of section 3(d) and (e), the answer to that is sections 48, 49, 57 and 65, the very provisions on which we rely. In our submission, that demonstrates, again, that we are in a comfortable position. Even if this Court were to endorse the position adopted by the Court of Appeal that the question is “the central object” – which is contrary to all of the authorities I have taken your Honours to – even if that were the frame of analysis, we say we ought succeed. That network of provisions I have just identified has, in our submission, four features built into the statutory design that make clear the importance of those in the mind of Parliament.
The four features are these. First, they are captured by the language of section 3. Second, they are expressed to be contractual terms required by statute and that puts them in a small group of provisions. Third, section 19 has an unusual effect of saying that if those particular terms are not apparent in the terms provided to a tenant, then the terms provided to the tenant are inoperative entirely; a dramatic effect, but one part of this statutory design.
The fourth point is that each of those provisions is coupled with a penalty provision, thus showing both a public and a private interest in those provisions being abided by. To that, we would add reference – I do not need to take your Honours to it – to Regulation 4(4) of the Housing Regulations 1983 – which your Honours will find in volume 2, at page 149. We have referenced that because it puts this class of houses – being, broadly, public housing in the Northern Territory – in the unusual position in that there is a regulatory requirement for the landlord to be – and I quote the regulation – “satisfied” before entering into the contract that the use of the dwelling will only be “as a home” and, quote, “for no other purpose”. In our submission, that marries with the overall analysis as to what is the purpose of a home.
The final substantive stopping point is to deal with “quiet enjoyment”. I deal with only because if it is necessary to deal with global or holistic assessment – as the landlord seems to be urging – then one could not ignore section 65. The summary of what we say is the proper conclusion when one looks at the authorities and the text of the Act is this, the implied covenant, in our submission, does give rise to distress or disappointment compensation on existing authority. We rely on Strahan, on the language used in Baltic Shipping and the endorsement in Baltic Shipping of Samson v Floyd. We also rely on the language used by the New South Wales Court of Appeal – I think it was Justice Spigelman in Martins Camera Corner where they deal with “quiet enjoyment” in terms that align with Baltic Shipping.
So, we say, that is the proper position in respect of the implied covenant – that the implied covenant, as a matter of British authority, also gives rise to disappointment and distress compensation being available. In that respect, as I foreshadowed earlier, we rely principally on Samson v Floyd. We also rely on the speech of Lord Denning in McCall v Abelesz.
However, in a sense, what I have just said can be ignored to reach the conclusion that we urge because what is before this Court is not the implied covenant. What is before this Court is a statutory reformulation and, in our submission, significant expansion of that implied covenant. In particular, we emphasise what is said in section 65(b) which is for Parliament, again, to identify particular ends – namely, ensuring “peace and privacy”. Again, we note how neatly that fits with the language of this Court in Baltic Shipping.
Can I close, then, with what is really a global assessment taken at its highest level, but a global assessment that we say is open and perhaps important in the resolution of this appeal. What I am speaking of is the universal value of a home. The universal value of a home recognised in countless authorities to which we have referred in our written submissions is to be a place that gives peace of mind, personal protection, freedom from molestation, and comfort.
We all know this from our own experience of our home, even if we give very little thought to it. We continue to rely on and draw inspiration from what was said in Semaynes’ Case – which I do not need to take your Honours to, but it is in tab 41, volume 5 – about what it means to have a home. Of course, the context of the Semaynes’ Case is very different, but the universal truth in Semaynes’ Case, in our submission, is both revealing and correct. What is determined or identified in that case is what it means for a home to be, in the language of the Court, a “castle”. It means “defence against injury and violence”, and it means, as the Court said, a place for “repose”.
Enid Young’s home, before your Honours, is modest by any measure, but it is still her castle in the sense that Sir Edward Coke described it. It is where she goes, like the rest of us, to spend her special times with family. It is where she, like the rest of us, gathers to provide comfort to and enjoy the company of her favourite people, to seek refuge and personal protection from her least favourite people. A place for her to seek peace and privacy when she wants time alone, and that is what her contract with her landlord was for. Neither of them was agreeing to the provision of a human storage facility. That is a warehouse or a morgue. A home is a place to live in, in the fullest sense – a place to enjoy being alive and a sanctuary to go to when life gets difficult, as Lord Bingham highlighted in his speech in Qazi.
A home, if nothing else, is a place for peace of mind and personal protection, to adopt the words of this Court in Baltic Shipping. And I say all of that in closing because even without reference to any of the swathe of authority or learning – and we have put textbooks before your Honours as well – which links tenancy agreements to peace of mind contracts in Baltic Shipping, these essential truths, in our submission, ought to lead to the appeal being allowed.
Enid Young brought a modest claim in the Northern Territory Civil and Administrative Tribunal seven years ago. Against the expectations of us all, that simple claim comes before your Honours. But it being in this Court does not change the modest ambition of the case. We seek no development of the law; we seek only the application of what is already said in legislation and by this Court. Enid Young seeks nothing more than the benefit of the protection of the law; a benefit that she was denied for five and a half years when she was left without being provided with a door.
If the Court pleases.
KIEFEL CJ: Yes, thank you, Mr Albert. Yes, Mr Solicitor.
MR CHRISTRUP: If the Court pleases. Your Honours, ground 1 of the appeal should be dismissed because a claim for compensation under the Northern Territory Residential Tenancies Act based on a failure to comply with the tenancy agreement requires, we say, as a general proposition, the application of the common law rules concerning damages for breach of contract, including those applicable to awarding damages for distress and disappointment.
As to the second ground, the object of the tenancy agreement is not to provide enjoyment, relaxation, or freedom from molestation within the meaning of the principle in Baltic Shipping, and for that reason, that ground should also be dismissed. Before I address those grounds specifically, paragraph 1 of my learned friend’s outline of oral submissions draws reference to the fact that the external door was missing for a period of 68 months. That is not the whole story, as the Tribunal found at paragraph 161 the tenant installed a mesh steel door to secure the property. Apart from that observation, I can delve into the issues that are raised by grounds 1 and 2.
Under ground 1, the appellants’ claim that the Court of Appeal fell into error in applying the restrictions imposed by the principles of remoteness and foreseeability in assessing a claim for damages for emotional disturbance and mental distress. It is obviously not in contest that the Court of Appeal applied the common law contractual principles in assessing that claim. It is also true that the Court of Appeal in paragraph 55 referred to foreseeability.
Whether that particular observation is technically correct, given that foreseeability normally has its or finds an expression in the law of tort of negligence, it is of no great moment in the resolution of this appeal, because the subsequent observations by the Court of Appeal are confined to principles of remoteness of damage, and for the recovery of damages for distress and disappointment. We have, in any event, explained in paragraphs 45 and 46 of our written submissions what the Court’s reference to foreseeability should be taken to mean.
The answer to appeal ground 1 concerning the application of contractual principles concerning damages and damages for distress and disappointment is resolved by the process of statutory construction and in regard to the text, context and purpose of the Act and in particular, your Honours, of course, the construction of section 122(1) of the Act. Now, if I can ask your Honours to go to that, it relevantly provides that:
the Tribunal may, on the application of a landlord or the tenant under a tenancy agreement, order compensation for loss or damage suffered by the applicant be paid to the applicant by the other party to the agreement because:
(a)the other party has failed to comply with the agreement or an obligation under this Act relating to the tenancy agreement; or
(b)the applicant has paid to the other party more than the applicant is required to pay to that other party in accordance with this Act and the agreement.
Section 3 defines the meaning of “tenancy agreement” and it does so exhaustively. It means:
an agreement under which a person grants to another person for valuable consideration a right (which may be, but need not be, an exclusive right) to occupy premises for the purpose of residency.
The other concepts used in subsection (1)(a), including loss and damage suffered because and failed to comply, those expressions, your Honours, are not defined. The question for your Honours is whether the recovery of compensation in respect of a claim that is based on a failure to comply with a tenancy agreement under subsection (1)(a), the common law contractual principles concerning loss and damage apply, save as they are modified by the Act. If those principles apply, then they include those concerning the recovery of damages for distress and disappointment and, in particular, the rule of the common law that such recovery is permissible where the object of the contract is for the provision of enjoyment, relaxation or freedom from molestation.
The alternative construction, the one that is advanced by the appellants, is that the recovery of damages for breach of a tenancy agreement is largely an inquiry into causation and, to be clear, that the rules of remoteness and the rules concerning the recovery of damages for distress and disappointment are not applicable. As a preliminary observation, this appeal does not concern determination of the principles that would apply where a claim is built for compensation through failure to comply with a provision of the Act. That is not the case that is before your Honours. Rather, the claim for damages and distress and disappointment ‑ ‑ ‑
EDELMAN J: You would not say, though, that if it is the second limb of section 122(1)(a) that one would apply contract provision principles to that?
MR CHRISTRUP: No, I am not saying that at all, your Honour. What I am saying is what is meant by that particular aspects of subsection (1)(a) is not for determination by this Court and there is no reason why the two should be the same. Rather, the claim for damages for distress and disappointment that was appealed to the Supreme Court and then to the Court of Appeal and ultimately to this Court arose out the respondent’s breach of the term that is incorporated into the tenancy agreement by section 49(1) of the Act, and that section provides, of course, that:
It is a term of a tenancy agreement that the landlord will take reasonable steps to provide and maintain the locks and other security devices that are necessary to ensure the premises and ancillary property are reasonably secure.
The appellant in their reply at paragraph 23 accepts that the appeal does not directly concern a breach of the Act. Having made those preliminary remarks, I can now turn to the textual analysis, your Honours. We rely, of course, on what we say in our written submissions in paragraphs 19 through to 47.
I propose to cover the following topics under ground 1 in oral submissions. First, to provide an analysis – to show that by analysis of the statutory text an intention is revealed that in respect of the claim for breach of the tenancy agreement the contractual rules in relation to loss and damage are intended to apply, subject to specific modifications in the Act. Secondly, I propose to address your Honours on the reasons why the construction advanced by the appellant must be rejected. If I can start with the ‑ ‑ ‑
GAGELER J: Could I just ask a jurisdictional question, you might want to take it on notice. Could a breach of the term of the tenancy agreement inserted by section 49 of the Act give rise to a claim for damages in the Supreme Court of the Northern Territory?
MR CHRISTRUP: So, section 49, your Honour?
GAGELER J: Yes. I am using that because that is the provision in issue here.
MR CHRISTRUP: Certainly, your Honour. Your Honour would see from section 122(5) that certain types of claims are excluded from determination by the Tribunal. Those claims are not extinguished by that provision. The effect of the provision is simply that the Tribunal cannot make an assessment in relation to claims of that kind. Where a breach of section 49, for example, could lead to a claim of the kind that is excluded by subsection (5) then it would seem that the claim for those damages would have to be brought in another forum and, most likely, the Supreme Court or with the Local Court.
GAGELER J: Where you have a claim that is within the jurisdiction of the Tribunal to address under section 122, is there some provision that prevents a claim for damage in respect of the same breach being brought in the Supreme Court of the Northern Territory? That is my question.
MR CHRISTRUP: Sorry, your Honour, I misunderstood. There is no express provision to that effect. We will take it under consideration over the lunch break, but it could at least be argued that implicitly claims of that kind are excluded where they fall within the jurisdiction of the Tribunal, but I will return to your Honour with a firmer answer in relation to that.
So, turning to the textual analysis, your Honours, we say that consideration of the Act as a whole demonstrates that it is intended to operate against the backdrop of the common law contractual principles as opposed to – which is what the appellants says – the displacement of those principles in toto, save to the extent that they had been expressly reintroduced into the Act.
We say that once that is appreciated the conclusion that the words “loss and damage suffered” because the other party has failed to comply with the tenancy agreement necessarily incorporate the rules concerning damages for distress and disappointment.
We have set out in our written submissions, in paragraphs 21 through to 27, the main instances where the Act relies, if you like, or piggybacks on concepts from the law of contract generally and as it has developed in relation to tenancies. I do not propose to take your Honours to these, but your Honours would have noticed the references to, for example, concepts such as agreement and consideration.
Moving on to paragraph 2(a) of our outline of oral submissions – and that concerns the fact about the Act has going to the trouble – or Parliament has gone through to the trouble in certain instances of specifying that a particular obligation shall be a term of the tenancy agreement. The clause forming the basis for the claim for damages and distress and disappointment in this case being section 49 illustrates the point. It commences:
It is a term of a tenancy agreement that –
and then et cetera – the provision follows. Our written submissions at paragraph 24, at note 29, sets out all the instances where Parliament has provided for an obligation in the form of making it a term of the tenancy agreements. A binding contractual term agreed between two parties is a long‑recognised common law mechanism for imposing primary rights and corresponding primary obligations between the contracting parties – that is, a primary obligation to do what has been promised.
But of course, at common law the incentive for a contracting party to comply with that primary obligation lies in the common law remedies that are available against the contract‑breaker if the promise is not honoured. Critically, a contractual term carries with it the well‑recognised secondary right and corresponding secondary obligation for the recovery of monetary damages where there has been a breach of the primary obligation. At common law, in most instances, the secondary right to damages is the only way in which a party can enforce the contractual promise. I say “most” because there are some instances of course where specific performance on injunction or other remedies may lie.
But the idea that the secondary right to monetary compensation is the usual way in which an innocent party obtains a remedy for a breach is, in our submission, reflected in the Act. In particular, the Tribunal’s power in dealing with the breach of the tenancy agreement is largely confined to ordering compensation, either under section 121 or section 122.
For example, the Tribunal has no general power under the Act to specifically enforce a term of the tenancy agreement. There are some instances scattered in the Act where the Act confers on the Tribunal powers to make orders that may have the character of being specific enforcement, for example section 63, where the Tribunal can order a landlord to make emergency repairs to premises.
However, by and large, the innocent party to a tenancy agreement is confined to the right to compensation and the principal one of those, of course, is the power in section 122 – or section 121(2) in the particular provision of where a tenant has failed to hand over vacant possessions.
So, Parliament has gone to the trouble of making certain obligations a term of the tenancy agreement. However, the same Act in other instances imposes a normal conduct on either the landlord or the tenant without making it a term of the contract. Section 28B is a good example. It says that:
A landlord must not require a tenant to vacate residential premises in order to make a condition report –
There are numerous other instances where Parliament has framed the obligation in this fashion. And we have set them out in note 30 in paragraph 24 of our written submissions. These are the type of provisions, the breach for which compensation can be sought, on the other aspect of section 122(1)(a), namely, for failing to comply with an obligation under the Act relating to the tenancy agreement. We say that the obvious reason for Parliament going to the trouble of using the term of contract form for some obligations, and that the statutory norm of conduct form for other obligations is because it is intended that the character of the parties’ rights and obligations is to be different, and for the consequences of non-compliance to be different; and in particular that the law of contract would provide the remedy where the breach is for a term of the tenancy agreement.
If that was not the intention, the statutory provisions would all have been of the same type, namely the ones imposing the statutory norm. The conclusion that a contractual term imposed by statute can be expected to invoke contractual principles relating to damages for breach can be drawn from the observation of his Honour Justice Smith in Reardon v Ministry of Housing. We have set out the quote in full in paragraph 31 of our submissions; I do not need to read it to your Honour.
Likewise, without taking your Honours to the case, but in our written submissions at 24 we have referred to this Court’s decision in Wallis v Downard‑Pickford (North Queensland) Pty Ltd, where the Court unanimously accepted the submission that the warranty implied by section 74(1) of the Trades Practices Act into a contract for the supply of services carried with it full contractual liability for the breach. That is, of course, liability, according to the common law principles of contract.
If I can then also ask your Honours to turn to – sorry, I should just say, before I do that – my learned friend took your Honours to the decision of Australian Licensed Aircraft Engineers that concerned the compensation power under the Fair Work Act 2009 (Cth). Can I just ask your Honours, or draw your Honours’ attention, to the observations in paragraph 443.
GORDON J: What number – I am sorry, could you say that again, what paragraph?
MR CHRISTRUP: Paragraph 443 ‑ ‑ ‑
GORDON J: Thank you.
MR CHRISTRUP: ‑ ‑ ‑ of the decision, where his Honour says that damages for distress and disappointment can be ordered despite the common law in Baltic Shipping, because the power in that Act – being a statutory norm – the power is quite divorced from this type of contractual consideration. Can I ask your Honours to turn to the objectives of the Act in section 3, in particular, the one in subsection 3(c), it provides that, one of the objectives of the Act is:
to ensure that landlords and tenants are provided with suitable mechanisms for enforcing their rights under tenancy agreements –
where the claim is for the failure to comply with a tenancy agreement, we say Parliament had in mind compensation in accordance with the common law, save as specifically modified by the Act. The second contextual indicator that we rely on for our ultimate conclusion, is to be found in section 122(1)(a) itself, and it refers to “has failed to comply” with the tenancy agreement.
It is clear that the Act uses this term as synonymous with having breached the tenancy agreement. As a matter of ordinary meaning, that is plainly the case. The language of contract law also used the two expressions interchangeably, and finally, of course, the Act itself treats them as synonyms; and your Honours need look no further than section 122(3)(b), which applies, of course, to section 122(1), and it says:
in the case of a breach of a tenancy agreement or this Act –
being a clear reference, we say, to section 122(1)(a). There are also references to “breach” in, for example, section 48(2), 51(3), 57(2) and (3). And then, of course, there is a reference to “breach” in section 120, a provision to which I shall return.
This, in turn, means that a Tribunal is required to apply the law of contract in determining whether the landlord or the tenant has failed to comply with the tenancy agreement – subject, of course, to those specific instances in the Act which says that a particular conduct is not a breach of the Act – for example, section 48(2). The Act also provides that it is the breach of the tenancy agreement that is the statutory trigger for the power of the Tribunal to award compensation.
This, your Honour, is a convenient place to then take your Honours to the manner in which section 122 modifies the common law in respect of the recovery of damages for breach of a tenancy agreement in the Tribunal. First – and I have mentioned section 122(5), prevents a claim being made to the Tribunal for:
death, physical injury, pain or suffering –
Those claims are out. It would seem the plaintiff will have to go elsewhere. Secondly, subsection (3) of the provision sets out a number of specific matters that the Tribunal must take into account in determining whether to order compensation and, implicitly, how much compensation to order.
Subsections (a) and (b) seem to be confined to a claim under section 122(1)(a) for failing to comply with a tenancy agreement or an obligation under the Act. But the other subsections appear to be capable of applying to the claim in subsection (1)(b) concerning overpayments as well. Subsection (a) requires the Tribunal to take into account whether the party did not comply with the “tenancy agreement” or the Act took all reasonable steps to comply with that obligation.
This, of course, is a matter that cannot usually be taken into account in assessing damages at common law. The provision would, therefore, seem to operate so as to commit the Tribunal to reduce those damages where reasonable steps have been taken – not an obligation to, but, at least, they can consider whether to reduce them for that reason.
Subsection (b) concerns the specific situation where the person seeking compensation has consented to the non‑compliance with the obligation. Subsection (c) is aimed at preventing double compensation and subsection (d) concerns offsetting benefits having been conferred on the innocent party in the form of a reduction or a refund in the rent. Subsection (e) requires the Tribunal to consider whether the applicant took action to mitigate. This is in contrast with the mandate in section 120 concerning the specific situation of a breach of the tenancy agreement.
GAGELER J: Section 120 must, on your construction of the Act, be redundant.
EDELMAN J: Or an “avoidance of doubt” provision.
MR CHRISTRUP: Exactly, your Honour. That is how we view it. We see it as being provision in there to make it clear that, because all the other principles apply in relation to recovery of damages, the Parliament wants to make it clear that the rules concerning mitigation also apply. So, it is to put the matter beyond doubt, we say, your Honour.
GAGELER J: Why that matter?
MR CHRISTRUP: Sorry, your Honour?
GAGELER J: Why that matter?
MR CHRISTRUP: Mainly because it is a matter that operates to reduce damages. I have gone through the second reading speech – I have been trying to discern a reason for why they would single that one out. But, maybe, it is because it is there to reduce the damages. It operates, if you like, in reverse as far as the recovery of damages are concerned.
Finally, subsection (f) concerns tender of compensation by the person in breach and subsection (g) provides the Tribunal must consider the fact that the defendant took action to repair the relevant damage “at his or her own expense”.
GORDON J: There is duty of mitigation just so – can we just go back to 120 for the moment, in the context of 122(3)(e).
MR CHRISTRUP: Yes, your Honour.
GORDON J: Is that intended – I do not know, but is it intended to deal with a landlord in fact renting the premises out and taking steps to rent them rather than just leaving them vacant and those kinds of considerations, as well as obligations on tenants? There is a duty to mitigate.
MR CHRISTRUP: Yes, it has got to be in relation to both, your Honour, both the tenant and the landlord, depending on who it is that brings the claim.
EDELMAN J: Well, the rules of mitigation also, in a broader sense, include not just actions that are taken but events that occur, which automatically reduce a loss.
MR CHRISTRUP: Yes, your Honour, that seems to follow.
EDELMAN J: Which would not be caught by the provision, for example, in subsection (3)(e), which is concerned with whether to order payment at all.
MR CHRISTRUP: I think subsection (3) concerns both questions, your Honour, whether to order compensation and also how much.
KIEFEL CJ: Is there an error in (3)(e), should “an action” be read as “any action”, otherwise it tends to suggest you have got to bring proceedings to mitigate?
MR CHRISTRUP: I see, your Honour, unless “action” is – it is just a reference to act rather than a proceeding.
KIEFEL CJ: Nothing much turns on it.
MR CHRISTRUP: No, and, on our construction, we would not say that it is a reference to court proceedings.
KIEFEL CJ: It is just any act, yes.
MR CHRISTRUP: Yes.
EDELMAN J: Well, I suppose on any view it may be said that section 120 is an avoidance of doubt provision because, at least on the dominant view in a lot of authorities that the rules of mitigation are rules of causation, those rules would, in any event, come in through the word “because” in section 122(1).
MR CHRISTRUP: With respect, that fact would not necessarily mean that section 120 is not in there as an avoidance of doubt provision. Just because it might also be picked up, the rules of mitigation might also be picked up through the causation mechanism. It is still, we say, likely that the provision is there as an avoidance of doubt provision because those rules operate in a countervailing fashion.
EDELMAN J: I see, because the causal rules in “because” could apply either tortious rules of mitigation or contract rules of mitigation and 120 makes it clear that it is the contract rules of mitigation that apply.
MR CHRISTRUP: Yes, but only in relation to claims for breach of a tenancy agreements.
EDELMAN J: Yes.
MR CHRISTRUP: It does not apply to the other aspect of subsection (a).
EDELMAN J: Yes.
GORDON J: It does not apply to what?
MR CHRISTRUP: It only applies to claims relating to the breach of the tenancy agreement.
GORDON J: Not claims under the Act.
MR CHRISTRUP: Correct – or for breach of a provision of the Act. So, in summary, in relation to subsection (3), the provision there is largely aimed at reducing the amount that would otherwise be recoverable under the common law rules. If I can then go to section 120, this provision provides that:
The rules of law contract about mitigation of loss or damage on breach of a contract apply to a breach of a tenancy agreement.
There is no discretion conferred here; it reads like a mandate. Critically, this provision is a strong indication that Parliament intended for the contractual principles concerning loss and damage to apply under section 122(1)(a). The rules of mitigation of loss and damage only operate where the contractual rules concerning loss and damage also apply.
You cannot, we say, as a matter of logic, have the former without the latter. In particular, the rules of mitigation operate to reduce only those damages that are recognised by the common law; that is, caused by the breach and are not excluded by the rules of remoteness. So, far from being a provision that evinces an intention that all of the contractual principles are excluded – this is put by my learned friend – it confirms that the principles, in relating to loss and damage, are intended to apply for a breach of a tenancy agreement.
The section refers to those principles by the words “loss or damage on breach of a contract”. It follows, we say, that as a matter of construing the text of the Act, the intention is clear: that the rules relating to loss and damage generally apply to a claim for breach of a tenancy agreement under section 122(1)(a). Those rules include the rules that concerns the recovery of damages for distress and disappointment.
EDELMAN J: That point is to say that otherwise loss or damage in 120 means something different from loss or damage in 122(1), when one is concerned with a breach of contract.
MR CHRISTRUP: Yes, your Honour. Now, it is not our case that section 122 prohibits damages of the kind that can be described as damages for distress and disappointment. They can be recovered, for example, if physical convenience causes the distress and disappointment. That is one aspect in which those damages can be ‑ ‑ ‑
GORDON J: But that is to say no more than you say the common law principles apply with the exclusions.
MR CHRISTRUP: Absolutely, your Honour. I think it is put – at least in the outline of oral submissions against us or in the written submissions against us – that it is our case that those provisions or those sorts of damages are excluded by the Act. We do not say that at all. We say that those provisions or the common law rules are incorporated by reference to section 122.
So, properly construed by reference to the Act as a whole, and contrary to what has been put against us, there is no silence in section 122(1)(a) in respect of remoteness of damage, or the recovery of damages generally, or damages for distress and disappointment. The provision refers to tenancy agreement, loss and damage, and failing to comply with the agreement, concepts which when taken together and construed in their proper context incorporate the principles concerning damages generally and those about distress and disappointment.
What I have said so far is sufficient for your Honours to reject the appellant’s construction of section 122. I will make some remarks highlighting the major difficulties with that construction. First, the appellant contends that the Act is a self‑contained scheme and orders a detailed and special code of contract. It is not clear what is meant by that submission. They cite Williams v Wreck Bay Aboriginal Community Council, but that case, as your Honours know, concerned a different question; namely, whether a Commonwealth law intended to provide that no other rules should apply to a residential tenancy, such that there was no room for the statute of the Australian Capital Territory to operate.
If their submission is, as it seems to be, that unless a contractual principle is expressly and with precision adopted by the Act, then it has no application. If that is the submission, then we say it is plainly misconceived. Take the example of the definition of “tenancy agreement” in section 4, for example. As mentioned earlier, it says:
an agreement under which a person grants to another person for valuable consideration a right . . . to occupy –
The single word “agreement” in that context – and there are a number of principles from contract law. It would include, for example, the requirement for intention to create legal relations. It would include the existence – or the presence, at least – of a legal capacity to enter into the contract, in terms of mental incapacity and, subject to section 8, the age of the person who enters into the agreement. The principle that a contract otherwise entered into as such can be void for mistake, or voidable in certain instances, in the case of misrepresentation, and duress or undue influence. The concept “agreement” would also seem to incorporate the concept of illegal contract.
So, those concepts and rules clearly apply, yet the Act makes no express mention of them. Further, and somewhat contradictorily, we say, the appellants reject the application of common law principles to the Act unless they are expressly incorporated. But then, of course, when it comes time to construe the word “because” in section 122(1)(a), the appellants point to the “but for” test, which is itself, of course, a common law concept.
GORDON J: But it is a common law concept without concepts of remoteness attached to them, as I understand the appellants’ submission.
MR CHRISTRUP: Yes, your Honour, I accept that. Our point is that the appellants’ argument is that unless a common law concept is expressly referred to then it is not incorporated into the Act. We say that their reliance on what is meant by “because” they are saying that picks up the common law test for “but for”.
GORDON J: But shorn of the limitations? As I understand their submission, that is shorn of the limitations of remoteness.
MR CHRISTRUP: That is how they put it, absolutely, your Honour.
GORDON J: So, the answer is that it would – you would go back, in effect, looking at questions of causation. How far back you go is unlimited.
MR CHRISTRUP: That is one of the major problems.
GORDON J: Is that your complaint?
MR CHRISTRUP: Well, that is not the oral submission I put here. We made that in our written submissions. I will address it in a moment because it leaves it wide open in terms of the sort of damages that can be recovered.
GLEESON J: I mean, is the “but for” test really a common law test? It is really just a test of logic that is being incorporated into the language of causation.
MR CHRISTRUP: I do not want to put it any higher than it is an expression which finds its genesis in the common law judgment of the Court. So, I do not put it any higher than that.
EDELMAN J: Does your submission really just come down to the fact that one could not contemplate that Parliament intended loss or damage to mean absolutely everything that was caused? So, there has to be some form of remoteness scope of liability restrictions that exist by implication in the terms “loss” or “damage”, and the best place to look for them when you are dealing with breach of contract is to the rules on contract.
MR CHRISTRUP: Absolutely, your Honour, yes. We do not put it solely on that basis but absolutely – that is one of the ‑ ‑ ‑
GORDON J: When you say you do not put it solely, could you explain to me where else you get it from? Is that from a textual analysis? Is that the other basis?
MR CHRISTRUP: Yes, exactly.
GORDON J: Thank you.
GAGELER J: Do you get it from there? From the textual analysis?
MR CHRISTRUP: Yes, your Honour, so ‑ ‑ ‑
GAGELER J: Or the textual analysis just takes you to the common law, as I understand it.
MR CHRISTRUP: Correct, it picks up the concepts, exactly.
GAGELER J: So, just spelling it out, of course – in your submission, the word “because” has two meanings. It has a meaning that is applied in respect of the breach of the tenancy agreement, and then it has got another potentially different meaning that you are not telling us about when applied to a breach of the Act.
MR CHRISTRUP: Yes, your Honour.
EDELMAN J: Is that so? Is the “but for” test different?
MR CHRISTRUP: No, I was not endorsing the “but for” test. I was agreeing with the question that the word “because” has two different meanings, depending on whether you are ‑ ‑ ‑
EDELMAN J: But if “because” means “caused” and the approach, as Justice Gleeson said, of logic and metaphysics is that “caused” is, at least, a starting point as a “but for” test, why would it be different in different contexts?
MR CHRISTRUP: Because the subsection (a) by its terms, includes as one of those claims that can be brought is a claim for breach of a tenancy agreement. So, read in context, the word “because” ties – insofar as a claim is made on that basis – to a claim of that kind.
GAGELER J: The argument against you might be a little overblown insofar as it says it is just a “but for” test. Another way of looking at it is that it is a statutory reference to causation and what is required to meet that statutory reference to causation is to be determined by reference to the subject matter, scope and purposes of the Act. So, it is not, necessarily, open‑ended. It is just constrained in a statutory way rather than a common law way. That is probably the better way of conceptualising the argument that you are trying to meet.
MR CHRISTRUP: Yes, thank you, your Honour. But we say that given that Parliament has gone to the trouble of meeting some particular obligations – the term of the contract of the tenancy agreement, if I can say that – and others, a statutory norm of conduct, the only reason why Parliament would want to do that, we say, is because it intends for the consequences of contractual breach to follow. Otherwise, there would have been no reason for having those two different types of obligations being imposed.
GORDON J: Do you need to even go that far? So, if you go to 122(1)(a), one is entitled to compensation from the Tribunal where you have:
failed to comply with the agreement or an obligation under this Act relating to the tenancy agreement –
So, it is not even picking up all of the statutory norms, as I understand it, to which you have taken us – referenced to. In other words, why would you then end up with two different regimes for the causation question when they both have the same source? I mean, not source in terms of one is contractual, one is statutory. But why would you end up with two different causation enquiries? Which is a question that has been asked of you both by Justice Gageler and Justice Edelman. At the moment I thought you gave different answers to both of them. I just want to make sure I understand what the right answer is.
MR CHRISTRUP: That was not my intention to do that. To answer your Honour’s question, where the subsection (1)(a) refers to:
an obligation under this Act relating to the tenancy agreement –
it does not have its source in the tenancy agreement ‑ ‑ ‑
GORDON J: No.
MR CHRISTRUP: ‑ ‑ ‑ it is just where there is that obligation. And, as a matter of construction, we say that the references to the two types of claims that can be brought under subsection (1)(a), the first one is clearly a reference to where something is a term of the tenancy agreement, and the second one is where the Act imposes an obligation on either the landlord or the tenant.
GORDON J: So, let us take the second category, because it seems odd to me you would have a different outcome for the meaning of “because” in both those cases. When one is looking at the limits on the word “because”, you have given your answer in relation to the first limb, you say it picks up the common law principles for the reasons you have identified. What happens in relation to the second category as a matter of statutory construction? Are the same principles picked up along the same lines you have put to us?
MR CHRISTRUP: Not in relation to where it is a claim for breach of obligation of the Act, and this is an area that has not – in the law that has not been developed yet in relation to this Act. But it is at least conceivable that it might take a form which is at least similar to the approach that has been adopted in relation to both the Trade Practices Act section 82 and also the Australian Consumer Law where it is the nature of the – sorry, it is the type of – the damages assessment inquiry, or damages recovery inquiry, is at least in part informed by the type of breach of the Australian Consumer Law or Trade Practices Act that one is dealing with.
EDELMAN J: So, that is the approach you get in a case like Moore where the particular breach of the consumer law invites a contract‑type analysis?
MR CHRISTRUP: Well, I do not think Moore was – the claim in Moore, the underlying claim of the breach of the consumer guarantees – I may stand to be corrected, but whilst the provisions in the Australian Consumer Law refer to that it is a guarantee in relation to the supply of services, those provisions do not, from memory, expressly say it is a term of the agreement or supply, it just simply said it is a guarantee where you supply.
EDELMAN J: Yes, but the Court took a contract‑type approach to those because the nature of those provisions was similar to, analogous to, the type of term that would be implied into a contract under, say, a sale of goods‑type analysis.
MR CHRISTRUP: Yes, your Honour. Whereas for a claim under the Tenancies Act, it might be that the way damages should be assessed, or the type of damages that can be recoverable, where it is a breach of a statutory norm imposed by the Act, may be informed by the type of norm that has been breached. We know that, for example, under the Trade Practices Act and the Australian Consumer Law, the approaches can be different in relation to the general power under section 236 to award damages. Those type of provisions just refer to loss and damage, what that means. You need to go back to the provision that has been contravened.
I see the time, your Honour.
KIEFEL CJ: Yes, Mr Solicitor. We will adjourn for lunch. The Court will adjourn until 2.15 pm.
AT 12.45 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
KIEFEL CJ: Yes, Mr Solicitor.
MR CHRISTRUP: Thank you, your Honour. Can I start by answering the question that was posed by his Honour Justice Gageler. The position is not entirely clear under the Act, but it would be our submission that if a claim is attempted to be brought in a court that is a claim that could have been brought in the Tribunal for compensation, then the Act impliedly prohibits such a claim being brought. It must be brought in the Tribunal.
GAGELER J: Are there analogous provisions to sections 120 to 122 in other State or Territory legislation?
MR CHRISTRUP: I do not know about section 120. Our view suggests that there is no provision that follows word for word or is materially identical to section 122. There are provisions which share some of the concepts and there are some similarities, but we have not been able to find a provision which is in exactly the same terms.
GAGELER J: Have you collected these provisions somewhere in your submissions?
MR CHRISTRUP: No, I have not, your Honour. I believe ‑ ‑ ‑
KIEFEL CJ: Would you be able to provide a table or something which indicates to us so we can see the differences between the other States and Territories, whether at all comparable or distinctively different?
MR CHRISTRUP: We can do that, no difficulty at all.
KIEFEL CJ: Thank you. If you could perhaps provide that within seven days, that would be of assistance.
MR CHRISTRUP: Certainly. No difficulty. The final points that I wish to make on ground 1 as to why the appellant’s construction should not be accepted is simply that there is no statement in the Act or in the second reading speech evincing an intention to so drastically widen the type of damages that can be recovered for breach of a tenancy agreement compared to the position that would have prevailed at common law. This goes both, of course, for claims that are being brought by a tenant against a landlord, but also the wide construction would also apply to claims that are being brought by the landlord against the tenant. Having said that, that is the end of our submissions on ground 1, and unless there are any further questions from your Honour, I will move on to ground 2, if that is convenient.
The Notice of appeal under this ground contends that the Court of Appeal erred in holding that a breach of section 49 of the Act could not found the claim for compensation for emotional disturbance, or mental distress. That is not quite what the Court of Appeal held. The Court of Appeal recognised at reasons paragraph [60] that such a claim would be available in the case of mental distress arising from physical inconvenience. Rather, what the Court held was that this particular tenancy agreement did not have as its central object the provision of relaxation, enjoyment or freedom from molestation. And it is whether the Court of Appeal was correct in that conclusion that falls for consideration by this Court.
You have already been taken to the legal principle as stated by the Chief Justice in Baltic Shipping – I will not take your Honours to the decision – but the rule there stated is that:
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.
There are, of course, other categories but those are the two categories that are set out in the principle at the bottom of page 365. The reasoning from the Chief Justice also reveals that in determining a claim for damages for distress and disappointment, where the contract is to provide enjoyment, relaxation or freedom from molestation, it is a two‑stage process that must be adopted. First, the characterisation of the contract as one whose object it is to provide those benefits, and secondly, there must be a breach of the promise to provide that benefit.
So, for example, in Baltic Shipping, the contract was, in essence, a pleasure cruise, and it was thus characterised as a contract the object of which was to provide enjoyment and relaxation. And there was a failure to provide that benefit, because the journey came to an end about halfway through when the ship sank. We also know at the outset that, save for the question of whether the inquiry is central object, major object, or an object, then the appellants are not inviting this Court to formulate a new test for the recovery of damages for distress and disappointment. Rather ‑ ‑ ‑
EDELMAN J: So, is that common ground then? That if the appellant is not correct that the section 122 operates without any form of restriction – call it remoteness, scope of liability, whatever – it has no form of restriction, is it then common ground that the only test that we can look to is the principles arriving from the law of contract?
MR CHRISTRUP: Yes, your Honour, for this type of claim under – for a breach of section 49, yes, your Honour.
EDELMAN J: So, neither you nor the appellant put forward any intermediate position that there might be some other way of deriving some limitation upon the breach of contract‑type claims, as opposed to the statutory obligations?
MR CHRISTRUP: That is so, your Honour. So, because the appellants are not inviting this Court to formulate a new test, this ground, really, or largely devolves into the application of the existing principle. I accept the principle too, for the facts of this case; in particular, the tenancy agreement in this case. And to be clear, it is our submission that the decision of this Court in Moore v Scenic Tours confirmed and left those principles intact. That decision did not involve, in any way, a shift in the law. The case concerned quite a different question, namely whether damages for distress and disappointment arising from a contract to provide enjoyment and relaxation; was a claim for personal injury within the meaning of Civil Liability Act (NSW).
The submissions I wish to make to your Honours in relation to ground 2 fall into four categories. The first one involves an analysis where we apply the very object test to this particular tenancy agreement. Secondly, we will then address your Honours on the overseas cases that concern whether a major or a principal object is sufficient. I will then move on to explain why there must be a rejection of the appellant’s submission that it is sufficient that a contract has as an object the provision of the specified benefits in order – and finally I wish to make some brief remarks about the objects of the three terms relied upon by the appellants.
Starting with the very object test, five of the judges in Baltic Shipping held that in order to qualify under this limb, the relevant contract must have as its object the provision of:
pleasure, relaxation or freedom from molestation –
His Honour the Chief Justice twice referred to the “very object” at page 363, point 3, and also 364, point 4, and, of course, in the final formulation at the bottom of page 365 his Honour referred to “the object” of the contract. Likewise, in the decision of their Honours Justice Deane and Dawson, their Honours there at page 381 through to page 382 in effect held that in order for a contract to satisfy this description it must be the very object or the object. If I can just take your Honours to the judgment of their Honours. At the bottom of page 380, there is a paragraph that starts:
One of the general rules relating to the assessment of compensatory damages –
GORDON J: Sorry, where are you reading from?
MR CHRISTRUP: From page 380.
GORDON J: Page 380, sorry, thank you.
MR CHRISTRUP: That is where the discussion starts in relation to damages for distress and disappointment. Then, at the bottom of page 381, about seven lines up, it is there said:
it should be accepted that the present case falls within a category to which the general rule does not apply.
That is, the general exclusion rule:
That category of case encompasses cases where the disappointment and distress have been caused by breach of a contract under which the party allegedly in breach is shown expressly or impliedly to have agreed to provide pleasure, entertainment or relaxation or to prevent molestation or vexation. In cases falling within that category, an assumption that the disappointment and distress occasioned by breach would not have been within the contemplation of the parties is particularly unjustifiable.
Then, their Honours say:
In that regard, we agree with the comment of Bingham L.J. in Watts v. Morrow:
“Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead.
Then it goes on to apply that principle to this particular contracting case where their Honours then observe that:
The object of contract between Baltic and Mrs. Dillon in the present case was to provide Mrs. Dillon with the relaxing enjoyment and entertainment of a fourteen‑day pleasure cruise. It was an implied term of the contract that Baltic would take all reasonable steps to provide such a cruise.
So, the only way to construe those paragraphs, we say, is that their Honours Justices Deane and Dawson are also adopting the very object, or the object test in order for a contract to fall into this category. There is then the secondary obligation. You must still find or identify a promise in the contact that has been breached, that has that requisite object or purpose, but it is not a test, we say, that embraces the notion that one goes to an individual clause in a contract and then determines whether the object of that clause is the provision of the requisite benefits. It becomes very much a question of characterising the contract as a whole.
Now, that characterisation process is primarily determined, in our submissions, by reference to the type of contract that has been entered into between parties and of course also the promises that are made in that contract. However, critically, the characterisation process does not entail identifying a few individual promises and then distilling from those particular promises in isolation the requisite object and then impute that object to the contract as a whole. That is not the test that is being put forward by their Honours. The relevant contract here, your Honours, comprise the terms in Schedule 2 of the regulations as supplemented by the terms ‑ ‑ ‑
EDELMAN J: If that is right, if that really is what they are all saying, how can that make sense as a matter of principle? In other words, contracts are comprised of many, many different obligations. You might have at the core of the contract it being a contract, say, for the provision of pleasure. But there might be obligations under that contract that have absolutely nothing to do with pleasure – documentary obligations or completely unrelated obligations. Is it really the case that the approach to damages for mental distress is an all or nothing approach? If it is a contract for pleasure, then you can get mental distress damages for every unrelated obligation that is breached?
MR CHRISTRUP: No, that is not what their Honours are saying in Baltic Shipping. Their Honours are saying two things, and we have addressed that in our written submissions. The first thing: the contract must be able to be characterised as having the requisite object as a whole. Then the second inquiry is the contract that – or the term that has been breached must at least relate to that object, or have that object that has been imputed to the contract as a whole.
So, to take the example of some obligation to provide a document within seven days, or 14 days, even though the contract as a whole has the requisite object, a breach of that term to provide a document and could not possibly, on this analysis, entitle the plaintiff to damages for distress and disappointment by nature of the contract. Likewise, in Baltic Shipping, the contract as a whole was construed as one to provide relaxation, and as their Honours observed, there was a breach of the promise to provide that benefit, and that is why ‑ ‑ ‑
EDELMAN J: What if the contract has multiple objects, as almost every contract does?
MR CHRISTRUP: We say, for the purposes of this test, it is necessary to identify the central object.
GLEESON J: Well, it is pretty easy in this case, is it not? It is provision of safe and habitable premises for human habitation.
MR CHRISTRUP: That is one way of arguing that that is the object of the contract. We say that it needs to be pitched at a general level, and we fully accept that in this exercise the answer can often be given by the level at which you are applying the analysis. We are not pretending either that there is some great principle that stands behind this. The majority in – or not the majority, the Court in Baltic Shipping accepted that, look, the exclusionary rule that is sitting on top of this, generally prohibiting these damages, are based on a matter of policy, and the exception in relation to physical inconvenience or contracts that have the requisite benefit is explained as a rule of convenience.
So, we are not pretending that there is any great theory that stands behind this reasoning, or that it can always be justified by reference to the existing principles in terms of Hadley v Baxendale and the principle that a promisee should be put in the position that he or she would have been in had the contract not been breached, because if you apply those principles as they observed in Baltic Shipping, then you often end up in a position where damages of this kind can be recovered.
GORDON J: Mr Solicitor, what Justice Gleeson just put to you is exactly the object of the Act itself.
MR CHRISTRUP: Yes. I was moving on to answer that question. It depends on at what level of generality you ask the question. We say that for a residential tenancy, the central object is the provision or the grant of a right of occupation of premises.
GORDON J: Sorry, provision?
MR CHRISTRUP: Provision of a right to occupy premises.
GLEESON J: Safe and habitable.
MR CHRISTRUP: We would say that is not the central object. We would say that is incidental.
GLEESON J: That is nice to have, is it?
MR CHRISTRUP: Of course, it is also nice to have a landlord that repairs the premises for you. It is also nice to have a landlord that has legal title. It is also nice to have a landlord that does not peek in through your windows when you are going about your daily business. Ultimately, our submission is going to be, on this point, that that is the central object of this ‑ ‑ ‑
GORDON J: I am not being pedantic here, but what do I about object in section 3(d):
to ensure that tenants are provided with safe and habitable premises under tenancy agreements and enjoy appropriate security of tenure –
MR CHRISTRUP: Just bear with me a moment, your Honour.
GORDON J: I think the submission put against you, Mr Solicitor, was it that those concepts reflected sections 48 and 49, to which we were taken, picking up the language of “habitable” in 48, and “security” in 49.
KIEFEL CJ: Except that is perhaps “security of tenure” that 3(d) refers to.
MR CHRISTRUP: It could be.
GORDON J: It is. The Chief Justice is right to correct me. And 48 is also dealing with safety.
MR CHRISTRUP: So, “security of tenure”, as the Chief Justice has observed, seemed to relate to the legal title of the landlord to ‑ ‑ ‑
KIEFEL CJ: But there is the question of safety, as part of the objective.
MR CHRISTRUP: And habitable. That, of course – the concept of safety can cover a number of aspects; it is not directed at any particular risk.
KIEFEL CJ: Would you think the security of the premises might have something to do with it.
MR CHRISTRUP: We would accept that an obligation of a landlord to provide premises that come with security features to make the premises reasonably secure – we say that the object of that clause is to provide premises that have those features. It is up to the tenant whether he or she wishes to take advantage by locking the doors, for example, or closing the windows.
GORDON J: If she has a door to lock.
MR CHRISTRUP: If there is a door to lock, of course, your Honour. But the sense in which Baltic Shipping uses the expression to – and the safety, section 49, is not so – in relation to secure premises. If that is to be aimed at protecting the promisee from – or to provide freedom of molestation on the tenant, we say that the way that expression is used in Baltic Shipping involves the landlord providing for that security, rather than providing simply facilities whereby the tenant himself or herself can take advantage of the facilities that are being provided.
As far as the objects of the Tenancy Act is concerned, they do cover a broad range. Our ultimate submission is that where you are looking at the exception concerning freedom of molestation, those cases usually talk about protecting the promisee from a specific risk. So, the injunction case in England, for example, the client came to the law firm to obtain an injunction against a specific person who was taking specific steps to assault her and harass her. Likewise, in Kemp v Sober, the specific risk was the one about not conducting a school next door. So, in relation to a specific risk, originating in that case from a specific area – namely, the land next door – this is quite different, we say, from the obligation in section 49 and section 48 to ‑ ‑ ‑
EDELMAN J: How does the specific risk in those cases become an object of the contract – or become the principal object of the contract?
MR CHRISTRUP: Take the case of Heywood v Wellers, the injunction case. That was the only task – or that was the main task that the solicitors were asked to perform, was to go and obtain an injunction to prevent her former man friend from harassing her.
EDELMAN J: No, but I mean, take an easier example like Farley v Skinner where it is only one specific provision: concern about aircraft noise in the context of a whole contract to provide a surveyor’s report.
MR CHRISTRUP: In relation to Farley v Skinner, it was, in effect, practically two contracts in one. There was the standard surveyor’s contract to go – can you please go and have a look at this house and identify defects? Of course, I want to know about them before I buy the house. Then there was the secondary task – or not secondary task, but the second task that the surveyor was also asked to do was to investigate the specific threat of aircraft noise.
EDELMAN J: That is every contract. Every contract contains multiple obligations.
MR CHRISTRUP: It does. That particular case, we say that it was essentially two contracts rolled into one and it was made clear beforehand to the surveyor to say, look, I am about to buy an expensive house. I am concerned about aircraft noise. I need to know before I commit to buying the property whether there is any aircraft noise, because if there is, I am not going to buy it. So, those are features that, if one was to adopt the approach in Farley v Skinner, might lead the Court to find, well, this particular contract has multiple objects. But at least as far as the test in Baltic Shipping is concerned, as presently formulated, that test requires the Court to find the central object.
Your Honours, I mentioned that the clauses in this contract are those set out in Schedule 2 to the regulations and, also, the classes of terms that are incorporated into the tenancy agreement by the Act. Those are the sort of clauses that one would normally find – or expect to find – in a tenancy agreement that deal with such matters as the provision of vacant possession, entry by the landlord, quiet enjoyment, minimum condition of the premises, maintenance by the tenant, repairs and the like. There were no special terms agreed between the parties in this contract. It was purely the default terms, if I can use that expression.
For the purpose of characterising this tenancy agreement as a whole, it is convenient, first, to consider whether the object is to provide pleasure or relaxation and then, secondly, to consider whether its object is to provide freedom from molestation. For the reason I am about to explain, we say the answer to both of those inquiries must be, no.
Can I start with pleasure and relaxation. The concept of contracts for the provision of pleasure and relaxation derives from the holiday cases. While the categories of contracts or cases that fit this particular description are not closed – and, at least, the holiday cases provide some indication of the type of contract which has been contemplated by this exception. With the luxury holidays, it usually involves the promise of agreeing to provide a certain experience to the promisee.
So, in the cruise ship holidays, you normally get fully‑furnished accommodation, coming with cleaning services. There are cooked meals in the restaurant with the customer not being obliged to do the dishes. There is normally the provision of relaxation facilities during the day for taking the holiday‑makers on daily excursions to tourist destinations, and then there is usually entertainment in the evening. In that sense, the promisor is, essentially, undertaking, or agreeing, to provide a certain experience. I can take another example on a much smaller scale. A contract for the provision of a relaxing massage or a pampering package. It usually involves pleasant surrounds, soft music and the promisor taking responsibility for the client being able to experience the pampering or the relaxation.
By way of contrast, the landlord, under a tenancy agreement, does not agree to provide a particular experience – I will interpolate “experience” – on the tenant. The landlord promises to provide premises that meet certain minimum standards in terms of safety, habitability, cleanliness, security and state of repair. The landlord also promises that the tenant will have good legal title as a tenant and that the landlord will not interfere with the tenant’s enjoyment of the premises, and that the landlord will carry out repairs. However, the landlord has no ongoing responsibility to provide the tenant with relaxation or with enjoyment.
What the tenant does with the premises in order to achieve those things – if, indeed, that is what the tenant wishes to do – that is a matter for the tenant to arrange. The fact that a particular breach of the clause by the landlord may have the effect that the tenant’s ability to arrange his or her own relaxation or enjoyment is impaired does not, in our submission, convert the contract into one whereby the landlord promises to provide an enjoyable or relaxing experience. The object of the tenancy agreement therefore cannot, in any sensible sense, be said to be an agreement to provide enjoyment and relaxation. If it is necessary to identify the central object of the contract when one is considering a claim for distress and disappointment, then we say that the object of this contract is the grant of the right of occupation in return for rent.
The appellant’s reliance on the quote from his Honour Justice Brennan in Baltic Shipping at page 371 and as reproduced in paragraph 45 of this Court’s decision in Moore is, with respect, entirely misconceived. It is clear from the passage that it applies to accommodation provided to holiday‑makers, not accommodation generally, which is the sense in which the appellants are deploying that quote.
Further, the point that his Honour was making in the paragraph, and the reason that it was approved by the decision in Moore, was a very different one. Justice Brennan was explaining that a contract for the provision of relaxation and enjoyment and damages for distress and disappointment flow directly from the breach, rather than from the distress and disappointment being a reaction to the breach or a reaction to other damage derived from the breach. The damages for distress and disappointment in that case therefore had nothing to do with the concept of mental injury in the personal injury case and hence the New South Wales statute did not apply.
Moving on to whether this particular tenancy agreement has the object of providing freedom from molestation, I have already said what I wish to say in relation to that in the sense that, ultimately, what we are submitting here is that – sorry, withdraw what I said. We say that the tenancy agreement, taken as a whole, clearly does not have its object that the landlord will protect the tenant from molestation, anxiety or injury. A tenancy agreement grants exclusive possession to a tenant, and it is then up to the tenant to deploy that right to exclusive possession against the world. It is not a right that the landlord enforces on behalf of the tenant.
It is not the object of the contract that the landlord will keep the tenant safe in the premises, or even that the landlord will take reasonable steps for that to occur, and there is not any promise by the landlord that there will be no illegal entry on to the premises, or that it will not be broken into, or that the tenant will not be assaulted in the premises. In short, the landlord does not take responsibility for the tenant experience and peace of mind when present at the premises, and that is why this particular contract does not fall within the exception, because it does not have that as a central object.
Can I move on to the second topic, which is whether the requisite test is a major or principal object – and this is from paragraph 5 of our outline of submissions. At paragraph 69 of the appellant’s written submissions, they rely on a number of overseas cases said to have held that damages for distress and disappointment are recoverable, where the provision of relaxation, enjoyment or freedom from molestation is only a major or important object of the contract – or some similar descriptor – as opposed to the object.
I have already addressed your Honours in my answer to the question from his Honour Justice Edelman as to how we say Farley v Skinner operates here. Yes, there are observations there of rulings by the Court that a major or important object is sufficient, but we say that those observations should be viewed in the context of the case in which they were made.
As to the American case of Taylor v Burton, paragraph 3 of that particular judgment makes it clear that the case concerned the interpretation of the Louisiana Civil Code, in particular the meaning of an article that specifically governed the damages for non‑pecuniary loss. It was in the construction of that article that the principal object test had been adopted. It was not a common law case.
The appellant also referred to Fidler v Sun Life Assurance Co of Canada. In that case, whilst there were comments reproducing the relevant paragraphs from Farley v Skinner in relation to principal and major object, in the end of the day, the Court in that decision reformulated the principle upon which damages for distress and disappointment could be recovered in Canada. All that was required there that it had to be in the contemplation of the parties for that occur, and there was therefore no need to have regard to whether the object was of the essence of the contract, or simply a principal or a major object. So that case, too ‑ ‑ ‑
EDELMAN J: But the Supreme Court of Canada read the Farley decision differently from the way that you read it, did they not?
MR CHRISTRUP: In terms of my submission as to the circumstances in which one can have regard to the major or the principal object?
EDELMAN J: The Supreme Court understood Farley as establishing that the law of contract protects all significant parts of the bargain, not those that are dominant or essential.
MR CHRISTRUP: I accept that, your Honour. But at the end of the day, the Court was not pushed to make a decision on that particular point because they pitched the recovery of damages for distress and disappointment at a more general level, being – this is just for the contemplation of the parties.
GAGELER J: I am not quite sure about that. Page 694 of volume 4 of the book of authorities – the requirements for damages for mental suffering seem to include that the object of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties.
MR CHRISTRUP: Yes, your Honour.
GAGELER J: It seems pretty much like what the House of Lords were saying in Farley v Skinner. I am just not quite following the distinction you are making.
EDELMAN J: Well, they say an object, not the object, do they not?
MR CHRISTRUP: In?
EDELMAN J: The Supreme Court of Canada expresses the requirement as an object of the contract, and an object can be identified, perhaps, from a single provision.
MR CHRISTRUP: Absolutely, your Honour. Because it is just where there is contemplation of the parties, it permits the court to go to that level of detail.
KIEFEL CJ: That is what Justice Brennan was referring to in Baltic Shipping as part of the explanation for the law of contracts view in this area as deriving from Hadley v Baxendale.
MR CHRISTRUP: Yes.
GAGELER J: What is wrong with that?
MR CHRISTRUP: That it should be a matter that has been in the contemplation of the parties ‑ ‑ ‑
GAGELER J: So, what is wrong with the principle stated by the Supreme Court of Canada?
MR CHRISTRUP: Well, it is in conflict with what has been held by this Court in Baltic Shipping, because Baltic ‑ ‑ ‑
EDELMAN J: If you read Baltic the way that you read it.
MR CHRISTRUP: Yes, in terms of central object. Yes, your Honour. In the judgment of – Chief Justice Mason was one that was most clear on this point. His Honour, before he arrived at the final conclusion at the bottom of page 365, explained and referred to the reasons why if you apply Hadley v Baxendale to damages for distress and disappointment then more often – well, not more than not – then, often, you might end up at a position where the damages are recoverable.
EDELMAN J: Although Justice Brennan is very clear that he is concerned with an object, like the Supreme Court of Canada, not the object, and it is the language of Justice Brennan that is picked up in Moore v Scenic Tours.
MR CHRISTRUP: In relation to Moore v Scenic Tours, can I address your Honour on that. It is our submission that Moore v Scenic Tours did not address the question of whether it should be – or did not hold that the object of an individual clause is sufficient to invoke the relevant principle of Baltic Shipping.
The question in Moore v Scenic Tours . . . . . by the decision of the plurality, it had been found below that there had been certain breaches of the guarantees that are provided by the Australian Consumer Law, and the only relevant defence that was mounted by the defendants in relation to the claim for those damages relevant to this was the Civil Liability Act (NSW) which restricted damages for personal injury, and that was what this Court held in Moore, that the character of the type of damages under this heading are not damages for personal injury.
Respectfully, the decision of this Court in Moore was not about whether considering an object or particular object or majority object or central object was the relevant test, it just simply did not arise. And, if anything, the plurality of paragraph 44 of Moore refer to Chief Justice Mason’s test of the central object or of the very object at 43 through to 44 and also in the judgment of his Honour Justice Edelman at paragraph 68, there is a reference to “the very object”.
On the facts of this case, we say that there is – and I am on the point about principle and major objects and still addressing your Honours in relation to that. The facts of this case do not give rise to the question of whether the principle should be modified, as suggested by the appellants, to include a major or a principal object, because there is no basis upon the many terms in this tenancy agreement to determine which ones are major promises and which ones are not the major promises. These are all standard obligations that are imposed by the statute and most of them are there because they are necessary, or they are implied into the tenancy agreement because they are a necessary or convenient . . . . . of the relationship of landlord and tenant.
Moving on the suggested test of an object, your Honours, the appellants submit that this is the test that should be applied to this particular tenancy agreement. They cite the observation of his Honour Justice Brennan in Baltic Shipping. Plainly, his Honour was in the minority on that point for the reasons that I have given. But, further, the acceptance of the submission by the appellants would, in our submission, require the principle established by Baltic Shipping to be either discarded in toto, or at least transformed into a very different one. And that is because the contract on that test, the inquiry for the recovery of these damages concerns merely an object of the contract which, in effect, then becomes the object of an individual clause, which is a very different test to the one that is put forward in Baltic Shipping.
It could fairly be said that where a clause in a contract has a particular object, well, then it can fairly be said that the object of the contract – or an object of the contract – would include the object of that clause. But this is not the principle for which Baltic Shipping stands. The inquiry must be in relation to the net of the contract as a whole, and the terms read as a whole. And, as your Honours will see, and are no doubt aware, once regard is had to the object of an individual clause, it lowers the bar significantly for when damages for distress and disappointment can be recovered, and it becomes a lot easier to impute a object of that kind to clauses that one would not normally expect to fit the characterisation of providing relaxation or freedom – sorry, enjoyment of freedom from relaxation.
EDELMAN J: But if that is the object of a particular clause – to provide freedom from molestation, peace of mind, and so on – why would not the parties be assumed to have taken – or the party undertaking that object be assumed to have taken the risk that, if it is breached, there would be mental distress damages?
MR CHRISTRUP: Again, only for the reason of policy and convenience that was arrived at in Baltic Shipping. So, take a contract, for example, for a haircut. There will be an implied term in that: that the hairdresser will take reasonable care not to injure you or injure the customer with the scissors during the haircut. It can be seen quite readily, I think, that the purpose of that implied term would be to protect the customer, and it is not a big jump to say the purpose of that clause is to keep the customer free of molestation. But no one would suggest that the contract for a haircut as a whole has got the object of the hairdresser or the stylist undertaking to provide freedom of molestation to the client. So, it becomes a very different test and it, in our respectful submission, lowers the bar significantly as to when damages for distress and disappointment can be awarded. It reduces to an analysis on the individual clause.
EDELMAN J: It is probably not a particularly good example, because it is absolutely taken for granted that you could get damages for pain and suffering, consequent upon physical injury by being cut by scissors in a haircut.
MR CHRISTRUP: True, if that is what occurred, you could get it under that, but I am just trying to explain that if this is the analysis at the individual clause level, then it changes significantly the circumstances in which these sort of damages can be recovered.
I will then briefly address your Honours in relation to the individual clauses in this contract that are relied upon by the appellants. Section 48 imposes an obligation to ensure that the premises are habitable, meets all health and safety requirements specified in an Act, and that they are reasonably clean. That is section 48. I will start with the question of whether it provides enjoyment or relaxation – enjoyment of relaxation by the landlord on the tenant. The obvious starting point is that that particular clause addresses a number of subject matters, and therefore, potentially, has a number of objects, including cleanliness and safety.
The appellant addressed enjoyment and relaxation at paragraphs 65 through to 66 of their submissions, and they rely on the fact that “habitable” in the series of cases recounted in their submissions and the references to “reasonable comfort” in the decision of her Honour Justice Blokland in the Court of Appeal demonstrate that the clause has the requisite object of enjoyment and relaxation. However, the extracts from the cases that are set out in paragraph 63 of my learned friend’s submissions show that, whilst the premises must provide reasonable comfort, the Court of Appeal held that not too much emphasis should be led on comfort, and at [41], that the concept referred to “[t]he most elementary needs of comfort”. That, we say, indicates that as far as enjoyment and relaxation is concerned, section 48 does not quite get the appellants there.
Secondly, it is for the landlord to supply premises that meets the standard of comfort, but the landlord is not promising by section 48 that they will provide the tenant with relaxation or enjoyment, or not promising that the tenant will, in fact, be comfortable. Those are matters for the tenant to arrange.
Can I then move on to whether section 48 addresses – or has the object of molestation. This is primarily a reference to section 48(1)(b) concerning safety and, to a lesser degree, the reference to “habitable” in sub‑paragraph (a). As I have explained in my earlier submissions, we say that the freedom of molestation category is concerned with specific risks. The type of risks that are covered by – or sought to be anticipated by section 48 are quite wide. There is no specific risk there which is being sought to be addressed. For example, there is obligation to install and maintain a smoke alarm, and no doubt that is aimed at reducing the risk of harm to the tenant, but the landlord is not promising to prevent or take reasonable steps to prevent that the tenant will not be harmed in a fire.
Section 49, the relevant clause has been breached here. It is put by the appellants that this clause has the object to exclude others from the premises. As I have addressed your Honours already, it is up to the tenant and not the landlord whether he or she wishes to take advantage of those security devices, and it is also plain from the clause itself that it is aimed not just at protecting the persons within the premises, but no doubt also the chattels within it.
Section 65 concerns not only quiet enjoyment but also preventing interference with the reasonable peace and privacy of the tenant. I will not address your Honours in detail on that. The covenant of quiet enjoyment was the subject of the reasoning of the Court of Appeal and we do not propose to repeat what has been said there.
Can I just make some brief observations in relation to the cases that my learned friend took you to of Residential Tenancy Tribunal v Offe, and also Strahan, and then I just want to make some quick remarks on some of the international cases. In Offe, his Honour Justice Abadee did not find that the residential lease in that case was a contract with the requisite object. Rather, his Honour held that, pending on the facts, the compensation power in the Act was wide enough to award compensation where there was physical inconvenience but where the lease had the requisite object.
And Strahan v Residential Tenancies Tribunal seems to have been a case that involved physical inconvenience. There was physical inconvenience present in that particular case. Finally, in Sampson v Floyd, the tenants were evicted from the premises. There was no ruling in that case that it fell within, if you like, the second limb of Baltic Shipping. And when one goes to the facts, it looks very much like a case of physical inconvenience. Likewise, the English case of Personal Representatives of Chiodi, that was a case concerning physical inconvenience and bouts of ill
health. I will refer your Honours to the observations on pages 11 and 14. There were references there to the tenant not being able to escape the damp and the cold.
The United Kingdom case of Calabar at page 290 makes it clear that this case concerned discomfort and ill health. The American case of Hilder from the Supreme Court of Vermont, page 206, lists all the inconveniences to which the tenant was subjected, and paragraphs 19 through to 20 of the judgment make it clear that the damages are for the tenant’s discomfort. Then finally . . . . . the other America case, concerns a civil code in California – the definition of actual damages – and hence that case concerns statutory construction of that concept, not the common law.
May it please the Court.
KIEFEL CJ: Yes, thank you, Mr Solicitor. Do you have anything in reply, Mr Albert?
MR ALBERT: Your Honours, I will seek to be brief. Can I primarily respond to three questions that were raised, as it happens, in each case by your Honour Justice Gageler, to which my learned friend responded, but to which our response would be different on all three occasions. In no particular order, your Honour Justice Gageler asked my learned friend whether a claim in contract could be brought in – I think your Honour gave the example of the Northern Territory Supreme Court – our answer to that question is, yes. Can I provide to your Honours, with the Court’s assistance, a provision. The provision that I am about to hand up is from the Local Court Act 2015 (NT). What your Honours will see ‑ ‑ ‑
KIEFEL CJ: Which Court did you say this belongs to?
MR ALBERT: If your Honour looks at the bottom of the page, it is the Local Court Act ‑ ‑ ‑
KIEFEL CJ: The Local Court. I thought you were talking about the Supreme Court.
MR ALBERT: I am coming to the Supreme Court by contrast. So, this is the Local Court Act, if your Honours see civil jurisdiction, Division 2, section 13, and then in particular, subsection (4), the Local Court:
does not have jurisdiction to deal with a claim within the jurisdiction of another court or a tribunal conferred by another Act –
In our submission, that provides the answer in respect of the Local Court. In respect of the Supreme Court, as your Honour the Chief Justice rightly directs me, there is no equivalent provision. And the significance of that, in our submission, is that Parliament has clearly turned its mind to the question of whether a contract claim could be initiated in a Court, has introduced a provision that says you cannot bring it in for a Local Court; and the natural implication is you are then left able to bring it in the Supreme Court.
GAGELER J: And the claim in the Supreme Court would be a contract claim, for damages in contract.
MR ALBERT: Quite, it would be a standard contract claim. So, in our submission, that provision tends strongly against the position that the Solicitor‑General put to the Court, and in our submission, the answer to your Honour’s question about whether a contract claim could be brought in the Supreme Court is yes. Can I, only in interests of being exhaustive, refer your Honours to Supreme Court Act 1979 (NT); there is no equivalent provision. The closest one gets is section 16A, but it actually, again, tends against the position put by the Solicitor‑General in that it expressly allows for the transfer of a proceeding from the Northern Territory Civil and Administrative Tribunal to the Court. That is a different position to the question your Honour was asking, but Parliament has turned its mind to that question and provided answers, in our submission.
The second question in respect of which we would offer a different response to our learned friends was a question asked by your Honour, Justice Gageler and your Honour, the Chief Justice, and that was about what I understood your Honours to be asking of analogous provisions. The answer to the question, are there analogous provisions, is, yes. In respect of section 120 of the Residential Tenancies Act about which there has been much discussion, that is a replica – I have just double‑checked that it is still current – of section 78 of the South Australian Residential Tenancies Act – and I emphasise the year of 1995 – that is to say, it predates. So, what one can easily infer is that the Northern Territory provision is derived from that provision. As my research indicates, that is the only replica of that provision. Your Honours will see that we have referred to that at footnote 39 of our primary submissions.
In respect of section 122 of the Northern Territory Act, that is, relevantly – not exactly, but materially the same as the Victorian Act of 1980 in sections 105 and 106. As to the references to that Act and it being a basis for the inspiration of section 122, there are two places to look. The first is in Reardon which considers the very same provisions and is the reason why we draw that connection as part of the historical backdrop to the introduction of section 122. The second place to which we have not yet taken your Honours – if I can just refer to it – is at tab 60, in volume 6, in particular, at pages 1395 to 1398.
GORDON J: What is that?
MR ALBERT: It is the working group – it is called a “working group report” of 1992 – which was when the Northern Territory Parliament was first interested in what I think can fairly be described as an overhaul of residential tenancy law in the Territory. So, what that working group report does – relevantly, at the pages that I have just given – is summarise and recite the operative residential tenancy laws of all other jurisdictions in Australia – including the 1980 Victorian Act from which, it seems apparent, that section 122 is derived.
The link – just to close the loop – between that working group report and the 1999 Act that is before this Court is made in the second reading speech – which is also in the bundle of materials – where the relevant Minister identifies the working group reports and I think the two, in the end, as being the basis for the overhaul of that statutory regime.
The third and final question, or comment, made by your Honour Justice Gageler, as it happens, again, to which we would seek to respond, is your Honour made some observations to my learned friend about the proper framing for the causation test under the Act. Your Honour suggested – and I would say, with respect, correctly – that we could be taken to have pitched too high on the “but for” test. Can I say that the reason I say, with respect, that that is correct is that the framing of the oral submissions by me may have misplaced emphasis.
We do not depart or in any way change our position as we have put it in writing. In that respect, can I particularly draw your Honour’s attention to our reliance on Comcare v Martin which, I think, interpolating, may have been the basis – or a basis – of your Honour’s comment about the content of causation being drawn from the statutory context. What is said in Comcare v Martin, at paragraph 42, we relied on in our primary submissions, at paragraph 38 – and I do not want to be taken to have departed from that, because it certainly was not my intention.
KIEFEL CJ: If causation is derived from statutory context here, it would be derived in relation to each section, which is a term of the tenancy agreement, tenancy contract, and the subject matter of that term, it would operate in each – with respect to each section that is breached? How does it work?
MR ALBERT: In our submission, it would have to have regard to the whole of the statutory context. But the particular context of relevance here is, as it happens, the one that I attempted to deal with in primary submissions, most relevantly including section 120 and 122. So, that is to say nothing against what your Honour puts to me about particular provisions and determining to what they are directed, but it is to say ‑ ‑ ‑
KIEFEL CJ: So, you would focus on compensation being a statutory concept for loss and damage caused by breach of particular terms in the statute and a court would simply go about how it – how? It would determine loss and damage?
MR ALBERT: By reference to causation and what was in the contemplation of the parties.
KIEFEL CJ: But you are not talking about causation in tort.
MR ALBERT: No.
KIEFEL CJ: No.
MR ALBERT: We are talking about causation ‑ ‑ ‑
KIEFEL CJ: Causation in fact.
MR ALBERT: Well, yes, but perhaps to draw on the language of Justice Gleeson, causation in logic, primarily. I should perhaps ‑ ‑ ‑
GAGELER J: Well, causation of damage within the scope of the statutory provision that inserts the term into the agreement.
MR ALBERT: Yes.
GAGELER J: I mean, there is a statutory purpose to be fulfilled by these provisions.
MR ALBERT: Yes. With respect, we would agree, and it perhaps takes us to the point of being slightly perplexed as to the debate about the landlord pushing about “but for” common sense statutory. The facts that are before the Court in this case, it really does not matter which version is applied, in our submission, you end at exactly the same result. So, to address your Honour Justice Gageler perhaps more directly, section 49 in terms is directed to the provision of “reasonable security”. The reflex of the non‑provision of reasonable security is a feeling of insecurity, and at that point, to address your Honour the Chief Justice, the inquiry ends. The statutory context ‑ ‑ ‑
KIEFEL CJ: The damage directly flows from the breach.
MR ALBERT: Directly flows – as it did in Kemp v Sober. So, you really, in truth, in our submission, do not need to get anywhere near determining one test over another. It really makes no difference and, in our submission, that is the position we have had – as I say, I may have misarticulated it in primary submissions – but if your Honours look in our primary submissions at footnote 49 – to be, perhaps, a little unkind to ourselves, we openly hedge our position – we say maybe it is “but for”, maybe it is common sense, maybe it is statutory context. It does not matter in this case. Can I also, on that ‑ ‑ ‑
KIEFEL CJ: It might matter to this Court, if it is stating principles.
MR ALBERT: I entirely accept that, and can I go one step further and say, on the basis of stating principles, we do not seek to adventure away from Comcare v Martin, which I understand to be the position of the Court at present in respect of statutory causation. So, again, we invite no adventure from that. Against those responses to particular questions, I think, there is only one true point of reply, and that is in relation to ground 1, it is to respond to a submission made early by my learned friend that the position adopted by the appellants in respect to what we say is a “code” was unclear. Can I attempt clarity, and that is, our focus is on section 122 – what is specifically dealt with in section 122 and what is not.
We are not seeking to have this Court – indeed, it would be unnecessary – engage in some analysis of whether the entirety of the Act represents a code. That is not our ambition and not what we seek. Rather, what we say is section 122 is specific, most particularly, in subsection (3) as to the contract law principles which apply – subsection (3), read with section 120, in particular. But also in subsection (5) where Parliament has seen fit to deal with the forms of non-pecuniary relief that are excluded, and we emphasise what is not mentioned in that exclusion.
Unless there was anything further, those are the submissions.
KIEFEL CJ: Yes, thank you, Mr Albert. The Court reserves its decision in this matter and adjourns to 9.30 am tomorrow.
AT 3.21 PM THE MATTER WAS ADJOURNED
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