Zadeh v Webb - [2012] SADC 154

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Under Residential Tenancies Act 1995)
In the Matter of ZADEH AND ZAREEI V WEBB AND MICHAEL KRIS REAL ESTATE PTY LTD
ZADEH v WEBB
[2012] SADC 154
Judgment of His Honour Judge Tilmouth
19 November 2012
LANDLORD AND TENANT - RESIDENTIAL TENANCIES LEGISLATION - JURISDICTION
In October 2010 the appellants' claim for damages or compensation caused by flooding damage was dismissed by the Residential Tenancies Tribunal in default of an appearance by them. A second application was dismissed by the Tribunal because it was held to be 'res judicata':
Held: The second Tribunal erred in law by failing to exercise the jurisdiction conferred up on it to set aside a previous order.
Residential Tenancies Act 1995 (SA) s 32(1)(f), s 37(1), s 65(1), s 68(1)(a) & s 110(1)(c) & (2); Chamberlain v Deputy Commission of Taxation (ACT) (1988) 164 CLR 502; Somodaj v Australian Iron and Steel Ltd (1963) 109 CCR 285; Pastras v Commonwealth (1966) 9 CLR 152; Cachia v Isaacs (1985) 3 NSWLR 366; McNickle v White and White (No 2) [2006] SADC 43, referred to.

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - EXTENSION OF TIME FOR APPEAL
The appellants seek an extension of time in which to appeal from the second order of the Residential Tenancies Tribunal dismissing their application.
Held: Extension of time granted in view of the merits of their application and for errors of law committed by the Tribunal in failing to consider the application to set aside the first order on its merits.
Residential Tenancies Act 1995 (SA) s 41(3); District Court Act 1991 (SA) s 42G(2), referred to.
Sola Optical Australia Pty Ltd v Mills (1987) 165 CLR 628; Ulowski v Miller [1968] SASR 277, applied.

ZADEH v WEBB
[2012] SADC 154
The Issues

The appellants rented a Home Unit from the first respondent at Hove under a Residential Tenancies Agreement. The tenancy was terminated by mutual agreement on 8 February 2011. In early July 2010 whilst they were in occupation, there was a storm resulting in water damage. The tenants brought an application before the Residential Tenancies Tribunal claiming compensation of $1,000 for the resultant inconvenience, which the Tribunal dismissed. They applied a second time for compensation and that too was dismissed. They now seek to appeal from that order.
Background Facts
The Tribunal heard the first application on 19 October 2010 in the absence of the appellants. Immediately after being advised of the outcome they claimed not to have received any notice of the hearing date, even though the Tribunal had sent a written notice of the hearing to the subject premises. The subsequent history of the matter strongly suggests they were keen to proceed with their application, so it is probably the case that they did not receive it, although their explanation that their mail might have been stolen seems unlikely.
In reasons published on 28 October 2010, the Tribunal noted the application under consideration was “for compensation… based on moisture entering the premises…and presumably for inconvenience as a result…”. It is accepted that the tenant gave notice of the problem following a storm on the 5 July 2010. As it turned out water had flowed into the unit because the gutters were severely blocked with leaves from nearby trees. Water also entered the cavity of the double brick wall, with apparently longer term consequences.
A plumber was dispatched by the landlord on 9 July 2010. He found no evidence of leaking pipes. When a tradesman attended over the weekend of 10 and 11 July he discovered the blocked gutters. They were cleaned at a cost of $350.00 to the landlord. She also acted by authorising her letting agent to hire a dehumidifier which was installed on the 16^th. It remained there until 29 September. This was also done at her cost of $250 per week. These basic facts do not seem to be in dispute.
Proceedings before the Residential Tenancies Tribunal
The Tribunal approached the application on the basis that the landlord had acted with ‘reasonable diligence’ by having defects repaired in accordance with Section 68(1)(a) of the Residential Tenancies Act 1995 (SA) (The ‘RTA’) and thereupon proceeded to dismiss the claim. It correctly noted there could be no claim for damages on account of personal injury because such a remedy is precluded expressly by s 110(2) of the RTA.
As to an award of compensation, the presiding member simply recorded that as ‘no-one on behalf of the tenant appeared to give evidence of the same’, that aspect of the application was dismissed as well.
On 30 October the appellants wrote to the Tribunal complaining in strong terms about this decision, stating they had not received the letter of notification. They reiterated that the ‘flat was not suitable to live in’ and complained of flooding and heavy moisture over a long period of time. The Tribunal responded on 12 November 2010, advising them of the capacity to apply to “set aside or vary” the decision and to “rehear the matter”. A copy of an appropriate application form was enclosed as well as two information booklets. That letter was apparently returned to sender. Another letter was sent in more or less identical terms on 26 November 2010.
In the meantime, the landlord’s agent (the second respondent) brought an application for vacant possession in the Tribunal on 28 January 2011. However that was eventually resolved by mutual agreement without calling on the Tribunal to make a determination. There were other proceedings in the latter half of 2011 concerning a security bond.
The appellants brought a second application filed with the Tribunal on 21 July 2011, seeking an order for ‘compensation of $3,000 for rent’. This represents precisely three months rent at $250.00 per week. It is unclear why it took them so long to act, but it appears unfamiliarity with the process and some problems with paying Tribunal fees and the distraction of the bond proceedings, played their part.
This second application was heard by a different member of the Tribunal on 6 September 2011. The appellants attended and were assisted by an interpreter, they being of Persian heritage. The application was dismissed without going into the merits, on the basis that they were ‘fundamentally making the same claim as’ the first. The Tribunal further considered the ‘tenant has not applied to set aside the previous order’ and advised them to get timely legal advice.
The precise order of the Tribunal was expressed in these terms.
The Tribunal declines to hear the current application on the grounds that the matter is ‘res judicata’; this means the substance of the application has already been heard and determined.
Jurisdiction of the Tribunal
There are a number of observations to make about the Tribunal’s reasons in the course of the second decision. The first is that it is difficult to appreciate just why it formed the view the appellants had not applied to set aside the previous order of dismissal. It was made on the appropriate form sent to them by the Tribunal in its letter of 26 November 2010. Although on its face it did not expressly seek an order for setting aside as such, it did seek compensation. The accompanying letter made it abundantly clear they had not received notice of the first hearing and that they were alleging extensive damage and inconvenience had in fact occurred. It was then in substance, if not in form, and application to set aside the first order and for a determination on the merits.
The second observation to make is that it is open to doubt whether the doctrine of res judicata - which holds that judgments are final and conclusive as to the rights and duties of the parties involved: Chamberlain v Deputy Commissioner of Taxation (ACT)[1] - applies to administrative decisions of the Residential Tenancies Tribunal: Somodaj v Australian Iron and Steel Ltd,[2] Pastras v Commonwealth,[3] Cachia v Isaacs.[4] But putting that question to one side, even if it did apply, the fact of the matter is that the Tribunal had before it for all practical purposes an application to set aside its previous order, thus invoking the jurisdiction expressly conferred by s 37 of the RTA. This provides:
[1] (1988) 164 CLR 502
[2] (1963) 109 CLR 285
[3] (1966) 9 FLR 152
[4] (1985) 3 NSWLR 366
37—Application to vary or set aside order
(1) A party to proceedings before the Tribunal may apply to the Tribunal for an order varying or setting aside an order made in the proceedings.
(2) An application to vary or set aside an order must be made within three months of the making of the order (unless the Tribunal allows an extension of time).
Section 32(1)(f) of the RTA confers a general discretionary power to extend periods of time provided for in the RTA.
The Tribunal should have embarked upon the path of exercising that jurisdiction. That process would necessarily encompass an inquiry into whether an extension of time was appropriate under s 37(2) of the RTA, in accordance with the principles discussed later. The inquiry would additionally entail examining whether there were ‘proper grounds’ for setting aside the first order within the ambit of s 32(1)(f) of the RTA: McNickle v White and White (No 2).[5]That would involve determining – amongst other things – whether the appellants did or did not receive notice of the hearing and if they did, why they did not attend.
[5] [2006] SADC 43
The Tribunal therefore fell into error in determining the matter was ‘res judicata’ because the RTA itself provides through s 37 effectively that it is not. It fell into further error by failing to exercise the jurisdiction that section conferred.
Another relevant consideration to the s 37 inquiry is the inadequate manner in which the first application was dismissed, quite apart from the failure of the appellants to attend. That decision simply dealt with the application for compensation on the limited basis of the landlord’s obligation to repair under s 68 of the RTA. It did not embark upon a wider inquiry as to whether it was appropriate to make an order for damages, aside from damages arising from personal injury.
The power to award damages derives from s 110(1)(c) of the RTA in these terms:
110(1) The Tribunal may, on application by a party to a tenancy dispute (c) order a person to make a payment (which may include compensation) under this Act, a residential tenancy agreement,…. or for breach of this Act….
Of relevance in this respect is that s 65 of the RTA protects the quiet enjoyment, comfort and privacy of tenants, as a statutory term of all residential tenancy agreements. So far as relevant s 65 provides:
65—Quiet enjoyment
(1)         It is a term of a residential tenancy agreement that—
(a)     the tenant is entitled to quiet enjoyment of the premises without interruption by the landlord or a person claiming under the landlord or with superior title to the landlord's title; and
(b)     the landlord will not cause or permit an interference with the reasonable peace, comfort or privacy of the tenant in the tenant's use of the premises…
It can be seen that a breach of s 65 satisfies the prerequisites for making an order for payment or compensation, because there is both a potential breach of the RTA and a breach of the Tenancy Agreement itself.
What was claimed here was clearly capable of causing interference with the reasonable ‘peace, comfort or privacy of the tenant in the tenant’s use of the premises’, a consideration the Tribunal simply did not avert to: s65(1)(b) RTA. This was an error of law, albeit one made at the first rather than the second hearing.
Another error committed at the first hearing was this. Even though the appellants did not appear, the Tribunal had credible independent evidence before it that there was at least some not inconsequential damage and inconvenience caused. This means there was a sound evidential foundation for making some form of order for compensation. That evidence is summarised below.
Extension of time in which to appeal?
Ordinarily the failure to exercise statutory jurisdiction would entitle the appellants to an order quashing the decision and remitting the matter. However appeals from the decisions of the Residential Tenancy Tribunal under s 41(3) of the RTA must be brought within one month of the decision ‘unless the District Court allows an extension of time’.
The broad purpose lying behind the power to grant such an extension is to eliminate injustice a party might suffer by reason of the imposition of rigid time limits: Sola Optical Australia Pty Ltd v Mills.[6]As Bray CJ explained in Ulowski v Miller,[7] the factors relevant to granting extensions of time include the length of delay, the explanation for the delay, the hardship to the party concerned if the application is dismissed, prejudice to the party resisting an extension, as well as the conduct of the parties in the proceedings. Another consideration is the strength of the underlying merits: Jackamarra v Krakouer.[8]
[6] (1987) 163 CLR 628
[7] [1968] SASR 277 at 283
[8] (1998) 195 CLR 516
The second decision of the Tribunal was published on 27 September and yet the appeal to this court was not launched until 6 January 2012, just over three months. The explanation given was that they were not familiar with court procedures and needed assistance from a relation who was overseas before lodging the necessary papers.
As to the merits and the potential injustice to the appellants, it is difficult to gauge just how bad the situation was. It was evident from material produced at the time of both hearings that a good deal of damage was caused. At least 5 or 6 days passed before the problem was identified and fixed. It took another four or five days to install the dehumidifier in order to commence the drying process, which process took as long as two and a half months. A considerable volume of water must have gotten within the cavity walls, creating an unpleasant situation, but for just how long that pertained is unclear. In their original application the appellants claimed there was moisture in the whole apartment ‘like a steam room, that it was unbearable to live in it or sleep in, especially at a time when there was cold weather’.
The plumber who inspected the unit on 9 July noted the carpet was wet in the main bedroom, that there were stains on the ceiling in two bedrooms and in the lounge. He said that he took photographs and he recommended the roof be checked. Both Tribunals had the plumbers report before them, as they did a loss adjusters report. This read in material part:
We note your advice the tenant’s of the property have made representations to the Tenancies Tribunal over this matter, with regards to delays in determining the source of the damage, firstly we understand your client arranged the immediate installation of the dehumidifier as soon as the moisture problem presented, in effect this began treating the moisture problem before the source had been determined.
We note that prior to our involvement, Mott Property Services had been in attendance but were unable to isolate any particular leak in the plumbing.
Subsequently it was resolved the damage occurred as a result of a roof gutter overflowing back into the cavity wall, this water sitting within the cavity and soaking through effecting the bedroom ceiling and walls. We note that arrangements were then made to ensure the storm water system was fully functioning.
Property Maintenance Crew were appointed by our office and when they attended deemed the dehumidifier had fulfilled its function and arranged for its immediate removal, we note they suggest the unit may have been running needlessly for the previous 2-3 weeks.
With regards to the question of delay, as you are aware we scheduled an appointment with the tenant on the day our instructions were received 16/07/10; but when we attended found no-one home and unfortunately it was some days before another appointment could be rescheduled, nonetheless as indicated the dehumidifier was already progressively resolving the problem from its initial installation.
With regards to the consumption of electricity through the use of the dehumidifier, we confirm we have already advised the tenant’s son that we would happily recommend an appropriate reimbursement and we are arranging for Property Maintenance Crew to calculate the likely electricity consumption for the use of the dehumidifier for the period in question.
This summary of the evidence demonstrates there was a sound basis for an order for at least some compensation.
It is clear that the appellants have long maintained a grievance about this issue, even though they renewed the lease on 7 September 2010. The explanation for doing so is that they could not immediately find alternative premises to let.
Given that the appellants are unfamiliar with the procedures involved, have always desired to present and agitate their case, because there is independent evidence confirming that damage and inconvenience of less than a trivial and transitory nature occurred, together with the fact that both Tribunals fell into error, and whilst accepting that the respondents have a proper interest in bringing this drawn out saga to an end, it is on balance appropriate to grant an extension of time. Accordingly the appeal will be allowed and the matter remitted for rehearing before the Tribunal.
Conclusions and orders
The Tribunal will have to exercise for itself its discretion to consider whether it is appropriate to extend time in which to set aside the first order of 19 October 2010 and to determine whether there are proper grounds to do so. An important consideration in fulfilling that function would be the failure to exercise the jurisdiction conferred in each instance and the independent evidence supporting the appellants’ case. By the same token, the appellants should fully understand by now that they are required to be punctual.
The following orders are made accordingly:
1An extension of time in which to appeal to 6 January 2013 is granted.
2The appeal is allowed.
3The matter is remitted to the Residential Tenancies Tribunal for rehearing.
There will be no order as to costs: s 42G(2) District Court Act 1991 (SA).