McGinn v NSW Civil & Administrative Tribunal

1. [1]

   HIS HONOUR: On 29 November 2017, the second defendant, Pasquale Barilla, lodged an application in the Consumer and Commercial Division of the New South Wales Civil and Administrative Tribunal (“the Tribunal”). The second defendant sought, inter alia, an order for the payment of rental bond pursuant to s 175 of the Residential Tenancies Act 2010 (NSW) (“the Act”) from his landlord, the plaintiff in these proceedings, Sophia McGinn. The first defendant is the Tribunal and filed a submitting appearance in these proceedings.

2. [2]

   The Tribunal constituted by a Member, Mr J Livingston, ordered that the plaintiff pay to the second defendant $3,150 representing the amount of the rental bond of $3,400 paid by the second defendant with respect of residential premises in Ashfield, less an amount of $250 conceded by the second defendant with respect to cleaning (“the rental bond”) .

3. [3]

   An appeal was brought from that judgment essentially on the ground that the Tribunal lacked power to order payment of the rental bond under provisions of the Act relied upon by the Tribunal as constituting the basis for jurisdiction, namely, ss 175, 187(1)(c) and 188(c). The appeal was heard by an Appeal Panel constituted by Mr R C Titterton, Principal Member, and Dr J Lucy, Senior Member.

4. [4]

   The principal argument before the Appeal Panel was that the Tribunal lacked power to make orders as to the payment of rental bond in circumstances under s 175 of the Act where the rental bond had not been deposited with the Secretary of the Rental Bond Board. The Appeal Panel rejected that contention and alternatively found that power existed under s 187 of the Act: McGinn v Barilla [2018] NSWCATAP 85 at [40] and [41].

5. [5]

   The Appeal Panel determined, however, that the orders made by the Tribunal should be set aside and in lieu thereof made the following orders (at [81(2)]):

6. [6]

   By a summons filed 23 April 2018 the plaintiff brought an action for judicial review under s 69 of the Supreme Court Act 1970 (NSW) for prerogative and declaratory relief (which was amended, by leave, in court at the hearing of the application). The relief claimed was expressed in the summons, as amended, as follows:

   1. (1)

      An order in the nature of certiorari to remove the records of NSW Civil and Administrative Tribunal Notice of Appeal Application dismissed on 10 April 2018 and the orders made pursuant to s 175, s 187 and s 188 of the Residential Tenancy Act 2010 (NSW) (the Act) be quashed.

   2. (2)

      A declaration that the Tribunal has no jurisdiction to make orders in relation to rental bond when the bond cheque is not lodged with Rental Bond Authority.

   3. (3)

      A declaration that the determination by Principal Member Titterton and Senior Member Lucy that the Tribunal has jurisdiction to make orders in relation to rental bond when the bond cheque was not lodged with Rental Bond Authority is an error of law.

   4. (4)

      An order in the nature of prohibition restraining the first defendant from determining a rental bond dispute pursuant to s 175, s 187, and s 188 of the Act when the bond cheque is not lodged with Rental Bond Authority.

   5. (5)

      An order that the second defendant deliver a new bank cheque to the plaintiff in 7 days.

7. [7]

   The matter had been earlier fixed for hearing on 1 August 2018. That hearing was vacated by Wilson J.

8. [8]

   Her Honour ordered the plaintiff to pay reasonable costs incurred by the second defendant resulting from vacation of the hearing date. Her Honour further ordered that the proceedings are not to be listed before the Court for further mention or hearing on the application of the plaintiff until the costs had been paid by her. Upon the paying of those costs, the matter has been relisted before the Court.

Issues

1. [9]

   The gravamen of the plaintiff’s application for judicial review was that the Tribunal did not have jurisdiction to make orders for the payment of a rental bond in circumstances where no bond had been lodged with the Rental Bond Board; in particular, the Appeal Panel did not have power to direct the plaintiff to return the bank cheque to the second defendant.

2. [10]

   The plaintiff contended that the Appeal Panel erred in law in finding that the Tribunal had jurisdiction to make orders as to the payment of a rental bond which had not been deposited with the Secretary pursuant to s 175 of the Act or alternatively s 187 of that Act.

3. [11]

   It was accepted that the order of the Appeal Panel under challenge was expressed as follows (McGinn v Barilla at [81(2)]):

The Appeal Panel Decision

1. [12]

   After setting out the provisions of s 175 of the Act, the Tribunal gave the following reasoning for the finding of power (McGinn v Barilla at [23]-[39]):

2. [13]

   The Tribunal then explored the question of power under s 187 of the Act in the event that it was wrong as to the operation of s 175 (McGinn v Barilla at [41]-[43]) as follows:

Background Circumstances

1. [14]

   The Court had before it an affidavit of the plaintiff sworn 29 May 2018 and the second defendant affirmed 5 May 2018.

2. [15]

   The following facts and circumstances were primarily derived from uncontentious findings of fact found by the Tribunal (see McGinn v Barilla at [8]).

3. [16]

   The plaintiff and the second defendant entered into a residential tenancy agreement made on 13 October 2016 for a fixed term of 12 months with a commencing weekly rent of $850 increasing to $900 from 13 October 2016 and a rental bond of $3,400 to be paid by the second defendant (“the agreement”) for the premises at Ashfield (“the premises”).

4. [17]

   The agreement was not in evidence but was apparently prepared by a managing agent for the plaintiff.

5. [18]

   In June 2014, the second defendant paid the rental bond by a bank cheque delivered to the managing agent in the sum of $3,400 (made out to the “Rental Bond Board”). That amount represented four weeks’ rent and was the amount of money payable by a tenant as security against any failure by the tenant to comply with the terms of the residential tenancy agreement.

6. [19]

   About one month after making the agreement, the plaintiff discontinued with the services of the managing agent. Upon termination of its retainer, the managing agent provided the plaintiff with its file for the premises, which included the bank cheque. The managing agent had not lodged the rental bond with the Secretary as it was required to do so under s 162 of the Act.

7. [20]

   Upon receipt of the file, which included the bank cheque, the plaintiff did not lodge the bank cheque with the Rental Bond Services (as she was required to do under s 162 of the Act). The plaintiff contended that no lodgement was undertaken because she had not seen the bank cheque. The bank cheque subsequently went stale.

8. [21]

   On 16 November 2017, the second defendant gave vacant possession and claimed return of his rental bond.

9. [22]

   On 29 November 2017, the second defendant lodged an application in the Consumer and Commercial Division of the Tribunal. The second defendant sought, inter alia, an order regarding the payment of the rental bond (relying on s 175 of the Act). In relation to the rental bond, on his application to the Tribunal, the second defendant stated:

10. [23]

    On 18 December 2019, the Tribunal ordered the plaintiff to pay the second defendant $3,150. That amount represented the rental bond of $3,400 paid by the second defendant in respect of the premises, less an amount of $250 conceded by the second defendant in respect of cleaning. The plaintiff appealed the decision.

11. [24]

    On 19 March 2018, the plaintiff’s appeal against the 18 December 2019 decision was heard by the Appeal Panel.

12. [25]

    On 10 April 2018, the Appeal Panel made, inter alia, the following orders:

13. [26]

    In the result, the plaintiff was partially successful on her appeal, with the earlier order of the Tribunal requiring the plaintiff to pay the second defendant $3,150 being set aide, and in lieu thereof the Tribunal was ordered to return to the bank cheque to the second defendant: McGinn v Barilla at [57]. The second defendant was also directed to pay the plaintiff $250, which was earlier conceded as owed to the plaintiff for cleaning: McGinn v Barilla at [58]-[59].

14. [27]

    In April 2018, pursuant to order 3 above, the bank cheque was provided to the second defendant by the Tribunal (it appears that the Registrar was in possession of the cheque at the time of those proceedings). The second defendant returned the bank cheque to the Commonwealth Bank.

15. [28]

    The second defendant no longer has possession or control of the bank cheque although Ms McGinn contended in submissions (not supported by evidence), that the bank cheque had been cashed in favour of the second defendant.

16. [29]

    On 23 April 2018, the plaintiff filed the application before the Court as presently constituted, seeking judicial review (see at [6] above).

Course of the Proceedings

1. [30]

   On 8 May 2018, Button J dismissed an application for the second defendant for summary dismissal of the summons: Sophia McGinn v NSW Civil and Administrative Tribunal [2018] NSWSC 630.

2. [31]

   On 19 June 2018, the plaintiff filed a notice of motion seeking a default judgment for liquidated damages in the sum of $3,150. The matter was stood over for hearing on 1 August 2018, with the substantive matters, before Wilson J.

3. [32]

   On 1 August 2018, there was no appearance by Ms McGinn. Her Honour made the following orders in Chambers:

4. [33]

   The matter was next listed for directions before the Registrar on 8 February 2018. Registrar Bradford listed the matter for hearing on 18 March 2019 for an estimate of half a day.

5. [34]

   On 18 March 2019, the matter was heard by the Court as presently constituted.

SUBMISSIONS OF THE PARTIES

1. [35]

   The plaintiff appeared on her own account and the second defendant was represented by Mr Peter Collins, solicitor.

The Plaintiff’s Submissions

1. [36]

   In substance, the plaintiff contended that a literal reading of s 175 made clear that the Tribunal did not possess jurisdiction to make an order for the payment of the amount of rental bond if the rental bond had not been deposited with the Secretary. This was confirmed, it was submitted, by the terms of s 175(2).

2. [37]

   In an affidavit filed by the plaintiff on 7 July 2018, a submission was made as to the operation of ss 175 and 187 in the following terms:

3. [38]

   During oral submissions, the plaintiff contended that the Appeal Panel did not have jurisdiction to make the orders at [81(2)] of McGinn v Barilla, which were in the following terms:

4. [39]

   The plaintiff emphasised that s 187 was a general power which gave no jurisdiction in the absence of a power found elsewhere in the Act such as s 175.

The Second Defendant’s Submissions

1. [40]

   The second defendant made a written submission in the following terms:

2. [41]

   The second defendant also relied upon the provisions of s 187 of the Act as conferring jurisdiction.

The Legislative Provision

1. [42]

   Part 8 of the Act concerns “Rental bonds”. Division 1 is entitled “Preliminary” and concerns, inter alia, definitions and online rental bond service.

2. [43]

   A “rental bond” is defined in s 157 as meaning an amount of money paid or payable by the tenant or other person as security against any failure by a tenant to comply with the terms of a residential tenancy agreement (s 157). The tenant includes a former tenant. A residential tenancy agreement is defined in s 3 as being “see s 13”. Section 13(1) provides:

3. [44]

   Section 157A of the Act deals with online rental bond service. By s 157A(1) the Act provides that the Secretary may establish an online rental bond service for, inter alia, the deposit of the rental bond with the Secretary, the making of a claim for payment of a rental bond and the making of a payment of an amount of the rental bond.

4. [45]

   The Secretary is defined in s 3 of the Act as the Commissioner for Fair Trading, Department of Finance, Services and Innovation or if there is no person employed as the Commissioner, the Secretary of the Department of Finance, Services and Innovation.

5. [46]

   Division 2 of Pt 8 of the Act concerns the “Payment and deposit of rental bonds”.

6. [47]

   Section 159(1) provides as follows:

7. [48]

   Section 162 provides for the deposit of rental bonds.

8. [49]

   Section 162(1) provides:

9. [50]

   Division 3 of Part 8 concerns the “Release of rental bonds” and incorporates ss 163-176 of the Act. Section 163(1)-(3) provide as follows:

10. [51]

    Section 164 provides for the notice of a claim. Section 164(1), (2) and (3) provide as follows:

11. [52]

    Section 167 deals with payments of rental bonds where there is no dispute. Section 168 deals with disputed rental bond claims. Section 168 is extracted in full below:

12. [53]

    Section 169 provides as follows:

13. [54]

    Section 175 lies at the centre of one of the controversies in this matter. That provision, which is found in Div 3, is in the following terms:

14. [55]

    The Tribunal is defined in s 3 as meaning the Civil and Administrative Tribunal (NSW).

15. [56]

    Part 9 of Div 1 of the Act deals with the powers of the Tribunal. Section 187(1) provides as follows:

16. [57]

    Section 188 provides:

17. [58]

    Section 189 provides:

18. [59]

    Part 9 of Div 2 concerns power of the Tribunal relating to breaches of residential tenancy agreements.

19. [60]

    Section 190 provides:

Consideration

1. [61]

   The Act applies to residential tenancy agreements in respect of residential premises (see s 6 of the Act). A residential tenancy agreement is, inter alia, an agreement under which a person grants to another person for value a right to occupation of a residential premises for the purpose of use as a residence (s 13(1) of the Act).

2. [62]

   Part 2 deals with general provisions relating to such agreements and the terms of the same. Part 3 deals with the rights and obligations of landlords and tenants, including provisions concerning rent (and the regulation by the Tribunal in certain respects such as rent increases (s 41) or excessive rent (s 44)) and rights and limitations of occupation and the use of residential premises, the repair of premises and the searching and safety of residential premises.

3. [63]

   Part 4 deals with changes to the tenant and landlord and Part 5 with the termination of residential tenancy agreements including a provision dealing with disputes about termination (s 111). Part 6 deals with recovery of possession of premises and Pt 7 social housing tenancy agreement.

4. [64]

   It follows that the Act constitutes a comprehensive scheme of regulation of residential tenancy agreements and provides extensive powers to resolve disputes as to such arrangements by the Tribunal (see Pt 9).

5. [65]

   Part 8 Divs 2 and 3 provide for the payment, deposit of and the release of rental bonds. A rental bond means monies paid by a tenant as “security” against a failure by the tenant to comply with a residential tenancy agreement.

6. [66]

   The rental bond must be deposited with the Secretary within a specified period (s 162(1)). A breach of that provision may result in a civil penalty.

7. [67]

   The release of rental bond may arise from claims by tenants or landlords (or both) (s 163(1)). The Secretary may make payment of a claim where there is no dispute (s 167) or where there is a dispute as to a claim (s 168).

8. [68]

   The power of the Secretary to make payment of a claim under s 168 is confined to circumstances where the Secretary holds the rental bond. This follows from s 168(1) of the Act, which provides that the provision only applies if the Secretary is notified in writing in the claim notice period (as defined in s 157) or “before payment for a rental bond”. The claim notice relates to rental bonds held by the Secretary (see s 164). In such cases the Secretary may make payment of the claim, inter alia, in accordance with an order of the Tribunal. However, no such confinement exists in relation to an appeal against a Tribunal or court affecting the payment of a rental bond as the provisions of s 169 provide that such an appeal may be brought “even though the Secretary has paid an amount of rental bond under the Division”.

9. [69]

   The construction of a 175(1) should be undertaken by its text, the immediate content within the provision, namely, s 175(2), and in the wider context: see Malvina Park Pty Ltd v Johnson [2019] NSWSC 1490 (“Malvina”) at [61]-[64], [66].

10. [70]

    The relevant principles of statutory construction were summarised in Malvina (at [61]-[64], [66]) and are extracted below:

11. [71]

    Section 175(1) contains no limitation of the kind contended for by the plaintiff, that is, power is confined to the making of an order with respect to rental bonds held by the Secretary. Nor is such an implication available when the provision is considered in context.

12. [72]

    Section 175(2) expressly contemplates that an order may be made whether or not the rental bond “has been paid by the Secretary”. Plainly the provision contemplates the resolution of rental bond disputes when the Tribunal adjudicates upon a claim in circumstances where rental bond amounts previously held by the Secretary are no longer held by the Secretary.

13. [73]

    Further, in the absence of an express limitation (and there is none), on a purposive construction, the legislation should not be taken to have limited the Tribunal’s powers to circumstances where the Secretary is in possession of the rental bond because a landlord had not deposited the rental bond in accordance with the Act.

14. [74]

    Any such a construction would be antithetical to the purposes of the Act. Part 8 regulates the taking of securities by means of restraint upon the amount of security taken and the requirement to deposit such bond with an independent agency so that at the end of tenancies claims as to such bond may be properly and securely managed particularly given the monies constitute no more than a security. The failure to make such deposits are penalised. The curtailment of the Tribunal’s powers to resolve disputes as to bonds where the landlord has failed to deposit the rental bond and in accordance with the Act would undermine in a significant way that scheme of security protection and regulation.

15. [75]

    It is unnecessary in these circumstances to decide the scope of the power under s 187. It was accepted by the plaintiff that the Tribunal would have the power to make the orders it did under that provision, but only if power existed under s 175 of the Act (it being contended that s 187 was only facilitative). No party raised an issue as to the power to make an order that there be forwarded a bank cheque. (It may be noted that the “standard form residential tenancy agreement” in Sch 1 of the Residential Tenancies Regulation 2010 (NSW), provides for payment of rent (being “the amount payable by a tenant under a residential tenancy agreement for the right to occupy premises for a period of the agreement”, s 3 of the Act) by means of cash, cheque or into a bank account nominated by the landlord. Further, it is stipulated that “the landlord or landlord’s agent must permit the tenant to pay the rent by at least one means for which the tenant does not incur a cost (other than bank or other account fees usually payable for the tenant’s transactions)”. A rental bond is “an amount of money paid or payable by the tenant or another person as security…” (s 157 of the Act). Therefore, a bank cheque is effectively a form of currency and, in the absence of argument, there is no reason to consider that the Tribunal could not make the order).

16. [76]

    Lastly, the remedies sought by the plaintiff are discretionary. The grant of relief either by way of prohibition or certiorari is discretionary: Lazarus v Director of Public Prosecutions (NSW) [2015] NSWSC 426 at [20] and [95] (per Garling J); see also Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57 at [43]-[60] (per Gaudron and Gummow JJ). So too is declaratory relief.

17. [77]

    The bank cheque has been returned to the Commonwealth Bank of Australia. The instrument was spent. It is said by the plaintiff that the second defendant received the value of the cheque but there is no evidence of the same. It is difficult to conceive in those circumstances how there may be any utility in the orders sought by the plaintiff unless an additional party was joined.

18. [78]

    The summons is dismissed.

Costs

1. [79]

   In a handwritten document entitled “Submissions for Second Defendant” dated 8 May 2018 (Tab 4 of the Court Book filed on 11 July 2018), the solicitor for the second defendant intimated that if successful on the application resisting the summons, indemnity costs may be sought by his client. It may be noted that no reference was made to those submissions during the course of the proceedings, but rather reliance was placed upon a written submission dated 30 July 2018 that was produced at the hearing. By that submission, the second defendant noted an intention to put further submissions as to costs. Whilst it is evident that an order for costs should be made in favour of the second defendant on an ordinary basis, given his success in having the summons dismissed, it is not clear why the second defendant should have indemnity costs.

2. [80]

   In the event that the Court receives an application for indemnity costs from the second defendant, with accompanying submissions and evidence, strictly within 7 days of this judgment, costs will be reserved and a program fixed to hear that application. In the absence of any application of that kind made within that time frame, the Court would otherwise propose to make orders for costs in favour of the second defendant on the ordinary basis.

Order

1. [81]

   The Court makes the following orders:

   1. (1)

      The summons filed 23 April 2018 is dismissed.

   2. (2)

      Any application for indemnity costs by the second defendant must be filed and served, together with written submissions and evidence, within 7 days of the publication of this judgment.

   3. (3)

      If an application is received in accordance with (2) above, costs will be reserved and a program fixed to hear that application.

   4. (4)

      In the absence of an application in accordance with (2) above, the plaintiff shall pay the costs of the second defendant of the proceedings as agreed or, in default, as assessed.