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District Court 23 May 2013

New South Wales Land and Housing Corporation v Cain

[2013] NSWDC 68

Drugs
LANDLORD AND TENANT APPEAL FROM CTTT WHETHER S 91(1)(A) MANDATORY WHETHER EXERCISE OF DISCRETION ERRED

Citation: New South Wales Land and Housing Corporation v Cain [2013] NSWDC 68
Court: District Court of New South Wales
Date: 23 May 2013
Judge: Gibson DCJ

Background

The landlord, a social housing provider, held a residential tenancy agreement with the defendant tenant in relation to premises at Coogee. Police found substantial quantities of cannabis at the leased premises, including cannabis bud being dried in a specially fitted cabinet. The tenant was convicted of drug supply offences under the Drug Misuse and Trafficking Act 1985 (NSW) following a plea of guilty.

Rather than pursuing termination through the standard notice provisions of the Residential Tenancies Act 2010 (NSW), the landlord applied to the Consumer, Trader and Tenancy Tribunal ("CTTT") under s 91. That section provides a "fast track" pathway to termination where residential premises have been used for certain serious illegal purposes, including drug supply, and allows an order to take effect immediately without the usual notice periods.

The CTTT accepted that the tenant's conduct constituted "a very serious breach" of the tenancy agreement satisfying s 91(1)(a). However, it declined to make a termination order. Instead, citing the tenant's health and financial circumstances and the risk that termination might disrupt her participation in rehabilitation programmes ordered as part of her criminal sentencing, the Tribunal ordered the tenant to comply with the residential tenancy agreement. The landlord appealed to the District Court on the ground that the CTTT had erred in law.

  • Whether s 91(1)(a) of the Residential Tenancies Act 2010 (NSW) confers a mandatory obligation to make a termination order once the threshold condition is satisfied, or whether it confers a discretion to decline.
  • If a discretion exists, whether any such discretion extends to considering the tenant's personal, health, and financial circumstances.
  • Whether the CTTT erred in law by exercising its discretion (if any) to refuse termination on the basis of the tenant's rehabilitation prospects and personal hardship.
  • Whether the CTTT could properly take guidance from the criminal sentencing process and align its orders with the adjournment granted by the sentencing judge.

Decision

Gibson DCJ held that the CTTT erred in law by refusing to make a termination order once it was satisfied of the matters specified in s 91(1)(a). The Court found that s 91 imposes a mandatory obligation to make a termination order in those circumstances; the provision does not confer a broad discretion on the Tribunal to decline to act based on the tenant's personal circumstances.

On the question of discretion, the Court accepted that some limited discretion may exist under s 91, but found it is confined to matters directly relevant to the statutory criteria themselves, such as whether the proscribed use had been established and whether possession should take effect immediately. It does not extend to weighing the tenant's health, financial hardship, or participation in rehabilitation programmes as reasons to withhold termination altogether.

The Court further held that, even if a broader discretion were available, the CTTT's exercise of it was infected by legal error. The Tribunal took into account extraneous or irrelevant matters (the tenant's personal and health circumstances) and based critical inferences on no more than surmise. The highest the Tribunal could put the impact of termination was that it "may" hinder the tenant's rehabilitation, and the Tribunal's own findings actually contained material inconsistent with that inference. Additionally, the criminal sentencing process and the adjournment granted by Berman DCJ did not bind the CTTT or require it to synchronise its orders with the rehabilitation programme.

Gibson DCJ also noted in passing that the significant delay in hearing the CTTT application, caused by a belief that proceedings had to be stayed until a guilty plea was entered, appeared to undermine the remedial purpose of s 91. The Court flagged this as a matter that may warrant legislative attention, without expressing a concluded view.

Orders Made

  • Appeal allowed.
  • Order of the CTTT dated 19 November 2012 set aside.
  • Termination order made pursuant to s 91(1)(a) and (3) of the Residential Tenancies Act 2010, terminating the residential tenancy agreement with immediate effect.
  • Possession order made in favour of the landlord pursuant to s 91(1)(a) and (3), with immediate effect.
  • Orders (1) to (4) stayed for 28 days.
  • Exhibits returned.

Key Takeaways

  • Under s 91(1)(a) of the Residential Tenancies Act 2010 (NSW), once the CTTT is satisfied that residential premises have been used for the supply of a prohibited drug, the District Court held that a termination order is mandatory and cannot be withheld simply because termination may cause personal hardship to the tenant.

  • Any discretion available to the Tribunal under s 91 is narrow and is confined to questions directly bearing on the statutory threshold, such as whether the illegal use is established and the timing of any possession order.

  • A tenant's health, financial hardship, and participation in court-ordered rehabilitation programmes are not relevant considerations that can justify declining to make a termination order under s 91.

  • The existence of a criminal sentencing adjournment to allow rehabilitation does not bind the CTTT, and the Tribunal cannot use that process as a template for refusing or deferring a termination order that the Act requires.

  • Findings resting on no more than surmise, where the Tribunal's own reasons contained contrary material, constitute a legally flawed exercise of discretion sufficient to ground an appeal.

Legislation and Cases Referenced

Legislation:
- Residential Tenancies Act 2010 (NSW), ss 80, 82, 84, 85, 86, 87, 91, 115, 152
- Drug Misuse and Trafficking Act 1985 (NSW)
- Crimes (Sentencing Procedure) Act 1999 (NSW), s 11
- Interpretation Act 1987 (NSW), s 9(1)

Cases:
- House v The King (1936) 55 CLR 499
- Julius v Bishop of Oxford (1880) LR 5 AC 214
- Houssein v Under Secretary, Department of Industrial Relations and Technology (NSW) (1982) 148 CLR 88
- Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106
- Ward v Williams (1955) 92 CLR 496
- Deputy Commissioner of Taxation v Lincoln Industrial Cleaners Pty Ltd (1975) 2 NSWLR 499
- Howard v B Miles Womens Foundation Inc [2012] NSWSC 1173
- Lyford v Commonwealth Bank of Australia (1995) 130 ALR 267
- Owens v Australian Building Construction Employees' and Builders Labourers' Federation (1978) 46 FLR 16
- Mitchell v R (1996) 184 CLR 333
- Leach v R (2007) 230 CLR 1
- Lugg v Wright [1941] SASR 106