Does Section 122 Residential Tenancies Act, 1999 (NT) incorporate common law principles of remoteness?

Young v Chief Executive Officer (Housing) [2023] HCA 31 (1 November 2023)

Intro:-

This is an appeal from the Supreme Court of the Northern Territory

Facts:-

Ms Young was the tenant of residential premises at Ltyentye Apurte, also known as Santa Teresa, an Aboriginal community approximately 85 kilometres from Alice Springs. The Chief Executive Officer (Housing) ("the CEO"), a corporation sole established under the Housing Act 1982 (NT), was the landlord. For 68 months, the premises had no back door in the doorframe.

Ms Young applied to the Tribunal for an order under s 122(1) of the Act that the CEO compensate her for loss or damage she claimed to have suffered because of non-compliance by the CEO with the tenancy agreement. Her application included a claim to be compensated for loss or damage by way of distress and disappointment due to the insecurity she felt because of the CEO's failure to provide a back door in compliance with the term of the tenancy agreement imposed by s 49(1) of the Act.

Taking the view that an external door is not "a security device" within the meaning of s 49(1) of the Act, the Tribunal found no breach of the term of the tenancy agreement specified in that sub-section and on that basis dismissed the application for compensation for non-compliance with it.

On appeal on a question of law to the Supreme Court of the Northern Territory Blokland J set aside so much of the decision of the Tribunal as had dismissed the application for compensation for non-compliance and substituted an order that the CEO pay compensation to Ms Young in the sum of $10,200 in respect of loss or damage identified as "distress and disappointment due to the failure to provide a premises which was secure.

On further appeal to the Court of Appeal of the Supreme Court of the Northern Territory the order made by Blokland J that the CEO pay compensation to Ms Young was set aisde. The Court of Appeal construed s 122(1) of the Act as importing principles of remoteness that limit the assessment of damages for breach of contract at common law. As a result, those principles operated to exclude compensation for distress or disappointment arising from non-compliance with a term of the tenancy agreement other than in consequence of physical inconvenience

Issue:-

Did the Court of Appeal err in construing s 122 of the Act to import common law principles of remoteness?

Consideration:-

Section 122 relevantly provides:-

"(1) Subject to subsection (2), 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.

There is no dispute that the "loss or damage" to which reference is made in s 122(1) can extend to non-economic loss and can include non-economic loss in the form of disappointment or distress suffered by a landlord or a tenant as "a normal, rational reaction of an unimpaired mind". There is also no dispute that disappointment or distress of that nature is not "physical injury, pain or suffering" so that an order for compensation in respect of disappointment or distress of that nature is not precluded by s 122(5)(a).

Breach of an obligation made a term of a tenancy agreement, such as the obligation specified in s 49(1), would be remediable in the original jurisdiction of the Supreme Court either in an application for equitable relief or in an action for damages at common law. The assessment of damages in any such action at common law would be governed by common law principles of remoteness. The assessment of damages in any such action would also be governed by s 120, which operates to remove any doubt that common law principles about mitigation of loss or damage on breach of a contract are applicable to a breach of a tenancy agreement.

It is consonant with the legislative objective of ensuring that landlords and tenants are provided with suitable mechanisms for enforcing their rights under tenancy agreements to recognise that s 122 leaves such remedies as may be available to landlords and tenants at common law or in equity untouched and provides an additional mechanism by which landlords and tenants can obtain from the Tribunal statutory compensation the measure of which is provided by the Act itself. Double recovery is avoided by the requirement of s 122(3)(c) that any money that may have been recovered by way of compensation must be taken into account by the Tribunal in determining whether to order compensation under s 122(1).

Compensation in this case

The evident purpose of the obligation specified by s 49(1) of the Act to be a term of a tenancy agreement, with which the CEO as landlord failed to comply, is ensuring that premises occupied by a tenant for the purpose of residency are reasonably secure. For a tenant to be secure in the occupation of premises is for the tenant to reside there free from threat of harm or unwanted access. The feeling of insecurity which Ms Young experienced because of the landlord's failure to provide the residential premises with a back door was the obverse of the security which it was the purpose of that obligation to secure. The connection between the landlord's breach and the distress and disappointment suffered by Ms Young readily satisfied the causal connection required by the word "because" in s 122(1).

Whether or not the distress and disappointment found to have been suffered by Ms Young due to the failure of the CEO to provide the requisite security would have been compensable in an action for damages at common law, Ms Young's distress and disappointment was compensable on application to the Tribunal under s 122(1)(a) of the Act, subject to the Tribunal's consideration of the factors prescribed by s 122(3).

Order:-

The appeal be allowed.