Compensation awarded to tenant who experienced psychological inconvenience caused by premises’ lack of security

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

Summary

In the case of Young v Chief Executive Officer (Housing) [2023] HCA 31, the High Court allowed an appeal from the Court of Appeal of the Northern Territory Supreme Court, which concerned the Civil and Administrative Tribunal of the Northern Territory’s power under section 122 of the Residential Tenancies Act 1999 (NT) (Act). Ultimately, the High Court held that statutory compensation under this section is an alternative and more accessible remedy to common law damages for breach of a tenancy agreement, and that the Tribunal was empowered to compensate Ms Young for her distress and disappointment. The matter was remitted to the Court of Appeal to determine the appropriate quantum of the compensation order.

Facts

This case was brought by Ms Kwementyaye Young, an elderly First Nations woman living in residential premises in the Aboriginal community of Ltyentye Apurte - more commonly known as Santa Teresa. Ms Young’s tenancy at the premises began on 13 November 2011.

The landlord of the premises was the Chief Executive Officer (Housing) (the CEO). The written form tenancy agreement between the CEO and Ms Young was the standard form prescribed tenancy agreement contained within schedule 2 of the Residential Tenancies Regulations 2000 (NT) (Agreement).

Section 49 of the Act provides 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.

Ms Young’s premises did not have a back door and the CEO failed to provide Ms Young with a back door for over 5 years. Ms Young installed a mesh-steel door, but it did not provide sufficient security for the premises, leaving Ms Young feeling vulnerable to animal and human intrusions.

Section 122 of the Act states that:

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 …

Ms Young made an application for compensation under section 122 of the Act, claiming that the CEO had failed to comply with section 49 of the Act by not installing a back door to the premises. As a result, Ms Young alleged that she suffered loss and damage and sought compensation for the distress and disappointment she felt by not having a back door.

The Tribunal dismissed the application on the grounds that the Agreement had not been breached as the external door was not a “security device” within the meaning of section 49(1) of the Act. On appeal to the Supreme Court of the Northern Territory, the Judge set aside most of the Tribunal’s decision after the CEO conceded that:

• the door was a security device within the meaning of section 49(1) of the Act;

• it was necessary to have a back door to ensure the premises was reasonably secure; and

• they did not comply with the terms of the Agreement.

The Judge ordered that compensation of $10,200 be paid to Ms Young by the CEO for her loss and damage in the form of “distress and disappointment” for not having premises secured by a back door.

On appeal to the Court of Appeal of the Supreme Court of the Northern Territory, the majority of the Court set aside the order for compensation made by the Supreme Court, stating that the principle of remoteness should be applied when interpreting section 122(1) and assessing damages for breach of contract. Consequently, compensation for loss or damages would only be available for those who suffer physical inconvenience as opposed to mental inconvenience such as distress and disappointment.

Special leave to the High Court of Australia was sought by Ms Young to determine:

• whether the Court of Appeal erred in construing that section 122 of the Act applied the common law principles of remoteness; and

• if not, whether the Court of Appeal erred in their application of these principles of remoteness.

Decision

The High Court allowed Ms Young’s appeal, with the reasons provided by the majority and minority being outlined below.

The majority of the High Court (Keifel CJ, Gageler and Gleeson JJ) found that the Court of Appeal erred in their interpretation of section 122 of the Act, and that Ms Young’s distress and disappointment was compensable by the Tribunal subject to the satisfaction of the factors detailed in section 122(3). Accordingly, their view was that section 122 did not import the common law principles of remoteness.

In making orders for compensation under section 122 of the Act, the majority highlighted that the Tribunal was required to determine the measure of compensation which aligns with both the purposes of the Act and the justice and equity of the case, whilst in parallel considering the overarching purpose of the obligation the landlord failed to comply with (in this case, section 49), along with the considerations outlined in section 122(3).

It was established that the primary purpose of section 49 of the Act is to impose an obligation on landlords to ensure that premises occupied by a tenant are reasonably secure.

The majority accepted the CEO’s argument that a causal connection was required to be established between a breach of the Agreement and the compensable loss and damage. However, in considering the construction of section 122 of the Act, the majority ruled that the connection between the CEO’s breach and the distress and disappointment suffered by Ms Young readily satisfied the causal connection required by the term “because” in s122(1).

While the minority (Gordon and Edelman JJ) also allowed Ms Young’s appeal, their reasoning for doing so differed from that of the majority.

Where the loss or damage was caused by the breach, there would be limits on recovering compensation under section 122 of the Act including the limitations contained within section 49 and common law principles of contract, including remoteness.

However, in response to the second issue in question, they cited the case of Baltic Shipping Co v Dillon (1993) 16 CLR 344 in deciding that the availability of compensation under section 122 is not limited to physical inconvenience, but also to psychological inconvenience such as the distress and disappointment experienced by Ms Young.

Commentary

This decision has implications for both landlords and tenants in the public housing sector. It clarifies the nature and scope of the CEO’s duty to provide a safe and secure premises to their tenants, as well as the nature of the loss and damages that are compensable if the CEO fails to do so. For tenants, it highlights their right to live in a safe and secure premises, and the potential for tenants to seek compensation under similar tenancy provisions if they suffer mental and psychological harm.

Authored by: Garth Tinsley and Jordan Islip from Clyde & Co.