Ainscow v Koulocheris & Koulocheris

[2013] SADC 137

DISTRICT COURT OF SOUTH AUSTRALIA

(District Court Administrative Appeals Tribunal: Appeal Under Residential Tenancies Act 1995)

AINSCOW v KOULOCHERIS & KOULOCHERIS

[2013] SADC 137

Judgment of His Honour Judge Tilmouth

18 October 2013

LANDLORD AND TENANT - CREATION OF RELATIONSHIP - OTHER CASES

Private arrangement for the occupation of a home held not to amount to a 'residential tenancy' within the meaning of the Residential Tenancies Act, and thus could not found the jurisdiction of the Residential Tenancies Tribunal to make an order giving up vacant possession.

Residential Tenancies Act 1995 (SA) Part 4, s 3(1), s 5(1)(d); District Court Act 1991 (SA) s 42E(1), s 42H(2), referred to.
Chase v Chase [2011] SADC 43, applied.

AINSCOW v KOULOCHERIS & KOULOCHERIS
[2013] SADC 137

The Appeal

1. Jayne Ainscow was the owner and occupier for some eight years of property situated at 14 Martin Road Willunga South in the McLaren Vale.[1]  She sold it in December 2012 to brothers Stefan and Nicolas Koulocheris, acquaintances of hers.  They obtained an order on 23 September 2013 from the Residential Tenancies Tribunal requiring her to vacate the premises by 11 am on Tuesday 8 October 2013.  That order was stayed by this Court pending the outcome of her appeal against that order.  The issue is whether the Residential Tenancies Tribunal had jurisdiction in the matter.

   [1]    Comprised in CT Vol 5931 Folio 643.

   Background

2. It appears that Ms Ainscow fell into financial difficulty. She approached a friend who agreed to assist her.  Her friend approached his sons, who eventually agreed to purchase the property with the intention that she could buy it back from them once she was in a better financial position.[2]  Ms Ainscow told the court:[3]

   … there was no talk about me losing the property, I was going to give [them] $5,000 for doing it for me as a favour and pay all the interest that may have occurred … because I was going to buy it back.

   Hence the arrangement was that the property would be reassigned once she recovered from her financial problems.  The brothers raised a substantial mortgage for the purchase.  In the meantime there was an imprecise agreement that she would meet their obligations under the mortgage, possibly to the extent of something in the order of $1,800-$2,000 per month.

   [2]    T3.8-10, 8/10/13.

   [3]    T3.26-.31, 10/10/13.

3. A settlement statement dated 5 December 2012 produced during the appeal, discloses a sale price of $505,000.00, with vendor finance of $133,789.97.  Thus whatever the nature of the legal relationship that may have been created by these arrangements, she retained a considerable equity in the property.  The conveyance was effected by contract on a standard Real Estate Institute of South Australia pro forma.  Ms Ainscow also produced a copy of a loan agreement during the appeal, apparently executed by the parties at about the same time (the precise date is not specified).  The Koulocheris brothers were designated therein as the borrowers of the vendor finance and Ms Ainscow the lender.  The agreement contains this item in the schedule thereto:

   Item 10 – monthly instalments of the loan

   The borrower is not obliged to make monthly instalment payments to the lender on the basis that the Moneys Owing shall be repaid as mutually agreed between the parties.

4. The validity of this agreement appears to be in dispute, although on the face of it was duly executed by the parties, witnessed by either a financial advisor of the respondents, or a land broker engaged by the appellant.  The above term serves to illustrate however the flexible nature of the arrangements and that Ms Ainscow assumed primary responsibility for the mortgage.

   Proceedings before the Tribunal

5. The matter came before the Residential Tenancies Tribunal on an application for an order for ‘vacant possession of property’. The grounds of the application were specified as ‘tenant is still residing at the premises’. There was no residential tenancy or lease agreement of any kind. None of the mutual rights and obligations contemplated by Part 4 of the Residential Tenancies Act 1995 (SA) were complied with.

6. After hearing the parties the Tribunal member made the above order.  In amended reasons dated 23 September 2013, the tenancy was said to have commenced on 6 December 2012, at a rent of $2,000 per month.

7. The operative portions of the decision were as follows:

   At the hearing the landlord’s agent state that they took over management of the tenancy from the landlord in June 2013. They also advised that the tenant has made no rental payments since the tenancy began on the 16^th of December 2012. However the landlord is merely seeking possession of the premises.

   The tenant advised the above evidence is not correct in that they claim they have made rental payments in the vicinity $8,000.00. They also advised that the landlord still owes approximately $135,000.00 of the purchase price of the property as the tenant claims to have formally owned the property. Furthermore the tenant advised the landlord has subsequently entered a further contract for the sale of the residential premises back to the tenant.

   Both parties agreed no security bond is held and no written lease exists in this matter.

   I have considered all the evidence and have decided the tenant must move out of the premises on Tuesday the 8^th of October 2013. Providing the tenant 2 weeks to vacate the premises will also provide them with time to pursue other issues disused above.

8. It can be seen that no examination was undertaken of the precise nature of the relationship between the parties and that no consideration was given to whether or not those arrangements amounted to a ‘residential tenancy’ under the Residential Tenancies Act.  Indeed no findings of fact were made as to that question.

   The Appeal

9. The further materials referred to earlier were received on the appeal pursuant to s 42E(1) of the District Court Act 1991 (SA). This situation arose because it became quite apparent that there was an unusual relationship between the parties of an imprecise nature. It emerged that the underlying basis of the transaction involving the sale of the property was a loan to Ms Ainscow. The respondents were friends who agreed to lend money to assist her at a time of financial difficulty. They settled upon the refinancing device, whereby the subject property was sold to them and used as a security by way of a mortgage that was to be discharged by her. The agreement was that eventually the property would be resold to her once she recovered financially.

10. In the meantime she remained in possession and carried on with its use as if she was the legal owner. Whether it was intended that she should service the mortgage at a fixed rate per month or not, is quite unclear. But it is clear that the nature of the arrangement was that she would indemnify them for the cost of servicing the mortgage. Whether the repayments by her were at times spoken of as ‘rent’ or not, there was decidedly no formal ‘agreement … under which a person grants another person, for valuable consideration, a right … to occupy premises for the purposes of residence’, within the meaning of s 3(1) of the Residential Tenancies Act.

11. As I pointed out in Chase v Chase[4] not all agreements giving rights of occupancy even when valuable consideration is involved, amount to Residential Tenancies falling within this definition.  I take the liberty to repeat what I wrote in that case.

    Not all agreements granting rights of occupancy to residential premises for valuable consideration fall within the definition of residential tenancies. There might be a myriad of domestic arrangements between families and friends over residences, where consideration of some kind is involved but not for one moment intended to attract the operation of the Residential Tenancies Act. This is fundamentally because there is no underlying relationship of landlord and tenant, so that no more than a licence to occupy is created.

    In any case the arrangement falls outside the definition of a Residential Tenancy within the meaning of s 5(1)(d) of the Residential Tenancies Act, as it merely amounts to an agreement conferring a right to occupy residential premises under which no rent is payable.

    [4] [2011] SADC 43.

    Conclusion

12. The circumstances of this case are that there was no formal Residential Tenancy at all.  Rather there was an informal arrangement to assist a friend in financial trouble, without the intention of creating residential tenancy obligations or rights.  As mentioned, what was payable was the obligation of the respondents under the mortgage by way of an agreement in the nature of an indemnity.

13. That being so, this was no Residential Tenancy arrangement.  The Tribunal therefore lacked the jurisdiction to hear the application for vacant possession.  The rights and responsibilities of the respective parties, whatever they might be, remain enforceable under general civil law and in equity, but they are not such as to give rise to the fundamental underlying relationship of landlord and tenant.  Nothing in these conclusions however, should be seen as relieving Ms Ainscow of the obligation to make repayments under the mortgage to the extent that she has agreed to do so with the respondents.

    Orders

14. It must follow that the appeal is allowed, the order of the Tribunal requiring Ms Ainscow to give up vacant possession is set aside and the application thereof filed with the Residential Tenancies Tribunal is dismissed. There will be no order as to costs: s 42H(2) District Court Act.