COMMISSIONER FOR SOCIAL HOUSING IN THE ACT & HIGGINS (Residential Tenancies)

[2013] ACAT 26

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COMMISSIONER FOR SOCIAL HOUSING IN THE ACT & HIGGINS (Residential Tenancies) [2013] ACAT 26

RT 12/803

Catchwords:             RESIDENTIAL TENANCIES – application for termination and possession order - non-payment of rent - whether Notice to Remedy and Notice to Vacate were served – whether Notice to Remedy was ‘spent’ – issue of estoppel by conduct –whether conditional termination and possession order could require payment of part of rental arrears – unconditional termination and possession order

List of Legislation:    Residential Tenancies Act 1997, ss 42 and 49

List of Cases:            Commissioner of Housing v Smith [1995] ACTSC 17

Eastman v Commissioner for Social Housing

[2010] ACTSC 71

Minister for Immigration and Ethnic Affairs v Kurtovic

[1990] FCA 22; (1990) 21 FCR 193

List of Texts/Papers: Community Law Reform Committee of the ACT, Private
Residential Tenancy Law, Report # 8

Tribunal:                  Ms Mary-Therese Daniel, Member

Date of Orders:  23 April 2013

Date of Reasons for Decision:       23 April 2013

ACT CIVIL &   )
ADMINISTRATIVE TRIBUNAL )  RT 12/ 803

TERMINATION AND POSSESSION ORDER

Between:The Commissioner for Social Housing in the ACT 

{Applicant Lessor}

And:          John Higgins 

{Respondent Tenant}

Tribunal:Ms. Mary-Therese Daniel, Member

Premises:

TAKE NOTICE that on Tuesday, 23 April 2013, the ACT Civil & Administrative Tribunal, made the following ORDERS:

1. The residential tenancy agreement is terminated at 5:00pm on Tuesday, 7 May 2013.

2. The tenant must vacate the premises on or before 5:00pm on Tuesday, 7 May 2013.

1. This Order has effect as a warrant for eviction.

   4. All Officers of the Australian Federal Police are hereby authorised to take appropriate action to evict the tenant from the premises upon the giving of two days notice in accordance with subsection 40(1) of the Residential Tenancies Act 1997, with such assistance as is necessary and reasonable.

It is noted that pursuant to Regulation 4A(a) of the Residential Tenancies Regulation 1998 it is appropriate for a police officer to enter the premises (by force if necessary) and physically remove a person from the premises between 8 am and 6 pm from Monday to Thursday, other than on a public holiday.                  . 

1. The tenant is to provide the Tribunal with his/her address for service of future notices and orders in these proceedings by 7 May 2013.

2. Liberty to relist the matter within 28 days of the lessor obtaining possession of the premises, for hearing of any claims for compensation and an order quantifing the rental arrears payable.

Ms. Mary-Therese Daniel
Member
ACT Civil & Administrative Tribunal

REASONS FOR DECISION

1. This matter consists of an application by the Commissioner for Social Housing in the ACT (applicant/lessor) against Mr John Higgins (respondent/tenant) for termination of a tenancy agreement on the basis of rental arrears. 

Factual background

1. The bare facts of the matter are as follows.

2. On 27 April 2010, the respondent entered into a tenancy agreement with the applicant. 

3. In early June 2011, the respondent tenant ceased paying rent. 

4. On 20 July 2011, a Notice to Remedy for arrears of $523.01 was served upon the respondent.  That Notice was not complied with and on 24 August 2011, a Notice to Vacate was served requiring the tenant to vacate the premises by 9 September 2011.  The tenant did not vacate the premises, neither did he commence paying rent.

5. On 20 January 2012, the respondent completed a Centrepay deduction form which authorised the rent (then $146.40 per fortnight) plus an additional $30 to be paid directly from Centrelink to the applicant.  The following payments then occurred:

31 January 2012	$176.40
14 February 2012	$40.50 (at this time the rent increased to $149.30 per fortnight
28 February 2012	$149.30
13 March 2012	$179.30
27 March 2012	$179.30
10 April 2012	$179.30

1. On 10 April 2012, the applicant issued a further Notice to Vacate, also relying on failure to comply with the Notice to Remedy of 20 July 2011.  The arrears at that time amounted to $2447.91.

2. The respondent tenant made a further three payments towards rent and arrears:

12 April 2012	$12.81
26 April 2012	$64.04
22 May 2012	$179.30

From 23 May 2012 until 6 February 2013, the tenant did not make any payments.

History of the proceedings

1. The applicant filed the current application for a termination and possession order under section 49 of the Residential Tenancies Act 1997 (Act) on 23 July 2012. At this time the arrears amounted to $3057.56.

2. The matter was listed for hearing on 9 August 2012, and notice of the date and time of the hearing was sent to both parties by post.  When the matter came before the Tribunal for hearing on 9 August 2012 there was no appearance by or on behalf of the respondent tenant.  At the request of the applicant, I adjourned the matter to 30 August 2012 to allow contact to be made with the respondent.

3. On 30 August 2012, the matter came again before me, and both parties were present. At that time the arrears amounted to $3506.86. There had been no payments of rent by the respondent since 22 May 2012. The respondent advised that he had had difficulties with his Centrelink payments. The applicant’s representative outlined the basis of the application, and indicated that the applicant would not oppose the Tribunal exercising discretion under to make a conditional termination and possession order under section 49(4) of the Act, if that was considered appropriate. I adjourned the matter to 11 October 2012 to give the respondent opportunity to demonstrate that he was able to make regular payments of rent, as this would be relevant for the exercise of discretion to make a conditional termination and possession order.

4. When the matter was called on 11 October 2012 the respondent tenant did not appear.  At the request of the applicant, which at this stage still sought a conditional termination and possession order, I again adjourned the matter, this time to 31 October 2012.

5. On 31 October 2012 both parties attended the Tribunal. The respondent indicated that his Centrelink issues had been sorted out, and that as of the next Tuesday he could pay his rent and an extra $25 per week. An updated rental account was tendered which demonstrated that there had been no rent payments during the time the proceedings had been on foot. The arrears now amounted to some $4181.86, which at $25 extra per week would take more than 3 years to pay off. I cautioned the parties that I was troubled by the length of time it would take to pay off the debt, and the likelihood that the tenant would be able to comply with an order of such length. I indicated I would require submissions on the next occasion on the length of the Order given the requirements of section 42 and section 49(3) of the Act.

6. When the matter came before me on 16 January 2012 there was no appearance by or on behalf of the respondent.  An updated rental account was tendered which indicated that, notwithstanding his assurances on 31 October 2012, the respondent had not made any payments of rent or arrears during the adjournment period.  The arrears at this stage were $5006.86.  The applicant indicated that it now sought an unconditional termination and possession order. 

7. Given the requirements of natural justice, I was unable to proceed to determine the application for an unconditional termination and possession order on 16 January 2013.  The proceedings to that time had been put on the basis that only a conditional termination and possession order was being sought, and I was not satisfied that the respondent – given the tenor of the proceedings on 31 October 2012 – was properly on notice that an unconditional order would be sought if he failed to attend the hearing.  I adjourned the proceedings for a week to allow the applicant to notify the respondent in writing that an unconditional termination and possession order was now sought.

8. The matter next came before me on 23 January 2012.  The respondent now had assistance from Mr Emerson-Elliott of the Welfare Rights and Legal Centre.  I outlined the above history of the proceedings to Mr Emerson-Elliott, and took into evidence a further updated rental account which demonstrated that the arrears were now $5081.86, and that there had not been a payment of rent or arrears by the respondent.  Because the respondent’s representative had only just been briefed, I adjourned the matter to 6 February 2012 to enable him to be fully instructed, and in a position to conduct a full hearing on that day.

The evidence and issues at hearing

1. Prior to the hearing,   the respondent’s representative filed with the Tribunal a copy of a letter that had been sent to the applicant’s representative, which outlined four deficiencies with the Commissioner’s case, that would be put in issue at the hearing.  These were:

   1.Lack of evidence of service of the Notice to Remedy

   2.Lack of evidence that the Notice to Remedy had not been complied with

   3.Undue lapse of time between service of the Notice to Remedy and service of the Notice to Vacate (making the Notice to Remedy ‘spent’ for legal purposes and therefore unable to support the Notice to Vacate)

   4.No evidence that the Notice to Vacate had been served upon the respondent

2. The issue of lack of service of Notices was curiously phrased in terms of there being a lack of evidence of service.  The respondent had not, at any point in the proceedings to date, indicated to the Tribunal that he had not received these notices.

3. The applicant filed a statement of service by post of each of the Notices.  The applicant also filed a complete copy of the rental account from 30 April 2010 to 27 January 2012.  This demonstrated that between 20 July 2011 when the Notice to Remedy was served, and 10 April 2012 when the second Notice to Vacate was served, the account was never brought into credit. 

4. At the hearing on 6 February 2013 it was confirmed that the issues of service of the Notices and non-compliance with the Notice to Remedy were not pressed by the respondent.  However, the issue of the Notice to Remedy being legally ‘spent’ was to be pursued.

5. The applicant did not call any witnesses to give evidence at the hearing, but relied upon the documents tendered to date.

6. Prior to the hearing Mr Emerson-Elliott on behalf of the respondent filed comprehensive submissions on the length of a conditional termination and possession order, and a statutory declaration of the respondent made 29 January 2013.  In this declaration the respondent explained the reasons why rent payments had stopped in May 2012, and that he had failed to sign a new Centrepay deduction authority in December 2012 because he went to Sydney to live with his mother for a month and under her supervision have contact with his children.   He explained his desire to preserve his tenancy so that he could have contact visits in Canberra with his children, supervised by his father.  He attested that he now had signed the papers for his Centrepay rent deduction (the previous week).  He acknowledged he had not stood by the assurances he had given at the hearing on 31 October 2012, and expressed his disappointment with himself at this failure. 

7. At the hearing on 6 February 2013, the respondent was asked questions confirming the matters set out in his statutory declaration.  The respondent also provided information about the circumstances which had led to his failure to pay rent.  He explained that he had a history of substance abuse, which he was now working to address through drug and alcohol counselling and mental health counselling.  He hoped to obtain a Naltrexone implant in Sydney when he could save the money for that procedure.

8. He explained that he was unaware of the abrupt ceasing of his rent payments in June 2011, and that he did not realise that he was not paying rent until a visit from his Housing Manager in January 2012, as a result of which he signed a Centrepay deduction form. 

9. He explained that he can basically read and write, but has ‘a paranoia’ about opening mail and so tends not to open mail.  This has led to him missing Centrelink appointments, until recently when an arrangement to send him reminders by text was put in place.  He has no difficulty reading text messages.

10. He explained he had his Centrelink payments cut off in May 2012 due to an altercation, that there were then several missed appointments, for various reasons, until his benefits were reinstated before he went to Sydney in mid December 2012.  He was unable to explain why he did not execute a Centrepay deduction form as he had foreshadowed at the hearing on 31 October 2012, and he was unable to account for anything he had done in the month of November.

11. He said that he had on 6 February 2013 made a first payment of $200 towards rent and arrears.  He undertook to continue to pay his rent every fortnight as it fell due, plus a sum every fortnight towards the arrears.  He agreed with the proposition put by Mr Emerson-Elliott that he was determined that this arrangement would remain in place.

12. The respondent was asked questions about the circumstances under which he signed the Centrepay deduction form on 20 January 2012.  He was unable to recall in any detail the discussions he had with the Housing officer at the time of signing this document.  He could not recall any specific representation made to him at the time of signing, other than that ‘everything would be ok’.  His evidence of his state of mind at the time of signing the form, despite questioning, remained imprecise and vague.  He at least knew at the time that the form was to cover payment of both rent and arrears.  It is to the respondent’s credit that he did not assert a clarity of recollection that he did not possess.  The answers to these questions raised for the first time the question of whether the applicant was estopped from taking action.

13. The Centrepay deduction form of 20 January 2012 was admitted into evidence.  This indicated that the rent plus an additional $30 was to be paid each fortnight. 

14. At the conclusion of the hearing, I reserved the decision to allow the parties opportunity to take instructions and, if necessary, file submissions addressing the fresh material.  As the applicant was unable to verify whether or not a payment of rent and arrears had been made that day, I requested that the applicant file an updated rental account.

15. The applicant’s submissions were filed on 22 February 2013, and on 27 February 2013 an updated rental account was filed.  This demonstrated that the respondent had made two payments on the rental account, one payment of $200 as advised on 6 February 2013, and one of $45 on 19 February 2013. 

16. On 4 March 2013, the respondent filed submissions in reply to the applicant, in which estoppel was raised formally.  On 12 March 2013 the applicant filed additional submissions in relation to the estoppel argument.  On 12 March 2013 the respondent’s representative by email made 2 further points.

The question of the Notice to Remedy being ‘spent’

1. It is convenient to first address the respondent’s novel argument that the Notice to Remedy was ‘legally spent’.  

2. The Act requires that, before the Tribunal can consider whether or not to make a termination and possession order under section 49, the Tribunal must first be satisfied that a Notice to Vacate has been served in accordance with the requirements of the legislation. One of those requirements is that the service of the Notice to Vacate was preceded by the service of a Notice to Remedy, which was not complied with[1].  If the Notice to Remedy in this case was in some way ‘spent’ or incapable of providing the basis for a Notice to Vacate, proceedings relying on any such Notice to Vacate must fail.

   [1]     There are other potential routes to service of a valid Notice to Vacate, such as prior service of two or more Notices to Remedy, but this is the requirement applicable to the current case.

3. When queried, the respondent’s representative was unable to point the Tribunal to any statutory basis or legal authority for the proposition that the Notice to Remedy was ‘spent’.   It was grounded, he submitted, in common sense. This oral submission was not pursued in the written submissions of the respondent.  Nonetheless, I have considered whether some argument as to laches, waiver or acquiescence could be made out on the evidence in this matter.  I do not think that it can.

4. There being a valid Notice to Remedy, the question then arises whether the applicant was or is in some way estopped from issuing a Notice to Vacate for failure to comply with that Notice to Remedy.

The question of estoppel

1. In written submissions on behalf of the respondent, it was argued that the applicant is estopped from issuing a Notice to Vacate on the basis of non-compliance with the Notice to Remedy.  This is submitted to be because on 20 January 2012 the respondent signed an agreement to his detriment to pay by Centrepay both his rent and an amount towards the arrears, and it was reasonable for him to assume that consequently the Notice to Remedy had been ‘appropriately addressed’.  The respondent submitted that the appropriate course was for the applicant to issue a fresh Notice to Remedy, followed by a further Notice to Vacate.

2. There is an issue of the extent to which estoppel can be asserted against the applicant, because of the principle that government entities cannot be estopped from performing their statutory  duties (see for example Minister for Immigration and Ethnic Affairs v Kurtovic [1990] FCA 22; (1990) 21 FCR 193). While that principle is long established, I am doubtful that it is of general application to proceedings for termination of a tenancy agreement brought by the Commissioner for Social Housing under the Act. This issue was considered by Lander J in Eastman v Commissioner for Social Housing [2010] ACTSC 71, who at paragraph 108 and 109 of his reasons for decision declined to rule out the availability of estoppel in such proceedings. His Honour’s reasoning should be adopted in this case.

3. It is not necessary in these reasons to set out in full the law relating to estoppel, nor to go in to the principles of the extent to which government entities can be stopped from performing their statutory functions.  This is because even as between two natural parties, the evidence in the current matter does not support a finding that the applicant was estopped from issuing the Notice to Vacate on 10 April 2012.

4. The respondent was unable to reliably recall the conversation between himself and the housing officer at the time of signing the deduction form.  The statement that ‘everything would be ok’, which was recollected by Mr Higgins, is not sufficiently precise to form the basis for estoppel by representation.  There was no evidence of any representation that would be inconsistent with the applicant proceeding to issue a Notice to Vacate based on failure to comply with the Notice to Remedy.  I am not satisfied that there was any representation made, capable of forming the basis of estoppel by representation.  

5. The respondent’s submissions assert estoppel by conduct.  The evidence does not support such a finding. 

6. First, the evidence of the respondent as to his state of mind at the time of signing the form was not sufficiently clear or persuasive to satisfy me that he made any firm assumption about the effect of executing the form upon enforceability of the Notice to Remedy. 

7. Secondly, even if an assumption had been made by the respondent, it must be ‘reasonable’ to found an estoppel.  The assumption suggested in the submissions filed on behalf of the respondent is not reasonable.  There is nothing in the conduct of inviting or accepting a Centrepay deduction form which makes it reasonable to assume that no future action will be based on notices issued prior to the execution of the form. 

1. Thirdly, I am not satisfied that the repayment of rent and arrears, which involved the respondent meeting an existing legal obligation, can be classified as a ‘detriment’ such that it would be ‘unconscionable’ for the applicant to take further action.  There is authority for this proposition, in relation to the question of paying rent (see Eastman v Commissioner for Social Housing [2010] ACTSC 71 at paragraphs 93- 96).

2. For completeness, I have also considered the argument that the respondent may have assumed that whilever payments occurred as per the Centrepay deduction authority, the respondent would not take further action.  Depending upon surrounding circumstances, it might be reasonable to assume that, whilever rent and arrears are paid as per a Centrepay form, no further action will be taken.  This submission was not put on behalf of the respondent but was addressed in the submissions of the applicant.   Such an assumption might seem more reasonable, but in this case the asserted estoppel would still be hampered by the lack of any persuasive evidence of the respondent having formed such an assumption, and the factors of detrimental reliance and unconscionability.  Further, even if such an estoppel did arise, as submitted by the applicant, it would have ceased to apply from February 2012 when two required payments under the Centrepay deduction form failed to occur.

3. It follows for these reasons that I am not satisfied that the applicant was estopped from serving a Notice to Vacate as it did on 10 April 2012.

The issue of whether a conditional termination and possession order should require repayment of the totality of the arrears

1. The legal issue which was initially highlighted in this case was the question of the length of a conditional termination and possession order and, specifically, whether an order under section 49(4) of the Act could expire before the total amount of arrears had been paid. In other words, can a conditional termination and possession order be made requiring payment of only part of the arrears of rent?

2. In the end, the resolution of this legal issue is not determinative in this matter.  That is because, as set out at paragraph 62 below, I did not form the opinion that the tenant is reasonably likely to pay rent and make repayments towards the arrears for even a period of less than one year.  Nonetheless, given the lengthy submissions on this point provided by the parties’ representatives, I set out my conclusion on this issue.

3. Section 42 of the Act provides that a conditional termination and possession order should not operate for longer than one year. However, there is provision in section 42(4) for the Tribunal to make an order of a longer duration where the Tribunal believes on reasonable grounds that there are exceptional circumstances, and it would be inappropriate to state an expiry day of one year or less.

4. Section 49 contains a number of references to the concepts of ‘the rent that has become payable’ and ‘future rent as it becomes payable’. Adopting the ordinary meaning of these phrases, the first would seem to refer to the full amount of the arrears, and the second to future periodic payments of rent as required by the residential tenancies agreement. This would suggest that, where a conditional termination and possession order is to be made under section 49(4), the Tribunal must in that order require payment of the entirety of the arrears.

5. The respondent submitted that it is possible for a conditional termination and possession order to require payment only of part of the arrears.

6. Section 49 does not expressly provide that a conditional termination and possession order may be made in relation to repayment of only part of the arrears of rent. Should the phrase ‘the rent that has become payable’ be interpreted as meaning ‘all or part of the rent that has become payable’?

7. As was submitted by the applicant, the language and structure of section 49 and the surrounding provisions of the Act indicate that the purpose of a conditional termination and possession order is to ‘secure the rent that has become payable and formally remedy the breach’. If there were any doubt that the ordinary meaning of the words used in section 49, requiring repayment of the entirety of the arrears, should be adopted, this doubt is removed by reference to the common law background against which the section was enacted[2] and the extrinsic material leading to the passage of the Act[3].

   [2]     The equitable remedy of relief against forfeiture – see for example Commissioner of Housing v Smith [1995] ACTSC 17

   [3]     Community Law Reform Committee of the ACT, Private Residential Tenancy Law, Report # 8, paragraphs 854 and 855

8. The respondent initially submitted that the Tribunal should not consider the extrinsic material which might demonstrate the intended operation of section 49, but should consider only the language of the section. The respondent did not however make any suggestions as to the meaning of the words used in the section. In its later submissions, the respondent conceded that the Tribunal should in exercising its discretion take into account the length of time required to repay the arrears, but was not limited in the exercise of its discretion to making an order of only a short duration.

9. The words used in section 49 should be given their ordinary meaning. This means that a conditional termination and possession order must require repayment of the full amount of arrears. That this is the correct interpretation is confirmed by reference to the legal background and extrinsic material to the Act.

10. No doubt the adoption of this interpretation will have consequences for the availability of such orders in matters involving public housing providers.  In such cases, a tenant is usually of limited financial means, and if legal action is not taken promptly the arrears may be so large that any repayment plan, such as in this case, can be expected to exceed the one year limitation imposed by subsection 42(3) of the Act.  Nonetheless it is open to the Tribunal to make an order of a greater duration where there are exceptional circumstances.  

What order should be made in this case?

1. In this matter, a Notice to Remedy was served on 20 July 2011.  It was not complied with within time, and a Notice to Vacate was served on 24 August 2011.  The tenant failed to vacate the premises as required by the Notice to Vacate.  On 10 April 2012, the arrears still not having been paid, a further Notice to Vacate was served upon the respondent.  The respondent has not vacated the premises as required.

2. The requirements of subsection 49(1) of the Act are clearly made out.  Subsection 49(2) is of no application, as it refers to matters in which the arrears have been paid by the time the matter comes before the Tribunal for hearing. 

3. Subsection 49(3) provides the Tribunal with a discretion to make a conditional termination and possession order, where the tenant undertakes to pay the rent that has become payable as directed by the Tribunal, and future rent as it becomes payable, and the Tribunal is of the opinion that the tenant is reasonably likely to do so.

4. With the comprehensive history of non-payment extending over years, unfulfilled undertakings and failure as recently as 19 February 2013 to meet the required rental payment, I cannot be satisfied that the respondent is reasonably likely to pay the rent and the rent that had become payable, as required under section 49(3) in order for the discretion to make a conditional termination and possession order to be exercised.

5. The respondent’s evidence as to his personal situation, the continued difficulties with opening his mail, lack of support from his family, and occasional conflict with Centrelink provide an explanation of his past failures to pay rent but provide little support for the argument that he will be able to reliably meet his financial obligations in the future.

6. Notwithstanding the respondent tenant’s most recent undertaking to pay the future rent and the arrears by instalments, in this case I am not of the opinion that these payments are reasonably likely to be made for even a short period into the future, let alone the years it would take for the arrears of over $5000 to be paid off.   Consequently, I decline to exercise the discretion to make a conditional termination and possession order in this matter, and proceed to make an unconditional order for termination and possession.

………………………………..

Ms M.T Daniel - Member

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A

FILE NUMBER:	RT12/803
PARTIES, APPLICANT:	Commissioner for Social Housing in the ACT
PARTIES, RESPONDENT:	Mr John Higgins
COUNSEL APPEARING, APPLICANT	Ms Kazanc, as authorised representative of the applicant
COUNSEL APPEARING, RESPONDENT	Mr Emerson-Elliott, as advocate for the respondent
SOLICITORS FOR APPLICANT	ACT Government Solicitor
SOLICITORS FOR RESPONDENT	Welfare Rights and Legal Centre
TRIBUNAL MEMBERS:	Mary-Therese Daniel
DATES OF HEARING:	6 February 2013
PLACE OF HEARING:	Canberra

PART B

RECOMMENDATION:

FULL REPORT ( )       CASE NOTE ( )        UNREPORTED DECISION ( )

COMMENTS: