Commissioner for Social Housing v Fowler (Residential Tenancies)
[2016] ACAT 133
•27 July 2016
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COMMISSIONER FOR SOCIAL HOUSING v FOWLER (Residential Tenancies) [2016] ACAT 133
RT 825/2015
Catchwords: RESIDENTIAL TENANCIES – application for termination and possession – public housing – revocation of rebate with effect from an earlier date – amount of revoked rebate not rental arrears – mistake as to amount of arrears in notice to remedy and notice to vacate – application to waive defect refused
Legislation cited: Housing Act 2007 (NSW) s 57
Housing Assistance Act 2007 ss 10, 11, 18, 19, 22,
Residential Tenancies Act 1997 ss 49, 59, standard term 92
Subordinate
Legislation cited: Housing Assistance Public Rental Housing Assistance Program 2013 (No.1) clauses 24, 26
Cases cited:Diab New South Wales Land and Housing Corporation v Diab [2015] NSWCA 133
Donohoe v Havelock Housing Association; McGough v Havelock Housing Association [2007] ACTRTT 1
Commissioner for Social Housing v Woodward [2016] ACAT 85
NSW Land & Housing Commissioner v Spiro Diab [2014] NSWCATCD 129
NSW Land & Housing Commissioner v Spiro Diab [2014] NSWCATCD 129
Peters v Commissioner for Housing in the ACT [2006] ACTRTT 6
List of
Texts/Papers cited: Macquarie DictionaryPearce & Geddes, Statutory Interpretation in Australia (LexisNexis, 8th Ed, 2014)
Tribunal: Presidential Member M-T Daniel
Senior Member H RobinsonDate of Orders: 27 July 2016
Date of Reasons for Decision: 30 November 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 825/2015
BETWEEN:
COMMISSIONER FOR SOCIAL
HOUSING
Applicant/Lessor
AND:
SHARA BEVERLEY FOWLER
Respondent/Tenant
Tribunal: Presidential Member M-T Daniel
Senior Member H Robinson
DATE:27 July 2016
ORDER
The Tribunal orders that:
1.The application is dismissed.
……………Signed…………..
Presidential Member M-T Daniel
REASONS FOR DECISION
The Issue
1.These proceedings consist of an application by the Commissioner for Social Housing (Commissioner) for a termination and possession order on the basis of an alleged failure by the tenant to pay rent.
2.In 2013 the Commissioner assessed the tenant as being eligible for a rental rebate pursuant to the Housing Assistance Public Rental Housing Assistance Program 2013 (No.1) (the HA Program). In 2015 the Commissioner cancelled the rebate, and backdated that cancellation to September 2014.
3.The parties agree that the practical effect of the rebate was that the tenant’s rent was reduced at the time it was payable. The parties also agree that the practical effect of cancellation was that the tenant should repay to the Commissioner an amount equal to the cancelled rebate.
4.It is the legal effect of the granting of the rebate, and the legal consequences of its retrospective cancellation, that are at issue in this proceeding.
The Facts
5.The main facts of this matter are not in dispute, and were set out in the Commissioner’s statement of facts filed 10 December 2015.
6.On 26 November 2013 the tenant entered into a written residential tenancy agreement with the Commissioner in respect of certain premises (the tenancy agreement). The tenancy agreement required the payment of the specified amount of $860.00 per fortnight as rent.
7.Also on 26 November 2013 the tenant applied to the Commissioner for a rebate of rent. Her application was approved and her ‘rebated rent’ was assessed at $307.14 per fortnight.
8.The parties agree that in practical terms, this rebated rent was the amount of money the parties anticipated the tenant would pay to the Commissioner each fortnight in exchange for the right of occupation of the premises.
9.In evidence before the Tribunal was the rental ledger[1] maintained by the Commissioner, which demonstrates a standard pattern of accounting for the charging of rent and recording of payments and rebate. Each week a debit item of the rent payable under the tenancy agreement is entered with the descriptor ‘standard debit’. A separate line item for a credit in the amount of the rebate, described as ‘standard housing benefit’, also appears each week. A third line item, also a credit and described as ‘payment received from the account holder’ usually appears each fortnight, and this records the amount paid to the Commissioner by the tenant.
[1] Section 43(2) of the Residential Tenancies Act 1997 (RT Act) requires a lessor to maintain a rental ledger in relation to a tenancy
10.The rental ledger thus attributes rent and rebate on a weekly basis, although the tenancy agreement requires rent to be paid fortnightly in advance. The ledger records payments by the tenant as they are received.
11.The rental ledger demonstrates that the amount of the rental rebate varied from time to time over the course of the tenancy. The parties agreed that this variation reflected a number of matters, including changes in the number of persons living at the premises. The payments made by the tenant over these periods varied accordingly.
12.While it appears that the tenant generally advised the Commissioner when other persons moved into and out of the premises, for reasons unknown the Commissioner did not receive notification when a Ms Keaton moved into the premises on 28 September 2014. Consequently, the rental rebate was not reassessed at that time. The tenant continued to make her usual payments of the difference between the most recently assessed rebate and the specified rent. The Commissioner continued to account for rent and rebate on a weekly basis in the usual manner.
13.On 12 February 2015 the Commissioner reviewed the rebate in relation to Ms Keaton’s residence at the premises. The Commissioner decided to cancel the rebate, and to backdate that cancellation to have effect from 28 September 2014.
14.On 17 February 2015 the Commissioner adjusted the tenant’s rent ledger to reflect the effect of the cancelled rebate. Multiple line entries on the rental ledger, each dated 17 February 2015, show a debit of each weekly rebate granted for the relevant period. These debits are described variously as ‘manual adjustment’ and ‘housing benefit underpayment’. In total, the adjustments indicated that the cancelled rebate was to the value of $5,851.65.
15.The effect of the amendment of the rent ledger on 17 February 2015 was that the tenant went from $179.92 in credit to $5671.73 in arrears.
16.By recording the revoked rebate on the rental ledger the Commissioner treated the revocation of the rental rebate as giving rise to unpaid rent.
17.On 24 February 2015 the Commissioner wrote to the tenant to notify her that she was in arrears and was required to pay $7,036.53 by 6 March 2015.
18.The tenant had previously made arrangements for her rent payments to be automatically paid. The tenant gave evidence in these proceedings that on 26 February 2015, without her authorisation, her full pay was deducted on account of rent. She then cancelled the automatic deduction.
19.On 2 March 2015 the tenant was sent a notice to remedy requiring that she pay $6,012.93 in rental arrears before 15 March 2015 (first NTR). In her oral evidence, the tenant stated that she did not receive this notice.
20.On 24 March 2015 the tenant was sent another notice to remedy, this time requiring that she pay $7,036.53 in rental arrears (second NTR).
21.On 9 April 2015, the tenant was served with a notice to vacate (NTV) the property on or before 30 April 2015, due to her failure to comply with the second NTR.
22.The Housing Assistance and Tenancy Review Panel considered the tenant’s circumstances on 9 July 2015 and recommended that the Commissioner make an application to the tribunal for a termination and possession order. By that date, the tenant’s account was $10,064.53 in arrears.
23.On 26 August 2015 the Commissioner lodged an application for a termination and possession order under section 49 of the Residential Tenancies Act 1997 (RT Act).
24.At the time of the final hearing on 27 July 2016, the arrears shown as owing by the tenant on the rental ledger amounted to $16, 878.93.
The Legislative Context
25.There is no dispute between the parties that the tenant owes the Commissioner a sum equivalent to the revoked rebate. The question is the nature of that debt, and whether it can be characterised as a ‘failure to pay rent’ capable of founding an application for a termination and possession order under section 49 of the RT Act.
26.Before considering the parties’ submissions, it is helpful to review the relevant provisions of the RT Act and Housing Assistance Act 2007 (HA Act).
Residential Tenancy
27.Section 49 of the RT Act provides that a lessor may apply to the Tribunal for a termination and possession order in relation to a tenant’s ‘failure to pay rent’. It is a precondition to the filing of such an application that the lessor has served a NTV on the basis of that failure. Clause 92 of the prescribed terms of each residential tenancy agreement provides that before such a notice to vacate can be given, a notice to remedy (NTR) for failure to pay rent must be given to the tenant.
28.The tenant asserts that the reason why she was in arrears at the time of the NTRs and NTV is largely due to the reversal on the rental ledger of the amount of the retrospectively revoked rebate. It was submitted for the tenant that the amount of a revoked rebate cannot be classified as rent that is unpaid – either at the time rent was originally payable or at the time that the decision to retrospectively revoke the rebate is entered onto the rent ledger for the tenancy.
29.If the tenant’s argument is accepted, the first NTR is invalid – the tenant was in credit when it was issued. The second NTR is inaccurate in that it refers to arrears of rent much larger than was the case. There was also a very large difference between the actual rental arrears and that stated in the NTV, raising the question of whether that notice was invalid and, if so and having regard to the amount of the discrepancy, capable of remediation.
30.The Commissioner argued that the consequence of granting a rebate is that the rent is taken to be paid in the amount of the rebate at the relevant time, and that the consequence of retrospective revocation was that the obligation to pay market rent was re-enlivened.
31.If the Commissioner’s argument is accepted, there is no question about the validity of the NTRs and NTV, and the issue for the Tribunal to consider is whether or not to grant a termination and possession order under section 49 of the RT Act.
The HA Act
32.The ACT Government Housing scheme is established through the combined effect of the HA Act, the RT Act and the HA Program.
33.Subsection 10(1) of the HA Act establishes a Housing Commissioner (Commissioner). The Commissioner’s functions include administering programs and funding arrangements for public rental housing and financial assistance to tenants.[2]
[2] Sections 11(1)(a)(i) and (iii) of the HA Act
34.Subsection 19(1) of the HA Act provides that the Minister may approve a housing assistance program, which in turn is defined in section 18 of that Act to mean, broadly, a program that sets out the kind of assistance that may be provided, the eligibility criteria for that assistance and how the Commissioner may make decisions under the program.
35.Subsection 22(1) of the HA Act sets out some limitations on what an approved program under section 19 can provide. Relevantly, it states the following in relation to market rent and rebates:
22Approved housing assistance programs—market rent
(1)If housing is being rented to an entity under an approved housing assistance program, the entity must be charged market rent for the housing.
(2)However, an approved housing assistance program may provide for a rebate of rent in accordance with the program.
(3)In this section:
market rent, for housing, means the rent that would be charged by the lessor for the housing if the housing were rented by a willing lessor to a willing tenant—
(a)dealing with each other at arm’s length; and
(b) each of whom had acted knowledgeably, sensibly and without compulsion.
36.Significantly, this means that any housing assistance program must be formulated having regard to the requirement that the tenant be charged market rent, but the program may then provide for a ‘rebate’ of that rent.
37.The HA Program is an approved Housing Assistance Program for the purposes of section 22 of the HA Act. Consistent with this provision, the HA Program provides both:
(a)the requirement for a social housing tenant to be charged market rent (section 23), and
(b)the power of the Commissioner to approve a rental rebate where a tenant meets certain eligibility criteria (section 25).
38.The HA Program also provides for the revocation of a rebate when eligibility is reassessed, to take effect from the date of the decision to revoke or an earlier date:
26 Rent Rebate - Reassessment of eligibility
(1) The housing commissioner may, from time to time, reassess a tenant’s entitlement to receive or to continue to receive a rent rebate.
(2) Where the housing commissioner seeks to reassess a rent rebate provided to a tenant the housing commissioner must notify the tenant in writing of the assessment date, which may be a date before or after the provision of the rent rebate.
(3) The housing commissioner may, at any time, ask a tenant who is receiving a rent rebate to give the housing commissioner further stated information to enable a reassessment by the housing commissioner.
(4) The tenant must give the housing commissioner any further stated information requested by the housing commissioner at the relevant assessment date to enable a reassessment of the tenant’s eligibility for continuing assistance by way of a rent rebate.
Note If the information is not given in accordance with a notice under section 24(3) or section 25(2) of the Act the application may be refused.
(5) If the housing commissioner thinks, for any reason, that the tenant is or was not eligible for a rent rebate or is or was eligible for a different amount of rent rebate, the housing commissioner may suspend, amend or revoke the provision of a rent rebate.
(6) A suspension, amendment or revocation of the provision of a rent rebate takes effect from—
(a) the relevant assessment date; or
(b) if the tenant notified the housing commissioner of a relevant change in circumstances and the housing commissioner has decided that the tenant’s rent rebate has increased—a date earlier than the relevant assessment date, decided by the housing commissioner, not more than 2 weeks before the date of notification; or
Note See clause 15 for meaning of relevant change in circumstances.
(c)a date earlier than the relevant assessment date as decided by the housing commissioner if—
(i)the tenant failed to provide full and correct information under clause 8(1) or when asked by the housing commissioner under subclause (4);
(ii)the tenant failed to advise the housing commissioner of a relevant change in circumstances; or
(iii)the housing commissioner considers it appropriate having regard to the circumstances of the case.
Example for par (c)(iii)
The tenant has received a lump sum payment (by compensation or otherwise) which the housing commissioner considers wholly or partly accounts for income lost or forgone by the person during a period.
39.There is no definition of ‘rebate’ in either the HA Program or the HA Act. ‘Rental rebate’ is unhelpfully described in the Dictionary to the HA Program as “... the provision of a rebate in the rent under clause 25.”
40.The HA Program goes into some detail in setting out who is eligible for a rebate and how it is calculated, but again does not deal with the issue as to what the rebate is, either legally or practically, or how it interacts with the obligation under the legislation to be charged market rent, or under the tenancy agreement to pay the specified rent.
41.The first question in this matter is therefore how one ‘characterises’ the rebate.
The parties contentions on the characterisation issue
The tenant’s contentions
42.In dealing with the arguments about the characterisation issue, it is useful to start with the tenant’s contentions, as it was the tenant who squarely raised the nature of the rental rebate as an issue in these proceedings, and her submissions frame the issues in contention.
43.The tenant’s argument is based on the application of standard contract principles, and upon the reasoning of the New South Wales Court of Appeal in New South Wales Land and Housing Corporation v Diab [2015] NSWCA 133 (Diab). The facts of Diab were similar to those in the current proceedings. Mr Diab entered into a residential tenancy agreement with the NSW Housing Corporation. He agreed to pay market rent for the property, but was granted a rental rebate that reduced that rent. Over time, his family circumstances and household composition changed, but he did not tell the relevant housing authorities. When it was discovered that Mr Diab’s adult sons were living in the premises, his rental rebate was cancelled with effect from an earlier date and Mr Diab suddenly owed the Corporation a considerable sum. The question in Diab, as here, was whether that sum was not only a debt that could be recovered in the usual way, but also rental arrears that could found the termination of his tenancy.
44.A majority of the Court of Appeal agreed with the first instance decision of the NCAT that the cancellation of a rental rebate gives rise to a debt, but not a failure to pay rent.
45.Of particular relevance, Justice Macfarlan (Beazley P agreeing)[3] found that the agreement between the Corporation and Mr Diab for the payment of rebated rent amounted to an agreement to vary the rent payable under the tenancy agreement by way of ‘ordinary contractual principles’. Leeming JA reached a similar conclusion, but analysed the position somewhat differently, as will be discussed later.
[3] at paragraphs 26 and 5 respectively
46.Adopting the principles of the plurality in Diab, and adapting them to the ACT context, the tenant argues:
(a)the tenancy agreement is a contract between the lessor and the tenant (notwithstanding the terms of the contract have largely been set by legislation, in the form of the standard residential tenancy terms in Schedule 1 of the RT Act);
(b)in this case, that contract (ie. the residential tenancies agreement) was varied by the offer and acceptance of the rebated rent;
(c)the tenant has paid the rent that she is contractually required to pay – that is, the amount of rent payable after the rental rebate is deducted;
(d)the cancellation of the rebate created a debt arising from a breach of contract, but the debt should not be characterised as rent arrears as the contractual rent was in fact paid;
(e)the outstanding debt does not give rise to a breach of the tenancy agreement by reason of a failure to pay rent; and
(f)consequently, there is no ‘failure to pay rent’ under section 49 of the RT Act.
47.The tenant’s representative acknowledged that the NSW and ACT residential tenancy schemes are different, but she submitted those differences do not modify the way that Diab should be interpreted or applied in the ACT. In particular, she argued that while subsection 57(4) of the NSW Act contains an additional recovery mechanism that the RT Act lacks (it expressly provides that a cancelled rebate may be recovered as a debt), this did not change the nature of what a rental rebate is, and how it should be viewed as interacting with the obligation to pay rent.
The Commissioner’s contentions
48.The Commissioner took a different view on the operation of the ACT public housing and residential tenancies schemes. The Commissioner’s argument was:
(a)the obligation to pay market rent is established contractually through a combination of the covering schedule to the tenancy agreement and section 26 of the Standard Residential Tenancy Terms (tenancy agreement);
(b)the discretion of the Commissioner to approve a rental rebate is established by a separate statutory scheme in the HA Act and HA Program;
(c)the obligation upon the tenant to pay rent and the discretion of the Commissioner to authorise a rent rebate arise from two separate schemes – with the rebate scheme operating alongside and independently of the overarching obligation of the tenant to pay market rent; and
(d)by revoking the rebate, the overarching obligation to pay market rent pursuant to clause 26 of the tenancy agreement is immediately enlivened and the market rent becomes ‘rent that has become payable’ under the tenancy agreement.
49.In relation to Diab, the Commissioner contended that the ACT and NSW schemes were sufficiently different that the Diab decision could not be applied in the ACT. The most crucial differences were that in NSW the provisions establishing the rental rebate scheme are set out in clause 26 of the NSW version of the standard residential tenancy agreement, and hence are an intrinsic part of the contractual arrangements between the parties. This is different to the ACT where the rental rebate scheme is established by a separate statutory instrument. Also, section 57 of the Housing Act 2007 (NSW) (NSW Housing Act) has a provision by which the parties to the tenancy agreement agree that the Department may recover any overpaid rebate as a debt.
Consideration
Issue 1: Is Diab persuasive authority for interpretation of the ACT legislation?
50.Although the ACAT is not bound by decisions of the NSW Court of Appeal, a decision of that Court dealing with a similar statutory scheme would be, at the very least, highly persuasive. The first question must therefore be whether the residential tenancy and rental rebate schemes established in NSW are sufficiently similar to that in the ACT that the reasoning of the Court of Appeal in Diab should be applied here.
51.The NSW housing assistance scheme is established under the NSW RTA and the NSW Housing Act (NSW HA). This legislation, much like its ACT equivalent, establishes a framework for a system of public and community housing, overseen by the NSW Land and Housing Corporation. In addition to the statutory framework, Mr Diab’s relationship with the Corporation was determined by the terms of a standard form residential tenancy agreement (the NSW RT Agreement).
52.There are, undoubtedly, many similarities between the NSW and the ACT public housing frameworks, both in terms of intent and structure. However, there are also some fundamental differences, the most significant of which is the interconnectedness between the rebate scheme and the RT Agreement under the NSW Scheme.
53.First, the ACT HA Act imposes, at section 22(1), a statutory obligation to charge market rent. By contrast, under the NSW scheme, this obligation is found not in statute, but rather in the standard terms of the NSW RT Agreement.
54.Secondly, although the NSW Act provides for the establishment of ‘policies’ to govern housing assistance, in NSW these provisions are grounded in contract as much as policy. For example, clause 26 of the NSW RT Agreement[4] provides as follows:
26 Rental Rebate Abatement
The landlord and the tenant agree that the landlord may formulate a policy for the granting of rebates or waiver of rents. The parties agree that in accordance with such policy the Department may grant a rebate or waive rent at its discretion.
[4] At [19]
55.The existence of this clause was fundamental to the reasoning of Macfarlan JA in Diab. His Honour found that this clause is effectively a contractual provision that permits the landlord to develop a policy whereby it can offer a rebated rent, and the tenant can accept this offer by occupying the property and paying the rebated rent.[5]
[5] Macfarlan at [26]
56.There is no equivalent to this clause in the ACT scheme. Indeed, the provisions in the ACT legislation would seem to expressly exclude this characterisation. The ACT rental rebate scheme is not established through an agreed ‘policy’ – it is established through the operation of a statutory instrument made under subsection 22(1) of the HA Act. The terms of section 22(1) define the scope and operation of the HA Program, and its interaction with the broader legislative housing scheme. There is, within the ACT scheme, no room for the kind of contractual analysis adopted by Macfarlan JA in Diab in respect of the NSW Scheme.
57.Additionally, under the ACT HA Act and the HA Program, the circumstances under which the Commissioner may change the rent charged are prescribed and regulated. In particular, clause 24 of the HA Program provides:
24 Change in rent payable
(1) This clause applies if the housing commissioner decides to change the amount of rent payable for a public housing dwelling occupied by a tenant.
(2) The housing commissioner must give the tenant written notice about the change.
(3) The notice must state—
(a) the rent payable as a result of the decision; and
(b) the day when the decision takes effect.(4) Provision of the notice must be in compliance with the Residential Tenancies Act 1997.
(5) The amount stated as the rent payable in the notice is taken to be the amount of rent payable under the tenancy agreement between the tenant and the housing commissioner in relation to the dwelling from the first rent period starting on or after the day when the decision takes effect.
58.This clause is not limited to increases in rent but also applies to reductions in rent. For either, it requires a decision to change the rate that is notified to the tenant in accordance with the clause. Separately, the RT Act provides its own limitations on a decision to increase the rent payable, including empowering the Tribunal to review such increases. These provisions are incompatible with the contractual analysis of a rebate adopted in Diab.
59.We also note the emphasis Leeming JA, in his separate judgement, placed upon the operation of section 57 of the NSW HA.[6] Again, there are no equivalent provisions in the Territory’s legislative framework.
[6] At [62]-[63]
60.Having reviewed the respective NSW and ACT public housing assistance and residential tenancy frameworks, the Tribunal accepts the Commissioner’s argument that the ACT framework is so fundamentally different to the NSW framework that the reasoning of the majority in Diab should not, and indeed cannot, apply. It follows that Diab should not be considered a persuasive authority in this matter.
Issue 2: Characterising the rebate in the ACT Scheme
61.The tenant’s representative referred the Tribunal to previous Tribunal decisions of Peters v Commissioner for Housing in the ACT [2006] ACTRTT 6, Donohoe v Havelock Housing Association and McGough v Havelock Housing Association [2007] ACTRTT 1, in which the Residential Tenancies Tribunal expressly adopted a contractual analysis to the granting and receipt of the rebate.
62.It may be noted that at first instance[7] in Diab, the Senior Member came to the view that:
...if the tenant is always obligated to pay the market rent then the consequence is that a tenant in receipt of a rental rebate who is paying rent as rebated will technically be in breach of that term of the tenancy agreement which obliged the tenant to pay the rent on time. A tenant in this situation will remain in breach of the agreement for as long as the tenant is paying market rent.[8]
[7] NSW Land & Housing Commissioner v Spiro Diab [2014] NSWCATCD 129
[8] at [46]
63.This argument was also advanced on behalf of the tenant– that to characterise the rebate as doing anything other than reducing or replacing the requirement to pay market rent would mean that a tenant receiving a rebate must at all times be in breach of the HA Act. While we accept the force of this argument, it does not logically follow that the rebate must therefore operate as a contractual variation. There are other mechanisms to reduce or replace the requirement to pay specified rent, which we discuss below.
64.It follows from the analysis set out above that the Tribunal accepts much of the Commissioner’s argument in relation to the broader characterisation of the ACT housing assistance scheme. The Tribunal accepts, in particular, that the ACT housing assistance scheme and residential tenancies legislation leave no room for the granting of the rebate to operate on the contractual basis provided by the NSW Scheme.
65.Not only is there no facility within the RT Act, the HA Act or the HA Program for a rebate to operate by way of variation of the residential tenancy agreement, the consequences of such an interpretation would be perverse and unworkable. For example, revocation or reduction of a rebate would expose the lessor to the potential of an application for review of a rent increase under the RT Act applying the principles set out in the RT Act, and simultaneously, for review of the administrative decision about the rebate under the HA Act applying the principles set out in the HA Act. The Tribunal accepts the Commissioner’s argument that the requirement to pay rent and the operation of the rental rebate are separate schemes – on a practical level they operate in parallel, but one does not affect the legal operation of the other, except as expressly provided.[9] The granting of a rebate does not vary the terms of the residential tenancy agreement.
Issue 3: If not a variation of the agreement, what is a rebate?
[9] See for example section 8 of the RT Act or as noted above, section 24(4) of the HA Program
66.If it is not an agreement to vary the rent payable, what is a rebate? The term ‘rebate’ is used only once in section 22(1) of the HA Act. It is not defined in either the HA Act, the RT or the Legislation Act.[10]
[10] We note that section 136 of the NSW RTA defines a ‘rent rebate’ for the purposes of Part 7 of the Act (which is headed ‘Social Housing Tenancy Agreements’) as “an amount waived or remitted, in accordance with a rent rebate scheme administered by a social housing provider, from rent payable to a social housing provider.” There is no equivalent definition in the ACT Legislation
67.At the hearing, the tenant’s representative contended that a rebate is a ‘subsidy’ that in this case had the effect of varying the lease to reduce the rent that the tenant had to pay. The Tenant pointed out that the NSW Act expressly defines the term ‘rebate’ to include a ‘subsidy’, but agreed there was no equivalent definition in the Territory legislation.
68.The Commissioner’s representative largely agreed with the tenant’s representative that a ‘rebate’ was effectively a ‘subsidy’.
69.Section 139(1) of the Legislation Act provides that in working out the meaning of a provision of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred.
70.The purpose of section 22 of the HA Act appears clear. An entity must be charged market rent for a property, but a housing assistance program may provide for a ‘rebate’ of that rent. The word ‘rebate’ appears to have been deliberately chosen to reflect that there remains an obligation to pay market rent, and that obligation cannot be modified, but can be ameliorated through another means. Hence, a HA Program may, in certain circumstances, authorise a rebate of some portion of the market rent that is obliged to be paid.
71.The Tribunal asked both parties to make further submissions on what they understood the word ‘rebate’ to mean in this context. The Commissioner initially characterised the ‘rebate’ as a ‘benefit’ or a ‘subsidy’, but declined to draw any broad conclusions about the nature of either of those things. The Tenant’s definition did not substantially differ from this.
72.Both agreed that the practical effect was that the rent paid was “less than market rent”.
73.Where there is no definition in the legislation, a word used in a statute should generally be given its ordinary and current meaning, unless there is something in the context to suggest another meaning should be used.[11] There was no evidence before the Tribunal that the word ‘rebate’ has any particular technical or trade usage, and therefore we turn to the ordinary meaning of the term. The Macquarie Dictionary defines the word ‘rebate’, relevantly, as follows
noun1. a return of part of an original amount paid or due for some service or merchandise; repayment, as of a part of charges
...
–verb (t) (rebated, rebating)
3. to allow as a discount.4. to deduct (a certain amount), as from a total.
[11] Pearce & Geddes, Statutory Interpretation in Australia (LexisNexis, 8th Ed, 2014), 154
74.In other words, a ‘rebate’ is a return or repayment, but it may also reflect a practice of discounting or deducting an amount from a total. This is not inconsistent with the view of the parties that the rebate was a form of subsidy.
75.The evidence as to how the rebate is effected in practice, at least in this case, was consistent with this definition.
76.Both parties initially denied that the granting of the rebate could take the form of ‘payment’ of the rent. Later during the hearing, however, the Commissioner appeared to concede that the rebate might be characterised as a payment made on the tenant’s behalf:
Tribunal: the commissioner agrees to pay, on behalf of the tenant, an amount of rent?
Ms Tarbet: Yes
This, in the Tribunal’s view, is much closer to the actual meaning of the term rebate – that is, a return, deduction or discount of monies otherwise payable.
77.Also key is the language used in the Determination. The Determination provides that the Commissioner “may provide the tenant of a public housing dwelling a rent rebate”. The Commissioner is providing a rebate. Also, subsection 26(1) refers to the tenant’s “entitlement to receive” a rebate. The tenant is getting, or receiving, something from the Commissioner.
78.Consequently, in our view, the effect of the ‘rebate’ is that the Commissioner provides the tenant with something that in effect offsets a portion of the ‘market rent’ to the value of the rebate.
79.But if this is the practical effect of a rebate, what is the mechanism by which is achieved?
80.There is an important legal distinction between the decision by the Commissioner to grant a rebate, and the acts or things done by the Commissioner to implement that decision. A decision to grant a rebate is an administrative decision, which may be reviewed by the Tribunal on application by the tenant. The HA Act and HA Program are silent on the effect of that decision on the other legal obligations of the parties. They are also silent on how the rebate is given effect. Significantly, the legislation does not provide that such a decision has the immediate or automatic legal effect of reducing the rent otherwise payable under the residential tenancy agreement.
81.It seems to the Tribunal that the legislation has left to the Commissioner the freedom to implement the decision to grant a rebate in the manner that is most suitable to the case at hand. So, for example, the Commissioner might have chosen to administer the scheme by paying the rebate to a tenant upon payment by the tenant of the full market rent. This is the classic use of a ‘rebate’. Administering the rebate as a refund of rent paid, while not practicable in the majority of cases, might be adopted in an individual case when a rebate of rent previously paid is granted with effect from an earlier date.
82.The Commissioner’s representative was unable to state how the rebate was effected. She was, in particular, unable to tell the Tribunal whether the record of the ‘standard housing benefit’ each week in the rental ledger was indicative of a movement of funds within accounts held by the Commissioner, or indicative of a discounting or waiving of the amount otherwise payable for that week.
83.It is not necessary for the Tribunal to resolve this question in order to determine this case. This is because there are limited ways in which the granting of the rebate could have been operationalised in the facts of this case.
84.Variation of the residential tenancy agreement to reduce the rent payable is not open on the legislation, as earlier discussed. Refund of market rent already paid was clearly not adopted in this case.
85.This leaves the two methods identified in paragraph 83. If the ‘standard housing benefit’ on the rental ledger represents a movement of funds to implement the granting of the rebate, then the rent was paid at the time it was due. If the ‘standard housing benefit’ represents a discounting of the rent by the Commissioner, this would amount to a waiver by the Commissioner of the right to the discounted amount of rent.[12]
[12] It is not necessary that an individual officer of the Commissioner make the decision to waive the rebated portion of the rent each week, it is sufficient that the Commissioner has established a system which effects such a waiver occurring automatically every week when the rent is imposed, consistent with the statutory authority established by the HA Act and HA Program, and other applicable legislation. See MC v Secretary to DSS (1996) 2(1) Social Security Reporter 12
86.The Tribunal is satisfied that whichever methodology was adopted in relation to the tenant in this case, the rent due each week was ‘paid’ at the relevant time by the action of the tenant, and the steps taken to implement the rebate decision. This means that the tenant did not, at that time, fail to pay rent that was payable.
What is the consequence of the revocation of the rental rebate approval?
87.Section 26 of the HA Program provides for the revocation of a rebate, and that the revocation may take effect on an earlier date than the date of assessment.
88.The Commissioner’s position is that the revocation of the rebate, with effect from an earlier date, means that that portion of the rent that was not paid because of the rebate immediately falls due and payable.
89.The Tribunal agrees with the Commissioner’s characterisation of the rental rebate scheme, and the HA assistance scheme, as being separate to the residential tenancies scheme. However, the Commissioner’s submission about the consequence of revoking the rebate does not logically follow from that characterisation.
90.This is because the HA Act and HA Program only provide a power to reverse or revoke, from an earlier date, the administrative decision to grant the rebate. There is no power given to undo the acts or things done to operationalise the rebate decision. For example, there is no power to ‘unwaive’ an amount of rent waived, or to reach into the tenant’s ledger, without their consent, to withdraw amounts previously paid on behalf of the tenant. The power to retrospectively revoke a rebate is not accompanied by a power to undo acts which were done to implement the grant of the rebate, and have taken legal effect.
91.For the Commissioner’s argument to be correct, at its highest, the revocation would need to make the decision to grant the rebate, and all acts taken to implement that decision, void ab initio. The legislation does not expressly provide that this is the legal effect of revocation. It might be argued that this meaning is implicit in the word ‘revoke’. However, in the absence of any extrinsic material to suggest that such operation was intended we decline to interpret the power to restrospectively ‘revoke’ a rebate as having such an extra-ordinary legal effect.
92.This does not mean that a tenant is not separately liable to repay the amount of any rebate which it turns out, they were not entitled to. There are means by which unauthorised or incorrect payments can be recovered. However, unauthorised payments cannot be recovered as rental arrears, nor can proceedings be brought for a termination and possession order on the basis of unpaid rent in that amount.
Consideration of the application for termination and possession
93.On 1 July 2016 the Tribunal advised the parties it had concluded that the amount of the revoked rental rebate could not be characterised as rent owing. This conclusion meant that the amounts identified as rental arrears in the NTRs and NTV issued to the tenant in 2015 were incorrect. The Commissioner indicated that it wanted to proceed with the application for termination and possession notwithstanding the errors. The matter was adjourned to further hearing on 27 July 2016.
94.When the hearing resumed the Commissioner asked the Tribunal to waive any defects in the second NTR and NTV. The tenant sought that the Tribunal either refuse to waive the defects and dismiss the application or, if the defects were waived, exercise its discretion to make a conditional termination and possession order.
95.The Commissioner provided the Tribunal with further evidence by way of an updated rental account, and a document which contained extracts from the Homenet notes – Homenet being the computerised record-keeping system for the Commissioner. These extracts covered the period of time over which the notices were issued, and recorded interactions between the tenant and officers for the Commissioner.
96.The tenant gave oral evidence about her situation over this period of time, including her interactions with staff of the Commissioner. The tenant also filed information relevant to the question of whether a conditional termination and possession order should be made.
Should the defects in the NTRs and NTV be disregarded or waived?
97.Because the amount of the revoked rebate is not rental arrears, the first NTR should not have been issued. It is clear from the rental ledger that the tenant was in credit when it was issued.
98.The tenant was in arrears when the second NTR issued, but the amount specified in the second NTR was $7,036.53 whereas the actual arrears amount was $502.48. The second NTR therefore incorrectly described what the tenant had to do to remedy the breach. This error was continued on to the NTV, raising the question of whether the NTV was invalid and, if so and having regard to the amount of the discrepancy, capable of remediation.
99.The Tribunal recently discussed the importance of a notice to remedy and notice to vacate being accurate, and the circumstances in which it might be appropriate to waive a defect in a NTV in Commissioner for Social Housing v Woodward [2016] ACAT 85.
100.In that case, the Tribunal concluded that:
It is conceivable that the kind of defects that are correctable by exercise of the power in section 59 may include mathematical mistakes or miscalculations of the arrears of rent. However, in such cases, there must be a consideration of the discrepancy and the consequences of this.[13]
[13] At [26]
101.In this case, the Tribunal considers that the error in the second NTR was so significant that the notice did not fulfil its function of advising the tenant of the action necessary to remedy the breach. It was misleading as to the amount owing, in a highly significant way. The amount of arrears referred to in the second NTR was, in the context of a public housing tenancy, crushing. It is understandable that a tenant could form a view that nothing could be done to remedy a defect requiring the payment of several thousand dollars within seven days, and so do nothing. On the other hand, a tenant notified that a few hundred dollars had to be paid to remedy a default could well see that as manageable and take steps to achieve a payment. The Tribunal is not satisfied that an NTR that satisfied the requirements of the legislation was provided to the tenant. The consequence of this finding is that the precondition for issuing a NTV was not satisfied.
102.Even if the second NTR did sufficiently comply with the legislated requirements and was not misleading, and even if the Tribunal were satisfied that the NTV were capable of being remedied under section 59, the Tribunal may still only exercise its discretion to waive a defect under that section if satisfied that the correction of the defect would not place the tenant in a substantially worse position than if the notice had complied with the statutory requirements.
103.The tenant gave evidence as to her response on being told that she owed such a significant amount of arrears. Faced with arrears of such a magnitude, she said that she gave up, and did not even try to pay a part of the amount off, as she knew she was unable to pay the entirety. She gave evidence that only weeks earlier the Commissioner’s automatic debit system had, for an unknown reason, taken her entire pay of $682. Faced with arrears, and not wanting to face a further period without pay, she said that she immediately cancelled her automatic rent payment, and saved her money so as to have some buffer against the prospect of an imminent eviction. While the tenant’s approach worsened her arrears, it was understandable, and perhaps even predictable, having regard to her seemingly impossible situation.
104.Having heard the tenant’s evidence, and reviewed the rental ledger, the Tribunal was satisfied that, had the amount of arrears been accurately stated in the second NTR and NTV, the tenant would have responded differently and it is unlikely termination and possession proceedings would have been brought.
105.Accordingly, the Tribunal declines to waive the defect in the NTV.
106.It follows that there being no NTV properly issued in accordance with the RT Act, the Commissioner’s application for a termination and possession order is dismissed.
………………………………..
Senior Member H Robinson
Delivered for and on behalf of the Tribunal
HEARING DETAILS
FILE NUMBER:
RT 825/2015
PARTIES, APPLICANT:
Commissioner for Social Housing
PARTIES, RESPONDENT:
Shara Beverley Fowler
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
ACT Government Solicitor
SOLICITORS FOR RESPONDENT
Canberra Community Law
TRIBUNAL MEMBERS:
Presidential Member M-T Daniel, Senior Member H Robinson
DATES OF HEARING:
27 July 2016
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