Commissioner for Social Housing v Ryan
[2018] ACAT 51
•28 September 2017
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COMMISSIONER FOR SOCIAL HOUSING v RYAN (Residential Tenancies) [2018] ACAT 51
RT 966/2016
Catchwords: RESIDENTIAL TENANCIES – previous conditional termination and possession order – statutory tenancy – previous application for termination and possession order dismissed – res judicata – implied tenancy – previous arrears amounts contained in notices to remedy and vacate – waiver of defect in notices – lessor’s entitlement to appropriate payments to arrears debt or current rent
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 84
Residential Tenancies Act 1997 ss 6A, 7, 42, 42A, 48, 49, 79
Cases cited:Caltabiano v Electoral Commission(Qld) [2009] QCA 182
Chamberlain v Deputy Federal Commissioner of Taxation (1988) 164 CLR 502
Commissioner for Social Housing in the ACT v Moffatt [2015] ACTSC 4
Commissioner for Social Housing and Pesi [2016] ACAT 100
Commissioner for Social Housing and Pesi [2015] ACAT 58
Commissioner for Social Housing v Thorn [2016] ACAT 37
Commissioner for Social Housing v Ryan [2015] ACAT 87
Cory Bros & Co Ltd v The SS Mecca [1897] AC 286
Johnson v Gore Wood and Co (2001) 1 All ER 481Leeson v Leeson [1936] 2 KB 156
Walsh; Ex parte Deputy Federal Commissioner of Taxation (1982) 60 FLR 355
Welch v Erica’s Aesthetics Pty Ltd [2017] ACAT 68
Williams v Commissioner for Social Housing [2016] ACAT 93
Tribunal: Presidential Member M-T Daniel
Senior Member RobinsonDate of Orders: 28 September 2017
Date of Reasons for Decision: 4 May 2018
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) RT 966/2016
BETWEEN:
COMMISSIONER FOR SOCIAL HOUSING
Applicant
AND:
ERIN RYAN
Respondent
TRIBUNAL:Presidential Member M-T Daniel
Senior Member H Robinson
DATE:28 September 2017
ORDER
The Tribunal orders that:
1.The tenant is to pay to the lessor the sum of $2,507.00 for arrears of rent, such payment to be made in instalments as follows:
1.01The sum of $30.00 by 5:00pm on Thursday 19/10/17
1.02The sum of $30.00 by 5:00pm on Thursday 02/11/17
1.03The sum of $30.00 by 5:00pm on Thursday 16/11/17
1.04The sum of $30.00 by 5:00pm on Thursday 30/11/17
1.05The sum of $30.00 by 5:00pm on Thursday 14/12/17
1.06The sum of $30.00 by 5:00pm on Thursday 28/12/17
1.07The sum of $30.00 by 5:00pm on Thursday 11/01/18
1.08 ·The sum of $30.00 by 5:00pm on Thursday 25/01/18
1.09The sum of $30.00 by 5:00pm on Thursday 08/02/18
1.10The sum of $30.00 by 5:00pm on Thursday 22/02/18
1.11The sum of $30.00 by 5:00pm on Thursday 08/03/18
1.12The sum of $30.00 by 5:00pm on Thursday 22/03/18
1.13The sum of $30.00 by 5:00pm on Thursday 05/04/18
1.14The sum of $30.00 by 5:00pm on Thursday 19/04/18
1.15The sum of $30.00 by 5:00pm on Thursday 03/05/18
1.16The sum of $30.00 by 5:00pm on Thursday 17/05/18
1.17The sum of $30.00 by 5:00pm on Thursday 31/05/18
1.18The sum of $30.00 by 5:00pm on Thursday 14/06/18
1.19The sum of $30.00 by 5:00pm on Thursday 28/06/18
1.20The sum of $30.00by 5:00pm on Thursday 12/07/18
1.21The sum of $30.00 by 5:00pm on Thursday26/07/18
1.22The sum of $30.00 by 5:00pm on Thursday 09/08/18
1.23The sum of $30.00 by 5:00pm on Thursday 23/08/18
1.24The sum of $30.00 by 5:00pm on Thursday 06/09/18
1.25The sum of $30.00 by 5:00pm on Thursday 20/09/18
1.26The sum of $30.00 by 5:00pm on Thursday 04/10/18
1.27The sum of $30.00 by 5:00pm on Thursday 18/10/18
1.28The sum of $30.00 by 5:00pm on Thursday 01/11/18
1.29The sum of $30.00 by 5:00pm on Thursday 15/11/18
1.30The sum of $30.00 by 5:00pm on Thursday 29/11/18
1.31The sum of $30.00 by 5:00pm on Thursday 13/12/18
1.32The sum of $30.00 by 5:00pm on Thursday 27/12/18
1.33The sum of $30.00 by 5:00pm on Thursday 10/01/19
1.34The sum of $30.00 by 5:00pm on Thursday 24/01/19
1.35The sum of $30.00 by 5:00pm on Thursday 07/02/19
1.36The sum of $30.00 by 5:00pm on Thursday 21/02/19
1.37The sum of $30.00 by 5:00pm on Thursday 07/03/19
1.38The sum of $30.00 by 5:00pm on Thursday 21/03/19
1.39The sum of $30.00 by 5:00pm on Thursday 04/04/19
1.40The sum of $30.00 by 5:00pm on Thursday 18/04/19
1.41The sum of $30.00 by 5:00pm on Thursday 02/05/19
1.42The sum of $30.00 by 5:00pm on Thursday 16/05/19
1.43The sum of $30.00 by 5:00pm on Thursday 30/05/19
1.44The sum of $30.00 by 5:00pm on Thursday 13/06/19
1.45The sum of $30.00 by 5:00pm on Thursday 27/06/19
1.46The sum of $30.00 by 5:00pm on Thursday 11/07/19
1.47The sum of $30.00 by 5:00pm on Thursday 25/07/19
1.48The sum of $30.00 by 5:00pm on Thursday 08/08/19
1.49The sum of $30.00 by 5:00pm on Thursday 22/08/19
1.50The sum of $30.00 by 5:00pm on Thursday 05/09/19
1.51The sum of $30.00 by 5:00pm on Thursday 19/09/19
1.52The sum of $30.00 by 5:00pm on Thursday 03/10/19
1.53The sum of $30.00 by 5:00pm on Thursday 17/10/19
1.54The sum of $30.00 by 5:00pm on Thursday 31/10/19
1.55The sum of $30.00 by 5:00pm on Thursday 14/11/19
1.56The sum of $30.00 by 5:00pm on Thursday 28/11/19
1.57The sum of $30.00 by 5:00pm on Thursday 12/12/19
1.58The sum of $30.00 by 5:00pm on Thursday 26/12/19
1.59The sum of $30.00 by 5:00pm on Thursday 09/01/20
1.60The sum of $30.00 by 5:00pm on Thursday 23/01/20
1.61The sum of $30.00 by 5:00pm on Thursday 06/02/20
1.62The sum of $30.00 by 5:00pm on Thursday 20/02/20
1.63The sum of $30.00 by 5:00pm on Thursday 05/03/20
1.64The sum of $30.00 by 5:00pm on Thursday 19/03/20
1.65The sum of $30.00 by 5:00pm on Thursday 02/04/20
1.66The sum of $30.00 by 5:00pm on Thursday 16/04/20
1.67The sum of $30.00 by 5:00pm on Thursday 30/04/20
1.68The sum of $30.00 by 5:00pm on Thursday 14/05/20
1.69The sum of $30.00 by 5:00pm on Thursday 28/05/20
1.70The sum of $30.00 by 5:00pm on Thursday 11/06/20
1.71The sum of $30.00 by 5:00pm on Thursday 25/06/20
1.72The sum of $30.00 by 5:00pm on Thursday 09/07/20
1.73The sum of $30.00 by 5:00pm on Thursday 23/07/20
1.74The sum of $30.00 by 5:00pm on Thursday 06/08/20
1.75The sum of $30.00 by 5:00pm on Thursday 20/08/20
1.76The sum of $30.00 by 5:00pm on Thursday 03/09/20
1.77The sum of $30.00 by 5:00pm on Thursday 17/09/20
1.78The sum of $30.00 by 5:00pm on Thursday 01/10/20
1.79The sum of $30.00 by 5:00pm on Thursday 15/10/20
1.80The sum of $30.00 by 5:00pm on Thursday 29/10/20
1.81The sum of $30.00 by 5:00pm on Thursday 12/11/20
1.82The sum of $30.00 by 5:00pm on Thursday 26/11/20
1.83The sum of $30.00 by 5:00pm on Thursday 10/12/20
1.84The sum of $17.00 by 5:00pm on Thursday 24/12/20
2.The tenant is to pay future rent as it becomes payable under the tenancy agreement, less any rebate granted by the Commissioner for Social Housing, the next payment of rent being due on or before Thursday 19 October 2017 and the sum of $155.50 fortnightly thereafter.
3.If the tenant fails to make one of the payments required by paragraph 1:
(i)the tenancy agreement shall terminate at 5:00 pm the following day;
(ii)upon termination of the tenancy agreement the lessor is entitled to possession of the premises; and
(iii)the instalments remaining under paragraph 1 are immediately due and payable.
4.If the tenant fails to make a payment of future rent as required by paragraph 2:
(i)the tenancy agreement shall terminate at 5:00 pm the following day;
(ii)upon termination of the tenancy agreement the lessor is entitled to possession of the premises; and
(iii)the instalments remaining under paragraph 1 are immediately due and payable.
5.If the tenancy agreement is terminated by operation of paragraph 3 or paragraph 4 of this Order, the tenant must vacate the premises on or before the date of termination.
6.If the tenant fails to vacate the premises as required by paragraph 5 of this Order the lessor may request the Registrar of the ACT Civil and Administrative Tribunal to issue a warrant for eviction.
7.Orders 3 and 4 expire at 5:00 pm on Wednesday 27 September 2018.
……………Signed………..
Senior Member H Robinson
Delivered for and on behalf of the Tribunal
REASONS FOR DECISION
1.This is an application for orders for termination and possession under section 49 of the Residential Tenancies Act 1997 (RT Act). The circumstances of the case included previous orders having been made under subsection 49(3) of that Act (the conditional orders), which had operated but had not been the subject of any eviction action by the lessor. The circumstances thus gave rise to the following issues which required determination:
(a)The nature of the relationship between the parties after the operation of the earlier orders, including:
(i) whether upon the expiry of a conditional termination and possession order the earlier tenancy ‘revived’;
(ii) if there was a ‘statutory tenancy’, whether this was a ‘residential tenancy agreement’ such that application could be made under section 49 and whether it by its nature precluded an implied tenancy from arising;
(b)Whether the lessor was entitled to ‘appropriate’ monies received from the tenant after operation of those orders towards existing debts, or future rent.
(c)Whether the refusal by the Tribunal of an earlier application for termination and possession orders operated as res judicata.
2.This matter was heard on 8 March 2017 and the decision was handed down on 28 September 2017. At that time we advised the parties that reasons for decision would be provided at a later date. These are those reasons.
3.In these reasons for decision the Tribunal hearing this matter is referred to as Tribunal. References to the tribunal or ACAT in these reasons refer to previous tribunals or the ACT Civil and Administrative Tribunal generally.
Background
3.The applicant, the Commissioner for Social Housing (Commissioner), is responsible for the provision of social housing in the ACT.
4.On 8 January 2004 the Commissioner and the respondent entered into a residential tenancy agreement (the first agreement) in relation to a property (the premises). It was a term of the first agreement that the respondent would make payments of rent. When the respondent fell behind on her rent, the Commissioner lodged with the tribunal an application for a termination and possession order (TPO) pursuant to section 49 of the RT Act (the first termination application).
5.Section 49 of the RT Act provides, relevantly, as follows:
49Failure to pay rent
(1)On application by a lessor, the ACAT may make a termination and possession order if—
(a)the tenant has failed to pay rent that has become payable under the residential tenancy agreement; and
(b)the lessor has served a termination notice on the tenant on the basis of the failure to pay rent; and
(c)the tenant has not vacated the premises in accordance with the notice.
(2)If a lessor has made an application under subsection (1), the ACAT may refuse to make a termination and possession order if—
(a)the tenant has paid any rent that has become payable and is, in the ACAT’s opinion, reasonably likely to pay future rent as it becomes payable; and
(b)the ACAT considers it just and appropriate to do so.
(3)Subsection (4) applies if—
(a)the tenant is, in the ACAT’s opinion, reasonably likely to pay the rent that has become payable as well as pay future rent as it becomes payable; and
(b)the tenant agrees to pay the rent that has become payable, and undertakes to pay future rent as it becomes payable, as required by the ACAT.
(4)Instead of making a termination and possession order under subsection (1), the ACAT may order (conditional termination and possession order) that if the tenant fails to pay the rent that has become payable, or future rent as it becomes payable, as required by the ACAT—
(a)the tenancy terminates at a stated hour on the day after the day when any rent becomes payable and is not paid; and
(b)the lessor becomes entitled to possession of the premises and all rent payable is payable immediately.
(5)If—
(a)the ACAT makes an order under subsection (1); and
(b)the ACAT is satisfied that—
(i)were the order not suspended for a specified period of no more than 3 weeks the tenant would suffer significant hardship; and
(ii)that hardship would be greater than the hardship that would be suffered by the lessor if the order were suspended for the specified period;
the ACAT may suspend the operation of the termination and possession order for a specified period of no more than 3 weeks.
6.On 21 February 2013 the tribunal declined to make an unconditional termination and possession order under section 49(1) of the RT Act, and instead made a conditional termination and possession order (CTPO) under section 49(4) of the RT Act.
7.At the date the CTPO was made, the arrears were $1,403.15. The order required the tenant to make payments of rent, and to pay $50 per fortnight toward the arrears. The CTPO was to commence on 7 March 2013 and to expire on 21 March 2014.
8.The first payment required under the CTPO was rent of $199 plus rental arrears of $50 totalling $249. It was to be made by 5pm on Thursday, 7 March 2013. On 7 March 2013 the tenant made a payment of $246.25, which was an underpayment of $2.75. It was not in contest that this amounted to a breach of the CTPO by the tenant. It was also not in contest that, by reason of the breach and operation of law, the tenancy terminated at 5pm on 8 March 2013, rendering the arrears immediately due and payable. The amount said to be owing at that time was $1,355.90.
9.Section 42A and 42B of the RT Act set out the consequences of a failure to comply with a CTPO:
42AFailure to comply with conditional order
(1)A lessor may apply to the registrar for a warrant for the eviction of a person if—
(a)the ACAT has issued a conditional termination and possession order; and
(b)the order has not expired; and
(c)the lessor satisfies the registrar that the condition has been satisfied; and
(d)the person to whom the order was directed continues to live at the premises.
(2)On receiving an application for a warrant, the registrar must—
(a)list the application for hearing before the ACAT not earlier than 1 week after the day the notice under paragraph (b) is given to the person; and
(b)give notice to the person to whom the conditional termination and possession order is directed stating—
(i)that an application for a warrant for eviction has been made; and
(ii)the time when, and the place where, the application is to be heard; and
(iii)that the person should seek legal advice about the application if the person wants to continue to live at the premises.
42BHearing of application
(1)An application under section 42A must be decided as if it were an application under section 49 for a termination and possession order.
(2)After considering the application and hearing the parties who attend the hearing, the ACAT must—
(a)allow the application; or
(b)dismiss the application.
(3)If the ACAT allows the application, the ACAT must direct the registrar to issue a warrant for the eviction of the person.
(4)If the ACAT dismisses the application, the ACAT may—
(a)confirm the conditional termination and possession order; or
(b)make another conditional termination and possession order; or
(c)set aside the conditional termination and possession order.
10.Briefly stated, these sections provide that where a tenant breaches a CTPO, the lessor may apply to the tribunal for a warrant for the tenant’s eviction. Upon hearing such an application, the tribunal may then determine whether to issue the warrant, dismiss the application, or make another termination and possession order.
11.In this case that process was not followed. The Commissioner did not make an application to the tribunal for a warrant of eviction after the date of the breach, or indeed before the expiry of the CTPO. The relationship between the parties continued, without any evident change, until early 2015, when the respondent again fell behind with her rent.
12.On 2 April 2015 the Commissioner filed a second application for a TPO pursuant to section 49 of the RT Act (second application).
13.The arrears owing at the time of the second application were claimed by the Commissioner to be $2,602.44. It is common ground that the arrears relied upon included a sum of arrears that had been the subject of the CTPO.
14.The second application was dismissed by the tribunal on 14 December 2015. The reasons for that decision are set out in Commissioner for Social Housing v Ryan [2015] ACAT 87 (Ryan No 1). This decision is considered in more detail below, but in effect, the tribunal declined to make any eviction order. Significantly, in declining make any eviction order, the Senior Member stated that:
91. The Tribunal acknowledges that it must apply the decision Moffatt. Accordingly the Tribunal takes as its starting point the following:
(a) that the 2004 tenancy terminated on 7 March 2013; and
(b) a form of statutory tenancy commenced at that time.
15.Ryan No 1 was not appealed.
16.After Ryan No 1, the Commissioner took no further action in relation to the respondent’s tenancy for some time. During this period, the relationship continued on foot as usual. It was not contested that the Commissioner undertook inspections of the property, processed a rental rebate application, accepted payments in the form of rental, and generally acted as a lessor. At no stage did the Commissioner indicate that it did not consider itself a party to a residential tenancy agreement.
17.Unfortunately, the tenant again fell behind on her rent, and on 18 February 2016 the Commissioner filed another application for termination of the tenancy pursuant to section 49 of the RT Act. The arrears were stated to be $2798.41 (third application). Again, this included a sum of arrears carried over from the first application.
18.On 24 November 2016 the third TPO application came before the Tribunal. At that first hearing the parties were in agreement that the first tenancy agreement of 2004 terminated in March 2013 due to the self-executing nature of the CTPO, although there was some disagreement over the exact date the termination took effect.[1] Where the parties substantively differed was in their interpretations regarding the nature of the relationship that now exists between the parties, and the status of the rent arrears owing under the first tenancy agreement.
[1] The applicant at [5] in his submissions claims that the date for termination was 7 March 2013. The respondent submits that the date of termination 8 March 2013 being the date following the date of the breach.
19.In summary:
(a)the Commissioner argued that the approach of the tribunal in Ryan No 1 allowed it to take a ‘revival approach’ whereby arrears of rent owed under a previous tenancy could be claimed under the existing tenancy; and
(b)the applicant argued that the current tenancy was an “implied” tenancy that arose by the conduct of the parties, and that the only “arrears of rent” were those payable under the implied tenancy.
20.Following this initial hearing, directions were made for the filing of submissions, and the matter was set down for final hearing on 8 March 2017.
21.On the morning of 8 March 2017 the Commissioner’s advocate raised a question as to the tribunal’s jurisdiction to hear the matter. On the morning of the hearing of this matter, an advocate for the Commissioner had sent an email to the tribunal and the parties raising what, he contended, was a jurisdictional issue. He sought an adjournment to consider whether to refer this matter to the Supreme Court. The Commissioner’s advocate further built upon this argument at the hearing.
22.Ultimately, the Tribunal was not satisfied that a jurisdictional issue arose, and declined to grant the Commissioner an adjournment. The Commissioner sought reasons for that decision. Those reasons are set out below, followed by the Tribunal’s reasons on the substantive matter.
The preliminary jurisdictional issue
23.The preliminary jurisdictional issue concerned whether there was a ‘residential tenancy agreement’, within the meaning of that term as defined in section 79 of the RT Act. The Commissioner submitted that if there was no ‘residential tenancy agreement’ between the parties, then the Tribunal did not have jurisdiction to hear the matter as a dispute under the RT Act.
24.The argument advanced by the Commissioner was complex. It was also, to some degree, tied up with the more substantial issue in this case – being whether the first tenancy had in some way been ‘revived’. Nonetheless, we can deal with the preliminary points made here.
25.First, section 79 of the RT Act sets out who may apply to the tribunal for resolution of a residential tenancy dispute, and provides:
79Who may apply to ACAT?
(1)A party to a residential tenancy agreement (including a child) may apply to the ACAT for resolution of a tenancy dispute.
(2)A party to an occupancy agreement (including a child) may apply to the ACAT for resolution of an occupancy dispute.
26.‘Residential tenancy agreement’ is then defined in section 6A as follows:
6AWhat is a residential tenancy agreement?
(1)An agreement is a residential tenancy agreement if, under the agreement—
(a)a person gives someone else (the tenant) a right to occupy stated premises; and
(b)the premises are for the tenant to use as a home (whether or not together with other people); and
(c)the right is given for value.
(2)The agreement may be—
(a)express or implied; or
(b)in writing, oral, or partly in writing and partly oral.
(3)The right to occupy may be—
(a)exclusive or not exclusive; and
(b)given with a right to use facilities, furniture or goods.
27.Significantly, the Commissioner contended, the definition in section 6A requires that there be an “agreement” between the parties for a “right to occupy” a premises. In the Commissioner’s submission, this definition would not cover a ‘statutory tenancy’ of the kind described by the Tribunal in Ryan No 1.
28.The Commissioner submitted that in Ryan No 1, the tribunal determined that a statutory tenancy had arisen between the parties on 7 March 2014. This finding, the Commissioner contended, “was never challenged” on appeal, and is therefore res judicata.
29.The ‘statutory tenancy’ was, the Commissioner submitted, the kind of protection outlined by Mossop M in Moffatt[2] “a bare protection against a forcible eviction” being a form of “prescribed possession” as provided for by section 37 of the RT Act.
[2] At [44]-[47]
30.In other words, the statutory tenancy was a mere protection against eviction in the absence of a Court or Tribunal order. It requires a lessor who wishes to recover possession of a house to apply to the tribunal or the Supreme Court for an appropriate order before doing so, but it doesn’t encompass any other terms and conditions. More significantly for the present circumstances, the Commissioner contended that the statutory tenancy operated in such a way as to make the establishment of an implied tenancy impossible. This is because, having regard to the terms of 6A, an implied tenancy requires that the lessor give the tenant ‘a right to occupy’. A ‘statutory tenancy’ however, the Commissioner contended, did not give the Commissioner a right to occupy the premises, and therefore the Commissioner could not ‘give’ that right to the tenant. No ‘implied tenancy’ could arise.
31.The existence of the statutory tenancy, the Commissioner contended, made this situation somewhat unusual, and distinguishable from other matters that typically come before the tribunal on the wake of the termination of a tenancy by reason of a breach of the CTPO.
32.It was on this basis that the Commissioner sought an adjournment of proceedings, in order to ‘consider’ whether it was necessary to commence proceedings in the Supreme Court.
33.The argument advanced by the Commissioner was interesting. It raised some serious questions about the consequences of a ‘statutory tenancy’, where one arises. However, for several reasons, the Tribunal was not satisfied that it was either necessary or appropriate to adjourn the proceedings in order to allow the Commissioner to explore it further. Those reasons are considered below.
34.First, however, it is opportune to make some observations about ‘jurisdictional arguments’ of the kind made by the Commissioner.
35.The ACAT is a subordinate body established under statute. Its jurisdiction is limited and determined by legislation. The Tribunal must be vigilant to ensure that it acts within that jurisdiction. Agreement, silence or acquiescence of parties cannot confer jurisdiction on the tribunal beyond that which statute gives, nor can it exercise jurisdiction only because the parties request its exercise. Where questions of jurisdiction are raised, the tribunal must reach its own conclusions on the issue[3], and it will usually not proceed until satisfied it may do so.
[3] See Welch v Erica’s Aesthetics Pty Ltd [2017] ACAT 68 at [6]
36.However, the circumstances under which this particular jurisdictional issue was raised are somewhat unusual, to say the least. The Commissioner conceded that it was not certain whether there was a jurisdictional issue – rather, the Commissioner wanted an adjournment to consider whether there was such an issue. When it was suggested to the Commissioner’s advocate that the more appropriate course of action would be to withdraw the application, so that he could consider which forum to bring the application in, he declined to do so. Then, when asked what he would do if the adjournment was denied, the Commissioner’s advocate confirmed that he would argue that there was jurisdiction, and would press for a termination and possession order, notwithstanding the Commissioner’s earlier concerns about jurisdiction. Such conduct is neither helpful, nor appropriate. This was the Commissioner’s application. If the Commissioner was of the view that the Tribunal did not have jurisdiction, the appropriate course would have been to withdraw the proceedings, and commence instead in the Supreme Court. In this case, there would have been no prejudice to the Commissioner in doing so.
37.Secondly, the Commissioner’s characterisation of the legal dictum of res judicata was simply not correct.
38.The Tribunal asked the Commissioner’s advocate whether, by referring to the principle of res judicata, he was suggesting that the Tribunal was “bound forever” by the findings in Ryan No 1. He stated “yes”. But that is not how the principle works.
39.The purpose of res judicata is to ensure finality in litigation and that a party should not be twice vexed in the same matter.[4] The principle is defined in the Concise Australian Legal Dictionary as:
Lat – a judicially decided matter. The rule that if a dispute is judged by a court of competent jurisdiction, the judgment of the court is final and conclusive as to the rights and duties of the parties involved. Res judicata constitutes an absolute bar to a subsequent suit for the same cause of action.
[4] Johnson v Gore Wood and Co (2001) 1 All ER 481 per Lord Bingham
40.Res judicata applies to prohibit a rehearing of the same case, between the same parties, on the same facts.[5] In this case, res judicata would operate so as to prevent this Tribunal from making a different finding on the facts as they were before the Tribunal in Ryan No 1, but it does not operate so as to ‘freeze’ a circumstance into the future. If the facts change, so may the legal relationship. The Tribunal cannot revisit the decision made by the Tribunal in Ryan No 1 in 2015, but it can, and indeed must, turn its mind to the consequences of the relationship as it is now. To do that, it must hear the matter, and make findings as to those facts and the law as it applies to them.
[5] Chamberlain v Deputy Federal Commissioner of Taxation (1988) 164 CLR 502
41.Accordingly, and for the above reasons, the Commissioner’s request for an adjournment was refused.
42.In any case, the Tribunal is satisfied that it has jurisdiction, as for reasons that will soon become apparent, the Tribunal is satisfied that the Tribunal in Ryan No 1, did not make findings of the kind contended for by the Commissioner in this case.
The substantive issue – the revival approach
The applicant’s position
43.Once the Tribunal declined to adjourn the proceedings, the Commissioner pressed its application for a termination and possession order pursuant to section 49 of the RT Act.
44.In support of its application, the Commissioner contended that:
(a)the respondent was significantly in arrears;
(b)the sum of that arrears included arrears owing under the previous tenancies; and
(c)accordingly, the notice to remedy issued 16 March 2016 and the notice to vacate issued on 27 September 2016 were valid notices showing the correct amount of arrears.
45.In arguing that the notices showed the correct arrears, the Commissioner relied upon what it described as the ‘revival approach’. The revival approach is drawn from the reasoning of the tribunal in Ryan No 1, particularly at [102] to [107]. These passages provide:
102.The issue for the Tribunal comes down to whether an order for possession should be made on the basis of the assumed trivial rent default on 7 March 2013 and having regard to:
a.the fact that the tenant was in rent credit in mid 2014;
b.the reasons why she fell into default in mid 2014;
c.the uncertainty as to present state of the arrears which in any event are not large;
d.the Commissioner’s role as a social housing provider of last resort; and
e.the tenant’s professed commitment to rectifying the arrears.
103.In these circumstances the Tribunal is not prepared to make the order for possession.
104.What is the import of the refusal to make an unconditional termination and possession order? Does the statutory tenancy continue or does it in some way revive the 2004 tenancy? If the statutory tenancy continues how it is different from the 2004 tenancy?
105.Assuming the revival approach, the CTPO of 21 February 2013 has expired and so no longer exists. Presumably the Tribunal can make a new CTPO under the power in section 42B(4)(b) without the need for there to have been any new valid notices.
106.In order to make a new CTPO the Tribunal needs to know the precise amount of rent arrears, which on the revival approach would include the whole of the historical rent arrears as they all relate to the one single tenancy. The Tribunal does not have this information and so is not in a position to make a new CTPO.
107.Given the uncertainty of the rent arrears in this matter, including rebate issues, the Tribunal declines to make a new CTPO. It would be cleaner and easier for the Commissioner to assess the new arrears based on the revival approach. If any arrears exist, a notice to remedy can be issued.
46.Drawing upon these passages, the Commissioner’s submissions were that, since Ryan No 1 was decided:
…the Commissioner has taken the ‘revival’ approach as suggested by Senior Member Anforth and have included the historical arrears as they relate to one single tenancy and these amounts are reflected on the Notice to Remedy issued on 16 March 2016 and the Notice to Vacate issued on 27 September 2016.
47.On the issue of whether an implied tenancy had arisen, the Commissioner was adamant that it had not, and indeed could not. The applicant argued that whether a tenancy has arisen is a question of fact.[6] However, the Commissioner submitted, as set out above, no tenancy could be implied in this case, because there was a statutory tenancy in place that precluded such a tenancy from arising. Accordingly, arrears of rent owed continued under the one, continuing tenancy.
Respondent’s position
[6] Pesi [appeal] at [55]
48.The respondent agreed that upon the termination of the first agreement on 8 March 2013, the lease of 8 January 2004 came to an end. However, the tenant says that upon that lease coming to an end, the sum of arrears that was unpaid at that date immediately became payable as a debt owed under the old tenancy agreement. Sometime after that date, a new implied tenancy arose.
49.The respondent further submits that the notice to remedy and notice to vacate were invalid, because they referred to arrears under a previous tenancy, not to the arrears under the new tenancy.
50.The respondent also contended that the ‘revival approach’ cannot be used by the Commissioner to attach arrears owed under the first agreement to the new implied tenancy.
51.The respondent’s arguments were several.
52.First, the ‘revival approach’ was not a declaration of the law, but a discussion about the problems with the framework for CTPOs, and a highlighting of the complexities and uncertainties that these provisions of the RT Act give rise to.
53.Second, even if the ‘revival approach’ were a legal declaration of the law, adoption of the approach was not available to the Commissioner in any case. Rather, ‘revival’ was an option that may be open to the Tribunal. The respondent’s submissions on this point read:
When Mossop M offered a ‘revival interpretation’ in Commissioner for Social Housing and Moffatt he was referring to a situation where actual termination of the tenancy ensued, which permitted ‘subsequent revival’ of the tenancy. In his words:
A tenancy, although terminated at the point of non-compliance of the CTPO can be ‘revived’ in some manner by operation of an order under s 42B. This interpretation would mean that the existing tenancy ended. The terminated lease would therefore not directly govern the relationship between the occupier and owner after the date of ‘termination’ pursuant to the CTPO.
54.The respondent then quoted the Appeal Tribunal in Commissioner for Social Housing and Pesi [Appeal]:
The Appeal Tribunal recognises, as it did Mossop M in Moffatt, that an earlier terminated lease might ‘revive’ if, on application for a warrant under section 42A the tribunal had made ‘another’ CTPO under section 42B (4)(b) that was found to ‘attach’ to the lease which had earlier terminated.[7]
[7] Pesi [Appeal] at [53]
55.Finally, the respondent concluded that:
Revival of a tenancy is not an assertion to be made by the inclusion in a notice of “the whole of the historical arrears as they all relate to the one single tenancy” as the respondent implies.… Neither can it be claimed under s 49 application when there have been historical CTPO’s. The revival of the tenancy is possible in s 42A proceedings but is not relevant to s 49 proceedings.
56.In other words, to the extent that the ‘revival approach’ may be applicable, it is something that can only be given effect by proceedings before the Tribunal, in which a previous CTPO is set aside as a consequence of an application for a warrant under section 42A of the RT Act. It is not something available to the Tribunal in the context of a subsequent application for a TPO order under section 49 of the RT Act, and it is certainly not something that the Commissioner can implement of its own accord.
Consideration
57.To resolve the issues raised in this case, it is necessary to review the findings of the Tribunal in Ryan No 1, and also the reasoning in several other cases, including Master Mossop’s (as he then was) decision in Commissioner for Social Housing in the ACT v Moffatt [2015] ACTSC 4 (Moffatt) and the decisions in Commissioner for Social Housing v Pesi, both at first instance and on appeal.
58.It is easiest to start with Moffatt. Much like the facts of the present case, Moffatt concerned a breach of a CTPO, about which no action was taken by the Commissioner, who later sought a further TPO. This matter was the first time the Supreme Court gave rigorous consideration to how section 49(4) of the RT Act, which deals with CTPOs, operates in law. It remains the only case in which a Court has considered this provision.
59.At first instance the Tribunal dismissed the Commissioner’s application for a termination and possession order.[8] The Tribunal held that, by operation of section 7 of the RT Act, when the old tenancy terminated pursuant to the CTPO, the parties actions in continuing the same arrangements caused a new implied residential tenancy agreement to arise between them, and Ms Moffatt was obliged to pay rent in relation to her occupation of the property, albeit under a new tenancy, from that time.
[8] Commissioner for Social Housing in the ACT v Moffatt [2013] ACAT 83
60.The Commissioner appealed to the Appeal Tribunal on a question of law, being whether the tribunal erred in its interpretation of the operation and effect of CTPOs made pursuant to section 49(4) of the RT Act. After consideration of the matter, then Appeal President Stefaniak ordered that the matter be referred to the Supreme Court pursuant to section 84 of the ACT Civil and Administrative Tribunal Act 2008 on the question of law.
61.Referrals under section 84 deal with identified questions of law and may involve a stated case or agreed facts are not full hearings. As such, the question before the Supreme Court was confined to whether: “... [Ms Moffatt’s] tenancy was terminated in accordance with the terms of that order following a breach of the conditions of that order?” His Honour found that the tenancy was so terminated, in the sense that a breach of a CTPO “…terminates a residential tenancy agreement, although this does not mean that all the rights and obligations of the parties under the agreement end at the time of the termination.”[9]
[9] at [65]
62.With that finding, the question that was referred was resolved. However, after determining that the provisions of a CTPO were self-executing, Master Mossop then turned his attention to the meaning of the term ‘terminates’. His Honour set out two contrasting interpretations – the “continuation interpretation” and the “revival interpretation”. On this point, his Honour observed as follows:
49. Termination that permits the continuation of the tenancy (“the continuation interpretation”): This was the characterisation contended for by the Commissioner. Upon this interpretation, “termination” is given a highly attenuated meaning, namely, notwithstanding the termination of the lease in accordance with the terms of the CTPO, the tenancy was not in fact ended because the tenant did not vacate and the potential, pursuant to s 42B(4), for an order continuing the tenancy. This would mean that the tenancy was only terminated in some abstract and contingent sense which would become absolute upon either the tenant vacating the premises or the Tribunal directing the issue of a warrant for eviction. Pending a decision of the Tribunal under s 42B, the tenancy would in fact continue on the same terms. There would therefore be an existing tenancy upon which orders under s 42B could operate.
...
52. The interpretation would mean that, because there was an existing tenancy that continued after “termination”, there was no room to imply a new tenancy from the conduct of the parties such as the tender and acceptance of rent.
53. Actual termination that permits subsequent revival (“the revival interpretation”): This was the characterisation contended for by Ms Moffatt. A tenancy, although terminated at the point of non-compliance with the CTPO, can be “revived” in some manner by operation of an order under s 42B. This interpretation would mean that the existing tenancy ended. The terminated lease would therefore not directly govern the relationship between occupier and owner after the date of “termination” pursuant to the CTPO.
63.His Honour went on to set out the arguments in favour of both approaches, before concluding that the ‘revival’ approach was the most accurate:
64. In this case the text of the RT Act is more consistent with the revival interpretation rather than the continuation interpretation. It means that “terminates” means what it says, subject to the possibility that, in appropriate circumstances, some form of tenancy going beyond a bare right to avoid eviction will be revived upon the determination of the tribunal under s 42B. It is also more consistent with the terms of s 36(d) and s 56 of the Act.
64.It is important to note, however, that his Honour did not have to decide which approach actually applied. His Honour did not consider whether, and under what circumstances, a tenancy could or did ‘revive’ – indeed, he was ‘not in a position’ to make any findings on this point. As such, the revival approach was neither defined nor applied, and the comments made by His Honour in relation to it were obiter (although, being observations by the Supreme Court, they would, nonetheless, in the usual course be at least highly persuasive on this Tribunal). Numerous questions about the practical operation of CTPOs were left for a later date, with his Honour even warning that:
Given the ubiquity of residential tenancies and their importance in the lives of many residents of the Territory, the legislature should, in my view, urgently review the provisions of the RT Act relating to termination of residential tenancies for non-payment of rent.[10]
[10] at [71]
65.In the months following the Moffatt decision, the observations of Mossop M in relation to the ‘revival approach’, and indeed CTPOs more generally, were considered by the two differently constituted tribunals.
66.The first published decision was in Commissioner for Social Housing and Pesi [2015] ACAT 58, was delivered on 3 September 2015. Pesi was later affirmed on appeal in Commissioner for Social Housing and Pesi [2016] ACAT 100. The second, published some months afterwards on 14 December 2015, was Ryan No 1.
67.Pesi concerned a situation very similar to the present case. The tenant had the benefit of a CTPO, but had breached that order. The Commissioner took no action for some time, but then sought a TPO. The tenant opposed the TPO on the basis that the CTPO had terminated the first tenancy, an implied tenancy had arisen between the parties, and the notices to remedy and notices to vacate contained arrears from the first tenancy, and hence were inaccurate and invalid.
68.In Pesi, the tribunal considered at some length the requirements for finding an “implied tenancy”. That analysis, together with the observations of the tribunal at first instance and the Supreme Court on referral in Moffatt, laid the foundation for what may be considered the ‘usual approach’ where there is an unaddressed breach of a CTPO. Elements of that reasoning are relevant to this case, so it is useful to restate them.
69.First, having regard to the findings of Master Mossop in Moffatt, the Senior Member in Pesi described the operation of the CTPO, including the conclusion that:
11. Thus, where the tenant breaches a conditional termination and possession order by either a failure to pay rent that has become payable (that is the arrears identified in the order) or by failing to pay rent as it becomes payable, there are two important consequences:
(a) the tenancy terminates at the time set out in the conditional termination and possession order; and
(b) all rent payable until the termination of the tenancy becomes payable immediately.
12. If the tenant does not vacate the premises then the lessor may make an application pursuant to section 42A for a warrant of eviction. The purpose of that warrant is to enable the lessor to recover vacant possession of the premises.
70.The tribunal then went on to explain that, where a lessor does not take any action to evict the defaulting tenant, and the relationship continues, in practice, as before, the ‘consequences’ of that may include the establishment of a new, ‘implied tenancy’:
14. In circumstances where the lessor fails to make an application pursuant to section 42A, and the tenant remains in possession of the premises, it may be that a new tenancy arises by implication from the conduct of the parties.
15. Section 6A of the Act defines a residential tenancy agreement as an agreement whereby a person gives to someone else (the tenant) a right to occupy premises and the premises are for the tenant to use as a home and the right is given for value. Section 6A(2) provides that the agreement may be express or implied or in writing, oral or partly in writing and partly oral.
16. Where the parties are in a continuing relationship which involves exchange of documents and other correspondence, it may be possible to state that the parties are in a contractual relationship, but difficult to genuinely label any particular action as an offer or acceptance. It may be more sensible to ask whether, in the circumstances, it can be shown that each party has assented to the contract. In Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 the Court examined the surrounding circumstances and asked whether a reasonable bystander would conclude from the conduct of the parties – that is the doing of work and the acceptance of payment for that work – that the parties were in a contractual relationship.
17. In Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 the Court concluded that it was not necessary to specifically identify an offer and acceptance before a contract can be said to be formed between the parties and concluded that there was sufficient authority for a court to find that a contract may be evidenced otherwise than by offer and acceptance. In Brogden v Metropolitan Railway Co (1877) to App Cas 666 it was found that conduct of the parties could lead to the inference that a contract which had been propounded had been in fact accepted. If one party had acted so that the other was reasonably entitled to believe that there was a contract, then there would be a contract which would bind them.
18. The common law in relation to leases recognised that a residential lease could arise from the conduct of the parties, in circumstances where the requirement that the agreement be in writing had not been met. The statutory scheme provided for residential tenancies in the ACT means it is much easier to imply a residential tenancy than under the common law. The Act provides that a residential tenancy agreement may be entirely oral. Once a residential tenancy agreement has arisen by implication, its terms are the standard residential tenancy terms set out in the schedule to the Act.
19. Whether a new tenancy has arisen by implication from the conduct of the parties is a question of fact, to be determined on a case-by-case basis. In making such a determination the Tribunal would have regard to the amount of time that had passed since the tenancy terminated on the breach by the tenant and the conduct of the parties, including but not limited to:
(a) correspondence between the parties;
(b) the demanding of rent;
(c) the payment of rent;(d) the exercise by the lessor of rights arising under a residential tenancy agreement, such as routine inspections, or market rent increases;
(e)the meeting by the lessor of obligations, such as repairs to the premises; and
(f) the calculation of a rental rebate.
20. If the Tribunal determines that a new tenancy has arisen by implication from the conduct of the parties, then if the tenant breaches the new tenancy agreement by failing to pay rent, the lessor is obliged to serve a valid notice to remedy and a valid notice to vacate upon the tenant, before making an application to ACAT for termination and possession.
71.The Senior Member next discussed the nature and scope of any ‘statutory tenancy’ that may arise immediately after the breach, and before any action is taken by the parties to establish an implied tenancy. While acknowledging the possibility of a statutory tenancy, she stated, that there was support for the Commissioner’s submission in this case that a statutory tenancy arose immediately upon termination of the lease consequent upon the breach of the CTPO. The Senior Member observed that:
To hold that a statutory tenancy arises immediately upon termination of the tenancy regulated by the conditional termination and possession order by the tenant’s breach of that order and that that statutory tenancy continues to regulate the relationship, is not consistent with the words or the intention of the Act. The chief difficulty is in determining the terms of such a tenancy. Either this is a tenancy subject to the Act and therefore containing the standard terms, or it is some other creature which contains only so many of those terms as suit the lessor, but allows the lessor to terminate by application to the ACAT, without the requirements of notices to remedy and vacate. There is no basis within the Act for such a statutory tenancy. The Act provides that a residential tenancy agreement must contain, and is taken to contain, terms to the effect of the standard residential tenancy terms mentioned in schedule 1. Such terms include the requirements for service of notices to remedy and to vacate.
72.In the end, the Senior Member determined that by including the arrears owed under the previous tenancy, the notice to remedy contained an error (by a factor of three[11]), declined to remedy the error, and dismissed the application.
[11] at [39](d)
73.The Commissioner appealed the decision in Pesi. The Appeal Tribunal (President McCarthy, Senior Member Lunney and Member Morris) summarised the Commissioner’s grounds of appeal as follows:
27. All these grounds of appeal arose from the Commissioner’s position that where a tenant remains in occupation of residential premises following termination of a tenancy agreement consequent upon a breach of a CTPO condition, the tenant does so under a statutory tenancy that operates under the same terms as the former tenancy until an order is made by the Tribunal under section 42B of the Act. The Commissioner submitted that until an order under section 42B is made the rental arrears under the former tenancy agreement ‘carries over’ as owing under the statutory tenancy with the result that the amounts stated in the notices to remedy and vacate were materially accurate. The notices were therefore valid or any minor inaccuracy in the stated rental arrears could (and should) be waived under section 59 of the Act.
74.The Appeal Tribunal rejected this argument. In relation to the issue of the existence of as statutory tenancy, the tribunal observed that:
... Although the tribunal found “there is nothing in the Act to support the assertion that a statutory tenancy arises immediately upon termination resulting from a breach of a conditional termination and possession order”, the tribunal went on to acknowledge by reference to Moffatt that “the period of time which elapses between the termination of the tenancy and the application by the lessor for a warrant of eviction may be a ‘type of statutory tenancy’.
When rejecting the general proposition that a statutory tenancy arises under the Act, subsequent to automatic termination of apply lease, the tribunal was doing no more than acknowledging the position pointed out in Moffatt that although the tenant’s right of occupation pending an order of the Tribunal to evict:
...can be described as a “statutory tenancy” ... there is also absolutely no indication that the legislature intended to pick up any of the jurisprudence on statutory tenancies, either from the United Kingdom or Australia.
75.The tribunal rejected the ‘revival’ approach to the calculation of arrears, although they left open the possibility of ‘revival’ being effected by orders following an application under section 42A:
48. If the relationship following termination on 26 September 2012 was a bare right to remain in occupation pending the lessor obtaining a TPO and serving a warrant for eviction, then the issue of carry-over does not arise. If that bare right is to be termed a statutory tenancy, so be it, but it does not create an obligation to pay ‘rent’ for occupation during that period. Rather, the lessor has a right to obtain compensation of “an amount that would have been payable ... if the premises had been tenanted” during that period pursuant to section 56 of the Act.
49 The Appeal Tribunal recognises, as did Mossop M in Moffatt, that an earlier terminated lease might ‘revive’ if, on application for a warrant under section 42A, the Tribunal had made ‘another’ CTPO under section 42B(4)(b) that was found to ‘attach’ to the lease which had earlier terminated. However that is not the situation here, and it is therefore unnecessary and inappropriate on this appeal to deal with that scenario.
76.The Senior Member’s other comments and findings were not disturbed on appeal. Indeed, the usual approach of the tribunal, when presented with similar facts (as it all too often is) is to apply her reasoning to determine whether, and when, an implied tenancy arises.
77.Turning then to Ryan No 1, and the slightly different approach set out therein.
78.The facts in Ryan No 1 were similar to those in Pesi, but they were not identical. The alleged breach, as set out above, was very minimal, and there was, in the Tribunal’s view, also “real doubt whether the tenant in fact breached the CTPO on 7 March 2013” (paragraph 43). The tribunal “was prepared to assume” such a breach (paragraph 50), but went no further. It ultimately did not need to decide this point, because the decision to reject the application was ultimately made by reference to other considerations.
79.The Commissioner’s submissions in Ryan No 1, as summarised by the Senior Member in his reasons, are not dissimilar to those made by the Commissioner in this case. The summary was as follows:
24. The Commissioner argued that notwithstanding the automatic termination of the tenancy upon the alleged breach on 7 March 2013, the effect of section 42B of the Act was to allow for the possibility of a revival of the original tenancy if the Tribunal declined to make an order for possession. In the interim the relationship of the Commissioner and the tenant was something akin to a statutory tenant. The submissions deal at length with the concept of a statutory tenancy drawn from the repealed Landlord and Tenant Act 1948 (NSW) (the 1948 Act) as it applied in the ACT.
80.In other words, the Commissioner had alleged, following Moffatt, that a statutory tenancy had arisen between the parties following the breach, and that statutory tenancy continued to govern the relationship between the parties. As to the content of the alleged ‘statutory tenancy’, the tribunal further summarised the Commissioner’s argument as follows:
24 If a statutory tenancy came into existence at the time of the breach of the original CTPO, then in accordance with the law developed on statutory tenancies under the 1948 Act, it only exists for a holding period while the lessor obtains a warrant for possession. It did not initiate a new relationship that required a further breach of the statutory tenancy before an attempt to terminate that tenancy.
25 It seems implicit in the Commissioner’s submissions that by equating the statutory tenancy with the original contractual tenancy, the rent arrears debt from the original tenancy carries over into the statutory tenancy and thus saves the validity of the later notice served under the statutory tenancy that included the earlier arrears.
26 The Commissioner’s submission so totally assimilates the original 2004 contractual tenancy to the statutory tenancy that it is a distinction without substance.
81.The tenant’s argument, by contrast, was that the facts of Ryan were similar to those in Moffatt, and a similar approach should be taken – that is, an implied tenancy should be found to have arisen following the breach, and any arrears owed should be determined by reference to what was owed under the new tenancy only.
82.In regard to whether an ‘implied tenancy’ had arisen in this matter, the tribunal in Ryan No 1 stated that that:
92. The Tribunal does not accept the tenant’s argument that a new implied tenancy arose from 7 March 2013. The Tribunal does cavil with the proposition that implied tenancies may arise in similar circumstances, but finds that it does not do so on the facts of this case.
93. The Tribunal accepts the Commissioner’s submissions on the issue of an implied tenancy. There was no intention on the Commissioner’s part to do anything other than manage the continuing 2004 tenancy. The Commissioner’s acceptance of rent is fully explained by this intention. Nothing the Commissioner did pointed to any understanding that a new tenancy had come into existence.
83.Obviously, the tribunal reached a different conclusion to that of the tribunal in Pesi, but that is not necessarily surprising. The facts of the cases were different, and as such the decisions are not inconsistent. In Ryan No 1, the tribunal expressly acknowledged that implied tenancies may arise in similar circumstances, but found that no such implied tenancy arose in this case. This finding of fact was within the discretion available to the tribunal on any view (including, clearly, that of the Appeal Tribunal in Pesi [Appeal]).
84.The Senior Member in Ryan No 1 then proceeded to consider what the legal situation was, given that no implied tenancy arose.
85.The Senior Member took, as his “starting point” [12], the reasoning of the Supreme Court in Moffatt that: “In the period following default a form of statutory tenancy was said to have arisen, pending any order of the Tribunal for possession”. He did not discuss the content of the statutory tenancy, or how it could be terminated. He did not need to, because he had made it quite clear that the “statutory tenancy” he was referring to was a starting point for a discussion of the consequences of there being no implied tenancy. A ‘discussion’ was all it could have been, because the Senior Member was not even certain that there had been a breach of the CTPO.
[12] at [91]
86.In any case, the existence or otherwise of the statutory tenancy was not ultimately a decisive consideration in the Senior Member’s reasoning. Rather, having discussed at some length some of the difficulties with the Act (including those identified by the Supreme Court in Moffatt), the Senior Member opined that the matter could ultimately be decided without a need to determine the status of the tenancy. His decision was set out as follows:
108.The issue for the Tribunal comes down to whether an order for possession should be made on the basis of the assumed trivial rent default on 7 March 2013 and having regard to:
a.the fact that the tenant was in rent credit in mid 2014;
b.the reasons why she fell into default in mid 2014;
c.the uncertainty as to present state of the arrears which in any event are not large;
d.the Commissioner s role as a social housing provider of last resort; and
e.the tenant s professed commitment to rectifying the arrears.
103.In these circumstances the Tribunal is not prepared to make the order for possession.
87.In other words, the ultimate issue for the tribunal in Ryan No 1 was not the nature of a statutory tenancy, or indeed whether or how it arose in this case, but rather whether an order for possession should be made on the basis of the assumed trivial rent default, having regard to a list of discretionary factors. Having considered all the factors listed, the tribunal declined to make a TPO. The tribunal’s discretion to decline to make a termination and possession order, even where other factors appear to have been met, has since been acknowledged by the Appeal Tribunal in Williams v Commissioner for Social Housing [2016] ACAT 93.
88.Paragraphs 102 and 103 amount to the ratio of the tribunal’s decision. The Senior Member then, having determined the case, proceeded to make some further observations about the consequences of his decision for the legal relationship between the parties. These observations were both obiter, and in any event based on an ‘assumed’ finding of fact (i.e. the breach of 7 March 2013). Consequently, they are not, as asserted by the Commissioner in the matter currently before the Tribunal, authority for the proposition that a ‘statutory tenancy’ arose between the parties as at 8 March 2014.
89.Moreover, even if the tribunal’s observations in Ryan No 1 could be taken as authority for the proposition that a statutory tenancy was in place between the parties as at 8 March 2013 or 14 December 2015, the decision is not authority for the proposition that the statutory tenancy still governs the relationship today. As is evident from the reasoning of the Appeal Tribunal in Pesi [Appeal], even assuming that something in the form of a statutory tenancy did arise after the breach of the CTPO, there is nothing in the Act that would prevent an implied tenancy arising at some later date. There is nothing too about the ‘statutory tenancy’ in this case, as discussed n Ryan No 1, to distinguish this case from Pesi, and no reason to adopt a different approach.
90.So, what then is the legal position in this case?
91.A lessor confronted with a breach of a CTPO has several options:
(a)First, a statutory tenancy will be in effect which enables the tenant to remain in possession pursuant to section 37 of the RT Act;
(b)The lessor and tenant may negotiate the tenant vacating the premises (thus entirely ending the residential tenancy) or agree to enter into a new residential tenancy agreement in relation to the premises;
(c)Where there is no agreement, the lessor may take formal legal action to recover possession or to restore the previous residential tenancy agreement, be it to seek a warrant for the tenant’s eviction, to seek to set aside the conditional termination and possession order, or to take some other action available under section 42B.
(d)Alternatively, the lessor may do nothing and continue to accept rent and other entitlements of a lessor as usual, in which case it is likely that a new and implied tenancy will ultimately arise.
92.As to when an implied tenancy arises, the considerations in Moffatt at first instance, and those of Senior Member Lennard in Pesi, are useful indicators of the factors to be considered. As Member Daniel observed in Moffat:
While it may not have been the subjective intention of either party to create a new residential tenancy agreement, it is an objective test which must be applied to the acts of the parties when determining whether an agreement is implied.
93.The conduct of the lessor in conducting inspections, calculating rental rebate, the effluxion of time, writing letters offering support to the tenant, referring the tenant the tenancy support services, accepting rents and approaching the tenant with regard to her rental arrears are, for the reasons set out in Pesi, all factors to be taken into account in determining the implied tenancy has arisen between the parties.
94.In this case, there was no dispute that the Commissioner conducted inspections, calculated a rental rebate, corresponded with the tenant, and accepted monies as rents. There being no dispute as to these facts, and no legal barrier to an implied tenancy arising, the Tribunal has no hesitation in finding such an implied tenancy arose sometime after 8 March 2013.
Conclusion
95.The Commissioner’s position depends upon this Tribunal accepting that the ‘revival’ approach permitted the Commissioner to ‘revive’ the first tenancy agreement, such that the arrears owing under the first tenancy agreement could be ‘revived’ under subsequent tenancies. The argument is, in turn, reliant upon the proposition that Ryan No 1 established a ‘statutory tenancy’ between the parties that endures to this day.
96.For the reasons set out above, the Tribunal does not accept that argument.
97.Rather, the Tribunal finds that, whatever was the legal relationship between the parties on 8 March 2013, and during the days that followed, the acts of the parties have long since given rise to a new, implied tenancy. To the extent that the notices to remedy and notices to vacate include arrears owed under the previous tenancy, they are invalid.
Validity of the notices to remedy and vacate
98.For the reasons set out above the Tribunal accepts that the arrears relate to two separate tenancies, and for that reason the arrears stated in the notice to remedy and the notice to vacate are wrong.
99.The notice to vacate of 27 September 2016 cites rental arrears of $2,619.56. $1,355.90 of this sum was, from 8 March 2013, in fact not arrears of rent, but a debt owing to the Commissioner. The correct sum should have been $1263.66.
100.The Commissioner has submitted that it is within the discretion of the Tribunal to correct the errors in the notices. We will do so in this case, for several reasons.
101.Firstly, the difference between the correct sum and the sum cited in the notice to vacate, while not insignificant, is not in the magnitude of other matters in which the Tribunal has declined to exercise the discretion.
102.In any case, the sum of the debt is not the only consideration. As was observed by Senior Member Lennard in Commissioner for Social Housing v Thorn [2016] ACAT 37:
In determining whether to correct a defect in a notice to remedy or a notice to terminate, the Tribunal ought to take into account all relevant circumstances. The quantum and the relative amount of arrears are but one factor. In this matter other factors that should be considered include that:
(a) the tenant was aware of her obligations to pay rent;
(b) there had been one CTPO made and complied with;
(c) the tenant would have understood from the notices to remedy and the notice to vacate that she was in arrears;
(d) the tenant would have understood that an application to the tribunal was likely to be made by the lessor should she not remedy the arrears;
(e) by March 2015, as a result of her failure to make any significant payments of rent over a three month period she would have understood that she was significantly in arrears of rent; and(f) there is no evidence that the tenant took any steps to address the arrears, or to contact the lessor.
103.This case bears many similarities to Thorn. The tenant was aware of her obligations to pay rent. She had been a party to a previous conditional termination and possession order. She would have understood from the notices to remedy and vacate that she was in arrears. She must have known of her obligation to pay rent and repay arrears and, from her previous experience before the tribunal, she must have known of the consequences of not doing so.
104.Just as significantly, however, the Commissioner indicated that, should the Tribunal be minded to make a TPO in this case, the Commissioner would not oppose the Tribunal making another CTPO, rather than an unconditional order. A CTPO will enable the tenant to retain the tenancy and repay the arrears in manageable instalments. A CTPO, made in these circumstances, would not disadvantage the tenant, and indeed would have the advantage of ensuring a repayment plan. It is preferable to the lessor commencing termination proceedings, again, and seeking a TPO rather than a CTPO – something that was a genuine possibility given that the tenant is still in arrears.
105.In such circumstances, there is no disadvantage to the tenant in amending the order, and the Tribunal will waive the inaccuracies in the notices.
The ‘debt argument’
106.Finally, during the close of the hearing in this matter, the respondent raised as an issue how the payments toward arrears owed under the previous tenancy should be treated.
107.In practical terms, when the CTPO is breached, the payment schedule is rescinded, and the remaining portion of the debt becomes a debt recoverable in its entirety in the Magistrates Court or elsewhere pursuant to the usual enforcement options available in respect of a debt.
108.The respondent contended that, on this basis, the payments of arrears made by the respondent from 8 March 2013 until present should not be taken as payments of arrears under the CTPO, as that fortnightly obligation no longer exists. Rather, the payments made should be treated, by the Commissioner, as rent for the new (implied) tenancy paid in advance.
109.The Commissioner submitted that it was open to a lessor to appropriate monies received from a tenant as it wished, whether to rent payable, or on account of other debts owed by the tenant to the lessor.
110.In Thorn the tribunal was also faced with the question of whether, and if so how, a lessor may ‘appropriate’ monies received from a tenant towards either existing debts or the ongoing obligation to pay rent. The RT Act is silent on this issue and one must instead turn to the position at common law. While the starting point is that a debtor is entitled to specify which debt the money paid is to be applied against, where no such ‘appropriation’ is made by the debtor, the right to appropriate the payment passes to the creditor. In Cory Bros & Co Ltd v The SS Mecca [1897] AC 286, Lord Macnaghten summarised the principles in the following passage:
When a debtor is making a payment to his creditor he may appropriate the money as he pleases, and the creditor must apply it accordingly. If the debtor does not make any appropriation at the time when he makes the payment the right of appropriation devolves on the creditor.
111.Where the debtor’s intention as to appropriation is not clearly communicated, it might nonetheless be inferred from surrounding circumstances.[13]
[13] Walsh; Ex parte Deputy Federal Commissioner of Taxation (1982) 60 FLR 355; Caltabiano v Electoral Commission(Qld)[2009] QCA 182, Muir JA at [31], [33]–[34] Reeves v McGuinness (1871) 2 VR (L) 187; Leeson v Leeson [1936] 2 KB 156, Green LJ at 162–163
112.As in Thorn, the Tribunal is satisfied that unless the proposed allocation of the monies is made clear by communication from the tenant, or the surrounding circumstances, it is open to a lessor to allocate monies received to a previous arrears debt or current rental obligation as it chooses.
113.On any interpretation of the matters before the Tribunal the tenant is very significantly in debt to the Commissioner. On the tenant’s position, which is accepted by the Tribunal, there is a money order compelling the tenant to pay rental arrears of over $3,000.
114.In this case, the Commissioner has regularly accepted payments from the tenant that are in excess of the rent she was required to pay under the lease. Those payments were commenced as payments of arrears under the CTPO. The respondent continued to make the extra payments in that pattern, and there is no evidence before the Tribunal that the tenant made these payments on anything other than the understanding that they were paying off her accrued arrears. The Commissioner continued to treat these payments as such, and had no reason to do otherwise. The common understanding apparently being that the payments were being made toward the arrears, there is no basis on which the Tribunal should find that those additional amounts were either intended by the tenant to be treated as rent payments in advance for the new (yet to be implied) tenancy, or effectively ‘appropriated’ by the tenant to meet that obligation.
Conclusion and Orders
115.The Tribunal is satisfied that:
(a)a residential tenancy agreement is to be implied from the conduct of the parties;
(b)The date of commencement of the implied tenancy is the date on which the respondent took possession of the premises, that is 8 March 2013;
(c)The respondent fell into arrears in relation to the implied tenancy;
(d)notices to remedy and to vacate were served upon the tenant but were incorrect in the amount of arrears stated. These defects are waived by the Tribunal; and
(e)the tenant is reasonably likely to pay the arrears of rent, and pay future rent as required by the residential tenancy agreement.
116.The Tribunal makes the Conditional Termination and Possession Order as set out above.
………………………………..
Presidential Member M-T Daniel
Delivered for and on behalf of the Tribunal
HEARING DETAILS
FILE NUMBER:
RT 966/2016
PARTIES, APPLICANT:
Commissioner for Social Housing
PARTIES, RESPONDENT:
Erin Ryan
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
Canberra Community Law
TRIBUNAL MEMBERS:
Presidential Member M-T Daniel, Senior Member H Robinson
DATES OF HEARING:
24 November 2016, 8 March 2017, 28 September 2017
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