Commissioner for Social Housing v Social Housing Tenants (Residential Tenancies)
[2021] ACAT 95
•6 October 2021
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COMMISSIONER FOR SOCIAL HOUSING v SOCIAL HOUSING TENANTS (Residential Tenancies) [2021] ACAT 95
RE 158/2020
RE 306/2020
RE 26/2021
RE 27/2021
RE 37/2021
RE 40/2021Catchwords: RESIDENTIAL TENANCIES – application for endorsement of terms to permit termination of a fixed term tenancy agreement on or after end of fixed-term upon 30 days’ notice – terms inconsistent with clause 94 of the standard residential tenancy terms – terms unenforceable – endorsement of term inconsistent with sections 36 and 47 of the Residential Tenancies Act 1997 –proposed term therefore void – terms obtained by undue influence – applications for endorsement dismissed
Legislation cited: Aboriginal Land Grant (Jervis Bay Territory) Act 1986 (Cth)
Australian Capital Territory (Self-Government) Act 1988 (Cth) s 28
Marriage Act 1961 (Cth)
Residential Tenancies Act 1997 ss 8, 9, 10, 36, 47, 48, 49, 50, 51, 64AA, 64AB, 71EK, 83, 127A, standard term 94
Cases citedBlackley v Devondale Cream (Vic) Pty Ltd [1968] HCA 2
Commonwealth v Australian Capital Territory (“Same-Sex Marriage Case”) [2013] HCA 55
Devenport v Commissioner for Housing in the ACT and Residential Tenancies Tribunal [2007] ACTSC 30Ex parte McLean [1930] HCA 12
Faull v Commissioner for Social Housing for the ACT and Residential Tenancies Tribunal [2013] ACTSC 121
Harris v Commissioner for Social Housing; Towney-Kilby v Commissioner for Social Housing; Sullivan v Commissioner for
Social Housing [2013] ACTSC 186
Miller v Miller [1978] HCA 44
Williams v Wreck Bay Aboriginal Community Council [2019] HCA 4
Work Health Authority v Outback Ballooning Pty Ltd [2019] HCA 2
List of
Texts/Papers cited: Justice David Mossop, The Constitution of the Australian Capital Territory (The Federation Press, 2021)
The Community Law Reform Committee of the Australian Capital Territory, Private Residential Tenancy Law (Report No 8, 1994)
Tribunal:Senior Member J Lennard
Date of Orders: 6 October 2021
Date of Reasons for Decision: 6 October 2021
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL RE 158/2020
RE 306/2020
RE 26/2021
RE 27/2021
RE 37/2021RE 40/2021
BETWEEN:
COMMISSIONER FOR SOCIAL HOUSING
Applicant/Lessor
AND:
SOCIAL HOUSING TENANTS
Respondent/Tenants
TRIBUNAL:Senior Member J Lennard
DATE:6 October 2021
ORDER
The Tribunal orders that:
1.The application for endorsement is dismissed.
…………signed….………
Senior Member J Lennard
REASONS FOR DECISION
Background
1.By 14 separate applications in relation to 14 separate residential premises, the Commissioner for Social Housing (the Commissioner) and the tenant, in each case, applied to the Tribunal for endorsement of two terms in each residential tenancy agreement (the Terms) which are as follows:
(1) The Commissioner for Social Housing, may at any time before the end of the fixed term of a fixed term agreement, give a termination notice (Notice to Vacate) for the residential tenancy agreement that is to take effect on or after the end of the fixed term.
(2) The termination notice (Notice to Vacate) must specify a termination date that is on or after the end of the fixed term and not earlier than 30 days after the day on which the notice is given.
2.The Commissioner and the tenant, in each case, applied for the Tribunal to endorse the Terms because they are inconsistent with clause 94 of the standard residential tenancy terms (the standard terms) as set out in Schedule 1 of the Residential Tenancies Act 1997 (the Act). Unless and until the Terms are endorsed, they are void.[1]
[1] Residential Tenancies Act 1997 section 9(1)
3.Eight of the 14 applications for endorsement were subsequently discontinued. Six remained for determination.
The power to endorse terms
4.The starting point is that a residential tenancy agreement “is taken to contain” the standard terms.[2] A residential tenancy agreement may contain another term that is consistent with the standard residential tenancy terms.[3] It may contain another term that is inconsistent with the standard terms if the term has been endorsed by the Tribunal under section 10 of the Act.[4]
[2] Residential Tenancies Act 1997 section 8(1)(a)
[3] Residential Tenancies Act 1997 section 8(1)(d)(i)
[4] Residential Tenancies Act 1997 section 8(1)(d)(ii)
5.Section 10(2) of the Act provides that if the parties apply for endorsement of an inconsistent term, the Tribunal must endorse the inconsistent term or substitute the equivalent standard residential tenancy term for the inconsistent term. It is apparent from reading section 10 as a whole that the Tribunal’s obligation under section 10(2) is subject to the matters set out in sections 10(3) and (4).
6.Section 10(3) of the Act provides that in making a decision in response to an application for endorsement of an inconsistent term, the ACAT must consider:
(a) the criteria determined under subsection (6); and
(b) whether the inclusion of the inconsistent term in the residential tenancy agreement was obtained by fraud or undue influence.[5]
[5] Residential Tenancies Act 1997 section 10(3)
7.I note that there are no determined criteria under section 10(6) of the Act.
8.In my view, if the Tribunal concludes that the inclusion of the inconsistent term “was obtained by fraud or undue influence”, it has a discretion not to endorse the term. It is difficult to imagine a circumstance where the discretion would not be exercised.
9.Section 10(4) of the Act provides that the tribunal “must not endorse a term that is inconsistent with [the] Act (other than a standard residential tenancy term)”.
10.Section 9(2) of the Act provides that a term that is inconsistent with the Act (other than a standard term) is void.
Summary
11.Arising from this legislative structure, two issues arose for consideration. First, are the Terms inconsistent with the Act? If so, the Tribunal must not endorse them. Second, were the Terms obtained by fraud or undue influence? If so, the Tribunal has a discretion not to endorse them.
12.In my view, the first question should be answered ‘yes’, with the result that the Tribunal cannot endorse them. If the Tribunal does have the power because the first question should be answered ‘no’, I would not endorse them in the exercise of my discretion because, in my view, the inclusion of the Terms in the tenancy agreement, in each case, was obtained by undue influence.
Are the Terms inconsistent with the Act?
13.Under the Act, including the standard terms, a lessor does not have a right to terminate a fixed term tenancy at the end of the fixed term. Rather, the tenancy continues after the end of the fixed term as a periodic tenancy.[6]
[6] See clauses 2 and 5 of the Standard Terms
14.There are a limited number of circumstances, absent breach by the tenant, where the lessor can terminate the tenancy.[7]
[7] See for example section 50 of the Act – hardship and clauses 94 and 96 in reference to periodic tenancies.
15.Although a lease for a fixed term converts to a periodic tenancy at the end of the fixed term, clause 94 of the standard terms permits the lessor to terminate the tenancy without cause upon providing 26 weeks’ notice to the tenant during the term of the tenancy. Clause 94 states:
94 The lessor may serve a notice to vacate during the term of a tenancy requiring the tenant to vacate the premises at the end of the notice provided that—
(a)the notice is for 26 weeks; and
(b)the notice does not require the tenant to vacate the premises during a fixed term.
16.The parties seek endorsement of the Terms which would allow the Commissioner to end the tenancy for no cause, on or after the end of the fixed term upon giving 30 days’ notice rather than 26 weeks’ notice. The Terms are inconsistent with clause 94 of the standard terms in that they reduce the period of notice for a ‘no cause’ termination from 26 weeks to 30 days.
17.The first question is whether the Terms must not be endorsed because they are inconsistent with the Act.
18.Ms N Gould, solicitor with Canberra Community Law, provided submissions on an amicus basis. Her submissions relied on the opening words to section 36(1) of the Act, which state:
(1) Despite anything to the contrary in any territory law, a residential tenancy agreement must not terminate or be terminated other than in the following circumstances…
19.She submitted that section 36(1)(a)-(n) of the Act sets out the only circumstances in which a tenancy agreement may terminate or be terminated, and that termination of a tenancy by reference to the Terms is not one of those circumstances. She submitted that where the Terms cannot be enforced they are inconsistent with the Act. Being inconsistent, they are void pursuant to section 9(2) and must not be endorsed pursuant to section 10(4).
20.Ms A Sydney, solicitor with the ACT Government Solicitor, on behalf of the Commissioner, submitted that section 36 does permit termination of a tenancy by reference to the Terms. She relied on section 36(1)(e), which provides that a residential tenancy agreement can be terminated:
(d) if the ACAT makes a termination and possession order in relation to the premises that are the subject of the agreement under …division 6.5…
21.Ms Sydney noted that division 6.5, headed “Powers and decisions of ACAT”, contains section 83(1)(i) of the Act which provides:
83 Orders by ACAT
(1) Without limiting the orders the ACAT may make, the ACAT may make the following orders in relation to an application about a tenancy dispute or occupancy dispute:
..
(i)an order terminating a residential tenancy agreement or occupancy agreement and granting vacant possession of the relevant premises to the applicant for the order;
22.Ms Sydney relied on two factors that, she said, show that the general power to terminate a tenancy under section 83(1)(i) permits termination by reference to the Terms.
23.First, with reference to section 36(1)(e) which permits termination under division 6.5, section 83(1)(i) is the only provision in division 6.5 that permits termination of a tenancy agreement. In other words, as I understood the submission, there is a direct linkage between section 36(1)(e) and termination under section 83(1)(i).
24.Second, section 83(1)(i) is, she said, the only provision that empowers the tribunal to terminate an occupancy agreement. If it is the power to terminate an occupancy agreement, it must follow that it is also a power to terminate a tenancy agreement.
25.Ms Sydney appropriately acknowledged that the Supreme Court has commented in several cases upon the “limited grounds upon which a landlord may terminate [a] lease”[8] but submitted that those cases can be distinguished from the present endorsement proceedings as they dealt with the circumstances covered by one or other of the grounds for termination by a lessor in sections 47 to 51 of the Act. The cases did not consider other means by which termination may occur. In particular, Ms Sydney could not identify any case that has considered the ambit of the termination power under section 83(1)(i).
[8] Devenport v Commissioner for Housing in the ACT and Residential Tenancies Tribunal [2007] ACTSC 30, Faull v Commissioner for Social Housing for the ACT and Residential Tenancies Tribunal [2013] ACTSC 121 and Harris v Commissioner for Social Housing; Towney-Kilby v Commissioner for Social Housing; Sullivan v Commissioner for Social Housing [2013] ACTSC 186
26.Responding to Ms Sydney’s first submission, I accept that section 36(1)(e) permits – and is directed to – termination under section 83(1)(i). I accept too that, by its general wording, it contemplates that termination may occur in a circumstance other than one of the circumstances listed in section 36(1) of the Act. Were it otherwise, section 83(1)(i) would be purposeless. That, however, does not mean section 83(1)(i) permits termination by reference to the Terms. In my view, the power under section 83(1)(i) is not a power exercisable at large. The section must be read and construed as a power to terminate in accordance with the Act. Were it otherwise, the regulatory structure of the Act would break down. The question therefore is whether termination by reference to the Terms would be in accordance with the Act. In my view it would not.
27.In my view, section 36(1)(e), permitting termination under division 6.5 (meaning section 83(1)(i)), is to accommodate a means by which a residential tenancy may be terminated in accordance with a provision of the Act that is not a circumstance described in section 36(1). I accept Ms Gould’s submission that sections 8(1)(b), 64AA, 64AB and 127A(2) are examples of such a provision. But for section 36(1)(e), which provides linkage to section 83(1)(i), an inconsistency would exist between section 36(1) and these additional provisions.
28.Responding to Ms Sydney’s second submission, I do not agree that section 83(1)(i) provides the only power to terminate an occupancy agreement. Section 71EK regulates the termination of an occupancy agreement in considerable detail. Consistent with my view that termination under section 83(1)(i) permits termination in accordance with the Act, section 83(1)(i) permits termination of an occupancy agreement, not at large, but in accordance with section 71EK where there is an “occupancy dispute”.[9]
[9] See definition of ‘occupancy dispute’ per Residential Tenancies Act 1997, section 73
29.Just as section 83(1)(i) permits termination of a residential agreement in accordance with sections 8(1)(b), 64AA, 64AB and 127A(2), it also permits termination of an occupancy agreement in accordance with section 71EK. By contrast, termination by reference to the Terms would not be in accordance with any provision of the Act. I do not accept that section 83(1)(i) permits termination of a residential agreement in such a circumstance.
30.It follows that none of the circumstances in section 36(1)(a)-(n) permits termination of the tenancy agreement under the Terms. In other words, the Terms, if endorsed, would be inoperative and unenforceable.
31.The question, then, is whether the Terms are ‘inconsistent’ with section 36 for this reason? In my view, they are. Two factors draw me to that conclusion.
32.First, ‘inconsistent’ is not defined in the Act for the purposes of section 10 or otherwise. It should be given its ordinary meaning. The Macquarie Dictionary defines it as follows:
1. lacking in harmony between the different parts or elements; self-contradictory. 2. lacking agreement, as one thing with another, or two or more things in relation to each other; at variance. 3. not consistent in principles, conduct, etc. 4. acting at variance with professed principles. 5. Logic incompatible.[10]
[10] Macquarie Dictionary (7th ed, 2017) ‘inconsistent’
33.It becomes apparent that inconsistency is not confined to a “textual”[11] or “direct collision”[12] between two facts or circumstances. It also entails subjective judgement about whether two facts or circumstances are lacking harmony or agreement between each other. In this case, are the Terms ‘in harmony’ with section 36?
[11] Miller v Miller [1978] HCA 44 at [11]
[12] Blackley v Devondale Cream (Vic) Pty Ltd [1968] HCA 2
34.Guidance on this question can be drawn from section 28 of the Australian Capital Territory (Self-Government) Act 1988 (Cth), which states:
28 Inconsistency with other laws
(1) A provision of an enactment has no effect to the extent that it is inconsistent with a law defined by subsection (2), but such a provision shall be taken to be consistent with such a law to the extent that it is capable of operating concurrently with that law.
(2) In this section:
law means:
(a)a law in force in the Territory (other than an enactment or a subordinate law); or
(b)an order or determination, or any other instrument of a legislative character, made under a law falling within paragraph (a). [emphasis added]
35.For the purposes of section 28, an ‘enactment’ is a law made by the ACT Legislative Assembly.[13]
[13] Australian Capital Territory (Self-Government) Act 1988, section 3
36.Different cases have come to different conclusions about whether a provision of an enactment (i.e. an ACT statutory provision) is inconsistent with a law (i.e. a Commonwealth law) for the purposes of section 28.
37.In his recent text, The Constitution of the Australian Capital Territory,[14] Justice Mossop commented on ‘inconsistency’ between Commonwealth and Territory laws for the purposes of section 28(1). His Honour said:
The operation of s 28 was explained in Commonwealth v Australian Capital Territory (“Same-Sex Marriage Case”).[15] In that case the [High] Court found that s 28 is directed to the effect which is to be given to an enactment of the Legislative Assembly. It is not directed to the effect which is to be given to a Commonwealth law. As a consequence, s 28 does not have the effect that laws of the Commonwealth Parliament are to be read down or construed in a way that would permit the concurrent operation of Territory enactments. The starting point is the determination of the legal meaning of the relevant Commonwealth law.[16]
[14] Justice David Mossop, The Constitution of the Australian Capital Territory (The Federation Press, 2021)
[15] Commonwealth v Australian Capital Territory (“Same-Sex Marriage Case”) [2013] HCA 55
[16] Justice David Mossop, The Constitution of the Australian Capital Territory (The Federation Press, 2021), pages 123-124
38.Justice Mossop went on to note that having found that the Marriage Act 1961 (Cth) provided “a comprehensive and exhaustive statement of the law of marriage” in Australia, the High Court ruled that the ACT Legislative Assembly enactment, which provided for same-sex marriages, altered, impaired or detracted from the Marriage Act 1961 (Cth) and was therefore inoperative.
39.In Williams v Wreck Bay Aboriginal Community Council,[17] the High Court considered the extent to which the Residential Tenancies Act 1997 (the Act) applied in the Jervis Bay Territory. Enactments of the ACT Legislative Assembly apply in that Territory, but only insofar as they are “not inconsistent” with a Commonwealth Act that is applicable in that Territory. The question was the application, if any, of the Act having regard to the Aboriginal Land Grant (Jervis Bay Territory) Act 1986 (Cth) (the Land Grant Act) that applied in that Territory. The Court concluded that the Land Grant Act provided for only certain matters, and that the Act applied but for those matters.
[17] [2019] HCA 4
40.In Work Health Authority v Outback Ballooning Pty Ltd,[18] the High Court said:
The basic test of inconsistency has been repeated and applied too often to be doubted. The canonical exposition is that “inconsistency does not lie in the mere coexistence of two laws which are susceptible of simultaneous obedience” but “depends upon the intention of the paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed.[19]
[18] [2019] HCA 2
[19] Work Health Authority v Outback Ballooning Pty Ltd [2019] HCA 2 at [65] citing Ex parte McLean [1930] HCA 12
41.Drawing on these principles, it is clear from the words “must not terminate or be terminated other than in the following circumstances” that the list of circumstances in section 36(1) are, and were intended to be, the only ways in which a residential tenancy can terminate or be terminated.
42.Where the Terms seek to create a circumstance in which a residential tenancy can terminate which is not one of the circumstances set out in section 36(1), and where section 36 provides that a termination “must not” occur other than by means of one of the circumstances listed in that section, it follows that the Terms are inconsistent with section 36(1) and are therefore inconsistent with the Act. It follows that they cannot be endorsed.
43.I reached the same conclusion regarding section 47 of the Act, and for similar reasons. The Act establishes, under section 47, the statutory pathway for the tribunal to make a termination and possession order[20] where a tenant is not in breach of the lease. In other words, it is the pathway for termination of a lease in accordance with the lease. However, section 47 applies only where there is a ground for termination under the standard terms. Section 47 would have no application if termination was by reference to a term other than a standard term.
[20] Such an order is defined in the Dictionary to the Act as an order “terminating a residential tenancy agreement and granting vacant possession of the relevant premises to the lessor”.
44.The question, therefore, is whether the Terms, by setting up such an arrangement, would be inconsistent with section 47. To put it another way, does section 47 provide the means, and the only means, by which the tribunal can make a termination and possession order to enforce termination under the terms of a lease? In my view, it does. Section 47 governs for all purposes the ability of a lessor to terminate a lease in accordance with the lease where a tenant does not vacate. It provides, in section 47(2), circumstances in which the tribunal can suspend such an order for up to three weeks. The Terms, if endorsed, would enable a lessor to defeat section 47. It would introduce a system for termination regulated only by the terms added to the lease, whatever they might be from time to time. I reject the proposition that such a system, if established, would not be inconsistent with section 47.
45.I draw support for this conclusion from the contrast between section 47 and section 48 of the Act. Section 48 accommodates, in section 48(1)(a)(iv), an endorsed term that permits the breach of a standard term. In other words, section 48 remains applicable where there is a breach of an endorsed term. There is no flexibility of that kind in section 47.
Negotiations
46.My conclusion that the Terms are inconsistent with the Act makes it unnecessary to consider whether the inclusion of the Terms in the residential tenancy agreement was obtained by fraud or undue influence. However, in case I am wrong about inconsistency, I have considered the question whether the inclusion of the Terms was obtained by undue influence.[21]
[21] There is no suggestion that the inclusion of the Terms was obtained by fraud.
47.The ACAT Application for Endorsement form contains Section F[22], which requires details of the circumstances relating to the agreement. This asks for:
(a)the inclusion of details relating to the consent of the lessor and the tenant to the inconsistent terms proposed;
(b)details of any negotiations between the lessor and the tenant relating to the inconsistent terms proposed;
(c)information about whether the inclusion of the term would result in any financial or other disadvantage to either the lessor or the tenant.
[22] A new version of this form was notified on 24 September 2021. This is now part 6 of the form.
48.Section F also asks whether a term in substantially the same form has been endorsed before. I note that the ACAT has previously endorsed terms in substantially the same form as the Terms, and I accept that the applicant has valid policy reasons for asking for the inclusion of the Terms.
49.I note that the tenants in these matters are social housing tenants and are often, by reason of financial, health, personal and other circumstances, vulnerable and disadvantaged. Often the tenants have no option but to rent from the Commissioner. There is thus a great imbalance of power between the Commissioner and the tenant. Nevertheless, the Terms would operate to deprive the tenant of a valuable right – the continuation of the tenancy at the end of the fixed term. Absent endorsement of the Terms, the tenancy could only be terminated without cause upon the Commissioner giving 26 weeks’ notice in accordance with clause 94 of the standard terms.
50.I note that the Act provides a scheme where there is no right in the lessor to terminate a tenancy at the end of the fixed term, and that the tenancy continues after the end of the fixed term as a periodic tenancy.
51.I have also had regard to the report of The Community Law Reform Committee of the Australian Capital Territory entitled ‘Private Residential Tenancy Law’ and note that the legislature intended to provide a scheme where the tenant had the security of knowing that the tenancy would continue after the end of the fixed term as a periodic tenancy. If the Terms were consistent with the Act, the Tribunal would also have to be satisfied that the tenant in each application for endorsement understood the Terms and voluntarily agreed to them. The applications before the Tribunal were made by both parties to the agreement.[23] The Tribunal must also be satisfied that the tenant understood that the application for endorsement was made by both parties. There is no evidence before the Tribunal of the circumstances of the joint application. It is not enough that there are sound policy reasons for the lessor, or the Commissioner in this case, to require the Terms.
[23] Residential Tenancies Act section 10(1) provides the parties to a residential tenancy agreement may apply in writing to the ACAT for endorsement of a term of the agreement (the inconsistent term ) that is inconsistent with a standard residential tenancy term.
52.I turn therefore to the applications for endorsement. I note that only one of the 14 tenants who were parties to the 14 joint applications for endorsement responded to the ACAT notice of hearing and attended the hearing. That tenant was confused and visibly upset at the hearing. The tenant believed that the Commissioner was seeking to terminate the tenancy, in circumstances which were contrary to those explained, apparently, at the commencement of the tenancy. The tenant did not understand that she was a party to an application to endorse the Terms. The absence of any response from all but one of the tenants was also troubling.
53.In each of the applications, in response to the request for details relating to the consent of the lessor and the tenant to the Terms, the parties stated merely that they had agreed to the inclusion of the inconsistent terms. There is no indication that the tenant, in each case, understood the Terms or what the result of their enforcement would be and nevertheless agreed to their inclusion in the tenancy agreement. In at least one of the applications for endorsement, the notation “N/A” is the response. On other applications, Section F is left blank. None of the applications contain sufficient details in Section F for the Tribunal to be able to consider, in accordance with section 10 of the Act, whether the inclusion of the Terms was obtained by undue influence.
54.I note that the Terms are the same in every application, yet the circumstances of the tenant in each application vary. The tenancy is usually to provide temporary accommodation while the Commissioner undertakes an investigation of either the tenant’s eligibility for public housing or the tenant’s eligibility for transfer to other, more suitable, accommodation. The majority of the applications set out the tenant’s circumstances and the Commissioner’s reasons for wanting the Terms.
55.The applications state that the Terms would be enforced if the tenant was not eligible to continue as a public housing tenant. The applications do not however, contain information concerning the details of any negotiations between the Commissioner and the tenant relating to the Terms or information about whether the inclusion of the Terms would result in any financial or other disadvantage to the Commissioner or the tenant.
56.A proposed term that sets out the circumstances of the tenancy and the investigations to be undertaken and an agreement by the tenant that if the result of those investigations should be unfavourable to the tenant that the lessor may serve a termination notice with a specified notice period would be more appropriate than the ‘one size fits all’ approach that underpins the Terms.
57.I am not satisfied on the evidence before me that the tenant, in each case, voluntarily agreed to the Terms or understood them or the consequences of their enforcement. It is also not evident that any of the tenants understood the process of endorsement.
58.For these reasons, I would not endorse the Terms even if they were consistent with the Act.
………………………………..
Senior Member J Lennard
Date(s) of hearing 16 April 2021 & 17 May 2021 Solicitors for the Applicant: Ms A Sydney, ACT Government Solicitor Respondent: Ms N Gould, Canberra Community Law, appeared as amicus curiae
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