Commissioner for Social Housing v Woodward

[2016] ACAT 85

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COMMISSIONER FOR SOCIAL HOUSING v WOODWARD (Residential Tenancies) [2016] ACAT 85

RT 981/2015

Catchwords:              RESIDENTIAL TENANCIES – termination and possession order – correction of invalid notice to remedy – notices from previous tenancies

Legislation cited:      ACT Civil and Administrative Tribunal Act 2008 s 56

Legislation Act 2001 ss 138, 139

Residential Tenancies Act 1997 ss 49, 59, standard term 92

Cases cited:               Casey v Alcock (2009) 3 ACTLR 1

Commissioner for Social Housing v Pesi [2015] ACAT 58
Commissioner for Social Housing v Thorn [2016] ACAT 37
Devenport v Commissioner for Housing in the ACT and Residential Tenancies Tribunal [2007] ACTSC 30
Leon Fink Holdings Proprietary Limited v Australian Film Commission (1979) 141 CLR 672
Project Blue Sky Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

List of

Texts/Papers cited:   Community Law Reform Committee (CLRC) in Report No. 8: Private Residential Tenancy Law (December 1994)

Explanatory Memorandum to the Residential Tenancies Bill 1997

Tribunal:                   Senior Member H Robinson

Date of Orders:  7 July 2016

Date of Reasons for Decision:         26 July 2016

AUSTRALIAN CAPITAL TERRITORY  )

CIVIL & ADMINISTRATIVE TRIBUNAL       )          RT 981/2015

BETWEEN:

COMMISSIONER FOR SOCIAL HOUSING

Applicant

AND:

KIM WOODWARD

Respondent

TRIBUNAL:             Senior Member H Robinson

DATE:7 July 2016

ORDER

The Tribunal Orders that:

1.The application is dismissed.

………………………………..

Senior Member H Robinson

REASONS FOR DECISION

Introduction

1.This is an application by the Commissioner for Social Housing (the Commissioner/applicant) for a conditional termination and possession order (CTPO) pursuant to section 49 of the Residential Tenancies Act 1997 (RTA).

2.It is not in dispute that the respondent, Ms Woodward, owes significant rental arrears. It is also not in dispute that over recent months she has demonstrated a commitment to the tenancy and is willing and able to pay the rent as and when it falls due. The Tribunal accepts that a CTPO would be an appropriate order to make in these circumstances.  However, a question has arisen as to whether the Tribunal has the power to make the order, given a procedural flaw in the Commissioner’s processes. 

3.In particular, the proceeding raises two issues:

(a)Whether the Tribunal can or should use the power in section 59 of the RTA to waive admitted ‘defects’ in two notices to remedy issued by the Commissioner; and, if not

(b)Whether clause 92 of the Standard Residential Tenancy Terms in Schedule 1 of the RTA (Standard Terms) permits the Commissioner to rely upon notices to remedy issued under a previous tenancy.

Legislation

4.Clause 92 of the Standard Terms sets out the process to be followed by the lessor before an application may be made under section 49 of the RTA:

Termination for failure to pay rent

92The tribunal may order the termination of the tenancy and eviction of the tenant on the ground of nonpayment of rent in the following circumstances:

(a)rent has been unpaid for 1 week. The first day of this period concludes at midnight on the day when the unpaid rent was due;

(b)the lessor has served a notice to remedy on the tenant for the failure to pay the rent, being a notice—

(i)served not earlier than 1 week after the day when the rent was due; and

(ii)containing a statement that if the tenant pays the rent outstanding to the date of payment within 7 days of the date of service of the notice to remedy, no further action must be taken and the tenancy continues;

(c)if all rent is not paid within 1 week of the date of service of the notice to remedy—the lessor may then serve a notice to vacate on the tenant requiring the tenant to vacate the premises within 2 weeks of service of the notice to vacate;

(d)no earlier than the date when the notice to vacate is served, the lessor may apply to the tribunal for an order terminating the tenancy and evicting the tenant;

(e)the tribunal hearing of the application to terminate and evict must not be earlier than the end of the period specified in the notice to vacate;

(f)during any tenancy in which the lessor has previously issued 2 notices to remedy, the lessor may serve a notice to vacate 1 week after the day when the rent has fallen due without serving a notice to remedy.

5. Section 59 of the RTA Act provides:

59 Lessor’s defective notice if tenant does not vacate

(1) If—

(a)    a lessor purports to serve a termination notice on a tenant; and

(b)    the form is not in the form approved under section 133 (Approved forms—Minister) for a termination notice or served as prescribed by regulation; and

(c)     the tenant does not vacate the premises;

the lessor may apply to the ACAT for a waiver of the defect in the notice or in the service of the notice and for the making of a termination and possession order.

(2)     The ACAT must not waive a defect in a termination notice or its service and make a termination and possession order unless satisfied that the defect did not, and is not likely to, place the tenant in a significantly worse position than the tenant would have been in had the notice been in, and served in, accordance with the standard residential tenancy terms.

6.Clause 6 of the Standard Terms provides that a reference to a notice to vacate under the Standard Terms is taken to be a reference to a termination notice under the Residential Tenancies Act.

Chronology of Facts

7.Ms Woodward has been a tenant of the respondent for some years (the exact period is not in evidence).

8.It is common ground that the current tenancy agreement is an implied tenancy that commenced on 2 May 2014 (current tenancy), replacing a previous statutory tenancy (previous tenancy). Consistent with the reasoning in Commissioner for Social Housing v Moffatt [2015] ACTSC 4:

(a)the implied tenancy brought the previous statutory tenancy to an end; and

(b)rent arrears owed by the tenant at the date that the current tenancy commenced were due and payable as a debt from that date, but were not ‘carried over’ as rent arrears.

9.Since the commencement of the current tenancy, the respondent has again fallen behind in her rent. The Commissioner accordingly made the present application under section 49 of the RTA. Although the application was initially for a termination and possession order (TPO), the Commissioner has since conceded that a CTPO is appropriate.

10.Pursuant to clause 92 of the Standard Terms, the Commissioner may only make an application for a TPO or CTPO under section 49 of the RTA Act if the Commissioner has:

(a)served a notice to remedy on the tenant, which was not complied with; and

(b)served a notice to vacate; and

(c)despite those notices, the tenant remains in the property.

11.There was no dispute that, during the course of the current tenancy, the Commissioner has served two notices to remedy and a notice to vacate and that the tenant remains in the property. It was conceded, however, that the two notices to remedy were invalid by reason of showing the wrong arrears[1]:

(a)The first notice dated 7 January 2014 was for arrears of $3205, rather than the correct sum of $1721; and

(b)The second notice to remedy dated 20 November 2014 was for arrears of $2567, rather than the correct sum of $1053.

[1] It is noted here, for completeness, that the Standard Terms do not actually require that a Notice to Remedy state the outstanding arrears – Clause 92(b) simply requires that the notice:

(a) Be served not earlier than 1 week after the day when the rent was due; and

(b) Contain a statement that if the tenant pays the rent outstanding to the date of payment within 7 days of the date of service of the notice to remedy, no further action must be taken and the tenancy continues.

However, it was not contended by the Commissioner that the notice was valid despite the inaccurate arrears

12.The discrepancy arose because both notices to remedy included a sum of $1484.83 that arose during the previous tenancy.

13.It was also not in dispute that a valid notice to vacate for failure to pay rent can only be issued after a valid notice to remedy for a failure to pay rent, and therefore the notice to vacate was defective and invalid. The Commissioner submitted that the Tribunal can and should waive the defects in the notices to remedy pursuant to section 59 of the RTA.

Correction of Defects

14.The Tribunal has some sympathy for the Commissioner’s position in this case. The tenant is in considerable arrears, and this is the second time in a short span of years that she has found herself in this position. The Commissioner’s desire to take steps to ensure that the tenant fulfil her obligations in the future is understandable, and the imposition of a CTPO would, from a policy perspective, be entirely appropriate. However, these factors alone do not provide the Tribunal with a reasonable basis to exercise its discretion under section 59 of the RTA to correct the defects in the notices to remedy.

15.There are three countervailing reasons why I am declining to exercise the discretion in this case.

16.First, section 59 of the RTA provides that the Tribunal may ‘waive a defect in the notice or the service of the notice’ (emphasis added). The ‘notice’, having regard to the language of paragraph 59(1)(a), is clearly a termination notice. By operation of clause 6 of the Standard Terms, the term ‘termination notice’ includes a notice to vacate. It does not include a notice to remedy.

17.I acknowledge that in some previous cases, the Tribunal appears to have been of the view that this power extends to correcting defects in a notice to remedy. Perhaps it is arguable that section 59 extends to correcting defects in the notice to vacate that are occasioned by defective antecedent notices to remedy. It is possibly also the case that the power is found in the power to “take any other action” found in paragraph 56(c)(d) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) – although caution needs to be exercised in any case where the use of a general power may conflict with that of a specific power[2]. I am not presently convinced that either option is permissible, but I do not need to come to a concluded position, as I am not minded to correct the defect in the notices in any case.

[2] See Devenport v Commissioner for Housing in the ACT and Residential Tenancies Tribunal [2007] ACTSC 30 per Higgins CJ, Gray and Connolly JJ at [24]-[25]; citing Leon Fink Holdings Proprietary Limited v Australian Film Commission (1979) 141 CLR 672 per Mason J at 678 (Barwick CJ agreeing)

18.This leads to my second concern about the exercise of the discretion in section 59 of the RTA in this case.

19.The purpose behind section 59 of the RTA is clearly set out in the Explanatory Memorandum to the Residential Tenancies Bill 1997 (ACT), which relevantly provides that:

Clause 58 together with the previous clause and the next clause this clause implements Recommendation 146. This clause implements the parts of Recommendation 146 that deal with a lessor's defective notice where the tenant does not vacate - the Tribunal should have the discretion to waive a defect in the form or giving of a notice in writing to vacate provided it is satisfied the tenant was not (or would not be) disadvantaged by the error should the termination application proceed.

20.The ‘recommendation’ referred to is Recommendation 146 of the Community Law Reform Committee (CLRC) in Report No. 8: Private Residential Tenancy Law (December 1994). This recommendation was largely in the same terms as the Explanatory Memorandum.

21.The clear intent of both these documents was that the power to correct errors in section 59 of the RTA was intended to allow the Tribunal to correct errors of ‘form’ or failings in the process of service (ie. procedural defects).

22.The terms of section 59 of the RTA, as enacted, do not expressly limit section 59 to the correction of defects of form (or service) in the way that the explanatory memorandum does. However, in working out the meaning of section 59, and particularly in working out what is meant by a ‘defect’, and what is capable of being remedied under the section, it is appropriate and necessary that I have regard to this extraneous material, and to the clearly intended limitations on that power.

23.Accordingly, in my view, section 59 confers a power that is closer in scope to the ‘slip rule’ than to a power to correct substantive errors.

24.A power to correct ‘slips’ reflects the reality that people make mistakes. It would be unreasonable if a lessor, confronted with a tenant who is not paying rent, and having acted reasonably and properly, is thwarted from evicting that tenant on the basis that the notice to vacate contained a misspelt name or a incorrect house number. It would also be a waste of resources if Tribunal hearings were consumed by arguments over such issues. Accordingly, by virtue of section 59, the Tribunal has the power to prevent these kinds of absurdities, so long as doing so does not unduly prejudice the tenant. This represents a reasonable balance of the interests of lessor and tenant.

25.However, the purpose of a notice to remedy or a notice to vacate is to advise the tenant that they are doing something that is putting the tenancy at risk (in this case, that the tenant was behind in the rent), and to give the tenant an opportunity to take steps to correct that conduct (in this case, by paying the arrears within seven days). The notice should specify what needs to be remedied with sufficient particularity to allow the tenant to know what has to be done.  If a notice does not do this, or if it misleads the tenants as to what they need to do to fix their situation, it should not be corrected, even if this means that the lessor must start again (the minimum time to start again, it should be noted, is three weeks).

26.It is conceivable that the kind of defects that are correctable by exercise of the power in section 59 may include mathematical mistakes or miscalculations of the arrears of rent. However, in such cases, there must be a consideration of the discrepancy and the consequences of this. As Senior Member Lennard observed in Commissioner for Social Housing v Pesi [2015] ACAT 58 :

If a notice to remedy, or a notice to vacate served upon the tenant contains a defect which could readily mislead the tenant about an essential element of the breach that had to be remedied, so that the decision as to what action they should take is influenced by the defective information, then taking into account the serious consequences (potential homelessness) for the tenant, the Tribunal should be extremely cautious about correcting a defect in relation to the quantum of arrears, said to be owed by the tenant.

27.In my view, errors of the kind in this case, being sums around twice the amount actually owed, are well beyond the kind of defect that is capable of being remedied by the application of the discretion in section 59.

28.Thirdly, even if I am wrong about the scope of section 59 (or the application of section 56 of the ACAT Act), and there is a power to cure a defect of the kind in this matter, then it remains the case that the power may only be exercised where the Tribunal is satisfied that the correction of the defect would not place the tenant in a substantially worse position than if the notice had complied with the statutory requirements. I am not satisfied that the test is met in this case.

29.In oral submissions, the Commissioner made a brief reference to the decision of the Tribunal in Commissioner for Social Housing v Thorn [2016] ACAT 37 as providing a basis to waive a defect, even where there are substantial arrears. It should be noted that in that case, the Tribunal did not have to exercise any power under section 59, but the Senior Member did make some obiter observations that she would have done so if necessary. The relevant passage is as follows[3]:

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.

[3] At [24]

30.Certainly, many of the circumstances of Ms Woodward appear to be similar to those of the tenant in Thorn, but those factors were not explored in any depth at the hearing of this matter. Moreover, it is clear that, unlike the tenant in Thorn, Ms Woodward is now paying rent.

31.I agree with the observations of the Tribunal in Thorn that, in considering the prejudice to the tenant, the difference in the amount of the arrears is only one consideration. However, I am also of the view that where there is a substantial divergence between amount in the notice and the actual amount owing, then that difference must be the starting point.  In this case, I cannot be satisfied that the tenant, having been presented with an accurate notice to remedy, would not have acted differently. While a debt of one thousand dollars is obviously very substantial, it is not beyond the capacity of a tenant on a limited income to repay. An amount of three thousand is a significantly more formidable amount, and the debt could well be crushing.

32.Accordingly, even if I had the power to waive the defect under section 59 of the RTA, I would not do so.

The effect of clause 92(f) of the Standard Residential Tenancy Terms

33.As I have declined to waive the defects in the first and second notices to remedy, the question must now turn to whether the Commissioner can instead rely upon two other notices to remedy issued to the respondent in 2012, prior to the commencement of the current tenancy (the 2012 notices).

34.The Commissioner’s submissions were that the inclusion of the words ‘any tenancy’ in clause 92(f) of the Standard Terms allowed the Commissioner to rely on notices issued in any tenancy, including any previous tenancy.

35.The respondent rejected this argument, and contended that the words ‘any tenancy’ were qualified by the words “in which the lessor has previously served two notices”, meaning that only notices issued in the current tenancy could be relied upon.

36.In my view, on a plain reading of clause 92(f) of the Standard Terms, the respondent’s argument must prevail.

37.However, that is not necessarily the end of the matter. Sections 138 and 139 of the Legislation Act 2001 (Legislation Act) require that a purpositive approach be taken to interpretation. As was observed by Besanko J in Casey v Alcock[4]:

Subject to one qualification, s 139 of the Legislation Act can be described as the Territory’s equivalent of s 15AA of the Acts Interpretation Act 1901 (Cth). It is clear enough that under s 139 a Court can have regard to the purpose of a provision to determine if more than one construction of the provision is open, even though on its face the provision is not ambiguous. That follows from the definition of ‘working out the meaning of an Act’ (which is the exercise referred to in the section), which includes as part of the definition in s 138 ‘(b) confirming or displacing the apparent meaning of the Act ’ and from the reasons for judgment of Dawson J in Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214 at 235.

[4] (2009) 3 ACTLR 1, 20–21 at [103]

38.It was therefore open to the Commissioner to point to something that may establish an ambiguity.

39.In oral submissions, the Commissioner compared the language of clause 92(f) of the Standard Terms to a number of other clauses in equivalent provisions of the RTA, particularly the other ‘termination’ provisions in clauses 93, 94, and 96. None of these clauses use the word ‘any’ before the word ‘tenancy’ – indeed, all of them include the word ‘the’ before the word ‘tenancy’. For example, clause 93(d):

The tribunal may order the termination of the tenancy and eviction of the tenant on the ground of breach of the tenancy agreement in the following circumstances:

(d) if the tenant breaches the terms of the tenancy on 3 occasions on any ground—on the 3rd occasion the lessor may serve a notice to vacate and need not give the tenant 2 weeks to remedy the breach.

40.Notably, the term ‘any tenancy’ is not used anywhere else in the Standard Terms or the RTA.

41.The Commissioner submitted that the inclusion of the word ‘any’ in clause 92(f) must have been intentional, and that the word must be given meaning.[5] Why, the Commissioner asked, include the word ‘any’ before the word ‘tenancy’ in clause 93(f) if it is not to distinguish concept of ‘any tenancy’ in that clause from the term ‘the tenancy’ in the other clauses?

[5]     In essence, the Commissioner appears to be relying to the principle referred to by the majority of the High Court in Project Blue Sky Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (McHugh, Gummow, Kirby and Hayne JJ) referred (at 382 [71]) as the principle that “... a court construing a statutory provision must strive to give meaning to every word in the provision”

42.The question raised by the Commissioner is an interesting one, but I do not think that it alone is sufficient to displace the plain meaning of the words. That plain meaning is clear.  As such, this is not a matter where I need look further.

43.Still, for completeness, and to confirm my view, I have reviewed the additional information provided by the Respondent. The respondent submitted that the Explanatory Memorandum to Residential Tenancies Bill 1997 (ACT) clearly contemplates three instances of non-payment in a single tenancy. It provides that:

If the tenant fails to pay rent for more than 7 days on a third occasion, the lessor may serve a notice to vacate on the tenant after the rent has been unpaid and owing for 7 clear days. There should be no requirement to serve a notice to remedy.

44.I do not think this explanatory memorandum makes things quite as clear as that contended by the Respondent, but it does not support the Commissioner’s position either. It offers no basis upon which to discard the plain meaning of clause 93(f), or upon which the Tribunal could find an intention to depart from the established principle that each tenancy agreement is separate, and that the rent ledger and obligations reset at the commencement of each new agreement.

45.Had it been intended that clause 93(f) enable a lesser to rely upon notices issued in any tenancy, then the explanatory memorandum should have made this clear. It does not.  

46.In light of the above submissions, the correct interpretation of clause 92(f) is that in any tenancy, if the lessor has served two previous notices during that tenancy, the lessor may serve a notice to vacate a week after the rent has fallen due without the need for a further notice to remedy.

Conclusion

47.For the above reasons, the application for a conditional termination and possession order is dismissed.

………………………………..

Senior Member H Robinson

HEARING DETAILS

FILE NUMBER:	RT 981/2015
PARTIES, APPLICANT:	Commissioner for Social Housing
PARTIES, RESPONDENT:	Kim Woodward
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	Canberra Community Law
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Senior Member H Robinson
DATES OF HEARING:	5 July 2016