Commonwealth of Australia v Pries
[2015] FCCA 3411
•21 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COMMONWEALTH OF AUSTRALIA v PRIES | [2015] FCCA 3411 |
| Catchwords: ADMINISTRATIVE LAW – Commonwealth tenancy dispute – termination of a periodic tenancy agreement under s.85 of the Residential Tenancies Act 2010 (NSW) – respondent in possession of the premises for less than 20 years – whether termination of the tenancy agreement is granted – original tenancy agreement expired – respondent notified of termination – predominant use of premises – termination of tenancy agreement granted – order for vacant possession suspended. |
| Legislation: Federal Circuit Court of Australia Act 1999 (Cth), s.10AA |
| Commonwealth of Australia (As Represented By The Department of Infrastructure and Regional Development) v Odzic & Anor [2015] FCCA 3363 Commonwealth of Australia (As Represented By The Department of Infrastructure and Regional Development) v Rigney & Anor (No.3) [2015] FCCA 3133 |
| Applicant: | COMMONWEALTH OF AUSTRALIA (AS REPRESENTED BY THE DEPARTMENT OF INFRASTRUCTURE AND REGIONAL DEVELOPMENT) |
| Respondent: | JOHN PRIES |
| File Number: | SYG 1793 of 2015 |
| Judgment of: | Judge Smith |
| Hearing dates: | 18 & 19 November 2015 |
| Date of Last Submission: | 14 December 2015 |
| Delivered at: | Sydney |
| Delivered on: | 21 December 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Doyle, Mr D.W. Rayment & Ms A. Mitchelmore |
| Solicitors for the Applicant: | Australian Government Solicitor |
| Counsel for the Respondent: | Mr P. King |
ORDERS
The residential tenancy agreement in relation to the premises at 470 (formerly Lot 7) Badgerys Creek Road, Badgerys Creek NSW 2555 comprising part of folio identifier Lot 1 DP 838361 (“Premises”) be terminated with immediate effect.
Vacant possession of the Premises be given to the Applicant on or before 28 December 2015.
The order for vacant possession be suspended until 25 January 2016.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1793 of 2015
| COMMONWEALTH OF AUSTRALIA (AS REPRESENTED BY THE DEPARTMENT OF INFRASTRUCTURE AND REGIONAL DEVELOPMENT) |
Applicant
And
| JOHN PRIES |
Respondent
REASONS FOR JUDGMENT
Mr Pries has occupied the land situated at 470 (formerly Lot 7) Badgerys Creek Road, Badgerys Creek NSW 2555 (“Premises”) since July 2008 as a tenant of the Commonwealth. The Premises are part of a larger area of land which the Commonwealth proposes to develop for the purposes of an airport.
On 26 November 2014 the Commonwealth gave Mr Pries a notice of termination of the residential tenancy agreement in respect of the Premises specifying 15 June 2015 as both the date of termination and the day on which vacant possession of the Premises was to be given. Mr Pries did not vacate the Premises by that date and the Commonwealth now seeks orders terminating the residential tenancy agreement and for vacant possession.
Mr Pries opposes the orders sought by the Commonwealth on a number of bases:
i)his partner, Christie and her two children are in joint occupation of the Premises with him;
ii)the law relied upon by the Commonwealth for the determination of the dispute between the parties does not apply because the Premises are predominantly used for non-residential purposes;
iii)the Court does not have jurisdiction to make the orders because the legislation purporting to grant the Court jurisdiction is unconstitutional;
iv)the determination of the law to be applied by the Court was beyond the power granted by the relevant statute;
v)he denies that a termination notice was served on him; and
vi)the Court should refuse to exercise its jurisdiction to terminate the agreement as a matter of discretion.
Preliminary issues
Co-tenancy
Mr Pries gave evidence that his partner Christie and her two children moved into the Premises to live with him in March 2015 and that the Commonwealth’s property agent was aware of that. He said that he “then paid the rent on that basis, that is that Christie and the children were in joint occupation of the land” with him.
In Mr Pries’ written submissions he argued that his partner and her children were tenants or co-tenants of the Premises and ought to have been given notices of termination.
I accept Mr Pries’ evidence about his partner and her children; however, that does not make them tenants or co-tenants within the meaning of the Residential Tenancies Act 2010 (NSW) (“Tenancies Act”). They are not parties to any residential tenancy agreement and have no “right to occupy residential premises under a residential tenancy agreement”, are not persons “to whom such right passes by transfer or operation of the law”, and are not sub-tenants of Mr Pries: see Tenancies Act s.3. In light of that, there was no requirement to “give” any of them any notice of termination.
In any event, should I be wrong about there being no such requirement, a document may be “given” to a person by delivering it personally to a person apparently of or above the age of 16 years at the person’s residential address: Tenancies Act sub-s.223(1)(a)(ii). That was done in this case. The evidence establishes that Mr Pries, who is 65, was personally handed the notice of termination. Mr Pries’ partner was therefore “given” the Notice of Termination.
Mr Pries also argues that, because his partner and her children were co-tenants and were not joined to the proceedings, the proceedings were defective and must be dismissed. For reasons I have given, only Mr Pries is a tenant.
Mr Pries refers to himself, his partner and her children as his family. For that reason, rather than the simple fact of their co-habitation, the interests of each of them is potentially relevant to the issue of the date on which vacant possession ought to be given. That said, this does not mean that the proceedings are improperly constituted. In my view, the interests of Mr Pries’ partner and her children are derivative of those of the actual tenant, Mr Pries and so are, at most, co-extensive with them. In light of that, and the fact that Mr Pries effectively gave evidence in support of their interests and they did not seek to be joined to the proceedings, they were not necessary parties and the proceedings were properly constituted.
Application of Tenancies Act
Mr Pries also argues that the Tenancies Act did not apply to the lease because its term had expired prior to the introduction of that Act. He does not address s.6 of that Act which provides:
This Act applies to residential tenancy agreements in respect of residential premises whether made before or after the commencement of this section.
The agreement between Mr Pries and the Commonwealth had a provision in it for the continuation of the agreement after the expiry of its fixed term. Thus, at the commencement of the Tenancies Act it was still in operation. The effect of s.6 of the Tenancies Act was to bring the agreement within the scope of operation of the Tenancies Act.
Procedural matters
There have been a number of proceedings brought by the Commonwealth against tenants and other occupiers of land in the vicinity of the Premises. The majority of those proceedings have fallen into two groups by reference to the length of time during which the tenants had been in possession of the land, namely, those who had been in possession for 20 years or more and those who had been in possession of the land for less than 20 years. Judgment has already been handed down in all of the first group of cases: see, for example, Commonwealth of Australia (As Represented By The Department of Infrastructure and Regional Development) v Rigney & Anor (No.3) [2015] FCCA 3133 (“Rigney”). These proceedings belong to the second group, most of the proceedings in which were heard concurrently. Judgment in each of the matters heard concurrently has been handed down at the same time as judgment in this matter. I note that judgment in these matters was reserved before I handed down judgment in Rigney.
In one of the matters handed down at the same time as this judgment, I explained in some detail the relevant statutory scheme: see Commonwealth of Australia (As Represented by the Department of Infrastructure and Regional Development) v Odzic & Anor [2015] FCCA 3363 (“Odzic”) at [7] – [19]. There is no need to repeat that explanation here. The judgment in that matter ought to be read together with my reasons in this matter.
In spite of the differences between the two groups of proceedings, similar issues arose in both groups. For example, similar challenges were made in both groups of proceedings to the jurisdiction of this Court. Those challenges were dealt with extensively in the reasons for judgment in Rigney. For that reason, these reasons ought to be read together with my reasons in that matter.
Jurisdictional issues
Before turning to the jurisdictional issues, it is necessary to deal with a number of factual issues.
Questions of fact relevant to the jurisdictional issues
I find the following facts, noting that, to the extent that any of them is controversial, my reasons for making the finding are set out further below:
a)the Commonwealth is the registered proprietor of the land comprised in folio identifier 1/838361 (“airport site”);
b)the Premises form part of the airport site;
c)Mr Pries has occupied the Premises since July 2008;
d)on 11 November 2008 the parties entered into a residential tenancy agreement (“Agreement”) in respect of the Premises;
e)the term of the Agreement was 52 weeks from 15 November 2008 and expired on 13 November 2009;
f)the respondent has been in continual possession of the Premises for less than 20 years;
g)the Premises are not predominantly used for non-residential purposes;
h)by letter dated 29 October 2014 the Commonwealth notified Mr Pries that it will likely require him to vacate the Premises by June 2015;
i)on 26 November 2014, the Commonwealth served a Notice of Termination of the Agreement on Mr Pries;
j)the notice of termination stipulated 15 June 2015 as the day on which the Agreement terminated and by which Mr Pries was required to give vacant possession of the Premises to the Commonwealth; and
k)Mr Pries did not indicate that he was willing to vacate the Premises by that date and has remained in possession of the Premises.
Predominant use of Premises
The finding at [16](g) above deals with Mr Pries’ second contention set out at [3] above. The relevance of that contention was explained in my judgment in Rigney at [8]-[23]. Briefly, the argument is as follows: first, the Tenancies Act does not apply to land that is predominantly used for agricultural purposes: s.7(h); secondly, the land which is the subject of these proceedings is predominantly used for agricultural purposes; thirdly, in those circumstances, the Court does not have jurisdiction in respect of the land.
The conclusion does not follow from the premises. As I explained in Rigney at [16], the only consequence of any conclusion that land is not governed by the Tenancies Act is that the Court must apply the common law to the dispute between the parties. In any event, the issue can be decided by reference to the second premise, namely the predominant use of the Premises.
Mr Pries’ evidence relevant to this issue was that he originally chose the Premises to assist in his business as a tow truck driver and to run his horses. He said that he did not need a house of that size just for himself as a residence but chose it for lifestyle and to suit his business purposes. The house is two bedrooms and occupies ¾ of an acre out of a total of five acres. He runs his horses and parks his tow truck on the remainder of the land. He said that and most of the land is used for riding and running the horses. He also uses it “as part of his job to park the tow truck and equipment for its use and other equipment from work”.
In my view, running horses, without more, does not constitute an agricultural activity. Further, even if it did constitute such an activity, in the absence of any details of the size or scale of that activity I cannot be satisfied that the use of the Premises is predominantly for that purpose. Using the land to park a truck and store equipment could be a business activity; however, once again, there is insufficient information about the extent of that activity to be satisfied that the predominant use of the land is for that purpose. The question is not answered by a comparison of the areas used for different purposes but, rather, by a qualitative analysis of the various uses. On that approach, I am not satisfied that the predominant use is other than for residential purposes and, subject to the remaining jurisdictional arguments, the law to be applied in resolution of these proceedings is the Tenancies Act.
Service of Notice of Termination
Mr Pries also contended that he had not been validly served with a notice of termination (cf. my finding at [16](i)). There are two aspects to this contention. The first is that the notice he was given did not amount to a notice of termination. That contention is dealt with further below. The second is that service of the notice was not proved. Instead, it is argued, the Commonwealth has only established service of an envelope. I reject that contention for the reasons immediately below.
First, Kylie Blackwood, an agent for the Commonwealth, gave evidence that Michael Guest, a licensed process server, served the respondent with a termination notice dated 24 November 2015. That evidence was not objected to and she was not cross-examined on it.
Secondly, Mr Guest swore an affidavit that he was given a number of envelopes by Vivienne Li and Joe Khayo of Wise McGrath, a firm of real estate agents. There were no objections to this affidavit and he was not required for cross-examination. Amongst those envelopes was one addressed to Mr Pries. He says that he was instructed to “attempt to serve the envelopes at the addresses marked on the front of each envelope.” He says that he then “served the envelopes at the addresses marked on the front of each envelope as described in” his previous affidavits of service. Mr Guest’s previous affidavit in relation to Mr Pries was sworn on 1 December 2014 and was not objected to. In that affidavit he stated that he delivered the notice of termination on Mr Pries “by delivering the same to him personally at 470 Badgerys Creek Road, Badgerys Creek in the State of New South Wales.” He said that he had the following interaction with Mr Pries:
“Are you Mr John Pries?” He replied “Yes.” I said “I have an envelope for you”. I then handed him the envelope.
This conversation was not denied by Mr Pries in his evidence and he did not give evidence of the contents of the envelope.
Thirdly, Ms Li swore an affidavit saying that Dinesh Thambyrajah, another employee of Wise McGrath, returned to the Castlereagh Street office with a bundle of sealed envelopes that he had collected from Australian Government Solicitors. She then said that she and Mr Khayo then divided the envelopes into three piles and gave one pile to each of three process servers including Mr Guest. There were no objections to her affidavit and she was not required for cross-examination.
Fourthly, Sarah Alderson affirmed an affidavit about the preparation of the envelopes. She said in her affidavit that she prepared affidavits for everyone whose name appeared on a list attached to her affidavit. Mr Pries was on that list. There was one envelope for each tenant or pair or group of tenants. Each envelope was labelled with the address stated for the relevant tenant. On 24 and 25 November 2014 she inserted into separate envelopes, addressed respectively to each tenant or tenants, the notice of termination addressed to the relevant tenant or tenant. Those notices were annexed to the affidavit and included one addressed to Mr Pries. Ms Alderson verified that each notice of termination was addressed to the same person or persons and contained the same address as the name and address appearing on the envelope before placing the notice in the envelope. She then sealed the envelope. On 25 November 2015 she saw all the envelopes prepared by her being collected by Mr Thambyrajah. There was no objection to any of this evidence.
Ms Alderson was cross-examined but it was never suggested to her that what was contained in her affidavit was not correct.
I find on the basis of that evidence that Mr Pries was given an envelope with a notice of termination in it and so was given or served with a notice of termination pursuant to sub-s.223(1)(i) of the Tenancies Act. Mr Pries’ other arguments about the effectiveness of the service are dealt with below.
Resolution of jurisdictional issues
The arguments raised in this case were the same as those argued in Odzic and are rejected for the reasons I gave there are at [40] – [44].
Consideration of substantive issues
In light of the statutory scheme outlined in Odzic, the first step in the resolution of these proceedings is to determine whether the duty to make a termination order arises. In essence, that requires consideration of whether a notice of termination has been given in terms required by the Tenancies Act and whether the respondents have vacated the property as required by the notice. The second step is to determine what the appropriate date is for vacant possession to be given. This involves some balancing of the parties’ interests. Part of this consideration could also involve the application of s.114 of the Tenancies Act to suspend the date of the order for vacant possession.
It is necessary, then, to turn to each relevant consideration.
Notice of termination
The term of the Agreement was 52 weeks from 15 November 2008 and it expired on 13 November 2009.
Another term of the Agreement was that at the end of that term the tenant could stay in the residential premises at the same or increased rent but otherwise under the same terms unless or until the agreement was ended in accordance with the Residential Tenancies Act 1987 (NSW). In other words, at the end of the term, the agreement continued as it had before but without any fixed term.
For that reason, the Agreement was a “periodic agreement” within the meaning of the Tenancies Act at least from the commencement of the Tenancies Act in 2011: s.3. Further, the effect of s.18 of the Tenancies Act is that a fixed term agreement that continues after the day on which the fixed term ends, continues to apply as if the term of the agreement were replaced by periodic agreement.
As Mr Pries has not been in continual possession of the property for 20 years or more, s.85 of the Tenancies Act applied to the termination of the agreement by the Commonwealth.
A termination notice under the Tenancies Act must set out the following matters: first, the residential premises concerned; secondly, the day on which the residential tenancy agreement is terminated by which vacant possession of the premises is to be given; thirdly, if the notice is not given under ss.84, 85, 96 or 97, the ground for the notice; and fourthly, any other matters prescribed by the regulations, in this case the Residential Tenancy Regulations 2010 (NSW). The termination notice must be in writing and be signed by the party giving the notice or the party’s agent and a termination notice for a periodic agreement may specify a day other than the last day of the period for the payment of rent as the termination date: s.82.
The notice of termination in this case was dated 24 November 2014 and given by delivering personally to Mr Pries at the Premises on 26 November 2014. It correctly identified the property, set out the day on which the agreement was to be terminated (15 June 2015) and the date on which vacant possession of the premises was to be given, being the same date as the date of termination. It was in writing and signed by an agent for the Commonwealth. There were no relevant regulations.
Mr Pries argues that the notice was not “given” in accordance with sub-s.223(1)(a) and s.85 of the Tenancies Act. First, he says that, at most, the notice was in an envelope and “left at the address”. I have already considered and rejected that argument at [21]-[28] above. He then says (inconsistently with his earlier argument) that s.223 of the Tenancies Act does not apply to notices required to be served “by this Act” but only to notices served under a residential tenancy agreement. That is simply wrong. The chapeau to s.223(1) provides:
A notice or other document that is authorised or required by this Act or the regulations or a residential tenancy agreement to be given to or served on any person may be given or served by: …
(Emphasis added)
Mr Pries next argues that Mr Guest’s affidavit refers to a table but that there is none. He is wrong. The table is on the second page of the affidavit and includes his name.
The final argument in relation to service is that service was required by the Federal Circuit Court of Australia Act 2001 (Cth) (“FCCA Act”) not the Tenancies Act “as it is the former upon which the lessor moves not the latter”. The FCCA Act gives jurisdiction to this Court. An instrument made under the FCCA then stipulates the law that is to be applied in the exercise of that jurisdiction. The law to be applied is the Tenancies Act. I reject the respondent’s argument in this respect. I would, in any event, have been satisfied that, by handing the envelope to Mr Pries, the agent of the Commonwealth “gave” the document in the envelope to him.
In those circumstances I am satisfied that a Notice of Termination was given in accordance with the requirements of the Tenancies Act.
Has the respondent vacated the premises as required by the notice?
Mr Pries’ evidence was that he is still living on the Premises.
For those reasons, the matters in s.85(3) of the Tenancies Act have been established and the residential tenancies agreement between the parties must be terminated.
The appropriate date on which vacant possession is to be given to the landlord
In considering this issue, it is convenient to deal first with the Commonwealth’s case before turning to the individual circumstances of Mr Pries.
The evidence in this matter concerning the circumstances relied on by the Commonwealth was the same as in each of the matters heard concurrently. I set out the effect of that evidence and my findings in Odzic at [59] – [80]. They form part of my reasons in this case but need only be summarised here as follows:
a)the development of a further airport in Sydney is of the general importance for both the economic and social wellbeing of Western Sydney, if not this country;
b)significant time, effort and money has already been put into preparation of the site for the future development of the airport and the continued presence of tenants on the airport site is to increase the amount of costs likely to be incurred by the Commonwealth in that development;
c)the safety of individual tenants will decrease as more and more tenants vacate the site; and
d)Mr Pries has been on notice since at least the beginning of the current residential tenancy agreement of the possibility of the use of the land in Badgerys Creek as an airport and the consequent need for them to give vacant possession to the Commonwealth for that purpose. That awareness was heightened by correspondence in October 2014 from the agents for the Commonwealth and put beyond doubt by the notice of termination served in November 2014.
Apart from the matters I have already dealt with, Mr Pries relies on a number of matters in support of the argument that the Court should refuse the Commonwealth’s application.
First, he argues that the power to make a termination order under s 85 is discretionary. That argument is rejected for the reasons I gave in Odzic at [82] – [84]. For that reason, I have considered Mr Pries’ remaining arguments (as outlined below) on the basis that they might inform the question of the appropriate date by which vacant possession of the Premises ought to be given to the Commonwealth.
Effectively, Mr Pries’ central argument about the appropriate date for vacant possession involves the availability of suitable alternative accommodation for his family and also for his horses. He also argues that he will suffer significant loss and that, in any event, the Commonwealth would save money if he and his family were to remain on the Premises.
Mr Pries gave evidence that he has tried without success to locate alternative suitable accommodation since October 2014. He said that he had looked at more than 14 premises and had rung more agents. He said that, from about March 2015, there had always been a big crowd of people when he had tried to put his name down at alternate premises and he missed out every time. He said that he had noticed other Badgerys Creek residents were amongst those inspecting properties.
There was a folder of material in evidence (Exhibit E) that included some documents relevant to the availability of accommodation in the Greater Western Sydney region. The first of those documents related to community housing. That information was seemingly not relevant to Mr Pries’ circumstances.
The second group of documents consisted of advertisements for rental accommodation that seem to have been downloaded from an online real estate website. However, they do not establish anything relevant other than that, at certain dates the properties shown in the advertisements were available for rent for particular amounts. There is no evidence that these were the only properties available, or what properties were available at other times or in other locations. None of this material carries any weight.
Although I accept that Mr Pries has tried unsuccessfully to rent alternative accommodation, I am not satisfied that none is available. Mr Pries’ evidence does not indicate the type of accommodation he has looked at or its location. It may be preferable to Mr Pries to remain in the Badgerys Creek area, but the evidence does not establish that it is the only area in the Greater Western area of Sydney with properties suitable for a family of four or that there are no other properties where Mr Pries can agist his horses.
Mr Pries’ evidence was also that he would suffer significant loss if he was forced to move. He calculates that he will have to pay an extra $475 per week in rent as well as pay $2000 for removalists. I accept that Mr Pries may have to pay a higher rent and to pay for removalists. While the evidence does not establish with any degree of certainty the amount of additional rent he will have to pay, the increase in Sydney rent over the last few years is well-known. However, the difficulty for Mr Pries is that he must move. The only remaining question is when. On one view, the longer he takes to move the more rent he is likely to have to pay.
Finally, Mr Pries argues that there is nothing identifying any immediate need or even medium term need for use of the land and that it is in the public interest for him and his family to remain on the land because they act as informal fire and security representatives. He argues that this saves the Commonwealth a lot of money. I do not agree that the Commonwealth has not established any need for immediate or medium term use of the land. A similar claim was made in a number of other proceedings, namely that there was no pending commercial requirement for the orders for termination for over 12 years. I dealt with and rejected the same arguments in Odzic at [95] – [101]. In brief, the evidence does not support the claim.
On the other hand, the evidence of Peter Robertson, a General Manager at the Department of Infrastructure and Regional Development, which I accept, did establish such a need. While Mr Pries might be correct to say that he and his family could continue to act as informal fire and security representatives I do not consider that to be a relevant factor to the issue for decision. First, Mr Robertson’s evidence was that the longer tenants remained on the airport site the more the development of the site would cost; and, secondly, as I have said, Mr Pries must move. The Court has no discretion as to whether to make an order terminating the Agreement.
Mr Pries’ written submissions contained two further arguments:
a)As there was an express provision in the Agreement in relation to termination, the rights of the parties are governed by that clause.
I dealt with and rejected this and a similar argument in Odzic at [106] – [108]. The argument is rejected in these proceedings for the same reasons. In doing so, I note that the express provision in the Agreement was sufficiently similar to the one referred to in Odzic.
b)Because the termination notice was served before the introduction of s.10AA into the FCCA, it was not effective for the purposes of the Commonwealth law
I dealt with and rejected this argument in Odzic at [110] – [111]. The argument is rejected in these proceedings for the same reasons.
In my view, apart from showing that he has, to date, been unsuccessful in his efforts to obtain alternative accommodation, Mr Pries has presented no real basis for his opposition to the orders sought by the Commonwealth.
Conclusion
In light of the circumstances relied on by the Commonwealth as summarised above and that I am not satisfied that there is no suitable alternative accommodation available within a reasonable period, I find that the appropriate date on which Mr Pries is to give vacant possession of the Premises is 28 December 2015, but that the order for vacant possession should be suspended until 25 January 2016. In fixing that date, I have taken into account the time of year even though that was not addressed by either of the parties.
The Commonwealth sought orders for the issue of warrants for possession. In my view, the basis on which it sought those orders was unclear. The Tenancies Act makes provision for the issue of warrants (s.121) and, if it is necessary to do so, there is nothing preventing the Commonwealth from making use of those provisions.
For those reasons, I make the following orders:
(1)The residential tenancy agreement in relation to the premises at 470 (formerly Lot 7) Badgerys Creek Road, Badgerys Creek NSW 2555 comprising part of folio identifier Lot 1 DP 838361 (“Premises”) be terminated with immediate effect.
(2)Vacant possession of the Premises be given to the Applicant on or before 28 December 2015.
(3)The order for vacant possession be suspended until 25 January 2016.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Smith
Associate:
Date: 21 December 2015
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