Commonwealth of Australia v Vassallo
[2015] FCCA 2695
•2 October 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COMMONWEALTH OF AUSTRALIA v VASSALLO & ANOR | [2015] FCCA 2695 |
| Catchwords: ADMINISTRATIVE LAW – Commonwealth Tenancy Dispute – termination of long term tenancy agreement under s.94 Residential Tenancies Act 2010 (NSW) – respondents in possession of the premises for over 20 years – whether termination of the long term tenancy agreement is granted – original tenancy agreement expired – respondents notified of termination – consideration of suitable alternative accommodation available to the respondents – consideration of the applicant’s interests – no appearance by the respondents during proceedings – termination of long term tenancy agreement granted – immediate vacant possession ordered. |
| Legislation: Fair Rents Act 1915 (NSW) |
| Cain v New South Wales Land and Housing Corporation (2014) 86 NSWLR 1 Articles and other material cited: |
| Applicant: | COMMONWEALTH OF AUSTRALIA (AS REPRESENTED BY THE DEPARTMENT OF INFRASTRUCTURE AND REGIONAL DEVELOPMENT) |
| First Respondent: | VICTOR VASSALLO |
| Second Respondent: | CHRISTINE VASSALLO |
| File Number: | SYG 642 of 2015 |
| Judgment of: | Judge Smith |
| Hearing date: | 21 May 2015 |
| Date of Last Submission: | 21 May 2015 |
| Delivered at: | Sydney |
| Delivered on: | 2 October 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Doyle & Mr. D.W. Rayment |
| Solicitors for the Applicant: | Australian Government Solicitor |
| No appearance by or on behalf of the Respondents |
ORDERS
The residential tenancy agreement in relation to the premises at 2110 Elizabeth Drive, Badgerys Creek, NSW 2555 be terminated with effect from 2 October 2015.
Vacant possession of the premises be given to the Applicant on or before 2 October 2015.
There be no order as to costs in relation to the proceedings.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 642 of 2015
| COMMONWEALTH OF AUSTRALIA (AS REPRESENTED BY THE DEPARTMENT OF INFRASTRUCTURE AND REGIONAL DEVELOPMENT) |
Applicant
And
| VICTOR VASSALLO |
First Respondent
| CHRISTINE VASSALLO |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Victor and Christine Vassallo have lived on a property in Badgerys Creek since 1989. Badgerys Creek is part of the semi-rural western edge of the greater metropolitan area of Sydney. The property is owned by the Commonwealth of Australia and is part of a site which is proposed to be developed as a new airport. In order to proceed with the development of the site, the Commonwealth has brought proceedings seeking orders terminating the residential tenancy agreement between it and the Vassallos and for vacant possession of the property.
The Vassallos have been served with the Commonwealth’s application and all of the evidence on which it relies. They have taken no part in the proceedings even when notified that the matter would proceed to hearing. When the matter came on for hearing they did not appear and the matter was heard in their absence.
The power of this Court to terminate a residential tenancy agreement and to determine the date upon which vacant possession of a property is to be given must be exercised upon consideration of the competing interests of the parties.
The only evidence concerning the Vassallos’ interests is that they have been in possession of the property now for 26 years.
The Commonwealth says that it needs occupation of the land in order to proceed with the proposal to develop the whole site as an airport. I accept that the proposal is considered to be in the national interest and that the Commonwealth has a genuine need for possession in order to pursue that interest.
In those circumstances, I consider that it is appropriate to terminate the residential tenancy agreement between the Vassallos and the Commonwealth and to order that vacant possession be given immediately.
Before turning to analyse the evidence it is necessary to consider the Court’s power to make the orders sought by the Commonwealth.
The relevant statutory framework
As I explained in Commonwealth of Australia (As Represented By Department of Infrastructure and Regional Development) v Hevers [2015] FCCA 1814 (“Hevers”), this Court has jurisdiction pursuant to s.10AA of the Federal Circuit Court of Australia Act 1999 (Cth) (“FCCA Act”) in relation to Commonwealth tenancy disputes in which the Commonwealth is the lessor and a person other than the Commonwealth is the lessee. In exercising that jurisdiction in respect of land in New South Wales, the Court is to apply the Residential Tenancies Act 2010 (NSW) (“Tenancies Act”) subject to some modifications and to the extent necessary to determine the dispute: Federal Circuit Court (Commonwealth Tenancy Disputes) Instrument 2015 (Cth), s.7.
A Commonwealth tenancy dispute includes a matter involving a lease, licence or other arrangement to possess, occupy or use land and a dispute about the termination of the lease, licence or other arrangement in which the Commonwealth is a party: FCCA Act s.5.
There is no question that these proceedings involve a Commonwealth tenancy dispute. In order to understand the law that is to be applied in determining the dispute, it is necessary to have regard to the relevant provisions of the Tenancies Act and briefly consider some of the historical context of that Act.
Tenancies Act
The following summary of the Tenancies Act is largely taken from the judgment in Hevers.
The Tenancies Act relevantly commenced operation on 31 January 2011 and applies to residential tenancy agreements in respect of residential premises made before or after that date: s.6. “Residential premises” is defined to include any premises or part of premises (including any land occupied with the premises) used or intended to be used as a residence: s.3.
A residential tenancy agreement is an agreement under which a person grants to another person, for value, a right of occupation of residential premises for the purposes of use as a residence: s.13. An agreement may be a residential tenancy agreement for the purposes of the Tenancies Act even if the agreement does not grant a right of exclusive occupation or grant the right to occupy residential premises together with the letting of goods or the provision of services or facilities: s.13(3).
A residential tenancy agreement that is for a fixed term continues to apply after that term ends as if the term of the agreement were replaced by a periodic agreement and on the same terms as immediately before the end of the fixed term: s.18.
The critical provisions of the Tenancies Act are found in pt.5 and concern the termination of residential tenancy agreements. Importantly, s.81(1) provides that a residential tenancy agreement terminates only in the circumstances set out in the Tenancies Act. Division 2 of pt.5 (ss.84-95) makes provision for termination by the landlord. Section 84 provides:
84End of residential tenancy agreement at end of fixed term tenancy
(1)A landlord may, at any time before the end of the fixed term of a fixed term agreement, give a termination notice for the agreement that is to take effect on or after the end of the fixed term.
(2)The termination notice 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.
(3)The Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice.
(4)This section does not apply to a residential tenancy agreement if the tenant has been in continual possession of the same residential premises for a period of 20 years or more and the fixed term of the original fixed term agreement has ended.
Section 85 deals with the termination of periodic agreements and provides:
85Termination of periodic agreement
(1)A landlord may, at any time, give a termination notice for a periodic agreement.
(2)The termination notice must specify a termination date that is not earlier than 90 days after the day on which the notice is given.
(3)The Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice.
(4)This section does not apply to a residential tenancy agreement if the tenant has been in continual possession of the same residential premises for a period of 20 years or more.
The Tribunal means the New South Wales Civil and Administrative Tribunal (“NCAT”): s.3.
Section 83 of the Tenancies Act provides that, if the Tribunal makes an order terminating a residential tenancy agreement under the Act, it must also make an order for possession of the residential premises, specifying the day on which the order takes or took effect.
Section 94 of the Tenancies Act is central to these proceedings. It provides:
94 Termination of long term tenancies
(1)The Tribunal may, on application by a landlord, make a termination order for a residential tenancy agreement:
(a)if the tenant has been in continual possession of the same residential premises for a period of 20 years or more, and
(b)if the tenant occupied the premises under a fixed term agreement, the fixed term of the original agreement has expired, and
(c)if the Tribunal is satisfied that it is appropriate to do so in the circumstances of the case.
(2)A landlord may make an application under this section without giving the tenant a termination notice.
(3)The Tribunal must not make a termination order under this section that specifies a termination date that is before the end of the fixed term if the residential tenancy agreement is a fixed term agreement.
(4)The Tribunal, in determining the day on which vacant possession of the residential premises is to be given to the landlord, must not order that vacant possession be given earlier than 90 days after the order is made.
It may be noted that the predecessor to the Tenancies Act, the Residential Tenancies Act1987 (NSW) (“1987 Act”), did not make any specific provision in relation to the termination of tenancies in circumstances where the tenant had been in possession of the premises for a long period: see 1987 Act s.64.
Recovery of possession of premises is dealt with in pt.6 of the Tenancies Act (ss.119-135). Section 119 provides that a landlord or former landlord must not commence proceedings against a tenant or former tenant of the landlord in the Supreme Court, the District Court or the Local Court to obtain recovery of possession of residential premises subject to a residential tenancy agreement. The effect of this provision is adumbrated above, namely, that the NCAT has exclusive jurisdiction in New South Wales in respect of the recovery of possession of residential premises subject to a residential tenancy agreement.
Part 9 of the Tenancies Act (ss.187-195) provides for the powers of the NCAT. Amongst the powers provided for in that Part, the NCAT may make an order that restrains any action in breach of a residential tenancy agreement or an order that requires an action in performance of a residential tenancy agreement: subs-ss.187(1)(a) and (b). An order under either of those subsections may be made even though it provides a remedy in the nature of an injunction or order for specific performance in circumstances in which such a remedy would not otherwise be available: s.187(3).
Tenancy Disputes Instrument
Sections 7 and 8 of the Tenancy Disputes Instrument are also important to the determination of the issues in these proceedings. They provide:
7 Law to be applied
(1)In determining a Commonwealth tenancy dispute involving land in New South Wales, the Residential Tenancies Act 2010 (NSW) and any regulations made under that Act are to be applied:
(a)to the extent necessary to determine the dispute; and
(b)subject to the modifications set out in section 8 of this instrument.
(2)The law mentioned in subsection (1) is the applicable NSW law.
8 Modifications of applicable NSW Law
(1)The applicable NSW law is to be applied as if:
(a)a reference to the Tribunal were a reference to the Federal Circuit Court of Australia; and
(b)a reference to the principal registrar of the Tribunal were a reference to a Registrar of the Federal Circuit Court of Australia; and
(c)a reference to the Sheriff, or to a sheriff’s office, were a reference to the Sheriff of the Federal Circuit Court of Australia.
(2)The Residential Tenancies Act 2010 (NSW) is to be applied as if it included the following section:
Despite anything else in this Act, if the Federal Circuit Court of Australia makes a termination order in respect of residential premises, the Court may make such orders as it considers appropriate in relation to the day vacant possession of the premises is to be given to the landlord.
Section 9 of the Tenancy Disputes Instrument is also pertinent to the issues in the proceedings. It provides:
9 Powers of the Court
In determining a Commonwealth tenancy dispute involving land in New South Wales, the Federal Circuit Court of Australia may exercise any powers that are:
(a)powers of the Civil and Administrative Tribunal under the applicable NSW law; and
(b) relevant to determining the dispute.
In very broad overview, the relevant effect of s.10AA of the FCCA Act and the Tenancy Disputes Instrument is that this Court has jurisdiction to determine an application by the Commonwealth, as landlord, for an order for termination (which includes an order for vacant possession) and that, subject to one qualification, where the tenant has been in occupation of the premises for 20 years or more, that application has to be determined in accordance with s.94 of the Tenancies Act. The qualification is that this Court is not bound by s.94(4), namely, that “in determining the day on which vacant possession of the residential premises is to be given to the landlord, [the Tribunal] must not order that vacant possession be given earlier than 90 days after the order is made.”
The power to make a termination order under s.94 of the Tenancies Act is expressed in permissive terms (“may”) and is conditioned by three matters. Before considering those matters, it may be noted that, at first glance, it is odd that the power to terminate a lease is at the discretion of the Court. It presents a large qualification to the ordinary right of a land owner, under common law, to the reversionary interest in the land as well as the contractual rights that ordinarily flow from leases of land. As will be seen, those incursions into the rights of landowners are part of a relatively recent legislative response to the imbalance in power between landlords and tenants and the changing need for rental accommodation throughout Australia and other parts of the developed world. Similar responses have been made in relation to retail tenancies. Further, the more immediate history of the Tenancies Act suggests that the power to make a termination order under s.94 is indeed discretionary.
The three conditions to the power to make a termination order under s.94 are: first, that the tenant has been in continual possession of the same residential premises for a period of 20 years or more; second, that if the tenant occupied the premises under a fixed term agreement, the fixed term of the original agreement has expired; and third, that the Court is satisfied that it is appropriate to do so in the circumstances of the case.
History of termination in NSW tenancy law
The termination provision in the predecessor to the Tenancies Act was in slightly different terms to s.85. The provision providing for termination by a landlord was s.64 of the 1987 Act. The relevant part of that provision was:
64Application to Tribunal by landlord for termination and order for possession
(1) If:
(a)a landlord or a tenant gives notice of termination of a residential tenancy agreement under this Part, and
(b)the tenant fails to deliver up vacant possession of the residential premises on the day specified,
the landlord may, not later than 30 days after that day, apply to the Tribunal for an order terminating the agreement and an order for possession of the premises.
(2)The Tribunal, on application by a landlord under this section, is to make an order terminating the agreement if it is satisfied:
(a)in the case of a notice given by a landlord on a ground referred to in section 56 or 61 - that the landlord has established the ground, or
(b)in the case of a notice given by a landlord on the ground referred to in section 57, relating to a breach of the agreement:
(i) that the landlord has established the ground, and
(ii) that the breach, in the circumstances of the case, is such as to justify termination of the agreement, or
(c)in any other case (except in the case of a notice given by a landlord on a ground referred to in section 63B, 63F or 63I):
(i) that the tenant has seriously or persistently breached the agreement, or
(ii) that, having considered the circumstances of the case, it is appropriate to do so.
(Emphasis added)
In Swain v Residential Tenancies Tribunal of New South Wales (Supreme Court of New South Wales, Rolfe J, unreported, 22 March 1995) it was argued that a landlord had the right to obtain a termination order under s.64 upon giving the requisite notice at the end of the term of a lease. Rolfe J rejected this argument, holding that the Tribunal must also be satisfied of the matters in sub-s.64(2)(c)(ii), namely, that it was appropriate to terminate the lease having considered the circumstances of the case. As to those circumstances, his Honour said:
… Possible “circumstances”, which may have to be taken into account, are the time the tenant has occupied the premises, the age and state of health of the tenant, the necessity for any number of reasons for the tenant to live in a particular area, and the inability of the tenant to obtain other suitable accommodation in which, of course, I include accommodation in an area suitable for matters such as proximity to family, facilities or employment. …
That decision was upheld on appeal: Roads and Traffic Authority v Swain (1997) 41 NSWLR 452. There, Meagher AJ, with whom Priestley and Cole JJA agreed, held at 456B, that the “circumstances” referred to in s.64 were the particular case before the Tribunal. His Honour also explained that the Act was intended to balance the rights of the landlords and tenants. See also Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 at [447].
In Scicluna v New South Wales Land and Housing Corporation (2008) 72 NSWLR 674 the New South Wales Court of Appeal considered, amongst other things, the nature of the power of the Tribunal under s.64(2). The Court found that the power conferred on the Tribunal was to make an order terminating a residential tenancy agreement if it were satisfied as to the statutory criteria; it was not a discretionary power but a matter of statutory obligation, once an evaluative opinion had been formed: 676 [1] per Hodgson JA, 677 [6] per Basten JA, 690 [63] per Campbell JA. See also Sydney Harbour Federation Trust v McCluskey [2012] NSWSC 253 at [19].
That conclusion was clearly correct in light of the terms of the chapeau that provides that the Tribunal “is to make an order terminating the agreement if it is satisfied …”. The evaluative opinion referred to in the decision arises from the condition of the power that the Tribunal be satisfied, “having considered the circumstances of the case, it is appropriate to do so.”
The scope of the power under s.94 of the Tenancies Act is to be understood against that legislative history.
There are a number of differences between the Tenancies Act and its predecessor that are worth noting. First, the Tenancies Act makes clear that the power to terminate a periodic tenancy (other than those where the tenant has been in occupation for 20 years) is not discretionary. Thus, s.85(3) provides that the Tribunal must, on application by a landlord, make a termination order if it is satisfied that a termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice. Secondly, the evaluative opinion referred to above is no longer a condition of the power to terminate. Thirdly, as is clear from the proviso in the parentheses above, the power to terminate is different depending on whether the tenant has been in occupation of the premises for 20 years or less. Where the occupation is greater than 20 years, the only power to terminate is under s.94.
As already mentioned, s.94 provides that the Tribunal (or, in this case, the Court) may make a termination order if the three conditions, set out in [27] above, are met. The power to terminate in s.91 of the Tenancies Act is similarly phrased: “The Tribunal may … make a termination order if it is satisfied …”. That power was considered by the Court of Appeal in Cain v New South Wales Land and Housing Corporation (2014) 86 NSWLR 1. In that case the respondent Housing Corporation had applied to the Tribunal for a termination order on the basis that the applicant, Ms Cain, had been convicted of the cultivation and supply of cannabis. The Tribunal did not make that order, but made an order in the nature of specific performance requiring the appellant to comply with the terms of the tenancy agreement. The respondent successfully appealed to the District Court and Ms Cain applied to the Court of Appeal for judicial review of that Court’s decision. The Housing Corporation argued that, in spite of the word “may”, the power in s.91 was not discretionary. That argument did not gain much traction in the Court of Appeal. It is unnecessary to examine the Court’s reasons too closely; however, the following matters are relevant to the present case.
First, Basten JA noted at 5 [15], referring to Ward v Williams (1955) 92 CLR 496, that the correct question was why what is, on its face, a discretionary power should be construed otherwise. Secondly, the principal argument was that the words “sufficient to justify termination” in sub-s.91(1)(b) conferred such an evaluative discretionary judgment that there would be no occasion for a further exercise of discretion. While both Basten and Leeming JJA found this argument plausible, they rejected it. Basten JA found that it gave insufficient force to s.91(2) which went to the decision “whether to make a termination order”: at 6 [19]. Leeming JA said, at 11 [47]:
… A natural meaning of s 91(1)(b) is that the Tribunal must first be satisfied that there has been sufficiently serious unlawful use to engage power to make a termination order without necessarily first giving a termination notice. If so, the Tribunal may then have regard to more general considerations in the exercise of the discretion to make the order. …
Thirdly, Leeming JA contrasted the use of the word “must” in s.84(3) with the word “may” in ss.86(4), 87(4), 89(5), 90(1), 91(1), 92(1), 93(1), 94(1), and 95(3) and stated that the change from one to the other was a “remarkable feature of the structure of the Division.”
Fourthly, the Housing Corporation relied on the terms of sub-s.94(1)(c), namely, “if the Tribunal is satisfied that it is appropriate to do so in the circumstances of the case” to argue that, if the discretionary language of subparagraph (c) were satisfied, there could be no further discretion remaining. Leeming JA held, at 11 [50]:
… That is so. However, accepting as I think it must be that this is a case where there is superfluous language, a consistent legal meaning is achieved by regarding the words of (c) as confirmatory of the discretion, rather than reading “may” as “must”.
His Honour there was applying the well-established principle that a statute is to be construed “so that it is consistent with the language and purpose of all the provisions of the statute”: Certain Lloyd’s Underwriters Subscribing to Contract No IHOOAAQS v Cross (2012) 248 CLR 378 at [24] citing Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69].
Although Leeming JA’s comments in respect of s.94 could be said to be strictly by way of obiter dictum, given the immediate legislative history of the termination provisions they were, in my opinion, clearly correct. That conclusion is reinforced by regard to the broader context and the evident purpose of the enactment of s.94.
A very brief history of the development of the common law of landlord and tenant is set out by Adrian (now Professor) Bradbrook in The New Era of Tenancy Protection (1987) 61 ALJ 593. He explains that, after the adoption of the English law by the Australian states there were very few statutory amendments or case law developments to that law. Amongst the few statutory amendments was the Landlord and Tenant Act 1899 (NSW) that contained very few provisions and could not be described as a comprehensive scheme of protection for tenants.[1] Bradbrook opined that the failure of the law in Australia to provide for such a scheme was that the tenant in 16th Century England required no such protection and that the problem with the common law approach of freedom of contract was not its inherent bias towards landlords, but its failure to keep pace with the times by recognising societal changes.[2]
[1] (1987) 61 ALJ 593 at 594.
[2] Ibid.
These societal changes were addressed to some extent in the First World War and subsequent legislation for the control of rents such as the Fair Rents Act 1915 (NSW) and the Reduction of Rents Act 1931 (NSW), the vestiges of which remain today in New South Wales in the Landlord and Tenant (Amendment) Act 1948 (NSW).
The reasons for the need for more comprehensive reform are explained by Bradbrook in both The New Era of Tenancy Protection and an earlier article, The Role of the Judiciary in Reforming Landlord and Tenant Law (1976) 10 MULR 459. Amongst those were the conclusion of the Commonwealth Commission of Inquiry into Poverty in 1974, the most important of which was the basic inequality of bargaining power between landlord and tenant.
The first attempt in New South Wales at comprehensive reform of the law of landlord and tenant (at least insofar as it relates to residential tenancies) was the 1987 Act. The Tenancies Act represents a further step in the same direction. The second reading speech made on the introduction of the bill elaborates on the need for the further reform. The Hon. Penny Sharpe (Parliamentary Secretary) said:
The structure and composition of the residential rental market in New South Wales has significantly changed since the current laws were developed more than 20 years ago. Families and older people are now a much bigger part of the rental market. Shared households are becoming increasingly common and many tenants now rent for their entire lives, compared to the past when renting was often seen as just a stepping stone into home ownership.
…
The changing rental market means that it is becoming increasingly important to make sure our tenancy laws are up to date, that they are unambiguous, and that they are responsive to the needs of the community. We need a regulatory regime that reduces unnecessary costs, promotes equity and supports the future provision of rental housing in New South Wales.
One of the concerns addressed in the second reading speech was that, under the 1987 Act, the Tribunal had to consider the circumstances of the case before making a termination order. The Hon. Penny Sharpe described the removal of that “discretion” as a “major win for landlords”.
In any event, the concerns discussed in the second reading speech were an evolution of those concerns that led to the first comprehensive reforms under the 1987 Act. Essentially, the continued reforms are aimed at achieving a balance between the interests of the landlord and the tenant. In the case of tenants who have been in possession of property for less than 20 years, the balance has shifted back to the landlord. However, the date of vacant possession is still a matter for the Tribunal or Court’s discretion. Section 8(2) of the Tenancy Disputes Instrument amends the Tenancies Act so that the date for possession is the date that the Court considers appropriate.
Consideration
The first step of the approach to this case must then be to determine whether the duty to make a termination order arises. That requires consideration of whether the three conditions in s.94 exist on the facts of the case. Those include whether “in the circumstances” the Court considers that a termination order is appropriate: sub-s.94(1)(c). Those circumstances are, as explained in Swain, all of the matters that arise on the material before the Court including the availability of suitable alternative accommodation. Once that is considered, the second step is to consider the exercise of the discretion. As Leeming JA said in Cain, this may be surplus and may be no more than an affirmation of the consideration under sub-s.94(1)(c). Although there is a real discretion, it is difficult to imagine the circumstances in which it would be appropriate to make a termination order and then exercise the discretion not to make such an order.
Once the Court decides to make a termination order it must also make an order for possession of the residential premises specifying the day on which the orders takes or took effect: s.83(1). As the minimum 90 day period specified in s.94(4) does not apply to these proceedings, there is no explicit guidance in the Tenancies Act as to the date on which possession should be ordered. In light of that, the contextual matters referred to above must also be involved in the determination of the date of possession. Essentially, the determination involves a balancing of the interests of the landlord and the tenant in the circumstances of each case, including the length of the tenant’s possession of the land.
It is necessary, then, to turn to each relevant consideration.
Continual possession for a period of 20 years or more: sub-s.94(1)(a)
The property in question is part of the land comprised in certificate of title folio identifier 1/838361 of which the Commonwealth is the registered proprietor. The address of the premises is 2110 Elizabeth Drive, Badgerys Creek, NSW 2555. On 27 January 1989 the Vassallos first entered into a lease with the Commonwealth in respect of the property. They entered into a residential tenancy agreement in respect of the property on 1 April 2002 with a term of one year. The improvements to the property were described in that lease as being a three bedroom concrete permalum 2 storey cottage with aluminium double garage.
On 1 March 2004 the Vassallos entered into another residential tenancy agreement with Commonwealth in relation to the property. That agreement was for a term of 52 weeks commencing on 1 March 2004. The improvements were described as being a five bedroom 2 storey house with garage and horse stalls.
There is no evidence that the Vassallos have ever given up possession of the property.
I am satisfied on the basis of these facts that the Vassallos are the tenants of the property and that they have been in continual possession of it for a period of 20 years or more.
If the tenant occupied the premises under a fixed term agreement, the fixed term of the original agreement has expired: sub-s.94(1)(b)
The term of the residential tenancy agreement between the parties was 52 weeks beginning on 1 March 2004 and ending on 21 February 2005. On that basis, I am satisfied that the fixed term of the original agreement has expired.
The Court is satisfied that it is appropriate to do so in circumstances of the case: sub-s.94(1)(c)
In light of the fact that the Vassallos took no part in the proceedings, it is convenient to first examine the circumstances relied upon by the Commonwealth.
The first steps towards construction of an airport
In the late 1980s and 1990s the Commonwealth undertook a land acquisition program in the Badgerys Creek area to acquire and reserve the land needed for an airport in Western Sydney. The acquisition program resulted in the acquisition by the Commonwealth of a large number of individual titles in the suburbs of Badgerys Creek, Luddenham and Greendale.
A 2012 Joint Study on aviation capacity in the Sydney region, commissioned jointly by the Commonwealth and NSW governments, identified that the demand for passenger journeys in the Sydney region was forecast to more than double over the next 20 years and to double again by 2060.
On 15 April 2014, in a joint release with the then Prime Minister Mr Abbott, and the Minister for Infrastructure and Regional Development, Mr Truss announced that the site for Western Sydney’s new airport would be Badgerys Creek. He announced that, although the airport would not be fully operational for a decade, planning for the new airport would start immediately and construction should start in 2016. He also said that, because of the time it takes to plan and build an airport, the Government’s approach would be to build the roads first and the airport second. It was envisaged that most of the cost of the airport would be met by a private sector operator.
The evidence in respect of the development of the site for the airport was given on behalf the Commonwealth by Peter Robertson, a General Manager at the Department of Infrastructure and Regional Development. He is one of three Senior Executive Service staff members managing the proposed Badgerys Creek airport project and has been engaged on it since the establishment of the Western Sydney unit which is tasked with the management of the proposed airport. Mr Robertson is responsible for management of policy development for the project and project timeframes.
Mr Robertson stated that there were four aspects of the substantial urgency of vacating (by which he meant obtaining vacant possession of) the site. The first was to obtain vacant possession in accordance with the Project timetable; secondly was the incompatibility of continued residential accommodation and the ongoing investigation and demolition works both in terms of cost and delay impacts on the work at the site and the residential amenity and safety; thirdly was the balance to be struck between the interests of the tenants and the high costs of them remaining on the site; and the fourth was importance of treating tenants equitably.
Mr Robertson explained that planning for an airport requires substantial on-site technical work including extensive investigations to support environmental assessment and geotechnical work by engineers and other consultants. He said in his affidavit of 11 March 2015 that work had already commenced and was expected to continue through 2015. He said that the site investigations including invasive geotechnical drilling work to obtain samples to inform the engineering options which requires substantial machinery on the site including large mobile rigs to drill and dig holes often several metres deep. The work was, at the time of his affidavit, being undertaken on a limited scale due to the occupants on the site. That was because the work is intrusive, requires out of hours access and could cause safety concerns for occupants.
In light of the occupation of parts of the site by the remaining tenants the work had been either been tailored to parts of the site of which the Commonwealth had possession, or alternatively had liaised with tenants to ensure that testing could be conducted safely without unnecessary disturbance. Mr Robertson explained that the additional work and costs that have resulted from working around tenants were “considerable”, although he did not give any further detail in that respect. Notably, his evidence did not deal directly with the part of the site on which the Vassallos’ home is located. Indeed, his evidence was that the planning, assessment, site management and preparation activities for the airport site were being undertaken on a “whole of site” basis for all of the land to be included in the airport site.
Mr Robertson also gave evidence of the further work that would be required on the site in general. Generally speaking, that work was to obtain further geotechnical and contamination information across the whole site which would then be fed directly into the government’s consideration of the land use arrangements for the site and the associated costings. Mr Robertson said that the information was urgently required in order to feed into the government consideration process but did not really explain the basis for the urgency other than saying that a delay in obtaining the testing information “risks delaying the proposal overall.”
Mr Robertson described the process for assessing residential tenant blocks as being administratively onerous and taking considerable time, effort and cost to implement. The steps usually followed in that respect were:
a)Identify sites for access: contracted specialists would identify access requirements for all specialist investigations on the site and then submit a request for access to the Department. That request would then reviewed by the Department in consultation with the property manager. Alternative access options would be identified should there be tenancy considerations.
b)Seek consent from tenants: once the final list of survey sites was determined then the Department would liaise with existing tenants by way of letters prepared by lawyers and follow-up telephone calls.
c)Where tenants refuse access: a new survey site would need to be identified in accordance with the previous steps.
d)Finalise access sites: when tenants are notified and consent is received the lists of sites for access is finalised, mapped and sent to contracted specialists to be given to the survey team.
e)Access to sites on the day of investigations.
Mr Robertson explained that the constant requirement to seek consent had implications for the achievement of the projects timeframes and generated substantial costs with uncertainties relating to access causing “serious obstacles to planning, delay and costs for work on site”.
Mr Robertson stated that the next stages of investigative work would be increasingly incompatible with the continued residential occupation of the land being tested. In addition to the substantial noise and disturbance caused by machinery there was a significant risk to safety arising both from the danger of individuals interacting with the machinery and dangers associated with holes which have been drilled.
In his affidavit of 30 March 2015 Mr Robertson stated that a minimum of 9 to 12 months was expected to be required to clear the Badgerys Creek site and that that timeframe was only achievable with multiple contractors working concurrently on the site with limited unfavourable weather. The expectation was also based on the assumption that there were multiple structures requiring demolition on 150 remaining properties after June 2015.
Preparation for development by a private sector operator
As was mentioned in the 15 April 2014 joint press release, the Commonwealth envisaged that the costs of the airport would be principally met by a private sector operator. Mr Robertson gave evidence about the contractual processes being undertaken by the Commonwealth in connection with that operator.
Mr Robertson stated that when the Commonwealth sold Sydney (Kingsford Smith) Airport to the Sydney Airport Group in 2002, the sale agreement included terms granting an opportunity to the purchaser to develop and operate any second major airport in the Sydney region within 100 kilometres of the Sydney GPO. That sale agreement detailed the process and timeframes for consultation between the government and owners of the Sydney airport on the development and operation of a second airport. Those processes were not in evidence before me.
As Badgerys Creek is located approximately 56 kilometres from the Sydney GPO the right of first refusal in the airport sale contract were applicable. That right of first refusal includes a number of phases including a consultative phase and a contractual phase. Those phases are expected to take between one and two years to complete.
On 30 September 2014 the Commonwealth government issued a “Notice to Consult” to the Sydney Airport Group advising that the consultative phase of the process would commence on 1 October 2014. The notice specified that the consultative phase would take nine months and so expire on 30 June 2015.
Mr Robertson explained that, following the consultative phase, the government may enter a contractual phase which would involve the issuing of a “Notice of Intention” to the Sydney Airport Group which would include detailed terms for the proposed development and operation of an airport at Badgerys Creek including technical specifications, contractual terms and a timetable. The Sydney Airport Group would then have the opportunity to exercise its option to develop and operate the airport at Badgerys Creek. If it declined that opportunity, the Commonwealth would be entitled to approach the market, or develop and operate the airport itself.
Mr Robertson gave evidence that while consultation was currently underway and a final decision on the airport proposal had not yet been made, a clear site was necessary to allow for investigations of the site to inform any proposal that could be made to the Sydney Airport Group or the market or in order to determine whether development would be carried out by the government itself. Essential to any proposal is the outcome of the environmental impact assessment process, geotechnical and engineering investigations, archaeological surveys, and other site interrogations.
Mr Robertson said that any second airport for Sydney would be a substantial piece of national transport infrastructure utilising a site measuring in the order of 1700 hectares and would be a key resource for the operation of the New South Wales and national economies because of its significance to air transport and a number of associated industries. That must be correct as a matter of common experience and I accept it.
The circumstances affecting the Vassallos
Apart from the security, safety and convenience issues that arise, according to the evidence of Mr Robertson, in relation to the whole site, there are three matters that relevantly affect the Vassallos’ interests. The first matter is the length of the Vassallos’ occupation of the property. The second arises from the terms of the residential tenancy agreement between the Vassallos and the Commonwealth. The third is the process which the Commonwealth has undertaken to obtain vacant possession of the property. That process includes the notice of proposed development of the site for the airport, notice of the proposed termination of the residential tenancy agreement, and any assistance given by the Commonwealth to the Vassallos in relation to moving from the premises.
The first matter is, as I have mentioned above, that the Vassallos have been in continual possession of the property for over 26 years. It is easy to infer that they have created their home on the property and have developed a considerable attachment to it.
The second matter arises from the fact that the additional terms to the residential tenancy agreement referred to the proposed airport site. Clause 53 provided:
53.1The tenant acknowledges that the premises forms part of the proposed site for Sydney West Airport.
53.2In the event that the Commonwealth of Australia decides to develop the Sydney West Airport the landlord may terminate this Agreement by serving on the tenant written notice expiring six months from the date of the notice or on expiration of the term (whichever is the earlier).
53.3The tenant shall not be entitled to any payment or compensation from the landlord arising from such termination.
53.4A termination of the Agreement under clause 53.2 shall not affect an existing right or obligation accrued or incurred by a party under this Agreement or otherwise at law or in equity.
Those provisions are subject to the operation of the Tenancies Act; however, they are relevant to the extent that they show that at least from the entry into the residential tenancy agreement in March 2004, the Vassallos were aware of the possibility that the site may be developed for the purposes of the development of an airport.
By letter dated 29 October 2014 from the firm managing the property on the site, the Commonwealth informed the Vassallos of the decision that the site at Badgerys Creek would be the site for Western Sydney’s airport. That letter also stated:
…
To implement the Australian Government’s decision, all properties on the site, including the property you occupy, will need to be vacated. The purpose of this letter is to provide you with additional information about the Government’s plans for Badgerys Creek and is for information only. This letter does not terminate your tenancy or alter the rights and obligations under your occupation arrangements.
What to expect
In the coming weeks, you will receive a formal notice of termination of your tenancy. That notice will provide a specific date by which you will be required to vacate the property. It is likely that this date will be in June 2015-but it will not be earlier.
…
There are special rules for residential tenants who have been in occupation for more than 20 years. Please tell us if anyone in your household falls into this category.
…
That letter enclosed a document entitled “Information to Assist You”. The information contained in that document included the following:
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Garbage Collection Service
Arrangements are currently in place for the collection of household waste from your premises and those arrangements are scheduled to end mid-2015 at the termination of your occupancy.
Internal Roads
Arrangements are currently in place for the maintenance of internal roads and public street lighting at the site to enable you to access your premises. Those arrangements are scheduled to end when you are required to vacate.
Roads inside the site may be closed if they are no longer required to enable occupiers to access their premises or if a road closure is required for other reasons (such as safety and security).
Despite any such road closure, convenient access to your premises will be available to you until you are required to vacate.
…
The Commonwealth’s property managers sent a further letter dated 24 November 2014 to the Vassallos. That letter relevantly stated:
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The Government requires that all tenants vacate the site by 15 June 2015. In our recent letter we advise that certain provisions apply to residential tenants who have been in continuous occupation of their property for more than 20 years.
We understand that you may have occupied the above property for a period of 20 years or more.
The attachment to this letter details are provisions that relate to the form of notification you will receive. This will not affect your vacation date of 15 June 2015 or other requirements for vacating the site.
You may vacate the property earlier than 15 June 2015.
…
The terms of this letter are somewhat surprising given that they are both inconsistent with the Tenancies Act and misleading to the extent that the letter suggests that there was an obligation on the Vassallos to vacate the their home by 15 June 2015. The misleading nature of the letter was overcome, to some extent, by an attachment to the letter referring to the position of tenants in possession of the premises for 20 years or more. That attachment included the following statements:
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If on the basis of available information, the Government considers that you have occupied the property for 20 years or more, the Government intends to apply to obtain an order pursuant to the Act to terminate your tenancy with effect from 15 June 2015.
It is not necessary for you to do anything in relation to obtaining that order. However, you may be invited to attend a hearing prior to the order being made.
If you vacate the property in the coming months it will not be necessary for an order to be obtained.
…
These statements are also misleading to the extent that they suggest that the right of the Vassallos to be heard in connection with orders terminating their tenancy was optional. Given the apparent importance to the Commonwealth of treating tenants equitably, it could have been expected that notices such as these would have accurately informed the tenants of their rights. The impression given by these letters is to the effect that the Vassallos would have no option but to vacate by 15 June 2015.
Mr Robertson gave evidence about the assistance and information provided to tenants beyond these two letters. It is not clear whether the Vassallos were directly provided with this assistance but may be accepted that it was at least available to them. The steps taken by the Commonwealth in this respect included the following.
First, the Commonwealth appointed Wendy Salkeld as the “Place Manager” who then became a dedicated point of contact responsible for communicating with tenants at Badgerys Creek on an individual basis concerning the transition of the site, and to help tenants understand the process.
Second, one-on-one meetings were offered to all tenants to facilitate them accessing the service and the Place Manager has had regular phone and email contact with those seeking assistance.
Third, assistance provided by the Place Manager included connecting tenants with various services that may help them in securing alternative accommodation, including programmes through the NSW Department of Family and Community Services - Housing Services. She has also provided contact details for other services including non-government low-cost/affordable housing providers, information on the rental process, local council pick up services, Centrelink loan programs and local charity assistance.
Fourth, there was an optional information drop-in session held on 25 February 2015 which was attended by NSW Housing Services, Centrelink and local real estate agents to give tenants personalised assistance in the services that were relevant and available to them.
Conclusion
Having considered the circumstances of this case as outlined above, I am satisfied that it is appropriate to make a termination order and that the date by which the Vassallos are to give vacant possession is 2 October 2015.
The question is resolved in the following way. I fully accept the general importance of the development of a further airport in Sydney for both the economic and social wellbeing of this State, if not this country.
The following matters add to that general importance. First, significant time, effort and money has already been put into preparation of the site for the future development of the airport. Secondly, although of less weight, the Vassallos have 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. Thirdly, although the evidence of Mr Robertson does not specifically address the property on which the Vassallos have lived for so long, I find that, as the property is part of the site for the airport, ready access to it, unhindered by concerns for tenant safety or permission, will save the Commonwealth time and money, that is, public money.
While the Commonwealth’s letters to the Vassallos in October and November of 2014 were misleading, the absence of the Vassallos from these proceedings makes it impossible to allot any significance to that fact.
The fact that the Vassallos have been in possession of the property as tenants for over 26 years should be given some weight, however, the absence of any other personal circumstances affecting the Vassallos leads me to conclude that it is well and truly outweighed by the very real need of the Commonwealth to obtain vacant possession of the property.
For that reason, it is appropriate to order that the residential tenancy agreement between the parties be terminated.
Further, given that the Vassallos have been on notice of the Commonwealth’s intention to develop the property for a considerable time, and have been on notice of these proceedings since at least April 2015, and their failure to take part in the proceedings, I consider that the appropriate date for vacant possession is the date of judgment.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of Judge Smith
Associate:
Date: 2 October 2015
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