Creely & Bingham v Cullen - [2006] SADC 21

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CREELY & BINGHAM v CULLEN
Reasons for Decision of His Honour Judge Tilmouth
7 March 2006
LANDLORD AND TENANT - RENT
Parties enter into oral agreement to leease property in form of lease for short initial term. Lessee occupies premises after term expired. Landlord seeks termination and possession. Tribunal orders pursuant to signed lease that consequential tenancy is of periodic nature and Landlord is therefore entitled to possession.
Held: Residential Tenancies Tribunal decision is affirmed. Ongoing lease was subject to "trial" period, becoming periodic at six months.
Residential Tenancies Act 1995 (SA) ss.41, 93, referred to.
Hawke v Edwards [1948] 48 SR (NSW) 21; Hempel v Robinson [1924] SASR 288; Masters v Cameron [1954] 94 CLR 353 at 360; Perpetual Trustee Co Ltd. v Bligh [1941] 41 SR (NSW) 33; Reid v Zoanetti [1943] SASR 92, considered.

CREELY & BINGHAM v CULLEN
[2006] SADC 21
1One weekday evening shortly before Friday 11 July 2003, and probably the evening beforehand, the appellants Ricki James Creely and Annette May Bingham inspected the residence and property at Lot 48, 18 Symes Road, Waterloo Corner and there, eventually, resolved to lease it, as a residential tenancy.
2According to Mr Creely, the appellants who have been in a de facto relationship for a very long time, inspected the property in the presence of the owner Mr Cullen, and his friend Mr John Jansen and his son Troy De Jong. Mr Creely had another property in mind, but as the asking price by way of rent was dropped from $190 to $170[1], he agreed to lease the property. There were certain areas of dispute relating to this occasion, to be discussed later in these reasons, concerning participants in the discussions and the length of the tenancy.
[1] Transcript 14 February 2006, P18 L20-L26.
3One thing is clear enough, namely that the appellants entered into a written Residential Tenancy Agreement, in the statutory form (Form 7) on 11 July 2003[2], which they executed in the presence of the land agent for the landlord, McGraths Real Estate at Woodville. The period of the tenancy was expressed to be from Friday 11 July 2003 to Saturday 10 January 2004, that is to say for six months.
[2] Exhibit D1.
4No right of renewal was conferred by this agreement. Clause 11, “Termination by Landlord” provided that when that once expired, a “holding over” situation applied. Clause 12 entitled, “Termination and Holding Over” provided that if “with the approval of the landlord, the tenant remains in occupation of the premises after the term, then the terms of this agreement continue but for all purposes the landlord has the right of immediate re-entry”. Clause 11 additionally provided for the landlord to give 90 days notice of termination, during the course of the agreement.
5The appellants by one means or another have remained in the property until the present time. The landlord engaged new agents, at a time which is not precisely clear, but on such evidence as there was, in late 2003 or early 2004. By late 2005 it became clear the landlord wanted to conclude the arrangement and regain possession. There was inconclusive evidence that the appellants sought to negotiate a further lease, once the original lease expired and that the landlord had wanted the appellants out of the property for some time.
6It appears Mr Creely had an income by way of pension which he supplemented by doing up old cars. There was some disputation between the parties, certainly in more recent times, about the cleanliness and order of the premises due to the presences of cars there, but as this was not the subject of dispute or a ground upon which the landlord sought termination in the Residential Tenancies Tribunal, no further reference to it need be made.
7On 23 December 2005 the “Professionals”, as new agents for the landlord, brought an application to the Residential Tenancies Tribunal seeking vacant possession on his behalf of the subject property. It appears from the reasons of the Tribunal of 9 January 2006, and also from brief notes made by it that at that time, Mr Creely claimed the original tenancy was “for five years or longer”. The other principal submission made by him on their behalf as tenants before the Tribunal was directed to their situation - “we have nowhere to go”.
8The Tribunal heard evidence from him as well as employees of the agent for the landlord and made an express finding:
“… that on 11 July 2003 a six month Residential Tenancy Agreement was entered into between [the parties] as tenants in relation to premises known as Lot 48, 18 Symes Road, Waterloo Corner … at the end of the six month fix term no further written agreement was entered into between the parties. Mr Creely told me that prior to the tenancy beginning he had a conversation with Mr Cullen and Mr Cullen told him that the agreement could be for five years. Despite this, the written agreement is for a six month period. Mr Creely said that since the agreement has expired he has requested a further fixed term but this has been denied by the agent.
I find that the agreement is currently periodic. Although Mr Creely may have had some hope or expectation that the agreement would be for a period of five years, this is not the agreement which was entered into in writing between the parties. It is clearly expressed as being a six month agreement. After that term no further fixed term was entered into between the parties. I find the agreement was therefore periodic thereafter.”
9No express reference was made by the Tribunal to Clauses 11 and 12 of the Residential Tenancy Agreement, as summarised above.
10By the Notice of Appeal invoking the jurisdiction of this Court, it is claimed the evidence given in support of the contention that a five year lease applied to the tenancy, “was either overlooked or was not taken into consideration”. In an attachment to the Notice of Appeal it is further claimed there is no signed agreement and that “I did have a fixed term with McGrath Real Estate, Woodville, with the option of signing a two year lease”.
11When the matter was first called on before this court, Mr Creely claimed in oral submissions firstly, that, “I signed a six monthly lease with the expectation of signing a two year lease”[3]; secondly, “I signed up for six months, they said, “sign up for two years”, I said “No, I’ll sign for six months, we’ll see how that runs” and I said “I’ll come back then and sign it two years after six months”[4]; thirdly that Mr Cullen promised “You can stay there as long as you like”[5]; fourthly that he had “an original lease of six months, plus two years on top”[6], and finally the agreement was “to stay there as long as we want”[7]. The order he sought on an appeal was “a declaration we can stay there for at least another twelve months”[8].
[3] Transcript 7 February 2006, pp 4-5.
[4] Transcript 7 February 2006 p5.
[5] Transcript 7 February 2006 p5.
[6] Transcript 7 February 2006 p6.
[7] Transcript 7 February 2006 p7.
[8] Transcript 7 February 2006 p8.

As this Court is charged under s41 of the Residential Tenancies Act 1995 (SA) with the jurisdiction to “rehear evidence taken before the Tribunal, or take further evidence,” the Court heard evidence from Mr Creely - who also gave evidence before the Tribunal - and from his witnesses, Messrs. Jansen and De Jong - who did not - concerning the discussions relating to the term of the original lease.
It was the evidence of Mr Creely that on his inspection, a day or so before Friday 11 July 2003, he spoke with the landlord Mr Cullen, as stated in the presence of Ms Bingham, Mr Jensen and Mr De Jong, after a telephone call was made to Mr Cullen to meet him at the premises. During this inspection Mr Cullen is alleged by Mr Creely to have said:
“I’ll give you up to five years, if you need longer we’ll probably negotiate and go longer if you need be”[9].
And later at the same meeting he repeated:
“You can have up to five years, then we’ll discuss it after five years and we’ll see if you’ll consider staying longer”[10].
[9] Transcript 7 February 2006 P19 L4-L6.
[10] Transcript 7 February 2006 P19 L23-L25.
It appears following this meeting that Mr Cullen put the matter in the hands of a land agent, Mr Roger McGrath. Mr Creely went on to depose in evidence to a discussion with the agent, at a time and place that was not made clear:
McGrath, said to me “You can sign a six-month term and see how you like it. If you like it, we can further that two years, and so on[11].
and
He said “You can sign a two-year lease, if you want to”, but he says “You can sign a six-months as well”, so I nominate to sign a six month one with an option to sign the two year one[12].
The evidence-in-chief of Mr Creely concluded on this note:
This is what Mr Cullen stated when I spoke to him that night, otherwise I wouldn’t have even touched the property, because I had another property to go to. Mr Cullen was also told I had another property to go to whilst I was looking at this one as well[13].
[11] Transcript 7 February 2006 P23 L9-L11.
[12] Transcript 7 February 2006 P23 L21-L25.
[13] Transcript 7 February 2006 P23 L21-L24.
Mr Creely declined to call Ms Bingham in this court and before the Tribunal. This evidence was supported, to a point, by the evidence of Mr Jansen and his son Mr De Jong. Each in turn was cross-examined by Ms Milo an employee of the Professionals, to the general effect that Mr Cullen made no such promise or gave no such undertaking for a five year lease or anything of the sort. She did not suggest to Mr Creely that Mr Cullen was not present on the alleged site-visit; in fact on one occasion she put questions to Mr De Jong on the premise that Mr Cullen was present[14]. The thrust of the representation by Mr Cullen according to the evidence of Mr Jensen was to the effect that:-
“You can lease the house between six months to five years”, “You can have the house between five to six years”[15].
And according to the evidence of Mr De Jong there was to similar, although not identical statement by Mr Cullen:
“He stated that you had the option of leasing the property for five years at the time”[16].
[14] T37, L1-L10 14 February 2006.
[15] Transcript 7 February 2006 P32 L27-L28.
[16] Transcript 7 February 2006 P36 L22-L23.
Following the close of the case for the appellants, the court adjourned the matter to enable the defendant to consider his position, since only Ms Milo appeared at that stage. When it came to the resumed hearing[17] Mr Cullen appeared in his own right and asserted from the bar table, and supported it by oral evidence, that there was no such on-site meeting at which he was present. On this occasion, the plaintiff tendered a copy of a defence filed by Mr Cullen in the Elizabeth Magistrate’s Court in answer to proceedings issued by Mr Creely, in which Mr Cullen wrote in his own hand “Mr Creely was a tenant at Symes Road for five years”[18]. This was put forward by Mr Creely as an admission by the landlord of the existence of a five year lease. Mr Cullen explained this on the basis that he had ascertained the information for completing the defence, from the Professionals. He said his wife was dying of cancer at relevant times - she passed away on October 2004 - and this distracted his attention from the lease and its operation. He further went on to explain that he would not have given a five year lease[19]. Mr Cullen declined to call any other witness including the land agent Ray McGrath, who was said to have made certain representations, according to the evidence of Mr Creely.
[17] On 27 February 2006.
[18] Transcript 27 February 2006 P54 L25-26, Exhibit D1.
[19] Transcript 27 February 2006 P57 L20-23.
When it came to final submissions, Mr Creely again asserted that “Roger McGrath said to me “Do a lease for two years” but he (Mr Creely) insisted “No, I’ll write out a lease for six months and I will give it a go, see whether I like it or not, because I had another premises to go to before this one but this one was in a better location”[20]. He further went on to agree that he first wanted to “try out the premises” and “wanted to see what the area was like, because [he] heard around there, after [he] had moved in … there had been a lot of thieving … I wanted to see whether that was true or not and apparently it is”[21].
[20] Transcript 27 February 2006 P59 L30-34.
[21] Transcript 27 February 2006 P59 L29-60 L4.
The above passages quoted both from submissions of Mr Creely before and after evidence was given, and from the course of his own evidence itself, are plainly inconsistent and contradictory. It is clear enough, however, that even if there were discussions concerning the prospect of staying in the premises for a lengthy period, the initial lease was entered into for six months as a trial period and that what was said by Mr Cullen, even if he were present at the site inspection, was in the most general of terms. Taking the combined evidence on behalf of the appellants at its highest, no fixed or binding agreement to enter into a lease for a term of five years was ever entered into. There may or may not have been discussions about what might have transpired in the longer term, but in the end result it seems very clear that whatever Mr Creely might have had in mind, and whatever Mr Cullen might have been prepared to ultimately agree, Mr Creely wanted a relatively short term arrangement in the first place. Even then, the evidence is by no means clear or conclusive that if there was a binding promise for a further term - which I find there was not - whether that further term was contemplated by the parties to be for two years or five years.
In those circumstances there is no need for the court to resolve issues of credibility, or to make any findings about whether Mr Cullen was present or not. The fact that Mr Creely and Ms Bingham wanted a somewhat shorter term in the first instance, is wholly consistent with the initial agreement of six months and the terms expressed therein as to holding over and the landlord’s right to terminate on 90 days notice. The situation was that although there may have been discussions about certain expectations, whatever understanding there was did not constitute and was not intended to constitute an enforceable arrangement for a lease of five years duration[22].
[22] Reid v Zoanetti [1943] SASR 92.
Furthermore, it is most unlikely anyone would enter into a lease of that length without at least providing for rent increments, or a mechanism for rent review, and it is further unclear whether the potential further term of either two or five years ran from July 2003 or January 2004.
In the above circumstances the Court is compelled to the conclusion described in Masters v Cameron[23], that the parties reached finality in the terms of their bargain to the extent that an initial lease for six months would apply, but at the same time proposed to have the terms of any further arrangement restated in a form which would be more precise, following the expiry of that six month period, if at all.
[23] [1954] 94 CLR 353 at 360.
I am unable to draw any adverse inference from the content of the cross-examination of Ms Milo, as she had no legal training and even a cursory examination of the transcript shows that she simply had no idea about the process of cross-examination. Nor am I able to draw an adverse inference from the defence filed in the Magistrates Court by Mr Cullen, firstly because it is responsive to a Statement of Claim not tendered in this court; secondly because there is no admission of a five year lease in terms; thirdly because the information it contains comes from a hearsay source and finally because it was prepared by an elderly man in ill health with no mind to detail of that kind.
Nor is there any reason to suppose that an estoppel applied in the circumstances of this case. Although it is clear the appellants agreed to lease the property, the operative reason was essentially the reduction in the asking rent. The discussions, such as they were, concerning the overall period, no doubt were present in the mind of the appellants when they agreed to take the property, but any subsequent longer term was subject to a shorter term, interim situation giving them time to assess the suitability of the property, before they would consider committing to any more enduring arrangement. Although towards the latter stages of his evidence Mr Creely suggested a reason why he “even touched the property” was because of what Mr Cullen had said to him that evidence came out in the context of statements to the effect that “you can sign a two year lease … you can sign a six months as well”, rather than in the context of a representation promising a five year term. Accordingly it is clear that any suggestion of a lease of five years duration, had nothing to do with the initial decision to take the premises.
For these reasons then, there was no error by the Tribunal rejecting the case for the appellants for the enforcement of a five year lease. On reviewing the matter, the Court is of the view that even on the most favourable construction of the situation for the appellants, no such binding agreement was entered into.
The order of the court is that the decision of the Tribunal below of 9 January 2006, ordering possession of the premises be given to the landlord, is affirmed.
The only remaining question is whether the time for possession pursuant to s93 of the Act should be further extended. Bearing in mind that the Tribunal itself allowed some further time from the date of its decision so the parties will have to be heard further in relation to that matter.