Director of Consumer Affairs v Srinivasan - [2014] VSC 271

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2013 5438

DIRECTOR OF CONSUMER AFFAIRS VICTORIA	Plaintiff
v
BALASUBRAMANIAN SRINIVASAN	Defendant

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	20 May 2014; further written submissions 5 June 2014
DATE OF JUDGMENT:	13 June 2014
CASE MAY BE CITED AS:	Director of Consumer Affairs v Srinivasan
MEDIUM NEUTRAL CITATION:	[2014] VSC 271

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ROOMING HOUSES – contravention of the Residential Tenancies Act 1997 by failing to comply with prescribed standards – s142B Residential Tenancies Act 1997 – Residential Tenancies (Rooming House Standards) Regulations 2012

DECLARATION AND INJUNCTION – whether declaration or injunction pursuant to ss 201 and 216 of the Australian Consumer Law and Fair Trading Act 2012 may be made in respect of breach of regulations only – proof of loss or damage – form of declaration and injunction – whether undertaking should be accepted in lieu of injunction – s 507A Residential Tenancies Act 1997 - s 201 and 216 Australian Consumer Law and Fair Trading Act 2012

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms R Ellyard	Victorian Government Solicitor
For the Defendant	In person

TABLE OF CONTENTS

Introduction......................................................................................................................................... 2

Facts....................................................................................................................................................... 2

These proceedings........................................................................................................................ 5

Issues and submissions..................................................................................................................... 5

Applicable law.................................................................................................................................... 7

Regulation of rooming houses.................................................................................................... 7
Rooming house standards and record keeping..................................................................... 10
Enforcement................................................................................................................................. 11

Application of the law to the facts of this case............................................................................ 14

Contravention of the RT Act...................................................................................................... 14
Declarations................................................................................................................................. 14

Are the proposed declarations “fair”?....................................................................................... 15
Contravention of the RT Act.................................................................................................... 15
The precondition of loss or damage for a declaration................................................................ 16
Discretionary considerations.................................................................................................... 17
Declaration as to contravention of the Regulations.................................................................. 18
How should the declaration be expressed?................................................................................ 19

Injunction...................................................................................................................................... 21

Preconditions to the exercise of the power................................................................................ 21
Discretionary factors................................................................................................................ 24
Is an undertaking appropriate in lieu of an injunction?........................................................... 24
Length of injunction................................................................................................................. 26

Costs and orders............................................................................................................................... 26

HER HONOUR:

Introduction

This is one of a number of proceedings instituted by the Director of Consumer Affairs Victoria to enforce standards for rooming houses. The standards are prescribed pursuant to the Residential Tenancies Act 1997(Vic) (“the RT Act”). The Residential Tenancies (Rooming House Standards) Regulations 2012 (“the Regulations”) prescribe the relevant standards and also require the retention of certain records for periods of time.

This proceeding was one of three that came before me for trial on 20 May 2014. In case any of the three were defended, an order for referral of the proceeding to me for hearing was made by Justice J. Forrest on 19 May 2014. The defendant in this proceeding did not dispute the facts or law on which the plaintiff relies, but did make submissions that in fairness to him I have construed as opposing the relief sought. I indicated in court, after ruling on certain issues of law in the course of the hearing, that I would make orders as sought by the plaintiff in revised proposed orders counsel handed up to give effect to those rulings. The plaintiff sought written reasons given that these are the first proceedings for enforcement of the rooming house standards to be judicially considered. In the course of the preparation of these reasons, I identified some further issues on which I invited further written submissions. The plaintiff provided further written submissions on 5 June 2014. The defendant, who is unrepresented, did not. As a consequence of the identification of these further issues, and the further submission from the plaintiff that followed, the orders that I will now make are slightly different in formulation to those sought by the plaintiff in the form of order handed up at the hearing, but are to the same effect. In addition to discussing these issues, I will also record the rulings I made orally in these reasons.

Facts

The defendant is the co-owner with Shamala Balasubramanian of 1509 Heatherton Road, Dandenong North, and the adjoining property, 1511 Heatherton Road, Dandenong North. Only Mr Srinivasan, however, of the two registered proprietors applied to the local council for registration of the premises as rooming houses. The relevant standards apply to the conduct of “a rooming house owner”.[1] The definition of that phrase in the RT Act is as follows:

rooming house owner in relation to a rooming house which is leased to a person who conducts the business of operating the rooming house, includes the lessee[2]

[1]Section 142B of the RT Act.

[2]Section 3

Thus, while the use of the word “owner” in juxtaposition to “rooming house” might otherwise suggest that what is relevant is ownership of the building which contains the rooming house, the definition makes it clear that it is the operation of the business of operating the rooming house that is relevant. In this case, counsel for the plaintiff confirms that the plaintiff does not contend that the other registered proprietor of the two properties operates either rooming house, and it is for that reason that proceedings are taken against Mr Srinivasan only.

The defendant does not dispute that he operates a rooming house on each property and that he is a rooming house owner within the RT Act.

The evidence relied upon by the plaintiff[3] is to the effect that officers of the plaintiff inspected the rooming house at 1509 Heatherton Road on four occasions – 8 April 2013, 30 April 2013, 14 May 2013 and 28 May 2013. Nine issues of non‑compliance were identified on the first occasion, including potentially very serious matters relating to locking devices, the failure to display evacuation diagrams, failure to conduct and keep records of gas checks and failure to conduct and keep records of electricity checks. Officers of the plaintiff advised the defendant after the first inspection that these matters must be rectified within seven days. Not all issues were attended to by the date of the second inspection on 30 April 2013 and by letter of 3 May 2013 the plaintiff required compliance with the following outstanding contraventions:
[3]Affidavits of Kathryn Louise Bannon, sworn 17 October 2013 and 1 November 2013, and affidavit of Antonio Domenico Mazzone, sworn 31 January 2014.

· failure to display an evacuation diagram in each resident’s room and in all common areas;

· failure to conduct a gas safety check of all gas installations and fittings every two years by a licensed gas fitter;

· failure to conduct an electrical safety check of all electrical installations and fittings every five years by a licensed electrician;

· failure to comply with Regulation 21 that provides that each external window that is able to be opened should be able to be securely fixed in a closed or open position without a key; and

· failure to comply with Regulation 11(f) which requires certain food storage facilities to be provided.

These issues had not been attended to by the date of the final inspection on 28 May 2013.

The evidence also shows that attempts were made to inspect the rooming house at 1511 Heatherton Road on 8 April 2013 and 30 April 2013, on both of which occasions entry could not be obtained. When the property was inspected on 16 May 2013 the inspectors identified eight issues of non‑compliance, including issues related to locking devices, evacuation diagrams, and electrical and gas safety checks, together with the adequacy of the provision of natural light, a failure to have two power outlets in each room in working order, and a failure to provide lockable cupboards. These contraventions had not been corrected by the date of the final inspection on 29 May 2013.

The second affidavit of Ms Bannon provides the context within which the Regulations were developed. Her evidence is that serious consequences, including the death of residents, can and have been caused where rooming houses have not met the standards now embodied in the Regulations.

The defendant, who attended in person, did not dispute any of these factual matters. I find them proved.

These proceedings

These proceedings were commenced by originating motion filed on 18 October 2013 and an accompanying summons which sought an interim injunction. After service of the originating motion, the defendant sent to the plaintiff proof that a gas safety check had been carried out on both properties on 25 July 2013 i.e. after the time for compliance pursuant to the inspections had expired, but prior to the commencement of the proceedings. The gas safety checks did not identify any issues of gas safety. Accordingly, the plaintiff no longer seeks any orders relating to the failure to conduct gas safety checks or provide records of same.

On 8 November 2013, the defendant attended the hearing of the plaintiff’s application for an interim injunction and an interim injunction was granted, requiring him to attend to the remaining contraventions within seven days. The defendant did not rectify all remaining contraventions within that time period, but the plaintiff is now satisfied that all remaining contraventions have been rectified and were rectified by January 2014. The issue that took the longest period to rectify was electrical safety. Other issues were remedied before January 2014.

Issues and submissions

In the course of this proceeding, as in the other similar proceedings, the plaintiff amended the originating motion to reflect comments made by Justice Kyrou on the first return date of the plaintiff’s applications for interim injunction. Those comments were to the effect that it is only the regulations contained in Part 2 of the Regulations that could properly be regarded as “standards” for the purposes of s 142B of the RT Act. The obligation to retain records of certain matters, such as gas safety and electrical safety checks, is found in Part 3 of the Regulations. The amended originating motion in this proceeding, which came before me on 20 May 2014, accordingly divides the declarations sought into two categories. It seeks in respect of each of the properties a declaration as to non‑compliance with the standards and a distinct declaration as to contravention of Regulations 23 and 24 of the Regulations by not maintaining a record of an electrical safety check. The amended originating motion also seeks that the defendant be restrained for a period of six years from the date of the order from providing any room, facility or service or access to any common area to a resident of a rooming house which fails to comply with the relevant requirements of the RT Act and the Regulations.

Counsel for the plaintiff quite properly informed me in the course of her address that other similar proceedings had been resolved by consent on the basis of undertakings proffered by the rooming house owner, and accepted by the plaintiff in lieu of an injunction. In those cases, the rooming house owners concerned had said they would leave the industry.

As noted earlier, the defendant made some submissions that in fairness to him I interpreted as opposition to the need for any Court orders, or to the effect that an undertaking by him in the terms of the injunction sought would be sufficient. He said he would give an undertaking to the Court in the terms of the proposed injunction.

By way of explanation or mitigation, the defendant says that it took a lot of effort and cost to make the rooming houses compliant, in particular, it took him six attempts to organise an electrical safety check. That check identified work that needed to be done, and he had to obtain another tradesman to do that work. It was also difficult to get the work done at that time, which was then December 2013. It was not until that remedial work was done that the rooming house or houses was or were compliant with the electrical standards.[4] The eventual cost of the electrical work alone was $6000. In relation to whether the orders sought are necessary, the defendant initially indicated that both premises are currently empty, and before he lets them out again as rooming houses he will ask officers of the plaintiff to inspect them to ensure they are compliant. At the close of the case for the plaintiff, the defendant said that he would no longer let the premises as rooming houses at all, and would let them as entire houses only. He confirmed that he had not previously indicated to the plaintiff that he would no longer operate as a rooming house owner. He said he works full time, and so is dependent on others to manage the properties, and operating them as rooming houses is “too much of a problem”.
[4]The defendant did not file any affidavit evidence, and neither party put into evidence the electrical safety checks as finally obtained. For these reasons I am unsure whether the defendant’s submissions related to only one of the rooming houses, or both.

In response, the plaintiff maintained its position that declarations should be made and an injunction granted, rather than an undertaking accepted. The plaintiff contends that the past contraventions provide sufficient basis for the declarations sought. The plaintiff also contends that as the contraventions were not remedied until after the making of the interim injunction, it is appropriate that injunctions also be granted to reinforce in the defendant’s mind the necessity of compliance with these standards.

Applicable law
Regulation of rooming houses

Part 3 of the RT Act regulates the rights and duties of residents of a rooming house. The rights and duties apply to a “resident” which is relevantly defined in section 3 of the RT Act as follows:

resident means—
(a) in relation to a rooming house, a person who, with the agreement of the rooming house owner, occupies a room as his or her only or main residence.

Section 92 of the RT Act confers on a “resident” of a rooming house the right to reside in the room that he or she occupies and to use the facilities in the rooming house. “Rooming house” and “room” are also defined in section 3 as follows:

rooming house means a building in which there is one or more rooms available for occupancy on payment of rent—
(a)in which the total number of people who may occupy those rooms is not less than 4; or
(b)in respect of which a declaration under section 19(2) or (3) is in force;

room means a room in a building, where the room is occupied or intended to be occupied for the purpose of a residence by a person having a right to occupy the room together with a right to use in common with others any facilities in the building but does not include a self-contained apartment.

Section 92 of the RT Act then provides that a “residency right” may be either an “exclusive occupancy right” or a “shared room right”. Section 92A provides that an “exclusive occupancy right” gives a resident a right to exclusive occupancy of the room, although two or more residents may have exclusive occupancy of a room. Section 94 provides that a resident and a rooming house owner may enter into a tenancy agreement or other agreement specifying the terms and conditions of the resident’s use and enjoyment of the rooming house. A resident or proposed resident cannot enter into a tenancy agreement in respect of a room unless the resident has or is to have exclusive occupation of the room. If a tenancy agreement is entered into in respect of a room, then the rooming house provisions cease to apply.

Divisions 2-7 of Part 3 of the RT Act set out the rights and obligations of residents and rooming house owners. These include matters such as the payment of “bonds” (Division 2); payment of “rent” and charges for utilities (Divisions 3 and 4); use of and access to a room, duty to pay rent, rights and duties applicable to a resident and the rooming house owner in relation to quiet enjoyment, maintaining the room in good order and repair, display of and compliance with house rules (Division 5); repairs (Division 6) and rights of entry (Division 7).

The RT Act regulates various forms of occupation for residential purposes, being tenancy, residence in a rooming house, residence in a caravan park and a site agreement in a caravan park. The terminology employed across these various forms of occupation is in some respects common across one or more categories. For example, the term “resident” is used in relation to both rooming houses and caravan parks. The words and phrase “rent”, “bond” and “quiet enjoyment” are used in relation to all four forms of residential occupation regulated by the RT Act. A resident of a rooming house may have an “exclusive occupancy right”, which confers the right to exclusive occupancy of the room (s 92A), and a resident of a rooming house may enter into a tenancy agreement with the rooming house owner in respect of a room, but only if the resident is to have “exclusive occupancy” of the room (s 94(3A)).

It does not appear, however, that the use of these terms is intended to equate the rights and obligations of residents across these various forms of occupation. Separation of the regulation of these rights and obligations into distinct divisions depending on the nature of the occupation would suggest otherwise. Further, some common terms used across forms of occupation, such as “rent” and “bond” that may be most familiar in the context of tenancy, are given expansive definitions in section 3 of the RT Act. Those expansive definitions explicitly treat as distinct the various forms of occupation regulated by the Act. In this case, there was no issue as to whether or not the premises in question were rooming houses, and their occupants residents as opposed to tenants. The defendant agreed that they were rooming houses and raised no issue that the residents had been tenants. Accordingly, there is no need in this proceeding to consider the distinction between tenancy and residence in a rooming house.

Rooming houses are also regulated by local councils pursuant to the Public Health and Wellbeing Act 2008 (Vic) (“Public Health Act”). Section 67 of that Act requires a proprietor of “prescribed accommodation” to register that accommodation with the local council in whose municipal district the prescribed accommodation is located. “Prescribed accommodation” is defined in section 3 of the Public Health Act to mean:

prescribed accommodation means any of the following which is prescribed, or is of a class which is prescribed, to be prescribed accommodation—
(a)any area of land which a person or persons are frequently, intermittently or seasonally permitted to use for camping on payment of consideration and any facilities provided on the land for the use of that person or those persons;
(b)any premises used as a place of abode, whether temporary or permanent, fixed or mobile, where a person or persons can be accommodated on payment of consideration;
(c)any accommodation provided to an employee in accordance with a term of an award governing the employment of the employee, or a term of the employee's contract of service, for use by the employee during that employment or service.

Regulations 13 and 14 of the Public Health and Wellbeing Regulations 2009 prescribe the accommodation for the purposes of the registration obligation as follows:

13Prescribed accommodation
The following classes of accommodation are prescribed to be prescribed accommodation for the purposes of section 3 of the Act—
(a) residential accommodation;
(b) hotels and motels;
(c) hostels;
(d) student dormitories;
(e) holiday camps;
(f)rooming houses.
14Exempt prescribed accommodation
The following are prescribed not to be prescribed accommodation for the purposes of these regulations—
(a)a house under the exclusive occupation of the occupier; or
(b)a self-contained flat under the exclusive occupation of the occupier consisting of a suite of rooms that—
(i)forms a portion or portions of a building; and
(ii)includes kitchen, bathroom and toilet facilities; and
(iii)forms a self-contained residence; or

(c)-(h) (not here relevant); or
(i) premises in which, other than the family of the proprietor, not more than 5 persons are accommodated, and which is not a rooming house.

The defendant caused both of 1509 and 1511 Heatherton Road, Dandenong North to be registered with the Greater Dandenong City Council as rooming houses, each with five bedrooms.

Rooming house standards and record keeping

Section 142C, which forms part of Division 8 of Part 3 of the RT Act, provides that the Governor in Council may make regulations which, amongst other things, may prescribe privacy, safety, security and amenity standards in relation to rooming houses, rooms in rooming houses and rooming house facilities and services. The Regulations- the Residential Tenancies (Rooming House Standards) Regulations 2012 -prescribe such standards in Part 2, and in Division 1 of Part 3 require a rooming house owner to retain the records of a gas safety and an electrical safety check for periods of two and five years respectively.

Section 142B of the RT Act creates a number of offences for non-compliance with the prescribed standards. It provides as follows:

142BStandards for rooming houses etc.
(1)A rooming house owner must not provide to a resident of a rooming house a room that does not comply with the prescribed privacy, safety, security and amenity standards.
Penalty: 60 penalty units in the case of a natural person;
300 penalty units in the case of a body corporate.

(2)A rooming house owner must not provide to a resident of a rooming house a facility or service that does not comply with the prescribed privacy, safety, security and amenity standards.
Penalty: 60 penalty units in the case of a natural person;
300 penalty units in the case of a body corporate.

(3)A rooming house owner must not provide a resident of a rooming house with access to a common area that does not comply with the prescribed privacy, safety, security and amenity standards.
Penalty: 60 penalty units in the case of a natural person;
300 penalty units in the case of a body corporate.

There is no distinct offence created in the RT Act for non-compliance with the record keeping provisions in Part 3 of the Regulations.

Enforcement

In these proceedings, the plaintiff seeks to enforce the standards by utilisation of the powers conferred on the Court by ss 201 and 216 of the Australian Consumer Law and Fair Trading Act 2012(Vic) (“ACL and FT Act”) and s 36 of the Supreme Court Act 1986 (Vic). Principal purposes of the ACL and FT Act are to apply the Australian Consumer Law[5] to persons and activities in Victoria, and to repeal and re-enact with amendments the earlier state consumer protection law, the Fair Trading Act 1999 (Vic)[6]. Sections 201 and 216 of the ACL and FT Act relevantly provide as follows:
[5]The text of which is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) and the regulations thereunder.
[6]See ss 1 and 7 of the ACL and FT Act.

201Injunctions to restrain conduct
(1)The Minister, Director or any other person may apply to the Supreme Court, County Court or Magistrates' Court for the grant of an injunction restraining a person from engaging in conduct that constitutes—
(a)a contravention of any provision of this Act; or
(b)-( e) (not here relevant)

(2)The Court may grant an injunction restraining a person from engaging in conduct of the kind referred to in paragraphs (a) to (e) of subsection (1)—
(a)if the Court is satisfied that the person is engaging in or has been engaging in conduct of that kind, whether or not it appears to the Court that the person intends to engage again or continue to engage in the conduct; or
(b)if it appears to the Court that, in the event that the injunction is not granted, it is likely that the person will engage in conduct of that kind, whether or not that person has previously engaged in conduct of that kind and whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind; or
(c)if the Court determines it to be appropriate, by consent of all the parties to the proceedings, whether or not the person has engaged in, or is likely to engage in conduct of that kind.

(3)An application for an injunction under this section may be made ex parte.
216Orders against persons found to have contravened this Act
(1)In any proceedings for an offence against, or a contravention of, this Act, the court may make any order it considers fair if the court finds that—
(a)the person against whom the proceedings were brought (the accused) has contravened a provision of this Act; and
(b)another person (the injured person) has suffered or may suffer loss or damage as a result of the contravention of this Act.

(2)Without limiting subsection (1), the orders that may be made under this section include—
(a)-(g)(not here relevant); or
(h)an order declaring that the accused has contravened a provision of this Act or the regulations.

(3)In any proceedings under section 201, 203 or 217, if the court or VCAT finds that—
(a) a party to the proceedings has contravened the provisions of this Act; and
(b) that another person has suffered or is likely to suffer loss or damage as a result of that contravention—

the court or VCAT may make any order against the party to the proceedings that might be made against an accused under subsection (1).
(4)The court may also make an order under this section against a person involved in a contravention of a provision of this Act.

The ACL and FT Act also confers power on the Court to, amongst other things, order persons to do an act or things (i.e. grant mandatory injunctions), grant interim injunctions, order a person to cease carrying on a particular business of supplying goods or services, order corrective advertising, declare contracts void or vary contracts, and order damages or compensation. Sections 201 and 216 of the ACL and FT Act came into operation on 1 July 2012.

Sections 201 and 216 of the ACL and FT Act are found within Part 8.2 of that Act. They are a source of power to enforce breach of the RT Act by virtue of s 507A of the RT Act which relevantly provides:

507A Application of provisions of Australian Consumer Law and Fair Trading Act 2012

(1)(Not here relevant)
(2)Sections 125, 126, 195 and 196 and Part 8.2 (except section 213) of the Australian Consumer Law and Fair Trading Act 2012 extend and apply (with any necessary modifications) to this Act (except Part 14) as if any reference in those provisions to the Australian Consumer Law and Fair Trading Act 2012 were a reference to this Act (except Part 14).
(3)(Not here relevant)

Section 507A of the RT Act was inserted into the RT Act by the ACL and FT Act and also came into operation on 1 July 2012. The effect of the section in this case is that ss 201 and 216 of the ACL and FT Act apply to a contravention of any provision of the RT Act. The section here said to be contravened is section 142B, which requires compliance with the prescribed rooming house standards.

According to the end notes to the RT Act, ss 142B and 142C both came into operation on 31 March 2012, the same date that the Regulations state that they commenced. The plaintiff’s material states that there was thereafter a “grace period” of one year[7]. On enquiry from me as to where this is shown, I was informed by counsel for the plaintiff on instructions that enforcement pursuant to the RT Act only became possible on 31 March 2013. I have not been able to confirm this from my own scrutiny of the legislation, but it is of no matter in this proceeding. The plaintiff here complains of acts of the defendant only after 31 March 2013.
[7]Supplementary affidavit of Kathryn Bannon sworn 1 November 2013 at [22].

Application of the law to the facts of this case
Contravention of the RT Act

On the evidence in the plaintiff’s case, which is not disputed by the defendant, the plaintiff has proved that the defendant contravened a section of the RT Act, being s 142B, by non-compliance with the rooming house standards as set out in the Regulations. The non-compliance was in relation to both properties in the period April 2013, when failure to comply was first detected, to January 2014, when all such failures were remedied.

By virtue of s 507A of the RT Act, it follows that ss 201 and 216 of the ACL and FT Act apply to confer power on the Court to grant an appropriate injunction and to make an appropriate declaration.

Declarations

The preconditions for the making of a declaration pursuant to s 216 of the ACL and FT Act in proceedings for contravention of the RT Act are as follows:

· that the Court considers the proposed declaration to be “fair”(s 216(1));

· a finding that the defendant has contravened a provision of the RT Act (s 216(1)(a)); and

· a finding that “another person has suffered or may suffer loss or damage as a result of the contravention” (s216 (1)(b)).

Are the proposed declarations “fair”?

Neither party made any submissions to me expressly related to the first of these preconditions, fairness. That precondition could be said to be invoked in relation to the question as to whether the failure to conduct gas or electrical safety checks within the prescribed period and the failure to keep records of same should each be declared to be contraventions.

As noted earlier, in the amended originating motion the plaintiff sought declarations that the defendant had failed, in respect of both properties, both to conduct an electrical and a gas safety check within the preceding prescribed period, and to retain a record of such a check. The parties agree that no check of either type had been conducted in respect of either property within the preceding prescribed period. Accordingly, there was no record of such a check that could be retained. I ruled at the hearing and here record that in these circumstances in my view it would be inappropriate to make both declarations. I do not consider that to do so would be “fair” because it could be seen as double punishment for the same wrongdoing. Further, it could be potentially misleading, as suggesting two items of distinct wrongdoing. Here the failure to retain the record was a consequence of the failure to conduct the check. Accordingly, I declined to make the proposed declarations in respect of failure to comply with the record keeping regulations. This also touches on another issue- whether the declaration making power and the power to grant an injunction extend to contraventions of the Regulations only- to which I will return later in these reasons.

Contravention of the RT Act

As set out above, the second of these preconditions is satisfied by my finding that the defendant contravened the Act by failing to comply with the standards prescribed by Part 2 of the Regulations.

The precondition of loss or damage for a declaration

There are two matters that arise from this precondition. The first is whether a plaintiff must show loss or damage in respect of each and every failure to comply with a standard in respect of which a declaration is sought. The plaintiff in this case seeks to identify in the proposed declarations for each property the particular standards and regulations with which the defendant did not comply. In my view that is preferable to a non- particularised declaration of non-compliance with the standards as a whole, because it is far more informative, but it does illuminate this first issue about proof of loss or damage. The second matter arising from s 216(1)(b) is the nature of potential as opposed to actual loss that may be sufficient, and the evidence required to establish same.

The plaintiff’s submission in relation to the first of these, is that the necessary loss or damage that must be shown flows from the contravention of the RT Act, not from the breach of individual standards. In other words, the relevant contravention is failure to comply with the standards as a whole, rather than with individual standards. It follows that it is not necessary to show that loss or damage has or may flow from each and every standard with which the defendant did not comply as a precondition to the making of a declaration as to such contravention.

That reading of the section is consistent with s 142B itself which proscribes failure to comply “with the prescribed privacy, safety, security and amenity standards”, in the plural, not with a privacy, safety, security or amenity standard in the singular (emphasis added).

Accordingly, I accept the plaintiff’s submission in respect of this first issue. It must be noted, however, that the defendant in this case was unrepresented and did not put any argument to the contrary on this or most other legal issues. It may be that the point can be properly re-argued in a case with a legally represented contradictor. If the plaintiff was required to show that loss or damage has been or may be suffered in respect of each and every failure to comply with a standard, then it may, for example, be more difficult to show such loss or damage in the case of failure to comply with some standards, such as amenity standards relating to illumination and cupboard space, than with others, such as safety or security standards.

In relation to the second issue relating to the precondition of loss or damage, the plaintiff does not adduce any evidence that any person has in fact suffered any loss or damage as a result of failure to comply with the standards. She relies on the evidence in Ms Bannon‘s second affidavit to the effect that persons have in the past been injured or may be so injured by failure to comply with the standards of gas and electrical safety, minimum requirements for two power outlets and ability to open windows from the outside without a key that are now included in the Regulations. As the evidence establishes that the defendant did not comply with these standards, amongst others, I am satisfied that the third precondition is here satisfied. I do so without argument to the contrary from the defendant. In another case, particularly in respect of less significant contraventions of the standards or contraventions less clearly related to safety, satisfaction of this third precondition may require more specific evidence.

Discretionary considerations

Even where the preconditions are established, declarations are a discretionary remedy. It could be said that the reference to the order being “fair” in s 216 (1) is also a discretionary factor. The plaintiff in her written submissions at the hearing sets out the discretionary factors that have been considered in the authorities to justify the making of declarations. She submits that the declarations as sought by the plaintiff are appropriate to be made in the Court’s discretion because they are directed to the determination of a real controversy, rather than an abstract question, and they involve a real interest of the plaintiff in her role as the statutory body responsible for ensuring compliance with the Regulations. The plaintiff also submits that there is a clear public interest in making declarations in this and other proceedings commenced at or about the same time as these proceedings are the first occasion on which the Regulations have been considered by this Court. She submits that, amongst other purposes, declarations will clarify the law, provide assistance to the plaintiff in her continuing duty to enforce the Regulations and record the Court’s disapproval of the contravening conduct.[8]
[8]Plaintiff’s Outline of Submissions at [15]-[20].

I am satisfied that it is appropriate to record the findings I have made in relation to past breach by the defendant of the standards and so of the RT Act by way of declarations, broadly for the reasons as submitted by the plaintiff. Although these contraventions have now been rectified, the rooming houses are currently empty, and the defendant says he will take steps to ensure they are compliant before re-letting them as rooming houses, he did not bring the rooming houses into compliance until proceedings were commenced, and only after the interlocutory injunction was granted. It is fair and appropriate to record his past contraventions for these reasons, and to record the Court’s disapproval of his actions for the purpose of bringing home to him and others that these contraventions will not be tolerated.

Declaration as to contravention of the Regulations

The power to make a declaration of non-compliance conferred by s 216(1)(h) extends to non-compliance with “the regulations”. In the context, that must mean any regulations made pursuant to the ACL and FT Act, not other legislation. Arguably, however, the effect of s 507A of the RT Act is that, just as the reference in s 216 (1)(h) to “this Act” is taken to mean the RT Act, the reference in s 216(1)(h) to “the regulations” is taken to mean regulations made pursuant to the RT Act, which would include the Regulations. If this is correct, it would follow that a declaration may be made pursuant to s 216(1)(h) (assuming all other preconditions are satisfied) of non-compliance with any aspect of the Regulations, and not just of non-compliance with the RT Act. I invited further submissions on this point, and in her further written submissions the plaintiff submits that this interpretation is correct.

As set out earlier, I have declined to make a declaration of non-compliance with the record keeping aspects of the Regulations, contravention of which is a contravention of the Regulations only. Accordingly, it is not necessary to reach a final view as to whether or not the declaration making power under the ACL and FT Act extends to non-compliance with the Regulations alone in this case. Although the plaintiff endorses my tentative view, I consider a final determination should await a hearing and argument where a decision is required, which would desirably be a hearing with a contradictor on the point.

These observations relate to a declaration pursuant to the power conferred on the Court by s 216 of the ACL and FT Act. The plaintiff also relies on the power to make a declaration conferred by, or confirmed by, s 36 of the Supreme Court Act 1986 should the Court take the view that the power under the ACL and FT Act does not extend to contravention of the record keeping obligations.[9] The Court’s general power to make declarations may well provide a jurisdictional basis for the making of a declaration of breach of a regulation, if the ACL and FT Act does not confer that power, but as indicated in this case it is not necessary to express a final view.
[9]T15-16.

How should the declaration be expressed?

I indicated at the hearing that the declarations sought in the amended originating motion should be redrawn to add reference to the specific regulation or standard with which the defendant had not been complied. The plaintiff has redrawn the proposed declarations accordingly. I consider that this form is an improvement, because it is more informative.

The proposed form of the declarations declares that the defendant by “providing rooms at, and/or facilities and services at, and/or access to common areas of, a rooming house at (the specified address) which was not compliant with the (Regulations) because (the particular contraventions are here set out, identified by regulation number) has contravened sections 142B(1), (2) and (3) of the (RT Act)” (emphasis added). Sub-section 142B(1) relates to provision of a room, sub-section (2) to provision of a facility or service, and sub-section (3) to access to common areas. It can be seen that by the use of “and/or” this proposed form of declaration does not differentiate between ss 142B(1), (2) or (3) and declares that the identified failure may relate to one, two or all three sub-sections. In the final phrase, however, “and/or” is replaced by “and”. In other words, the proposed order does not identify within which sub-section any of the standards with which the defendant failed to comply falls, but asserts that all three sub-sections have been breached.

The plaintiff took me in detail to the evidence supporting each of the proposed sub declarations as to breach of the Regulations, but did not seek to show to which sub-section of s 142B each breach of the Regulations related, and nor did I require her to do so.[10] As discussed at the hearing, I accept that it could be a time consuming and somewhat arbitrary exercise to reach a conclusion as to which particular sub-section a particular breach related, and indeed some breaches may relate to more than one. Drawing that relationship may be required in criminal proceedings, but these are civil proceedings, and the defendant took no issue with this formulation. For these reasons, I consider the use of “and/or” to be acceptable in this case in the preamble to the declaration.
[10]Counsel referred briefly in oral submissions at T70 line 24- T71 line 8 to the absence of evacuation diagrams and failure to conduct an electricity check as instances of breach of all three subsections of s142B but I did not require her to elaborate that submission.

However, on reflection, I consider that the safer formulation of the final phrase is that the defendant contravened s 142B, rather than the proposed elaborated declaration that he contravened all three sub-sections. I reach this conclusion because although the evidence on its face sufficiently supports breach of at least s 142B(1) (provision of a room that is non-compliant) and probably also s 142B(3) (provision of access to a common area that is non-compliant), drawing a connection between the breaches and s 142B(2) (provision of a non-compliant facility or service) would require submission and determination as to what is a “facility or service” as opposed to a “room” or “access to a common area”. That exercise was not undertaken and is not warranted.

I also observe that the proposed form of declaration correctly in my view identifies the contravention as being a contravention of the RT Act, by contravention of the Regulations (in the relevant respects). I will utilise a parallel form of wording for the injunction that is sought. For the reasons I will now express, connection of the proscribed behaviour to contravention of the Act (as opposed to the Regulations) is of critical importance in relation to the grant of an injunction.

Injunction
Preconditions to the exercise of the power

The power to grant an injunction conferred by s 201 contains fewer statutory preconditions than those that apply to the power to make a declaration. In the case of contravention of the RT Act, if such a contravention is proved, s 201 does not require the plaintiff to show that the defendant is continuing to engage in the contravening conduct, or that he will do so again, and nor is it necessary to show any loss or damage already incurred as a result of the contravention or likely to be incurred if the conduct recurs.

The injunction power in s 201 is, however, confined to restraining the defendant from contravening the RT Act. Unlike the power to make a declaration conferred by s 216 it does not extend to conduct that is in breach of a regulation, as opposed to an Act.

The injunction sought by the plaintiff in the amended originating motion and at hearing is in these terms:

The defendant is hereby restrained for a period of 6 years from the date of the order from:
a.   providing any room to a resident of a rooming house which fails to comply with the Residential Tenancies Act 1997 and Residential Tenancies (Rooming House Standards) Regulations2012 ; and/or
b.   providing any facility or service to a resident of a rooming house which fails to comply with the Residential Tenancies Act 1997 and Residential Tenancies (Rooming House Standards) Regulations2012; and/or
c.   providing access to any common area to a resident of a rooming house which fails to comply with the Residential Tenancies Act 1997 and Residential Tenancies (Rooming House Standards) Regulations2012.

This proposed order enjoins conduct that fails to comply with the RT Act and the Regulations. There is no obligation in the RT Act in terms to comply with the Regulations, only with the standards that are prescribed by the Regulations. The Regulations also deal with matters other than the standards, for example, the record keeping obligations. I indicated at the hearing that it may be desirable as a matter of fact to require the defendant to comply in future with the record keeping obligations as well as with the standards, because retention of the records facilitates proof of compliance with the standards.[11] Whatever the desirability of such an injunction in principle, the power is confined by the terms of s 201. On identifying that issue in the preparation of these reasons, I invited further submissions after the hearing on the scope of the injunction power and the appropriate form of order in both this and a similar case also heard on 20 May 2014[12]. The plaintiff made further submissions, noting that those submissions were made with specific reference to the facts of these two cases and “any concessions made by the Director in the context of these two specific cases should not be taken as a concession by the Director in other matters”.[13]
[11]At T20
[12]Director of Consumer Affairs Victoria v Nguyen SCI 2013 5410. I will not publish separate reasons for the orders in that case, but the same reasoning as in this case applies.
[13]Letter from the solicitors for the plaintiff dated 5 June 2014.

The plaintiff in those further submissions first agrees that there is no “specific” reference in s 201 of the ACL and FT Act to “the regulations” (in the context, the regulations made under the RT Act) and accordingly “the Director accepts that it is appropriate to frame the injunction in Mr Srinavasan’s case more narrowly”. An injunction is not sought in the other matter. The plaintiff then submits that because s 142B of the RT Act “picks up, and includes as part of the Act for the purposes of a contravention, the prescribed rooming house standards…Part 2 is part of the Residential Tenancies Act for the purposes of section 201”. The plaintiff next states that “It is appropriate that injunctions be as precise and specific as possible in defining the conduct being injuncted” [14].
[14]Ibid.

I agree with all these submissions. It is only a contravention of the RT Act to contravene Part 2 of the Regulations (and not, for example, the record keeping obligations which are found in Part 3) because s 142B only imports the standards into the RT Act, not the Regulations as a whole. The proposed form of injunction made reference to the whole of the Regulations, although the surrounding words may have made it sufficiently clear that this referred only to the standards in Part 2. For clarity and the avoidance of doubt, reference should be made in the injunction to Part 2 of the Regulations only.

The plaintiff then submits that the form of the proposed injunction against Mr Srinivasan be changed to refer to the defendant “being restrained from engaging in conduct that is in breach of “the Residential Tenancies Act or Part 2 of the Residential Tenancies (Rooming House Standards) Regulations””. I have added the emphasis to the word “or” to highlight that what appears to be proposed is replacing the current conjunction “and” with the disjunction “or” between reference to the RT Act and the Regulations. The plaintiff submits that “the nature of the contraventions by Mr Srinivasan make it appropriate that he be the subject both of an injunction restraining conduct in breach of the Residential Tenancies Act generally as well as an injunction which refers specifically to the prescribed standards in Part 2 of the (Regulations)” (emphasis added).

In my view, while the plaintiff’s submissions as to the scope of the power to injunct and the principle that the injunction should be as precise and specific as possible are correct, the remedy she suggests does not give effect to those submissions and in fact broadens the scope of the proposed injunction, rather than narrowing it. I do not consider a broadened injunction to be warranted on the facts of this case. The only contravention of the RT Act by the defendant that is here proved is a breach of the RT Act by virtue of breaches of the standards imposed by the Regulations. Replacing the word “and” with “or” would enjoin him from any conduct in breach of the RT Act, whether related to the standards or not. That is not warranted.

I consider that on the facts of this case, the injunction should be limited to conduct that is in contravention of the RT Act because it is in contravention of the standards i.e. to limit the injunction to a repetition of the proved conduct. To give effect to this intention, and to make it clear how and to what extent only the Regulations are imported into the RT Act, I will enjoin the defendant from conduct which fails to comply with the Residential Tenancies Act 1997 by failure to comply with Part 2 of the Residential Tenancies (Rooming House Standards) Regulations 2012”. I have bolded the changed wording. It confines the reference to the Regulations to Part 2, and replaces “and” with “by failure to comply with”.

In relation to elaboration of the conduct, the terms of the proposed form of injunction restrain the defendant from conduct in breach of subsections (1) “and/or” (2) “and/or” (3) of s 142B. I consider it is appropriate for the defendant to be restrained from conduct in breach of all three subsections, and for that reason will replace the words “and/or” with “and”.

Discretionary factors

The plaintiff in her written submissions for the hearing sets out the principles that govern the granting of injunctions in the public interest and the discretionary factors to be considered. In particular, she submits that the granting of injunctions may be appropriate to mark the Court’s disapproval of the past conduct and to deter future breaches.[15] I accept those submissions.
[15]Plaintiff’s Outline of Submissions at [22]-[25].

Is an undertaking appropriate in lieu of an injunction?

The defendant sought that he be permitted to give an undertaking to the Court in the terms sought in the proposed injunction, in lieu of an injunction being granted. The plaintiff pressed for an injunction for the following reasons. First, the properties remain registered as rooming houses.[16] Although the defendant at the hearing expressed the intention of no longer letting them as rooming houses, he had not previously expressed this intention. Had he indicated that this was his intention earlier, the plaintiff may have taken a different view. Further, the defendant’s stated future intentions, whether expressed as leaving the industry or first seeking approval from officers of the plaintiff before re-letting the properties as rooming houses, are essentially assertion only and should be given no weight as he is free to change his mind.
[16]I was not referred to any evidence in support of this assertion. The evidence in the plaintiff’s material is in relation to the 2013 year.

The plaintiff further submitted that the Court is likely to view breach of an injunction more seriously than breach of an undertaking in the same terms. Finally, the plaintiff laid stress on the fact that the defendant had been given opportunities to remedy the contravention prior to the institution of proceedings, and did not do so completely until after the grant of the interlocutory injunction, and even then after the time ordered.

At the hearing I accepted the plaintiff’s submissions and indicated that I would grant an injunction, rather than accepting an undertaking from the defendant. In addition to the matters to which the plaintiff had referred, in my oral reasons I accepted that the defendant’s intention stated at the hearing to cease letting the properties as rooming houses was an honest one, and also accepted that the properties were currently empty, but held that there was nothing to prevent the defendant changing his mind. In that regard I held that it was not insignificant that this was the first occasion the defendant had indicated an intention to leave the industry as this showed this was not a long held view, and so may more susceptible to change. I also accepted that the time of the year after the grant of the interlocutory injunction rendered compliance difficult, because of the general unavailability of tradesmen close to Christmas. I noted, however, that the fact that more time was required because work had to be done at considerable cost made the failure to comply with the electrical standards of more concern, not less. A principal intention of the Regulations is to make rooming houses safe for their residents, and the coronial enquiry referred to in the supplementary affidavit of Ms Bannon demonstrates the fatal consequences that can ensue from fire caused by faulty electrical wiring.[17] I here confirm all those reasons.
[17]At [18]-[20].

I accept the plaintiff’s submission that both general deterrence and deterrence of a repetition of non-compliant behaviour by the particular defendant is better served by a Court order being an injunction than acceptance of an undertaking. The fact that the defendant is not personally engaged in the management of these rooming houses because he works full time is a further reason to make it very plain to him that he must comply in future with the standards.

Length of injunction

A further matter that was addressed at the hearing was the length of the proposed injunctions. The plaintiff seeks that the defendant be enjoined from contravening conduct for six years. At first blush that may appear an inordinately long period, but I accept the plaintiff’s submission that it is an appropriate period given that the obligation to conduct an electricity safety check arises only every five years, and such check has only just been conducted.

Costs and orders

The plaintiff sought that the defendant pay a proportion of her costs of the proceeding, fixed in the sum of $2000, being the setting down fee of $1300 and the balance of $700 as a modest contribution to the costs of counsel and instructor on the hearing. The plaintiff did not seek any other costs, in particular her costs prior to the setting down of the matter for trial.

As I will make orders substantially as sought against the defendant ordinarily the plaintiff would be entitled to at least some of her costs, if not the whole. The amount sought is modest. Nevertheless, in the particular circumstances of this matter, after hearing from the parties I ruled at the hearing that the defendant would not be required to pay any contribution towards the plaintiff’s costs, and I confirm that ruling. Where costs are sought, as here, on the basis that the plaintiff has incurred costs at hearing that could have been avoided had the defendant signed consent orders in advance of hearing, the clearest way of demonstrating that costs could have been avoided is by sending proposed consent orders to the defendant. Here the plaintiff gave the defendant the opportunity, by letter dated 30 April 2014, of contacting the plaintiff’s solicitors to advise his attitude, but the plaintiff did not send the defendant any proposed orders for him to sign. I accept that the plaintiff had doubts as to whether that was appropriate given that the defendant was unrepresented. The defendant did ring the plaintiff after receipt of that letter to inquire if the matter was proceeding, and there were further telephone conversations a week later and again on the day before hearing. I ruled that in the light of this contact, and apparent confusion in the defendant’s mind as to what was required, and in the absence of the provision of written consent orders to the defendant for him to sign, it was not appropriate to order the defendant to contribute to the plaintiff’s costs of the hearing.

I will make orders in chambers to give effect to these reasons.

CERTIFICATE

I certify that this and the 26 preceding pages are a true copy of the reasons for Judgment of Lansdowne AsJ of the Supreme Court of Victoria delivered on 13 June 2014.
DATED this thirteenth day of June 2014.

Associate

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Director of Consumer Affairs v Srinivasan [2014] VSC 271

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