Director of Consumer Affairs Victoria v Betta Housing Pty Ltd
[2011] VSC 369
•8 August 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
S CI 2011 03237
| DIRECTOR OF CONSUMER AFFAIRS VICTORIA | Plaintiff |
| v | |
| BETTA HOUSING PTY LTD & ORS | Defendants |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 August 2011 | |
DATE OF JUDGMENT: | 8 August 2011 | |
CASE MAY BE CITED AS: | Director of Consumer Affairs Victoria v Betta Housing Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 369 | |
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RESIDENTIAL TENANCIES – Numerous contraventions of Residential Tenancies Act 1997 (Vic) by landlords – Failure to comply with orders made by Victorian Civil and Administrative Tribunal in connection with contraventions – Application by Director Consumer Affairs Victoria in the public interest – Whether landlords should be restrained from continuing to lease residential accommodation otherwise than through a licensed estate agent – Balance of convenience considered – Injunctions granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R C Knowles | Solicitor to the Director, Consumer Affairs Victoria |
| For the Defendants | Mr J D McKay | D S McKay and Associates Lawyers |
HIS HONOUR:
The plaintiff is the Director of Consumer Affairs Victoria. That office is established under pt 7 of the Fair Trading Act 1999 (Vic). By s 100(1) of the Fair Trading Act, the Director’s functions include receiving and dealing with complaints made in connection with contraventions of, monitoring compliance with, investigating breaches of, prosecuting breaches of and instituting proceedings to achieve the purposes of the Fair Trading Act or any ‘Consumer Act’ as defined. The Residential Tenancies Act 1997 (Vic) is a Consumer Act for this purpose.
The main purposes of the Residential Tenancies Act include defining the rights and duties of landlords and tenants of rented premises and rooming houses and to provide for a centralised system for the administration of rental bonds. The purposes of the Fair Trading Act include the protection of consumers. Reading the two Acts as a whole, it is clear that they have a consumer protection purpose, and the functions and powers of the Director in connection with them are to be exercised in the public interest.
By s 100(2) of the Fair Trading Act the Director is given all of the powers necessary to perform her functions. Relevant to this case are the wide powers under ss 149 to 151B of the Fair Trading Act to approach the Court for a wide range of injunctive relief, including orders restraining persons in breach of the Act from continuing to trade, or providing that they may only continue to trade on certain conditions. By virtue of s 507A(2) of the Residential Tenancies Act, ss 149 to 151B of the Fair Trading Act apply to contraventions or apprehended contraventions of the Residential Tenancies Act.
In this case, the Director seeks injunctions against the defendants of the latter kind, permitting them to continue trading as landlords of residential premises directly or indirectly owned by them or one or more of them, but only on condition that they do so through a duly licensed estate agent holding a licence under the Estate Agents Act 1980 (Vic).
The defendants are Francis Cassar, his wife Sandra Cassar and a company associated with them, Betta Housing Pty Ltd.
In summary, the Director contends that the affidavit evidence relied upon to support the application reveals serious and regular contraventions of the Residential Tenancies Act by Mr Cassar and Betta Housing, and conduct by Mrs Cassar from which it can be inferred that she has been a person involved in those contraventions. Alternatively, even if there be no serious question to be tried as to involvement by Mrs Cassar in contraventions of the Residential Tenancies Act by Mr Cassar and Betta Housing, the Director nevertheless claims interim injunctive relief under s 150 of the Fair Trading Act, on the basis that, by s 150(1)(b), interim injunctive relief may be granted whether or not Mrs Cassar has previously engaged in or been involved in a contravention.
The affidavit evidence filed on behalf of the Director is extensive. I have read it all. I have also read the affidavit evidence filed on behalf of the defendants by Mr and Mrs Cassar, in which they dispute significant aspects of the evidence filed for the Director, but also acknowledge the truth of other significant aspects of that evidence. I am satisfied that there are serious questions to be tried. In summary, the Director’s evidence either establishes, or where disputed will establish if accepted at trial, the following contraventions of the Act by Mr Cassar and Betta Housing.
First, pursuant to s 406 of the Residential Tenancies Act, it is an offence for a landlord to fail to lodge with the Residential Tenancies Bond Authority (‘the Authority’) bond payments made by a tenant or tenants. The evidence filed on behalf of the Director establishes that Mr Cassar and Betta Housing have regularly failed to lodge tenants’ bond payments with the Authority. On 1 June 2009, Mr Cassar was convicted on four counts of failing to lodge bond payments with the Authority in accordance with s 406 of the Act. Notwithstanding these convictions, since 1 June 2009 he and Betta Housing have continued to act in contravention of that section, by failing to lodge bond payments with the Authority.
Second, Mr Cassar and Betta Housing have regularly failed to repay moneys owing to tenants, usually being bond payments or holding deposits. The Victorian Civil and Administrative Tribunal (‘the Tribunal’) has made many monetary orders against Mr Cassar and Betta Housing in connection with contraventions of the Residential Tenancies Act 1997 (Vic). They have regularly refused or failed to comply with these orders. That refusal or failure is itself an offence under s 480 of the Residential Tenancies Act. In that regard, on 1 June 2009, Mr Cassar was convicted of five counts of failing to comply with monetary orders made by the Tribunal, in contravention of s 480 of the Act. Notwithstanding these convictions, Mr Cassar and Betta Housing have continued to fail to comply with monetary orders.
Third, Mr Cassar and Betta Housing have also engaged in conduct involving:
(1) contraventions of s 66 of the Residential Tenancies Act, by failing to provide tenants with a written statement about the respective rights and duties of a landlord and a tenant in connection with the relevant tenancy agreement;
(2) contraventions of s 35 of the Residential Tenancies Act, by failing to provide tenants with a condition report in respect of leased premises;
(3) contraventions of s 405 of the Residential Tenancies Act, by failing to prepare and then provide to tenants a completed bond lodgement form;
(4) contraventions of s 408 of the Residential Tenancies Act, by failing to hold bond payments on trust for tenants;
(5) contraventions of s 65 of the Residential Tenancies Act, by failing to provide rented premises in a reasonably clean condition;
(6) contraventions of s 68 of the Residential Tenancies Act, by failing to maintain rented premises in good repair;
(7) contraventions of s 50 of the Residential Tenancies Act, by failing to refund deposit moneys when due for refund; and
(8) contraventions of s 67 of the Residential Tenancies Act, by failing to provide quiet enjoyment of the rented premises to tenants.
Further, Damian Stock, an Australian Legal Practitioner who was employed by the Tenants Union of Victoria at relevant times, has sworn that Mr Cassar has a long history of disputes with tenants, involving frequent breaches by him of the Residential Tenancies Act and the failure to accept responsibility. In particular, Mr Stock deposed that Mr Cassar would often attend at Tribunal hearings for the sole purpose of having himself removed as a respondent to applications made also against Betta Housing or another corporate entity as named landlord and, at these hearings, often said to Mr Stock that the result of the hearing did not matter ‘as nobody would get any money from him whatever [the Tribunal] did [and] … that the Tribunal Orders “meant nothing”.’ Mr Cassar did not file an affidavit disputing these aspects of Mr Stock’s evidence.
Counsel for Mr Cassar and Betta Housing rightly acknowledged that there was a serious question to be tried that Mr Cassar and Betta Housing have regularly contravened the Residential Tenancies Act, that there is a significant risk that they may continue to do so in the future and, for reasons including Mr Cassar’s illness, it is appropriate that they be restrained until trial from continuing to trade as landlords of residential premises otherwise than through a duly licensed estate agent.
However, it was contended that there is no basis for injunctive relief against Mrs Cassar, as the evidence filed on behalf of the Director is insufficient to raise a serious question to be tried that she has been a person involved in established contraventions of the Residential Tenancies Act by Mr Cassar and Betta Housing. Alternatively, it is contended that the balance of convenience favours refusal of the Director’s application for an injunction restraining Mrs Cassar from involvement in the letting of premises otherwise than through a duly licensed estate agent, as she has agreed to consent to a series of conditions to the effect that she will comply with material provisions of the Residential Tenancies Act in the course of acting on behalf of Mr Cassar, Betta Housing and other companies associated with the defendants in the future.
I will first consider whether the evidence establishes a serious question to be tried that Mrs Cassar has been a person involved in contraventions of the Residential Tenancies Act by Mr Cassar, Betta Housing or other companies associated with the defendants.
By s 143(1) of the Fair Trading Act,[1] if a body corporate contravenes the Residential Tenancies Act, each officer of that body corporate is deemed to have contravened the same provision ‘if the officer knowingly authorised or permitted the contravention’. Further, as to knowing involvement in a contravention, ss 149, 149A and 151A give the Director power to apply for injunctive relief against a person who has been in any way directly or indirectly knowingly concerned in, or a party to, the contravention by another person of a provision of the Residential Tenancies Act. In each case, as counsel for Mrs Cassar rightly pointed out, the requisite knowledge is actual knowledge,[2] although he also acknowledged that actual knowledge may be inferred from a combination of suspicious circumstances and a failure to make enquiry.[3]
[1]When read with s 507A(2) of the Residential Tenancies Act.
[2]Yorke v Lucas (1985) 158 CLR 661.
[3]For example, Peiera v DPP (1989) 63 ALJR 1; Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681.
It was submitted on behalf of the defendants that there was insufficient evidence that Mrs Cassar had actual knowledge of any of the contraventions by her husband or Betta Housing of the Residential Tenancies Act. For the following reasons, I reject that submission. Taking the evidence as a whole, in particular that mentioned below, there is a serious question to be tried that Mrs Cassar had actual knowledge or inferred actual knowledge in the sense described in the relevant authorities.
First, the evidence indicates that Mr Cassar or companies associated with him, other than Betta Housing, own 11 apparently valuable inner-city properties in the vicinity of the premises from which Mr Cassar conducts a smash repair business (‘the properties’). Pursuant to arrangements between property owners and Betta Housing, the substance of which are not in evidence, Betta Housing has entered into many tenancy agreements with tenants in respect of some of these properties or rooms in those properties.
Second, Mrs Cassar is and has been since 1 August 2008 the sole director, secretary and shareholder in Betta Housing.
Third, although Mrs Cassar has sworn that her husband ‘primarily managed the leasing’ of properties by Betta Housing, the evidence establishes that Mrs Cassar had significant involvement in relation to the tenancies which are the subject of the affidavit evidence in this proceeding. That evidence discloses that Mrs Cassar was present in the smash repair offices of Mr Cassar’s business and regularly dealt with tenants. The letting business was run from those premises. Further, Mrs Cassar completed the relevant tenancy agreements in evidence on behalf of Betta Housing as landlord. This involved hand writing all of the rental details and further conditions insisted upon by Betta Housing, and signing the agreement on its behalf. She had a hands-on practical role in relation to leasing the properties. In these circumstances, as the sole director, secretary and shareholder, there is a serious question to be tried as to whether she knew that moneys had been paid by way of bond and that those moneys had not been lodged with the Authority as required by the Residential Tenancies Act.
Fourth, although Mrs Cassar said that she left it to her husband to manage the properties leased by Betta Housing, taking the evidence as a whole there is a serious question to be tried as to whether Mrs Cassar also knew that Mr Cassar and Betta Housing had failed to repay moneys due to tenants as a result of orders made by the Tribunal. In that regard, factors indicating a serious question to be tried include the marital relationship between Mr and Mrs Cassar, the fact that Mrs Cassar was the sole director, secretary and shareholder of Betta Housing, the numerous monetary orders made by the Tribunal against Mr Cassar and Betta Housing, the likelihood that such orders would have been served by the Tribunal upon Betta Housing and Mr Cassar, the likelihood that the beneficiaries of monetary orders made by the Tribunal would have sought payment from Betta Housing and, in that connection, may have spoken with Mrs Cassar, Mr Cassar’s convictions for breaches of s 480 of the Residential Tenancies Act, a history of adverse publicity directed at Mr Cassar over the past few years and a tenants’ protest outside the smash repair premises from which Mr and Mrs Cassar conducted the business of letting residential real estate through Betta Housing and other entities.
Taking the evidence as a whole, there is a real case to be investigated, or a serious question to be tried, as to whether Mrs Cassar had actual knowledge of many of the contraventions of the Residential Tenancies Act by Mr Cassar and Betta Housing.
Accordingly, I proceed to consider the balance of convenience in connection with the injunctive relief claimed against Mrs Cassar. In Bradto Pty Ltd v State of Victoria,[4] Maxwell P and Charles JA said in respect of the balance of convenience that:
whether the relief sought is prohibitory or mandatory, the Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’, in the sense of granting an injunction to a party who fails to establish his right of trial, or in failing to grant an injunction to a party who succeeds at trial.
[4](2006) 15 VR 65, [35].
It was submitted on behalf of Mrs Cassar that there will be adequate protection for the public interest if the injunctions claimed against Mr Cassar and Betta Housing are made, but she is permitted to act on their behalf, and on behalf of other entities associated with the defendants who own real estate, in the continued conduct of the business of letting residential real estate. In that regard, it was submitted that Mrs Cassar was prepared to consent to orders in the following form:
(1) Until the trial of the proceeding, Mrs Cassar shall ensure that any person with whom she negotiates a residential tenancy agreement (or to whom she negotiates the granting of a residency right), whether on her own behalf or for any third party, receives:
(a) a complete copy of any written tenancy agreement;
(b) a Residential Tenancies Bond Authority Lodgement Form in accordance with s 405 of the Residential Tenancies Act;
(c) a condition report in accordance with s 35 of the Act; and
(d) an information statement in accordance with s 66 of the Act.
(2) Until trial, Mrs Cassar shall ensure that any bond moneys received by her from any residential tenant or prospective residential tenant shall be lodged with the Authority in accordance with s 406 of the Act.
(3) Until the trial, Mrs Cassar shall obtain a written signed confirmation from each tenant or person who is provided with documents in accordance with para (1) that they have received each of those documents.
It was submitted on behalf of the Mrs Cassar that these were routine steps which she should have no difficulty in performing and, if she does not do so, that she risks contempt of Court and possible fines or jail in that event.
In considering the balance of convenience, a stronger case may lead to the Court more readily granting an injunction where the balance of convenience is fairly even. Correspondingly, where the case is a weaker one but still satisfies the test of raising a serious question to be tried, the balance of convenience is more likely to tip the scales against the grant of injunctive relief where that balance is fairly even.[5] In my opinion, the balance of convenience favours granting injunctive relief against all defendants in the form sought by the Director. In reaching that conclusion, I have taken the following factors into account.
[5]Oswal v Carson & Ors [2011] VSC 70, [12]-[15]; Nicholas John Holdings Pty Ltd v ANZ Banking Group Ltd [1992] 2 VR 715, 723.
First, Mr Cassar and Betta Housing do not oppose the injunctions sought against them.
Second, as the evidence presently stands, the case against Mrs Cassar is in my view a strong one. Her involvement in the rental business conducted by her husband and Betta Housing is likely to have given rise to actual knowledge that rental bonds were not being deposited with the Authority and that orders made by the Tribunal were not being complied with.
Third, taking the evidence as a whole, I am satisfied that, in the absence of injunctive relief, the defendants or one or more of them will or may continue to engage in conduct in contravention of the Residential Tenancies Act in some respect. I am not satisfied that the Court can rely upon Mrs Cassar to comply with the conditions to which she is prepared to consent. The evidence justifies a finding that Mr Cassar is the person in effective control of the business of letting residential real estate and that Mrs Cassar has simply done Mr Cassar’s bidding, notwithstanding that she is the sole director, secretary and shareholder of Betta Housing. In the absence of injunctive relief against her, there is a significant risk that she will act in accordance with the wishes of her husband.
Fourth, the fact that each of Mr Cassar and Betta Housing has been the subject of orders made by the Tribunal that they pay or repay moneys to tenants or proposed tenants and that they have refused or neglected to pay the judgment debts. Each of those judgment debts is for a relatively small amount to persons such as the defendants, who are, directly or indirectly, the owners of a number of valuable inner-city properties in Melbourne. On the other hand, the amounts are of great significance to the tenants concerned.
Fifth, the fact that Mr Cassar has been convicted of offences arising out of contraventions of the Residential Tenancies Act and that this has not deterred him from continuing a course of conduct.
Sixth, as to the submission that Mrs Cassar can be trusted to comply with routine obligations under the Residential Tenancies Act, I note that Mr and Mrs Cassar have been unable or unwilling to comply with those routine requirements over a number of years, notwithstanding orders made by the Tribunal and Mr Cassar being convicted of offences for non-compliance.
Seventh, the Director has acted reasonably in seeking relief which permits the defendants to continue trading as providers of rental accommodation on conditions which will reduce the risk of further contraventions. Although this will impose costs obligations on the defendants, in the form of agents’ fees or commissions which they appear to be unwilling to pay, I see no injustice in that course. Responsible landlords regularly engage estate agents to manage their investments. This is in the interests of both landlord and tenant and serves to avoid disputes arising of the kind disclosed in the evidence in this case.
It was submitted on behalf of the defendants that it would cause financial hardship to the defendants if they were forced, by injunction, to retain a licensed real estate agent at a significant cost. In that regard, Mr Cassar deposed that he had been quoted a fee of 10 per cent of the gross rental by a reputable real estate agent. The solicitor for the Director telephoned that agent and was told that the offer was to manage the properties for 5 per cent. Whether it be 5 or 10 per cent, the defendants placed insufficient evidence before the Court as to their financial ability to pay for a licensed real estate agent to manage their properties. Although Mr Cassar has asserted that the rental income is less than the mortgage payments and that the mortgagee may have taken, or may be threatening to take, possession of one property, the Court was given no details of the approximate values of the properties or the amounts secured by the mortgages. Taking the evidence as a whole, I am not satisfied that the defendants have been forthcoming as to full details of their financial position. The fact remains that, directly or indirectly, they own at least 11 valuable inner-city residential properties. In circumstances of proven and regular contraventions of the Residential Tenancies Act by Mr Cassar and Betta Housing, and the need to protect the public interest, payment of agent’s fees will not cause substantial injustice to them.
Accordingly, I propose to make the orders sought by the Director on an interlocutory basis.
I will hear the parties as to the precise form of the orders, as to directions for trial, as to costs and any further matters.
SCHEDULE OF PARTIES
| S CI 2011 3237 | |
| BETWEEN: | |
| DIRECTOR OF CONSUMER AFFAIRS VICTORIA | Plaintiff |
| - and - | |
| BETTA HOUSING PTY LTD | First Defendant |
| FRANCIS MICHAEL CASSAR | Second Defendant |
| SANDRA ANNE CASSAR | Third Defendant |
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