Henderson v Housing Choices South Australia Ltd
[2019] SASC 121
•12 July 2019
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HENDERSON v HOUSING CHOICES SOUTH AUSTRALIA LTD
[2019] SASC 121
Judgment of The Honourable Justice Peek
12 July 2019
BANKRUPTCY - ADMINISTRATION OF PROPERTY - PROPERTY AVAILABLE FOR PAYMENT OF DEBTS - PROPERTY DIVISIBLE AMONGST CREDITORS - CAPACITY TO EXERCISE POWERS
REAL PROPERTY - TORRENS TITLE - LEASES - GENERALLY
REAL PROPERTY - LICENCES - GENERALLY - LICENCE DISTINGUISHED FROM OTHER INTERESTS IN LAND
Ms Patrina Kelly Henderson (Henderson) seeks permission to appeal to this Court from orders made by the South Australian Civil and Administrative Tribunal (SACAT) in relation to her residential tenancy agreement (RTA), including an order requiring her to vacate the subject premises (Henderson’s application).
In March 2018, Housing Choices SA (HCSA) served a breach notice on Henderson for unpaid rent and subsequently lodged an application with SACAT seeking vacant possession. SACAT granted HCSA vacant possession on 6 June 2018.
On 30 July 2018, Hughes P stayed the vacant possession order pending resolution of Henderson’s various applications but on 29 October 2018, Hughes P dismissed the last of Henderson’s applications and lifted the stay. On 21 October 2018, Henderson filed a Notice of Appeal in this Court; and on 26 October 2018, filed an interlocutory application for, inter alia, a stay of the vacant possession order.
On 1 November 2018, the first directions hearing in this Court was held. A stay and other orders were made. It became apparent that a sequestration order had been made by the Federal Circuit Court Registrar against Henderson’s estate on 13 June 2018 and that she had appealed against that order to Federal Circuit Court Judge Brown.
On 21 February 2019, Henderson’s appeal against the sequestration order was dismissed by Judge Brown. On 18 March 2019, the second directions hearing in this Court was held and various orders were made concerning a timetable for determination of the respondent’s contention that Ms Henderson had no standing to seek permission to appeal against the SACAT orders (the respondent's no standing application). On 28 March 2019, the Court received confirmation that Henderson’s Trustee in Bankruptcy would not continue Henderson’s application.
On 26 April 2019, the respondent's oral submission on its no standing application was heard. Henderson was permitted to file written submissions in reply by 7 June 2019, which date was extended to 5 July 2019. In the event, she filed no written submissions.
The issue now for determination is whether, by reason of the provisions of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), Henderson’s application for permission to appeal vested in her Trustee in Bankruptcy.
Held, dismissing Ms Henderson’s application for permission to appeal:
1. Exclusive possession is the decisive factor in distinguishing a lease from a licence. Henderson’s RTA granted her vacant possession of, and the right to peaceably occupy, the premises; further, ss 65 and 66 of the Residential Tenancies Act 1995 granted her the right to quiet enjoyment and security of the premises. Accordingly, the RTA granted her exclusive possession of the premises, confirming that the RTA is a lease. Radaich v Smith (1959) 101 CLR 209 considered.
2. Ms Henderson’s application for permission to appeal pursuant to s 71 of the SACAT Act constitutes the taking of proceedings for the purposes of s 116(1)(b) of the Bankruptcy Act in that her lease falls within the broad definition of property in s 5 of the Bankruptcy Act. Accordingly, it is Henderson’s Trustee in Bankruptcy who has standing to seek permission to appeal, not her. Bagshaw v Scott [2002] FCAFC 362; Cirillo & Another v Citicorp Australia Ltd and Others (2004) 236 LSJS 24; Cummings v Claremont Petroleum NL (1996) 185 CLR 124; Kostov v Amelie Housing (NCAT Appeal) [2019] NSWSC 16; King v King [2012] 2 Qd R 448; Maher v Commonwealth Bank of Australia [2004] FCA 248 considered.
3. Section 58(3) of the Bankruptcy Act does not affect the claim for vacant possession and nor does it prevent the Court dismissing Henderson’s application. Ezekiel v Orakpo [1977] QB 260; Murdock & Anor v Bettcher (2008) 254 LSJS 174 considered.
Bankruptcy Act 1966 (Cth) ss 5, 58(1), 58(2), 58(3), 60(2), 116(1)(b), 116(2)(b), 116(2)(g); Bankruptcy Act 1914 (UK) ss 7, 9; Residential Tenancy Act 1995 (SA) ss 3, 5(2), 65, 66; South Australian Civil and Administrative Tribunal Act 2013 (SA) s 71, referred to.
Cirillo & Another v Citicorp Australia Ltd And Others (2004) 236 LSJS 24; Cummings v Claremont Petroleum NL (1996) 185 CLR 124; Ezekiel v Orakpo [1977] QB 260; King v King [2012] 2 Qd R 448; Kostov v Amelie Housing (NCAT Appeal) [2019] NSWSC 16; Maher v Commonwealth Bank of Australia [2004] FCA 248; Murdock & Anor v Bettcher (2008) 254 LSJS 174; Owsten Nominees No 2 Pty Ltd v Anderson (Tenancy) [2011] NSWCTTT 438, discussed.
Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106; Bagshaw v Scott (2002) 126 FCR 27; Chelsea Investments Pty Ltd v Commissioner of Taxation (Cth) (1966) 115 CLR 1; Cumberland Consolidated Holdings Ltd v Ireland [1946] KB 264; Dampier Mining Co Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 408; Goldsworthy Mining Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 408; Ibrend Estates BV v NYK Logistics (UK) Ltd [2011] 4 All ER 539; Lewis v Bell (1985) 1 NSWLR 731; Western Australia v Ward (2002) 213 CLR 1, considered.
HENDERSON v HOUSING CHOICES SOUTH AUSTRALIA LTD
[2019] SASC 121Civil
PEEK J.
Ms Patrina Kelly Henderson (Ms Henderson) seeks permission to appeal from decisions made by members of the South Australian Civil and Administrative Tribunal (SACAT) concerning her residential tenancy agreement relating to premises at Wright Street, Adelaide (the subject premises). These comprise decisions of Hughes P dated 30 July 2018, 7 September 2018,[1] 5 October 2018 and 29 October 2018; the decision of Executive Senior Member Johns dated 6 June 2018; and the decision of Member Carlton dated 8 May 2018. Ultimately, Ms Henderson seeks to overturn orders requiring her to give up vacant possession of the subject premises.
[1] In her application, Ms Henderson refers to a decision of Hughes P on "4 September 2018". The hearing which preceded the decision of 7 September 2018 was held on 4 September 2018 but the orders were in fact dated 7 September 2018.
The right of appeal appears in s 71 of the South Australian Civil and Administrative Tribunal Act 2013 (the SACAT Act) as follows:
71—Appeals
(1)Subject to this section and to any provision of a relevant Act as to the review of, or appeal against, a decision of the Tribunal, an appeal lies—
(a) in the case of a decision of the Tribunal—
(i) constituted of a Presidential member of the Tribunal; or
(ii) constituted of 2 or 3 members including a Presidential member,
to the Full Court of the Supreme Court; or
(b) in any other case—to the Supreme Court constituted of a single Judge.
(1a)The Rules of the Supreme Court may provide that a matter that would otherwise go to the Full Court under subsection (1) will instead go to a single Judge, and vice versa.
(2)An appeal under this section is only by leave of the Supreme Court (but this principle may be displaced or modified by the provisions of a relevant Act).
Since the decisions presently complained of include decisions of the President, an appeal is to go to the Full Court but permission is first required for any appeal pursuant to s 71.
The proposed grounds of appeal
The proposed grounds of appeal are as follows:
That President Hughes erred in:
3.1 not finding that SACAT decisions by Tribunal Members Suzanne Carlton (8 May 2018) and Barbara Johns (6 June 2018) were unlawful, being in breach of the South Australian Housing Trust Act s 32D (7)) and in breach of a duty of care, and in breach of the Disability Discrimination Act 1992 (Cth) (indirect discrimination), and in breach of the Law of Property Act 1936 (SA) s33, and in breach of the SACAT Act.
3.2 not finding that Housing Choices SA’s application was unlawful, being in breach of the South Australian Housing Trust Act s 32D (7)) and in breach of a duty of care, and in breach of the Disability Discrimination Act 1992 (Cth) (indirect discrimination), and in breach of the Law of Property Act 1936 (SA) s33, and in breach of the Appellants’ Tenancy agreement terms and conditions and breached the ROSAS HMT Deed and Lease.
Ms Henderson initiated the appeal on 21 October 2018 by filing a “Notice of Appeal against Administrative Decision”. On 26 October 2018, Ms Henderson filed an Interlocutory Application which sought, inter alia, stays of the orders for vacant possession made by SACAT and an affidavit in support of that application.
The matter first came before me in the Chambers List on 1 November 2018 (the 1 November 2018 hearing). At that time it was necessary for me to first address two supervening events. One was that Ms Henderson had been premature in initiating her application to the Supreme Court on 21 October 2018, since at that time a judgment of Hughes P concerning an application for internal review of certain decisions had not yet been delivered. However, on 29 October 2018 Hughes P had delivered judgment dismissing that application and affirming the decisions under review. Her Honour further ordered that the time within which the respondent could enforce the order for vacant possession was extended to midday Tuesday 13 November 2018.
It was the wish of Ms Henderson to broaden her application for permission to appeal to include that latest decision of Hughes P of 29 October 2018 and to apply for a stay pending determination of the broadened application. I indicated that those things could be done in due course.
However, the second supervening event was more difficult to address expeditiously. It had come to the attention of the respondent only on the day before the 1 November 2018 hearing that a sequestration order had previously been made pursuant to the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) over the estate of Ms Henderson as long ago as 13 June 2018. The Court received an affidavit filed by the solicitor for Housing Choices South Australia Ltd (HCSA) on 31 October 2018 which deposed to, inter alia, a sequestration order being made by Registrar Colbran in the Federal Circuit Court of Australia on 13 June 2018 and a subsequent stay order made by Federal Circuit Court Judge Brown on 26 July 2018.[2]
[2] The circumstances leading to Ms Henderson being declared a bankrupt are not presently relevant. It suffices to note that the City of Adelaide, having successfully obtained the summary dismissal of proceedings brought against it by Ms Henderson in the Federal Court for declarations and injunctions pursuant to the provisions of the Environment Protection and Biodiversity Conservation Act 1999 (Cth), and having obtained an order for costs, had applied on 22 September 2017 to the Official Receiver for a Bankruptcy Notice to issue requiring her to pay the sum of $64,492.73 (including interest) within 21 days (which Bankruptcy Notice was served on her on 22 December 2017) and had filed on 24 January 2018 a creditor’s petition seeking an order for the sequestration of her estate.
The respondent had ascertained that the stay had been granted by Judge Brown on 26 July 2018, with further consideration of the matter being adjourned to 26 October 2018 (only four days prior to the hearing now being referred to). Unfortunately, the Federal Circuit Court records indicated only that no hearing had actually occurred on 26 October 2018 and that the matter had been adjourned off to 6 February 2019. The respondent was in the dark as to why this had occurred. Ms Henderson stated that she did not know.
In the circumstances, it appeared necessary to adjourn the matter beyond the date of the next hearing of the Federal Circuit Court on 6 February 2019. I addressed the matters of a stay of the orders of Hughes P until that time; the payment of rent by Ms Henderson to the Suitors’ Fund at the low rate of $101.00 per week; and access to the subject property by HCSA for the purposes of inspection and repairs. At the conclusion of the 1 November 2018 hearing, I made the following orders:
1. Subject to the Appellant complying with Orders 2 and 3 hereof, execution of the Order for vacant possession made by the South Australian Civil and Administrative Tribunal on 6 June 2018 is stayed until further order.
2. The Appellant shall pay rent in the amount of $101 per week to the South Australian Suitors’ Fund at the Registry of the South Australian Supreme Court on a weekly basis with the first payment to be made on Thursday, 8 November 2018.
3. The Appellant must attend and permit two representatives of the Second Respondent to enter and inspect all parts of the property at …[3] Wright St ADELAIDE SA 5000 on Tuesday, 20 November 2018 commencing at 11.00 am and to carry out in due course any urgent matters of repair that are required in the reasonable view of the Second Respondent.
4. If the Appellant fails to comply with either or both Order 2 and 3 above, Order 1 shall stand discharged without further order.
5. The matter is adjourned for directions on Monday, 18 March 2019 at 10.00 am.
[3] Number redacted.
Before proceeding further, I will set out, in chronological order, relevant events from before the 1 November 2018 hearing until the present.
A chronology of events
In October 2007, Ms Henderson entered into a residential tenancy agreement (RTA) with South Australian Housing Trust (SAHT) concerning the subject premises (Ms Henderson’s RTA). The tenancy commenced on Saturday 13 October 2007 when Ms Henderson commenced occupation pursuant to the terms of the formalised residential tenancy agreement.[4] She has since continuously resided there to the present date.
[4] At the hearing before me on 26 April 2019, Ms Henderson informed the Court that she had actually completed a six month probationary tenancy at the premises prior to there coming into existence a formal residential tenancy agreement.
In early 2017, it was decided by SAHT that its role as landlord under a number of RTAs, including Ms Henderson’s RTA, would be transferred to HCSA. This transfer was effected by the Housing Transfer Management Deed dated 24 May 2017. On 15 September 2017, HCSA wrote to Ms Henderson to remind her that it was about to take over the role of landlord from SAHT.
On 20 September 2017, Ms Henderson lodged with Housing SA an application to appeal various decisions made by SAHT in relation to her RTA. On 21 September 2017, Ms Henderson wrote to the Director, Office of the Chief Executive of Renewal SA lodging “a formal request for internal review, and appeal against, any and all decisions made by any and all Renewal SA staff in relation to”, inter alia, the “transfer of Tenancy Management of my SA Housing Trust home from Housing SA and in direct detriment to my health and wellbeing” and “distribution of my personal information to Renewal SA staff and third parties, including, but not limited to, Housing Choices South Australia, and in direct detriment to my health and wellbeing”.
On 23 September 2017, HCSA commenced its responsibilities as landlord under the RTA and assumed the right to demand rent from Ms Henderson.
Ms Henderson’s initial application to SACAT
On 28 November 2017, Ms Henderson made an application to SACAT for a review of a decision of SAHT, said to have been made on or about 23 September 2017 and affirmed on 1 November 2017 (the 2017 decision of SAHT), to transfer the management of her tenancy to HCSA.[5] In her application, Ms Henderson stated:
The review is incompetent. I should be removed from the transfer list, that my property not be transferred to housing choices group [sic], and that I be given permission to purchase my home. They have not given the dates of their issues and decisions.
[5] The decision of Member McEvoy dated 17 August 2018 on Ms Henderson’s application states that this application was made on 5 December 2017. However, the copy of the “Admin and Disciplinary Application” provided to this Court lists the date that the application was lodged as 28 November 2017.
In the section of the originating documentation which required Ms Henderson to describe the orders she sought, she simply noted that she sought deletion of information “they [HCSA] have gathered without my consent and that every staff member involved with my transfer be prosecuted. The property be placed on the exclusion list; not the transfer list”.
Notices of breach by Ms Henderson
On 7 December 2017, HCSA prepared a notice of breach by Ms Henderson. The alleged breach was said to be:
1. Unpaid rent at $167.10 per week for the total amount of $1503.90 – includes Rent Arreas of $1074.21 (>14 days in arrears) – for period 9/10/2017 – 22/11/2017 inclusive, which equates to 6 weeks + 3days [sic]. ($429.69 of the unpaid amount is due to bring rent up to date for rent period ending 10/12/2017 - $334.20 will be due on 11/12/2017 for the next two weeks rent in advance.) 2. Property condition is not of an acceptable standard, overgrown rear yard. Attached letter from Adelaide City Council.
The notice attached a “Statement of Account Transactions” bearing out the allegations of non-payment of rent. The notice required Ms Henderson to remedy the alleged breach by:
1. Paying in full the amount of $1503.90 for unpaid rent, then continue with fortnight rent in advance payments of $334.20 commencing 11/12/2017. Alternatively, make contact before the expiry of this notice with Housing Choices on 1300 312 737 and come to an acceptable arrangement to repay outstanding rent. Outside of property needs clean up. Cut down weeds/grass/dispose of all flammable material [sic]
It is not clear from the documentation filed in this Court when (or indeed whether) this notice was served on Ms Henderson. However, on 5 March 2018, under cover of a letter from the Acting State Manager of HCSA to Ms Henderson, a notice of breach was served on Ms Henderson. It alleged that there had been a “failure to pay rent when due”, which was particularised as:
RENT DUE WEEKLY BETWEEN THE PERIOD 25/09/2017 TO 05/03/2018 FOR THE WEEKLY AMOUNT OF $167.10, IS UNPAID.
The notice attached a “Statement of Account Transactions” and required Ms Henderson to remedy the alleged breach by 19 March 2018 by paying the outstanding rent moneys in the amount of $3,808.40. The notice indicated that Ms Henderson’s RTA would be terminated by force of the notice on 20 March 2018 if Ms Henderson failed to remedy the alleged breach.
Housing Choices SA’s application to SACAT and the subsequent history of the proceedings in SACAT
The history of the proceedings in SACAT is lengthy and complicated. On 23 March 2018, HCSA brought an application seeking vacant possession of the premises for non-payment of rent. HCSA alleged that it had not received rent from Ms Henderson since the time when the management of the RTA had been transferred to it in September 2017.
HCSA’s application for vacant possession was listed for a hearing on 13 April 2018, but on that day Ms Henderson sought an adjournment to obtain legal advice. That application was granted and the matter was adjourned to 8 May 2018.
On 8 May 2018, Ms Henderson sought a further adjournment of the matter of the application for vacant possession on the basis that she had not been provided with all relevant documents. That application was refused by Member Carlton. In determining HCSA’s application, Member Carlton found that no rent had been paid to HCSA since the transfer of the management of the tenancy in September 2017. She found that rent had been paid to 8 October 2017 but that, as at the date of the decision, the amount of $5,060.74 remained in arrears. Nonetheless, Member Carlton ordered that Ms Henderson could remain in possession provided she paid to HCSA the amount of $20.00 plus her ordinary fortnightly rent on and from 25 May 2018 on an ongoing fortnightly basis. Member Carlton also made orders allowing HCSA to seek an urgent hearing to terminate the tenancy and evict Ms Henderson if there was non-compliance. The matter was adjourned until 7 August 2018 so that SACAT could monitor the situation.
On 28 May 2018, Ms Henderson lodged an application for internal review, challenging the decision of Member Carlton. Ms Henderson asserted various alleged errors, including, inter alia, “coercion of the tenant into an agreement”; “breaches [of] Federal anti-discrimination legislation”; and that she was denied the opportunity to obtain legal representation. Further, Ms Henderson made requests that she not be sent communication electronically.
Ms Henderson did not comply with the orders of Member Carlton dated 8 May 2018 and on 1 June 2018, HCSA made an application for vacant possession by reason of that non-compliance. That application was scheduled to be heard on 6 June 2018 by Executive Senior Member Johns. However, on the morning of 6 June 2018, Ms Henderson contacted the SACAT Registry and advised it that she would not be able to attend by reason of her obligation to care for an elderly acquaintance with dementia. Executive Senior Member Johns permitted Ms Henderson to participate in the hearing by telephone. During the hearing, Ms Henderson stated:
I paid my (inaudible) into a separate account in the amount of $101, the amount that I was required to pay subject to my lease. I complied with that lease and SACAT denied me any opportunity to have a sequestered trust fund that was protected from Housing Choices SA, who have made false allegations and sought to breach my lease and my legal and human rights.
Executive Senior Member Johns found that rent had been paid only to 24 September 2017 and that rent was in arrears in the amount of $6,087.21 as at the date of the hearing. In view of Ms Henderson’s failure to pay rent, Executive Senior Member Johns concluded that “the only sensible order to make” was an order for vacant possession. She ordered that Ms Henderson move out of the premises by 31 July 2018 and that, upon such date, all outstanding rent would become immediately due and payable.
On 19 July 2018, Ms Henderson made an oral request to the SACAT Registry to expand the basis of her application for internal review of Member Carlton’s decision so as to incorporate a challenge to the decision of Executive Senior Member Johns dated 6 June 2018.
On 20 July 2018, a directions hearing was held before Member McEvoy regarding the hearing then scheduled for 17 August 2018 at which Ms Henderson was to make submissions on her application for review of the 2017 decision of SAHT. At the directions hearing, Ms Henderson asserted that her disabilities precluded her from attending any further hearings in person or by telephone. Directions were made by Member McEvoy for the filing of written submissions and any further documentation by 27 July 2018 and for HCSA to file its submissions on 3 August 2018.
On 27 July 2018, Ms Henderson made an application to SACAT for variation of Member McEvoy’s directions dated 20 July 2018. She sought an extension of time for the filing of submissions on the grounds that she suffered from a disability; that the time within which to file her submissions was insufficient to enable her to obtain legal advice; and that she had not received a copy of the audio recording of the directions hearing on 20 July 2018.
On 30 July 2018, Member McEvoy heard the application for variation of her earlier directions. She extended the date by which Ms Henderson was to file her submissions and documents to 3 August 2018 and extended HCSA’s deadline to 10 August 2018. In the event, Ms Henderson failed to file any submissions.
In a separate hearing on the same date, 30 July 2018, Hughes P stayed the operation of the order granting vacant possession to HCSA until the hearing of the application for internal review.
On 17 August 2018, Member McEvoy made an order affirming the 2017 decision of SAHT and dismissing Ms Henderson’s application for review. With Ms Henderson’s application to SACAT resolved, her internal review against the orders of Member Carlton and Executive Senior Member Johns could proceed. The internal review of the order for vacant possession was accordingly listed to be heard before Hughes P on 4 September 2018.
On 21 August 2018, Ms Henderson wrote to SACAT seeking an adjournment of the 4 September 2018 listing date for a period of six weeks. She asserted that she had suffered a nervous breakdown and an exacerbation of her asserted post-traumatic stress disorder as well as her asserted agoraphobia and dizziness; she submitted that she required time to obtain legal advice and disability support services to assist her in presenting her case. On 22 August 2018, Hughes P refused Ms Henderson’s application for an adjournment but ordered that the hearing listed for 4 September 2018 be conducted as a directions hearing.
On 4 September 2018, a representative from Adelaide Day Centre for Homeless Persons, one Ms van der Sman, appeared for Ms Henderson at the now directions hearing. Ms Henderson did not attend, having communicated to Registry her asserted inability to attend “due to ill-health and a need to travel interstate”.
Following the directions hearing before Hughes P on 4 September 2018, her Honour made orders on 7 September 2018. Her Honour ordered that the hearing of the internal review be listed in the week commencing 15 October 2018 at a date to be fixed but not on Wednesday 17 October 2018. The hearing was eventually fixed to be heard on Tuesday 16 October 2018.
On 7 September 2018, Hughes P extended the stay her Honour had granted on 30 July 2018 but made the stay conditional upon Ms Henderson meeting certain conditions including, inter alia, that the premises be made available for inspection by HCSA, which inspection was to be held on 2 October 2018. Hughes P also ordered that HCSA file a written submission outlining its position in relation to the quantum of unpaid rent prior to the hearing.
On 2 October 2018, Ms Henderson applied to SACAT for a stay of that part of the order made by Hughes P on 7 September 2018 requiring her to make the subject property available for inspection. The application was delivered to SACAT approximately 30 minutes prior to the time scheduled for the inspection, with no reason given for the lateness of the application. Hughes P refused to stay the operation of the order made on 7 September 2018.
On 5 October 2018, Hughes P lifted the stay of the order requiring Ms Henderson to give vacant possession (granted on 30 July 2018 and extended on 7 September 2018) because she had failed to comply with the conditions set out in the orders dated 7 September 2018. HCSA had 14 days or such longer period as the SACAT might permit to enforce the order for vacant possession.
On 8 October 2018, HCSA lodged a written submission in compliance with Hughes P’s order of 7 September 2018 that HCSA file prior to the hearing a written submission concerning the quantum of unpaid rent.
On 11 October 2018, Ms Henderson wrote by email to the SACAT Registry requesting an adjournment of the hearing and enclosed a note from a General Practitioner dated 6 August 2018 (reproduced by SACAT as follows):
Ms Henderson is a patient at this medical practice.
Ms Henderson suffers from significant medical issues which impact upon her ability to meet deadlines and finalise commitments.
In my opinion Ms Henderson requires extra time to complete tasks and to meet deadlines.
I therefore certify her unfit to meet requirements from the 1st August 2018 to the 30th November 2018.
Further information may be obtained by contacting the writer.
The application for the adjournment was refused.
On 16 October 2018, Ms Henderson attended at the scheduled hearing before Hughes P accompanied by a support person, one Mr Paxton. At the commencement of the hearing, Ms Henderson applied for an adjournment of six weeks. One ground was the medical certificate earlier sent to the SACAT Registry. Hughes P determined that the medical certificate did not evidence incapacity and that it was appropriate to proceed. Ms Henderson made a further application for an adjournment on the ground that she was a candidate in the City of Adelaide Council election in November 2018 and was challenging a candidate with a political party membership which aligned with the membership of the CEO of HCSA. Hughes P refused the application for an adjournment and heard the parties in full. Her Honour reserved judgment.
On 29 October 2018, Hughes P dismissed the application and affirmed the decision under review. Her Honour noted that “Ms Henderson had been expressing her objections to the transfer to HCSA and to SAHT since September 2017”. Her Honour noted in her reasons that:
19. … Ms Henderson required negotiations about the matter to accommodate her agoraphobia, PTSD, a hearing impairment and distrust including: ground-floor meeting places; the need for a support person; the need for additional time to process information and make decisions; no electronic communication for urgent correspondence; and no direct communication from Housing Choices SA.[6] The negotiations were difficult.
[6] It is to be noted that similar accommodations were made for Ms Henderson during her various appearances in this Court, including, on two separate occasions, the transfer of the proceedings from courtrooms in the Sir Samuel Way Building to the Supreme Court Building on Gouger Street to accommodate Ms Henderson’s requests.
Her Honour extended the time within which HCSA was permitted to enforce the order for vacant possession to 12.00 pm on 13 November 2018.
Permission to appeal application: first Supreme Court directions hearing on 1 November 2018
The initiation of the present proceeding for permission to appeal to this Court and the 1 November 2018 directions hearing is referred to above at paragraphs [4] to [10].
Permission to appeal application: second Supreme Court directions hearing on 18 March 2019
Subsequent to the 1 November 2018 directions hearing, the Court received further affidavit material from the parties, amongst which was the Second Affidavit of Matthew William Elson, solicitor acting for HCSA. He deposed to the dismissal on 21 February 2019 by Judge Brown of Ms Henderson’s application for a review of the sequestration order made by Registrar Colbran, annexing a copy of his Honour's orders. The reasons of Judge Brown are extensive, his Honour noting:
11. On 13 June 2018, Ms Henderson filed an application to review the decision of the Registrar. These reasons for judgment are directed to resolving the review. The proceedings constitute a hearing de novo of the City of Adelaide’s creditor’s petition. As such, the central issue for the court is whether Ms Henderson has committed an act of bankruptcy and thereafter whether there is sufficient cause not to make a sequestration order.
It transpired from these reasons that the reason for the lengthy adjournment from 26 October 2018 to 6 February 2019 was to accommodate Ms Henderson’s wish to stand as a candidate in the City of Adelaide Council election in November 2018.
At the directions hearing on 18 March 2019, a number of matters relating to Ms Henderson’s present standing to pursue an appeal having regard to her bankruptcy were discussed. I decided that that matter should be first determined before the broader issue of permission to appeal was to be considered. To that end, a regime was established to minimise Ms Henderson’s difficulties associated with being unrepresented. She was provided with hard copies of three relevant decisions referred to by the respondent[7] and a timetable was set down whereby the respondent was required to furnish ten days prior to the hearing on Friday 26 April 2019 a detailed Outline of Argument and List of Authorities, whereas there would be no corresponding obligation on Ms Henderson. I made the following orders which are self-explanatory:
[7] The respondent provided Ms Henderson with copies of the following: Kostov v Amelie Housing (NCAT Appeal) [2019] NSWSC 16; King v King [2012] QCA 39; Owsten Nominees No 2 Pty Ltd v Anderson (Tenancy) [2011] NSWCTTT 438.
1. By close of business on Tuesday, 19 March 2019 the solicitors for the Respondent, Housing Choices South Australia, are to serve on the Trustee of the Applicant’s bankrupt estate, Mr Nicholas David Cooper, by hand delivery to the Trustee’s offices at Suite 1103, Level 11, 147 Pirie Street, Adelaide a copy of the following:
1.1.Notice of Appeal dated 12 October 2018;
1.2.Interlocutory Application dated 25 October 2018;
1.3.Affidavit of Patrina Henderson sworn on 26 October 2018; and
1.4.Affidavit of Patrina Henderson sworn 31 October 2018.
2. On or before Thursday, 21 March 2019 the solicitors for the Respondent, Housing Choices South Australia, are to file and serve an affidavit of service regarding the documents required by Order 1.
3. There will be a short mention hearing on Wednesday, 3 April 2019 at 10.00 am at which the parties will appear and at which the Trustee will appear if the Trustee has decided to adopt the within proceedings.
4. If the Trustee decides not to adopt the within proceedings and formally indicates that decision in writing to the Court and to the parties by close of business on Monday, 1 April 2019, the mention hearing on Wednesday, 3 April 2019 referred to in Order 3 will be vacated.
5. A full hearing will be conducted concerning the Respondent’s objection to the Applicant’s standing to bring the within appeal on Friday, 26 April 2019 at 10:00 am.[8]
6. The Respondent will file and serve a written Outline of Argument and List of Authorities by no later than close of business on Tuesday, 16 April 2019.
7. Liberty to apply.
8. Costs in the cause.
[8] It is to be noted that this date was selected specifically to accommodate the requests made by the applicant, who intimated to the Court that she would be unable to attend on two prior dates which were determined by the Court and the representatives of Housing Choices SA to be convenient.
Events after the second Supreme Court directions hearing on 18 March 2019
On 20 March 2019, the solicitors acting for HCSA filed an affidavit deposing to their compliance with Order 1 above.
On 28 March 2019, the Court Registry received a letter dated 28 March 2019 from Mr Nick Cooper, Trustee of Ms Henderson’s bankrupt estate, enclosing a copy of his Certificate of Appointment dated 13 June 2018. He advised that he elected “not to continue the litigation”. Accordingly, my associate emailed the parties on 29 March 2019 to advise them that the mention hearing foreshadowed by Order 3 above had been vacated by reason of the Trustee’s indication that he would not be adopting the proceeding. The email attached a copy of the Trustee’s letter dated 28 March 2019 and his Certificate of Appointment.
On 16 April 2019, HCSA’s solicitors provided the List of Authorities and Outline of Argument required by Order 6 above. On 17 April 2019, my associate wrote to Ms Henderson by letter (copied to HCSA’s solicitors) reminding the parties of the hearing which was to be held on 26 April 2019 at 10.00 am. Enclosed was a hardcopy of HCSA’s Outline of Argument and List of Authorities.
On 18 April 2019, shortly after 9:00 am, my Chambers received from Registry a photocopy of a document which purported to be a medical certificate. Registry informed the Court that Ms Henderson had attended there between 3.00 pm and 4.00 pm on 17 April 2019; had presented an original of the purported medical certificate; and had requested that a photocopy be made and filed, without further explanation or communication. The document was as follows:
CERTIFICATE OF SICKNESS
Date: 17.4.19 (HW)[9]
THIS IS TO CERTIFY THAT I HAVE EXAMINED
Mr./ Mrs./ Miss Patrina Kelly Henderson (HW)
on 17.4.19 (HW) In my opinion he/ she is[10]/ was suffering from
Medical illness (HW)
(a) He / she will be / was unfit for work from 17.4.19. (HW)
and up to and including 17.5.19. (HW)
(b) He / she should be able to resume work on 18.5.19 (HW)
Signed [Handwritten signature]
Qualifications BMBS (HW) [Stamp]
[9] Doctor’s handwriting to be delineated by “HW”.
[10] The words "she is" were circled by hand.
By letter from my associate to the parties by email, and by hard copy on 18 April 2019, a directions hearing was scheduled for 24 April 2019 at which Ms Henderson was required to present evidence in proper form which established her alleged inability to appear at the hearing scheduled for 26 April 2019.
On 24 April 2019, the parties attended at the directions hearing.[11] Ms Henderson gave evidence and attempted to rely upon the purported medical certificate provided on 17 April 2019 and a purported psychological report apparently dated 13 June 2018 which I refused to receive, it being almost a year out of date and there being no opportunity for the respondent to cross-examine.
[11] Ms Henderson attended at Courtroom 2 in the Sir Samuel Way Building fifteen minutes late at 10.15 am but then departed before the matter could be called on. The matter was called on at 10.25 am at which time she was not in attendance but she then reappeared at 10.27 am. She objected to the use of that courtroom due to the fact that the Sir Samuel Way Building allegedly triggers post-traumatic stress disorder and agoraphobia, and the hearing was adjourned for her convenience to Supreme Court Courtroom 1 where it commenced at 10.55 am.
Ms Henderson did not satisfy me that she was unable to attend on 26 April 2019. However, during that directions hearing I again attempted to reduce her difficulties. It was indicated that counsel for the respondent would be required to present the whole of his argument on 26 April 2019 and that Ms Henderson would be given a significant period of time thereafter to formulate and file written submissions, ideally with the assistance of a lawyer, but in any event with the assistance of hard copies of: counsel’s Outline of Argument; all of his authorities; transcripts of the previous hearing on 18 March 2019 and, more importantly, the hearing on 26 April 2019 itself (all at no charge).
The fixing of the precise period of time by which any written submissions had to be filed (should Ms Henderson wish to prepare them) was deferred to the day of the hearing. I made the following orders:
1. The Applicant is to be provided with a copy of the transcript of the Directions Hearing on 18 March 2019 at no cost.
2. The Parties are to attend at the hearing on Friday, 26 April 2019, commencing at 10:00 am.
3. At the hearing on Friday, 26 April 2019, the Respondent is to deliver its oral submissions (and provide to the Court and to the applicant in hardcopy any documents and/or authorities upon which it seeks to rely) on the issue of the Applicant’s standing in the within matter.
4. Following the hearing on Friday, 26 April 2019, the Applicant is to be provided with a copy of the transcript of the proceedings on Friday, 26 April 2019 at no cost.
5. The Applicant is to file and serve written submissions in response to the submissions of the Respondent by a date to be fixed at the hearing on Friday, 26 April 2019.
On 26 April 2019, the parties attended at the substantive hearing to determine Ms Henderson’s standing. Counsel for HCSA made detailed submissions in support of his contention that Ms Henderson did not have standing. Ms Henderson made some oral submissions and I take them into account, so far as they were relevant. As foreshadowed, in the interests of permitting Ms Henderson sufficient time to consider and reply to HCSA’s submissions, it was ordered that a copy of the transcript from the hearing on 26 April 2019 be provided to her as soon as possible (at no cost) and that if she wished to file and serve written submissions, she had six weeks, until 4.00 pm on Friday 7 June 2019, to do so. At the end of the hearing counsel for the respondent stated:
MR MARSH: The applicant has previously indicated that sometimes due to various exigencies, she misplaces documents. She expressed concern on the last occasion that therefore she may not have a copy available to give to a legal adviser.
HIS HONOUR: A copy of what?
MR MARSH: Of materials used in the case. For example, today she's received a number of documents, she might misplace them through some mishap. So we want to make it clear if she manages to engage legal assistance, we are prepared at short notice to provide direct to that adviser an additional copy of anything that she might have misplaced in the meantime.
HIS HONOUR: Right.
MR MARSH: So I just wanted to make that quite clear, on the record, if she wishes to get the legal adviser to contact me or Mr Elson, we will provide a further copy. There's a limit to how many copies we wish to provide but we understand how things can be lost.
HIS HONOUR: All right, thank you. That's very reasonable and I'm taking it that that's without charge to her?
MR MARSH: Yes.
I attempted to make clear to Ms Henderson the importance of compliance with the time limit thus:
[His Honour:] … I can only say and add this and then we'll adjourn, Ms Henderson, that the transcript of today will, as I say, be available in the registry to you early next week and can be supplied to you without charge and I now formally make that order. It is in your interest to start composing your written submission sooner rather than later - in other words, don’t put it off down the track because the longer you put it off, it seems to me the harder it will be for you to get back to it. It would be better for you to keep the momentum going, start your analysis of these cases - and you've got copies of all of them - this weekend. Get the transcript early next week, continue on with it and try to get the document in at an earlier deadline than the final deadline of 7 June. Set yourself an earlier deadline so that if you miss that deadline you'll still achieve the major deadline of 7 June because, as I say, I'm not proposing to extend that; 7 June, 4 p.m.
MS HENDERSON: Thank you but the medical realities are that any trauma like this usually results in me being, like, knocked out for several days.
HIS HONOUR: I can't help that, you've been given every consideration by the courts as far as I'm concerned and what's going to occur is that I've got to wait for some six weeks before I can get your submissions which is not at all ideal. So what I'll be doing is come that date, if they're not here, I will be preparing the judgment to deliver as soon as possible after that and it will be delivered.
The Court was adjourned to await such submissions and then to prepare judgment. Unfortunately, the Court did not receive any submissions from Ms Henderson, or any explanation or request for an extension of time, by 4.00 pm on 7 June 2019 and I commenced preparing the judgment. On 14 June 2019 an affidavit (and exhibits) affirmed by Ms Henderson on 13 June 2019 was delivered to these Chambers seeking an extension of time. With reluctance, I extended the deadline for receipt of written submissions by three weeks to 4.00 pm on Friday 5 July 2019. In the event, Ms Henderson did not supply any written submission.
MS HENDERSON’S STANDING TO BRING THE APPEAL
The dismissal of Ms Henderson’s application for a review of the making of the bankruptcy order by Federal Circuit Court Judge Brown makes it necessary to consider whether Ms Henderson, as an undischarged bankrupt, can continue to prosecute the proceedings presently before this Court in circumstances where her Trustee in Bankruptcy has positively declined to adopt them.
The Bankruptcy Act 1966 (Cth)
First, I refer to s 60(2) of the Bankruptcy Act only to dismiss it. It provides that any action which is commenced by a person who subsequently becomes a bankrupt is automatically stayed upon that declaration of bankruptcy until the Trustee in Bankruptcy makes an election to prosecute or discontinue the proceeding. It does not apply here because Ms Henderson was declared to be a bankrupt on 13 June 2018 and she initiated the application for permission to appeal on 21 October 2018, long after the bankruptcy declaration.
The position of a person who commences an action after becoming bankrupt
The Act does not expressly deal with the present situation of a person commencing an action after becoming bankrupt, but it is to be inferred from a number of provisions in the Act that such “proceedings” will generally be vested in the Trustee in Bankruptcy. The critical provisions of the Act (in order of appearance) are ss 5 (definition section), 58(1) and 116(1)(b).
First, the term “property” is very broadly defined in s 5 thus:
property means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.
Secondly, the vesting of property upon bankruptcy is dealt with in s 58(1) of the Act thus:
58 Vesting of property upon bankruptcy—general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a) the property of the bankrupt, not being after‑acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b) after‑acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
Thirdly, s 116(1)(b) is important - but it is best to see the context in which that provision appears. Thus s 116(1) and (2) relevantly state:
(1) Subject to this Act:
(a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and
(b) the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge; [Emphasis added] and
(c) property that is vested in the trustee of the bankrupt’s estate by or under an order under section 139D or 139DA; and
…
is property divisible amongst the creditors of the bankrupt.
(2) Subsection (1) does not extend to the following property:
(a) property held by the bankrupt in trust for another person;
(b) the bankrupt’s household property that is:
(i) of a kind prescribed by the regulations; or
(ii) identified by a resolution passed by the creditors before the trustee realises the property;
(ba) personal property of the bankrupt that:
(i) has sentimental value for the bankrupt; and
(ii) is of a kind prescribed by the regulations; and
(iii) is identified by a special resolution passed by the creditors before the trustee realises the property;
(c) the bankrupt’s property that is for use by the bankrupt in earning income by personal exertion and:
(i) does not have a total value greater than the limit prescribed by the regulations; or
(ii) is identified by a resolution passed by the creditors; or
(iii) is identified by an order made by the Court on an application by the bankrupt;
(ca) property used by the bankrupt primarily as a means of transport, being property whose aggregate value does not exceed the amount prescribed by the regulations or, if before the trustee realises the last‑mentioned property the creditors determine by resolution a greater amount in relation to that property, that greater amount;
…
(g) any right of the bankrupt to recover damages or compensation:
(i) for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or
(ii) in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt;
and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person;
…
It can thus be seen that “property” within the meaning of s 5 vests in the Trustee in Bankruptcy upon declaration of the bankruptcy and all such property, including the capacity to “take proceedings for exercising all such powers in, over or in respect of property”,[12] becomes property divisible amongst the creditors. Thus in Cirillo & Another v Citicorp Australia Ltd And Others, Gray J (with whom Perry and Bleby JJ concurred) stated:[13]
79. ‘Property’ in section 5 of the Act includes choses in action both legal and equitable.[14] Any choses in action owned by Mr Cirillo in 1992 vested in the Official Trustee.[15] The definitions also catch rights of action which are not themselves choses in action and the incidents and fruits of those rights;[16] as well as equitable rights and equitable claims.[17]
80. Even rights unassignable by acts inter partes are transmitted by the provision of the Bankruptcy Act. In Federal Commissioner of Taxation v Official Receiver[18] Kitto J observed:
[F]or the unassignability of a right to be paid money does not necessarily exclude it from the category of property which vests in the official receiver under the Bankruptcy Act.
81. The question to be determined is the nature of the right to apply to the court and, specifically, whether the right to apply pursuant to the undertaking is a chose in action.
82. The classes of assets or rights vested by operation of law in the Official Trustee are wider than common law concepts of choses in action and property. Property vested by law pursuant to the Bankruptcy Act in the Trustee is wider in its ambit than property denoted by the common law concept of a chose in action.
[12] Bankruptcy Act 1966 (Cth) s 116(1)(b).
[13] (2004) 236 LSJS 24, 41.
[14] See Re Edelsten (1988) 84 ALR 547 at 556-557; In Re Rules Settlement [1915] VLR 670
[15] Re Movitor Pty Ltd (1996) 64 FCR 380 at 392. See also Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 314.
[16] Re Huggins (1882) 21 ChD 85; Hollinshead v Hazelton [1916] 1 AC 428 at 436, 441; Cotterill v Bank of Singapore (1995) 37 NSWLR 238; Official Receiver in Bankruptcy v Shultz (1990) 170 CLR 306, 314.
[17] Pridmore v Magenta NominLees Pty Ltd (1999) 161 ALR 458 at 469.
[18] (1956) 95 CLR 300 at 327.
A household lease is property within the meaning of the Act
The decision of the Federal Court in Maher v Commonwealth Bank of Australia confirms that a lease of a household residence is not exempted. Thus Finkelstein J stated:[19]
21. … Mr Maher’s rights over the property are dependent upon his lease from Mr Taylor. He says that the lease was granted on 15 March 1995 for a term of five years. At that time Mr Maher was an undischarged bankrupt. It follows that immediately upon the execution of the lease it passed to his trustee in bankruptcy. That is the effect of s 58(1)(b) of the Bankruptcy Act 1966(Cth). In Reeves v Davies [1921] 2 KB 486 Lord Sterndale MR said in relation to similar legislation (at 490):
"I base my judgment simply upon this, that where by statute the interest of the tenant of a house has been entirely divested or taken away from him and vested in his trustee by operation of law, the tenant has no more interest in the property than any passer-by in the street, and has no right to intervene. The fact that the trustee disclaims the lease in my opinion makes no difference."
It follows that a bankrupt has no interest whatsoever in the property immediately upon him being divested of it pursuant to s 58(1)(b).
22. Two things flow from this. The first is that Mr Maher’s allegation that he exercised the option to renew the lease in late 1999 cannot stand because the option was not his to exercise. Second, if instead of exercising the option Mr Maher had, after his bankruptcy, entered into a new lease with Mr Taylor (a case which has not been put), such lease would not bind the bank because it had not given its written consent to it: Transfer of Land Act 1958(Vic), s 66(2).
23. Mr Maher contends that the lease did not devolve on his trustee as divisible property because it has the character of` exempt property. Section 116(2) of the Bankruptcy Act exempts certain property from that which is divisible among a bankrupt’s creditors. A lease of a household residence is not property falling within any exemption. …
[19] [2004] FCA 248.
Thus, the critical question in the present case is whether the present proceedings seeking permission to appeal fall within s 116(1)(b) of the Act. Consideration of that question leads to the following subsidiary questions:
-First, does the initiation and prosecution of the application for permission to appeal constitute “the taking of proceedings” by the bankrupt Ms Henderson?
-Secondly, what is the nature of Ms Henderson’s right to occupy the subject premises?
-Thirdly, is Ms Henderson’s right of occupancy of the subject premises “property” which vests in her Trustee in Bankruptcy?
-Fourthly, does the exception in s 116(2)(g) apply?
-Fifthly, does s 58(3) prevent a dismissal of the application for permission to appeal for lack of standing?
I turn to consider those questions in that order.
Does the initiation and prosecution of the application for permission to appeal constitute “the taking of proceedings” by the bankrupt Ms Henderson?
This question must be answered in the affirmative. The decisions from which Ms Henderson seeks permission to appeal are various orders made by Members of SACAT. The appeal rights are governed by s 71 of the SACAT Act and are set out above at paragraph [2].
The definition section of the Bankruptcy Act, s 5, commences with the important words “unless the contrary intention appears” and later defines the term “proceeding” as meaning “proceeding under this Act”. It is plain that “the contrary intention” does appear in s 116(1)(b); the term “proceedings” there clearly means all proceedings at law or in equity or pursuant to statute that the person could have taken to protect his property but for the occurrence of bankruptcy.
As to the question of whether an appeal is a “proceeding”, there can be no doubt that it is. The initiation and prosecution of an appeal has always been considered to be an “action” or a “proceeding” at common law and the Act does not manifest any intention that an appeal would not fall within the purview of s 116(1)(b). The following excerpt from the judgment of Brennan CJ, Gaudron and McHugh JJ in Cummings v Claremont Petroleum NL is apposite:[20]
The term “action” is defined to mean any civil proceeding (s 60(5)). The institution of an appeal by a defendant against a judgment in favour of a plaintiff is the commencing of a proceeding. That follows from the decision of the Full Court of the Supreme Court of New South Wales in Want v Moss. [Citations omitted]
[20] (1996) 185 CLR 124, 130.
In Cummings, the Justices used the terms “action” and “proceeding” interchangeably and there appears no reason why, for the purposes of s 60, an “action” would encompass an appeal but for the purposes of s 116, a “proceeding” therein referred to would not encompass an appeal.
Accordingly, I find that Ms Henderson’s application for permission to appeal pursuant to s 71 of the SACAT Act constitutes the taking of a proceeding for the purposes of s 116(1)(b) of the Bankruptcy Act.
Is Ms Henderson’s right of occupancy of the subject premises “property” within the meaning of the Act?
Section 3 of the Residential Tenancies Act 1995 (the RT Act) defines “residential tenancy agreement” to mean:
an agreement (other than a rooming house agreement) under which a person grants another person, for valuable consideration, a right (which may, but need not, be an exclusive right [Statutory Footnote 1 to definition] to occupy premises for the purpose of residence.
Statutory Footnote 1: However, it should be noted that the Act confers certain protections against intrusion on the premises by the landlord. Hence, even if the agreement does not, in its terms, confer an exclusive right to occupation, the Act will (at least in some respects) assimilate the right of occupation to the exclusive right conferred by a lease.
Section 5(2) provides that only certain provisions of the RT Act will apply to RTAs under which SAHT or a subsidiary is the landlord:
(2) The following provisions of this Act (and only those provisions) apply to residential tenancy agreements under which the South Australian Housing Trust or a subsidiary of the South Australian Housing Trust is the landlord, to residential tenancies arising under those agreements and to related disputes—
(a) Part 3 (South Australian Civil and Administrative Tribunal);
(ab) Section 65 (Quiet enjoyment);
(b) Section 66 (Security of premises);
(c) Section 71 (Tenant’s conduct);
(ca) Section 87 (Termination on application by landlord);
(cb) Section 89A (Termination based on domestic abuse);
(d) Section 90 (Tribunal may terminate tenancy where tenant’s conduct unacceptable);
(e) Section 93 (Order for possession);
(f) Section 99 (Enforcement orders for possession);
(g) Division 3 of Part 8 (Powers of the tribunal);
(h) Division 4 of Part 8 (Representation).
Is Ms Henderson’s residential tenancy agreement a lease?
It would appear from the terms of s 3 reproduced that there may be power to draft a particular RTA in such terms as to amount to some form of licence granting something less than exclusive possession. However, putting aside that possibility, the question here is whether the particular RTA pursuant to which Ms Henderson occupies the subject premises is a lease.
The RTA said to govern the relationship between Ms Henderson and SAHT (now HCSA) was tendered by the respondent and received as Exhibit RA.[21] The “tenant” is therein stated to be “Patrina Henderson”, her name being handwritten. The address of the subject premises is handwritten as “… Wright St Adelaide”. The execution clause provides for execution of the RTA by “Housing SA, on behalf of the South Australian Housing Trust”. The term ‘The Trust’ is defined to mean “the South Australian Housing Trust which is represented by Housing SA”. There is further handwriting in the “Conditions of Tenancy” portion of the document which states that the tenancy was to commence on “13/10/07”.
[21] At transcript page 81, Exhibit RB was received subject to any objection Ms Henderson might formulate in written submissions. No such objection has been formulated and I now unconditionally receive the exhibit.
This document was not executed by either party. At the hearing on 26 April 2019, Ms Henderson stated that the handwriting on it was not hers and that it was filled out by SAHT “following a six month probationary lease” prior to the commencement date of 13 October 2007; that she successfully completed that probationary period; and, in her words, the lease “continued contiguously upon the completion of the prior six month probationary tenancy”. She stated that the only difference between the probationary tenancy and Ms Henderson’s RTA (Exhibit RA) would be the date, and that “the rest should be I think pretty much the same”.
Ms Henderson has always maintained that she has a lease (her contention being, as I understand it, that the landlord remains the SAHT rather than HCSA).
Mr Marsh, counsel for HCSA, no doubt on their specific instructions, submitted extensively in written submissions filed on 16 April 2019 and oral submissions on 26 April 2019, that although Ms Henderson’s RTA exists in the context of a specific statutory regime, it is indeed a lease. He submitted in writing:
2.2 As appears from Section 3, the scheme of the Act is not to establish residential tenancy agreements as a form of statutory right but rather to provide a series of specific restrictions or rights that apply to agreements that are created under the general law.
2.3 Section 5(2) imposes a limitation on the application of the Act where the landlord is the South Australian Housing Trust. Only specific provisions from the Act apply to such tenancy agreements but they are still agreements existing under the general law.
2.5 The South Australian Housing Trust Act 1995 (SA), establishes the South Australian Housing Trust and imposes restrictions on the kind of tenancy that the Trust can grant (e.g. Section 38). However, the SAHT Act does not otherwise create rights.
2.6 In short, although residential tenancy agreements granted by the South Australian Housing Trust exist in the context of a specific statutory regime, they remain fundamentally leases, that is, contracts in relation to the grant of a leasehold interest in real property.
Accordingly, counsel submitted that Ms Henderson’s RTA was a lease such as to constitute “property” falling within the broad purview of ss 58(1)(a) and 116(1)(b) of the Bankruptcy Act. He submitted that the right of appeal concerning cancellation of the RTA therefore vested in Ms Henderson’s Trustee in Bankruptcy and thus forms part of the property divisible amongst Ms Henderson’s creditors. He further submitted that the right to apply for permission to appeal may therefore only be exercised by the Trustee and, since he has elected not to adopt the proceedings, the within application for permission to appeal should be dismissed.
I find that the Ms Henderson’s RTA is a lease for the following reasons.
Exclusive possession of the premises
Butt’s Land Law stresses the importance of exclusive possession and that its absence will be the leading indication that the parties did not intend to create a leasehold estate but intended, rather, to merely grant a licence to occupy or enter the premises. Thus it is stated:[22]
[7.90] A lease (or demise) gives the tenant the right to exclusive possession – the right to exclude all others from the land. This includes the right to exclude even the landlord, subject only to any rights the landlord has by law or under the lease agreement, such as the right to enter and view the state of repair. Further, a lease usually gives the tenant an interest in the land (the “demised premises”) itself. In contrast, a licence gives a mere right to occupy, and usually gives no interest in the land. …
[22] Brendan Edgeworth, Butt’s Land Law (Thomson Reuters Lawbook Co, 7th ed, 2017) 306-307.
The decision of the High Court in Radaich v Smith is accepted as the leading authority in Australian law on the distinction between a licence and a lease.[23] There, a deed described the parties respectively as “licensor” and “licensee” and the Court had to decide whether, notwithstanding such terminology, the grant was of a proprietary nature. All of the Justices considered that the choice of words was not determinative. Thus Windeyer J observed:[24]
Whether the transaction creates a lease or a licence … depends upon the nature of the right which the parties intend the person entering upon the land shall have in relation to the land. When they have put their transaction in writing this intention is to be ascertained by seeing what, in accordance with ordinary principles of interpretation, are the rights that the instrument creates. If those rights be the rights of a tenant, it does not avail either party to say that a tenancy was not intended. And conversely if a man be given only the rights of a licensee, it does not matter that he be called a tenant; he is a licensee.
[23] (1959) 101 CLR 209.
[24] (1959) 101 CLR 209, 222.
All of the Justices accepted exclusive possession as the decisive factor.[25] Thus Windeyer J observed:[26]
What then is the fundamental right which a tenant has that distinguishes his possession from that of a licensee? It is an interest in land as distinct from a personal permission to enter the land and use it for some stipulated purpose or purposes. And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life or lives. If he was, he is a tenant. And he cannot be other than a tenant, because a legal right of exclusive possession is a tenancy and the creation of such a right is a demise. To say that a man who has, by agreement with a landlord, a right of exclusive possession of land for a term is not a tenant is simply to contradict the first proposition by the second. A right of exclusive possession is secured by the right of a lessee to maintain ejectment and, after his entry, trespass. A reservation to the landlord, either by contract or statute, of a limited right of entry, as for example to view or repair, is, of course, not inconsistent with a grant of exclusive possession. Subject to such reservations, a tenant for a term or from year to year or for a life or lives can exclude his landlord as well as strangers form the demised premises. All this is long-established law… [Original emphasis]
[25] (1959) 101 CLR 209, 213 (Dixon CJ), 214 (McTiernan J), 217 (Taylor J), 221 (Menzies J), 222 (Windeyer J).
[26] (1959) 101 CLR 209, 222.
The High Court has accepted the approach in Radaich v Smith as determinative of the question on subsequent occasions[27] as have State Courts.[28]
[27] See, eg, Chelsea Investments Pty Ltd v Commissioner of Taxation (Cth) (1966) 115 CLR 1, 7 (Windeyer J); Goldsworthy Mining Ltd v Commissioner of Taxation (Cth) (1973) 128 CLR 199, 212; Dampier Mining Co Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 408, 428 (Mason and Wilson JJ); Western Australia v Ward (2002) 213 CLR 1, 224-227 [506]-[513] (McHugh J). Brendan Edgeworth, Butt’s Land Law (Thomson Reuters Lawbook Co, 7th ed, 2017) 309 [7.120].
[28] See for example Lewis v Bell (1985) 1 NSWLR 731.
In the present case, while the RTA does not expressly state that Ms Henderson is to have exclusive possession, such a grant is the inevitable conclusion by reference to the following considerations.
First, by clause 1 SAHT agreed: “to pass vacant possession of the premises to the tenant on the date on which the tenancy beings except for any property left by any previous occupier…”.[29] Thus exclusive possession is initially granted.
[29] It is trite that vacant possession required SAHT to vacate the premises or cause any earlier tenant to vacate the premises as at 13 October 2007, being the date upon which the tenancy commenced operation. In this regard, it is likely that only Ms Henderson and any persons entitled to reside at the property pursuant to the consent of SAHT were entitled to occupy the premises at such time. See discussion in Cumberland Consolidated Holdings Ltd v Ireland [1946] KB 264; Ibrend Estates BV v NYK Logistics (UK) Ltd [2011] 4 All ER 539, 549-553 [39]-[50] (Rimer LJ).
Secondly, by clause 4 SAHT agreed: “to permit the tenant and his/her household, as set out in Condition 6(a), to peaceably occupy the premises in accordance with the Conditions of Tenancy…”. Further, pursuant to s 5(2) of the RT Act, s 65 is applicable and provides:
(1) It is a term of a residential tenancy agreement that—
(a)the tenant is entitled to quiet enjoyment of the premises without interruption by the landlord or a person claiming under the landlord or with superior title to the landlord’s title; and
(b)the landlord will not cause or permit an interference with the reasonable peace, comfort or privacy of the tenant in the tenant’s use of the premises; and
(c)the landlord will take reasonable steps to prevent other tenants of the landlord in occupation of adjacent premises from causing or permitting interference with the reasonable peace, comfort or privacy of the tenant in the tenant’s use of the premises.
Thirdly, s 66 of the RT Act imports certain obligations on HCSA to ensure the security of the subject premises, a matter directly associated with preventing unwanted intrusion by others.
Obviously, any suggestion of treating the tenant as having other than exclusive possession would be inconsistent with, and inimical to, these covenants concerning peaceable enjoyment, quiet enjoyment and security of enjoyment.
Fourthly, while Ms Henderson’s right to possess and enjoy the premises to which she is granted an interest by the RTA is subject to certain intrusions,[30] these do not alter the conclusion that Ms Henderson is being given exclusive possession. The intrusions are not out of the ordinary having regard to rights of inspection customarily given to landlords. Any intrusion upon the right to exclusive possession of the premises is transient and temporary and there is no basis to suggest that the rights conferred on HCSA pursuant to Ms Henderson’s RTA amount to a possessory right. The only person to whom possession is granted is Ms Henderson and, in my opinion, that right to possession is exclusive.
[30] For example, by condition 6(g), the applicant is required to “allow the Trust or any person authorised by it to enter the premises at any time in case of an emergency and at other times by arrangement with the tenant, to inspect any part of the premises, to carry out such repairs as the Trust considers appropriate, to remove rubbish, or to remove or prune any tree or shrub which is causing damage”.
Accordingly, I conclude that the RTA granted to Ms Henderson exclusive possession of the subject premises. This conclusion really determines that Ms Henderson’s RTA is a lease; but for completeness I also note the following matters confirmatory of that conclusion. First, the specification of the term of the lease and the obligation to pay rent at specified intervals. Second, condition 7(b) recognises a power to assign; the requirement of prior approval of HCSA is now the rule rather than the exception in private residential leases.[31] Third, the language used of tenant and sub-let is redolent of the intention of the parties being to make a lease.
Is Ms Henderson’s right of occupancy of the subject premises “property” which vests in her Trustee in Bankruptcy?
[31] Even if the RTA completely prohibited sub-letting that would only be a factor to be taken into consideration. See Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106, 165-166 (Brennan J).
It is appropriate to commence consideration with the decision of the High Court in Cummings v Claremont Petroleum NL.[32]
[32] (1996) 185 CLR 124.
The two appellants, Messrs Fuller and Cummings, were bankrupts. Sequestration orders were made, in respect of the estate of the former, on 20 May 1993, and in respect of the estate of the latter, on 21 May 1993. At those dates, judgment was reserved in the Federal Court in an action brought by the respondents, Claremont Petroleum NL and another, against the appellants and others. On 10 June 1993, judgment was pronounced in the Federal Court in favour of the respondents and damages were assessed at $44,450,000. Judgment was entered against the appellants on 15 June 1993. On 1 July 1993, the appellants filed notices of appeal in the Full Court of the Federal Court. The respondents in that proceeding moved the Full Court to set aside or dismiss the notices of appeal. By majority, the Full Court dismissed the notices of appeal as incompetent. The appellants brought their application to the High Court against that decision by special leave.
There were two joint judgments, the plurality judgment of Brennan CJ, Gaudron and McHugh JJ and the joint judgment of Dawson and Toohey JJ. Both judgments were in favour of the appeal being dismissed, but on different bases. Although a little unusual, but for reasons that will become apparent, I will first refer to the joint judgment of Dawson and Toohey JJ. Their Honours surveyed the statutory provisions (relevantly corresponding to current provisions) and stated:
The intent of the Act is clear, namely, that save for rights of action of a personal nature, everything answering the description of "property" vests in the trustee, including after-acquired property.[33]
[33] (1996) 185 CLR 124, 141 (Dawson and Toohey JJ).
…
If a right of action does not result in something which can be used by the trustee for the payment of debts, it may be argued that nothing in the scheme of the Act demands that it vest in the trustee. Thus in Rose v Buckett the bankrupt had commenced action for trespass and seizure of goods. It being admitted that no substantial damage had been done to the premises or the goods, it was held that the right of action did not pass to the trustee in bankruptcy. The argument has a certain attraction. But it involves reading "property" in the Act as limited to that which can be turned to profit for the payment of debts. There is no justification for that limitation. It does not lie easily with the scheme of the Act, the breadth of the definition of property or the narrow scope of the exceptions to be found in s 116(2)(g). Thus in WR Henry and Son v Hodge Adam J held that the right to have set aside a default judgment upon which a sequestration order was based was "property" within the meaning of s 4 of the Bankruptcy Act 1924 (Cth). A similar view was taken in Kyte v Mahoney, where the default judgment was not the basis for the sequestration order.[34]
[34] (1996) 185 CLR 124, 144 (Dawson and Toohey JJ).
…
… But if a right of appeal is property within the meaning of the Act, whether as a chose in action or otherwise, no such question arises on bankruptcy because there is a statutory vesting of the property in the trustee.
The question is not simply whether a right of appeal is a chose in action or whether it is property according to general concepts. The question is whether a right of appeal is "property" within the meaning of the Act. In bankruptcy legislation, a broad view has been taken of the meaning of "property". In Federal Commissioner of Taxation v Official Receiver Kitto J observed:
"[T]he unassignability of a right to be paid money does not necessarily exclude it from the category of property which vests in the official receiver under the Bankruptcy Act".
While the definition of "property" in the Act is cast in broad terms, it is a definition which requires consideration of what is meant by the word property itself. The answer to that question is not to be found directly within the definition. At the same time the scope of the word cannot be divorced from the context in which it appears. In that regard the respondents naturally stressed that the scheme of the Act is to vest in the trustee rights of the bankrupt, including some which would not traditionally be thought of as proprietary, subject only to the exceptions to be found in s 116(2). Gummow and Whitlam JJ, in referring to s 116, said:
"What is of present significance is that s 116 contemplates that were it not for the express exclusion, what might be called bare rights of action to recover damages for personal injury, rights not ordinarily assignable, would nevertheless be treated as property divisible amongst the creditors of the bankrupt and therefore as property which vested under s 58(1)."
The meaning of property in the Act, "real and personal property of every description", is wide enough to include the right of appeal conferred by s 24 of the Federal Court Act. And that is so even where the appeal is against a judgment imposing a monetary obligation on the appellant.[35][Citations omitted]
[35] (1996) 185 CLR 124, 145-146 (Dawson and Toohey JJ).
The emboldening of that last sentence serves to explain why I have proceeded in the above order. The two joint judgments are ad idem up to the penultimate sentence above and, on correct analysis, the plurality judgment accepted that the definition of property in the Bankruptcy Act, “real and personal property of every description”, is wide enough to include rights of appeal. However, their Honours held that that did not apply to the particular situation in Cummings where the particular right of appeal related to “a judgment imposing a monetary obligation on the appellant”. The plurality judgment found this to be so for the following reasons:[36]
A right to appeal may be a substantive right, but it is another question whether such a right has the character of property. Some rights created by statute can constitute property, but a right to appeal does not have the character of property merely because it is the creature of statute. A chose in action may be the property of the person entitled to enforce it, but a liability to satisfy a judgment enforcing a chose in action is not property of the person against whom the judgment is entered. A liability is not property of the person liable. Nor is a right to appeal against a money judgment property of the judgment debtor. Nor does such a right to appeal answer the description of property divisible among creditors defined by s 116(1)(b), namely, "the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit". The powers referred to are powers "which are familiar to all conveyancers and are powers properly so called", as Farwell J pointed out in In re Rose; Trustee of the Property of E T Rose v Rose. In other words, the powers referred to are authorities to dispose of property or interests in property for the benefit of the donee of the power or of some other person. In this case, there is no property "over or in respect of" which the bankrupt is or would have been capable of exercising a power. As a matter of ordinary language, a judgment debtor's right to appeal against the judgment is not property. [Citations omitted]
[36] (1996) 185 CLR 124, 133 (Brennan CJ, Gaudron and McHugh JJ).
The plurality then referred to the judgment of Farrell LJ in Boaler v Power and stated:[37]
… If the postulated appeal relates to property that became vested in the trustee on the bankruptcy, or if the postulated appeal relates to a claim by the bankrupt for money or property that would be vested on recovery in the trustee, the right to appeal is vested in the trustee, as the cases cited by Farwell LJ illustrate. But it does not follow that a right to appeal against a money judgment entered in an action against a bankrupt is property of the bankrupt and, on that account, vested in the trustee. [Emphasis added]
[37] (1996) 185 CLR 124, 134 (Brennan CJ, Gaudron and McHugh JJ).
Thus, the difference between the two joint judgments may be stated as follows. The plurality considered that an appeal concerning a monetary judgment entered in an action against the bankrupt did not fall within the definition “real and personal property of every description” whereas Dawson and Toohey JJ considered that it did. But the important point for present purposes is that the decision of the plurality in that regard is in no way inconsistent with the proposition that an appeal right concerning a lease, being “property” within the meaning of the Bankruptcy Act, will become vested in the Trustee.
This approach to the judgments in Cummings is strongly supported by the decision of the Full Court of the Federal Court in Bagshaw v Scott where their Honours explained the disagreement in Cummings thus:[38]
[38] (2002) 126 FCR 27, 32-34 (Mansfield, Conti & Allsop JJ).
26. Important to that disagreement was the identification of the subject matter of the appeal. Their Honours drew a clear distinction between an appeal relating to property that became vested in the trustee and an appeal relating to a claim by the bankrupt for money or property that would, on recovery, vest in the trustee, on the one hand, and an appeal against a money judgment entered in an action against the bankrupt, on the other hand: see Cummings at 134. The distinction was relevant in the analysis as to whether the right of appeal of the bankrupt vested in the trustee as property envisaged by s 58(1). Their Honours were of the view that a right to appeal against a judgment merely creating a liability in the bankrupt was not “property”, nor did it answer the description of property divisible among creditors defined by par 116(1)(b): Cummings at 133.
27. However, their Honours seemed to accept that rights of appeal of the former kind did vest in the trustee. In this context their Honours examined the Court of Appeal decision of Boaler v Power [1910] 2 KB 229 which had been used by Adam J in W R Henry & Son v Hodge [1963] VR 111 at 112 as authority for a general proposition that any right to appeal a judgment was property divested from the bankrupt and vested in the trustee. In Boaler v Power, Farwell LJ (with whom Kennedy LJ agreed) said (at 232-233):
“It is open to the Court in Bankruptcy, if it thinks fit, to allow the debtor to contest in the Bankruptcy Court the validity of the petitioning creditor's judgment on the ground of fraud, collusion, or for any other sufficient reason: In re Flatau(1888) 22 QBD 83. But this is the only way in which the bankrupt can contest it: the adjudication, while it stands, is conclusively binding on him: he cannot contest it in any other Court on the ground of fraud or on any other ground. The right to continue these three actions is a chose in action vested in the trustee, and the bankrupt has no locus standi: see Motion v Moojen (1872) LR 14 Eq 202; Rochfort v Battersby (1849) 2 HLC 388[ 9 ER 1139]; Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210.”
28. An examination of the cases referred to by Farwell LJ: Motion v Moojen (1872) 14 Eq 202, Rochfort v Battersby (1849) 2 HLC 388; 9 ER 1139 and Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210, reveals that none had been concerned with an appeal against a judgment in personam, simply creating a liability in the bankrupt. Their Honours examined these cases in the following way. Motion concerned a bankrupt who filed a bill of Chancery impugning an order approving a sale of part of the bankrupt's interest in a partnership. Rochfort involved a dispute between the mortgagees of certain property and the assignees in bankruptcy as to priority in respect of the mortgaged assets. Thus each of these two cases dealt with the right to bring proceedings which, if successful, would enhance the property which had formerly belonged to the bankrupt, but was then vested in the trustee. In Metropolitan Bank the bankrupt instituted proceedings claiming damages against a defendant who, the bankrupt claimed, had tortiously maintained the proceedings which led to his bankruptcy. The damages, if awarded, would have fallen into his estate. Boaler was itself a case in which the bankrupt was seeking to impeach judgments in actions brought to enforce proprietary rights which, if they existed, vested in the trustee. In this context their Honours said (at 134):
“If the postulated appeal relates to property that became vested in the trustee on the bankruptcy, or if the postulated appeal relates to a claim by the bankrupt for money or property that would be vested on recovery in the trustee, the right to appeal is vested in the trustee, as the cases cited by Farwell LJ illustrate. But it does not follow that a right to appeal against a money judgment entered in an action against a bankrupt is property of the bankrupt and, on that account, vested in the trustee. [Original Federal Court emphasis]”
29. After discussing the four cases to which we have just referred in the terms we have used, their Honours said the following (at 135-136):
“None of the three cases cited in Boaler v Power related to litigation in which judgment has been sought or entered against a bankrupt. Boaler v Power itself was a case in which the bankrupt was seeking to impeach judgments in actions brought to enforce proprietary rights which, if they existed, were vested in the trustee. Neither Boaler v Power nor the cases cited establish the affirmative proposition that a right to appeal is property. They do establish the negative proposition that a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy (see Rochfort v Battersby(1849) 2 HLC 388at 406, 409 [ 9 ER 1139 at 1146, 1147] and Heath v Tang[1993] 1 WLR 1421; [1993] 4 All ER 694, referred to below). W R Henry & Son v Hodge was wrongly decided. If Boaler v Power were taken as authority for the proposition that a right to appeal in an action brought to enforce a liability of the defendant is property of the defendant, it too would be wrongly decided. But Boaler v Power is explicable as a case relating to proceedings brought by a bankrupt to protect or enforce rights in or to property vested in his trustee. But that is not the present case.
The appellants, believing that they had to escape from the proposition that the right to appeal in the present case was property, contended that that ‘property’ was not vested in their trustee but was analogous to those rights of action which do not pass to a trustee on bankruptcy because they are personal to the bankrupt and do not affect the quantum of the bankrupt estate (Beckham v Drake(1849) 2 HLC 579at 627 [ 9 ER 1213 at 1230]; Rose v Buckett[1901] 2 KB 449 at 454; Davies v English, Scottish & Australian Bank Ltd(1934) 7 ABC 210 at 214; Coffey v Bennett [1961] VR 264 at 266). As the right to appeal in this case was not ‘property’ within the meaning of that term in s 58(1), the appellants' submissions miss the point. [Original Federal Court emphasis]”
30. It is unnecessary to discuss what might be seen to be the tension between what their Honours said at 134 (emphasised in the extract at [28] above) and at 135 (emphasised in the extract at [29] above). The former may be seen as approval of the proposition that, in the case of the rights to appeal there postulated, the right to appeal is vested (as property) in the trustee. The latter may be seen as a drawing back from the proposition that even such postulated rights to appeal are property. Even so, the passages (at 135-136) make clear that Boaler v Power and the other cases referred to establish the negative proposition that a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he or she was divested on bankruptcy.
With respect, I entirely agree. Of course, in the present case there is no monetary judgment against Ms Henderson; here the right of appeal concerns a lease, fitting precisely within the broad definition of property in s 5 of the Bankruptcy Act and consequentially within s 116(1)(b).
Two court decisions involving appeals commenced to protect a residential tenancy agreement after a declaration of bankruptcy
Counsel for the respondent referred the Court to two decisions involving appeals commenced to protect a RTA after a declaration of bankruptcy.
The first is Kostov v Amelie Housing (NCAT Appeal),[39]a recent decision of Fagan J of the NSW Supreme Court which involved circumstances almost identical to the present case. The facts in brief were as follows.
[39] [2019] NSWSC 16.
On 27 July 2017, the plaintiff entered into a RTA with the defendant. On 4 October 2017, the defendant commenced proceedings in the NSW Civil and Administrative Tribunal seeking termination of the tenancy for non-payment of rent. Orders were made requiring the plaintiff to do certain things, which orders were later breached. The proceedings were accordingly reinstated and the Tribunal issued a warrant for the Sheriff to obtain possession of the premises. The plaintiff’s appeal against that decision was dismissed as was her later review application.
By summons filed on 3 October 2018, the plaintiff appealed to the NSW Supreme Court. Meanwhile, a sequestration order had been made against her on 18 July 2018 and accordingly the question arose as to whether she could proceed with her Supreme Court appeal.
The defendant submitted that the definition of “property” in s 5 of the Act was broad enough to “include the interest claimed by the plaintiff under the RTA which was the subject of the litigation in the Tribunal” and that the plaintiff’s capacity to prosecute the proceedings to protect her interest under the RTA fell within the purview of s 116(1)(b) of the Act and therefore vested in the Official Trustee from a date prior to the filing of the summons on 3 October 2018.[40] Fagan J accepted those submissions and stated:[41]
10. If the plaintiff’s summons had been filed before she was made bankrupt on 18 July 2018, s 60(2) of the Bankruptcy Act would very clearly have had the effect that the proceedings were automatically stayed until the Official Trustee made an election with respect to them. In the absence of such an election within 28 days from the sequestration order it would be deemed that the proceedings were abandoned.
11. Commencement of proceedings by a plaintiff after he or she has been made bankrupt is precluded by the Act in a more indirect and less explicit fashion. The combined effect of the definition of “property” (in s 5), the vesting of property in the Official Trustee (under s 58) and the inclusion of capacity to bring proceedings within the concept of divisible property (s 116(1)(b)) is to remove the power of commencing proceedings from the hands of the bankrupt and to place it in the hands of the Trustee.
12. I accept the defendant’s submissions that for these reasons the plaintiff had no standing to commence the proceedings. The Official Trustee has been given the opportunity to adopt the proceedings and to seek to regularise them but he does not wish to do so. In those circumstances the proceedings should be dismissed.
[40] [2011] NSWSC 16, [9] (Fagan J).
[41] [2011] NSWSC 16.
His Honour referred to various authorities which bore out that conclusion:[42]
[42] [2019] NSWSC 16.
13. A number of decisions confirm this understanding of the Bankruptcy Act. In Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45, Kirby P (Samuels and Clarke JA agreeing) said (at 50-51) the scheme and purpose of the Act is that:
... upon the debtor's becoming a bankrupt, to transfer property rights, including the right to sue in respect of claims to property, from the bankrupt to his trustee. This is so, notwithstanding that it involves personal inconvenience to the bankrupt: see Faulkner v Bluett [1981] FCA 3; (1981) 52 FLR 115 at 119. It is so notwithstanding the fact that it deprives the bankrupt of important civil rights which he or she would otherwise normally enjoy.
His Honour further held:
It is of the essence of bankruptcy, as provided for by the Act, that property which belongs to the bankrupt, including choses in action (other than those which are specifically exempted) are vested upon bankruptcy in the bankrupt's trustee.
14. In Rana v Musolino [2009] FCA 476 McKerracher J cited the above passages from Daemar v Industrial Commission of New South Wales and held:
A bankrupt does not have standing to commence proceedings unless the action falls into an exception in s 116(2)(g) of the Bankruptcy Act.
Fagan J ordered that the summons should be dismissed. I consider that Counsel for the respondent is correct in his submission that this case is on all fours with the present case.
Counsel very properly also drew the Court’s attention to the second of the two decisions, the Queensland Full Court decision in King v King,[43] which might at first blush appear helpful to Ms Henderson. There, the respondents were the registered proprietors of a unit at which their father, the applicant, and his wife had resided pursuant to a RTA dated 3 October 2007 as a family arrangement. The applicant and his wife divorced and she vacated the premises, but he remained. The respondents wished for the applicant to leave and obtained an order from the Residential Tenancy Tribunal (which has become ‘QCAT’) for vacant possession. This order was stayed pending determination of proceedings commenced by the applicant in the Queensland District Court on 18 March 2011, being subsequent to the applicant having been declared a bankrupt on 21 January 2009.
[43] [2012] 2 Qd R 448.
The District Court Judge found that the applicant had no standing to bring an appeal on the basis of the relevant provisions of the Bankruptcy Act.
On the hearing of the appeal to the Full Court, it was considered to be of importance that the applicant had not been represented below and that the pleadings were in a state of disarray. Chesterman JA (with whom White JA and Margaret Wilson AJA concurred) stated:
17. The statement of claim is seriously defective. It mostly pleads evidence rather than material fact, and much of what is pleaded appears irrelevant. Facts which are pleaded are confusing or ambiguous. The respondents did not attack the pleading on the basis of these or other deficiencies. Such an attack would, no doubt, have led to an order that the statement of claim be reformulated to produce greater clarity. The Court must therefore approach the pleading on the basis that such facts as might fairly be said to appear in it must be accepted as established, and in the most favourable light for the applicant.[44]
…
31. What then is the nature of the right to reside in the unit pleaded by the applicant? The statement of claim is defective, as I have said, and fails to identify with any particularity the nature and incidence of the right asserted but it is correct, as Mr Lilley SC who appeared for the applicant submitted, that the pleading is capable of claiming a bare licence to occupy the unit for the duration of the applicant’s life or for as long as he wishes to remain in occupation. The case should therefore be dealt with on the basis that that is the, or at least a claim, made by the applicant.[45] [Emphasis added]
[44] [2012] 2 Qd R 448, 451.
[45] [2012] 2 Qd R, 448, 453.
Thus the Court proceeded to resolve the appeal by assuming for the immediate purposes of the argument that the factual situation was that the right asserted by the applicant was not in fact a property right but rather it was limited to “a bare licence to occupy the unit for the duration of the applicant’s life or for as long as he wishes to remain in occupation”.[46]
[46] [2012] 2 Qd R 448, 453 [31].
On that assumption (that may or may not have coincided with the truth of the matter) it is not surprising that the Court proceeded to find that the applicant had “a distinctly arguable claim that his right to occupy the unit was a personal right or privilege, not a right of property”[47] and on that basis concluded:[48]
[41] The judge was wrong to conclude that the applicant’s bankruptcy had unquestionably deprived him of the right to enforce his right of occupation against the grantors of the right. The action should not have been summarily struck out. To prevent injustice the applicant should have leave to appeal and the appeal should be allowed with the result that the orders setting aside and striking out the claim must themselves be set aside.
[47] [2012] 2 Qd R 448, 455 [39].
[48] [2012] 2 Qd R 448, 455.
The Court then proceeded to urge that the re-trial to determine what the facts actually were should be heard as soon as possible.
The present case is plainly distinguishable from King v King. The basis of that decision was, in effect, an assumption that the right being asserted was not a right of property within the purview of the Bankruptcy Act. By contrast, in the present case it is asserted by both sides that the right being asserted is in fact a lease, which is a right of property within the purview of the Bankruptcy Act.
Does Ms Henderson come within s 116(2)(g) of the Bankruptcy Act?
As noted above, s 116(2)(g) provides that, notwithstanding a sequestration order, the divisible property of the bankrupt does not include:
(g) any right of the bankrupt to recover damages or compensation:
(i) for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or
(ii) in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt;
and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person.
In Kostov v Amelie Housing (referred to above) in circumstances almost identical to the present case, Fagan J said of this provision:[49]
16. That exception is clearly not engaged by these proceedings. As recognised in Moss v Eaglestone [2011] NSWCA 404, a derivative proceeding based on some underlying cause of action or a lost right to pursue a cause of action takes its character from the underlying matter. In my opinion this applies with equal force to an appeal. On any view, neither the proceedings in the Tribunal nor these proceedings by way of appeal from the Tribunal’s decision fall within the exception in s 116(2)(g).
[49] [2019] NSWSC 16.
It is unnecessary to say more, other than to again mention the decision of Finkelstein J in Maher v Commonwealth Bank of Australia confirming that a lease of a household residence is not exempted (referred to above at paragraph [68]).[50]
Does s 58(3) of the Bankruptcy Act prevent a dismissal of the application for permission to appeal for lack of standing?
[50] [2004] FCA 248.
As noted above at paragraph [26], on 1 June 2018, HCSA made an application for vacant possession by reason of failure to pay rent. That application was heard on 6 June 2018 by Executive Senior Member Johns who at that time found that rent had been paid only to 24 September 2017 and that rent was in arrears in the amount of $6087.21 as at the date of the hearing. Executive Senior Member Johns at that time ordered that Ms Henderson move out of the premises by 31 July 2018 and that, upon such date, all outstanding rent would become immediately due and payable. Shortly after the making of that order, Ms Henderson was declared to be a bankrupt on 13 June 2018.
Section 58(3) and (4) of the Act provide as follows:
(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
(4)After a debtor has become a bankrupt, distress for rent shall not be levied or proceeded with against the property of the bankrupt, whether or not the bankrupt is a tenant of the landlord by whom the distress is sought to be levied.
In Ezekiel v Orakpo,[51] the plaintiff, on 23 January 1975, commenced an action claiming possession of premises let to the defendant on the ground that the lease was forfeited for non-payment of rent. The defendant pleaded that a receiving order in bankruptcy had been made against him on 6 January 1975, and therefore the proceedings issued by the plaintiff were invalid and should be stayed under the provisions of s 7 or s 9 of the Bankruptcy Act 1914 (UK) which provided as follows:
Section 7(1): On the making of a receiving order an official receiver shall be constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings, unless with the leave of the court and on such terms as the court may impose.
Section 9(1): The court may, at any time after the presentation of a bankruptcy petition, stay an action, execution, or other legal process against the property or person of the debtor, and any court in which proceedings are pending against a debtor may, on proof that a bankruptcy petition has been presented by or against the debtor, either stay the proceedings or allow them to continue on such terms as it may think just.
[51] [1977] QB 260.
At trial, the judge held that the effect of s 7 (which equates to s 58(3) of the Bankruptcy Act) was to deprive him of jurisdiction to deal with money claims put forward by the plaintiff but that it did not affect the claim for forfeiture; his Honour gave judgment in favour of the plaintiff for possession. The defendant’s appeal to the Court of Appeal was dismissed. The Court (Cairns, Lawton and Shaw LJJ) stated:[52]
It is clear that the section intends to inhibit any form of remedy or action which is directly designed to enforce payment of the debt which is owed. What has first to be considered is whether an action in which an order A for possession is sought where a lease has been forfeited for default in payment of rent, comes within the terms of section 7 (1) at all. If it does not, it is not necessary to get leave of the court under section 7 before commencing such an action. In our view, an action for possession following the forfeiture of a lease is not within the terms of the section, and this is so whatever the ground of forfeiture to which the lessor has recourse under the covenants in the lease. The nature of the action is the same in every case, namely, that the right and interest of the lessee to possession has been terminated before its natural expiry in pursuance of a contractual provision in his lease so that he becomes a trespasser if he continues in occupation of the premises. The obverse of this situation is that the lessor becomes entitled to possession on forfeiture of the lessee's interest. The action for re-entry is in the nature of an action in trespass. It is not a remedy against the property of the debtor in respect of a debt, notwithstanding that the occasion of the forfeiture is default in payment of the rent reserved by the lease. The consequence of forfeiture (subject to the power of the court to grant relief) is to determine the lessee's interest. It is not a remedy enforcing payment of the rent due and it is not within the ambit of section 7 (1).
[52] [1977] QB 260, 267-268.
Accordingly, on 27 May 1976, the appeal was dismissed with costs. Further, the Court of Appeal refused applications for a stay of possession and for leave to appeal. Subsequently, on 7 July 1976, the Appeal Committee of the House of Lords (Lord Wilberforce, Lord Kilbrandon and Lord Salmon) dismissed a petition for leave to appeal.
In Murdock & Anor v Bettcher, the Full Court of this Court followed Ezekiel v Orakpo and stated:[53]
16. … The respondent did not obtain leave to commence these proceedings. Legal proceedings to recover possession of premises are not legal proceedings in respect of a provable debt: Ezekiel v Orakpo [1977] QB 260. In these proceedings, the respondent seeks no remedy other than to recover possession of the premises. The respondent is exercising her right to recover possession of her premises on the ground that the tenancy has been forfeited for non-payment of rent. The consequence of forfeiture is to determine the lessee’s interest. It is not a remedy seeking to recover in respect of a provable debt. The proceedings are, therefore, competent notwithstanding the bankruptcy of Murdock.
[53] (2008) 254 LSJS 174, 176-177 (Debelle J).
I conclude that s 58(3) of the Bankruptcy Act does not have an effect of requiring this Court to abstain from dismissing the present application for permission to appeal for lack of standing.
Conclusion
I conclude that Ms Henderson’s RTA constitutes “property” for the purposes of the Act and vested in the Trustee in Bankruptcy upon her becoming a bankrupt. It is the Trustee who has standing in the within application for permission to appeal, not Ms Henderson. The Trustee having indicated to the Court by letter dated 28 March 2019 his intention that he will not be continuing the proceedings, Ms Henderson is unable to pursue an appeal or an application for permission to appeal.
Accordingly, the application for permission to appeal is dismissed.
I will hear the parties as to consequential orders.
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