Maloney v Commissioner for Social Housing in the Act (Appeal) - [2013] ACAT 74

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

MALONEY v COMMISSIONER FOR SOCIAL HOUSING IN THE ACT (Appeal) [2013] ACAT 74

AA 13/31
Catchwords: APPEAL – RESIDENTIAL TENANCIES – whether breach of conditional termination and possession order (CTPO) terminates a tenancy – whether nature of tenancy changes if tenant stays in premises after termination of tenancy – whether implied tenancy arose after termination of tenancy: stay of tenant in premises, landlord continuing to accept rent, and landlord helping tenant with rent rebate applications – continuing obligations under terminated tenancy agreement
Legislation:Residential Tenancies Act 1997, ss 42A, 42B and 49
Cases:ACT Housing v. Mildwater [2006] ACTRRT 3
Commissioner for Social Housing in the ACT & Lowe
[2013] ACAT 49
Fisher and Commissioner for Social Housing in the ACT [2012] ACAT 32

Appeal Tribunal: Mr C.G Chenoweth – Acting Presidential Member

Date of Orders: 8 November 2013
Date of Reasons for Decision: 8 November 2013

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

AA 13/31

BETWEEN:
MELANIE MALONEY
Appellant

AND:

COMMISSIONER FOR SOCIAL HOUSING IN THE ACT

Respondent

APPEAL TRIBUNAL: Mr C.G Chenoweth – Acting Presidential Member

DATE: 8 November 2013

ORDER

The Appeal is dismissed.
The stay order in relation to the warrant for eviction is discharged.

………………………………..

Mr C.G Chenoweth
Acting Presidential Member

REASONS FOR DECISION

This is an appeal against a termination and possession order made in the Tribunal on 18 July 2013. A stay of that order was directed pending the hearing of the decision on the appeal.
The appellant leased of a property from the respondent in Melba, ACT. The lease was originally entered into on 8 September 2008. As a result of the failure by the appellant to pay the rent owing under the lease agreement, proceedings were taken against her by the respondent in the Tribunal. On 12 November 2009, the Tribunal made a conditional termination and possession order (“CTPO”).
The appellant fell further into arrears, and on 24 November 2011, the respondent instituted further proceedings in the Tribunal for termination and possession.
Following some interim orders, a further CTPO was made by the Tribunal on

17 January 2012. This order was expressed to expire on 17 January 2014.
On 5 July 2013, the respondent instituted proceedings in the Tribunal for termination of the tenancy and payment of rental arrears. The particulars annexed to the application indicated that the appellant had breached the CTPO of 17 January 2012, and that the breach occurred on 10 February 2012. (This should have referred to 10 February 2013.) In accordance with the terms of the CTPO, this breach had the effect of terminating the right to occupancy with effect from the following day. On 18 July 2013, the Tribunal considered an application for a warrant for eviction of the appellant, under section 42A of the Retail Tenancies Act 1997 of the ACT (“the RT Act.”)
The application was granted by the Tribunal on 18 July 2013, and the registrar was directed to issue a warrant for the eviction of the appellant pursuant to section 42B (3) of the RT Act.
It should also be noted that in the Tribunal’s order of 18 July 2013, it provided:
"The residential tenancy agreement is terminated at 4 PM on Thursday, 18 July 2013."
While this order reflects the practice of the tribunal when hearing an application for termination and warrant of possession, it may be that the order is superfluous because the effect of the breach of the conditional termination and possession order means that the right to occupy as a residential tenant with all the protection that the agreement gives, has already been terminated. However, nothing turns on that in the disposition of this appeal.
On 9 August 2013, the appellant appealed against the order referred to in the preceding paragraph, on two grounds. The first was that the appellant had fallen into arrears due to non-payment of monies from Centrelink, and had been attempting to get the payments made to enable her to pay the rent. The second ground of appeal was that the Tribunal was unreasonable in its decision not to grant a further CTPO.
Prior to the hearing of the appeal, the appellant engaged the services of Welfare Rights and Legal Centre (“WRLC”). The grounds of appeal were subsequently amended by WRLC filing a new notice of appeal on 23 August 2013, and these were the grounds upon which the appeal was heard.
The first ground of appeal was that the refusal by the Tribunal to grant a further CTPO at the hearing of 18 July 2013 was unreasonable. This ground was abandoned at the hearing, and need not be referred to again.
The second ground of appeal was that the order of 18 July 2013 was wrong in law. The appellant maintained that as the CTPO of 17 January 2012 had been breached on the 10th February 2013, the tenancy terminated on the following day. An implied tenancy had arisen since that date as the respondent had treated the appellant as a tenant, including accepting rent from her.
Directions were made for the filing of submissions. The appellant filed submissions on the 9th September 2013, the respondent on the 16th September 2013, the appellant filed further submissions on 17 September 2013, and the respondent filed further submissions after the hearing, on the 27 September 2013.
The matter was heard on 19 September 2013 and adjourned for a decision. I ordered that the warrant be stayed until further order.

Appellant’s arguments

The appellant argued that an implied tenancy had arisen in favour of the appellant from the date of the termination of the tenancy in accordance with the CTPO. As the tenancy agreement had been terminated, the conduct between the parties should be examined because it demonstrated that by allowing the appellant to stay and accepting money from her, there had been an implied tenancy agreement established by conduct from that date.
The respondent had accepted rent from the appellant during the period, and other than the proceedings referred to in paragraph 5 had in all respects treated her as a tenant. The implied tenancy in question could not have been the original tenancy constituted by the written agreement, because that tenancy was terminated under the terms of the CTPO. The CTPO was a self executing order, and once it came into effect any future conduct between the parties was evidence of the creation of a new agreement.
The appellant also argued that the previous decision of the tribunal in the matter of Commissioner for Social Housing in the ACT & Lowe [2013] ACAT 49 (“Lowe”) had been incorrectly decided when it had determined that a breach by the tenant of his or her obligations under a CTPO does not, of itself, terminate a residential tenancy agreement for all purposes.
The decision in Lowe was based upon the decision of the previous Residential Tenancies Tribunal in the case of ACT Housing v. Mildwater [2006] ACTRRT 3 (“Mildwater”). The tribunal in that case considered whether under the provisions then in force (similar to section 42A of the RT Act) a breach of a CTPO automatically terminated a tenancy for all purposes. In Mildwater, the tribunal found that the breach did not have this effect. In the present case, the appellant argued that the propositions in Mildwater were incorrect, and should not have been followed in Lowe, or in this appeal.
The appellant also argued that the CTPO would separately constitute termination of the tenancy for purposes of section 36 (d) of the RT Act.
In the further submissions of the appellant dated 17 September 2013, the appellant repeated the arguments that the acceptance of rent by the respondent following the date of the termination of the tenancy, the request to submit regular rebate applications and the approval of the applications thereby affording the appellant a reduced rent, constituted evidence of an implied tenancy arising after the termination of the original agreement.

Respondent’s submissions

The respondent submitted firstly, that a breach by the tenant of his or her obligation under a CTPO does not of itself terminate a residential tenancy agreement "for all purposes."
In circumstances where the tenant has not vacated the premises after a breach of a CTPO, but continues to reside at the premises, the tenancy agreement does not automatically come to an end.
If the Tribunal was to find against the respondent on those points, the respondent submitted that the nature of the relationship between at a tenant and a lessor after a breach of a CTPO is not an implied tenancy within the meaning of the RT Act.
As the contract between the lessor and the lessee contains a number of obligations imposed upon both, those obligations must continue until discharged. Although the principal benefit to the tenant arising under the agreement, being the right of quiet enjoyment of the property, is terminated by the decision of the Tribunal to grant a warrant under section 42B until that time arises, the tenant has the right to continue in occupation, albeit subject to the right of the lessor to institute proceedings for a warrant for eviction.
Although the right to apply for a warrant for eviction will mean that if it is granted the tenant loses the right to occupy, the agreement continues in relation to such matters as the obligation to pay money and not to disturb the neighbours to the tenancy. The existence of these continuing obligations under the original tenancy agreement is inconsistent with the creation of a new and distinct agreement between the same parties relating to the same matter.
To sustain any argument that there is a separate agreement arising after the breach of a CTPO which would constitute an implied agreement between the parties, there must be some indication that the parties have intended this to happen as a matter of contract law. Not only was there no such evidence in this case, but the statutory provisions regulating the respondent prevent the respondent from entering into an agreement to provide housing assistance to a person in circumstances where that person owes the respondent money.

The Statutory Provisions

Section 42A of the RT Act provides the procedure for the lessor to apply to the tribunal for a warrant for the eviction of a person, when a CTPO has been made and there is a claim that it has been breached. Subsection (1) sets out the conditions which must be satisfied. However, this procedure does not allow the issue of a warrant prior to the hearing of an application under section 42B. On considering the application, the tribunal may allow the application, dismiss it or (in dismissing it) confirm the existing CTPO, make another CTPO or set aside the original CTPO in which case the terms of the original lease regulate the obligations of the parties.
If the tribunal decides to make another CTPO, then the matters that it needs to take into account are set out in section 49 of the RT Act.
The sections referred to above are annexed as annexures to the reasons for decision.

Consideration

The issue of whether a CTPO is a self executing order in the event of breach has been considered in a number of cases before the Tribunal. In paragraph 34 of Lowe, Presidential Member Symons noted as follows: "The tribunal is satisfied that a breach by the tenant of his or her obligations under a CTPO does not, of itself, terminate a residential tenancy agreement for all purposes."
This followed the comments in Mildwater, where the tribunal noted in paragraph 42:
"The tribunal can find no support in ACT Housing v K. A for the tenant’s argument that Termination and Possession Orders on Condition act as self executing orders in the sense that the entire relationship both proprietary and contractual between the landlord and the tenant comes to an end automatically upon default by the tenant."
In paragraph 43 of Mildwater the tribunal noted:
"It follows that where there is a breach and the lessor takes no action the tenancy does not end, and the rights and obligations created by the termination and possession order on condition remain in force."
These authorities indicate that a breach of the CTPO places the tenant in a position where their most valuable right, the right to quiet enjoyment of the property, is likely to be terminated by action by the lessor seeking a warrant for eviction. It does not mean that the whole of the agreement comes to an end, in a form similar to a situation where a commercial contract may be terminated by mutual agreement, with mutual releases against any surviving obligation. Even if the right to occupy is terminated by the issue of a warrant for eviction, the existing agreement continues to be binding between the parties to enable them to deal with such matters as rectification of damage, discharge of obligations to pay overdue rent and recovery of the tenant’s private property, and those matters will need to be resolved between the parties.
If this approach to the effect of a CTPO and a breach of it is correct, then it is inconsistent to argue that a separate agreement arises automatically by implication on the breach of the CTPO, should the tenant be left in possession of the property. It is submitted by the representative for the appellant that this was the consequence, and that administrative difficulties such as the number of CTPO’s that the respondent had to administer and the difficulties that the respondent may have in taking immediate action should not be given weight in determining the effect of a breach of a CTPO. It is unclear on the appellant’s argument how long a tenant must be left in the property, and how many activities provided under the original agreement for the landlord to perform (such as receipt of rent and rectification of damage) need to be undertaken to enable the implied agreement to be established. This uncertainty must bear against the outcome that the appellant seeks.
The Tribunal points out that one consequence of this argument is that if there is a breach of a CTPO, then it would be very much in the interests of the lessor (in order to avoid any implication that future conduct implies a new and separate tenancy arising, although on undefined terms) to immediately seek a warrant for eviction and bring the matter back before the Tribunal. This would have the effect of preventing the lessor from allowing the tenant to remain in occupation for inadvertent or minor breaches, in circumstances where if the tenant rectified the breach and continued on in compliance with the order and the lease, the lessor may be inclined to overlook the breach.
There cannot be two separate agreements relating to occupation of the single property between the same parties at the same time. The appellant’s argument would lead to great uncertainty as to what the terms of ongoing occupancy were, and the length of its term. It is not enough to argue that the terms would be either the standard terms in the RT Act, or the same terms as the original agreement, because the parties must be treated as starting from scratch. Payment of the amounts owing may be an indication of the rent under any implied agreement, but the term and any particular conditions such as the number or identity of the people who can be in the property, would be quite unclear.
While an occupancy agreement can arise by implication, there must be some indication of a consent or meeting of minds to achieve this purpose. Otherwise, persons who squat unlawfully on the property of others and who are not removed by some sort of legal action (possibly because the lessor does not have the resources to mount such an action) could argue that there is an implied agreement to continue in occupancy.
A breach of the CTPO and the subsequent right in the lessor to apply for a warrant for eviction under section 42A of the RT Act terminates the most valuable right in the tenant – that is, the right to quiet enjoyment of the property. However, until action is taken by the Tribunal to issue a warrant under

section 42B, the tenant retains the right to reside in the premises, certainly against all the world other than the lessor. The lessor’s remedies are limited to applying for a warrant for eviction.
Prior to making any decision under section 42B, the Tribunal must consider whether in all the circumstances, it is appropriate to make a further CTPO. In doing so, the Tribunal is directed to consider the terms of section 49 of the RT Act. However, this does not require the lessor to go through the whole procedure set out in section 49 after the date of the alleged breach of the CTPO before the Tribunal can exercise its powers. These procedures have been undertaken to the satisfaction of the Tribunal prior to the granting of the CTPO in the first place. As the General President Crebbin pointed out in the case of Fisher and Commissioner for Social Housing in the ACT [2012] ACAT 32:
34. The Tribunal accepts that section 42B(1) does not require that a
lessor who has already obtained a conditional order, start the process for terminating a tenancy agreement and recovering vacant possession of his or her premises again, by first establishing that the tribunal’s power to make such an order is engaged because the requirements of section 49(1) are met. There would be no point in providing that a lessor can make an application for a warrant for eviction under section 42A if that were the case. The source of the Tribunal’s power to make an order in response to an application made under section 42A is contained in section 42B. The power is enlivened if the criteria set out in section 42A(1) are met. The Tribunal does not look to section 49(1) to find its power and does not need to repeat the process of satisfying itself of the matters set out in section 49(1) before it can make the orders provided for in section 42B.
I respectfully concur with the views set out above.
Once the lessor recovers possession under a warrant for eviction, then it is free to deal with the property in whatever way it sees fit. The remaining obligations under the original lease are in the nature of contract and do not involve any proprietary interest in the property the subject of the lease.
The appellant argued that she had an implied right to continue in occupancy following the breach of the CTPO, and that this right was derived from the actions of the lessor in accepting rent payments from her, not under the original agreement but under some separate agreement arising by implication. The appellant’s argument cannot be sustained, and, accordingly, fails.
It follows that the appeal must be dismissed. The stay order in relation to the warrant for eviction is discharged.
………………………………..
Mr C.G Chenoweth
Acting Presidential Member

Statutory Provisions

Residential Tenancies Act 1997
42AFailure to comply with conditional order
(1)A lessor may apply to the registrar for a warrant for the eviction of a person if—
(a)the ACAT has issued a conditional termination and possession order; and
(b)the order has not expired; and
(c)the lessor satisfies the registrar that the condition has been satisfied; and
(d)the person to whom the order was directed continues to live at the premises.
(2)On receiving an application for a warrant, the registrar must—
(a)list the application for hearing before the ACAT not earlier than 1 week after the day the notice under paragraph (b) is given to the person; and
(b)give notice to the person to whom the conditional termination and possession order is directed stating—
(i)that an application for a warrant for eviction has been made; and
(ii)the time when, and the place where, the application is to be heard; and
(iii)that the person should seek legal advice about the application if the person wants to continue to live at the premises.

42BHearing of application
(1)An application under section 42A must be decided as if it were an application under section 49 for a termination and possession order.

(2)After considering the application and hearing the parties who attend the hearing, the ACAT must—
(a)allow the application; or
(b)dismiss the application.
(3)If the ACAT allows the application, the ACAT must direct the registrar to issue a warrant for the eviction of the person.
(4)If the ACAT dismisses the application, the ACAT may—
(a)confirm the conditional termination and possession order; or
(b)make another conditional termination and possession order; or
(c)set aside the conditional termination and possession order.

Failure to pay rent
(1)On application by a lessor, the ACAT may make a termination and possession order if—
(a)the tenant has failed to pay rent that has become payable under the residential tenancy agreement; and
(b)the lessor has served a termination notice on the tenant on the basis of the failure to pay rent; and
(c)the tenant has not vacated the premises in accordance with the notice.
(2)If a lessor has made an application under subsection (1), the ACAT may refuse to make a termination and possession order if—
(a)the tenant has paid any rent that has become payable and is, in the ACAT’s opinion, reasonably likely to pay future rent as it becomes payable; and
(b)the ACAT considers it just and appropriate to do so.
(3)Subsection (4) applies if—
(a)the tenant is, in the ACAT’s opinion, reasonably likely to pay the rent that has become payable as well as pay future rent as it becomes payable; and
(b)the tenant agrees to pay the rent that has become payable, and undertakes to pay future rent as it becomes payable, as required by the ACAT.
(4)Instead of making a termination and possession order under subsection (1), the ACAT may order (conditional termination and possession order) that if the tenant fails to pay the rent that has become payable, or future rent as it becomes payable, as required by the ACAT—
(a)the tenancy terminates at a stated hour on the day after the day when any rent becomes payable and is not paid; and
(b)the lessor becomes entitled to possession of the premises and all rent payable is payable immediately.
(5)If—
(a)the ACAT makes an order under subsection (1); and
(b)the ACAT is satisfied that—
(i)were the order not suspended for a specified period of no more than 3 weeks the tenant would suffer significant hardship; and
(ii)that hardship would be greater than the hardship that would be suffered by the lessor if the order were suspended for the specified period;
the ACAT may suspend the operation of the termination and possession order for a specified period of no more than 3 weeks.