South Australian Housing Trust v Pawelzik; South Australian Housing Trust v Popczynski

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
SOUTH AUSTRALIAN HOUSING TRUST v PAWELZIK; SOUTH AUSTRALIAN HOUSING TRUST v POPCZYNSKI
[2015] SASCFC 194
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Blue and The Honourable Justice Nicholson)
24 December 2015
LANDLORD AND TENANT - RESIDENTIAL TENANCIES LEGISLATION - GENERALLY
LANDLORD AND TENANT - RESIDENTIAL TENANCIES LEGISLATION - OBLIGATIONS, PROHIBITED MATTERS AND PROTECTION FOR LESSEES - RATES AND CHARGES
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION
Appeal against orders of the District Court allowing appeals against determinations by the Residential Tenancies Tribunal.
The appellant entered into tenancy agreements in the 1980s with each respondent for the rental of a unit forming part of a 70 unit property. Water was supplied to the property via water meters connected to multiple units. From July 2008, the Trust rendered invoices to each tenant for 1/70th of 70% of SA Water’s consumption charge for water consumed at the property. The respondents contended that they were not obliged to pay the invoices.
Clause 6(f) of the tenancy agreements required the tenant to pay “the amount from time to time assessed for additional water in respect of the property”.
With effect from July 2008 to August 2010, section 30 of the South Australian Housing Trust Act 1932 provided that a provision in a tenancy agreement that provided for the tenant to pay an amount for additional water would be taken to provide, in the absence of a fresh agreement, that the Trust would bear water supply charges up to a limit fixed under regulation and any excess was to be borne by the tenant. Regulation 4 of Regulations made under the 1932 Act provided that the limit was fixed at the supply charge charged by SA Water.
With effect from September 2010, regulation 9 of the Regulations made under the South Australian Housing Trust Act 1995 has provided that the Trust is responsible for payment of the supply charge and the tenant is responsible, if no separate meter is fitted to the premises, for the proportion as determined by the Trust of all water rates (other than the supply charge) payable in respect of the premises.
The Residential Tenancies Tribunal held that since July 2008 the respondents were liable for water usage as assessed by the Trust pursuant to the tenancy agreements as modified by the legislation.
A Judge of the District Court allowed the respondents’ appeals against that decision. The Judge held that clause 6(f) of the tenancy agreements governed the position before September 2010 and on its proper construction did not permit the Trust to charge the entire water consumption charge nor to charge for water not supplied via an exclusive meter. The Judge held that after September 2010 regulation 9 did not permit the Trust to charge for water not supplied via an exclusive meter and alternatively that the Trust had charged the respondents for water not supplied via a meter shared with their premises.
The Trust appeals against the decision of the Judge.
In respect of the period from July 2008 to August 2010:
Held
1. Regulation 4 was validly made under section 30 of the 1932 Act at [71] per Blue J, Kourakis CJ and Nicholson J agreeing.
2.      Regulation 4 entitled the Trust to charge the entire SA Water consumption charge on the basis that it bore the supply charge at [72] per Blue J, Kourakis CJ and Nicholson J agreeing.
3. Section 30 did not cover the field of the entitlement of the Trust to charge for water but only defined what was to comprise “additional water” for the purposes of clause 6(f) at [14] per Kourakis CJ, at [85] per Blue J, contra at [147] per Nicholson J.
4.      Clause 6(f) permitted the Trust to assess the amount to be paid by a tenant for the water supply charge for water supplied via a shared meter to multiple premises at [97] per Blue J, Kourakis CJ agreeing.
5.      Clause 6(f) did not permit the Trust to charge a tenant for water not supplied via a meter not shared with the tenant’s premises at [101] per Blue J, Kourakis CJ agreeing.
6.      On the evidence two 50mm meters were shared by the respondents’ premises with 46 other units at [107] per Blue J, Kourakis CJ and Nicholson J agreeing.
7.      Appeal allowed Kourakis CJ and Blue J, Nicholson J dissenting. Declaration that the Trust is entitled to ascertain in good faith and to charge a fair and equitable proportion of the consumption charge for water supplied via the shared meters. Direction given to the Trust to calculate the amount to be charged accordingly at [124] per Blue J, Kourakis CJ agreeing.
In respect of the period from September 2010:
Held by Blue J, Kourakis CJ and Nicholson J agreeing:
1.      Regulation 9 entitled the Trust to charge a tenant for a proportion determined by the Trust of all SA Water consumption charges for water supplied via meters shared with the tenant’s premises (at [113]).
2.      Regulation 9 did not permit the Trust to charge a tenant for water supplied via a meter not shared with the tenant’s premises (at [117]).
3.      On the evidence two 50mm meters were shared by the respondents’ premises with 46 other units at [107], Kourakis CJ agreeing.
4.      Appeal allowed. Declaration that the Trust is entitled to ascertain in accordance with the principles governing the exercise of the statutory power conferred by regulation 9 to charge a proportion of the consumption charge for water supplied via the shared meters. Direction given to the Trust to calculate the amount to be charged accordingly (at [125]-[126]).
South Australian Housing Trust Act 1936 (SA) s 30; South Australian Housting Trust (Water Rates) Variation Regulations 2008 (SA); Statutes Amendments (Waterworks and Sewerage) Act 1991 (SA) s 3(a), s (3e); Waterworks Act 1932 (SA) s 65a, s 65b, s 65d, s 66; Waterworks (Rating) Amendment Act 1991 (SA) , referred to.
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640; Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, considered.

SOUTH AUSTRALIAN HOUSING TRUST v PAWELZIK; SOUTH AUSTRALIAN HOUSING TRUST v POPCZYNSKI
[2015] SASCFC 194
Full Court: Kourakis CJ, Blue and Nicholson JJ

KOURAKIS CJ: I gratefully adopt the summary of the evidence appearing in the judgment of Blue J. I agree with his Honour’s conclusions on the issues numbered 1, 4 and 5 in [25] of his judgment for the reasons he has given.
On issues 2 and 3, I would hold that the South Australian Housing Trust (the SAHT) was not entitled to recover any amount pursuant to the terms of Clause 6(f) of each of the Respondents’ Conditions of Tenancy (Clause 6(f)) after the change to the water charging regime which removed the base allocation of water which was a concomitant of the supply charge. However, I would hold that s 30 of the South Australian Housing Trust Act 1936 (SA) (the 1936 Act) amended the operation of Clause 6(f) so that the SAHT could recover the charges levied against it for the water consumption of its tenants. I would therefore hold that the SAHT is entitled to an amount on account of the rates and charges charged by SA Water for water supply to the premises of each of the Respondents for the period 1 July 2008 to 31 August 2010 (the earlier period). I agree with Blue J that the proportion of the amount charged by SA Water other than the supply charge is to be determined by SA Water in good faith pursuant to the contractual power conferred by Clause 6(f) of the each Respondents’ Conditions of Tenancy. My reasons follow.
The evident purpose of s 30 of the 1936 Act enacted on 30 June 1995 was to address the change in the charging regime for water supply effected by the 1 July 1995 amendment (the Rating Amendment)[1] to the Waterworks Act 1932 (SA) (the Waterworks Act). From 1 July 1995, property owners were liable to pay SA Water a supply charge and a consumption charge with the former charge not including any entitlement to a volume of water. The Respondents contend that the new regime rendered meaningless the concepts of excess or additional water where those terms were used in the SAHT’s tenancy agreements. They contend that Clause 6(f) could have no application to the new water charging regime, with the result that the SAHT is not entitled to recover any amount pursuant to it.
[1] Waterworks (Rating) Amendment Act 1995 (SA) (the Rating Amendment) substituting new s 55A to s 65C for s 65a to s 65d and repealing s 66.
The SAHT contends that “additional water” should be construed, after the change in the statutory regime for charging for water effected by the Rating Amendment, to mean any water the cost of which is not included in the supply charge. That submission must be rejected for four related reasons.
The first is purely textual. On the removal of any base allocation, the water consumed by a tenant can not meaningfully be described as “additional” water.
The second is contextual. At the time the tenancies were entered into the terms excess or additional water were well known to refer to elements of the particular charging regime then in force under the Waterworks Act. Additional or excess water was water consumed in addition to the quantum of water to which there was an entitlement by virtue of the levying of a supply charge under the Waterworks Act. The terms “additional” and “excess” water, objectively construed, were references to the charges so understood.
The third arises from the need for contractual certainty. The SAHT and the Respondents agreed on Clause 6(f) at a time when the supply charge included a base allocation of water and neither contemplated the statutory changes effected by the Rating Amendment. Viewed subjectively, the Respondents would contend that their agreement to pay additional water was conditional on them receiving a base allocation of water from which they could meet their needs for no charge. The SAHT would contend that its intention was to meet only the supply charge which coincidentally happened to include a base allocation but that otherwise the cost of water used was to be borne by tenants as it was for the other consumables mentioned in Clause 6(f). The reasonable bystander has no objective criterion by which to choose between the inconsistent subjective positions of the parties. The language of Clause 6(f) should not be strained, or an implication made, to favour one party over the other. Applying the text of Clause 6(f) to the changed circumstances, it simply has no subject, “additional water”, on which to operate and therefore imposes no liability on the tenant.
Finally, the Conditions of Tenancy document is a pro forma document drawn by the SAHT. It is therefore preferable to allow any deficiency in the terms of Clause 6(f) to operate against it than its tenants.
The context, terms and timing of the enactment of s 30 of the 1936 Act shows that its purpose was to address this very deficiency in clauses like Clause 6(f), and the uncertain meaning of references to “additional” or “excess” water in those clauses, following the enactment of the Rating Amendment. Caution should be exercised in going further. In particular, even though it is, in one sense, likely that Executive would intend legislation introduced by it and which affects the financial interests of its agencies to favour its interests, that intention should not too readily be found to be Parliament’s purpose. Indeed, there is reason to construe legislation strictly against the interests of the Executive when, as here, the legislation would impose a contractual burden on tenants which they would not otherwise bear. The tenancies are interests in property and legislation should not too readily be construed in a way which detracts from that property.
On the other hand, it is clear that s 30 of the 1936 Act and Regulation 4 do exactly that for tenants of premises supplied through a single meter. The position is not as clear with respect to shared meters. However, once it is accepted that the purpose and effect of s 30 of the 1936 Act was to address the deficiency in clauses like Clause 6(f) so that the SAHT could charge tenants supplied by a single meter for the water consumed by them, there is no reason to think that Parliament did not have the same intention for tenants supplied through a shared meter.
Having identified the purpose of s 30 of the 1936 Act, the first question to be addressed in its construction and application is whether it applies to the Respondents’ tenancies. In my view, Clause 6(f) is a provision to which that section applies because it “provides for the tenant to pay an amount for or towards excess or additional water supplied to the premises”. Clause 6(f) is clearly such a clause in cases in which the premises are serviced by a single dedicated meter. It is also such a clause in tenancies of premises served by a shared meter. That is because “additional water” means water additional to the water the cost of which is included in the supply charge. The water additional to the base allocation supplied through a common meter, or at least some of it, is supplied to all of the premises served by the common meter even if the occupier of one of those premises has used less than his or her proportion of the base allocation.
Turning to s 30(b)(i) of the 1936 Act I observe that it does not expressly repeat the words “the premises” in the chapeau to s 30 of the 1936 Act, but those words must necessarily be implied in that subparagraph
The next question which arises is whether s 30(b) of the 1936 Act supplants or merely supplements Clause 6(f). By reference to the text of s 30 of the 1936 Act alone, the reasons of Nicholson J for concluding that it was intended to supplant s 30 of the 1936 Act are persuasive. I would add that, again approaching the question from the textual perspective alone, if the Parliament intended s 30 only to supplement clauses like Clause 6(f), the more natural legislative course would have been to provide expressly that the words “for additional water” should be taken to read “for water consumed”. However, the identified purpose of s 30 of the 1936 Act leads me to the conclusion that that provision supplements, and does not supplant, Clause 6(f).
No express provision is made by s 30 of the 1936 Act for shared meters. Section 30(b) of the 1936 Act provides for the allocation of rates and charges between SAHT and a tenant or tenants, but it is silent as to the individual liability of tenants, who share a meter, to the SAHT for the rates and charges in excess of the supply charge. The purpose of s 30 of the 1936 Act can only be effectuated with respect to tenancies with shared meters by reliance on the terms of Clause 6(f) as amended by it.
I turn then to the construction and application of the amended form of Clause 6(f) to tenancies supplied with water through a shared meter. Section 30(b)(i) of the 1936 Act applies to the rates and charges “for water supply” to a tenant’s premises. Rates and charges can be said to be “for water supply” to a premises even though the premises are one of a number supplied with water through a common meter. In the case of a shared meter, the supply charge levied under the Waterworks Act is plainly enough a supply charge for all of the premises serviced by the meter on which the charge is levied. Pursuant to Regulation 4 the SAHT is responsible for the whole of that charge and no question of the proportion that the SAHT can recover from each tenant arises.
The ultimate question is whether the charge for water consumed through a common meter is a charge “for water supply” to each of the premises which share the meter or whether it is not such a charge because it is not a charge for water supplied exclusively to those premises. Textually, I would be inclined to characterise the total charge for the water supplied to all of the premises as a charge levied for the supply of water to each of the premises because water is supplied to each of the premises from the total volume of water supplied through a common meter but I recognise that that reading is a little strained. Again it is the purpose of the provision which is critical. It militates strongly against applying it only to premises with a single meter. To my mind, that consideration is ultimately decisive. I would construe s 30(b)(i) as applying effectively to both tenancies serviced through a single meter and to those with a shared meter.
An unmeritorious distinction between tenants with dedicated meters and those with shared meters is avoided by treating s 30(b) of the 1936 Act as applying to shared meters and as supplementing Clause 6(f). It does so by replacing the words of Clause 6(f) - “the amount from time to time assessed for additional water in respect of the property” - with the words “the amount charged for water supply to the premises in excess of the limit fixed or determined under the regulations”. The “amount charged for water supply to the premises” on this construction is the total amount charged for all of the water supplied to all of the premises. However, Clause 6(f) allows the proportion of that amount for which each tenant is liable to be determined by the SAHT.
Finally, as to that determination, I would observe that the supplementation of Clause 6(f) means that in the earlier period the power is contractual and, therefore, limited by contractual obligations of good faith of the kind mentioned by Blue J. However, with the enactment of Regulation 9, the determination became administrative in nature. In the later period contractual considerations are replaced by those considerations which attend the exercise of an administrative power.
Accordingly, I would join in the orders proposed by Blue J.
BLUE J.
The South Australian Housing Trust appeals against orders of the District Court allowing appeals against determinations by the Residential Tenancies Tribunal that the respondents Rudi Pawelzik and Aleksander Popczynski are liable to pay invoices for water costs.
The Trust entered into a separate tenancy agreement in the 1980s with each respondent for the rental of a unit forming part of a 70 unit property. Water was supplied to the property via 13 water meters. Clause 6(f) of the standard Conditions of Tenancy required the tenant to pay “the amount from time to time assessed for additional water in respect of the property”.
The Governor was empowered by section 30 of the South Australian Housing Trust Act 1936 (SA) to make regulations fixing a limit up to which the Trust was to bear water charges beyond which tenants were to bear them. The Governor made regulation 4 fixing the limit with effect from 1 July 2008 at the amount of the supply charge, leaving tenants to bear the whole consumption charge.
The Governor subsequently made regulation 9 with effect from 1 September 2010 under the general regulation making power in the South Australian Housing Trust Act 1995 (SA) providing that the Trust was responsible for the supply charge and, where no separate meter was fitted to the premises, the tenant was responsible for a proportion determined by the Trust of all consumption charges payable in respect of the premises.
With effect from 1 July 2008, the Trust invoiced the tenants for a proportion of the total consumption charge for all water supplied to the property. The respondents contended that the invoices were not authorised under the tenancy agreement or the regulations.
The appeal raises the following issues:
1.Is regulation 4 ultra vires section 30 of the South Australian Housing Trust Act 1936 (SA) because it did not fix a quantity of water as the limit?
2.If so, does clause 6(f) on its proper construction entitle the Trust to payment of the full consumption cost of water after the water authorities ceased to charge only for the consumption of “excess water”?
3.Does regulation 4 cover the field of the subject matter of clause 6(f) and apply to the exclusion of clause 6(f) to govern all aspects of the rights and liabilities of the parties in respect of water?
4.If not, does clause 6(f) on (as modified by regulation 4) its proper construction entitle the Trust to charge for a proportion of:
(a)     all water supplied to multiple tenancies via shared meters; or
(b)    when it is not known which meters supply which tenancies for    all water supplied to the property?
5.Does regulation 9 on its proper construction entitle to Trust to charge for a proportion of:
(a)     all water supplied to multiple tenancies via shared meters; or
(b)    when it is not known which meters supply which tenancies for    all water supplied to the property?
6.If the Trust is entitled to charge for a proportion of all water supplied to multiple tenancies via shared meters, which meters measured water supplied to the respondents’ premises?
Background

The South Australian Housing Trust owns land bounded by Angas Street, Frome Street, Old Treasury Lane and Cypress Street (the Land).
Constructed on the Land are:
1.a block of 10 townhouses numbered 225 to 237A Frome Street and 198 Angas Street (the Frome Street Townhouses);
2.a block of 12 apartments numbered 176, 180 and 184 Angas Street (units 59 to 70) (the Angas Street Apartments);
3.five blocks of 36 apartments numbered 3, 5, 7, 11 and 13 Old Treasury Lane (units 1 to 36) (the Treasury Lane Apartments);
4.a block of 12 apartments numbered 217 and 221 Frome Street (units 37 to 48) (the Frome Street Apartments).
The Frome Street Townhouses are attached to each other but are contained within their own detached building on the Land.
The Angas Street Apartments are contained within their own detached building on the Land separated by substantial distances from the other buildings.
The Treasury Lane Apartments are contained within five buildings, two pairs of which have a partial common wall, and collectively are separated by substantial distances from the Angas Street Apartments and the Frome Street Townhouses. They are separated by a relatively small distance from the Frome Street Apartments.
The Frome Street Apartments are contained within two buildings but are joined by a common wall. They are separated by a substantial distance from the Angas Street Apartments and by relatively small distances from the Treasury Lane Apartments and Frome Street Townhouses.
The Trust entered into tenancy agreements with tenants in respect of the 70 units (townhouses or apartments) referred to in the previous paragraphs.
Water has been supplied to the Trust by the Minister of Works (the Minister) and later the South Australian Water Corporation (SA Water) for use on the Land by the tenants and for common areas. The water is supplied via 13 water meters. SA Water issues to the Trust a single quarterly invoice for all such water but also makes available to the Trust details of water consumption recorded by each meter.
In November 1982, the Trust and Mr Popczynski executed a tenancy agreement entitled Conditions of Tenancy for unit 21 being one of the Treasury Lane Apartments. In January 1988, the Trust and Mr Pawelzik executed Conditions of Tenancy for unit 3 being another Treasury Lane Apartment. The Conditions of Tenancy were printed standard terms, the only variable being the name of the tenant and address of the tenancy.
Clause 6(f) of the Conditions of Tenancy relevantly provided:
The tenant further agrees to –
...
(f)pay to the Trust on demand the amount from time to time assessed for additional water in respect of the property, or such proportion thereof as the Trust may determine …
Clause (5) of the Conditions of Tenancy provided that, other than those agreed to be paid by the tenant, the Trust agreed to pay all rates, taxes, charges and other outgoings assessed or imposed upon the premises.
Up to 30 June 2008, the Trust did not seek payment from tenants in respect of water supplied to the Land.
In April 2008, the Trust wrote to the tenants informing them that from 1 July 2008 the Trust would bear the supply charge and absorb the cost of 30% of water consumed at the property and would charge each tenant 1/70^th of the remaining 70%.
In July 2008, the Trust issued invoices to each tenant for $60.30 for water use from June to December 2008 based on the formula referred to in the previous paragraph. The Trust periodically issued further invoices on the same basis. The respondents objected to and did not pay the invoices.
In May 2013, the Trust purported to terminate the respondents’ tenancy agreements for failure to remedy alleged breaches by failing to pay the water invoices. The Trust applied to the Residential Tenancies Tribunal for orders for possession.
In February 2014, a Member of the Tribunal concluded that the respondents were liable for water usage as assessed by the Trust. He considered that, although not ideal, the method adopted by the Trust was the most equitable means of apportioning water costs in large complexes with joint meters. He held that the original tenancy agreements referring to additional water must now be read in the light of subsequent legislative amendments which removed the concept of excess water. He determined that the respondents were liable for water costs as from time to time assessed by the Trust. He reinstated the tenancies and ordered that the respondents pay the outstanding balance of the water invoices by fortnightly payments.
The respondents appealed to the District Court. During the hearing, it was discovered that the Trust had included in its calculations water measured by a fourteenth meter not connected to any of the 70 units (the fourteenth meter). This meter measured water supplied to land situated on the opposite side of Angas Street not owned or occupied by the Trust. The Trust acknowledged that it needed to recalculate the invoices to exclude that water. The Trust adduced evidence from its employee Ronald Lochert concerning the layout of the 13 water meters and water pipes connected to them and tendered SA Water records of the water usage recorded by each of the 14 meters. The Trust claimed that it did not know which of the 70 units were connected to which of the 13 meters.
In November 2014, a Judge of the District Court allowed the respondents’ appeals, holding that the water invoices were invalid because the Trust could not charge for water not supplied exclusively to a tenant or alternatively because not all of the 70 units were connected to the meters connected to the respondents’ premises.
Statutory water and tenancy regimes
When the parties entered into the tenancy agreements, section 66 in Part V of the Waterworks Act 1932 (SA) (the Waterworks Act) levied water rates on land against the landowner.[2] The rate payable was the greater of:
(a)a base rate calculated on the annual value of the land (the base rate amount); and
(b) an amount equal to a unit rate per kilolitre multiplied by the kilolitres of water supplied to the land.
[2] Waterworks Act 1932 (SA) s 66.
The base rate amount encompassed both the right to the connection for the supply of water and the consumption of the number of kilolitres of water (the included kilolitres) equal to the base rate amount divided by the unit rate per kilolitre. The owner only paid a variable charge if and to the extent that the water usage exceeded the included kilolitres.
On 1 July 1991, the Waterworks Act was amended to differentiate between residential and non-residential land.[3] A new Division 1 was inserted (sections 65a to 65d) that applied to “residential land” (not including flats).[4] The base rate (renamed “access rate” and later “supply charge”) now included a fixed number of kilolitres (regardless of land value) to be published by the Minister in the Gazette.[5] The Minister fixed 136 kilolitres per year for this purpose.[6] Section 66 became part of Division 2 and was confined to “non-residential land” (including flats) and largely preserved the existing provisions.
[3]    Waterworks (Rating) Amendment Act 1991 (SA).
[4]    Waterworks Act 1932 (SA) s 65a and 65b.
[5]    Waterworks Act 1932 (SA) s 65b to 65d. The Minister could after 22 November 1991 fix different water allocations in respect of different classes of residential land but not by reference to value: Statutes Amendments (Waterworks and Sewerage) Act 1991 (SA) s 3(a).
[6]    See Statutes Amendments (Waterworks and Sewerage) Act 1991 (SA) s 3(e) inserting Schedule 2 into the Act.
On 1 July 1995,[7] the Waterworks Act was amended again.[8] Division 2 was repealed and residential and non-residential land was largely treated alike. Charges were now divided into a supply charge (the supply charge) that covered only the right to the supply of water to land[9] and a consumption charge based on the volume of water supplied to the land at a unit rate (the consumption charge). The supply charge did not include any entitlement to consume any volume of water.[10]
[7]     On the same date, SA Water was established to take over from the Minister amongst other things the supply of water: South Australian Water Corporation Act 1994 (SA) s 5 and 7 and Schedule 2 amendments to the Waterworks Act 1932 (SA).
[8]    Waterworks (Rating) Amendment Act 1995 (SA), which substituted new sections 65A to 65C for sections 65a to 65d and repealed section 66.
[9]     SA Water was entitled to charge the supply charge even though the land was not connected to the waterworks or SA Water had cut off the supply of water to the land: Waterworks Act 1932 (SA) s 65B(2) but this is not relevant to the appeals.
[10] Except for commercial land, which is not relevant to these appeals.
On 30 June 1995, the South Australian Housing Trust Act 1936 (SA) (the 1936 Act) was amended.[11] A new section 30 was inserted:
[11] South Australian Housing Trust (Water Rates) Amendment Act 1995 (SA).
Excess or additional water
30.     A provision in a tenancy agreement between the trust and a tenant that, on the commencement of this section, provides for the tenant to pay an amount for or      towards excess or additional water supplied to the premises will be taken to       provide—
(a)     that rates and charges for water supply are to be borne as agreed between the trust and the tenant under a new agreement (or a variation to an existing agreement) made after the commencement of this section; and
(b)     in the absence of an agreement about rates and charges for water supply under paragraph (a)—
(i) that the trust will bear the rates and charges for water supply charged after the commencement of this section up to a limit fixed or determined under the regulations; and
(ii)that any amount in excess of the limit is to be borne by the tenant.
On 30 June 1995, the South Australian Housing Trust (Water Rates) Regulations 1995 (SA) (the 1995 Regulations) came into operation. Regulation 4 provided that the limit for the purpose of section 30(b) was the supply charge together with the consumption charge for 125 kilolitres per financial year.
On 1 January 1996, the South Australian Housing Trust Act 1995 (SA) (the 1995 Act) came into operation. It repealed the 1936 Act but preserved regulations made under section 30 of the 1936 Act and empowered the Governor to vary such regulations from time to time.[12]
[12] South Australian Housing Trust Act 1995 (SA) Schedule 1 clause 1 and Schedule 2 clause 4.
On 1 July 2008, the 1995 Regulations were amended[13] to substitute a new regulation 4 (regulation 4):
For the purposes of paragraph (b) of section 30 of the Act, the limit up to which the trust will bear rates and charges for water supply under an agreement to which that section applies is fixed at the supply charge for the premises under part 5 of the Waterworks Act 1932.
[13] South Australian Housing Trust (Water Rates) Variation Regulations 2008 (SA).
On 1 September 2010, the South Australian Housing Trust Regulations 2010 (SA) (the 2010 Regulations) made under the 1995 Act came into operation. They revoked the 1995 Regulations made under the 1936 Act.[14] Regulation 9 (regulation 9) provided:
[14] South Australian Housing Trust Regulations 2010 (SA) Schedule 1 clause 1.
9—Responsibility for payment of water rates
Where SAHT is the landlord of premises subject to a tenancy agreement, SAHT and the tenant under the tenancy agreement are responsible for water rates payable under Part 5 of the Waterworks Act 1932 in respect of the premises as follows:
(a) SAHT is responsible for payment of the supply charge for the right to a supply of water to the premises;
(b) the tenant is responsible—
(i)if a separate meter is fitted to the premises to measure the quantity of water supplied to the premises—for all water rates (other than the supply charge) payable in respect of the premises;
(ii)if no such separate meter is fitted to the premises—for the proportion (as determined by SAHT in respect of each financial year) of all water rates (other than the supply charge) payable in respect of the premises.
The Judge’s reasons
The Judge held that in respect of the period up to 31 August 2010 clause 6(f) of the Conditions of Tenancy did not apply because the Trust charged for all water and not “additional water” and because the Trust charged for water not supplied exclusively to each respondent’s own unit or alternatively for water supplied exclusively to other units:
In my opinion Clause 6 (f) of the Tenancy Agreement is not applicable because the claim of the Trust is not one for excess water or additional water. I reject the submission of counsel for the Trust that the expression ‘additional water’ in Clause 6 (f) means ‘all water’. Additionally, for reasons explained more fully below, I find that the assessment made by the Trust related to 70 separate units and was not an assessment for water ‘in respect to the property’.[15]
[15] Pawelzik & Popczynski v South Australian Housing Trust [2014] SADC 182 at [14].
The Judge held that in respect of the period after 1 September 2010 regulation 9 of the 2010 Regulations did not apply because the Trust charged for water not supplied exclusively to each respondent’s own unit or alternatively for water supplied exclusively to other units:
...the appellants have been required to pay 1/70^th of the total measured by 14 separate water meters, one of which has no connection with the block of 70 units at all and most of which are unlikely to have any connection with the premises of the appellants. That is, the appellants have been charged for water which was not measured by a shared meter. Some of those meters in respect of which the appellants have been required to pay a proportion of the usage was for water which was supplied to units other than an appellant’s premises.
…
In my opinion, for the purposes of reg 9, the ‘premises’ are the particular premises which are leased to the appellants...
...
The Trust has interpreted the expression ‘all water rates’ to include the rates payable in respect of premises other than the premises of the appellants. In my opinion the Tribunal Member erroneously accepted that interpretation.
Alternatively, if the expression ‘the premises’ extends to premises other than the particular premises occupied by each of the appellants, the expression ‘the premises’ should be confined to premises connected by ‘shared meters’ and the term would not include those units in the block of 70 which are connected to water meters which are not connected to the appellants’ property. That is, if my interpretation is incorrect, the proportion of water rates apportioned by the Trust from shared meters should be confined to an apportionment between properties connected to the same water meter or water meters.[16]
[16] [2014] SADC 182 at [26], [28], [31], [32].
The contentions on appeal
Different considerations apply between the earlier period from 1 July 2008 to 31 August 2010 and the later period from 1 September 2010 to 6 May 2013. In respect of the earlier period, section 30 of the 1936 Act and regulation 4 of the 1995 Regulations were in force. In respect of the later period, the 1995 Act and regulation 9 of the 2010 Regulations were in force.
In respect of the earlier period, the Trust contends that the Judge made three errors.
1.The Judge erred in construing the phrase “additional water” in clause 6(f) of the Conditions of Tenancy by failing to have regard to regulation 4 because the definition of “additional water” for the purpose of clause 6(f) was modified by regulation 4 and regulation 4 prescribed in effect that “additional water” meant the consumption charge as opposed to the supply charge.
2.Alternatively, the Judge erred in his construction of the phrase “additional water” in clause 6(f) in its own right and ought to have held that it referred to the variable charge imposed for water as opposed to the fixed charge and after 1 January 1996 this meant the consumption charge as opposed to the supply charge.
3.The Judge erred in construing clause 6(f) as being confined to the supply of water via an exclusive meter and ought to have held that it entitled the Trust to assess or apportion for a particular unit an amount for water supplied collectively to multiple units via a shared meter.
The respondents make the following contentions in response:
1.The respondents do not take issue with the purported effect of regulation 4 as defining “additional water” as the consumption charge for the purpose of clause 6(f) but contend that it was invalid as ultra vires section 30 of the 1936 Act.
2.The respondents support the Judge’s construction of the phrase “additional water” in clause 6(f) in its own right.
3.The respondents support the Judge’s construction of clause 6(f) as being confined to water supplied via an exclusive meter.
In respect of the later period, the Trust contends that the Judge made two errors.
1.The Judge erred in construing “all water rates … payable in respect of the premises” in regulation 9(b)(ii) as being confined to rates for water supplied via an exclusive meter and ought to have held that it encompassed water supplied collectively to multiple units via a shared meter.
2.The Judge erred in his alternative construction of “all water rates … payable in respect of the premises” in regulation 9(b)(ii) as being confined to rates for water shared between the particular tenant’s premises and other tenants’ premises via a shared meter and ought to have held that it applied whenever it is not known or readily ascertained whether water is supplied via a meter in common with the tenant’s unit.
The respondents support the Judge’s primary and alternative constructions of regulation 9.
July 2008 to August 2010
The Judge held that the Trust could not charge for water supplied during this period for two independent reasons. First, the Trust was only entitled to charge for water in excess of a base quantity pursuant to clause 6(f) of the Conditions of Tenancy but it charged for the entire consumption charge. Secondly, the Trust was only entitled to charge for water supplied exclusively to each respondent’s own unit pursuant to clause 6(f) of the Conditions of Tenancy but it charged for water shared with other units and for water supplied to other units not shared with the respondent’s unit.
There are two groups of issues. First, those relating to the apportionment of water costs between landlord and tenant and in particular whether the Trust could charge for the entire consumption charge or could only charge for consumption in excess of a certain quantity of kilolitres of water that was not effectively defined (the landlord/tenant apportionment issues). Secondly, those relating to the apportionment of water costs between tenants who were or may have been sharing common meters (the tenant/tenant apportionment issues).
Apportionment between landlord and tenant
The Trust contends that the Judge erred in his first reason because the apportionment of water charges between landlord and tenant was governed by regulation 4 of the 1995 Regulations and not by clause 6(f) of the Conditions of Tenancy.
The respondents contend that regulation 4 of the 1995 Regulations was ultra vires section 30 of the 1936 Act and the Judge was therefore correct to ignore it.
Validity of regulation 4
It is common ground that section 30(a) of the 1936 Act does not apply because the parties did not make any new agreement after 30 June 1995 as to the apportionment of rates and charges for water supply.
Section 30(b) of the 1936 Act therefore relevantly provided:
30.     A provision in a tenancy agreement between the trust and a tenant that, on the commencement of this section, provides for the tenant to pay an amount for or      towards excess or additional water supplied to the premises will be taken to       provide—
…
(b)     …
(i) that the trust will bear the rates and charges for water supply charged after the commencement of this section up to a limit fixed or determined under the regulations; and
(ii)     that any amount in excess of the limit is to be borne by the tenant.

Regulation 4 of the 1995 Regulations purported to fix the limit referred to in section 30(b)(i) at the supply charge under the Waterworks Act.
The respondents contend that section 30(b) required the limit to be fixed in terms of kilolitres of water such that the Trust bore the consumption charge in respect of a specified quantity of water supplied and the tenant bore the balance of the consumption charge.
The proper interpretation of section 30(b) is to be determined by reference to its text, context and evident purpose.[17] The reference in section 30(b) to the limit to be fixed does not refer to a quantity of water. Section 30(b) refers to rates and charges in a compendious manner which is apposite to incorporate both the supply charge and the consumption charge. It refers to one limit being fixed to apply to the compendious rates and charges. There is nothing in the text of the provision to prevent the limit being fixed as comprising the supply charge component of the total rates and charges, leaving the tenant to bear the consumption charge.
[17] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] per McHugh, Gummow, Kirby and Hayne JJ.
This is consistent with the evident purpose of section 30. Section 30 was introduced in 1995 in the historical context that tenancy agreements had been drafted when the supply charge for water included an allowance of a number of kilolitres of water to be consumed and the variable charge only applied to the consumption of water in excess of that amount. Such agreements were therefore likely to refer to “excess” or “additional” water and to require the tenant to bear the whole of the variable charge while the landlord bore the whole of the fixed charge. Upon the change to the Waterworks Act on 1 July 1995, the variable charge applied to the whole of the water consumed. The evident purpose of section 30 was to empower the Governor to make regulations apportioning the whole of the water rates and charges between landlord and tenant. It was consistent with this purpose that the apportionment might be of the supply charge to the landlord and of the consumption charge to the tenant.
The respondents accept that, if their construction of section 30(b) applies, there is no constraint on the quantity of water that could be fixed by the regulations as the limit. The regulations could fix a limit of 100, 10 or 1 kilolitres. There is no significant difference between a limit of 1 and 0 kilolitres.
Regulation 4 was validly made. Regulation 4 modified the contractual provisions contained in tenancy agreements in the manner prescribed by the section. The Judge erred in determining the issue of apportionment between landlord and tenant by reference to clause 6(f) of the Conditions of Tenancy rather than by reference to section 30(b) and regulation 4.
Consequence of validity
Regulation 4 operated at least[18] to modify the definition of “additional water” for the purposes of clause 6(f) and prescribe that “additional water” meant the consumption charge as opposed to the supply charge.
[18] Whether it has a more expansive operation is addressed below.
The Judge erred in failing to have regard to regulation 4 and instead merely construing clause 6(f) in its own right.
The Judge’s first reason summarised at [60] above for holding that the respondents were not liable during the earlier period to pay the consumption charge was misconceived.
Construction of clause 6(f)
The Trust makes an alternative contention that the Judge erred in construing clause 6(f) of the Conditions of Tenancy. It is unnecessary to address this question.
Apportionment between tenants
The Judge construed clause 6(f) of the Conditions of Tenancy such that the Trust could only make an assessment for water supplied exclusively to each respondent’s unit and could not make an assessment based on a share of water supplied collectively to multiple units. In the alternative, the Judge held that the Trust could not make an assessment based on water supplied to other units that was not shared with the tenant’s own unit.
The relevance of section 30 and regulation 4
The Judge decided the tenant/tenant apportionment issues solely by reference to clause 6(f) of the Conditions of Tenancy. The respondents did not contend before the Judge and do not contend on appeal that section 30 of the 1936 Act or regulation 4 are relevant to these issues.
The question arose during the Trust’s submissions on appeal whether section 30 covers the field of the liability of tenants to pay the Trust in respect of water to the exclusion altogether of clause 6(f) as opposed to merely defining what “additional water” means in and for the purpose of the operation of clause 6(f).
Section 30 relevantly provides:
A provision in a tenancy agreement between the trust and a tenant that, on the commencement of this section, provides for the tenant to pay an amount for or towards excess or additional water supplied to the premises will be taken to provide—
…
(i) that the trust will bear the rates and charges for water supply charged after the commencement of this section up to a limit fixed or determined under the regulations; and
(ii)that any amount in excess of the limit is to be borne by the tenant.
The enactment of section 30 coincided with the amendments to the Waterworks Act that abolished for residential flats the old concept of the fixed charge incorporating a base quantity of water and now distinguished between a supply charge that covered only the right to connection to the waterworks and a consumption charge that applied to the whole of the water actually supplied.
Section 30 was enacted on the basis that the existing tenancy agreements between the Trust and its tenants had been drawn for the purpose of apportioning water charges between landlord and tenant in accordance with the old system of charging under the Waterworks Act and it was necessary or desirable to stipulate by regulation a new apportionment in those cases in which the old tenancy agreements were not amended to address the question of apportionment between landlord and tenant.
The evident purpose of section 30 was confined to empowering and requiring regulations to define the limit up to which the Trust was to bear water charges and beyond which the tenant was to bear water charges. That purpose did not extend to supplanted the other aspects of the contractual provisions in existing tenancy agreements relating to the liability of tenants to pay the Trust in respect of water charges. That the purpose of section 30 was confined to the definition of the limit is confirmed by the fact that the section only applies to those tenancy agreements in which the tenant is liable to pay for additional or excess water such that a limit needs to be fixed. If section 30 supplants the contractual provisions as to water entirely, it follows that in all cases in which tenants were supplied with water via shared meters under tenancy agreements under which tenants were obliged to pay the entire variable charge (ie for “additional water”), tenants were now free to use limitless amounts of water without having to pay for any of it. That is a very unlikely intention to impute to the legislature.
Textual considerations also indicate that section 30 and regulations made under it only addressed the apportionment of the water charges between landlord and tenant and not other aspects of the tenant’s liability to pay the Trust in respect of water charges. If section 30(b) had been intended to define the entire rights and obligations of the parties, paragraphs (i) and (ii) would have been expressed in self-sufficient terms to define those rights and obligations in like manner to that done by regulation 9 after August 2010. However, paragraphs (i) and (ii) refer to “the rates and charges for water supply charged” without defining how they are to be charged: they assume that the tenancy agreement will define the subject matter of the apportionment between landlord and tenant effected by the section and regulations made under it. They refer to “water supply” without identifying the subject of the supply. In a shared water meter situation, paragraphs (i) and (ii) assume that the tenancy agreement will define how the charges for water supply are to be calculated and then provide for those amounts to be apportioned between landlord and tenant by reference to the limit fixed by the regulations.
The reference in paragraph (i) to “rates and charges for water supply” cannot be construed to refer to the “amount for or towards excess or additional water supplied to the premises” in the chapeau to section 30. The concept of “excess or additional water” had ceased to have any practical meaning after 1 July 1995 when the Waterworks Act abolished the concept.
The reference in paragraph (i) to “rates and charges for water supply” cannot be construed to refer to charges for “water supplied to the premises” in the chapeau to section 30. If section 30(b) did cover the field of the rights and obligations between Trust and tenant in respect of water rates, the interplay between the chapeau to section 30 and paragraphs (i) and (ii) would operate as follows. If the reference to “water supplied to the premises” meant “water supplied exclusively to the premises”, ie not via a shared meter, then the chapeau would not apply to those tenancy agreements (such as those of the respondents on the construction adopted above) under which the tenant is liable to pay for shared water. In that case, the existence of section 30 would be no impediment to the Trust relying on clause 6(f) of the Conditions of Tenancy. Alternatively, if the reference to “water supplied to the premises” included “water supplied to the premises via a shared meter”, the section would be silent as to how the water was to be allocated between the tenants and it would have to be the intention of the section to leave this to the tenancy agreement. This demonstrates that section 30 was confined to defining the apportionment between landlord and tenant and did not address the other aspects of the liability of the tenant for water which was left to the tenancy agreement. Section 30 would not in any event assist the respondents in the present case.
Non-exclusive supply to tenant’s unit
Clause 6(f) relevantly provided:
The tenant further agrees to …pay to the Trust on demand the amount from time to time assessed for additional water in respect of the property, or such proportion thereof as the Trust may determine …
The Trust contends that the reference to “property” is a reference, where the demised premises form part of residential flats, to the flats as a whole when SA Water makes a single charge for the flats as a whole. The Trust contends in the alternative that, if the reference to “property” is a reference to the demised premises, water is supplied “in respect of” the demised premises if it is supplied collectively to multiple units and shared between them.
The proper construction of clause 6(f) is to be determined by reference to its text, context and evident purpose.[19]
[19] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] per McHugh, Gummow, Kirby and Hayne JJ; Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35] per French CJ, Hayne, Crennan and Kiefel JJ.
The Trust’s first contention should be rejected. It is true that several clauses of the Conditions of Tenancy refer to “the premises” as the unit the subject of the demise.[20] However, several clauses use the term “dwelling” to refer to the unit the subject of the demise.[21] This demonstrates that the draftsperson used different words with the same connotation and is consistent with using the different words “the property” with the same connotation.
[20] Clauses 2, 3, 5(a), 6(a), (e), (g), 7(b), (c), (d), (f), (g), 8(a), (b), 9(b), (c) (d) and (1), (2), (3), (4), (5), (6).
[21] Clauses 5(b), 6(d), 7(a), 8(e).
Clause 8(c) contains a covenant by the tenant not to drive nails into the walls or woodwork which may damage “the property”. On their proper construction, the words “the property” are used in that clause to refer to the demised premises.
If the words “the property” in clause 6(f) did not refer to the demised premises, a more obvious alternative construction than that advanced by the Trust would be that they refer to the entire block of flats. However, this would give rise to uncertainty and ambiguity in those cases (such as the present) where there are several blocks of flats constructed on the land. Would “the property” refer only to the building in which the unit is located or to all of the buildings on the land?
On the Trust’s construction, the reference to “the property” in clause 6(f) would vary depending on whether SA Water rendered one invoice for water supply to the land on which the unit is situated or separate invoices per meter even though SA Water provided the same breakdown of charges in respect of each meter.
There is no reason to suppose that, objectively considered, the parties intended the reference to “the property” to have the meaning advanced by the Trust. The focus of the subclause is upon the responsibility of the tenant to pay for water in respect of the demised premises.
The Trust’s second contention should be accepted. The Judge held and the respondents accept that the reference in clause 6(f) to “the amount from time to time assessed” is to the amount assessed by the Trust and this is evident from the structure of the clause. The words “in respect of” are words of wide import and only require a connection between the two objects – in this case the “water” and the “property” - that is sufficient in the context. If water is supplied collectively to multiple units via a shared meter, there is a sufficient connection between the water and each unit to which the water is supplied.
The Conditions of Tenancy are in standard terms and were drafted to encompass not only a tenancy of a standalone house but also a tenancy of a flat in a block of flats. Thus, clause 6(g) addresses communal facilities, clause 6(h) addresses common passages and stairways, clause 6(i) addresses communal laundries, clause 6(j) addresses communal areas and clause 8(f) addresses communal car parking areas. Shared water meters may be expected to have been relatively common in Trust properties and it may be expected that the Conditions of Tenancy would provide for water charges to tenants in such properties.
The evident purpose of clause 6(f) is to pass on to tenants the incremental cost of water above the fixed charge which is to be borne by the Trust. The purpose is facilitated in properties with shared meters by the construction advanced by the Trust and would be frustrated by the construction adopted by the Judge.
The Trust is empowered by clause 6(f) to make an assessment of the water supplied in respect of the premises. This requires the Trust to act in good faith to make what it considers is a fair and equitable assessment of the portion of the water supplied via a common meter to the tenant’s unit and to other tenants’ units sharing that meter.
The Judge erred in construing clause 6(f) such that the Trust could only make an assessment for water supplied exclusively to each tenant’s unit.
Inclusion of water not shared with tenant’s unit
The Judge held in the alternative that the Trust was not entitled under clause 6(f) to include water not passing through a common meter shared with the tenant’s unit.
The Trust contends that, on the proper construction of clause 6(f), the Trust can make an assessment in respect not only of water supplied to multiple units via a common meter but also in respect of water supplied to multiple units where it is not known whether water is supplied via a meter in common with the tenant’s unit. The Trust contends that the test whether the water is in respect of the tenant’s unit is not objective but depends on the Trust’s subjective knowledge.
The Trust’s contention should be rejected. The Judge was correct in holding that the Trust was not entitled under clause 6(f) to include water not objectively passing through a common meter shared with the tenant’s unit.
The text of clause 6(f) insofar as it refers to “water in respect of the property” indicates that this is an objective fact and does not depend on the subjective state of mind of the Trust. The Trust’s construction would lead to uncertainty and irrational distinction being made. There is no evident purpose in the clause leaving it to the Trust to determine whether the water is supplied via a common meter to the tenant’s unit and accordingly comprises “water in respect of the property”.
Water shared with tenant’s unit
The Judge made a factual finding that the invoices rendered by the Trust to the tenants were calculated in respect of water supplied to other units that was not shared with the tenant’s own unit. The Trust conceded that this was so in respect of the fourteenth meter. The Judge appears to have made a finding that this was also the case in respect of some of the 13 meters but the Judge did not identify the meters in question nor give any reasons for this finding.
The evidence before the Judge relevant to this factual question was twofold. First, the Trust tendered the services plan prepared in 1981 when the buildings were constructed showing amongst other things the location of water meters and pipes. The plan was annotated by Mr Lochert’s assistant to show the details of the water meters present as at October 2014. This can be read in conjunction with a plan tendered by the respondents showing the layout and numbers of the buildings. Secondly, the Trust tendered screen dumps taken from SA Water’s computer system showing water usage measured by each of the 14 meters quarterly from June-September 2008 to June-September 2013.
The services plan shows ten 20 mm meters connected to the ten Frome Street Townhouses. The SA Water usage screen dumps show relatively consistent quarterly water usage measured by those 10 meters and average quarterly usage of 27 kilolitres per meter. Coupled with the small size of the meters, this justifies a finding that the water passing through these ten meters was not shared with either respondent’s unit and should have been ignored in assessing water usage by the respondents.
The services plan shows one 32 mm meter connected to the twelve Angas Street Apartments. Those apartments are physically separated from the Treasury Lane Apartments by a car park. The SA Water usage screen dumps show relatively consistent quarterly water usage measured by this meter and average quarterly usage of 167 kilolitres. This justifies a finding that water passing through this meter was not shared with either respondent’s unit and should have been ignored in assessing water usage by the respondents.
The services plan shows one 50 mm Flostar meter in Frome Street and one 50 mm Woltex meter on the corner of Old Treasury Lane and Cypress Street. It shows interconnected pipework servicing the 48 units comprising the Treasury Lane and Frome Street Apartments connected at one end to the Flostar meter and at the other end to the Woltex meter such that water can be supplied to the 48 units via either meter. The SA Water usage screen dumps show relatively consistent quarterly water usage measured by both meters combined at average quarterly usage of 1,566 kilolitres. They show that the water usage measured by each meter individually varied dramatically from 0 to 765 kilolitres for the Flostar meter and from 811 to 2,031 for the Woltex meter, which is consistent with the pipework being interconnected. This justifies a finding that these two meters are interconnected and that water passing through them was shared between the 48 units comprising the Treasury Lane and Frome Street Apartments including the respondents’ units. The usage recorded by these two meters should have been used by the Trust in assessing water usage by the respondents.
September 2010 to May 2013

The Judge held that the Trust could not charge for water supplied during this period. The Judge held that regulation 9 of the 2010 Regulations did not apply because the Trust charged for water not supplied exclusively to the respondents’ own units or alternatively for water not shared by them with other units.
Exclusive supply to tenant’s own unit
The Judge interpreted regulation 9 of the 2010 Regulations such that the Trust could only make an assessment for water supplied exclusively to each tenant’s unit and could not make an assessment based on a share of water supplied collectively to multiple units.
Regulation 9 relevantly provided:
Where SAHT is the landlord of premises subject to a tenancy agreement, SAHT and the tenant under the tenancy agreement are responsible for water rates payable under Part 5 of the Waterworks Act 1932 in respect of the premises as follows: …
(b) the tenant is responsible—
(i)if a separate meter is fitted to the premises to measure the quantity of water supplied to the premises—for all water rates (other than the supply charge) payable in respect of the premises;
(ii)if no such separate meter is fitted to the premises—for the proportion (as determined by SAHT in respect of each financial year) of all water rates (other than the supply charge) payable in respect of the premises.
The Judge held that the reference to “the premises” at the end of clause (ii) is a reference, where the demised premises form part of residential flats, to the individual flat the Trust is charging for water. The Trust accepts that construction, which is inescapable given the reference to “the premises” at the beginning of clause (ii).
The Trust contends that the Judge erred by not giving consideration to the words “in respect of” which precede the reference to “the premises” at the end of clause (ii). The Trust contends that, when clause (ii) is read as a whole, the intention is plain that “all water rates … payable in respect of the premises” must mean all water rates payable for water supplied via the shared meter. Otherwise clause (ii) would have no work to do because clause (i) addresses the situation where there is no shared meter and clause (ii) only applies where there is a shared meter.
The Trust’s contention should be accepted. The draftsperson of the regulations utilised the words “in respect of” because they are words of wide import and only require a connection between the water rates payable and the premises. For the same reasons as apply to the construction of clause 6(f) of the Conditions of Tenancy, the words should be construed to apply to all water supplied by a meter shared by the tenant’s premises with other premises. The Trust is then required to determine the proportion of the total cost of the water supplied to be charged to the tenants whose premises share the meter in question.
In determining the proportion of the total cost to be charged to tenants sharing a meter for September 2010 onwards, the Trust makes an administrative determination. In so doing, it is bound to act in accordance with the principles governing the exercise of the statutory power conferred by regulation 9. In practice, this is likely to be similar to its contractual obligation when making a determination for the period before September 2010 to act in good faith to make what it considers is a fair and equitable assessment of the proportion of the cost of the water to be charged to the tenants whose premises share a common meter.
Inclusion of water not shared with tenant’s unit
The Judge held in the alternative that the Trust was not entitled under regulation 9 to include water not passing through a common meter shared with the respondents’ units.
The Trust contends that, on the proper construction of regulation 9, the Trust can determine a proportion not only of water supplied to multiple units via a common meter but also of water supplied to multiple units where it is not known or readily ascertained whether water is supplied via a meter in common with the tenant’s unit.
The Trust’s contention should be rejected for the same reasons as in respect of clause 6(f). The Judge was correct in holding that the Trust was not entitled under regulation 9 to include water not objectively passing through a common meter shared with the tenant’s unit.
Water shared with tenant’s unit
For the reasons given above, the Trust should have excluded water measured by the 20 mm meters and the 32 mm meter as well as the fourteenth meter. The Trust should have apportioned the cost of water measured by the two 50 mm meters between the 48 units comprising the Treasury Lane and Frome Street Apartments.
Relevance of clause 6(f)
The respondents contend that they did not agree to the form of charging set out in regulation 9(b)(ii) and the rights and duties of the parties are still those set out in clause 6(f) and clause (5) of the Conditions of Tenancy.
This contention must be rejected. Regulation 9 only applies when there is a tenancy agreement between the Trust and the tenant. However, regulation 9 clearly evinces an intention that the rights and duties of the parties in respect of the cost of water are as set out in the regulation and this supersedes the provisions of the tenancy agreement to that extent. Regulation 9 takes its force from section 44 of the 1995 Act and as a legislative instrument overrides inconsistent provisions of a contract.
Method of apportionment between tenants
On appeal, the respondents contend that the Trust’s apportionment of shared water equally between tenants sharing that water is not fair and equitable because some tenancies have one occupant and others have two or more occupants and the apportionment should differentiate by reference to the number of occupants.
The issues before the Residential Tenancies Tribunal and the District Court were the issues addressed above. They did not extend to the method of apportionment as between tenants. It is not appropriate to entertain that issue at this stage of the appeal process. However, in terms of the future supply of water, the Trust should consider the respondents’ contention and consider whether it ought to differentiate between tenancies in some way by reference to number of occupants.
Conclusion
The appeal should be allowed.
A declaration should be made pursuant to section 35 of the Residential Tenancies Act 1995 (SA) that in respect of the period from July 2008 to August 2010 the Trust was entitled to ascertain in good faith and to charge each respondent a fair and equitable proportion of the consumption charge for water supplied to each respondent and other tenants via a shared meter or meters being the water measured by the Flostar and Woltex meters.
A declaration should be made pursuant to section 35 of the Residential Tenancies Act 1995 (SA) that in respect of the period from September 2010 onwards the Trust is entitled to ascertain in accordance with the principles governing the exercise of the statutory power conferred by regulation 9 and to charge each respondent a proportion of the consumption charge for water supplied to each respondent and other tenants via a shared meter or meters being the water measured by the Flostar and Woltex meters.
A direction should be given pursuant to section 35 of the Residential Tenancies Act 1995 (SA) that the Trust calculate the amount to be charged to each respondent on that basis for the periods covered by the appeal and issue to each respondent fresh invoices in accordance with that calculation.
NICHOLSON J.
I am grateful for the advantage of having read Blue J’s judgment in draft. I agree with his Honour’s reasons, except for one premise on which the success of the appellant’s claim to charge for water supplied, during the period 1 July 2008 to 31 August 2010, depends. Whilst I agree with his Honour’s consequential reasoning, because the premise is not sound, it is my view that this aspect of the appeal should fail. I would allow the appeal, in part, and join in the declaratory relief proposed by Blue J but only with respect to the period 1 September 2010 to 31 May 2013.
As far as the earlier period is concerned, I agree with Blue J that section 30 of the South Australian Housing Trust Act 1936 and regulation 4 of the South Australian Housing Trust (Water Rates) Regulations 1995 governed any entitlement in the appellant to pass on to each respondent a component of charges for water supplied. Section 30 provided as follows.
A provision in a tenancy agreement between the [appellant] and a tenant that, on the commencement of this section, provides for the tenant to pay an amount for or towards excess or additional water supplied to the premises will be taken to provide –
(a)that rates and charges for water supply are to be borne as agreed between the [appellant] and the tenant under a new agreement (or a variation to an existing agreement) made after the commencement of this section; and
(b)in the absence of an agreement about rates and charges for water supply under (a) –
(i) that the [appellant] will bear the rates and charges for water supply charged after the commencement of this section up to a limit fixed or determined under the regulations; and
(ii) that any amount in excess of the limit is to be borne by the tenant.
It is common ground that, at the commencement of the operation of section 30, there was a provision in each respondent’s tenancy agreement (clause 6(f)) which provided for each respondent to “pay an amount for or towards excess or additional water supplied to the [tenanted] premises”. It is also common ground that no “new agreement” or “variation to an existing agreement” was ever entered into between the appellant and either respondent dealing with that topic. Section 30(b) therefore applied.
By regulation 4, the legislature purported to identify for the purposes of paragraph (b) of section 30 the limit up to which the appellant was to bear the rates and charges for water supplied. I will come back to regulation 4 shortly.
Blue J is of the opinion that section 30 operated only to modify any existing relevant provision in a tenancy agreement being, in the present case, clause 6(f). In other words, on this approach, clause 6(f) continued to regulate any entitlement in the appellant to recover a contribution to charges for water supplied save as modified by section 30.
I take a different view. Section 30, on its proper construction, did not modify any applicable provision in a tenancy agreement but supplanted it in the sense that it operated as a complete replacement.
The opening words of section 30 provide, in essence, that “a [certain type of] provision in a tenancy agreement between [the appellant] and a tenant... will be taken to provide...”. The two issues that arise are: what is the type of provision identified by section 30 as its subject? And, what does the phrase “will be taken to provide” mean?
The opening words characterise the subject provision in a tenancy agreement as one that “provides for the tenant to pay an amount for or towards excess or additional water supplied to the premises”. The word “premises” can only refer to the premises occupied by the tenant the subject of the tenancy agreement earlier referred to in section 30. The provision in question must be one that, inter alia, provides for the tenant to pay an amount for or towards “additional water supplied to [those] premises”.
Clause 6(f) of each respondent’s tenancy agreement is in the following terms.
The tenant further agrees to –
(f)pay to the [appellant] on demand the amount from time to time assessed for additional water in respect of the property, or such proportion thereof as the [appellant] may determine... .
I agree with Blue J, for the reasons his Honour has given, that the word “property” where it occurs in clause 6(f) can only be a reference to the premises the subject of the tenancy. Accordingly, clause 6(f) is a provision in a tenancy agreement that is captured by the opening words of section 30.
The phrase “will be taken to provide” (or close variants) is an everyday readily understood English expression. Nevertheless, it can take on different meanings according to its context. Section 30, including its component parts, is to be interpreted by reference to its text, context and evident purpose, to adopt Blue J’s phrase. In Project Blue Sky v Australian Broadcasting Authority[22] McHugh, Gummow, Kirby and Hayne JJ observed as follows.
However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. In Statutory Interpretation, Mr Francis Bennion points out:
"The distinction between literal and legal meaning lies at the heart of the problem of statutory interpretation. An enactment consists of a verbal formula. Unless defectively worded, this has a grammatical meaning in itself. The unwary reader of this formula (particularly if not a lawyer) may mistakenly conclude that the grammatical meaning is all that is of concern. If that were right, there would be little need for books on statutory interpretation. Indeed, so far as concerns law embodied in statute, there would scarcely be a need for law books of any kind. Unhappily this state of being able to rely on grammatical meaning does not prevail in the realm of statute law; nor is it likely to. In some cases the grammatical meaning, when applied to the facts of the instant case, is ambiguous. Furthermore there needs to be brought to the grammatical meaning of an enactment due consideration of the relevant matters drawn from the context (using that term in its widest sense). Consideration of the enactment in its context may raise factors that pull in different ways. For example the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with." (footnotes omitted)
[22] [1998] HCA 28; (1998) 194 CLR 355 at [78].
It is true that the phrase, (or a close variant) can be used to indicate supplementation. For example, it is frequently used in consumer protection legislation such as in the context of retail leases. For example, section 38(1) of the Retail and Commercial Leases Act 1995 (SA) is in these terms.
(1)A retail shop lease is taken to provide that if the lessor—
(a)     inhibits access of the lessee to the shop in a substantial manner; or
(b)     takes action that would inhibit or alter, to a substantial extent, the flow of customers to the shop; or
(c)     unreasonably takes action that causes significant disruption of, or has a significant adverse effect on, trading of the lessee in the shop; or
(d)     fails to take all reasonable steps to prevent or put a stop to anything attributable to causes within the lessor's control that causes significant disruption of, or which has a significant adverse effect on, trading of the lessee in the shop; or
(e)     fails to rectify any breakdown of plant or equipment under the lessor's care or maintenance; or
(f)     in the case of a shop within a retail shopping centre—fails to clean, maintain or repair the retail shopping centre (including common areas),
and the lessor does not rectify the matter as soon as reasonably practicable after being requested in writing by the lessee to do so, the lessor is liable to pay the lessee reasonable compensation for loss or damage (other than nominal damage) suffered by the lessee as a consequence.
In such a case, the phrase operates so as to cause to be included in the lease, in effect by way of statutory incorporation or implication, an additional identified term or terms.[23] However, the statutorily included term or terms do not supplant or replace the lease itself but simply supplement and/or modify it.
[23] See also, for example, section 17(1)(b) of the Retail Tenancies Act 1986 (Vic) and section 33 of the Retail Leases Act 1994 (NSW).
Another example of this type of meaning can be seen in the New South Wales Uniform Civil Procedure Rules. UCPR 20.6 employs a cognate phrase to ensure that a 28 day time period for acceptance of a rules costs offer will apply unless the notice of offer otherwise provides. Again, the context makes it plain that this is to supplement not to supplant the terms of the rules offer, in fact made.
However, when the phrase “will be taken to provide”, as used in section 30, is considered in the overall context of section 30, it is evident that it is not employed in this sense of supplementing something. The provision identified in the opening words of section 30 (in this case, clause 6(f)) is not to be supplemented or modified but to have its content or meaning replaced by paragraphs (a) and (b) of section 30. These paragraphs provide a comprehensive regime for the sharing of water supply rates and charges between the appellant and each tenant who is captured by the opening words of section 30. Strictly, it is only a potentially comprehensive regime because the effectiveness of paragraph (b)(i) will depend upon a suitable regulation being passed. However, this does not affect the validity of the argument to this point. To all intents and purposes a comprehensive regime is provided for.
In the event that the appellant and either respondent, after the commencement of section 30, had entered into a new agreement, that agreement would have dictated the manner in which the rates and charges for water supplied were to be borne as between the two, to the complete[24] exclusion of clause 6(f). However, no such “new agreement” was entered into. In this event, paragraph (b) provided that the appellant was to bear the rates and charges for “water supply” (and this can only be a reference to water supplied “to the [tenant’s] premises” as referred to in the opening words of section 30”) up to a limit fixed or determined by regulation. Any amount in excess of that limit was to be borne by the tenant.
[24] Unless, of course, any such “new agreement”, by its terms replicated or effected a variation of clause 6(f).
There is no room for both clause 6(f) and section 30 to operate side by side, the latter modifying the former. The evident purpose, to be discerned from the text and context, of section 30 is to provide for a replacement regime. Where the opening words of section 30 state, in effect, that clause 6(f) “will be taken to provide” the meaning and intent is that clause 6(f) will be deemed to operate [as follows].
There is nothing, in principle, that would prevent the legislation from overriding completely the original contractually agreed allocation of risk provided for by the clause 6(f). It did so, again, for the period after 1 September 2010 with the imposition of regulation 9 of the South Australian Housing Trust Regulations 2010 (SA).
The entitlement of the appellant to recoup rates and charges for water supplied to the premises occupied by each of the respondents and the corresponding obligation on each of the respondents to pay, for the period 1 July 2008 to 31 August 2010, was regulated entirely by section 30 and regulation 4.
Regulation 4 provided as follows.
For the purposes of paragraph (b) of section 30 of the Act, the limit up to which the [appellant] will bear rates and charges for water supply under an agreement to which that section applies is fixed at the supply charge for the premises under Part 5 of the Water Works Act 1932.
The reference in regulation 4 to “an agreement to which [section 30] applies” is a reference to the tenancy agreement referred to in the opening words of section 30 and not to any “new agreement” or “variation to an existing agreement” as referred to in paragraph (a). Regulation 4 provided, in effect, that the appellant will pay “the supply charge for the premises”. It would follow from paragraph (b)(ii) that any amount charged in excess of “the supply charge for the premises” was to be the responsibility of the tenant.

The “premises” referred to in regulation 4 can only be the premises referred to in section 30, that is, the premises the subject of the relevant tenancy. In the circumstances in which water is supplied, metered and charged for by the authority with respect to each respondent’s tenanted premises, as described by Blue J, regulation 4 cannot operate in any sensible way. In this respect, it is to be noted that the critical phrase employed is the far more circumscribed “for the premises” not, as in regulation 9, “in respect of the premises”.
Section 30 which comprehensively regulated the relationship, depended for its effectiveness on the wording of regulation 4. However, the terms of regulation 4 were not such as to embrace the circumstances relevant to the two respondents. The position was rectified by the introduction of regulation 9.

[2015] SASCFC 194

24 December 2015

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