TONG v TONG (Residential Tenancies)
[2020] ACAT 85
•11 March 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
TONG v TONG (Residential Tenancies) [2020] ACAT 85
RT 4/2020
Catchwords: RESIDENTIAL TENANCIES – unpaid rent – tenant refuses to pay arrears – where tenant has died, and spouse remains a resident at the premises – where spouse was not a party to the tenancy agreement – whether tenancy continues under the estate – where conflict for estate to pay rent – application for termination and possession granted
Legislation cited: Family Provision Act 1969
Residential Tenancies Act 1997 ss 6A, 49, 49A, 127
Residential Tenancies Act 2010 (NSW) s 77
Cases cited:Commissioner of Housing of theAustralian Capital Territory v Nicole Smith [1995] ACTSC 17
David Harold Eastman v Commissioner for Housing for the Australian Capital Territory [2006] ACTSC 52
Estate of Humphries v Commissioner for Housing [2003] ACTSC 40
Tribunal: Senior Member H Robinson
Date of Orders: 11 March 2020
Date of Reasons for Decision: 22 October 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL RT 4/2020
BETWEEN:
LE NGOC TONG
Applicant/Lessor
AND:
SUQIN ZHU TONG
Respondent/Tenant
TRIBUNAL: Senior Member H Robinson
DATE:11 March 2020
TERMINATION AND POSSESSION ORDER
The residential tenancy agreement is terminated at 5:00pm on Wednesday 11 March 2020.
The tenant must vacate the premises on or before 5:00pm on Wednesday 11 March 2020.
If the tenant fails to vacate the premises as required by paragraph 2 of the Order the lessor may request the Registrar of the ACT Civil and Administrative Tribunal to issue a warrant for eviction.
The operation of paragraphs 1, 2 and 3 of this Order is suspended until 31 March 2020.
The tenant is to give the Tribunal and the lessor a Notice of New Contact Details with an address for service of future notices and orders in these proceedings by 31 March 2020.
The lessor's claims for compensation and loss of rent and water bills is listed for preliminary conference on Thursday 4 June 2020 at 10:30 am. The lessor is to give to the Tribunal and the tenant a document itemising the amounts claimed by one week prior to the conference.
The parties have leave to approach.
…………Signed…………..
Senior Member H Robinson
REASONS FOR DECISION
By way of this application the applicant lessor, Ms Le Ngoc Tong (Ms Tong) sought a termination and possession order for unpaid rent pursuant to section 49 of the Residential Tenancies Act 1997 (the RT Act).
I granted the application on 11 March 2020 and delivered brief oral reasons on that date. Further to a request for reasons from the respondent’s solicitor, I have prepared these more comprehensive reasons.
The parties
Ms Tong is the legal owner of a property in Richardson in the ACT (the premises).
The respondent is the applicant’s sister in law, Mrs Suquin Zhu Tong (Mrs Tong). Mrs Tong’s deceased husband, Mr Quoc Tong (Mr Tong), was the applicant’s brother.
Mrs Tong has lived on the premises with Mr Tong and their family since 2016. However, only her husband was a party to the written residential tenancy agreement.
The hearing process
The application was first listed for hearing on 23 January 2020. On that occasion Ms Tong and Mrs Tong represented themselves, although Mrs Tong had assistance from a support person. Mrs Tong’s English is not strong, but her support person provided some assistance. The parties indicated a willingness to try to settle the matter, so after a discussion, I adjourned it to a preliminary conference.
On 30 January 2020 the parties attended a preliminary conference before Member Morris. It is apparent from the Orders that were made on that occasion that the parties reached an agreement under which certain financial incentives would be provided to Mrs Tong if she vacated the property within 30 days. The parties were given leave to relist if the orders could not be complied with.
Some weeks later, Ms Tong sought to have the matter relisted, and it was listed for directions on 21 February 2020. Ms Tong represented herself at this hearing, and Mrs Tong was represented by Mr Yung, a solicitor, and was supported by Mr McNicol, a family case manager with the PCYC. No orders were made as the 30-day period for compliance with the consent orders had not passed. However, the matter was listed final hearing on 11 March 2020.
At the final hearing on 11 March 2020 Ms Tong represented herself, and Mrs Tong was again supported by Mr McNicol. Ms Tong pressed the application for a termination and possession order. After hearing from the parties, I granted the termination and possession order.
The family provision proceedings
Prior to the first hearing, Mrs Tong commenced proceedings in the ACT Supreme Court under the Family Provision Act 1969. Mrs Tong filed a copy of an affidavit she prepared for family provision proceedings in this matter. Ms Tong was not cross examined on this affidavit, but I had regard to the uncontroverted facts set out in that document, particularly as they related to the background to this case.
Factual findings
On the limited evidence before the Tribunal, I was satisfied of the following facts.
In mid-2003 Mrs Tong moved to Australia to live with Mr Tong. She married him some months later. They subsequently had four children, all of whom were minors at the time of the hearing.
Mr and Mrs Tong and their children commenced living at the premises in March 2006. Mrs Tong’s elderly mother also lived with them. As this time, Mr Tong was the lawful owner of the premises (subject to any mortgage).
At an unknown date, Mr Tong transferred his interest in the premises to Ms Tong. At that time, Ms Tong became the sole Crown lessor of the property.
Ms Tong and Mr Tong entered the present lease on 3 July 2017. The lease provides for rent of $500 a week, paid fortnightly. The lease was periodic from the date of commencement.
In December 2018 Mr Tong was diagnosed with cancer. He died in June 2019.
In May 2019 (that is shortly before his death), Mr Tong established the Tong Family Trust (the Trust). A company known as Fortitude Investment Group Pty Ltd (Fortitude) was appointed as the trustee of the trust. The directors of Fortitude are Mr Tong’s brother and his sister, Ms Tong.
Mr Tong left a significant portion of his assets to Ms Tong, his brother, and the Trust. Mrs Tong appears to be the beneficiary only of Mr Tong’s superannuation policy.
The residential tenancy agreement
Section 127 of the RT Act provides that if one of two tenants who are parties to a residential tenancy agreement dies, the tenancy and the tenancy agreement continue to operate as if there are two or more tenants. As Mr Tong was the only tenant named on the lease, this provision did not apply to continue the tenancy with Mrs Tong.
I note here that the New South Wales Residential Tenancies Act 2010 (NSW) contains a provision that enables the Tribunal to declare a resident a tenant in circumstances where the tenant has died,[1] but no such provisions exists in the ACT RT Act. That means the only option open to the Tribunal is to try to determine, from the documentation and other evidence, whether a tenancy has arisen in law between Mrs Tong and Ms Tong. This is a jurisdictional fact for the exercise of power under to terminate a tenancy that exists under the RT Act.
[1] Section 77
The current legal position appears to be that a tenancy is a right that is continued in the name of the estate and the beneficiary of the estate may exceed to the title in their own right.[2] The executor of the estate was not a party to these proceedings, but it appears from Mrs Tong’s evidence that Mrs Tong considers any tenancy with Mr Tong or his estate to be at an end, by virtue of the estate being released from any obligation, and the executor of the estate does not oppose this.
[2] Estate of Humphries v Commissioner for Housing [2003] ACTSC 40
That leaves the question of the status of Mrs Tong.
Following Mr Tong’s death, Mrs Tong and her children and mother remained in the premises. Ms Tong sought to have Mrs Tong pay the rent and either continue the current lease or enter into a new lease under her own name.
Following preliminary discussions, on 23 July 2019, Mrs Tong emailed Ms Tong and stated that before asking her to pay rent, Ms Tong should fix various things, including “The [g]arden, laundry, kitchen” and “match the lease”.
On 24 July 2019, Ms Tong sent Mrs Tong an email in reply stating that the “this is a continuing lease” and noting, by reference to the RT Act, the kinds of matters that she was required to fix urgently. Ms Tong also referred Mrs Tong to some information for tenants available online.
It appears the parties continued to negotiate.
Sometime thereafter,[3] Ms Tong again wrote to Mrs Tong and advised her that:
(a)if the parties remained in dispute, she will treat her “as a tenant”;
(b)Mrs Tong had the right to refuse permission to enter the property but in such a case she could not expect her to make the requested repairs;
(c)Mrs Tong was required to pay rent; and
(d)the dispute over the estate was a separate matter to the requirement to pay rent.
[3] The date of the email is in Chinese
On 5 August 2019, Mrs Tong replied to Ms Tong, stating relevantly that:
I [will] never move out from my house…. I will not pay you 1 cent until court decide.
Ms Tong then served a notice to remedy on 8 August 2019, stating that Mrs Tong owed $2,000 in arrears of rent. Mrs Tong made no attempt to pay the arrears, maintaining that she was not required to pay rent to live in the house. She also declined to pay the outstanding water accounts.
Ms Tong issued a further notice to remedy on 16 September 2019 when the rent had reached $4,500. Again, Mrs Tong did not comply with the notice.
Ms Tong served a termination notice on 14 October 2019, requiring that Mrs Tong vacate the premises on or before 1 November 2019. Mrs Tong did not do so.
It appears that negotiations between the parties continued. Ms Tong made offers to allow Mrs Tong to pay the arrears by instalments. The trustees of the Trust offered to approve the payment of rent assistance to Mrs Tong for a period of up to twelve months, but only if she agreed to move from the premises. Mrs Tong did not appear to have engaged with those discussions, at least in part because she did not accept that she should be required to pay rent for what has been, for many years, her marital home.
The Trust is not prepared to pay that assistance to Mrs Tong while she remains in the premises. This is because, as a trustee of the Trust, Ms Tong is concerned that it would be a conflict of interest for her, as a trustee, to approve to payment of rent from that trust to herself.
Was the respondent a tenant?
The key threshold issue was the nature of the legal relationship between the parties.
Section 49(1) of the RT Act provides the Tribunal may make a termination and possession order if the tenant has not paid rent, and the necessary notices have been served. In cases where a person is not a tenant, different processes may need to be followed, and the Tribunal cannot issue a warrant.
Section 6A defines a residential tenancy agreement as follows:
What is a residential tenancy agreement?
(1) An agreement is a residential tenancy agreement if, under the agreement—
(a) a person gives someone else (the tenant) a right to occupy stated premises; and
(b) the premises are for the tenant to use as a home (whether or not together with other people); and
(c) the right is given for value.
(2) The agreement may be—
(a) express or implied; or
(b) in writing, oral, or partly in writing and partly oral.
(3) The right to occupy may be—
(a) exclusive or not exclusive; and
(b) given with a right to use facilities, furniture or goods.
This is a statutory definition. Parties cannot contract out of it.
I was satisfied that at all relevant times, on the evidence before the Tribunal, Ms Tong was the legal owner of the premises and that she had the legal right to let those premises and to give someone the legal right to occupy them. The Tribunal has no jurisdiction to decide any equitable claim for an interest in the property.
I was satisfied that Ms Tong offered Mrs Tong the legal right to occupy the premises as a home, upon the same terms as an agreement she previously offered Mr Tong.
On Mrs Tong’s part, I was satisfied that Mrs Tong knew of the terms of the agreement between Ms Tong and Mr Tong and that, at least as at 23 July 2019, she consented to remaining in the premises on those terms, albeit she was also engaging in an impermissible rental strike at that time. Mrs Tong acknowledged this by demanding that repairs be undertaken by Ms Tong, and Ms Tong agreed she had certain obligations in that regard. Mrs Tong asserted a right to exclude Ms Tong from the property and Ms Tong acceded to that right. Both parties have acted consistently with a tenancy agreement, notwithstanding that Mrs Tong asserts that she does not have to pay rent. That Mrs Tong has since asserted an equitable interest in the property that may override or render nugatory any lease does not change this position.
The termination application
Both parties were in a difficult position, particularly considering the Supreme Court proceedings. The applicant lessor had a mortgage over the property she must service, and liability for water bills the respondent is not paying. She had attempted to negotiate with the respondent but was met with resistance and no arrangements have been finalised. Meanwhile, the respondent was aggrieved that she was potentially to be evicted from her marital home, where she had lived for fourteen years.
The nature of the proceedings before the Tribunal was an application for termination under section 49 of the RT Act on the basis of unpaid rent. It was at no stage in dispute that, if the lessor were indeed the legal owner, then rent was owed, the arrears were large, and the respondent had doubtful capacity, and in any case, no intention of paying them.
The RT Act gives the Tribunal a discretion to grant or refuse to grant an order for termination and possession. Even where the terms of section 49 are satisfied, the Tribunal is not bound to make an order under it. The terms of the agreement, and the purpose and scope of the RT Act inform the breadth of the discretion that remains.[4] As was observed by the Supreme Court in Commissioner of Housing of theAustralian Capital Territory v Nicole Smith [1995] ACTSC 17:
A discretion to refrain from making an order for the issue of an ejectment
warrant must, of course, be exercised judicially. The range of relevant considerations will be circumscribed by a consideration of the object and purposes underlying the Act in question and any related legislation.
[4] David Harold Eastman v Commissioner for Housing for the Australian Capital Territory [2006] ACTSC 52 at [33]
For the reasons outlined above, I was satisfied that there was a residential tenancy agreement in place, the terms and conditions of which included both the Standard Terms in the RT Act, and those terms that had been earlier agreed between Ms Tong and Mr Tong and adopted by Mrs Tong.
I was satisfied that rent had not been paid for a considerable period time, and that there were outstanding water bills as well. Valid notices to remedy and a valid notice to vacate had been issued. The respondent tenant was adamant in her position that she did not, and would not, pay rent, and in any case had demonstrated that would not comply with any agreement to do so.
The main alternative in situations such as this, where a tenant has not paid rent for a considerable period to time, and there is a continuing obligation to pay rent as well as outstanding areas, is to make a payment order under section 49A of the RT Act instead.
As at 11 March 2020, 49A provided that:
49A Failure to pay rent—payment order
(1) This section applies if a lessor applies to the ACAT for a termination and possession order under section 49 (2).
(2) Instead of making a termination and possession order, the ACAT may make an order (a payment order) requiring the tenant to pay—
(a)the rent, or a stated part of the rent, that has become payable; and
(b)future rent as it becomes payable.
(3) The ACAT must not make a payment order unless satisfied the tenant is reasonably likely to make the payments required under the order.
However, I could not make such an order, because I could not be reasonably satisfied that the tenant would comply with it.
Granted, there was some evidence that Mrs Tong was in receipt of superannuation payments from Mr Tong’s superannuation, around $2,200 per fortnight. Although not a large sum, this should have been sufficient to allow her to at least contribute to the rent. However, her position remained that she did not have to and would not pay rent, even if she could afford it. In such circumstances, it is simply not appropriate to make a section 49A order. It would be doomed to fail.
Mrs Tong was either unwilling or unable to pay the rent as and when it fell due. The consequences of failing to pay rent had been explained to her by this Tribunal. The lessor had made offers of alternative accommodation, including funded alternative accommodation, which the tenant has declined. The debt was not disputed. Mrs Tong is seeking through legal action in the Supreme Court, only family provision, not a transfer of the property or a declaration stating that the transfer was unlawful. In the circumstances, the continuing accrual of arrears appears inevitable. Meanwhile, the Supreme Court proceedings had barely commenced and would not result in a resolution for some time. The parties were no closer to an amicable resolution, and with no prospect of the Supreme Court proceedings being resolved quickly, there was little purpose to be served by further adjournment or delay.
Although I can appreciate and empathise with the unfortunate position Mrs Tong found herself, I was ultimately persuaded that the appropriate course of action to make a termination and possession order under section 49 of the RT Act.
Accordingly, I made such an order, and having regard to Mrs Tong’s difficult position, and the hardship that she would suffer, I stayed it for the maximum period of three weeks.
………………………………..
Senior Member H Robinson
HEARING DETAILS
FILE NUMBER: | RT 4/2020 |
PARTIES, APPLICANT: | Le Noc Tong |
PARTIES, RESPONDENT: | Suqin Zhu Tong |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | N/A |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | N/A |
TRIBUNAL MEMBERS: | Senior Member Robinson |
DATES OF HEARING: | 11 March 2020 |
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