Arap 1 NSW v Hudson [2014] NSWCATAP 30 | Case summary

Introduction 1This appeal is from a decision of the Consumer and Commercial Division of the Tribunal made on 13 January 2014. A request for a written statement of reasons was made by the Appellant (which was the applicant landlord below) pursuant to section 62 of the Civil and Administrative Tribunal Act 2013 (NSW) (the Act). A written statement of reasons was published on 11 February 2014. Those reasons were accompanied by an order in the following terms: The application is dismissed because the Tribunal has no jurisdiction to determine the application as the tenant was the vendor on the sale of the property and the Tribunal lacks jurisdiction vide section 8(1)(f) of the Residential Tenancies Act 2010. 2The notice of appeal was filed on 28 February 2014 and the grounds of appeal were described as follows: 1. The Tribunal erred in finding that the Tribunal had no jurisdiction to determine the application. 2. The Tribunal Member erred when the Member did not allow the appellant to tender any relevant documents in support of the applicants case, including the residential tenancy agreement. 3. The Tribunal Member erred when making the finding without reference to any relevant documents. During the hearing of the appeal the second ground was not pressed and the appellant relies only upon grounds 1 and 3. 3The grounds of appeal raise a question of law, namely whether the decision below contained an error of law in determining that the Tribunal had no jurisdiction to hear the dispute between the parties by reason of section 8(1)(f) of the Residential Tenancies Act 2010 (NSW) (the RTA). The appellant contends that on a correct construction of that section it should be determined that the Tribunal has jurisdiction to determine the dispute between the parties. 4The proceedings below were commenced in 2013 in the Consumer Trader and Tenancy Tribunal and were decided this year in this Tribunal. Accordingly, the decision below constitutes an internally appealable decision and the rights of appeal are governed by section 80 of the Act - see NSW Land and Housing Corporation v Diab [2014] NSWCATAP 8. 5The proceedings below 6The appellant's application below sought the following orders:

The decision of the Appeal Panel 18The parties entered into the Contract for Sale of Land on 19 November 2012. Clause 41 of the contract provided: 41. Tenancy 41.1 The Vendor and the Purchaser acknowledge that the Vendor occupies the property at the contract date and will not be required to provide vacant possession at the date of completion of this contract, subject to the parties entering into the Tenancy Agreement. 41.2 Completion of this Contract is subject to and conditional upon the Vendor and the Purchaser entering into the Tenancy Agreement. 41.3 The Vendor requests to pay the first year's rental pursuant to the Tenancy Agreement in advance upon settlement of this Contract ("the Vendor's Request"). In making the Vendor's Request, the Vendor specifically acknowledges Section 33(2) of the Residential Tenancies Act 2010 No 42 which provides:- 33(2) A landlord, or landlord's agent, must not require a tenant to pay more than 2 weeks rent in advance under a residential tenancy agreement or to pay rent for a period of the tenancy before the end of the previous period for which rent has been paid. Note. A tenant may pay more than 2 weeks rent if the tenant wishes to do so. Maximum penalty: 10 penalty units. 41.4 The Vendor's Request is made voluntarily by the Vendor as an inducement to the Purchaser to enter into this Contract. The purchaser will agree to the Vendor's Request on the basis that the advanced payment of rental is made in the manner detailed in Special Condition 38 above. The Vendor represents to the Purchaser that it will not withdraw the Vendor's Request during the term of the Tenancy Agreement. The Vendor acknowledges that the Purchaser would not have entered into this Contract if not for the Vendor's Request. 19Clause 30.2 of the Contract contained the following definition of the term "Tenancy Agreement". Tenancy Agreement - means the written agreement between the Purchaser (as the Landlord) and the Vendor (as Tenant) for the occupation of the Property, entered contemporaneously with this contract. 20The Contract was completed on 7 December 2012 and the parties entered into the Residential Tenancy Agreement dated the same date. Clause 1 of that agreement provides as follows: The landlord agrees that the tenant has the right to occupy the residential premises during the tenancy. The residential premises include the additional things (if any) noted under "Residential premises". 21The Residential Tenancy Agreement contained an annexure headed "Annexure A Part 3 Special Terms". Special Terms 1, 5 and 6 provide as follows: 1. The term of this Tenancy Agreement shall be 12 months commencing on the date of settlement of the Contract. 5. This Tenancy Agreement is subject to and conditional upon:- Settlement of the Contract of Sale for the premises between the Lessor (as Purchaser) and the Tenant (as Vendor) referred to in these Special Conditions as "the Contract"; Execution of the Option Agreement between the Lessor (as Vendor) and the Tenant (as Purchaser) to which a copy of this Tenancy Agreement is attached ("the Option Agreement"). 6. The parties agree that an essential condition of this Tenancy Agreement is that the Tenant punctually observe and comply with the terms of the Option Agreement at all times during the term of this Tenancy Agreement and that a Material Breach of the Option Agreement by the Tenant shall be a breach of an essential term of this Tenancy Agreement. 22It is clear that by the Contract for Sale the parties agreed that the appellant and respondent would, on settlement of the contract, enter into the residential tenancy agreement with the vendor becoming the tenant pursuant to the residential tenancy agreement. The tenancy agreement commenced on the date of settlement in accordance with Special Term 1. This is so notwithstanding the definition of tenancy agreement in Clause 30.2 of the Contract which appears to state the tenancy agreement is entered into contemporaneously with the Contract for Sale. In fact it was entered into contemporaneously with settlement of the Contract. 23We agree with the submissions of the appellant that the Contract for Sale does not confer a right to occupy on completion. Special Condition 41 provides that the vendor does not have to provide vacant possession at completion subject to entering into the tenancy agreement. The conferral of the right to occupy from completion occurs in Clause 1 of the Residential Tenancy Agreement provided that the Residential Tenancy Agreement is entered into. 24The respondent contends that the contract for sale of land confers a right to occupy the premises. In support of that proposition the respondent contends that he would not have entered into the contract for sale of land without the assurance that he would be allowed to remain in occupation by way of a residential tenancy agreement. 25In the opinion of the appeal panel the fact that the parties may not have entered into the contract for sale of land without the provision that completion would be subject to entry into a residential tenancy agreement does not lead to the conclusion that the source of the conferral of the right to occupy is in the contract for sale. 26Prior to the introduction of the RTA the jurisdiction of the predecessor Tribunal (the Consumer Trader and Tenancy Tribunal) was regulated by the Residential Tenancies Act (NSW) 1987 (the 1987 Act). The 1987 Act contained s 6(1)(a) which provided as follows: Agreements and premises to which Act does not apply (1) This Act does not apply to a residential tenancy agreement: (a) if the tenant is a party to an agreement made in good faith for the sale or purchase of the residential premises. 27Section 6(1)(a) was considered by the Tribunal's predecessor, the Consumer Trader and Tenancy Tribunal in the case of Georgiardis v Hadjichristodoulou (Tenancy) [2000] NSWCTTT 36 (4/4/2002). In that case the respondents agreed to sell the premises to the applicant. A contract for sale was entered into and settlement occurred on 13 November 1999. It was common ground that the purpose of the sale was to give the respondents a chance to continue to live at the premises. The Tribunal said that the arrangement allowing (or permitting) the respondents to occupy the premises after the sale was completed was a residential tenancy agreement for the purposes of the Act (ie the 1987 Act). With respect to s6(1)(a) of the 1987 Act the Tribunal said that there was no contract for sale or purchase of the premises since the arrangement was entered into and settlement of the applicants purchase had occurred. The Tribunal was satisfied that the agreement between the parties was not one to which s 6(1)(a) applied. 28Section 6(1)(a) of the 1987 Act was also referred to in Parkroad Projects Pty Ltd v Luckey and Anor [1999] NSWSC 214. In that case the first defendant had occupied and owned the premises. The plaintiff and the first defendant entered into a residential tenancy agreement and a mortgage (the plaintiff as landlord / mortgagor and the first defendant as tenant / mortgagee). The plaintiff and first defendant entered into a contract for sale of land. The first defendant was the vendor and the plaintiff the purchaser. Some years later an application came before the Tribunal which determined it had jurisdiction. It was accepted between the parties that the residential tenancy agreement came into effect as such upon completion of the sale of the premises to the plaintiff. The Court held that the preferred construction is that the Act (the 1987 Act) continues to apply in cases of a vendor selling and leasing back for a long term and that s 6(1)(a) applied during the performance of the sale agreement (paragraphs 38 and 39). 29The provisions of s 6(1)(a) are expressed in language which is different from s 8(1)(f) and therefore decisions on s 6(1)(a) need to be treated with care. 30It is the opinion of the Appeal Panel that s 8(1)(f) applies only where the Contract for Sale contains a provision which confers a right to occupy residential premises on a party to the agreement. It does not apply where a right to occupy is conferred by another agreement (such as the residential tenancy agreement in this case) or where the contract for sale purports to confer a right to occupy residential premises on a third party. 31Therefore the Tribunal has jurisdiction to determine the application brought by the appellant against the respondent and, accordingly, the decision below contained an error of law in determining that the Tribunal did not have jurisdiction on the basis that the contract for sale conferred the right to occupy. 32The respondent submitted that the appellant should be held to the concession made by Mr Graham at the hearing that the Tribunal lacked jurisdiction and to the consequences of Mr Graham's failure to tender the Contract for Sale and the residential tenancy agreement. In the opinion of the appeal panel Mr Graham's concession concerning jurisdiction is not relevant to the question of whether the Tribunal in fact has jurisdiction. It is also the opinion of the appeal panel that his apparent failure to tender the Contract and residential tenancy agreement does not result in those documents being unavailable for consideration by the appeal panel. It would be inconsistent with the so called guiding principle set out in s36 of the Act (which requires the Tribunal to facilitate the just, quick and cheap resolution of the real issues in the proceedings) to disallow the appellant from tendering the contract for sale and the residential tenancy agreement to the appeal panel. 33Accordingly the appeal panel will order that the appeal be upheld and that the proceedings be remitted to the Consumer and Commercial Division for rehearing. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar

Arap 1 NSW v Hudson

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