Case v Frimont

Court of Appeal (NSW)|2021-03-02|Before: Basten JA, Gleeson JA, Leeming JA, Davies J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

The sole registered proprietor of the land at Blaxlands Ridge was the late Albert Bruce Case. He was survived by a widow Joyce and three children, Kenneth, Robert and Pamela (another daughter Sylvia had died as a child in 1944). Kenneth obtained letters of administration in 1968.
In accordance with the rules governing intestate succession then prevailing (Wills, Probate and Administration Act 1898 (NSW), s 50(a)), Joyce was entitled to a one third share of the estate. Joyce died in 1986, leaving a will appointing Robert as executor and sole beneficiary of her estate. A grant of probate was obtained of Joyce's will. Joyce's estate included her right to the due administration of Albert's estate, which in due course, subject to the estate assets being realized to meet estate liabilities and costs, would result in her one third interest in the land being transmitted to Robert. Nothing turns for present purposes on any more precise identification of the position of Robert as sole next of kin of his mother's deceased estate which included her right to due administration of her husband's intestate estate, as was given in Horton v Jones (1935) 53 CLR 475 at 486-487; [1935] HCA 7. Nor is it necessary to consider how that might eventually occur (whether by partition or appointment of trustees for sale).
The evidence was that Albert had no creditors. It will be seen that if the land in Albert's estate was available for distribution, then, after 1986, the entitlements of Kenneth, Robert and Pamela would be two ninths, five ninths and two ninths respectively (each surviving sibling was entitled to a one third share of the two thirds to which Joyce was not entitled, and Robert would have succeeded to the entirety of his deceased mother's one third share).
Kenneth died in 2003. Albert's estate remained unadministered. Donald and his wife Peggy moved in around late 2010 to occupy a house built on the land to look after his uncle Robert, who died on 17 January 2011. They have lived in that house ever since. They have from time to time paid some amounts of Council rates (as to which see further below), but not since August 2018. They have never otherwise paid rent (although the payment of rates thereby discharging the owner's liability to the Council is capable of amounting to rent). In what follows I shall adopt the parties' approach and refer merely to Donald. I did not understand any point to have been taken that Donald's wife had not been joined to the litigation.
Pamela obtained letters of administration in March 2018, and became registered proprietor of the land in April 2018. In November 2018, her solicitor wrote to Donald advising that she had decided to sell the land so as to finalise the estate. Subsequently, she has agreed to sell the land for $1.27 million, with vacant possession.
Donald has declined to vacate the premises. Donald contended that he was entitled to remain in possession because he is a tenant and the land comprises residential premises subject to a residential tenancy agreement.
The primary judge conducted a short trial on 23 June 2020, in which both parties were cross-examined. Judgment was delivered on 3 July 2020: Frimont v Case [2020] NSWSC 850. His Honour accepted that Donald had paid a portion of the Council rates levied upon the land, ceasing in 2018, and that Pamela was unaware of that fact until cross-examined, although contrary to her evidence it was found that she had asked him to do so.
It is necessary to have regard to the precise way in which Donald defended the proceedings at trial. Donald's pleading alleged three residential tenancy agreements. 1. The first was entered into around September 2010 when he and his wife moved into the residence in order to provide domestic services (essentially, palliative care) to Robert. 2. The second was entered into after Robert's death, when "in consideration for remaining in occupation of the Residence, the Defendant and his wife Peggy paid half the rates and charges levied by Hawkesbury City Council in respect of the Land, to the knowledge of [Pamela]"; it was alleged that "there was a residential tenancy agreement between the estate of Albert Bruce Case as landlord and the Defendant (alternatively, the Defendant and Peggy) as tenants of the Residence." 3. The third residential tenancy agreement was with Pamela as administrator, by continuing "to make payments towards half of the Council rates and charges by various instalments, the last of which was paid to the Council on 20 August 2018 in the sum of $100, and [Pamela] accepted the payments".
The primary judge held that none of the alleged residential tenancy agreements was made out. It will be convenient to deal with his Honour's reasons at the same time as resolving the grounds of appeal.
The primary judge also addressed other issues raised by Donald. While no claim of prescriptive ownership was ever advanced, Donald did maintain a claim based on estoppel. This formed no part of the appeal to this Court. A claim based on s 127 of the Conveyancing Act 1919 (NSW) was abandoned at trial.

The significance of a residential tenancy agreement

It is convenient at the outset to identify the significance of the narrow issue arising in this Court, namely, the existence of one or more residential tenancy agreements. As Donald correctly emphasised in submissions, such an agreement is distinct from a lease, and turns on occupation rather than exclusive possession. It need not be written or indeed formal. A residential tenancy agreement is defined in s 13 of the Residential Tenancies Act 2010 (NSW) relevantly as follows: "Agreements that are residential tenancy agreements (1) A residential tenancy agreement is an agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence. (2) A residential tenancy agreement may be express or implied and may be oral or in writing, or partly oral and partly in writing. (3) An agreement may be a residential tenancy agreement for the purposes of this Act even though - (a) it does not grant a right of exclusive occupation, or (b) it grants the right to occupy residential premises together with the letting of goods or the provision of services or facilities. Note - See section 8 for agreements that are not covered by this Act. Section 7 sets out premises not covered by this Act."
It was not suggested that any of the exceptions in ss 7 or 8 was applicable. "Residential premises" is defined in s 3 to mean "any premises or part of premises (including any land occupied with the premises) used or intended to be used as a residence". Thus the fact that the 60 acre parcel of land contained two houses, only one of which was occupied by Donald, does not stand in the way of the conclusion that part of the land was "residential premises".
However, it is necessary in order for there to be a "residential tenancy agreement" for there to be an agreement, even though the agreement need not be in writing and may be implied.
The forensic goal of establishing a residential tenancy agreement in response to Pamela's claim for possession was pleaded at paragraphs 51 and 52 of the amended defence: "51. These proceedings are a claim against a tenant of the Plaintiff to recover possession of residential premises subject to a residential tenancy agreement. 52. By reason of s 119 of the Residential Tenancies Act, 2010, this Court has no jurisdiction to grant the relief sought in the statement of claim."
Section 119 provides: "119 Prohibition on certain recovery proceedings in courts A landlord or former landlord must not commence proceedings against a tenant or former tenant of the landlord in the Supreme Court, the District Court or the Local Court to obtain recovery of possession of residential premises subject to a residential tenancy agreement."
"Landlord" is defined to mean: "(a) the person who grants the right to occupy residential premises under a residential tenancy agreement, or (b) a successor in title to the residential premises whose interest is subject to the interest of the tenant, or (c) a tenant who has granted the right to occupy residential premises to a sub-tenant, and includes a prospective landlord."
"Tenant" is defined correspondingly to mean: "(a) the person who has the right to occupy residential premises under a residential tenancy agreement, or (b) the person to whom such a right passes by transfer or operation of the law, or (c) a sub-tenant of a tenant, and includes a prospective tenant."
Accordingly, if Donald succeeded in establishing a residential tenancy agreement, he would be a "tenant", and Pamela would be a "landlord" (either because she was a successor in title to the premises, or because she had granted the right of occupation), and s 119 would apply.
Whether or not a prohibition upon the commencement of proceedings in a court has the effect of denying jurisdiction, as Donald's defence pleaded, is a question of construction: Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364; [2006] HCA 32. Indeed, it has been held that s 119 does not have the pleaded effect of denying jurisdiction: Whiteford v Commonwealth of Australia (1995) 38 NSWLR 100 at 106 and 114. That is not to deny that s 119 may be a defence to proceedings of the kind brought by Pamela, in vindication of the processes in Pt 5 of the Residential Tenancies Act and in particular the powers now conferred on the Civil and Administrative Tribunal (which is the successor to a long line of specialised bodies dealing with such disputes, as noted in Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 484; [1997] HCA 36).

No error in failing to find first residential tenancy agreement

By late 2010, Robert Case had been occupying part of the land for many years. The circumstances by which his brother (who had been the administrator of the deceased estate for some 35 years) permitted this to occur cannot be established on the evidence. Let it be assumed, favourably to Donald, that Robert's occupation of part of the land occurred by reason of an informal agreement with Kenneth. There is a large difficulty in sustaining a residential tenancy agreement in relation to the premises after Kenneth's death, which may be passed over for present purposes, for I am also prepared to make the assumption, once again favourable to Donald, that Robert enjoyed some form of informal right to occupy. The critical question is the position in late 2010. As Mr Weller submitted, the definition of "residential tenancy agreement" does not refer to owner or lessor but refers merely to the granting by one person to another for value of "a right of occupation". Fragile as Robert's tenure may have been, s 13 does not preclude him agreeing to share occupation of the dwelling which had been occupied by him for many years, in exchange for the provision of services. In that event, Robert is taken to be a "landlord" for the purposes of the Act (bearing steadily in mind that the nomenclature of the statute does not imply that there was a lease as might be recognised at general law).
The primary judge addressed the first residential tenancy agreement at [31]: "There are a number of difficulties associated with a conclusion that a residential tenancy agreement came into being between Robert and the defendant when the Defendant and Peggy moved into the house. The first is that there is no certainty about what care was to be provided so that the care could be regarded as constituting 'value' for the purposes of s 13. For a lease at common law to come into existence, there must be a term identifying the rent or a mechanism for determining the rent: Whitlock v Brew (1968) 118 CLR 445 at 456 and 460. Further, the party asserting that an agreement exists, must show that there was an intention to create legal relations, even although no presumption exists that legal relations are not intended in a family arrangement: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [26]. In my opinion, the evidence does not show that the parties did intend to create legal relations. I note also that the claim was not put on the basis of some proprietary estoppel arising from promises by Robert in return for which care was provided."
I agree with the conclusion, although I respectfully would not accept all aspects of the reasoning.
It may be a distraction to ask whether there is a lease at common law. The question is whether there is a residential tenancy agreement as defined in s 13. If there is a lease at common law, then there will likely be a residential tenancy agreement, but it is unsafe to conclude that the absence of a common law lease entails the absence of the statutory creature, which in many respects is less circumscribed than a legal lease, as Barrett J explained in Cohen-Hallaleh v Cyril Rosenbaum Synagogue [2003] NSWSC 395 at [15].
However, there must still be an agreement, and I agree that an arrangement where members of a family share the household of a terminally ill man in order to care for him is a poor candidate for imputing an intention to create legal relations. Contrary to ground 2 of the appeal, I would not depart from the conclusion of the primary judge in this respect. Further, it is essential in order to engage the definition in s 13 for "value" to be provided, and insofar as the only value alleged and the subject of evidence was caring for Robert, that necessarily ceased in January 2011. The provision of care is capable of amounting to value, and to that extent I would accept ground 1 of the appeal, but the difficulty here is that this aspect of Donald's appeal requires a conclusion that the caring for Robert prior to his death leaves in place a residential tenancy agreement a decade later. Ground 7 of the appeal contends as much, but it was not alleged that in exchange for caring for Robert, Donald would be entitled to occupy the premises in perpetuity, and even if it were, the evidence did not sustain such a finding. This was not fully explored in submissions, because Donald accepted that if there had been a residential tenancy agreement from 2010, it had come to an end at the latest in 2018 when Pamela was appointed administrator and became registered proprietor.
Grounds 1-7 of the appeal addressed the first residential tenancy agreement, but grounds 4, 5 and 6 were abandoned, and ground 3 only arose in connection with s 81 which was an obiter passage of his Honour's reasoning mentioned below.

No error in failing to find second residential tenancy agreement

Kenneth died in 2003. The office of administrator is personal and not transmissible, so no executor or administrator of Kenneth's estate could succeed as representative of Albert, as explained in Re Clover [1919] NZLR 103. The pleading alleges an agreement with "the estate of" Albert, but that simply cannot be. There is no such legal person. If there were any representative of Albert's deceased estate between 2003 and 2018, it was the NSW Trustee (pursuant to s 61 of the Probate and Administration Act 1898 (NSW)), but there is no suggestion of any such agreement.
The primary judge rejected the "second" residential tenancy agreement at [34]-[41]. None of the grounds of appeal that were pressed (grounds 8-11 were abandoned) challenged any aspect of that reasoning. The primary judge said that the principal difficulty faced by Donald was that there was no "person" who could grant a right of occupation to the premises: at [34]. The primary judge observed that until letters of administration were obtained by Pamela on 29 March 2018, the land remained registered in Albert's name. His Honour considered at [35] that there could not be an "agreement" under s 13, because there was no person to enter into that agreement with Donald. I agree.

No error in failing to find third residential tenancy agreement

The third residential tenancy agreement alleged by Donald turned on the payment of Council rates and charges after Pamela was appointed administrator. The primary judge found that the only evidence of this was his paying $100 on 20 August 2018, and that there was no other evidence of the amounts paid by the appellant after March 2018: at [49]. I accept Mr Weller's submission (referable to ground 15) that that finding is erroneous. The appellant tendered evidence of post office receipts, each in the amount of $100, paid on 13 April, 27 April, 14 May, 29 May, 14 June, 28 June, 13 July and 3 August 2018, referable to payments of outstanding rates. There was in fact evidence that some $900 was outstanding in March 2018, which approximately equates to the payments made by Donald later that year. However, Donald was not cross-examined to the effect that he intended to pay the outstanding amounts prior to Pamela's appointment, and it may be doubted that any uncommunicated intention as to why he was making those payments would be relevant to any issue.
The primary judge found that Pamela was unaware of these payments. They were relatively small, ceased some four or five months after she was appointed administrator, and there had been no subsequent payments. That finding was one which was expressly informed by her demeanour in cross-examination: "The plaintiff said that she did not know that the defendant had paid any of the rates. When confronted with documents showing that he had done so, she accepted that he had. I had the impression from the way she answered, that she was finding out for the first time by these questions that the defendant had paid some of the rates": at [44].
Although ground 13 challenged the finding that Pamela did not know that the appellant was paying half the rates, no basis for that challenge, which was governed by the principles stated in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 and Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55], was articulated in written or oral submissions. There is no basis to overturn the finding by the primary judge. Ground 14 challenged a statement by the primary judge that there was no evidence that Pamela gave copies of the rates notices after March 2018 or had asked Donald to pay them, but nothing turns on these issues in light of the finding of Pamela's lack of knowledge.
Similarly, ground 12 challenged the conclusion that Donald had not proven that he had paid half the rates. However, the primary judge expressly proceeded on the basis that even if Donald had not shown that he had paid half the rates, that would not of itself stand in the way of the conclusion that there was a residential tenancy agreement. His Honour said in terms that "I do not think anything turns on that": at [47]. It follows that nothing turns on this ground.
The primary judge correctly concluded that there could be no residential tenancy agreement with the administrator based merely upon Donald's continuing occupation of the premises and payment of a fraction of the rates and charges of which the administrator was unaware.

Conclusion and orders

The foregoing suffices to conclude that the appeal must be dismissed. There are two supplementary points.
The first is that the primary judge gave one further reason, in the alternative, for the termination of the first alleged residential tenancy agreement. That turned on s 81 of the Act. Indeed, Mr Weller accepted that s 81 had the effect found by the primary judge, namely, that upon letters of administration being issued to Pamela, or, on the latest, on 27 April 2018 when she became registered proprietor, the residential tenancy agreement terminated. That was on the basis of s 81(4)(a), providing: "(4) Other legal reasons for termination A residential tenancy agreement terminates if any of the following occurs - (a) a person having superior title (such as a head landlord) to that of the landlord becomes entitled to possession of the residential premises". It is not necessary to express a view as to the correctness of that aspect of his Honour's reasons or Mr Weller's concession. With respect, I doubt its correctness. The provision turns not merely upon a person having superior title but also upon that person becoming entitled to possession, and it seems clear that merely transferring ownership of property which is subject to a residential tenancy agreement to a third party does not without more bring the residential tenancy agreement to an end.
Secondly, the parties proceeded on the basis that there was an appeal as of right. That is not so. The right of appeal from a final judgment of the Supreme Court is qualified, in cases where there is an amount in issue not exceeding $100,000, by the requirement of leave: Supreme Court Act 1970 (NSW), s 101(2)(r). It was not established that the residential tenancy agreement for which the appellant contended was property amounting to or of the value of $100,000 or more. Accordingly, an appeal lies only by way of leave. However, there having been a full exchange of written and oral submissions, there should be a grant of leave.
I propose the following orders:
Grant leave to appeal.
Appeal dismissed.
Mr Case to pay Ms Frimont's costs of the appeal.

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Wills, Probate and Administration Act 1898(NSW)

(Wills, Probate and Administration Act 1898(NSW)

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