Chen v Mulholland

Chen v Mulholland - [2005] VCAT 2709 - VCAT 2005 case summary — Zoe

[34]

22. The facts I set out in the next six paragraphs are findings that I make on the basis of the evidence contained in the two witness statements I have mentioned and of the oral evidence of Mr Tandy.

23. Water is supplied to the Flinders Wharf building by City West Water. It bills the body corporate for all the water used. The body corporate pays for the water used. The bills from City West Water at all material times charged at the rate of $1.66 per kilolitre used.

24. Gas is supplied to the building by Origin Energy. It bills the body corporate and the body corporate pays the bills.

25. Cold water is delivered to each apartment by a mains pressure system. Each apartment has a cold water meter in the ceiling space above the entry door. The meter measures the volume of cold water that is consumed within the apartment.

26. In the building there is a rooftop hot water plant with two gas-fired boilers. Water that is delivered to the plant is heated and distributed throughout the building. For each apartment there is a hot water meter that sits next to the cold water meter and measures the volume of hot water consumed within the apartment.

27. Energy Plus reads the two meters, then prepares and delivers to the occupier of each apartment an invoice for the cold water consumed and for the hot water consumed. For cold water, Mr Chen was charged at the rate of $1.66 per kilolitre, the same rate as that for which the water supplier City West Water had charged the body corporate. For hot water, Mr Chen was charged at the rate of $10.00 per kilolitre. This was a figure arrived at by Mr Tandy and agreed to by the body corporate. He arrived at it by having regard to the cost of the water (at the rate of $1.66 per kilolitre) that had been heated, the cost of the gas that had been charged for by Origin Energy in respect of the whole building, a component to take account of the cost of electrical heat tracing (for the hot water system has a heat trace cable attached to the pipework for the purpose of maintaining a constant water temperature) and a component to take account of the cost of equipment.

Mr Tandy estimated that a charge of $10.00 per kilolitres to each occupier for hot water consumed was sufficient for the body corporate to cover its costs once regard was had to all those matters.

28. The body corporate agreed to Energy Plus charging each occupier a fee of $10.00 for its work in reading the meters and preparing invoices. This is what is described as the "hot water service charge" or "hot water supply charge" in the two invoices that are the subject of this proceeding. The two invoices also include goods and services tax calculated on everything except the cold water charge.

The Residential Tenancies Act

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57. The two invoices in question in this case were for more than the consumption of hot water and cold water. They included an additional flat charge of $10.00. That was the flat charge that the body corporate had agreed that Energy Plus could charge each occupier as a fee for its work in reading meters and preparing invoices. In each invoice addressed to an occupier, that flat charge was passed on to the occupier.

58. In the case of an owner-occupier, perhaps the body corporate's decision binds each member and the occupier thereby becomes liable to pay the flat charge. But the case of a tenant is different. In the present case the tenant challenges his liability to pay the flat charge and it is necessary for the body corporate to prove that, as a matter of contract, Mr Chen is liable to pay it.

59. The second sentence in the "Account Application" document recorded Mr Chen's undertaking of responsibility for payment of "all Energy Plus invoices". In isolation, this sentence might be regarded as a promise to pay the flat charge if an Energy Plus invoice happened to include it. But the sentence cannot be read in isolation. The first sentence authorises invoicing "for usage" of hot and cold water and for nothing else. The tenant correctly submitted, in my opinion, that "all Energy Plus invoices" in the second sentence should be construed as meaning "all Energy Plus invoices for usage of hot and cold water", in the light of the first sentence.

60. "Usage" in my opinion, should be given its ordinary meaning in the context of a supply of a utility service. It comprehends the use or consumption of the utility. It does not comprehend work done by somebody to calculate the volume of what has been used or consumed. So Mr Chen, by the "Account

Application" document, was not promising to pay the flat charge which was

Energy Plus's fee. That conclusion is arrived at as a matter of construction

of the agreement into which Mr Chen entered, irrespective of who was the opposite party to the agreement. There having been no other way in which it was suggested that Mr Chen could have been liable to pay the flat charge

than as a result of a promise by him to pay it, I conclude that he was not liable to pay the flat charge of $10.00 in the first invoice and is not liable to pay the flat charge of $10.00 in the second invoice.

The Width of the Term

61. There is a principle of construction that if a clause of a contract is followed by a later clause which destroys the effect of the first clause the later clause is to be rejected as repugnant and the earlier clause prevails: Lewison, op.cit. pp 299-300.

62. The term created by the two sentences in the "Account Application" document purported to make Mr Chen liable for payment of invoices received for usage of hot and cold water, whether or not the premises were

separately metered for hot and cold water. So did special condition numbered 19 in the "Residential Tenancy Agreement" document. The additional term numbered 9 in the "Residential Tenancy Agreement" document, which appeared earlier in it, was expressed to make Mr Chen liable to pay charges for services only where the rented premises were separately metered for those services.

63. I do not think that the principle of construction can be relied upon so as to make the term in the "Account Application" document repugnant because of inconsistency with the additional term numbered 9. The reason is that, where there are two separate documents constituting one agreement, it is not possible to say which of them contains the "earlier clause". I do not need to express any view about whether the principle operates to enable special condition numbered 19 to be rejected, or whether the principle is inapplicable because the additional term numbered 9 is outweighed by two different clauses both inconsistent with the additional term numbered 9 but consistent with each other.

Invalidity under Section 27

64. The term in the "Account Application" document not having been rendered ineffective by reason of inconsistency with an "earlier" term in the tenancy agreement, it is now necessary to consider whether, as the tenant submitted, the term is invalid under section 27 by reason of it purporting to have the effect of excluding or modifying the application to the tenancy agreement of section 52.

65. It is clear, in my opinion, that the term does have that effect. It purports to render a tenant liable to pay for usage of "hot and cold water" irrespective of whether the supply of water is separately metered or whether the supply of the heating medium is separately metered. It purports to modify the application of section 52 (b) by extending a tenant's liability for "the cost of all water supplied to the rented premises" beyond circumstances in which the cost is based solely on the amount of water supplied and the premises are separately metered. It purports to modify the application of section 52 (c) by extending a tenant's liability for "that part of the charge that is based on the amount of water supplied to the premises" beyond circumstances in which the premises are separately metered.

66. Accordingly, the term is rendered invalid by reason of the operation of section 27 (1). For the same reason the special condition numbered 19 in the "Residential Tenancy Agreement" document, at least insofar as it affects the use of electricity, gas, oil and water, is invalid. The additional term numbered 9 in that document, insofar as it deals with consumption, appears to be valid; it is consistent with the application to the tenancy agreement of section 52.

67. There was a submission on behalf of the body corporate that section 53 did not render the landlord liable for any hot or cold water charges in the circumstances of this case. That submission is relevant to the issue of whether Mr Chen is entitled to claim reimbursement from the landlords of sums that he has paid in respect of the first invoice; I shall deal with that issue shortly. But in my view the submission has nothing to do with whether a term of the tenancy agreement offends section 52 or whether under section 52 liability is imposed upon Mr Chen.

The Application of Section 52

68. The first invoice rendered to Mr Chen included a charge of $39.18 for "Total Cold Water including Disposal", calculated at the rate of $1.66 per kilolitre. The second invoice included a charge of $48.31 for "Cold Water Volume Charge" calculated at the same rate. It was conceded on Mr Chen's behalf that he was liable under section 52 for the payment of those charges. The concession was correct. The rented premises were separately metered for cold water. The charges simply passed on to Mr Chen the "cost of all water supplied to the rented premises during the tenant's occupancy", that cost having been based solely on the amount of water supplied, and the amount having been measured by the separate meter. The charges therefore conformed to section 52 (b). Insofar as the bills rendered by City West Water to the body corporate included sewerage disposal charges (as I imagine they did, although there was no evidence about that), those charges were simply passed on to Mr Chen also; so the charges conformed to section 52 (d) in that regard. The concession assumed that City West Water held the appropriate water and sewerage licence. There is no reason to doubt the correctness of the assumption.

69. The first invoice included a charge of $85.00 for "Total Hot Water including Disposal", calculated at the rate of $10.00 per kilolitre. The second invoice included a charge of $91.00 for "Hot Water Consumption" calculated at the same rate. The charge was composite. It was "partly based on the amount of water supplied to the premises". The premises were separately metered to measure the supply of the water. But the charge was also partly based on other matters. It included a provision for the cost of gas supplied to the body corporate for heating of the hot water supplied to the rented premises, although the rented premises were not separately metered in relation to the supply of gas. It included a component to take account of the cost of electrical heat tracing, although there was no evidence that the rented premises were separately metered in relation to the supply of electricity. It included a provision for the cost of equipment.

70. For the two charges referred to in the previous paragraph, section 52 (c) limits Mr Chen's liability to "that part of the charge that is based on the amount of water supplied to the premises during the tenant's occupation". On the evidence, that part was the sum arrived at by multiplying the total kilolitres of water supplied, that become hot water, and the rate of $1.66 per kilolitre for water supplied and measured by the separate meter. So it amounted to 16.6 per cent of each charge made: $14.11 and $15.11 respectively.

71. Each invoice included the flat charge of $10.00, described as "Hot Water Service Charges" and "Hot Water Supply Charge" respectively. This was the charge for Energy Plus's work in reading meters and preparing invoices. Nothing in section 52 renders a tenant liable for charges of that kind. The term in the "Account Application" document, even if valid, did not on its proper construction render Mr Chen liable for charges of that kind. He did not request Energy Plus or the body corporate to do any work or perform any services for him in relation to reading meters or preparing invoices. There is no basis in law for concluding that he was legally liable to pay those charges and I determine that he was not.

72. Each invoice purported to pass on to Mr Chen goods and services tax. I assume that goods and services tax is indeed payable on the services referred to in the invoices (although the invoices reflect, as I was told in the Winter case, that the mere supply of cold water does not attract goods and services tax). As the tax relates to charges which I have already determined were not payable by Mr Chen it follows that he was not liable to pay the tax.

73. The result is that the only sum for which Mr Chen was liable under the first invoice was $53.29 ($39.18 for cold water and $14.11 for part of the hot water charge) and the only sum for which he is liable under the second invoice is $63.42 ($48.31 for cold water and $15.11 for part of the hot water charge). This result corresponds to the result in the Winter case.

Reimbursement

74. Mr Chen has paid the whole of the sum of $143.68 charged for in the first invoice. He has asked for an order that the landlords reimburse him for the difference between that sum and the sum of $53.29 which I have determined was the only sum that he was liable to pay.

75. The claim for reimbursement cannot succeed, at least at the moment. For a tenant to be entitled to reimbursement from a landlord, section 55 (2) requires the tenant to prove three things. The first is that the tenant has paid for something for which the landlord was liable under section 53. For the moment I shall assume that the landlords in this case were liable under section 53 for the balance of the first invoice which Mr Chen was not liable to pay. The second thing is that the landlord has received a written request for reimbursement attached to a copy of the account and the receipt or other evidence of payment. The third thing is that 28 days have elapsed since the receipt of the request for reimbursement. There was no evidence that Mr Chen had ever complied with section 55 (2) by making a written request for reimbursement to which was attached the evidence of payment required by the sub-section. So he did not prove the second thing.

76. Mr Strahan submitted that there was a more fundamental reason why Mr Chen could never establish an entitlement to reimbursement: under the terms of section 53 the landlords were not liable to pay any of the charges in the first invoice even if I determined that Mr Chen was not liable to pay them.

77. First, he submitted that section 53 (1) (b) did not cover the case of the hot water charges because they were not a charges "in respect of the supply or use of electricity (or) gas ..... by the tenant". The argument, as I understood it, was that the electricity and gas supplied and used in the heating of the water were supplied and used prior to Mr Chen's use of hot water, so the electricity and gas were not supplied to him or used by him. I do not accept that first submission. The phrase "in respect of" is of broad import and requires no more than a relationship, whether direct or indirect between two subject matters: see Pearce & Geddes, Statutory Interpretation in Australia, 5th Edition (2001) at para [12.7]. There is a clear relationship between the charges made for hot water and the supply and use of the heating medium.

78. The second submission of Mr Strahan on this topic was more formidable. He submitted that section 53 (1) (c) did not cover the case of the hot water

charges because they were indeed "based on the amount of water supplied"

to separately metered rented premises, even though they were also based on other components. He pointed to the difference in expression between "based solely" in section 52 (b) and "based" in section 53 (1) to support the argument that "based" in that later section meant "based whether wholly or in part".

79. The submission, if correct, would mean that neither a landlord nor a tenant could be liable for hot water charges that were calculated in the manner in which they were calculated in the present case. There would be a gap in the Act, and conceivably a gap in any process by which a body corporate could attempt to recoup charges that it had paid to a gas supplier. But I do not think that the submission is correct. The appropriate comparison, in my opinion, is between section 52 (b), which has the expression "based solely",

and section 52 (c), which has the expression "only partly based". The word "solely" is being used to highlight the distinction between the two sub-paragraphs. There is no such distinction made in section 53 and hence no need to use either "solely" or "only partly" in that section. So the absence of "solely" from section 53 (1) (c) is not significant and does not imply that that sub-paragraph is dealing only with a case where the measurement of the amount of water supplied is not a factor at all in the basing of the charge. Moreover, the first purpose expressed in the Act, in section 1 (1), is "to define the rights and duties of landlords and tenants of rented premises". In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act is to be preferred to a construction that would not promote that purpose or object: Interpretation of Legislation Act 1984 section 35 (a). A construction of section 53 (1) (c) of the Residential Tenancies Act that left a gap in the Act and in the allotment under sections 52 and 53 of liability as between tenant and landlord would not promote the purpose of defining their respective rights and duties.

80. The proper construction of section 53 (1) (c) is, therefore, in my opinion, that a landlord is liable for all charges arising from a water supply service to separately metered premises that are not based solely on the amount of water supplied to the premises.

81. On the other hand, section 53 does not deal with a charge of a kind that equates to the flat charge of $10.00, the service charge, and does not render a landlord liable for such a charge. Whether a landlord becomes liable for it by virtue of being a member of a body corporate when the majority of members have approved of such a charge is not something that I need to decide. The point is that there may be a technical difficulty in Mr Chen ever being able to obtain reimbursement from the landlords for the service charge (and tax thereon) that he has paid under the first invoice, because under section 55 (2) his right to reimbursement is only for something for which he has paid but for which the landlords were liable to pay under section 53, whereas the liability (if any) of the landlords does not derive from either of those sections.

Jurisdiction

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82. Part 9 of the Fair Trading Act 1999 confers jurisdiction upon the Tribunal to hear and determine a "consumer and trader dispute", which is defined by section 107 (1) of that Act to mean (so far as is relevant to this case) a dispute or claim arising between a purchaser of services and a supplier of services in relation to a supply of services. By section 3 of that Act "services" is defined to mean (so far as is relevant to this case) any rights, benefits, privileges or facilities that are provided, granted or conferred in trade or commerce, "purchaser" is defined to mean the person to whom the services have been supplied, and "supplier" is defined to mean the person who has supplied the services.

83. Section 108 (2) (i) of the Fair Trading Act provides that, in relation to a consumer and trader dispute, the Tribunal may declare that a debt is, or is not, owing.

84. The application in the present proceeding has been amended so that it expressed to have been made under the Fair Trading Act as well as under the Residential Tenancies Act. Mr Chen and the landlords are purchaser and suppliers respectively of services, the landlords by the tenancy agreement having in trade or commerce conferred rights on Mr Chen to have exclusive possession of the rented premises during the currency of the tenancy agreement. As I said in the Winter case, the possibility that the body corporate will call upon the landlords to pay charges in the invoices for which Mr Chen is not liable creates a controversy between him and the landlords which is a dispute for the purposes of Part 9 of the Fair Trading Act.

85. So far as the dispute over the second invoice is concerned, I may resolve that dispute by making a declaration as to what sum is owing under it. So far as the dispute over the first invoice is concerned, I doubt that section 108 (2) (i) of the Fair Trading Act empowers me to make a declaration, because there is not a claim that anything is "owing" under it, Mr Chen having paid the whole of it. Nevertheless, I consider that there is power to make a declaration under section 109 (1) of that Act, which in a "consumer dispute" (defined in section 109 (4) of that Act in a way that covers the present case, the relevant services being of a kind ordinarily used for personal household or domestic purposes) empowers the Tribunal to "make any order it considers fair", including a declaratory order declaring void any unjust term of a contract; I am pointing to the example given of one kind of declaration to support the view that other kinds of declaration may be made if considerations of fairness require them.

86. As in the Winter case, no party questioned the Tribunal's jurisdiction to make orders or declarations binding Energy Plus and the body corporate, but there is still a need to be satisfied that the Tribunal does have that jurisdiction. I am so satisfied. In that regard the present case is more straightforward than the Winter case was. Both Energy Plus and the body corporate can be regarded as having rendered invoices to Mr Chen in which a charge is made for services purportedly rendered to him. The first invoice bore the name of Energy Plus (and the name of the body corporate in smaller typeface) and the second invoice bore the name of the body corporate. By asserting in its invoice that it had provided services to Mr Chen (for it was charging him a flat fee for a service), each of those parties gave rise to a "consumer and trader dispute" between it and him, and the sub-class of such a dispute which is a "consumer dispute". By reason of Part 9 of the Fair Trading Act the Tribunal has jurisdiction to determine each dispute by making an appropriate declaration.

87. So there will be declarations as follows:

Of the sums totalling $143.68 claimed in the first invoice, the applicant was liable to pay $53.29 only. Of the sums totalling $159.41 claimed in the second invoice, the only amount owing by the applicant is $63.42.

"Unfair" or "Unjust" Terms

88. To meet the possibility that the attack made upon the "Account Application" document under section 27 of the Residential Tenancies Act might fail, Mr Pound made three alternative submissions. All were made on the footing, as contended for by Mr Strahan, that the document created a contract between Mr Chen and Energy Plus.

89. The first alternative submission was that it is not possible for a tenant and a third party to enter into a contract containing terms that are contrary to provisions of the Residential Tenancies Act in that the terms seek to impose liability on a tenant to pay for something for which under the provisions of the Act the landlord, not the tenant, is made liable. I defer consideration of that submission. I shall deal with it towards the end of these reasons. All I say at the moment is that I do not accept the submission in the terms in which it was made.

90. The second alternative submission was that the "Account Application" document created an unfair term in a consumer contract and so the term was void under section 32Y of the Fair Trading Act.

91. It is fair to mention that this submission was made only after I myself had raised with the parties, during argument, the possibility of the application of Part 2B of the Fair Trading Act, which deals with unfair terms in consumer

contracts. In view of the decision I have reached about the applicability of section 27 of the Residential Tenancies Act I do not need to deal with the submission at all. The provisions introduced by Part 2B of the Fair Trading Act are novel in Victoria and there has been no authoritative decision in relation to any of those provisions. So, although I do propose to say something about the submission, what I say shall be brief.

92. Plainly enough, the contract between Mr Chen and Energy Plus (if that is what it was, although I have determined that it was not) was a consumer contract as defined by section 3 of the Fair Trading Act. Section 32W of that Act provides:

"A term in a consumer contract is to be regarded as unfair if, contrary to the requirements of good faith and in all the circumstances, it causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer".

Section 32X goes on to set out matters which the Tribunal may take into account, without limiting section 32W, in determining whether a term is unfair.

93. Of the matters set out in section 32X, the only one which I consider is arguably applicable to the present case is matter numbered (d): "permitting the supplier but not the consumer to vary the terms of the contract". The possible applicability of that matter arises from the phrase "at the current rate" in Mr Chen's promises to pay invoices for usage of "Hot & Cold Water at Apartment 404 at the current rate". I have already said that the promise should be interpreted as one to pay the invoices at the respective rates that Energy Plus was charging occupiers generally at Flinders Wharf for hot and cold water respectively at the time that invoices were rendered to Mr Chen. Those rates could vary from time to time. Energy Plus could vary them unilaterally. But a term of a contract permitting a party to vary a rate unilaterally from time to time is a different thing from a term of a contract permitting a party to vary another term of the contract. The contract in the present case does not permit a party to vary the term that requires payment at "the current rate". It is simply the case that the rate is variable. While a term expressed in that vague way is not what I would regard as a paragon of contractual fairness, I do not think it is "unfair" within the meaning of section 32W of the Fair Trading Act.

94. Mr Pound's submission also relied upon the assertion that the contract was not "individually negotiated" in that the "Account Application" document was presented to Mr Chen for his signature at the same time as he was offered a tenancy on those terms and had to decide whether to take it or leave it. One of the matters mentioned in section 32X of the Fair Trading Act is "whether the term was individually negotiated". The assertion was correct, as far as it went, but the trouble with it, and with other matters relied upon in the written submission on this point but which I shall not enumerate, is that they tend to impugn the whole contract, not just one term of the contract. The written submission included points based upon comparable provisions in the United Kingdom and a House of Lords decision upon them. In a case which turns upon the operation to be given to the "unfair terms" provisions, those points would merit close attention by the Tribunal. The present case has not turned upon that.

95. The third alternative submission was that the "Account Application" document created an unjust term of a contract which, under section 109 (1) of the Fair Trading Act, the Tribunal may and should declare void. I have already said that there is a "consumer dispute" in the present case and so it is possible to call section 109 in aid. Like the "unfair terms" provisions, section 109 has not attracted any authoritative exposition. To my mind, the general tenor of section 109 is of a state of affairs in which one party is susceptible to being overborne by the other party. My observation of Mr Chen was that he was an intelligent man with facility in English who was well able to understand what he signed. Even though he no doubt was in a "take it or leave it" situation when he signed, there was no overbearing of him and I am not persuaded that the powers created by section 109 of the Fair Trading Act ought to be exercised. This particular alternative submission was put in brief terms. Likewise I have dealt with it in brief terms. I repeat that the occasion did not arise in which I had to deal with it at all.

"Energy Plus Invoices"

96. Mr Pound made a submission that was directed only to the issue of Mr Chen's liability to pay the amount of the second invoice. Mr Chen's promise - whether made to the landlords (as I have determined) or made to Energy Plus - was to pay "Energy Plus invoices" for usage of hot and cold water. The second invoice bore the name of the body corporate, under a heading and Lego for Flinders Wharf. It appears, therefore, to be an invoice rendered by the body corporate. It was not, the argument went, an

"Energy Plus" invoice and so nothing in the "Account Application" document obliged Mr Chen to pay it.

97. I do not accept that submission. The invoice included a direction to mail a cheque to Energy Plus at a post office box number or to pay into a bank account or Energy Plus. Whether or not it was indeed an invoice rendered by the body corporate, it met the description of an "Energy Plus invoice" because the invoice, in effect, demanded "pay Energy Plus". Nevertheless, I have determined that the term in the "Account Application" document was invalid. That is the reason why the second invoice was not payable by virtue of that term (although part of it is payable as provided for in section 52), not because the second invoice was not the subject matter of the term.

The Width of the Orders Sought

98. In the written application filed to commence this proceeding Mr Chen set out the orders he was asking for. He asked for "a determination as to the extent of his liability for water bills sent by the body corporate". I have indicated what declarations I am going to make in relation to the two invoices discussed above. Then he asked for compensation for "overpaid water bills". That was in effect a request for an order that the landlords reimburse him for part of the amount of the first invoice. I have explained why I am not making an order for reimbursement. Finally, he asked for "injunctive orders restraining the body corporate from continuing to send such bills to the tenants".

99. In a written submission made on Mr Chen's behalf that final request was elaborated upon. I was asked to make a declaration that no tenant at Flinders Wharf is liable to pay any invoice that includes charges for the supply of water or gas that is not separately metered or includes any service fee, and a declaration that the liabilities set out in section 52 and section 53 "are not able to be restricted, modified or otherwise affected by any agreement between a tenant and any third party to a tenancy agreement".

100. In the present case there are better than usual reasons for not making any orders or declarations that go further than those that are necessary for determining the particular case. The outcome of this case has depended upon the way in which the "Account Application" document was framed and the circumstances in which Mr Chen signed it. I have no knowledge of whether any other tenant at Flinders Wharf has signed a document that was framed in the same way or in some different way and no knowledge of the circumstances in which any such document was signed. Making determinations that affect the interests of persons who are not parties to the proceeding is hazardous at the best of times. I certainly do not propose to make any such determination in this case.

Agreement between a Tenant and a Third Party

101. From the length of these reasons, from the numerous hearings that have taken place in this proceeding and from the comprehensive submissions that I have discussed in these reasons, it will have been apparent that the parties had hoped that this would be a test case to determine whether a tenant and third party like Energy Plus or the body corporate, by entering into a contract as to the tenant's liability to pay utility charges, can achieve a result that is different from the result that the Winter case produced.

102. As I have determined that there was no such contract between a tenant and a third party, the case has turned out not to be such a test case. Moreover the case has involved documents and circumstances which may not have been replicated anywhere else. It is appropriate, however, that I should venture some views about the issue which the parties hoped would fall for determination but did not. It is an important issue and the arguments that have been ventilated before me call for a response.

103. In the Winter case I was incautious enough to make the assertion that section 52 "appears to be a complete statement of the circumstances in which a tenant is liable for utility charges", an assertion on which Mr Pound, and Mr Darling before him, relied more than once in support of the argument that it is not legally possible for a tenant and a third party to enter into a contract that imposes a wider liability upon a tenant for the payment of utility charges than section 52 imposes. The assertion was not essential to my decision in the Winter case and I need not have made it. The able argument of Mr Strahan on this issue has persuaded me that the assertion is wrong.

104. I now think that there is nothing in the Residential Tenancies Act, and in particular nothing in Part 2 Division 4 (which includes sections 52, 53 and 55), which prevents a tenant and a third party from entering into and being bound by such a contract. Sections 52 and 53 deal with the respective liabilities of tenant and landlord, as between themselves, for utility charges. Those sections do not appear to contemplate, and certainly do not deal directly with, a state of affairs in which utilities are supplied to a body corporate and the utility supplier charges the body corporate; nor do they contemplate or deal with the existence of a contract between a body corporate, or any other third party, and a tenant or a landlord as to the ultimate incidence of liability for those charges.

105. At first sight, to permit such a contract to operate validly may appear to be contrary to the scheme of the Act. Section 27 prevents a landlord and a tenant from validly contracting with each other in a way that produces a result different from the result produced by the operation of sections 52 and 53. It may be thought odd, and contrary to the scheme of the Act, that a tenant could be permitted to contract in that way with a third party.

106. Yet on closer sight I do not think that it is necessarily contrary to the scheme of the Act to permit such a contract to operate. Suppose that the tenant becomes obliged, under such a contract, to pay to a body corporate or to another third party a utility charge which under section 52 the tenant would not have been liable to pay but under section 53 the landlord would have been liable to pay. Once the tenant pays the charge and makes the appropriate request for reimbursement under section 55 the landlord would become obliged to reimburse the tenant for the amount paid. Except that the burden of payment has fallen upon the tenant at first although not at the last, and except that a service fee once paid to the third party may not be able to be made the subject of a claim for reimbursement under section 55, the scheme of the Act will have been followed.

107. There might be reasons, of course, other than any possible application of the Residential Tenancies Act, why an attempt to enforce such a purported contract fails. The document creating it might be expressed as vaguely and confusingly as the "Account Application" document in the present case, or even more vaguely and confusingly. The purported contract might fall foul of the "unfair terms" provisions in Part 2B of the Fair Trading Act. There might be other reasons.

108. Whether it is desirable that a third party should be permitted to bind a tenant contractually to pay for utility charges for which under section 52 a tenant is not liable is, I think, a matter for Parliament, not this Tribunal, to determine. If it is regarded as undesirable, it can be forestalled by legislation, and the appropriate legislation would appear to me not to be the Residential Tenancies Act but legislation that deals with bodies corporate. Attention is being given at the moment to introducing new legislation that deals with bodies corporate and that may confer some jurisdiction upon the Tribunal in respect of them. I hope that the issue I have just been discussion is given attention in that, or other, legislation.

Order

109. For the above reasons, there will be an order as follows:

The Tribunal declares that the amount which the applicant was liable to pay under the invoice from the firstnamed interested party in respect of a period between 01 October 2004 and 14 December 2004 was $53.29. The Tribunal declares that the amount which the applicant is liable to pay under the invoice from the secondnamed interested party in respect of a period between 14 December 2004 and 23 February 2005 is $63.42.

At a glance

Court

Decision date

Before

Source

Judgment (85 paragraphs)

Chen v Mulholland (Civil Claims) [2005] VCAT 2709 (15 December 2005)

Parties

Legislation Cited (6)

Cases Cited (1)