Cross v Cross-Boyd

Supreme Court of NSW|2021-06-17|Before: Davies J

Judgment

These proceedings, seeking possession of premises at 16 Flower Street, Maroubra ("the property"), arise out of the Will of the late Horace Sylvester Cross ("the deceased").
The deceased made his last Will on 17 December 1999. He appointed his wife and his sons William and Gregory to be the executors. The Will established a trust of which the beneficiaries were his six children, grandchildren and other relatives of his children. The trustees of the trust were the deceased's wife (with an alternative appointment if his wife would not or could not act) and the six children, being William, Kathryn, Rosemary, Margaret, Gregory and Virginia. In fact, the deceased's wife pre-deceased him in 2007.
The Will also directed that the trust he established was to provide specifically for his daughter Kathryn Gail Cross "for her special needs arising out of her disability". Kathryn has an intellectual disability. In particular, the trustees were to provide a place for Kathryn to live. That place was, in the first instance, the deceased's principal place of residence but, if it became necessary to sell that property, the trustees were to provide a fund to enable Kathryn to reside with her brothers and sisters or to enter a form of hostel accommodation. The trust was also to provide sufficient income for Kathryn to ensure her well-being.
The deceased died on 24 February 2016 and, his wife having pre-deceased him, William and Gregory obtained probate on 29 April 2016.
Subsequently, the present defendant, Virginia commenced family provision proceedings in this Court on 23 February 2017. The proceedings were settled on 22 August 2018, with the parties executing a Deed of Family Arrangement. The parties to the Deed included not only the executors and Virginia, but the other trustees under the Will.

Application to amend defence and file cross-claim

At the outset of the hearing, the defendant sought to move by a notice of motion dated 1 June 2021, served but not filed, to amend the defence and to file a cross-claim.
In relation to the defence, a number of different matters were raised. There were two minor amendments. The first was in paragraph 12, to insert the word "purported" before "Notice of Termination". The second concerned paragraph 16(a). That paragraph had alleged that the defendant was not in breach of the deed and, at the date of the defence (24 June 2020), she was in credit in the amount of $600. The proposed amendment pleaded that, on the defendant's case, she was in credit in the amount of $3,500 and, on the plaintiffs' case, in the amount of $450. The plaintiffs did not oppose those amendments.
The third amendment, also in paragraph 16, was more substantial. Paragraph 16 of the existing defence sets out the defendant's substantive answer to the claim. That substantive answer dealt with the fact that the defendant was the full-time carer for Kathryn, and referred to the fact that the Will requires the trustees to provide a place for Kathryn to live. The defendant wished to insert two further sub-paragraphs to read as follows: g. Pursuant to clause 1(a)(i) of the Deed, the defendant is to reside at the Property (or any other property purchased by the Trustees) for such period as Kathryn consents to such residence. h. Kathryn continues to consent to the defendant residing with her.
The next amendment concerned the insertion of three paragraphs entitled "waiver/estoppel/election". The proposed defence pleaded that the Notice of Termination sent on 20 February 2020 demanded that the defendant continue to make payments as the Deed required, that the defendant had done so, and that the plaintiffs had accepted those payments. The defendant pleaded that inconsistent demands were made, with the result that the plaintiffs have waived any right they had to terminate the defendant's occupancy, and that they were estopped from terminating the occupancy, alternatively, that they had elected to keep the occupancy on foot.
The defendant then sought to plead relief against forfeiture on the basis that, even if the defendant had earlier been in breach, her payments were up to date, and that the plaintiffs' conduct in seeking to evict her was unconscionable.
Finally, the defendant sought to rely on the provisions of the Residential Tenancies Act 2010 (NSW), asserting that the arrangement whereby she occupied the property in fact constituted a residential tenancy. In those circumstances she pleaded that s 119 of the Residential Tenancies Act precluded the plaintiffs from commencing proceedings in the Supreme Court to recover possession of the property.
The proposed cross-claim sought relief against forfeiture on the basis referred to in the proposed amended defence.
The plaintiff opposed the substantive amendments to paragraph 16, on the basis that there was no evidence of the matters in proposed paragraphs (g) and (h), but that, in any event, those matters could not constitute a defence to the claim. The plaintiffs' attitude to the defence in reliance on the Residential Tenancies Act was that the issue raised by that defence needed to be decided at the outset. The plaintiffs accepted that the issue of waiver and estoppel was able to be determined as a legal argument without the need for any further evidence. Nothing was said in opposition to the insertion of the paragraphs claiming relief against forfeiture.
I granted leave to the defendant to file the amended defence, and I said I would give reasons in my final judgment for doing so. I considered that it was not necessary for the defendant to file a cross-claim seeking relief against forfeiture, the amended defence having clearly set that matter out as a defence to the claim. These are my reasons.
These proceedings commenced on 29 May 2020. They had been case managed by Lonergan J and, before that, by the Registrar. On 9 July 2020 the Registrar directed that any cross-claim by the defendant was to be filed and served by 24 July 2020.
On 18 December 2020, Lonergan J, having given the parties liberty to approach the List Manager to obtain a hearing date, directed that if either party had any further evidence on which it wished to rely, or any application at all in that respect, it should be served on the other party by no later than 9 February 2021, with a copy to be sent to Lonergan J's Associate by that date. The defendant did not avail herself of either of those directions.
An affidavit was read on the amendment application by the solicitor for the defendant. That affidavit disclosed that Anthony Tudehope of counsel had previously been briefed in the matter and had advised in relation to the defence. Mr Tudehope advised the solicitor on 19 May 2021 that he was briefed in a long-running matter, that he was unavailable to advise further in the proceedings, and was unavailable to appear at the hearing.
On 21 May 2021 the solicitor briefed Mr Nicholas Newton of counsel to advise and appear. On 26 May 2021 Mr Newton provided the solicitor with a draft amended defence pleading reliance on the Residential Tenancies Act. On 28 May 2021 Mr Newton advised that the defence should be amended further to plead waiver, estoppel and relief against forfeiture, and advised that a cross-claim should be filed. The final form of the proposed amended defence and cross-claim was served on the plaintiffs' solicitor on 1 June 2021.
The solicitor went on to say in his affidavit: The evidence that the defendant will rely upon in support of the proposed amended defence and proposed cross-claim is found within evidence already served in the proceedings as updated by Ms Cross-Boyd's affidavit. In my opinion the matters raised in the proposed amended pleadings will not require the plaintiff to file any further evidence, given they raise legal issues flowing from the evidence already filed in the proceedings. However, if the plaintiff wishes to file further evidence to meet the matters raised in the proposed amended pleadings, Ms Cross-Boyd will consent to appropriate orders being made to accommodate that.
I am mindful of what the High Court said in Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [89]-[98] and [102]-[103]. While there is no doubt that the defendant had sufficient opportunity to plead her case (Aon at [94] and [102]), the proposed amendments did not mean that further evidence would need to be led by either party, nor did the amendments mean that the final hearing of the case could not proceed on the days fixed for hearing. In that way other litigants in the Court were not affected by any grant of leave in favour of the amendments.
There were no doubt costs implications for raising new defences (as counsel for the plaintiffs submitted), but by reason of the matters I have identified, an appropriate order for costs will, in this case, be adequate compensation for the grant of leave to amend (Cf Aon at [96]). In my opinion, this was a case where the considerations in ss 56 and 58 of the Civil Procedure Act 2005 (NSW) favoured the grant of leave to the defendant to amend.
In relation to paragraphs 16(g) and (h), although I had doubts that those matters constituted any defence (or any more of a defence than paragraphs 16 (b), (c), (d), (e) and (f) did), argument about those matters was best left for final submissions.
Counsel for the defendant identified four principal issues to be determined in the proceedings. Those were: (1) Was there a breach of clause 1 of the Deed? (2) Was there a waiver or estoppel by reason of the demands made in the Notice of Termination? (3) If the defendant was in breach, should she be granted relief against forfeiture? (4) Is the agreement in the Deed a residential tenancy agreement?
I did not understand counsel for the plaintiffs to have a different view. I agree that those are the issues.

(1) Was there a relevant default?

There appeared to be some confusion on the plaintiffs' part about what defaults were relied upon by them. Part of the difficulty arose from the form of the pleading. Paragraphs 9, 10 and 11 of the statement of claim pleaded: 9. The last payment in accordance with Clause 1(a)(ii) of the Deed made by the Defendant was on 2 October 2019 (or alternatively 22 January 2020). 10. By 23 October 2019 (or alternatively 19 February 2020), the Defendant had failed to make payment for a period of four consecutive weeks in accordance with Clause 1(c) of the Deed. 11. On 20 February 2020, the Plaintiff issued a Notice of Termination to the Defendant in accordance with Clause 1(c) of the Deed.
Initially, the plaintiffs pointed to the period between 2 and 23 October 2019 to demonstrate, from an agreed table of payments (MFI 1) that, as at 23 October 2019, there was $600 outstanding in weekly contributions, that is, contributions for four weeks.
The difficulty with that submission was that cl 1(c) of the Deed provides: c. In the event that the Plaintiff fails to make payment of the Contribution for a period of 4 or more consecutive weeks, the Executors shall be entitled to give notice in writing terminating the licence agreement immediately; (emphasis added)
In the period 2 to 23 October 2019, the defendant had not failed to make payment of a contribution for four weeks because she had paid $150 on 7 October and $300 on 15 October. Certainly, by 23 October 2019 she was four weeks in arrears. However, cl 1(c) of the Deed does not concern itself with arrears but with payments.
The plaintiffs then submitted that they relied on all defaults within the meaning of cl 1(c) prior to 23 October 2019. In that regard, the plaintiffs relied on the pleading in paragraph 10 that, "by" 23 October 2019, the defendant had failed to make payment for a period of four consecutive weeks. That does not sit easily with the pleading that the last payment made "in accordance with Clause 1(1)(ii) of the Deed" was made on 2 October 2019. As it happens, no payment was made on 2 October 2019 in any event.
Nor is the matter resolved if the alternative dates in paragraphs 9 and 10 are relied upon. There was no consecutive period of four weeks from October 2019 to February 2020 (let alone from 22 January 2020 to 19 February 2020) when no payment was made for four consecutive weeks.
What is clearer, however, is that there were a number of periods prior to 23 October 2019 where no payment was made for four or more consecutive weeks. The first such period was from the date of the Deed until 7 November 2018. Although the weekly payments were due from 1 August 2018, no failure to pay prior to the date of the Deed can be relied upon by the plaintiffs. However, the defendant clearly failed from 22 August 2018 (the date of the Deed) until 7 November 2018 to comply with the terms of the Deed. Similarly, there was period from 4 February 2019 to 7 March 2019 when no payments were made.
The difficulty for the plaintiff in relying on these earlier periods is that the plaintiffs continued to accept payment of the weekly fee, notwithstanding those defaults. Whilst the plaintiffs commenced proceedings in NCAT on 14 November 2018 because of the ongoing failures from the time the Deed was signed to make payment, after those proceedings were dismissed the defendant remained in the premises making payments at somewhat irregular intervals until the letter of 9 August 2019 purporting to terminate the arrangement was sent. That acceptance amounts to a waiver of the breach: Owendale Pty Limited v Anthony (1967) 117 CLR 539; [1967] HCA 52 at 587; Byron Bay Retirement Villages Pty Ltd v Zandata Pty Ltd [2008] NSWSC 1123 at [32]-[33].
The confusion about what period was relied upon was not assisted by the fact that the Notice of Termination sent to the defendant on 20 February 2020 did not specify precisely the breach relied upon. It simply asserted that the defendant had failed to make a payment for a four week period.
Although, for reasons to which I will come, it is not strictly necessary to decide this issue of default, I consider that there has been failure on the defendant's part to comply with cl 1 of the Deed, in that she has failed to make payments of the contribution for a period of four or more consecutive weeks, being the periods mentioned in [48] above. However, I consider that the claim pleaded in paragraphs 9 and 10 of the statement of claim has not been made out. On a fair reading of those paragraphs, the breach is said to have occurred between 2 October 2019 at the earliest, and 19 February 2020 at the latest. At no time during that period was there a failure by the defendant to make payments for a four week period.
In those circumstances, the issue concerning whether the defendant was entitled to offset amounts paid by her for repairs and maintenance does not arise. However, in deference to the submissions made, and in case I am found to be in error in relation to the issue of default, I will say something briefly about the offset issue.
The defendant submitted that she was entitled to be reimbursed for payments she had made to repair the house, and in that way she was not in arrears of her weekly contributions because she was entitled to offset the amounts paid against those contributions. That was her explanation for the delay in making the first payment of $2,400. The defendant claimed that she had spent money on repairs and maintenance prior to entry into the Deed.
She relied on cl 5(a) of the Will which provided: I DIRECT the Trustees of the HSC FAMILY TRUST to provide specifically for my daughter KATHRYN GAIL CROSS for her special needs arising out of her disability. In particular, my Trustees shall provide adequately for KATHRYN in the following respects:- (a) They will provide a place for her to live and if necessary to keep and maintain my principal place of residence at my death for her use, in good order and condition paying all rates, taxes, outgoings and repairs relating to the property from the balance of the Trust Fund.
However, the Deed, which had the effect of varying the Will to the extent of the terms of the Deed (cl 1(e)) provided in cl 1(d): d. During any period of residence in the Property, the Protected Person and the Plaintiff shall be required to: i. Maintain the Property in good and serviceable condition, subject to fair wear and tear for the duration of the residence; and ii. Notify the Executors of all repairs, maintenance and upkeep required to be carried out at the Property;
Moreover, neither expressly nor by implication, did the payment by the defendant for maintenance and repairs enable her to offset the cost of those against the weekly contribution. Indeed, since the default issue concerned an absence of payments over a four week period, and not arrears as such, that provides a strong indication on a construction of the Deed that no offsets were contemplated.
Finally, when the monies expended by the defendant pre-dated the Deed, it could reasonably be expected that issues concerning offsets for those expenses would have been provided for in the Deed. The Deed was silent about those matters.
The defendant was not entitled to offset amounts she had paid against her obligation to pay $150 per week under the Deed.
The further matter relating to an offset concerned the amount of $800 for repairs to the door at the property. The issue arose in this way. The defendant said that the rear door was damaged in a storm in June 2016. The defendant said that she raised the need for its repair on a number of occasions, but the plaintiff refused to repair it. In February, the defendant arranged for the door to be repaired at a cost of $1,011.
The defendant said that William attended the house for an inspection on 22 May 2019. The defendant said that she said to him: There is the invoice for the door (I placed a copy of the invoice from Doors Plus dated 26 February 2019 for $1,011.00 on the kitchen table for William to take with him). I only want the balance credited to me for my maintenance fee. The defendant said that she walked outside. When she returned a few minutes later she observed that the invoice was not on the table where she had placed it. She went on to say: 76. …As William was the only person in the room at the time, I concluded that William had taken the invoice. 77. As William retained the Doors Plus Invoice, without complaint, I took that as an acceptance by him of the $800.00 being set-off against the contribution.
William's evidence was that when he went to the house that day he had no conversation with the defendant, and the first time he saw the invoice was when the defendant's affidavit was served.
I prefer William's evidence to that of the defendant. I thought William gave his evidence in an entirely straightforward way. He was frank in acknowledging his desire to sell the house, and not to carry out repairs unless safety was involved. I thought that the defendant was combative and argumentative when she gave evidence. There is obvious bad feeling within the family, and the defendant feels aggrieved about how she perceives that she has been treated by the plaintiffs. I do not think that she is dishonest, but her sense of grievance has coloured her recollection of events, and she now believes that the event occurred in the way she described it.
Even if the defendant's evidence was accepted concerning the conversation and the taking of the invoice by William, that would not have been a reasonable basis for the defendant to assume that she was not liable for weekly contributions to the extent of $800, in the absence of any acknowledgement to that effect by William or the plaintiffs together. Acceptance does not come from silence.
There is no basis for offsetting the $800.
Finally, there is the issue of the return of the $3,000, and the endorsement and banking of the plaintiffs' cheque for that sum. If the defendant had cashed this cheque herself, that would be an acceptance of the basis on which it was returned. The fact that she endorsed it to Kathryn does not alter that. She was giving that money to Kathryn. The defendant's submission that the endorsement of the cheque to Kathryn was, in some way, a satisfaction of the trustees' obligation to provide Kathryn with an income stream, must be rejected. There is no evidence that Kathryn was in need of the money or that she did not have an income stream without that cheque being endorsed to her.
The defendant is not entitled to offset the $3,000.

(2) Waiver and estoppel

The Notice is curiously drafted in a number of respects. For example, the operative part of the Notice precedes the Recitals. Then, following the Recitals, the section headed "TERMS" purports to require the defendant to do various things.
The operative part of the Notice reads: As Executors of the Estate of the Late HORACE SYLVESTER CROSS , we, WILLIAM PATRICK CROSS and GREGORY CROSS give notice to you to deliver up vacant possession of the property at: Property: 16 FLOWER STRET. MAROUBRA NSW 2035 (the "Property") On: 20 MARCH 2020 As this notice is not being given to end a fixed term tenancy, you can vacate and hand back possession of the Property at any time prior to this date.
There is then a heading, "TERMINATION OF LICENCE TO OCCUPY", followed by the Recitals. The basis for the termination appears in recital G which reads: VIRGINIA CROSS-BOYD has failed to make payment for a four (4) week period and has failed to rectify this outstanding amount.
Recital G appears to compound two matters; the first is the failure to pay for a four week period, and the second is the issue of arrears. If the breach is a failure to pay during a four week period, it is difficult to see how that breach can be rectified. Outstanding arrears can be rectified, but a failure to pay over a period cannot. Significantly, as noted earlier, the four-week period was not specified.
The Notice went on under the heading "Terms" to say: From the date of this Notice, to the date upon which you vacate, you will be required to: (1) Continue to pay the contribution fee due and owing in respect of the property to the nominated bank account of the Horace Sylvester Cross Family Trust. (2) Pay the costs and charges associated with the property, that is, water usage, electricity and any telephone, internet or cable television used at the Property in accordance with the terms of your licence agreement. (3) Ensure that upon your vacation, the property is left in a clean and tidy condition subject to fair wear and tear. (4) Not undertake any work at the property to alter or otherwise vary the property, its internal fixtures of (sic) fittings, painting or removal or alteration of soft furnishings. (5) In the event that you do not vacate the property in accordance with the terms of this notice, the executors reserve their right to take proceedings in the Supreme Court of NSW for possession and seek costs against you.
The defendant submitted that, by the Notice requiring the defendant to continue to pay the contribution fee due and owing in respect of the property and to pay the costs and charges associated with the property, the Notice effectively waived the requirement for the defendant to vacate the property, and in that way the plaintiffs are estopped from terminating the defendant's occupancy.
In my opinion, there was no waiver of the plaintiffs' rights by the terms of the Notice. The Notice dated 20 February 2020 gave the defendant until 20 March 2020 to vacate the property. The requirement to continue to pay the contribution fee due and the other costs and charges amounted to nothing more than a reminder that she was obliged to do so until she vacated the property. By the terms of the notice, the arrangement was not coming to an end until 20 March 2020. Put another way, there was no obligation on the defendant to vacate until 20 March 2020. In that way, the terms of the Deed remained in place and the defendant had obligations under the Deed, notwithstanding that she had in the past breached the Deed, and that breach gave rise to the right of the plaintiffs to require her to vacate.

Relief against forfeiture

Although not necessary to do so, I shall say something briefly about relief against forfeiture.
At the date of the hearing, it was accepted that the defendant was up to date with payments of the weekly contribution without regard to the $3000 or the $800 setoff for the door. On that basis, and taking into account the fact that the defendant had cared for and continued to care for Kathryn, the defendant submitted that she should be granted relief against forfeiture.
In Kay v Playup Australia Pty Ltd [2020] NSWCA 33 Brereton JA said at [103]: In a case where the object of the provision for forfeiture is to secure the payment of money, the discretion to grant relief against forfeiture is ordinarily exercised in favour of granting relief if the default is cured (with interest if appropriate). Relevant discretionary considerations include the gravity of the breach, whether it was wilful, whether there is a history of default and the risk of future defaults; whether reliance on the forfeiture is coloured by equitable fraud, accident, mistake or surprise; and whether the forfeiture would result in a windfall. …
There is a dispute about whether relief against forfeiture is available in the circumstances of the present case. That is because there is a dispute on the authorities about whether relief against forfeiture is available only in respect of possessory or proprietary rights.
In Kay v Playup, Brereton JA, in a very thorough judgment, surveyed the authorities and concluded: [118] Accordingly, to the extent that there is authority extending relief against forfeiture to contractual licences in respect of real property, that is only so where the licensee has, in addition to their contractual rights, some estate or interest in the land which equity would protect. … [122] As it seems to me, there is no decided case in which relief against forfeiture has been granted in respect of a mere contractual right, accrued or not. All the cases that suggest that it might be available in that context assume its availability in the context that relief is otherwise refused. None of them purport categorically to determine the question. On the other hand, the decisions of the House of Lords in The Scaptrade, and in Sport International Bussum; of the United Kingdom Supreme Court in Vauxhall Motors v Manchester Ship Canal; of the Privy Council in Çukurova Finance International Ltd v Alfa Telecom Turkey; of the Court of Appeal of England and Wales in BICC Plc v Burndy Corporation; of the Full Court of the Supreme Court of Western Australia in Westminster Properties Pty Ltd v Comco Constructions Pty Ltd, and of this Court in Milton v Proctor, support the view, which in my judgment represents the current state of the law, that the doctrine is confined to proprietary or possessory rights, and does not extend to mere contractual rights.
The other two members of the Bench, Macfarlan JA and Simpson AJA, expressly reserved their opinion on that aspect of Brereton JA's judgment, on the basis that it was not necessary to determine it for the appeal they were hearing.
The view contrary to Brereton JA's view was that of Edelman J (then sitting in the Federal Court), in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 at [981] - [990]. His Honour's remarks were referred to with approval by the Full Court of the Federal Court in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55 at [421]. That view has been noted by Darke J in Ayers Rock SkyShip Pty Ltd v Voyages Indigenous Tourism Australia Pty Ltd [2019] NSWSC 828, and by Ward CJ in Eq in Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd [2017] NSWSC 1230; (2017) 324 FLR 378 at [211]-[213], although in both cases the outcome made it unnecessary to decide if Edelman J's view was to be followed.
For the reasons which follow, it is also unnecessary do decide which view is to be preferred.
In the present case, I do not accept that the defendant has more than contractual rights from the contractual licence given in the Deed. The fact that as a trustee she has a proprietary interest in the property is not to the point. She is not endeavouring to protect that proprietary interest, but her rights under the Deed which are confined to a licence.
Whilst I acknowledge that the defendant has brought her payments up to date, and has even paid in advance, and notwithstanding that I accept she looks after Kathryn to some extent and Kathryn wishes her to remain living in the property, it is difficult to see how the plaintiffs have taken unconscientious advantage of the defendant in seeking to evict her because of asserted defaults under the terms of the Deed.
Much was made of the evidence of each of the plaintiffs about whether or not they have desired to sell the property from a time shortly after the deceased's death. I accept William's frank evidence that that has been his desire, and that the reason for that is the money which needs to be spent on the property for repairs and maintenance. However, a desire to sell the property in their capacity as trustees is not unconscientious simply because the opportunity has arisen when an asserted default has occurred, with the result that, all other things being equal, the plaintiffs can lawfully give notice to the defendant to vacate.
The Will contemplates in clause 5(g) and (h) that the property might have to be sold, but Kathryn was to be involved in that process. Similarly, recital E to the Deed notes: The Trust gives the Protected Person [Kathryn] a right to live in the real property of the Estate being 16 Flower Street, Maroubra (the "Property") for her life time. The Property may be sold to purchase an alternative property or provide for other accommodation for the Protected Person. Clause 1(a)(iii) of the Deed also contemplates a sale of the property.
Had I found that the plaintiffs had established a default entitling them to terminate the licence arrangement, I would not have found that the defendant was entitled to relief against forfeiture.

Residential Tenancies Act

Section 13 of the Residential Tenancies Act 2010 (NSW) ("the 2010 Act") provides: 13 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. (4) For the purpose of determining whether an agreement is a residential tenancy agreement, it does not matter that the person granted the right of occupation is a corporation if the premises are used (or intended for use) as a residence by a natural person.
Section 119 of that Act 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.
Although s 119 does not have the effect of denying jurisdiction to this Court it may amount to a complete defence to the claim: Case v Frimont [2021] NSWCA 30 at [23]. In any event, s 81 of the Residential Tenancies Act would seem to deny the right of this Court to make an order terminating a residential tenancy, although that would not preclude this Court making a declaration that a tenancy had been terminated in accordance with s 81. In that regard, s 81 provides: 81 Circumstances of termination of residential tenancies (1) Termination only as set out in Act A residential tenancy agreement terminates only in the circumstances set out in this Act. (2) Termination by notice and vacant possession A residential tenancy agreement terminates if a landlord or tenant gives a termination notice in accordance with this Act and the tenant gives vacant possession of the residential premises. (3) Termination by order of Tribunal A residential tenancy agreement terminates if the Tribunal makes an order terminating the agreement under this Act. (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, (b) a mortgagee of the residential premises becomes entitled to possession of the premises to the exclusion of the tenant, (c) a person who succeeds to the title of the landlord becomes entitled to possession of the residential premises to the exclusion of the tenant, (d) the tenant abandons the residential premises, (e) the tenant gives up possession of the residential premises with the landlord's consent, whether or not that consent is subsequently withdrawn, (f) the interests of the landlord and tenant become vested in the one person (merger), (g) disclaimer occurs (such as when the tenant's repudiation of the tenancy is accepted by the landlord).
Section 82 sets out what must be contained in a termination notice. Section 82 provides: 82 Termination notices (1) A termination notice must set out the following matters - (a) the residential premises concerned, (b) the day on which the residential tenancy agreement is terminated and by which vacant possession of the premises is to be given, (c) if the notice is not given under section 84, 85, 96 or 97, the ground for the notice, (d) any other matters prescribed by the regulations. (2) A termination notice must be in writing and be signed by the party giving the notice or the party's agent. (3) A termination notice for a periodic agreement may specify a day other than the last day of a period for the payment of rent as the termination date.
In Cohen-Hallaleh v Cyril Rosenbaum Synagogue [2003] NSWSC 395 Barrett J (as his Honour then was) said of the definition of residential tenancy agreement in s 3(1) of the Residential Tenancies Act 1987 (NSW): [15] …That definition makes no distinction between lease and licence. It is concerned only with a particular kind of "agreement", being one that, among other things, is the source of a grant of "a right of occupation". A lease which, by definition, confers a right to exclusive possession (Radaich v Smith (1959) 101 CLR 209) is clearly the source of a grant of such a right. But so too is a contract under which some right of occupation falling short of exclusive possession is conferred. A finding that a particular agreement is not a lease says nothing at all about its status as a "residential tenancy agreement". … [19] It seems to me that the correct approach in the present case is to have regard to the overall structure of the Act. Section 3(1) defines "residential tenancy agreement" in the way already noticed. The definition does not attempt to deal with anything beyond the existence of an agreement, the status of that agreement as the source of a grant of a right by one person to the other, the requirement that the grant be for value, the nature of the right as a right of occupation, the nature of the premises as residential premises and the existence, as the purpose of the occupation, of a purpose of use as a residence. If all these elements are found to exist, the parties' agreement is a "residential tenancy agreement" regardless of any other relationship that may exist between them.
The definition in s 13 of the 2010 Act is identical with the definition in s 3 of the earlier Act. The decision in Cohen-Hallaleh was approved by the Court of Appeal in Case v Frimont [2021] NSWCA 30 at [27]. The Court of Appeal added at [28], that there must, however, be an agreement. It is not disputed in the present case that an agreement was made in terms of the Deed.
Although the defendant, in her amended defence, pleaded that the arrangement in the Deed constituted a residential tenancy agreement, counsel for the defendant made this submission: In my submission the Residential Tenancy Act does not apply to these proceedings. It is a back up defence if your Honour determined against me that it did. But the nature of my client's - I accept the authorities, including the authority that your Honour was in, suggest that if one looks at section 13 of the Act, it has a broad scope. It picks up obligations which aren't leases, at least conventionally. There's no question about that, if for no other reason than that you don't have to have an exclusive occupation. But this interest, where it is effectively a codicil to a will, it's granting a personal right of occupation to my client as a beneficiary under the will. It is subject to the consent of Catherine (sic). So, in essence, on one view of it - well, she's a landlord, as are the other trustees, because they're granting the right, but she also has a particular ability to terminate this personal right of occupancy by withdrawing her consent at any time. So she clearly - if it's a residential tenancy agreement, she would be someone that would need to be a necessary party for such proceedings.
This submission was difficult to understand in the light of the amended pleading, except as a way of avoiding a potential costs order as a result of the late amendment which, if successful, was a complete answer to the plaintiffs' claim, and would have made the other issues arguably otiose, with the result that costs would have been unnecessarily incurred. However, the issue raised by s 119, having been raised, needs to be determined.
In my opinion, the arrangement put in place under the Deed satisfied the requirements of s 13 of the Residential Tenancies Act. The trustees and/or the executors granted to the defendant a right of occupation in the property for use as a residence and in return she was to pay $150 per week.
As can be seen, counsel's submission was that the requirement of Kathryn to consent to the defendant's occupation, and the manner in which the occupancy arrangement came about, somehow took the matter outside s 13 on the basis that it involved third party consent. As Barrett J recognised in Cohen-Hallelah, (although making reference to the relevant sections in the earlier Act), it is necessary, first, to see if the arrangement falls within the very broad definition of residential tenancy agreement, and then to see if any of the provisions in ss 7 and 8 take the arrangement or the premises outside the Act's purview. In my opinion, the present arrangement does not fall within any of those provisions.
Third party consent would also arise if the agreement was between a person entering an arrangement with a person who themselves was a tenant, and where the registered proprietor needed to consent to such a "sub-tenancy" arrangement. The mere fact that Kathryn had to consent to the defendant's occupation does not mean there was not an agreement by the trustees and/or the executors to permit the defendant to use the premises as a residence in return for the payment of the monies stipulated.
In my opinion, the arrangement amounted to a residential tenancy agreement. In those circumstances s 119 provides a complete defence to the claim.

Conclusion

The plaintiffs do not establish a breach of the Deed in the manner pleaded, and by reason of the findings made at [51] above. In any event, the arrangement in the Deed is a residential tenancy agreement. The proceedings should not have been commenced in this Court. In any event, there is no power in s 81 of the Residential Tenancies Act for this Court to terminate the agreement. Judgment must be given for the defendant.
At the time the defendant sought to amend, I warned her counsel of the risk of a costs order if she succeeded in the proceedings by reason of the fact that a defence under s 119 of the Residential Tenancies Act was made out. However, the plaintiffs were unsuccessful in establishing that default had been made by the defendant or, if it had, it had not been waived by ongoing acceptance of the occupation fee.
In those circumstances, the ordinary costs order should apply.
I make these orders: 1. Judgment for the defendant. 2. The defendant is to pay the plaintiffs' costs incurred by reason of the filing of the amended defence. 3. Otherwise, the plaintiffs are to pay the defendant's costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 August 2021

Residential Tenancies Act 1987(NSW)s 3

Residential Tenancies Act 2010(NSW)ss 13, 81, 82, 119

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (8 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (14)

Cited By (1)