Magistrates Court Act 2004 - Review order - Natural justice - Residential Tenancies Act 1987 - Termination of tenancy - Proceedings for possession - Privative clause - Error of law going to jurisdiction - Stay of execution

Magistrates Court Act 2004 (WA), s 36(1)

Residential Tenancies Act 1987 (WA), s 26, s 71

Rules of the Supreme Court 1971 (WA), O 56A, r 3(2)(b)

Order for application for review to be heard by a Judge in chambers

Copies of application and affidavits to be served as directed and then application to be relisted for further directions

1 EM HEENAN J: This is an application for a review order under s 36(1) of the Magistrates Court Act 2004 (WA) of a decision of his Honour Mr Michelides in the Magistrates Court at Fremantle made on 1 December 2005 in proceedings under the Residential Tenancies Act 1987 (WA). The actual order which was made by his Honour Mr Michelides on that occasion is set out as Exhibit VA1 to the affidavit of Mr De Alwis of 24 December 2005.

2 The proceedings in the Magistrates Court concerned rental premises, unit 42 at 190 South Street, White Gum Valley, occupied by Mr De Alwis under a tenancy agreement with Homeswest. The order made was: (1) that the tenancy agreement be terminated forthwith; and (2) that recovery of possession of the premises to the applicant occur on 1 January 2006.

3 This present application has been brought as a matter of urgency and has at least twice been before the duty Judge during the Christmas vacation period and has been brought on before me this morning as an urgent application because of an apprehended fear that there would be eviction effected in the immediate future.

4 As it transpires, Homeswest has assured Mr De Alwis and the Court that no action to evict him from the premises will be taken until on or after 25 January 2006, a date upon which a further application is due to be heard in the Magistrates Court at Fremantle.

5 The situation leading to the order of the Magistrates Court on 1 December 2005 is that Mr De Alwis got into arrears in the payment of rent in respect of the premises. Steps were then taken, so it alleges, by Homeswest to give notice of termination of the tenancy agreement because of the failure to pay rent. Those steps are said to have been taken under s 71 of the Residential Tenancies Act 1987.

6 It also appears that there is a prior history of dispute between Mr De Alwis and Homeswest concerning these premises which led to an actual eviction some time in the past. That led to representations being made on his behalf by his local member of Parliament and his restoration to possession. That then generated subsequent disputes about an increase in the bond for the premises demanded by Homeswest and eventually paid by Mr De Alwis and an increase in the rent charged for the premises in a manner alleged by Mr De Alwis to be otherwise than in compliance with the statutory procedure. Be that as it may, the increased rent was paid.

7 When proceedings for termination of a residential tenancy agreement for non-payment of rent are taken, the landlord may, as it seems to have done in this case, attempt to terminate the agreement immediately by giving notice of termination following the breach without any need for a prior notice of default specifying the breach and giving a 14-day period for remedy. That is the procedure Homeswest asserts it took in this case but, notwithstanding such a notice, actual termination and steps taken to secure possession cannot occur without an order of the Court under s 71. It was an application under s 71 for a termination of the agreement and for an order for possession that was before the learned Magistrate in the Court at Fremantle on 1 December last.

8 As well as those issues initiated by Homeswest, there were some cross or counter-applications brought by Mr De Alwis. He complains that the Court refused to allow him to make a counterclaim in the same proceedings and forced him into initiating a separate claim or cross-claim to be heard at the same time but involving the payment of additional fees. Not much turns on this controversy about the proprieties of the procedures demanded, but there was a cross-claim before the learned Magistrate in which Mr De Alwis was asserting a number of things. Firstly, he was asserting that an excessive bond was demanded, as I have already touched upon. Secondly, he was asserting that the increased rent charged by Homeswest had not been approved in the statutory manner. As a result of those contentions, he was submitting that he was entitled to a refund of portion of the bond and a credit for part of the rent, giving rise to a counterclaim which could be set off against the rent demanded. He also asserted that in the event of such a successful counterclaim the aggregate amount of the arrears due would be less than that asserted by Homeswest and that consequently the notice of termination was defective because, on his argument, it overstated the arrears.

9 In his somewhat convoluted submissions it is not possible to be certain of the significance which Mr De Alwis seeks to attach to these counter allegations, but the submissions appear to me to involve an assertion that because of those matters the Fremantle Magistrates Court did not have the power to proceed to consider the application for termination of the residential tenancy agreement based on what Mr De Alwis says was the excessive demand for rental arrears and that this went to the jurisdiction of the Court. That is a somewhat complicated submission and one which has not been adequately formulated and for that reason not answered in the application this morning.

10 Perhaps more significantly Mr De Alwis says, and it is not disputed, that before the hearing in the Magistrates Court on 1 December 2005 he in fact paid the whole of the arrears of rent due to Homeswest and consequently had remedied the breach by the date of the hearing. Payment of arrears of rent in whole or in part after notice of default will not, under this legislation, itself constitute a waiver of the breach.

11 The argument for Homeswest is that in order for a tenant to bring himself within the protection of the legislation any payment of arrears must be made within the period of 14 days after the notice of breach, and if not paid within that period, even if subsequently paid before the hearing of an application for possession under s 71, will not preclude the court from making an order terminating the agreement and ordering possession.

12 The parties were not, this morning, in a position to develop any submissions as to whether or not a court in those circumstances had any jurisdiction to consider the well-established equitable principles for relief against forfeiture in cases of non-payment of rent under leases or other tenancy agreements.

13 Both the claim and Mr De Alwis' cross-claims proceeded before the learned Magistrate in Fremantle on 1 December 2005, but unfortunately in the course of the proceedings, apparently towards the end of the morning hearing, Mr De Alwis was struck down by a chronic medical condition necessitating a short adjournment of the Court. An ambulance was called and he was transferred to hospital by the ambulance staff where he remained for the rest of the day, or at least during the rest of the hearing.

14 Notwithstanding that event, the proceedings were resumed before the learned Magistrate in the afternoon. It is not clear whether additional evidence was taken or whether the afternoon proceedings were confined to dealing with submissions but, whichever was the position, the proceedings did continue in Mr De Alwis' absence, with the result that the order terminating the residential tenancies agreement and the order for possession on or after 1 January 2006 were made.

15 I am told that in Mr De Alwis' absence his cross-claims were simply adjourned sine die. As I do not know exactly what happened and as no transcript of the proceedings has been put before me, it is undesirable that I express any final conclusions about exactly what happened, but the course of events as described to me certainly raises some concerns as to whether or not a decision on the principal claim by Homeswest could, or should, have been made without a decision also being given upon the cross-claim which involved, as I understand it, an alleged set-off of part of the arrears of rent because of the cross-claims. Be that as it may, both the disposition of Homeswest's claim and the adjournment of Mr De Alwis' cross-claims were ordered in his absence.

16 Since then two further initiatives were taken by Mr De Alwis in the Magistrates Court at Fremantle. One was an application heard and rejected on 3 January 2006, by a Registrar who was acting as a delegate of the Court at the time of this vacation. That application, for a suspension of the order of 1 December, was dismissed. No reasons for that are set out in the evidence before me this morning, but I have been told from the bar table that the reason, or perhaps a reason, for that decision was that Mr De Alwis had a second application to have the order set aside because it was made in his absence and that this has been listed for hearing on 25 January 2006 and is still pending. That is the second initiative to which I have already adverted and it has been brought pursuant to provisions in the Magistrates Court Act 2004 which entitle a person to apply to have set aside an order or a decision made in his or her absence.

17 The application for review under s 36(1) is brought on a series of grounds which are expressed in very complicated form in the application itself and in Mr De Alwis' two affidavits. However, reducing them to their elements, the basis of the application seems to be, firstly, that there was a breach of the rules of natural justice in determining Homeswest's application in the absence of Mr De Alwis after his collapse and removal from the court by ambulance; secondly, that there was a breach of the rules of natural justice because of certain alleged actions or comments by the learned Magistrate which, according to Mr De Alwis' submissions, demonstrate a perception of bias or actual bias. I say immediately that in the absence of the transcript or any answering evidence I am not disposed at present to place any great weight on those assertions other than to acknowledge that, if made out, they would give rise to a contravention of the rules of natural justice.

18 Next, Mr De Alwis contends that the court was without jurisdiction to hear or determine the applications for various reasons. These can all be lumped together and are as follows: First, there was no actual proof before the court that notice of termination of the tenancy agreement for non-payment of rent had been served upon Mr De Alwis prior to the s 71 application as, so he contends, is essential under the legislation; second, that the payment by him of the whole of the arrears before the hearing meant that the court had no power to proceed with the s 71 application; and third, that because of the existence of the cross-claims giving rise to a set-off, the amount relied upon by Homeswest as being the aggregate amount of the arrears was overstated and, being overstated, any notice relying upon that amount was defective, such a defect going to the jurisdiction of the court.

19 It is important to appreciate that notwithstanding the breadth of power available to this Court under s 36 of the Magistrates Courts Act 2004, there is a limit to the extent of judicial review in disputes concerning residential tenancies. The details of that are to be found in s 26 of the Residential Tenancies Act 1987 which, first of all, excludes any right of appeal from a decision of a Court made under that Act and then goes on to provide in s 26(2):

"No declaratory judgment shall be given and no order shall be made under section 36 of the Magistrates Courts Act 2004 in respect of proceedings taken or to be taken under this Act in the Magistrates Court or any order made in such proceedings by that court, unless the Supreme Court is satisfied that the Magistrates Court had or has no jurisdiction conferred by or under this Act in respect of the proceedings, or that a party to the proceedings has been denied natural justice."

20 This is an important limitation in the present case because the errors alleged by Mr De Alwis concerning the decision of 1 December 2005 which involved submissions that, firstly, no effective notice of termination of the residential tenancy agreement for non-payment of rent was served; secondly, that the proceedings continued after all the arrears of rent had been paid, and thirdly, that the proceedings continued on the basis of an aggregate of arrears which was overstated (because of his entitlement to a set-off of his cross-claims) are all matters which, even if they were to demonstrate errors of law, may not go to the jurisdiction of a court. However, this is new legislation and the consequences of non-compliance, if that is what occurred, in those several respects has not been considered previously, and as there are also grounds involving breach of natural justice, that is, continuation of the proceedings after his collapse and the allegations of perceived bias, it seems to me that it would be useful to allow him to advance those contentions as well.

21 There may be some explanation for the continuation of the proceedings in the Magistrates Court after his collapse, but on the face of it I am satisfied that there is an arguable case for the deprivation of natural justice on this occasion. For that reason I will make an order under s 36 - a review order of the kind contemplated by r 3(2)(b) of O 56A of the Rules of the Supreme Court 1971. The orders which I shall make will be: that the present application for review under s 36 be heard before a Judge of this Court sitting in Chambers; that the application be served, including the amendment put before me by consent this morning, upon the respondent and upon the Registrar of the Magistrates Court at Fremantle on behalf of the Magistrate who heard the proceedings; thirdly, that the learned Magistrate shall have liberty to apply to be joined as a party to the proceedings and to be represented by counsel if so desired.

22 I further order that this review order shall operate as a stay of the order for the termination of the tenancy and of the order for possession from 1 January 2006 and onwards. There will be liberty to any party to apply on notice for a variation of this stay or for it to be set aside.

23 I further order that this stay order shall not prevent the applicant, Mr De Alwis, proceeding, if he should elect to do so, with the application before the Magistrate at the court at Fremantle presently listed for 25 January 2006 or any adjournment thereof dealing with his application to have the judgment and orders of 1 December 2005 set aside on the grounds that they were made in his absence.

24 I direct that a copy of the transcript of the proceedings, or any recording of notes or other record of the proceedings available on 1 December 2005, be brought into court either at the initiative of the applicant or of the respondent and that the Registrar of the Magistrates Court at Fremantle shall remit to this Court certified copies of all the process, exhibits and other papers received or considered at the determination of that hearing. I will reserve the costs of this application.

25 I also direct that this review order be adjourned for further consideration by a Judge in Chambers in this Court at a date to be set approximately six weeks from today, but after notice of this order has been served upon the respondent and the learned Magistrate. On that occasion the Court will give further directions as to whether or not the Magistrate should be joined or represented separately in these proceedings, and for any other procedural orders.