1. The Tribunal grants leave to apply for internal review.
   1. I set aside the order of the Tribunal made on Wednesday 11 November 2020 in matter number 2020/SH007786 and substitute the following orders instead:

The application in matter number 2020/SH007786 is dismissed.

1. I affirm the order of the Tribunal made on Wednesday 11 November 2020 in matter number 2020/SH007866.

Internal review - Residential tenancy - Jurisdictional matters - Existence of residential tenancy agreement

South Australian Civil and Administrative Tribunal Act 2013 s 70

Residential Tenancies Act 1995 ss 3, 54, 74, 83A

Corporations Act 2001 (Cth) ss 58AA, 471B

Re AKS [2016] SACAT 19

Shire Council v J & B Taitapanui & Anor (2002) VSC 418

Shaw v Sumo Constructions Pty Ltd (2016) ACAT 124

Bhalla v One Stop Lighting (2018) HCA 15

Meringnage v Interstate Enterprises Pty Ltd (2020) VSCA 30

Attorney-General for the State of South Australia v Raschke & Anor (2019) SASCFC 83

Made under the South Australian Civil and Administrative Tribunal Act 2013 s 70(6)(c)(i)

1. This is an application for leave to apply for an internal review. It is also the consideration of the application for internal review of an order made by the Tribunal on 11 November 2020 in matters numbered 2020/SH007786 and 2020/SH007866 (the original Order). The original Order required the tenant, Mr Colangelo to vacate the property.
2. The original Order dealt with an application by Nepondi Pty Ltd (in liquidation) (Nepondi) on the basis that:-
   • Nepondi was the landlord of the property,
   • Nepondi entered into a fixed term tenancy with Angelo Colangelo (a director of Nepondi) from 24 June 2020 to 31 October 2020,
   • Nepondi (through its agent) served a valid notice of termination (Form 2A) on the tenant,[1] to the effect that the landlord would not be extending the tenancy,
   • Mr Colangelo failed to provide vacant possession of the property to Nepondi;
   • Therefore Nepondi sought an order for vacant possession.
3. The original Order also dealt with an application by Mr Leffler seeking an order permitting him to remain in the property.
4. The original Order dismissed Mr Leffler's application, and required the tenant (Angelo Colangelo) to vacate the property on 25 November 2020. The original Order made ancillary orders in relation to the bond and the balance of rent arrears.
5. Both Mr Colangelo and Mr Leffler sought a review of the original Order.
6. Initially I made an order refusing to stay the original Order. However after conducting two hearings in the matter (on 24 November 2020 and 25 November 2020), I adjourned the application for internal review, I issued directions for each party to provide various documents and I stayed the order for eviction.

1. The registered proprietors of the property are Nepondi as to one half share, and Johnny Bianco and Ellena Bianco as to one half share (and their half share is held as joint tenants).[2]
2. At the time of the original hearing, Member Kennedy was informed that Johnny Bianco and Ellena Bianco no longer had an interest in the property[3]. Accordingly, he did not seek their attitude to the applications before him.
3. In the original hearing conducted by Member Kennedy, Mr Leffler argued that he had a right to occupy the property arising from contracts for the sale of the property which he had entered into as the prospective purchaser.
4. In the review hearing process, Mr Leffler argued that he had a right to occupy the property either as a subtenant pursuant to a verbal agreement between him and Mr Colangelo (and pursuant to the agreement between Nepondi and Mr Colangelo) or pursuant to a Heads of Agreement document entered into by him with Nepondi and Mr and Ms Bianco in relation to the sale of the property to him.
5. In either case, Mr Leffler says that his right to occupy is in the nature of a residential tenancy agreement and accordingly, the Tribunal has jurisdiction to deal with the dispute.
6. During the second review hearing, Mr Prior claimed that Mr Leffler and Mr Colangelo were unable to bring their application for internal review because of s 471B of the Corporations Act 2001 (Cth) (the Corporations Act). I issued directions for Mr Prior to provide submissions about that issue and he has done so. I allowed Mr Leffler to provide a response. He has provided a submission.
7. I also directed that Mr and Mrs Bianco were to provide a submission as to whether or not they wished to join in Nepondi's application for possession. They have provided that submission.

1. The applications are made under s 70 of the South Australian Civil and Administrative Tribunal Act 2013 (the SACAT Act). The Tribunal will deal with applications of this nature in two stages. First, the Tribunal will determine whether or not leave should be granted. Second, if the Tribunal grants leave for the internal review application, then the Tribunal will review the decision made at the previous Tribunal hearing.
2. Section 70(1a) of the SACAT Act provides that an application for internal review may only be made with leave of the Tribunal. The applicant, as the person who has applied for internal review, has the responsibility of demonstrating that the discretion to grant leave should be exercised in his favour.

1. The Tribunal will adopt the following approach as set out by Justice Parker in Re AKS [2016] SACAT 19 (at para 14) in determining whether or not permission should be granted:

...the Tribunal should take the same approach to the exercise of its discretion... to grant permission for an internal review as is taken by the Supreme Court when it decides whether or not to grant permission for a civil appeal. The overriding principle is always the interests of justice. The ordinary approach is that permission will only be granted where an appeal is reasonably arguable and the subject matter is of sufficient substance to justify consideration.

1. In this matter, I consider that leave should be granted as there is fresh information before the Tribunal that was not available to Member Kennedy at the original hearing.

1. I will deal with this application by addressing the following questions:-
   1. Does the fact that Nepondi is in liquidation mean that the review process can only proceed with leave of the Federal Court?

b) Is the decision under review the correct or preferable decision?

(i) Is the decision correct to grant Nepondi's application for possession?

(ii) Is the decision correct to dismiss Mr Leffler's application?

1. I note here that although he participated in both review hearings, Mr Colangelo did not provide any written submissions in relation to the issues I must decide.

Question 1: Does the fact that Nepondi is in liquidation mean that the review process can only proceed with leave of the Federal Court

1. Mr Prior argues that the internal review hearing cannot proceed without leave of the Court under Section 471B of the Corporations Act.
2. Section 471B states as follows:-

While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

(a) a proceeding in a court against the company or in relation to property of the company; or

(b) enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

"court" is defined to have the meaning assigned to it by section 58AA

Section 58AA says that court means any court.

1. I accept that the general position is that if a landlord is a company, once a company is in liquidation, then a tenant cannot initiate any legal action against the landlord without leave of the Federal Court and the action is stayed until that occurs. However, it is not clear to me whether that position applies to proceedings in a civil tribunal such as SACAT.
2. Mr Prior has submitted that the decision in the matter of Moorabool Shire Council v J & B Taitapanui & Anor (2002) VSC 418 is authority for the proposition that for the purposes of Section 471B, the term "court" includes a tribunal such as SACAT.
3. That decision dealt with a building dispute and applied a particular piece of legislation in which the term "court" was specifically defined to include the Victorian Civil and Administrative Tribunal. Therefore, I do not accept Mr Prior's submission that the decision is authority for a general proposition that s 471B applies to these review proceedings.
4. Mr Prior also referred me to the decisions in Shaw v Sumo Constructions Pty Ltd[4] and Bhalla v One Stop Lighting[5]. However, the decision in Shaw involved a company which was deregistered, which I consider to be a different scenario. Although the decision in Bhalla supports Mr Prior's argument, I have reservations about following that approach in view of the number of recent decisions which deal with the general question of whether or not a civil tribunal is a court, notably Burns v Corbett which dealt with an appeal from NCAT[6], the decision of Meringnage v Interstate Enterprises Pty Ltd (2020) VSCA 30, in which it was held that VCAT was not a court. Finally, in South Australia, there is recent authority from the Full Supreme Court to the effect that SACAT is not a court.[7]
5. Therefore I have decided to deal with the application on the basis that s 471B is not applicable to SACAT proceedings.
6. Even if I am wrong in this approach, I would suggest to both parties that SACAT is not the appropriate place to deal with their dispute because of my conclusions (which I outline in more detail below) that:-
   • the arrangement between Nepondi and Mr Colangelo is not a binding residential tenancy agreement;
   • Nepondi was not entitled to seek an order for possession against Mr Colangelo unless Mr and Ms Bianco joined in the application;
   • Mr Leffler is not a tenant pursuant to a residential tenancy agreement (whether as a subtenant or otherwise).

Question 2: Is the decision under review the correct or preferable decision?

Is the decision correct to grant Nepondi's application for possession?

1. The original Order was made on the basis that Nepondi was the sole registered proprietor of the property and therefore entitled to enter into the tenancy agreement and therefore entitled to seek the order for possession.
2. It is clear that Nepondi is not the sole registered proprietor of the property. Accordingly, Nepondi was not entitled to enter into the residential tenancy agreement - Section 64 of the RTA requires that the landlord must provide the tenant with vacant possession of the property - Nepondi was not in a position to do that as they were not the sole proprietor.
3. Accordingly, in my view the residential tenancy agreement was invalid or voidable.
4. The logical consequence is that Nepondi was not entitled to serve the notice of termination and Nepondi was not entitled to make the application for possession.
5. In relation to the issue of the invalidity of the notice, I observe that It is common in the Tribunal for notices of termination to be invalid for one reason or another. It is also common for any minor or procedural irregularity to be waived, and for the Tribunal to proceed with the application in any event.[8]
6. However, it is only appropriate for the Tribunal to correct an error in a notice if the error is a relatively minor one and the correction is not to apply to a substantial issue.
7. Once I became aware that Mr and Ms Bianco were still registered proprietors of the property (as to one half share), I directed that they be served with notice of the proceedings so that they could participate in that process. Mr and Ms Bianco were served with all relevant documents in the matter. Ms Bianco participated in the second review hearing at which I explained to her the nature of the dispute. I allowed her and Mr Bianco an opportunity to consider their position.
8. Mr and Ms Bianco have now sent in a written response about the dispute. They have said that they do not wish to join in Nepondi's application for possession.
9. In that scenario, I do not consider it is appropriate for the Tribunal to correct the error in the notice and I do not consider it is appropriate for the Tribunal to make an order for possession. In my view if there is more than one registered proprietor of a property, then all registered proprietors must join in any application seeking an order for possession.
10. This was the approach taken in the matter of Schnell v Clavell (R5274/87) in which the position was stated as follows:

Where the "landlord" is a joint landlord, as in this case, it seems clear, that if two or more parties comprising the landlord are acting ad idem a single signature on the notice will be sufficient to constitute notice from the landlord. But where the joint landlord is not of one mind "notice" from only one of the joint landlords, as here, cannot, in my view, constitute notice from the landlord.

1. Therefore, in my view the correct and preferable decision in relation to Nepondi's application for possession on the basis of the expiry of the fixed term tenancy, is an order to dismiss the application because Nepondi is not the sole registered proprietor of the property and therefore is not entitled to bring the application.
2. I will make a comment here about Mr Leffler's submissions to the Tribunal concerning the role of the liquidator, Mr Prior, in information provided to the Tribunal by Mr Prior concerning the attitude of Mr and Ms Bianco.
3. Mr Prior provided the Tribunal with an email from Ms Bianco to the effect that Ms Bianco did not object to the proposal to not extend the current tenancy agreement (and Ms Bianco repeated that statement in her second email to the Tribunal referred to in paragraph 34 above).
4. Mr Leffler suggested that Mr Prior had misled or lied to the Tribunal about Ms Bianco's attitude and that the original email was false. This is simply not correct and I have completely disregarded the submission. Mr Prior has in no way lied to or misled the Tribunal about a communication to him from Ms Bianco and the original email was not false.
5. For these reasons, I will set aside that aspect of Member Kennedy's decision which ordered vacant possession in favour of Nepondi and substitute a decision to dismiss the application.

Is the decision correct to dismiss Mr Leffler's application?

1. Mr Leffler argues that he has a right to occupy the property either as a subtenant pursuant to a verbal agreement he entered into with Mr Colangelo (as the head tenant pursuant to his agreement with Nepondi) or pursuant to the Heads of Agreement document.
2. During the hearing conducted by Member Kennedy, neither of those arguments was raised in the same way.

1. The first difficulty I have with the argument that Mr Leffler has a right as a subtenant is that if Mr Colangelo does not have a valid tenancy agreement, then he is unable to create a valid subtenancy agreement.
2. In addition, there are two further difficulties with this argument - first, Mr Colangelo did not obtain the landlord's approval to the subletting, and second, the use of the property.

1. The general position is that a tenant may create a subtenancy. Any subtenancy may be created in writing or verbally[9]. When that occurs, for the purposes of the RTA, the tenant takes on the roles and responsibilities of the landlord and the subtenant takes on the roles and responsibilities of the tenant[10]. However, a subtenancy may not be created without the prior written approval of the landlord[11]. Section 74(2a) RTA states that the absence of the landlord's prior written consent does not invalidate a subletting arrangement, however without it, the head tenant remains liable.
2. During the review hearings, Mr Leffler said that upon execution of the residential tenancy agreement between Nepondi and Mr Colangelo, Mr Colangelo and Mr Leffler immediately entered into a verbal arrangement for Mr Leffler to occupy the property. Mr Leffler said that he made all the rent payments (ie he paid rent at the same rate as that applicable to Mr Colangelo under the tenancy agreement with Nepondi), and he made those payments direct to the landlord's agent. He said that he also paid the bond (which would otherwise have been required of Mr Colangelo under the tenancy agreement).
3. The agent acting for Nepondi, Ms Harrison, was uncertain about the source of rent payments and payment of the bond, but said that those payments could have been made by Mr Leffler.
4. Ms Harrison said that she had acted as the agent for the tenancy agreement throughout the duration of the agreement but she was not aware of the arrangement between Mr Colangelo and Mr Leffler until mid-way through the agreement when she conducted a routine inspection.
5. Ms Harrison also said that no approval had been sought for the property to be sublet. Mr Colangelo did not dispute this.
6. As Mr Colangelo did not obtain Nepondi's consent to the subletting, subject to the other issues in this matter, Nepondi could have sought to terminate Mr Colangelo's tenancy[12] but the opportunity to do that was once Ms Harrison had been to the property and found that Mr Leffler was in occupation.

1. Section 3 RTA defines "residential tenancy agreement" as follows:-

Means an agreement (other than a rooming house agreement) under which a person grants another person, for valuable consideration, a right (which may, but need not, be an exclusive right) to occupy premises for the purpose of residence.

1. Regulation 6(1)(b)(i) of the regulations made under the RTA states that the RTA does not apply to an agreement for residential premises where part of the premises are used for a trade, profession or business carried on by the tenant.
2. Sometimes parties will enter into an agreement with a blended purpose: partly residential and partly business. In that scenario, the issue will come down to what is the predominant use of the premises - for business purposes, or as a residence?
3. Ms Harrison said that when she attended at the property for the purposes of a routine inspection, it was not clear to her that someone was living there - she said there were computers there and a couple of mattresses on the floor. She said that it was not set up as a home.
4. During the review hearing, Mr Leffler acknowledged that he was using the property for both business and residential use. He said that he ran a "lean" operation, and his requirements for living were minimal.
5. The Tribunal was provided with the following documents concerning arrangements made by Mr Leffler (or an entity in which he has an interest) in relation to the property:-
   • A contract of sale for the property in 2018 for which the purchaser was Transitional Funding Pty Ltd/Thinking of Marketing Pty Ltd - the purchase price was $1,800,000.00 and settlement was to occur on 19 December 2018;
   • A contract of sale for the property in 2020 for which the purchaser was to be the Boo Boo and Keeper Trust (or the trustee of that trust - the purchase price was to be $1,650,000.00 and settlement was scheduled to occur on 30 November 2020;
   • A Heads of Agreement between Jonathon Leffler and Transitional Funding Pty Ltd (together as lenders) and the registered proprietors, which refers to funding arrangements between the parties concerning the sale of the agreement and which purports to create a licence to occupy, which I will deal with below.
6. During the review hearing, the parties raised the issue of the proposed sale arrangements. Clearly, those arrangements are outside the scope of this Tribunal process. However, they appear to be at the heart of the dispute between the parties.
7. In my assessment, the arrangements between the parties have a commercial flavour - they involve funding arrangements which would generally be associated with business transactions, and not a residential tenancy agreement. For this reason, and on the basis of the agent's evidence about her observations when she conducted her inspection at the property, I consider that the primary use of the property by Mr Leffler is for business rather than for a residential tenancy agreement.
8. Therefore, I do not accept that Mr Leffler has a valid subtenancy under the RTA for the following reasons:-

1. if there was not a valid tenancy agreement between the owners and Mr Colangelo, then Mr Colangelo is unable to create a valid subtenancy agreement; 2. Mr Colangelo did not obtain the landlord's prior written consent to the arrangement with Mr Leffler; and

1. the purpose of Mr Leffler's occupation of the property has been primarily for business purposes.

1. The Heads of Agreement is a document between Jonathon Leffler/Transitional Funding (as the first party), and Nepondi and Mr and Ms Bianco (as the second party). The Heads of Agreement sets out arrangements to facilitate the sale contract of 2018. The sale contract names Transitional Funding as the purchaser and Nepondi and Mr and Ms Bianco as the vendors of the property.
2. Clauses 3.1 and 3.2 of the Heads of Agreement relevantly state as follows:-

3.1.......the First Party's primary obligations are...

..3. Pay 450,000 for a 12 month lease for the license of occupation for Thinking of marketing.

3.2 Under the Proposed Agreement, the Second Party's primary obligations are:

1. Once $50,000 Thinking of Marketing will take license to occupy once the leases in place have expired for 201 Gover street North Adelaide 5006. The license to occupy will have lease term of 12 months from date of Occupation.

If Nepondi and OSR's fail or hinder the occupation or settlement of the contract then the controlling party of Nepondi will refund the $50,000.

2. If the company Nepondi falls in liquidation then both title holders and any trustees hand over possession of the property 201 Gover Street..."

1. The arrangement under Clause 3 of the Heads of Agreement may have created a licence to occupy the property in favour of Mr Leffler but I do not agree with his submission that they create a residential tenancy agreement for the following reasons.
2. The arrangements are part of commercial arrangements concerning the sale of the property. They have none of the hallmarks of a residential tenancy agreement. For example, the requirement to pay a lump sum in advance of $50,000[13], is inconsistent with the requirement of s 54 RTA that a tenant may only be required to pay 2 weeks' rent in advance.
3. Therefore, if Mr Leffler does have rights of occupancy created by the Heads of Agreement, I do not consider the proper characterisation of those rights is as a residential tenancy agreement.
4. For all of the above reasons, I do not accept that Mr Leffler has a residential tenancy agreement either as a subtenant pursuant to an agreement with Mr Colangelo, or under the Heads of Agreement.
5. Therefore in this respect I consider that the original Order to dismiss Mr Leffler's application is the correct and preferable order and I will affirm the original Order in that regard.

1. The Tribunal grants leave to apply for internal review.
2. I set aside the order of the Tribunal made on Wednesday 11 November 2020 in matter number 2020/SH007786 and substitute the following orders instead:

1. The application in matter number 2020/SH007786 is dismissed.

1. I affirm the order of the Tribunal made on Wednesday 11 November 2020 in matter number 2020/SH007866.

[2] This is clear from the Certificate of Title.

[3] Member Kennedy did not have a copy of the Certificate of Title at the original hearing and see paragraph 10 of his decision.

[4] (2016) ACAT 124.

[5] (2001) VCAT 1976.

[6] (2018) HCA 15.

[7] See: Attorney-General for the State of South Australia v Raschke & Anor (2019) SASCFC 83.

[8] This approach is specifically permitted by Section 25 Acts Interpretation Act, 1915 (SA) and Section 83 SACAT Act which allows the Tribunal to correct procedural irregularities.

[13] Which Mr Leffler claimed he had paid, but which Mr Prior said he had not seen in Nepondi's books.