Landlord and Tenant - Residential tenancies legislation - Recovery of possession - Generally - Order for vacant possession to be delivered - Whether discretion to refuse - Relevance of condition of premises.

Residential Tenancy Act 1997 (Tas), s45(3).

Mason v Northern Territory Housing Commission [1997] NTSC 61; (1997) 114 NTR 1; Chief Executive Officer (Housing) v Binsaris [2002] NTSC 9, referred to.

Commissioner for Housing for the Australian Capital Territory v Smith [1995] ACTSC 17, distinguished.

Judgment Number: [2004] TASSC 153

1 This is an appeal pursuant to the Magistrates Court (Civil Division) Act 1992, s28, from an order of a magistrate that vacant possession of certain residential premises be delivered to the owner thereof. The respondent is the owner. The appellant leased the premises from the respondent pursuant to a residential tenancy agreement dated 12 December 2003. His rent fell into arrears. The respondent issued notices to vacate on 30 March 2004, 21 April 2004, and 28 September 2004. A claim for vacant possession under the Residential Tenancy Act 1997 ("the Act") was filed in the Civil Division of the Magistrates Court on 18 October 2004. On 27 October 2004 a magistrate made the order now appealed from. There was at least one earlier claim for possession before the Magistrates Court, but that is irrelevant.

2 The appellant asserted to the learned magistrate that the premises were not in good order. He told him that the plumbing was defective; that sewage was leaking; that a wall had been damaged as a result of leakage; that his children were at risk; and that the house was not fit to live in. He contended that, as a result, he should not have had to pay his rent, and should not be required to vacate the premises as a result of not having paid it. The learned magistrate treated the condition of the premises as irrelevant. When giving reasons for his order, he said the following:

"It is not a satisfactory situation for a tenant to refuse to pay rent because he says the premises are unfit. The fact is, a tenant has a remedy under the Residential Tenancy Act if he alleged that the circumstances are that the premises are unfit for human habitation."

3 The notice of appeal raises two grounds. First, the appellant contends that the learned magistrate should have disqualified himself. Further, he contends that the learned magistrate did not hear his side of the case. It is quite clear that the learned magistrate did not afford the appellant an opportunity to present evidence as to the condition of the premises. If such evidence was relevant, he has been denied procedural fairness. The critical question is whether such evidence was relevant.

4 The appellant was not legally represented before the learned magistrate or before me. At both hearings, he advanced a lot of irrelevant arguments. He contended that an order for the vacation of the premises was inappropriate because Housing Tasmania did not have an appropriate grievance process; because there had been too little time for the Ombudsman to pursue an investigation; because of the conduct of an officer of Housing Tasmania; because of the nature of certain neighbours; and because of aspects of earlier proceedings that had been abandoned. None of these things can possibly have relieved him of the obligation to pay rent. They are not matters that a magistrate could properly take into account in deciding whether to make an order for the recovery of vacant possession of residential premises.

5 The power of a magistrate to make an order for vacant possession of residential premises to be delivered to the owner is conferred by the Act, s45(3), which reads as follows:

"(3) The Court may order that vacant possession be delivered to the owner if satisfied that -

(a) a notice to vacate the premises was properly given; and

(b) the reason for serving the notice to vacate was genuine or just; and

(c) vacant possession was not delivered to the owner; and

(d) the tenant was served with a copy of the application."

6 The evidence before the learned magistrate established quite clearly that a notice to vacate the premises had been properly given; that the notice to vacate stated on its face that the reason it was given was "Rental Arrears"; that, at the time of that notice, there were rental arrears entitling the respondent to serve a notice to vacate; that vacant possession was not delivered to the respondent; and that the appellant was served with a copy of the application to the Magistrates Court. Clearly pars(a), (c) and (d) of s45(3) were satisfied. Because the rent was in arrears, it was open to the learned magistrate to hold that the reason for serving the notice to vacate was "genuine", and thus that par(b) was satisfied. However it is necessary to consider whether, if the applicant's contentions as to the condition of the premises were true, the learned magistrate then had any power or discretion not to order that vacant possession be delivered to the respondent. Counsel for the respondent, Mr Turner, submitted that, when the requirements of s45(3) are satisfied, a magistrate has no discretion not to order the delivery of vacant possession, despite the use of the word "may" in the opening words of that subsection.

7 A similar question was considered in Mason v Northern Territory Housing Commission [1997] NTSC 61; (1997) 114 NTR 1 in relation to the Tenancy Act 1979 (NT), s48. That section implied that a magistrate had the power, on the application of a lessor, to make an order for the issue of a warrant of possession in respect of leased premises. It was silent as to whether or not the magistrate had a discretion not to order the issue of a warrant when a lessor had served a notice to quit on grounds established to be valid, and had otherwise complied with the applicable statutory provisions. Bailey J concluded that the statute provided a code governing the repossession of premises, with the result that there was no implied discretion. In Chief Executive Officer (Housing) v Binsaris [2002] NTSC 9, his Honour adhered to that view, and held that the statute excluded the operation of the doctrine of relief against forfeiture.

8 In the Australian Capital Territory, the opposite view was reached in relation to a similar legislative provision by Higgins J (as he then was) in Commissioner for Housing for the Australian Capital Territory v Smith [1995] ACTSC 17. However that case concerned a statutory provision that provided that a magistrate "may" issue a warrant, and the Interpretation Act 1967 (ACT), s26(3) required "may" to be interpreted as conferring a discretion.

9 Courts with equitable jurisdiction have the power to grant tenants relief against forfeiture unless that power has expressly or impliedly been excluded by the operation of a statute. When a tenant has failed to pay rent, but has brought the rent payments up to date, a court of equity will ordinarily grant relief against forfeiture, subject to the payment of interest and costs, in the absence of very special circumstances: Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562; Shiloh Spinners Ltd v Harding [1973] AC 691 at 722.

10 However I think it is clear from the provisions in the Act as to the recovery of premises that those provisions, like the equivalent provisions in the Northern Territory, are intended to operate as a code and to exclude the equitable jurisdiction to grant relief against forfeiture. If a tenant fails to comply with a provision of a residential tenancy agreement as to the payment of rent, but does not deliver vacant possession of the premises to the landlord voluntarily, and does not abandon or vacate the premises, then the residential tenancy agreement is not terminated until the stage is reached when vacant possession of the premises is delivered to the owner by order of the court: s37(1)(d). Self-help is prohibited by s37(2). By virtue of s43(2), a notice to vacate on the ground of failure to pay rent is of no effect if the tenant pays all arrears in rent before that notice takes effect, ie, before it expires, unless two or more notices to vacate on the ground of failure to pay rent have been served on the same tenant during the preceding 12 months. There is no express exclusion of the equitable remedy of relief against forfeiture, but I think it must be implied from these provisions that that remedy is excluded and replaced by the relevant provisions.

11 The Act makes no express provision as to the situation when a tenant pays all arrears of rent after a notice to vacate has taken effect, but before the hearing of an application for an order for vacant possession under s45. Although the payment of arrears prior to a notice to vacate taking effect is expressly dealt with in s43, the Act does not expressly state whether a magistrate has any discretion when all arrears are paid after a notice to vacate has taken effect. Section 45(3) does not begin, "The Court is to order ...", rather than "The Court may order ...". The words "is to", are used in ss23(2), 30(3) and 45(4) to impose on magistrates obligations as to which they were obviously intended to have no choice. However, if Parliament had intended magistrates to have a statutory discretion similar to the discretion to grant relief against forfeiture, I think that a specific provision would have been made in the Act. The Act appears to have been intended to simplify the law in relation to residential tenancies. I therefore think it would be contrary to the object of the Act to hold that there are situations, not provided for in the Act, in which magistrates may continue the existence of tenancies which landlords have a prima facie right to have terminated.

12 The significance of the condition of the rented premises needs to be assessed in the light of this conclusion.

13 At common law, a lease of residential premises does not ordinarily contain an implied term that the premises will be fit for human habitation: Penn v Gatenex Co Ltd [1958] 2 QB 210; Bottomley v Bannister [1932] 1 KB 458; Pampris v Thanos (1967) 69 SR (NSW) 226.

"32 - (1) The owner of residential premises is to maintain the premises as nearly as possible in the condition, apart from reasonable wear and tear, that existed on the day on which the residential tenancy agreement was entered into."

15 Under s32(2), the tenant is required to notify the owner of any repairs needed in respect of premises within seven days of the need arising. Under s32(3), the owner is required to carry out any repairs specified in a s32(2) notice, other than repairs needed because of some fault of the tenant, within a specified period after the receipt of the notice. Under s36A, a tenant may apply to the Magistrates Court for an order that the owner carry out any reasonable repairs that do not arise from any fault of the tenant. An order akin to a mandatory injunction can be made under that section.

16 The residential tenancy agreement of 12 December 2003 contains a number of clauses listing the respondent landlord's obligations, including the following:

"4.1 We must maintain the premises having regard to their age, character and prospective life, subject to your obligations in this Lease.

4.6 We must provide the premises to you in a clean state when you first occupy them.

4.7 We must provide the premises to you in a reasonable state of repair when you first occupy them."

17 If the appellant's contentions as to the condition of the premises are correct, it is at least possible that the respondent breached cl4.1 by failing to maintain the premises as required by that clause, and that that breach entitled the appellant to damages.

18 The authorities suggest that, in the absence of any statutory provision to the contrary, such an entitlement to damages on the part of a tenant could be set off against a landlord's entitlement to arrears of rent. See Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th ed, pars37-040, 37-045. In the absence of a statutory provision to the contrary, an equitable set-off can be relied upon as a defence to a non-money claim: BICC plc v Burndy Corp [1985] Ch 232. I think it is clear from that case that the basis upon which a court exercising equitable jurisdiction can permit a set-off to be relied upon as a defence for a non-money claim is that equity has a discretion to grant relief against forfeiture.

19 As I have already said, I think it was intended that the equitable remedy of relief against forfeiture should not be available to a tenant in proceedings for the recovery of vacant possession of residential premises under s45. I do not think it can have been intended that magistrates have a discretion under s45(3) to refuse relief because of the condition of premises and a possible entitlement of the tenant to set off an entitlement to damages against the landlord's entitlement to arrears of rent. Once again, I think Parliament would have made its intention clear by making a specific provision if it had intended such a discretion to exist when a landlord has a prima facie right to the recovery of possession of rented premises.

20 It follows that the learned magistrate had no discretion to refuse the order sought, and that he did not err in treating the appellant's contentions as to the condition of the premises as irrelevant and stopping him from advancing argument or evidence in relation to the condition of the premises.

21 The applicant submitted that the learned magistrate should have disqualified himself because of earlier cases in which they had met. The applicant told me that he appeared before the same magistrate on an assault charge in 2001 or 2002, pleaded not guilty, gave evidence, was disbelieved, and was sentenced to imprisonment. He told me that he appeared before the same magistrate in about July 2003 on a charge of failing to appear, pleaded not guilty, gave evidence, was disbelieved, and was again sentenced to imprisonment. He told me that he gave evidence before the learned magistrate in three cases concerning restraint orders in the last three years, and was disbelieved each time. He told me that he had also appeared before the learned magistrate in a child protection case in 2000, but that it had concluded with the making of a consent order without him having given evidence. He told me that the officer who represented the respondent before the learned magistrate in the proceedings at first instance had appeared against him as a child protection officer in that case in 2000. The transcript reveals that he started to tell the learned magistrate something about that case during the proceedings at first instance, but that the learned magistrate said that he was not concerned about that. The applicant told me that he had wanted to submit that the learned magistrate should disqualify himself, but that he had been stopped.

22 It is well settled that, subject to questions of waiver and necessity, a magistrate or judge must disqualify himself or herself if he or she is actually biased against a litigant, or if a party reasonably apprehends, or a fair-minded lay observer might reasonably apprehend, that he or she might not bring an impartial mind to the resolution of the question or questions that he or she is required to decide: Livesey v New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288 at 294; R v Watson; ex parte Armstrong [1976] HCA 39; (1977) 136 CLR 248; R v Lusink; ex parte Shaw (1981) 55 ALJR 12; Re JRL; ex parte CRL [1986] HCA 39; (1986) 161 CLR 342; Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568; Webb v R [1994] HCA 30; (1994) 181 CLR 41; Johnson v Johnson [2000] HCA 48; (2002) 201 CLR 488; Ebner v Official Trustee [2000] HCA 63; (2000) 205 CLR 337.

23 There is nothing before me to suggest any actual bias on the part of the learned magistrate. I do not think I need to decide whether there was any basis for a reasonable apprehension of bias on his part because, as I have said, the only appropriate outcome in the proceedings before him was the order that he in fact made. If he was obliged to disqualify himself, and had disqualified himself, the only proper outcome would have been the making of the same order by a different magistrate. If I were to decide that he erred in not disqualifying himself, the only appropriate outcome would be for me to dismiss this motion in spite of such an error having occurred. That can be done pursuant to the Justices Act 1959, s110(2)(ab), when no substantial miscarriage of justice has occurred. Whether there was error on the part of the learned magistrate in not disqualifying himself or not, the order for vacant possession of the premises should not be quashed.

25 On 3 November 2004 Slicer J ordered that the order of the learned magistrate be stayed until 29 November 2004. On that day I ordered that the stay order of Slicer J continue in force until further order. On 6 December 2004 counsel for the respondent told me he had instructions that, in the event of the motion to review being dismissed, the respondent did not wish to take possession of the premises within 14 days after judgment. Accordingly, I order that the stay order made by Slicer J on 3 November 2004 be discharged with effect from 6 January 2005.