McGainey and Ors v Barac [2008] ACTSC 48

5. The order made by Chief Justice Higgins suspending the effect of the Notice of Eviction be discharged.

(a) the costs of the application for leave to extend time for and the leave to appeal against the orders of the Residential Tenancies Tribunal made on 15 August 2007, other than the hearing of today;

(b) three-quarters of the respondent's costs of the hearing of today.

7. The respondents pay the costs of the application for leave to appeal against the orders of the Residential Tenancies Tribunal made on 14 September 2007, other than the costs of the hearing of today.

8. Discharge the applicants' undertaking as to damages given on 25 September 2007 and subsequently.

1. On November 2003 Benjamin McGainey, David Marsh, Jane Marsh and Denise Campbell, the appellants, whom I will call the tenants, entered into what was described in the document itself as a Residential Tenancy Agreement for premises known as 29 Cobbadah Street, O'Malley in the ACT with Mr and Mrs Barac, the respondents, whom I will call the lessors. I refer to the agreement as "described as a Residential Tenancy Agreement" only because there was some evidence that part of the building was in fact used as offices. I do not know if there is any significance in that. No point was taken about it in the hearings before the Residential Tenancies Tribunal nor before me.

2. On 31 July 2007 the lessors made an application to the Residential Tenancies Tribunal for the termination of the tenancy agreement, rental arrears and "compensation/damages".

3. The proceedings came before the Residential Tenancies Tribunal on 15 August 2007. On that day, the Tribunal made an order declaring that there had been a breach of the agreement and, unless certain conditions set out in the order were met, terminated the agreement at a specified date and time.

4. I note that for some reason the front page of the transcript of the proceedings describes them as though the proceedings were in the Magistrates Court of the Australian Capital Territory and the Tribunal Member, Ms J David, is described as "Magistrate" even though neither is correct. While it may be a small matter, it would be appropriate were the transcript of proceedings to be correctly titled and the presiding member correctly described. It may be desirable for the Court Procedures Rules 2006 (ACT) to include a provision similar to O 52 r 25 of the Federal Court Rules, especially ss (3) and (4) as they appeared before the repeal in 2006, so that errors in the transcript are corrected before inclusion in the Appeal Book. This may particularly apply to appeals from Tribunals and perhaps the Magistrates Court where the pressure of business and nature of the proceedings may cause difficulties in accurate transcription.

5. On 29 August 2007 the lessors sought to restore the application to the Tribunal's list for the purpose of seeking a warrant of eviction. The application came on for hearing on 14 September 2007. Three of the four tenants were present in person and the lessors were represented by Mr G Santucci of Snedden Hall & Gallop. The Tribunal issued orders for the issue of a warrant of eviction and for rental arrears and an occupancy fee until possession was given to be paid.

6. I note that the front page of the transcript of the proceedings on that day shows the same inaccuracies as I have noted above, but further that, despite a reference to Ms David presiding, it appears that in fact the President of the Tribunal presided. Presumably this is a person who is in fact a magistrate (see ss 111 and 112 of the Residential Tenancies Act 1997 (ACT) (`Residential Tenancies Act')) but the Presiding Member is still shown as the Member who presided at the earlier hearing. It was common ground between the parties before me that the person presiding in the hearing on 14 September 2007 was not the same Tribunal Member who presided over the earlier proceedings.

7. By application dated 21 September 2007 the tenants sought from this court leave to appeal against the orders of the Residential Tenancies Tribunal. That leave was required because s 125 of the Residential Tenancies Act requires an appeal to be brought only with the Supreme Court's leave. I note that the application was for leave to appeal only against the orders of the Tribunal given on 14 September 2007.

8. At the hearing on 25 September 2007 the sealed order of the court shows that no leave was actually given, although order 2 is in terms that "the parties have liberty to approach the list clerk for a hearing date". That is ambiguous; it could refer to a date for hearing of the application for leave, or it could imply that leave was given and the hearing of the appeal itself was to be listed for hearing.

9. It was common ground between the parties, however, that leave had formally not been given, and that is reinforced by the fact that no notice of appeal has been sealed, nor is one to be found on the court file. Indeed, the notice of appeal in the appeal papers is unsigned and undated and paragraph 3 which reads "The appeal is brought by leave of the court given on..." leaves the date blank.

10. Accordingly, it would appear that the first task is to consider whether leave should be granted.

11. The notice of appeal also purports to appeal against the decision of 15 August 2007. That order was not encompassed in the application referred to above. On 15 April 2008, however, an application was made for an extension of time within which to seek leave to appeal and for leave to appeal against the orders made on 15 August 2007. It appears that this application is also before me for hearing. That application to extend time was necessary because of r 5072 of the Court Procedures Rules 2006, which requires an application for leave to appeal to be made no later than 28 days after the day on which the order appealed from is made, or not later than any further time allowed by the court.

12. As to the extension of time for leave to appeal, the general principles are not in doubt. Rules of court which prescribe time limits should ordinarily be observed: Ratnam v Cumarasamy & Anor [1964] 3 All ER 993 at 935. Nevertheless, the rules themselves provide for discretion to extend the time limits in a proper case.

13. The purpose of such rules is to ensure that rules fixing time limits do not become instruments of injustice and to do justice between the parties: Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479 at 480. In that case, McHugh J identified that to determine whether the rules will work injustice it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences to the parties of the grant or refusal of the extension of time. His Honour added that "... it is always necessary to consider the prospects of the applicant succeeding in the appeal."

14. An alternative approach has been used in the Federal Court. There, in Deighton v Telstra Corporation Ltd [1997] WAG 74 (unreported, Lee, Heery and Nicholson JJ, 17 October 1997), the Full Court of the Federal Court considered that at least there must be "... a satisfactory explanation for any delay in making the application" (perhaps included in what McHugh J described as "the conduct of the parties") and "... it would be necessary for the court to assess the prospects of ... leave [to appeal from the interlocutory decision] being obtained."

15. I do not see any significant difference between these two approaches: the approach of McHugh J perhaps requires a wider range of matters to be considered by the court. It goes without saying that these other matters are all properly to be considered, though in some, perhaps many cases, they may have little, if any, weight in the final decision.

16. In this case, in any event, the two orders were interrelated closely and while each can arguably stand on their own, they have such a relationship that it would be inappropriate to have regard to one without at least considering the other. Mr D Shillington, who appeared for the lessors, did not oppose a grant of extension of time and, accordingly, I grant the extension of time.

17. The question of whether leave to appeal should be granted is somewhat more problematic. At least one significant issue is the merits of the appeal, to which I now turn.

The application to the Residential Tenancies Tribunal

18. As noted above, the application sought three orders, termination of the tenancy required under s 36 of the Residential Tenancies Act, an order for payment of arrears of rent and compensation or damages.

19. The statement of particulars attached to the application set out the claim in detail. As to rent, it referred to payment of rental arrears calculated in total in the sum of $56,664.

20. In direct terms, this is outside the jurisdiction of the Tribunal. Under s 115 of the Residential Tenancies Act the Tribunal does not have jurisdiction to make an order for the payment of an amount greater than $25,000. This is modified to a limited extent by s 115B of that Act which provides:

115B Extended jurisdiction of tribunal with agreement of parties

1. This section applies if--

(a) an application (the original application) is made to the tribunal under--

(i) this Act; or

(ii) the standard residential tenancy terms; or

(iii) the standard occupancy terms; and

(b) the parties to the proceeding agree to the tribunal exercising extended jurisdiction under this section.

2. The tribunal has jurisdiction (extended jurisdiction) to hear and decide any matter that--

(a) arises out of, or is ancillary to, the dispute that gave rise to the original application; and

(b) the Magistrates Court has jurisdiction to hear and decide under the Magistrates Court Act 1930, pt 4.2 (Civil jurisdiction).

3. If the tribunal is exercising extended jurisdiction, the tribunal may exercise the jurisdiction and powers of the Magistrates Court under the Magistrates Court Act 1930, Pt 4.2 (Civil jurisdiction).

Note The Magistrates Court has jurisdiction to hear and decide any personal action at law if the amount claimed is not more than $50,000 (see the Magistrates Court Act 1930 (ACT), s 257).

21. The statement of particulars, attached to the lessors' application, also referred to ten items of repair or cleaning or replacement claimed by the lessors.

22. While there was reference to the claim for repairs in the hearing before the Tribunal, the Tribunal Member considered that it was appropriate for the parties to confer and indicated that she intended to "... order [the parties] to have discussions within, say three weeks of the needs for repairs and who's responsible for what. And then if you can't sort that out well somebody's doing [sic] to have to come back here and sort it out" at Appeal Book p 136.10-13. She then appeared to formalise that at Appeal Book p 137 lines 5 to 8:

So the last order I'll make is that the lessors representative and the tenants meet to inspect the premises and to negotiate over the maintenance issues on or before - and I'll give you 5 September, that's the three weeks to do that - 5 September.

23. That order appeared in the formal termination and possession order. It appears that such an order was made under s 104(l) and perhaps subs 102(l)(f) of the Residential Tenancies Act. I am not required to consider whether or not that order was appropriate or within power or jurisdiction.

24. Mr Thomas submitted that because the application to the Tribunal sought an order for payment of rent arrears which exceeded the limit of the Tribunal's jurisdiction to make a money order, even though associated with other orders clearly within the jurisdiction of the Tribunal, the jurisdiction of the Tribunal was not thereby enlivened and the hearing on 15 August 2007 invalid.

25. Unfortunately, Mr Thomas was unable to refer me to any authority or to any principles from which I could accept that proposition. It is difficult to see why a claim for an order beyond jurisdiction should affect the validity of a whole application.

26. In the time available to me, I have been unable to find any clear authority. It does seem to me, however, that I can draw some comfort from cases in the Federal Court of Australia, a court of limited statutory jurisdiction. In a case such as Nixon and Ors v Phillip Morris (Australia) Ltd and Ors [1999] FCA 1107; (1999) 95 FCR 453, Wilcox J considered whether the court had jurisdiction in relation to claims for common law negligence which included some claims under the Trade Practices Act 1974 (Cth), the latter clearly within jurisdiction. At 462 his Honour provisionally opined that one set of negligence claims was arguably beyond jurisdiction. They were, unfortunately for any assistance further discussion might have afforded me, ultimately abandoned by the applicants. Nevertheless, nothing his Honour said could be construed as coming near to suggesting that the inclusion of these claims infected the whole application and rendered it beyond jurisdiction.

27. I have also to be aware that the proceedings before the Tribunal are often conducted by litigants in person who would have little idea of these technical niceties. It would be inconceivable in these circumstances and be likely to render the Tribunal into a court of strict pleading that inclusion of a claim beyond jurisdiction would invalidate any application that included claims well within jurisdiction, so long as the latter were not fundamentally dependent upon the claim beyond jurisdiction.

28. In my view, there is no substance in the contention that the inclusion of the claim for $56,664 for rental arrears in the particulars of claim invalidated the whole of the application to the Tribunal.

29. The principal argument in the hearing was about the question of rent and it is to the issue surrounding this that I now turn.

30. There was also considerable debate about the payment of rent in the Tribunal and how it should be paid. There was no dispute before the Tribunal at either hearing that there were arrears of rent, nor, indeed, was that contested before me, though the quantum was not agreed. There was also evidence in the documents attached to the application that showed some prior history of dishonoured cheques. For example, see the Appeal Book pp 97 to 99 and 103 to 106.

31. The Statement of Contesting/Defending Application filed in the Tribunal by the tenants, conceded that rent was outstanding but challenged many of the claims for repairs. In the affidavit of 20 September 2007 sworn by Mr McGainey in support of the application for leave to appeal, he deposed at par 19 that "[t]he arrears of rent as at 18 September 2007 is $41,712". Mr McGainey, who appears to be the lead tenant, appeared before the Tribunal through his employee, Michael Gazzard. Mr Gazzard indicated that a cheque to the value of $32,000 was being sent immediately by FedEx in payment of that rent: Appeal Book p 127. There was no reference to the currency in which that cheque would be drawn. It would be inevitable that all involved, including the Tribunal Member, would assume that this was in Australian currency. It appears that a "FedEx Report" about that cheque was in the hands of the tenants' agent but it is not clear whether that was tendered. It does not appear in the appeal papers.

32. Further discussion showed that that amount had been calculated on an incorrect basis and that shortly the total rent would be in the order of $62,000: Appeal Book p 133.4-6. Mr Gazzard sought time for at least the cheque for $32,000 to be paid. The Tribunal Member allowed seven days for that to be done. She stressed the importance of the cheque being honoured and that the payments were to be made on time: Appeal Book pp 136.20-29; 137.30-138.9. It appears that the Tribunal Member accepted that the arrears could be paid in instalments, but the balance $30,000 payable shortly after that: Appeal Book p 133.18-29. She also extended the order to cover continuing rent for the ensuing 6 months. This was clearly for a period within power (see s 42(2) of the Residential Tenancies Act).

33. Of course if the sum of $62,000 had been ordered by the Tribunal to be paid by the tenants then that order would have been outside the jurisdiction of the Tribunal. Indeed, it is even outside the extended jurisdiction of the Tribunal. This was made clear and, indeed, the Tribunal member appeared to assume that she was making an order, which exceeded her jurisdiction: Appeal Book pp 125.18-24; 127.11-12; 137.30-45 and 139.23-27.

34. That, of course, must be true if the order was "an order for - the payment of an amount greater than $25,000" as referred to in s 115 of the Residential Tenancies Act. In the event, however, the actual order made was:

1. That the tenancy agreement has been breached.

2. That the Residential Tenancy Agreement relating to the tenant/s occupancy of the above premises shall terminate, unless the tenant complies with the conditions set out at order 4 below.

3. That the Residential Tenancies Agreement between the parties will terminate and the lessor is to be granted vacant possession of the premises at 3.00 pm on the day after default in any of the conditions set out in order 4.

4. That this order is made subject to the following conditions:

(a) The outstanding rent owed is to be paid:

(i) by the following payments:

$32,000 on the 22nd day of August 2007, and

$30,000 on the 5th day of September 2007

(b) That in addition to payment of owed rental arrears, the tenant is to pay rent regularly in accordance with the Tenancy Agreement. Once the arrears have been paid in full the tenant is to continue to pay rent, in advance, in accordance with the Tenancy Agreement.

(c) That in default, this order is enforceable for any arrears of rent and unpaid rent which has accrued from the date of this order.

5. That where the tenant/s are in default of any of the conditions specified in order 4 of these orders and the tenant/s fail to vacate, the lessor/s may apply under s 42A of the Residential Tenancies Act to the Registrar for a Warrant of Eviction.

6. That subject to the criteria set in s 42A of the Residential Tenancies Act, a warrant for eviction may issue.

7. That this order will expire on the 15th day of February 2008.

8. That the lessors representative and the tenant meet to inspect the premises and to negotiate over the maintenance issues on or before 5th September 2007.

9. That the lessor observe the terms of the lease concerning inspections and give the required 7 days notice in writing to visiting the premises.

35. The Tribunal would have had power to deal with an amount of up to $50,000 had the jurisdiction it had been exercising been the extended jurisdiction, as defined in s 115B of the Residential Tenancies Act. It would appear that all of the relevant preconditions had been met, save for the question of whether the parties to the proceedings agreed to the Tribunal exercising extended jurisdiction under the section.

36. The Tribunal Member proceeded as though there was an exercise of extended jurisdiction. At no time did she specifically draw the parties' attention to the consent required. None of the parties objected. Indeed, they seemed to embrace the way the proceedings were conducted. The lessors' solicitor appears expressly to have consented (Appeal Book p 139.29). The tenants were not represented by a lawyer. Their consent was never sought and could not really be inferred. It is highly desirable that consent to extended jurisdiction of the Tribunal be expressly given and not inferred from silence or acquiescence, even though in suitable cases that may be able to be achieved: see the second meaning of "acquiescence" referred to by Griffith CJ in Cashman v 7 North Golden Gate Gold Mining Co (1897) 7 QLJ 152 at 153-4. It would not seem that the conditions, under which that could be found, exist here.

37. The issue before me then is whether the orders made by the Tribunal were beyond jurisdiction and therefore must be quashed.

38. It is to be noted that despite what the Tribunal Member actually said, the form of the order was what is generally called a conditional order. Such an order is permissible where non-payment of rent is at issue: see Devenport v Commissioner for Housing in the ACT [2007] ACTSC 30; (2007) 210 FLR 325 at 330-1.

39. Even if the Tribunal Member thought she was doing something different, the order she actually made was a conditional order which she was empowered to make. That is what I have to consider; it is not the reasons or the argument that can be challenged on appeal, but the order actually made. Having regard to the terms of s 48 of the Residential Tenancies Act, the order seems to be in a form that is consistent with the powers given by the Act.

40. Mr Thomas who appeared for the tenants, submitted that the fact that the Tribunal Member considered that she was exceeding her jurisdiction infected the order which might then be thought to be an attempt to circumvent the jurisdictional limits of the Tribunal.

41. Where there is some ambiguity or impropriety in the actual orders, or were the evidence to support them not clearly available in the evidence before the Tribunal, this might be arguable. None of that was present here. I see no impropriety in a judicial or quasi-judicial officer making an order within jurisdiction and achieving a result that was thought to be beyond jurisdiction if done in another way, so long as the evidence and other material justified it and the terms of the order did not mean a party was denied the opportunity to make relevant submissions on its substance.

42. Neither position pertains here; indeed, the order was favourable to the tenants, for if such an order could not have been made, the tenants would have faced immediate termination of the tenancy and probably eviction shortly after that. That the actual order was to the tenants' benefit was relevant in the circumstances.

43. The only issue, then, is whether an order in this form breaches the jurisdictional limit expressed in s 115. It seems to me that it does not. It does not require payment of the arrears in the sense that it is not enforceable so as to require the payment to be made as a judgment on which execution could ensue. It is merely a condition, the fulfilment of which will render the order for termination of the tenancy agreement ineffective.

44. On the other hand, were the termination of the tenancy to be effected because of non-payment of the money, the lessors would still have to take action to recover the unpaid rent from the tenants and the order itself would not oblige the tenants to make payment. A further order would be needed for this. That reinforces the view that it is not "an order for the payment of an amount greater than $25,000".

45. It is not in doubt that a court may make a conditional order where the condition is one which the court would have no power to make as an order: see R v Martiniello [2005] ACTSC 9 at [25] - [28]. The view that the order made is not an order for the payment of an amount is reinforced by a consideration of s 109 of the Residential Tenancies Act which provides that an order for the payment of money can be registered by filing in the Magistrates Court and then is deemed to be a judgment of the court on which execution can issue. The order in this case could not be so registered or, if registered, could not found execution as it does not order any party to pay any money.

46. Further, a reading of the Residential Tenancies Act as a whole confirms me in this view. Section 49 permits the Tribunal to make what is described as a conditional order, in effect, terminating a tenancy for failure to pay rent unless the arrears are paid in a certain time and rent continues to be paid as it falls due.

47. There is nothing in this section which would suggest this power is limited by the jurisdictional limit in s 115. Indeed, s 42 permits the condition to be made for up to one year. There would be a great many tenancies these days where the rent for 12 months would well exceed $25,000. There is no reason why the ameliorative provisions of s 49(3) should not be available to so many tenants. As clearly remedial legislation, the Act "should be construed so as to give the fullest relief which the fair meaning of its language will allow": Devenish and Ors v Jewel Food Stores Pty Limited [1991] HCA 7; (1991) 172 CLR 32 at 44 quoting with approval Bull and Ors v Attorney-General (NSW) [1913] HCA 60; (1913) 17 CLR 370 at 384.

48. Mr Thomas was unable to quote any authority to suggest that the particular orders were beyond the jurisdiction of the Tribunal or, indeed, any principles supported by authority from which I then could infer that conclusion.

49. I am unpersuaded that the Order of 15 August 2007 exceeded the jurisdiction of the Tribunal.

50. Ultimately it appears that a cheque for US$27,000 was handed to the solicitors for the lessors and received by them. There is no evidence before me as to whether that sum is equal to or more than AUD $32,000, payment of which was a condition in the Tribunal's order. I note it was paid on 22 August 2007, the day required in the condition.

51. No point was taken that the payment was made by cheque. Indeed, in the circumstances it could not be, given that this was clearly in the contemplation of the parties at the time the Order was made. The claim by the tenants' agent at the hearing was that a cheque was on its way by FedEx; there was extensive discussion of the need to ensure a cheque did not bounce. At p 138 of the Appeal Book the following exchange occurred:

TRIBUNAL MEMBER: Okay, I've made it the $32,000 is to be paid by the 22nd, which is next Wednesday. That's so that cheque doesn't bounce, but actually is honoured. And then I've made another $30,000 by 29 August, which is the week after. And you know, if you want another week for that for him I think he wouldn't mind if one cheque's honoured to leave it another week, so he's got two weeks to get it, the balance."

MR TEBBEY [the lessors' lawyer]: I guess no, that's probably fair, given all the - I mean, my client is adamant that this has sort of got to stop and - - -

52. Further the cheque was at least initially accepted. That brings this matter within the principles set out by Mason J, with whom Aitken J agreed, in George v Cluning (1979) 28 ALR 57 at 62-63. It is clear that the cheque is a conditional payment, conditional upon being met on presentation, but once met the payment is complete at the time when the cheque was accepted: National Australia Bank Ltd v KDS Construction Services Pty Ltd [1987] HCA 65; (1987) 163 CLR 668 at 676. The acceptance, if such it was, occurred on 22 August 2007. I do note, however, that on 23 August 2007, the lawyers for the lessors did advise "that the provision of this cheque falls well short of your obligations under the Tribunal's orders". I do not have enough material before me to decide whether in the circumstances this is sufficient to amount to a rejection of the cheque for these purposes, though it does appear that the cheque was actually taken to the bank but not lodged for collection: Appeal Book p 145.37-9.

53. As to whether the tender of a cheque in US dollars is within this principle is more complicated. It does appear, though the evidence is slight, that cheques in US currency have previously been tendered and accepted: see Appeal Book p 147.16-18; that might amount to a course of conduct entitling the applicants to be entitled to rely on that method of payment. I am not asked to decide that and do not have sufficient evidence to do so.

54. I then come to the Order of 14 September 2007. It is in the following terms:

1. That the Tenancy Agreement has been breached.

2. That the Residential Tenancies Agreement is terminated and possession of the premises is to be given to the lessor/s at 11.00 am on the 14th day of September 2007.

3. That the said tenant and any other person claiming right of possession through the tenant's tenancy is to vacate the premises in accordance with this Order.

4. That a warrant for eviction is to be issued in accordance with Order 2 of these orders.

5. That the tenant/s shall pay the lessor rental arrears in the sum of $62,000 forthwith.

6. That the tenant/s shall pay the lessor an occupancy fee at the rate of $229.00 per day from the 15th day of September 2007, until the date that possession is given.

55. It is clear that order 5 is beyond the jurisdiction of the Tribunal. Mr Shillington did not contend to the contrary. Mr Thomas did not contend that the Tribunal did not have jurisdiction and sufficient evidence (particularly in the light of the validity of the earlier order), to make orders 1 to 4. Although I did not seek specific submission it would appear that order 6 is also valid.

56. The only question then is whether the invalidity of order 5 meant that the whole order was invalid.

57. At first blush it seems entirely proper that order 5 simply be severed from the order. It is unenforceable and any attempt at execution would be met by an immediate defence that it was beyond jurisdiction. It would not even be enforceable up to $25,000.

58. Mr Thomas submitted, however, that it was not severable. He referred to no authority nor to any principle from which I might conclude that this was so.

59. In that event, I do not so conclude. It seems to me as a matter of common sense that if an order is beyond jurisdiction it is unenforceable but unless intimately connected with other orders is severable and, so long as the other orders are supportable and within jurisdiction, they can stand.

60. As a result I do not consider that any of the grounds evinced by the tenants have been made out, save as to order 5 of the Order of 14 September 2007. That is sufficient to grant leave to appeal against the orders of 14 September 2007. I do not consider it proper to grant leave to appeal against the order of 15 August 2007 and I dismiss the application for that leave.

61. Accordingly, on the appeal against the orders of 14 September 2007 I quash order 5 but otherwise dismiss the appeal

I certify that the preceding sixty one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.

Solicitor for the respondents: Snedden Hall & Gallop