NSW Land and Housing Corporation v Catherine McGeown

NCAT Consumer and Commercial|2014-01-16

APPLICATION 1By an application filed on 10 September 2013, the applicant sought the following order: "Section 87 - A termination order where the tenant has breached the residential tenancy agreement". 2The reasons given by the applicant for seeking the order for termination was "due to non-occupancy" of the premises.

JURISDICTION 3The dispute involves a residential tenancy agreement between the parties entered into on 30 October 2001. 4The premises are "residential premises" within the meaning of section 3 of the Residential Tenancies Act 2010 ("the RTA"). Schedule 1 of the Consumer Trader and Tenancy Tribunal Act 2001 establishes the Tribunal's jurisdiction in respect of matters arising under the RTA. 5The application was filed on 10 September 2013 in the Consumer Trader and Tenancy Tribunal ("CTTT") but had not been heard before 1 January 2014. Clause 7 Schedule 1 of the Civil and Administrative Tribunal Act provides that any unheard proceedings before CTTT are taken on and from 1 January 2014 to have been commenced in the Civil and Administrative Tribunal of New South Wales ("NCAT") and may be heard and determined by NCAT. 6The Tribunal has jurisdiction to hear and determine the application.

RESPONDENT'S SUBMISSIONS 18The respondent provided a written submission which was supplemented by oral submissions at the hearing. 19The written submissions provided background material and submitted that the Tribunal should dismiss the application for termination because: "The clause that the applicant purports to rely on is void." 20The clause to which the respondent was referring was clause 35 of the Agreement requiring the respondent "to personally occupy the premises at all times". 21The 3 reasons advanced as to why clause 35 should be considered or declared void were stated as: " (a) The term is inconsistent with the Residential Tenancies Act 2010; (b) The meaning of the term was so uncertain that the parties cannot be said to have reached an agreement; (c) The term is unfair in the sense referred to in the Australian Consumer Law. " 22The respondent submitted that any requirement by the landlord for the tenant to occupy the property in a particular way (i.e. "all of the time") represents an inconsistency with the right to quiet enjoyment of the premises granted by the RTA. 23The respondent also contended that clause 35 was uncertain because it was open to different interpretations and is ambiguous. 24The final submission concerned the application of Australian Consumer Law. The respondent agreed that clause 35 was void because it was unfair. It was submitted that the unfairness was that the clause prohibited a tenant from leaving the premises for periods of more than 3 months at a time. 25The respondent suggested that there are alternative mechanisms available to the applicant to achieve its policy objectives.

APPLICANT'S SUBMISSIONS 26In response to the respondent's submissions, the applicant provided a written submission and made oral submissions at the hearing. Various documents relating to the tenancy were tendered in evidence. 27The applicant's submissions sought to address each of the issues raised in the respondent's submissions. 28Clause 35 imposes an obligation on the tenant to personally "occupy" the residential premises. The applicant submitted that the word "occupy" should be considered in the context in which it was used and should be interpreted as meaning "to reside". It was argued that support for this interpretation can be found by reference to sections 77 and 95 of the RTA. 29The applicant argues that clause 35.1 is not void for uncertainty and that its meaning is quite clear given the context in which "occupy" is used in the clause. 30The applicant contended that a requirement that a tenant personally occupy the premises is not an unfair term given the objects of the provision of public housing in the Housing Act 2001. The applicant says that the term is reasonably necessary to protect the legitimate interest of the applicant.

FINDINGS AND DETERMINATION 31The applicant seeks an order pursuant to section 87 of the RTA for an order for termination of the respondent's tenancy and vacant possession of premises in Maher Street, Hurstville. 32The applicant alleges a breach of clause 35 of the Agreement which requires the tenant to personally occupy the premises at all times. 33There is no dispute that the tenant is not personally occupying the premises as she has been incarcerated since December 2012. 34The applicant served a NOT on the respondent relying on a breach of clause 35. The NOT required vacant possession to be given on 28 August 2013. The respondent has not vacated the premises as required by the NOT. 35Section 82 of the RTA 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. 36The Tribunal finds that the NOT complies with the requirements of section 82 of the RTA. Further, the date specified in the notice i.e. 28 August 2013 was not earlier than 14 days after the date on which the notice was given. 37Section 87 of the RTA provides: 87 Breach of agreement (1) A landlord may give a termination notice on the ground that the tenant has breached the residential tenancy agreement. (2) The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given. (3) The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement if it is a fixed term agreement. (4) The Tribunal may, on application by a landlord, make a termination order if it is satisfied that: (a) the tenant has breached the residential tenancy agreement, and (b) the breach is, in the circumstances of the case, sufficient to justify termination of the agreement, and (c) the termination notice was given in accordance with this section and the tenant has not vacated the premises as required by the notice. (5) In considering the circumstances of the case, the Tribunal may consider (but is not limited to considering) the following: (a) the nature of the breach, (b) any previous breaches, (c) any steps taken by the tenant to remedy the breach, (d) any steps taken by the landlord about the breach, (e) the previous history of the tenancy. (6) The Tribunal may refuse to make a termination order if it is satisfied that the tenant has remedied the breach." 38It is undisputed that the landlord is a social housing provider and that the Agreement is a social housing agreement as defined in section 136 of the RTA. 39The Tribunal is required to consider the additional matters set out in section 152 of the RTA when determining whether to terminate a social housing agreement on the ground of a breach by the tenant. Section 152 of the RTA provides: 152 Termination by Tribunal of social housing tenancy agreements for breach (1) In determining whether to terminate a social housing tenancy agreement on the ground of a breach by the tenant, the Tribunal is to have regard to such of the following matters as may be relevant: (a) any serious adverse effects the tenancy has had on neighbouring residents or other persons, (b) whether any breach of the agreement was a serious one, and whether, given the behaviour or likely behaviour of the tenant, a failure to terminate the agreement would subject, or continue to subject, neighbouring residents or any persons or property to unreasonable risk, (c) the landlord's responsibility to its other tenants, (d) whether the tenant, wilfully or otherwise, is or has been in breach of an order of the Tribunal, (e) the history of the tenancy concerned, including any prior tenancy of the tenant arising under a social housing tenancy agreement. (2) This section does not limit any other matters that may be considered by the Tribunal under any other provision of this Act." 40The Tribunal now turns to a consideration of each reason advanced by the respondent as to why clause 35 of the Agreement should be considered or declared void.

Inconsistent with the RTA 41The respondent contends that any requirement by the landlord for the tenant to occupy the property in a particular way represents an inconsistency with the right to quiet enjoyment (and non-interference with peace, comfort and privacy) granted by section 50 of the RTA. 42Part 2 Division 2 of the RTA deals with the terms of residential tenancy agreements. 43Section 19(1) and (2) of the RTA are as follows: 19 Prohibited terms (1) A residential tenancy agreement must not contain a term of a kind set out in this section or prescribed by the regulations for the purposes of this section. (2) Terms having the following effects must not be included in a residential tenancy agreement: (a) that the tenant must have the carpet professionally cleaned, or pay the cost of such cleaning, at the end of the tenancy, (b) that the tenant must take out a specified, or any, form of insurance, (c) exempting the landlord from liability for any act or omission by the landlord, the landlord's agent or any person acting on behalf of the landlord or landlord's agent, (d) that, if the tenant breaches the agreement, the tenant is liable to pay all or any part of the remaining rent under the agreement, increased rent, a penalty or liquidated damages, (e) that, if the tenant does not breach the agreement, the rent is or may be reduced or the tenant is to be or may be paid a rebate of rent or other benefit. Note: Section 15 also prohibits certain additional terms from being included in a residential tenancy agreement for which a standard form is prescribed." 44For the purposes of section 19(1), Regulation 5 of the Residential Tenancies Regulation prohibits the following term: 5 Prohibited terms A residential tenancy agreement must not contain a term having the effect that the tenant must use the services of a specified person or business to carry out any of the tenant's obligations under the agreement. No other terms have been prescribed by the regulations. 45Clause 21 of the RTA provides: 21 Inconsistent and prohibited terms void (1) A term of a residential tenancy agreement is void to the extent to which it: (a) is inconsistent with any term included in the agreement by this Act or the regulations, or (b) is prohibited by this Act or the regulations. (2) The Tribunal may, on application by a landlord or a tenant, make an order declaring that a term of a residential tenancy agreement is void or partly void if satisfied that the term is inconsistent with any term included in the agreement by this Act or the regulations or is prohibited by this Act or the regulations. 46A term in the RTA which requires a tenant to "personally occupy the premises at all times" is not a prohibited term under section 19(2) nor is it a term prescribed by the Residential Tenancies Regulations which must not be included in a residential tenancy agreement. 47Section 15(4) of the RTA permits a residential tenancy agreement for which a standard form is prescribed to include additional terms, but only if: (a) The terms do not contravene the RTA or regulations or any other Act; and (b) The terms are not inconsistent with the terms set out in the standard form. 48It is noted that the RTA applies to residential tenancy agreements whether made before or after the commencement of the RTA. The Agreement in question was made before the commencement of the RTA and the Tribunal finds that the RTA applies to the Agreement. 49The Tribunal rejects the submission that clause 35 of the Agreement is inconsistent with section 50 of the RTA. The prescribed form of residential tenancy agreement is to be found in Schedule 1 of the Residential Tenancies Regulation 2010. Section 15(4) allows additional terms to be included subject to the limitations set out in that section. 50The Tribunal finds that clause 35 of the Agreement does not contravene the RTA or the Residential Tenancies Regulation or any other Act, and its terms are not inconsistent with the terms set out in the prescribed standard form in Schedule 1. 51The Tribunal notes the rationale behind clause 35 of the Agreement is detailed in the applicant's written submission dated 16 January 2014: "25.Furthermore at the time the parties entered into the Agreement they intended 'occupy' in clause 35.1 to mean 'reside in' the premises. The applicant is a Statutory Corporation established pursuant to section 6 of the Housing Act 2001 (the Housing Act). Section 5 sets out the objects of the Housing Act including: (a) to maximise the opportunities for all people in New South Wales to have access to secure, appropriate and affordable housing." 26.To achieve that objective, section 18 of the Housing Act provides: For the purposes of this Act and subject to this Act, the Corporation may in relation to land vested in the Corporation; (a) ... (b) Subject to such terms and conditions as it thinks fit, sell, lease, exchange or otherwise dispose of or deal with the land and grant easements or rights-of-way over the land or any part of that land. 27.Therefore to assist the applicant to achieve the objective of maximising the opportunities for all people in New South Wales to have access to secure, appropriate and affordable housing, section 18 of the Housing Act specifically allows the applicant to include such terms and conditions as it thinks fit in residential tenancy agreements it enters into in respect of public housing. Clause 35.1 of the Agreement is such a term." 52The Tribunal finds that there is no inconsistency between a term of the Agreement which requires the respondent to personally occupy the premises and the tenant's right to quiet enjoyment as provided for in section 50 of the RTA.

VOID FOR UNCERTAINTY 53The second reason advanced by the respondent is "the meaning of the term is so uncertain that the parties cannot be said to have reached an agreement". The respondent argues in the written submission that "On the face of it, the wording of the clause requires the tenant to remain perpetually inside the boundaries of the property". The respondent submits that this cannot be the intention of clause 35. 54In United Group Rail Services Ltd v Rail Corporation NSW [2008] NSWSC 1364, Rein J summarised the relevant law at [10]-[11]. "General Principles in Respect of Construction, Ambiguity and Uncertainty 10. A Court is required in construing a written contract, to endeavour to discover the intention of the parties from words used in the contract - a clause's meaning may be reached by other parts of the document: see Australian Broadcasting Commission v Australasian Performing Right Assn Ltd [1973] HCA 36; (1973) 129 CLR 99 per Gibb J (as he then was) at 109. The Court endeavours to ascertain what objectively was the meaning of the words used: Toll (FGCT) Pty Ltd (formerly Finemores GCT Pty Ltd) v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [35] -[38]. 11. In Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429; (1968) 41 ALJR 348, in which the words "supplier's costs" were held not to be meaningless, Barwick CJ also said: "But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; (1932) 147 LT 503, at p 512 ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in Scammell (G) & Nephew Ltd v Ouston (1941) AC 251 is not "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved". 55The applicant's submissions focused on the meaning of the word "occupy" as used in clause 35.1. The submissions were in response to the respondent's contention that the meaning of clause 35.1 was uncertain and should be held to be void for uncertainty. 56The Tribunal finds the applicant's submission persuasive. The applicant argued that the "use of "occupy" in clause 35.1 must be considered in the context in which it is used." 57What meaning should be attributed to the word "occupy" in clause 35.1? The applicant referred to several dictionary definitions in its submission. Those definitions suggest that one meaning attributable to the word "occupy" is to "reside in". This meaning appears to be consistent with the use of the words "right to occupy", "right of occupation" and "to occupy" which appear throughout the RTA. 58In Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSW AD TAP41, the Appeal Panel of the Administrative Panel was required to consider the meaning of "occupy". The Tribunal said at [23]: "... 'Occupation' means something of a continuity of possession and residency for reasonably lengthy periods of time. 'Occupation' need not be permanent but mere transitory user is not sufficient: Allison v Lowe [1998] Tas R 21. There must be an element of regularity, continuity and permanence: Baulkham Hills Shire Council v Mekol Pty Limited (1970) 92 WN (NSW) 553. 'Occupation' focuses upon what a person does or may do in relation to those premises: Harris v McKenzie (1986) 9 NSWLR 139. In such circumstances, the Appellant submits that 'occupation' requires residency for a period of approximately a few months so that section 12(1) can be relevantly satisfied." 59The respondent contended that clause 35 does not specify the amount of time the tenant is required to stay at the property and therefore is ambiguous. It is apparent that clause 35.1 requires the tenant to personally occupy the premises. If the tenant ceases to personally occupy the premises, then this constitutes a breach of the tenancy agreement and the applicant can give a notice of termination for breach of agreement (see clause 35.2). 60The tenant in entering into the tenancy agreement was fully aware that the premises are public housing. By signing the tenancy agreement, the respondent agreed to abide by the additional terms governing the tenancy as set out in clauses 27 to 36. 61The Tribunal finds that clause 35 is not void for uncertainty. The proper construction of clause 35 is that the tenant is to personally reside in the premises. Whether the tenant is personally occupying the premises is a question of fact that is to be assessed objectively having regard to all the circumstances. 62The failure to personally occupy the premises is a breach of the tenancy agreement and may result in the issue of a notice of termination. Ultimately, the final decision whether to terminate the tenancy rests with this Tribunal which must have regard to the requirements of the RTA. The Tribunal is given a discretion in section 87 of the RTA whether or not to make a termination order and must be satisfied of the matters in section 87(4).

APPLICATION OF AUSTRALIAN CONSUMER LAW 63The respondent referred to Australian Consumer Law ("ACL") and submitted that the tenancy agreement was a consumer contract under section 23(3) of ACL. The respondent argued that clause 35 was part of a standard form contract and was unfair. 64The applicant contended that "the requirement that a tenant personally occupy the premises is not an unfair term". The applicant referred to the objects of the provision of public housing in the Housing Act 2001. 65The submissions of the parties did not address the question of whether the ACL applied in the present situation. The Tribunal finds that the Residential Tenancy Agreement was entered into between the parties on 30 October 2001. 66Schedule 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 deals with transitional matters upon the introduction of Australian Consumer Law. Paragraph 8 provides as follows: 8 Unfair contract terms (1) Part 2-3 of the Australian Consumer Law applies to a contract entered into on or after the commencement of this item. (2) That Part does not apply to a contract entered into before that commencement. However: (a) if the contract is renewed on or after that commencement--that Part applies to the contract as renewed, on and from the day (the renewal day ) on which the renewal takes effect, in relation to conduct that occurs on or after the renewal day; or (b) if a term of the contract is varied on or after that commencement, and paragraph (a) has not already applied in relation to the contract--that Part applies to the term as varied, on and from the day (the variation day ) on which the variation takes effect, in relation to conduct that occurs on or after the variation day. (3) If paragraph (2)(b) applies to a term of a contract, subsection 23(2) and section 27 of the Australian Consumer Law apply to the contract. (4) Despite paragraphs (2)(a) and (b) and subitem (3), that Part does not apply to a contract, or a term of a contract, to the extent that the operation of that Part would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms (within the meaning of that paragraph of the Constitution). 67The ACL applies to transactions which occurred from 1 January 2011 and accordingly has no application in the present case. SHOULD THE TENANCY BE TERMINATED? 68The Tribunal finds that there was a valid NOT and that there has been a breach of clauses 35.1 and 35.2 of the Agreement. The respondent conceded she has not been in personal occupation of the premises since 11 December 2012. 69The Tribunal now turns to a consideration of whether the breaches are in the circumstances sufficient to justify the termination of the Agreement. In Howard v B Miles Womens Foundation Inc (2012) NSWC 1173, Schmidt J said; "It is obvious that the legislation seeks to achieve a balance between the rights and obligations of landlords and tenants". In that case, Her Honour was referring to the Residential Tenancies Act 2010. 70Section 87 gives the Tribunal a clear discretion as to whether or not to make an order for termination. In considering the circumstances of the case, the Tribunal has had regard to each of the matters in section 87(5) of the RTA. 71The Tribunal has considered each of the matters in section 87(5) and is satisfied that the respondent has breached clause s 35.1 and 35.2 of the Agreement. The respondent did not seriously address the matters in section 87(5) in her submissions. 72The Tribunal has in determining whether to terminate the Agreement also had regard to the matters in section 152 of the RTA in so far as they are relevant. The Tribunal has taken into account as a relevant consideration that the applicant is a social housing provider and the objects of the provision of public housing in the Housing Act 2001 which are detailed in the applicant's submission. In the Tribunal's opinion, these are a relevant consideration in deciding whether it is appropriate to make a termination order. 73The applicant is the provider of low cost housing to those most in need. After considering all the circumstances of the case, the Tribunal finds that the respondent has breached the Agreement and the breach is sufficient to justify the termination of the Agreement. (signed) GA Kinsey Member Civil and Administrative Tribunal of New South Wales 15 April 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 28 July 2014 - representation added Amended paragraphs: coversheet 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: 28 July 2014

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