O'Keefe v Integral Corporate Property Pty Ltd

Ground 1 of the summons for leave to appeal

1. Ground 1 in the summons is in the following terms: 1 The Tribunal below erred in law when they found upon the facts that the relationship between the plaintiff as occupier and the first defendant as registered proprietor was a residential tenancy within the meaning of the Residential Tenancies Act 2010.
2. In Farmer v Cotton's Trustees [1915] AC 915 at 932, Lord Parker of Waddington said: [W]here all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only.
3. That statement was quoted and adopted by Latham CJ in Commissioner of Taxation v. Miller (1946) 73 CLR 93; [1946] HCA 23 at p 97 and again by Fullagar J in Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47; [1956] HCA 21 at p 51. In the latter case Fullagar J said that where the ultimate fact in issue involves a term used in a statute, the question whether the facts adduced to prove or disprove that ultimate fact actually do prove it "will generally - so far as I can see, always - be a question of law". Mason J (as his Honour then was) cited and approved these statements in Hope v Bathurst City Council (1980) 144 CLR 1; [1980] HCA 16, with the concurrence of all other members of the Court.
4. While ground 1 undoubtedly raises a question of law, the plaintiff has no realistic prospect of demonstrating that there was an error in this respect on the part of the Senior Member and of the Panel for not reversing the first instance decision. The facts fully found by the Senior Member clearly give rise to a relationship of landlord and tenant under which the first defendant, as registered proprietor, allowed the plaintiff to occupy the residential unit for residential purposes on terms that he pay outgoings such as strata levies and that he pay a monthly amount quantified at the level of the first defendant's monthly mortgage payment on a loan that was secured over the property. I do not see how that conclusion of law could be faulted on the basis of the facts found. The findings of fact necessarily lead to a conclusion that there was a residential tenancy.

Ground 2 of the summons for leave to appeal

1. Ground 2 in the summons repeats ground 1 with the addition of the words "when it failed to take account of the following considerations". There follow 19 asserted facts listed under ground 2. These facts include, first, that the plaintiff was the registered proprietor of the subject unit from 1977 and, secondly, that in 2012 George Peterson (aka George Kekatos) advised him to transfer it to an associate of the plaintiff, Mr Adam Stone. Thirdly, it is alleged that a contract of sale was entered into between the plaintiff and Mr Stone, stating a consideration of $850,000. Fourthly, the plaintiff alleges that a transfer to Mr Stone was effected under this contract, with the plaintiff paying the stamp duty and conveyancing costs.
2. Fifthly, it is alleged that in 2013 Adam Stone transferred the unit to the first defendant; that the first defendant mortgaged it to secure a loan, and that the plaintiff has since that time paid the first defendant's monthly mortgage payments. These payments have been variable according to the rate of interest charged by the first defendant's lender from time to time. The 19 facts alleged under ground 2 in the summons also include that the first defendant has not complied with various statutory obligations of a landlord such as disclosure of information to the plaintiff under s 27 of the Residential Tenancies Act, provision of the name and address of an agent under s 28, provision of a written tenancy agreement under s 29 and a condition report under s 30.
3. The above is a summary and condensation of the 19 asserted facts. In my view there is no reasonably arguable case that it was a legal error on the part of the Senior Member or the Panel not to "take into account" any of these matters. The determination of whether there exists a residential tenancy agreement is not a discretionary judgment that requires wide-ranging considerations to be "taken into account". The question is governed by whether or not the registered proprietor and the occupier agreed upon well-known essential terms. The Senior Member approached the legal issue in that way, correctly.
4. Ground 2, plainly on its face, seeks to have this Court make extensive additional findings of fact and to bring them to bear upon the question of whether there was a residential tenancy or not. That is not a question of law and there is no basis for this Court to entertain such an appeal, by leave or otherwise.

Plaintiff's evidence concerning fraud and breach of trust

1. Evidence tendered on the present application includes a Deed of Settlement and Release made between the plaintiff, the defendant, Mr Stone and Mr Peterson in December 2013 ("the Deed"). That document was signed by the plaintiff and contains recitals that provide prima facie evidence of some background facts that the plaintiff says are relevant to a claim that he was defrauded of ownership of the subject unit by Mr Peterson and that Mr Peterson and the first defendant are liable to the plaintiff for breach of trust. Other documents exhibited to the plaintiff's affidavit provide further prima facie evidence touching these subjects.
2. It appears that in May 2012 the plaintiff owed Westpac Bank nearly $590,000 secured by mortgage over the subject unit. The Deed recites that he also owed $268,000 to his mother, secured by an unregistered mortgage protected by caveat. The plaintiff has sworn an affidavit stating that he did not in fact owe this debt to his mother. A strong prima facie inference is available that in May 2012 the plaintiff was under financial pressure. In an affidavit that he has sworn in another recent legal proceeding he said as much. The plaintiff transferred the subject unit to Mr Stone in about the middle of 2012. Mr Stone took out a fresh mortgage of $630,000 from Suncorp Metway Pty Ltd and used that to discharge the plaintiff's liability to Westpac. Mr Stone secured his borrowing from Suncorp Metway by granting that company a mortgage over the unit. Although the plaintiff has deposed that he did not receive $850,000 that was payable to him by Mr Stone for the unit, this evidence suggests that a substantial part of that consideration was given by way of discharging the plaintiff's mortgage liability to Westpac.
3. The recitals in the Deed referred to an agreement for the sale of the unit by the plaintiff to Mr Stone, said to have been made in May 2013 but clearly intended to mean May 2012. It is recited that the terms of the sale included the following: (iii) [the plaintiff] would pay all amounts for which Stone was liable in respect of the loan and mortgage obtained to complete the purchase by way of monthly direct deposits (Rent) to the account held by Stone from which those loans and mortgage payments were debited; (iv) provided [the plaintiff] continued paying Rent and all other costs in respect of the Property, he would continue to occupy the Property following completion of the contract for sale of the Property […].
4. Recital K of the Deed referred to the plaintiff's performance of the agreement of May 2012 for transfer of the unit to Mr Stone and for the plaintiff's continued occupancy, as follows: K Rent pursuant to the agreement was (i) paid in full each month from September 2012 through January 2013 and in March 2013; (ii) part-pad in August 2012 and February 2013; and (iii) not paid in July 2012, and not paid in or after March 2013.
5. It appears from the documents that as a result of non-payment of Mr Stone's mortgage instalments by way of rent, Mr Stone commenced proceedings in the Consumer Trader and Tenancy Tribunal, the predecessor to NCAT, to recover possession of the property from the plaintiff. The Deed gave effect to a settlement of those possession proceedings. Clause 3 provided that the first defendant would purchase the unit from Mr Stone for $850,000 and that on completion of this purchase, or after "such further time agreed by the parties in writing", the following would apply: (a) any tenancy or other occupation agreement by which [the plaintiff] occupies the Property is terminated; (b) If required to do by the [first defendant], [the plaintiff] is to give vacant possession of the Property; (c) Stone is to file a Notice of Discontinuance with the CTTT.
6. On 29 September 2015, the plaintiff signed a Statement of Affairs and filed it in connection with a voluntary submission to bankruptcy. He was declared bankrupt on 5 October 2015.
7. In support of the plaintiff's present application for a stay of the Tribunal's order for possession of the unit, he has deposed that the Deed from which I have quoted, his statement of affairs filed in bankruptcy and other transactional documents were all executed under the inducement of fraudulent misrepresentations by George Peterson. It is submitted that the plaintiff has a cause of action in fraud against Mr Peterson and that he is entitled to substantial damages on that account. The plaintiff contends that in so far as the above-mentioned documents suggest that he was a tenant of, first, Mr Stone and, thereafter, the first defendant, those documents were not knowingly adopted by him and they do not represent the true relationships.
8. The evidence that the plaintiff has filed on this application is largely directed to establishing an arguable case that when he transferred the unit to Mr Stone in 2012 it was agreed that Mr Stone would thereafter hold the unit on trust for him and that he would occupy it, not as tenant, but as beneficial owner pursuant to the obligations of Mr Stone as his trustee. The evidence is directed to trying to establish that, similarly, the first defendant acquired title to the unit in 2013 as trustee for the plaintiff and that the plaintiff has continued to occupy it as beneficial owner.
9. The plaintiff commenced proceedings in the Equity Division on 21 February 2020, seeking a declaration that the first defendant holds the unit on trust for him and claiming damages for breach of trust and for fraud. With a view to protecting the subject matter of that claim, the plaintiff applied for and obtained a freezing order over the assets of the first defendant and George Peterson. However, that freezing order was not continued when the matter came before Ball J on 24 February 2020. His Honour concluded that the Court had no jurisdiction to grant a freezing order because the plaintiff had no standing to bring the underlying claim. Ball J held that if the plaintiff had such a claim it had accrued before the sequestration order was made against him and the right to pursue it formed part of his bankrupt estate, which remains under the administration of the plaintiff's trustee in bankruptcy.
10. The plaintiff has endeavoured to purchase from his trustee in bankruptcy the right to pursue his claims against the first defendant and Mr Peterson. The possibility of those claims being pursued is, at present, contingent on a number of factors, principal amongst which is the question whether the plaintiff will be able to acquire the causes of action.
11. The stay that is sought in this Court of the Tribunal's order for possession cannot be granted upon the basis that the plaintiff may achieve standing to prosecute against the first defendant and Mr Peterson a claim in fraud and/or a claim against the first defendant that it holds the subject unit on trust. The stay sought in these proceedings could only be supported on the basis of an arguable case for leave to appeal the decision of the Tribunal.

Ground 3 of the summons for leave to appeal

1. Ground 3 in the summons is in these terms: The tribunal in the court below erred when they found that because the relationship between the plaintiff and the defendant fell within the definition of a residential tenancy agreement in s13 of the Residential Tenancies Act 2010, that the relationship between the plaintiff and the defendant was a residential tenancy.
2. That ground conveys no sensible meaning. Where the Senior Member found facts that, as I have earlier stated, necessarily dictated that there was a residential tenancy agreement within the meaning of s 13, then the provisions of the Act were engaged, including s 85 pursuant to which the first defendant as landlord was entitled to give a 90 day notice of termination. There is no substance in ground 3.

Ground 4 of the summons for leave to appeal

1. Ground 4 in the summons is as follows: If the relationship between the plaintiff and the defendant is found to be a residential tenancy agreement, (which is not admitted) the tribunal below erred in law when it found that the tenancy had been terminated in accordance with s 85 of the Residential Tenancies Act 2010 when it had already found that (a) the plaintiff had been in possession of the residential premises for more than 20 years and (b) s 85(4) of the Residential Tenancies Act 2010 provides that s 85 does not apply to a residential tenancy agreement if a tenant has been in continual possession of a residential premises for 20 years or more.
2. Section 85 is reproduced at [12] above. The correct interpretation of subs (4) of s 85 is that the operation of the earlier sub-sections, including subs (1) that permits a landlord to give 90 days' notice of termination, is excluded only if the tenant has been in continual possession of the same premises for 20 years in the capacity or character of a tenant. The sub-section is not engaged on the present facts where the plaintiff was for many years the registered proprietor of the unit and then transferred it to another registered proprietor who became his landlord. It was only for seven years up to the date of the hearing in the Tribunal that the plaintiff occupied the unit as the tenant of the registered proprietors who succeeded him to the title.
3. There are a number of indications in the Act that support this interpretation of sub-s (4) of s 85. Section 84 is the equivalent of s 85 in relation to fixed term tenancies. It provides that such a tenancy may be terminated on 30 days' notice given at any time after the fixed term has expired. That section is also subject to exclusion of its operation where "the tenant has been in continual possession of the same residential premises for a period of 20 years or more and the fixed term of the original fixed term agreement has ended": s 84(4).
4. Section 94 is in the following terms (so far as relevant): 94 Termination of long term tenancies (1) The Tribunal may, on application by a landlord, make a termination order for a residential tenancy agreement - (a) if the tenant has been in continual possession of the same residential premises for a period of 20 years or more, and (b) if the tenant occupied the premises under a fixed term agreement, the fixed term of the original agreement has expired, and (c) if the Tribunal is satisfied that it is appropriate to do so in the circumstances of the case. (2) A landlord may make an application under this section without giving the tenant a termination notice. […] (4) The Tribunal, in determining the day on which vacant possession of the residential premises is to be given to the landlord, must not order that vacant possession be given earlier than 90 days after the order is made.
5. Section 94 empowers the Tribunal to terminate tenancies of premises that have been occupied continuously for 20 years or more, whether the tendency is for a fixed term or periodic. Sub-section (1)(a) of s 94 stipulates the additional pre-condition for exercise of the Tribunal's power but must be satisfied in the case of a fixed term tenancy. Upon reading ss 84, 85 and 94 together it seems clear that ss 84(4) and 85(4) are both concerned only with cases where the character of the occupation for 20 years or more has at all times been as a tenant.
6. Further, it is correct, as the appeal Panel stated, that the operation of s 85(4) was not raised before the Senior Member. The Appeal Panel's view was that it could not be raised in the internal appeal because if the issue had been brought to the attention of the Senior Member, evidence could have been adduced that may have overcome the point. More directly, if the issue had been raised it would have been seen that upon the correct interpretation of s 85(4) it had no application. If, contrary to my interpretation of the sub-section, the plaintiff's occupation of the premises as a registered proprietor were held to count toward the accumulation 20 years, it would have been open to the first defendant to apply to the Tribunal for an order under s 94 that the tenancy be terminated. That is another reason why the point could not be permitted to be taken for the first time before the Panel.
7. I do not consider that ground 4 in the plaintiff's summons has any reasonable prospect of being made the subject of a grant of leave to appeal to this Court.

Orders

1. The reality in this proceeding is that the plaintiff wishes to agitate the circumstances of his occupation of the property in reliance upon evidence of oral agreements entered into and fraudulent representations made to him. He wants to press a claim to continue in occupation of the unit that depends upon him successfully prosecuting a proceeding entirely different from his application for leave to appeal from the Appeal Panel's decision. Unless and until the plaintiff acquires from his trustee in bankruptcy the right to commence such a proceeding he cannot litigate his allegations of fraud and breach of trust. When and if the plaintiff does acquire that right, the prosecution of the claims that he envisages will raise significant issues of fact. None of that can be dealt with under the present summons. The possibility of the plaintiff's claims becoming the subject of other competent proceedings in this Court cannot justify a stay of the order for possession as interlocutory relief in support of the proceedings under this summons.
2. The orders of the Court will be: 1. The plaintiff's application for a stay of the order for possession made in the Civil and Administrative Tribunal is dismissed. 2. The plaintiff is to pay the first defendant's costs of the stay application. 3. The summons is stood over to the Registrar's list at 9.30am on Friday 12 June 2020.

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: 15 June 2020