Parkroad Projects Pty Ltd v Luckey & Anor [1999] NSWSC 214 | Case summary

JUDGMENT 1 HIS HONOUR: The plaintiff seeks a declaration that the lease of the land known as 33 Mons Street, Five Dock, in the state of New South Wales, between the plaintiff and the first defendant, dated 1 July 1995, is not governed by the provisions of the Residential Tenancies Act (1987). The plaintiff further seeks an order setting aside orders made by the second defendant at the Residential Tenancies Tribunal made on 2 July 1998, file number 97/07253. 2 The proceedings involve an appeal from the decision of Mr J Bordon, a member of the Residential Tenancies Tribunal, dated 2 July 1998 with the file number referred to. A number of grounds of appeal are advanced on behalf of the plaintiff. The first ground is that by s 6 of the Residential Tenancies Act 1987 (NSW) the second defendant had no jurisdiction to determine the matters arising by the first defendant's application dated 11 March 1997; secondly, that the first defendant as vendor was party to an agreement made in good faith for the sale of the premises to the plaintiff. 3 The second defendant has filed a submitting appearance. In respect of the proceedings, the Minister for Fair Trading has intervened. There is no dispute raised as to the right of the Minister for Fair Trading to intervene in respect of the proceedings before the court. 4 It is appropriate for me to record that this is an appeal assigned to the Administrative Law Division pursuant to s 53 (3B)(ii) & (iii) of the Supreme Court Act 1970 (NSW). The appeal is filed pursuant to s 107(2) of the Residential Tenancies Act 1987. 5 The plaintiff seeks a declaration, in effect, setting aside the decisions of the Residential Tenancies Tribunal "the RTT". Further, as I have indicated, the plaintiff seeks to set aside the particular orders on 2 July 1998 made by Mr J Bordon of the second defendant against the plaintiff in favour of the first defendant concerning the first defendant's tenancy of the premises. 6 It is agreed that the factual matrix in relation to the issues that arise in the present proceedings is to be found in the intervener's written submissions. It seems to me it is appropriate, bearing in mind the agreement referred to, that I should record at this point in time the facts in respect of the matter. 7 The first defendant is an elderly man. Premises known as 33 Mons Street, Five Dock, (the residential premises), had been occupied and owned by the first defendant for many years prior to 7 February 1990. On 7 February 1990 the Federal Court of Australia made a sequestration order against the estate of the first defendant pursuant to the Bankruptcy Act 1966 (Cth). A Mr Hugh Jenner Wily became a registered trustee of the estate of the first defendant pursuant to the Bankruptcy Act on 8 February 1990. The bankrupt estate of the first defendant was annulled by the Federal Court of Australia on 26 February 1991. 8 In or about 1994 the State Bank of New South Wales took possession of the residential premises. On 23 February 1995 a search of the Land Titles Office recorded that Hugh Jenner Wily was the registered proprietor of the residential premises and such search further disclosed a mortgage to the State Bank of New South Wales Limited. 9 In about early 1995 the first defendant responded to an advertisement in a city newspaper which said something along the lines: "Do you have any money problems?" The first defendant, Mr Luckey, had conversations with Mr Byrnes, who represented the plaintiff in response to the advertisement. 10 On 1 July 1995 the plaintiff and the first defendant executed at least two documents as follows: First, a Real Property Act Mortgage document referable to the residential premises recording the plaintiff then known as Byrnes Property Group Pty Ltd as mortgagor and the first defendant as mortgagee. This document was signed by both the plaintiff and the first defendant. Next was a document headed: "Residential Tenancy Agreement - Residential Tenancies Act - 1987" referable to the residential premises which recorded the plaintiff again by its former name, as landlord and the defendant as tenant for a term of seven years beginning on 1 July 1995 and ending on 30 June 2002 with rental of $666.66 per month starting on 1 July 1995. It may be noted that no reference to the aforesaid mortgage or contract of sale could be found in the document entitled: "Residential Tenancy Agreement", nor could any reference to the document entitled: "Residential Tenancy Agreement" or contract for sale be found in the said mortgage document. 11 On 10 July 1995 the plaintiff and the first defendant executed a document entitled: "Contract for Sale of Land" of the residential premises in the form of a 1992 Law Society of New South Wales and Real Estate Institute of New South Wales contract describing the first defendant as vendor and the plaintiff again by its former name, as purchaser for a purchase price of $134,000. 12 On 10 July 1995 a Real Property Act Memorandum of Transfer of the residential premises was signed by or on behalf of the plaintiff by its former name and the first defendant and dated recording the first defendant as transferor and the plaintiff as transferee. On or about 10 July 1995 the plaintiff paid out the first defendant's indebtedness to the State Bank of New South Wales in the sum of $99,000 thereby releasing any entitlement the bank had over the residential premises. 13 As a matter of history, it is appropriate to record that the first defendant received a notice from the Residential Tenancies Tribunal requiring him to attend the Tribunal on 22 August 1996 in response to an application to that Tribunal pursuant to the Residential Tenancies Act 1987 ("the Act") made by the plaintiff. The terms of settlement agreement dated 22 August 1996 resolved the plaintiff's application to the Tribunal. 14 On 25 November 1996 the plaintiff further applied to the Residential Tenancies Tribunal for determination orders in respect of the first defendant's occupancy of the residential premises. On 3 April 1997 the Tribunal dismissed the plaintiff's application. 15 On 11 March 1997 the first defendant made application to the Residential Tenancies Tribunal against the plaintiff seeking, inter alia, orders for repairs to be made and a rental reduction as well. 16 On 14 May 1997 the Tribunal gave leave to the parties to be legally represented. Then immediately on 7 November 1997 the formal hearing before the Tribunal was adjourned. Directions were given to the matter of written submissions. A question arose - and it is a matter in dispute as well before me - as to whether or not on 7 November 1997 the landlord did or did not dispute the Tribunal's jurisdiction. 17 An ex parte hearing was conducted by the Residential Tenancies Tribunal on 7 May 1998. On or about 2 July 1998 the Residential Tenancies Tribunal made a decision and orders favourable to the first defendant. On or about 28 July 1998 the plaintiff filed a summons seeking declarations and orders against the first defendant and second defendant. I have earlier stated in these reasons what the orders are that are now being sought at this hearing. 18 The Minister for Fair Trading intervened on 12 February 1999 pursuant to the Fair Trading Act 1987 (NSW). It should be recorded now, before I proceed any further, that in dispute in the current proceedings is whether or not the plaintiff consented to the Tribunal having jurisdiction to hear the dispute being the dispute raised in the application of 11 March 1997. What is not disputed is that there is in existence a document which records, or notes, that the landlord did not dispute the Tribunal's jurisdiction on 7 November 1997. It is appropriate for me to record that the intervener has submitted that there were a number of matters of fact which have not been or were not dealt with by the Tribunal and the intervener has put submissions in relation to such matters. 19 Thus in issue before me is the question as to whether or not in respect of the subject application to the Residential Tenancies Tribunal there was, in fact, consent given to the jurisdiction given by the plaintiff. Materials have been put before me in relation to the question of whether or not the plaintiff gave consent to the jurisdiction of the Residential Tenancies Tribunal in respect of the application. 20 An affidavit has been read without objection being an affidavit of Mr Byrnes solicitor sworn 1 September 1998. On behalf of the first defendants an affidavit of Kelly Muirhead sworn 9 September 1998 was read and read without objection. In addition, exhibits to that affidavit have been tendered and have become Exhibit 1 in the instant proceedings. 21 It seems to me desirable to determine the question of whether or not consent to the jurisdiction was, in fact, given. Despite some reservations that I expressed during the course of argument, in relation to the extent to which I can now have regard to the materials that have been put before me, the simple fact is that the materials have been put before me without objection. It was not disputed by the parties, one or all of them, that I should not have regard to such materials for the purposes of making a finding of fact in relation to whether or not consent to the jurisdiction was given. 22 The question arises as to whether or not there may have been some error in the Tribunal's referral to a consent being given on 7 May 1997. It does seem to me that having regard to the materials before me that there is perhaps an error in respect of at least the date and that one is really speaking in terms of whether or not consent was given on 7 November 1997 as opposed to 7 May 1997. Having regard to the position adopted by the parties, I will make a finding of fact as to this consent question, to the extent that it be relevant to the ultimate decision. I am prepared to and do make a finding of fact that on 7 November 1997 the landlord plaintiff did, in fact, inform the Residential Tenancies Tribunal that it did not contest its jurisdiction to entertain the application. 23 In his submissions Mr Trebeck, on behalf of the first defendant, has taken me to a number of matters that appear in Exhibit 1 and perhaps I can briefly refer to them. 24 In Exhibit 1 at KM (6) is to be found the contract of sale to which I have earlier made reference. That contract reveals that it was dated 10 July 1995 showing that the vendor was the first defendant and the purchaser was Byrnes Property Group Pty Ltd and it is common ground there has been a change of name by Byrnes Property Group Pty Ltd to that of the plaintiff. The document further reveals that there was to be a simultaneous sealing and completion on the same date for a price of $134,000. I have already mentioned that document was dated 10 July 1995. 25 The Residential Tenancy Agreement is also set forth in Exhibit 1 at KM 16. It is an agreement between the plaintiff and the first defendant bearing date 1 July 1995 and preceded the contract for sale between the same parties. It is noted that the agreement in relation to rent is for a payment by the first defendant to the plaintiff in the sum of $666.66 starting on 1 July 1995 and being payable on the first of the month. The term of the agreement was seven years commencing 1 July 1995 and ending on 30 June 2,002. 26 My attention has been directed in particular to the mortgage document (KM 28) appearing in Exhibit 1, that document reveals a mortgage of the subject property. The mortgagor being the plaintiff and the mortgagee being the first defendant. That document was executed on 1 July 1995. P 3 of the document shows that there were to be loan repayments in the amount of $666.66, first such payment being on 1 July 1995. It is to be observed in passing that this amount of repayment is the same amount of the monthly rental referred to in the Residential Tenancy Agreement. 27 Particularly relevant is the decision of the Residential Tenancies Tribunal which is incorporated in Exhibit 1 and commencing at KM (116). In its reserve decision in the subject application the Tribunal did deal with the issue of jurisdiction and it is appropriate if I here set out the Tribunal's decision in relation to the matter of jurisdiction: "(1) The landlord is to cause a licensed trades person to carry out the following work up to a total cost of $3,000 at the premises on or before 30 July 1998: - (a) repairs to electrical wiring at rear of premises; (b) replacement of cooking facilities, sink, windows and cupboards in kitchen. (2) The Tribunal determines that rent for the premises has been excessive having regard to the withdrawal and reduction of facilities by the landlord. (3) It is determined that from 28 August 1996 for a period of twelve months, rent should not exceed $222.22 per month. (4) Having regard to the amount of rent already paid by the tenant for that twelve month period constitutes an overpayment of $5,333.28, and having regard to the orders made above in relation to repairs to be carried out and the jurisdictional limit imposed by s 85(3) of the Residential Tenancies Act 1987, the tribunal orders that the landlord pay the tenant the sum of $2,000 forthwith. (5) The above orders exhaust the jurisdictional limit set by s 85(3) at the time of application." 28 At KM (122), under the heading of "Jurisdiction": "The applicant and the respondent entered into a Residential Tenancy Agreement on 1 July 1995. Furthermore, the respondent company (or its predecessor) had made an application to this Tribunal on a previous occasion seeking orders for termination of the Residential Tenancy Agreement. The question of jurisdiction was considered by Mr Graham Cochrane (a member of this Tribunal), in relation to that application, following a hearing on 12 March 1997. The Tribunal on that occasion specifically considered the effect of s 6(1)(a) of the Residential Tenancies Act 1987 which provides as follows: 6(1) "This Act does not apply to a Residential Tenancy Agreement; (a) If the tenant is party to an agreement made in good faith for the sale or purchase of the residential premises."; The Tribunal nevertheless concluded on the facts that it had jurisdiction. On 7 May 1997, the respondent acknowledged that the Tribunal had jurisdiction. In those circumstances, I am satisfied that I have jurisdiction to determine this matter." 29 That said, it is appropriate for me to mention that the Tribunal appears to have incorporated, in effect, as part of its reasoning, the decision on jurisdiction of another member of the Tribunal. That decision is found again in Exhibit 1 commencing at KM (70). The decision is dated 3 April 1997. At p 4 of the reasons of Mr Cochrane's decision is to be found his reasons in respect of the issue of jurisdiction. 30 The following appears at p KM (73), under the heading of "Jurisdiction":- "The preliminary question to decide is the effect of s 6(1)(a) of the RTA87. 6(1) This Act does not apply to a Residential Tenancy Agreement. (a) If the tenant is a party to an agreement made in good faith for the sale or purchase of the residential premises; The view I have taken of this in previous applications is that a purchaser in possession of premises prior to completion under Tenancy Agreement is exempt from the provisions of the Act. Such a person is a licensee or tenant at will. The situation for a vendor/prospective tenant is more complicated. Clearly a purchaser/prospective landlord cannot grant a tenancy prior to completion. The legal estate of the owner subsumes any purported grant of a lesser interest. The rationale for excluding vendors who become tenants prior to completion has been amply illustrated. Arguments have been presented before the Tribunal as to the condition of the premises at the commencement of the tenancy; the obligations to provide and maintain the premises in 'reasonable repair' and argument over what fixtures and/or fittings were or were not included in the sale. As a matter of practise agents and solicitors should ensure that the Tenancy Agreement is entered into after completion of the sale/purchase. I read the section as excluding jurisdiction if at the time of entering into the Tenancy Agreement the tenant was a party to a contract for sale or purchase. The facts of the present case are, of course, different. Indeed, they are highly unusual. I note with great interest that the mortgage Luckey to Byrnes dated 1 July 1995 and Transfer Luckey to Byrnes dated 10 July 1995 have both been certified correct for the purposes of the Real Property Act 1900 by the same solicitor. I do not understand this certification. On 1 July 1995 the Trustee in Bankruptcy H J Wiley was registered as proprietor of the land. Byrnes Property Group Pty Ltd was not, as stated on the mortgage dated 1 July 1995, "registered as the proprietor in fee simple". (I wonder how and when the first mortgage was registered and came into being). How could Byrnes Property Group Pty Ltd grant a tenancy dated 1 July 1995 commencing 1 July 1995 with rent due from that date? H J Wiley was still proprietor. The property was next transferred to Luckey on 10 July 1997 and then to Byrnes. Nevertheless, they did. It is quite clear that on the day the tenancy was entered into, My Luckey was not a party to an agreement made in good faith for the sale or purchase of the premises. The Tribunal has jurisdiction." 31 I should also add to what I have said that the award of the Tribunal in respect of the matter of compensation has been incorporated into an order pursuant to s 112 of the Residential Tenancies Act and that order was dated 6 July 1998. It is an order that the plaintiff in these proceedings pay to the first defendant in these proceedings the sum of $2,000. 32 It is appropriate if I now turn to consider the provisions of the Residential Tenancies Act that are perhaps relevant to the determination of the instant proceedings. 33 Residential Tenancy Agreement is defined in s 3(1) of the Act of the definition of "Residential Tenancy Agreement" as follows:- "Means any agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence: (a) whether or not the right of exclusive occupation; (b) whether the agreement is express or implied; and (c) whether the agreement is oral or in writing, or partly oral and partly in writing, and includes such an agreement granting the right to occupy residential premises together with the letting of goods." 34 Section 6(1) of the Act deals with the matter of agreements and premises to which the Act does not apply. I set out the provision of s 6(1)(a):- "This Act does not apply to any residential tenancy agreement: (a) if the tenant is a party to an agreement made in good faith for the sale or purchase of the residential premises". 35 It is not disputed that the contract for sale on 10 July 1995 was made in good faith within the meaning of s 6(1)(a). A focus point of debate has been as to the meaning of the word "is" in the expression "is a party" within the meaning of s 6(1)(a) of the Act. 36 It seems to be accepted as and between the plaintiff and the first defendant that the document dated 1 July 1995 came into effect as a Residential Tenancy Agreement upon the completion of the sale of the premises to the plaintiff by the first defendant on 10 July 1995. On the other hand, the Minister as intervener has submitted that the document dated 1 July 1995 had effect as a Residential Tenancy Agreement on 1 July 1995 existing legally as such from 1 July 1995 and thereafter. 37 Mr Marshall for the plaintiff, has submitted that the first defendant was strictly only a party to an unperformed agreement for sale for a period of time on 10 July 1995. He argues that, on literal and narrower terms of s 6(1)(a), the first defendant could strictly only be said to be a tenant within the meaning of s 6(1) for the duration of the contract for sale. He argues that to interpret "is" in that way would to be contrary to the purposes of the Act and that the word "is" should be interpreted widely to give effect to s 6(1)(a) in respect of the vendor sale lease back transaction. I Trust I do no injustice to Mr Marshall's careful written and oral submissions by stating the argument in these terms. 38 For the first defendant, it has inter alia been submitted that even if there was a Residential Tenancy Agreement on 1 July 1995 albeit, it is not strictly necessary for me to resolve that particular matter, nevertheless, the preferred construction is that the Act continues to apply in cases of a vendor selling and leasing back for a long term. He submits that such an interpretation would accord with the purposive approach of the relevant legislation. 39 In the circumstances of this case, I do not consider that it is necessary to resolve what is the precise status and description to be accorded to the document dated 1 July 1995. That said, I consider that that first submission of the first defendant should be accepted. Indeed, it is a submission at least reflected in part by one of the submissions that was advanced on behalf of the intervener Minister. Mr Quickenden, who appeared on behalf of the Minister, submits that s 6(1)(a) applied to Residential Tenancy Agreement during the performance of the sale agreement whenever such agreement was formed, when the tenant is a party to the sale agreement of the subject premises in New South Wales. As I have already indicated, that submission to an extent, also reflects the submission that I have referred to and advanced on behalf of the first defendant. 40 The submissions of the first defendant and the intervener to which I have referred and which substantially mirror each other should be adopted in respect of the terms of s 6(1)(a). It seems to me that such accords with the purposive approach that should be adopted in respect of that section. (See the reasoning of McHugh J in Newcastle City Council v GIO General Limited (1997) 72 ALJR 97 at 110-114). 41 What I have said is really sufficient to dispose of this case. However, it is appropriate for me to, nevertheless, turn to another aspect of the matter which has caused me some considerable concern. It touches upon alternative submissions advanced by Mr Trebeck in respect of the issues in the instant case. 42 Mr Trebeck also submitted that the plaintiff's appeal should in any event be rejected for further and independent reasons. The reasons may be summarised as follows: On 7 November 1997 while the lessor was legally represented by a solicitor the same solicitor who acted for the plaintiff on the purchase of the property, the plaintiff expressly conceded that the Tribunal's jurisdiction was not disputed. I have already made a finding in respect of that matter. The plaintiff did not withdraw the concession in the hearing before the Tribunal nor did the plaintiff make an application under s 110 for the setting aside of the orders based on the withdrawal of the concession. As the first defendant correctly pointed out, the plaintiff now seeks to challenge in this Court the very matter it conceded below. 43 I must say, were I concerned with merely the justice and merits, it would be appropriate for me to give effect further or alternatively to the submission on behalf of the first defendant. Indeed, in the instant case, the plaintiff company had commenced two sets of proceedings before the same Tribunal - the first in August 1996 and the second in November 1996. The matter of jurisdiction in circumstances of this case was fully dealt with, accepted, and not thereafter challenged. 44 There was a third set of proceedings commenced on 11 March 1997 by the tenant in respect of which there was again a concession as to jurisdiction. Finally, in respect of the proceedings with which this appeal is concerned, the plaintiff, as I have said, conceded that the Tribunal had jurisdiction. It seems to me somewhat unmeritorious against that background for the plaintiff to now suggest to this Court that despite its conduct and despite its concessions, that the plaintiff should be permitted to argue before this Court that the Residential Tenancies Tribunal, in fact, possessed no jurisdiction to entertain the proceedings, the subject of this appeal. 45 The first defendant submits that the plaintiff should not now be permitted to depart from the way it conducted its case before the Residential Tenancies Tribunal and that the plaintiff should be bound by the conduct of his case at the trial. 46 The first defendant has referred to the decisions particularly of the High Court in Water Board v Moustakas (1998) 180 CLR 491, the University of Wollongong & Ors v Metwally (No 2) (1985) 59 ALJR 481 at 483, and Coulton v Holcombe (1986) 162 CLR 7 at 78. It seems to me that those cases are somewhat distinguishable from the instant matter because those cases dealt not with the issue of jurisdiction, but rather with the matter of raising new arguments on appeal the success of which could depend on findings of fact being made or capable of having been made at the original trial. I am sympathetic to the first defendant's position and I believe were it necessary to decide it, there would be much merit in it in the circumstances of this case. 47 Interestingly enough, Mr Marshall, who appears for the plaintiff, and Mr Quickenden, who appears for the intervener, have both sought to distinguish decisions of Moustakas and Metwally. I am indebted to them for their assistance in respect of this particular issue. 48 As I would understand the submissions by both Mr Quickenden, and directly or indirectly adopted by Mr Marshall, it is said that the principles expounded in Moustakas and the cases referred to relate to matters not argued at trial and have questionable application to jurisdictional issues or as to the form of hearing before a Residential Tenancy Tribunal. Mr Quickenden took me to the decision of Mayor, Alderman & Citizens of Norwich v Norwich Electric Tramways Ltd [1906]) 2 KB 119 and the decision of Gibbs J, as he then was, in Sobanai v Nitshe (1969) 16 FLR 329. 49 The point I believe that is made by both Mr Quickenden and Mr Marshall is that despite the plaintiff's unmeritorious conduct and despite the plaintiff's consent to jurisdiction in the instant proceedings and the concessions made earlier in the earlier proceedings, nevertheless, the plaintiff can still, on an appeal such as this, raise a jurisdictional point. Were it necessary for me to decide, I would be prepared, in the circumstances of this case, to conclude that not only is the point sought to be raised one that is belatedly raised, but also that, in all the circumstances, it would be unmeritorious and would potentially render an injustice to the first defendant. Thus, were I compelled to decide the matter, and I do not believe I am, I would consider that there is much force and substance in the submission of the first defendant. Indeed, in the instant case, not only did the plaintiff concede jurisdiction, but, as I understand the situation, the plaintiff, in effect, walked away from the proceedings, and the matter proceeded ex parte. So were it necessary for me to decide the point, I would consider that in the circumstances there is a basis for concluding that the point raised by the plaintiff, in respect of jurisdiction, in terms of justice or in terms of having merit should not be accepted. 50 One other matter that needs to be considered is the first defendant's alternative submission which is raised in par 11 of his helpful written submissions. That paragraph is to the effect that, in the case of a sell leaseback arrangement predating the contract for sale, the vendor does not become a tenant until after completion. His submission is based upon an analysis of the matter in terms of property law. It seems to me that in the circumstances that I have already stated, that it is not necessary for me to determine this further or alternative submission of the defendant. 51 I have said enough in this somewhat lengthy ex-tempore judgment to indicate what the result should be in this case. For the reasons stated, I am of the opinion that this appeal should be dismissed.

Parkroad Projects Pty Ltd v Luckey & Anor

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