Roth v Pipeclay Creek

Respondent's submissions

1. The respondents contentions are set out in the following paragraphs, but in summary are as follows: 1. The application was brought outside the period of three months required by s20(2) of the AT Act 2. The Tribunal has no jurisdiction to determine the dispute against the guarantors, 3. The guarantors have no liability because the lease has not been registered under the Real Property Act 1900 NSW (the RP Act) and 4. The application against the guarantors cause them disadvantage and should be struck out pursuant to clause 10 Schedule 4 of the Act
2. The respondents rely on s20(2) of the AT Act. S20 is in the following terms: (1) An owner or tenant may apply to the Tribunal for determination of any of the following: (a) a dispute relating to a right or obligation conferred by this Act, (b) a dispute arising from, or relating to, an agreement creating a tenancy or any other dispute (not being a dispute referred to in paragraph (a)) arising from, or relating to, a tenancy, (c) any other matter that may be determined by the Tribunal under this Act. (2) An application to the Tribunal must be made not later than 3 months after the relevant dispute or other matter arises or the end of the tenancy, whichever is the later.
3. The respondents say that the initial lease binding the parties (being the lease commencing in December 2010 and ending in December 2013) was terminated in March 2013 and the effect of s20(2) was to require the applicants to commence proceedings in the Tribunal within 3 months of March 2013. The application was commenced 11 months after the 3 month deadline.
4. The respondents also contend that even if the Tribunal has jurisdiction to determine the dispute between the applicants and the first respondent there is no jurisdiction in respect of the other respondents (the guarantors) at least until a time when the Tribunal has determined that the first respondent is liable to the application and an order to that effect is made.
5. The basis for the contention described above is that the AT Act defines in s4 the parties which may be subject to proceedings pursuant to s5(2) "being owners and tenants". As the second and third respondents are neither the owners nor the tenants they are not parties to the dispute.
6. The respondents refer to clause 10 of the lease which in summarised form provides that the guarantors will be liable to the lessor for the due payments of all money under the lease and the performance of all covenants to be performed by the lessee. The respondents' submission was that this clause and the lease as a whole was of no effect because it was not a registered lease. It was common ground that the leases were not registered.
7. The respondents submitted that s53 of the Real Property Act 1900 NSW (the RP Act) requires a lease for a term exceeding 3 years to be executed in the approved form and that s41(1) of the RP Act provides that unregistered dealings pass no interest in land.
8. The respondents submit that even leases of less than three years can only be legally created by registration and that in this case clause 11(b) of the lease documents contemplates that the leases were intended to be registered. The respondents submit that what was created was an "at - will common law lease" which was terminated on 11 March 2013 by a notice which was effective from 11 April 2013.
9. The respondents referred to the High Court decision in Chan v Cresdon Pty Ltd (1989) 168 CLR 242 as authority for the proposition that the failure to register the lease has the effect that the obligations of the guarantors are not binding or effective.
10. The respondents also relied upon the case of Barecall v Hoban (2010) NSWCA 304. More will be said about that case later in these reasons.
11. Turning back to the submission that the application was commenced outside the three month period required under s20(2) of the AT Act, the respondents submitted that the applicants had not applied for an order extending time under s41 of the Act and were such extension sought they would oppose it.
12. The basis for the respondents submission that time should not be extended was that the applicants case was hopeless, there was no explanation for the delay in commencing proceedings and that the applicants were not at any personal disadvantage and indeed were in receipt of legal advice.
13. The respondents also submitted that the application should be struck out under the provisions of clause 10 Schedule 4 of the Act. Clause 10 provides: 10 Proceedings causing disadvantage (1) The Tribunal may exercise the powers conferred by this clause if the Tribunal is of the opinion that a party in any proceedings for the exercise of a Division function is conducting the proceedings in such a way that unreasonably disadvantages another party in the proceedings by any conduct (including by failing to comply with an order or direction of the Tribunal). (2) The Tribunal may: (a) if the party causing the disadvantage is the applicant - order that the proceedings (or part of the proceedings) be dismissed or struck out, or (b) if the party causing the disadvantage is not the applicant: (i) determine the proceedings (or part of the proceedings) in favour of the applicant and make any appropriate orders, or (ii) order that the party causing the disadvantage be struck out of the proceedings (or part of the proceedings). (3) Before making any order under subclause (2) against a party, the Tribunal is to have regard to the following: (a) the extent to which the party is familiar with the procedures of the Tribunal, (b) the party's capacity to understand, and act on, a direction of the Tribunal, (c) whether the party suffers from a disability, (d) whether the party is acting deliberately in failing to comply with the Tribunal's directions. (4) The provisions of this clause are in addition to, and do not limit, the provisions of section 55 (Dismissal of proceedings) of this Act.
14. The respondents' submission was that the applicant's case was "hopeless" and put the respondents to disadvantage. The submission was that the two guarantors were not parties to the lease or to the dispute and that it was an abuse of process to join them. The other aspects of the submission involving clause 10 essentially repeat the arguments already referred to concerning s20(2) and the requirement to register the leases.

Applicants' submissions

1. The applicants contend that clause 10 of the leases provides for the guarantors to have "an independent responsibility to the applicants" and that the Tribunal has jurisdiction to make findings and orders against the guarantors as if they had been named as lessees.
2. The applicants submit that the respondents are mistaken in submitting that the applicants rights are constrained by s5(2) of the AT Act as that section is only relevant where the tenancy agreement is not in writing. In this case, the applicants submit, the agreement is in writing.
3. The applicants also submit that s4 of the AT Act does not limit the parties to proceedings to owners and tenants only. The definition of "tenant" is an inclusionary definition and includes persons who are jointly and severally liable with a lessee.
4. The applicants dispute the relevance of the authorities concerning registration cited by the respondents on the basis they did not concern a lease of three years or less.
5. The applicants dispute the respondents' contentions that the proceedings should be dismissed under clause 10.
6. The applicant's acknowledge that the lease was terminated on 30 May 2013. Accordingly, the applicants seek to have the Tribunal extend the time in which to commence the application under s41 of the Act. The applicants submitted that from the date of termination of the lease the applicants have been engaged in active discussions or correspondence with the respondent guarantors in an effort to resolve the dispute. The applicants' submissions referred to discussions with Mr Bannister in October 2013 and a part payment made by him in November 2013. There were also meetings in July and October 2013 with Mr Gartrell followed by settlement offers from Mr Gartrell in February 2014.

The Tribunals Findings and Decision

1. The objects of the AT Act are set out in s3 of the AT Act and include the object of providing a mechanism for settling disputes between parties to agricultural tenancies through applications to this Tribunal.
2. S20(1) of the AT Act provides that an owner or tenant may apply to the Tribunal for determination of any of the following: (a) a dispute relating to a right or obligation conferred by this Act, (b) a dispute arising from, or relating to, an agreement creating a tenancy or any other dispute (not being a dispute referred to in paragraph (a)) arising from, or relating to, a tenancy, (c) any other matter that may be determined by the Tribunal under this Act.
3. An appeal panel of the Tribunal has described the powers invested in the Tribunal by virtue of the AT Act as "very broad" (Steak Plains Olive Farm Pty Limited v Australian Executor Trustees Ltd [2014] NSWCATAP 85). In particular the wording of s20(1)(b) is sufficiently broad to incorporate a claim brought by an owner against parties who have guaranteed the obligations of the tenant. In the opinion of the Tribunal this claim falls within the language of s20(1)(b) of the AT Act.
4. However, s20(2) require an application to the Tribunal to be made not later than three months after the relevant dispute arises or at the end of the tenancy whichever is the later. The applicants did not contend that the application was made within the time required by s20(2) but instead sought to have the Tribunal extend time under s41 of the Act.
5. The issues for consideration with respect to an application under s41 have been set out in decisions of appeal panels of the Tribunal - for example see Jackson v NSW Land and Housing Corporation and De Salvo v Leung.
6. Having regard to the considerations referred to in those decisions the following findings are made.
7. First, the length of the delay is not insignificant. The application was lodged many months after the three month deadline.
8. However, there is a reasonable explanation for that delay. The applicants contend they were in discussions with the respondents in the second half of 2013 in an attempt to settle the dispute. They have provided a chronology describing meetings and discussions between July 2013 and February 2014 involving both guarantors. The respondents did not dispute the applicants' contentions that settlement discussions had occurred.
9. The respondents referred to the case of Allendale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103 for the proposition that if an applicant makes a forensic decision not to challenge a court decision but rather to wait and see if other proceedings were resolved favourably the applicants should be bound by that forensic decision. However, that decision was made because it was the opinion of the court that the applicants' strategy was not consistent with the statutory objective of the just, quick and cheap resolution of the real issues in dispute under s56 of the Civil Procedure Act 2005 (NSW). Here, the applicants decision to delay commencing proceedings was not in breach of the similar objective contained in s36 of the Act because during the period of alleged delay there were no proceedings on foot. Furthermore the purpose of the delay was to seek to resolve the dispute without having to resort to the Tribunal.
10. The applicants contend that the respondents have not suffered any prejudice by reason of the delay in commencing these proceedings. However, the respondents assert that they have been prejudiced and stated that the applicants have neglected the management of the orchard. That neglect was said to prejudice the respondents. In the view of the Tribunal the respondents' assertions concerning any alleged neglect by the applicants can be dealt with in the context of determining whether the applicants alleged losses arose from the respondents breaching their obligations or arose from the applicants neglect or inactions. The Tribunal does not find that the delay in commencing proceedings has caused the respondents prejudice.
11. A further consideration in considering whether to extend time is the applicants' prospects of success i.e. whether they have a fairly arguable case.
12. In the view of the Tribunal the applicants have a fairly arguable case in that if it can be established by appropriate evidence that the respondents have breached obligations under the leases causing monetary loss to the applicants , the applicants will be entitled to an award subject, of course, to any defence (supported by evidence) from the respondents. This is not a case where it can be said that the applicants' prospects of success are so poor that the discretion to extend time under s41 should not be exercised. Having regard to the other findings of the Tribunal in these reasons the Tribunal finds that the applicants case is not such as to warrant refusing to extend time.
13. A final consideration is that in the Tribunal's opinion strict compliance with s20(2) would potentially work an injustice to the applicants if they are precluded from having the Tribunal hear and determine their claims and the respondents defence. The potential injustice is significant when the reason for the delay in commencing proceedings were the attempts by the parties to resolve their dispute by negotiation.
14. Section 41 expressly authorises the Tribunal to extend time despite anything to the contrary in the relevant legislation (in this case the AT Act). Having considered the matters referred to above and the obligations of the Tribunal contained in s36 of the Act the Tribunal finds it is just to extend time and will order accordingly.
15. The next issue is whether the fact that the lease was not registered means that the principles decided in Chan v Cresden and Barecall v Hoban render the guarantors not liable.
16. Chan v Cresden concerned a lease for a term of in excess of 3 years and by reason of s43 of the Real Property Act 1861 (Qld) was required to be registered in order to pass an estate or interest in land. The majority judgment expressly stated that s43 is not a bar to the creation of a lease or tenancy for a term of less than three years otherwise than by registration of a memorandum of lease - see Property Law Act 1974 (Qld), Ss5 (1)(b), 10(1), 10(2)(c).
17. Similarly, Barecall v Hoban concerned a lease for more than three years and the decision was based on an implied covenant imposed on the landlord to effect registration by virtue of the agreement to grant a lease which for its validity required registration (see paragraph 186 of the judgment).
18. This case is distinguishable from the above two cases in that it concerns a lease for a term of three years. S53 of the Real Property Act NSW 1900 provides for a lease of more than three years to be executed in the approved form. There is no requirement under the RP Act for a lease of three years to be executed in an approved form or registered.
19. Here there were a number of leases each for a term of three years with each lease to commence the day after the preceding one comes to an end. There was no evidence that the parties treated these leases on any basis other than on the basis that each lease should be construed as separate agreements.
20. Accordingly, the leases the subject of these proceedings do not require to have been registered.
21. The provisions of s41 of the RP Act (which provides that no dealing, until registered in the manner provided by the RP Act shall be effectual to pass any estate or interest in land) do not apply to a lease for a term of three years.
22. The result is that the Tribunal finds that the fact that the leases the subject of these proceedings were not registered does not affect the efficacy of the leases nor the enforceability of the guarantors given under those leases.
23. The respondents relied upon clause 11(b) of the leases for the submission that the parties intended that the leases were to be registered. That clause provides that should the lessor be entitled to re enter and take possession and determine the lease, the lessee appoints the lessor to be the attorney of the lessee to execute and procure the requisition of a surrender of lease.
24. The opinion of the Tribunal is that it is not relevant that the parties may have intended, or not intended, to register the lease because the leases were effective and binding whether or not the leases were registered.
25. Finally, there is no basis for the respondents to invoke the provisions of clause 10 Schedule 4 of the Act because there is no basis for the conclusion that the applicants are conducting the proceedings in such a way that unreasonably disadvantages the respondents. The respondents submissions concerning clause 10 were largely based on the other submissions made by the respondents and as the Tribunal has found against the respondents with respect to the other submissions it follows that this submission concerning clause 10 also fails.
26. The respondents also submitted that as one of the respondents now resides in the Philippines it would cause him disadvantage to have to defend these proceedings. In the opinion of the Tribunal this submission is without merit. If the applicants are successful the fact that that respondent is put to expense and inconvenience in having to return to Australia from the Philippines is not relevant. If on the other hand the applicants are unsuccessful against that respondent the respondent may have a basis for seeking reimbursement of some of the costs incurred in defending these proceedings.
27. In conclusion the Tribunal finds that the Tribunal has jurisdiction to hear and determine the application but that it is appropriate to extend the time to commence the application under s41 of the Act to the 25 April 2014 (being the day after the application was lodged with and received by the Tribunal).
28. It follows that the Tribunals decision in respect of the three preliminary issues identified towards the beginning of these reasons is: 1. yes 2. no 3. the application was made out of time but the Tribunal extends the time to the day after the day the application was filed.
29. It is appropriate to relist the proceedings for the purpose of making directions for the proceedings to be prepared for hearing. The parties may appear at the directions hearing by telephone.
30. Orders will be made accordingly. S Westgarth Deputy President Civil and Administrative Tribunal of New South Wales 5 December 2014 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 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: 12 February 2015