ACT CIVIL & ADMINISTRATIVE TRIBUNAL

PEISLEY & COMMUNITY HOUSING CANBERRA LTD (Residential Tenancies) [2012] ACAT 12

AA 10/31

Catchwords:	RESIDENTIAL TENANCIES – proper lessor in the 2006 lease agreement – a tenant of a Commissioner for Social Housing (CSH) is not eligible to apply for and receive Commonwealth rental assistance (CRA) – the transfer of property by CSH to the Community Housing Canberra Ltd – whether the clause  in the lease agreement requiring the tenant to obtain CRA and pay it to the lessor enforceable after the transfer of the premises – The meaning of “rent” under the Residential Tenancies Act 1997 – characterisation of the paying over of CRA - the 2010 lease agreement made after the decision appealed against is outside the terms of the appeal - 

List of legislation:	Residential Tenancies Act 1997, s.15
			Social Security Act 1991 (Cwlth), s.1070C

List of Texts/Papers:	 Anforth A, Christensen P, and Taylor B, Residential Tenancies Law and Practice New South Wales, 5th edition, (The Federation Press, 2011), paragraph 2.3.4

Tribunal:		Mr C.G Chenoweth, Acting Presidential Member

			
Date of Orders:		 	1 March 2012	
Date of Reasons for Decision:	1 March 2012
AUSTRALIAN CAPITAL TERRITORY		)
CIVIL & ADMINISTRATIVE TRIBUNAL	)	AA 10/31 

BETWEEN:

LEONIE PEISLEY
Appellant

AND:

                                                      COMMUNITY HOUSING CANBERRA LTD 
Respondent

TRIBUNAL:		Mr C.G Chenoweth, Acting Presidential Member

DATE:	1 March 2012

ORDER

	1.	Application for appeal is dismissed.

………………………………..
Mr C.G Chenoweth
Acting Presidential Member

REASONS FOR DECISION

Background

1.	This is an appeal by the Applicant Leonie Peisley ("LP") against a decision of Appeal President Stefaniak made at the hearing on the 30 July 2010. Reasons for the decision were given at the hearing, and those were expanded in written reasons for decision made on 12 August 2010. An appeal against the decision was lodged by LP on 3 September 2010. The matter was heard before me on 
20 April 2011.

2.	LP occupies premises in Banks ACT ("the Premises"). These proceedings concern a tenancy agreement entered into on 30 July 2006 ("the 2006 agreement"). The 2006 agreement is described as being between the Commissioner for Housing as lessor, and LP as tenant. Havelock Housing Association Inc ("HHA") is shown as the lessor's agent.

3.	The 2006 agreement provided for a market rent of $260 per week. The agreement as provided in evidence had an annexure B, being the Housing Assistance Public Rental Housing Assistance Program 2008 (number 1) ("the Program"). The Program provides in clause 5 that the Housing Commissioner may grant rent rebates for eligible tenants. Clause 25 of the Program provides that the rent rebate is calculated as the amount in excess of 25% of the tenants income, as determined in accordance with the Program.

4.	It is apparent that the details of the 2008 program could not have been annexed to the 2006 agreement, but it was accepted by the parties that the terms of the earlier housing assistance programs would have had a similar effect to the Program.

5.	On 22 March 2010, LP through her representative the Welfare Rights and Legal Centre made an application against the Commissioner for Social Housing for the ACT (“the CSH”) as first respondent, and HHA as second respondent. As a result of material provided to the Tribunal in the form of a statement by 
Mr Baumgart, senior manager within the Asset Management Branch of Housing ACT, an order was made on 4 May 2010 by consent dismissing the proceedings against CSH as the first respondent.

Who is the lessor?

6.	The statement by Mr Baumgart indicated that in 1999 the CSH leased the Premises to the Respondent ("CHC") for a period of 20 years. Mr Baumgart also said in his statement that he understood that CHC sublet its premises to HHA, and that HHA collected rent on behalf of CHC. HHA receives management and other fees for this service. 
7.	In paragraph 10 of the statement, Mr Baumgart said that on 29 June 2007, CSH and CHC entered into a deed of transfer "which transferred the Commissioner’s interest in the subject property to Havelock in its entirety." This appears to be incorrect. The deed of 29 June 2007 was between the CSH and CHC. HHA was not a party to it. The agreement shows the Premises as one of the properties transferred in accordance with clauses 11 and 12 of the deed. While the transferee is CHC, HHA is shown as "the Provider" in the schedule of properties transferred.
8.	A title search of the Premises dated 24 April 2010 shows CHC as the registered proprietor of the Premises, although the actual date of transfer is not shown. Presumably in accordance with the usual conveyancing practice, the transfer would have been registered shortly after the transfer was completed. The risk in the Premises transferred to CHC from 29 June 2007 in accordance with clause 13 of the deed. The 2006 agreement is on an HHA form, not a CSH form. HHA is described as agent of the lessor which is consistent with the June 2007 deed.
9.	Clause 3 of the statement of Mr Baumgart indicates that since 1999, the Premises had been leased by CHC from the CSH, which would mean that the CSH was not itself in a position to sublease the Premises to LP. The only body which would have had the right to enter into the sublease would have been CHC.
10.	All of the evidence therefore indicates that the reference to CSH as the lessor in the 2006 agreement was (as Mr Baumgart states in clauses 6, 8 and 9 of his statement) an error and the 2006 agreement was between CHC as lessor with HHA as its manager collecting the rent and with LP as the tenant.
11.	Even if the original lessor was the CSH, the transfer to CHC would not have altered the terms of the lease. The transfer would have been subject in equity to the terms of the lease.
12.	The 2006 agreement also contains a clause relating to the obligation of the tenant to apply for and hand over to the lessor any money received from the Commonwealth by way of rent assistance (CRA). This clause is as follows:
Commonwealth rent assistance.
Upon commencement of the tenancy the Tenant to apply and collect CRA, the Tenant agrees to forward 100% of the CRA to the Lessor."

Preliminary proceedings

13.	On 11 May 2010, the Tribunal ordered that CHC be joined as the first respondent. This left HHA as the second respondent. The parties were ordered to come back on 31 May 2010 with a statement of what the issues were, and an agreed list of dates for hearing. On 24 May, LP's representative filed an Applicant's Amended Statement of Particulars, referring to CHC as first respondent and HHA as second respondent.
14.	The further orders of the Tribunal on 31 May 2010, 8 July 2010 (the date of the hearing), 30 July 2010 (the date of the written decision) and 12 August 2010 (the date of the formal order) all omitted a reference to CHC as the first respondent. They were all made against HHA as the only respondent.
15.	All of these dealings with the Premises and the uncertainty as to who was the proper lessor under the 2006 agreement does not detract from the simple fact that there was a rented property and that LP paid rent and undertook other obligations in accordance with the 2006 agreement. Whether HHA received the rent and managed the property as lessor or lessor’s agent may not affect the issues that I have to decide, but the uncertainty has not assisted the parties or the Tribunal in resolving the case.

Initial decision

16.	The orders sought in the original application of 22 March 2010 were that:
–  	the amount of rent that has been charged since commencement of rebate on 1 October 2009, other than in accordance with the tenancy agreement, be reimbursed to the applicant; and
–  	the inconsistent term of the tenancy agreement relating to Commonwealth rent assistance to be struck out on the basis of inconsistency with section 15 of the Residential Tenancies Act 1997  (“RT Act”); and
–  	any other orders the Tribunal deems fit. 

The reasons for the application were spelt out in greater detail in the 
          application.

17.	On 24 May 2010, LP's Amended Statement of Particulars in the matter set out the issues in dispute as the following:
(a) 	the Respondent's system of calculation of rebated rent;
(b) 	term of the lease agreement relating to Commonwealth Government's Rent Assistance and the percentage of which may be taken into account when calculating rebated rent;
(c) 	the Respondent's failure to notify the applicant of the transfer of title to Community Housing Canberra in 2007;
(d)	 the refund of the excess rent that the Respondent has collected from the Applicant since 1 October 2009.

18.	The orders sought by LP were as follows:
(a)	the Commonwealth Rent Assistance is to be calculated as part of the Applicant’s gross income before rebated rent is calculated;
(b)	the amount of excess rent that has been charged since commencement of rebate on 1 October 2009, to be reimbursed to the Applicant;
(c) 	the inconsistent term of tenancy agreement with section 15 of the RT Act relating to Commonwealth rent assistance to be struck out;
(d) 	the Tenancy Agreement dated 31 July 2006 that indicates Housing ACT as the Lessor and Havelock Housing Association as the Agent to be amended to show the actual parties to the agreement and the true nature of the lease; and
(e) 	any other orders the Tribunal deems fit.

19.	On 12 August 2010, the following orders were made:

1. 	The respondent, Havelock Housing Association Incorporated, is entitled to charge the applicant the rent it is charging pursuant to the Agreement signed by the parties and dated 31 July 2006.

2. 	The Commonwealth Rent Assistance clause in the Agreement is a valid clause and such assistance provided to the applicant by the Commonwealth may legally form part of the rent charged.

3. 	The Commonwealth Rent Assistance received by the Applicant is not part of her income for the purpose of assessing rent payable by her to the Respondent.

20.	For reasons that are not clear, it appears that CHC as the first respondent was not the subject of this order, and it does not appear as a party to the proceedings in the order or in the reasons for decision. 
Appeal by LP

21.	On the 3 September 2010, the Applicant lodged an appeal against the decision. The grounds of appeal were as follows:
A. 	Whether Havelock Housing Association is the lessor under the lease agreement of 2006;
B. 	Whether the Tribunal had the authority to remove the initial First Respondent, the Commissioner for Social Housing of the ACT from proceedings;
C. 	Whether the Tribunal had the authority to unilaterally remove the joined First Respondent, Canberra Community Housing ("CHC") from the proceedings and replace it with Havelock Housing Association that was the second Respondent in the application before it;
D. 	Whether the Lessor is entitled to charge rent plus CRA under section 15 of the RT Act; and
E. 	Whether the terms of the lease Agreement of 2006 compelling the tenant to obtain CRA and hand over 100% of it to the lessor is lawful in all the circumstances.

22.	The remedies that the Appellant sought were as follows:
A.	That the orders of 12 August 2010 are set aside;
B. 	That the term related to CRA in the lease agreement of June 2006 is contrary to section 15 of the RT Act 1997;
C. 	That the term related to CRA in the lease agreement is unlawful as it compels the tenant to apply for CRA to which she was not entitled under the Social Security act (Cth).
D. 	That the legal obligations of the lessor, Commissioner for Social Housing for ACT, under the RT Act 1997 do not change in character by reason of appointing an Agent; and 
E. 	Any other order the Tribunal deems fit.

23.	The reasons for the appeal set out in the notice of appeal argue that orders one and two originally made by the Tribunal are not supported by law and fact for the following reasons:
1.	Under the lease Agreement, Havelock Housing Association was merely an "agent" of the Lessor, and not the Lessor.
2. 	Section 15 of the RT Act prohibits charging or receiving any other amounts by the Lessor except "rent or bond". Commonwealth rent assistance is neither and as such should not be charged in addition to rent.
3. 	Orders of the Tribunal do not address the legal responsibility and liability of the initial Lessor, the Commissioner for Housing and the subsequent Lessor, the CHC, under the Agreement.

24.	As a result of several directions hearings, including a direction that the parties were to file an agreed statement of the issues for determination on appeal, the issues were crystallised as follows in a Statement of Issues on Appeal on behalf of the Appellant and the Respondent filed with the Tribunal on 10 March 2011 :

1.	The appellant submits that an issue in the appeal is whether the tenancy agreement of 2006 and its terms changed as a result of the transfer of ownership of the property from the ACT Commissioner for Housing to the Respondent with respect to it being subject to the provisions of the Housing Assistance Public Rental Housing Assistance Program, including Clause 20 of the Program in relation to rebated rent calculation which is confined to 25% of income.

The respondent believes the issue in the appeal is whether the program regulates the terms of any residential tenancy agreement entered into as a result of an application for housing assistance by the tenant.

2.	The appellant submits that an issue in the appeal is whether including a term compelling the appellant to apply for, to receive, and to hand over 100% of CRA is a valid term in view of express exclusion contained in the Commonwealth Social Security Act with respect to lack of entitlement of the tenants of the Commissioner for Housing of the ACT.

The respondent believes a preliminary issue in the appeal is the correct interpretation for the ‘CRA term’ in the 2006 agreement.

3.	Whether obtaining 100% of CRA in addition to rent is contrary to the provisions of section 15 of the Residential Tenancies Act.

4.	Whether the Respondent should reimburse 75% of the CRA it has received from the Appellant since 1 October 2009;

5.	The Appellant submits that the question of the “new lease agreement” is outside the appeal application and not relevant to the issues before the Tribunal. The Appellant contends that the so called new lease agreement 2010 is invalid and of no effect because it has been obtained by misleading and deceptive conduct of the Respondent’s agent.

The Appellant submits that the appeal application is about the Tribunal’s decision made in relation to the terms of the lease of 2006. Any other document that was created after that decision is outside this application before the Tribunal and will have no bearing on the appeal.

The Appellant further contends that the question of validity of the so called new lease agreement is a matter for a separate proceeding within the primary jurisdiction of the Tribunal. However, if the Tribunal is mindful to consider this question, the appellant is prepared to make an application to amend the appeal application and to include the question of validity of the ‘new lease of 2010’ for this tribunal’s determination. In any event, if the new document were to be found a valid lease, it will benefit from the Tribunal’s determination on the issues set out above in paragraphs 2 to 4.

The respondent believes an issue in the appeal is whether the 2010 Agreement governs the relations between the parties from 
7 December 2010.

25.	The parties have both filed statements of fact and contentions in the matter, which set out the dispute as to who was the proper lessor at the time that the 2006 agreement was entered into, what the effect of the transfer (by whatever means) from the CSH (using HHA as its agent) to the CHC and whether the clause in the 2006 agreement requiring LP to apply for and handover Commonwealth rent assistance was enforceable. There was also an issue raised as to whether the obligation in the 2006 agreement to handover any rental assistance received from the Commonwealth through the Department of Social Security amounted to a charge or encumbrance upon those payments, in breach of the provisions of the Social Security Act.

26.	After further directions on the 9 December 2010 the matter came before me on 17 February 2011. At the hearing, it was revealed that LP and CHC had entered into a new tenancy agreement for the Premises, dated 7 December 2010 ("the 2010 Agreement”.) Copies were immediately provided to LP and to the Tribunal.

27.	There was disagreement between the Appellant and the Respondent as to whether the obligations under the new tenancy agreement signed in December 2010 should be the subject of this appeal. The Appellant’s submission was that this appeal is concerned with the 2006 agreement. Any document that was created after the decision appealed against is outside the terms of this appeal. The Respondent contends that an issue in the appeal is whether the 2010 agreement governs the relations between the parties from 7 December 2010.

28.	The issues on the appeal are made more complicated because of the history of ownership of the Premises. As indicated above in paragraph 2, the 2006 tenancy agreement refers to the CSH as the lessor, with HHA as the lessor’s agent.

29.	The statement of representative of the CSH of 4th May 2010 indicates that in 1999, a memorandum of understanding and sublease was entered into between CSH and CHC. While there was no transfer of the property undertaken at that stage, it appears that CHC derived an interest in the Premises, with the benefits and obligations of that position. 

Commonwealth rent assistance

30.	Commonwealth rental assistance (“CRA”) for tenants of private or community housing rental properties and who are low income earners is governed by the Social Security Act 1991 (Cwlth) (“SS Act”). Section 1070C sets out the conditions of eligibility for that assistance. The section specifically excludes assistance where the tenant pays rent to government housing agencies, including the Commissioner for Housing of the Australian Capital Territory. Therefore, if at all times LP continued as a tenant of the CSH, she would not be eligible to apply for nor receive rental assistance in this form. If, properly construed, she was a tenant of CHC, if her income was at an appropriately low levels she would have been entitled to apply for and receive CRA. It is this payment which section referred to above of the 2006 agreement compels the tenant to apply for and pay to the lessor.

31.	If at the time that the 2006 agreement was entered into, the lessor was the CSH, then on the face of it the obligation to apply for rental assistance and pay it to the lessor would be in breach of section 1070C of the SS Act. However, if on the proper construction of the 2006 agreement the lessor was not the CSC but the CHC, then the rent that was being paid was not being paid to the CSH, but to a community housing association. On this basis, section 1070C of the SS Act would not exclude the right of the tenant to apply for housing assistance.

32.	On the material before me, and in particular the statement of Mr Baumgart about the transfer of beneficial ownership of the Premises, I am satisfied that at the time that the 2006 agreement was entered into, the lessor of the Premises was CHC and not CSH. 

33.	It follows from this that the clause in the 2006 agreement was not in breach of the SS Act as it was not one that required the tenant to do anything unlawful. The clause had been accepted by LP as a contractual condition, and it was always within her power, and it was her obligation, to make the application. If the Department of Social Security accepted the application and paid the rental assistance, then LP was contractually bound to pay that money to CHC. The application and receipt of money would only be unlawful if LP was at that time a tenant of the CSH.

34.	It was argued that the obligation to apply for CRA and then pay it to the lessor could amount to an encumbrance over a Social Security payment, in breach of the SS Act. In my opinion this clause in the 2006 agreement does not have the effect contended for.

35.	An encumbrance or charge would arise if LP had assigned to the lessor all of her rights to CRA in a way that would have prevented her from recovering those rights at will. The essence of a mortgage over real property or other asset is that the mortgagee has the right to obtain or sell the property charged if there is default under the charge itself. The chargor cannot prevent this, except by paying the debt that the charge secures. In the present case, LP has a contractual obligation to apply for and hand over CRA, but she is free at any time to decide not to do so. If she so decided and told the Department to cease paying it, then the lessor would have no right to separately obtain that benefit from the Department. Such a failure on the part of LP would amount to a breach of the sublease and would give the lessor grounds to terminate for a breach of the condition. It would not give the lessor an independent right to access the benefit against the wishes of the lessee.
Is CRA "rent" within the meaning of the RT Act?

36.	Section 15 (1) of the RT Act provides as follows:
“In consideration for giving a tenant the right to occupy premises, a lessor
may only require or accept rent or a bond.”

37.	The expression "rent" is not defined in the RT Act. It has been defined as "an amount payable by the tenant." (See, Anforth A, Christensen P, and Taylor B, Residential Tenancies Law and Practice New South Wales, 5th edition, (The Federation Press, 2011) at paragraph 2.3.4.) The definition from Butterworth's Concise Australian Legal Dictionary is that "rent is a period payment, usually in money, due by the tenant of land or premises to the landlord in consideration for the tenants right to occupy the land or premises." It has been defined in the Macquarie Dictionary as "a return or payment made periodically by a tenant to an owner for the use of land or building."

38.	There is no reason why a lease agreement should not contain two separate provisions concerning the payment of rent. In commercial leases, it is quite common for there to be a base rent of a fixed amount, together with further rent determined by the turnover of the business in the premises. In this case, there is the rebated rent payable by LP, based on her own income, and a further payment being the CRA. 

39.	The Respondent contends that the obligation to apply for and pay over the CRA is not an obligation to pay "rent", and is not consideration for giving LP the right to occupy the Premises. The Respondent contends that the obligation to apply for CRA and forward in the CRA collected to the lessor is consideration for the lessor providing the rental rebate based on the income of the tenant.

40.	There are financial obligations of tenants under residential tenancy agreements that are not the payment of rent: for example, the obligation to pay for services connected to the premises. However, these are obligations owed to third parties, and not to the lessor itself.

41.	The characterisation of the payment over of the CRA is not clear, but when one considers the whole structure of the financial arrangement between the parties, in my view, the better view is that the obligation to pay over the CRA if and when received is not an obligation to pay rent, but is a separate contractual obligation. That being so, the obligation is not barred by section 15 of the RT Act.

42.	The payment of the rent itself under the lease is a fixed obligation for a sum certain, after the rebate has been applied to the income of the tenant. The CRA depends not only upon the tenant applying (which she is bound to do) but depends upon the policy from time to time of the Department of Social Security as to whether and if so how much might be paid by way of CRA. This potential uncertainty detracts from classifying it as "rent".

43.	It follows from this that there is no basis upon which the appellant can obtain an order for the repayment of all or part of the CRA that has been paid to her and then to the lessor.

Parties to the proceedings

44.	The initial grounds of appeal filed on the 3 September 2010 included the question as to whether the tribunal had the authority to remove CSH from proceedings. As noted in paragraph 5, the order of 4th May 2010, dismissing the proceedings against CSH was made by consent.

45.	In relation to the appeal point as to the power of the Tribunal to unilaterally remove the joined first respondent, CHC and replace it with HHA, I have referred in these reasons to the interim hearings in the Tribunal prior to the original hearing from which this appeal is brought. Whatever the efficacy of those, the matter was heard on the appeal with CHC as the Respondent and submitting to the jurisdiction. As will be seen from the earlier discussion in these reasons of the question of who is the lessor, in my opinion CHC is the appropriate party to be the Respondent and not HHA. Essentially, these grounds of appeal are procedural matters which should not prevent the Tribunal from making appropriate orders to ensure that the real parties are joined in the proceedings.

The 2010 Lease agreement

46.	It is regrettable that the existence of the new lease was only disclosed during the course of the appeal hearing. In the Appellant's response of 
23 February 2011 to the Respondent’s statement of facts and contentions, the Appellant has sought a declaration that the 2010 lease agreement is invalid and of no effect. This is based upon contentions on behalf of the Appellant that the new lease was entered into unfairly, and as a result of inappropriate pressure being applied by the lessor’s representative. The statement by the lessor’s manager denying any such conduct forms part of the Respondent’s documents filed on 8 March 2011. The status of the 2010 lease agreement does not form part of the appeal in this matter, and if there continues to be dispute about it, then the appropriate course is for the matter to be heard in the Tribunal by a further application. The allegations about what was said and what conduct took place would require evidence in person to be given by the various parties, which is not appropriate in these proceedings. 
47.	Having regard to the foregoing, the appeal fails on all grounds and is dismissed.

………………………………..
Mr C.G Chenoweth
Acting Presidential Member

PUBLICATION DETAILS

TO BE PUBLISHED
To be completed by Tribunal Staff

PART A							FILE NO:	

APPLICANT:		
RESPONDENT:		

COUNSEL APPEARING:	APPLICANT:	
RESPONDENT:	

SOLICITORS:			APPLICANT:	 
RESPONDENT:	

OTHER:				APPLICANT:	
RESPONDENT:	

TRIBUNAL MEMBER/S:	

DATE/S OF HEARING:				PLACE: CANBERRA

DATE/S OF DECISION:				PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( )	CASE NOTE ( )	UNREPORTED DECISION ( )

COMMENTS: