Submission: NSW Fair Trading Review of Regulatory Burden

The present submission is made on our own behalf, and on behalf of the Tenants Advice and Advocacy network. It addresses the following pieces of legislation discussed in the issues paper:

• Consumer Claims Act 1998 (‘the CCA’)
• Landlord and Tenant Act 1899 (‘the 1899 Act’)
• Landlord and Tenant (Amendment) Act 1948 (‘the 1948 Act’)

We are most concerned about the proposals in relation to the 1948 Act. We are strongly of the view that this Act must not be repealed. Hundreds of persons – most of them elderly pensioners – would lose their homes if the 1948 Act were repealed.

Consumer Claims Act 1998

The CCA gives consumers access to a range of remedies in the relatively inexpensive and informal forum of the Consumer, Trader and Tenancy Tribunal. As such the CCA is a crucial complement to the statutory guarantees and remedies provided by the Fair Trading Act 1987 (FTA) and the Australian Consumer Law.

We support the proposal to include the CCA’s provisions in FTA.

Recommendation

Repeal the CCA and include its provisions in the FTA.

 

Landlord and Tenant Act 1899

The 1899 Act has two related functions, the first applying to a small class of tenancies, and the second applying to a smaller subclass. Each is a potentially useful function for the small number of tenancies to which it applies. The 1899 Act is not ‘red tape’ we submit that it should be retained.

Application and functions of the 1899 Act

The first function of the 1899 Act is to provide landlords with procedures for the recovery of possession through the courts (either the Supreme Court (Part 2) or the Local Court (Part 4)). This function of the 1899 Act may apply in relation to the small class of residential tenancies (under leases, as distinct from licences) that are excluded from theResidential Tenancies Act 2010 (NSW) (‘the RTA’). This small class of tenancies comprises:

• Tenancies under the 1948 Act[1]
• Tenancies under leases of flats and cottages located in the grounds of any of the premises referred to in s 7 of the RTA 
• 99-year tenancies (RTA, s 8(j))
• Social housing head-tenancies (RTA, s 156)
• Heritage property tenancies (Residential Tenancies Regulation 2010 (NSW) (‘the RTR’), cl 16)
• St Patrick’s Estate, Manly, tenancies (RTR, c 17)
• Life tenancies (that is, leasehold tenancies for the term of the tenant’s life) (RTR, cl 19).

We submit that this first function of the 1899 Act may also apply to non-residential tenancies that are excluded, for whatever reason, from the various legislative regimes for non-residential tenancies.

The second function is to prohibit and penalise recovery of possession other than through the courts (that is, a lock-out) (s 2AA(5)). This function applies in relation to ‘dwelling houses’, as qualified at s 2AA(1) and (6), as distinct from other sorts of premises. This means that this second function of the 1899 Act may apply in relation to tenancies of each of the types in the dot-point list above, where the tenancy is for a dwelling house.

Problems with repealing the 1899 Act

If the 1899 Act were repealed, there would be uncertainty as to the legal procedure for recovering possession of properties subject to the small classes of tenancies to which the Act applies.

We note that the 1899 Act repealed and replaced a similar scheme of proceedings under the Summary Ejectment Act 1853 (NSW) – so a scheme of this sort has been part of the law of New south Wales a very long time. We admit that we do not know with certainty what the law would provide in the absence of the 1899 Act.

We do not know what court proceedings would be available to landlords seeking to recover possession: it may be (and this is mere conjecture), that all proceedings would have to be taken in the Supreme Court, not the Local Court there may even be no clear way of proceeding in the Supreme Court.

We are also not certain as to what other extrajudicial actions may be allowed in the absence of the 1899 Act, and particularly s 2AA. The common law has traditionally allowed a landlord to physically re-enter a property and forcibly expel a tenant wrongfully holding over ­– though not with more force than is reasonably necessary (Imperial Acts Application Act 1969 (NSW), s 18). We submit, however, that there may be some doubt as to the continuing availability of this remedy at common law, considering developments in the equivalent remedy for the recovery of chattels ­– that is, the ancient remedy of ‘recaption’.

In Toyota Finance Australia Ltd v Dennis [2002] NSWCA 369, the NSW Court of Appeal declined to follow the hitherto leading case of Blades v Higgs (1861) 10 CB NS 713 142 ER 634, and restricted forcible recaption to where the wrongful possession of the chattel was wrongful from its inception. In other words, the remedy of recaption is not available where possession of the chattel was originally lawful, then subsequently became unlawful (that is, on termination of the bailment and demand for return of the chattel). This may be relevant to the present discussion because possession of a property acquired as a result of a lease is originally lawfully.

We submit that the need to clarify the legal uncertainty created by the repeal of the 1899 Act would amount to a greater regulatory burden than anything provided by the 1899 Act itself.

Recommendation

Retain the 1899 Act in its current form.

 

Landlord and Tenant (Amendment) Act 1948

The 1948 Act applies to a relatively small and contained number of tenancies, held mostly by elderly persons of modest means. It is the primary source of law in relation to those tenancies and its provisions – particularly in relation to rents and termination – are crucial to the continuation of those tenancies. If the 1948 Act were repealed, those tenancies would end and the tenants would lose their homes of many years. This would have serious negative consequences for their housing and, possibly, their health and wellbeing.

If, as the issues paper alternatively proposes, the provisions of the 1948 Act were ‘streamlined&rsquo redrafted, settled interpretations of the provisions may be relitigated. If, as also alternatively proposed, the 1948 Act were repealed and its provisions included in the RTA, there may also be relitigation of the provisions and the RTA would be made undesirably complex.

The 1948 Act is not ‘red tape&rsquo we strongly submit that it should be retained.

Application of the 1948 Act

On its commencement, the 1948 Act applied, with some exceptions, in relation New South Wales tenants generally – not, as the issues paper states, ‘particularly servicemen and their families’. In fact, service personnel and certain family members are subject to special provisions in the 1948 Act (Part 5) the rest of the Act is of general application. Over the years amendments to the Act have curtailed its application and, as tenancies have ended, premises have passed from the control of the Act from 1 January 1986, there have been no new tenancies created to which the 1948 Act applies (s 5AA).

The number of 1948 Act tenancies still in existence is unknown. However, and contrary to the statement in the issues paper, it is well known that 1948 Act tenancies still exist. The organisations listed in the table below advise that each were contacted in 2012 by tenants known to be subject to the 1948 Act, as indicated.

Organisation	Number of 1948 Act tenants who contacted the organisation in 2012
Older Persons Tenants Service	15
Illawarra and South Coast TAAS	1
Northern Aboriginal TAAS	1
NSW Legal Aid[2]	2
Total	19

We are further advised by OPTS that it has examined its records of tenant contacts for the 30 months to the end of 2012, and found another six 1948 Act tenants whom OPTS can confirm are still in their tenancies – making a total of21 tenants under the 1948 Act presently on OPTS’s books. Also on its books are an additional 23 persons who may be 1948 Act tenants, but whose coverage has not been confirmed.

We reiterate: these numbers are of tenants who recently contacted services for information and advice. It is reasonable to assume that other 1948 Act tenants remain, and have not sought advice recently. We are advised by Dr Mowbray at OPTS that he has updated his estimate as to the total number of 1948 Act tenancies remaining to450-900 tenancies.

Details about some of the 1948 Act tenants who have contacted these organisations are presented in case studies at the end of this submission.

We submit that for the purposes of the present review there are two implications of the 1948 Act’s current application. First, where it applies, the tenancy will necessarily be of long standing – not less than 27 years. In most cases, the tenant is elderly, and of limited means. Repealing the principal source of law for their housing arrangements may have large and damaging effects on them. 

The second implication is the obverse: no person – landlord or tenant – entering into a tenancy agreement now, or indeed at any time in the past 27 years, need be concerned about the application of the 1948 Act to their own arrangements. Section 5AA ensures that the Act presents no ‘red tape’ entanglements for persons entering the rental market today.

Functions of the 1948 Act

Where it applies, the 1948 Act provides strong controls on rents and terminations by landlords. Tenants under the 1948 Act are entitled to pay ‘fair rents’, set according to the Act, and their tenancies may not be terminated without grounds, and only on the grounds set out in the Act.

It is not, however, ideal residential tenancies legislation. As the issues paper observes, the 1948 Act provides no express obligation on landlords to maintain premises in a reasonable state of repair. It is also drafted in an extraordinarily complex way.[3] A great deal of litigation, particularly in the 1950s and 1960s, was conducted because of this complexity.

However, for many years now, and especially as the application of the Act has become so limited, there has been very little litigation of the 1948 Act’s provisions, and the interpretation of them is now much more settled. Furthermore, OPTS advises that most fair rents are now set by agreement between the parties under s 17A of the 1948 Act, rather than by determination of the Fair Rents Board. Some of these agreements also deal with the making of repairs. 

The 1948 Act’s controls on rents and terminations also have a further, consequential effect: properties subject to 1948 tenancies are bought and sold at a discount. This is important to the question of the distribution of the costs associated with the 1948 Act: typically, the cost to a landlord has already been accounted for in the discounted price they paid for the property. It also means, on the other hand, that where a property becomes decontrolled, the landlord stands to gain a windfall. This is important to the question of the effect of repealing the 1948 Act.     

Problems with repealing the 1948 Act

The issues paper presents three options for the 1948 Act. We submit that there are problems with each option.

Repeal and give tenants 12 months to find alternative housing

The first point we make about repealing the 1948 Act is a point made implicitly by the issues paper: if the 1948 Act is repealed, affected tenants will have to find alternative housing, because their existing tenancies will end. We expect that upon repeal of the 1948 Act and the decontrolling of their properties, most landlords will sell and realise the windfall if any keep the property in the rental market, they will do so at a substantially higher rent. Whether because of a termination notice, or because of the prospect of paying a much higher rent, tenants currently under the 1948 Act will have to move out.

We expect that finding affordable alternative housing for these tenants would be difficult – and that not all of them will find such housing within 12 months.

The private rental market does not provide adequately for elderly persons of limited means. For example, for tenancies entered into in the quarter to September 2012,[4] the first quartile rent for one-bedroom flats in the Greater Sydney region is $350 per week the Age Pension (single rate) is $356 per week, plus $60.50 Rent Assistance and $30.30 Pension Supplement. In other words, a single aged pensioner renting a one-bedroom flat at the low end of the Sydney market would pay about 78 per cent of their income in rent.    

We expect that most 1948 Act tenants faced with termination would be eligible for social housing, and many – but certainly not all – would be eligible on a priority basis. Priority is given to elderly applicants only if they are aged 80 years or older[5] applicants who are not aged 80 years must either qualify for priority housing under other criteria of risk and urgent housing need, or be considered for social housing on a wait-turn basis. Waiting times for social housing on a wait-turn basis are well in excess of 12 months for most types of dwellings in most parts of the State.[6] For example, in most parts of Sydney the expected waiting time for studio/bedsit apartments is 2-5 years for dwellings with one or more bedrooms, it is 5-10 years.

Repealing the 1948 Act would have serious negative consequences for the housing of 1948 Act tenants more than that, we are concerned that it may have serious negative consequences for their health. Advocates and community workers report anecdotally their impression that elderly persons who are forced to move from their homes are more likely to become sick or die. We are not aware of any local research on this question, but the impression of advocates and community workers is supported by research from overseas. Danermark, Ekstrom and Bodin[7] analysed the effects of the residential relocations of 22 579 elderly persons in Sweden, and considered both those who had been forced to move (because of urban renewal) and those who moved otherwise. Compared to the death rate for non-movers (8.7 per cent), the death rate for those forced to move because of urban renewal (12.5 per cent) was almost 50 per cent higher. (The death rate for those moving otherwise was no higher than that for non-movers).

We are cautious about using this research to draw direct conclusions about the prospects of 1948 Act tenants, because the results of the research may reflect local factors: in particular, the housing options afforded to elderly persons by local housing policies and markets. By the same token, however, we submit that the housing options afforded in Sweden – where 17 per cent of the housing stock is public housing, rents are collectively negotiated and security of tenure is assured – are probably less bleak than those faced by elderly tenants who lose their homes in New South Wales. The relation between forced relocation and mortality may well be greater here.

Amend the 1948 Act to retain and redraft key provisions

As we observed above, the 1948 Act is a complex piece of drafting. In general, we strongly support making legislation clear and easily comprehensible. In relation to the 1948 Act, however, we are concerned that amending the Act to retain and redraft key provisions – and delete the rest – would come with significant risks and costs that would, especially considering the limited application of the Act, outweight any benefit of improved clarity.

Firstly, ‘streamlining’ the 1948 Act would not be a straightforward exercise in rescuing its key provisions – controls on rents and terminations – from surrounding complexity. The key provisions are themselves complex. The most straightforward way of reducing the complexity of termination provisions would be to reduce the number of grounds for termination but prima facie this would further restrict termination and alter substantially the balance of parties’ rights under the Act. The rent provisions are probably more amenable to being redrafted without a change in substance (because in practice most fair rents are now negotiated, not determined by the formulae in the Act), but this is not certain.

Secondly, the question of whether the amendments have substantially altered the rights of parties could be litigated, wherever a provision is redrafted or deleted. As a community legal centre, we think that litigation of such questions is not necessarily a bad thing, particularly where it provides an answer that may apply to a wider class of parties. However, in relation to an amended 1948 Act, such litigation would really be the relitigation of otherwise relatively settled questions of law applying only to a limited number of longstanding tenancies, and produce more expense than benefit.

Repeal the 1948 Act and transfer key provisions to the RTA

This option presents all of the problems of the second option, discussed immediately above, and a further problem: it would make the RTA much more complex.

The issues paper suggests that a ‘self-contained schedule’ to the RTA could contain the provisions of the 1948 Act, ‘effectively separate’ from the other provisions of the RTA. We submit that this may be more easily said than done, and that it is possible that numerous other amendments to the RTA may be necessary to appropriately seal off the rest of its provisions from those in the schedule.

Furthermore, even if this separation was effected as a matter of law, as a matter of practice the RTA would be less streamlined, more complex and more confusing, particularly for landlords and tenants consulting it without a lot of background knowledge of tenancies law. The presence within the RTA’s regime of rights, obligations and procedures of another, very different regime may confuse casual readers and lead them to think that it is relevant to them. 

We submit that transferring the provisions of the 1948 Act to the RTA would create a greater regulatory burden than retaining the 1948 Act in its current form.

Recommendation

Retain the 1948 Act in its current form.

 

Appendix: 1948 Act tenant case studies

Case study: Walter

Walter has lived in his home in regional New South Wales for 73 years. He first moved in as a child with his parents and siblings in 1940, and remained after the deaths of his parents in the 1960s. Walter is deaf, almost blind, and has mobility difficulties. He is, however, independent and takes enormous pride in his home.

Walter’s tenancy was at risk in 2002, when his landlord wrongly gave him a termination notice under the Residential Tenancies Act 1987, and again in 2012, when his landlord threatened him with eviction. On both occasions a tenants advocate helped Walter assert his rights as a tenant under the 1948 Act. In 2009, Walter received a rent increase notice, and with the help of a tenants advocate he negotiated with the landlord a fair rent agreement that also dealt with some repairs.

Walter’s tenants advocate reports that there is no suitable alternative accommodation available for Walter in the private rental market, and that the prospect of losing his tenancy is very distressing for Walter.

Case study: Rod

Rod is 78 years old and has, for the last 30 years, lived in an inner-Sydney boarding house under the 1948 Act (it is possible for boarding houses to be prescribed premises under the 1948 Act).

Rod’s rent is not cheap (he pays $758 per month, or 40 per cent of his pension, in rent), but over the years his landlord has tried unlawfully to force him to pay more by threatening him with eviction – including by calling the police to remove him as a trespasser. On each occasion Rod has asserted his rights under the 1948 Act and his remained in his home.

Rod does most of the repair work around the boarding house himself.

Case study: Dorothy

Dorothy is a 1948 Act tenant who lives in the Blue Mountains. Her landlord, after having given many invalid rent increase notices over the years, finally applied properly to the Fair Rents Board for a determination.

At the hearing, it became apparent that the presiding magistrate was not familiar with the 1948 Act, so Dorothy’s tenants advocate proposed to conciliate with her landlord. Eventually an agreement was reached: Dorothy could stay in her home for the rest of her life, and her rent would increase by $20 per week for the coming year, and a further $10 per week each year thereafter.

Case study: Gladys

At age 94, Gladys had lived in her home for 70 years, and on the same street all her life. She had had a succession of landlords, all of whom refused to do repairs. With the help of a tenants advocate, she got the broken taps fixed by Sydney Water under a water efficiency program, but she could not get fixed the badly leaking roof. It became apparent that her landlord was preparing to make the case that the premises required reconstruction – a ground for termination under the 1948 Act.

Gladys negotiated a settlement with her landlord and surrendered her tenancy. She moved in with her daughter and died shortly afterwards.

Footnotes

1. Contrary to its characterisation in the issues paper as a ‘stand alone piece of legislation’ (p 12), the 1948 Act relies on the 1899 Act for termination proceedings, subject to certain qualifications made by the 1948 Act (s 69, 1948 Act).

2. The NSW Legal Aid figure is from an informal survey by broadcast email to NSW Legal Aid solicitors.

3. For example: provisions of the 1948 Act relating to its application go down to the level of sub-sub-sub-sub-subsections (see s 5A(1)(e)(ii)(b)(ii)) the formula for determination of a fair rent by the Fair Rents Board involves consideration of 14 factors, and the express non-consideration of another four (s 21) the termination provisions include such narrow grounds as ‘that the premises are used as, or have been acquired for use as, a parsonage’ (s 62(5)(h)).

4. Housing NSW (2012) ‘Rent and Sales Report’, No 101.

5. Housing Pathways ‘Social Housing Eligibility and Allocations Policy Supplement’.

6. Housing NSW (2012) ‘Expected Waiting Times for Social Housing 2012’, accessed 14 January 2013 atwww.housingpathways.nsw.gov.au/How+to+Apply/Expected+Waiting+Times

7. Danermark, B D, Ekstrom, M E and Bodin, L L (1996) ‘Effects of residential relocation on mortality and morbidity among elderly people’ European Journal of Public Health: 212-217.