Last Thursday, JemmesonFisher appeared before the New South Wales Local Court in proceedings commenced to terminate a residential tenancy on behalf of an interstate landlord.
The background of the matter is somewhat unremarkable. In January 2019, the managing agent caused an Application to be commenced in the NSW Civil and Administrative Tribunal (“NCAT”). The Agent sought orders of termination and possession of a residential tenancy, occasioned by a failure of the tenant to pay rent in accordance with the residential tenancy agreement.
The Agent followed the new procedure by correctly applying to NCAT at first instance. Thereupon NCAT being apprised of the interstate residential status of the landlord, promptly resolved that the matter would require the exercising of federal jurisdiction and could not be heard by NCAT.
On 4 February 2019, NCAT issued the agent with a letter advising “The Tribunal declines to accept this application as it seeks to invoke federal jurisdiction because it involves a matter between residents of different States”. This letter from NCAT is required prior to the Court being approached.
At this point, the Civil and Administrative Tribunal Act 2013 (Part 3A Federal Proceedings) (“the Act”) becomes vital in seeking the remedy for the landlord.
JemmesonFisher was engaged by the Landlord Plaintiff to file a Summons with the Court seeking leave to the have the Court determine the residential tenancy matter.
Despite the process to date, leave of the Court is still required.
Pursuant to the Act, the Court may grant leave for the filing of the Summons if it is satisfied that:
(a) the Application was first brought in NCAT;
(b) NCAT had determined that the Application would involve an exercise of federal jurisdiction;
(c) NCAT would otherwise have had original jurisdiction enabling it to determine the Application; and
(d)Substituted proceedings on the Summons would be within the jurisdictional limit of the court. This final part goes to whether we commence in the Local or District Court.
JemmesonFisher filed the Summons with the supporting Affidavit and sought a waiver of the court filing fees, which was granted..
After some initial negotiations with the Local Court as to procedural matters, the case was set down for Directions before the Registrar. Lisa Jemmeson of JemmesonFisher appeared for the Plaintiff Landlord and sought a referral to a Magistrate for a hearing. There was no appearance by the tenants, and a further affidavit was read in Court as to the proper service of the Court Notice of Listing on the tenant defendants.
At the 9.30am Directions hearing, the Senior Registrar allocated 15 minutes in Magistrate Atkinson hearing list. Perhaps we were being optimistic, as the hearing took place over four hours and included oral testimony of the property manager.
Ultimately Her Honour was persuaded by the Plaintiff Landlords’ argument on the Motion. The residential tenancy was terminated, an Order for suspended possession was made, an Order for the payment of rental arrears and mechanics for the warrant were provided should the tenant fail to comply with the Court Order of possession.
In this tenancy dispute, the landlord is insured through EBM Rent Cover. EBM under the Policy of Landlord Insurance covers the landlord Plaintiff for their legal fees in accordance with the policy terms and conditions.
As we understand, these proceedings are the first residential tenancy matter involving an exercise of the federal jurisdiction that has proceeded all the way to hearing.
It highlights several critical points for property managers and interstate investors:
1) All interstate landlords should consider a suitable landlord protection insurance product. A real estate agent must not provide financial advice to a landlord. Real Estate Agents should have regard to the Property, Stock and Business Agents Regulation 2014- Part 2, Reg 6, which deals with the provision of financial and investment advice. Real Estate Agents may however, point out the glaring deficiencies in some Landlord protection policies that limit recovery of rental arrears or continue to contain a somewhat nebulous collection of exceptions to damages recovery, be aware of archaic policy pre-conditions such as the one requiring that the residential tenancy agreement be on a current fixed term in order for the policy to respond to the landlords damages claim.
2) In these proceedings, the initiating application to NCAT was made on 17 January 2019, and the Court determined the matter in late April with possession suspended until mid-May. The new regime is lengthy, even when carriage of the Court proceedings is handled by experienced tenancy lawyers such as JemmesonFisher. In this matter, the Agent played a critical role in managing the NCAT proceedings, doing so expeditiously and progressing the matter ready for handing over to JemmesonFisher.
3) Real estate agents should be conscientious as to whom they seek their advice on legal matters. If you are an agent telephoning a “help-line” that does not service your inquiry by an Australian legal practitioner, then you should proceed with caution. We remind real estate agents that through their managing agency agreements, a landlord delegates the management of the tenancy to the agent, there is an active and ongoing obligation to perform these services to a high standard. A real estate agent will act outside their professional indemnity insurance coverage if they give their landlord clients legal advice. Moreover, there is the risk that if the advice received is incorrect and acted upon; then a claim framed in negligence facilitated through that advice and or conduct, could succeed against the real estate agency. The best practice is to get the right advice from an Australian legal practitioner that is conversant with tenancy law.
As the law develops in this area, we shall provide regular updates to present current and factual advice for parties caught by the federal jurisdiction exception. For further details contact Lisa Jemmeson or Sarah Heuvel of JemmesonFisher.