Interstate Landlords and NCAT the issue explained – Burns Case – High Court Appeal

7 Aug 2017
Estate Agents Co-operative
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It is the Constitution, it is Mabo, it is justice, it is the law, it is the vibe; it can be a big problem for property managers.

The 2017 EAC Insight Roadshow is proving very popular with Estate Agents across New South Wales.

Of particular interest to Estate Agents managing properties on behalf of interstate landlords is the recent NSW Court of Appeal decision in Burns v Corbett; Gaynor v Burns [2017] NSWCA (‘the Burns case’).

The Burns case  has profoundly impacted the property industry in that it prevents the NSW Civil and Administrative Tribunal (‘NCAT’) determining matters involving interstate parties, i.e. landlord and tenants.

Since the Court of Appeal decision, NCAT has been dismissing up to one application per day for want of jurisdiction, despite s.119 of the Residential Tenancies Act 2010 (NSW) providing a prohibition on certain recovery proceedings in court.

The problem unfolds like this. There is an application to NCAT by an interstate landlord, made by their NSW Real Estate Agent; the dispute concerns a tenant’s non-compliance with a validly served Termination Notice for non-payment of rent. At the first conciliation hearing whereby the landlord’s agent advocates for Orders of termination, possession and the payment of money, the landlords application is dismissed. The tenant remains in the property, owing many weeks rent and there is no Tribunal or Court with jurisdiction in NSW to terminate the tenancy.

Likewise, a tenant who moves interstate and challenges the bona fides of a landlord claim over their rental bond cannot have their matter heard through NCAT. The issue is problematic for all the parties in the tenancy dispute.

In the middle of a housing crisis in New South Wales, we are aware of interstate landlords instructing agents to let their properties sit vacant rather than enter into a lease that perhaps could not be terminated. Likewise, the issues surrounding a rent-default claim on the landlord insurance policy become dubious. While the tenant remains in occupation of the property, the debt owed to the landlord does not crystalise, thus enlivening the insurance policy.

The issue arises because NCAT is not a “court of the State” for the purposes of Chapter III of the Constitution. A State tribunal which is not a “court of a State” is unable to exercise judicial power to determine matters between residents of two States because the State Law which purports to authorise the tribunal to do so is inconsistent with the s39(2) of the Judiciary Act and therefore rendered inoperative by s.109 of the Constitution.

Rather than creating panic amongst agents, the 2017 EAC Insight Roadshow explains in plain terms the Court of Appeal decision; it articulates who is affected, what is the ‘test at law’. Of critical importance, it provides Agents with the best practice for dealing with a dispute involving an interstate party before NCAT. EAC CEO David Crombie recommends that Members, who have not attended an EAC Insight event, that are faced with the issue contact Jemmeson & Fisher to receive advice on how to best deal with it.

Gary Burns has recently been granted leave to appeal to the High Court. However, as of the date of this press release, no hearing date has been set, and there is no basis to conclude that NCAT’s jurisdiction to hear and determine matters will change in the reasonably foreseeable future because of the High Court Appeal.

NCAT’s current practice is to dismiss applications in which jurisdictional issues apply and not to adjourn matters pending the High Court’s decision. This is consistent with NCAT’s obligations under s.36(1) of the Civil and Administrative Tribunal Act 2013 to facilitate the resolution of the real issues in dispute in a manner that is just, quick and cheap.

Agents are encouraged to attend the EAC Insight Events and hear from leading property experts together with the Regulator on significant issues impacting their agency practice.

To quote Australian folk law…. ‘in summing up it is the Constitution, it is Mabo, it is justice, it is the law, it is the vibe” …… and armed with the right knowledge, it does not need to be an insurmountable problem for property managers.

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Lisa Jemmeson
Senior Associate
Jemmeson & Fisher Solicitors and Accountants

Jemmeson & Fisher are the providers of real estate legal advice to EAC and  Lisa represents EAC on the NCAT Consumer and Commercial Division Consultative and General/Commercial Forums.

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