R.S.L. v Walker and Ors [1999] NSWSC 81 (17 February 1999)

Last Updated: 18 February 1999

NEW SOUTH WALES SUPREME COURT

CITATION: R.S.L. v Walker and Ors [1999] NSWSC 81

CURRENT JURISDICTION:

FILE NUMBER(S): 30122/96

HEARING DATE{S): 02/12/97

JUDGDMENT DATE: 17/02/1999

PARTIES:

The Returned and Services League of Australia (New South Wales Branch)

William Ammon Walker

John Alexander McKenzie

Alan George Buxton

JUDGMENT OF: Dowd J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr M D Young

Mr C Lonergan

SOLICITORS:

Shailer Dawson & Hickey

Christopher Pacey

CATCHWORDS:

Administrative Law

Retirement Village Industry Codes of Practice

Requirement of having dispute heard by Retirement Village Disputes Committee before having dispute heard by the Residential Tenancies Tribunal

ACTS CITED:

Residential Tenancies Act 1987 (NSW)

Retirement Villages Act 1989 (NSW)

Fair Trading Act 1987 (NSW)

Retirement Village Industry Code of Practice Regulation 1995

DECISION:

Appeal allowed in so far as it relates to the jurisdiction of the Tribunal

Proceedings to be stayed until Defendants have fulfilled the requirements of s.14 of the Retirement Villages Act 1989

Defendants to pay the Plaintiff's costs of the Summons

JUDGMENT:

- 30 -

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

DOWD J

17 February 1999

No. 30122/96

R.S.L. v WALKER and Ors

REASONS FOR JUDGMENT

1 This is an appeal brought under s.107 of the Residential Tenancies Act 1987 ("the Act") from a decision of the Residential Tenancies Tribunal (`the Tribunal') delivered on 25 October 1996. This appeal relates solely to the jurisdiction of the Tribunal.

2 The proceedings before the Tribunal, nos. 24034, 24035 and 23338 of 1995, concerned a retirement village known as Rowland Village ("Rowland") at Galston owned by the plaintiff, the Returned and Services League of Australia (New South Wales Branch) ("the RSL"). Rowland had been set up by the plaintiff as a retirement style village for persons who were eligible to be members of the RSL. The defendants, William Walker, John McKenzie and Alan Buxton, were three of the original residents at Rowland.

3 In 1993, a dispute arose between the defendants and the RSL concerning financial arrangements in existence between the parties. The practice at Rowland had previously been that prospective residents of the village were given a document headed "Finance" ("the finance sheet") prior to each entering into a licence agreement to secure a unit at Rowland. The finance sheet provided that prospective residents of Rowland were to make a formal interest free loan to the RSL in return for the grant of a licence by the RSL to occupy a unit at Rowland. The loan would be subject to two categories of non-refundable deductions. The first was a $10,000 deduction upon entering the village. This deduction was described in the finance sheet as being one "to assist with ongoing care and village amenities". The second was a series of 3% deductions on the principal loan after the $10,000 had been deducted, each year for a period of five years. The 5 x 3% deductions were earmarked as "a depreciation factor", "to cover long term maintenance", the purpose being "to enable management charges to be kept as low as possible."

4 A formal dispute arose when the Rowland Village Residents' Association ("the Association") referred the issues to the Rowland Village Disputes Committee ("the Disputes Committee") by letter dated 5 September 1994. The Disputes Committee was a body set up in accordance with the Retirement Village Industry Code of Practice Regulation 1989 (`the 1989 Code'), which was subsequently repealed and replaced by the Retirement Village Industry Code of Practice Regulation 1995 (`the 1995 Code'). The Codes were created and given effect by the Fair Trading Act 1987 (NSW).

5 It was claimed by the Association in its letter that, on the basis of the finance sheet, the Rowland residents had an expectation that the loan deductions would be placed in dedicated accounts to "ensure their preservation for their stated purpose". The residents also believed that the interest earned on the surplus in each account would be credited to the "Village Maintenance Revenue Account".

6 It was claimed that the RSL, in July 1992, without consulting Rowland Village residents, removed from its finance sheet the words relating to the purpose of the $10,000 deductions, and then those words relating to the 3% deductions were removed in October 1993. As a result of this, the residents complained that no money had been set aside for amenities since mid 1992, no income had been received from interest on surpluses in the dedicated accounts; that they had no guarantee of long-term maintenance; and, the expectations of incoming residents in relation to amenities at Rowland was reduced, thus reducing the attractiveness of units being sold by outgoing residents.

7 The final two paragraphs of the letter to the Disputes Committee provided as follows:

"We requested the R.S.L. in our Rowland Village Residents Council letters dated 3/11/93 and 5/5/94 to re-instate the original Finance Sheet and to credit interest on the dedicated accounts to Village maintenance revenue account.

We are in dispute because the R.S.L. in their letters JS:IC 3470/9 of 17/3/94 and JS/AC of 20/5/94 refused to re-issue the earlier Finance Sheet containing the deduction qualifications and to credit residents with any interest earned on the two funds."

8 It was the RSL's case that the finance sheets had been given out by mistake, by an agent who had for a brief time been involved in marketing the units, to residents who had bought units in the early years. The RSL discovered the error in 1992 and 1993 and wished to stop the practice of handing out the finance sheet.

9 In October/November 1995, there being no determination by the Disputes Committee, there were two unsuccessful attempts at mediation at the Commercial Disputes Resolution Centre. In November 1995, the defendants applied to the Tribunal for the following orders under the Act seeking:

"1. An order requiring the administering authority to restore the original (1988) wording of the "Finance" Sheet issued to potential residents enquiring about Village entry and costs.

2. An order requiring the administering authority to fully account for and protect [the respective applicant's] interests in these funds [being the funds which had been set up for the $10,000 deductions and the 5 x 3% deductions] in the event of the Village being sold to another organisation."

10 The third defendant further sought orders, as set out:

"1. An order requiring the administering authority to carry out work or take such other steps to make good the broken terms of the residence contract.

2. A dispute committee was formed May '94. Nothing resolved to date.

3. Dispute is between Admin. Authority and Rowland Village Residents' Association.

4. Following the appeal, the Commisioner (sic.) of Consumer affairs approved a mediation process hearing which was held Friday 3-11-95 at O.R.E.S., Sussex Street. Mr George Sarris, Compliance Officer, said to contact him if necessary, ph. 377-9234.

5. The main subjects of dispute were not discussed because the dispute committee had not reached its judgment.

6. Other relevant orders will need to be added if and when the sale of R.V. occurs as the repayment of unspent funds to R.V.R.A. will be a major consideration."

11 The Disputes Committee did not hand down its determination until 11 January 1996, notwithstanding the provision in its Charter requiring that determinations be made and notified in writing within 30 days of receiving an application to have a dispute heard. The Disputes Committee found:

"The RSL has the right to remove the Finance sheet and other promotional material at its discretion at any time and therefore was acting within its rights when those documents were withdrawn in 1992 and 1993. The withdrawal of those documents, however, does not mitigate the RSL's obligations to the Initial Residents in respect of both long term maintenance and the provision of the promised amenities."

12 The Disputes Committee also made two recommendations:

"The Committee recognises that the discussions over the past twelve months have canvassed many issues outside the ambit of the initial disputes. To assist in ameliorating the current situation, this committee recommends:

1. That the balance of $125,000 which remains from the $10,000 amounts contributed by the Initial Residents be made available for the provision of further amenities as outlined in the Initial Selling Brochure, and that this amount would be in full settlement of the claims in respect of amenities detailed in the initial selling brochure.

2. Attached is a report on the Rowland Village visit of Messrs Danks and Lang in which the inspection revealed the Village to be in first class order and that it was evident that long term maintenance would be minimal, requiring only life cycle maintenance.

"For residency comfort, a short deed or letter should be issued for attachment to the initial Residents' contracts confirming that life cycle maintenance will be provided as necessary to resident's (sic) buildings without cost to the residents."

13 The RSL was therefore substantially successful before the Disputes Committee. It subsequently complied with all aspects of the determination, and wrote to all residents on 22 January 1996 undertaking to provide life cycle maintenance as necessary to residents' buildings without any cost to the resident.

14 Then on 31 July 1996, some six months after the Disputes Committee's determination had been given, the defendants (applicants before the Tribunal) wrote to the Registrar attaching amended orders which they proposed to seek at the next hearing date. The "Amended Orders Sought" were as follows:

"1.That the administering authority prepare a correct Balance Sheet and financial information as at 31/12/95 in respect to "Rowland Village" so that it reflects the position that the maintenance provision of $1,783,627 (being the total of $1,503,068 - Maintenance Provision, and $280,559 - Capital Receipts) is a sum to be set aside "to cover long term maintenance;

2. That all of the amount, calculated at 3% for 5 years on the principal loan after deducting $10,000 paid by residents, be applied by the administering authority for the purpose for which it was, and is, collected, namely "to cover long term maintenance".

3. That the administering authority be required to deposit into an account reserved for that purpose on the 31/12 each year a sum equal to the 3% for 5 years on the principal loan after deducting $10,000 from each lender and that the money so accumulated be used "to cover long term maintenance".

4. That the administering authority be restrained from transferring the amount (and any future amounts collected) to "against cost of village" and that that amount and future sums collected or accumulated from the same source be used and applied towards "the cost of long term maintenance".

5. That the administering authority provide in tis accounts that any and all non-refundable contributions of $10,000 received from past, current and future residents in accordance with the "Finance" document given to residents at the commencement of their residency is to be a reserve sum "to assist with ongoing care and village amenities".

6. That the administering authority be restrained from transferring any portion of the $10,000 received from residents to "against the cost of village" in its accounts and that such sums be used for the purpose for which they were and are received namely "to assist with ongoing care and village amenities".

7. That the administering authority be required to create a reserve account into which shall be deposited an amount equal to each of the non-refundable contribution of all residents less any sum(s) properly expended to date and that such funds be used and applied only for the purpose for which such contributions are made and received, namely to "assist with ongoing care and village amenities".

8. That the reserve accounts referred to in orders sought 3 and 7 hereof be created prior to the administering authority entering into any agreement to sell the Retirement Village and that each resident be given an audited statement setting out the manner in which the sum deposited to create the two reserved accounts is calculated. Such statement shall set out the total amounts received by the authority and the amount and purposes of all expenditures and/or transfers within the accounts of the authority.

9. That the administering authority be restrained from restricting the movement of residents from the Rowland Village self care accommodation to the Rowland Court and that as residents of Rowland Court they be entitled to full care services without the requirement of medical assessment."

15 By letter of 21 August 1996, the solicitors for the RSL, the respondent before the Tribunal, advised the defendants that the RSL would object to the amended orders sought on the ground that the Tribunal had no jurisdiction to hear the matters raised by the amended orders.

(1) The Tribunal Hearing

16 The application before the Tribunal was heard before Chairperson Toose over two days, on 24 and 25 October 1996. As foreshadowed, the question of jurisdiction was raised on behalf of the respondent early on the first day of the hearing.

17 Section 14(1) and (2) of the Retirement Villages Act 1989 (NSW) provides as follows:

"Applications to Tribunal relating to disputes

14(1) If a resident or the administering authority of a retirement village claims that -

(a) a dispute has arisen between the resident and the authority or the authority and one or more residents or the resident and another resident; and

(b) all procedures for settlement of the dispute under any applicable code (otherwise than be reference of the dispute to the Tribunal) have been exhausted without resolving the dispute to the satisfaction of the resident or the authority or, if there are no such procedures, the dispute has not been resolved,

the resident or authority may apply to the Tribunal for an order in respect of the dispute."

(2) The Tribunal shall not hear an application under subsection (1) (other than an application relating to a dispute arising out of the transfer or the proposed transfer of a resident of a retirement village from one kind of accommodation in the retirement village to another) unless it is of the opinion that -

(a) the dispute materially affects a party to the dispute; or

(b) it is in the public interest to do so."

18 Section 3 of that Act makes the Tribunal the Residential Tenancies Tribunal.

19 Part 6 of the 1995 Code makes the following provisions:

"PART 6 - DISPUTE RESOLUTION

43. Dispute resolution

(1) It is recognised that in any communal living situation such as a retirement village where facilities are shared, disputes between residents and management and between residents will arise from time to time.

(2) This Code places particular emphasis on providing easy access to an informal and inexpensive process to resolve disputes.

(3) However, the obligation remains on the parties to a dispute to attempt to resolve the dispute themselves.

44. Disputes committee

(1) Management is required to convene a disputes committee to hear and mediate disputes that arise within a retirement village.

(2) The disputes committee is to have 3 members:

(a) one person appointed by residents; and

(b) one person representing management; and

(c) one person agreed to by both the resident and management representatives.

(3) The residents and management of the retirement village must agree upon and establish a charter for the disputes committee so that residents and management are aware of the process to be followed should a dispute arise.

45. Applications to disputes committee

(1) Where a dispute arises within the charter of the disputes committee a resident, a group of residents or management may apply to the disputes committee to have the matter heard.

(2) The disputes committee should meet as soon as possible after being notified of a dispute and may hear or mediate the matter in accordance with its charter.

(3) The disputes committee must advise the parties to the dispute, in writing, of its decision within 30 days of receiving notice of the dispute.

46. Appeal mechanism to the Residential Tenancies Tribunal

(1) The Retirement Villages Act 1989 provides that either the resident or management may apply to the Residential Tenancies Tribunal for an order in respect of a dispute.

(2) Applications about a dispute (other than a dispute about a transfer or about village rules) may be made to the Residential Tenancies Tribunal in the following circumstances:

(a) where there is no disputes committee for the retirement village;

(b) where the nature of the dispute or any other circumstances of the case make it inappropriate or undesirable for the dispute to be determined by a disputes committee;

(c) where either party to a dispute is dissatisfied with the determination of a disputes committee;

(d) where a disputes committee declines to hear or determine the matter.

(3) The Residential Tenancies Tribunal is not to hear an application about a dispute (other than a dispute about a transfer or about village rules) unless it is of the opinion that:

(a) the dispute materially affects a party to the dispute; or

(b) it is in the public interest to do so.

(4) Upon receipt of the application the Residential Tenancies Tribunal will set a date and venue for hearing the dispute and will notify all the relevant parties accordingly.

(5) After the hearing the Residential Tenancies Tribunal will notify the parties in writing of the outcome and of any orders made at the hearing."

(a) The RSL's Submissions on Jurisdiction

20 It was argued on behalf of the RSL that the Tribunal had no jurisdiction to grant the applicants' "Amended Orders Sought" because the defendants had neither complied with s.14(1) of the Act, nor Part 6 of the Code, before taking the matter to the Tribunal. It was submitted that the defendants had not "exhausted" all procedures for settlement of the dispute under the applicable code, since the dispute particularised in the "Amended Orders Sought" had never been referred to the Disputes Committee (Indeed, it was submitted that the RSL could have taken the jurisdiction point as to the original applications made by the defendants to the Tribunal, however the subject hearing related to the "Amended Orders Sought"). Therefore, it was submitted that the defendants were not entitled to apply to the Tribunal for the "Amended Orders Sought" because of failure to comply with s.14(1) of the Retirement Villages Act 1989.

21 It was submitted that orders 1 to 8 had nothing to do with the dispute originally referred to the Disputes Committee, which had sought relief in respect of the RSL ceasing to give out the old finance sheet. Rather, it was argued orders 1 to 8 were effectively seeking injunctions relating to how the RSL should prepare its balance sheets, the accounts into which certain moneys were to be deposited and the creation of reserve accounts in its formal accounting system.

22 As to order 9, it was argued on behalf of the RSL that it encroached upon "absolutely new territory", this was conceded by counsel for the defendants and thus order 9 was not pressed.

23 In support of his submission that the "Amended Orders Sought" could not have come within the dispute originally referred to the Disputes Committee, counsel for the RSL pointed to the fact that the orders made reference to the RSL's accounts of 31 December 1995, which did not even exist at the time the original application to the Disputes Committee was made. It was submitted that by the end of 1995, the accounting was happening in a way that the residents were happy with. It was after the Disputes Committee's decision, when the accounts came out again with an adjustment consequent upon that decision, that the defendants raised their "Amended Orders Sought", which should have been referred back to the Disputes Committee.

24 Counsel for the RSL also relied upon a letter from the Association dated 8 July 1995 to show that the issues raised by the "Amended Orders Sought" were understood by the residents themselves to differ from the dispute that was put before the Disputes Committee. This letter is not before this court, although exerpts of the letter are set out in the transcript of the Tribunal proceedings of 24 October 1996 at pp. 23 and 24.

25 Section 14(1)(b) of the Retirement Villages Act requires settlement procedures "under any applicable code" to have been exhausted. Counsel for the RSL contended that the provisions of the Code relating to disputes had not been complied with. It was submitted that the 1989 Code of Practice had "quite clearly" not been complied with because it had an appeal mechanism within it. As for compliance with the 1995 Code, clause 46 makes special provision for appeals to the Tribunal. Counsel for the RSL referred specifically to clause 46(2)(a)-(d). It was argued that the only possibly relevant subclause to the present fact situation was clause 46(2)(b), which allows for an appeal to the Tribunal if the circumstances are such that it is "inappropriate" or "undesirable" for the relevant Disputes Committee to hear the dispute.

26 Firstly, it was contended that this avenue was not available to the defendants since, as a matter of law, a later regulation could not qualify the Act. Secondly, it was argued that there was nothing in the present case that made it "inappropriate" or "undesirable" for the Disputes Committee to hear the dispute. The composition of the Disputes Committee was such that one member of the three had been appointed by the residents and another had been agreed upon by the residents and the RSL (the third having been appointed by the RSL). Therefore, there could be no issue that the residents were not adequately represented. Further, it was submitted that it was much more appropriate that the Disputes Committee, whose members had detailed knowledge of Rowland and were well acquainted with the issues, determine the dispute in the informal and inexpensive way prescribed by its Charter.

27 Finally, counsel for the RSL described the dispute resolution process that should have been adopted by the applicants. In relation to the "Amended Orders Sought", the Residents' Association should have first raised the matter with the RSL, then if the RSL had not agreed to the residents' requests, they should have applied to the Disputes Committee. Then if the Disputes Committee's decision was considered unsatisfactory, the residents would have been entitled to apply to the Tribunal under clause 46(2)(c) of the Code.

(b) The Defendants' Submissions on Jurisdiction

28 Counsel for the defendants contended that the issues raised in the "Amended Orders Sought" merely particularised the defendants' original applications to the Tribunal filed in November 1995. Counsel for the defendants appears to have been working on the assumption that the defendants' original applications to the Tribunal were substantially the same as their application to the Disputes Committee, because the issue here is whether the issues raised in the "Amended Orders Sought" were put before the Disputes Committee. It was submitted that it was incorrect to assert that the original applications to the Tribunal sought to deal solely with a dispute about the finance sheets.

29 In support of this submission, counsel for the defendants referred firstly to the wording of Mr Walker's Application for an Order filed with the Tribunal on 14 November 1995, specifically to oppose order 9, "Reasons for asking for this order or orders?...":

"1. The items in dispute are non-refundable (1) $10,000 for amenities; (b) long term maintenance, maintenance costs charges, minimisation and depreciation.

2. As far back as 89/90 a finance sheet setting out these qualifications was issued to the RSL official sales brochure....

3. The RSL simply refused to be held accountable and would not provide details as to the moneys geld and disbursements, etc. Also amenities as promised have not been provided. Residents needed assurances that the funds had not been used for purposes other than those intended hence the dispute.

4. The dispute must be resolved irrespective of sale.

5. If a sale takes place the long term becomes the short term and the RSL (NSW) will be required to refund to Rowland Village Residents Association all unspent funds in the two non-profit accounts shown as liabilities in the books - that is, liability to licences of R.V. Community."

30 The text under that contention as to order 9 in the applications of Messrs McKenzie and Buxton was not identical to that set out above, however it was submitted that it involved substantially the same issues.

31 Counsel for the defendants further supported his contention that the "Amended Orders Sought" were not in substance different from the defendants' original applications to the Tribunal by reference to the Anshun estoppel principle (Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589). It was submitted that if the decision of the Disputes Committee had been that of a court, and the defendants had then put on another Summons seeking the "Amended Orders Sought", they would have been estopped from proceeding by virtue of the operation of the Anshun estoppel principle, because the "Amended Orders Sought" were to precisely the same effect as the original orders.

32 Counsel for the defendants contended that the references to the 1995 accounts were provided by way of illustration. It was submitted that the provision accounts had always existed but the figures had been added to year by year, the residual of which was last reported in the accounts for 1995 contained in the 79th Annual Report and Financial Statements of the RSL, exhibited before the Tribunal. It was submitted that the accounts of 1995 had merely confirmed the defendants' worst fears in relation to what they had been arguing before the Disputes Committee since 1994.

(c)Discussion of Issues Arising

33 Counsel for the RSL agreed that the word "claims" applies to both subsections (a) and (b) of s.14(1), however it was submitted that it had to be read objectively and be capable of examination. It was submitted that if "claims" was not read objectively, then the section would allow a person who made a false or frivolous claim that a dispute had arisen and that all avenues of dispute resolution had been exhausted to apply to the Tribunal to have the matter heard. It was submitted that this was a result that could not have been intended by s.14(1).

34 Chairperson Toose enquired as to whether, during the 16 months that the Disputes Committee was considering its decision, other communication and correspondence was put to it which may have drawn its attention to the matters raised in orders 1 to 8, as a result of which it was ascertained that there were two relevant documents which came before the Disputes Committee in the period between the making of the application and the Committee's determination. There was a document emanating from the Rowland finance panel dated 7 November 1994 and a reply to it dated 11 November 1994 (Annexures "AF6C" and "AF6D" to the affidavit of Annette Fontana sworn 24 February 1997).

35 It was submitted by counsel for the defendants that the above correspondence made it perfectly clear that the Disputes Committee had before it precisely what had been encapsulated in the "Amended Orders Sought".

36 There was a witness at the Tribunal hearing, a Mr Wilkinson, who was a member of the Disputes Committee. He was never formally called to give evidence, however he advised that, except in a very limited sense in relation to orders 2 and 5, none of the issues in 1 to 9 had ever come before the Disputes Committee.

37 Chairperson Toose raised the issue that disputes relating to retirement villages could be taken through a vast array of avenues of dispute resolution, other than the Disputes Committee. With this in mind, she invited counsel to comment on whether "exhausted" meant that every single applicable avenue for dispute resolution had to be pursued from start to finish before an application to the Tribunal could be made.

38 The issue of whether the Disputes Committee's delay in reaching its decision affected the determination of whether all settlement procedures had been "exhausted" was also considered. A significant delay could justify a belief, albeit subjective (and the word "claims" would have to be interpreted accordingly), that all avenues to resolve the dispute had in fact been exhausted. An example of such a subjective belief was provided by the statement annexed to the William Walker's original application to the Tribunal.

39 Counsel for the RSL submitted that the delay was irrelevant to the jurisdictional issue, since the issues now raised by orders 1 to 9 were never put before the Disputes Committee in the first place.

(2) The Tribunal's Decision on the issue of Jurisdiction

40 Judgment on the jurisdictional issue was delivered on 25 October 1996, detailed written reasons for which were sent out on 11 November 1996. The findings were as follows:

1. The application to the Disputes Committee dated 5 September 1994 was intended to be read as a whole. The original application to the Disputes Committee was not restricted to the matters contained in the final two paragraphs of the letter of 5 September 1994;

2. The word "claims" in s.14(1) of the Act applies to both subsections (a) and (b). There is no condition precedent that what is claimed must actually have occurred before an application may be made to the Tribunal;

3. There is an extraordinary number of avenues of dispute resolution available to retirement village residents due to the application of a variety of other pieces of legislation to the Act and Regulations. There was no evidence that each and all of these other avenues had been exhausted. However, it can not have been the intention of the legislation that each and all avenues had to be exhausted before a person could apply to the Tribunal;

4. Section 14(1) of the Act should be read subjectively and read down and on the basis of settlement procedures reasonably available to the parties or reasonably contemplated by them. Since 1993 the disputed matter had been to the administering authority, the Tenancy Commissioner, mediation and the Disputes Committee, and more then two years later remained unresolved;

5. The applicants' original applications to the Tribunal were made more than 12 months after the matter had been referred to the Disputes Committee. Given the passage of time and the imperative obligation imposed upon the Committee that it deliver its determinations within 30 days, and given all the other avenues of dispute resolution attempted, each of the applicants was entitled to assume that the Disputes Committee was unable or unwilling to resolve the dispute or deliver a decision and that the applicants could deem that avenue of dispute resolution exhausted;

6. In relation to the issues raised by the applications of Messrs Buxton and McKenzie, the Tribunal had jurisdiction under s.14(2) of the Act, because the issues materially affected a party to the dispute. This jurisdiction was however subject to s.14(3) which sets out the types of orders the Tribunal is able to make. Messrs Buxton and McKenzie were entitled to bring their applications under s.14(1);

7. In his application, Mr Walker raised the issue of the proposed sale of Rowland, which had not gone before the Disputes Committee and therefore was not able to be referred to the Tribunal. However, Mr Walker's application raised issues that were in the "nature" of the issues raised in the application submitted to the Disputes Committee and therefore he was also entitled to lodge his application pursuant to s.14(1);

8. As to the applications of Messrs Buxton and McKenzie, the "Amended Orders Sought" filed on 31 July 1996, orders 1 to 8 were within the nature of the issues that were dealt with by the Disputes Committee and therefore they were able to be the subject of an application pursuant to s.14(1). There was no evidence that order 9 had been previously put to the Disputes Committee, the Tenancy Commissioner or mediation, therefore it was not an appropriate issue to be heard by the Tribunal;

9. The amendments sought to be made to the original applications of Messrs Buxton and McKenzie by "Amended Orders Sought" 1 to 8 should be allowed, however the inclusion of order 9 should not be allowed;

10. The same finding as in 9) was made in relation to Mr Walker's application, because what was termed "Amended Orders Sought" 1 to 8 were, in fact, further particulars and a redrafting of his original application in a more succinct and legalistic fashion.

(3) The Appeal to the Supreme Court

41 On the basis of Chairperson Toose's findings, the RSL appealed to this Court by way of Summons seeking the following orders:

1. An order allowing the appeal in so far as it relates to jurisdictional issues in relation to orders 1-8 in the defendants' "Amended Orders Sought";

2. An order dismissing each of the proceedings;

3. (Alternatively to 2), an order that the respective proceedings be stayed (or not be heard) until the defendants have fulfilled the requirements of s.14(1) of the Retirement Villages Act 1989 in respect of the issues raised by the said orders 1-8;

4. Costs (including the costs of the proceedings to date in the Residential Tenancies Tribunal).

42 Filed with the Summons on behalf of the plaintiff was a Statement of Grounds pursuant to SCR Pt 51A r5. They grounds can be briefly summarised as follows:

1. Chairperson Toose erred in law in characterising and considering the original applications filed with the Tribunal by the defendants when determining whether the requirements of s.14(1) of the Act had been met;

2. Chairperson Toose should instead have addressed the issue of whether the requirements of s.14(1) of the Act had been met in respect of the "Amended Orders Sought";

3. Chairperson Toose erred in law in her construction of the application made by the Association dated 5 September 1994;

4. Chairperson Toose should have found that the dispute raised by the letter of 5 September 1994 concerned the discrete issues of the RSL's refusal to reinstate its original finance sheet and to credit residents with interest earned on the two alleged funds;

5. Chairperson Toose erred in law by finding, in relation to the "Amended Orders Sought", that the defendants had complied with s.14(1) in that all procedures for the settlement of the dispute had been exhausted under the provisions of the applicable code;

6. Chairperson Toose erred in law in finding that s.14(1) was to be read subjectively;

7. The Chairperson erred in law in finding that the defendants had satisfied the requirements of s.14(1)(a) and (b) because there was no evidence of any "claim" by the defendants in terms of either the existence of a dispute or that all avenues of dispute resolution had been exhausted;

8. Chairperson Toose erred in law in finding that the "Amended Orders Sought" nos. 1-8 had been dealt with by the Disputes Committee and that s.14(1) had, impliedly therefore, been satisfied by the defendants;

9. In relation to her findings in relation to the Disputes Committee, the Chairperson erred in law in that:

(a) she failed to consider whether the delay of the Disputes Committee in giving its decision was caused by and assented to by both parties while they attempted to mediate the dispute;

(b) she failed to address whether the delay had been waived;

(c) she erred in finding clause 45(3) of the Code (relating to the time within a determination by the Disputes Committee shall be given) to be mandatory;

(d) she equated a past delay of the Disputes Committee in making a determination with exhaustion of all procedures for dispute resolution under s.14(1) of the Act;

10. The Chairperson should have found that the "claim" under s.14(1):

(a) had not been made in respect of the "Amended Orders Sought";

(b) even if it were made, it was examinable by the Tribunal so as to determine objectively whether the subsection had been satisfied.

(a) The RSL's Submissions on the appeal

43 Outlined below are submissions which were made by the RSL, additional to those already made at the Tribunal hearing.

44 It was submitted that Chairperson Toose ignored the central point of the RSL's submissions, that the Tribunal lacked jurisdiction in respect of the "Amended Orders Sought" (and not the original applications). It was submitted that Chairperson Toose focused on the original applications made to the Tribunal and not the "Amended Orders Sought". By allowing an "application to amend", such an application not being necessary in the first place, it was submitted that Chairperson Toose had attempted to "buttress a finding by taking on something neither in issue nor the subject of addresses". It was conceded, however, that this was not a point of substance since the same issue of jurisdiction would have arisen on any formal application to amend.

45 It was submitted that the right to remove the finance sheet, adjudicated on by the Disputes Committee, was not challenged nor sought to be reopened in the "Amended Orders Sought". There were no complaints arising out of the Disputes Committee's recommendations either. These were issues which would have fallen within the jurisdiction of the Tribunal by virtue of s.14(1) and the operation of clause 46(2)(c) of the Code, and can be contrasted with the issues that were raised by the "Amended Orders Sought".

46 In relation to the Chairperson's interpretation of s.14(1), it was submitted that to read down the words, "all procedures for settlement of the dispute under any applicable code...have been exhausted" was contrary to the ordinary principles of statutory interpretation. It was submitted that words are to be construed according to their ordinary and natural sense. In short, it was submitted that "all" means "all".

47 It was submitted that the Chairperson's interpretation of "claims" as subjective was also incorrect in light of the principles of statutory interpretation. Firstly, "where two meanings are open...it is proper to adopt that meaning that will avoid consequences that appear irrational and unjust" (P.T.C. of NSW v J Murray-More (NSW) Pty Ltd [1975] HCA 28; (1975) 6 ALR 271, at 282). Secondly, one should resist an interpretation which renders a statute nugatory.

48 It was contended that if "claims" were to be read subjectively, a person who had not participated in any procedure for settlement of a dispute under any applicable code could simply "claim" he had, and by the mere fact of his making such claim could set at nought the obvious intention of the legislation and the Code that applications to the Tribunal should be a last, not first, resort, especially in light of the informal, inexpensive and accessible mechanisms that had been set up in respect of Rowland Village. It was submitted that "claims" should be interpreted objectively and should be, in effect, examinable.

(b) The Defendants' Submissions on the appeal

49 It was submitted that, by reference to the late addition of s.14(1) when the original Retirement Villages Bill was introduced, the formalistic approach to interpretation of that section advocated by the RSL could not have been intended by the legislature. The following passage from a speech by the then Deputy Leader of the Opposition was relied on:

"If agreed to, this amendment [the addition of s.14(1)] will have the effect of allowing the tribunal to arbitrate in relation to a range of disputes before a breach is notified. It aims to further the underlying philosophy of the 1987 legislation to enable arbitration and mediation to take place, which was always the central thrust of the legislation. Under the Government's proposal tenants will be compelled to breach an agreement to ensure the resolution of a dispute - a proposition that the Opposition cannot support."

50 It was submitted that it was incorrect to argue that, just because the "Amended Orders Sought" were not worded identically to the original application to the Disputes Committee, the issues raised in the "Amended Orders Sought" had never been put to the Disputes Committee. It was submitted that the nature of the dispute as identified on 5 September 1994 and then particularised in the "Amended Orders Sought" were in substance and effect the same. Reference was made to s.89 of the Act, however it is irrelevant as that Act applies in a very limited sense only to disputes under the Retirement Villages Act.

51 Counsel for the defendants referred to Part 6 of the 1989 Code which dealt with dispute resolution:

"Applications to Disputes Committee

Where a dispute arises within the charter of the disputes committee (as decided by the residents and management of a retirement village) either a resident or management may apply to the village's disputes committee to have the matter heard"

52 Reference to the Rowland Disputes Committee's Charter was also made:

"Applications to the committee shall be made in writing and shall state: -

(i)the names of the parties to the dispute;

(ii) the nature of the dispute;

(iii) and how the applicant would like the dispute to be resolved"

53 On the basis of the above provisions, it was submitted that at the level of a referral to the Disputes Committee, informality was encouraged. However, when a matter comes before the Tribunal, there is a need for particularity with a view to resolving the real issues in dispute.

54 Prior to the hearing and the reserving of the decision in this matter, the court was advised that the question of validity of the Codes was to be decided by Windeyer J in the Equity Division of this Court. Subsequent to reserving this decision, his Honour delivered his judgment in Murphy and Ors v Overton Investments Pty Ltd (Windeyer J, 10 December 1997, unreported) in which his Honour upheld the validity of the Code. This matter was subsequently taken to the Court of Appeal, however the issues in the appeal did not concern the validity of the Code.

(4) Analysis of the Arguments and Law

55 The legislative structure which set up the Codes of Practice as part of the Fair Trading Act 1987 (NSW) as variously amended, was a specific legislative scheme intended to obviate legal proceedings, legal expenses and the problems involved in court proceedings. The intention was to provide simple and prompt resolution mechanisms. The very terms of the Code itself as approved by the Minister is to emphasise, in Part 6, the mechanism for resolution of disputes and the appeal mechanism to the Residential Tenancies Tribunal.

56 The fact that the appeal mechanism is specifically referred to as such, underlines the fact that it is intended that the dispute be dealt with by the Disputes Committee before the appeal takes place.

57 Clause 46(2) of Part 6 sets out the circumstances where matters may go to the Tribunal, namely in circumstances where there is no Disputes Committee, where the nature of the dispute makes it inappropriate for the matter to go before the Disputes Committee, where a party is dissatisfied with the determination of the Disputes Committee and where a Disputes Committee declines to hear or determine the matter.

58 It seems to me that, except for the circumstances of there being no Committee, or the declining of an existing Committee, or the matter being inappropriate, that it is clear that the Committee dispute mechanism is intended to work before the matter proceeds to the Tribunal by way of appeal.

59 The essence of the Code is the use of the Disputes Committee. Section 14 of the Retirement Villages Act 1989 makes it abundantly clear that there is a requirement that the mechanisms under a Code have to be exhausted. Section 14 of that Act does not require all procedures outside the Code to be exhausted, it requires that the Code be complied with. There seems to be no reason for that specific provision, s.14(1)(b), to be read other than in accordance with the principles of statutory interpretation, and it must be read objectively. I consider that to read it other than objectively would render the statute of no effect.

60 Similarly, I consider that the word "claims" should be interpreted in accordance with the ordinary rules of statutory interpretation. It is to have its ordinary meaning, and the circumstances of each claim will be interpreted by the body determining that claim as to whether it is spurious or frivolous, or a claim of substance to be heard.

61 "Claims" should have its ordinary meaning. If a claim arises, it should be dealt with. A Tribunal must examine whether a claim exists. I agree with the submission of Mr Young for the RSL, that the provision in s.14(2) of the Retirement Villages Act 1989, requiring that there be public interest or a material affect to a party, underlines the requirement that a Tribunal is not to hear a frivolous matter. A claim is to be examined on its merits.

62 With the greatest of respect to the learned Chairperson, the decision on jurisdiction seems to have missed the principle matter before her, in that the primary dispute before the Tribunal related to the "Amended Orders Sought" and that in relation to those orders, there had not been compliance with the provisions of the Act and the Code of Practice requiring exhaustion of procedures for settlement of the dispute. The "Amended Orders Sought" as such had not been put before the Disputes Committee and the informal procedures had been by-passed. The Chairperson does not seem to have accepted the submission before her that the case was about the "Amended Orders Sought". It is unfortunate that the delays in the Disputes Committee procedure had frustrated the intention of the Code, ie. the production of a prompt result, however that mechanism in fact eventually worked, and the issues before the Disputes Committee were resolved.

63 The whole reason for seeking of the "Amended Orders Sought" was to take the matters in dispute into a somewhat more complex accounting and accountability issue, whereas the earlier dispute related to matters of principle, concerning the issues arising out of the "Finance Sheet" and the consequences of those matters of principle.

64 The "Amended Orders Sought" raise issues which obviously are directly related to the earlier dispute, but it is necessary to look at the substance of what the new issues were, rather than whether the new issues raised were simply related to the earlier issue. The whole reason for the "Amended Orders Sought" was to raise the new issues. If these new issues had gone before the Disputes Committee, there would have had to have been a significantly different and more sophisticated debate dealing with accounting matters and matters of legal and fiscal consequence, which, although more difficult, are still within those areas contemplated by s.14 of the Retirement Villages Act 1989 and contemplated by Part 6 of the Code.

65 It is obvious, in determining whether a claim is the same, that it is the substance of the claim which has to be looked at. It seems to me, however, in this case, the substance of the dispute issues are significantly wider and of very different consequence from the issues originally raised before the Disputes Committee.

66 It seems to me that the learned Chairperson has erred in her determination that items 1 to 8 in the "Amended Orders Sought" are in the nature of the issues dealt with by the Disputes Committee. The Chairperson refers to the power to amend and that no application is sought to amend to include items 1 to 8 of the "Amended Orders Sought". It seems to me the simple reason for no such application being made was that it was clear to counsel that, as outlined before the Chairperson, if the issues raised were substantially different, then the jurisdictional point was valid.

67 I consider, therefore, that the "Amended Orders Sought" bring in to the dispute new and significantly different issues which had not been before the Disputes Committee. The Retirement Villages Act 1989 and the Code both apply. This dispute is clearly one contemplated by the Act and the Code, and the "Amended Orders Sought" ought to have gone through the proper mechanisms described. It seems to me, therefore, that the learned Chairperson was in error, and that the submission on jurisdiction should be upheld. I find therefore that the learned Chairperson did not have jurisdiction to hear the matter.

68 I therefore make the following orders:

1. That the appeal be allowed in so far as it relates to the jurisdiction of the Tribunal in relation to the defendants' "Amended Orders Sought";

2. That the respective proceedings be stayed until the defendants have fulfilled the requirements of s.14 of the Retirement Villages Act 1989 in respect of the orders raised by items 1 to 8;

3. That the defendants pay the plaintiff's costs of this Summons.

LAST UPDATED: 17/02/1999