Jesberg v Jesberg[2021] QCAT 314

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

Summary of claim

1. [1]
   The Applicants seek $4,600 from the Respondent by way of ‘rent arrears’. They assert that that amount of rent is owing under a ‘General Tenancy Agreement’ partly in Form 18a executed between the Applicants as ‘lessors’ and the Respondent as ‘tenant’ on 11 October 2017 (‘the lease’). The ‘rental premises’ is identified in the lease as having an address at Collingwood Park, Queensland (‘the Property’).

Procedural issues

2. [2]
   The Application was filed by Mr Jesberg only. As Sandra Jesberg, Mr Jesberg’s wife, is a co-owner of the Property, I made an order joining her as a Respondent on the first hearing of the Application, on 23 February 2021. At the second hearing, Mrs Jesberg asked to be joined as an Applicant and I ordered her to be removed as a Respondent and added as an Applicant.
3. [3]
   The Respondent did not appear at either hearing. She filed submissions for the purpose of each hearing. In her submissions for first hearing, she indicated she would attend unless illness prevented her from being there, and that she hoped to bring her solicitor. In her submissions for the second hearing, she indicated it may not be possible for her to attend as she needed assistance to walk outside her home. No mention of this fact was made in the first submissions. The Respondent did not request leave to attend by telephone, did not request an adjournment, did not apply for leave to be represented and did not supply a medical certificate. It was evident that the Respondent had obtained legal advice in relation to this dispute – two letters to the Applicants from McNamara Law on behalf the Respondent were filed by the Applicant.
4. [4]
   In those circumstances, I proceeded with the hearing in her absence under section 93 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’).

The issues for determination

5. [5]
   The complicating factor in this case is that, at the time of executing the lease, the parties had entered into a ‘Life Tenancy Agreement’ (‘LTA’) on 6 September 2017. The LTA does not impose an obligation on the Respondent to pay rent to the Applicants. Nevertheless, the Respondent paid rent of $400 per fortnight for a period of two years and nine months after the execution of the lease, until 29 July 2020.
6. [6]
   The following key issues flow from these facts:

   1. (a)
      does the Tribunal have jurisdiction to determine the dispute?
   2. (b)
      what constitutes the contract between the parties?
   3. (c)
      is there a ‘residential tenancy agreement’ for the purpose of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (‘RTRAA’);
   4. (d)
      is the Respondent required to pay $400 per fortnight to the Applicant? On what basis?

The circumstances surrounding the execution of the LTA and the lease

7. [7]
   The following version of events reflects the evidence of Mr and Mrs Jesberg:

   1. (a)
      Mr Jesberg’s father (Mr Jesberg Snr), the Respondent’s husband, had become terminally ill;
   2. (b)
      some time prior to his death in April 2017, Mr Jesberg, the Respondent and Mr Jesberg Snr met to discuss what would happen to the Respondent after he died;
   3. (c)
      Mr Jesberg Snr told Mr Jesberg that the Respondent would not be able to afford to live in the Property on her own;
   4. (d)
      the Respondent said ‘this is my home and I want to live here for the rest of my life’;
   5. (e)
      following Mr Jesberg’s consultation with his broker as to his ability to service a loan, Mr Jesberg made an offer to the Respondent to pay $115,000 for the Property, which was enough to discharge the mortgage on the Property and leave the Respondent with $15,000;
   6. (f)
      it was collectively agreed between Mr Jesberg, Mr Jesberg Snr and the Respondent that the Property would be transferred to the Applicants who would take out a loan from a bank, pay out the mortgage on the Property, give the Respondent $15,000 and allow her to live in the Property for the rest of her life. The Respondent had said that she had never had that much money in her life;
   7. (g)
      the Respondent had, prior to the signing of the LTA, made statements to the effect that she would be happy to pay rent to help the Applicants out, that she would be able to obtain rent assistance, and that she would rather pay rent to the Applicants than pay rent to someone that she doesn’t know;
   8. (h)
      after Mr Jesberg Snr died, the property was transferred to the Respondent. The amount owing on the Property was $105,000;
   9. (i)
      the LTA was prepared by the Respondent’s solicitor, and the parties signed the LTA. At the time of signing, which took place at the offices of the Respondent’s solicitor, it was stated by Mr or Mrs Jesberg in the presence of the solicitor and the Respondent that the Respondent would be paying rent and no objection was made by either of them. The solicitor asked Mrs Jesberg before signing the LTA whether she was happy with the agreement, and she said ‘yes’;
   10. (j)
       after the LTA was signed, the parties agreed on a $200 per week rent to be paid by the Respondent, as this was the minimum amount of rent which could be paid in order for her to obtain rent assistance;
   11. (k)
       Mr Jesberg and the Respondent went to Centrelink to enquire about obtaining rent assistance payments for the Respondent. They were told to bring a copy of the tenancy agreement;
   12. (l)
       the lease was then signed at an agreed rent of $400 per fortnight;
   13. (m)
       if the Applicants had not acquired the Property, there was no way that the Respondent would have been able to afford to pay the mortgage on her own: the amount remaining on the mortgage was about the same as it was when the mortgage was taken out, some 30 years ago, and Mr Jesberg Snr and the Respondent had been some $5,000 in arrears with rates, which the Applicants paid for and were reimbursed by Mr Jesberg Snr before he died from the proceeds of sale of his caravan;
   14. (n)
       the Applicants would not have been able to afford to purchase and pay the mortgage on the Property without the benefit of rent from the Respondent: if the Respondent had said to Mr Jesberg that the Applicants would pay out the house for them and she would live there for free, Mr Jesberg would have said he could not afford to do that;
   15. (o)
       the Respondent started paying rent from 21 October 2017 and made the last payment on 29 July 2020;
   16. (p)
       ‘everything was going fine’ until a dispute arose: Mr Jesberg decided not to visit his mother on one occasion due to inclement weather and an argument ensued;
   17. (q)
       a notice to remedy breach was issued by the Applicants to the Respondent on 26 August 2020.
8. [8]
   The LTA records in the Recitals that the Property was transferred from the Respondent to the Applicants for $115,000 and had at the time of transfer a value of $275,000. Mr Jesberg said the Property had a slightly higher value – $280,000. The parties all signed the LTA however and I find that version to be true.
9. [9]
   In her submissions filed on 31 December 2020, the Respondent states, relevantly:

Before my husband died, he and Craig Jesberg, came…to an agreement, for Craig to buy the duplex cheap…and for me to live here rent free until I die.

10. [10]
    In her submissions filed on 5 March 2021, the Respondent states, relevantly:

Before my husband Graham Jesberg suddenly died from severe liver [cancer] in April 2017, he allowed Mr Craig Jesberg to sign our duplex into his name.

…

So between Mr Craig Jesberg and Mr Graham Jesberg, the title of our duplex was transferred into Mr Craig Jesberg’s name. The reason was: “My husband said he could now die in peace knowing I, his wife of 52 years…would be “taken care off” (sic).

The legal contract, at (sic) my solicitor states, I pay no rent for the rest of my life, and I can stay here, as long as I wish, to live at this address. However, after my husband died his wishes didn’t exactly eventuate.

…

Mr Craig Jesberg signed the duplex over to himself and his wife…very cheap (for him to make a good profit…the day I die)!!

I have no intentions to pay any further rent to live in my own home, as “per agreement” …Craig Jesberg was well aware off (sic) this agreement before he signed!! He still signed.

I think?? He may not have been in a good financial situation when he signed for the duplex…otherwise why burden me with a huge rent???

…

I legally have no further obligations to pay Craig Jesberg and further rent to live in “my own home” … as per arrangement prior to Craig Jesberg signing the contract.

…

11. [11]
    The Respondent also refers (in substance) to the following matters in her submissions:

    1. (a)
       Mr Jesberg has charged her rent for the past three years of $200 per week, which is almost half of her aged pension, and she has paid in total over $30,000;
    2. (b)
       Mr Jesberg wanted an extra $60 in rent and ‘hinted’ she was getting rent assistance;
    3. (c)
       Mr Jesberg has failed to communicate with her, to ‘be there’ for her, that she was treated ‘poorly’ by him, that he was ‘ripping off his elderly mother’, that he has become a terrible burden to her and has made the last four years of life a ‘living hell’;
    4. (d)
       that she is still very independent (however not medically well) so she requested that she and Mr Jesberg part ways and she never wished to see him again, and that she has asked him to keep away or she will take legal action.

Whose version should I accept?

12. [12]
    Where the evidence conflicts, I prefer the evidence of the Applicants. Where the evidence of the Applicants is not contradicted, I accept the evidence of the Applicants (unless otherwise stated). They impressed me, generally, as honest witnesses. The Respondent declined to attend without, in my view, adequate explanation, and her evidence could not be tested. Further, the Applicants’ version of events is more plausible in circumstances where the Respondent not only signed the lease which provided for rental payments, but paid rent for two years and nine months. She had, prior to signing the lease, the benefit of her solicitor’s advice, and could have called on her solicitor to assist if she had concerns about being asked to pay rent.
13. [13]
    The Respondent crucially failed to mention that she signed the lease, despite it being included with the Application, referred to by Mr Jesberg in an email to her of 22 August 2020, and her solicitor having been provided with a copy of the lease by 8 September 2020.^[1] She failed to explain why she paid rent for such a long period.
14. [14]
    She asserted that Mr Jesberg Snr allowed the transfer of the Property into Mr Jesberg’s name, yet Recital B of the LTA records that the property was transferred by her to the Applicants.
15. [15]
    It was not disputed by the Applicants that the relationship between Mr Jesberg and the Respondent had broken down. But I am not satisfied that the relationship had broken down at the time of the execution of the LTA and the lease. The payment of rent without objection for a long period of time is inconsistent with that having been the case.

Does the Tribunal have jurisdiction to determine the dispute?

16. [16]
    Under section 11 of the QCAT Act, the Tribunal has jurisdiction to determine ‘minor civil disputes’. ‘Minor civil dispute’ is defined in Schedule 3 to the QCAT Act to include, relevantly, a ‘tenancy matter’ and a ‘claim to recover a debt or liquidated demand of money, with or without interest’ of up to the prescribed amount.
17. [17]
    A ‘tenancy matter’ is defined in Schedule 3 to mean ‘a matter in relation to which a person may, under the Residential Tenancies and Rooming Accommodation Act 2008, apply to the tribunal for a decision.’ A person may apply under section 419 of the RTRAA (as the Applicants have done)^[2] only if there has been a breach of a ‘residential tenancy agreement’.
18. [18]
    I am therefore required to determine the source of the Respondent’s right to occupy the Property,^[3] and determine whether the source of the occupation was a residential tenancy agreement as defined in section 12(1) of the RTRAA. This case differs from King v King^[4] in that the Applicants are not seeking to evict the Respondent from the Property. They do not dispute that the Respondent is entitled to reside in the Property for life. I consider there is sufficient evidence tendered and given at the hearing on 18 May 2021 for me to determine the source of the Respondent’s right to occupy the Property. The only controversy is whether rent is payable as a condition of the right to reside. The amount claimed is below the prescribed amount and may be characterised as a claim for a debt or liquidated demand. In those circumstances, I have jurisdiction to make the determinations referred to above.
19. [19]
    For the reasons set out below, I do not consider that the parties entered into a residential tenancy agreement, whether by the execution of the lease or the LTA.
20. [20]
    However, the Applicants’ claim is to recover a debt or liquidated demand. That being the case, the incorrect form has been used,^[5] and the Respondent may not have been served personally.^[6] Under section 61(1)(c) of the QCAT Act, I may, by order, waive compliance with ‘another’ procedural requirement under the Act or the Queensland Civil and Administrative Tribunal Rules 2009 (Qld). Under section 61(3) of the QCAT Act, I am prevented from doing so if to do so would cause prejudice or detriment, not able to remedied by an appropriate order for costs or damages.
21. [21]
    I do not consider there is any prejudice to the Respondent by waiving compliance with the requirement as to the form and service of the Application. The form which was used and the documents included in the Application make it clear that what is sought is money owed under the lease. The Respondent has evidently been served. In those circumstances the requirements as to form and service are waived.

What constitutes the contract between the parties?

22. [22]
    I find that the terms of the agreement reached in discussions with the Respondent and Mr Jesberg Snr were that:

    1. (a)
       the Applicants would pay the amount owing on the Property, so the mortgage could be discharged, and the Respondent would be given $15,000;
    2. (b)
       the Property would be transferred into the Applicants’ names (this may be inferred);
    3. (c)
       the Applicants would give the Respondent a right to reside in the Property for life; and
    4. (d)
       the Respondent would pay rent to the Applicants.
23. [23]
    I will refer to the above steps as ‘the transaction’.
24. [24]
    However, what followed was the execution of a written agreement, the LTA, reflecting part, but not all, of the transaction.
25. [25]
    Recital B of the LTA provides:

The property was originally owned by Ingrid and Ingrid transferred the property to Craig and Sandra for a sum of $115,000 in consideration of a life time right to reside in the property (“the transfer”).

26. [26]
    Clause 1 of the LTA provides:

In consideration of Ingrid transferring the property to Craig and Sandra for the sum of $115,000, Craig and Sandra grant Ingrid the right to reside in the property for life.

27. [27]
    When I asked Mr Jesberg why the LTA did not provide for rent his response in my view was not satisfactory. He said that he couldn’t do the paperwork earlier as he couldn’t proceed with the respondent’s solicitor until all the documents were together with [Mr Jesberg Snr’s] death certificate. That does not make sense. However, Mr Jesberg later stated that he did not read the document. I accept that that was the case.
28. [28]
    There was nothing stopping the parties from including a provision in the LTA which provided for rent to be paid if that was their agreement, other than the fact that no rent had been agreed. It is likely that this is the reason it was not provided for, although why it had not been agreed at this point is not clear.
29. [29]
    I do accept however that at the time of signing the LTA, the Applicants communicated to the Respondent and her solicitor that the Respondent would be obliged to pay rent, and that no objection was made. That was the evidence of Mrs Jesberg.
30. [30]
    An obstacle to importing an obligation to pay rent as consideration additional to that set out in the LTA is the parol evidence rule: this excludes evidence of extrinsic terms that subtract from, add to, vary or contradict the language of a written instrument.^[7]
31. [31]
    While it could be argued that the agreement between the parties was partly written and party oral, the oral term to be relied on, as to the payment of rent, would contradict the written agreement, which limited the consideration for the grant of the right to reside to the transfer price of $115,000. In that circumstance, the oral consensus was discharged and the parties’ agreement was recorded in the writing they executed.^[8]
32. [32]
    Further, if the agreement was partly written and party oral, the agreement would be incomplete in that the amount of rent was yet to be agreed. In McDonald v Australian Wool Innovation Ltd,^[9] Weinberg J held:

[181] In order to determine whether a contract has been concluded in the course of negotiations, it is necessary to consider the negotiations as a whole. There must be an intention by both parties, continuing up to the date of the supposed contract, to make a contract. At the date of the supposed contract, the parties must have been of one mind on all of the terms that they then regarded as being required in order that a contract should come into existence (the essential terms)…

[182] It is clearly established that there cannot be a concluded agreement unless the parties are “of one mind” on all essential terms. The test for determining whether a term is “essential” is objective. One way of answering that question is to ask whether the contract would be “commercially viable” without such a term. 

  …

[188] The parties may have reached agreement on vital matters of principle, but left important points unsettled so that their agreement is incomplete.

33. [33]
    In Gamvrogiannis v Blackshaw,^[10] Giles JA held that an agreement to lease at a rent to be agreed is incomplete even if "at a rent to be agreed" is there in black and white. If an essential provision is uncertain, the whole agreement falls.
34. [34]
    I consider that is the case here – there was uncertainty as to an essential provision, namely, the payment of rent.
35. [35]
    Alternatively, it could be argued that the agreement to pay rent was a collateral contract. However, the collateral contract would be inconsistent with the main contract, which is impermissible.^[11]
36. [36]
    Further, in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd,^[12] French CJ, Kiefel and Bell JJ stated:

In Hospital Products Ltd v United States Surgical Corporation Gibbs CJ explained that a representation made in the course of negotiations may result in an agreement collateral to the main agreement if it can be concluded that the parties intended that the representation be contractually binding. It may be so concluded if the representation has the quality of a contractual promise, as distinct from a mere representation. The question of intention is adjudged by reference to the words and conduct of the parties, but it is an objective test — of what a reasonable person in the position of the parties would necessarily have understood to have been intended.^[13] (footnoted omitted) (italics added)

37. [37]
    In this case there was no agreement, at or before the time of signing the LTA, as to what amount of rent would be payable. I consider the Respondent made a representation that she would pay rent, but that this did not have the quality of a contractual promise, and cannot support a collateral contract.
38. [38]
    I conclude that, at the time of its signing, the LTA embodied the terms of the parties’ agreement.
39. [39]
    I also consider that the Respondent’s promise to pay rent, and her failure to object at the signing of the LTA to the Applicants’ stated requirement that she pay rent, are not representations which are sufficiently clear to support an estoppel.^[14]

Was the transaction tainted by the fact that the Respondent may have been worse off financially?

40. [40]
    I have considered whether the LTA or the lease should not be given effect because they were executed by the Respondent under duress, or were executed as a result of undue influence or unconscionable conduct. It was not disputed that the Applicants obtained the Property for an undervalue.
41. [41]
    Mr Jesberg conceded that the Respondent had by the transfer suffered a loss of $120,000. In fact, the difference between the transfer price and the value of the Property was $160,000. Further, the payment of rent, which was not wholly offset by rental assistance, meant that the Respondent was further ‘out of pocket’.
42. [42]
    The Respondent did not assert in her submissions that she was coerced into signing the LTA. The LTA at clause 13 includes an acknowledgment of the Respondent having received independent advice in relation to Centrelink, Capital Gains Tax or other financial consequences or obligations created by transferring the Property to the Applicants and the ‘life tenancy interest’. The Respondent asserted in her submissions filed on 5 March 2021 that she was still very independent. She did not assert that the Applicants coerced or influenced her to pay rent, only that Mr Jesberg had ‘charged her rent’ and ‘had me paying big rent’. She omitted to refer to the lease at all. Having been provided with a copy of the lease, the Respondent’s solicitor did not assert that the Respondent’s execution of it was the result of improper conduct on the part of the Applicants. The only challenge to its validity was its failure to specify an end date.
43. [43]
    I consider that there was real benefit to the Respondent from the transaction – it allowed her to continue to live in her home for life, rather than face having to sell her home or have it sold, because she could not afford the mortgage and rates, and pay money to ‘someone she didn’t know’, and suffer the vagaries of the rental market.
44. [44]
    In all the circumstances, I do not consider that the transaction is tainted by duress, undue influence or unconscionable conduct.

What is the effect of the LTA?

45. [45]
    The LTA was signed by all parties under seal, although the LTA is not expressed to be executed as a deed. It is expressed to be executed as an agreement. It is described within the text as an agreement. There is no reference in the LTA to it being a deed. The LTA refers to consideration in Recital B and in clause 1.
46. [46]
    In 400 George Street (Qld) Pty Ltd v BG International Ltd,^[15] Muir JA^[16] accepted the submission that the role of the Court when confronted with conflicting indications in an instrument is to determine the actual intention by balancing those indications. Balancing the indications in the LTA, I consider that the LTA took effect as a contract, rather than a deed. That calls into question whether it was supported by consideration.
47. [47]
    The last three Recitals of the LTA state:

B The property was originally owned by Ingrid and Ingrid transferred the property to Craig and Sandra for the sum of $115,000 in consideration of a life time right to reside in the property (‘the transfer’).

C At the time of transfer the property was valued at approximately $275,000.00.

C (sic) The Owners and the Life Tenant have executed this Agreement (“the Agreement”) dated the           (sic) of September 217 to state the terms and conditions and the parties (sic) mutual obligations and liabilities of Ingrid’s right to reside in the property for life.

48. [48]
    By the time the LTA was signed, the Property had already been transferred. Should the consideration be construed as past consideration, and therefore insufficient?
49. [49]
    The execution of the LTA and the transfer of the Property were steps in a ‘single transaction’.^[17] It was held in the Privy Council decision in Pao On v Lau Liu Long^[18] that:

An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisor’s request, the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and the payment, or the conferment of a benefit must have been legally enforceable had it been promised in advance.^[19]

50. [50]
    All three elements are present here:

    1. (a)
       the act, namely the transfer of the Property to the Applicants, can be seen as one done at the Applicants’ request: it was the quid pro quo for the offer to discharge the mortgage on the Property and pay the Respondent $15,000;
    2. (b)
       the parties understood that the transfer of the Property would be remunerated by the conferment of a benefit, namely, the grant to the Respondent of a right to reside in the Property for life;
    3. (c)
       if the grant of that right had been made at the time of the transfer of the Property, it would have been legally enforceable.
51. [51]
    To similar effect is the decision in In Re Casey’s Patents, Stewart v Casey.^[20]
52. [52]
    I conclude that the LTA is supported by consideration and is binding on the Applicants. If I am wrong in that conclusion, I consider the Applicants would be estopped from denying its validity, on the basis of a conventional estoppel (on the principles set out below, in particular given that the parties have conducted themselves since September 2017 on the mutual assumption that the LTA is binding) or an equitable estoppel, according to the principles stated by Brennan J in Waltons Stores (Interstate) Ltd v Maher.^[21]

Does the LTA confer a life tenancy or a right to reside for life?

53. [53]
    The LTA is problematic in that it is unclear whether it confers a right to reside or a life tenancy, and whether the right is intended to be a personal right or a proprietary right. According to Butt, in Land Law:

A life estate differs from a mere personal right to reside on land for life...  So far as any general proposition can be stated in an area where so much turns on context, it is that a right “to reside” or “to live” on land confers a personal right only, since it must be exercised in person, while a right to “use and occupy” a property points to a life estate since “use” or “occupation” may be exercised in person or through another (such as a tenant).  In truth, this general proposition is no more than a “broad generalisation”.  But it is a useful guide.  Thus, a provision in a will permitting the testator’s widow to “continue to reside” in the family home created a mere personal right; while a provision allowing a beneficiary to have “full use and enjoyment” of a property “during her life time”, or “to be used by him as long as he wishes”, created a life estate.  But since context may colour sense, the generalisation must yield to a contrary meaning in appropriate circumstances.  And so, depending on context, a right to “use, occupy and enjoy” a property may confer only a right of residence and not an estate in the land. (footnotes omitted).^[22]

54. [54]
    The LTA contains references to a ‘Life Tenancy’ (clauses 10 and 11), the ‘life tenancy interest’ (clause 13) and refers to the Respondent as a ‘Life Tenant’ (clause 12.4 and the execution section). It refers to the Respondent’s ‘interest’ in the property and requires the Applicants to provide a ‘signed consent Caveat’ which may be lodged in the event of the Applicants’ acts of default or prejudice to the ‘Life Tenancy’ (clause 11).
55. [55]
    Despite these matters, I consider that the LTA confers only a right to reside. The seminal operative provision in my view is clause 1 which purports to grant to the Respondent a ‘right to reside for life.’ Clause 3 provides that the right created is personal to the Respondent and not transferable to any other person. Clause 4 indicates that the Applicants could sell the property unencumbered by a life interest – the consequence is that the right under the Agreement would transfer to any substitute property (clause 4). There was no intention to register the LTA as a registered life tenancy on the Property (clause 14). The object of the transaction, apparent from its terms, and in the context of the surrounding circumstances, was to allow the Respondent to live in her home, and not to provide a source of income from letting the premises.

Is the LTA a residential tenancy agreement?

56. [56]
    Under s 12(1) of the RTRAA, a residential tenancy agreement is an agreement under which a person gives to someone else a right to occupy residential premises as a residence. The LTA certainly confers on the Respondent a right to occupy the Property, but provides much more protection than that. For example, under clause 6, the Applicants are only to deal with the Property in a way which is approved by the Respondent and is not detrimental in any way to the Respondent.
57. [57]
    In Coleman v Dolman,^[23] Alan Wilson J, President of the Tribunal, held that a ‘private agreement’ which provided for the applicant to rent a residential property, but was not in the prescribed Form 18a was a residential tenancy agreement. His Honour stated:

[9] Section 12 of the Residential Tenancies and Rooming Accommodation Act 2008 (RTRA Act) provides that a residential tenancy agreement is an agreement under which a person gives to someone else a right to occupy residential premises as a residence. It does not matter whether the agreement is in writing or oral and, importantly for the purposes of this appeal, it does not matter that the agreement is not in accordance with Form 18a.

[10] To ensure that, so far as possible, all parties are protected by the regulatory regime of the Act, s 53 of the RTRA prohibits contracting out of the consequences of the Act. The effect of s 53 is that the RTRA Act does not distinguish between a “private agreement” and some other form of tenancy agreement.

[11] There is no doubt that Ms Dolman was given a right to occupy, and did in fact occupy, the premises…That is enough to constitute a residential tenancy agreement.’

58. [58]
    However, in King v King,^[24] Judge Kingham, Deputy President of the Tribunal, considered a case in which the respondent, Mr King, asserted an equitable interest in the property, arising from the fact that the subject property had been purchased by the applicants, his children, with funds from his father so that he would have a house that he could reside in.^[25] Her Honour held that, if the respondent’s claim were established, there would be no residential tenancy agreement within the meaning of the Act.^[26]
59. [59]
    I consider this case is distinguishable from Coleman, and analogous to King v King. Although a right to reside does not confer a proprietary interest, as was held by Chesterman JA in King v King,^[27] protection is afforded by the implication of a negative stipulation that the contractual license will not be revoked and that any purported revocation will be restrained by injunction.^[28]
60. [60]
    I conclude that the right of occupation under the LTA was not pursuant to a residential tenancy agreement.

Was the LTA ‘converted’ to a residential tenancy agreement by the execution of the lease?

61. [61]
    The effect of the lease is difficult to characterise legally. It has the following features:

    1. (a)
       it consists of three pages, being pages 1, 2 and 8 of the Form 18a. The final page contains the signatures of the parties and the box for ‘Part 3 Special terms’ is marked ‘N/A’ (not applicable);
    2. (b)
       the lessor is specified as being the Applicants and the tenant as the Respondent; and the parties are referred to throughout the forms as ‘lessor’ and ‘tenant’;
    3. (c)
       the address of the Property is inserted;
    4. (d)
       at item 6.1, an ‘x’ is placed in the box to indicate a fixed term agreement;
    5. (e)
       at item 6.2, a start date is given of 11 October 2017 but no end date is specified;
    6. (f)
       the rent is specified at $400 per fortnight;
    7. (g)
       the services to be paid for by the respondent are electricity and phone;
    8. (h)
       one person is entitled to reside at the premises;
    9. (i)
       two small dogs are approved;
    10. (j)
        all of the terms and conditions contained in the Form 18a are omitted.
62. [62]
    The following legal questions need to be answered to determine its legal effect:

    1. (a)
       is the lease a variation of the LTA, or a new contract replacing the LTA?
    2. (b)
       if the lease is a variation of the LTA, is it enforceable?

Is the lease a variation of the LTA or a new contract replacing the LTA?

63. [63]
    It is arguable that the lease did not effect any other change to the obligations of the parties other than require the Respondent to pay a sum by way of additional consideration for the right to reside (which both parties described as ‘rent’).
64. [64]
    Alternatively, it could be argued that the execution of the lease, although not expressly providing for the termination of the LTA, amounts to an implied agreement to terminate the LTA and impose new obligations on the parties, corresponding with those of landlord and tenant. Whether this is the case depends on the intention of the parties, but is a matter of degree.^[29]
65. [65]
    In my view, the lease will have brought about a termination of the LTA if its effect is to change the relationship between the parties to one of landlord and tenant, which would then be regulated by the RTRAA, and, in certain circumstances, confer a right of termination of the Respondent’s right of occupation upon the Applicants, and allow the Applicants to deal with the Property subject to the provisions of the RTRAA.
66. [66]
    However, the lease is ambiguous, because the key terms which particularise the relationship between the parties are absent, and because the term is stated to be fixed, but without an end date having been given. In these circumstances, resort may be had to surrounding circumstances, known to both parties, to construe the lease. According to Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW):^[30]

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

67. [67]
    Also in Codelfa, Mason J cited what he, Stephen and Jacobs JJ had said in DTR Nominees Pty Ltd v Mona Homes Pty Ltd:

A court may admit evidence of surrounding circumstances in the form of ‘mutually known facts’ ‘to identify the meaning of a descriptive term’ and it may admit evidence of the ‘genesis’ and objectively the ‘aim’ of a transaction to show that the attribution of a strict legal meaning would ‘make the transaction futile …’.^[31]

68. [68]
    I consider the following circumstances to be relevant to and may be taken into account in construing the lease:

    1. (a)
       the Respondent and the Applicants had agreed on and purported to give effect to the right to reside in the LTA, and the Respondent had the benefit of legal advice with respect to the LTA;
    2. (b)
       what had not been agreed upon at the time of signing the LTA was the amount of rent which would be payable by the Respondent;
    3. (c)
       rent of $200 per week was subsequently agreed between the parties, being the minimum necessary to obtain rent assistance;
    4. (d)
       Centrelink required a lease to be provided in order for the Respondent to obtain rent assistance;
    5. (e)
       there being no evidence that any of the parties received legal advice before signing the lease, I find that neither party received legal advice before signing the lease;
    6. (f)
       there was no circumstance which would have rendered it objectively likely that the parties would act to undermine the Respondent’s right to reside under the LTA.
69. [69]
    In those circumstances:

    1. (a)
       the specification as to the term of the agreement should be construed as conferring a right to reside in the Property for life;
    2. (b)
       to accord the descriptive terms ‘lessor’ and ‘tenant’ and ‘rental premises’ their strict legal meaning would make the transaction futile. It would create a relationship of landlord and tenant where, judged objectively and in light of the surrounding circumstances, that is unlikely to have been intended. The references to ‘lessor’ and ‘tenant’ should be construed as references to the parties only and the reference to the ‘rental premises’ should be construed as a reference to the Property.
70. [70]
    Having adopted that construction, I consider that the lease was a variation of the LTA, and had the objective of requiring the Respondent to pay rent of $400 per fortnight.

Is the lease enforceable as a variation to the LTA?

71. [71]
    Having found that the lease is an agreement to vary the LTA, it is necessary to consider whether the Applicants have provided consideration for the Respondent’s promise to pay $400 per fortnight. The requirement for consideration applies to variations.^[32]
72. [72]
    In this case, the lease does not require the Applicants to provide any additional benefit in exchange for the promise by the Respondent pay $400 per fortnight. The only consideration for the variation is a promise to perform an existing duty, which is ‘illusory’ consideration, and generally cannot be regarded as sufficient consideration.^[33]
73. [73]
    However, a ‘practical benefit’^[34] may be said to have flowed to the Applicant from the execution of the lease, and provided the necessary consideration. The first practical benefit is that, by the payment of rent, the Applicants would be better able to meet their mortgage repayments on the Property, minimising the prospect of default by the Applicants and increasing the likelihood that the Respondent would be secure in her home. A second practical benefit was the obtaining of rent assistance (although the amount was not sufficient to offset the rental amount). A third practical benefit flows from the familial relationship between the parties – I accept Mr Jesberg’s evidence that the Respondent said she would ‘help [the Applicants out]’ by paying rent.

Is the Respondent prevented from denying she is liable to pay $400 per fortnight?

74. [74]
    If I am wrong to conclude that the lease was effective to vary the LTA so as to require the Respondent to pay $400 per fortnight, the question arises whether the Respondent is prevented (or ‘estopped’) from denying that she is obliged to pay $400 per week to the Applicants.
75. [75]
    In Browning v ACN 149 351 413 (in liq),^[35] Applegarth J (with whom Gotterson and Morrison JJA agreed) cited the principles of an estoppel by convention:

[estoppel by convention] is not founded on a representation. It is based on the conduct of relations between parties. To establish a common law estoppel or estoppel by convention, a plaintiff must establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) the departure from the assumption will occasion detriment to the plaintiff. (footnotes omitted)

76. [76]
    I consider that all of these elements are satisfied in this case.
77. [77]
    The Applicants have assumed, based on the agreement reached with the Respondent after the execution of the LTA as to the amount of rent payable and the execution of the lease by the Respondent to give effect to that agreement, that the Respondent would be legally obliged to pay rent to them of $400 per fortnight.
78. [78]
    The Respondent has also assumed that that was the case – I infer that from the fact that she signed the lease providing for rent of $400 per fortnight, and paid that amount to the Applicants for two years and nine months, and received rent assistance on that basis (as the Respondent acknowledged in her submissions filed on 5 March 2021).
79. [79]
    The parties have conducted their relationship on the basis of that assumption: the Respondent has paid, and the Applicants have accepted, $29,500 in rent since the time of signing the lease in October 2017 until 29 July 2020.^[36] No objection was made to the arrangement by the Respondent until Mr Jesberg declined to visit her on one occasion.
80. [80]
    The execution of the lease in the context of the Respondent’s prior assurance that she would pay rent indicates that each party knew and intended that the other would act on the basis that the Respondent was obliged to pay rent of $400 per fortnight to the Applicants.
81. [81]
    The Applicants will suffer significant detriment if the common assumption is departed from – they will not have the benefit of funds which could be used to repay the loan obtained to purchase the Property, and the Applicants could be subject to an action by the Respondent for the return of the moneys already paid.
82. [82]
    I conclude that the Respondent is estopped from denying her obligation to pay rent to the Applicants in accordance with the lease.

Is the lease unenforceable on the basis of illegality?

83. [83]
    I have considered whether the lease is unenforceable because it is an illegal contract,^[37] namely one whose purpose is to obtain a Commonwealth government benefit (rent assistance) by fraud.
84. [84]
    Rent assistance is governed by Part 3.7 of the Social Security Act 1991 (Cth) (‘the SSA’) and in particular section 1070A which, generally speaking, provides that, for qualifying persons, an amount is added to the person’s social security payment to help cover the cost of rent.
85. [85]
    ‘Rent’ is defined in section 13 of the SSA, relevantly, as follows:

2. (2)
   Amounts are rent in relation to the person if:

1. (a)
   the amounts are payable by the person:

1. (i)
   as a condition of occupancy of premises, or of a part of premises, occupied by the person as the person's principal home; … and

2. (b)
   either:

1. (i)
   the amounts are payable every 3 months or more frequently; or

2. (ii)
   the amounts are payable at regular intervals (greater than 3 months) and the Secretary is satisfied that the amounts should be treated as rent for the purposes of this Act.

86. [86]
    Under section 135.1 of the Schedule to the Criminal Code Act 1995 (Cth):^[38]

1. (1)
   A person commits an offence if:

1. (a)
   the person does anything with the intention of dishonestly obtaining a gain from another person; and

2. (b)
   the other person is a Commonwealth entity.

87. [87]
    Mr Jesberg denied that the execution of the lease was for the purpose of defrauding Centrelink, effectively on the basis that the requirement for the Respondent to pay rent was a genuine obligation.
88. [88]
    I find that the payment of rent was a genuine ‘condition’ of occupation, that there was accordingly no dishonesty, and that neither the Contract nor the lease is unenforceable by reason of illegality.

Conclusion

89. [89]
    I conclude that, by the execution of the LTA and the lease, the parties have not entered into a residential tenancy agreement as defined in the RTRAA, but have entered into a binding agreement that requires the Respondent to pay $400 per fortnight to the Applicants, alternatively that the Respondent is estopped from denying that obligation. The Respondent has failed to make payments in accordance with that obligation and is indebted to the Applicants to that extent.
90. [90]
    If I am wrong to find there is no residential tenancy agreement, the result is the same. If in fact the LTA and/or the lease constitute a residential tenancy agreement, the Respondent is in breach of it for failing to pay rent. Under section 420(1)(b) of the RTRAA, the Applicants should be paid an amount equivalent to the arrears of rent which had accrued at the date of filing the Application. Alternatively, under section 420(1)(e), they should be compensated for the Respondent’s breach of the obligation to pay rent in the same amount.

The amount which should be awarded

91. [91]
    The Application was filed on 9 December 2020 and the amount claimed in the Application is $4,600 ‘up to and including’ 30 December 2020. I construe the lease as requiring payments made under it to be paid every Wednesday fortnight, commencing from 11 October 2017 (which was a Wednesday).
92. [92]
    The notice to remedy breach included with the Application states that the rent was paid to 18 August 2020. In the absence of any challenge I accept that evidence. Nine fortnights elapsed between that date and the date of filing, leaving an amount owed of $3,600 at the date of the Application. The balance was no doubt claimed on the assumption that no further monies would be paid, but legal liability had not accrued at that point and could not be the subject of the Application.
93. [93]
    Although the amount due has climbed since that point, an application for leave to amend the Application was not filed, and an amendment to the Application was not specifically sought at the hearing. In any event, it would have been procedurally unfair to the Respondent to have allowed an amendment at the hearing.
94. [94]
    The amount for which judgment should be given is $3,600.
95. [95]
    As neither party sought an order under section 418(1)(a) of the RTRAA for a declaration that the LTA or lease is or is not a residential tenancy agreement to which the RTRAA applies, it is not appropriate for me to make an order to that effect.

Orders:

1. The requirement that the Applicants file and personally serve a Form 3 ‘Application for minor civil dispute – minor debt’ ­is waived.
2. The Respondent is to pay to the Applicants the amount of $3,600 within 14 days from the date of this Order.