Dunn v Warwick [2018] QCATA 115

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Dunn v Warwick [2018] QCATA 115 PARTIES: BENJAMIN DUNN (first appellant) KAREN DUNN (second appellant) v ANDREW WARWICK (first respondent) JOANNE WARWICK (second respondent) APPLICATION NO/S: APL362-17 ORIGINATING APPLICATION NO/S: MCDT1101-17 (Southport) MATTER TYPE: Appeals DELIVERED ON: 17 August 2018 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Howard, Presiding Member Howe ORDERS: 1. Leave to appeal is granted. 2. The appeal is allowed 3. Andrew Warwick and Joanne Warwick must pay to Benjamin Dunn and Karen Dunn the sum of $1,028.57 plus $28.40 for the balance of the filing fee. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – where tenants abandoned premises – where notice to leave given without prior service of notice to remedy breach – where new tenants found – whether lessors mitigated loss – where delay in reducing rent – where the difference in rent between what the respondent tenants had agreed to pay for the balance of their fixed term and the rent payable by the new tenants not allowed by the Tribunal – where half the break lease fee allowed Queensland Civil and Administrative Tribunal Rules 2009 (Qld) s 83(b) -- 1 of 8 -- 2 Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 277(1), s 302, s 421(1)(c), s 424 House v R (1936) 55 CLR 499 Norbis v Norbis (1986) 161 CLR 513 Pickering v McArthur [2005] QCA 294 REPRESENTATION: Applicant: Self-represented Respondent: Self-represented APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). REASONS FOR DECISION [1] Andrew and Joanne Warwick (the tenants) entered into a tenancy agreement for a period of 1 year from 25 January 2017 to 23 January 2018, paying rent of $890.00 per week, for residential premises at Torquay. They moved out early and returned the keys to the agents on 26 June 2017. [2] They had earlier given notice of their intention to leave the premises in Form R13 (a Rooming Accommodation form, rather than a Residential Tenancy form) dated 3 June 2017 to the lessor’s agent. The notice advised of their intention to leave on 23 June 2017, which was a Saturday. They applied to the Tribunal for termination of their residential tenancy agreement on 26 June 2017. On 12 July 2017 the Tribunal made an order terminating the tenancy on the grounds of abandonment effective from 26 June 2017. [3] Benjamin Dunn and Karen Dunn (the lessors) claimed rent and compensation from the tenants. The Tribunal heard that claim on 24 August 2017. [4] The claim had a number of components. Rent of $4,195.72 from 24 June 2017 until a new tenant moved in on 28 July 2017, plus a break lease fee of $935.00 (one weeks’ rent plus GST) was claimed; together with compensation of $40.00 per week to the end of the fixed term of the Warwick’s tenancy on 23 January 2018 (representing the difference between the rent payable by the Warwicks and the rent paid by the new tenant). A number of other claims, for electricity, water and pool chemicals, were either abandoned at hearing or disallowed. The claims totalled $6,159.29. [5] The learned Tribunal Member awarded the lessors $1,572.64 from the bond money held by the Residential Tenancies Authority and ordered the balance of the bond to be paid to the tenants. [6] The lessors want to appeal that decision. -- 2 of 8 -- 3 [7] An appeal from a decision made in the Tribunal’s Minor Civil Dispute jurisdiction, may only be made with leave of the Appeal Tribunal.1 Leave to appeal will usually only be granted where an appeal is necessary to correct a substantial injustice and where there is a reasonable argument that there is an error to be corrected.2 Reasonable Relet Period [8] The tenants had entered into a fixed term tenancy that should have ended on 23 January 2018. A fixed term tenancy can be ended early on grounds provided for in the Residential Tenancies and Rooming Accommodation Act 2008 (the Act) and upon the taking of the procedural steps required. A notice of intention to leave in Form 13 (Residential Tenancy) can be given and the tenancy ends on the date vacant possession of the premises is given. However, there must be a valid ground for issuing the Form 13. [9] Section 302 of the Act provides that if a tenant gives a notice to remedy breach to the lessor (Form 11) and the lessor fails to comply with it, a Form 13 can then be given by the tenant. Section 424 provides that a lessor can apply to the Tribunal about the Form 11 or the following Form 13. The Tribunal may then determine that the tenancy should or should not be terminated because of either notice. The Tribunal might determine that the breach is insignificant and refuse to terminate or decide that the tenancy should be terminated and proceed to make the necessary order. [10] Here, a Form 11 was not given to the lessors. Therefore, the tenants were not entitled to give the lessors a Form 13R (which was the wrong form in any case – it was for Rooming Accommodation) to end the tenancy. They left without taking the requisite steps provided for in the Act: their actions amounted to a breach of the fixed term tenancy agreement on their part. [11] The learned Member below found that the tenants simply didn’t want to stay at Torquay any longer. It was not a matter of excessive hardship. The tenants left quite expensive rented premises at Torquay, where they were paying $890.00 per week and rented other premises, paying $850.00 per week. [12] The tenants agreed that they left because of ‘fundamental breach of the agreement’.3 In that regard from their perspective, that appears to be a reference to three issues they raised at hearing concerning the lessors’ agent’s failure to return the entry condition report, a water leak in the garage and being required to do some of the gardening the cost of which was to covered by the rent.4 [13] However, pursuant to s 277(1) of the Act, a residential tenancy agreement ends only in a way mentioned in the section, and fundamental breach is not one of them. 1 QCAT Act, s 142(3)(a)(i). 2 Pickering v McArthur [2005] QCA 294, [3]. 3 Transcript of Proceedings, Benjamin Dunn and Anor v Andrew Warwick and Anor (Queensland Civil and Administrative Tribunal, Southport Claim MCDT1101/17, Member Gunn, 24 August 2017) 46, Line 10. 4 Ibid 14, lines 8-18. -- 3 of 8 -- 4 [14] Vacating the Torquay premises in the way they did constituted an abandonment in the sense that the tenants left before the agreed end date of the tenancy, and outside the terms of the tenancy and the Act. [15] That said, regardless of the breach of the tenancy agreement by the tenants, s 362 of the Act applied to impose a duty on the lessors to mitigate their loss caused by the actions of the lessees. [16] The lessors say they did mitigate their loss. The rent was higher than an average family rental in the area and there were not many tenants willing to pay it as would have been the case with a lower rent. They advertised the property for rent almost immediately after they were given the tenants notice of intention to leave, at the same rent payable by the Mr and Mrs Warwick under their agreement. After 3 weeks they lowered the rent. New tenants were subsequently found but at a reduced rent of $850.00 per week, that is, $40.00 less per week than that payable by the Warwicks. [17] The lessor’s agent held ten open days. The agents said the market had ‘softened’ from when the Mr and Mrs Warwick first rented Torquay. There were not many inquiries. The agents said they had a very similar property for rent in the same suburb for $825.00 per week. It took approximately one month to rent the other property. The lessors here were advised about the other property and agreed to reduce the rent to $850.00 per week. [18] In his reasons for decision, the learned Member took into account the softening of the market in June and July 2017.5 He concluded that if the rent had been reduced to $825.00, then Torquay would possibly have rented earlier, and he estimated it would probably have taken one month.6 He supported his conclusion about that time estimate by comparing the time to let the other similar property in the same suburb. [19] The lessors argue that the learned Member failed to give sufficient weight to the evidence that there was a limited pool of tenants prepared to pay the higher than usual rent for premises in the neighbourhood. [20] In making his findings, the learned Member was obliged to weigh and balance various factors. It required an exercise of discretion. The manner in which such is considered on appeal was explained in the High Court decision of House v R:7 The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.8 5 Ibid 61, line 25. 6 Ibid 61, line 45. 7 (1936) 55 CLR 499. 8 Ibid 504-505 per Dixon, Evatt and McTiernan JJ. -- 4 of 8 -- 5 [21] The leeway granted the decision-maker at first instance in matters involving the exercise of discretion was further explained in Norbis v Norbis:9 If the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance. In conformity with the dictates of principled decision-making, it would be wrong to determine the parties' rights by reference to a mere preference for a different result over that favoured by the judge at first instance, in the absence of error on his part. According to our conception of the appellate process, the existence of an error, whether of law or fact, on the part of the court at first instance is an indispensable condition of a successful appeal.10 [22] The learned Member took into account the limited pool of tenants prepared to pay the higher than usual rent for a house in this neighbourhood. He considered the evidence about the other comparable property. That premises was rented out quicker than Torquay. The other property’s rent was less by some $65.00 per week. [23] He concluded that had the lessors immediately reduced the rent to $850.00 per week from the time it was listed, it would probably have taken four weeks to let. It was the evidence of the agent that both properties were available for rent at about the same time. The agent advised the lessors to lower the rent. It is not clear when the lessors were advised to do that, but it appears both homes were on the rental market and competing for tenants at the same time.11 [24] All of this evidence was before the learned Member. In the circumstances we consider his conclusion was open on the evidence before him. Indeed, when the advice of the agents was taken after three weeks and the rent reduced, it took four weeks to relet Torquay. [25] There is no error disclosed in the learned Member’s approach, nor in the decision made. Break Lease fee [26] By virtue of s 421(1)(c) of the Act, in making an order compensating a lessor for breach of a tenancy agreement, the Tribunal must consider expenses incurred for work carried out by the lessor for reletting premises. This ‘work’ includes costs charged by the agent for finding the lessor a new tenant. [27] The learned Member allowed half the cost of the relet fee charged by the agent to the lessors to relet the Torquay premises. The agent charged $935, which was one week’s rent at $850 plus GST. [28] A break lease fee is not infrequently rejected or reduced because of the unwarranted advantage gained by a lessor in claiming the agent’s costs of finding another tenant for a period greater than the defaulting tenant’s term. Here, the tenant’s fixed term had some 6 months to go when the tenants vacated. The new lease was from 28 July 2017 9 (1986) 161 CLR 513. 10 Ibid 518-519. 11 T1-38 L43. -- 5 of 8 -- 6 to 1 August 2019. If allowed in full, the tenants were also paying for the agent’s fees in finding tenants for a longer period than the date on which the vacating tenants lease would have expired, had it gone full term. If the Warwicks’ lease had run its full term, the lessors would have had to pay a fee to relet for the next 12 month lease period. [29] That said, here, the learned Member did not allow the entire break lease fee because he determined both parties shared some responsibility for the early end to the lease. Although the tenants failed to take the necessary steps to terminate the tenancy, the reasons they determined to leave was considered by the learned Member. He appears to have found that both parties were at fault. [30] At the end of March 2017, Cyclone Debbie caused flooding in the garage which damaged the tenants’ possessions stored there. The owner thought it was the unseasonal deluge that was the problem. Nothing was done and there was another rain event and further flooding. A tradesman was called in. He gave a report. He found there was box guttering rusted out. By the time the lessors decided to fix the problem, the tenants had decided to leave. [31] The Member’s decision which effectively required both parties to share the cost of reletting was based on his assessment of the relevant facts and his determination about the orders appropriate in all of the circumstances. It was open to him. [32] It would also have been open to him to reach the same conclusion based on the full amount of the break lease fee representing an unwarranted benefit to the lessors and effectively a penalty against the tenants as discussed earlier. [33] There is no error disclosed in the Member’s decision. Shortfall rent [34] The lessors also complain about the learned Member’s refusal to allow the difference between the rent otherwise payable under the existing tenancy agreement and the rent payable by the new tenants for the remainder of the term. The difference was $40.00 per week and totalled $1,028.57. [35] The learned member refused that claim because ‘that was meeting the market. The market had softened’.12 [36] With respect to the learned Member, given the tenants breached the fixed term agreement, the lessors were entitled to claim the difference between what the tenants had promised to pay to the end of their term and what the lessors were forced to accept from new tenants. It is sufficiently clear that the learned Member accepted the tenants had defaulted under the lease because he awarded compensation for eight days of rent after they vacated and half the relet fee, amounts the lessors would not be entitled to had the tenants not been in breach.13 [37] The learned Member accepted the property should have been rented out at a reduced rent after four weeks of the property being listed. That appropriate step to mitigate 12 Transcript of Proceedings, Benjamin Dunn and Anor v Andrew Warwick and Anor (Queensland Civil and Administrative Tribunal, Southport Claim MCDT1101/17, Member Gunn, 24 August 2017) 63, line 8. 13 Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 420. -- 6 of 8 -- 7 loss does not mean the loss represented in taking that step should be borne by the lessors. The defaulting tenants are responsible for the shortfall. [38] The ‘softened’ market was only relevant to the issue of what was reasonably necessary to replace the tenants. [39] In rejecting this claim, the Tribunal erred. Insurance Excess [40] The lessors also complain that the Tribunal did not have jurisdiction to reduce the lessors’ claim by the amount of the insurance excess of $500.00 paid by the tenants for their claim for water damaged possessions stored in the garage. [41] The Tribunal did not do that however. The matter was canvassed at hearing,14 but no part of the award reflects an allowance to the tenants for that $500.00. The learned Member appears to have dismissed consideration of any such claim where he said ‘Well I’m not getting into the fixing of the roof thing, because that’s all been decided….’15 Additional Compensation items [42] The application for leave to appeal is unclear in so far as it states the lessors also claim ‘the additional costs towards compensation sought at the hearing’. As stated a number of the initial items of claim, for electricity, water and pool chemicals, were either abandoned at the hearing (electricity, water) or disallowed (pool chemicals). The lessors are bound by their decision at the hearing to abandon claims. It was conceded the pool chemical cost ($20.00) was incurred after the date of termination. There was no error here in respect of these additional items on the part of the Tribunal. Costs [43] The lessors appear to include the matter of the cost award of half the filing fee in their ‘items of compensation’. The lessors claimed an appearance fee of $77.00 and a filing fee of $116.00. The learned Member said he would not allow the attendance fee because the owners had not attended the hearing. That was, with respect to the learned Member, irrelevant, because there are no costs able to be awarded in a Minor Civil Dispute claim which is not a Minor Debt claim other than to an applicant and limited only to the filing fee.16 [44] Whether an award is made in respect of the filing fee is a matter of discretion. Here, the learned Member, saying he allowed half of the fee, awarded $88.00 to the lessors because they had to file the application in order to obtain an award of compensation. He was mistaken as to the amount of the fee paid: it was $116.40. 14 Transcript of Proceedings, Benjamin Dunn and Anor v Andrew Warwick and Anor (Queensland Civil and Administrative Tribunal, Southport Claim MCDT1101/17, Member Gunn, 24 August 2017) 10, line 43. 15 Ibid 12, line 31. 16 Queensland Civil and Administrative Tribunal Rules 2009 (Qld) s 83(b). -- 7 of 8 -- 8 [45] Conclusions and orders [46] For the reasons explained, we make orders granting leave to appeal. The appeal is allowed on the error of mixed fact and law identified in these reasons. [47] On a rehearing17 of the application, because the rental bond has been paid out to the parties in proportions pursuant to the Tribunal’s order made on 24 August 2017, the appropriate order is to require that the tenants pay to the lessors an additional sum of $1,028.57 for the shortfall in rent claim. [48] In our discretion, having regard to the overall award of compensation to the lessors (that is, as a result of the Tribunal’s decision and the additional amount awarded by us), we also consider that it is in the interests of justice to order that the tenant pay the full amount of the filing fee ($116.40). Therefore, the difference between that amount and the amount awarded by the Member ($88.00), that is, $28.40, must also be paid to the lessor by the tenant. [49] Orders are made accordingly. 17 As required by the QCAT Act s 147. -- 8 of 8 --