Amos v Ball [2010] QDC 545

1 [2010] QDC 545 DISTRICT COURT APPELLATE JURISDICTION JUDGE DEVEREAUX SC No 5 of 2010 EDWARD AMOS Applicant and AARON ROBERT BALL Respondent BRISBANE ..DATE 27/09/2010 JUDGMENT -- 1 of 21 -- 2 JUDGMENT 1 10 20 30 40 50 60 HIS HONOUR: This is going to take a while, because of the amount of material and because of the way appeals are prepared in this Court, where there isn't a record book, but because I'm of the view that the issues are quite straightforward, and I have a firm view about them, I consider it best if I give a decision immediately; and I say that the issues are straightforward because as I perceived the issues in the trial, and the arguments on appeal, there isn't a nice question of law which requires exploration. Mr Amos appeals against his five convictions; judgment on which was given by Magistrate Costello on 2 December 2009. The five charges relate to provisions of the Residential Tenancies Act 1994 and the Residential Services (Accommodation) Act 2002. I am satisfied having heard argument and viewed the materials and examined the legislation, and taking into account the grounds of appeal, that the appeal should be dismissed. The first charge is that on 17 April 2008, Mr Amos entered into an agreement or arrangement with the intention either directly or indirectly, of defeating, evading or preventing the operation of the Residential Tenancies Act 1994. The particulars are that on that day, 17 April 2008, Mr Amos entered into a Residential Tenancy agreement with two people for some premises at 18 Oriel Road Clayfield. -- 2 of 21 -- 3 JUDGMENT 1 10 20 30 40 50 60 The prosecution case broadly put, was that an examination of the provisions of certain special conditions that attached to the agreement in the light of evidence of Mr Amos' earlier dealings with the Residential Tenancies Authority, proves beyond reasonable doubt that he had the requisite intention; in particular, it was alleged that special condition (1), conflicted with section 53 of the Residential Tenancies Act. The special condition reads, "The lessor may increase the rent from time to time, and any such increase or increases shall be one-fourth part of the rent payable immediately prior to any such increase." Section 53 of the Act, which is headed, "Rent Increases" provides in subsection 1, "If the lessor proposes to increase the rent, the lessor must give written notice of the proposal to the tenant." Subsection 2 provides, "The notice must state (a), the amount of the increased rent and (b), the day from when the increased rent is payable." By subsection 3, of section 53, the Act provides, "The day stated must not be earlier than (a), for a periodic agreement, two months after the notice is given and or, (b), for a fixed term agreement, one month after the notice is given." The learned Magistrate was of the view that clause 1 clearly breached section 53, subsection 3 (b), in that it provided "a contractual mechanism for increasing at a time in contravention of the RTA Act." It was argued for the appellant, that clause 1 does not breach section 53 because it -- 3 of 21 -- 4 JUDGMENT 1 10 20 30 40 50 60 says nothing about notice; that is, it does not attempt to put in place a regime inconsistent with the Act. I'm satisfied it does and so, so far as it’s relevant, I agree with the learned Magistrate that clause 1 is inconsistent with section 53. The second principal particular of count 1 is that the special conditions include a term appointing Mr Amos as the tenants' representative for the purposes of dispersal of the bond. The relevant term is special condition 7. It says, "The tenant authorises the lessor to complete on the tenant's behalf, the application form for the payment out of the Residential Tenancy Authority, of the bond at the end of the tenancy and the tenant hereby appoints the lessor his or her or their attorney for such purpose." The learned Magistrate found that at the time of entering into the agreement the defendant had the tenant sign a Form 4, which is a Refund of Rental Bond Form. His Honour was of the view that the operation of clause 7 was an attempt by the defendant to evade the operation of the Act, particularly the requirement for notice and dispute resolution. That was a reference, as I understand his Honour's remarks, to several of the provisions of the Act concerning the return of rental bonds. Chapter 2 part 3 of the Act concerns rental bonds. Section 67 provides, "If the application is made jointly by the lessor and the contributor, the authority must make each payment -- 4 of 21 -- 5 JUDGMENT 1 10 20 30 40 50 60 directed by the application." The scheme as it is set out in the Act is for an application to be made for the release of the rental bond and as section 67 provides, "if the application is made jointly by the lessor and the contributor, the authority” without discretion, “must make a payment directed by the application." The effect of special clause 7 then seems to be to ensure that at the end of a lease, Mr Amos, the lessor, was guaranteed a joint application. In section 68 and section 69(G), a scheme is created whereby if the application is made by the lessor only, certain procedures must take place including written notice of the application to any interested person and after a certain period of time if the interested person makes a dispute resolution request, then a dispute resolution process is put into place. It seems to me that's the part of the Act that the Magistrate was referring to when his Honour considered that special clause 7 was an attempt to evade the operation of the Act. That finding was certainly open, in my opinion. Another particular of count 1 refers to special condition 2. It reads: "This lease is entered into upon the express condition that the lessor shall not in any way be liable for any loss, damage or injury to the premises or the tenant or tenants or anyone on the premises or to his or her or their property and the -- 5 of 21 -- 6 JUDGMENT 1 10 20 30 40 50 60 tenant indemnifies and saves harmless the lessor against all actions or claims in respect of personal property howsoever arising during the tenants occupancy of the premises." The learned Magistrate considered that that term breached section 103 of the Act. It provides: "1. This section does not apply to an agreement if: (a) The premises are moveable dwelling premises consisting only of the site for the dwelling, and (b) The tenancy is a long tenancy (moveable dwelling). 2. At the start of the tenancy the lessor must ensure: (a) The premises and inclusions are clean, and (b) The premises are fit for the tenant to live in, and (c) The premises and inclusions are in good repair, and (d) The lessor is not in breach of a law dealing with issues about the health or safety of persons using or entering the premises. 3. While the tenancy continues, the lessor: -- 6 of 21 -- 7 JUDGMENT 1 10 20 30 40 50 60 (a) Must maintain the premises in a way that the premises remain fit for the tenant to live in, and (b) Must maintain the premises and inclusions in good repair, and (c) Must ensure any law dealing with issues about the health or safety of persons using or entering the premises is complied with, and (d) If the premises include a common area, must keep the area clean." I won't recite subsection 4. Subsection 5 provides: "In this section premises include any common area available for use by the tenant with the premises." The learned Magistrate found that the special clause breached section 103, subsections 2 and 3, in that it provided "a contractual mechanism for the defendant to avoid his obligations to maintain and repair the subject premises in contravention of the Act." I respectfully agree. The clause is exceptionally widely drawn and is designed to protect the -- 7 of 21 -- 8 JUDGMENT 1 10 20 30 40 50 60 lessor from liability in the case of injury or damage to property or person even if the damage or injury arose out of a breach of section 103 of the Act. I will mention now one other of the special conditions. It is special condition 3. It provides: "If the premises leased are a single dwelling house then the tenant agrees to be liable for maintaining the presently clear and unchoked sewerage pipe lines clear of any chokeage and the tenant agrees to be responsible for the costs of clearing any chokeage in the sewerage pipe lines whether attributable to the tenant's conduct or otherwise and the tenant agrees to engage at his or her or their sole expense a licensed contractor to clear any chokeage howsoever caused occurring during the tenant's occupancy of the premises and the tenant agrees to ensure that no improper objects, substances or roots enter the sewerage pipe lines." The learned Magistrate considered that that condition breached the provisions of section 103 of the Act, and I agree. Section 36 of the Act provides: "1. An agreement or arrangement is void to the extent to which it purports to exclude change or restrict the application -- 8 of 21 -- 9 JUDGMENT 1 10 20 30 40 50 60 or operation of a provision of this Act about the terms of a residential tenancy agreement. 2. A person must not enter into an agreement or arrangement with the intention, either directly or indirectly, of defeating, evading or preventing the operation of this Act. Maximum penalty, 50 penalty units. 3. In this section agreement includes an agreement that is not a residential tenancy agreement." As I read that, what must be proved is, first, that a person entered into an agreement or arrangement; second, that the person entered into the agreement or arrangement with a particular intention, namely, directly or indirectly to defeat, evade or prevent the operation of the Act. The relevance then of examining the special conditions which attached to the residential tenancy agreement against various provisions of the Act is to consider whether Mr Amos entered into the agreement with the intention of defeating, evading or preventing the operation of the Act. In that regard, having examined the clauses that I have just examined, the learned Magistrate said: "Now in my view, each of the special conditions shows - and -- 9 of 21 -- 10 JUDGMENT 1 10 20 30 40 50 60 I'm satisfied that Amos intended to directly evade or prevent the operation of the Act on the basis that he would - he was directly interested in the benefit conferred upon him by those conditions." Taken with evidence of Mr Amos's earlier dealings with the Authority, I think the view is inescapable, that is, the only reasonable inference is that Mr Amos had the requisite intention. Attention has been drawn to some of the exhibits which demonstrate communications between Mr Amos's solicitors and the authority as early as 1995, and I refer to Exhibits 14, 15, 16. In particular, Exhibit 14 which is a letter dated 23 October 1995 from Mr Amos' solicitors to the manager of the Residential Tenancies Authority, includes a schedule of special conditions, some of which are very closely similar to the special conditions I have discussed above. One refers to the chokeage in a water or sewerage pipe. Another to the increase of rent from time to time. Another to the completion of the application for return of bond and another to indemnifying the landlord. A letter of response was sent on 8 November 1995 which although it did not purport to give advance advice, brought attention to the difficulties that the Authority would have with certain of those conditions. There is evidence which was not relied on at trial but was tendered for sentencing purposes of Mr Amos's earlier conviction under section 36(2). On the 30th of May 2003, he -- 10 of 21 -- 1-11 JUDGEMENT 1 10 20 30 40 50 60 was fined. Other evidence was available to the learned Magistrate in support of a conclusion that Mr Amos intended to use the provisions to defeat, evade or prevent the operation of the Act. Under cross-examination, it was made plain that with respect to the parties jointly filling in the form 4 that I have referred to, Mr Amos was aware that that bound the authority to release the money. A question was put to him, "And you'd accept that if only one party fills in the form/bond - form 4 bond refund form, then the authority has to give notice to the other side of the tenancy to see whether or not they dispute that bond refund form?" Answer: "I believe so." There was also some evidence that Mr Amos lodged the forms and he was later asked this: "Mr Amos, you talk about how these special conditions are really an incentive for the tenant to do the right thing; that's what you said in your evidence?" Answer: "Yes." Question: "Well, that may well be with the discount in clause 4 of the special conditions but how is it to the benefit of the tenant or an incentive to the tenant to pre-fill in a form 4, so that they no longer have a right to dispute with you anything under the tenancy?" Answer: "No, but those amounts I was entitled to because they haven't paid the rent or they’ve owed me the money anyway, so-----". Question: "But at the time of signing it, you didn't know that?" Answer: "No, that's right and I wouldn't have used it but for the fact that they owed me the money." -- 11 of 21 -- 12 As I understand that evidence, it amounts to Mr Amos conceding that should circumstances arise whereby he considered it necessary, he would use the pre-filled-in forms and that would have the effect of precluding dispute, and thereby evading the provisions of sections 67 and those that follow, of the Act. Broadly speaking, there was evidence of Mr Amos' experience as a lessor and it was open to the Magistrate to conclude based on an examination of the clauses and the evidence of experience, that Mr Amos appreciated the potential effect of the special clauses and that he entered into the agreement which contained the clauses with the intention of defeating, evading or preventing the operation of the Act. Count 2 asserts that Mr Amos required a tenant to enter into an agreement containing a term that is void under section 96 subsection 1 of the Residential Tenancies Act in that the term provided that if the tenant breached the agreement or an Act, the tenant is liable to pay an amount as penalty or an amount as liquidated damages. The relevant term is special condition 10 - it reads, "The tenant agrees if he or she or they do not comply with paragraph 48.2(a) of the General Tenancy Agreement to pay the lessor $100 per room compensation." Clause 48.2(a), was one of a number of obligations of the tenant at the end of the occupancy regarding the condition of the premises. It concerned having the carpets shampooed or steam-cleaned. Section 96 of the Act provides relevantly in -- 12 of 21 -- 1-13 JUDGMENT 1 10 20 30 40 50 60 subsection 1, "A term of an agreement is void to the extent it provides that if the tenant breaches the agreement or this or another Act, the tenant is liable to pay … (c), an amount as a penalty, or (d), an amount as liquidated damages." Mr Sheaffe who appears for Mr Ball, accepts that clause 10 provides for the payment of liquidated damages, but argues that subsection 1(A) of section 96 excludes liability, that section 96 subsection 1(A), saves the clause because the amount of $100 is not shown not to be "reasonable costs". Subsection 1(A) provides, "Despite subsection 1, a term of a fixed term agreement is not void to the extent it provides that if the tenant terminates the agreement other than in a way permitted under this Act, the tenant is liable to pay the reasonable costs incurred by the lessor in re-letting the premises." Subsection 1(B) provides, "Subsection 1(A) applies to a term only if the only reference in the term to the amount payment by the tenant is a reference to the reasonable costs incurred by the lessor in re-letting the premises." In my view, subsection 1(A) does not allow a liquidated damages clause. It provides that while a clause which makes a tenant liable to pay liquidated damages is void, a different kind of clause which is described in subsection 1(A) would not be void; that is, a clause which provides that in certain circumstances the tenant is liable to pay the reasonable costs -- 13 of 21 -- 1-14 JUDGMENT 1 10 20 30 40 50 60 incurred by the lessor in re-letting the premises. No authority was presented on the interpretation of section 96, but on its plain words, subsection 1(A) does not purport to excuse a clause proscribed by subsection 1. The introductory terms despite subsection 1, in my view, are to be construed as making it plain that while what is prescribed by subsection 1 is wrong, it would be not wrong to do what is then described in subsection 1(A). In the circumstances, the appellant's argument must fail; it being conceded, with respect, quite properly, that clause 10 is a liquidated damages clause. Now, count 3 concerns section 14 subsection 3 of the Residential Services (Accommodation) Act 2002. That section headed, "Contracting out Prohibited", relevantly provides in subsection 3, "A person must not enter into an agreement or arrangement with the intention either directly or indirectly, of defeating the operation of this Act. Maximum penalty 50 penalty units." In subsection 4, "Defeating" is inclusively defined to include evading and preventing. -- 14 of 21 -- 15 JUDGMENT 1 10 20 30 40 50 60 The particulars in the complaint include reference to what I take to be special clause 1, that is a clause which purports to allow increases in rent during the fixed term period of the residential services agreement between Mr Amos and the resident, and special clause 2, that is a clause which purported to absolve himself as service provider of all liability for certain maintenance of the premises and to place such liability onto the resident for the whole term of the residential services agreement, and it is pleaded that those clauses are in contravention of the obligations of the service provider under the Residential Services (Accommodation) Act. In particular, section 21 of that Act provides: "1. This section applies if the service provider proposes to increase the rent payable by a resident under a residential service agreement. 2. The resident is not required to pay the increase unless it is made under this section. 3. The service provider must give the resident a notice stating the amount of the increased rent and the day not earlier than four weeks after the day the notice is given from which the increased rent is payable. -- 15 of 21 -- 16 JUDGMENT 1 10 20 30 40 50 60 I have already stated my agreement with the Magistrate that special clause 1 is inconsistent, at least, with the provisions of section 21, those being similar in effect to the provisions of section 53 of the Residential Tenancies Act 1994. The other particular of the complaint is special clause 2, which, as I have set out above, bears some similarity to section 103 of the Residential Tenancies Act. It includes the following: "The service provider for a residential service has the following responsibilities in relation to each resident in the service: (e) To maintain the resident's room and common areas in a way that the room and areas remain fit for the resident to live in. (f) To take reasonable steps to ensure the resident's room and common areas and facilities provided in the room and areas: (i) are kept safe and in good repair, and -- 16 of 21 -- 17 JUDGMENT 1 10 20 30 40 50 60 (ii) subject to any agreement with the resident about cleaning the resident's room are kept clean." With respect to count 3, the Magistrate, after setting out special clauses 1 and 2, concluded that clause 1 was in breach of section 21(3)(b) of the Residential Services (Accommodation) Act 2002, and that clause 2 was in breach of section 10(a) and (f). Whether it is correct to conclude that the clause breaches section 10(a), I am satisfied, like his Honour was, that it potentially breaches section 10(f). His Honour continued: "These special conditions had the effect of directly or indirectly defeating, evading or preventing the operation of the legislation. In my view the defendant intended to directly defeat, evade or prevent the operation of the legislation on the basis that he was directly interested in the benefit conferred upon him by the special conditions referred to." The special conditions have such potential to breach sections 10 and 21 of the Act that their inclusion in the agreement gives rise inescapably to the inference that by entering into the agreement Mr Amos did so with the intention of defeating, evading or preventing the operation of the legislation. -- 17 of 21 -- 18 JUDGMENT 1 10 20 30 40 50 60 Counts 4 and 5 are similar in all respects to counts 1 and 2 but relate to a different agreement. That agreement was entered into in November 2008. It was an agreement to which the Residential Tenancies Act 1994 applied, and as I understand the evidence and all of the arguments, a conviction on counts 4 and 5 follows the conviction on counts 1 and 2. For my purposes it's enough to state that the failure of the appeal on counts 1 and 2 leads to the failure of the appeal on counts 4 and 5. The notice of appeal contains up to 17 grounds. Apart from one which relates to the quantum of the fine imposed by the learned Magistrate, and one which relates to the costs, the others are all, as I read them and doing my best to understand them, assertions that the Magistrate was wrong in finding that the various conditions breached various sections of the Act and ultimately in finding that Mr Amos entered into agreements with the relevant intention, particularly with respect to counts 2 and 5. Ground 15 asserts that on the evidence the Magistrate ought to have found that the special condition relating to the reasonable costs incurred by the lessor in reletting the premises upon breach by the tenant did not constitute contracting outside of the Acts and was valid and enforceable pursuant to section 96(1)A of the Residential Tenancies Act. -- 18 of 21 -- 19 JUDGMENT 1 10 20 30 40 50 60 So the appeal against conviction should fail. There is also an appeal against the sentence. The question is whether the sentence of a fine of $7,000 imposed on the defendant was manifestly excessive. There were five counts. In effect what the learned Magistrate did was impose a sentence of $1400 on each count, making the total of 7,000. The submissions of opposing counsel supported a sentence of a fine in the range from about 5,000 to about $8,000. Both submissions were in effect submissions of a global sum to take into account of the offending. I should point out that although the breach of section 36(2) of the Residential Tenancies Act 1994 and 14(3) of the Residential Services (Accommodation) Act 2002, both make the offender liable to 50 penalty units; a breach of section 93 of the Residential Tenancies Act 1994 makes the offender liable to a maximum penalty of only 20 penalty units. The result is that the maximum penalty for counts 2 and 5 is 20 penalty units; the maximum penalty for counts 1, 3 and 4 is 50 penalty units. It may have been appropriate for the Magistrate to fix different sums in respect of the two species of offence but submissions were made below on a global figure and I'm not satisfied that the global figure, taking into account the number of offences over three separate agreements, -- 19 of 21 -- 20 JUDGMENT 1 10 20 30 40 50 60 set against Mr Amos's experience as a lessor, and his earlier conviction for a similar offence in 2003, is manifestly excessive. So although another Magistrate might have divided the penalty differently to reflect the different maximum penalties available, I don't see that that makes overall the fine manifestly excessive. The final ground of appeal that I must deal with is as follows: "The Magistrate erred in law in awarding costs of $4898 against the defendant and/or that such costs were unwarranted or excessive in the circumstances." That figure was the sum of the schedule costs of the trial and an amount awarded to the respondent with respect to an application to limit a subpoena. Another Magistrate had earlier allowed an application to limit a subpoena by finding that the Authority had established a claim for legal professional privilege in respect to certain of the documents. That Magistrate reserved the question of costs of that application to the trial Magistrate. The learned trial Magistrate was told by reference to a schedule, that the costs of responding to and making the application regarding the subpoena amounted to $4,493.32. -- 20 of 21 -- 1-21 JUDGMENT 1 10 20 30 40 50 60 The learned Magistrate awarded one-third of those costs, namely $1,497.74 to the respondent adding that amount to the legal and filing costs which were $3,401. No submissions were made about that order and the basis for it having been explained as I have briefly outlined above, I decline to overturn it. It was within the learned Magistrate's discretion to make the order considering the expense gone to in answer to the subpoena and which itself was incidental to the application to narrow it, I consider that the award was quite reasonable. In the circumstances, the appeal against conviction is dismissed. The appeal against sentence including the appeal against costs is dismissed. ... HIS HONOUR: All right. So, the orders are that the appeal is dismissed and the appellant pay the respondent's costs of the appeal fixed in the sum of $1500. ----- -- 21 of 21 --