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- Unreported Judgment
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Ray White Holland Park v Zagami  QCATA 110
yes estate agents pty ltd t/as Ray WHITE holland park
ORIGINATING APPLICATION NO/S:
29 July 2019
On the papers
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – where in a bond claim the Adjudicator refused to take into account the lessor’s documentation for various reasons – whether error of law
LANDLORD AND TENANT – COVENANTS TO REPAIR – MEASURE OF DAMAGES FOR BREACH – where cleaning and repairs may have been done by the lessor using his own labour at the end of the tenancy – whether the lessor can claim the value of this work as compensation from the tenant – manner of assessment
Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 43
Dimond v Lovell  1 AC 384
Powercor Australia Ltd v Thomas  VSCA 87
Stockdale & Leggo v Gordon  QCATA 112
Represented by the property manager
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
- This is an appeal from a decision of an Adjudicator in a residential tenancy matter. Chris Zagami was the tenant of rental premises. When his tenancy ended there was a dispute about the rental bond and he applied to the tribunal to have the dispute determined. He accepted in his application that he owed $221.43 in rent at the end of the tenancy. But he asked for the remainder of the bond of $3,100 to be paid to him.
- The matter was heard by an Adjudicator on 20 June 2018. At the hearing the lessor was represented by a property manager as agent. The Adjudicator decided that the tenant was entitled to the whole of the remainder of the bond and made a decision accordingly.
- The appeal is brought by the agent on behalf of the lessor on these grounds:-
- (a)The Adjudicator failed to request evidence from the tenant to substantiate any claims made by the tenant regarding the damages to the property noted during the vacate inspection and completion of the required flea treatment to be completed at the end of the tenancy.
- (b)The Adjudicator failed to accept evidence, both photographic and written, offered by the agent that proves the original condition of the property and the condition with which the tenant left the property upon vacating on 3 January 2018.
- (c)The Adjudicator failed to enter into a discussion and/or negotiation for compensation to the lessor for damages to the property caused by the tenant and cleaning not completed to the required standard.
- An application to the Appeal Tribunal has been made by the lessor for leave to rely on ‘fresh’ evidence in this appeal. The fresh evidence is of two types. Firstly there are documents which were available at the original hearing and which the lessor says the Adjudicator should have considered then. These are the entry condition report signed by both sides, and photographs said to have been taken at the commencement of the tenancy. Secondly there is an itemised quote from another contractor which was not available for the original hearing but which is said confirms the value of the work done at the property at the end of the tenancy.
- Since I have decided to remit this matter to the tribunal’s list for a rehearing I do not need to decide the application for leave to rely this fresh evidence.
- The Appeal Tribunal has obtained a transcript and from this it can be seen what happened at the hearing.
- At the hearing the agent handed to the Adjudicator some documentation. This documentation appears in the Minor Civil Dispute file marked ‘R’. It included an email sent by the agent to the tenant at the end of the tenancy with a list of things which needed attention, and colour photographs taken at that time.
- More importantly for this appeal, at the hearing the agent also handed to the Adjudicator and to the tenant an invoice dated 16 February 2018 for $4,125 including GST which was said to be the work done to restore the property to the condition it was at the commencement of the tenancy. The invoice stated on its face to be from Pat O’Connor, although the legal entity doing the work appeared to be Texo Projects Pty Ltd. This invoice was accompanied by a breakdown showing the hours spent on various items of work. There is some handwriting on this document which appears to be the Adjudicator’s note of the tenant’s response at the hearing to the items listed. There was also a quote from Texo Projects for $1,780 plus GST for ‘repaint makeup damage’ in various areas of the house.
- The notice of appeal and the appeal submissions make certain factual statements about what happened at the hearing. It is true that at the hearing the agent offered to hand up photographs taken at the commencement of the tenancy, which she said could be compared with the photographs taken at the end of the tenancy which had already been handed up. It is true that the Adjudicator did not take up this offer. It is true that the Adjudicator did not ask to see the entry condition report. The Adjudicator was aware that this reported existed, as would be usual, because it was mentioned in the email which was before him.
- It appears from the transcript that the reason why the Adjudicator did not look at the offered photographs, nor ask for the entry condition report, was that he had already decided to find against the lessor. This also appears from the fact that during the hearing the tenant admitted that there was a ‘small scratch’ on the floor, which might have been two hours’ work to repair. But the Adjudicator did not allow any claim for compensation even for this admitted breach. Instead, he directed that the whole rental bond should be paid to the tenant less the admitted amount of rent owing.
- The way the Adjudicator described his decision to find against the lessor was to say that he was not going to take the lessor’s documentation into account at all. He gave three reasons for this:-
- (a)The repair invoice was issued by an owner of the property.
- (b)The documentation was overstated, the amounts to remedy any breach being ‘far too great’.
- (c)The documentation had not previously been provided to the tenant.
- As for (a), it emerged at the hearing that the property was jointly owned by Patrick O’Connor and Michael O’Connor. The invoice for the remedial work therefore appeared to have been presented by an owner of the property, Patrick O’Connor possibly through his company Texo Projects Ltd. The Adjudicator explained his approach to this. He said during the hearing that ‘I never pay owners to do their own work’. In his reasons he said a similar thing.
- It is clear that the Adjudicator treated this as a blanket rule, which was one of the reasons why he found against the lessor.
- As a blanket rule, this is problematical. In many cases, lessors will wish to do their own remedial work between tenancies. There is no principle of law which prevents a lessor who does this, from claiming compensation from the tenant for the value of the work if the tenant is in breach. One reason for this is that if the tenant is in breach, the lessor’s right to compensation arises immediately and not at some later date when expenditure is incurred. The right to compensation, as opposed to its amount, is independent of the fact of actual repair. The amount of that compensation will however, be informed by what happens later. Where there is damage, the lessor is entitled to compensation for the diminution of the value of the property. Often this diminution will be equal to the cost of repair. But in many cases this will not be the case, where for example the repairs are left over, or are combined with other work on the property. Often such repair work will result in the property being in a better condition than before the tenant’s breach. In such cases, the award can be adjusted under the principle of betterment.
- It is now well settled that a lessor can recover compensation if they use their own labour rather than engaging others to effect repairs. The leading case is Powercor Australia Ltd v Thomas  VSCA 87 where Osborne JA (giving the judgment of the court) said:-
 Counsel for Powercor submitted at one point that there are no reported cases of a claimant recovering for the cost of his or her own repairs to tortious damage to property. Conversely, it was conceded that there are no reported cases of a claimant failing to recover damages in respect of direct tortious damage to property because he or she effected repairs himself or herself. I do not accept that the fact a claimant undertakes or proposes to undertake repairs himself or herself displaces the ordinary measure of loss resulting from direct damage to chattels including fixtures.
 It was also submitted that if a claimant repairs fences himself and is reimbursed for the cost of materials he will have had the fences fixed ‘for nothing’. This is self-evidently incorrect. The claimant will not only have expended the reimbursed costs of materials but also incurred the cost of his own labour. The proper measure of damages is ordinarily the reasonable cost of effecting such repairs. In some cases, the reasonable cost of labour may exceed and, in other cases, may be less than the cost to the claimant of labour actually expended.
- Where a lessor personally performs cleaning or repairs, the costs claimed must be carefully assessed. The aim is to assess the reasonable value of the work and then to consider whether this fairly compensates the lessor for the tenant’s breach. Some guidance as to the reasonable value of the work may come from commercial rates, but it will usually be appropriate to apply a discount from such rates, such discount depending on the lessor’s personal circumstances.
- As for (b) it often happens in bond claims that an invoice is higher than appears to be reasonable. The usual reason is that the lessor did other work unconnected with the claim against the tenant. For example a lessor may wish to put the property into a certain condition, and so deal with items of fair wear and tear which are not chargeable to the tenant as well as those items of damage which are chargeable to the tenant. In such cases, Adjudicators are well practiced in identifying the extent to which the invoice is properly chargeable to the tenant. A higher than expected invoice is not a reason to find against a lessor without considering whether part of the compensation claim may be justified.
- As for (c) the tenant explained at the hearing that he had not seen the invoice from Texo Projects before. And in his application to the tribunal he stated that he did not know what figures were involved in the lessor’s claim at all. These matters were not disputed by the agent at the hearing. The Adjudicator said to the agent that the documents should have been sent to the tenant in advance of the hearing to give the tenant a chance to consider them. He adjourned the hearing for a few minutes for the tenant to look through the documents. The hearing resumed after 22 minutes.
- Having looked at the documents the tenant did not ask for more time or express any difficulty in dealing with the issues raised and the amounts claimed. If it was a matter of procedural unfairness to the tenant therefore, not to provide him with the documents prior to the hearing, such unfairness was repaired by the short adjournment. In the circumstances, treating this as a reason to find against the lessor and not to hear the lessor’s claim for compensation was problematical.
- It should also be pointed out that there is nothing in the rules of the tribunal requiring a respondent to a tenancy dispute to provide any material prior to the hearing. In fact, Rule 43 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) expressly prohibits any response to such an application, although the rule says this would not prevent a respondent giving the tribunal evidence or submissions. However, there is nothing in the application form or in any of the tribunal’s published material encouraging a respondent to a tenancy dispute to provide any material prior to the hearing.
- Although it is good practice for parties to exchange all documentation prior to the hearing to avoid delays and difficulties in the hearing, in fact it is common for this not to be done. Usually any unfairness can be dealt with as the Adjudicator did here, by having a short adjournment for the new material to be considered. Sometimes it is necessary to adjourn the case to another date if the material provided on the day is substantial.
- The reasons given by the Adjudicator for disregarding the lessor’s documentation, and in effect therefore finding against the lessor without hearing the lessor’s claim for compensation, were not sufficient reasons. In the circumstances, the lessor was deprived of a fair hearing. Leave to appeal must be given and the appeal allowed. The tribunal’s original decision is set aside. The matter is remitted to the tribunal to be reheard.
 These grounds are gleaned from the application to appeal and for leave to appeal and from submissions filed in support of the appeal.
 A copy of this cannot be provided to the parties for copyright and costs reasons.
 The handwriting seems to correspond with what the tenant said at transcript 1-8 and 1-9.
 Transcript 1-9, line 35.
 Transcript 1-8, line 32.
 Transcript 1-10, line 47.
 Transcript 1-11, line 1.
 Transcript 1-10, line 17.
 Dimond v Lovell  1 AC 384 (English House of Lords), also Stockdale & Leggo v Gordon  QCATA 112.
 Transcript 1-5, line 5.
- Published Case Name:
Ray White Holland Park v Chris Zagami
- Shortened Case Name:
Ray White Holland Park v Zagami
 QCATA 110
29 Jul 2019