Russo v Propertyman[2016] QCATA 200

REASONS FOR DECISION

1. [1]
   Melissa Russo entered into a lease for a property in inner City Brisbane with Mr Murray Ploetz as the lessor and Propertyman as the agent. The lease was prepared as a general tenancy agreement (Form 18a) under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act).
2. [2]
   The lease commenced on 6 January 2015 and was for a fixed term of three years. The rent was $900.00 per week with provision for “9 persons as per council approval”, as provided in item 15. The only named tenant was Melissa Russo. The standard terms at clause 21 stated that the tenant may use the premises only as a place of residence. At the time of signing the lease, Ms Russo had paid two weeks rent in advance in the amount of $1,800.00 and a bond in the amount of $3,600.00 being a total of $5,400.00. The bond was paid to the Residential Tenancies Authority.
3. [3]
   It was always known that Ms Russo intended to rent the individual rooms in the leased premises (the property) to nine third parties by way of sub-leases.
4. [4]
   At the time of commencement of the lease, the property was not suitable for habitation and various work was required to be performed by the lessor to rectify these issues.
5. [5]
   An agreement was reached between the lessor and Ms Russo for her to pay no rent for an initial period and then half the rent until the property was ready for occupation.
6. [6]
   Ms Russo had the property inspected by a council representative and became aware that it was not suitable for nine tenants (as intended) but was suitable for five tenants. Ms Russo attempted to negotiate a decrease in the rent to $500.00 per week but this was not acceptable to the lessor.
7. [7]
   Ms Russo was able to rent some of the rooms and was collecting rent for those rooms. She had not paid any further rent to the lessor. A notice to remedy breach was served on her and then a notice to leave.
8. [8]
   An application was made to the Tribunal and an order was made on 4 May 2015 that the tenancy is terminated as and from 11 May 2015.
9. [9]
   Ms Russo filed an application for compensation in the Tribunal and the lessor filed a counter application. The applications were heard on 15 June 2015 in the Tribunal’s minor civil disputes jurisdiction. The learned adjudicator ordered that the bond in the amount of $3,600.00 be paid to the lessor and that Ms Russo pay a further amount of $7,988.00 to the lessor in instalments.
10. [10]
    Ms Russo wants to appeal the decision and has filed an application for leave to appeal or appeal. Leave of the Appeal Tribunal is required as the decision appealed from is a decision in a proceeding for a minor civil dispute.^[1]
11. [11]
    When determining whether to grant leave the Appeal Tribunal considers established principles including whether there is a reasonably arguable case of error in the primary decision,^[2] whether there is a reasonable prospect that the appellant (in this case Ms Russo) will obtain substantive relief,^[3] whether leave is needed to correct a substantial injustice caused by some error,^[4] and whether there is a question of general importance upon which further argument and a decision of the Appeal Tribunal, would be to the public advantage.^[5]
12. [12]
    In the application for leave to appeal or appeal, Ms Russo claims that the decision of the learned adjudicator is not correct because, as contended, the owner of the property took matters into his own hands and was receiving and has received a credit of $1,800.00 for rent. Ms Russo also claims that she has made losses.
13. [13]
    Ms Russo relies on various documents filed to support her contentions including a bank statement that demonstrates that the amount of $1,800.00 was received by the lessor. Ms Russo was not able to explain at the oral hearing how this bank statement supported her claim.
14. [14]
    At the oral hearing, Ms Russo argued that the lessor and agent of the property (Propertyman) changed the locks. Ms Russo says that she had to get removalists and was not aware of the obligations under the lease because she was under a lot of stress. Ms Russo says that the lessor did not do what the Tribunal order required and did not allow her access to the property. Ms Russo wants the learned adjudicator’s decision reconsidered on the basis that the property was not fit for liveable condition under the RTRA Act. Ms Russo says that proper consideration was not given to the fact that the property was not suitable for nine tenants (as agreed) and she was only able to lease to five tenants.
15. [15]
    In reply, Mr Leeson for Propertyman submitted at the oral hearing that these matters were taken into account and Ms Russo was given a 30% discount from the rental arrears by the learned adjudicator.
16. [16]
    Mr Leeson accepts that up until 11 May 2015 Ms Russo was entitled to the enjoyment of the property and any sub-tenant rentals were payable to Ms Russo. Ms Russo submits in response that from 28 April 2015 the tenants were told to pay rent direct to Propertyman as the agent for the lessor. This was disputed by Mr Leeson.
17. [17]
    Ms Russo submits that the learned adjudicator did not take into account the fact that she did not have access to the property and she was stressed. Ms Russo says that the learned adjudicator did not take into consideration relevant issues such as access, tenant payments, storage costs, damage to her property by tenants and the fact that she had to remove her own furniture and property including linen. Ms Russo says that she rented the rooms that she furnished and has spent approximately $25,000.00. The amount spent by Ms Russo included the cost of installing built-in wardrobes that were left behind. At the oral hearing, Ms Russo informed the Appeal Tribunal that she did not ask for an adjournment when the matter proceeded before the learned adjudicator.
18. [18]
    The Appeal Tribunal has read the transcript of the hearing at first instance before the learned adjudicator. Ms Russo stated at the commencement of the hearing ‘I leased the property from Propertyman for rooming accommodation. So I had a lease’.^[6] The learned adjudicator noted and Ms Russo confirmed in response ‘so you’ve got a head lease and you lease it out to other people. Is that right?’^[7] Ms Russo later stated that ‘this is my primary job’^[8] and confirmed that she had four other properties.^[9]
19. [19]
    Ms Russo also stated that she offered $900.00 per week in rent for the property, stating ‘because I work… on a formula, so I’m looking for properties that I can put more than five occupants in there if they comply’.^[10] She later explained ‘and the rent, I usually pay $100 per room we worked out on formula. That’s why I offered $900 a week for nine bedrooms’.^[11] Ms Russo confirmed that she charged her tenants $250.00 per room.^[12]
20. [20]
    The property, according to Ms Russo, was not compliant with relevant laws at the time of entering into the lease.^[13] The transcript shows Ms Russo noted that the agent had agreed to get the property in a state so that it was compliant and she had the property checked to determine what was needed to bring it up to standard.^[14]
21. [21]
    Ms Russo later stated that the owner [the lessor] misled her and that is why she leased the property. The relevant extract from the transcript is as follows:^[15]

And the owner misled me and said that the property was able to take nine people and that’s on my agreement. That’s why I leased the property in the first place. I felt that I was misled because he had signed a stat dec in 2010 to say that he’d had no more than five occupants in the property and had issues with Brisbane City Council previous and Fire Safety.

22. [22]
    The transcript shows that Ms Russo acknowledged that she had only paid two weeks rent plus the bond and she had tried to negotiate a 50% rent reduction before the lease was terminated by the Tribunal due to non-payment of rent.^[16]
23. [23]
    Mr Leeson on behalf of Propertyman stated at the hearing before the learned adjudicator that the property was fit for tenancy. Mr Leeson stated ‘the property was fit for tenancy and we’ve – even got invoices to show that’.^[17] Mr Leeson did not agree that the property was unfit for tenancy even at the stage when Ms Russo had six people living in the property.^[18] He stated that Ms Russo ‘was collecting rent from her tenants’, but not paying any rent.^[19] Mr Leeson did acknowledge that as a result of the tradesman going back and forth (inside the property) over the first couple of weeks and the inconvenience that that had caused (to Ms Russo) the lessor had agreed to a reduction in rent being half rent until 25 February 2015 and then full rent.^[20]
24. [24]
    Ms Russo stated at the hearing before the learned adjudicator that she did not agree to pay full rent after 25 February 2015.^[21] Ms Russo confirmed that she had wanted to place nine tenants in the premises and Mr Leeson confirmed that the lease was ‘modified’ to, in effect, accommodate nine people as per council approval. The learned adjudicator then noted that there was only council approval for five.^[22]
25. [25]
    Mr Leeson stated at the hearing before the learned adjudicator that it was important to note the email correspondence with Ms Russo prior to signing the tenancy agreement (or lease) which he stated ‘spells out’ that the property being rented to her as stated ‘[is] as a normal residential property. Anything that [Ms Russo] needs to do to enable her to rent it as however she’s using the property is at her own cost...’^[23]
26. [26]
    At the hearing before the learned adjudicator, Mr Leeson read out what he considered to be the relevant parts of the email correspondence between himself and Ms Russo in regard to the lease negotiations and her reply.^[24] He stated that they wanted to be clear that they were only renting the property to her as a normal residential property. The learned adjudicator noted that it was ‘a big problem that someone wrote “nine people” on the front of the lease^’_.^[25]
27. [27]
    The learned adjudicator determined that Ms Russo should pay an amount of arrears of rent and a period of four weeks after the termination and a relet fee and a further $100 for a total of $11,588. This was after allowing Ms Russo a discount of 30% allowing for the fact the property was not suitable for nine people.^[26]
28. [28]
    In relation to the property and whether the lease is, in fact, a residential tenancy, the learned adjudicator stated:^[27]

It troubles me as to whether this is a residential tenancy or not, except the definition of residential tenancy is so wide. This is a commercial property. You are a businesswoman. Right. You’re not a tenant and you’re not entitled to the protection under the Act, frankly.

29. [29]
    The learned adjudicator further stated:^[28]

Well; we’re treating this as if it’s a tenancy matter. It isn’t by the way. It’s a commercial matter.  And. The items you are seeking are deductible in your own business anyway.

30. [30]
    The transcript shows that the learned adjudicator had formed the view that Ms Russo had rented the property with the purpose of subletting it to nine individual tenants and that this was in accordance with a representation made to her in the lease that there was council approval for nine people. The learned adjudicator even allowed Ms Russo a 30% discount on the arrears of rent on the basis that the property could only be let to fewer tenants.
31. [31]
    The learned adjudicator considered that the definition of residential tenancy was ‘wide’ enough for the arrangement that existed between the parties to constitute a residential tenancy. This is important as the Tribunal’s jurisdiction in regard to this matter is such that the tenancy must be a residential tenancy for the purposes of the RTRA Act.
32. [32]
    A residential tenancy is defined in s 11 of the RTRA Act as follows:

A residential tenancy is the right to occupy residential premises under a residential tenancy agreement.

33. [33]
    Residential premises are further defined in s 10 of the RTRA Act as follows:

Residential premises are premises used, or intended to be used, as a place of residence or mainly as a place of residence.

34. [34]
    There is no definition of premises in the RTRA Act. The Australian Oxford Dictionary (2^nd) defines premises as ‘the place where a person resides’.
35. [35]
    A residential tenancy agreement is defined in s 12 of the RTRA Act as follows:

3. (1)
    A residential tenancy agreement is an agreement under which a person gives to someone else a right to occupy residential premises as a residence.

36. [36]
    A lessor is the person who gives the right to occupy residential premises under a residential tenancy agreement.^[29] A tenant is the person to whom the right to occupy residential premises under a residential tenancy agreement is given.^[30]
37. [37]
    The RTRA Act applies to residential tenancy agreements and to lessors, tenants and their respective rights and obligations under residential tenancy agreements.^[31]
38. [38]
    Where a lessor or tenant claim there has been a breach of a residential tenancy agreement they may apply to the tribunal for an order about the breach.^[32]
39. [39]
    The terms of the general tenancy agreement entered into between the parties in regard to the application and counter-application before the learned adjudicator, are contained in clause 21 (of the lease or agreement) that states ‘the tenant may use the premises only as a place of residence or mainly as a place of residence or for another use allowed under a special term’. In this matter there were no relevant special terms. Clause 23 of the lease also states that no more than the number of persons set out at item 15 may reside at the premises and that is stated at item 15 as ‘nine as per council approval’. Clause 34 of the lease states that the tenant may sublet the premises only if the lessor agrees in writing or if the subletting is made under a tribunal order. In this proceeding, there was no evidence before the learned adjudicator that the lessor approved or was asked to approve any of the tenants who were to reside or resided in the property.
40. [40]
    As we have said, Ms Russo stated at the hearing that she had leased the property as rooming accommodation. The transcript shows that the learned adjudicator noted that Ms Russo had a head lease and she leased the property (i.e. the rooms of the property) out to other people.
41. [41]
    Rooming accommodation is defined in the RTRA Act as accommodation occupied or available for occupation by residents, in return for the payment of rent, if each of the residents has a right to occupy one or more rooms and does not have a right to occupy the whole of the premises in which the rooms are situated. It is clear from the transcript that Ms Russo intended to rent or lease individual bedrooms in the property to tenants with the use of common facilities such as kitchens and lounges.
42. [42]
    It is common ground that Ms Russo was the tenant in respect of three other properties at the time of entering the lease and in each case she leased out individual bedrooms in those premises to sub-tenants. It is contended by Ms Russo that leasing bedrooms was her primary business. If she had have been able to rent the nine rooms at the property for $250.00 each she would have made a gross profit of $1,350.00 per week.
43. [43]
    It is non-contentious in this matter that Ms Russo had no intention of residing at the property and her intention was to sublet each bedroom in the property to other tenants. She was prepared to pay $900.00 per week rent on the basis that she would be able to lease nine bedrooms separately and when it became clear that that would not be possible she took steps to try to renegotiate the amount of rent. The attempt to renegotiate with the lessor was not successful.
44. [44]
    The lessor was clearly aware of Ms Russo’s intentions in regards to leasing out the bedrooms. The email dated 20 December 2014 deals with the costs of registering with the Brisbane City Council. There is reference in the email to the requirement that fire safety will comply with normal residential requirements and any additional fire safety to enable the property to be used for another purpose and this will be at Ms Russo’s cost. The lease was also amended to state that the number of persons allowed to reside at the premises was ‘9 as per council approval’.
45. [45]
    It is therefore arguable, and open to the Appeal Tribunal to find on the evidence before the learned adjudicator, that the lease entered into by Ms Russo in respect of the premises was not a residential tenancy for the purposes of the RTRA Act. This is because the purpose of the lease was for Ms Russo to use the property as rooming accommodation and not as her residence.
46. [46]
    The tribunal has jurisdiction to hear and decide a minor civil dispute.^[33] A minor civil dispute includes a tenancy matter.^[34] A tenancy matter is further defined as a matter in relation to which a person may under the RTRA Act apply to the tribunal for a decision.^[35] The tribunal may exercise its jurisdiction for a minor civil dispute if, a person who under the RTRA Act may apply to the tribunal for a decision in relation to the matter has, under the QCAT Act, applied to the tribunal to deal with the dispute.^[36] In a proceeding for a minor civil dispute the tribunal must make orders it considers fair and equitable to the parties to the proceeding in order to resolve the dispute, but may if the tribunal considers it appropriate, make an order dismissing the application. The tribunal may only make final decisions under the RTRA Act to resolve the dispute.^[37]
47. [47]
    For Ms Russo and Propertyman to have standing to make an application and counter-application to the Tribunal they must do so as tenant or lessor respectively under a residential tenancy. In this case, the Tribunal does not have any other jurisdiction in regard to tenancy matters involving the letting of houses.
48. [48]
    The lease between Ms Russo and Mr Ploetz as the lessor for whom Propertyman is the agent is one, which was characterised by the learned adjudicator as a ‘commercial matter’ and not a residential lease. This was clear from the transcript and evidence presented by the parties at the hearing. Ms Russo did not lease the property with the intention of residing in it, but rather to sub-let out the bedrooms to other tenants for profit.
49. [49]
    In this case, it is therefore arguable that the learned adjudicator did not have jurisdiction to hear the application and counter application and leave to appeal is granted on that basis.
50. [50]
    In addressing the grounds of appeal there are no other errors discernible in relation to the learned adjudicator’s decision. The learned adjudicator has determined that Ms Russo has obtained some value from the tenancy by being able to sublet some of the bedrooms and she was therefore obliged to pay rent. She was in arrears of rent at the time of termination of the tenancy and the lessor was entitled to those arrears. The learned adjudicator made some allowances, such as a 30% reduction, in respect of the fact that the premises were represented to be suitable for nine occupants which they were not.
51. [51]
    The learned adjudicator’s decision was wrong, however, in regard to jurisdiction. As we have said, the tribunal’s jurisdiction in regard to tenancy matters is that given under the RTRA Act and the Queensland Civil and Administrative Tribunal Act 2009 (Qld). It requires that the lease be a residential tenancy agreement and in this case, it was not. The Tribunal did not have jurisdiction to determine the application and counter-application. The appeal is allowed and the application and counter-application are dismissed.^[38]