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Goddard v Colonial Airways Pty Ltd ATF The McNeil Family Superannuation Fund QCATA 130
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Goddard & Cleveland v Colonial Airways Pty Ltd ATF The McNeil Family Superannuation Fund  QCATA 130
COLONIAL AIRWAYS PTY LTD ATF THE MCNEIL FAMILY SUPERANNUATION FUND
ORIGINATING APPLICATION NO/S:
MCDT3 of 2018
31 August 2018
On the papers
The application for leave to appeal or appeal is refused.
LANDLORD AND TENANT – RESIDENTIAL TENANCIES LEGISLATION – OTHER MATTERS – where the applicants for leave to appeal broke the lease before the end of the fixed term – where the applicants were ordered to pay compensation to the landlord for rent, repairs and carpet replacement – where the applicant asserts the tribunal misapplied the law when assessing compensable loss – where the applicant argues that the landlord failed to mitigate loss by not readvertising the property sufficiently and not allowing the applicants to perform repairs themselves – where the applicant also asserts that damage to the carpet falls within the definition of fair wear and tear – where there is no principled basis for setting aside the tribunal’s findings under any head – where the application for leave to appeal is refused
Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 188(4), 238(3)-(4), 277(5)(b), 329(2)(k), 331(2)(g), 420
Johnson v Perez (1988) 166 CLR 351
Wong v Pie & Wood  QCATA 50
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 application for leave to appeal from part of a tribunal decision ordering the former tenants (the applicants) to pay the respondent lessor rental compensation for 6 of the 7 weeks claimed ($2732.85) plus the cost of repairs ($782.00) and half the amount quoted for carpet replacement ($785.00) in a break lease dispute.
- The functional purpose of an appeal is to correct substantial error. Therefore, an arguable case of error is a standard prerequisite for a grant of leave to appeal in this jurisdiction.
- The proposed appeal is based on an asserted misapplication of the law when assessing compensable loss. The applicants claim that if the decision is allowed to stand it will result in severe financial injustice to them.
The rental compensation issue
- The respondents gave notice on 4 October 2017 to vacate on 23 December 2017, i.e. the last day of the fixed term tenancy.
- The applicants then issued a Form 13 (notice of intention to leave – without grounds) on 11 October 2017 with a handover date of 5 November 2017 and paid the rent ($470 per week) up to that date.
- The applicants complain that by not readvertising the property properly the respondent failed to mitigate its rental loss. They also assert that:
- the respondent had no intention of reletting the property prior to January 2018;
- readvertising was unreasonably delayed for 10 days after notice of intention to leave was issued;
- in a phone conversation on 20 October 2017 the rental agent denied there was any obligation to relet the property and it was only on his prompting by phone call that the agent relisted the property;
- even then the property was only listed on the Century 21 website and not listing it externally hindered reletting;
- the advertising was inadequate as there was no information about the number of bedrooms, bathrooms and additions;
- a reduction in the rental price was never considered to attract potential tenants.
- The applicants say that they advertised the property themselves via Facebook and Gumtree, directing 18 prospective tenants to the agent but that is denied.
- The respondents also dispute the alleged failure to mitigate losses with evidence that the property was readvertised on multiple websites as early as 13 October 2017 or two days after receiving notice of intention to leave.
- The screenshot of the “e-sales” portal (annexed to the respondent’s appeal submissions) supports the contention that the property was readvertised on 13 October 2017 but it shows the “date available” as 13 January 2018 which is after the end of the fixed term.
- They point out that the applicant has provided no evidence that the lessor did not intend to relet the property prior to Christmas 2017 and no statements were made that the owners would occupy the property. Some maintenance would normally be performed while the property was vacant; however, if new tenants were secured Clause 2 of the General Tenancy Agreement includes provision for the landlord to enter the property to conduct repairs, maintenance or improvements as required and on proper notice to the tenants.
- The respondents also note the applicants’ refusal of the offer for a week’s rent reduction which would have allowed them to honour the agreement but vacate before Christmas 2017.
- The terms of a residential lease are strictly binding on both parties. Legally, neither of them can unilaterally bring it to an end automatically.
- Clause 7(2) of the general tenancy agreement also provides for an award of the “reasonable costs” incurred (usually a week’s rent) in reletting the premises such as agents fees and expenses but the quantum will be reduced if the costs would have been incurred in any event.
- QCAT has power to order break lease compensation in a particular case having regard to the mandatory considerations in s 421(1) RTRAA including the respondent’s duty to mitigate loss under s 362.
- Attempts to minimise break lease losses must be reasonable. The reasonableness of any steps taken is a question of fact. Findings of fact will not be disturbed on appeal unless they are clearly wrong and plainly contrary to the only reasonable interpretation of the available evidence.
- Subject to the steps the respondent took to mitigate the applicant is prima facie legally liable for rent to the 23 December 2017.
- The tribunal reduced the applicants’ overall liability by $490 from $3222.85 to $2732.85, or slightly more than a week’s rent, presumably to take into account that the rent was increased when the property was readvertised making it harder to relet. Admittedly it could rationally have been even more generous to the applicant by decreasing the compensable amount even further to take into account of the respondent’s action in not making the premises available until 13 January 2018 despite readvertising 4 months earlier. However, the tribunal’s implied finding that the premises could not have been reasonably relet sooner than they actually were was not unreasonable in the legal sense.
- Leave to argue otherwise is refused.
Maintenance and repairs
- A lessor is obliged to keep the premises in a state of good repair. The tenant is responsible for looking after the property and keeping it reasonably clean but cannot add fixtures, cause damage or make unauthorised repairs.
- Fair wear and tear excepted, residential premises must be left at the end of tenancy in the same condition as the beginning of the lease.
- The phrase “fair wear and tear” refers to damage or disrepair due to ordinary use. It does not include botched attempts to rectify or cover up structural damage.
- The tribunal ordered the applicants to pay a $782.00 invoice for maintenance including repainting wall patches and redoing bad repairs.
- The applicants say they requested that they be given the opportunity to rectify the agreed areas as soon as possible. The next communication (received 39 days later on the 19 December 2017) was an email which gave the applicants 84 minutes to reply or a 3rd party would be engaged. On this basis they argue that they were unreasonably not given the opportunity to do the repairs themselves for less.
- Despite annexed entry and exit condition reports the applicants also claim that there is no evidence provided by the respondent that the repairs were required as a result of the applicant’s occupancy.
- There is no requirement under the RTRAA to allow tenants time to perform repairs and maintenance after the end of the tenancy. In any event, the tenants had from 11 October to 5 November 2017 to ensure the property was up to scratch. Furthermore, the list of rectifications was given on 7 November 2017 and quotes were obtained on 19 December 2017 which was additional time to do any repairs. Moreover, according to the respondents, the owner also performed some repairs himself, which helped reduce the loss.
- There is no principled basis for setting aside the tribunal’s findings under this head.
- The parties agree that 5 year old carpet in the main bedroom was stained by a timber chest.
- The applicants deny that the stain damaged the carpet and say its utility remains intact. They say the damage falls within the definition of fair wear and tear and the tribunal erred in ordering them to pay half of the replacement cost, or $785.00. On their account, the relative size of the stained area compared to the cost of replacing the whole carpet was not adequately considered.
- They also complain they were not supplied with relevant information (i.e. the quote for $1570) until the day of the hearing, the respondent did not articulate what they were claiming contribution for and there was no attempt to communicate about the claim prior to the MCD application to allow the parties to reach an agreement in line with RTA recommendations.
- Lastly, the applicants doubt whether the carpet has been replaced at all and contend that awarding a sum on the basis of a quote only represents a windfall gain to the owner.
- However, according to the respondent, replacing the whole carpet was a last resort after several other loss-mitigating solutions were investigated, including carpet cleaning, dyes and replacing only the stained area (the original carpet is no longer in production).
- Under ordinary assessment principles property owners should be put back so far as they can be in the same position financially as they were in before their property was damaged.
- The dollar value of the compensable loss is the diminished value of the asset usually measured by the reinstatement cost but actual repairs are not a condition precedent to recovery.
- On one view, used carpet stains justify awarding the full cost of a new one to a lessor forced to make unwanted expenditure early, unless it was fully depreciated and due to be replaced soon anyway or could be invisibly patched, but the tribunal regularly gives credit for betterment in such situations as a matter of fairness to reflect a carpet’s age and condition.
- The carpet in issue has an effective life of 10 years according to the standard depreciation rates used by the tax office and the tribunal obviously accepted the adequacy of the respondent’s mitigation steps. In those circumstances while 100% recovery would probably have been within the tribunal’s discretion, the respondent has not cross-appealed and the benefit in likely higher rental returns to the respondents of having a brand new carpet in the premises 5 years earlier than expected arguably justify a 50% discount in the applicants’ favour.
- Accordingly, leave to appeal the apportionment is not justified.
- As none of the proposed grounds are sustainable leave to appeal is refused.
As required by Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRAA) s 329(2)(k).
Cf. RTRAA s 331(2)(g).
RTRAA s 277(5)(b).
RTRAA s 238(3)-(4).
See also Wong v Pie & Wood  QCATA 50.
RTRAA s 420.
Transcript of proceedings, 12 February 2018, 1-11:45.
Transcript of proceedings, 12 February 2018, 1-4:20-25.
RTRAA s 188(4).
Transcript of proceedings, 12 February 2018, 1-12:5.
Transcript of proceedings, 12 February 2018, 1-12-5-10.
Johnson v Perez (1988) 166 CLR 351.
- Published Case Name:
Goddard & Cleveland v Colonial Airways Pty Ltd ATF The McNeil Family Superannuation Fund
- Shortened Case Name:
Goddard v Colonial Airways Pty Ltd ATF The McNeil Family Superannuation Fund
 QCATA 130
31 Aug 2018